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Hong Kong*:  Sept 1 2011  Share

Police Commissioner Andy Tsang Wai- hung has blown the whistle on the University of Hong Kong in defending officers' actions at the campus during Vice Premier Li Keqiang's visit. At a special meeting of the Legislative Council's security panel yesterday, he also denied the tough policing was an attempt to win favor with Beijing. But Tsang did say later when quizzed on other trouble during the Li visit that the force had been in talks with mainland counterparts, though he refused to reveal what they talked about. On the university visit, Tsang said HKU authorities had decided to adopt a wider security zone when they met police officers on August 17, a day before Li attended its centenary celebrations. However, he rejected claims that officers detained three student protesters during Li's visit. Officers were acting on the university's request that uninvited guests be kept out of the security zone, he said. Responding later to Tsang's claims at the panel session, the line from the university was that it never asked police to create a " security zone" on the campus. The discussions on August 17 were focused on traffic arrangements, it said. Police representatives proposed an extension of a traffic-control zone to Swire Bridge and asked for assistance from the university. The three students were allegedly locked up on the back stairs of the university's K K Leung Building after they tried to reach Loke Yew Hall, where Li was taking part in celebrations. According to Tsang yesterday: "At that time, the police officers were just assisting the institution to block [students] from entering the institution's security zone from the back stairs. They absolutely did not lock them up. " Subsequently, the police handed them over to the institution's security guards." But Tsang amended his account later, explaining he had meant to say the police handed the case - not the students - to the institution. Also, Tsang stressed, officers " did not explicitly say or imply that [students] could not leave." He added: " The security guards of HKU repeatedly asked them to leave through the smoke stop door of the back stairs instead, but the students ignored the request, scolded the police officers at the scene with foul language and phoned a woman [reporter] to come and were interviewed. " The three entered and left the back stairs many times, so the accusation of an illegal lock-up is not based on facts." But one of the three students, Samuel Li Shing-hong, last night denied they had " scolded police officers with foul language." And officers had never said they could leave, he added. Also raised at the panel meeting was Li's visit to Laguna City, where a resident named Wong - wearing a T-shirt with a slogan demanding Beijing change its official verdict on the 1989 Tiananmen crackdown - was hustled away by police officers. Questioned repeatedly by lawmakers on whether the force was told by the mainland to ensure that Li would not face any embarrassment, Tsang said the content of their discussions remains confidential and he refused to disclose details. He only admitted there had been communication between Hong Kong and mainland police over security arrangements. Tsang also said the police operation had a legal basis, citing section 10 of the Police Force Ordinance, which stipulates officers are duty bound to preserve the public peace and prevent injury to life and property. Security for Security Ambrose Lee Siu-kwong said the arrangements for Li were consistent with the practice for visits of government leaders or foreign dignitaries. But Confederation of Trade Unions lawmaker Lee Cheuk-yan accused the force led by Tsang of behaving like mainland police and asked if Ambrose Lee would sack the commissioner because of what happened. In related developments, two groups published statements in newspapers yesterday, one in support of the police action and the other against.

HSBC Global Asset Management plans to launch yuan-denominated bond funds in Europe later this year. Europe's largest lender will sell Luxembourg-domiciled yuan bond funds throughout the continent as it bets that Europeans, like Hongkongers and investors elsewhere in Asia, will find the products attractive. HSBC Global Asset Management's newly appointed Asia-Pacific chief executive Joanna Munro said the bank also planned to offer yuan denominated funds in the US and Taiwan. This followed the launch of its US$500 million yuan-denominated fund in Hong Kong and Japan early this year. HSBC is among six funds houses which have issued yuan-denominated bond funds in Hong Kong since the People's Bank of China relaxed rules in July last year. But it is the first to expand the product beyond the city's borders aggressively. "We see a growing demand for yuan bonds globally and with our strong investment capabilities in the Chinese market and Asian fixed income, we will be a leader in this area,'' Munro said. Investors bet on yuan fund products partly due to expectations of valuation gains in the currency, which has risen over 20 per cent against the US dollar since 2004. Munro, a veteran British fund manager with 25 years' experience, relocated to Hong Kong from London in May. As part of her new role, she said she would continue to launch new funds in the region, after successfully setting up 12 new funds in first half of this year, including the popular yuan bond funds. Munro also wants to capture growing business opportunities on the mainland, now the world's second largest economy. HSBC has a mainland joint venture fund company HSBC Jintrust, with whom "we have been managing close to US$10 billion of Chinese assets and will continue to strengthen our resources to capture the growing and evolving opportunities in this market." On the institutional business side which invests for large companies, insurance companies and pension funds, Munro wants to focus on emerging markets. "We do not want to be all things to all clients, so our focus is clearly on emerging markets, as the world rebalances away from developed markets," she said. Munro said the recent stock market turmoil triggered by the Europe sovereign debt crisis and the worry over the US economy outlook has meant investors have shifted from stocks to more conservative investment choices such as bond funds. However, she did not see massive redemption demand as many fund investors were seeking long-term investment. The challenges ahead, she said, were not the volatile stock markets. "The major challenge is to recruit the right talents in Asia as the employment market here is so competitive," she said.

Norman Foster's architectural firm, defending its design for the West Kowloon Cultural District yesterday, insisted that the plan's green features were not responsible for HK$4 billion in cost overruns. Spencer de Grey, a senior executive of the Foster team, which is in charge of the final design of the 42-hectare arts hub, said he did not know why the hub authority said last week that underground facilities and other green features would add an extra HK$4 billion to the costs. "A green approach, including an underground car park, has always been an integral part of our proposal," de Grey said. "We have a good track record of taking costs very seriously." He denied that underground roads, car parks and the waste and water recycling systems were responsible for raising the construction costs of the HK$21.6 billion project by HK$4 billion, as the authority's chief executive Michael Lynch told lawmakers on Friday. "You must ask the authority [how the sum was calculated]," he said. He maintained that putting traffic, parking and servicing below ground was a flexible way to use space. Lynch had said the financial situation of the arts hub project was vulnerable because of high inflation, surging construction costs and low investment returns from the government's HK$21.6 billion endowment in 2008. The authority had said, in a paper submitted to the legislature, that the economic environment in recent years was very different from the long-term assumptions used in the analysis by its financial consultant in 2006. For example, the construction costs in 2010 were 49 per cent higher than estimated. Sin Chung-kai, board member of the West Kowloon Cultural District Authority, said neither Foster's nor the other two competing designs fitted with the HK$21.6 billion budget. "They went over the sum to different degrees," he said. "To be fair, we didn't make it a requirement that they must fit the figure. Each of them had their own budget." Sin said the higher costs of building underground facilities, a key element of Foster's design, were not taken into account in the 2006 assessment, since the design came afterwards. "What we now should do is to sort out ways to increase income," he said. With lawmakers saying they would not easily approve more money for the authority, the executives proposed new ways to raise funds. They will review the possibility of building the more expensive mega-venues at a later stage, explore sponsorships and naming rights, and reduce the number of car parks which are underground. Foster's team is consolidating the final design with elements from the other two architect teams, taking reference from public feedback. The ultimate design will be released for the last round of public consultation, which starts at the end of September and lasts for a month. It will then go to the Town Planning Board.

Secretary for Security Ambrose Lee and Police Commissioner Andy Tsang attend a special meeting of the Legislative Council. The government has refused to promise better press arrangements next time state leaders visit Hong Kong amid calls from journalists and lawmakers not to replace media coverage with official press material. Vice-Premier Li Keqiang attended at least 22 events when he visited the city two weeks ago but the media were invited to only 10, raising fears that press freedom had been eroded. Information on other events - including Li's visit to local families, a home for the elderly and meetings with officials and business leaders - was released only through the government's Information Services Department or Xinhua. Democratic Party lawmaker Emily Lau Wai-hing called for the government not to rely on issuing official press material as the only means of releasing information. But Secretary for Security Ambrose Lee Siu-kwong, the highest-ranking official attending a special Legislative Council meeting yesterday, refused to make such a promise, saying he was not in a position to do so. "Space in some venues was too limited so we could only arrange official media to record [the event]," he said. Chief Secretary Henry Tang Ying-yen, who earlier dismissed as "complete rubbish" claims that press freedom had been suppressed, did not attend the meeting. Lau said it was common for the media to arrange for one or two journalists to cover an event, if it was held in a confined space, and share the information with other press afterwards. Lee said he would discuss her suggestion with the Information Services Department. About 300 journalists staged a protest last week over the media arrangements for Li's visit. The chairwoman of the Journalists Association, Mak Yin-ting, said the police had failed to strike a balance between public security and press freedom. "The press areas were very far away [from the venues] and some were separated by roads or pillars. Maybe the police commissioner thinks that reporters' cameras can make turns like AIM-9 Sidewinder missiles [to capture Li]," she said. Serenade Woo, an Asia-Pacific representative of the International Federation of Journalists, said the way police treated journalists was becoming similar to tactics used by public security on the mainland. Tang will meet the News Executives' Association tomorrow and Police Commissioner Andy Tsang Wai-hung will meet the Journalists Association on Thursday to discuss the press arrangements for future state leader visits.

Citic Securities, China's biggest publicly traded brokerage, has obtained approval from the China Securities Regulatory Commission (CSRC) for its potential US$2 billion initial public offering in Hong Kong, the firm said late on Monday. The CSRC approved Citic Securities’ plan to issue up to 1.14 billion shares in Hong Kong, the brokerage said in a statement to the Shanghai Stock Exchange. Citic Securities said the IPO plan still needed approval from the Hong Kong stock Exchange. Separately, IFR, a Thomson Reuters publication, reported on Tuesday that Citic Securities would seek approval from the Hong Kong Stock Exchange on September 1 and planned to kick off pre-marketing of the deal once approval was granted. Citic Securities International, CCB (SEHK: 0939) International and ICBC International are joint sponsors on the deal, as well as joint bookrunners with ABC International, BOC (SEHK: 3988) International and BoCom (SEHK: 3328) International, according to IFR. Bank of America Merrill Lynch, CLSA, HSBC and Morgan Stanley are international co-ordinators for the offering.

Hong Kong-listed shares of China Construction Bank (SEHK: 0939) rose more than 4 per cent on Tuesday after Bank of America said it will sell about half of its 10 per cent stake in the Chinese lender, providing relief to investors by removing uncertainty surrounding the stake. News that Temasek Holdings was among institutions that bought the shares offloaded by BoA also lifted CCB’s appeal as the Singapore state investor had only about a month ago sold $3.6 billion worth of CCB and Bank of China shares. Two sources familiar with the situation had told Reuters on Monday that Temasek is among the buyers of the BoA stake in the the world’s No.2 lender by market value, a move that surprised some. “They’re behaving almost like a hedge fund, which is surprising because they’ve always talked about being a long-term investor,” said James Antos, a banking analyst at Mizuho Securities in Hong Kong. Temasek-linked investment firm Seatown, run by the state fund’s head of strategy Jimmy Phoon, was also a buyer, another person familiar with the situation said. The person did not know the size of Seatown’s purchase. Before adding the newly bought shares, Temasek already owned 7.03 per cent of CCB. This makes it the largest CCB shareholder after the Chinese government, which owns 59 per cent of the banks through its Huijin investment arm. Temasek pocketed about HK$9.39 billion when it sold part of its CCB stake for HK$6.26 per share on July 5. This is 43 per cent higher than the HK$4.38 it paid per share when it subscribed to BoA’s share of the Chinese bank’s rights offer, according to Antos’ calculations. Separately, Temasek also raised its stake in China’s No 4 lender Bank of China to 7.07 per cent from 6.96 per cent, according to a disclosure to the Hong Kong stock exchange on Monday. It bought each share for HK$2.972, according to the disclosure, which would translate into a total deal size of about HK$288 million. That is a 7 per cent discount to BOC (SEHK: 3988)’s current trading price of about HK$3.20. A Temasek spokesman declined to comment. Temasek had said in July it was bullish on China and is looking for opportunities in emerging markets and the United States. Temasek has plenty of cash, having added $7 billion to its cash pile in its last financial year, 70 per cent more than a year ago. Standard & Poor’s estimates that the fund, owned by Singapore’s Ministry of Finance, had cash and bank balances of almost S$40 billion ($33 billion) at the end of March last year. By 2.27pm, CCB was up 1.62 per cent at HK$5.64, its highest in about three weeks but paring earlier gains of over 4 per cent. The benchmark Hang Seng China Enterprises Index of top locally listed mainland companies was up 1.9 per cent. Trading volume spiked to a more than two-year high with about 4.7 billion shares changing hands. Of that, 4.4 billion shares changed hands at HK$4.94 in pre-opening trade, said Patrick Yiu, a director at CASH Asset Management. “This suggests that about a third of the shares sold by Bank of America went to hedge funds and other institutional investors,” Yiu said. “It’s a big discount on the CCB shares, and whoever was offered such a big discount should be happy to take it up.” Shares of CCB are down 17 per cent so far this year, worse than the 12 per cent decline on the benchmark Hang Seng Index. CCB will sign a five-year strategic cooperation agreement with BoA within days, it said in a statement posted on its website, adding that it understood the reasons for BoA’s stake sale and reiterated that it believes the US lender will remain a long-term investor. The two sides signed an agreement in 2005 to cooperate on areas such as credit card sales, risk management and retail banking, and the new cooperation will build on that, the statement added. A sale price of HK$4.94 per share would represent a discount of about 11 per cent to CCB’s Monday’s close of HK$5.55, based on Reuters’ calculations. This comes on top of an about 10 per cent discount that CCB was trading at compared with its two closest rivals, Industrial and Commercial Bank of China (SEHK: 1398) Ltd and Agricultural Bank of China. BoA is selling 13.1 billion CCB shares for US$8.3 billion, it said on Monday, in its latest effort to shed assets and boost capital. “This removes an uncertainty that’s been hanging over CCB shares for a long time,” said BNP Paribas analyst Dorris Chen in Shanghai. “When you look at CCB’s valuations, it’s clearly a very strong buy, but asset quality concerns are going to drag on for a while more,” Chen added. There have been widespread worries that asset quality at Chinese banks such as CCB and ICBC may sour if the country’s economy slows, as many of them had boosted lending in a big way during the global financial crisis to boost growth.

The new-look Central harbourfront will boast a 60-metre-high observation wheel if a company that runs such wheels in several cities around the world has its way. It would complement promenades, cafes and a maritime museum planned for the area. The company and a partner will submit the proposal for a "Hong Kong Eye" to the Harbourfront Commission today. The Hall Organisation and Great City Attractions Global in Britain want to site the wheel on reclaimed land near piers No 9 and 10 for one to three years. Great City Attractions Global runs similar wheels in several cities including Singapore, where its 165-metre Singapore Flyer is the world's tallest. "The wheel will definitely become a focal point of the harbour, offering postcard photo opportunities. It will attract people to the harbourfront and can promote vibrancy both day and night," the potential operators say in a paper to be presented to the commission. Peter Wong Yiu-sun, an engineer and commission member, agreed. "We need something other than just cafes on the waterfront. A wheel can add vibrancy to the area," Wong said, adding that he did not see typhoons posing a safety problem to the metal-framed structure, which does not require ground works or foundations. But another member, Paul Zimmerman, had reservations about a wheel occupying a huge site in the centre of the waterfront. "It is immediately iconic, but it seems to me having a wheel in Hong Kong, after London and Singapore, is a bit `me-too'," he said. "It's a positive thing that people are starting to throw out ideas for the harbourfront, but I would hope for something more creative and outstanding." The would-be operators are eyeing about 3,000 square metres at the future Site 7, one of four on the Central harbourfront the government has planned for development under a public-private partnership. The site is currently zoned as open space. The wheel, carrying 336 passengers at a time, would be lit with LED lighting and be open from 9am to midnight daily, the paper says. It would entertain 2,000 visitors on weekdays and 4,000 at weekends, the operators estimate.

Hong Kong customs said on Tuesday they had seized HK$13 million worth of African ivory tusks inside a container shipped to the territory. A spokesman said customs officers on Monday found 794 pieces of African ivory tusk, weighing a total of 1,898 kilograms, in a container shipped from Malaysia. The consignment was declared to customs as non-ferrous products for factory use but officers ordered an inspection, based on intelligence received earlier, and found the tusks concealed among stones. A 66-year-old man was arrested in connection with the haul, the spokesman said. “Follow-up investigations are still going on,” he added. International trade in elephant ivory was banned in 1989 under a trade convention to protect African and Indian elephants under threat of extinction. Before the ban, Hong Kong was a major importer, and a trading and manufacturing centre for ivory carvings, crafts and products. In Hong Kong, ivory imports are banned under the Protection of Endangered Species of Animals and Plants Ordinance. People found guilty of trading in endangered species for commercial purposes could face a maximum fine of HK$5 million and two-year’s imprisonment.

Gome Electrical Appliances Holding Ltd, China's second-largest electronics retailer by sales, is seeking to increase annual sales by 15 percent in the coming years, President Wang Junzhou told reporters in Hong Kong on Monday. The company aims to expand its store network to 2,400 by 2014, up from 938 at the end of June, Wang said. Smaller cities will be the focus in terms of new stores, Chairman Zhang Dazhong said. "The group will endeavor to further optimize its store network in first-tier markets, while actively expanding into second-tier markets," Zhang said. "The group will penetrate into third-tier and fourth-tier markets, which are economically developed, when opportunities arise," he said. Gome posted a 30 percent gain in first-half profit after opening stores to meet demand boosted by rising wages. Net income climbed to 1.25 billion yuan ($196 million), the Beijing-based retailer said in a statement to the Hong Kong Stock Exchange on Monday. Sales advanced 20 percent to 29.8 billion yuan. Zhang became the company's chairman after the unexpected resignation in March of former chairman Chen Xiao, marking the end of a long battle between Chen and the company's founder, Huang Guangyu, who is serving a 14-year jail sentence for bribery and other illegal business practices. The company, which operates under two major brands, Gome Appliances and China Paradise, closed 19 underperforming stores in the first half but opened 131 new stores, bringing the total number of stores to 938 at the end of June from 826 a year earlier. The company is adding outlets to narrow the gap with larger rival Suning Appliance Co Ltd in an electronics and appliances market that is forecast to surge 70 percent to 2.14 trillion yuan by 2015 compared with 2010, according to London-based researcher Euromonitor International. Suning opened 140 new outlets on the Chinese mainland and five stores in Hong Kong from January to June. At the end of June, it operated 1,488 stores - 1,451 on the mainland, 28 in Hong Kong and nine in Japan. Gome is developing regional logistics centers to support the expansion of its store network and the development of its e-commerce business, it said in its statement. Shares of Hong Kong-listed Gome rose 3.66 percent to HK$3.4 (44 US cents) on Monday. The company's stock has risen 21 percent this year, compared with a 14 percent loss for the benchmark Hang Seng Index. Per capita urban disposable income rose 13.2 percent in the first half and rural cash incomes climbed 20.4 percent, China's statistics bureau said in July. Gome's same-store sales, which strip out the effect of outlets open less than a year, rose 7.4 percent in the first half, according to the statement. Gross margin widened to 18.3 percent at the end of June, compared with 17 percent a year earlier, it said. Suning reported a 25.4 percent increase in its net profit to 2.47 billion yuan in the first half of the year. Suning's sales grew 22.7 percent to 44.2 billion yuan, cementing its leadership in the Chinese market.

 China*:  Sept 1 2011  Share

Former British PM Tony Blair launches his memoir in Beijing - Former British Prime Minister Tony Blair attends the book launch ceremony of the Chinese edition of his memoir A Journey in Beijing, Aug. 30, 2011.

Stepped-up security at Beijing and Shanghai airports has caught travelers by surprise, with long queues for checks, delayed departures and some passengers missing their flights. The measures came into force on Sunday - apparently after finds of dangerous items - with travelers told to be early to allow time for checks. But some complain the security processes are too slow, taking up to 30 minutes. The checks include passengers having to remove their shoes and to keep their bags open. "Standing in a long queue is not that dreadful," passenger Liu Wei remarked on his blog. "What is dreadful is that there was no explanation." And Xinjiang-bound passengers at Beijing Capital International Airport were separated for two security checks. Among them, a traveler named Zhao said: "People can understand that stricter security measures protect our safety." But he hopes airport personnel will improve efficiency for the checks. Although aviation authorities did not give reasons for the measures, speculation is that it follows the recent discovery of knives and other banned items at an airport in Xinjiang, where the first China-Eurasia Expo opens next month. Some media reported that security staff at Xinjiang's Urumqi airport found a knife in a water bottle on August 3. Bosses at Hong Kong travel agent Modern China welcome stricter checks as they are for passenger safety. Another agent, Wing On Travel, is now arranging for groups to arrive at the airports earlier than before. A spokeswoman said groups had until now been asked to assemble at airports three hours before departures, but that is being increased by 15 minutes. But the agency has not received complaints about the increased security. A Dragonair spokesman said the airline was notified of the measures yesterday. But its operations at Beijing and Shanghai airports remain normal. "We'll continue to work closely with the relevant authorities," he added.

Philippine President Benigno Aquino will discuss a controversial Chinese-funded railway project when he flies into Beijing today at the start of a five-day state visit. Philippine Secretary for Transportation and Communications Manuel Roxas confirmed at the weekend that the suspended North Luzon Railways (Northrail) project "will be one of the matters to be discussed". "We are seeking amendments to the existing agreement so that problems can be addressed," Roxas said, without elaborating. The Northrail was to have been the showcase of a "golden age" in Philippine-Chinese relations when it was made the centrepiece of President Hu Jintao's state visit to Manila in 2005. During the visit, the Export-Import Bank of China extended a US$400 million loan facility to Manila covering phase one of the project. This would have involved upgrading 32 kilometres of an old 80km railway line running from Metro Manila to Clark international airport in Pampanga province. A contract was agreed with China National Machinery Industry Corp - formerly China National Machinery and Equipment Corp - to build the project. However, it was soon derailed by charges of overpricing and illegality because no public bidding was held. Other delays were caused by squatters on land where the railway tracks would pass. Northrail soon became a political hot potato for then Philippine president Gloria Macapagal-Arroyo, becoming a basis for an impeachment complaint against her that was thrown out by her lawmaker allies. However, a separate lawsuit filed by residents who would be displaced by the project is still pending. Work on the railway began in 2008, but in May this year, Northrail halted building for a thorough review by then transport and communications secretary Jose de Jesus. After he resigned due to poor health, De Jesus criticised Northrail, saying the design was wrong - "the ground (for the piles) is a lot softer than anticipated" - and it would cost too much. He estimated that up to US$2 billion more would be needed to complete the project in addition to the US$621 million already spent. The Chinese embassy in Manila declined to say how much has been spent so far. China's ambassador to Manila, Liu Jianchao, said last week that Beijing was open to a review of the project. "We are ready to have further discussions with the Philippine government on what we are going to do about the project. We hope it will materialise and we hope that the project will benefit the Philippine people in whatever way," Liu said. "The Northrail project I believe, and the Philippine government believes, is one the Philippine government needs. China takes a very positive and open approach to this project." Beijing will have to convince Aquino that it is a worthy project. Before running for president, he said the Northrail was one project he would review if he won because it delivered "less bang for the buck". He explained why: "You take a project like Northrail and contrast it to Southrail by the Koreans. The Koreans will build a 34-kilometre narrow-gauge railway system for US$50 million. The first phase of Northrail is US$503 million for 32 kilometres."

Spring Airlines Co Ltd, China's only budget carrier, is set to establish a subsidiary in Japan as part of its efforts to explore international markets. Preparatory work is currently under way. "Spring Airlines is planning to open a company in Japan," said Wang Zhenghua, Spring Airlines' chairman and founder, during a lecture at Shanghai Jiaotong University on Saturday, according to reports on the major Chinese-language website 163.com. Zhang Wuan, a spokesman for Spring Airlines, said on Monday that the idea of opening a subsidiary in Japan was first raised at the beginning of this year. "Currently, we have embarked on the preparation work," Zhang said. The subsidiary is likely to become the first for a Chinese carrier in Japan, according to Zhang. Even the nation's three biggest State-owned carriers - China Southern Airlines Co Ltd, China Eastern Airlines Co Ltd and Air China Ltd - only operate sales departments there. Since starting its first international flight to Japan's Ibaraki prefecture in July 2010, Spring Airlines has been actively exploring overseas markets, and more than 20 percent of its external flights are bound for Japan. "The Japanese aviation market is extremely important and large, especially for carriers based in the Yangtze River Delta region," said Zhang. He added that Japan's more-than-100 airports need to begin flights to China. Spring Airlines has been approached by more than 10 Japanese prefectural governors about starting regular flights. Meanwhile, an agreement was reached a month ago for Spring Airlines to begin flights to Sagaken. Wang said that Japan has an isolationist and protectionist market - as a case in point, he said that in order to open its subsidiary, Spring Airlines had to establish a joint venture in Japan, with a stake of no more than 33 percent. "A stake of 33 percent stake is too low for Spring Airlines, and we are worried that this will limit our influence during decision-making," Wang said. The carrier's flight to Ibaraki has so far maintained an average occupancy rate of 95 percent, indicating strong demand for low-cost air travel in the Japanese market. Spring Airlines is not the only carrier looking to explore the low-cost Japanese air market. Japan Airlines Co Ltd has established a joint venture - Jetstar Japan Co Ltd - with Australia's Qantas Airways Ltd and the trading house Mitsubishi Corp to tap into the nation's budget travel market, according to the Wall Street Journal.

It was a hand-to-hand battle between the two fastest men ever in history on the 110m hurdles track - literally. Cuban hurdler Dayron Robles was stripped of gold and glory on Monday in a twist every bit as dramatic as Usain Bolt's disqualification from the blue riband 100 metres sprint the night before.

Hong Kong*:  Aug 31 2011  Share

Hong Kong's Census and Statistics Department announced Monday that the value of total retail sales of the city in July was provisionally estimated at 35.2 billion HK dollars (4.52 billion U.S. dollars), up 29.1 percent year on year. According to the department, after netting out the effect of price changes over the same period, the volume of total retail sales grew 22.4 percent. The revised estimate of the value of total retail sales in June rose 28.8 percent at 31.3 billion HK dollars, and the volume of total retail sales increased 22.2 percent. For the first seven months of the year, total retail sales increased 25.1 percent in value and 19.6 percent in volume, over the same period last year. Analyzed by broad type of retail outlet and comparing July this year with the same month last year, the volume of sales of miscellaneous consumer durable goods increased the most, by 84.6 percent, followed by sales of electrical goods and photographic equipment, up 73.3 percent. The department added that based on the seasonally adjusted series, the volume of total retail sales increased by 5.3 percent in the three months ending July when compared with the preceding three-month period. (1 U.S. dollar equals 7.796 HK dollars)

One group of Hong Kong service providers is bullish about its mainland prospects under Cepa, the free-trade deal Hong Kong negotiated with the central government. Testing and certification bodies have been able to put their safety tags on selected products for sale on the mainland since May last year and the list has just grown sixfold. Vice-Premier Li Keqiang has said that local testers would be able to certify all kinds of Hong Kong-processed consumer products that require the CCC - China Compulsory Certification - mark, a safety label for many products sold since May 2002. The seventh Closer Economic Partnership Arrangement, signed in May last year first allowed Hong Kong's testing companies to conduct CCC assessment on four types of mainland consumer products. These were toys, switches and protective and connection devices for electrical installations, information technology equipment and lighting apparatus. The scope has been expanded to all 23 types of products under the CCC system, including medical devices, fire fighting equipment and vehicle safety parts. "The expansion means that the central government recognises the ability of our industry," said Ching Pak-chung, chairman of the Hong Kong Council for Testing and Certification. SGC, an international testing and certification company with headquarters in Switzerland and a branch in Hong Kong, was the first to become qualified in July, and is so far the only one. "Living standards on the mainland have improved drastically ... Safety of their homemade products is more emphasised," SGC's consumer testing services director Raymond Wong said. "With the CCC qualification, we're very optimistic about opening up the market in China." On the mainland, only 11 testing organisations, which Ching said were mostly authorised by the central government, can carry out testing on products under the CCC system. "In the past, China was mainly an export-oriented country. But now it is producing more and more products for its own use," said Raymond Li Wai-keung, vice-president of Bureau Veritas, another local testing company. "We believe the 11 mainland companies are no longer enough to do all the testing jobs."

Siu mei is popular among Hongkongers but poses serious health risks unless one removes the fat and skin, a dietitian reminds us. Hongkongers love their roast pork and other kinds of siu mei, or Chinese-style barbecued meat. But, a dietitian warns, more than one piece a week can be hazardous to your health if you leave the juicy fat and crispy skin on when you eat it. The average Hongkonger eats siu mei 1.79 times a week, or once every four days, a survey of 1,706 people in the past two months by health website healthyD.com found. The survey, the first of its kind, shows char siu - barbecued pork marinated in honey - is the most popular. Roast pork or pork belly ranks second, and roast goose third. Dietitians warn of the high risk of heart disease and stroke in eating too much fatty meat. Roast pork belly is the most dangerous kind of siu mei, with roasted spare ribs next, registered dietitian Sally Poon Shi-po said. "You can't get rid of the fat no matter how hard you try. One shouldn't take them more than once a week," she said referring to both kinds. Chicken has less saturated fat and is the healthiest kind, she said. Poon said one should not eat siu mei too often - at most twice a week. Each time, a woman can take up to 80 grams, about four to six pieces. Men can take up to 120 grams, six to eight pieces. But that is provided one removes the fat and skin, she said. "Fatty meat and skin are unhealthy food," she said. "Eating more than one piece a week is too much. If you do eat it, you may need to exercise for at least half an hour to make up for it." Some people like their siu mei charred, and some like theirs with condiments like soya sauce, plum sauce or mashed ginger. But Poon said eating the charred parts can cause cancer, and salty, oily sauces can cause high blood pressure. Of those surveyed, 78 per cent said they knew eating siu mei was unhealthy, but only 1 per cent said they had stopped eating it for health reasons; 45 per cent admitted they ignored the risks to their health. Eating fatty siu mei increases the risk of coronary heart disease and stroke, because animal fats contain a large amount of saturated fats, which stimulate the liver to make the bad cholesterol that blocks blood vessels. A separate survey by heart disease patients' groups showed that 53 per cent of 994 people interviewed at a mobile check-up station had at least one of three risk factors for heart disease - high blood pressure, abnormal fat levels in blood and diabetes - of which they were unaware. "This result raises concern. It shows that many high-risk people are not alert enough," said Dr Chan Ngai-yin, an associate consultant in cardiology at Princess Margaret Hospital, who oversaw this survey. Other high-risk factors include being overweight, lack of exercise, smoking and an unbalanced diet lacking in fruits and vegetables. Thirty per cent of heart disease patients with heart muscle death die within a month of their heart blood vessels being blocked, half of them before reaching a hospital, Chan said, citing research from abroad.

Cathay Pacific Airways Ltd. Chief Executive John Slosar said Monday that the Hong Kong-based carrier plans to launch premium economy cabins on long-haul flights from the second quarter of next year, tapping a new source of revenue from travellers who would like more space but don't want to fork out substantial business-class fares. The blue-chip airline will join a handful of other major regional carriers to offer the premium economy cabin—an intermediate step between coach and business class—at a time when many companies have cut executives' travel budgets amid global economic uncertainties. To stay competitive, many airlines have in recent years invested heavily in their long-haul business-class cabins, with amenities such as flat-lying beds becoming standard in the trade. Meanwhile, coach-class products have remained largely unchanged in terms of personal space, resulting in a significant price gap. A round-trip flight between Hong Kong and New York on Cathay Pacific's business class in September costs as much as six times the fare of a coach ticket, according to the airline's website. "The seat will be more like a regional business-class seat," Mr. Slosar said in a statement. "But it's not just the seat, we'll have an improved service as well," he said, noting that meals on the service will also be improved. Pricing and other specifics on the new cabins haven't yet been released. In the aftermath of the 2008 global financial crisis, Cathay Pacific conducted a strategic review of its product offerings to consider whether it needed to adjust its heavy focus on the premium travel market, and whether it should introduce a premium economy cabin for long-haul services. Mr. Slosar said in June the airline plans to offer new economy-class seats on its aircraft as early as the third quarter. Cathay Pacific's long-haul economy-class cabins last underwent a retrofit in 2006 with the installation of seats that move forward when passengers recline to give them more space. However, some travelers said the hard-back seats were uncomfortable. Other airlines that offer premium economy cabins on their long-haul flights include All Nippon Airways Co., Qantas Airways Ltd., Japan Airlines Corp., British Airways PLC and Virgin Atlantic Airways. United Continental Holdings, Inc.'s United Airlines markets several rows of coach on most of its aircraft as an 'Economy Plus' product, which offers a few extra inches of legroom for customers paying a surcharge or who have an elite status on its frequent flyer program.

The Court of First Instance on Monday rejected a Mei Foo resident’s bid to block a controversial project to build a 20-storey building on a site neighbouring her home. Ho Mei-ling, who lives in a flat at Mei Foo Sun Chuen Stage 8, last month applied for a judicial review of the Building Authority’s decision to approve the project. Ho argued the authority had been wrong in approving the project. Ho had stressed that the land being used for the 20-storey block was actually part of Mei Foo Sun Chuen. She told the court that the authority needed the consent of residents before going ahead with the project. Her application followed protests by residents against the project and its developer, Billion Star. In Monday’s ruling, Justice Johnson Lam Man-hon said he accepted that the authority had not made any error. Lam said the site was independent of Mei Foo Sun Chuen and calculations of the project’s plot ratio and site coverage were in accordance with the law. Lam also said Ho had been late in filing the judicial review application. Ho made the application nine months after the plans were approved, beyond a three-month limit. Outside court, a Mei Foo residents’ group supporting Ho said they were planning to appeal the ruling.

 China*:  Aug 31 2011  Share

The stewardesses prepare to board on a Wuxi-Taipei direct flight of Shenzhen Airlines at the airport in Wuxi City, east China's Jiangsu Province, Aug. 29, 2011. A regular direct cross-strait flight between Wuxi and Taipei of southeast China's Taiwan was launched Monday. A new regular direct air service was launched between Wuxi on the Chinese mainland and Taipei on Monday. The mainland's Shenzhen Airlines and China Eastern Airlines and Taiwan's China Airlines and TransAsia Airways will jointly operate the air route and share the same flight numbers, according to a spokesman with the Sunan Shuofang International Airport in Wuxi. Shenzhen Airlines and TransAsia Airways are jointly running a round-trip flight (ZH9021/2 and GE9021/2) every day except Saturday, the spokesman said, while China Eastern Airlines and China Airlines are jointly operating a round-trip flight (MU2931/2 and CI8014/3) every day, plus an additional round-trip flight (MU2961/2 and CI8016/5) on Mondays, he added. The airport mainly serves its residents and visitors to Wuxi and Suzhou cities, which have 18,000 Taiwan-funded businesses and 300,000 Taiwan business people, and the cities both enjoy close trade links with Taiwan, he said. "The new air route will further promote cultural, economic and political exchanges between Wuxi, Suzhou and Taiwan," he said.

Dayron Robles of Cuba (R) clears a hurdle next to Liu Xiang of China during the men's 110 metres hurdles final at the IAAF World Athletics Championships in Daegu, August 29, 2011. Dayron Robles was disqualified from the 110 metres hurdles final at the world championships in Daegu and stripped of his gold medal on Monday after bumping China's Liu Xiang in a physical track tussle. America's Jason Richardson was lifted from silver to gold with the Cuban's disqualification and Liu moved up to second. Britain's Andrew Turner was given bronze.

China's mutual funds made a combined loss of 125.4 billion yuan (US$19.6 billion) in the first half of this year, battered mainly by weakness in the country’s stock market, official financial newspapers reported on Monday. The reports gave no comparison, but state media have reported the funds lost 439.75 billion yuan in the fist half of last year. All of the country’s 61 fund management companies, which manage 763 mutual funds, posted losses in the first six months of this year, the official Shanghai Securities News said. Stocks-oriented funds reported the biggest loss, of 78.9 billion yuan, while the funds that invested just a part of their funds in stocks lost 47.9 billion yuan, it said. “Mutual funds were mainly hit by the weak stock market,” the newspaper said. Money market funds made a slight profit to become the only silver lining of the domestic industry during the period, the newspaper said. China’s benchmark Shanghai Composite Index fell 1.6 per cent in the first half of this year, due mainly to a slew of economic cooling steps, including increases in interest rates and bank reserve requirement ratios. In the first half of last year, the index plunged 27 per cent, battered by a government campaign to ease property price rises.

Chinese cabbage ready for shipping to South Korea at a logistics center in Shenyang, Liaoning province. China has become the fifth-largest global exporter of agro-goods. When he worked from dawn to dusk fishing in the sea off Weihai in Shandong province, more than three decades ago, Tang Jude never thought of turning his trade into a business that could reach people outside the East China coastal city, let alone outside the country. The 20-year-old fisherman of those faraway days is now the executive vice-president of Homey Group Co Ltd, a top 10 Chinese seafood exporter, with a sales network covering a number of developed nations including Japan, South Korea, the United States and the European Union (EU) trading bloc. In 1978, Tang and 200 fellow fishermen established the Qiujia Fishing Company, the predecessor of Homey Group. "It was a small business. We fished everyday and sold to local people, but business was very good," Tang said. It was around 1990 that Tang's company began to sell overseas, but the volume was quite small, as it was very difficult to promote sales abroad at that time. The turning point came in the mid-1990s when a delegation from Japan flew to Weihai and visited the company. The team stayed for a couple of days, researching and sounding out local people, and eventually an agreement to establish a joint venture was signed with TableMark Co, Japan's biggest Japanese food processing company by sales. Now Homey Group's annual exports are $70 million and 80 percent of its goods go to Japan. The company listed on the Shanghai Stock Exchange in early 2004, with total assets of 3.5 billion yuan ($550 million). "Quality is the lifeblood for the food business," Tang said. Homey Group is the epitome of thousands of agricultural goods manufacturers and exporters in China, and their evolution and prosperity have helped the country grow into the fifth-largest global exporter of agro-goods. The exports are projected to be on the rise and the prospects to be promising, but quality and branding will be key to maintaining robust growth, said government officials and company executives. China's entry into the World Trade Organization (WTO) in 2001 stimulated the nation's exports of agricultural goods. According to the General Administration of Customs, exports of Chinese agricultural goods surged to $48.88 billion in 2010 from $18.03 billion in 2002, registering an annual growth rate of 13.4 percent. That growth was mainly buoyed by sales of labor-intensive goods, with the three categories of organic aquatic foods and seafood, garden produce, and livestock and poultry products contributing approximately 70 percent of the nation's agro-exports annually over a period of years. China has the largest population in the world, but it is limited in terms of arable land, so the nation mainly plants wheat, rice and corn for domestic self-sufficiency, importing large amounts of soybeans, cotton, edible oil and sugar. Last year, the country became the largest destination for US agricultural goods, with imports totaling $17.5 billion. That figure accounted for 15 percent of US agro-goods exports in 2010. As the world's major agriculture nation with a huge rural population, China is set to see a surge in food-based exports, according to officials. "We have reason to believe that China's agro-exports will experience rapid growth and the future will be very positive," said Wang Shouwen, director of the department of foreign trade at the Ministry of Commerce. China's agro-export growth is gaining momentum. Between January and April, exports rose by 34.4 percent from a year earlier to $18.68 billion, compared with annual growth of 13.4 percent during the past nine years. Shandong province in East China is the country's biggest region for agricultural exports, contributing one-fourth of the nation's total in 2010.

Visitors look at a huge moon cake exhibited in a food fair in Chengdu, Sichuan province, on Sunday. When Wang Youhua heard that his company was giving him a pack of moon cakes to celebrate the coming Mid-autumn Day festival, you might think he was full of cheer. Instead he is bristling over the fact that the cakes, valued at 300 yuan ($47), will land him a bill of at least 60 yuan from the tax authorities. Wang, who works for an IT website in Beijing and has a monthly salary of 10,000 yuan, said that until he had read a news report he was unaware that the cakes were taxable. "Since when are moon cakes taxed?" he said. "I'd rather not receive such benefits if I have to pay tax." Under long-standing tax regulations, in-kind benefits that employees receive are taxed according to their market value. Under the regulations, workers are liable to pay tax for such benefits if their monthly income surpasses the tax-free threshold. A month ago the State Council announced income tax law changes that will come into force on Sept 1, raising the monthly tax exemption from 2,000 yuan to 3,500 yuan, and changing other tax brackets. owever, rules on in-kind benefits are unchanged. In Wang's case, if the moon cakes are taxed under the old rules he will have to pay 60 yuan; if they are taxed under the new rules he will have to pay 75 yuan. "Moon cake tax" became a buzz phrase on the Internet after the Beijing newspaper the Mirror Evening News reported on the ramifications of the tax changes on Friday. In a poll by weibo.com, which had attracted more than 5,000 respondents by Sunday afternoon, 96 percent of those answering said they oppose moon cakes being taxed. Most workers are unaware of such a tax, believing the moon cakes to be a benefit, with no strings attached, a report of China National Radio said. An opinion piece on Sunday in the Qilu Evening News, in Jinan, East China's Shandong province, said authorities had never explained the tax implications of giving moon cakes, so they were responsible for public ignorance on the matter. The cakes are subject to consumption tax when they are bought, so should not be taxed again when given to workers as a benefit, said an article on people.com.cn, the website of People's Daily. Wei Yan, of the Tai'an office of the State Administration of Taxation in Shandong province, told China Daily that the local tax bureau had taxed in-kind benefits since the regulation was enacted in 1994. "All in-kind benefits, such as gasoline cards and moon cakes, are taxed as part of the individual income according to the regulation. "Most large companies report the in-kind benefit to the tax bureau, but many small and middle-sized companies don't. It's difficult for the tax bureau to police." Wang Yi, of the Beijing Folklore Association, said the rules on taxing moon cakes were highly regrettable because the Mid-autumn Day festival was meant to be "heart warming for the union of the family". Wang Youhua, the IT worker, said that the high valuation put on moon cakes also made him reluctant to receive the benefit. "The value of a '300 yuan' moon cake is really less than 50 yuan, but I have to pay at least 60 yuan tax on it. It's a financial burden rather than a benefit."

A high-speed bullet train arrives at the railway station in Nanjing, Jiangsu province on Aug 27, 2011. According to the new schedule issued by the Ministry of Railways, high-speed trains will run at a slower speed from Aug 28. More high-speed trains, including those on trunk lines, will be running at slower speeds from Sunday, greatly altering the country's train schedules. According to the new schedule issued by the Ministry of Railways, high-speed lines with a designed speed of 350 km/h will be allowed to run at 300 km/h from Sunday. Lines operating at 250 km/h will now run at 200 km/h, and passenger trains that used to run at 200 km/h on older lines will operate at 160 km/h. The new plan will affect the timetable of 498 pairs of trains that belong to 18 railway sub-bureaus across the country. This is the second time this month that the Railways Ministry has made national adjustments to slow train speeds to improve safety. Two weeks ago, bullet trains on the Beijing-Tianjin intercity railway, the eastern section of a loop railway on Hainan island, and the Guangzhou-Zhuhai intercity railway had their speeds reduced in the first part of this program. Those adjustments came after the State Council's decision earlier this month to put a brake on the country's railway networks. On July 23, a bullet train rear-ended another in East China's Zhejiang province, killing 40 passengers and injuring nearly 200 others. The tragedy fueled public concerns over China's high-speed rail safety. The new schedule will increase passengers' travel times on many fast lines. For example, after train speeds on the 190-km Shijiazhuang-Taiyuan line are reduced to 200 km/h from the original 250 km/h, journeys from Beijing to Taiyuan via Shijiazhuang will take an extra 27 minutes. "The passenger flow might be affected a bit in the short term after the adjustment, but there is no chance of a sharp decrease," Tian Qiang, a publicity officer at Taiyuan railway administration, said on Sunday. Guo Weidong, a 46-year-old Taiyuan resident who takes a train to Beijing every weekend to take care of his daughter, said the new schedule would not affect his decision to commute between the two cities. "Half an hour is a good price to pay for safety," he said. "Besides, a slower car is more comfortable." To compensate for the slower speeds, ticket prices will be reduced by about 5 percent for all types of seats, railway authorities said. The adjustment also involves adding or cutting trains on certain lines to help meet market demand. Four pairs of bullet trains that leave at night and arrive in the morning at places between Beijing and Shanghai will resume operations on Sept 1. Those trains had been popular with passengers but were halted after the new Beijing-Shanghai high-speed railway opened. However, some high-speed trains will be eliminated in the new schedules. The bullet trains linking Beijing to Chengdu and Beijing to Chongqing will be halted. Slower passenger cars that ill have larger capacity and cheaper tickets will replace those fast trains, which started operating seven months ago. China has increased the speeds of its trains six times since 1997 and has been expanding its high-speed rail network at a fast pace in recent years. This adjustment is the first time railway authorities have gone against the long-standing policy of acceleration. Sheng Guangzu, the railways minister, said earlier that the decision was designed to "accumulate safety management experience". According to the Ministry of Railways, local railway administrations will have a 10-day transition period to adjust to the new schedules. Construction of new rail lines will be halted from Aug 26 to Sept 4 to guarantee transport safety during the grace period.

The People's Bank of China will require banks to hold more types of deposits in reserve, effectively tightening credit conditions further, according to a memo from the central bank seen by Dow Jones Newswires. The central bank will require banks to include so-called "margin deposits," or collateral deposited by customers for letters of credit and other guarantees, in calculating the proportion of deposits that they must put aside for the required reserve ratio, according to the memo circulated within a major domestic bank. With the official bank reserve requirement ratio now at 21.5%, the move could take 800 billion yuan ($125 billion) to 900 billion yuan out of the system by the time it is fully implemented in February, economists said. Separately, the state-run Xinhua news agency reported Monday that stabilizing prices remains the government's top macroeconomic priority, in a possible sign that Beijing will keep policy tight despite market volatility around the world.

Hong Kong*:  Aug 30 2011  Share

Cheung Tsz-chun may be only 10 years old but his gift of giving and desire to help the poor reveal a maturity way beyond his years. It all began in 2009 when Tsz-chun donated eight years of accumulated lai see money - HK$61,000 - to the Anglican Church to help it and the St James' Settlement charity in Wan Chai expand services to the poor. To show its gratitude, the church recently invited him as a guest of honour at the groundbreaking ceremony of a service block in Kennedy Road, funded by the Jockey Club and individual donors. Once there, Tsz-chun found himself among guests such as banker and finance sector lawmaker David Li Kwok-po, Anglican archbishop Paul Kwong and the chairman of the Jockey Club, Brian Stevenson. "People reacted strongly to Tsz-chun's decision," said his mother, Siu Wai-yee, of the short-sighted schoolboy who likes playing with friends and making model ships and aircraft in his spare time. "They surprised us. The pastor invited the congregation to sign a thank you card to Tsz-chun. Another church invited him to share his experience. Then he was invited to officiate at the groundbreaking, and now the media want to talk to us." Siu, an accountant and a member of the St James' Church congregation, said she wanted her children to grow up happy, healthy and embracing the right values. Loving others and sharing with those in need are part of those values. During summers, Tsz-chun visits the poor in low-income areas instead of joining the overseas study tours favoured by his classmates. He has visited partitioned flats in Sham Shui Po and rooftop units in To Kwa Wan to take a look at the lives of their residents. "The conditions in those places are terrible and very crowded. They are hot and the sanitation is poor," Tsz-chun said. As a long-time member of a child-sponsorship programme, Sui introduced her children to the importance of sharing, and today Tsz-chun and his younger sister each sponsors a child on the mainland.

The much-touted Cepa preferential treatment for Hong Kong professionals is not quite all it appears. More than 600 architects and engineers have had their qualifications recognised on the mainland, but seven years after the signing of the cross-border trade deal that made this possible, none can practise there. Meanwhile, doctors and lawyers, whose qualifications are also recognised under the Closer Economic Partnership Arrangement, are slightly better off but still only a few - about 20 and 70 respectively - have the qualifications to practise on the mainland. Few have chosen to do so because of hurdles in opening their own business. During Vice-Premier Li Keqiang's visit to Hong Kong, he outlined a plan to open up the mainland market to Hong Kong's service providers by 2017. New agreements to be signed by the end of the year are expected to make it easier for the industries to establish themselves on the mainland. But previous efforts to bring local professionals across the border have been sluggish. Institute of Architects honorary secretary Daniel Chi Wuh-cherng said 412 local architects had secured a national qualification from 2004 to 2008 but none had managed to become registered architects who could sign off technical drawings of buildings. They still have to pass a test on national regulations next month. So far, 60 architects have applied to sit the examination, and even if they pass they still have to secure positions at a design institute in Guangdong. "Many of the architects are bosses of small and medium-sized enterprises," Chi said. "They cannot leave their companies behind and join mainland design institutes." If they want to establish their own firms on the mainland they must employ at least three mainland architects with top qualifications. Chi said that as each architect would be paid about HK$400,000, hiring three of them would cost too much for most of the 167 local firms, of which 70 per cent are small and medium-sized enterprises. He called for new terms allowing local professionals to practise on the mainland to be included in the forthcoming Cepa agreement and said obstacles to starting new companies should be removed. Engineers are making similar demands for a relaxation. Two hundred structural engineers have had their technical skills recognised on the mainland since mutual recognition agreements were introduced in 2003, but none managed to fulfil all criteria and they are banned from endorsing structural drawings. Discussions on recognising qualifications of building services and electrical engineering experts started three years ago. The local association was invited to set questions for a qualification exam, but there was no progress after this. "It's meaningless if we can't practise there," Institution of Engineers president Dr Chan Fuk-cheung said. Meanwhile, lawyers are troubled by an extremely difficult national licensing exam. Only 70 passed it, of whom 20 were registered lawyers in Hong Kong, Law Society president Junius Ho Kwan-yiu said. The overall pass rate for the exam is eight per cent, while for Hong Kong lawyers it is just one per cent - a possible reason being that locals, who are used to the common law system, need to make an extra effort to familiarise themselves with the mainland's system. "Like any other candidates [with no legal background], local lawyers are required to take more than 20 papers in the exam ... they should be exempted from some of them," Ho said. He also said Hong Kong lawyers were not allowed to pursue criminal cases or civil ones unrelated to Hong Kong even after they had passed the examination. As for doctors, most were not interested in obtaining licences, with only about 20 doing so, Medical Association president Dr Choi Kin said. They have to pay more than HK$10,000 for the national licence, and most refrain from doing so, knowing it will be difficult to get past regional restrictions and start clinics. Guangdong authorities have received seven applications from Hong Kong to set up clinics and four have been approved since 2009. Cepa allows tariff-free exports of more than 350 types of Hong Kong goods. Hong Kong goods are defined as those with 30 per cent of their value added in Hong Kong. The pact also initially opened 38 mainland service sectors to Hong Kong companies. Since it was signed on June 29, 2003, several supplements to the pact have been signed around the same time each year.

The territory's testing and certification business for products headed for the mainland is expected to grow by at least six times under an economic initiative announced by Vice Premier Li Keqiang. During his visit this month, Li said Beijing would allow SAR companies to carry out testing of all 23 Hong Kong-processed products that require China Compulsory Certification before they can be imported into the mainland. That opening makes its mark with Hong Kong Council for Testing and Certification chairman Ching Pak-chung, who estimates the business will increase at least sixfold. "The mainland is a market of unlimited opportunity. About HK$1.5 billion worth of products were processed in Hong Kong, and then imported into the mainland last year," Ching said. There are about 700 testing companies in the territory and the whole industry made a profit of HK$8 billion last year. Updates to the Closer Economic Partnership Arrangement between the mainland and Hong Kong last year opened the door for laboratories to do the tests in cooperation with mainland certification bodies on four products - toys, lighting apparatus, information technology equipment, and switches and connection devices for electrical installations. So far four companies have applied, said Hong Kong Accreditation Service senior accreditation officer Eric Sze Tung-po, but only SGS Hong Kong succeeded. He expects more accreditation applications. One reason for the high failure rate is that testing companies need time to improve the quality of their services, Sze said. About 2 percent of a product's cost goes into testing, he added. Raymond Wong Wai-yin, SGS consumer testing services director, expects companies to benefit tremendously because demand for products, such as toys, is increasing on the back of rising incomes in the mainland. More details are expected to emerge in the eighth CEPA update to be signed before the end of the year, Innovation and Technology Commission secretary general John Hung Leung-bun said.

Beijing's decision to allow the use of the yuan in foreign direct investment (FDI) is expected to herald a new era in the internationalisation of the currency. Even the current market volatility is not expected to have a big impact on companies issuing more yuan-denominated bonds and shares as investors bet on the ongoing appreciation of the currency. The liberalisation of the yuan, one of 30 measures announced by Vice-Premier Li Keqiang during his three-day visit to the city earlier this month, means that from as early as September, foreign companies will be allowed to invest their yuan holdings directly into mainland projects. That will help reduce currency risks for companies, as their projects are on the mainland, and it makes sense for them to use the yuan instead of the US dollar. The measures are also aimed at boosting yuan trading in Hong Kong. Foreign companies last year pumped in US$105.7 billion worth of FDI to the mainland, 57.3 per cent of it from Hong Kong. Now that companies can use the yuan to invest directly on the mainland, more are expected to issue `dim sum' bonds - yuan-denominated bonds issued in Hong Kong - or yuan-denominated initial public offerings and share placements. Joseph Tong Tang, executive director of Sun Hung Kai Financial, said companies had been reluctant to issue yuan-denominated bonds or shares as the mainland's capital controls mean they were unsure if they could repatriate money back to the mainland. "The new FDI rule would remove these worries and encourage them to issue yuan-denominated bonds or yuan-denominated shares,'' Tong said. Regardless of the market's present volatility, Tong said yuan-denominated stock or bond offerings would still be favoured by investors as they bet on the rising value of the currency, which has gained over 20 per cent against the US dollar since 2004. The first yuan-denominated IPO in Hong Kong, however, had a less than stellar market debut. Hui Xian Real Estate Investment Trust, a spin-off of tycoon Li Ka-shing's Beijing Oriental Plaza, dropped 9.35 per cent on its debut in April. So far, no non-reit yuan-denominated share offering have been launched. Yuan-denominated bonds have had a better start, with 49.6 billion yuan (HK$60.4 billion) worth of "dim sum" debt issued in the first seven months this year, compared with 35.8 billion yuan last year as a whole. Mike Wong Ming-wai, chief executive of the Chamber of Hong Kong Listed Companies, said companies were interested in issuing yuan-denominated bonds and shares. "The Chamber and the HKEx (SEHK: 0388, announcements, news) is organising a seminar about yuan-denominated share offerings and the response from listed companies is very strong,'' Wong said. "Companies are interested in understanding more about the mechanisms." Wong said companies that have existing operations on the mainland use the yuan as operating cash anyway. "Should they need further investment or expansion, the need for yuan is even stronger,'' Wong said. "Even for companies that don't have existing operations, they too can make investment projects with the yuan directly, rather than raising US dollars and converting the funds into yuan. This will do away with the exchange rate risks at a time when the yuan is so strong." Wong said the market volatility would not deter companies from raising funds for yuan-denominated bonds or shares. "Compared to the rest of the world, China remains a relatively strong economy and still offers growth opportunities in a comparatively safe environment," Wong said. "So if a company has a strong Chinese investment story to tell, investors should be willing to subscribe to its yuan offering when alternative choices are limited." Bernard Chan, president of Hong Kong-listed insurer Asia Financial Holdings, said his company might consider a yuan-denominated bond or share offering when opportunities arise. "All in all, it will depend on whether a profitable investment is identified and the cost of funding from a yuan-denominated bond issue,'' Chan said. Chan said besides yuan-denominated bonds or shares, yuan-denominated loans may be another option to consider. "It is expected that once the yuan FDI is in place, those Hong Kong banks with yuan-denominated retail deposits will offer yuan-denominated term loans to their customers,'' Chan said. "In view of the current low yuan-denominated deposit rate, the lending rate for offshore yuan may not be too high. It may be cheaper for Asia Financial Holdings to consider one-year yuan-denominated term loans than having a private placement of yuan-denominated bonds." However, Chan said if his company has a longer-term funding need, then a yuan-denominated bond may be a good option as it will have an advantage of offering a longer financing term at a pre-fixed rate than the shorter-term banking facility. Besides Hong Kong companies, Mark Konyn, chief executive of asset management firm RCM Asia Pacific, expects international companies and financial institutions to tap the offshore yuna-denominated bond market in a significant way as the market expands. Konyn said the current market volatility would mean yuan-denominated bonds would be more popular than yuan-denominated shares. "Short-term volatility makes pricing more difficult although the current indication is that there is healthy interest," Konyn said. "Yuan-denominated bonds will likely attract more attention as equities remain volatile in the short term. The IPO pipeline in general remains fairly strong and the key challenge for equity issuers is overall confidence and market sentiment.''

The Hong Kong stock market is getting "shorter" as investors turn bearish on equities because of fears of a recession which will hit corporate earnings and see share price falls. Profits may be made in such a market by "short-selling" or "going short". This involves borrowing stocks from a third party (usually a broker), and then selling them with the intention of buying the shares back at a lower price in order to return them to the lender at the end of the contract period, and pocket the difference in the prices. In the Hong Kong market such short selling is closely regulated, and "naked" short selling, or going short without first borrowing the stock, is not permitted. Such short-selling has been on the rise since analysts began downgrading their forecasts for growth over the next 12 months, and large institutional investors have begun withdrawing from equity markets. Under a tide of selling, the benchmark measure of Hong Kong stock prices, the Hang Seng Index, has fallen 13.37 per cent since the beginning of this month on low turnover, indicating little liquidity going into trading shares. However, in contrast to trading, short selling volumes have risen to 2008 financial crisis levels. According to the Securities and Futures Commission's (SFC) latest weekly report, short selling turnover in the week of August 15 to 19 was higher than in the months of the 2008 crisis. Average daily short selling turnover during the week was HK$7.6 billion, constituting 10.3 per cent of the total market turnover, said the SFC. The overwhelming majority of short-sellers are proprietary trading firms, hedge funds, and institutional investors, but a number of Hong Kong brokers such as Phillip Securities said that in recent weeks they had received more inquiries from retail investors on how to short-sell stocks. "Until now shorting hasn't been very common among retail investors," said Alex Wong, a director of Ample Finance Group. "But I can see it becoming more popular now." To go short, investors have to sign an agreement with a broker before registering it with the Inland Revenue. The tax office charges a registration fee of HK$500 and short-sellers are also required to pay stamp duty. While the broking arms of investment banks and global securities firms offer short selling to hedge funds and other professional investors, not many Hong Kong brokers provide the same service. Short sellers are also asked to put aside collateral with the brokers based on the market price of a stock. For example, using HSBC (SEHK: 0005) shares, currently worth HK$65, a short-seller would have to deposit collateral of HK$62,400 to borrow 800 HSBC shares (two board lots of 400 shares each), if the collateral is 120 per cent. If the HSBC share price falls to HK$55, the short seller can opt to cash in HK$8,000 profits from the fall. But if the stock rises to HK$75, the short seller has to pay a total of HK$9,600 to meet the shortfall of the collateral required by the broker, or suffer a loss of HK$8,000. To terminate the agreement, short-sellers have to return the stock by buying shares in the market. "One advantage of shorting stocks is that you can capture a movement in the stock prices and take a straight gain," said Steven Leung Wai-yuen, a director of institutional sales at UOB Kay Hian. "But there's the risk that the lender of the stock might ask for the stock back any time." But there are other costs involved. Brokers will have administrative, transaction, and borrowing charges. A hedge fund manager, who did not want to be named, said it was sometimes not possible to borrow stock because there were not sufficient shares available. "I have been asked to pay more than 40 per cent interest on a stock," the hedge fund manager said. "I decided it's not worth it in the end." Brokers said small investors preferred betting on stock price movement indirectly using listed derivatives because the costs were lower. "Factor in the costs of shorting, and the investment might have to be in the region of at least a few millions to make it worthwhile," said Simon Yung, a director and head of warrant sales at Standard Chartered.

Weeks after cyber attackers crashed the Hong Kong stock exchange's regulatory disclosure website, a United States-based information technology company has emerged as a key player that helped the exchange resume operations. F5 Networks, the world's leading supplier of so-called application delivery networking products, provided technology that allowed the website to continue running while being shielded from further attacks. During a three-day stretch from August 10, a wave of cyber attacks derailed operations of the HKExnews.hk site, the official portal for corporate announcements under bourse operator Hong Kong Exchanges and Clearing (HKEx (SEHK: 0388)). The security breach came in the form of distributed denial-of-service (DDOS) attacks, which bombarded the website's server with more traffic than it could handle, so it shut down. That forced the suspension of shares in seven firms with a combined market value of HK$1.5 trillion - including blue chips HSBC Holdings (SEHK: 0005), HKEx itself and Cathay Pacific Airways (SEHK: 0293) - on August 10. Trading was also halted on a listed debt security and 419 warrants and derivatives linked to the suspended stocks. Police on August 18 arrested a 28-year-old businessman, Tse Man-lai, in connection with those attacks. On August 24, Tse appeared in a Tuen Mun court where he was accused of one charge of accessing a computer with dishonest intent. Earlier investigation by the police found that the malicious attacks also came from a network of computers located on the mainland and overseas, including Russia, Japan and Singapore. "The complexity of [current internet] attacks, which have been very organised and very targeted, have seen firewalls just collapse," F5 chief executive John McAdam said. In computing terms, a firewall is designed to deny unauthorised network access and permit legitimate traffic to pass based on a set of designated rules. According to F5, traditional solutions such as network firewalls, anti-virus software and intrusion prevention systems (IPS) focus on solving specific security issues and are often deployed on individual devices. This static approach is no match for today's more sophisticated and multilayered attacks, which target the network as well as underlying applications and data. Linda Hui, a managing director at F5's Hong Kong and Taiwan operations, said her team went to the HKEx on August 10 "to help after hearing the big news" that its website crashed. "We worked with them that day," Hui said. "We have some security experts who gave suggestions after looking at their IPS, network firewall and security framework." Hui declined to elaborate on the scope of F5's work or which security technologies were replaced by the HKEx to prevent further harm from the attacks. Although cyber attacks continued on August 11 and 12, the HKEx credited the new software it had installed for fending them off. The attacks followed a successful hacking of Zimbabwe's stock exchange site earlier this month and hacking attacks on the websites of the London and Nasdaq stock exchanges in February. "The most significant breaches of late have been through exploiting web applications. Web application firewalls have seen great advances, but single-layer solutions are no longer enough to fend off today's sophisticated attacks," said Greg Young, a vice-president at market research firm Gartner. "It's vital for organisations to take a dedicated approach to security." McAdam said that considering the sheer number of connections hackers could create, an average firewall was "lucky if it can do a million connections per second. We can do up to 16 million connections per second."

In an attempt to understand the origins of matter, Chinese and US scientists have begun a multimillion-dollar collaboration at the Daya Bay nuclear facility, the power station northeast of Hong Kong that provides the city with most of its electricity. After eight years of building and planning, the Daya Bay Reactor Neutrino Experiment this month began measuring the side-effects of the plant's nuclear reactions, in an attempt to understand why, in a universe full of antimatter, matter exists at all. The US Department of Energy has provided US$68 million to finance half the cost of the Daya Bay experiment, most of which is being conducted deep underground. The mainland is paying the other half and the civil-engineering costs. Hong Kong is helping too, with a HK$17 million grant - and by reopening a physics lab nestled between the lanes of one of the city's busiest highways to provide back-up experiments and support. The experiment being conducted by 200 scientists, including physicists from Hong Kong, Taiwan, the Czech Republic and Russia. "This is a remarkable achievement after eight years of effort - four years of planning and four years of construction - by hundreds of physicists and engineers from around the globe," said Yifang Wang of the Institute of High Energy Physics of the Chinese Academy of Sciences, a spokesman for the project. "The Daya Bay experiment represents a new alliance between China and the US and it opens up new opportunities in high-energy physics," according to a news report in the US scientific media. The experiment will involve measuring the antineutrinos that are produced when protons change into neutrons as Daya Bay's two reactors provide the energy that lights up much of Hong Kong and neighbouring Guangdong province. Detectors more than 200 metres underground at the facility will collect data about the three "flavours" of neutrinos - electron, muon and tau - in an attempt to discover how they were formed when the universe was created in the Big Bang more than 14 billion years ago. Neutrinos are elementary particles - one of the fundamental building blocks of all matter. According to the big-bang theory, the early universe was so hot that most of it was just energy. As the universe expanded and cooled, the energy converted into matter and anti-matter. The Daya Bay experiment will seek to understand this process by measuring a property of neutrinos called theta one-three. One theory among physicists is that neutrino oscillations break the symmetry between matter and antimatter. There have been advances in describing these oscillations, which determines whether they will be electrons, muons or taus, but the value of a key parameter - theta-one-three - remains unknown. The physicists say the Daya Bay experiment will give them the most accurate measurement of this quantity, thanks to their equipment's unprecedented accuracy. This will shed light on how electrons and their cousins were born in the moments after the big bang, and help explain why there is more matter than antimatter in the universe. "Among the current generation of reactor neutrino-oscillation experiments for measuring theta one-three, Daya Bay has the best sensitivity," said Luk Kam-biu, spokesperson for the Lawrence Berkeley National Laboratory in California, one of the participating institutes. According to the laboratory's website, the detectors are filled with a clear liquid which reveals antineutrino interactions by the faint flashes of light they emit. Lining the walls are sensitive photomultiplier tubes that amplify and record the telltale flashes. Only a small number of these interactions - about 1,000 a day - from the millions of quadrillions of antineutrinos that are produced by the reactors every second, are recorded by the detectors. Daya Bay's first two detectors began taking measurements on August 15, with two more being installed. The last four detectors will be installed in 2012 and all will take measurements for the following next eight years. The Hong Kong team, led by physicists Dr John Leung Kon-chong and Dr Jason Pun Chun-shing, of the University of Hong Kong; and Dr Chu Ming-chung, of Chinese University, has been an active member of the project since its formation. With the HK$17 million from Hong Kong's Research Grants Council, they are primarily responsible for designing and building a mineral oil monitoring system and a nitrogen cover gas system for the antineutrino detectors. "The unprecedented opportunity provided by the Daya Bay experiment, to collaborate with top scientists from all over the world to build the most sensitive neutrino detector ever, is just too good to miss," said Chu, one of the project's principal investigators. Pun agreed, saying: "It is a rare opportunity for Hong Kong to participate in such a major and large-scale research project in elementary particle physics." Chu said it was "an outstanding question of great importance in the world of physics why the universe evolved to be matter-dominated - that is, why there is far more matter than antimatter". Yet, since neutrinos interact weakly it is difficult to study their properties accurately. That is why understanding those properties and interactions are of "fundamental" importance to the world of physics, Chu said. The experiment has also brought back into use Hong Kong's only underground particle physics laboratory, tucked between the two tubes of the Aberdeen Tunnel. The laboratory was built by HKU in the 1980s to study cosmic rays, and it was revived in 2003 by HKU and Chinese University as a satellite laboratory for the Daya Bay experiment. With the help of more than 30 physics students it is now measuring high-energy cosmic rays that penetrate deep underground and their interactions. Its location, beneath all that rock is meaningful because it is effective at creating shielding against background radiations. The Aberdeen Tunnel has rock types and depths similar in composition to those of the experimental halls in the Daya Bay experiment, Chu said, making it suitable for testing materials and components to be used at the nuclear facility. On safety, Chu, said the experiment does not deal with particles that harm the human body. "We only measure the antineutrinos produced through radioactive decay of the fission [the splitting of the nucleus of an atom which results in the release of a large amount of energy] products," he said. Nonetheless, stringent safety rules were drawn up according to Chinese and the American standards, and all personnel undergo safety training and tests before they can work in the underground laboratories. The Hong Kong team has also designed, developed, and implemented a monitoring system for radon, a gas produced by nuclear reactions, in all Daya Bay's experimental halls. This is not only important for the experiment per se, but also for testing background radiation safety of workers, Chu said.

The moment you step into the Happy Printing shop on Pok Man Street, you are transported back in time. Four large hand-powered printing presses dominate the room with ink-soaked rags and towers of coloured paper filling the spaces in between. The walls are filled with floor-to-ceiling shelves housing traditional letter punches, made from lead - the key components for the star of the shop, a Heidelberg Original press, known by printers as the "Prince of Presses". The other star of the shop is owner Kwan Wing-cheuk, 69, who has been churning out receipts, invoices, letterheads and pamphlets for more than 35 years with the help of Ou San-ying, his 64-year-old wife. "There are not many people that do this old-fashioned style of printing now," Kwan said, standing among stacks of string-bound orders. Kwan, who moved from Hoi Ping, Guangdong province, to Hong Kong when he was 16, bought the second-hand Heidelberg in 1977 for HK$30,000, the same price for a flat back then, and has been making his mark on the neighborhood since. But while he still uses the Heidelberg, the use of letter punches is fading fast. "Before I would buy the new characters when I needed them for an order, but you can't buy these letter punches anymore," he said. The last store in Central that sold the punches closed about four years ago. Kwan used to spend about 90 minutes meticulously creating an order, piece by piece like a puzzle, using his collection of 3,000 commonly-used characters. A letter punch that printed a pea-sized character used to cost HK50c while a fingernail-sized character cost HK$2. He now uses a plastic version of punches and the shop produces about 7,000 prints every day with an average of 12 new orders arriving every week. "Although a lot of people use digital printing, many still use handwritten invoices," Kwan said. The veteran printer has no plans to retire yet. "I want to keep going," he said. "I've done it for so long and I still love it."

Legco president Tsang Yok-sing said he believed the Hong Kong government and police were under pressure from mainland officials to keep the city in "complete quiet and total security" during Vice-Premier Li Keqiang's visit earlier this month. Speaking on ATV's current affairs programme Newsline, broadcast last night, Tsang said it was obvious that mainland officials, who were responsible for arranging the visit, would expect their Hong Kong counterparts to keep protesters away from the vice-premier. The police's heavy-handed security surrounding Li's visit has been much criticised, especially the handling of student protesters on the University of Hong Kong campus. "I believe the police would have been under pressure to ensure the VIP did not see or hear anything he did not want to see or hear," Tsang said. "Whenever an important official from Beijing visits Hong Kong, those [mainland officials] in charge of the arrangements always require complete peace and total security." Tsang said this reflected on a value gap between Hong Kong people and the central government. He said it was unfortunate that the officials did not want state leaders to have a chance to see "another side of Hong Kong" - referring to the protests held during Li's visit. However, Tsang refused to comment on whether the police went overboard during the visit, because the Legco security panel would meet today to discuss the matter. But writing on his blog yesterday, Home Affairs Bureau chief Tsang Tak-sing, the Legco president's younger brother, said Hongkongers should focus discussions on what benefits would come from the economic measures Li offered, rather than being distracted by other issues. Li announced more than 30 economic and financial measures to enhance links between Hong Kong and the mainland during his three-day visit. "[The measures] will improve livelihoods substantially and facilitate continuous social improvement; this is the big issue related to the people's well-being," Tsang wrote. "Some issues are more important and some are less important. It would show the wisdom of the public if they could distinguish the importance and priority of those issues. We should not be distracted." Emily Lau Wai-hing, vice-chairwoman of the Democratic Party, said Tsang's views reflected how out of touch the home affairs chief was with what Hongkongers were most concerned about.

 China*:  Aug 30 2011  Share

Movie stars shine at 14th Huabiao Awards ceremony - The Huabiao Awards, also the governmental film prize, is known as one of the three most important domestic awards for Chinese films.

APT Satellite Holdings, which provides satellite transponder, communications and broadcast services in the Asia-Pacific region, sees big potential for its services on the mainland if Beijing permits more television stations to broadcast their programs by satellite. So far, only one TV station in each of the 31 provinces, autonomous regions and municipalities can broadcast by satellite. Cheng Guangren, president of APT Satellite, hopes for a change in the limited broadcasting regime, but admits it may not be in the offing any time soon. "Economically developed provinces, for example Guangdong, might support more than 100 TV stations," Cheng said: "But at the moment only one broadcasts by satellite." Simon Twiston Davies, CEO of the Cable & Satellite Broadcasting Association of Asia (CASBAA), said there was "a huge amount of opportunity in Beijing for satellite services". The immediate beneficiaries of a policy change allowing more providers would be domestic satellite operators, such as state-controlled China Satellite Communications Co, he added. Tai Po-based APT will launch its Apstar 7 satellite into space in March next year to replace Apstar 2, which is due to retire at the end of next year. The company currently operates five satellites. A satellite costs between US$250 million and US$280 million, including its purchase and launch. "Up to 13 per cent of the cost is buying launch insurance," said Cheng. "This is the most risky part and costs more than US$20 million." APT said competition in its industry was fierce at the moment. But looking further ahead, Twiston Davies said the industry was poised to experience robust growth. "We have a strong economy in the Asia Pacific. We have increasing demand for the use of radio services and media and we have a young demographic." About 60 per cent of all satellite operator revenues in Asia are generated by TV distribution, according to CASBAA, and the financial crisis since 2008 has helped the satellite industry as people were spending more time at home watching TV. China at the moment does not permit individual access via roof-top satellite dishes to satellite TV broadcasts. Instead, officially-installed satellite dishes are used to relay programmes via cable to homes. But according to Twiston Davies change may be under consideration. "There are a number of dishes that have been distributed to villages in the rural areas in order to deliver satellite TV," he said. Shares in the Hong Kong-listed company fell 0.63 per cent on Friday, closing at HK$1.57, while the benchmark Hang Seng Index dropped 0.86 per cent.

Local land and resource officials in Qinghai province estimate that Dachang gold mine is likely to become one of the largest gold mines in Asia with 300 tons in proven reserves in 2015. The current proven reserve in Dachang mine in the Tibetan autonomous prefecture of Yushu is 195 tons, with another 35 tonnes expected to be confirmed by the end of 2011, according to the Qinghai Land and Resources Department. The geological exploration was conducted jointly by Qinghai geology and mineral exploration and development bureau and a Canadian mining company -- with a total investment of 200 million yuan (31.3 million U.S. dollars). Qinghai is endowed with rich mineral resources. The proven gold reserves of the province's six mines, including Dachang, is 430 tons. 

Hong Kong*:  Aug 29 2011  Share

Fundraising using Chinese Bond save Tesco almost 50% on finance cost - About 70 per cent of Tesco's profit growth last year came from Asia and Europe, while market share in Britain hovered at about 30 per cent. Tesco's 725 million yuan (HK$884 million) Chinese bond sale cost Britain's largest supermarket chain almost half what its competitors would probably pay to raise money in Europe as it expands into the world's fastest-growing major economy. The dim sum bonds were sold on Thursday at a yield of 1.75 per cent. That compares with yields of 2.96 per cent on retail-company debt with an average rating one level higher than Tesco's, Bank of America Merrill Lynch indexes show. Tesco joins companies from restaurant chain McDonald's to construction equipment-maker Caterpillar in the US in issuing yuan-denominated debt in Hong Kong to take advantage of cheap financing. Investors are eager to deploy the 553.6 billion yuan that official figures show was in Hong Kong's bank accounts at the end of June. "This market gives international borrowers an opportunity to diversify their investor base," said Vishal Goenka, the head of local currency credit trading at Deutsche Bank in Singapore. "Yields are low." The yield on Tesco's inaugural dim sum bonds is lower than those on its existing, similar-maturity notes in European currencies. The world's third-largest retailer, whose sales growth has lagged behind British rivals, plans to open more than 20 stores in China by year-end, Shanghai Daily reported in July. "China is an important market for us and represents a great growth opportunity," Tesco CEO Laurie McIlwee said. "This is an innovative way of funding our business." Tesco is rated A3, four steps above non-investment grade, by Moody's Investors Service and an equivalent A- by Standard & Poor's. Tesco also sold bonds denominated in Thai baht and Malaysian ringgit in the past two years to fund its expansion into Asia. The company reported first-quarter sales growth that fell below analysts' estimates on June 14 amid "constrained demand" for general merchandise items such as electronics. About 70 per cent of its profit growth last year came from Asia and Europe, according to the company, whose market share in Britain has hovered at about 30 per cent for more than five years. Tesco reduced net debt by £1.1 billion (HK$14 billion) to £6.8 billion in the 2011 fiscal year ended on February 26. The drop exceeded the company's £7 billion target. Tesco entered China in 2004 and has a network of more than 100 stores in 10 provinces, according to its website. Elsewhere in Asia, it has a presence in India, Thailand, Malaysia, Japan and South Korea.

Madhu Rao, executive director and chief financial officer of Shangri-La Asia, announces the company's results for the first half of this year. Luxury hotel owner and operator Shangri-La Asia (SEHK: 0069) saw net profit in the first half of this year jump 45 per cent to US$108.4 million on strong performances from its properties in Hong Kong and the mainland. The hotel group's revenue for the six months ended June was US$894.6 million, up 24 per cent. Hotel operations contributed most of the turnover, accounting for 94.6 per cent, or US$846.6 million. The rest came from hotel management and property rentals. Occupancy at its hotels in Hong Kong came in at 79 per cent, 10 percentage points higher year on year. The average room rate of the group's hotels in the city is US$322, compared with US$269 a year ago. The hotelier believes growth in Hong Kong, where it owns the flagship Shangri-la hotels in Admiralty and Tsim Sha Tsui, is sustainable. "At the moment the outlook is positive," said Greg Dogan, president and chief executive of Shangri-La Hotels and Resorts. "The demand, particularly outbound from the mainland, is very strong, which is fuelling a lot of the growth." The occupancy of its mainland hotels was 59 per cent in the first half, with the average room rate rising to US$152 from US$133. The group added new hotels to its portfolio in the first half of the year in Shanghai's Pudong district and the northeast city of Manzhouli. Three properties are projected to open next year, with the first one coming into operation in the first quarter. Madhu Rao, chief financial officer of Shangri-La Asia, said: "Our experience in China in the last 24 or 25 years is that the economic growth is so robust that it has been able to absorb our increased supply." Zhao Huanyan, researcher at the Tourism Research Centre of the Shanghai Academy of Social Sciences, said the demand for hotel rooms would continue to be strong on the mainland, given its buoyant economy and tourism. Last year, four- and five-star hotels on the mainland, which make up 27 per cent of the hotel market, contributed half of the revenue for the industry, according to Zhao. In the first half, Shangri-La saw a loss of US$11.4 million in Japan because of the tsunami. "We closed down for almost four weeks following the tsunami because there were a lot of logistics issues in Tokyo," Rao said. "Business is coming back and now people are looking to go back into Japan to reinvest."

Vice-Premier Li Keqiang's visit to Hong Kong has kick-started a number of talked-about initiatives to internationalise the yuan - an ambitious task as the mainland becomes a major economic powerhouse. Li outlined measures during his city tour last week offering Hong Kong and overseas businesses new ways to invest in the mainland. Some of these ideas had long been discussed and speculated in the industry but few put into practice. Yesterday Shanghai Securities News and Xinhua reported that China could introduce regulations for a scheme allowing foreign and Hong Kong investors to use yuan to buy mainland stocks as early as next month. Li, who is expected to take over from Premier Wen Jiabao, received a warm response from the securities industry after announcing there would be an investment quota of 20 billion yuan (HK$24.4 billion) for Hong Kong companies or institutions to invest in mainland stocks. Official consultation was launched this week by China's Ministry of Commerce in relation to foreign direct investments on the mainland by Taiwan, Hong Kong and Macau investors. The ministry is seeking comments from the financial industry about draft proposals on using yuan in cross-border trade settlements, and offshore yuan bond and equity issuances. Raymond Yeung, a senior economist with ANZ Research, said it took a high-powered top-level leader to co-ordinate different ministries, departments and bourses on the mainland and Hong Kong to push forward the long-awaited policies to promote the use of yuan. "[Li's visit signals] that he can be the next premier and this is to show that he has the power of execution," said Yeung. The Shanghai Securities News said yesterday that the China Securities Regulatory Commission was to meet firms in Hong Kong to discuss the yuan-denominated qualified foreign institutional investors scheme, known as RQFII, citing unnamed sources from the securities regulator. Mainland securities firms are expected to be among the first to get approval to launch RQFII products. Yim Fung, president of Guotai Junan Securities, said last week that he believed the development of RQFII would be similar to the US dollar-denominated programme, which was launched in 2003.

It's official: in its first interpretation of the Basic Law requested by the Hong Kong courts, Beijing concluded that the city must follow the mainland's law on state immunity. This means states that have entered into business deals cannot be taken to a Hong Kong court should the agreement go sour, setting in stone an eventuality lawyers primed themselves for months ago. It was the same position expressed in letters from the Office of the Commissioner of the Ministry of Foreign Affairs in Hong Kong shown to the Court of Final Appeal months ago, and a draft response presented by the vice-chairman of the NPCSC Legislative Affairs Commission, Li Fei , on Wednesday. And yesterday, all 157 members of the National People's Congress Standing Committee voted in favour of the interpretation. "I see that in [Hong Kong's] Court of First Instance, the Court of Appeal and the Court of Final Appeal, judges showed differences in understanding," Li said yesterday. "What does this illustrate? It illustrates the need to clarify the application of state immunity policy in Hong Kong." The need for a ruling stemmed from a debt dispute between the Democratic Republic of Congo and United States-based fund FG Hemisphere Associates. Congo claimed it was immune from prosecution in Hong Kong, triggering the argument of whether Hong Kong follows Beijing's practice of absolute immunity or can continue with its pre-1997 regime that denies immunity to states in commercial deals. Yesterday's interpretation said state immunity policy was considered part of foreign affairs, and therefore the central government had the right to decide the city's policy, in accordance with Article 13 of the Basic Law. And with respect to Article 19 of the mini-constitution, Hong Kong courts have no jurisdiction over matters of state immunity policy. Now that has been decided, lawyers have another question on their hands: how can they sidestep a law that appears to give carte blanche to states that can never be prosecuted in Hong Kong courts for their business deals? That is important for both sides: a state - which might soon find no one willing to cut a deal if it was always claiming immunity - and the private parties - which would fear the state could invoke immunity. Cheung Fai-hung, a partner at law firm Allen & Overy, said deal-makers could agree when the contract was signed to only settle disputes out of court, or agree to settle them in overseas courts where the immunity would not be upheld. Mark Lin, partner at law firm Hogan Lovells, said absolute immunity of the state had not deterred foreigners from investing in the mainland. The interpretation gave clarity and certainty, which made striking deals easier. "Certainty is good for businesses because they know where things stand, and that is what Hong Kong prides itself on," he said. Li, the Legislative Affairs Commission vice-chairman, said the immunity laws did not apply to Chinese state-owned enterprises as they have assumed the legal status of a company. But Lin said overseas state owned enterprises, central banks and sovereign wealth funds could be seen as state-controlled, yet the immunity did not automatically apply to them. "That will have to be a decision for another day," he said.

The final cost of the much-delayed West Kowloon Cultural District will easily exceed the HK$21.6 billion that the government has already invested. Michael Lynch, the new chief executive of the arts hub authority, told a Legislative Council meeting yesterday that the amount was far from sufficient. He also said the government should consider picking up the costs of some projects, especially infrastructure. To preserve cash, the phased construction of the development is also under review. However, the much-delayed project should be able to start under any circumstances, Lynch said. He conceded, however, that the financial situation was vulnerable because of high inflation, surging construction costs and low investment returns from the government's HK$21.6 billion endowment. His assessment comes five weeks after he took over from Graham Sheffield, who left for health reasons. New features laid out in the latest development plan - such as underground facilities and green features - would add to costs. The green features, which will cost HK$4 billion, will include a centralised cooling system, automatic garbage collection and advanced recycling system. "Since [an assessment in 2006] there have been significant short-term fluctuations, in terms of construction cost escalation, investment return and inflation rate, including a world financial crisis," Lynch said. "As you note from the newspapers, inflation ran at 7.9 per cent in July in Hong Kong with ongoing uncertainty about the future." Lawmakers said it would not be easy to get approval for more money. "Hongkongers are not going to feel it is acceptable. Not a single building has been put up and now you are saying you need more money," said Democrat Lee Wing-tat. Several members of the West Kowloon Cultural District Authority board said more money was needed to prevent the failure of the project, which is aimed at creating a world-class arts and cultural centre. "We can't do it now. Construction costs have surged," said Professor Lee Chack-fan, a board member. Sin Chung-kai, vice-chairman of the Democratic Party, estimated costs had surged by 50 per cent since a 2006 assessment, which led to the approval of the HK$21.6 billion in funding in 2008. Board member and Ocean Park chairman Allan Zeman said more cost details would be made available after the next round of the public engagement exercise next month. In a paper submitted to Legco, the authority proposed reducing the size of some facilities, such as car parks, and developing venues in "optimised" phases. Selling the naming rights of facilities is seen as another possible source of income. Also, Lee said the board had considered seeking financing from the private sector in the form of private-public partnerships, corporate sponsorship and philanthropic contributions. In 2008, Legco approved the one-off endowment of HK$21.6 billion for the construction of the arts hub, which will produce a dozen performing and visual arts centres and museums. The venues include the M+ museum and the Xiqu Centre, a performance venue for Cantonese opera, which is the first facility slated for completion in 2015. That is according to the current plan, which will be submitted to the Town Planning Board later this year. Lynch became the new head of the arts hub last month after Sheffield's abrupt resignation. Lynch said yesterday that he was "reasonably well adjusted" to his new job. He said he was prepared to meet the challenges arising from local politics and red tape. He said he was confident that he would not be "killed by bureaucrats".

Hong Kong students aspiring to study in China's mainland may soon have their exam pressure lessened, as the Chinese central government last week unveiled relevant measures including pilot open admission programs by some universities. Sources in local education circle believe the new move, which was one of the 36 measures to promote Hong Kong's economic and social development announced by Chinese Vice Premier Li Keqiang during his visit on Aug. 16-18, will help facilitate local students to seek higher education in the mainland. "The new measure will definitely increase students' interest in studying in mainland which will do good not only to their personal development, but also to the exchange and integration of the two places," Principal of Heung To Middle School, Wong Chung Leung said, adding that he has met quite a number of local students who had expressed their wiliness to study in mainland universities. Under the pilot project, as of 2012, Hong Kong students will be exempted from Joint Entrance Examination for universities in mainland, with some universities being entitled to directly enroll Hong Kong high school graduates based on their test results in the Hong Kong Diploma of Secondary Education Examination (HKDSE). Before the new measure, Hong Kong students who intend to study in mainland universities are subjected to the JEE, which mismatches the teaching syllabus of Hong Kong high schools, Wong told Xinhua. Those hopefuls for mainland universities have to prepare for both the local college entrance exam and the JEE, shouldering more pressure, Wong added. The new policy relieved the Hong Kong students from the stress, enabling them to concentrate on HKDSE, Wong added. The benefit of exam exemption is prominent, said Zou Chong Hua, Head of Division of Academic and Training of Beijing-Hong Kong Academic Exchange Center, an institute that provides Hong Kong, Macao and Taiwan students with information and assistance of applying for mainland universities. The syllabuses of Hong Kong and mainland senior high schools are not that alike, and the JEE is indeed a hard nut to crack for Hong Kong students, Zou said. Asserting that local students, varying yearly from hundreds to thousands, have been enrolled in mainland universities through JEE in recent years, Zou said the scale that generally has room for growth will be boosted by removal of the JEE. Zou also said, in recent years, more and more local middle schools have held seminars to provide information on studying in mainland universities, demonstrating growing will of local students to seek higher education in mainland. The new policy will help facilitate academic exchange between Hong Kong and the mainland in the long term, Zou said. And for students, studying in mainland universities will give them a good opportunity to both broaden their horizon and set up a social network, he added.

 China*:  Aug 29 2011  Share

Of the many natural scenic resorts surrounding Beijing, the Wuling Mountain Resort is among the most sought after by residents hoping to escape the daily grind of city life. Located in Miyun County some 150 kilometers east of Beijing, Wuling Mountain is a national-level forest reserve. What distinguishes the reserve from other similar mountain resorts in suburban Beijing is its many creeks, waterfalls and moisture-rich air. Hikers visiting Wuling Mountain can always find tumbling creeks and occasional waterfalls as they make their way up the mountain. The most magnificent water feature of the resort is the Dragon Pond Waterfall. A broad curtain of water, 56 metres high, pours over the canyon, with the sound created by the rushing water resonating throughout the valley. On the northern slope of the Wuling Mountain, tourists can also find a one hundred kilometer stretch of Ming dynasty Great Wall. The mountain used to be the natural defensive barrier protecting Beijing from invasion. Today, all that remains of the Great Wall is debris from the watch towers and collapsed walls. Other major sightseeing areas at Wuling Mountain are named after the landmarks within the area. For instance, the Five Dragon Head scenic spot is known for its five giant rocks resembling the head of dragons and in the Tower of Immortals there is a 48 meter tall rock structured like a tower. The peak of Wuling Mountain is 2118 meters above sea level, and the scenery differs depending on your altitude. The best season to visit Wuling Mountain is in the summer and autumn. Tourists can reside in one of the family-run hotels or hostels at the foot of the mountain. How to get there: Take Bus No. 980 to Miyun county at Dongzhimen Station. Take Bus No.38 and get off at Caojia road. The west gate of the Muling Mountain resort is within walking distance from the bus station. Transport inside the scenic area: Cable car is available to take visitors from the west gate entrance to the Dragon Pond scenic spot. The price is 40 yuan per person. (70 yuan for round-trip ticket) Ticket: Entrance ticket for the Wuling Mountain resort is 90 yuan per person.(70 yuan per person for group ticket)

Amid growing sales on the mainland, American apparel maker Guess plans to boost its investment in the country to open hundreds of stores in the next five years. Los Angeles-based Guess sees the development of strong distribution in China and South Korea, the company's strongest markets in Asia, as vital to building a US$1 billion-a-year business in the region. In a conference call with analysts on Thursday, chief executive Paul Marciano described that growth target "as one of the greatest opportunities ever for our company" and acknowledged the mainland as "a major factor in our future investments". "Our goal is to have 500 stores and concessions in China in the next five years," Marciano said. "We are making very, very strong progress... having a presence in every key city. At any of the meaningful malls that you visit, you will find a Guess store." Guess, which has 113 retail locations on the mainland, is on track to launch 40 more stores and concessions by the end of this year. The company designs, markets, distributes and licenses what it calls "a lifestyle collection" of denim garments, handbags, watches, footwear and other related products. As of July 30, it directly operated 490 retail stores in the United States and Canada and 218 retail stores in Europe, Asia and Latin America. Its licensees and distributors operated a further 757 stores outside North America. "In China, we continue to work with strategic partners to open stores in secondary cities," Marciano said. Guess operates shops in Shanghai, Beijing and other major cities. Marciano said some mainland partners had resources to operate 100 to 200 stores. These are "experts in the region, with [skilled] management and training [programs]". Guess chief financial officer Dennis Secor reported that revenue from operations in Asia rose 27.1 per cent to US$115.4 million in the six months to July 30, from US$90.8 million a year earlier, on the back of its strong sales on the mainland and South Korea. "Both of these markets posted double-digit revenue increase," Secor said. Consumer spending by mainlanders on luxury bags, footwear, cosmetics and apparel will reach a record 84 billion yuan (HK$102 billion) this year, according to a report by consulting firm Bain & Co.

Donations to charitable foundations on the mainland dropped by more than 80 per cent in the wake of a series of scandals at charity groups in the past two months centring on allegations about the misuse of money. The Ministry of Civil Affairs' China Charity and Donation Information Centre yesterday revealed that donations to charitable groups and foundations dropped from 6.3 billion yuan (HK$7.7 billion) in the three months from March to May to 840 million yuan from June to August 24. Song Zonghe, a director of the centre, said donors might be giving their money to government departments or individuals instead. "The general public just does not trust charitable groups now," he said. "Some charitable groups are in trouble. It is good that we have spotted the problems and come up with remedial measures, which is the only way to create a better working environment for the NGOs." Allegations that donations to charitable foundations have not been well spent emerged after Guo Meimei (pictured), who falsely described herself as a senior staff member of the Red Cross Society of China, posted pictures of her luxury cars and designer handbags on her personal microblog. Zhang Shiliang , father of a four-year-old leukaemia patient, also threatened to take a fund-raising group affiliated with the Red Cross Society to court for keeping 50,000 yuan of charity-auction funds meant for his daughter's medical bills. Liu Xuanguo deputy general secretary of the Chinese Red Cross Foundation - which is managed by the Red Cross Society of China - told The Beijing News that donations to the Angel Fund for leukaemia patients totalled just 7,000 yuan between August 1 and 19, compared with a monthly average of 100,000 yuan before the scandal. "There will definitely be fewer patients we can help, when donations go down," Liu said, adding it spent 60 million yuan helping 922 patients over the past three months. A staff member at the Smile Angel Foundation, established by singer and actress Faye Wong and husband Li Yapeng, said the scandals had had an impact on charitable groups. "But I believe this situation will not last long," the staff member said. The China Charity Federation, the mainland's second-largest non-government organisation, has vowed to investigate the whereabouts of solar panels worth 15 million yuan after coming under mounting public pressure. The federation has been accused of issuing donation receipts to a solar panel company even though the panels remained in the donor's warehouse instead of being distributed to mainland schools. The China Youth Development Foundation, which has teamed up with the Hong Kong-registered World Eminence Chinese Business Association on a project to build schools in Africa, has also found itself at the centre of a storm after allegations the association earned at least 2 billion yuan a year from membership fees. The foundation said the fees were legal and the money was spent administering charity projects. Critics have demanded that charitable groups be more transparent. But this was difficult, a project manager at an international NGO said, "because many charitable projects under their names are actually carried out by a third party".

France has been calling for a timetable for emerging currencies like China's yuan to be included in the IMF's Special Drawing Rights, a type of foreign exchange reserve asset. China and France are forming a task force to clear the way for the yuan's inclusion in the Special Drawing Rights (SDR) of the International Monetary Fund (IMF), French finance minister Francois Baroin said in Beijing yesterday. The group will make a formal proposal to leaders of Group of 20 nations in Cannes in November, Baroin told a news conference after meeting with senior Chinese officials, including People's Bank of China governor Zhou Xiaochuan and China Banking Regulatory Commission chairman Liu Mingkang. The task force, comprising officials and experts from both countries' finance ministries, central banks and other economic agencies, will work within the framework of G20 nations, Baroin said without elaborating. "The group will discuss, and propose under what conditions and in what form the yuan could be part of the special drawing rights," he said, speaking through a translator. Baroin's announcement comes after French President Nicolas Sarkozy made a brief stopover in Beijing to meet with his Chinese counterpart, President Hu Jintao, on Thursday. Analysts said Sarkozy was desperate for a helping hand from Beijing to extend its purchases of European bonds to stabilise the euro and to back an international financial reform plan proposed at the year-end G20 summit, which he chairs. The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. It is a synthetic currency composed of the euro, US dollar, the pound, and the yen. SDRs can be exchanged for freely usable currencies. They can be also held by central banks and other leading financial institutions to pay off international debt obligations, or to influence their domestic exchange rate. Since this year, Sarkozy has been calling for a timetable for emerging currencies like China's yuan to enter the IMF's SDR in recognition of its growing role in the world economy. Baroin said France sees a convertible and international yuan as in line with China's increasing openness and economic clout. China has been speeding up reforms aimed at making its currency international, with the goal of eventually opening its capital account, to aid trade. On Thursday, Sarkozy said he and Hu had agreed to work together to advance the yuan's convertibility and its integration into the global financial system. Baroin said he and his Chinese counterparts had agreed to work closely on reforming the global financial system within the G20. Beijing has called on the IMF to establish "shadow SDRs" to include emerging currencies. With the US teetering on the brink of a debt crisis, Beijing wants a new monetary order that is less dependent on the dollar. At the crux of the Chinese strategy is a proposal to let SDRs act as the world's base currency in place of the dollar. China, recently anointed the world's No2 economy, has plenty of weight to back up its monetary diplomacy. Its foreign exchange stockpile of US$3.19 trillion as of the end of June, is the world's largest. China's influence in the IMF increased after its voting rights were raised to 6.07 per cent from 3.65 per cent last year. With the third-largest voting quota, China was behind the United States and Japan, but overtook Germany, France and Britain.

Liu Ming, a 28-year-old woman from Chengde in Hebei province, sells trinkets at a small stall she owns with her boyfriend. They earn an average of about 4,000 yuan ($626) a month, enough to lift them above the urban poor in Shanghai. Until recently, life was full of hope and aspiration for this enterprising young couple trying to strike out in this cosmopolitan city. Inflation, marked by escalating food prices, has caught up with many young people, hampering their goal of joining the ranks of the middle class. "I suddenly realized that the goal posts have moved further and further away from us," Liu said. To save money for her business, Liu said she and her boyfriend have given up on the "luxuries" of life that they used to take for granted. The austerity program she imposed on herself has gone as far as forsaking pork and any kind of "fancy" vegetables. "We have been eating rice and cabbage for months," she said. Understandably, many other young people have also cut back on their spending. This, in turn, is hitting Liu's business hard. "My income is falling because of the business slump and my expenses are soaring because of inflation, I feel depressed," she said. China's consumer price index rose 6.5 percent in July year-on-year, the highest in three years, driven mainly by rocketing food prices, which have soared 14.8 percent compared with last year. Meanwhile, inflation shows little sign of abating, despite repeated government assurances. "We trust the government," Liu said. But "the price of everything around us seems to keep going up", she added. Neither have the predictions of some economists that inflation in China has topped out provided much comfort to Liu and others. "I'll believe them when I feel I can afford to eat pork again," she said. Shanghai's municipal government has obviously taken note. At a regular executive meeting of the city's top officials earlier this month, Mayor Han Zheng reportedly made a strong case for maintaining the stability of food prices, particularly pork. Liu is not alone in feeling the pinch. A young mother who teaches at Fudan University said that she has stopped shopping for food at the neighborhood supermarket. Instead, she travels for more than an hour by bus once every week to the farmers' market on the outskirts of town to shop for groceries. The rising price of food is even more disturbing for the elderly who live solely on their pensions. Shen Leiyang, a 78-year-old retired Shanghai Engineering Machinery Factory worker, lives in a 20-square-meter apartment with his wife. "She used to cook pork three to four times a week, but now, it is just once a week." Shen said. For the Fudan lecturer and many thousands of others in the middle class, the increase in the price of food is just one of their concerns. "We are spending more on clothing, diapers and milk powder for my 2-year-old son," she said. "I don't want to scrimp on expenses for my only child."

Mooncake-shaped gold discs are available at a gold shop in Shenyang, Liaoning province on Aug 25, 2011.

The Chinese government has set the goal of attracting at least 500,000 overseas Chinese scholars from 2011 to 2015 as the country is in large demand of high level talents to boost its development. Scientists, team leaders and other talents in innovative science and technology who can "achieve technological breakthroughs and boost the country's hi-tech and emerging industries" are the country's main targets, according to the 2011-2015 blueprint on returned overseas Chinese talents released by the Ministry of Human Resources and Social Security. The country also aims to attract talents in fields including equipment and manufacturing, information, bio-technology, new material, aviation, environmental protection, energy resources and modern agricultures. "China will further improve policies regarding returned overseas Chinese in the next five years in accordance with the country's economic and social development... and create a favorable environment for them to utilize their talents," said the document. In addition, the country plans to have 200 business start-up incubators by 2015, which are expected to house 15,000 enterprises run or participated in by returned Chinese who have studied abroad. Figures show that the current 150 incubators are providing business start-up services for more than 8,000 enterprises and over 20,000 returning students.

Hong Kong*:  Aug 28 2011  Share

Plenty of bank jobs openings in Hong Kong - Standart Chartered Sees Potential in Yuan-Trade Finance - Multinationals that trade with China and need to hedge their yuan exposure will be a good source of business for Standard Chartered PLC, a senior executive at the bank's Hong Kong unit said Friday. Last year, China relaxed rules on offshore yuan trading, fueling growth in settlements in the Chinese currency. Standard Chartered saw a 60% jump in the first half of this year in its clients' trades settled in yuan from a year earlier, and expects demand to grow from clients looking to hedge their yuan exposure, an executive said. Benjamin Hung, chief executive at Standard Chartered Bank (Hong Kong) Ltd. told Dow Jones Newswires in an interview that there's greater potential to help clients hedge currency positions to facilitate yuan-trade settlements compared with earning fees in the offshore yuan-bond business. The need to bulk up StanChart's hedging business is also important as fees from such bonds, or so-called 'dim sum' bonds, are typically minimal. The emerging markets-focused lender—which is one of Hong Kong's three note-issuing banks—has been at the forefront of the burgeoning offshore yuan business, underwriting billions of dollars worth of dim sum bonds and actively boosting spot and forwards trading in yuan over the last year. Foreign companies have in the past used mainly the U.S. dollar to settle payment for goods from their Chinese trading partners. However, the more liberal rules governing offshore yuan trading, as well as expectations of further appreciation in the Chinese currency, are fueling rising demand for trades to be settled in the renminbi. In 2010, China recorded 506.3 billion yuan ($79.27 billion) in yuan-trade settlements, representing 5.7% of its overall foreign trade, according to figures from China's central bank. In the year-to-date, banks have underwritten $8.44 billion worth of dim sum bonds, surging 60% from total issuance of such bonds in 2010, according to data provider Dealogic. Still, Mr. Hung said helping the market to evolve is more important than making money through higher bond fees. "It's just in the beginning phase...if you're trying to use it as a milking machine, you're playing it wrongly," Mr. Hung said.

Plenty of bank jobs openings in Hong Kong - Financial Crisis “Speeding Up” Yuan Liberalization - As the wave of layoffs at European banks continues with no respite – UBS, RBS, ABN Amro, to name a few – the job market is encountering the opposite problem in Asia, says Standard Chartered’s head in Hong Kong. “It’s hard to hire. You have to steal from another bank, but then they steal one of yours,” said Ben Hung, Chief Executive Officer of the lender in Hong Kong, speaking in an interview with the Wall Street Journal. He added that the tight labor market is pushing up wages in the process. “But it’s a good problem to have,” he joked. Apart from prompting bankers to move to more fertile fields in Asia, the financial crisis in Europe and the U.S. is having another important effect, says Mr. Hung – it’s expediting the process of the liberalization of the Chinese yuan. Mr. Hung said Chinese policymakers are increasingly wary of overly exposing themselves to the volatilities of Western economies and are using the opportunity to speed up the process of opening the country’s capital account, and diversifying their reserves away from the weakening U.S. dollar. He points to Chinese Vice Premier Li Keqiang’s visit to Hong Kong as an indication of Beijing’s willingness to push the process. Mr. Li announced several initiatives aimed at easing the flow back into mainland China of offshore yuan, and said there are plans to allow exchange-traded funds holding Hong Kong-listed stocks to be sold in mainland China. Corporates and investors interested in using the yuan have expressed concerns over the opaque process of repatriating the money back to the mainland, and the lack of yuan-denominated investment products. But Mr. Hung says the details should not obscure the bigger picture. “Don’t look at the details…look at the direction,” he said, adding that he is “encouraged by the willingness” of Chinese policymakers to listen to market voices in developing the offshore yuan market. He admits that yuan-denominated instruments are still in a very nascent stage, with a “lopsided” market due to almost unanimous belief in the appreciation of the currency, but the market will slowly develop into one with “adequate buying and selling” with a “bull and bear case.” One indication that such a market is taking shape, is the increasing interest in the secondary trading of dim sum bonds, which exploded this year, according to Deutsche Bank. At the beginning of this year, the secondary market was extremely small. And what about the ultimate risk investors still associate with investing in emerging markets – policy risk? “There is policy risk, make no mistake…but do you think there are no policy risks in the U.S. or the EU?”

Outgoing Li & Fung (0494) chairman Victor Fung Kwok-king has set up a think-tank in Hong Kong, to analyze global issues from an Asian perspective. "Asia has become prominent in global transformations, and it is essential to feed an Asian perspective into the global discourse towards a more constructive future," said Fung, chairman of the Fung Global Institute. The institute will serve as a critical resource for business leaders and policymakers, said president Andrew Sheng Len-tao, former chairman of the Securities and Futures Commission. It will carry out research on issues relevant to business decisions, business strategy and policymakers, said Michael Spence, Nobel Laureate in economics. Spence is the academic board chairman of the institute. The think-tank currently has four key research areas: global supply chains, global governance, new growth model for China and sustainable global growth. 

The chief executive last night claimed his final policy address will be both aggressive and defensive. Donald Tsang Yam-kuen said this is because the economy has faced many uncertainties since the beginning of the year, such as the instability of the euro and weak US economy. "This year's policy address must be aggressive and defensive at the same time, to consolidate Hong Kong's strength and also provide proactive suggestions," he told a gathering for a public consultation at the space museum. "The most important thing is that when the transition [to the next SAR government] comes, it needs to be stable and that the public is not harmed." Tsang said there are many problems the SAR needs to deal with, such as the high cost of housing, income disparity, an aging population, retirement protection and inflation. He is due to make his final policy address on October 11. More than 30 protesters outside the museum were kept in check by as many police officers.

Pity Hong Kong's poor expats - they've dropped to 10th place in the regional pay rankings. While middle-ranked managers in Japan earn US$98,000 (HK$764,400) a year on average, expatriates at the same job level in Hong Kong receive only US$80,000 (HK$624,000). But wait a minute. Add in benefits and the local expats perk up to third in the ranks - behind Japan and India. Posh homes and allowances for international school fees, along with power costs and cars, plus tax breaks, bring Hong Kong packages up to US$250,000. In many cases, Hong Kong expats get more in benefits than take-home pay. Expats in Japan received the highest average net take-home pay last year when compared with those in 16 other places, including South Korea, Singapore, the Philippines and the mainland. With benefits and tax breaks included, expats in Japan got US$350,000. Those in India were second with packages of US$275,000. The figures are revealed in a poll of more than 230 companies worldwide carried out by human resources consultancy ECA International late last year. More than 100 of them have headquarters in Asia. The results are based on data from more than 10,000 expat workers. "A constant issue for companies operating globally is the need to strike a balance between cost-effective assignments and attracting the right talent," said Lee Quane, ECA's regional director, Asia. "The high cost of employing expatriates in Japan may partly explain why fewer companies assign staff to Tokyo versus Hong Kong and Shanghai. "In Hong Kong, the limited availability of accommodation for expatriates and international school places is putting pressure on companies to cover these costs. However, these benefits can have a big impact on the attractiveness of the package for the assignee, particularly in a competitive market." Quane said expat market rates are influenced by factors that don't affect local market rates. "For example, changes in cost of living indices and location [hardship] ratings, typically used when calculating an expatriate salary, will affect the levels of salaries awarded to expatriates in the country, in addition potentially to more traditional market influences," he said. Japan was followed by South Korea, Taiwan and Laos in terms of net take- home pay. "Despite local salaries in Laos being low, net salaries for expatriates are the fourth highest in the region owing to the fact that companies typically provide allowances in order to attract employees to accept assignments in this location," Quane said. Expatriates in the mainland, India and Vietnam receive the lowest net take- home pay. Gross salaries are not sufficient to enable accurate benchmarking. Expats in India are found to receive the lowest net take-home pay in the region, but when high tax rates and benefit costs are taken into consideration, they are second only to Japan in terms of average gross salaries.

The Two IFC office building is seen to the left of 39 Conduit Road, one of Hong Kong's most luxurious residential towers. A big jump in sales from newly released projects helped Henderson Land Development (SEHK: 0012) to a 159 per cent increase in underlying profit to HK$3.428 billion for the six months to June 30. The surge in underlying profit came as the company sold flats in completed projects such as 39 Conduit Road in Mid-Levels, Casa Marina in Tai Po, and The Beverly Hills. Hong Kong's fourth-largest developer by market value said it sold 281 residential flats in the first half, generating attributable sales revenue of HK$6.93 billion. This compared with HK$2.44 billion for the same period last year (before a HK$734 million charge for the failed sales of 20 luxury apartments at 60 per cent-owned 39 Conduit Road). Bottom-line profit, including property revaluation gains, was HK$8.824 billion, up 7 per cent from the restated HK$8.262 billion a year earlier. Directors declared an interim dividend of 30 HK cents a share, unchanged from last year. The interim dividend will be payable in cash, with an option to receive new and fully paid shares in lieu of cash under the scrip dividend scheme. Earnings per share were HK$3.92 against HK$3.84 in the first half of 2010. Despite uncertainties surrounding the Hong Kong housing market, the developer said that given the city's solid economic fundamentals, it would continue to expedite its sales programmes and construction process. It said 4,000 flats would be available for sale up to mid-2012. These include two urban redevelopment projects at Po Tuck Street, and Boundary Street; La Verte, in Fanling; and projects in Wu Kai Sha, Ma On Shan; and Tai Tong Road, Yuen Long. Since many buyers were still coming from various mainland cities Henderson said in response to the trend it would set up another two exhibition centres in Haikou and Wenzhou in addition to its existing centres in Shenzhen and Guangzhou. As at June 30, Henderson had a land bank in Hong Kong comprising a total attributable gross floor area of about 21.2 million square feet. Sales in major cities on the mainland were negatively affected by housing policies pursued by the government in the first half of the year, with the surge in home prices losing momentum, Henderson said. But prices and sales in some second- or third-tier cities continued their uptrend, and its developments at Riverside Park in Suzhou, and La Botanica in Xian, generated good responses when they were sold in early 2011. The company said it sold and pre-sold an attributable HK$903 million worth of mainland properties during the period, an increase of 70 per cent over the same period last year. As of June 30, the developer had a mainland development land bank of about 152.6 million sq ft in attributable developable gross floor area of which, around 82 per cent was earmarked for residential developments for sale.

The cost of sending expatriates to work in Hong Kong is the third-highest in Asia, just behind Japan and India, according to a new survey. But the take-home income of the city's expatriates ranks 10th in Asia, behind those working in developing countries such as Cambodia, Pakistan and Laos. The survey of 10,000 expatriate middle managers by EBA Communications concludes that global companies are still drawn to Hong Kong because of its proximity to the mainland. "Many people consider [moving to Hong Kong] a good career move, so fewer incentives are required," said Lee Quane, EBA Communications regional director. But because expats in the city are paid in Hong Kong dollars, pegged to the sliding US dollar, their purchasing power is eroding. At the same time, the overall cost of sending an employee to Hong Kong, including benefits packages for housing, children's education and utilities, is rising, due to soaring property prices and inflation. Average take-home pay for expats in Hong Kong is US$80,000 per year, compared to US$98,000 in Japan, the highest level in Asia. The cost of employing expatriates in India was higher than in Hong Kong because of India's high taxes, Quane said. Expats in developing countries would ask for higher take-home pay, Quane said, as an incentive to move to "hardship" locations. Quane said multinational companies faced with a choice between sending a worker to Hong Kong or Singapore might choose the latter, where housing and education costs were likely to be lower.

An "oil-free" glass grill is showcased yesterday at the Natural Products Expo Asia at the Convention and Exhibition Centre. Global economic woes and the lack of legal legislation on organic products in Hong Kong have done nothing to dampen the growth and popularity of the organic market. A survey by the Hong Kong Organic Resource Centre shows that in 2008, 90 per cent of interviewees had bought organic products, compared with only 30 per cent in 2005. The increase in demand is met with an increased supply: the number of stores selling organic products and the number of companies processing organic products grew 41 per cent this year compared with last. There are now more than 300 outlets in Hong Kong carrying various types of organic products, including fresh produce, cosmetics and health supplements. "This market is resistant to recession," said Andre Leu, a vice-president of the International Federation of Organic Agriculture Movements. Leu said the organic market was a "sun-rise industry", with certified organic market sales rising to US$55 billion in 2009, from US$15 billion in 1999. "It is the fastest-growing segment in the [world's] economy," Leu said. This year's Natural Products Expo Asia, in its ninth year running, has attracted 200 exhibitors from more than 14 countries. The show, at the Convention and Exhibition Centre in Wan Chai, started yesterday and ends tomorrow. The expo showcases the latest technologies and services, as well as new products and ingredients that are all-natural and organic. One such new product is pink-tinted salt from the Himalayas rich in natural minerals. William F. Edward, vice-president of business development at Hong Kong company Stephen James Luxury Organics, said the salt would naturally discharge from the body if not absorbed, making it a healthy choice for cooking. The brand also carries pili nuts, which are found in the volcanic regions of the Philippines and have one of the highest vitamin contents among nuts, according to Edward. The company also sells organic sweet and savoury energy bars. Also on display was the locally designed and engineered "oil-free" glass grill. A chef was demonstrating how to cook clams on the flat surface with no oil and no condiments. "It works like a Japanese teppanyaki grill - only it's suitable for common households - very healthy and fuss-free," said Alfred Li Kwok-yin, director of Premier Industrial Development. Li said that almost any kind of meat, vegetable and seafood can be cooked on the grill. Leu said: "The [organic industry] is more than an alternative and more than a niche market, it is a growing business introducing a wholesome and healthy lifestyle."

 China*:  Aug 28 2011  Share

To get rich is glorious, Deng Xiaoping famously opined. By that standard, the mainland's most glorious cities are Beijing, Shanghai and Guangzhou, which have the highest concentration of millionaires. Out of 960,000 mainlanders with individual net worth of 10 million yuan (HK$12.2 million), Beijing accounted for 170,000, or 17.7 per cent. It also topped other rich lists by having 10,000 people with personal wealth exceeding 100 million yuan, and 400 billionaires, a study found. Shanghai and Guangzhou were respectively a close second and third in each of the wealth categories. The 960,000 people, who each owned at least 10 million yuan in cash, valuables and fixed assets, were 39 years old on average, and those who were 10 times richer had an average age of 43. That is according to Hurun Report, an authority on the mainland's wealthy people, and the publisher of the annual China Rich List. Seven out of 10 rich people were men. While most on the list made their money as entrepreneurs, others did it from investing in property and stocks. In each of the past three years, property overtook stocks as a preferred form of investment. Nearly 40 per cent of 401 wealthy respondents polled by Hurun Report last year said they would invest in property this year. Surging property prices and robust economic growth have boosted the wealth of the richest mainlanders. There was a 9.7 per cent rise in the number of people with assets of more than 10 million yuan, while the number of people with assets exceeding 100 million yuan rose 9.1 per cent to 60,000 this year from 2010. Luxury home prices jumped 17.4 per cent in Beijing last quarter from a year ago, while luxury home prices in Shanghai's financial centre increased five per cent over the same period, according to property broker Savills. However, home prices in Beijing and Shanghai stopped rising last month for the first time this year, as the central government's measures to cool the overheated property sector started to bite.

China still has confidence in the European economy, President Hu Jintao told French counterpart Nicolas Sarkozy in hastily arranged talks in Beijing yesterday, while urging European countries to take measures to protect Chinese investment. For his part, Sarkozy reiterated that both France and Germany were committed to safeguarding the stability of the euro. He called for China to play an important role in the Group of 20 to tackle the deepening financial crisis. Sarkozy said he had not asked China to invest more in euro assets. Sarkozy made a brief stop in Beijing yesterday to discuss the European debt crisis and the agenda for the G20 summit in Cannes in November. The trip was announced on Sunday, and Sarkozy left for New Caledonia after diner with Hu. In addition to the lingering debt crisis, the two also discussed the situation in Syria and Libya. Sarkozy said China had reservations about - but had not blocked - military intervention in Libya, and he invited China to participate in a meeting in Paris soon to discuss Libya's future governance. But financial issues were the focus, as the panic caused by the European sovereign debt crisis spreads to France, with rumours that its second-biggest bank, Societe Generale, is on the brink of bankruptcy. Hu gave an upbeat assessment of the sovereign debt issue in Europe. "China is convinced that Europe has the wisdom and ability to overcome current difficulties and maintain economic stability and growth," a Ministry of Foreign Affairs press release quoted Hu as saying. He said China would continue to make Europe a major investment market and he "looks forward to measures by the European side to ensure the security of Chinese investment in Europe". Sarkozy said he needed to ensure that the Cannes summit would play an active role in the world's economic recovery, and that China's participation was important. "I think it would be inappropriate for me if I did not come to China to discuss with you the serious economic problems that are worrying the world," he said. Speaking at a press briefing after the meeting, Sarkozy said the value of the euro would be protected, and euro assets were still a good investment choice for China. He said they discussed currency reform, the internationalisation of the yuan and reform of the International Monetary Fund to enhance the representation of emerging markets.

ZTE Corp will play a more active role in the communication, smart terminal and mobile broadband industry, according to Xie Daxiong, the company's executive vice-president. ZTE Corp, China's second-biggest telephone equipment maker, plans to seek a "more active" role in the smartphone market as the resignation of Apple Inc Chief Executive Officer Steve Jobs creates opportunities for rivals. "We are very thankful to Steve Jobs' contribution to the smartphone and mobile broadband industry," Xie Daxiong, ZTE's executive vice-president, said in an e-mail on Thursday. "With innovation (and) spirit, ZTE will play a more active role in the communication, smart terminal and mobile broadband industry, and build more value for consumers around the world." Jobs was a "core" product manager at Apple and his departure will create long-term opportunities for rival suppliers, according to Sun Peilin of Analysys International in Beijing. Jobs' resignation comes at a time when China Unicom (Hong Kong) Ltd, the largest seller of iPhones outside the United States, is seeking to diversify away from the iPhone with lower-priced handsets, including ZTE's V880, to reduce subsidy costs. Unicom is currently the only carrier in the world's largest mobile-phone market that offers the iPhone with a service contract. Unicom has the largest number of iPhone users in the world outside the United States, said Chairman Chang Xiaobing on Wednesday, without saying how many of the company's 23.95 million third-generation (3G) network subscribers use the device.

China releases adapted nationwide map - A worker at the National Geomatics Center of China in Beijing shows a map to visitors. China released its first 1:50,000 scale nationwide map on Thursday. "The map provides detailed information, such as land features and village names updated since 2005, and will play an important role in economic development, environmental protection and disaster relief," Li Weisen, deputy director of the National Administration of Surveying, Mapping and Geoinformation, said at a news conference. The 1:50,000 scale map provides the latest information on the nation's development, especially in the western region, which has enjoyed a fast pace of development in recent years, Li said. For example, in the Xinjiang Uygur autonomous region, the Tarim River management will be able to benefit from the 1:50,000 map, which will aid the assessment process for key programs such as water resources, the mining industry and road building, said Tian Jiangrong, assistant to chairman of the Xinjiang Uygur autonomous region. Xinjiang is China's largest administrative division, spanning over 1.6 million square kilometers of land, including 750,000 square kilometers that are unsuitable for habitation. The newly unveiled map is expected to help speed up economic development dramatically in Xinjiang, as more than 700 billion yuan ($108 billion) is pouring in from the major State-owned enterprises. Without basic geological information, too much preparation work, which includes mapping the area before the construction of railways, expressways and major programs, needs to be done, explained Zhang Jixian, president of Chinese Academy of Surveying and Mapping. The comprehensive and detailed information in the map will accelerate the preparation period before launch of these programs, Tian added. The 1:50,000 map is just a beginning as China is also planning to introduce 1:10,000 and 1:5,000 nationwide maps. Song Chaozhi, deputy director of the National Administration of Surveying, Mapping and Geoinformation, told China Daily that before 2020 the 1:10,000 map covering the country's land region will be finished.

Hong Kong*:  Aug 27 2011  Share

Security chief Ambrose Lee Siu-kwong yesterday borrowed Chief Secretary Henry Tang Ying-yen's controversial phrase "totally rubbish" to describe a report that the police's security arrangements last week resulted from a meeting at Tang's Peak home. Next Magazine reported that Tang had met officials from the central government liaison office and the National Security Bureau in the lead up to the three-day visit by Vice Premier Li Keqiang. Lee insisted the arrangements were entirely a matter for the SAR government, according to the Basic Law. "[The report] is totally ridiculous, and totally rubbish if I can borrow the words of the chief secretary," he said. Speaking to reporters during a visit to Guangzhou, Lee said it was too early to judge if there was a case of "unlawful detention" because criticisms were based on lopsided media reports. Student Samuel Li Shing-hong was allegedly detained for an hour by officers, while others were manhandled when Li visited the University of Hong Kong campus last Thursday. Lee said he will not sack Police Commissioner Andy Tsang Wai-hung amid public calls for him to step down. "It is unacceptable to sack the police commissioner just because of one-sided accusations," he said. Lee said he will investigate the facts behind the row, and study the letter from Hong Kong University Vice-Chancellor Tsui Lap-chee, who described the tough policing as unacceptable. Lee will appear at a Legislative Council security panel meeting on Monday, during which Tsang will give the police version of what happened. As for the Bar Association's argument there is no legal basis for the designation of a "core security zone," Lee said he has to study its statement first. Law Society president Junius Ho Kwan-yiu said the force has the power to set up a "designated public area," according to Public Order Ordinance, and that it is not practical to require it to be gazetted during emergency situations. Independent Police Complaints Council chairman Jat Sew-tong expects the force to hand in a preliminary report next week for the council to follow up on the matter. As a barrister, Jat said he has never heard of any legislation empowering the designation of such a zone. In another twist, about 300 HKU alumni are running an advertisement in three Chinese-language newspapers today, saying it was appropriate for the vice premier to officiate at the university's centenary ceremony. The statement, titled "Be tolerant and all-inclusive to build a common future," came in response to criticisms that inviting Li to the campus was a political decision to please Beijing. 用新聞自由和言論自由為藉口, 這一位二年的政治科學生演技出色, 過去3天獲得優秀的新聞報導, 名聲大幅增加. 這一位學生如果把同樣的行動在歐美演出. 國土安全部會好好照顧他.

Steve Jobs resigns, end of an era at Apple - Steve Jobs has resigned as the chief executive officer (CEO) of Apple, the company said on Wednesday.

Controversy surrounded the start of the academic year at the University of Hong Kong yesterday. Vice chancellor Tsui Lap-chee pledged to safeguard the university's autonomy and the right to express opinion. That came amid simmering anger over security for Vice Premier Li Keqiang's visit last week. Freshmen turned up at the ceremony wearing black ribbons on their wrists to show disapproval of "heavy-handed" police action. Welcoming new students, Tsui said he is proud to have "a noisy bunch." Tsui added in his speech: "New students, be prepared. Controversies are not unusual at HKU. Protests, forums and debates are frequent parts of students' life here. And we are proud that there are students like [those] in many parts of the world who can be a noisy bunch." He said the attendance of Li, widely expected to replace Wen Jiabao as premier next year, was special and meaningful but once again he expressed regret at the university's oversight in the handling of security on campus. Tsui issued four statements in a week expressing his regret and apologies. "For many of us in the university, the past week has been a learning experience. I learned a lot from the experience myself," he said. Tsui later said he was "shocked" that such a large police contingent was deployed on the campus last Thursday for the visit and a letter has been sent to Secretary for Security Ambrose Lee Siu-kwong seeking an explanation. Tsui promised to attend tomorrow's assembly at which thousands of HKU students are expected to discuss the matter. The row over security for Li's visit has triggered debates across society including the Hong Kong Bar Association which has, for the first time, spoken on the matter. The association said it is not aware of any legal basis for the designation of a "core security zone," a term used by police in defending the arrest of a man wearing a T-shirt with the words "Vindication of the June 4 Tiananmen Massacre" when Li was visiting nearby homes. "The shielding of high political figures from public embarrassment at being confronted by others holding different views in the exercise of the right of free expression is, in the HKBA's view, a manifestly inadequate basis," it said. The group urged the Security Bureau and the police to explain publicly the legal authority for introducing various security measures for Li's visit. A bureau spokesman said it noted the association's statement. The police said they have the responsibility to ensure the safety of VIPs.

Britain's biggest retailer Tesco is planning its first offshore yuan-denominated bond issue in Hong Kong, a report said on Thursday, seeking to raise over US$100 million. The world’s third largest supermarket group by sales is the latest to join a slew of foreign firms that are aiming to tap the so-called "dim sum" bond market as China tries to turn the yuan into an international currency. Tesco will use the net proceeds from the 725 million yuan (US$113 million) three-year offering for general corporate purposes, according to Dow Jones Newswires, citing a draft prospectus of the Hong Kong issue. The report said the hypermarket chain’s yuan bond issue was part of a 15 billion euro (US$25 billion) eurobond program. It has hired HSBC (SEHK: 0005) and Standard Chartered as joint bookrunners for the issue in Hong Kong. Tesco officials in Shanghai could not immediately be reached for comment. The bid signals the rising interest in yuan funding among foreign firms, after US fast-food giant McDonald’s raised US$30 million from its bond issue in Hong Kong last year. It is reportedly planning a second offering. Heavy equipment maker Caterpillar followed suit while budget carrier Hong Kong Airlines reportedly said in May that it was also planning a similar issue. Yuan-related financial products have been booming in the city that has been acting as a test bed for Beijing’s ambitious goal to make the unit a global currency. Tesco is the world’s third-largest retailer after US-based Wal-Mart and France’s Carrefour, both of which have important operations in a booming China where a growing middle class provides a market for Western style shopping. The British group operates about 100 hypermarkets and malls in the mainland, and said earlier this year that it will set up a joint venture with Asian investors to develop shopping malls in China.

The government said on Thursday it has sold a plot of land to a consortium in a tender for HK$6.27 billion – a price below market expectations amid cautious sentiment. The land, which could be used for commercial and residential purposes, is located at North Point on Hong Kong Island. Local radio reported the buyer is Ocean Century Investments, a subsidiary of developer Cheung Kong (SEHK: 0001). Five other companies bid for the land. Surveyors had valued the site at between HK$6.47 billion and HK$9.07 billion.

Three judges in the Court of Final Appeal on Thursday granted the father-in-law of a mainland mother leave to mount a challenge to the government's policy of charging higher obstetric fees to non-resident women. The judicial review was launched by 72-year-old Hong Kong man Fok Siu-wing on behalf of his son Fok Chu-wa, who is moderately mentally retarded, and daughter-in-law from Shenzhen. Zeng Lixia gave birth at Princess Margaret Hospital in December 2007 and was billed HK$48,000. In 2007, the Hospital Authority required non-resident mothers to pay HK$39,000 for a pre-booked obstetrics package and HK$48,000 without a prior booking, while residents enjoy subsidised fees. A lawyer representing Fok told the court on Thursday the fee policy discriminated against mainland women married to Hong Kong residents because it required mainlanders to pay higher fees than local residents. Fok had earlier sought a judgment in two lower courts to rule the authority’s policy discriminatory, but both courts dismissed his appeal. In this case, the authority waived the fee after initially refusing because the Court of Appeal, while upholding the fee policy, urged it to reconsider. Zeng, who applied for a one-way permit in 2007, now has a Hong Kong identity card. Fok’s lawyer said the issue was of public interest and the city’s top court should hear the case. Acting Chief Justice Patrick Chan Siu-oi, Mr Justice Kemal Bokhary and Mr Justice Roberto Ribeiro scheduled a two-day hearing on the case starting on February 6.

Hong Kong seniors who have settled over the border should be allowed to collect their HK$6,000 handouts from mainland banks, or through the Hong Kong Economic and Trade Office in Guangzhou or Shenzhen. So says the Hong Kong Federation of Trade Unions. Federation members helped about 150 seniors complete their registration forms between 10am and 5.30pm yesterday on Hubei Road and Huangbeiling in Lo Wu, Shenzhen. The group will put forward its suggestions at a meeting with the government to help those who have no SAR bank accounts, local contact persons, or smart identity cards, vice chairman Wong Kwok-kin said. "There are currently around 60,000 elderly citizens residing in the Pearl River Delta region, and many of them encounter difficulties in meeting the government's requirements under the scheme," Wong said. Many seniors who have resided in the mainland for a long time have not applied for smart ID cards. "Also, I believe many of them don't even know about the handout scheme," he said. Of about 400 callers to the federation office in Shenzhen inquiring about the scheme and seeking help, about 300 said they have physical disabilities, while a similar number do not have a Hong Kong address. Around 200 do not have SAR bank accounts. "Applicants with the old card issued before 2003 are still eligible if they apply for and can possess the smart ID card before March 31, 2012," a spokesman for the Financial Services and the Treasury Bureau said. Those born in or before 1946 are the first batch of eligible payout applicants.

If they decide to run, Chief Secretary Henry Tang Ying-yen and Executive Council convener Leung Chun-ying would find themselves in a neck-and- neck race for the chief executive's post, an opinion poll has found. Forty-three percent of 1,000 adults polled last week supported Tang, while 42 percent favored Leung. In terms of suitability for the job, Leung received 52 marks, while Tang got 50.8. Tang was found to be slightly more widely recognized than Leung. But the findings also showed some people don't fully favor either of the two hotly tipped candidates - as 41 percent of respondents opposed Tang, while 38 percent were against Leung. The poll, conducted by the University of Hong Kong's Public Opinion Programme, was commissioned by the Hong Kong Public Opinion Research Centre. The center is a subsidiary of the One Country Two Systems Research Institute, of which Leung is chairman of the board. The pollster said the questions, fieldwork operation and data analysis were designed and handled without interference from any outside party. Chang Hsin-kang, a director of the institute, said the poll was commissioned to find out public backing for the two. Researchers said people cannot take issue with a poll on just two possible candidates even if the race for the job next year may see a wider field since no one has declared his or her candidacy. The pollster said no statistically significant difference in the support levels and suitability ratings for Tang and Leung were observed. Reacting to the findings yesterday, Leung expressed gratitude for the public's support. "I will keep working hard and use my long-held beliefs and spirit to make every effort to serve the people of Hong Kong," he said. Asked when he will declare his candidacy, Leung said he will make his intentions clear at a later date. Tang's office refused to comment on the issue beyond saying he will continue to perform his duties as chief secretary for administration. Former National People's Congress deputy Ng Hong-mun said Beijing will not only take a candidate's popularity into consideration when deciding who it favors but also whether the business sector and civil servants find the person acceptable. He said it is obvious that as the person replacing Donald Tsang Yam-kuen as chief executive will be selected by the 1,200-member Election Committee, the final outcome may not be the same as the findings of the poll.

Xu Minjie, vice-chairman and managing director of container operator Cosco Pacific, which is looking at projects in Europe. Cosco Pacific (SEHK: 1199), the world's fifth-largest container operator, says overseas port projects will be the major driving force for earnings in the medium term. Unveiling a 24.8 per cent rise in net profit to US$237 million for the first half yesterday, Cosco said its search for overseas acquisitions was gathering pace. After stripping out disposal gains from ports in Dalian and Qingdao and other non-recurring items, underlying profit surged 116 per cent to US$212.6 million from a year earlier on a 144 per cent rise in profit from terminal business. Helped by higher turnarounds in the Piraeus terminal in Greece and an increased stake in Yantian International Container, profit from terminal business, which accounted for 53.6 per cent of total revenue, increased to US$96.7 million in the first six months from a year earlier. "The rebound in Piraeus has given us much confidence in further overseas acquisitions," said Ken Chan, deputy managing director of the company. The previously troubled port in Greece was plagued by strikes after the company bought it from the local government in October 2009. A drop in shipments followed due to the service disruptions as well as the country's sovereign debt crisis. But the largest port in Greece swung back into black in the last quarter of 2010 after the company exerted stringent cost control measures and improved service at the port. In the first half, Piraeus contributed US$1.7 million in profit, as opposed to a US$ 10.7 million loss in the same period last year, on a 28 per cent jump in volume. The port moved 480,000 million 20-foot equivalent units (TEUs) in the first half. Chan said it could handle about 1.6 million TEUS for the year, on par with a record achieved by the port when it was run by the government. "Overseas acquisitions are gathering pace. We are looking at some projects in Europe now," Chan said. Cosco is also still pursuing the acquisition of a stake in the Kaohsiung Terminal through a partnership with Yang Ming Marine Transport in Taiwan. The contribution from overseas ports would increase over time, Chan said. In the first half, cargo handling at overseas ports, which accounted for 13 per cent of total throughput, grew 17 per cent year on year. In the first six months, total throughput at the ports operated or partially owned by the company grew 19.7 per cent annually to 24.2 million TEUs. Equity throughput, which is determined according to interest in each port, increased 31 per cent to 6.5 million TEUs. In addition to an average 10 per cent year-on-year rise in handling charges at mainland ports, the revenue in the company's port division rose 45 per cent to US$149 million. The port operator's container leasing division, which accounts for 46 per cent of total sales, saw profit increase 17 per cent to US$56 million on an 8 per cent growth in sales - slower growth than its rivals. Shares in the company dropped 0.96 per cent to HK$10.28 yesterday.

Bank of China Hong Kong's yuan deposits rose by 40 per cent in the first half, while total customer deposits increased 7.5 per cent. Bank of China Hong Kong yesterday posted its highest first-half net profit since listing in 2002, but its lending profitability continued to drop because of pressure from yuan-related business. The Hong Kong arm said net profit rose 66.8 per cent year-on-year to a record HK$11.99 billion, boosted by higher income from its core lending business and Lehman Brothers minibonds-related recovery. Net interest margin (NIM), a measure of lending profitability, fell 37 basis points year-on-year to 1.21 per cent in the first half. He Guangbei, vice-chairman and chief executive, said narrowing NIM was partly due to the bank's function as Hong Kong's sole yuan clearing bank. If the yuan effect were discounted, net interest margin would have dropped by only 16 basis points to 1.48 per cent. "Our net interest margin pressure was great, as the clearing bank's yuan assets increased by a larger amount in the first half, " said He. He added that yuan business had nonetheless helped to boost revenue and as a strategic plan, the bank would continue to develop that business by expanding its yuan deposit base, seeking more investment channels and developing trade settlement work. Warren Blight, a senior analyst at Keefe, Bruyette & Woods Asia, said even though the yuan business was strategically good for the bank, in the short term it was being held back by low yields available on yuan investments. Steve Chan, head of Asian financial equity research at MF Global Hong Kong, said that as bank customers converted their Hong Kong dollar deposits into yuan deposits, it drained the bank's Hong Kong dollar liquidity. BOCHK (SEHK: 2388)'s Hong Kong dollar loan-to-deposit ratio had risen to more than 75 per cent with a decline in Hong Kong dollar deposits. "Offshore yuan deposits are a curse, not a gift," said Chan, adding that the bank needed to compete for Hong Kong dollar deposits in the second half, otherwise it would face very slow Hong Kong dollar loan growth. BOCHK said first-half net interest income from core lending activities rose 14 per cent to HK$10.21 billion. Yuan deposits rose by 39.9 per cent to HK$218.8 billion and the yuan loan-to-deposit ratio stayed at 60.95 per cent as of the end of June. Total customer deposits increased by 7.5 per cent to HK$1.1trillion in the first half. The bank also made adjustments to regulatory reserves in the first half, provisioning for loans based on requirements from the Hong Kong Monetary Authority. While it did not disclose by how much the HKMA required it to lift reserves, the bank said it increased loan provisions by HK$2 billion. The increase in provisions was partly due to the increase in regulatory reserve ratios, and partly due to the bank's increase in loans, it said. Return on average shareholder equity, a measure of a bank's profitability judged against shareholder capital, rose 6.32 percentage points to 19.88 per cent compared to last year. A first-half dividend of 63 cents a share was proposed.

Beijing yesterday moved to distance itself from tensions between Hong Kong and Manila ahead of Philippine President Benigno Aquino's first state visit to China next week. Just 24 hours after the Hong Kong government said it would not lift a black travel alert imposed since the Manila hostage tragedy last year, China's ambassador to the Philippines, Liu Jianchao , said Beijing would not discourage Chinese tourists from visiting the country. Speaking in Manila, Liu said: "I'm very sorry the incident resulted in very bad relations. We feel very sad about it. We understand the reasons and thinking of the Hong Kong people about the security situation in this country, but the central government of China also does evaluation of the security situation in the Philippines. "At this stage, we don't see it as necessary to upgrade the travel warning." He said specific warnings were in place for some parts of the Philippines deemed risky. Hong Kong has had a black travel alert in place for the entire country since the shootings. The only other country for which it has such an alert in place is Syria, where violence nationwide involving protesters and government forces has left 2,200 people dead in the past five months. The ambassador's comments angered hostage survivor Li Yick-biu, 73, who said: "He's only trying to be diplomatic, especially before the state visit and in the light of tensions over the Paracel Islands, among other issues. But as a Hongkonger involved in the incident, I feel it shows we are inferior to citizens on the mainland. They don't really care about us." Democratic Party lawmaker James To Kun-sun, who has been helping the victims of the incident and their relatives, said the matter came under the umbrella of the "one country, two systems" formula. To said Liu's comments should not stop government officials helping survivors and relatives get justice when Aquino visits Beijing at the end of the month. "It's difficult to measure how safe the people of one nationality are in another country, and how they might be at greater risk than those from elsewhere," he said. "But it may show that Hongkongers have higher safety standards than people on the mainland." A spokesman for Hong Kong's Security Bureau said it would monitor safety measures in the Philippines. Liu said that during Aquino's visit, an accord would be signed to boost tourism, a main economic driver. He said that how long Hong Kong's alert stayed in place was a matter for the city's government. "As far as I'm concerned, the central government is concerned, we hope the dialogue will continue so both sides can be convinced that it is the right time to lift the alert, so normal exchange of people between Hong Kong and the Philippines will resume soon." The hostage fiasco had not affected "the general relationship" between the two countries, he said. Liu also signalled that Beijing was willing to separate tensions over the South China Sea from The countries' business ties. He confirmed the Spratlys would be discussed during the visit, which comes just a week after Aquino welcomed to Manila the navy's new Hamilton-class cutter to patrol the South China Sea. Aquino will be accompanied by more than 300 businessmen and 13 cabinet ministers. Trade and investment deals will take centre stage during the five-day visit, which starts on Tuesday. He would speak to business forums in Beijing, Shanghai and Xiamen - "a rare thing" for a Philippine leader, Liu said.

Hong Kong taxis are the third best in the world, behind London and New York, a poll of tourists by a hotel agency has found. The survey by Hotels.com, for which nearly 5,000 travellers in 23 countries were interviewed, found 28 per cent liked London taxis the best. New York cabs won 9 per cent of votes, followed by Hong Kong with 7 per cent. Tourists were especially impressed by Hong Kong cabbies' knowledge of the city and the cleanliness of the taxis, the survey found. While London and New York have been in the top two places for four consecutive years, it is the first time Hong Kong has made it to the top 10. Local cabbies attributed the improved service to higher fares and younger, better-educated drivers. "With the increased flag falls and better economy, taxi drivers are earning more, so they are happier in their jobs and provide better services to their passengers," Lai Ming-hung, chairman of the Taxi and Public Light Bus Concern Group, said. He said cabbies were now earning HK$400 to HK$500 a day, compared to HK$200 when the financial crisis hit in 2008. Lai said some taxi drivers would need to become friendlier and avoid cheating tourists, to further improve their impression of Hong Kong taxis. "Some drivers are cheating tourists by starting their meters long before the tourists get in from airport terminals. This has to be curbed." Wong Wing-chung, chairman of the Northwest Area Taxi Drivers and Operators Association, said the city's cabbies had been offering a good service, and the quality had improved in recent years as they had faced competition from cheaper operators. "There were times when business was not good and we had to be friendly and helpful to our passengers to fight back. This then became a habit," he said. Wong, who has seen an increase in tourists taking taxis over the past two years, said there were more younger drivers now, and as they usually had higher education levels they were able to communicate better with tourists. He said the industry was looking for more comfortable cars to further improve the quality of service. The survey also found Hongkongers rated taxis in Guangzhou to be the worst in terms of safety, quality of driving, cleanliness and availability. New York cabs were named the most available but their drivers worst for geographical knowledge, while taxis in London, where the minimum fare is £2.20 (HK$28.30), were rated the most expensive.

Beijing wants to facilitate the use of the yuan for cross-border trading and investments in September, as it seeks to internationalise the currency. Shen Danyang, a spokesman with the Ministry of Commerce, yesterday said the government is soliciting opinions on a draft policy and plans to implement it next month. "The draft policy is going through a period of soliciting opinions," Shen said. "We hope it can be announced in September." The time frame appears to be shorter than Hong Kong officials had expected when they predicted yuan liberalisation could be approved this year. It is rare for Beijing to set a specific and such a tight timetable for a currency policy change, and the fact it has done so reflects growing demand for yuan trading abroad. The announcement of the timetable comes a week after Vice-Premier Li Keqiang said Beijing would allow foreign investors to use the yuan for cross-border direct investment in China. That includes allowing foreign investors to set up or expand their manufacturing facilities. Shen said yuan liberalisation also applied to other regions, such as Macau and Singapore. Presently, foreign investors can only convert foreign currencies into yuan for direct investment projects and the process is subject to complicated regulatory approvals. They will still undergo review procedures before the conversion of their currencies into the yuan for such investments. The central government has yet to disclose the quota for overall and individual yuan-denominated foreign investments; however, yuan liberalisation could help Hong Kong businesses pursue better returns from the 554 billion yuan in low-yielding deposits in the city's banks. A banker close to the People's Bank of China said the central bank had been actively studying potential revisions to capital controls to reinforce China's efforts to internationalise the currency. Beijing is looking to strengthen its ties with Hong Kong, officially acknowledged as the offshore centre for yuan trading, to promote the use of the yuan even though it is not fully convertible. "Any liberalisation without a fully convertible yuan can only be viewed as a small step," said Yi Xianrong, a researcher at the Chinese Academy of Social Sciences. "The significance of yuan-denominated foreign direct investment has been hyped up but it will do little to internationalise the yuan." The yuan is not convertible under the capital account, which includes foreign direct investment and securities investments. The central bank controls the yuan exchange rate by buying foreign currency entering the country through foreign direct investment, export payments or speculators. Foreign companies are also barred from investing in Chinese equities or other financial assets. Yesterday the yuan hit a 17-year high after the central bank set the reference rate at 6.3896 to the US dollar. Analysts said the gradual removal of capital controls would have minimal effect on the currency's exchange rate, though there would be an inflow of foreign funds. "It is expected that the [yuan liberalisation policy] will draw in only a small amount of money," a Bank of China currency trader said. "It will have a psychological effect rather than causing a real change in fund flows."

The Fire Services Department has formed the High Angle Rescue Team, who use specialised techniques to save lives at high locations. The department has spent $5.2 million in the last year purchasing specialised rescue equipment for the team - launched this month - and training its officers, selected from the Special Rescue Squad. The officers undergo five weeks of intensive training, including two weeks with the Industrial Rope Access Trade Association, working with cranes, bridge towers, scaffolding and cable-car systems. The new equipment includes the "power ascender", an electric winch system that allows rescuers to traverse vertically at 22 metres per minute. Divisional Officer (Special Rescue Squad) Li Chun-kit said the system allows for faster and more efficient rescues. "In the past we had to use human lifting, meaning we needed a lot of hands to lift up the weight of two people. Now we can make use of the winch. It will help us a lot to save manpower." The 42 team members are stationed in Pok Fu Lam Fire Station on Hong Kong Island, and Tin Sum Fire Station in the New Territories. The department is considering establishing a third team based in Kowloon, and is looking to recruit more officers for the unit. A new elite rescue team is scaling the heights of Hong Kong and saving lives in places others firefighters simply cannot reach. The members of the Fire Services Department's high-angle rescue team specialise in saving people who are trapped among the heights of the city's skyscrapers on scaffolding, work gondolas or in other perilous high-rise situations. The 42-member team, composed of firefighters at Pok Fu Lam fire station on Hong Kong Island and Tin Sum station in the New Territories, was established in early August. "Our city is full of skyscrapers, and some are several hundred metres high," divisional officer Li Chun-kit said. "Last year, the Fire Services Department started to prepare for the establishment of a high-angle rescue team that could handle complicated rescue situations that involve high-rises." Response to the team's recruitment was strong, with about 400 applicants from within the department. Candidates had to pass an aptitude test and then attend a five-week course that trained them in the skills for working at heights, as well as on-site rescue practice. Five power ascenders - able to carry a 200kg load and move at 22 metres per minute - were acquired to assist the team in carrying out the rescue work. In a demonstration yesterday, a firefighter took about 40 seconds to ascend a 15-metre-tall building with a "rescued" person. Without the specialist equipment the rescue would have taken about 15 minutes, acting divisional officer Choi Kwok-chung said. The Fire Services Department spent HK$3.8 million on equipment, including the power ascenders, and HK$1.4 million on the training courses for the new squad.

Hong Kong's fight against tobacco reached a milestone, as the city saw its lowest smoking rate since records began 30 years ago. Only 11.1 per cent of people aged 15 or older were daily smokers last year - down from 12 per cent in 2009 and 11.8 in 2008. Some 19.9 per cent of men smoked, the first time the rate had gone below 20 per cent, said Dr Raymond Ho Lei-ming, Tobacco Control Office head. The rate among women was 3 per cent. "We are one step closer to having a single-digit smoking rate," he said. The city's latest smoking rate is one of the world's lowest. In Asia-Pacific, the next best rate is in Singapore, where 14 per cent of people smoke. Hong Kong's figures were released yesterday as a part of the Census and Statistics Department's "thematic household survey", conducted from October to December last year. But teenage smoking increased, with 2.5 per cent of those aged 15 to 19 smoking every day, up from 1.8 per cent the previous year. Ho said that as the household survey was done before the latest tobacco tax increase of 41.5 per cent in February, it could not be taken as suggesting the tax rise had failed to curb young smokers. "If we view the general trend in the past decade, teenage smoking is slowing - from 4.5 per cent in 2000 to 2.4 in 2008," he said. The office would put more focus on helping the young to quit, he said.

Beijing's concept of "state immunity" applies equally in Hong Kong, the central government says in a draft interpretation of the Basic Law, requested by the special administrative region's highest court. It is the first time Hong Kong's Court of Final Appeal has gone to the national legislature to decide on the city's mini-constitution, although Beijing has performed three interpretations in the past at the request of the Hong Kong government. The question concerns whether Congo is immune from the court's jurisdiction in a commercial case. Is the court bound to follow Beijing's position, where states are immune in all types of case, or may the SAR follow the position of "restricted immunity" - where states are not immune in commercial deals? "Restricted immunity" applied in Hong Kong before the handover. The court thinks the Basic Law is ambiguous in its mention of "acts of state such as defence and foreign affairs". But the answer is clear, according to the draft response. Li Fei , a senior state legal official, said yesterday in his presentation of the draft that Hong Kong must follow the central government's position because the question concerned foreign affairs. "[State immunity] directly impacts on a country's relations with foreign countries," he wrote. As vice-chairman of the legal affairs commission of the National People's Congress Standing Committee, Li was addressing committee members, who will vote tomorrow on its interpretation of two articles of Hong Kong's Basic Law. In the case, the United States-based fund FG Hemisphere Associates is trying to reclaim over US$100 million from the Democratic Republic of Congo. The debts are held in Hong Kong. Congo says the repayment is not enforceable as the country is immune from jurisdiction. Li said Beijing did not recognise itself being sued overseas. "Our country does not accept that foreign courts have jurisdiction over cases where our country is a defendant or cases which target our property." The final interpretation will be unlikely to deviate from the draft, although a bill theoretically allows for deliberation before voting. "Normally there won't be any deliberation and you can expect the vote will likely be unanimous," said Eric Cheung Tat-ming, assistant law professor at the University of Hong Kong. Cheung said that although the Basic Law Committee, which has six Hong Kong members, was consulted, there was no mention of any of its views in the release. "This is not surprising, because we all know that the Basic Law Committee is just a rubber stamp," he said. Elsie Leung Oi-sie, vice-chairwoman of the Basic Law Committee and former Hong Kong justice secretary, said the Basic Law Committee had already reviewed and agreed with the draft response. "While we have self-governance under `one country, two systems', when it comes to sovereignty and foreign relations it is not possible to have two positions," she said.

 China*:  Aug 27 2011  Share

36th Miss Bikini Int'l China final held in Beijing - Top three contestants stood out at the 36th Miss Bikini International China final in Beijing Tuesday night.

Agricultural Bank of China said on Thursday its first-half net profit rose 45 per cent to a record high, thanks to growth in more profitable loans and financial services fees.

ICBC, the world’s most valuable lender, said its first-half net profit rose 29.4 per cent to a record, helped by improving net interest margin and higher fee income.

UBS cut its growth forecasts for the mainland for this year and next year on Thursday, with the downward revision reflecting much weaker growth prospects in developed economies.

United Parcel Service (UPS), the world's largest package delivery company, will open a new branch in Zhengzhou, the capital of central China's Henan province, according to a memorandum of understanding (MOU) signed with the local government. The US company said it will set up a Zhengzhou-based branch for package delivery and logistic services in order to tap into China's growing express delivery industry. Meanwhile, UPS will also work with the local government which plans to build Zhengzhou a new aviation hub of China, the Henan Daily, a local newspaper, reported on Wednesday. Zhengzhou's central location in China will facilitate UPS's expansion, Daniel Brutto, president of UPS International, was quoted as saying at Tuesday's signing ceremony of the MOU. UPS has invested heavily in China, and its local operations have maintained double-digit growth, even during the global financial crisis, Brutto said. Fueled by the nation's rapid growth of online shopping business, China's express delivery industry has experienced fast development, topping 10 million parcels delivered per day at the end of last year. The figure represents the third largest volume globally after the United States and Japan, according to statistics released by China's State Post Bureau (SPB).

Chinese President Hu Jintao on Thursday afternoon met with his French counterpart Nicolas Sarkozy, with European debt crisis and Group of 20 nations summit high on the agenda. "Your visit reflects the height of China-France strategic cooperation," Hu told Sarkozy, who is on a five-hour trip to Beijing, at the start of their meeting at the Great Hall of the People. Hu said stronger China-France coordination and cooperation will play an important part in pushing forward positive results from the G20 summit, boosting international economic cooperation and promoting the sound recovery of the world economy. On European debt crisis, Hu said China is keeping a close watch of the impact of the European sovereignty debts and expects the European economy to keep stability and financial reforms by some European countries to be successful. "China is confident about the European economy and euro. We believe Europe has the wisdom and capability to overcome the current difficulties and maintain the economic stability and growth," Hu told Sarkozy. Hu underscored China's commitment to continue to regard Europe as one of the major destinations for investment. "We also expect Europe to take measures to ensure Chinese investments there are safe." Sarkozy said measures are taken in the Euro zone to advance the financial reforms in some countries and step up the economic governance on the Euro zone. As France, which currently holds the G20 chairmanship, will host the G20 summit in Cannes in November, Hu said the summit is highly expected by all parties. He said China agrees with the core issues set for the summit and appreciates the "productive preparation" made by France. "China will continue to support and participate in the summit and work with all G20 members to contribute to the summit's success," Hu said. Hu also stressed the importance of unity, confidence and coordination among the international community, facing the increasing unstable and uncertain elements that affecting the recovery of world economy. Acknowledging the important role China has played in world economic affairs, Sarkozy said France, as the G20 presidency, will discuss with China the major problems confronting the world economy. France will also strengthen coordination with all sides to help the Cannes Summit play a positive role in the world economic recovery, Sarkozy said.

The company behind historical hit movies “300” and “Clash of the Titans” has announced plans for its first production in China, which will focus on the country’s most recognizable historical monument: “The Great Wall.” The film will be a fictional story set at the time of the wall’s construction. It will be directed by Edward Zwick, whose credits include “The Last Samurai,” “Love and Other Drugs” and “Blood Diamond.” Legendary Pictures, a Hollywood production company, said that its newly-formed Asian venture, Legendary East, will be handling the project. The company has so far released no details about the cast or production schedule. Prior to the announcement of the new production, Legendary East’s chief executive Kelvin Wu said the company expects to draw on its experience in turning classical history and mythology into cinematic hits. “The whole team at Legendary has been doing Greek culture-based movies so well, and they’ve been accepted globally,” he said. “What we’re going to do are big-budget films and create some sort of imaginary world in a film for a fan-boy community.” Hong Kong-based Legendary East was created in June as a collaboration between Legendary Pictures and Huayi Brothers, a Chinese film producer and distributor. Hong Kong-based construction firm Paul Y. Engineering has also invested $220.5 million for a 50% stake in the venture. Legendary East’s mission is to crack the notoriously closed Chinese film market – Beijing only allows 20 foreign films to be shown in Chinese theaters each year and tightly controls film production in the country. The new venture’s mandate is to make English-language films based on Chinese folklore and history. Mr. Wu said he believes Legendary East can steer through China’s movie distribution rules while still creating films that appeal to a worldwide audience. China is an increasingly attractive market for movie producers. Box-office receipts in China jumped 64% in 2010 to $1.5 billion from the previous year according to the country’s Film Bureau and experts expect receipts to reach $2 billion this year. “Hollywood people are businessmen and they want their product to be seen by everybody in the world,” said Mr. Wu. “The way we propose to do that is very different from the conventional idea of pressing the government to open up film quotas. We don’t think this is a good way to do business in China. We think we need to be local, find partners and deliver a good product.”

China Life (SEHK: 2628) Insurance's shares plummeted yesterday because of disappointing half-year results and uncertain prospects for the mainland's insurance industry in the second half. The company's shares closed down 11.55 per cent, or HK$2.65, to HK$20.30 and were the second most actively traded on the Hong Kong stock exchange yesterday. Ping An, another mainland insurance company, was the most traded stock as its shares fell 3.6 per cent. Vice-president Liu Jiade said during an interim results briefing that the company would continue to look at the possibility of selling subordinated debt in Hong Kong to take advantage of lower costs. China Life recently announced plans to sell up to 30 billion yuan (HK$36.6 billion) of subordinated bonds to help boost its solvency ratio to around 204 per cent, up about 40 percentage points compared to the end of June. Liu said China Life's move to raise funds was just part of a larger industry effort, as Chinese insurance companies have raised a total of about 100 billion yuan and banks have raised about 500 billion yuan this year. On Tuesday, the world's largest life insurer by market value posted a bigger-than-expected 28.1 per cent drop in net profit of 12.96 billion yuan compared with the same time last year. Revenue rose 5.6 per cent to 227.5 billion yuan. Yuan Li, the company's new chairman, said that besides a volatile macro environment, China Life needed to make certain "adjustments", though he was vague on what that might entail. Analysts said China Life's weak performance was mainly due to higher-than-expected claims paid, slow growth in sales through bank distribution and investment losses. "The results were disappointing," said Sheng Nan, an analyst at UOB-Kay Hian. "The first half was difficult for life insurers, especially for those highly dependent on bancassurance," said Li Wenbing, an analyst at Bocom (SEHK: 3328) International, referring to using banks as the channel to sell insurance products. Because of regulatory changes, insurance companies have been banned from sending sales people to bank branches to sell their insurance policies and products. China Life's new business from bank channels decreased 5.78 per cent compared to last year. Net premiums rose 6.1 per cent year on year to 195 billion yuan. China Life also suffered from volatile market conditions in the first half. Gross investment yield dropped 56 basis points to 4.5 per cent in the first half compared with last year. The company booked an equities impairment loss of 3.6 billion yuan through its profit and loss statement, and an additional loss of 19.5 billion yuan through shareholders' equity. The company cut down on its holding of bonds and stocks and increased its investment in deposits, cash and cash equivalents. Bonds now make up about 43 per cent of China Life's investment and equities account for about 13 per cent.

Chinese Premier Wen Jiabao meets with Pakistani Foreign Minister Hina Rabbani Khar in Beijing, Aug 24, 2011. 

China might further open up its seed market to foreign companies, with the Ministry of Commerce and the Ministry of Agriculture studying the market shares and development of these companies, said an official close to the matter. The possible opening means that foreign seed companies may be allowed to hold controlling interests in joint ventures, compared with the current 49 percent ceiling, a commerce ministry official said on condition of anonymity. The evaluation is still in progress and there is no target date for its conclusion, the source said. "Further opening up of the seed industry to foreign companies will bring more competition, which can spur the development of the whole industry and provide farmers and consumers with more choices," the official said. The current policy is holding back the development of China's seed industry, the source added. Under current regulations, foreign participants in the business for field-crop seeds, such as soybeans and rice, must establish joint ventures with domestic companies. The foreign partner is limited to 49 percent of a joint venture, according to the Ministry of Commerce. Many Chinese agribusiness experts say the limits are intended to prevent foreign companies from controlling the country's seed industry. China's seed market, which is estimated at 50 billion yuan ($7.7 billion) annually, is the world's second-largest behind the United States. But the industry is highly fragmented, with more than 8,000 small and medium-sized companies vying for market share. These small companies are weak in terms of research and technological abilities, experts said. Fewer than 100 have patent rights, for example. To improve the situation, the State Council issued new industry guidelines in April that call for industrial consolidation and development. Analysts said that a larger presence of the foreign companies will contribute more to the development of the industry. "Fierce competition with multinationals will lead to an industrial consolidation and push large domestic seed companies to develop further," said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, a major agricultural consulting company. But a freer market does not mean the government should ease up on its supervision, Ma cautioned. But some experts say it is too early to remove the limits on foreign participation. "There is still a huge gap between domestic and foreign companies in research and development capabilities. Chinese companies are vulnerable to their foreign rivals," said Jing Fei, a seed expert at Bohai University in northeastern China's Liaoning province. Some large companies, taking an optimistic view of the industry's prospects, also prefer an open market. "We have our own technological advantages. We have already been competing with multinationals in the international market," said Jin Yi, deputy general manager of Winall Hi-tech Seed Co Ltd, China's third-largest producer of rice seeds by capacity. Based in Hefei, the capital of eastern China's Anhui province, Jin's company exports rice seeds to many countries including Bangladesh, Vietnam, Pakistan and Indonesia. "Competition is not always a bad thing. Through competition, we have learned a lot from foreign companies, particularly in terms of management, research and development," Jin said. "We are ready to face them in our domestic market."

Though “Made in China” has unflattering connotations for some, Uma Wang hopes to change that. The 38-year-old, one of the country’s emerging fashion-design talents, hails from Hebei, a northern-Chinese province bordering Beijing. Ms. Wang has headlined Shanghai Fashion Week, been featured in Vogue and opened a flagship store last year in Shanghai’s affluent Xintiandi neighborhood. Her studio, tucked in a quiet compound in a western suburb of Shanghai, is seemingly a world away. There she’s busy preparing for Paris, where she’ll show in the fall. She spoke with The Wall Street Journal about growing up in the countryside, her fashion influences and basketball.

Hong Kong*:  Aug 26 2011  Share

China's Sany Heavy Industry has obtained approval from the country's securities regulator for an about US$3 billion share offering in Hong Kong, joining a long list of Chinese companies jostling to a list there amid market volatility. The China Securities Regulatory Commission (CSRC) had approved Sany Heavy’s plan to issue up to 1.54 billion shares in the Hong Kong offering, the company, which makes construction machinery such as concrete pumps and truck cranes, said in a statement to the Shanghai Stock Exchange. Sany Heavy would join rival XCMG Construction Machinery and about 12 other companies that have announced plans to raise about US$11.7 billion in September alone from share sales in Hong Kong, the world’s biggest market for IPOs for two years running. The surge in offerings might indicate renewed confidence among companies and their bankers to list in Asia, after issuers including China Everbright (SEHK: 0165) Bank delayed offerings in recent weeks because of volatility in global markets. Shenzhen-listed XCMG obtained CSRC approval earlier this week for its potential US$2 billion Hong Kong listing. XCMG will issue about 593 million shares in Hong Kong, including an overallotment option of about 77.35 million shares. CICC, Credit Suisse Group, HSBC Holdings (SEHK: 0005), Macquarie Group, Morgan Stanley, and BNP Paribas were joint bookrunners for the XCMG deal, according to IFR. Sany Heavy aimed to seek approval from the Hong Kong stock exchange for its offering on September 1, IFR reported on Wednesday. Bank of America Merrill Lynch, Citigroup and Citic Securities were handling the Sany Heavy offering, according to IFR. Earlier this month, Sany Heavy, which was listed on the Shanghai Stock Exchange in 2003, reported a 107 per cent rise in first-half net profit to 5.94 billion yuan (US$929 million). Sany Heavy’s Shanghai-listed shares have gained 13 per cent so far this year and XCMG’s Shenzhen-listed shares have fallen 21 per cent. The benchmark Shanghai composite index has fallen 9 per cent during the same period.

Hong Kong's tight property market has activists pressing the government to make more of its valuable land bank available for development, but one prime Central-district property is beyond the reach of the government and developers. St. John's Cathedral has a freehold on its 53,175-square-foot Garden Road property, which means that it has a lease in perpetuity, as long as the land is used for ecclesiastical purposes. The freehold was granted by Queen Victoria for the establishment of a Church of England in Hong Kong prior to the laying of the Anglican cathedral's foundation stone in 1847, according to the Rev. John Chynchen of St. John's. SHSBC and Standard Chartered buildings tower over St. John's Cathedral. If the property did belong to the government, it could fetch around 3.99 billion Hong Kong dollars, or about US$512 million, a conservative estimate of the land's expected value if it were to be converted into an office building, according to Lucia Kwong, the Hong Kong property analyst at Asian Pacific Equity Research, J.P. Morgan Securities. Ms. Kwong used the current market rates for rent at the Citibank Plaza building across the street to calculate the estimated value of the property per square foot. If the trustees of the cathedral ever wanted to develop the site, St. John's would have to trade its freehold to the government for a lease. If the land were used for commercial purposes, it would void the freehold. The government declined to elaborate on how such a process would be handled. Giving freeholds to the Church of England was a popular practice during the colonial era, according to the Rev. Philip Wickeri, theological and historical studies adviser to Hong Kong's Anglican archbishop. "All over the world where the British had colonies, they established churches through land grants," he said. In Singapore, for example, there are Anglican churches, including St. Hilda's Church and St. Paul's Church, that also have freeholds on their land. The freehold agreement was solidified in 1930 in the Church of England Trust Ordinance, which incorporated the group of trustees that hold the property for the cathedral. The freehold exists today under the Church of England Trust Ordinance, said Olivia Nip, a Hong Kong land registrar. The Trust Ordinance states that St. John's Cathedral will remain in the hands of its trustees as a freehold for as long as the cathedral remains in the Church of England. The land wasn't handed over to China along with the rest of Hong Kong Island in 1997, because at that point, it was no longer the U.K.'s to give away. On the day of the handover, July 1, amendments to Hong Kong laws took effect that simply removed all references to the queen. "I just think it wasn't particularly a priority and they didn't want to upset things," said Rev. Wickeri, explaining why China let the cathedral retain the freehold. "At that point, with all of the financial matters, they wanted to pretty much not rock the boat." Either way, when Hong Kong's transitional period as a Special Administrative Region of China is complete in 2047, it is unclear what will happen to the cathedral's freehold, or any other land leases that were granted under British law. Many of the buildings or plots in Central were initially granted 999-year land leases (essentially the same as a freehold), a few of which are still around, according to John Davison, a Hong Kong land lawyer. Some of the buildings that still have these land leases include the Standard Chartered Bank Building and the Baskerville House at 22 Ice House Street. It is unlikely that the cathedral would ever be disturbed, because it was listed as a declared monument in 1996 by the Antiquities and Monuments Office in the Leisure and Cultural Services Department. There are only 34 such listed structures on Hong Kong Island. "It's a curiosity I think, really," Rev. Wickeri said. "Everything else used to be crown land, and now it's government land. I don't think in practical terms, this makes any real difference in the governance or maintenance of the cathedral."

 China*:  Aug 26 2011  Share

Yiyi, the two-year-old girl who captured the hearts of the nation after she was orphaned and seriously wounded in the Wenzhou train crash, will probably be permanently disabled, a media report said on Wednesday. Yiyi, the two-year-old girl who captured the hearts of the nation after she was orphaned and seriously wounded in the Wenzhou train crash, will probably be permanently disabled, a media report said on Wednesday. Xiang Weiyi – nicknamed Yiyi – was found alive in mangled wreckage 21 hours after the train she was travelling in was rammed by an oncoming high-speed service in an accident that killed her mother and father. Rescue operations had already ended by the time she was pulled out, prompting accusations the search for survivors of the crash – which killed at least 40 and left nearly 200 others injured – had been halted too early. A Shanghai TV report posted on the website of the hospital in Shanghai where the girl is currently being treated said the damage to her left leg, which was crushed in the accident, was incurable. “Experts have confirmed that… she will almost certainly be disabled in the future,” the report said. Yiyi has already had five operations on her left leg, which doctors initially feared they would have to amputate. According to the report, Yiyi is suffering from ischemic contracture, an abnormal shortening of muscle tissue. She also sustained injuries to some of her internal organs in the crash, but is recovering. The disaster in Wenzhou city was a major embarrassment to the Beijing government, which had made the construction of the world’s biggest high-speed rail network a key political goal. Earlier this month, authorities said they were suspending approval of new railway construction projects and ordered the maximum speed of trains on the newly-built lines lowered by as much as 20 per cent, due to safety fears. A state-owned train manufacturer has also recalled 54 bullet trains being used on a new high-speed rail link between Beijing and Shanghai because of “flaws”.

The United Nations should lead post-war efforts in Libya, China’s foreign minister told the UN chief, adding that Beijing was willing to help rebuild the north African country. In a phone call with UN Secretary General Ban Ki-moon, Foreign Minister Yang Jiechi suggested Beijing wants bodies such as the UN, rather than Western governments alone, to co-ordinate international involvement in post-war Libya. This would give China a say in decisions, despite the leading role Western powers played in defeating the forces of long-time leader Muammar Gaddafi. “The United Nations should play a leading role in post-war arrangements for Libya, and China encourages the United Nations to strengthen co-ordination and co-operation with the African Union and Arab League,” Yang said, according to the ministry website late on Tuesday (www.mfa.gov.cn). China is “willing to work alongside the United Nations to promote a rapid stabilisation in Libya and a swift course towards reconciliation and reconstruction,” said Yang. “The international community should continue offering humanitarian aid to Libya,” he added. Beijing has yet to formally recognise the rebel forces as Libya’s new leaders, but Yang’s comments add to signs that Beijing wants a stake in guiding Libya’s future as Gaddafi’s support crumbles and rebels take control of Tripoli. On Tuesday, China urged Libya to protect its investments and said their oil trade benefited both countries, after a Libyan rebel warned that China oil companies could lose out after the ousting of Gaddafi because Beijing did not offer enough support to the rebels. China and Russia have a tradition of opposing intervention in sovereign states, even when Western governments favour military action on humanitarian grounds. China did not use its UN Security Council veto power in March to block a resolution that authorised the Nato bombing campaign against Gaddafi’s forces, but it then condemned the strikes and urged compromise between the government and rebels. Since then, Beijing has courted Libyan rebels by hosting their leaders and sending envoys for talks. China is the world’s second-biggest oil consumer, and last year it obtained 3 per cent of its imported crude from Libya.

Two major food companies said that they are facing mounting pressure from rising raw material prices which are eroding profits. Tingyi (Cayman Islands) Holding Corp, China's biggest maker of packaged food, said cost pressures would persist in the second half as its gross margin stayed near the lowest level in at least a decade. "It may take a longer period of time for prices to return to a lower level," the maker of Master Kong noodles and ready-to-drink tea said in its earnings statement on Tuesday. The first-half gross profit margin was 26.1 percent, the second-lowest level for a six-month period since at least 2001, according to data compiled by Bloomberg. Net income rose 16 percent to $229 million, Tingyi said in a statement to the Hong Kong Stock Exchange. Sales climbed to $4.1 billion as revenue from instant noodles rose 22 percent. Tingyi's smaller rival in China, Want Want China Holdings Ltd, also said it faced "tremendous pressure" from surging raw material costs. Want Want raised prices for some products, according to a statement to the stock exchange in Hong Kong on Tuesday. It plans to start marketing activities in the second half to try and improve profit margins, the company said. "Since last year and in the first half of this year, our group faced tremendous pressure from surging costs in raw materials, which significantly affected our profitability," Want Want said. Net income for Want Want rose 3.6 percent to $167 million in the first half, with sales growing 28 percent to $1.3 billion. China's consumer prices rose 6.5 percent in July, the fastest pace in three years. The global economy's recovery "is not smooth, and uncertainties in economic growth and instability in the financial markets have increased significantly", Tingyi said. Tingyi said it will strengthen cost controls and optimize production to deal with rising raw material and labor costs. "The domestic driving force for domestic economic growth remains strong."

There are fewer than 10 days left for third-party payment companies to obtain a payment business license issued by the People's Bank of China (PBOC). According to the "non-financial institution payment service administrative measures" issued by the central bank on Sept 1, 2010, third-party payment companies should apply for and receive the payment business license within one year of the measures taking effect, which is Sept 1 this year. Those who fail to obtain the license by the correct date will be disqualified from continuing with the payment business. A total of 27 Chinese third-party payment companies received their licenses on May 26, including Alipay, the affiliated third-party online payment platform for the e-commerce giant Alibaba Group, and Unionpay Merchant Services Co, an affiliated payment institution of China UnionPay Co Ltd. But 131 companies are still awaiting approval from the central bank. "What is special about these 131 companies is that most of them are operating in the prepaid card business, while the first 27 to have received the payment business license are mostly conducting online third-party payment business," said Zhang Meng, an analyst from the Beijing-based research company Analysys International. Shanghai-based SandPay E-commerce Service Co Ltd received its payment-business license in May. However, in July it announced on its official website that it had suspended all issuance of new cards. "The license we have obtained specifies that we can only carry out payment business. With regard to card issuance, we are applying for another license. Therefore, we have suspended the issuing of new cards for the time being. But it is not known when we will offer new cards again," said a source at SandPay who declined to give his name. "But consumers can rest assured that all our cards will function normally even after the central bank's deadline. The bank has ruled that related companies will be disqualified from conducting payment business. But it has not said that consumers will be unable to use the cards after the specified date," he said. As a leading prepaid card company in Shanghai, Bailian E-commerce Co Ltd has been issuing the popular Lianhua OK card for several years, which can be used in more than 9,000 commercial outlets, with the total face value amounting to some 900 million yuan ($140 million), as the Oriental Morning Post reported on Monday. Although Bailian has not yet received a payment service license, according to the Shanghai Youth Daily newspaper, the company has invested 100 million yuan and has registered a company to conduct its third-party payment business with the State Administration for Industry and Commerce. The PBOC says that consumption at stores belonging to the companies that issue prepaid cards does not constitute third-party payment. As Bailian covers a large number of stores in the Shanghai area, consumption has been little affected. But the third-party payment companies still have to face the deadline. "There are two possibilities. One is that the central bank will issue the licenses for these 131 companies before Sept 1. The other is that the specified date will be adjusted, which is more likely to happen given the timescale," said Zhang of Analysys International.

Hong Kong*:  Aug 25 2011  Share

The Japanese restaurant Wallmann Market in Causeway Bay will close by the end of this month. Landlords of street-level shops in Hong Kong are demanding big rent increases as leases come up for renewal, forcing tenants to quit in search of cheaper premises. The rolling rent rises have extended from primary to secondary locations, despite a market outlook that remains clouded by global economic uncertainty. Restaurant operators on Canal Road West and Leighton Road, Causeway Bay - which cater for a largely local clientele - have been informed by their landlords that rents will increase by up to 110 per cent. "Rents for street-level shops in first-tier locations have increased to sky-high levels, and the ripple effects will fuel rent rises in fringe areas. Disregarding locations, landlords think every shop is now a goose that lays a golden egg," said Joe Lin, senior director of retail services for property consultancy CB Richard Ellis. Lin said hotels catering to big-spending mainland tourists had provided a shot in the arm for retail properties. In June, the 258-room Best Western Hotel at the junction of Bowrington Road and Canal Road West opened. With the soon-to-open 90-room Vela Pacific in Morrison Hill Road, there will be six hotels in the area. Japanese restaurant Wallmann Market, located near Best Western, will close this month after the landlord raised the monthly rent to HK$180,000 from HK$85,000. Owner Ruby Wong said it was extremely difficult for small restaurants to survive. She opened the 1,000 sq ft restaurant eight years ago, when her monthly rent was just HK$45,000. "Our set lunch sells for HK$40 and most customers are white-collar workers from nearby offices. If I increase the set lunch to HK$60, who will come? "We are not a jewellery store, or an international flagship store that can afford to pay high rent." Wong said the big increase arose mainly because the new owner needed to justify its investment after buying the shop for HK$45 million in March. The yield under the old rent would be only 2 per cent a year. But a monthly rent of HK$180,000 would now bring a yield of 4 per cent. A step away from Wallmann, the 600 sq ft kebab shop Pakora & Spice will also close this month. "We are struggling to survive as rental and food costs keep rising," said Mable Chan, a former web designer who opened the shop with her husband eight months ago. "The landlord has accepted our early termination as he believes he will generate higher rents from the next tenant." Chan said food costs alone had jumped 30 per cent this year, making it difficult for a small shop like hers to compete with fast food chains like Maxim's, which opened recently in the area. The 3,000 sq ft Nam Ah Restaurant in Leighton Road, which serves Singaporean and Malaysian cuisine, will close its doors in November after its landlord increased its rent to HK$360,000 from HK$255,000. "We cannot sustain our business at a rent exceeding HK$300,000 a month. No matter how hard I work, it is impossible to make a profit," said owner Lam Doon. Lam said he had found 4,000 sq ft premises on the first floor of a commercial building in a nearby area in order to continue operating. Rents there were only one-third of the new asking rate, he said. "It is a most difficult time to do business now as rents spiral upwards. It is the first time we have had to relocate to an upper floor since my father started the restaurant in 1964. At the peak of our business we had five outlets. Now we are down to only one," said Lam. Helen Mak, a director of retail services at Colliers International, said the recent dramatic change in market sentiment had had little negative impact on the retail leasing market, and she was unaware of any retailers holding back on their expansion plans. "Since 1996, noodle shops and rattan furniture stores in Canton Road, Tsim Sha Tsui, have been edged out by jewellery retailers who can pay rents of millions of dollar a month. It is hard to blame landlords for charging higher rents if the area is undergoing a dramatic change," she said.

A Towngas plant in Tai Po. The utility has reported "good growth" in sales of natural gas in its traditional Hong Kong market, analysts say. Hong Kong and China Gas (SEHK: 0003), commonly known as Towngas, says its mainland gas and clean-energy businesses are growing so fast that their combined profits will overtake that of its core gas operations on its Hong Kong home turf next year. Chairman Lee Shau-kee made this prediction yesterday after the utility reported a 16 per cent jump in net profit, excluding one-off items, to HK$3.22 billion in the first six months of this year. Including a surplus in the revaluation of investment properties and a profit from selling properties, net profit grew 6.73 per cent compared with the account of the same period last year, which was restated. Earnings before interest, taxation, depreciation and amortisation of gas, water and energy supply services on the mainland soared 27.18 per cent to HK$1.31 billion in the first half, while that of core naphtha piped-gas supply in Hong Kong climbed 0.83 per cent to HK$2.42 billion. Towngas has amassed a portfolio of 127 projects spanning upstream, mid-stream and downstream natural gas supply, sewage treatment and new energy sources in 21 provinces and regions across the mainland. Lee said the utility sought to capitalise on the central government's five-year plan to 2015 to double natural gas consumption. The company claims to be the largest piped-gas enterprise on the mainland in terms of sales, which leapt 21.49 per cent to 5.2 billion cubic metres in the first-half. In Hong Kong, Towngas sold 2.84 per cent more gas, at 15.53 million megajoules, which analysts considered "good growth" in the matured market. Lee attributed the growth to prosperous tourism and hospitality sectors and cooler temperatures in the first half. The utility's customers on the mainland grew 10.61 per cent to 12.40 million, well above that of Hong Kong, which saw customers increase 1.16 per cent to 1.73 million. Part of the firm's growth came from Towngas China, a piped-gas service provider on the mainland of which Towngas owns 66.18 per cent. Towngas China reported a 75.9 per cent rise in net profit to HK$302 million in the first half on a 58.1 per cent gain in turnover to HK$1.96 billion. Lee said Towngas China would pursue purchasing more city piped-gas projects in order to boost growth. Towngas shares slipped 4 HK cents to HK$17.92 yesterday before the results were made public. Towngas China jumped 11 HK cents, or 2.7 per cent to HK$4.18 yesterday.

Manulife has big plans for Hong Kong - Yuan products, more agents and growth in the MPF market are priorities after strong quarter - Insurance provider Manulife Hong Kong said yesterday that it planned to promote yuan products, recruit thousands more agents in Hong Kong and lift its share of the mandatory provident fund (MPF) market. Michael Huddart, executive vice-president and CEO of Manulife Hong Kong, said he hoped that yuan products in insurance, savings and wealth management could reach 25 to 30 per cent of its premiums and deposits sales within five years. Huddart plans to increase the company's agency force in Hong Kong by about 10 per cent each year to 7,000 people by 2015, up from 4,600 agents as of the end of June. At the same time, the company aims to increase sales from non-agency channels, including independent and bank distribution, to 25 per cent of total sales by the end of 2015, up from 13 per cent. The Canadian company will work on lifting its share of the MPF market from 17.6 per cent to 20 per cent within the next five years. Manulife Hong Kong posted HK$685 million in net income attributed to shareholders in the second quarter, up 17 per cent year-on-year. Internationally, Manulife beat market expectations to record a profit of about US$495 million for the quarter. In Hong Kong, insurance sales grew by 10 per cent to HK$392 million in the second quarter compared to the same period last year. This was driven by a rise in agent numbers and sales of new products. Wealth management sales in the second quarter jumped 45 per cent to about HK$ 1.98 billion year-on-year on the back of strong demand via a bank partner for a short-term yuan-denominated endowment product and the launch of Manulife Global Fund-Asia Total Return Fund. Funds under management by the end of June reached HK$205 billion, up 19 per cent from same period last year. This was mainly due to premiums and deposits in the second quarter reaching HK$6.29 billion, an increase of 15 per cent from last year. On the group level, investors have been concerned about Manulife's decline in its core premium income business, said Kenson Yeung of Phillip Securities. He added that Manulife's net profit in the first half mainly came from a rise in investment income, which faces volatility and uncertainty in current global markets. Yeung said the low-interest-rate environment around the world could reduce the interest earned from Manulife's fixed income financial products, which usually make up a large proportion of an insurance companies' portfolio. In addition, the European debt crisis and the downgrade of US government bond's rating would potentially impact on Manulife's investment income.

Guangzhou vice-mayor Chen Mingde (left) and Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung sealed the deals with a handshake after an agreement-signing ceremony yesterday. Hongkongers and mainlanders will be able to travel or shop in Hong Kong and six Guangdong cities with one electronic card next year, after smart card companies in both regions signed an agreement to issue a two-in-one card. The deal between Lingnan Tong and Octopus to issue the card was among five Hong Kong-Guangdong collaboration agreements signed yesterday. Holders will be able to use the card in Hong Kong, Guangzhou, Foshan , Jiangmen , Zhaoqing , Shanwei and Huizhou . The card will be equipped with two electronic "purses", enabling yuan payments in Guangdong and Hong Kong dollar payments in Hong Kong. At a ceremony marking the signing of the agreement during a meeting of the Hong Kong-Guangdong Joint Co-operation Conference, Chief Executive Donald Tsang Yam-kuen said cross-border co-operation was bearing fruit. "These agreements can set goals for the next stage of Hong Kong-Guangdong collaboration, and prove the determination and sincerity of both in reinforcing co-operation," he said. A much anticipated scheme to expand the number of drivers allowed to cross the border would be implemented in March - after a postponement of 15 months - Guangdong governor Huang Huahua announced. Under the scheme, people wishing to drive a Hong Kong-registered car with up to five seats to Guangdong will be issued a one-off permit at the border, possibly subject to a quota. (Details of the scheme are not known yet; previous discussions envisaged a reciprocal arrangement that would eventually benefit 7.4 million vehicle owners.) Huang said the scheme was a high priority for provincial authorities. "The scheme offers another choice for citizens across borders to build exchanges," said Huang. "We have set up a working group with nine departments to implement it." The two administrations signed a letter of intent on co-operation to push forward the development of the Nansha new area, which Tsang and Huang described as a future hub for the development of innovative technology. Hong Kong and Guangdong also signed agreements on combating climate change, establishing a notification mechanism on critical disruption of telecommunication networks, and on dealing with issues concerning intellectual property.

The Basic Law allows immigration laws to exclude groups of people - including domestic helpers - from becoming permanent residents, government lawyers argued yesterday. On the second day of a landmark judicial review, the lawyers said the intent behind the Basic Law could be gauged from the Sino-British Joint Declaration, which authorised the legislature to make laws imposing controls on immigration. David Pannick QC, for the government, told the Court of First Instance that the Basic Law allowed the Director of Immigration to deny domestic helpers the right of abode. He said the 1984 declaration, which formed the basis for the drafting of the Basic Law, allowed for laws to regulate the entry, stay in and departure of anyone from the city. Therefore, the provision of the Immigration Ordinance that denies foreign domestic helpers the right to be "ordinarily resident" - and thus makes them ineligible to become permanent residents - could not be unconstitutional. In their opening argument, lawyers for Evangeline Banao Vallejos, a Filipino who has lived in Hong Kong for 25 years, had argued that Section 2(4) of the Immigration Ordinance was unconstitutional as it added an extra hurdle to the requirements for residency under the Basic Law. The government's lawyers denied the provision was discriminatory, because it was imposed regardless of nationality and was legislated for a "perfectly legitimate aim". Pannick had argued that the fact domestic workers were required to return home every two years to maintain links there, and other requirements of their special conditions of stay, made the domestic helpers "extraordinary residents". But Gladys Li SC, for the applicant, said such requirements were part of helpers' contracts of employment, rather than their conditions of stay. "Does that make the residents extraordinary, because they have links with home?" Li asked, in reply to the argument over the requirement to return home every two years. Li will continue her reply to the government's submission today.

The algae, decomposing fast in the hot weather, is spotted off Residence Bel-air at Cyberport, Pok Fu Lam, yesterday. Tonnes of fish killed as red tide spreads - Algal bloom deprives waters of oxygen in Tai O on Lantau, known for its seafood restaurants, before moving into southern Hong Kong waters - Red tide left two tonnes of fish dead off Tai O, western Lantau, as the algal bloom spread into southern Hong Kong waters in the past week. The algae in this case is not toxic, fisheries officials say, but hot weather has sped up its decomposition, reducing oxygen in the waters off the fishing village. That causes the fish to suffocate. The Agriculture, Fisheries and Conservation Department said the red tide, a natural phenomenon, had this time been caused by an algae called Protopolykrikos distortus, which was also recorded in Hong Kong waters from 2005 to 2007 and in 2009 but did not kill any fish. A departmental spokeswoman said the summer heat and Tai O's geography had caused the red tide to spread. "The recent hot weather has raised water temperatures and sped up decomposition of algae," she said. "The decomposition then consumes all the oxygen in the water. "Tai O waters are shallow and water flow is static." This caused the oxygen depletion, she said. On receiving complaints from residents about the smell of the dead fish, the Marine and Food and Environmental Hygiene departments had begun clearing them from Tai O on Monday. In two days, they collected 1,870kg of dead fish in the sea and on the shore. Ho Pui-han, a Tai O resident, said the odour had gone yesterday after the fish were removed. The fisheries department first received red tide reports on August 15. Now the algae is hitting southern and southwestern waters including 22 beaches in Tsuen Wan, Tuen Mun, Cheung Chau, Lantau Island, Repulse Bay, Shek O and waters near Lamma Island. Red flags have been hoisted at all of the beaches. It also spread to waters off Cyberport in Pok Fu Lam yesterday, the department confirmed. In Tuen Mun, the supply of sea water for toilet flushing was for a time suspended and replaced with fresh water. The red tide has spread to three other fish culture zones: Ma Wan, between Lantau Island and Tsing Yi Island; and Lo Tik Wan and Sok Kwu Wan on Lamma. Pang Wah-kan, who leads a help group for fish farmers in Cheung Sha Wan and Lamma, said he had reports of dozens of dead fish in Cheung Sha Wan, Kowloon, in the past few days. "For the time being we will stop feeding the fish for one to two weeks because without the food the fish will not swim up to the water surface, where algae is floating," Pang said. Lee Choi-wah, who leads an association of seafood businesses, said some fish deaths had also been reported in Lamma and he understood that fishermen would pump oxygen into the water to protect the fish. The department said it had liaised with the Guangdong Provincial Oceanic and Fishery Administration and exchanged information.

 China*:  Aug 25 2011  Share

Franchising will enable McDonald's to take advantage of local partners' capital and resources to expand its network and establish its brand name. Fast food giant McDonald's wants to open more franchised stores in western China in a bid to expand on the mainland in a faster and more cost-efficient way. McDonald's China issued its first "developmental licence", a form of franchising, to a catering enterprise in Yunnan province yesterday. With the licence, the franchisee will take over the operation of the existing 11 McDonald's restaurants in the province and has the right to open new ones across Yunnan. Globally, more than 80 per cent of McDonald's 33,000 stores are run by franchisees. In China, however, the group only has six conventional franchised outlets and runs the other 1,300-plus stores itself. "McDonald's China will leverage the developmental licence model to expand our brand and create opportunities for local entrepreneurs," said McDonald's chief executive Kenneth Chan. The developmental licence will allow franchisees to own or secure all assets, including property, and gives them the right to open new restaurants across a province or other geographical area. McDonald's collects a royalty based on restaurant sales. Chan said the world's largest restaurant company was also looking for franchise partners in other inland provinces, but would continue a self-run business model in first- and second-tier cities in coastal regions. The move is seen by the industry as McDonald's latest efforts to catch up with major rival KFC, owned by Yum! Brands, which runs more than 3,000 restaurants in China, more than double the number run by McDonald's. McDonald's said earlier this year that it aimed to increase the total number of outlets to 2,000 by 2013. Shi Jun, senior consultant with Beijing-based consulting firm Alliance PKU Management Consultants, said franchising would enable McDonald's to take advantage of local partners' capital and resources to expand its network and establish its brand name. However, a tighter control over the quality of the products and services would be the reason it would run the stores itself in big cities, Shi said. "It has been shown that it's hard to succeed in China using conventional franchising, " said Shi. Franchisors might find their local partners incompetent or sometimes even dishonest, Shi added.

Warren Buffett-backed carmaker BYD Automobile may swing to a net loss of as much as 153.74 million yuan (HK$187.7 billion) in the quarter ending next month, an analysis of the company's stock exchange filings shows. That would be the firm's first loss since it began quarterly reporting two years ago and follows the 99 per cent plunge in profit for the April-to-June quarter that the car, battery and mobile phone producer unveiled yesterday. BYD's shares plummeted 14.3 per cent after it reported second-quarter net profit of 8.62 million yuan, down from 717.05 million a year ago. BYD is struggling with rising costs and the waning popularity of its F3 sedan, once the best-selling car in the world's biggest car market. The company's car sales declined for the 12th month in a row last month, falling 16.8 per cent from a year ago to 27,496 units. BYD chairman Wang Chuanfu said the company's present focus is on boosting the quality of its car line-up and strengthening its existing network of dealers. He said BYD was planning to begin exporting its much-delayed electric cars to markets including Europe and the United States "next year," repeating a pledge made in previous years. Wang said he was "confident we can maintain good relations" with Buffett, whose MidAmerican Energy paid HK$1.8 billion or HK$8 per share for a 10 per cent stake in BYD in September 2008. The value of that stake worth HK$3.64 billion based on yesterday's closing price of HK$16.80 per share, a 28-month low. Despite price cuts in February, shipments of BYD's F3, which retails from 52,800 yuan, fell 28 per cent to 121,800 cars in the first seven months of the year, according to J.D. Power and Associates data. The company has struggled to find a replacement for the F3. Its dealer network has declined from a peak of around 1,000 locations to about 800 currently. BYD forecast that net profit for the first nine months of the year would fall between 85 and 95 per cent to between 121.63 million yuan and 364.88 million yuan. For the July to September quarter, that implies anything from a net loss of 154.74 million yuan to a profit of 89.52 million yuan.

Robots dance during the opening ceremony of the 2011 China Robot Competition in Lanzhou, capital of Northwest China's Gansu province, Aug 23, 2011. Nearly 1,000 teams from 162 colleges and universities in China took part in the competition.

Groupon Inc.'s joint venture in China has closed offices in some cities and laid off hundreds of employees, according to people familiar with the situation, raising questions about the online coupon company's strategy in a big market ahead of its planned initial public offering of stock. Former and current employees of the Chinese joint venture, which operates the website GaoPeng.com, say more than 10 offices around China have been closed, including one in the northern city of Tangshan where an employee said he and his co-workers were locked out last Friday after their lunch break just after being notified of the shutdown. "They've been firing people for at least three months," said the staffer, James Liu, a photographer for GaoPeng. A Chinese lawyer representing some disgruntled former GaoPeng employees estimated about 400 people have been fired so far, a number that couldn't be confirmed. The moves appears to mark an abrupt reversal of Groupon's aggressive expansion into China just eight months ago. Since January, Groupon has invested $8.6 million for a 40% stake in the GaoPeng joint venture, which is also funded by Chinese Internet giant Tencent Holdings Ltd. and private-equity firm Yunfeng Capital. Groupon and GaoPeng said Tuesday that the office closures are part of a change in strategy and don't diminish their commitment to China. A spokesman for GaoPeng said it plans "to focus more on the middle to large-sized cities" in China where the market is "more developed," adding that the company "is fully committed to the Chinese market for the long term." "Groupon's approach to international expansion is to aggressively create a large presence upfront and refine our strategy as we gain deeper insight into the local market," said Groupon spokeswoman Heather Dickinson. "We view any adjustments to the business as very typical in order to build a long-term foundation for success. Our JV in China is just one example of many new markets where we have fine-tuned our strategy as we go. " GaoPeng said it is still hiring in China, but it doesn't dispute that its total number of employees is shrinking. Groupon said it doesn't disclose its staff count by country, and it couldn't be determined how many employees the China venture currently has. Tencent and Yunfeng couldn't be reached for comment. Groupon expects to raise about $750 million in a mid-September IPO that could value the company at $20 billion. China represents less than 1% of Groupon's global revenue, according to a person familiar with the situation. Foreign Internet companies have long struggled in China, which has more Internet users than any other country. Yahoo Inc., one of the earliest to enter, handed over its China business in 2005 to Alibaba Group Holding Ltd., and has since quarreled with the Chinese company. EBay Inc. sharply scaled back its presence in China after losing market share to an online shopping site owned by Alibaba. Google Inc. has seen its market share slide, to the benefit of rival Baidu Inc. since the U.S. company moved its Chinese-language search engine to Hong Kong out of frustration over censorship and hacking issues. Groupon's entry into China was turbulent from the start. The company has struggled to gain market share as its legions of local competitors also invested heavily in marketing and geographical expansion. Hundreds of Chinese companies were already offering online buying services in China by the time GaoPeng started offering deals to Chinese users in March. One of those competitors owns the Chinese domain Groupon.cn which, according to research firm Analysys International, had more visitors in the second quarter than Groupon's own GaoPeng. While Groupon is the dominant daily-deals website in the U.S., GaoPeng was No. 8 among such websites in China in the second quarter, with 15 million unique visitors a month—less than 30% the number for the top website in the category, Lashou.com. One GaoPeng manager, who spoke on the condition of anonymity, said the company had some 80 offices around the country at its peak, and total headcount of more than 3,000 people, before it started scaling back. "Groupon came into China and tried to expand too aggressively," he said. "That strategy just doesn't work in China." Zhao Zhanling, an attorney in Beijing representing people laid off by GaoPeng, said a number of employees have complained about the circumstances under which they were fired and negotiated to receive two months of compensation to settle the issue. Mr. Zhao said he plans to ask for a similar deal in the coming months for 100 other former employees, and knows of at least 300 more that have been laid off. Groupon's China launch followed a spate of bad publicity from a Super Bowl commercial pegged to the political situation in Tibet—an extremely sensitive issue for China's government. In the ad, which was quickly translated and circulated on Chinese websites, actor Timothy Hutton narrates a seeming public-service announcement about Tibetans being "in trouble, their very culture in jeopardy"—but the spot then morphs into an ad for a Groupon deal on Tibetan food. Chinese Internet users criticized it, calling the ad offensive and a display of the company's ignorance about China. Many Americans also took umbrage. Meanwhile, the U.S. Securities and Exchange Commission has raised questions about Groupon's use of an unconventional accounting measurement in its filing for an IPO that critics say masked Groupon's high marketing costs. The company has since taken the measurement out of its prospectus, which shows it had a loss of $413.4 million last year on revenue of $713.4 million.

Hong Kong*:  Aug 24 2011  Share

Photo taken on Aug. 23, 2011 shows the a stamp sheetlet marking the 170th anniversary of the Hong Kong postal service on a press conference in Hong Kong, south China. Hongkong Post Wednesday announced that the stamp sheetlet will be released for sale together with associated philatelic products on Aug. 25. 

Celebrity couple Nicholas Tse Ting-fung and Cecilia Cheung Pak-chi have officially announced they are divorcing following months of speculation their five-year marriage is on the rocks. In a joint statement, Tse and Cheung said they will have joint custody of their two sons, four-year-old Lucas and one- year-old Quintus. "We, Cecilia Cheung Pak-chi and Nicholas Tse Ting-fung, formally announce that we decided to divorce due to differences in personality. We have peacefully reached an agreement on the divorce matter," they said in the statement, dated Friday and released yesterday. "We will have joint custody of our two children. Their happy growth will be our main consideration in all matters." They said some media reports about their marriage break-up are inaccurate and they reserve the right to pursue all necessary steps. They appealed to the media not to speculate further on the separation. The statement made no mention of how they will share their wealth. They extended their "heartfelt gratitude" to those who expressed concern about them and their families. Media organizations were also urged to particularly leave their children alone, so that the toddlers can grow up out of the spotlight. They said they will not respond to further questions about the divorce. News of their marriage difficulties first surfaced in May after actress-singer Cheung reportedly took photos with singer-actor Edison Chen Koon-hei on a Hong Kong-bound flight. There were suggestions that Cheung's relationship with Tse had already turned sour before May, and that the Chen incident made it unsalvageable. Explicit photos of Cheung taken by Chen were leaked to the public in a 2008 sex-photo scandal that also involved celebrities such as Gillian Chung Yan- tung, Bobo Chan Man-woon and Rachel Ngan Wong-sze. Chen announced in February 2008 he was taking indefinite leave from the entertainment industry, but he resumed his work late last year. Many people praised Cheung's bravery for breaking her silence about a year after the sex-photos scandal came to light, so her widely reported move to initiate a photo opportunity with Chen in May when they came across each other on the flight to Hong Kong struck many as a stark contradiction.

Gold may climb the most in more than three decades this year as investors and central banks boost their holdings on concerns that global economic growth may stall amid a worsening sovereign-debt crisis in the US and Europe. Gold for immediate delivery may reach US$2,000 an ounce by the end of the year, extending this year's gain to 41 per cent, according to the median forecast in a Bloomberg survey of 13 traders and analysts. That would be the most since the 127 per cent surge in 1979, according to Bloomberg data. Holdings in exchange-traded products reached a record on August 8 and central banks are adding to their reserves for the first time in a generation. George Soros, the billionaire investor, cut his holdings in the SPDR Gold Trust this year as prices rallied, while billionaire John Paulson maintained the largest stake, according to regulatory filings last week. "The economic data, debt problems, balance sheet problems are all deep-rooted and will take years to work out of the system, and that is why we are still bullish on the trend in gold," said Paul Walker, global head of precious metals at industry researcher GFMS. Gold for immediate delivery advanced as much as 1.5 per cent to a record US$1,879.05 an ounce yesterday and traded at US$1,872.35 an ounce at 11.29am in Singapore. Prices gained 6 per cent last week, the most since January 2009. "Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world's current fiscal problems," said Dennis Gartman, the economist who correctly forecast 2008's commodities slump, in his daily Gartman Letter on August 19. Bank of America Merrill Lynch raised its 12-month gold price target to US$2,000 an ounce on the increased chance of a third round of so-called quantitative easing in the US, it said in a report dated August 9. "A developed world with slower growth, a large fiscal deficit and near zero rates over the next few years, inflationary pressures in emerging economies, and larger political and economic uncertainty bodes well for history's oldest form of wealth," Barclays Capital said on August 18. Soros and Eric Mindich's Eton Park Capital Management LP cut their holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by gold, in the second quarter, while Paulson held on to his 31.5 million shares, a filing with the US Securities and Exchange Commission showed on August 16. Central banks added 155 tons, valued at about US$8.18 billion, to reserves in the first five months of the year, according to the World Gold Council. Thailand, South Korea and Kazakhstan added gold valued at about US$2.38 billion to their reserves. Thailand's reserves rose to about 4.07 million ounces (126.6 tons) in June, from about 3.523 million ounces in May, according to the Bank of Thailand. The Bank of Korea bought 25 tons over a one-month period from June to July, lifting reserves to 39.4 tons, the bank said. Kazakhstan's holdings increased by 3.1 tons, according to data from the International Monetary Fund. "Gold may rise to $2,000 or more by 2011-end if the global economy remains the same," said Prithviraj Kothari, president of the Bombay Bullion Association. "Central banks are also buying gold, which is positive." Gold imports by India, the biggest consumer, may reach a record of as much as 1,000 tons this year, Kothari said.

More companies are set to issue yuan bonds or shares in Hong Kong after Beijing said it would allow them to use the currency for investment projects on the mainland by the end of this year. The new move, one of 30 measures announced by Vice-Premier Li Keqiang during his three-day visit to the city last week, will allow foreign direct investment (FDI) on the mainland using offshore yuan instead of the current policy of only allowing US dollars. Hong Kong Monetary Authority deputy chief executive Peter Pang Sing-tong said mainland regulators are expected to issue guidelines on procedures for foreign companies investing yuan in mainland projects by the end of the year. "This will reduce the currency risks for companies as their projects are on the mainland and it makes sense for them to use the yuan instead of the US dollar," Pang said. Foreign companies last year brought in US$105.7 billion worth of FDI to the mainland, 57.3 per cent of it from Hong Kong. "If only of some of this FDI was in yuan, we would be talking about a huge sum of money," Pang said. "This will encourage companies to issue dim sum bonds or to use syndicated yuan lending to finance their mainland projects." Brokers said some companies may also launch yuan initial public offerings or share placements in order to invest the money on the mainland. Companies now are reluctant to issue yuan-denominated bonds or shares as capital controls mean they are not sure if they can repatriate the money back to the mainland. "The FDI guidelines will remove this worry as companies will know when and how they can repatriate money back to China," Pang said. Undersecretary for Financial Services and the Treasury Julia Leung Fung-yee said allowing offshore yuan to be used for foreign direct investment would not escalate inflation on the mainland. The country already allows US dollars to be directly invested, so making the yuan an alternative currency would make no difference. "The yuan is already part of the existing money supply," she said. Louis Tse Ming-kwong, director of VC Brokerage, said allowing the yuan to be used for FDI would help the internationalisation of the currency. "However, it will take time for companies to accept the idea as it is a new concept," Tse said. 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. Yuan bonds have had a better start, with 49.6 billion yuan (HK$60.41 billion) worth of "dim sum" debt issued in the first seven months this year, compared with 35.8 billion yuan last year as a whole. Other measures announced by Vice-Premier Li to boost the local economy include a 20 billion yuan quota for Hong Kong companies to invest in securities on the mainland via a yuan-denominated Qualified Foreign Institutional Investors (QFII) scheme. This is in addition to the existing US dollar-denominated QFII scheme for international investment banks. Beijing has, since mid-2009, relaxed yuan trading, in the process transforming Hong Kong into an offshore yuan-trading centre. Companies can settle trade in yuan and different yuan investment products have been launched. Companies from January this year have also been able to use yuan to invest overseas as Overseas Direct Investment.

Gold soared above US$1,900 an ounce in Hong Kong for the first time on Tuesday as dealers flocked to the safe haven asset due to growing concerns over the state of the global economy. The precious metal was trading at US$1,914.50-1,915.50 an ounce in the morning after opening at US$1,898.00-1,899.00.Gold climbs to record above US$1,910 on growth fearsReuters in SingaporeSpot gold soared to an all-time high above US$1,910 on Tuesday, scoring a record top for a fourth consecutive session, as persistent worries about global economic growth burnished bullion’s safe-haven appeal. The precious metal was headed for a seventh straight session of rise and a monthly gain of more than 16 per cent, highest since September 1999. Spot gold gained 0.8 per cent to strike an unprecedented US$1,911.46 an ounce, before easing to trade nearly flat at US$1,895.99 by 10.56am HK time. US gold rose 1.4 per cent to a record high of US$1,917.90, and retraced to US$1,899.60. Investors are waiting for flash purchasing managers’ index (PMI) data for Germany, France and the euro zone later in the day, with a weak number likely to exacerbate fears about bailing out the bloc’s indebted peripheral states. “We are not hearing much good news out of Europe or the United States,” said Darren Heathcote, head of trading at Investec Australia. “The picture looks pretty bleak in the short term... For the time being investors are happy looking at gold as safe haven in these troubled times, and will continue to do so until we see something positive and sustainable.” On the chart, gold has been in the overbought territory since early August, with the Relative Strength Index hovering about 83. Technical analysis suggested gold could pull back to US$1,860 during the day, said Reuters market analyst Wang Tao. The Shanghai Gold Exchanges said it will raise trading margins on three of its gold spot deferred contracts to 12 per cent from 11 per cent starting August 26, and widen the daily trading limits to 9 per cent from 7 per cent. Shanghai gold T+D contract fell less than 2 yuan from a high of 391.85 yuan per gram at the news, but has since stabilised around 391 yuan, or US$1,900.02 an ounce. Traders are eyeing potential hikes in US gold futures margins. They were last raised on August 11 by 22 per cent, triggering a correction in gold prices. But concerns about the world’s economic growth soon offset the impact of the margin hike, and gold embarked on another leg of record-setting rally just a week later. “Everyone says that gold has been rising too fast – beware!” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong. “But there is no sign of gold prices turning to point south.” Leung said scrap selling was minimal and sellers are waiting for higher prices, while investors continued to show buying interest. Market participants are eyeing an annual central bank conference in Jackson Hole, Wyoming, where the US Federal Reserve Chairman Ben Bernanke is scheduled to speak on Friday.

Swimmers wanting to join the first cross-harbour race in more than 30 years had better start practising now. Just 1,000 entrants will be accepted for the 1.8-kilometre race from Sam Ka Tsuen in Lei Yue Mun to Quarry Bay Park on October 16 and they will all have to pass minimum performance standards. Half of the quota will be reserved for those who have met a minimum time requirement in 1,500-metre swimming races held by the organisers, the Hong Kong Amateur Swimming Association, or who have swum in open-water races. The remainder will go to the top performers in four 1,500-metre swimming tests next month. "Swimmer safety is always our priority concern," association secretary Ronnie Wong Man-chiu, a winner in the former cross-harbour races that ended in 1978, said. "If there are any signs or circumstances that may threaten the safety of the swimmers, we will consider postponing the event." A key concern is water quality in the harbour, amid reports of a deterioration last year. The route was chosen to avoid pollution and marine traffic, and Wong said careful checks would be made before the race. He said water quality in the eastern part of the harbour had improved over the past 12 years after the introduction of a deep tunnel sewage collection network and a centralised treatment plant at Stonecutters Island. But some raw sewage from northern Hong Kong Island was still being pumped directly into the harbour. Wong, who has been in talks with the government for years to plan the event, said the race would be held at high tide when cleaner water from the sea flowed into the harbour from the east, keeping the pollution in central and western waters at bay. Figures from the Environmental Protection Department show the range of bacteria level, as indicated by the number of E coli units measured at one of the monitoring sites near the race route, ranged between 180 and 4,400 units last year. The bacteria standard for a bathing beach is now set at 610. The first cross-harbour swim was held in 1906 and the most recent in 1978 when a route between Tsim Sha Tsui pier and Queen's Pier in Central was used. The event was suspended because of pollution and increasing marine traffic. Wong said he hoped the experience with the revived race would lead to it becoming a full international event. Ng Yuk-kong, who took part in the most recent cross-harbour race on October 15, 1978, with his friends from a swimming club, said: "We took it so seriously that we actually hired sampans ... to check the tidal flow and current." Ng, 54, recalled that many who wanted to lead the race jumped from the pier into the water and some people were scratched. He said he would not join this year's race but his 14-year-old son who had entered the Tai Mei Tuk open-water event would enrol. He also said he was not worried about the water quality. David Chiu Chin-hung, assistant honorary secretary of the association, who took part in the event in the 1960s, said the water at the time was even more worrying than now. "Rubbish was floating in the sea and the water was not necessarily cleaner than now as everything was also pumped directly into the harbour, too. I believe the water now is much safer," he said. The organisers will use about 100 lifeguards to help swimmers in trouble, and there will also be a team of scuba divers to handle emergencies. Those will fail to reach the finishing point within 95 minutes will be asked to leave the water. A spokesman for the Marine Department yesterday said there was no need to close the waters to shipping during the race. He said the director of marine would later issue directions for port users on traffic management measures that would ensure the safety of the swimmers. A spokesman for the Environmental Protection Department said it would closely monitor the water quality before the race. But a spokesman for the Drainage Services Department said the sewage network did not cover some of the Lei Yue Mun area and some village houses and restaurants might still be using septic tanks to treat waste water. It was not certain if there were any illegal discharges into the sea.

The city's real-life spidermen - scaffolding workers - are to receive an 11 per cent pay rise from next month, thanks to the construction boom which has pushed up demand for site workers. The increase, agreed by the trade association and union, is the biggest since 1997 and will see scaffolding workers paid around HK$1,000 for an eight-hour day, up from the current HK$900. Assuming 20 days of work a month, a scaffolder can earn HK$20,000 - comparable to that of a management trainee. The construction sector yesterday said it hoped the pay adjustment would attract more young people to the trade to ease the labour shortage and solve the problem of an ageing workforce. Contractors have also complained of shortages of bar benders, carpenters and drainage and metal framework workers. Bar benders are being paid HK$1,250 a day, but there is still a shortage of around 1,500. The Hong Kong Construction Association, which represents about 300 contractors, expected labour costs to keep rising but hoped this could attract higher quality and younger workers. The association said it had no plans to consider importing cheap labour. "The association is of the view that, from the perspective of human resources, wages will continue going up according to the market demand in the coming 10 years when Hong Kong will see a construction boom. It is conducive to attracting more new blood to the sector," the association said in a statement. Association secretary general Thomas Tse Che-wah added: "We are positive [about the pay rise]. Labour costs are not a very big problem. Contractors will take into account possible pay rises when doing estimates or tenders." Labour costs account for 30 to 40 per cent of the overall development costs, the association says. What really matters is the cost of building materials. The government has tried to boost the economy by investing in infrastructure developments. Capital works spending rose substantially from HK$20.5 billion in 2007-08 to HK$49.6 billion in 2010-11. The estimated capital works spending for 2011-12 will reach a record high of more than HK$58 billion. Ten major infrastructure projects, announced by the chief executive in 2007, are being rolled out. Of these, work has begun on the Hong Kong-Zhuhai-Macau bridge, the Guangzhou-Shenzhen-Hong Kong express rail link and the Kai Tak development. Railway construction work on the South Island Line (East) and Sha Tin-Central Link is expected to start this year and in 2012, respectively. Ho Yiu-sum who has been a bamboo scaffolding worker for 20 years, however, was upset by the extent of the wage increase. "No matter how much more they pay, it's not going to cover our loss - eroded by inflation in the past 10 years. "Property prices now are far higher than the level before 1997, there's no reason why we don't deserve to have a pay rise in the future," Ho said. Chow Luen-kiu, of the Construction Industry Employees General Union, said a more significant rise would be needed to attract new blood to ease the problem of ageing workers the sector was facing.

A Buddhist monk sprinkles holy water during a religious ceremony to mark the first year anniversary of the Philippine bus hostage fiasco at Rizal park in Manila on Tuesday, as relatives of the victims of the bus hijacking attend the ceremony. Relatives of eight Hong Kong tourists killed in a Philippine bus hostage fiasco cried out for justice as they returned to the site of the slaughter on Tuesday for an emotional one-year anniversary ceremony. Buddhist monks lit incense and offered food and drinks on a makeshift altar on the pavement of Manila’s Rizal Park where the hijacked bus stood for 11 hours before a bungled rescue attempt led to the bloodbath. Last year’s chaos was replaced by a peaceful atmosphere, the mournful hymns and chants of the monks broken only by the rapid shutter clicks from the cameras of a Hong Kong press contingent. “We will never forget the pain,” said Tse Chi-kin, whose brother Masa Tse Ting-chunn, was the tour guide on the bus and was among those slain. He said the family came back seeking closure of sorts, but they had largely failed after President Benigno Aquino rejected an appeal to meet with them and personally apologise. “It has been one year, but we have not received any apology – not an email, not a letter, not even a call,” he sobbed. Aquino, who skipped the ceremony, maintained he regretted the tragedy, but ruled out an apology for an attack he said could not have been stopped. “An apology connotes that the state did them grievous harm. I don’t think that is correct,” he told reporters after giving a speech at a naval event just a block away from where the mourners had gathered. “We sympathise with them, we really wished it did not happen. But in the same token that in Norway, there was this tragedy that could not be prevented because of a lone solitary deranged gunman.” Aquino was referring to far-right extremist Anders Behring Breivik, who bombed Oslo’s government quarter before shooting down participants at an island youth camp, killing 77 in all. But Manila survivor Lee Ying Cheum, who said she was still recovering from deep mental trauma, insisted Philippine authorities clearly mishandled the crisis. “We trusted the government to save us. We were wrong,” Lee said. “We are still angry [because] families were torn apart, children were orphaned.” The Philippine hostage taker, Roland Mendoza, was a decorated Manila police officer sacked over corruption allegations, who seized the bus in a crazed bid to be reinstated. As the drama unfolded live on television, police stormed the vehicle and shot Mendoza dead, but eight hostages also died during the rescue attempt. The incident triggered public outrage in Hong Kong, which maintains a travel advisory on the Philippines. Aquino ordered an investigation into the incident, but was criticised in Hong Kong after only minor punishments were handed out to four policeman, while senior officials accused of incompetence escaped without sanction. As the relatives left after the ceremony on Tuesday, one of the two police negotiators involved last year’s drama walked to the altar and offered a prayer. “I feel regret. I needed to say sorry to them [the victims],” chief inspector Romeo Salvador said. “We did not fully fulfil our job. We should have done better.”

Wealthy shoppers don’t visit Hong Kong without making a trip to Central, a neighborhood brimming with the likes of Armani, Prada, Dior, DeBeers, Gucci and Tiffany. Now they can add a luxury-themed cell phone shop to their itinerary. Last week, 1010, a wireless brand operated by Telstra subsidiary CSL, opened a flagship store that looks more like an upscale cigar lounge than a place to sign up for a new mobile phone plan. The store is furnished with leather sofas and wood-trimmed trunks, while mobile devices and accessories are displayed in cabinets that appear to have come straight from a museum. The 1010 Central store even has its own signature fragrance. “Retail is all about the shopping experience,” said Irene Leung, a CSL vice president. “In Hong Kong, you can buy phones at so many places. If we open a store just selling handsets, then we’re just an electronic shop. We’re trying to create something more.” The market for mobile devices in Hong Kong is strong–the number of mobile service subscribers in the city is 13.7 million according to official statistics, meaning Hong Kong has one of the highest mobile penetration rates in the world. But competition among retailers of mobile devices is fierce. Cell phone and tablet shoppers can buy phones and data plans from a convenience store, a market stall or a full service mobile retail shop. The competition among retailers of mobile devices will likely get even more intense later this year when Apple opens its first store in Hong Kong. CSL says the design of its Central store is a one-off but it does plan to rebrand the rest of its retail locations over the next two years.

Taiwan's main opposition presidential candidate said on Tuesday that if she is elected in January she will strive to maintain peace and continue large-scale trade with the mainland. The comments by 54-year-old Tsai Ing-wen departed from her Democratic Progressive Party’s traditional anti-Beijing approach, hewing instead to the moderate stance favoured by most of Taiwan’s 23 million people. Taiwan split from the mainland amid civil war in 1949. Beijing still claims the island as part of its territory and threatens to attack if Taipei declares formal independence or indefinitely delays union with Beijing. Tsai’s opponent in the upcoming elections, President Ma Ying-jeou of the ruling nationalist Kuomintang, has built his time in office around reducing tensions across the 160-kilometre wide Taiwan Strait. Ma has a slight lead in most opinion polls, though in recent weeks it appears to have slipped. Speaking to reporters in Taipei, Tsai urged Beijing not to use her possible election as a pretext to stoke tensions, like those that predominated when her DPP predecessor, Chen Shui-bian, served as president between 2000 and 2008. Chen, who spoke enthusiastically in favour of formal Taiwanese independence, is currently serving a 17-year sentence on corruption charges. He was reviled by Beijing for initiatives such as pressing for Taiwan’s early return to the United Nations. It is “in the best interest of the both sides to get along peacefully and maintain stability in bilateral relations,” Tsai said. While criticising Ma for rushing into trade deals and allegedly subordinating the island’s interests to those of Beijing, Tsai said she still supports strong economic ties with the mainland. “The DPP understands the importance of cross-strait trade and recognises that no country can afford to ignore China’s rise,” she said, adding that if elected she will honour a wide-ranging tariff-reduction deal Ma signed with Beijing last year. Tsai said that despite her party’s support for Taiwan’s formal independence, she recognises the majority of the Taiwanese people want a continuation of the current quasi-independence amid robust economic engagement with the mainland. Recent polls have shown that while most Taiwanese want strong trade ties, few favour any sort of political connection to the mainland and certainly not the formal union that has been the core of Beijing’s policy toward Taiwan for more than six decades.

 China*:  Aug 24 2011  Share

Photo taken on Aug. 23, 2011 shows the closing ceremony of the 26th Summer Universiade held at the Window of the World theme park in Shenzhen, a city of south China's Guangdong Province. 

China's Ministry of Railways plans to sell up to 100 billion yuan (US$15.6 billion) in corporate bonds this year, three sources told reporters on Tuesday, braving the market after a deadly crash raised questions about the rapid growth of its high-speed network. That will mark an increase from 80 billion yuan in corporate bonds it sold last year, and follow several issues of shorter-term debt earlier this year. While the size of the planned bond issues is not out of the ordinary for the ministry, which is one of the biggest borrowers in China’s bond market, analysts said the timing would make it a test of investors’ demand for its debt as it continues to pile on more of it. Two high-speed trains in eastern China crashed on July 23, killing at least 40 people and triggering a wave of criticism toward the railway ministry as well as concerns over the reliability of the country’s railway systems. “The cost of borrowing for the Ministry of Railways has certainly risen this year, partly due to the train crash and partly due to investor concern over the health of the ministry,” said Wu Zezhi, analyst at Orient Securities. Wu noted that the rise in the market yields on the ministry’s debt has effectively downgraded the ministry’s bonds to AAA from AAA plus. “Although a default is still unlikely, institutional investors certainly have to act to reduce their holdings of the ministry’s bonds even purely for the sake of internal risk-management.” The first tranche of the bonds, worth around 20 billion yuan, is expected to be issued as soon as next month, with maturities of seven and 20 years, one of the sources with direct knowledge of the issue said, adding that Guotai Junan Securities and China International Capital would act as underwriters. Another source said the first tranche would consist of a 10 billion yuan 7-year portion and a 10 billion yuan 20-year portion, with Guotai Junan acting as lead manager. Repeated calls to the ministry’s media relations department were not answered. Some analysts have cast doubt over the ministry’s increasing debt load, especially in the wake of allegations over corruption among top former officials and last month’s crash, which prompted a suspension of new project approvals and a nationwide safety check. The ministry said earlier this month that its total liabilities at the end of June were 2.1 trillion yuan, up by nearly half from the end of 2009 and bringing its liability-to-asset ratio up to 59 per cent. When the next batches of bonds are sold, it will be a test of whether major institutional investors such as insurers will continue to be happy to buy the ministry’s debt, which has been key to funding its ambitious expansion in recent years at reasonable interest rates. The ministry has recently sold three-month paper at yields over 5 per cent, higher than longer-dated bonds from other government agencies and highlighting the potential challenges the ministry could face in raising funds. In addition to the planned corporate bond sales, the ministry has sold nine tranches of commercial paper and medium-term notes so far this year, totalling 140 billion yuan. Around 35 billion yuan in commercial paper will be coming due by the end of the year, with another 75 billion yuan in commercial paper and medium-term notes maturing by the end of next year, meaning the ministry could be using the new bond sales in part to roll over its debt, analysts said. The ministry has reportedly slashed its spending plans for this year to 400 billion yuan from the previously planned 700 billion yuan.

China did not need reassurance: Biden - US vice-president leaves singing the praises of Xi Jinping and says Beijing expressed no concerns about the downgrading of American debt - Joe Biden walks with Mongolian Prime Minister Sukhbaatar Batbold as they inspect honour guards after he arrived in Ulan Bator yesterday. US Vice-President Joe Biden said yesterday China's leaders did not need reassurance about the struggling US economy, and called Vice-President Xi Jinping - the man expected take over as president of the world's second largest economy in 2013 - "strong" and "pragmatic". "My impressions of Xi were that he's strong, that he's pragmatic," Biden said in an interview with a small group of reporters on his plane, Air Force Two, while flying to Tokyo from Mongolia. "I would guess his highest priority is not to have any surprises in the [Sino-US] relationship." Biden, who had just wrapped up a multi-day visit to China that included stops in Beijing and Chengdu, said the United States would continue to press China to let its yuan currency rise, but he made it clear he did not expect that to happen quickly in the coming year. Biden also said China's leaders had not expressed concern about ratings agency Standard & Poor's downgrading of US debt. "I didn't get any sense that there was any anxiety on the part of the Chinese government about whether or not we were a rising or declining economic power. I got the sense that, just like with us, they were hoping we'd begin to grow again seriously - because it's in their interest. So it wasn't like, `Is my investment OK?'" he said. However, to some Chinese media and scholars, Biden's tour was overshadowed by suggestions that America's global influence is waning and fears about the rise of China. Jia Qingguo, associate dean of Peking University's international studies school and one of five academics who met Biden on Saturday, said that allaying fears was the key achievement of Biden's visit because it showed that both sides were determined to create a positive atmosphere for relations. "It is rare and commendable for Biden to say in public that the US welcomes the rise of China," he said. But other analysts said the visit was largely symbolic and had not settled long-term bilateral disputes. A commentary by Xinhua on Sunday gave Biden a positive assessment but said the US had to realise that confidence could not be established through mere rhetoric but only from responsible actions. "Now comes the time when the United States needs to show the world that it is not only capable of making promises but also has the determination, ability and political will to turn them into reality," it said. A key feature of Biden's tour was that he was accompanied by Xi for most of the itinerary. "Xi was more active than I expected," said Renmin University US affairs expert Jin Canrong, who also met Biden on Saturday. "It shows that China is more confident with its status in the world and believes it has more bargaining power now." But Niu Xinchun, from the China Institutes of Contemporary International Relations, said the visit had not resulted in significant changes to the occasionally troublesome Sino-US relationship. For Beijing, the tricky issue of US arms sales to Taiwan made good bilateral sentiment precarious, Jin said, and that could affect arrangements for Xi's reciprocal visit to Washington, the details of which have not been fixed.

US Vice-President Joe Biden has put Beijing eatery, Yaoji Chaogan Restaurant (Yao's Stir-fried Liver), on the map after a lunchtime visit on Aug 19, 2011. Biden and his entourage ordered five bowls of Beijing noodles with soybean paste, 10 steamed buns, smashed cucumber salad, mountain yam salad, shredded potatoes and Coca-Cola. The owners have dubbed it the 'Biden Set' and is now available on the menu for 79 yuan ($12.37).

Spilled oil can still be seen on the surface of the water near the affected area in North China's Bohai Bay, on August 22, 2011. The oil spills near Platform C at Penglai 19-3 oil field were first detected on June 4.

China surpassed the U.S. to become the world's biggest personal-computer market for the first time during the second quarter, market researcher IDC said Tuesday, highlighting the growing importance of a market where big U.S. PC makers have struggled to compete. PC shipments to China numbered 18.5 million units in the second quarter, outnumbering the 17.7 million shipped to the U.S., IDC said. However, IDC still expects the U.S. to have more PC shipments than China in 2011, as sales in the U.S. usually surge during the year-end holiday season. IDC expects U.S. PC shipments of 73.4 million this year, just 1 million more than in China, which will likely have shipments of 72.4 million units. PC shipments to China will likely surpass the U.S. on an annual basis next year, IDC said, adding that likely PC shipments of 85.1 million units to China will outstrip an expected 76.6 million units to the U.S. The market researcher said the figures represent domestically manufactured and imported PCs that are shipped to distributors in each country.

Chinese banking officials said Bank of America Corp. will keep at least half of its 10% stake in China Construction Bank Corp., disappointing investors who hoped the largest U.S. bank by assets would sell more of the Chinese lender's shares. Investors have been viewing the stake, valued at $19.6 billion at midyear, as a prime candidate for divestiture. BofA's shares have been under pressure amid questions about whether the bank can build enough capital through asset sales to withstand future economic shocks. CCB President Zhang Jianguo told reporters Monday in Beijing that the U.S. lender has committed to keeping at least 5% of its shares over the longer term. Bank of America was mum on whether it had agreed to a 5% floor on its CCB holdings, saying only that "we look forward to expanding and extending that relationship, which has been positive for both parties." Bank of America's shares dropped for the third consecutive day on Monday, falling 55 cents, or 7.9%, to $6.42, in 4 p.m. New York Stock Exchange composite trading. They are down 52% for the year and just 11 cents above their 52-week low. The cost of insuring Bank of America debt against default rose 9% Monday to its highest level since the first quarter of 2009, when the financial crisis was roaring and the economy was in recession. Bank of America is under more pressure than other U.S. banks largely because of its widespread exposure to a slowing U.S. economy and an array of mortgage-related lawsuits and losses. Investors have long assumed the Charlotte, N.C., lender would unload much of its stock in the state-owned Chinese bank as it works to build a big enough capital cushion to reassure investors and meet future regulatory requirements. Bank of America owns 25.6 billion shares of CCB, including 23.6 billion shares that will emerge from a lockup period on Aug. 29. A spokesman played down any capital concerns, saying the $218 billion Bank of America held at the end of the second quarter was twice what is required to meet minimum regulatory standards. "We expect that our capital ratios will be in excess of required levels at all times as the new rules are phased in between 2013 and 2019," the spokesman said. Bank of America Chief Executive Brian Moynihan has emphasized the bank won't have to issue any new stock to meet new capital standards. Instead, he has been unloading a series of noncore assets since becoming CEO in 2010, including a minority stake in money manager BlackRock Inc. and its Canadian credit-card portfolio. Bank of America first purchased a CCB stake in 2005 in return for technical and managerial advice and a seat on the board. The bank's investment was seen as a strategic advance by both sides, giving BofA access to a hot market and CCB a big-name backer at a time when it was trying to put corruption scandals and bad loans behind it. BofA sold about a third of its holdings in 2009 amid regulatory demands for new capital. Mr. Moynihan never has publicly acknowledged that the remaining CCB stake could be sold. But recently Bank of America officials have discussed potential buyers for portions of the remaining CCB stake, including several investment funds in the Mideast, according to a person familiar with the situation. CCB Chairman Guo Shuqing said Monday that "so far we haven't got any notice" from Bank of America about a sale of its stake. "We think Bank of America will be a long-term strategic partner and important shareholder," he said. The CCB chairman said he had confidence that the U.S. bank would work its way out of its current troubles. "We understand the difficulties they are facing now, but they are also very experienced" at dealing with difficult situations, he said. CCB faces its own set of challenges. Investors have been watching how Chinese authorities will address potential credit risk from local government borrowings. CCB played down such concerns Monday, saying 84% of such loans are fully covered by sufficient cash flow. As of June 30, CCB held 580 billion yuan ($91 billion) of outstanding loans to local government financing vehicles, up from 540 billion yuan from the end of last year. CCB's Mr. Zhang also said the lender has no plan to raise capital in the near term to replenish its core capital base, which comprises common equity and retained earnings. Compared with other Chinese banks, CCB isn't in urgent need of capital. As of June 30, the bank's capital accounted for 12.5% of its risk-bearing assets, above the regulatory minimum of 11.5% required for China's state-run big lenders. Its core capital adequacy ratio stood at 10.4%, above the regulatory minimum of 9.5%.

Hong Kong*:  Aug 23 2011  Share

Partial loss of limbs may be compensated for in future under a travel insurance policy to be launched by a major insurer. Hong Kong insurers currently only pay out when victims suffer complete loss of limbs or death. However, following criticism of insurers who declined to pay out in the aftermath of the Manila hostage shootings which claimed the lives of eight Hongkongers a year ago - the claims were eventually settled - one company is to launch a new policy under which the loss of a part of a limb may be compensated for as a percentage of the total policy. Chartis is a company which provides insurance via more than 300 travel agents in Hong Kong. Under its new policy, victims who suffer permanent disability may be compensated up to 75 per cent more than current full coverage, while loss of sight or hearing would also be fully covered. Accidental death will still be 100 per cent covered. Chartis says the new policy, available at an additional premium, will come into effect in two months. Customers will still be able to choose the old policy with limited personal accident coverage. "The new product will offer more extensive personal accident coverage than that currently provided under the standard existing travel insurance policies in the market," said Peter Joblin, a spokesman for Chartis. Rival insurer Blue Cross, which serves 500 tour agencies in the city, said it had no plans to launch new products. In the Manila shootings, survivor Joe Chan Kwok-chu was shot in both hands, while his wife, Yik Siu-ling, had her lower jaw injured. Both complained that travel agents failed to explain details of the insurance policies they had bought, and did not know their injuries were not covered. The couple later secured a one-off HK$1 million donation from an insurance fund set up by Chartis. Since 2006, the government has issued a special licence for travel agents to sell travel insurance to encourage more tourists to buy policies. Paul Chan Kin-por, a lawmaker for the insurance functional constituency, said the policy had proven to be a success, with more than 80 per cent of tourists now buying travel insurance. "It is convenient for customers to be able to buy insurance when they sign up for a tour," Chan said. Meanwhile, the family of Masa Tse Ting-chunn, the tour guide killed in the Manila shooting, has received HK$650,000 in a "condolence payment" from seven charities in the Philippines. But Tse Chi-kin, his older brother, said the family was annoyed after some media reported the Manila government describing the money as "compensation". "We treat the money as a condolence payment," he said. "Nothing in the letter issued by the charities said it was compensation or a settlement. We were so angry after reading reports that quoted the presidential office in Manila describing the sum as compensation. It was a trap; we may return the whole sum of money to them," he said. Tse Chi-kin and six others including his mother and Democratic lawmaker James To Kun-sun flew to Manila last night before the first anniversary of the fatal shootings tomorrow. China's ambassador to the Philippines Liu Jianchao last night visited the group to express sympathy. He said the embassy would try its best to work with them.

Deep tunnels used to move excavated materials out of the West Island Line construction site could be kept and converted for other purposes like wine cellars, a veteran geotechnical engineer says. Edwin Chung Kwok-fai, geotechnical division chairman of the Hong Kong Institution of Engineers, said shafts and tunnels in Western district had been built at a depth of about 60 metres and had high potential for other uses. "These shafts and tunnels provide excellent underground space for storage of wine and they are large enough for that purpose. It would be a waste if they were just filled in after the construction," he said. Some wine cellars have already taken up underground spaces like air raid shelters abandoned after the second world war. The underground railway construction corridors, one near Hill Road and another near Belcher, are up to eight metres in diameter and between 170 and 340 metres long, the MTR Corporation (SEHK: 0066) says. The rail operator said that under the existing agreement on the rail project, it was required to backfill the tunnels and return the sites to the government. "There is no change to that agreement at the moment," a spokeswoman said. The Civil Engineering and Development Department, which is in charge of vetting temporary tunnel construction, said it was open-minded about the potential uses of these underground spaces. "Various options of after-use including backfilling, beneficial reuse, or other sustainable options are under consideration. But there is no firm arrangement yet," a spokeswoman said. The government has already commissioned a consultancy study to gauge the potential of using underground space to free up prime sites above ground now occupied by various public facilities. The study is expected to be completed by the end of this year at the earliest. The government and the Institute of Planners will co-organise a conference next month to promote the idea. In theory, Hong Kong is ideal for developing underground spaces because the city has so many hills near existing developments that are suitable for excavation. But whether it was cost-effective would largely depend on the future uses of the vacated sites, Chung said. "It mainly ties in with the land prices of the vacated sites. The higher the prices, the more attractive the option is," he said. Chung worked on a project involving a salt water reservoir that was hidden in a man-made cavern next to the Centenary Campus of the University of Hong Kong. While the project could be significantly more expensive to develop and maintain afterwards, it helped to preserve sites on the surface for campus development, while protecting two heritage buildings near the site and hundreds of trees on slopes. The cavern, created by drilling and blasting, cost about HK$100 million to build between 2006 and 2009.

Hong Kong's already fragmented legislature faces a power shift, with 12 lawmakers announcing yesterday they had formed a pro-business alliance to counter what they call rising radical and populist sentiments in society. The bloc, which has yet to be formally named, will have more lawmakers than the pro-government Democratic Alliance for the Betterment and progress of Hong Kong, which has 10. It consists of: three Liberal Party lawmakers: Miriam Lau Kin-yee, Vincent Fang Kang and Tommy Cheung Yu-yan; four from Economic Synergy: Jeffrey Lam Kin-fung, Sophie Leung Lau Yau-fun, Lau Wong-fat and Andrew Leung Kwan-yuen; four from Professional Forum: Dr Raymond Ho Chung-tai, Abraham Razack, Professor Patrick Lau Sau-shing and Dr Priscilla Leung Mei-fun; and independent lawmaker Philip Wong Yu-hong. Lam will act as convenor, with Miriam Lau and Ho as deputies. Lam said: "We believe most Hong Kong people want a stable society rather than growing populism and radical movements that make society more divided." He cited the by-elections triggered by the resignation of five pan-democratic lawmakers in March last year as one motivating factor behind the new group. Lam said the alliance would not bind its members when they cast votes in the legislature, and the existing political groupings represented by respective members would not combine in the near future. The Legislative Council now has three major factions: the pan-democrats with 23 votes; the pro-establishment camp - which includes the DAB and the Federation of Trade Unions - with 14 votes; and the new pro-business alliance with 12 votes. Lam said the alliance came together because the members found common ground on social and economic issues. They began discussions on forming a coalition several months ago as they saw society had become more divided and the political atmosphere more radical. Andrew Leung said members would not rule out the possibility of developing further as an organised political party in future. Miriam Lau, who is chairwoman of the Liberal Party, said: "We were seen as divided groups in the past and therefore our bargaining power was weak." She would vote according to her party in the event of a voting preference that conflicted with the alliance. "My loyalty rests with the Liberal Party." But she said the alliance would give the party a platform to take a united stance on policies and to strengthen its bargaining power in negotiations with the government. The power reshuffle comes after three former Liberal Party lawmakers - Lam, Sophie Leung and Andrew Leung - walked out three years ago amid an intense leadership power struggle. They then set up the pro-business group Economic Synergy. The political restructuring also comes ahead of the District Council elections in November, in which Lam said the alliance would field "no less than 50 candidates". He also said it would co-operate in the elections for the Election Committee that selects the chief executive in January and for Legco in September next year. "When someone declares their candidacy for the chief executive election, we will give our voice as well," Lam said. James Sung Lap-kung, a City University political scientist, said it would now be easier for the government to canvass support from pro-establishment camp as it only needed to negotiate with a few groups. He said the new alliance had a hidden agenda. "It shows they have stepped up efforts to keep the functional constituencies in the Legco election in 2020." The government has yet to say if it will scrap functional constituencies to ensure all lawmakers are elected by universal suffrage by 2020.

Macau casino operator MGM China Holdings posted a 380 per cent gain in net profit for the first six months of this year, bolstered by surging revenue in the world’s largest gaming destination. MGM Resorts International, which owns a majority stake in the US$7 billion company, posted its results on August 9, including MGM China’s unaudited figures. Net profit for the first half was HK$1.9 billion (US$244 million), compared with HK$397.3 million the previous year, MGM China said on Friday, in its first half-year statement since listing on the Hong Kong stock exchange on June 3. Shares in MGM China, one of six licensed casino operators in Macau, have slipped about 10 per cent since listing amid global market volatility. Macau’s glitzy multi-billion casinos are the only place that mainland Chinese are legally allowed gamble. Hordes of newly minted millionaires and a voracious appetite for gambling have driven revenue figures to dwarf neon rival Las Vegas five times over.

Hong Kong's inflation accelerated to nearly 8 per cent last month on the back of rises in housing rents, pork prices and package tour charges, government figures released on Monday showed. The 7.9 per cent year-on-year increase in the consumer price index for July was up from 5.6 per cent in June, the Census and Statistics Department figures showed. A department spokesman said the rise was partly due to a time difference the government’s waiver of public housing rentals between this year and last year. The waiver took place between July and September last year, but it fell between August and September this year. Netting out the effects of all relief measures, the underlying inflation rate in July was 5.8 per cent, still larger than the 5.5 per cent in June. The spokesman said last month’s inflation largely reflected higher food prices and higher private residential rents. Housing costs – including rent and property prices – rose 16.4 per cent year-on-year last month while prices of food increased by 10.7 per cent. Alcoholic drinks and tobacco increased by 20.1 per cent due to a 41.5 per cent tobacco duty rise introduced early this year. The spokesman said inflation would probably rise further, despite signs over the past few months that food prices in the international markets were stabilising. “Inflation is likely to remain notable in the near term, on the back of still-elevated global food prices, the further feed-through of higher private residential rentals, as well as higher domestic cost pressures amid the economic upturn,” he said. “The government will continue to monitor the movements of global food and commodity prices, and remain vigilant about the local inflation situation – particularly its impact on the lower-income people,” he added. July’s inflation was the largest rise since November 1995 when a rate of 8.4 per cent was recorded. Hong Kong’s inflation had dropped to around 0 per cent in the months following the 2008 global financial crisis. But it has then risen gradually since then.

 China*:  Aug 23 2011  Share

French President Nicolas Sarkozy will meet President Hu Jintao for talks on Thursday in Beijing, his office said on Sunday. Sarkozy, whose country holds the Group of 20 presidency this year, is adding a stop-off in China to a pre-planned trip to the French South Pacific territory of New Caledonia, following telephone discussions with other world leaders in recent days over the meltdown in financial markets. His office said he would meet Hu at 5pm local time for talks followed by a dinner.

A chocolate factory in Nantong, Jiangsu province. Chinese manufacturers are upgrading their equipment to gain an edge in competition and reduce energy consumption. The old-fashioned machines in the factory of Jinbiao Woolen and Textile Mills Co Ltd in an underdeveloped county in southern Jiangsu province whirl and grind all day, churning out reams and reams of cheap cloth to supply the many garment makers in the region. Workers toil in the heat and noise inside the grim workshop that conjures up images of Dickensian conditions and William Blake's "dark, satanic mills." A middle-aged mechanic in sweat-stained undershirt and shorts walks from machine to machine listening for any unusual groans from the aging gears and belts that can presage trouble. Although China has been experiencing rapid economic growth during recent years, it is still falling behind in terms of productivity. While Japanese textile workers are busy pressing buttons on computerized machines and increasing production by leaps and bounds, some of their Chinese counterparts are sweating in workshops without air-conditioning, using the sort of machines that disappeared from Japanese factories about 20 years ago. It is a gap that the Chinese government intends to close. On July, 19, the State Council approved a comprehensive work plan to conserve energy and reduce emissions during the 12th Five-Year Plan (2011-2015) period. The aim of the plan is to save energy by eliminating inefficient methods and establishing advanced production facilities. The robust growth of environmental-protection companies is the most convincing proof of rising support for the government's policy. Some five companies, led by Zhejiang Fuchunjiang Environmental Thermoelectric Co Ltd - which specializes in the generation of electricity and heat steam through waste products - saw their shares rise by more than 5 percent on the day the work plan was approved. By contrast, the Shanghai Stock Exchange Composite Index fell 0.7 percent to 2796.98 points on the same day. Since then, Zhejiang Fuchunjiang shares fell to close at 18.30 yuan ($2.86) on July 25, down 5.57 percent, while the index dropped a total of 2.96 percent over the same period. About a week before the work plan was approved, the Ministry of Industry and Information Technology (MIIT) came up with a list of production lines and facilities that must be withdrawn from service by the end of the year. The list covers some 2,255 companies from 18 industries, with the focus on eliminating backward production facilities in heavy industries such as iron manufacturing and cement production. Two eastern coastal provinces, Jiangsu and Zhejiang, have been leaders in terms of Chinese economic growth in recent years. But that fact doesn't necessarily indicate that they have no outdated factories or production methods. As China's two major textile-manufacturing areas, their focus will be mainly on eliminating old-fashioned machinery and methods. Among the 66 production facilities that need to be eliminated in Jiangsu, seven are related to the textile industry, while in Zhejiang 17 of 74 outmoded factories are textile companies. Although the national government is resolute, some local companies are turning a blind eye to the MIIT list. Jiangsu Jinbiao Woolen Textiles, based in the city of Jintan in southern Jiangsu province, must eliminate about 50 machines according to the list - that's equal to annual production of more than 10 million meters of woolen textiles. However, two weeks after the publication of the list, the company claimed it was unaware of the MIIT requirements. "The company is running smoothly. None of the machines you have mentioned is being replaced," said Mao Xiaozhong, a sales manager for the company. That attitude may be confined to small companies, though. Their larger counterparts are much more likely to introduce the sophisticated machinery that will help boost productivity. Having started from scratch in 1998, Ling Lanfang is now chairman of Silk Road Holdings Group Co Ltd, a leading manufacturer of Chinese silk, which is based in northern Zhejiang's Huzhou city and has annual sales of 1.8 billion yuan. Ling's motto, "I will still buy new machines even if I have to sell my underwear", may be designed to amuse, but it may also account for much of his success. "It means that the new machines weigh way more than my self-esteem," he laughed. Although China is the biggest textile manufacturer globally,its textile industry, as Ling sees it, still faces two deadly failings. The first is low productivity and the second, the exhaustion of resources. The first part of the silk-making procedure involves the use of an iron-grinding machine, which prepares the raw materials for further combing into the silk fibers. Despite having no Western examples to emulate, Silk Road has managed to improve the machines already in service, and has increased annual productivity to 4 tons for each worker, overtaking the single annual ton made by its Japanese counterparts and the company's previous capacity of less than 1 ton. Even leading companies such as Silk Road are still dependent on these machines, which date from the 1990s. However, Silk Road will wave goodbye to the noisy and non-computerised machines by the end of the year and new technologically advanced machines will take their place. "We bought the machines for 5,000 yuan each some 20 years ago. We will only be able to sell them for 3,000 yuan each at the most. However, the new computerized machines will cost us 500,000 yuan each," said Ling. "It is a lot of money, but it's worth the investment. With the new machines, the productivity of each worker will be increased 20-fold annually, because each employee will take charge of a greater number of machines that run at faster speeds. Meanwhile, the quality of the products will also be improved and the employees will work in a more comfortable environment with less humming and buzzing," he said. "But it is a great challenge for small companies. Higher productivity requires greater stocks of raw materials. If the company stocks more materials worth some 1 million yuan, it will shoulder an extra risk of about 20 million yuan," added Ling. But the risk is worth taking, especially for companies wishing to compete in the domestic market. "Actually, the requirements laid down by the MIIT are quite low. If one had to score 60 out of 100 to get a pass in an exam, most of the production facilities we are being required to eliminate would only score 20 ... seriously," said Ling. 

Chinese Vice President Xi Jinping (C, back) and United States Vice President Joe Biden (3rd L, back) watch a basketball training at the Qingchengshan high school rebuilt after the deadly earthquake in May 2008 in Dujiangyan, southwest China's Sichuan Province, Aug 21, 2011. Chinese Vice-President Xi Jinping and his US counterpart Joe Biden Sunday afternoon visited a high school rebuilt after the deadly earthquake in May 2008 in Southwest China's Sichuan Province. The Qingchengshan high school, located in the Dujiangyan city near the province's capital of Chengdu, was flattened by the 8.0-magnitude devastating Wenchuan earthquake. And the post-quake assistance from the US National Basketball Association (NBA) added a bond between the school and the United States. As NBA helped the school build four brand-new basketball courts, the two leaders watched a basketball training by a 30-member team upon their arrival. Xi and Biden then stepped into the teaching building to talk with a group of students. "We have a mutual interest," and "President Obama and I want to see a rising China, we don't fear a rising China," Biden said when answering a question by a student on how he viewed China's changes in recent 30 years. The two leaders also visited the city of Dujiangyan, which was renowned for its Dujiangyan Irrigation System, the world's oldest functioning irrigation project, dating from 256 BC. Earlier Sunday, Biden delivered a speech on US-China relations at Sichuan University. Biden arrived in Beijing Wednesday evening for a six-day official visit to China as a guest of Xi. He will leave Chengdu for Mongolia on Monday.

Hong Kong*:  Aug 22 2011  Share

Police chief Andy Tsang Wai-hung stood by the three days of tight security measures, saying "our top priority is to ensure the safety of visiting VIPs. There's no political consideration." He also insisted that Vice Premier Li Keqiang was given the same treatment as other VIP guests including Russian President Dmitry Medvedev and US Secretary of State Hillary Clinton. "Everyone knows about the terrorist threat in the mainland. You can see how close [the places are] by reading a map or estimating the length of a flight," he said. "This is one of our considerations." It is believed the police commissioner was referring to ethnic violence in Xinjiang, where reports said at least three dozen people were killed in incidents allegedly by overseas-based militants. Over the past three days, police deployed 2,000 to 3,000 officers, keeping protesters within designated areas far from the events, while journalists experienced stringent checks on their baggage. On the arrest of a resident wearing a T-shirt with the words "Vindication of the June 4 Tiananmen Massacre" on Tuesday when Li was visiting nearby homes, Tsang said the man, surnamed Wong, had trespassed into a "core security zone." He added: "The zone must be under our control. If we allow anyone to enter, we cannot protect the safety of VIPs. "Police respect the freedom of speech and assembly. But these cannot override the safety of others." Secretary for Security Ambrose Lee Siu-kwong also defended the force, saying there was no political prosecution. At the University of Hong Kong, around 10 present and former students were prevented from getting closer than 20 meters to Li by three times the number of policemen. During the standoff, student Li Shing-hong and two members of the Hong Kong Federation of Students was pushed to the floor. Later, with tears in his eyes, Li said: "I am very disappointed with the university." HKU vice chancellor Tsui Lap-chee said the security arrangement was for the safety of students and others. Security in Admiralty was also tight, with around 100 protesters kept on the footbridge leading to the new government headquarters.

Esprit Holdings (SEHK: 0330), the Hong Kong listed clothing retailer, may be rethinking its businesses in North America and Asia, analysts said yesterday. The company is considering the possible sale of its operations in the US and Canada, according to Bloomberg, which cited three people familiar with the matter. Patrick Lau, Esprit's senior vice-president for finance and head of investor relations, declined to comment. Analysts said it would be sensible for Esprit to exit the US market to focus on expansion in fast-growing Asia, especially as the sagging European market accounts for nearly 80 per cent of Esprit's revenue. According to Esprit's interim results for the last six months of 2010, revenue in Europe fell 3.3 per cent, or HK$1.7 billion, due to declining sales and weaker European currencies. The biggest revenue declines were in Portugal, Italy and Britain. North America, which has more than 90 stores, was considered a growth market, where revenue rose 10.8 per cent to HK$657 million, but it only accounted for 3.7 per cent of the group's total revenue of HK$17.69 billion. In contrast, revenue in Asia surged 38.8 per cent to HK$3.02 billion, accounting for 17.1 per cent of total revenue. Castor Pang, research director at Core Pacific-Yamaichi, said the inability of Esprit to disentangle itself from European markets' malaise would continue to hurt its share price. Esprit shares have fallen significantly from their peak of HK$64.50 per share in March 2010 - when worries about European debts first surfaced - and closed at HK$20.50 per share yesterday. More than two-thirds of its market value has been wiped out. While Esprit may attempt to exploit Asia's rapid economic growth, especially on the mainland, Kenny Tang, general manager of ATMD Financial Planning, said it was unlikely to be able to compete with other mid-tier clothing retailers. Meanwhile, shares of luxury fashion label Prada yesterday fell 8.2 per cent to close at HK$38.25 per share, Prada's lowest since its debut in June. Pang said Prada, unlike Esprit, was not as affected by the weak economies in the US and Europe because Asia generates most of its revenue. He attributed the decline of Prada shares to price correction - the stock was still trading at a high price-to-earnings ratio, which stood at 38.4 yesterday despite the stock's fall. "When the market is robust, investors are willing to pay a premium," Pang said. "However, the current market is weak. So it is calling for a correction on stocks which are trading at extremely high PE ratios." Pang expects Prada shares to fall further until its PE ratio drops to 30 times.

The city's most cashed-up property developers have submitted bids for the former Government Supplies Department site in North Point. The government's latest tender of a commercial-residential site in North Point drew a total of six bids, demonstrating market confidence despite a poor auction result last week. "It's quite an ideal response because this investment, including both the land price and construction costs, would amount to at least HK$10 billion. There are fewer than six developers in Hong Kong who can afford this amount, meaning that the tender may have attracted as many as 10 developers. This shows their confidence in the site," Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services, said. Chan said the strong interest reflected the potential of the 84,896 sq ft land parcel in Oil Street on Hong Kong Island, which commands a view of Victoria Harbour. He said it also demonstrated developers' optimism about the outlook over the next two to three years. He said short-term volatility in global stock markets had only had a small impact on local developers. According to Savills and six other surveying firms' valuation, the government could raise between HK$6.47 billion and HK$9.07 billion from the North Point site, which equated to between HK$8,562 to HK$12,003 per square foot. Developers including Cheung Kong (Holdings) (SEHK: 0001), Henderson Land (SEHK: 0012) and Kerry Properties (SEHK: 0683) submitted their bids before the tender closed at noon yesterday. Last week, the government sold a Sha Tin residential site for its opening bid of HK$5.5 billion, which was far below market estimates, sparking concerns over the property sector's underlying strength. With a plot ratio of 8.9, the former government supplies depot at North Point has a total gross floor area of 755,633 square feet. At least 42.7 per cent of the floor area must be used for hotel purposes, while the rest can be used for flats or offices. Chan Cheung-kit, director at Lanbase Surveyors, also said all developers capable of undertaking the project had submitted bids, showing the strong demand for the site. Nam Cheong Property Development, a joint venture between the Kowloon-Canton Railway Corporation and the government, yesterday sought expressions of interest from developers in a site for building flats at the Nam Cheong MTR station. The invitation came more than a year after the joint venture decided not to award a tender because of the poor response. Surveyors said they believed the Nam Cheong site would attract a good number of developers this time around because the site was on a railway line and had a sea view.

Hong Kong does not depend on favours from Beijing, Chief Executive Donald Tsang Yam-kuen said. His comments come after Vice-Premier Li Keqiang announced a series of initiatives to help the city during his three-day visit last week. Tsang dismissed suggestions that the city is dependent on assistance from the central government, and said agreements between local and mainland authorities would be positive for both sides. "Some people are inclined to view Hong Kong's development since the handover in a negative, picky or doubtful manner," he told a radio programme. They saw measures adopted by the mainland to support Hong Kong as evidence of Hong Kong becoming reliant on the mainland, and thought the city was extending its hand in the hope of getting favours, he said in his weekly Hong Kong Letter on RTHK. Li outlined 36 measures he said were intended to bolster Hong Kong's economy during his visit. The key measures include the creation of an exchange-traded fund, which will allow mainlanders to invest in the city's stock market for the first time; the expansion of a scheme that allows local and foreign companies to settle cross-border trades in yuan; and a plan to allow more mainland companies to sell yuan-denominated bonds in Hong Kong. Tsang said the policies represented a breakthrough in the city's development as an offshore yuan centre. Hong Kong's strength as an international financial centre would allow it to continue to serve as a bridge between the mainland economy and the world, he said. Some 80 per cent of cross-border trade settlements in yuan are handled by the city's banks, and yuan-denominated bonds worth almost 70 billion yuan have been issued in the city so far this year, almost double the level in 2010. Tsang said the city's leaders were continuing to implement their own policies, and cited as an example a meeting this week with Guangdong governor Huang Huahua over the implementation of the Framework Agreement on Hong Kong/Guangdong Co-operation that was signed last year. Democratic Party lawmaker Cheung Man-kwong agreed a bigger role in yuan trade settlement would benefit Hong Kong, but said policies such as allowing more individual mainland visitors to Hong Kong - a boost for the tourism sector - were more of a "gift" to the government. Ivan Choi Chi-keung, a political analyst, said Tsang's comments were an attempt to polish his image. Media reports on Li's visit to the city may have given the impression that local leaders were weak.

Designer Kay Chan Wan-ki with some of her floating eggshell candles. She says upcycling can bring the community together. Recycling our waste is not enough – we need to go a step further and turn it into something better, say a group of Hong Kong "upcyclers". "Upcycling" is the name given to the process of taking trash and using it to create something of higher value without reducing it to raw material, as is done in recycling, thereby conserving energy and reducing waste. Examples include light shades made out of vinyl banners, handbags made out of taxi seats and even floating candles made from eggshells. But proponents say there is more to upcycling than just environmental benefits. Some even see it as a way of engaging with disconnected communities in Hong Kong, by including different sectors of society in the "production line". "Recycling is actually ‘downcycling' – perfectly good objects are mashed up and reduced into primary substances before being made into lesser goods. More energy ends up being used in the process of recycling," said Polytechnic University Professor Siu King-chung, who leads workshops and classes on "turning waste into treasure" at the university and the Community Museum Project. The term "upcycling" first came to prominence in the 2002 book Cradle to Cradle: Remaking the Way We Make Things, by William McDonough and Dr Michael Braungart. While the term was coined in the West, Siu said upcycling was something Hong Kong people had done for decades, taking inspiration from skilled craftspeople in Sham Shui Po. "I met an old man while doing research on Hong Kong's traditions in craftsmanship, who for years has been using discarded wood on the street, unwanted metal bits from garages and old car tyres to build completely upcycled wooden carts. And I thought, ‘why couldn't we do it too?'" he said. Apart from being environmentally friendly, designers hope to use upcycling as a way to engage local communities and promote locally produced goods. "The point is to try building a self-sustainable community," says designer and upcycler Kay Chan Wan-ki, whose products include eggshell candles which float on water, light shades made from old vinyl banners and coffee tables made from clothes hangers. Chan works with NGOs to make use of the skills of people they support. "Of course, being able to make money is good," she said. "But we are doing this for more than money, more than being environmentally conscious, which should actually be a criteria for any design. There are important social benefits in this whole concept." She said the best thing was to see the community come together, from collecting unwanted material, to designing and producing the product locally, and finally marketing the finished products. She found that there was a market for these kinds of goods, as "people like the idea that things are locally produced and designed, and, of course, that things are green, environmentally friendly." "Good designs should be sustainable," agrees Billy Potts of Handsome Co, the designer and producer of "taxi-bags", which are leather bags made out of old taxi seats and seat belts. Potts said while upcycling was a good idea, Hong Kong should still focus on how to design, produce and use products in the most efficient way, to reduce waste. Wu Mei-lin, co-ordinator at the Hong Kong Women Workers' Association, which is involved in upcycling, said their collaboration with Polytechnic University, which started in 2009, had developed into some long-term partnerships with designers. Even more important was the hope it gave to all those involved. "I see how designers are given the hope of seeing their designs come to life, while our seamstresses have their skills recognised. Both designers and women at our association have their worlds opened up to see that what people see as ‘waste' can become with a bit of creativity," Wu said.

From the neon-lit streets of Hong Kong to France's City of Light, a group of homeless young people - many of them former drug addicts - celebrate at the chance to represent Hong Kong in soccer's Homeless World Cup which kicks off in Paris today. The team will join other sides to march through the streets of Paris as part of the opening ceremony for the annual event. It began in 2003 and has been held in a different city each year. Later today, the first games will be played across the city with 48 male teams and 16 female teams vying for titles.

A Hong Kong-managed ship was captured by Somali pirates for the first time - attacked at anchor off a port in Oman in a dawn raid yesterday that could signal bold new tactics by bandits plaguing the Indian Ocean. The 25,390-deadweight tonne chemical tanker Fairchem Bogey, managed by Anglo-Eastern Ship Management, was seized just six nautical miles off the port of Salalah at about 10am Hong Kong time. The ship was waiting to load cargo. It is now believed to be heading across the Arabian Sea towards a pirate lair on Somalia's coast. The ship's captain was allowed to talk to the company. He said that the crew of 21 Indians were shaken but no one had been hurt. The US Office of Naval Intelligence posted an alert about the attack, later confirmed by Anglo-Eastern officials who said the ship had had armed guards on board but they had left the vessel to comply with local regulations. "It's a frightening story. And a new development" in the way pirates attack vessels, an Anglo-Eastern spokesman said. The Indian government was informed and the company was also trying to reach relatives of the crew. The tanker, owned by Fairfield Chemical Carriers - which has offices in the United States and Singapore - had unloaded one lot of cargo and had hugged the coast before reaching Salalah to load another cargo, he said. Anglo-Eastern chief executive Peter Cremers said the armed guards got off the ship at Muscat because under maritime rules guards were not allowed on board while the ship was loading or unloading cargo. "They just disembarked as the ship was inside the port anchorage ready to start loading [cargo]," said Cremers, a former chairman of the Hong Kong Shipowners Association. The spokesman said the ship's crew sent "a couple of messages off to the [Salalah] port authority" as the pirates boarded the tanker. The coastguard scrambled a patrol vessel, which was warned off by pirates. "I don't think there was any gunfire," the spokesman said. He was unable to say whether naval forces in the area were shadowing the tanker. Analysts said the attack could be the first of the autumn piracy season, when shifting monsoons calm the Indian Ocean. "This is the first successful attack on a big ship since April ... and suddenly in a port," said one shipping security analyst. "We know that the widening use of armed guards has troubled the pirates ... but now they seem to have found a weak spot yet again." Thousands of small fishing dhows ply the Oman coast, making it difficult for ships' captains to spot suspicious vessels. The International Maritime Organisation recently approved draft guidelines on the use of armed guards on ships. But there are not yet guidelines for flag states, including Hong Kong, outlining the rules of engagement for armed guards defending vessels. There are also no IMO guidelines for port authorities over the use of armed guards. Some 17 ships and 378 crew are currently held by pirates off the Somali coast. Ships and crew are typically held for months while ransoms, some of which have reached more than US$10 million, are negotiated and delivered in cash.

Hong Kong's ICAC a major inspiration for India's anti-graft fight - The streets of New Delhi are buzzing with revolution, and inspiration for the anti-corruption movement has come from an unlikely source: Hong Kong's ICAC. This afternoon, more than 100 people are expected to gather at the India Club in Jordan to get the latest update on the anti-corruption movement spearheaded by activist Kisan Baburao Hazare, 74, who is more commonly known as Anna Hazare. The meeting was organised by the Hong Kong chapter of India Against Corruption (IAC), a group that has been galvanising the expatriate Indian community in Hong Kong for months. "In India, people are very frustrated by the leadership and Indians living abroad are supporting this movement," said member Dilip Pandey, an information-technology consultant in Hong Kong. "But it shouldn't just be an emotional outburst, it's got to be a logical approach too." Hazare, a long-time advocate of laws for government accountability, was arrested last week after his request to carry out a 15-day fast in a public place was rejected by police. He refused to leave jail until his request was granted, and after a groundswell of public support the authorities were forced to grant Hazare his request. Today will be the third day of his hunger strike. The fasting is part of a non-violent protest in support of legislation that would create an independent body to investigate corruption with powers to punish those found guilty. Prime Minister Manmohan Singh's government has been left floundering by a tide of support for Hazare's campaign, with many Indians saying years of anger at corrupt officials has reached boiling point. Yesterday Singh struck a conciliatory note after previously dismissing Hazare's tactics as undemocratic. "We are open to discussion, dialogue. We would like a broad national consensus to emerge," the prime minister said. "There is a lot of scope for give and take." Pandey, 30, said Hazare's team had studied the formation of the Independent Commission Against Corruption in Hong Kong and incorporated many of its goals into the proposed bill. "Before 1974, Hong Kong was very corrupt. If you called the ambulance, you had to pay tea money. "We are trying to bring rules that can cover corruption from the top to the bottom. If I'm going for a passport, I should not be paying a bribe." Pandey said that even if the proposed legislation was approved, it would take time to shift the country's mindset after decades of corruption. "It's a ... second freedom fight. The picture is going to change. We're doing this to galvanise people to get off their couches." Born in Jamania, a village in the eastern part of Uttar Pradesh state, Pandey said corruption was part of his life from an early age, with perpetrators from the highest levels of government down to the local areas. "I have seen a lot of corruption on the ground level," he said, recalling his days in school where students sat on the floor because there were no desks or chairs. Pandey said two of the group's members had flown to India to join the fast.

 China*:  Aug 22 2011  Share

China Travel International Investment Hong Kong (SEHK: 0308) said it would step up its investment in tourism resources, such as the concessions at natural scenic locations and hot springs on the mainland, to improve its return on assets and profitability. "The target is to transform into a tourism resources company," said general manager Jeremy Xu Muhan. He said that in the past, the tourism industry profited by connecting travellers to their destinations, but that business shrank remarkably because of the internet, which enabled consumers to make their own arrangements. Xu said that in the first half of this year, revenue generated by the travel agency business decreased to 37 per cent of total revenue, from 54 per cent in the same period of 2010. Meanwhile, revenue from managing tourist spots and resort operations rose to 33 per cent, from 22 per cent a year earlier. "This shows the development direction of the company," Xu said. He maintained that China Travel Service (Hong Kong), the company's travel agency, is "definitely not for sale". So far, travel agency operations are still the biggest contributor to China Travel's revenue, though it fell 10 per cent in the first six months year-on-year, the result of fewer outbound tours to the mainland after the Shanghai World Expo last year. Vice-Premier Li Keqiang, who visited Hong Kong this week, said the central government would support Hong Kong's setting up agencies on the mainland. If the door is opened to Hong Kong travel agencies to take middle-class mainland tourists abroad, it will be a challenge for mainland agencies, which have enjoyed sole access to the market. Xu said China Travel would not be affected by such a policy "because, luckily, we have disposed of our mainland travel agencies last year." The company reported revenue of HK$2 billion in the first half of the year, down 13 per cent from a year earlier, and net profit soared 434 per cent to HK$349 million.

Visiting US Vice-President Joe Biden's 79 yuan (HK$96) lunch in Beijing has been widely discussed by internet users in China, with many viewing it as more effective than the billions of yuan spent by China on a so-called "soft power" campaign to boost its image overseas. Biden took his granddaughter to an old Beijing snack restaurant for lunch on Thursday in the company of Gary Locke, the new US ambassador to China, a posting on the embassy's microblog said. The meal for five at the Yao Ji Stewed Liver restaurant, near Beijing's Drum Tower, included five bowls of noodles with fried soybean paste, 10 steamed buns with filling and cold dishes including cucumber, Chinese yam and sliced potato. During the meal, a smiling Biden said hello to other customers and agreed to pose for photos with the restaurant's owner and staff. After the lunch, Biden handed a 100 yuan bill to the owner, Yao Yan, saying they had caused her trouble and asking her to keep the change. Many internet users doubted the low price at a time when food prices in the capital have been rising fast. Some suspected that the restaurant must have charged a "special inspection" price, a discounted price for leaders. However, later internet postings showed photos allegedly taken in the restaurant to prove it was the actual price. People flocked to the restaurant on Thursday night, queuing up to try its "presidential set meal" for 79 yuan. Some internet users said Biden has embarrassed Chinese officials, who often opt for extravagant meals with lashings of liquor. Other said it was a show put on by a politician keen to make a good impression. CCTV anchorman Rui Chenggang wrote on his microblog that American politicians were excellent at public relations, a skill they developed because of US politics. "It also has to do with cultural differences. American celebrities and politicians often eat a sandwich for lunch," Rui wrote. The 79-yuan meal followed Locke's low-profile arrival in Beijing last weekend, with some internet users saying it could mark the start of an American "soft power" offensive on the mainland. "No Maotai liquor or Lafite wine, no shark fin or abalone," one internet user said on a Weibo microblog. "It is an obvious evolutionary change for China, where even a village chief can splash out recklessly on meals." Photos of the heavy security presence during the lunch were also circulated online, with some internet users criticising it for "abusing mainland taxpayers' money".

US Vice-President Joe Biden, holding a book by Tsinghua University's Yan Xuetong, is presented with flowers at Chengdu airport yesterday. Visiting US Vice-President Joe Biden yesterday asked the capital's top think tanks what factors Chinese leaders considered when formulating foreign policy, two sources with knowledge of the meeting told the Sunday Morning Post (SEHK: 0583). The US embassy said on its official Sina Weibo, or microblog, that Biden met five Chinese scholars during a closed-door meeting at the embassy yesterday before heading to the southwestern city of Chengdu, Sichuan province. The scholars were Peking University's dean of the international studies school Wang Jisi and his deputy, Jia Qingguo , Renmin University's Jin Canrong, Tsinghua University's Yan Xuetong and China Institute of Contemporary International Relations president Cui Liru . Biden was also concerned with the restrictions Chinese leaders faced in setting foreign policy, sources said. The meeting lasted for about two hours. "Biden wanted to know Chinese views about many international issues, such as Libya as well as the Iranian and North Korean nuclear programs," one source said. "He wanted to know what restraints the Chinese leaders faced when making foreign-affairs policy." The scholars told him that China needed to consider mainly two public sentiments, one advocating more co-operation with the US and the other blaming the US for adopting a conspiracy theory towards China. They also told him that the US needed to handle Taiwan issues cautiously because some Chinese believed "they cannot tolerate any disrespect when China's international power is rising". Another source said Biden told the academics that he had become more familiar with the development of China after the past two days of meetings with its leaders. Both sources said he gave a positive outlook of Sino-US ties and appeared to be amiable when discussing China's internal problems. "Biden showed us that he had considered the perspective of China when we were discussing the ageing population and unemployment," one source said. "He sometimes jokingly said, `Handling such problems would be an enormous challenge to me if I were in China'." The US vice-president's main mission on this trip is to build a personal relationship with his counterpart Xi Jinping , who is expected to be China's next leader, and to assure Beijing that the US economy remains healthy. Biden is accompanied by Xi in Chengdu, where he will deliver a speech on Sino-US ties to university students. The governments of both countries have commented positively on the relationship between Xi and Biden. Chinese analysts said Xi appeared more frank and straightforward at the meeting than expected. "It is a signal that China may continue its existing US policy after its leadership reshuffle next year," said Tao Wenzhao , a fellow at the Chinese Academy of Social Sciences.

Visiting US Vice President Joe Biden on Sunday called China's rise a "positivedevelopment" that will bring more opportunities for bilateral cooperation. "I believed in 1979, and I believe now that a rising China is a positive development," Biden toldhundreds of students in Sichuan University in Chengdu, capital city of southwest Sichuanprovince. Biden said a rising China will "fuel economic growth and prosperity," and will mean "more demands for American-made goods and services and more jobs back home in the United States." It will also bring a new partner "with whom we can meet global challenges together," he added. "It's in our self interest that China continues to prosper," he said. As a member of the first delegation of US congressional leaders who visited China in 1979, Biden acknowledged that China was on a course of remarkable transformation and the US-China relationship has also improved dramatically in the past 30 years. "President Obama and I will continue the important work of making this partnership even more positive, cooperative and comprehensive in the coming years," he said. He stressed the importance of cooperation in development of bilateral relations and called for more from China in many areas, ranging from international and regional issues to bilateral dialogue between military leaders. "We're working very hard to develop our cooperative partnership through more than 60 separate dialogues on issues" that matter to both China and the United States, Biden said. In the speech and the following question-and-answer session, the vice president rejected the claim that US power is declining and he reassured the security of China's huge holding of US financial assets and treasury bonds. "You are safe," he said. "America today is by far the largest economy, with a GDP of almost 15 trillion dollars, about two and a half times as large as China's." He said Americans own a far bigger percentage of US financial assets and treasury bonds than China does. "Please understand that no one cares more about this than we do," he said. "So our interest is not just to protect Chinese investment. We have an overarching interest in protecting our investment, and the United States has never defaulted and never will default." Chengdu is the second and last leg of Biden's six -day official China visit. Biden said he was pleased to make his first visit to western China, acknowledging the incredible role it played in China's history, and the role it will play in the hi-tech future. In the city's hi-tech zone, there are more than 160 Fortune 500 companies operating, including US businesses such as Intel, Dell and Oracle. Biden also visited a high-school, which was reconstructed after the disastrous earthquakes in May 2008. He will wrap up his visit on Monday and then head to Mongolia and Japan.

The Yichun Bridge is pictured in the process of being blown up in Yichun city, East China's Jiangxi province, Aug 21, 2011. The 284-meter-long bridge, built in 1970, will be replaced by a new 1,760-meter bridge, which is scheduled for completion in June 2013. 

Hong Kong*:  Aug 21 2011  Share

Lawmakers say they are likely to move into the Tamar building in Admiralty before the new legislative term starts in October, as long as various electronic systems are ready. The Legislative Council Secretariat had started a three-week testing of the building's electronic systems, including the voting system, microphones and timers, said Miriam Lau Kin-yee of the Legco Commission, which handles administrative affairs. If there were no major problems, lawmakers would move in, Lau said. "If they're not ready, we can't even hold our meetings," she said. Legco president Tsang Yok-sing said last month that they would move in only after the interior construction was done, walkways to the building were improved and more space was designated for public protests. He set an August 10 "non-negotiable" deadline for the work to be completed. But on a press tour yesterday, plastic wrapping still covered some walls, the floor in the chamber was unfinished and the lifts unadorned. The construction work is largely complete and the building will be handed to Legco on August 29. Lau said other outstanding issues would be discussed in a meeting to be held by the end of the month and could be resolved soon. "The government can't ignore public opinion about transport problems in the area. I'm sure we can manage the issues." She dismissed talk that legislators were compromising with the government by making the electronic systems the key criterion for moving in. Fellow commission member Cyd Ho Sau-lan said Wi-fi access in the building had not been set up yet and mobile signals were weak. She was also worried that the access card system had not been installed.

Secretary for Security Ambrose Lee Siu-kwong said on Friday Hong Kong would only consider reviewing a travel warning against the Philippines when safety measures for tourists in the country had been improved. Lee was speaking at a media session during a visit to Beijing. The Security Bureau issued a black alert – the highest of three warnings – for the Philippines last year after seven Hong Kong tourists and their guide were killed in a hostage siege in Manila on August 23. The black alert means people should “avoid all travel” to the country. Hong Kong has maintained the alert since then. Lee said he had also asked the Philippine government to give information about its measures on tourist safety. He said his bureau would then assess whether they considered that these were effective. “The most important thing is to look at whether the Philippines has adopted any measures to protect tourist safety, what measures they are, and how they are implemented,” Lee said. Another consideration was whether Hong Kong tour agencies had regained confidence in running trips to the country, he said.

Casino magnate Stanley Ho Hung-sun, with daughter Pansy, is greeted by tycoon Li Ka-shing (right) at a University of Hong Kong centenary event yesterday. It was a rare public appearance for the ailing Ho, who only recently settled a lengthy family battle for control of his assets.

A scene with actress Saori Hara, right, and actor Hiro Hayana from ’3-D Sex and Zen.’ “3-D Sex and Zen: Extreme Ecstasy,” the erotic movie billed as the first 3-D one in the world, opens in New York, Los Angeles, Toronto and Vancouver this weekend. As Scene Asia previously reported, China Lion Distribution bought North American rights to the skin flick, telling the Hollywood Reporter that it sought “as wide as possible a release.” “Sex and Zen” broke box-office records when it opened in Hong Kong in April. Detractors pointed to the so-so reviews, dearth of compelling 3-D effects and, frankly, disturbing sex scenes, but the marketing hook of “3-D porn” offset them, as the movie attracted mainland Chinese filmgoers (it was banned in China) and sparked ladies’-night screenings and other promotional efforts.

In 1981′s “My Young Auntie,” a young Wai Ying-hung fends off a gang of attackers while seated in a rickshaw, using quick punches and lower-leg kicks. The performance earned Ms. Wai the Hong Kong Film Awards’ first best-actress award, confirming her status as one of the top female kung-fu stars of the time — and beginning a long struggle to shed the “action actress” label. For three decades Ms. Wai has worked to get the audience to accept her as a dramatic actress with kung-fu skills, rather than as just an action performer. A decade ago, she even took a break from movies altogether, and when she resumed her career a few years later she chose roles that would show her in a new light. Finally last year came a breakthrough: a bouquet of trophies, including a second best-actress prize from the Hong Kong Film Awards, for a dramatic role as a despondent mother in “At the End of Daybreak,” a Chinese-language film from Malaysia about a family shattered when the adult son faces rape allegations. “The meaning was tremendous,” Ms. Wai says through a translator. It was the acclaim she longed for and made her one of the few prominent female action performers to make a successful transition to dramatic roles (Michelle Yeoh being another). Still, the 51-year-old star has never turned her back on the genre that made her famous. “Being an action actress requires more skills,” says Ms. Wai. “There’s more risk,” which many actors might not be willing to take, she says. This summer she is back in the thick of the action, with a small but crucial role as a brutal warrior battling Donnie Yen in the martial-arts thriller “Wu Xia” from director Peter Chan. “I had a strategy when taking the character in ‘Wu Xia,’” she says, explaining it contrasts with her other two film roles this year, one in “A Chinese Ghost Story,” released in the spring, and the other as the mother of a mentally ill girl in a mainland Chinese drama slated for release at the end of the year. “All these films allow the audience to see me in different types of roles,” she says. Reflecting on a career that started more than 30 years ago — she was plucked from her job as a teenage dancer in a Hong Kong nightclub by Shaw Brothers Studios at the height of its 1970s glory — Ms. Wai says her best roles lie ahead. Whether in feature films or television dramas, she’s looking for parts that allow her to stretch her talents. “That’s the actor’s challenge,” she says.“If an actress already has a favorite role, then she wouldn’t know how to go on. So I still look forward to my best role.”

Hong Kong Exchanges & Clearing Ltd. said it is in talks with the Shanghai and Shenzhen stock exchanges for a joint venture in Hong Kong, marking a concrete step toward increasing cooperation among China's exchange operators. The potential venture could involve the development of index and other equity derivative products, the city's sole stock exchange operator said Thursday. However, China's capital restrictions continue to limit the extent to which entities in the special administrative region and the mainland can work together. Shares of the blue-chip exchange operator rose 3.6%y on the news, ending at 147.60 Hong Kong dollars (US$18.94). The benchmark index ended down 1.3% at 20016.27. The news comes a day after Chinese Vice Premier Li Keqiang, on an official visit to Hong Kong, unveiled several initiatives aimed at bolstering the city's role as a financial hub, including plans to allow exchange-traded funds holding Hong Kong-listed stocks to be sold in mainland China. ETFs are funds that often track certain indexes and trade like stocks. The ETF initiative will make it easier for mainland investors to gain exposure to Hong Kong's equities market, but Mr. Li didn't make it clear when Hong Kong ETFs, which have been expected for some time, would launch. KC Chan, Hong Kong's secretary for financial services and the Treasury, told reporters Thursday that Mr. Li said the plan to form a joint venture should be implemented "as soon as possible." The potential deal between the Hong Kong and Chinese exchanges is in line with the Hong Kong stock exchange's oft-stated stance that any tie-up with other exchanges would have to be consistent with its focus on markets in China. It also comes amid a recent spate of linking up among the world's largest exchanges. Hong Kong's exchange operator has been pushing hard to strengthen ties with China's markets. It has said many times that increasing the overlap with China is crucial because more than 70% of the trading volume on the local stock market is in China-related securities. Last year, it announced plans to allow locally listed Chinese companies to prepare their financial statements using Chinese accounting standards and mainland auditors to vet them, a decision that has come under scrutiny by some analysts and shareholder-rights advocates, particularly amid recent allegations from U.S. investors and short-selling funds of fraud at some Chinese companies listed overseas. In addition, the exchange is in the middle of a plan to extend trading hours in Hong Kong to better align itself with Chinese markets, despite complaints from local brokers, who yield significant political influence. The exchange operator also launched local share listings denominated in the yuan—though so far only one has been completed—amid concerns that the market wouldn't have access to enough yuan liquidity to allow significant trading in those stocks. The exchange has said it plans to launch a yuan equity-trading facility to ensure long-term growth and stability of a yuan stock market.

 China*:  Aug 21 2011  Share

Vice-President Xi Jinping (R) speaks next to US Vice-President Joe Biden during a discussion with US and Chinese business leaders at Beijing Hotel in Beijing August 19, 2011. China and the United States "have a responsibility to strengthen macro-economic policy coordination and together boost market confidence," Xi told visiting Biden on Thursday. Chinese Vice President Xi Jinping said Friday that he believes the US economy will improve by addressing current challenges. "The US economy has always been resilient and capable of repairing itself," Xi said as he joined visiting US Vice President Joe Biden in attending the China-US Business Dialogue, which was held in Beijing on Friday. Xi told the businessmen at the dialogue that the visiting US vice president briefed him on Thursday on the US government's measures to boost its economy and increase employment. Biden's six-day official visit to China comes on the heels of an unprecedented downgrade of the United States' credit rating earlier this month, which created global uncertainty about the safety of dollar assets. China remains the largest foreign holder of US debt, with about 1.16 trillion US dollars in US Treasury securities. "We believe that the US economy will move for the better by addressing these challenges," Xi said. "I hope that Chinese and US entrepreneurs will judge the situation appropriately, remain confident and turn challenges into opportunities," Xi said, urging the businessmen to "make contributions to facilitate the sustainable and balanced development of the Chinese and US economies, as well as the global economy." Senior executives from prestigious Chinese and American companies, such as the China Ocean Shipping (Group) Company, the Bank of China, Lenovo, General Motors and J.P. Morgan, attended the dialogue.

Brian Curley has designed dozens of golf courses in China, but none is quite as outlandish as the one he's crafting now. On southern China's Hainan Island, Mr. Curley is shaping a regulation 18-hole course that will feature a replica of the Great Wall, a hole inside a giant bowl of noodles, a small-scale version of the Bird's Nest Stadium from the 2008 Beijing Olympics, and a tee tucked behind a waterfall. The owners sought suggestions online for their fantasy course, and then they asked Mr. Curley to turn that into reality. "Think of miniature golf like you played as a child, but on a grandiose scale," says Mr. Curley, an American pioneer of China's golf industry and one of the most prolific course designers in the sport's fastest-growing market. "Purists might not like [the Hainan course], but I think it's exactly what golf needs," he says. "Golf has been stagnant for way too long." There is evidence of the existence of a golflike sport in China as early as the 14th century. A Ming Dynasty scroll known as "The Autumn Banquet" shows a player swinging a club at a ball. But modern golf is still finding its feet in the Middle Kingdom. Until recently, golf was considered too bourgeois for Chinese society. As the country opened up to business—and middle-class pastimes emerged—golf gained in popularity. But in 2004, construction of new courses was halted across most of China because of concerns about the effect of rampant development on land and water resources. Still, new golf courses continue to spring up in China—construction is allowed in some areas designated for tourism, while developers in other locations get around the ban by dubbing new sites as 'sporting facilities' or 'private clubs.' Today there are an estimated 300 to 500 golf courses in China. That still leaves plenty of room for growth—by comparison, there are more than 15,000 courses in the U.S. Just about every important course designer is looking at China's potential. "I saw the potential in China long ago and decided to give it 110% effort when everyone else questioned why we would work there," Mr. Curley says. "China is the epicenter of the golf universe." China's burgeoning golf industry has attracted some criticism from purists who say the game's traditions are being eroded by garish Chinese courses, over-the-top elite resorts, and poor etiquette, such as widespread gambling and cellphone use on fairways and greens. "Golf has developed in China in a very different way to in its traditional homes," says Damien McDowell, an expert on golf marketing in the Asian-Pacific region. "By starting as a game for the wealthy and with memberships something of a status symbol, the grass-roots participation, the etiquette and the broad interest in the game just has not been there. You still see mobile phone conversations on the course, people moving while others are playing and plenty of other things that would probably not be tolerated in golf's older markets." There are also concerns that most of the new courses tied to hotel or housing developments are essentially a speculative play on the country's real-estate market. Still, the outgoing Mr. Curley, over six feet tall and often dressed in dirty work boots and a cowboy hat, is too busy designing courses to worry about the critics of the path the sport is taking in China. The 51-year-old, who grew up in California near the famed links at Pebble Beach, got his start in course design in the mid-1980s. He worked with leading U.S. course designer Pete Dye and helped build standout courses in the U.S. and Asia, including Thailand's Siam Country Club, renowned as one of the leading golf clubs in the region. In 1997, Mr. Curley and Dye colleague Lee Schmidt set up their own firm, Schmidt-Curley Designs, of Scottsdale, Arizona. The pair was quick to focus on China. The firm's big break came when it was hired to oversee work on the mammoth 20 square-kilometer golf complex at Mission Hills Shenzhen. The site, just over the border from Hong Kong, is home to 12 courses designed by leading golf personalities, including Jack Nicklaus, Ernie Els and Nick Faldo. In recent years, the resort has hosted important events on the international golfing calendar, including, between 2007 and 2009, the World Cup of Golf. The site also placed Schmidt-Curley at the head of the pack when it came to course design in China. "Mission Hills broke all of the molds," says Dana Fry, Hong Kong-based partner with Hurdzan/Fry Environmental Golf Course Design. "When they began developing the market we thought that they were a little nuts, to be honest, but they saw the potential, and now they are the standard setters." To date, Mr. Curley has worked on the construction of 35 golf courses in China and says about 85% of his current workload is there. He typically spends three weeks out of every month in China, often at the Schmidt-Curley offices in Kunming in Yunnan province, or on Hainan, a resort island designated for tourism development. (The rest of the time, Mr. Curley lives in Scottsdale with his wife and two sons. He rarely has time to play golf these days, and his handicap has slipped from a low of two to about nine or 10, he says). His work in China has earned Mr. Curley the envy of many of his peers. "He has raised the bar for the golf industry in China as a whole," says Mark Hollinger of California-based JMP Golf Design Group. "Brian Curley's work in China has been quite good over a number of years, and extremely consistent, which in China is the most difficult thing of all." Designing and constructing courses in China can be tougher than in the West, and requires ample face time with suppliers, contractors, and course owners. "Getting a job is very difficult but getting them built properly is another thing," says Mr. Fry. "The multitude of problems faced by architects to get courses built according to specs and somewhat close to their plans is enormous. Brian and Lee have made sure that top quality golf gets both designed and built." When the owners of Mission Hills were planning their second site, in Hainan, they hired Schmidt-Curley again. On the island's eerie volcanic landscape, manicured greens and white sand traps are set against dazzling black rock. He says the tournament course at the new resort, with spacious lawns for viewers and television crews, is among the standouts in his career. "His work at the new Mission Hills complex on Hainan island—where he has sculpted 10 excellent courses from a harsh, volcanic landscape—is incredibly diverse," says Alex Jenkins, editor of HK Golfer magazine. The resort opened in 2010. Last fall, stars including Hugh Grant teed off at a celebrity event at the resort that offered the biggest purse ever for China: $1.28 million. Work on more courses at the site—including the one with the replica Great Wall—is continuing. Meanwhile, Mr. Curley is far too busy to worry about whether golf is to the taste of traditionalists, or even thinking about China's real-estate market. He's far too busy designing fairways, greens and sand traps. "There are really only three kinds of designers in the business," he says. "You have the ex-pros like Arnold Palmer. You have the families of golf designers and players, with the big names. And then you have the weirdos like us. We don't have names, we just build courses."

Hong Kong*:  Aug 20 2011  Share

Beijing has pledged to issue more government treasury bonds in Hong Kong after the sale yesterday of 20 billion yuan (HK$24.39 billion) in yuan-denominated or "dim sum" bonds - the third and largest tranche of government bonds it has issued so far. In addition, Vice-Premier Li Keqiang said yesterday the mainland's non-financial corporations would be allowed to issue up to 25 billion yuan in yuan bonds in Hong Kong this year. Beijing has set a 50 billion yuan quota to be shared equally between non-financial and financial corporations this year. "We will have more mainland-based financial institutions issuing yuan-denominated bonds in Hong Kong, and allow mainland enterprises to do so on a larger scale," Li said on a visit to Hong Kong. Currently any entity repatriating yuan raised in Hong Kong to the mainland is subject to a cumbersome case-by-case approval process, which has discouraged some potential issuers. Yesterday's move signalled that a simpler process will be created. Mike Wong, chief executive of the Chamber of Hong Kong Listed Companies, welcomed Beijing's efforts to make it easier for overseas companies and investors to use yuan to invest on the mainland. "This will encourage more companies to issue yuan bonds or yuan shares in Hong Kong as they will feel more comfortable to raise funds in yuan if they know they will be allowed to use the yuan to invest in China," Wong said. Credit Suisse said these were important steps "to allow off-shore yuan to be channelled back on-shore for investment purposes, which are integral parts of the ongoing yuan internationalisation process and the development of Hong Kong into a yuan off-shore centre". The Ministry of Finance's 20 billion yuan in government yuan bonds range from 0.6 per cent yields for three-year bonds to 2.36 per cent for 10-year bonds. Analysts said the third round of the ministry's offering was attractive, despite their low yields, since they were low-risk and the market expected the yuan to continue appreciating at about 5 per cent annually. The yuan has climbed 3.2 per cent against the dollar this year. The ministry first offered sovereign bonds in Hong Kong in 2009, but the latest issue is more than double the size of the two previous offerings. "Investors feel secure investing in yuan bonds," said Kenny Tang Sing-hing, general manager of AMTD Financial Planning. "China has huge foreign reserves and the possibility that the Finance Ministry might default is terribly low. "Investors are not just looking at the interest rate, but also the prospect for the appreciation of China's currency." Raymond Yeung, senior economist for China at ANZ, predicted the bonds would see strong demand as investors had lost confidence in some assets denominated in US or Hong Kong dollars. "I think the appreciation of the yuan will slow down a bit in the latter half of this year. But for the next couple of years the appreciation trend will be maintained," Yeung said. Hong Kong's financial secretary, John Tsang Chun-wah, said tendering for the bonds scored a "satisfactory" result. Subscription of the 15 billion yuan bond for the institutional tranche was 3.66 times oversubscribed based on the 70 billion yuan figure released by the Bank of Communications (SEHK: 3328), the sole underwriter of the offer. The ministry allocated 15 billion yuan worth of bonds at maturities of three, five, seven and 10 years to institutional investors, and 5 billion yuan worth of two-year bonds to retail investors in Hong Kong. The ministry set the yield for the two-year retail tranche at 1.6 per cent. For institutional investors, the three-year bonds are set at 0.6 per cent and the five-year at 1.4 per cent. The seven- and 10-year bonds would yield 1.94 and 2.36 per cent respectively. Louis Tse Ming-kwong, director of VC Brokerage, said the yields were low. "But people who want to buy such bonds are not so interested in yield but in capital growth. "Yuan investments are like a safe haven for investors so they can sleep well given the uncertainty facing the international economy, an unsettled stock market and an expensive commodity market."

Hong Kong's role in the nation's reform, opening-up and modernization drive is "irreplaceable," according to Vice Premier Li Keqiang. He also predicts the SAR will have a bright future with its vigor and vitality. Wrapping up his three-day visit, Li said: "There is a wide range of areas that the mainland and Hong Kong can cooperate on to develop, and there is huge potential." Li also listed some of traits he observed about local people. "Hong Kong compatriots are hardworking and wise. They work seriously, diligently and professionally. Hong Kong society is open, diversified and full of vigor. "Hong Kong, under the rule of `one country, two systems,' has the great vitality to cope with challenges and maintain prosperity and stability whatever the circumstances." Speaking at Chek Lap Kok airport before returning to Beijing in the afternoon, he said: "With potential, vigor and vitality, I am fully confident of Hong Kong's future development." He also said his first-time official visit as vice premier deepened his understanding of the SAR. Earlier, in a speech at the University of Hong Kong's centenary ceremony, Li said local youngsters are ambitious, promising and capable and hold great hope for the future. He then headed to the central government liaison office in Sheung Wan for a meeting before officiating at the completion ceremony of the HK$5.5 billion new government headquarters at Tamar in Admiralty, accompanied by Chief Executive Donald Tsang Yam-kuen. At the ceremony, Tsang stressed the need to take to heart the concerns of citizens. "The idea of the `door always open' is fully manifested in the design of the new government headquarters, an exemplification of our strong conviction that we should always be people- oriented, open-minded and receptive to public opinion," he said. With the Legislative Council complex next to government headquarters, Tsang said the layout shows the close relationship between the administration and the legislature. "It is our belief that effective administration hinges on close cooperation and concerted efforts between the administration and the legislature."

Secretary for Financial Services and the Treasury Professor Chan Ka-keung said on Thursday a 20 billion yuan quota for Hong Kong companies to invest in mainland securities could be raised in future. Vice-Premier Li Keqiang announced on Wednesday that the central government had set aside the 20 billion yuan (HK$24.4 billion) quota for Hong Kong companies to invest in securities on the mainland via a yuan-denominated Qualified Foreign Institutional Investors (QFII) scheme. Chan explained on Thursday that the quota was only a starting point and Hong Kong could discuss with the central government the possibility of raising it if it proved successful. This comes after concerns in Hong Kong that the 20 billion yuan is quite a small amount. “The 20 billion renminbi [yuan] is an initial size as a starting point, which means as the programme continues, we should expect to see more,” he said. “We will be working in this direction.” The new scheme could help achieve a better return for the 554 billion yuan now sitting as low-yielding deposits in banks in Hong Kong. It came among more than 30 measures announced by Li on encouraging two-way investment and trade between Hong Kong and the mainland and strengthening the city’s role as a centre for offshore yuan trade.

China said its third bond issue in Hong Kong, the territory's biggest yuan bond offering yet, has seen strong demand from institutional investors. The offering totals 20 billion yuan ($3.1 billion) in size, of which 15 billion yuan is being offered to institutional investors in maturities of three, five, seven and 10 years. That portion has attracted 69.0 billion yuan in subscriptions from investors eager for exposure to a currency widely expected to continue appreciating in tandem with China's economic ascent. The retail tranche, totaling 5 billion yuan of two-year paper, is expected to be popular with individual Hong Kong investors. Order-taking for that portion begins Thursday. The latest offering will help to establish a benchmark yield curve for future yuan-denominated bond issues in the city, and is according to Chinese Vice Premier Li Keqiang part of a long-term institutional arrangement aimed at boosting the offshore yuan bond market in Hong Kong. Li Yong, the finance ministry's vice minister, said the coupon for the three-year bond is set at 0.6%, while the coupon of the retail tranche is set at 1.6%. The coupon for the five-year bond is set at 1.40%, while the seven-year and 10-year bonds carry coupons of 1.94% and 2.36%, respectively, said Bank of Communications, which is arranging the sale of the institutional tranche. By issuing its third yuan sovereign bond in Hong Kong, HSBC Holdings PLC Chairman Douglas Flint said, "China's Ministry of Finance has added a further layer to the measured course of (yuan) liberalization, provided greater depth to this evolving market and bolstered Hong Kong's standing as a leading international financial center." Japanese Government Bonds Yields fell Wednesday, following moves in U.S. Treasurys. The benchmark 10-year yield declined 0.015 percentage point to 1.02%. Some safe-haven demand flowed into JGBs after German Chancellor Angela Merkel and French President Nicolas Sarkozy on Tuesday dismissed the idea of euro-zone bonds, saying they are potentially harmful to Europe's healthiest economies. Analysts believe such bonds could be a key to solving the sovereign debt problems in Europe, and eventually help ease downward pressure on Japan's yields as well. "One reason why the 10-year JGB yield has established itself below 1.2% is the downward pressure created by the worsening debt crisis in Europe," said UBS Securities senior strategist Atsushi Ito. "We believe a fundamental resolution of the euro zone's problems will require a move to a single European fiscal authority."

Four Chinese companies that are planning to raise a total of $5.5 billion will have their listing applications assessed by Hong Kong's stock exchange next week, people familiar with the situation said Wednesday, a sign that companies are continuing to tap the city's stock market despite its steep losses this month. Global markets, including that in Hong Kong, have rebounded from a plunge earlier this month amid growing worries that policy makers won't be able to stimulate the global economy. Even so, the benchmark Hang Seng Index is down 9.6% for August, despite a gain of 0.4% on Wednesday. Still, companies continue to tap Hong Kong's stock market, the second biggest venue for initial public offerings so far this year after the New York Stock Exchange, according to data provider Dealogic. Hearings are set for Aug. 25 to discuss the listing plans of Shanghai-listed construction machinery producer Sany Heavy Industry, which is seeking to raise around $3.5 billion; Citic Securities, China's largest securities firm by market value, which is seeking to raise at least $1.5 billion; Chinese tea company Ten Fu Tea, which hopes to raise about $300 million; and Fujian province-based food maker China Lifestyle Food and Beverages Group Ltd., which is targeting up to $200 million. The IPO for Sany would be among the biggest this year in Hong Kong. The biggest is the $10 billion dual listing in Hong Kong and London by Swiss commodities trader Glencore International AG. Investors will likely compare Sany with that of another Chinese machinery maker, Changsha Zoomlion Heavy Industry Science & Technology Development Co. Ltd., which raised $1.68 billion in a Hong Kong IPO in December. Citic Securities is looking to list in September, one person said. The company, whose shares already are listed in Shanghai said in late March that it planned to issue no more than 10% of its entire stock as Hong Kong-listed H shares, with an overallotment option that allows it to increase the offering size by 15%. It said it would use the proceeds to set up "overseas business platforms," including acquisitions of research, sales and trading networks, and for other types of overseas or cross-border operations. A number of other listings, with the potential to raise more than $15 billion, also are awaiting the approval of the Hong Kong exchange in the next couple of months. They include Chinese insurer New China Life Insurance Co. which plans to raise around $4 billion; Shenzhen-listed machinery maker XCMG Construction Machinery Co., which is seeking to raise $1.5 billion to $2 billion; Bluestar Adisseo Nutrition Group Ltd., which is seeking about $1.5 billion ahead of a dual Paris-Hong Kong listing; and Carlyle Group L.P.-backed New Century Hotel Group Ltd., which is planning to raise around $400 million. Shanghai-listed lender China Everbright Bank Co. in June postponed the launch of its multibillion dollar Hong Kong listing, people familiar with the situation said. It has yet to launch the offer. Bank of America Merrill Lynch, Citigroup and Citic Securities Co. are handling the IPO of Sany Heavy, people familiar with the situation said earlier. Citic Securities International, CCB International (Holdings) Ltd., ICBC International Holdings Ltd., BOC International, Bocom International Securities Ltd, Agricultural Bank of China International, HSBC Holdings PLC, CLSA Asia-Pacific Markets, Morgan Stanley, Bank of America Merrill Lynch, BBVA, Nomura Holdings Inc., Samsung Securities are handling the IPO of Citic Securities. Ten Fu Tea, which has 1,088 stores in China, has hired China International Capital Corp. and Credit Suisse Group to handle its listing, the people said, while China Lifestyle Food, which makes jelly desserts and candies, has hired Citigroup Inc. and BOC International Holdings Ltd. to handle its listing.

Beijing is set to launch an exchange-traded fund (ETF) linked to Hong Kong stocks - a move that will allow mainlander investors to enter the local stock market for the first time. The scheme, a proxy for 2007's shelved through-train investment scheme, is among a range of measures announced by Vice-Premier Li Keqiang yesterday in Hong Kong to boost the city's reputation as a financial hub. While brokers believed the ETF would be popular with investors, they said the fund would have far less impact than the scrapped through-train scheme, which would have allowed mainlanders to invest directly in Hong Kong stocks. The prospect of massive investment in the city pushed the Hang Seng Index to a record high of 31,638.22 in October that year. But the scheme was shelved a month later and scrapped in January 2010 because regulators feared losing control of capital outflows. Capital controls that ban mainland investors from directly putting money into overseas markets, including Hong Kong, are still in place. A proxy plan to have a Hong Kong ETF listed on the Shanghai and Shenzhen markets was first proposed in May 2009 under the sixth supplement to the Closer Economic Partnership Arrangement, but technical issues thwarted a quick launch. People's Bank of China governor Zhou Xiaochuan yesterday said the problems had been solved and the fund could be launched, but he did not say when. A spokesman for the Financial Services and the Treasury Bureau said the ETF was expected this year. An ETF is issued by a bank or broker, which buys a basket of stocks to package into a fund. Investors can subscribe to the fund's offerings or trade them like shares on the market. "An ETF is a good way for mainlanders to invest in Hong Kong stocks. However, we need to look at the details to see the impact. For example, what are the qualifying criteria for the issuance of ETF?" said Joseph Tong Tang, executive director of Sun Hung Kai Financial. Mark Konyn, chief executive of investment fund house RCM Asia Pacific, said other types of ETFs were popular on the mainland. Konyn said a Hong Kong ETF would help encourage mainland investors to use their yuan overseas, but differences in the exchange rate might discourage them. The stock market yesterday reacted calmly to the ETF news. The benchmark Hang Seng Index rose 0.38 per cent to close at 20,289.03 points. Desmond Ng, chief operating officer at Invesco Hong Kong, said that in seven years the mainland's ETF market had grown to 27 funds, worth more than US$12 billion. "Nowadays, ETF buyers range from retail investors to institutional ones such as hedge funds, insurance companies and sovereign wealth funds," Ng said. "I believe the China ETF market has the potential to grow in a manner similar to developed markets, such as the US," Ng said. Danny Yan, a portfolio manager at Haitong International Asset Management, said: "The impact on Hong Kong will be more long term than short term, because to implement these measures, it will take a few months to a year."

Vice-Premier Li Keqiang (centre) with HKEx chairman Ronald Arculli (left) and Chief Executive Donald Tsang Yam-kuen during a visit to the stock exchange yesterday. Vice-Premier boosts HK role as yuan trade hub - Li Keqiang encourages two-way investment and trade between HK and mainland and strengthening of city's role in internationalisation of the yuan - Vice-Premier Li Keqiang yesterday announced a raft of more than 30 measures to boost the local economy by encouraging two-way investment and trade between Hong Kong and the mainland and strengthening the city's role in the internationalisation of the yuan. The business community and trade organisations generally welcomed Li's proposals, made on a visit to Hong Kong, hoping they would improve gloomy market sentiment. The Hang Seng Index has dropped about 3,000 points, or 12 per cent, over the past two weeks due to worries over the US and European sovereign debt crises. "The central government will exert its utmost to contribute to the prosperity (SEHK: 0803, announcements, news) and stability of Hong Kong and to the common development of Hong Kong and the mainland," Li said. "Its status as a financial centre in Asia and globally is crucial for Hong Kong's development." Of the measures he announced at a forum on the nation's 12th five-year plan, 12 are related to financial services and the development of the offshore yuan market. One key scheme to support the stock market is to allow mainland investors to invest in Hong Kong stocks by launching the long-awaited index-tracking Exchange Traded Fund backed by a portfolio of Hong Kong stocks. The fund, to be listed on the stock exchanges in Shenzhen or Shanghai, will allow mainlanders to invest in Hong Kong stocks. Several other measures will encourage expanded use of the yuan. One is a 20 billion yuan (HK$24.4 billion) quota for Hong Kong companies to invest in securities on the mainland via a yuan-denominated Qualified Foreign Institutional Investors (QFII) scheme. (A US dollar-denominated scheme already operates.) This could help achieve a better return for the 554 billion in yuan now sitting as low-yielding deposits in banks in Hong Kong. A scheme allowing companies to settle trades in yuan, currently limited to 20 provinces, is being expanded nationwide. Bejing will also allow more mainland companies to sell yuan bonds in Hong Kong. Hong Kong companies will be able to invest on the mainland using yuan - making it easier to repatriate to the mainland yuan raised through bonds or share issues. There are still capital controls and currently all transfers need approval. "The new measures will encourage more companies to issue yuan bonds or yuan shares in Hong Kong," said Andrew Fung Hau-chung, the head of treasury and investment at Hang Seng Bank (SEHK: 0011). "China is speeding up its pace of internationalising the currency by these new measures. "Most importantly, the vice-premier has confirmed Hong Kong's role as an offshore yuan trading centre for China. This would help Hong Kong fend off rivals such as Singapore or London which also want to develop as yuan trading centres." The yuan trade is considered a key driving force for the Hong Kong economy, which shrank in the second quarter relative to the first quarter. Li also said Beijing planned to further open up service industries to local firms under by the eighth supplement to the Closer Economic Partnership Arrangement, to be signed this year. The new initiatives come as Hong Kong's district council elections approach and social problems spread. Political commentator Johnny Lau Yui-siu said: "Beijing is of the view that if economic issues are not handled properly, they would escalate into political problems." At a dinner with legislators last night, Li gave what was seen as a show of support from Beijing for Chief Executive Donald Tsang Yam-kuen and his administration following recent criticism by the head of the State Council's Hong Kong and Macau Affairs Office, Wang Guangya , who said civil servants trained in the colonial era were good at taking orders but not at making policy, and lacked the ability to plan for the long term. Tsang and most of his ministers are ex-civil servants. Li said Tsang's administration had been industrious and under its leadership Hong Kong was heading in the right direction even though it still faced difficulties and challenges. "The central government affirms all the good work you have done and expresses sincere gratitude to all of you," Li said. Helping hand - Hong Kong companies to be allowed to make direct investments in yuan on the mainland; Cross-border trade settlement in yuan to be extended from 20 cities to the whole country; Qualified foreign institutional investors in Hong Kong to be allowed to invest in mainland equity markets subject to initial quota of 20 billion yuan; Mainlanders to be allowed to invest indirectly in HK stock market via exchange-traded fund; Mainland service industry to be further opened to HK firms; HK travel agencies to be encouraged to set up shops on the mainland.

Visiting Chinese Vice-Premier Li Keqiang attended and addressed a celebration ceremony marking the centennial anniversary of the founding of the Hong Kong University on Thursday morning. Li commended the university for its great contribution to Hong Kong and the entire nation by nurturing more than 130,000 alumni, including Chinese revolution forerunner Sun Yat-sen. He said the central government would set up a dedicated fund to aid 1,000 Hong Kong University teachers and students to visit the mainland every year, starting in 2012.

 China*:  Aug 20 2011  Share

Vietnamese authorities say anti-China protests must stop, arguing that hostile forces are abusing the situation to stoke dissent against the Communist government. Some 10 demonstrations have been staged in Hanoi since early June demanding that China stay out of Vietnam’s territory. They follow the government accusing China of interfering with its oil and gas exploration activities in disputed waters in the South China Sea. The Hanoi People’s Committee said in a statement on its website on Thursday that some opposition elements inside and outside the country have abused the protests to oppose the Communist party and state. It says their aim is to stoke “division in national unity and the Vietnam-China relations.” It says law enforcement agencies will apply “necessary measures” against those who defy the order.

The Philippine President Benigno Aquino will visit China at the end of this month amid tensions over conflicting territorial claims in the South China Sea, the government in Manila said on Thursday. Aquino will hold his first summit meeting with President Hu Jintao during the trip, from August 30 to September 3, the Philippine government foreign affairs department said in a statement. Some of the issues on the agenda will be measures to boost trade, tourism, education and cultural ties, the statement said. The statement made no mention of a rise in tensions between the two nations this year over their conflicting claims to areas of the potentially resource-rich South China Sea. The Philippines has repeatedly complained that China has become more aggressive in enforcing its claims to the waters. Aquino in June publicly called for help from long-time ally the United States to help contain China’s alleged aggressiveness in the South China Sea.

A worker moves oak barrels in a cellar of Rongzi Chateau in Xiangning county of Linfen city, North China’s Shanxi province on Aug 15, 2011. The owner of the chateau, Zhang Wenquan, used to be a coal mine boss with total assets worth around 2 billion yuan. Zhang said he made the change as Ningxiang county’s geography and soil are suitable for grape growing, and investment in wine is a better economic development plan. The chateau was established two years ago with nearly 250 million yuan in initial funding. Its annual maximal production stands at 5,000 tons and he plans to enter the market by the end of 2011.

Coca-Cola Co. Chairman and Chief Executive Muhtar Kent on Thursday said the Atlanta soft-drink giant plans $4 billion in new spending in China over the next three years, the latest big investment commitment by a multinational food group targeting the world's No. 2 economy. During an interview with The Wall Street Journal, Mr. Kent said the investment would be used to add bottling factories, expand some existing facilities and fund initiatives in distribution, marketing and the development of new cold drinks. "It's our third-largest global market, growing at double-digits," he said.

On U.S. Vice President Joe Biden's first full day in China, he and his Chinese counterpart emphasized the global importance of strong ties between the world's two largest economies. "The economic stability of the world in no small part rests on cooperation between the United States and China," Mr. Biden said at the outset of a meeting in Beijing Thursday with Chinese Vice President Xi Jinping. "It affects every country." Mr. Biden is scheduled to spend extensive time with Mr. Xi during the five-day visit, providing U.S. officials with a rare close look at the man expected to succeed current top leader Hu Jintao as Communist Party chief next year and as president in 2013. U.S. debt woes and their impact on the world economy and on China's massive holdings of American government debt—a stake of well over $1 trillion—are expected to be central topics in Mr. Biden's meetings with Mr. Xi and other Chinese leaders. Before his arrival, Mr. Biden and other U.S. officials sought to reassure China that Washington can right its fiscal ship. The positive atmosphere that both sides sought to foster was slightly marred when Chinese security agents forcibly removed foreign journalists and members of Mr. Biden's press staff from the meeting room, grabbing and pushing them, before the U.S. vice president had finished his statement. Journalists had expected to be allowed to listen to the entirety of Mr. Biden's opening remarks. U.S. officials were visibly displeased, although neither the U.S. Embassy in Beijing nor Mr. Biden's office had any immediate comment. Before his meeting with Mr. Xi, Mr. Biden received a full military welcome at Beijing's giant Great Hall of the People. "China and the United States have ever-more extensive common interests and we shoulder ever-more important common responsibilities," Mr. Xi said in his opening remarks. The U.S. vice president, known for his sometimes unorthodox statements, tried several times to leaven Thursday's proceedings with some humor. "Good to see you again… I know you are very busy with national affairs at home," Mr. Xi said to him. "You are national affairs. You are our national affairs," Mr. Biden replied. "Happy to be here." Greeting one member of the Chinese delegation, Mr. Biden quipped: "Remember what I told you last time: If I had hair like yours I'd be president." Friday Mr. Biden will meet with Mr. Hu and with Premier Wen Jiabao. China's top leadership has so far been largely silent on the U.S. fiscal crisis and many are wondering to what extent they might criticize the U.S. over the issue. Mr. Biden will travel Saturday to Chengdu, the capital of the relatively poor inland province of Sichuan.

Mainland online video giant Tudou Holdings has raised US$174 million from its initial public offering in the United States, marking the resumption of IPOs in the market after a series of postponed deals last week. Shanghai-based Tudou sold 6 million American Depositary Shares (ADS) on Tuesday at US$29 apiece, the mid-point of its previouslyannounced offering price range of US$28 to US$30. Each ADS represents four Class B ordinary shares. The company, the mainland's second-biggest online video service provider behind Youku.com, started trading yesterday on the Nasdaq stock market under the ticker "TUDO". It was the only IPO scheduled for this week after many companies pushed back their US listing plans because of the extreme market volatility last week, according to investment adviser Renaissance Capital. Ten of 12 IPOs slated last week were put off. Credit Suisse Securities, Deutsche Bank Securities and Oppenheimer & Co served as underwriters of the Tudou offering. Net proceeds from the IPO were estimated to be US$143.5 million, which will be used to acquire and license premium video content, produce content developed in-house, expand internet bandwidth capacity and to cover general corporate purposes. Founded in 2005, the company has enjoyed rapid subscriber and traffic growth in recent years. Its registered users reached 90.1 million as of June 30, up from 78.2 million as of December last year. The average number of new video clips uploaded daily increased to about 47,000 in the six months ended June 30, compared with 40,000 last year. It also had more than 48.2 million user-generated video clips in its library as of June. In its recent filing with the US Securities and Exchange Commission, Tudou reported a 94.5 per cent rise in second-quarter revenue to 166.7 million yuan (HK$203.62 million) from 60 million yuan a year earlier. The increase was fuelled by improved online advertising sales as the number of advertisers swelled to 378 in the quarter to June from 297 the previous year. Its net loss, however, widened to 78.9 million yuan last quarter from 45.2 million yuan a year ago because of the expenses related to marketing and building up its operations.

Shanghai Pharmaceuticals Holding Co, which has almost $2.5 billion in cash, may make its first acquisition outside China by the end of the year, spurred by a plunge in pharmaceutical stocks and a stronger yuan. Targets may include mid-sized drugmakers in the United States or Europe that would help the Shanghai-based company, China's second-largest drug distributor, expand its portfolio of medicines, Chairman Lu Mingfang told reporters on a conference call on Monday. He didn't identify any candidates. Overseas purchases are becoming cheaper after shares of healthcare companies slumped in Europe as the region's sovereign debt crisis deepened and as investors in the US speculated the economy may contract. Since 2010, Shanghai Pharma has bought, or agreed to make, at least nine acquisitions to expand its distribution business. Buying assets abroad may help Chinese drug makers improve their image and brand awareness, according to a report by KPMG Advisory (China) Ltd in May. "We hope to complete a major acquisition in the next six to 12 months that we hope will enable us to raise the quality of our innovative drugs portfolio," Lu said. "The current market conditions are conducive for us." A stronger yuan is also reducing the cost of overseas purchases. The Chinese currency reached 6.39 a dollar on Aug 12, the strongest since the country unified official and market exchange rates at the end of 1993. Shanghai Pharma is reviewing about 10 potential targets, which are "medium-sized manufacturers, including brand-name drug manufacturers", said Johnson Sun, a health-care analyst at Guotai Ju nan Securities HK Ltd in Hong Kong. The acquisition price may be about HK$6 billion ($770 million), he said. Shanghai Pharma hasn't yet allocated the $770 million it raised from its HK$16 billion initial public offering in May and had cash and cash equivalents of 15.8 billion yuan ($2.4 billion) as of June 30, it said on Monday. "We think it would be the first M&A case in China's pharmaceutical industry," Sun said. "The news would be quite positive to its share price." Many companies in China are aiming to go overseas for their next growth opportunities, according to KPMG. "The main motivation for them to go abroad is a deep concern for building brand awareness and a trusted image domestically," KPMG said in the report. "It is important for local companies to work on the trust factor because Chinese consumers tend to have more faith in foreign brands." China's pharmaceutical market, the world's third-largest, is supplied by more than 5,000 local companies, almost all of which produce generic medicines, according to KPMG. China's generic-drug industry was worth $29.3 billion in 2009, accounting for 63 percent of the pharmaceutical market. To date, all of Shanghai Pharma's acquisitions have been in China. In April, it won regulatory approval to take control of China Health System Ltd, the third-largest drug distributor in Beijing. "A foreign acquisition would be the first for Shanghai Pharma, so there would be a steep learning curve," said Derrick Sun, an equity analyst with BNP Paribas Securities (Asia) in Hong Kong. "If they actually acquire something in Europe or the US, how to make the acquisition a success is a huge uncertainty, so I won't be too excited about it at this stage."

US vice-president kicks off China visit - US Vice-President Joseph Biden (L), waves with his granddaughter Naomi Biden, as they walk out from Air Force Two upon arrival at the airport in Beijing August 17, 2011. Vice-President of the United States Joseph Biden arrived in Beijing Wednesday evening, kicking off his six-day official visit to China. Biden is making the visit at the invitation of his Chinese counterpart, Xi Jinping. Shortly after his arrival, Biden attended a friendly men's basketball game between China's Shanxi Zhongyu Brave Dragons and the United States' Georgetown University Hoyas held in a stadium inside the National Olympic Sports Center. During his visit, Biden will meet with Chinese President Hu Jintao, top legislator Wu Bangguo and Premier Wen Jiabao. Vice-President Xi Jinping will hold talks with him and accompany him on a visit to southwestern China's Sichuan Province. Biden's tour of China will be the first of the planned reciprocal visits between the vice-presidents announced during Chinese President Hu Jintao's state visit to the United States in January, the White House said earlier. Leaders of China and the United States will consult on a broad range of bilateral, regional and global issues.

Hong Kong*:  Aug 19 2011  Share

If you see groups of Taiwanese yuppies hanging around Hong Kong's major shopping and entertainment districts, don't be surprised. Chances are you might encounter a growing number of such wealthy young visitors when you do your shopping or visit your favourite nightspot. They may even become a fixture of the city's cosmopolitan landscape, courtesy of a Taiwan-friendly gesture by the Hong Kong government. From next month, Taiwanese passport holders with mainland travel permits can stay for a maximum of one month in Hong Kong, up from seven days. Those without mainland permits can register online and need not apply for Hong Kong visas through travel agencies in Taiwan, according to the arrangements announced recently by Financial Secretary John Tsang Chun-wah. "The move will certainly go a long way towards enticing more young people in Taiwan, mostly in their 20s, to come here," Hong Thai Travel Services director Jason Wong Chun-tat said. "The Hong Kong market is very attractive to them because of the similarity in culture - aside, of course, from shopping and the city life here, which is more glitzy than theirs." The new policy would encourage them to increase the frequency of their visits to Hong Kong, as well as attract new visitors, he added. Wong said young Taiwanese were likely to travel on package tours and provide a significant boost to Hong Kong's hotel occupancy rates. There have been no firm forecasts on the impact of the visa policy change, but analysts are united in saying that the city can expect an increase this year from the 2.2 million Taiwanese arrivals recorded last year by the Hong Kong Tourism Board. "This development will certainly help increase tourist arrivals from Taiwan significantly, and the hotel sector will be one of the major beneficiaries. But the full impact is unclear," Chan Cheong-kit, a director at Lanbase Surveyors, which provides consultancy services in property valuation and land administration works in Hong Kong, said. Chan said the prospect of increased Taiwanese visitor arrivals may not necessarily spur developers to build hotels that will specifically cater to this growth segment. "They will wait and see if demand from Taiwanese tourists grows significantly," he said. "They may then expand their hotel portfolio depending on growth from this sector - aside, of course, from catering for more arrivals from the mainland." But with more control points at Hong Kong's border with the mainland being opened, coupled with the likelihood of more visitor arrivals from Taiwan, demand for more hotel rooms in Hong Kong was bound to grow further, spurring more hotel developments, he said. Chan noted, however, that the supply of land for hotel projects was not keeping pace with growing demand for rooms. "The government should put more sites for hotels up for sale in urban areas. It should be more proactive in doing this. At the moment, hotel rates can be likened to prices of seafood in the sense that rates can change every day because of tight supply," he said, adding that while the government has several sites in its land application list suitable for hotel developments, developers have virtually ignored them because of their locations outside urban areas. Alnwick Chan, executive director at property agent Knight Frank Hong Kong, said most sites being offered were not in established tourist areas which explained the lack of interest from developers. Interest would be much keener if more sites were offered in urban areas, such as a plot in Queen's Road East in Wan Chai. Emperor International recently won the tender for a 7,717 square foot site at 373 Queen's Road East, on which it plans to develop a 220-room hotel. It outbid Sino Land, Cheung Kong (Holdings) (SEHK: 0001) and Magnificent Estates for the site. "There are actually very few available sites in the urban areas. And if there are any, I doubt very much if the government will offer them for hotel developments because its main focus right now is on meeting the shortage of residential units," Alnwick Chan said. "Besides, there are no loud complaints against hotel rates being astronomically high, unlike in the residential sector." He said that for many developers there were more lucrative options. "Unlike residential projects, hotels often involve long payback periods and a reliance on the support of a hotel chain, aside from other issues like fitting out and maintenance. In this sense, most developers prefer to do residential projects rather than hotels," he said. Chan Cheong-kit said that in spite of the shortage of sites in urban areas, some developers still found ways of undertaking hotel projects. "My company has been engaged by some landowners to apply to the Town Planning Board for approval for small hotel projects of about 50 rooms. Developments of small-scale hotel projects are ongoing and I believe this trend will continue because of bright prospects of more tourist arrivals from [mainland] China, which will be boosted further by visitors from Taiwan," he said. Because of difficulties in assembling sites in urban areas and buying up old buildings with multiple owners for redevelopments, developers with hotel development plans opted for sites ranging from 3,000 sqft to 5,000 sqft, he said. "These developers who want to build more hotels would like very much to buy, but this depends entirely on availability. If not multi-owned, some sites are family-owned and are often not for sale," he said.

China's Vice Premier Li Keqiang waves as he is accompanied by HKSE Chairman Ronald Arculli, left, and Chief Executive Donald Tsang Kam-yuen in the Hong Kong Stock Exchange on Wednesday. China sold 20 billion yuan (US$3.1 billion) of offshore bonds on Wednesday, the biggest renminbi-denominated debt deal ever in Hong Kong, adding depth to a market that reflects Beijing’s ambitions to spread the use of its currency abroad. The deal from the Ministry of Finance, with maturities aimed at institutional investors of 3-year, 5-year, 7-year and 10-years, attracted solid demand, underscoring the growing popularity of the market for investors hungry for exposure to the yuan in Hong Kong, where renminbi in bank deposits far outstrip the amount of assets available. While the retail tranche of the bonds was priced at the same levels as a sale in November, probably to keep retail investor demand intact, the institutional tranche met with blockbuster interest. With bids for the institutional tranche of the total bond offer at 4.6 times the issue size, Hong Kong Financial Secretary John Tsang Chun-wah said the result of the tender was “ideal”. “In the global financial turmoil, the overwhelming response from institutional investors indicates the sovereign bonds are of high quality and safe for investment,” he told reporters. The 3-year bond was priced at 0.6 per cent, compared to 1 per cent at a previous auction in November, while 10-year paper was sold at 2.36 per cent, compared to 2.48 per cent. A seven-year bond – the first of its kind in the offshore market and intended to serve as a benchmark for future issuers in this sector – printed at 1.94 per cent. Expectations that Beijing will allow more rapid appreciation of the yuan have also whetted investors’ appetites, after the central bank fixed the currency’s mid-point at record highs versus the dollar for five days in a row since last week. In a show of support, Chinese Vice Premier Li Keqiang and a number of senior officials flew to Hong Kong to attend the launch of the sovereign yuan bond issue and pledged more support to boost the growth of the market. Li is a protege of President Hu Jintao and is widely tipped to succeed Wen Jiabao as premier in 2013. Since landmark reforms in July last year allowed banks in Hong Kong to freely trade renminbi, trade settled in China’s currency has grown by six times. Yuan-settled trade accounted for 7 per cent of China’s total trade in the March quarter compared to less than 1 per cent in the same period a year ago. The growth in offshore yuan trade settlement has boosted the development of a so-called “CNH” market in Hong Kong. Big-name foreign borrowers, including the World Bank, Volkswagen, McDonald’s and Caterpillar, have sold yuan-denominated bonds, or “dim sum” bonds, as they are more colourfully known. As of the end of last week, 88 billion yuan (US$13.7 billion) worth of dim sum bonds had been issued this year, more than double the 42.6 billion yuan issued in all of last year. The tender’s success was almost guaranteed with banks chartering helicopters with banners to fly over the main business districts and colourful advertisements plastered across hoardings in the city leading up to the sale. The 20 billion yuan offer, spread across various tenors, has a 15 billion yuan institutional tranche and a 5 billion yuan retail tranche. The oversubscription levels indicated that demand was stronger than that in the MOF’s earlier two forays. “The demand on the latest offering proves that the froth is out of the market, which is much more real now compared to last year or 2009,” said one debt capital markets banker in Hong Kong. “The latest bond is still a huge success considering how much demand it attracted in the auction that lasted only one hour and the yields achieved are also quite impressive,’ he said.

Li Keqiang waves at the airport as Hong Kong officials and PLA officers applaud his arrival for his first visit to the city as vice-premier. He later visited a housing exhibition, a day-care centre and families in Lam Tin. Bearing gifts, the man widely expected to succeed Premier Wen Jiabao yesterday arrived on his first official visit to Hong Kong as vice-premier. Li Keqiang said after landing at Hong Kong International Airport that he would announce measures today to enhance the city's development and cross-border trade. He did not elaborate, but Beijing has regularly announces extensions to the Closer Economic Partnership Arrangement (Cepa) - the free-trade deal for Hong Kong announced by the central government after the severe acute respiratory system crisis in 2003 that gives city businesses and some professionals preferential access to mainland markets. "On behalf of the central government, I have brought certain new measures that will enhance the development of Hong Kong and the cross-border economic and financial links between Hong Kong and the mainland," Li said after he and his delegation were welcomed by Chief Executive Donald Tsang Yam-kuen and other top officials at the airport. Li is leading a high-powered delegation which includes the governor of the People's Bank of China Zhou Xiaochuan , Commerce Minister Chen Deming , and the director of the National Development and Reform Commission, Zhang Ping. Li, who is expected to succeed Wen as premier in 2013, said the main purpose of his three-day visit was to attend a forum today on the nation's 12th five-year plan and to show the central government's concern and support for Hong Kong. That concern appeared to include the way Hong Kong was being run by Tsang's government. Xinhua reported that, in his talks with Tsang yesterday, Li told the chief executive and his governing team to maintain "good spirit" and "try the best to resolve or reduce negative factors" in society. "[The government] needs to listen to voices from various sectors, and be practical and active in helping grass-roots communities to tackle their difficulties and alleviate pressure they face on their livelihoods," Xinhau quoted Li as saying. He also told Hong Kong officials that there were "certain problems that have to be resolved" as the city was facing challenges posed by changing economic situations, Xinhua reported. He asked the government to be "practical and active" in solving the economic problems faced by its grass-roots communities. Li said he would use the visit to get in touch with local people, "in order to deepen my understanding of Hong Kong and to feel its new changes". His schedule yesterday included a visit to a day-care centre for the elderly in Ho Man Tin, where he toured the facilities and chatted with residents, whom he presented with a 55-inch colour television set and an electric wheelchair. He then visited the Hong Kong Housing Authority Exhibition Centre, where he was briefed on the city's development of public housing. Li also visited two families in Lam Tin, where residents said they felt he was pleasant and showed a willingness to approach ordinary people. However, some said his visit had disturbed their normal life. In the evening Li met representatives from the business sector and attended a dinner hosted by Tsang at Government House. Apart from today's forum, Li is also scheduled to attend a ceremony to launch yuan sovereign bonds and another dinner hosted by the city's government to which all Hong Kong's 60 lawmakers have been invited. Tomorrow he will attend a ceremony celebrating the University of Hong Kong's centenary and the opening ceremony of the new government headquarters in Admiralty, before returning to the mainland.

Chinese Vice Premier Li Keqiang Wednesday affirmed Hong Kong's position as an offshore yuan and financial hub, announcing a laundry list of measures to enhance the city's international competitiveness through closer ties with mainland China. Chinese Vice Premier Li Keqiang, left, accompanied by Hong Kong Chief Executive Donald Tsang, meet representatives from commercial and industrial sectors in Hong Kong Tuesday, Aug. 16, 2011. "Maintaining the city's long-term prosperity and stability is the starting point of the central government's policy for Hong Kong," Mr. Li said at an economic forum hosted by the Hong Kong and Chinese governments. "The central government will actively support the growth of the yuan market in Hong Kong," he said. Mr. Li, widely seen as a leading contender to succeed Premier Wen Jiabao in 2013, is in Hong Kong for a three-day visit. As many analysts had expected, Mr. Li unveiled measures to boost the offshore yuan trade in Hong Kong, as well as an expanded scope for Chinese yuan trade settlement to include all of China. China Vows to Support Hong Kong Mr. Li said the government supports the use of yuan as foreign direct investment into China, following calls for less stringent rules to make it easier to bring yuan funds raised offshore back to the mainland. Mr. Li also expressed support to allow overseas investors to use offshore yuan to invest in domestic securities with an initial amount of 20 billion yuan. Hong Kong has been developing into a major offshore yuan hub since China removed some restrictions last year on the use and circulation of its currency. The city's push to increase its yuan profile reflects its desire to remain competitive with the emergence of Shanghai's financial and trading markets.

 China*:  Aug 19 2011  Share

China's foreign-exchange regulator pledged Tuesday that it will continue to guard against speculative money inflows in the second half of this year as illegal foreign exchange transactions rose in the first half. In a statement posted on its website, the State Administration of Foreign Exchange (SAFE) said it will continue to combat illegal cross-border money flows in the second half of the year in the face of complicated domestic and overseas economic situations. The SAFE found 1,865 cases of illegal foreign exchange businesses in the first half of the year, up 26.2 percent from a year earlier, the statement said. The money involved increased 26.9 percent year-on-year to more than $16 billion from January to June, it said. China's forex regulatory authorities imposed administrative fines of 260 million yuan ($40.7 million) in the first half of this year, exceeding the total of the whole of last year, according to the statement.

Evergreen Solar Inc., once a darling of the U.S. solar industry, filed for bankruptcy protection this week, saying it couldn't compete with Chinese competitors without a reorganization—a sign of the difficulty in creating "green" U.S. manufacturing jobs amid bruising competition across the globe. The market for solar panels is expanding world-wide. But the key thing driving demand is increasingly lower prices, which is forcing U.S. firms into a cutthroat cost-cutting war with rivals in China and elsewhere. "When margins are getting squeezed, pennies count," says Pavel Molchanov, a solar analyst with Raymond James Financial. "Quite frankly, as a solar manufacturer, it is a lot better to pay workers $1 an hour in China than workers $15 an hour in Massachusetts." The average price of solar modules has fallen 30% this year, after declining steeply last year, he said. Evergreen declined repeated requests for comment. Earlier this year, Evergreen closed its Massachusetts factory, a $450 million facility that opened in 2007 with support from state and local subsidies and employed about 800 workers. One of its largest creditors is MassDevelopment, a state agency, according to the bankruptcy filing. Evergreen began to manufacture panels in Wuhan, China, last year. Other U.S.-based solar companies have already moved their production overseas: SunPower Corp. to the Philippines and First Solar Inc. to Malaysia. In its Chapter 11 filing, Evergreen cited the difficulty in competing against Chinese solar companies that "receive considerable government and financial support." It also blamed reductions in European subsidies for solar installations and what it called the U.S.'s failure to adopt supportive policies. But while low-cost Chinese competition may have accelerated the collapse of the company's balance sheet, Evergreen also bet on the wrong technology. Evergreen developed a technology that uses less polysilicon —a material housing small silicon crystals—than its competitors. When the cost of this raw material reached $400 per kilogram in 2008, Evergreen's solar panels were competitive. Evergreen's share price closed at a split-adjusted $108 in January 2008, its highest level in more than seven years. Since then, polysilicon prices have plummeted to about $55 a kilogram. This has stripped away Evergreen's competitive edge and left it with a higher-cost manufacturing process. Its share price steadily fell since 2008, closing Tuesday at 16 cents on the Nasdaq Stock Market. "As polysilicon got cheaper, this company could not compete with standard technology, which is getting cheaper weekly," says Jesse Pichel, global head of cleantech research at Jefferies & Co. Chinese solar manufacturers enjoy extensive support from government industrial policy. They benefit from inexpensive capital, low-cost electricity and real estate, as well as less-expensive labor, says Mr. Pichel. The global solar industry is growing quickly, in part because of government subsidies to promote clean-energy production and because of falling panel prices. The annual production of solar photovoltaic cells reached 24 gigawatts in 2010, more than double the figure for 2009, according to Ren21, an international, government-supported institute that supports renewable-energy development. The Obama administration has also supported "green" jobs as a future economic engine and has highlighted the solar industry. Its track record has been mixed,. Solyndra, a California-based solar-products maker, received a $535 million federal loan guarantee in 2009, but in late 2010 it announced plans to shutter an older plant and lay off workers. Evergreen listed $424.5 million in assets in its filing with the bankruptcy court in Delaware, and debt of $485.6 million. It said it intended to shutter its facility in Midland, Mich., in the "near future." It also plans to lay off 83 workers in Massachusetts and Michigan, retaining 50 employees to help with the bankruptcy and reorganization process. The company plans to reorganize operations with an emphasis on building up its China-based manufacturing facility.

Private equity in China is a booming business and, according to a recent survey from Dow Jones VentureSource, more and more investors are clamoring for a piece of the action. A recent VentureSource survey of 59 investment firms, including funds of funds, private equity firms, venture capital investors, and seed investment groups, found that 37.7% expect venture capital investments in China to “increase significantly,” while another 49.1% expect the VC industry to pick up its pace “slightly.” More than 50% of all respondents expect to open an office in China within the next five years. The data also showed that firms that already have a presence in China are looking to expand to more cities, to take advantage of growth in the tier-two, -three and -four population centers that rival the largest cities in the U.S. in terms of population, if not economic firepower. Furthermore, 60% of respondents who had a China presence said that they would increase their staffs in 2011, while a majority expect that the size of venture funds in the region would increase, as would the number of new limited partners active in China. Nearly 40% said that they would be raising a new fund to invest in China in 2011. There are several reasons for investors to turn to China’s private equity market as a haven from the storm shaking global financial markets.

Hong Kong*:  Aug 18 2011  Share

Jetstar CEO Bruce Buchanan speaks as Japan Airlines' president Masaru Onishi looks on during a press conference in Tokyo on Tuesday. Australia's Qantas Airways is setting up two new airlines in Asia and ordering US$9 billion of new Airbus aircraft as part of a do-or-die makeover to salvage its loss-making international business. Qantas will also cut 1,000 jobs in Australia as it shifts its focus to the world’s fastest-growing aviation market, triggering threats by unions to block the move and a government pledge to scrutinise the plans. Qantas, which has been reviewing its offshore operations to cut costs and unprofitable routes, said it will launch a new, premium Asian airline and a Japanese budget carrier, the latter jointly with Japan Airlines and Mitsubishi. The new airlines will fly Airbus A320 jets, cementing their reputation as the plane of choice on regional networks over archrival Boeing. Qantas plans to acquire up to 110 of them, worth more than US$9.4 billion at list prices. As Qantas rebases its loss-making international operations in Asia, it also plans to give up some of its long-haul routes and retire older planes as well as cut jobs. “Right now 82 out of every 100 people flying out of Australia are choosing to fly with an airline other than Qantas, not including Jetstar,” the airline’s Irish-born chief executive, Alan Joyce, told a news conference. Joyce has cut costs and jobs since taking the helm at Qantas in 2008, with growth increasingly focused on the budget offshoot Jetstar, which he ran before becoming chief executive. “To do nothing, or tinker around the edges, would only guarantee the end of Qantas International in our home Australian market. That would be a tragedy,” he said, adding that the international operation’s cost base was around 20 per cent higher than its major rivals. Joyce said the new premium airline was expected to be launched next year with an initial fleet size of 11 A320s. It may based in Kuala Lumpur or Singapore and would not be majority owned by Qantas, he said. China was also being considered, one source familiar with the airline earlier told reporters. Qantas has an existing relationship with Malaysia’s AirAsia - , which this week agreed to swap shares with Malaysian Airline system as part of a partnership deal. Qantas shares were trading 1.8 per cent higher at A$1.56 by 1.50pm, off early gains which saw the stock rise 4 per cent. The shares closed down 0.33 per cent at A$1.52. “It’s a prudent move,” said Jason Teh, a portfolio manager at Investors Mutual, which does not own Qantas shares. “That’s a way to get your costs down. If you know your return on capital’s going to be thin, share your capital base. The international business is more cyclical and poses more competitor threats than their domestic business.” The plan announced by Qantas drew immediate fire from several quarters. Australian Transport Minister Anthony Albanese said the government will examine the plan to ensure it does not breach the airline’s privatisation rules. “The Australian government very firmly believes in an Australian-based and majority Australian-owned Qantas,” he said. The Qantas Sale Act of 1992 requires the airline’s operational base and headquarters to be in Australia, foreign ownership is capped at 49 per cent and the name Qantas is preserved. At least two-thirds of the board and its chairman must be Australians. Trade unions and a key independent senator have said they could also seek legislative or regulatory steps to ensure Qantas remains an Australian-owned company. Qantas faces a likely escalation of industrial action at home over the plan’s estimated 1,000 job cuts, with trade unions opposed to any move by Qantas to shift its international operations offshore. About 200 pilot jobs were expected to be included in the cuts. “Until we get an assurance from Alan Joyce that future Qantas flights will be operated by Qantas pilots, instead of outsourced and offshored alternatives, we will be doing everything we can to stop this destructive strategy for Qantas’s future,” Barry Jackson, president of the Australian and International Pilots Association, said in a statement. Qantas’ plan refocuses its offshore business squarely on Asia, a region that should account for more than half of global airline profits this year, according to the International Air Transport Association. Qantas plans to acquire between 106 and 110 Airbus A320 aircraft, including planes for Jetstar Japan and the new premium Asia-based airline. Between 28 and 32 planes of these would be current-generation A320s and the rest the fuel-efficient, next-generation A320neo aircraft. Airbus has scored resounding victories over Boeing with its narrow-body A320neo aircraft, taking a commanding lead in the single-aisle market once dominated by Boeing’s 737 family. Just last month AirAsia announced a deal worth US$18.2 billion at list prices for 200 A320neo planes while AMR Corporation’s American Airlines, previously an all-Boeing customer, ordered 260 narrow-body A320 planes. Qantas also delayed the delivery of its final six A380s for up to six years in a move aimed at conserving capital and bolstering its balance sheet. It said it would retire four Boeing 747s and would make no change to its existing order of Boeing 787s. Qantas reaffirmed its earnings guidance, though it said the restructuring would cost more than A$350 million (US$367 million).

Chinese Vice Premier Li Keqiang Signals New Measures to Support Hong Kong - China's Vice Premier Li Keqian addresses the media upon his arrival to Hong Kong on Tuesday. Mr. Li, the expected successor to Premier Wen Jiabao, is making a three-day visit to Hong Kong with plans to speak about economic ties with the territory. Chinese Vice Premier Li Keqiang kicked off a three-day visit to Hong Kong on Tuesday by announcing plans for fresh measures to back the Chinese territory's economy, which faces an uncertain outlook amid a brewing global confidence crisis. The visit by Mr. Li, who is seen as a leading contender to succeed Premier Wen Jiabao, comes amid growing public distrust in the Hong Kong government for its inability to slow booming consumer prices and rein in the city's red-hot private housing market. Chinese government officials have earlier pressed the Hong Kong government, which has its own set of laws and rules distinct from China, to make housing more affordable for the general public. "I have brought with me new measures...to further support Hong Kong's development...and to deepen economic and trade cooperation between mainland China and Hong Kong," Mr. Li told reporters at the city's international airport. Mr. Li, who is leading a delegation of top officials that includes People's Bank of China Gov. Zhou Xiaochuan, Minister of Commerce Chen Deming and National Development and Reform Commission Director Zhang Ping, said he will present the measures Wednesday during a speech at a economic forum. Local media reported earlier that Mr. Li will likely announce measures to boost the offshore yuan trade in Hong Kong, as well as an expanded scope for Chinese yuan trade settlement. Hong Kong has been developing into a major offshore yuan hub since China removed some restrictions last year on the use and circulation of its currency. The city's push to boost its yuan profile reflects its desire to remain competitive with the emergence of Shanghai's financial and trading markets. Hong Kong's yuan market has blossomed over the last year, underpinned in large part by strong demand for yuan assets from investors betting on the currency's continued appreciation. Some analysts and traders are keenly watching Mr. Li's speech Wednesday for streamlined rules that could make it easier to bring yuan funds raised offshore back to the mainland. Such a move could further diversify the use of the Chinese currency available offshore and encourage more firms to issue yuan-denominated securities in Hong Kong. Currently, China's capital account is strictly controlled, and approvals for yuan remittances into China in the form of foreign direct investment are given only on a case-by-case basis.

Continuing to parcel out his empire following a very public family feud, Macau gambling tycoon Stanley Ho last week halved his stake in his flagship casino company SJM Holdings Ltd. to 0.09% from 0.18%. In an off-exchange transaction Thursday, the 89-year-old sold five million shares of SJM, according to a disclosure on the Hong Kong stock exchange. Also in an off-exchange transaction, according to another disclosure, the woman he calls his fourth wife, Angela Leong, acquired five million shares. Ms. Leong later bought an additional 750,000 shares through the market; the two purchases combined raised her stake to 8.21% from 8.11%. Last month, Pansy Ho, the eldest daughter of Mr. Ho's second wife, acquired a chunk of Mr. Ho's property and transport flagship, Shun Tak Holdings Ltd., according to a statement from the company. Shun Tak said Ms. Ho, who is the company's managing director, bought 36,285,523 shares from her father at market price, raising her stake to 12.67% from 11%. Based on Shun Tak's closing price of HK$4.89 per share that day, the purchase came to HK$177.4 million (US$22.77 million). Earlier this year, a family dispute burst into the open when Mr. Ho, who is in poor health, accused the children of his second wife of colluding with his third wife to steal the holding company that held the bulk of his assets. They denied his accusations. Mr. Ho said the dispute was settled in March.

 China*:  Aug 18 2011  Share

Vice President Joe Biden heads to the mainland on Tuesday in hopes of winning favour with the rising power's next leader, seeking a smoother relationship after Beijing's sharp criticism of US fiscal policy. Biden will spend five days in China, an unusually long trip that comes at the invitation of Vice President Xi Jinping who is expected to take over as leader by 2013 and is little known in US policy circles. “Simply put, we’re investing in the future of the US-China relationship,” said Tony Blinken, the vice president’s national security adviser. The number-two US leader will also visit close ally Japan, where he will go to an area hit by the March 11 mega-earthquake and encourage a quick recovery, and Mongolia to praise its embrace of democracy. In China, Biden will meet President Hu Jintao in Beijing and travel the country alongside Xi. In Chengdu, the vice presidents will dine at an informal restaurant and Biden will deliver a speech, Blinken said. Biden’s visit comes after stinging criticism in China’s state-run media of the US “addiction to debt” following a deal reached by US lawmakers that narrowly averted a default. China is the largest foreign holder of US debt. Lael Brainard, the undersecretary of the Treasury for international affairs, defended the controversial deal as “very strong” and, in a preview of Biden’s message, said that Beijing must now also undertake reforms. Biden will tell China that its yuan remains “substantially undervalued” and urge the second largest economy to move from manufacturing inexpensive exports to encouraging its own growing middle class to consume, she said. “Chinese policymakers know that they can no longer count on the US consumer to provide that demand to the global economy,” Brainard told reporters on a conference call. “They’ve got tremendous capacity to help bolster global growth by switching to a domestic demand-led growth strategy.” Brainard insisted that the United States remained “the most flexible, the most innovative” economy and called the debt deal “a major step” in putting US finances in order. Xi’s views remain a mystery in Washington. Bonnie Glaser, a senior fellow at the Center for Strategic and International Studies, said the 58-year-old came from a new generation that was more accustomed to the outside world yet also more nationalistic. She said much of Washington’s knowledge of Xi has come through interlocutors such as Australia’s Mandarin-speaking Foreign Minister Kevin Rudd and Singapore’s elder statesmen Lee Kuan Yew. But Glaser expected Xi to reveal little of his thinking during Biden’s visit, as he will be exceptionally cautious before taking power. “We may get glimpses into his thinking, but even those people who are close to him are not clear about where he stands on very controversial, sensitive topics such as political reform,” Glaser said. The White House insisted that Biden would not shy away from human rights. Activists say that the mainland is holding numerous prisoners for political reasons, including Nobel Prize-winning writer Liu Xiaobo, and has stepped up its controls on perceived dissent. “The protection of human rights globally is a central part of President Obama’s foreign policy in China, as it is elsewhere,” said Danny Russell, the senior White House adviser on Asia. “As we do consistently, we will raise our concerns about the human rights situation throughout China,” he said. Xi visited Tibet last month and vowed to crush “separatist activities” by the region’s exiled spiritual leader the Dalai Lama. His address came one day after Obama received the Dalai Lama, who is widely respected around the world and says he is not seeking independence. Russell said that Biden would not bring up arms sales to Taiwan, although he expected Beijing to raise the issue. US law requires the administration to provide Taiwan with means of self-defence; under longstanding policy, the United States does not consult China beforehand. US magazine Defense News reported on Sunday that the Obama administration has rejected Taiwan’s request for advanced F-16 fighter-jets, which the island believes it needs to balance China’s rising military edge. Administration officials said they have not made a decision.

A man reads the ingredients on the label of a bottle of Shanxi vinegar (Shanxi Laochencu), which shows it contains the food additive sodium benzoate. Shanxi Vinegar Industry Association Vice-chairman Wang Jianzhong said that about 95 percent of Shanxi vinegar products in the domestic market are not genuine brewed concoctions. Soon afterward, he contradicted himself and denied what he said during an interview with the media. People are losing confidence in the safety and quality of food in China following claims that concentrated ingredients are used by some restaurants. Industry experts are urging restaurant owners to show more respect for their customers. It follows the controversy last month when Hong Kong-listed Japanese-styled Ajisen Ramen was reported to be using concentrated stock made from pig bones in its noodle dishes while claiming the meal was prepared using fresh ingredients. Ajisen Ramen issued a public statement on August 12 to express sincere apologies to customers and promised to undertake more corporate social responsibility in order to ensure the safety and nutritional value of its food. Global fast food outlet Kentucky Fried Chicken (KFC) and others were accused of using soymilk powder or concentrate as the basis of soymilk drinks in China rather than using fresh beans. In the face of criticism, companies involved in the controversy released statements to clarify the situation. Taiwan-based Yonho Soymilk, one of the largest soymilk retailers, held a news conference on Aug 9 in Shanghai at which it admitted 10 percent of products sold in China were made from soymilk powder. KFC stated on its official website that its soymilk drinks are made from soymilk powder. The company said two businesses provided soymilk powder to the company: Yihaikerry and Hailong Group. KFC emphasized that the quality of its soymilk products complied with safety standards in China. "I've been to Ajisen Ramen restaurants in Beijing many times and liked the noodle bone soup very much. But, since I saw the media report of the company using bone concentrate to make noodle soup I thought it was so disgusting that I decided not to go there again," a netizen called Da Hui Tuzi Hao posted at www.dianping.com. "We paid 5 yuan ($0.80) or 6 yuan for a cup of soymilk drink and then we are told it is made from soymilk concentrate or powder. We can understand it will be difficult for stores to prepare soymilk from beans, but at least KFC should state clearly the drink is not freshly made from soybeans," said Li Yuan, from Shanghai. The cost of a cup of soymilk drink made with soymilk powder is less than 1 yuan, reliable sources told China Daily. Lin Ping-sheng, president of Yonho Soymilk, promised to state the ingredients clearly on the company's products in future. He was quoted by media as saying that soymilk powder will be used in all stores in China in the future. Small restaurants in China have long being criticized for the low quality and unhygienic processes in their food preparation. Chinese customers have traditionally held higher expectations of foreign fast food restaurants. Customers tend to believe strict control processes can eliminate problems and improve food quality. However, the recent controversies have brought about doubts whether it is worthwhile paying a premium for products made with concentrates. Many are demanding that restaurants reveal more information about ingredients to customers, industry experts say. "The key problem is that we don't know exactly what was used to prepare the food. From media reports we know some retailers are using cheap ingredients, but what about the others?" asked Li. China Consumers' Association (CCA) has called for restaurants to reveal more information to customers to protect their rights. "Customers may have high expectations of the quality of food and raw materials at branded outlets, so these restaurants should reveal more information to them," said the CCA in a statement released on Aug 5. "Foreign-styled fast food has taken a big market share in China. The managers should be aware that not only an advanced management system contributes to success: The trust of customers also helps business growth," said the CCA. "Restaurant operators should pay more attention to building their credibility so as to establish a solid customer base in China". Fan Zhihong, associate professor with the College of Food Science and Nutrition Engineering at China Agriculture University, said soybean milk powder contains CMC, an additive commonly used as a thickening agent. It makes powder-based soybean milk more creamy. Some soybean milk powders and concentrates also contain non-dairy creamer that contains a large quality of saturated fatty acid, which can be deleterious to people's health if consumed in excess over a long period. "As a traditional Chinese food, soybean milk has been drunk for thousands of years but there is s a lack of unified food safety standards covering it, making it impossible for consumers to know how safe and healthy freshly ground or powder-based soybean milk is," said Xu Lu, a nutritionist who also works as a health consultant for young people. "Nowadays, many manufacturers and food stores claim they have introduced advanced technology when preparing powder-based soybean milk but it's still difficult to tell the specific nutrition level." According to available information, the soybean milk powder used by KFC and Yonho Soymilk is safe and meets national food safety requirements, although its nutritional value may be lower than freshly ground soybean milk, said an official from Shanghai Food and Drug Inspection Institute.

Speeds, prices cut on high-speed trains - A passenger shows a ticket for the Beijing-Tianjin intercity train on the first day of speed reductions and price cuts, Aug 16, 2011. Passengers board a high-speed train at Tianjin railway station on Tuesday. The high-speed trains from Beijing to Tianjin will slow from 350 kilometers per hour to 300km/h, accompanied by a 5 percent decrease in ticket prices, from Aug 16. A one-way run between the two municipalities is thus cut from 33 minutes to 30 and a second-class ticket is sold at 55 yuan ($8.61) from 58 yuan. The State Council has made the decision to slow the speed of high-speed trains on tracks across the country after a severe train crash in Wenzhou, East China's Zhejiang province.

China Treads on New Turf - Chinese construction-equipment makers are burrowing into Caterpillar Inc.'s backyard and they're counting on people like Lon Coon to do it. The Syracuse native runs Stephenson Equipment Inc.'s upstate New York operations. For decades, Stephenson had focused on selling and renting out cranes and paving equipment. But Mr. Coon says that last year he decided to branch out into "the dirt business"—excavators, backhoes and other earth-moving equipment. Since rivals had the rights to sell Caterpillar and other big-name brands in his region, Mr. Coon turned to China. He arranged a tour of Guangxi Liugong Machinery Co.'s sprawling factory complex in the southeastern Chinese city of Liuzhou. "I was pleasantly surprised," the 64-year old recalls. "The floors were clean, the lines were neat, things were well-organized." Last November he signed on to become a Liugong dealer. Established in 1958 as a state-owned company making industrial machinery, Liugong still is about one-third owned by the government. The company has about 13,000 employees, a factory in India and says it is the world's biggest maker of wheel loaders, often used for loading material into trucks. Liugong (pronounced lu-GONG) exports equipment to most parts of the globe, with a particular emphasis in Latin America and Southeast Asia. It also is one of the most ambitious Chinese contenders for a chunk of the U.S. market. So far, though, its presence is tiny. Winning the support of U.S. dealers like Mr. Coon will be critical for companies like Liugong. It also promises to be a tough haul. Most construction equipment in the U.S. is sold through exclusive, regional arrangements with dealers. And most of the biggest dealers are tied up by major manufacturers like Caterpillar, the world's biggest maker of construction equipment, and Japan's Komatsu Ltd. Liugong needs customers like Mr. Coon who want to expand their product lines into construction equipment. The Chinese company's main initial attraction will be price, Mr. Coon says. Liugong says its equipment typically costs 15%-20% below that of Caterpillar. A Caterpillar spokesman says his company's equipment is durable and supported by a strong service network, providing "the lowest owning and operating costs over the life of a product." Even with its heft, the company takes Chinese competition seriously, having seen Komatsu and Sweden's Volvo AB build strong U.S. dealer networks over the past few decades. Caterpillar Chief Executive Doug Oberhelman, who is expanding the Peoria, Ill., company's factories and dealer networks in China, has said he expects one or two of his Chinese rivals eventually to become global players in construction gear. China's Sany Heavy Industry Co. also is expanding in the U.S., offering such items as cranes and cement-pumping equipment. Sany expects to open a $60 million office-and-assembly plant this month near Atlanta. Signing up dealers is just one piece of the puzzle for Liugong. Mr. Coon bought nine of its machines for a total of about $1 million. He hasn't sold any, although a few construction firms have rented the equipment. Many potential customers ask " 'Who the heck is Liugong?' " Mr. Coon says. Fahs Construction Group of Binghamton, N.Y., recently rented a Liugong excavator. "Our guys said it's very powerful," Fahs operating chief Rich Gangemi says, but they also found it "kind of jerky." He says he is unlikely to buy Liugong equipment. "We generally stick with the proven brands," such as Caterpillar and Komatsu. Mr. Coon says Liugong uses parts from popular suppliers to the industry, such as Cummins Inc. for engines and Kawasaki Heavy Industries Ltd. for hydraulic pumps. "The guts of the machine are the same thing everybody else is using." But he says Liugong needs to improve its painting process to prevent rust spots. Jim Donoghue, chairman of Liugong's U.S. subsidiary, says the company is investing in better painting methods at all its plants. For now, Liugong exports equipment to the U.S. from China. Might it make equipment in the U.S., following the paths of Komatsu and Volvo? "Not yet," says Liugong President Zeng Guang'an. He says, however, that Liugong has more than 1,000 employees who speak English, up from five a few years ago. Liugong doesn't disclose its U.S. sales. Company executives acknowledge that its U.S. market share is tiny but say they are taking a long-term view, looking to expand their reach over five years. Establishing strong parts and service capabilities is a must for Liugong. Construction companies won't buy equipment unless they know they can get it fixed fast. "If you don't have service, there's no sense to having any product," Mr. Zeng says. Liugong opened a 16,000-square-foot parts warehouse and office near Houston in 2008. The company since has signed up 17 dealers, in 18 mostly northeastern states, Ontario and Quebec. Mr. Donoghue, who has worked in the construction-equipment business since 1981, says Liugong dealers cover about 20% of North America now. It will probably take three to five years to get complete coverage, he says. In addition to targeting dealers who want to expand their product lines, Liugong aims to find dealers who are signed up with the big names in one region but want to move into another area where the big manufacturers' franchises already are locked up. Liugong executives say they hope to persuade customers that the company can deliver high quality at low prices. Liugong equipment operated in China has to be tough because it often is run for three shifts a day, nearly every day of the calendar year, company executives say. When Liugong machines come to the U.S. and are operated just eight hours a day, "it's almost like they are going on vacation," says David Beatenbough, a Liugong vice president.

Hong Kong*:  Aug 17 2011  Share

Vice Premier Li Keqiang will today begin a three-day visit to Hong Kong amid expectations Beijing will dish out a slew of economic sweeteners. These may include initiatives to strengthen the SAR's status as an offshore yuan trading hub and a lowering of the threshold to allow Hong Kong's financial, trade and economic service providers to enter the mainland market, a source said. Li will also visit grassroots people in their homes to learn more about Hong Kong's social development. The vice premier, on his first official visit to the SAR, will give a speech on the National 12th Five-Year Plan and economic, trade and financial cooperation and development between the mainland and Hong Kong tomorrow. He will also officiate at the launch here of government bonds worth 20 billion yuan (HK$24.24 billion), which comes two weeks after the Ministry of Finance announced the move. Issues of "dim sum" bonds in Hong Kong this year may reach 120 billion yuan, said Bank of China (Hong Kong) deputy chief executive David Wong See- hong. "Around 60-80 billion yuan worth of dim sum bonds have been issued in Hong Kong so far compared to 36 billion yuan a year ago," he said. The growth of such bonds, however, will depend on the yuan deposit growth in the territory, Wong said. He expects the yuan will appreciate 4-5 percent this year against the weak US dollar. Li, meanwhile, will tomorrow evening attend a welcome dinner hosted by the government at the Grand Hyatt hotel. Top officials, permanent secretaries, legislators and representatives of the civil service groups have been invited. Chief Executive Donald Tsang Yam- kuen will hold a dinner tonight. The visits to the grassroots come today along with meetings with business professionals. Accompanying Li are National Development and Reform Commission director Zhang Ping, Commerce Minister Chen Deming, People's Bank of China governor Zhou Xiaochuan, Guangdong governor Huang Huahua and Hong Kong and Macao Affairs Office director Wang Guangya. Political commentator James Sung Lap-kung said Li will probably succeed Wen Jiabao as premier. The high-level delegation, he said, shows Li's high status and that Beijing attaches great importance to Hong Kong. Wen is expected to step down in early 2013. Sung expects Li will probably praise the development of public housing rather than pinpoint government shortcomings. Before leaving on Thursday, Li will officiate at the opening ceremony of the government offices at Tamar and give a speech at the centenary celebration ceremony of the University of Hong Kong. League of Social Democrats lawmaker Leung Kwok-hung said he has been invited to tomorrow's dinner. Should he be allowed in, Leung said he will protest against the jailing of human rights defender and Nobel Prize winner Liu Xiaobo.

Casually leaning against the wall, Ken Chen watches over two carts and several bags full of biscuits, frozen dumplings and seaweed. He is also waiting for his wife to return with more goods. Although she holds the purse strings in the household, she is now busy loosening them. "We spent HK$1,000 so far together, but I think my wife has already spent much more [on her own]," said the car mechanic from Yuen Long. Chen was one of 382,000 visitors who shopped for and sampled food from 19 countries and multiple regions at this year's Hong Kong Trade Development Council Food Expo at the Convention and Exhibition Centre. The event, which ended last night after five days, attracted 3 per cent more visitors than last year. As it was the last day, most of the 900 exhibitors slashed their prices, and thousands of people came with bags, carts and even suitcases to stock up on everything from ground coffee to mooncakes. Dried abalone, normally priced at HK$5,600 for 500g was discounted by 50 per cent, while two packs of four steamed buns cost HK$10, instead of HK$14 for one. Phillis Man, a housewife from the New Territories, chose to come on the last day because she already knew what she wanted and how much she wanted to spend. "I came here for items that cannot be found in normal supermarkets or are usually too expensive," she said, filling two suitcases with biscuits, coffee, peanuts, crabs and seaweed. A primary school teacher from Kowloon bought HK$1,500 worth of Chinese traditional medicine. She estimated she spent a total of HK$3,000 on her first visit to the expo. Most exhibitors were satisfied with this year's show. "In the Trade Zone, we made 1,360 business contacts, which was slightly better than our expectations," said Tomohiro Ando, the director of agriculture, forestry, fisheries and food business promotion division at the Japan External Trade Organisation, which co-organised the Japanese pavilion. With more than 160 exhibitors, the earthquake, tsunami and nuclear disaster-hit country sent its largest-ever group of participants in order to restore people's faith in food coming from Japan. "It is remarkable that our exhibitors sold their products so well, even under such difficult conditions," Ando said, referring to worries about the fallout from the damaged nuclear plant in Fukushima. "This shows that Hong Kong people still love Japanese food. We found it very encouraging."

Captain Erwann Le Rouzic is chasing the sun at sea. The Frenchman is manning the world's first solar marine expedition on the Turanor PlanetSolar, a boat that runs entirely on energy from the sun, and, at 90 tonnes, is the largest solar boat ever built. As part of a global voyage that has spanned 38,000 kilometres since leaving Monaco last September, the ship berthed at Ocean Terminal in Tsim Sha Tsui yesterday. It has more ports to visit and a further 22,000 kilometres or so to go before it ends its trip in Portugal. A crew of just four - the captain, an engineer, a maintenance man, and the US$25 million expedition's founder - is making the voyage to demonstrate the possibilities of silent, solar-powered boats. "In 15 years, it may be possible for you to buy a solar boat ... we have the technology," said the founder, Raphael Domjan, a Swiss native and self-styled eco-explorer. Though solar power alone may not work for much bigger boats, he said commercial boats could use hybrid technology. With 537 square metres of solar panels on its wide, flat deck, the vessel - a central hull borne by two pontoons which also carry the propellers - provides all its own energy for the motors and on-board electrical equipment, including the crew's refrigerator and coffee-maker. The boat can travel for 60 hours once its solar batteries are charged. With an average cruising speed of five knots - nine kilometres an hour - it is slow by power boat standards but comparable with most sailing yachts. It can travel at up to nine knots, but the sailors are careful: higher speeds mean more energy use and they want to use no more than what they can generate from the sun. Domjan described this mentality as like a microcosm for the planet and its rapidly increasing use of limited fossil fuels. "If we try to use more energy than what we get, then it's not sustainable," he said.

Hong Kong home prices are being hammered by turmoil in the global financial markets and the government's moves to restrain the property boom. Property prices in the city had risen to be among the most expensive in the world after rebounding by some 75 per cent after the global financial crisis in 2008. Today the euphoria seems to be fading fast, with brokers reporting that luxury home owners are discounting their original asking prices by as much as 20 per cent. In some cases, buyers are terminating their purchase contracts and forfeiting their deposits due to concerns that the market may be headed for a steep correction. Last week, an investor reportedly forfeited an estimated HK$4.7 million after terminating a contract to buy a 3,174 sq ft apartment at The Masterpiece, a luxury housing project, in Tsim Sha Tsui. The investor walked away from the deal after the Hang Seng Index lost 1,912 points that week after the credit downgrade of the US and the growing debt crisis in euro-zone economies. On Tuesday, a consortium - consisting of Kerry Properties (SEHK: 0683), Sino Group, and the Manhattan Group - won its opening bid of HK$5.5 billion for the site of a luxury housing development in Kau To in Sha Tin, 24 per cent below the lowest estimate of HK$7.24 billion. Last month, average sales prices of mass housing estates dipped by almost 1 per cent to HK$6,514 per square foot, the first decline since December last year. That is after the government tried to deter speculation by implementing a sales levy of as much as 15 per cent from buyers who sell their flats within two years. Even so, residential prices have jumped 12 per cent this year, exceeding the record pace in 1997, thanks to an abundance of cheap money, strong economic growth and heavy demand from mainland investors. Meanwhile, rents have risen by an average of 6.6 per cent to HK$22.33 per sq ft, above the record of HK$22.20 per sq ft in 1997. Patrick Chow, head of research at Ricacorp Properties, expects further declines in mass housing prices. "A sharper downward adjustment will be seen this month as the global sell-off of equities triggered a wave of discounted sales last week," he said. Chow expects average prices at the 50 housing estates that his firm tracks to fall by a further 5 per cent this year. Larger declines were unlikely and average transaction prices would reach a floor at between HK$6,200 and HK$6,250 per sq ft, he said. On Tuesday, US Federal Reserve chairman Ben Bernanke said after a policy meeting last week that it planned to keep its benchmark short-term interest rates close to zero for the next two years, which was longer than previously anticipated. That helped calm property sellers, leading them to lower their discounts to between 3 per cent and 5 per cent, from 3 per cent and 10 per cent before the recent rout in the global markets, brokers said. "Owners recovered some confidence after hearing that the low interest rate environment will be extended for another two years," said Chow. He said the Hong Kong dollar's peg to the US greenback meant that local lenders would track interest rate movements in the US. Edward Farrelly, head of research at CB Richard Ellis, agrees. "The Hong Kong government has the stated aim of cooling house prices and they have a number of tools at their disposal," said Farrelly. "On the demand side, we have already seen measures introduced to restrict credit and to discourage property speculation. "On the supply side, the recent land auction suggests that government land policy has shifted away from pure revenue generation and towards increasing land availability to the market. "These measures should be enough to cool prices, even if base rates stay low." Farrelly also said the recent strong demand and supply constraints had pushed prices up very quickly to levels which were unlikely to be sustained when confidence faded. "It is difficult to predict the timing and magnitude of a correction, but there are clear signs that a softening in the market is now taking place, and [there are] very understandable reasons why this should be the case," he said. "In general, we expect a decrease in transaction volumes and a five to 10 per cent correction in residential prices in the next six to 12 months. If sentiment continues to weaken, a correction of up to 20 per cent by the end of 2012 would not be surprising." Wong Leung-sing, associate director of research at Centaline Properties, expects rental yields to rise to 4 per cent, from 3 per cent currently in the event of a 10 per cent price decline. "Higher rental yields will lure investors back to the property market because other investments such as yuan deposits earn just 3 per cent a year," he said. Buggle Lau, Midland Realty's chief economist, said more people would choose to buy flats if interest rates remained low. "It is true that investors can buy gold to protect their wealth, but most people prefer go for less complicated investment products after the global financial crisis," Lau said. "Buying property is one of their favourite choices." Taking a more positive stance, Paul Louie, regional head of property research at Nomura International, said he was sticking with his forecast that home prices would increase by 15 per cent this year, and by a further 7 per cent next year. Louie said a short-term correction could occur because of weak market sentiment. However, property prices would continue to rise as real interest rates stay negative, he said.

Celestial Pictures chief executive Ross Pollack says the company is creating a whole new system of interaction - not one project, but an ecosystem. Hong Kong-based Celestial Pictures, which owns the world's largest Chinese-language film library, is expanding into online gaming through creating what it says will be the city's answer to Marvel Universe's comic superheroes. The first step came last week with the launch of My Kingdom Game for the iPhone and iPod Touch, available for free on the company's website. The move comes ahead of next month's release at local and regional cinemas of My Kingdom, a 70 million-yuan martial arts epic that it is co-producing with mainland studio Skyland Films (Beijing) and production company DW Films. The film was produced by industry veteran Andre Morgan and stars heartthrob Wu Chun and Han Geng. A version of the game for the iPad is also on the way. Celestial Pictures said it planned to go beyond film and TV productions by tapping into the gaming and animation business. It appointed Justin Weng as vice-president of game development and licensing in April, and is developing animated characters based on 100 action heroes selected from the 760 Shaw Brothers classics it owns. "We are creating a universe in which they all interact. It's like a Shaw universe. No one has seen this before," said Ross Pollack, chief executive of Celestial. Pollack said the characters would be similar to Marvel comic heroes like Spiderman and the Hulk. "With these characters we can explore gaming and animation territories." The company would adopt a 360-degree "transmedia" approach across films, games and TV productions, where they are all related. Celestial Pictures, a subsidiary of the Malaysian Astro All Asia Networks, would initially invest about US$500,000 into its animation and games project, Pollack said, and would be looking for partners for the venture. Celestial is currently collaborating with a company based in Los Angeles and another on the mainland to do characterisation for the project. Each company is responsible for drawing the characters according to American or Asian comic style. The characterisation was expected to be completed by the autumn, Pollack said, and another game was planned for release next year. The company hopes to launch one to five games every year. But while its new games division may top the agenda at the moment, Celestial Pictures would not neglect its core businesses. Celestial recently signed a deal with Sony Max, a 24-hour action and reality TV channel in Africa, licensing the Shaw titles to the continent for the first time. And with an eye on the fast-growing box office revenues on the mainland, Celestial is looking into producing two to four feature films within the next year. Potential titles include remakes of Shaw classics like Come Drink with Me, One-Armed Swordsman and Five Deadly Venoms. Pollack said the projects would be co-produced by Hong Kong and mainland partners with each project budgeted at no more than US$10 million. The company is also looking into making three to four productions for pay-TV that will lead to opportunities to take the storylines into games. Pollack said the company had recently co-produced the 30-episode martial arts drama Kung Fu School at a cost of US$100,000 per episode. Also on the cards is a move to high definition programming. Out of the 760 Shaw titles that have been re-mastered and digitised, 133 are already in HD format. Another 217 titles are now waiting to be converted into HD. "We are not creating just one project, we are creating an ecosystem," Pollack said.

Anti-smuggling operations may not be the most glamorous sort of police work but are among the most dangerous. Officers said driving a speedboat could be much more dangerous than driving a car at high speed. "Imagine you are driving at 110km/h on the road with your eyes covered, but the road is not divided into lanes, and your opponent is making a fierce effort to escape. That's how dangerous it is for us," acting superintendent Law Ka-hong of the small boat division said. Law said the sea could be very rough. At speeds of about 60 knots (111km/h), the waves would repeatedly throw his boat into the air for three to four seconds at a time. Superintendent Fred Tsui Wai-hung of the marine police operations bureau said if anybody fell into the sea at such a high speed, he or she could be injured as badly as when falling to the ground from a car: "You could probably be hit by other boats or break your neck, arms or legs." But Tsui stressed that marine police would take care of smugglers during a chase. Officers said smugglers' speedboats and other equipment had advanced greatly in recent years. Police spent HK$445 million on a maritime patrolling response system in 2005 to help track smugglers. It consists of many surveillance monitors and heat detectors installed in strategic locations to detect boats as far as 20km away. Some 40 high-speed patrol boats and two barges can respond promptly if any suspicious boats are detected. The small boat unit also plans to spend HK$20 million to HK$30 million to replace its five high-speed inceptors - the force's fastest vessels, with a top speed of 60 knots - with even faster boats.

Softening demand for exports and weakness in the financial sector threaten a deeper slowdown for Hong Kong after a surprise contraction in the territory's economy in the second quarter. Waning global demand and supply-chain disruptions following the March earthquake and tsunami in Japan led to a 11.1% drop in exports from the first quarter, a dramatic reversal from a 14.4% rise in the previous quarter. That caused Hong Kong's gross domestic product for the three months ended June 30 to contract 0.5% from the first quarter on a seasonally adjusted basis. A median of analysts' forecasts anticipated growth of 0.7%. Businesses are reporting signs of weakness in trade, which makes up about one-fifth of the economy. Cathay Pacific Airways Ltd., the territory's main airline, announced on Wednesday a drop in profit in the first six months of the year, due in part to a 4.1% decline in cargo demand. Lo Wai Kwok, managing director at electronic manufacturing services company Surface Mount Technologies Ltd., said the entire electronics sector is seeing profitability come under pressure. The Hong Kong-based company, which had about $241 million in revenues last year, has a factory in China, where inflation and wage increases have added to costs, as have the price of Japanese components, which are priced in the surging yen. Because most of his products are priced in weakening U.S. dollars, he says profit margins are getting thinner. Felix Chung of Chungweiming Knitting Factory Ltd., a company that makes knitwear in China and exports to the West through Hong Kong, is experiencing a similar problem. His clients in Europe and the U.S. are ordering fewer sweaters. "We're seeing a slowdown in orders from the West for a long time now," he said. "Chinese orders are picking up, but Chinese demand cannot replace Western demand." He added that he sells about 20% of his products within Chin–a figure that has grown from zero over the last five years, but still small when compared with the 80% that goes to his European and American customers. Kevin Lai, an economist at Daiwa Capital Markets in Hong Kong, believes slowing growth in China will hurt, pushing Hong Kong's GDP growth down to 0.5%in the final quarter of this year compared with a year earlier. The sharp downturn in global financial markets hasn't spared Hong Kong either. The city's benchmark Hang Seng stock index is down 19% from its early-April highs. At least 12 companies are slated to raise more than US$19 billion in the coming weeks, though with the market downturn, some of those companies may have to shelve their deals. Hong Kong is the second most important center for initial public offerings after New York, thanks in large part to a spate of Chinese companies raising money in recent years. Meanwhile, the city's real-estate market is in the midst of a slowdown as once-hot home sales taper off. A site sold at Tuesday's government land auction was sold for the opening bid of 5.5 billion Hong Kong dollars (US$709.5 millon), far below the HK$7.1 billion to HK$8.25 billion range forecast by property analysts. Despite recent turmoil in global financial markets, the city's government on Friday maintained its forecast for GDP growth between 5% and 6% this year, underpinned by resilience in Asian economies. Unemployment in Hong Kong remains low, at 3.5%, while private spending growth accelerated in the second quarter, rising 2.3% from the previous quarter compared with a 1% increase in the first quarter. Retail sales, which jumped 28.8% in June by value due largely to a continuing shopping spree by an influx of tourists from mainland China, remain a bright spot in the economy. The Hong Kong Tourism Board reported that 19.3 million visitors came to Hong Kong in the first six months of 2011, two-thirds of whom came from China. Clothing company I.T Ltd. said its sales in its Hong Kong stores continue to be strong, thanks largely to shoppers from the mainland, who make up 40%-50% of total sales, said Benny Fong, the company's investor relations manager. "I don't see any slowdown and I'm very positive about Chinese spending power," he said. "I'm not worried at all." The sunny outlook is shared at Wah Ming Hong Ltd., a company that imports watches from Switzerland and exports them primarily to China, where they are sold at an average price of US$1,500 apiece. "The watch industry is enjoying a great year," said Geoffrey Kao, executive director at Wah Ming. "We all have double-digit growth." Mr. Kao said that while his import costs have increased–watches are priced in Swiss francs, which have soared in value this year–the appetite for luxury goods continues to grow among mainland Chinese consumers. That means he has been able to pass along the costs to his clients. Mr. Kao increased prices between 5% and 8% on Aug. 1. However, wholesale and retail sales make up less than 5% of the city's economy, while the city's hospitality sector is about 4%. Hong Kong may still benefit if investors from the U.S. and other slow-growth regions shift more money to Asia, betting on the prospect of Asian economies outperforming the West. "There's a potential flood of capital coming back into emerging markets in Asia, which if it happens will likely give Hong Kong's economy another leg up in the second half of this year," said HSBC economist Donna Kwok, who believes growth in China and Asia generally will remain robust.

 China*:  Aug 17 2011  Share

Zhaojin Mining Industry, Shandong province's largest gold miner, is in talks to acquire assets in North America, Australia and north China, and aims to close deals worth 380 million yuan (HK$463 million) in the second half of this year. The Zhaoyuan-based firm is in early negotiations on the overseas assets, whose acquisition will take longer to realise compared to domestic acquisitions as the due diligence process is more complicated, said chairman Lu Dongsheng. It is also in talks to buy mining rights in Xinjiang and Inner Mongolia autonomous regions, Gansu and Shandong provinces. Progress in areas close to its existing mines is more advanced. In the year's first-half, Zhaojin completed 120 million yuan of acquisitions, including a gold mining project and a minor stake increase in another project, both in Xinjiang. Last year, it executed acquisitions worth 784 million yuan on the mainland and bought a small stake in Australian miner Citigold for around 11.5 million yuan. The company on Sunday posted a 28.3 per cent year-on-year rise in first-half net profit to 720.13 million, on the back of a 12.3 per cent rise in self-mined gold output to 7.63 tonnes and a 19 per cent jump in average selling price to 314 yuan per gram. Gold smelting and processing volume grew 10.7 per cent to 3.8 tonnes. Overall gross profit margin was dragged down to 52.3 per cent from 61.2 per cent by an increase in sales contribution from non-gold and smelting of third-party sourced gold operations, which command much lower profit margins. "Excluding these factors, our self-mined gold's gross margin has been steady at 61.2 per cent from the year-earlier period," chief financial officer Zhang Banglong said. Lu said Zhaojin will not waver from its strategy to be a miner focusing on gold, with the production of by-products silver, copper, lead and sulphuric acid forming only a complementary business. This was being done so as not to waste the resources that co-exist with gold. Zhaojin has maintained its target set in March to produce 15.9 tonnes of self-mined gold this year. A 33-day mine closure in Zhaoyuan in January and February due to tightened safety requirements had cut output amounting to just over 6 per cent of this year's target. Last month, mines in the city including Zhaojin's were again ordered to shut for five days for safety checks due to an accident involving another mining company.

A controversial judicial interpretation of the mainland's Marriage Law by the Supreme People's Court last week may eventually change long-standing views about how one chooses a spouse, legal professionals and newlyweds say. The supreme court said the interpretation, which came into effect on Saturday, was aimed at resolving the increasing number of disputes over property rights during divorces. The most contentious of the 15 articles is that properties bought by parents will go to their child instead of being split between the couple. If the parents of both partners have paid jointly for the property, the two sides should negotiate on how to divide the ownership in the event of divorce. The interpretation has sparked widespread debate on the mainland about whether it is putting property above marriage. Legal experts believe it will help alter the popular belief that a woman should marry a well-off man who is rich in assets - because she will not get any property bought by her in-laws if they divorce. Zhu Lieyu , a Guangzhou-based lawyer and delegate to the Guangdong People's Congress, said: "I think the new interpretation will have a positive impact on mainland marriage values because those seeking a relationship will first focus on their future spouse's personal characteristics and abilities, not the wealth of their families." Lu Ying , an expert in marriage law at the China Law Society, agreed. "The strong need for property has affected [the foundation of] true love," Lu said. "It is not supposed to be the task of the law to correct wrong values [of marriage], but there is no better way to handle the problem." Joe He, a 28-year-old China Mobile (SEHK: 0941, announcements, news) employee who plans to marry next year, said: "Many young people seeking marriage in recent years have always considered how much money their potential mate has. Now, their priority will go back to basics - how much he loves me and can we really walk to the end." As people become richer and more materialistic, having one's own flat has become a major criterion when choosing a spouse. Tying the knot without a flat is jokingly called a "naked marriage", as most people find it risky and unacceptable. However, as property prices soar, many young people have had to rely on their parents, who are eager to see their only child get married and are willing to pour all their savings into buying properties to help the couple get hitched. Sun Jungong , spokesman for the supreme court, admitted the controversial article aimed to tackle the rising concerns of parents that their life savings would be lost if their children divorced. However, many critics said the interpretation would benefit the richer party in a marriage. Many also criticised it for lowering the status of wives as they might not be entitled to anything from their husbands if they wanted a divorce. Alice Gao, an academic with a Guangzhou university who married a few months ago, said the complaints were reasonable, although she believed they represented only a part of women's opinions. "Pressures in life facing everyone, especially women, have become bigger and bigger, and `love' sometimes feels so unreliable that some of them have to grab at something tangible, such as properties, first," Gao said. "But I know it's just the thinking of some women; many others believe they can rely on themselves but not their future husbands."

Independent Hollywood studio Relativity Media, the company behind The Social Network and Fast & Furious, has linked with mainland players in a bid to drive Sino-US movie production deals in the world's fastest-growing film market. Los Angeles-based Relativity and Huaxia Film Distribution Co, the mainland's second-largest movie distributor, yesterday announced in Beijing a partnership that aims to accelerate co-production. Relativity unveiled separately an alliance with private equity firm SAIF Partners and IDG China Media, an investment arm of Boston-based International Data Group. The three firms intend to develop, produce, distribute and acquire mainland films for the global market through SkyLand Film and Television Cultural Development, their jointly owned film production and financing company. Financial terms were not disclosed. "China is the fastest-growing film market in the world, with over 6,000 screens and more than US$1.5 billion in box-office revenue last year, an increase of 60 per cent [year on year]," Relativity chief executive Ryan Kavanaugh said. "With six new screens added daily in China and a business which has been tripling in revenue every three years, it is unquestionable that China and the US must work closely together to build an entertainment business for the future, which strives to make and release global products appealing to worldwide audiences." Kavanaugh said partnerships with Huaxia Film, SAIF and IDG China represented "a critical first step in achieving just that". Founded in 2004, Relativity has produced or financed more than 200 movies that generated more than US$16 billion at the box office. Its highest profile co-production on the mainland was The Mummy: Tomb of the Dragon Emperor, which was released in 2008 and earned more than US$400 million worldwide. Its stars included Jet Li and Isabella Leong Lok-sze. Huaxia Film executive chairman Gu Guoqing said the partnership with Relativity would "introduce significant resources for the co-production of future movies". Prior to its two mainland partnerships, Relativity committed to producing or financing more than 200 studio-quality movies up to 2014. Relativity's new ventures marked the latest inroad by Hollywood on the mainland, where the government limits the number of foreign film releases per year. A US joint venture led by Stan Lee, the co-creator of popular comic-book characters Spider-Man, Iron Man and the X-Men, last June teamed up with Hong Kong firm Ricco Capital (Holdings) to produce and develop a new superhero franchise for China and the global market.

Tsingtao Brewery Co, China's second-largest brewer by volume, said on Sunday its first-half profits rose 21.62 percent year-on-year due to higher sales volume and expanded production capacity. Net profits rose to 989.9 million yuan ($155 million), or 0.73 yuan a share, from 813.9 million yuan, or 0.6 yuan, one year earlier, the brewer said in a statement filed to the Shanghai Stock Exchange. Sales climbed 21.1 percent to 11.87 billion yuan. The company sold 3.75 million kiloliters of beer during the first half, a rise of 20.6 percent year-on-year. The brewer increased its production capacity and introduced diversified products to cater to growing demand in the world's most populous country. The company aims for annual beer sales of 10 million kiloliters in 2014, the statement said. However, the company said exchange rate fluctuations are likely to affect its margins as it relies on imported barley to brew beer. The country's beer output increased 11.4 percent from one year earlier to 23.5 million kiloliters during the first half, according to data from the National Bureau of Statistics.

Customers choose perfumes at a tax-free shop in Sanya, south China's Hainan province, Aug 12, 2011. The offshore tax-free scheme kicked off on a trial basis across Hainan from April 20, and was formally launched on May 1. Up to Aug 10, the tax-free shop in Sanya has received over 1.3 million customers and more than 340,000 deals have been made.

Chen Bingde, visiting chief of the General Staff of China's People's Liberation Army (PLA), pledged Sunday to lift the friendly ties between the Chinese and Israeli militaries to a new level during a meeting with Israeli Defense Minister Ehud Barak. Chen Bingde, visiting chief of the General Staff of China's People's Liberation Army (PLA), shakes hands with Israel's Defence Minister Ehud Barak in Tel Aviv August 14, 2011. A deepening Sino-Israeli cooperation is contributing to regional peace and stability, Chen said, stressing the relationship between the two countries' armies is developing in recent years. Barak, who visited China two months ago, hopes that the two countries will work together to tackle all kinds of threats and challenges. Chen's visit is the first of its kind, according to Israel Defense Force (IDF) Chief of Staff Benny Gantz, who said the visit was significant in promoting the relations between the two militaries. At the invitation of Gantz, Chen arrived here on Sunday for a three-day visit.

Hong Kong*:  Aug 16 2011  Share

Higher fuel costs, increased competition and lower revenues have taken their toll on niche container shipping companies operating transpacific services between Asia and North America. The latest casualty is Matson Navigation, which will end its service between Hong Kong, southern China and the US west coast in the next few weeks, although a Yangtze River Delta-US service will continue. The Containership Company, which launched transpacific services between eastern China and the US west coast in April last year, closed its container shipping operations a year later. Hong Kong-based TS Lines also recently culled one of its three transpacific routes. Despite coming under tough financial pressure Horizon Lines is the only one of these four niche carriers that has not cut its services across the Pacific. Matson Navigation will end its Long Beach CLX2 express service linking Hong Kong, Yantian, Shanghai and Long Beach on the US west coast, with the last ship sailing from Shanghai on Sunday. The final departure eastbound from Long Beach will be on September 3, just a year after the service was launched. Another Long Beach route - CLX1, connecting Xiamen, Ningbo, Shanghai with Hawaii, Guam and Long Beach, which started in 2006 - is unaffected. Commenting on the decision to cut its south China services Matson Navigation spokesman Jeff Hull said: "While Matson recognises that the Hong Kong/south China market is a vital and important region in China, the economics of the current environment made this difficult decision necessary." Matson is part of the Hawaii-based transport and property group Alexander & Baldwin, which said the CLX2 route lost US$17.7 million up to June 30. Alexander & Baldwin president Stanley Kuriyama, said: "Persistently high fuel prices and overcapacity in the transpacific trade had a significant negative impact on the performance of our two China-Long Beach services [CLX1 and CLX2]." This was despite a doubling of container volumes as a result of the launch of the CLX2 service. Hull said Matson Navigation transported 69,000 China-related containers in the first half of this year compared with 30,900 containers in the same period last year. But the economics of the two services were different, so while the south China route was a direct service, the Yangtze River Delta route loads and unloads cargo in Guam and Hawaii, adding to revenue. Hull said there were no plans to add more mainland ports calls to the CLX1 Yangtze delta service. On Hong Kong and south China, he added: "We do not have any plans to continue to serve the region after the service has ended." Pointing to the tough operating conditions on transpacific routes, Horizon Lines, which has services between Shanghai and Ningbo to Los Angeles and Oakland, said container rates, net of fuel, fell 7.9 per cent to US$2,989 between April and June, down from US$3,246 per container a year ago. "The reduction was due to the addition of China volume, with lower average and declining rates," the company said. Horizon Lines' president Stephen Fraser said transpacific rates remained under pressure for most of the second quarter "as some large international carriers continued to take aggressive rate actions amid capacity expansion in the trade lane". He added: "In addition, average fuel costs during the quarter were up 41 per cent from a year ago." The company was saddled earlier this year with a US$15 million fine to settle price fixing allegations. Higher fuel costs and falling revenues were key to the decision by TS Lines to end its transpacific route from Ningbo and Shanghai to Long Beach last month. The service was intended to operate as a fast "greyhound" connection, with ships speeding at 24 knots across the Pacific Ocean to offer a faster port-to-port transit time than other container lines. Instead the company focused on two slower transpacific services. One of these calls at Xiamen, Hong Kong, Yantian, Shanghai, Long Beach and Pusan, while the other, launched in May has calls at Qingdao, Ningbo, Shanghai, Long Beach and Oakland.

In most countries the fight to win the top political post is usually a blood sport. But in Hong Kong it is a more mannered game. That, at least, was how it looked yesterday after potential contender for the post of chief executive, Rita Fan Hsu Lai-tai, praised another likely rival. Fan, a former Legislative Council president, said Chief Secretary Henry Tang Ying-yen had a winning resume and rich administrative experience. While coy about her intention to run in the election next March, Fan, a member of the National People's Congress Standing Committee, was not shy about disclosing her preference for Tang over the third likely candidate, Executive Council convenor Leung Chun-ying. "Tang's profile shows he has rich experience in government participation - he has been the secretary for commerce, industry and technology and the financial secretary, and now he is the chief secretary ... that gives him a winning edge," said Fan in a TVB (SEHK: 0511) interview. However, she hinted that she found Leung wanting, despite his willingness to share his views on policies, and his recent efforts at outreach, especially in grass-roots sectors such as visiting cage homes and partitioned flats. "I understood the needs of citizens when I was the Legco president," Fan said. "I do not find it necessary to visit a particular sector ... such as [those who live in] partitioned flats." Fan also rejected Leung's defence of his lack of experience in administration, having cited overseas examples such US President Barack Obama - who had not held a government post before winning the top position. "It may not be relevant to compare Hong Kong politicians with overseas ones," Fan said at a public function yesterday. A hotly-tipped candidate for the top job, Fan said in May she would start considering entering the race after two months. It is now almost three months. "I am still pondering," she said yesterday. "A chief executive has to bear huge responsibilities. I need more time for deliberation, and advice from friends on various issues." She also denied her participation hinged on blessings from Beijing. "If I was determined to run for chief executive, I would not be dissuaded by anybody," said Fan. Legco president Tsang Yok-sing was singled out on Saturday by former local deputy to the National People's Congress Ng Hong-mun as a strong and capable choice for the next chief secretary.

Hong Kong smugglers are believed to be behind a massive increase in the amount of seafood being illegally transported onto the mainland. Marine police have seized HK$5.64 million worth of smuggled seafood in the first half of this year. That is more than three times the total value of seafood seized in the whole of last year, which was HK$1.83 million. The main delicacies being smuggled include lobsters, geoduck and oysters imported from overseas. Terence Fung Wai-kin, senior superintendent at the marine crime regional headquarters, said the mainland's demand for expensive products and seafood had risen due to the increasingly prosperous economy. But police had stepped up efforts to combat the smuggling of luxury products, and this had led to an increase in the trafficking of seafood. The mainland also imposes a tax of 30 per cent on highly priced seafood, creating a profit margin for smugglers. "Now they smuggle whatever makes a profit," he said. "We have even seized water monitor lizards before. There are some people in mainland China who have a special taste in food." A customs officer said demand had also risen because of the number of visitors arriving in Shenzhen for the World University Games, which started on Friday. Fung said many smugglers were previously fishermen. With the decline of the fishing industry in Hong Kong they turned to smuggling many years ago and had developed syndicates with a historical background. He said he had arrested a father, then 20 years later his son and his 16-year-old grandson, all from the same smuggling family. Fung also said boats with seafood could usually be found in western waters of Hong Kong near the airport, while boats with computer parts could mostly be found in the eastern waters. Overall smuggling figures in the first half of this year saw a rise of 7 per cent, from 28 cases to 30 cases year on year. Twenty-six people were arrested, with goods costing HK$38,902,991 confiscated. Apart from seafood, these included iPhones and iPads, computer parts, cigarettes, live snakes, frozen pangolin and expensive traditional Chinese medicine. Superintendent Albert Ho Wai-hong, at the marine regional crime headquarters, said smugglers would use either fishing boats or speedboats, or would use small boats first then transfer to speedboats at designated points. The three options would be rotated to avoid being caught by police or customs officers. Meanwhile, there were 32 cases of illegal logging of Buddhist pine and incense trees in the first half this year, up 255 per cent year on year. The trees were cut down and transported to the mainland to be sold as fung shui plants or expensive Chinese medicine. Police are co-operating with the Agricultural Fisheries and Conservation Department to combat the practice.

Whether you're the CEO or the cleaner, employees rate respect from their colleagues as the key to being happy at work. Three-quarters of Hong Kong people questioned in a survey agreed that it was the main reason for staying in a job. The figure was one of the highest of the 80 countries surveyed and way above the global average of 61 per cent. Mainland employees also listed respect as one of their top priorities (69 per cent), but placed more emphasis on relationship-building. This involved saying "hello" and "goodbye" when you enter and leave the workplace and also remembering colleagues' birthdays. In Beijing, a fifth of respondents said remembering birthdays was important, compared to just 2 per cent in Hong Kong. Greeting colleagues when entering or leaving the office was twice as crucial in Beijing (32 per cent) and Shanghai (30 per cent), compared to Hong Kong (14 per cent). The job satisfaction survey was carried out by serviced office provider Regus. Hans Leijten, regional vice-president for Regus East Asia, said: "In Beijing, it's more important to be socially involved with these things, making sure you drop off the small present, having the right guanxi [Putonghua for networks or connections] with the right people." He said: "In Hong Kong, they silently go to their workspace. It's almost like they don't want to disturb their colleagues who might be working. But in Shanghai, they shout out, `Good morning, how are you doing?'" Other differences included sharing the workload, which was more important for Hong Kong staff (36 per cent) than those on the mainland (26 per cent). Celebrating colleagues' successes was far more important in Beijing (56 per cent) and Shanghai (45 per cent), compared to Hong Kong (36 per cent). But it was less important to vocally acknowledge the work of others on the mainland (28 per cent) compared to Hong Kong (34 per cent) and the global average (49 per cent). Turning up to meetings on time was important in Hong Kong (18 per cent) and globally (19 per cent), but less so in Beijing (12 per cent) and Shanghai (7 per cent) while sharing knowledge and skills was rated higher in Hong Kong (55 per cent) than on the mainland (47 per cent). Leijten said the differences in punctuality could be down to traffic congestion in mainland cities. Claudia Choi Po-chu, managing director of public relations firm EBA Communications, said she tweaked workplace practices to reflect differences in the attitudes of staff in the company's offices in Hong Kong, Shanghai, Beijing and Guangzhou. But in each office she aimed to retain staff by nurturing an "emotional attachment" to the company. Every month, the company hosts a party for people who celebrated their birthday in that month, and the birthdays of employees' children and partners are also recognised. Respect between all levels of staff was also a key retention strategy, she said. "We try to make the relationship between the boss and subordinates very fair. Even when the cleaning lady started and called me Ms Choi, I said. `Call me Claudia'. "But the tier of classes still exists in China, where they will not use first names. For example, I would be addressed as managing director Choi." About 17,000 respondents completed the survey globally, with 200 from Hong Kong and almost 300 from the mainland.

 China*:  Aug 16 2011  Share

A strengthening yen and a shrinking population is driving Japanese companies to accelerate their expansion into the China market. "The appreciation of the yen is pushing Japanese companies to reduce production costs in order to stay competitive in the export trade," said Mika Hanada, director of the agriculture, forestry, fisheries, and food department of the Japan External Trade Organisation (Jetro). "One of the best ways will be revising the supply chain of Japanese goods and moving production bases further into China, which is one of the most important export markets for Japan," said Hanada, who was in Hong Kong to attend an international Food Expo. Hanada also said the number of Japanese companies seeking advice from Jetro on overseas investment had risen significantly from April onwards. These include companies in the electronics, vehicle and food industries. The Japanese yen strengthened to 76.785 yen per US dollar as at August 13, compared with its pre-quake level of 83.0 yen per US dollar. Economists have warned that the strengthening of the currency could wipe out the country's fledgling post-quake economic recovery. As of June this year, China accounted for 20 per cent of Japan's total exports, and 21.1 per cent of its total imports. Imports from China - up 21.4 per cent year-on-year - are growing at a faster rate than exports to the country, which were up 14.3 per cent year on year in the first half. Japan's trade deficit with China was US$5.2 billion in June, compared with its total trade deficit of US$47.3 billion. For Japanese companies eyeing low-cost production bases, inland areas such as Chengdu, Chongqing, and Changsha were to be likely targets, said Hanada, rather than coastal cities which were already saturated with both Japanese and Western companies. Increasing concerns with food safety and quality in the mainland's growing market would provide good opportunities for Japanese food companies, which were famous for adhering to the most stringent of standards, said Hanada. However, to succeed in securing a market share in the food production industry in China, Japanese companies would need to revise their management culture, she advised. "It's tough working for Japanese companies because they always demand the best," said Hanada, who previously spent three years working for Jetro in Shanghai. "But the remuneration package is not always as attractive with US and European companies, which are also breaking into the food industry of China." There was also a management ceiling common to Japanese companies and local Chinese staff would rarely get promoted to senior management, which would remain Japanese. "This will have to change, too, if we want the best of local talent in China," Hanada said. On the other hand, despite the pressing need for Japanese companies to expand their production bases to China, Japanese senior management staff were not as eager to locate themselves on the mainland compared with their US and European counterparts. While most US and European staff members were sent to China on a voluntary basis, such decisions were always top-down in Japanese companies, which would appoint senior management staff to rotate in China every three to five years. As a result, Japanese management leaders in China were not as enthusiastic and charismatic as their Western counterparts, as most of them just "want to finish their term as soon as possible, making as few mistakes as possible", said Hanada. That made it even more difficult for Japanese companies to retain local talent. One reason behind the reluctance of Japanese companies to move the best of their staff to China concerned intellectual property ownership, since it was not uncommon that Japanese companies found their technology being copied by local people after years of training. One of the ways of tackling this issue would be setting up joint-ventures with mainland companies - to share the risks, while benefiting from their local knowledge and distribution networks. Kikoman Corporation, a major Japanese soya bean sauce manufacturer, set up a joint venture with Chinese group Zhenji and Taiwanese group Uni-President in Hebei province. Nippin, a Japanese flour manufacturer, established a similar joint venture with Taiwanese and Chinese counterparts in Tianjin city. Yukiguni Maitake, the world's largest grower of fresh Kosher maitake mushrooms, merged with a Chinese company and set up a production plant in Shanghai that involved 150 million yuan (HK$182.59 million) of capital investment. Hanada said more joint ventures were now in the pipeline. "Japan's population is shrinking. In order for Japanese companies to survive and grow, we need to work out a strategy to expand into our export markets," she said.

Residents hold a banner among protesters rallying against the petrochemical plant in People's Square, Dalian, yesterday. The banner reads: "Give me back my beautiful home". Authorities in Dalian , Liaoning province , have ordered the immediate shutdown and swift relocation of a controversial chemical plant. The radical move came after tens of thousands of people took to the streets to protest about the threat of pollution. Vast crowds of protesters swarmed into People's Square in the heart of the city yesterday morning, calling for the closure of the Fujia Petrochemical Company plant, which has been under intense scrutiny after a typhoon last week came close to causing a toxic spill, according to pictures and postings online. Some scuffles broke out as demonstrators clashed with hundreds of riot police - some wearing full body armour - in front of the city's government headquarters, Xinhua reported on its English-language news wire. The city government held an emergency meeting at 4pm and an announcement was made shortly afterwards that the plant would be shut immediately and arrangements for it to be relocated made as soon as possible, Xinhua reported. The news agency said thousands of protesters took part, but online postings and local residents said hundreds of thousands of demonstrators were involved. A staff member at Noah's Ark Bar on the south side of the square said she had seen large and boisterous crowds gathering there throughout the day. "When I first went out to look at the protest a little before 11am I'd say there were at least 50,000 people there," she said. "The protest grew even bigger after that." The announcement followed failed attempts by local party secretary Tang Jun and Mayor Li Wancai to calm demonstrators with a promise to move the plant, which had been met by demands for a clear timetable, Xinhua reported. Independent political candidate and social commentator Li Chengpeng, said on his blog: "Dalian has won, not because the officials won or public opinion won, but because maintaining stability necessitated the win." Social networks, such as Weibo, the Chinese version of Twitter, were abuzz with comments and images of the protest, but searches for words like "Dalian" or "strolling" - a tacit reference to protests - were banned from the microblog yesterday. Twitter postings said some protesters were still gathering last night despite the relocation announcement. The Fujia plant produces paraxylene - known as "PX" by locals - a toxic petrochemical used in a number of paints and plastics. It was almost engulfed by huge waves a week ago as Typhoon Muifa tore through the city. A protective seawall was breached by the storm in two places, prompting officials to act to prevent flooding from damaging 20 metal tanks containing toxic chemicals. At least 400 truckloads of rocks were needed to repair the dyke.

China on Sunday appointed former Spanish national coach Jose Antonio Camacho as new coach in place of the incumbent domestic coach Gao Hongbo. The experienced Spanish tactician will take helm of the Chinese squad, his second ever job with a national team, under a three-year contract after six months without coaching. The news came only four days after the 45-year-old Gao, the youngest coach ever to lead China, saw his side edge past Jamaica 1-0 in a friendly match played in central China's Hefei on Wednesday. Camacho, 56, coached Spain from 1998 to 2002 when the current European and world champion advanced to the quarterfinals of both Euro 2000 and 2002 World Cups. The former Real Madrid and Benfica coach was fired from La Liga side Osasuna when the Spanish side was battling relegation in February. Camacho, who would shoulder the Chinese hopes of making the 2014 World Cup finals, is expected to meet the national team for the first time in the southern Chinese city of Kunming on August 22, eleven days before China's Asian Zone qualifying match against Singapore. In China's first and only appearance in the World Cup finals in 2002, the team failed to win a match or even score during the tournament, jointly hosted by Japan and South Korea.

US ambassador to China Gary Locke meets media - Gary Locke (2nd L), the new US ambassador to China, stands with his family - wife Mona (L), son Dylan (3rd R), and daughters Emily and Madeline (in pink) - outside their residence as he speaks to the media in Beijing August 14, 2011.

Hong Kong*:  Aug 15 2011  Share

Legislative Council president Tsang Yok-sing could be a "strong and reliable" chief secretary in the next government to support a "not so strong" chief executive, according to Beijing loyalist Ng Hong-mun. The former local deputy to the National People's Congress said the three widely tipped candidates for the city's top job had failed to gain broad support from the public. Writing in a Chinese-language newspaper, Ng said "a more capable and reliable chief secretary" would therefore be needed. Ng said Tsang would be an ideal candidate because he was born and raised in Hong Kong, was highly educated and had been an outstanding legislator and Legco president. Ng's suggestion came the day after Allen Lee Peng-fei, who served on the Executive Council before the handover, said Tsang would be an ideal candidate for chief secretary as part of a "coalition" government, with representatives from several leading political parties. Ng earlier suggested what he called a "weird" dream team, consisting of the three most likely candidates for chief executive, Chief Secretary Henry Tang Ying-yen, NPC Standing Committee member Rita Fan Hsu Lai-tai and Exco convenor Leung Chun-ying. His views on the chief executive race attracted much attention after he was granted a rare meeting with Premier Wen Jiabao in April. In Ng's article, Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, was quoted as saying that Tsang would be a suitable candidate to be a top official. Tsang, elected to Legco as a DAB member, was chairman of its predecessor, the Democratic Alliance for Betterment of Hong Kong. Ng said Tam may have been hinting that Beijing wanted Tsang in the next chief executive's cabinet. But Ng said Tsang's alleged close links with the Communist Party were likely to rule him out as a candidate for chief executive. Tsang has never responded directly to the question of whether he is a Communist Party member, despite widespread speculation. Separately, Leung hit back yesterday at critics who claimed he lacked experience in administration. "A political leader doesn't have to have been an official in an administration," he said in a TVB (SEHK: 0511) interview, citing US presidents who had not run an administration before their election. Leung continued to hint that he might throw his hat into the ring for the chief executive's job. He said he might have been "too definite" in saying previously that he did not want the post. "I am willing to take up any position that can serve Hong Kong," he said. "In 1996, I said I was not interested in being the chief executive because I thought my mission [in helping the handover run smoothly] was accomplished. I never thought there would be new problems appearing after the handover."

Hong Kong's property tycoons have vowed greater transparency after a survey they commissioned to discover what the public thinks of them came back with the answer: "Not a lot." Nine out of 10 of the property-buying public had an average, negative or very negative impression of the much-maligned magnates, in the study ordered by the Hong Kong Real Estate Developers Association (REDA) more than a year ago. A lack of openness and communication plus a perceived closeness to the government were the main criticisms cited by the respondents. Now, after much soul-searching, REDA has pledged to "be as transparent as we can be". Two surveys were commissioned in July last year. One was of 42 stakeholders including NGOs, industry associations and public bodies. The other focused on 568 members of the property-buying public. The studies were completed in November but a report of the results has only just been released on the internet. REDA boasts a who's who of big money in Hong Kong as members, including the top four on Forbes' Hong Kong rich list - Cheung Kong (SEHK: 0001)'s Li Ka-shing, Sun Hung Kai's Kwok brothers, Lee Shau-kee, of Henderson Land Development (SEHK: 0012), and Cheng Yu-tung of New World Development. The organisation's mandate is to protect and self-regulate the industry. But such has been the opaque nature of its operations, the 46-year-old association didn't even have a website until three months ago. It was introduced as a result of the surveys by international firm Ogilvy Public Relations. "We did the study, we heard the views of the stakeholders and the public and we are working to dispel some of the misconceptions of the industry," REDA secretary general Louis Loong Hon-biu said. When asked which three things developers did best, the consumers "obviously tended to have no idea" how to answer, the report says. But when asked which three things they did worst, in-store marketing and a lack of industry transparency were the main complaints. Loong said a website was the first step towards a rebranding of REDA. And he said important REDA meetings may in future be followed by press conferences. He also defended REDA's relationship with the government, saying there was "nothing untoward" in working closely with the only supplier of land in the city. Last year, misleading show flats, accusations of market manipulation at 39 Conduit Road and the vicar-general of the Catholic diocese likening Li Ka-shing to the devil stole the headlines. This year, it's been the Icon's "rubbish flats" and the runaway prices of a property bubble. Meanwhile, another survey released by Chinese University last week said three out of four people believed "property hegemony" - the dominance of property developers over the economy and politics - existed in the city. Loong said: "It is a perception and frankly I do not expect that to be changed overnight. These things take time and all we can do now is to try to be as transparent as we can be."

Basic Law Committee vice-chairwoman Elsie Leung says the dispute over permanent residency for domestic helpers would be better settled by an interpretation from Beijing. Seeking an interpretation of the Basic Law from Beijing would be better than trying to use administrative measures to end the dispute over permanent residency for domestic helpers, a senior adviser to the central government on the city's mini-constitution said. Elsie Leung Oi-sie, vice-chairwoman of the Basic Law Committee, said that seeking an interpretation from the National People's Congress, as allowed by the city's mini-constitution, should not be treated as a threat to judicial independence. "As long as we are executing the power authorised by law, how would it affect the independence of the judiciary?" Leung asked. She said changing administrative rules to limit the number of helpers eligible for permanent residency would not be a long-term solution. "It would arouse numerous legal challenges [against the administrative measures] and the dispute would go on without an end," Leung said. "I think we should have the provision [of the Basic Law] correctly interpreted, rather than using administrative measures to plug the loopholes." The High Court will later this month hear a judicial review of the Immigration Ordinance filed by Evangeline Banao Vallejos, a Filipino helper who has worked in Hong Kong for 25 years. The ordinance prevents domestic helpers from seeking permanent residency, while other workers can do so after living in the city for seven years. Vallejos' writ, filed by human rights law firm Vidler & Co, argues that the right to equality under the law is protected constitutionally. There has been speculation that the government is unlikely to seek an interpretation from Beijing until after the court issues its ruling. Wang Guangya , head of the State Council's Hong Kong and Macau Affairs Office, earlier said that the Basic Law could not be amended easily, leaving a request for interpretation as the only legal option if the government lost the legal challenge. New People's Party chairwoman Regina Ip Lau Suk-yee agreed with Leung that the government should seek Beijing's interpretation on the Basic Law when the dispute could not be handled by other means. But University of Hong Kong legal scholar Cheung Tat-ming said the right of residency was an internal matter, and there were no grounds for seeking an interpretation of the Basic Law. Liberal Party vice-chairwoman Selina Chow Liang Shuk-yee said she opposed asking for an interpretation. She also denied accusations her pro-government party had used the dispute to smear pan-democrat rivals. Her denial came after her party put an advertisement in three Chinese-language newspapers accusing the Civic Party of evading the question of whether it believed helpers are entitled to permanent residency.

He’s had just three years’ experience in making Hong Kong-style milk tea, but Chan Kam-wui, 18, yesterday beat five more experienced rivals from Shanghai, Beijing, Shenzhen, Melbourne and Toronto to win the International Kam Cha Competition.

The manpower shortage in public hospitals is set to get worse in the next decade as baby-boomer doctors come up for retirement. The prospect is putting added pressure on the Hospital Authority to retain its doctors, 22 of whom have quit on average each month over the past year. "The coming five to seven years will be a key period for us to train colleagues and retain talent," said the authority's new head of human resources, Dr Derrick Au Kit-sing. "It will be necessary to assess the peak period of retirements for each department." Au said the number of departing doctors was expected to jump as baby-boomers reached retirement age. Every year about 4.5 per cent of public doctors depart, with one in nine of these choosing retirement. Au predicts the impending surge in departures will push the departure rate up by 2 per cent by 2022. The authority faces a more immediate need for 500 additional doctors to cover the loss of staff and develop new services, but it is able to only hire 330 due to manpower shortages. Au said rates were high for the departments of oncology, anaesthesia, as well as accident and emergency. Hiring of overseas doctors and expansion of the number of local doctors working in part-time schemes are among options being considered to alleviate the situation. Obstetrics and gynaecology, a department that has suffered a severe loss of staff to the private sector, has been recruiting part-time doctors. The scheme was expanded to other specialist departments in June. While the authority used to target those who had worked in public hospitals to join the part-time force, it aims to extend its reach to the private sector by the end of this year. Recruitment adverts will be placed in newspapers and the Medical Association's journal. Nevertheless, different departments are still divided over the employment of private doctors. "We have heard both approval and objections [to hiring private doctors]. Some are worried about whether they can manage them well," Au said. The working culture in public hospitals is quite different from that of the private sector, and newcomers will have to adapt to new codes of practice, he explained. Attracting overseas talent is another controversial solution put forward by the authority. Recently it had received 160 enquiries from overseas doctors, out of which 30 were clearly eligible to join, Au said. The authority had proposed bringing in overseas doctors without asking them to sit for a Hong Kong licensing exam. But some doctor groups opposed the plan. Discretion can be exercised to approve registration as medical practitioners for doctors who possess only overseas qualifications. Similar discretion may be extended to increase manpower in emergency rooms and anaesthesia departments, Au said.

A recently upgraded land sales program will proceed as planned despite a lackluster response at an auction for a plot in Sha Tin on Tuesday. "The plot was sold at the reserve price due to a poor response from developers," Secretary for Development Carrie Lam Cheng Yuet-ngor said yesterday. "But still, that was the market price, so I do not find it disappointing."  Authorities had announced in June that seven additional plots were going to be offered for sale between July and September. The 248,100-square-foot site at Kau To Shan, Sha Tin, offered on Tuesday was one of the seven sites. It was sold for HK$5.5 billion - 16 percent below the lowest market estimate. A downturn in local stocks and building restrictions on the plot were said to have dampened demand for the plot. But Lam was unfazed. "The administration will not change plans for land sales due to the result of a single auction," she said. The secondary residential market has also felt the effects of economic uncertainties, with owners continuing to slash asking prices. One homeowner took a HK$814,000 hit after selling a 511-sq-ft flat at Metro City Phase 1 in Tseung Kwan O for HK$2.85 million, or HK$5,245 psf. The owner lopped 6 percent off the asking price to make the sale. Neighboring flat owners are now asking for HK$6,014 psf. Another homeowner cut the asking price by 14.6 percent, or HK$1.18 million, before selling a flat of 1,215 sq ft at Mei Foo Sun Chuen for HK$6.9 million, or HK$5,679 psf. The leasing market also faces a squeeze. A 514-sq-ft flat at Healthy Gardens in North Point went for 11 percent lower than the asking price of HK$13,800 per month. The owner now has an investment return of 4 percent rather than 4.5 percent.

Thousands of bargain hunters - many of them armed with suitcases, trolleys and wads of cash - packed the opening of the Hong Kong Food Expo, where stocks of goodies from instant noodles to dried black mushrooms are being sold at discounts of up to 30 percent. Some early birds were seen dragging trolleys into the Hong Kong Convention and Exhibition Centre, with several saying they were prepared to spend at least HK$2,000 on groceries. Yuen Lai-si, a regular at the annual fair, yesterday loaded up on large amounts of imported jelly, spaghetti sauce and vegetarian food. "I spent only HK$1,000 on the food, which would normally cost HK$1,300 at supermarkets," said Yuen, pointing out that a six-cup jelly pack costs HK$65 at the five-day fair, but HK$86 at supermarkets. Lam Yu-ting bought a trolley filled with 20 packs of instant noodles. "The price of the noodles is about the same as in the market, but the trolley was the real bargain," said Lam, who paid HK$100 for the set. Nissan Foods marketing assistant Tse Hui- kin said about 16,000 noodle packages had been sold by 3.30pm. One exhibitor cut the price of dried black mushrooms imported from Japan by 20 percent to draw customers. "Mushrooms for dinner are common not only during Lunar New Year," said Kai Wah International deputy marketing manager Woo Chung-man. "Mushroom packs imported from Japan are very popular, as we don't usually have enough stock at our retail stores." One of the fair highlights is a free sampling of abalone from Japan. Two whole abalone, which sell for HK$7,142 each, were cut into pieces for 20 early birds. A thousand tins of abalone priced at HK$1 each sold out within minutes of the opening.

 China*:  Aug 15 2011  Share

Being a train driver used to be a prestigious technical career on the mainland. Working for a large, state department meant a stable, well-paid job with the added perk of travelling around the country when few even had the chance to visit a neighbouring city. That's no longer the case for Max Zhou and his disillusioned former engine driver colleagues, who say the job today brings mostly exhaustion, frustration, and pressure. Now their main concerns are to arrive at the next station on time, have enough rest and time off with their families, and to get a fair wage. Unlike many of his former colleagues whose relatives worked on the railways, Zhou fell in love with the locomotives as a boy in Hunan province. After graduating with an economics degree from a local university, Zhou's family asked their "connections" - which means bribing industry insiders - to help him find a job as a trainee train driver. He worked at the job for more than three years until he quit in 2009. As Zhou soon learned, the job's prestige had not only declined and the hours lengthened, the drivers had become much reliant on technology. "The job might be dangerous but we don't think about that too much. Generally we trust the technology," Zhou said. "But it's definitely boring and, to me at least, it has no future." Modern locomotives have diesel or electric engines, with today's high-speed versions capable of speeds of up to 350km/h. The new systems, signalling and dispatching systems play critical roles in the networks. So much so that there can be little for a driver to do on the long trips. Zhou shot a short video a few years ago showing a typical day at work. In the two-minute video, his co-driver is seen sitting in the train cab, drinking hot tea, toying with his tousled hair, and not touching a button on the control console. The signalling system tells them when to move forward, slow down or stop. Other instruments show them where they have to adjust speed for inclines. "Unless there's an emergency that requires the driver to take immediate action, such as people or animals crossing the rail line, drivers just follow the signal system all the time," he said. But Zhou and other drivers regard the habitual reliance on the signalling system as one reason that let to the mainland's worst train crash in years. On a rainswept night on July 23, the southbound D301 collided with the rear of the D3115 Hangzhou-to-Fuzhou train on the outskirts of Wenzhou , Zhejiang province, killing at least 40 passengers and injuring nearly 200. The Ministry of Railways and mainland media attributed the crash to the failure of the signalling equipment, which was supposed to give the D301 a red light while the D3115 was making an emergency stop. The public and media have questioned why the driver of D3115 failed to report his stoppage to dispatchers or the driver of D301. Zhou says it's a reasonable question, but an action most drivers would consider unnecessary. "If I were the driver of D3115, I wouldn't make that call because either the dispatchers or the signalling system would tell the trains following me to stop, so why would I bother reporting my status?" he says. "As it turned, it was out an unpredictable error of a system we trusted totally that caused such a tragedy." China has one of the world's largest and most complex railway systems. Its 91,000-kilometre network trails only the United States and Russia for scale and the high-speed-rail network of more than 8,000 kilometres was the world's most extensive at the end of last year. The sector operates 19,400 train engines and the number of passengers has increased by nearly 60 per cent in a decade to more than 1.67 billion last year. Meanwhile, the Ministry of Railways has trimmed its huge workforce over the past decade from 3.2 million to 2.15 million last year, which train drivers say has only added to their stress with longer hours and stagnant, low wages. In contrast with the rapid expansion of the industry they work for, the drivers complain their status is far lower than before. One of Zhou's former colleagues, a train driver with the Guangzhou Railway Group who was born into a railway family, says a driver could support his whole family in the 1980s and 1990s. But now, a driver like him with 10 years' experience earns up to only 5,000 yuan (HK$6,060) a month. Drivers only get to stay at home for less than a day between journeys of more than 30 hours. There are no weekends or holidays, just annual leave of 10 days. "Our heavy responsibilities are similar to those of airline pilots, but there's a huge gap in our social status and income," a driver in his 30s complained. "You know how much a train driver with more than 30 years' experience can earn by the time he retires? Just 80,000 yuan a year." The frustrations have spilled over into industrial action. In a rare demonstration, about 200 drivers with the Guangzhou Railway Group protested for two days last week inside the main railway station of Changsha , the capital of Hunan province, over working conditions and poor pay. Claiming that they were owed eight years' of unpaid overtime, the drivers refused to return to work until the company promised to look into their demands. Xu Yifa , a former train driver who became director of Zhengzhou's railway bureau before he retired two years ago, admits that the mainland railway sector's has lost much of its shine, and there had been many complaints in the industry. But, he said, many train drivers once saw career opportunities in the sector's new age, especially with the development of bullet trains. But Zhou's companion, the driver from the railway family, says only those with good connections to top rail executives are offered training courses to drive bullet trains, and must bribe officials for promotions, something he has no intention of doing. "My family has been with the railways for decades and I do love it," he says. "But I don't want to be a driver anymore. It's really hard work with too much pressure."

Port operator China Merchants Holdings (SEHK: 0144) (International) has become the biggest shareholder of the Colombo South Container Terminal in Sri Lanka after signing an agreement to take a 55 per cent stake yesterday, At an expected investment of more than US$500 million, the deal would be the single largest foreign investment by a private company in Sri Lanka, China Merchants said. China Merchants chairman Fu Yuning and the president of Sri Lanka, Mahinda Rajapaksa, were at the signing ceremony in Shenzhen yesterday, on the eve of the opening of the 26th World University Games. Colombo International Container Terminal is the joint-venture company that will operate the terminal. Sri Lankan-listed Aitken Spence will hold 30 per cent of the joint venture and the Sri Lanka Ports Authority 15 per cent. The company has been granted the rights to manage and operate the terminal for 35 years. China Merchants, which owns stakes in ports moving about a third of the mainland's containers, made the investment to target rising trade in India and other South Asian nations, Fu said. The company has begun to expand overseas as rising competition pares margins at domestic harbours, according to Bloomberg. "Sri Lanka's economy is currently at an important turning point and it is our country's strategy to enhance our ports-related economy," Rajapaksa said. When finished in 2013, Colombo South's 1,200-metre quay will allow it to handle the world's largest container vessels. It has a designed capacity of 2.4 million 20-foot equivalent units per year. Colombo South is an extension of the Port of Colombo, currently the only container port in the country. It has a designed capacity of 4.5 million teu a year. It moved 3.46 million containers in 2009, followed by four million teu last year, representing growth of 15.6 per cent year on year. China Merchants and Aitken Spence signed a memorandum of understanding in September last year to jointly develop the Port of Colombo. China Merchants manages and invests in terminals in Hong Kong, Shenzhen, Ningbo, Shanghai, Qingdao, Tianjin, Xiamen and Zhanjiang. The company handled 52.28 million teu last year, ranking it No1 on the mainland and the fourth-largest container operator in the world. The mainland port operator began investing overseas in 2008 when it entered into a preliminary agreement to take a 65 per cent share in a joint investment in a marine logistics base and a general cargo port in Vietnam's Vung Tau province. Last year, it acquired a 47.5 per cent stake for US$154 million in cash in a joint venture with the China-Africa Development Fund to run the Tin Can Island Container Terminal in Lagos, Nigeria. China Merchants reported an 81.5 per cent jump in net profit to HK$5.88 billion last year. Revenue from port operations rose 17.6 per cent to HK$13.22 billion. The port operator's shares closed 2.77 per cent higher at HK$24.15 yesterday.

Spaniard Jose Antonio Camacho arrived in Beijing on Saturday morning for his new post as coach of the Chinese national soccer team. Surrounded by flashlights from local media at the Beijing Capital International Airport, the 56-year-old kept a prudential profile and reclined to elaborate on his future plan for the team. "We are happy to be here. My team and I are proud to join the Chinese national squad. Our goal for the moment is to try to qualify for the World Cup finals in Brazil. But we have a long-term plan for the future," said Camacho, who also greeted "Hello, China" in Chinese. Camacho arrived with his coaching staff, including an assisting coach, a physical coach and a technical analyst. After a year of carefully estimates and selection, the Chinese Football Association (CFA) chose the former Spain and Real Madrid coach to steer the men's national senior team with just around three weeks ahead of the qualifying Group A opener against Singapore on September 2. During an early interview, Yu Hongchen, vice director of the Chinese Football Administration Center, told Xinhua the appointment of Camacho as China's new coach is part of the country's long-term revival blueprint. "Even if he could not bring the team into the World Cup finals, he will not lose the job," said Yu. The CFA will sign a three-year contract with Camacho and the Spaniard is also expected to forge a suitable playing style for the national side and meanwhile help improve China's youth training system. Camacho will be officially presented by the CFA at a press conference on Sunday morning. As the seeded team, China is pooled together with Jordan, Iraq and Singapore in Group A. The top two teams of the group will advance to the next stage, with 10 teams to be divided into two groups to fight for four direct qualifying spots. The two third placed sides will face off with the winner taking on fifth placed team from South America.

Lotte signals expansion in Chinese market - A Lotte Mart store in Jilin in Northeast's China's Jinlin province .Lotte Mart first entered the Chinese supermarket business in 2008 through the aquisition of the retailer Makro, a unit of Germany's Metro AG. Lotte Mart Co China, a division of South Korea's Lotte Group, is planning to open more than 200 stores in China by the end of 2018, a step driven by an aggressive overseas expansion strategy. "We plan to have 300 supermarkets in China by the end of 2018, Including several regional store-openings this year," said Guo Miao, public relations manager of Lotte Mart China on Friday. Guo said the retailer will open three outlets in North China's Hebei province this year. Meanwhile, the company says it will also open eight stores in East China and three more outlets in Jilin and Liaoning provinces by the end of the year. In addition to its plans for China, the company will also open stores in Vietnam and Indonesia this year. "Lotte Mart has to expand its overseas market because of the sluggish domestic economy in South Korea," said Tang Jiarui, a retail analyst at Everbright Securities Co Ltd. "But the road for Lotte Mart will be tough in China as the timing of its entry has been late." Lotte Mart first entered the Chinese supermarket business in 2008 through the acquisitions of the retailer Makro, a unit of Germany's Metro AG. Lotte Mart currently has 107 outlets outside its home market, 82 in China, 23 in Indonesia and two in Vietnam, compared with 92 stores in South Korea. Although its overseas outlets outnumber domestic stores, overseas sales revenue is much smaller than domestic sales. The sales revenue of non-Korean Lotte Mart stores was 2.6 trillion won ($2.4 million) in 2010, less than half the 5.9 trillion won achieved by the Korean outlets. The South Korean retailer was quoted by media as saying that with an increase in overseas marketing, sales in non-Korean markets could start to outstrip domestic sales in four or five years. A recent posting on the website of the China Chain Store & Franchise Association quoted a Yonhap News Agency report of a Lotte official saying the company will strengthen its presence in China through the aquisition of local companies, in addition to opening its own-brand outlets because China is the company's most important overseas market. "The entry and expansion of foreign companies in China will definitely affect the local retail industry," said Wang Hongtao, press officer with the China Chain Store & Franchise Association. "But they will also bring good management, marketing and logistics strategies." Earlier this week, South Korean media reported that Lotte Mart plans to move its headquarters to China.The relocation plan was originally revealed by Lotte Mart's CEO Noh Byung-yong in a report by Yonhap. "We will accelerate our opening of stores abroad and are mulling moving our headquarters to China when overseas sales exceed domestic sales," said Noh. "We have heard about it (the report of the relocation plan), but we haven't had an official announcement from our headquarters," Guo said.

China launched a communications satellite PAKSAT-1R for Pakistan at 0:15 am Friday from the Xichang Satellite Launch Center in Southwest China's Sichuan province. A Long March-3B carrier rocket carrying the communications satellite PAKSAT-1R blasts off from the Xichang Satellite Launch Center in Southwest China's Sichuan province, August 12, 2011. The satellite was carried by a Long March-3B carrier rocket, according to the launch center. It is China's first in-orbit delivery to Asian customers and also the first commercial satellite export to international users this year. According to statistics from the control center, the satellite successfully separated from its carrier rocket and entered geostationary transfer orbit as scheduled, 26 minutes after being launched. PAKSAT-1R will provide a range of services, including broadband Internet, telecom and broadcasting, covering some regions of Europe, South Asia, the Middle East, and the eastern Africa. The contract for the PAKSAT-1R was signed in 2008 between China Great Wall Industry Corporation and the Space and Upper Atmosphere Research Commission of Pakistan. China and Pakistan share a long history of space technology cooperation. Pakistan's first low-orbit satellite, BADR-A, was launched by China in 1990 with Long March 2E rocket.

Despite the unexpected jump in July exports, overseas demand for Chinese goods remains shaky in the face of debt problems in the United States and the European Union, said Li Rongcan, assistant minister of commerce. "The business environment both at home and abroad for Chinese manufacturers is very complicated and unstable and there are still many uncertainties," Li told the China Top 500 Foreign Trade Enterprises Forum 2011 in Beijing on Friday. "The slowdown of the global economic recovery is making the growth of Chinese exports slow down, and the overlapping of the sovereign debt crisis with the US and euro bloc is adding turbulence to the world financial market," he said. Li made the remarks two days after the latest trade figures showed that exports jumped by a higher-than-expected 20.4 percent in July, leading to a monthly trade surplus of $31.5 billion, the highest since January 2009. However, that blip comes after the monthly figure had been on a decline for the first six months of this year. Many exporters said they had experienced the worst time since the outbreak of the financial crisis in late 2008. Besides the shrinking overseas demand, rising costs and the continual appreciation of the yuan are hurting exporters. On Thursday, the yuan strengthened beyond 6.4 per dollar for the first time in 17 years. Although short-term prospects might be sound due to the increasing orders for the Christmas season, experts and manufacturers said they are not upbeat about overseas sales in the longer term, as the US sovereign treasury ratings were downgraded and the EU debt crisis is spreading. "It's hard to predict precisely how the global debt crisis will affect our exports in the long term, but the general picture is gloomy," said Wang Huidao, general manager of Hiking (Qingdao) International Trading Service Group Co Ltd, a subsidiary of Hiking Group, the largest foreign trade company in Shandong. Compared with the previous year, the company saw a "slight" increase in sales during the first six months, but "the pressure for the second half is huge, and probably we have to get ourselves ready for difficulties for another two to three years", Wang said. On Thursday, the Ministry of Commerce warned that the EU is considering charging high-level import duties on goods from China, citing reports from European media that the EU is expected to levy and extend duties on tiles and bicycles. Zhang Ji, director of the ministry's department of mechanical, electronic and high-tech industry, said recently that China's exports will decelerate and some manufacturers, especially in the mechanical and electrical sectors, will probably die out. Also at the forum, China released a report on its top 500 foreign trade companies, showing private companies are playing a bigger role in China's foreign trade, with the proportion of their trade rising to 25 percent of the national total in 2010 from 16 percent in 2005. "It's high time for Chinese manufacturers to strengthen their advantages through adding research and development efforts and expanding global sales networks and enhancing after-sales service, especially for automotives, household appliances and engineering machinery," said Li. Emerging markets including Brazil, India, Indonesia and Russia, as well as South Korea, deserve more focus and effort, Li said. During the first seven months, China's exports to Brazil and Russia rose by 38 and 37 percent, while the average growth was 25 percent. Exports of mechanical and electrical products and high-tech goods rose by 18 and 15 percent. "Given the complex business environment, we have to assist Chinese companies going overseas and growing into real global brands," Cheng Siwei, former vice-chairman of the Standing Committee of the National People's Congress, said during the forum. "Establishing sales offices and even manufacturing bases abroad are the right way ahead," he said.

Hong Kong*:  Aug 14 2011  Share

Pilots on flights between the mainland and Hong Kong will not have to calculate two different sets of measurements once an agreement with the mainland to replace the metric system with the more popular imperial method comes into effect - at least for the southern part of the Pearl River Delta. Varying measurement units in different air zones have long caused headaches for pilots and air traffic control officers, who have to convert important data such as wind speed and altitude, increasing their workload and weighing on safety. But in the coming decade, the southern part of the delta - including airports in Shenzhen and Zhuhai - will standardise measurements with Hong Kong's, which like most of the aviation world, plots distances in feet, the Civil Aviation Department says. The move is aimed at smoothing management of the region's air traffic, which is expected to nearly double from 2,700 flights an hour now to 5,000 by 2020. Civil aviation director general Norman Lo Shung-man did not say when the new arrangement would start, only that the parties had reached "consensus". Standardisation of the aviation measurement system between Hong Kong and the mainland has been a touchy subject as to who should adopt whose system. The consensus was an outcome of talks between Hong Kong, Macau and the mainland over the past three years on ways to accommodate air traffic growth and airport expansion, including Hong Kong's proposed HK$136.2 billion third runway. Lo said the limited mainland airspace would not pose a problem for the runway project, because the Civil Aviation Administration of China had already agreed to open up the delta's airspace in stages. Lo was speaking at the launch yesterday of the department's new air traffic control centre, which will boost the Chek Lap Kok airport's hourly capacity from 61 flights now to 68 in 2016. By September 22, a new flight hangover point - where aircraft transfer from one air zone to another - will be added over western Macau to divert some Shenzhen-bound planes away from Hong Kong's busy airspace. This will not help boost Hong Kong's capacity but will free up more space over the airport.

Slashed prices, bargain-basement offers and one-dollar tokens had gadget geeks queuing in their hundreds yesterday as the annual Computer Mall Festival opened in Sham Shui Po. More than 300 bargains priced as low as HK$1 are being offered daily during the 11-day fair at the Golden Computer Arcade, Golden Computer Centre, Golden Computer Plaza and New Capital Computer Centre and - for the first time - the Wan Chai Computer Centre. But numbers were down on the festival's opening day, thanks to the city's economic situation and competition from the Hong Kong Computer and Communications Festival which starts in Wan Chai next Friday. "Expensive items are not going to sell well but cheap deals will," Lui Kin-ching, vice-president of the Hong Kong Computer Association, which jointly organised the festival, said. "We're less optimistic about turnover this year given our city's economic situation, but we hope to attract mainlanders." The festival - which offers $HK1.8 million worth of goods at bargain prices - attracted 50,000 visitors yesterday, a 25 per cent drop on last year. "Discounts were not as attractive as before, when iPads were sold at HK$1," bargain hunter Wyman Lin Wai-man, 23, from Tin Shui Wai, said. "It makes them unprofitable for resale." Some shoppers were also disappointed by the policy that allowed each customer to buy only one discounted item per day. "We came all the way from the New Territories with a long shopping list, and it turned out we could only buy one item," Fong Cho-yan, 19, from Tuen Mun, said. But Lui still has some sales ammunition ready to fire, planning a "counterattack" on the last four days of the festival, which overlap with the Wan Chai computer expo. "Laptops and netbooks will be our last resort," he said. "We've reserved HK$300,000 for the four-day battle." While numbers were down yesterday, there was still a queue of about 400 people despite the summer heat, with some having queued for up to 15 hours. First in line was Kin Chung, from Ma On Shan, who snatched a D-Link router originally priced at HK$1,299 for just HK$1. "It's just worth it despite a 15-hour wait," he said. "I bought this for my children, so that they can enjoy wi-fi at home." Nine-year-old Fong Yeung, from Sheung Shui, lined up overnight with his family who bought three of five Sony PSPs which were marked down to HK$999 from an original retail price of HK$1,499. "I only slept for three hours," he said. "But the first thing I'll do after going home is play video games - not sleep."

The long wait is drawing to a close. In 16 days the process that will allow people to get their hands on the government's HK$6,000 cash handout finally begins. But even for those who are first in line - the elderly - actually getting their hands on the cash will take a little longer. The first HK$6,000 will not be handed out until November. The first registration day is August 28 - a Sunday. Although this is usually a day off, 1,100 branches of the 21 banks taking part in the scheme will open specially. And post offices will open from 9am to 5pm for permanent residents over 65 to register. After 10 to 12 weeks, when their eligibility is confirmed, they can receive the cash. The younger you are, the longer you will have to wait. Registration will take place in batches every two weeks from September 11. There are only two ways to register - through a bank or by post. Permanent residents with a personal local bank account can submit their registration forms to one of the 21 local banks, or through e-banking if the service is provided. Those without a Hong Kong bank (SEHK: 0005, announcements, news) account can leave forms in drop boxes at post offices or send them by post; cheques can be collected at specified post offices in person. All those registering have to be over 18 on or before March 31 next year. An extra HK$200 bonus is available for those delaying their registration until April 1. The last registration date will be December 31, 2012. Secretary for Financial Services and the Treasury Dr Chan Ka-keung said people should have ample time to register and did not need to rush. "I would like to remind members of the public, especially the elderly, that whichever way you register, there is no need to queue up to submit the forms in person," Chan said at a press conference to launch the scheme yesterday. Only those who are mentally unfit can receive their money through a legal guardian. People who are immobile are allowed to authorise someone else to register and collect the money on their behalf. From August 22, registration forms can be downloaded from www.scheme6000.gov.hk or obtained from post offices, retail banks and some government departments. Meanwhile, a Housing Authority spokesman said yesterday the HK$6,000 would not be counted as income in the vetting of public rental housing applications. The handout is also not subject to tax since it is not income derived from employment. The windfall for the more than 6 million adult permanent residents was announced after a budget U-turn in March by Financial Secretary John Tsang Chun-wah, who had initially proposed that the money be paid into Mandatory Provident Fund accounts. Further opposition led to this being extended to needy new migrants; those who will be 18 or above by March 31, 2012, have settled in Hong Kong for less than seven years, lack a Hong Kong permanent identity card and fulfil the income requirements can apply.

Officials want to phase out millions of inefficient light bulbs and replace them with fluorescent ones that are up to 70 per cent more energy-efficient and last longer. But the government has no plan to offer subsidies to help people switch to the greener lights. In 2009, Chief Executive Donald Tsang Yam-kuen proposed in his policy address handing out HK$100 cash coupons for the public to buy energy-saving bulbs. But the scheme was scrapped when it emerged that one of his in-laws was a major light bulb supplier. The proposal, now under public consultation for three months, would outlaw the sale and supply of incandescent light bulbs of 25 watts or above if they fail a minimum energy efficiency standard. Some light bulbs, such as the tungsten halogen lamps widely used for commercial display, will be exempted temporarily as they are deemed relatively more efficient and as yet have no effective substitute - a concession that led an environmental activist to label the proposal half-hearted. Officials have yet to offer a timetable for the ban, though they have already pledged to provide a 12-month grace period for suppliers to clear existing stocks. Apart from that, bringing in restricted light bulbs from across the border for personal use would still be permitted. If a law is endorsed, Hong Kong will fall into line with many Western nations in regulating energy-inefficient light bulbs, and will possibly be ahead of the mainland, which has put more focus on restricting the production of such bulbs than on their sale. Greenpeace campaigner Aloria Chang Wan-ki was unhappy at the exclusion of the tungsten halogen lamps. "It is just a half-hearted proposal," Chang said. The incandescent bulbs are estimated to use 900 million kilowatt hours of electricity a year, or 2 per cent of the power consumed in Hong Kong. In 2008, about 6.8 million were in use, according to a projection by a government consultant. There were 4.2 million tungsten halogen lamps. The government says that if all the incandescent bulbs were replaced by compact fluorescent lamps, up to HK$390 million in energy bills and 273,000 tonnes of carbon dioxide emissions could be cut a year. The greener bulbs cost HK$20 to HK$30, while less efficient ones are about HK$8. Light-emitting diode bulbs can cost more than HK$100 each. Acting director of electrical and mechanical services Chan Fan said that while there should be sufficient financial incentives for the switch, a mandatory approach was better than voluntary action or relying on market forces. "A ban can speed up the replacement, which might take 10 years under market forces or a voluntary approach," he said. Asked if lower-income groups might be hit by the sales ban and if subsidies should be provided for switching to energy-saving bulbs, Katherine Choi Man-yee, principal assistant secretary for the environment, said some charity groups had been funded by the Environment and Conservation Fund to distribute free energy-saving light bulbs.

A row has broken out over the sale of critically endangered bluefin tuna at the Food Expo. At loggerheads are an international conservation group, exhibitors and the Trade and Development Council, which organises the expo. As representatives of the Japan-based Yashima Shoji Company handed out bite-sized pieces of the delicacy yesterday, Gary Stokes, a member of the Sea Shepherd Conservation Society, tried to alert people to the nature of the fish they were sampling. "It's like eating a panda," he said to the crowds gathered for the food. "Who wants some endangered species?" Although tasters slowly backed away from the counter, they were soon replaced by more eager hands. The episode highlights the difficulties in protecting the species, because of its high commercial value, popularity, and the nonchalance of some consumers towards its possible extinction. "It's just one type of fish," one woman said. "There are many, many more fish in the sea." Along with pandas and tigers, the northern bluefin tuna, also known as the Atlantic bluefin, is on the International Union for Conservation of Nature's Red List of the species it sees as in greatest need of conservation. Although the species is considered by the union as more endangered than the tiger or the panda, the fish do not have the same kind of protection. A proposal to ban international trade in the tuna was rejected at a 2010 meeting of the Convention on International Trade in Endangered Species in Doha, Qatar. "The bluefin tuna is not listed as an endangered species in Hong Kong or elsewhere in the world," TDC spokeswoman Katherine Chan said. "Since we are promoting free trade and it's legal to sell and promote bluefin tuna in Hong Kong, we don't see why we should take action to ban the bluefin tuna." While some samplers look ashamed others like tea firm representative Liu Jinghui were less so. "It's delicious," she said. "I think it's OK to eat a reasonable amount. We know it's endangered, but people keep eating it. You're not going to stop people from eating it just because it's endangered." With high demand and rapidly falling supply for what the company describes on the TDC website as "the most precious part ... featuring a soft and tender texture which melts in your mouth", trade is lucrative. In January, Hong Kong's Itamae Sushi and a Japanese restaurant paid 32.49 million yen (HK$3.07 million), for a single 342kg bluefin tuna. In March last year, supermarket chain City'super was selling bluefin tuna for between HK$100 and HK$300 per 100 grams. It later took the product off its shelves after shoppers threatened to boycott the chain if it did not halt the sales. Representatives of Yashima Shoji declined to comment.

US Carrier in Hong Kong for 4-day port visit - The USS Ronald Reagan Aircraft Carrier and its three support ships arrived in Hong Kong on Friday for a four-day port visit, which is its fourth visit here. In the press conference held on the Aircraft Carrier, its commanding officer, Capt. Thom Burke said, "We are excited to have this opportunity to visit this fine city of Hong Kong, and we are looking forward to experiencing the culture and continuing to build ties in the community." According to Burke, while in Hong Kong, sailors and marines will participate in community service projects and experience the local culture through tours. These service projects include opportunities to distribute food and visit the elderly, provide care and encouragement to youth, provide landscaping to facility grounds, and play games with children. It was introduced that the nuclear-powered supercarrier was deployed back in March to provide support after Japan's massive earthquake. It acted as a refuelling station for the Japanese military and coast guard helicopters flying relief missions in the area. Following their role in providing humanitarian aid and disaster relief in Japan, the Ronald Reagan then proceeded on to the 5th Fleet area of responsibility where they conducted various operations in support of Operations Enduring Freedom (OEF) and New Dawn. USS Ronald Reagan is a Nimitz-class nuclear-powered supercarrier in the service of the United States Navy. The ninth ship of her class, she is named in honor of former President Ronald Reagan (from 1981 to 1989). Upon her christening in 2001, she was the first ship to be named for a former president still living at the time.

 China*:  Aug 14 2011  Share

Fuji Heavy Industries, which makes Subaru cars, said the Chinese government was delaying its decision on a proposed venture that was key to the carmaker's plan to triple sales in the world's biggest vehicle market. Fuji Heavy, which exports to China, previously expected to announce details on local production in July. Yet the Tokyo-based company was still waiting for government approval of a partnership with Chery Automobile, Fuji Heavy president Yasuyuki Yoshinaga said. Manufacturing with Chery, China's sixth-biggest carmaker, is key to Fuji Heavy's goal of boosting sales to 180,000 units in the country and increasing global deliveries by 42 per cent to 900,000 by 2015. Local production also will help reduce the company's sensitivity to the rising yen against the US dollar because its exports to China are dollar-based. "I feel that our perseverance is being tested," Yoshinaga said. "In the past, the government welcomed foreign companies seeking local joint ventures to encourage the growth of the country's auto industry. Our advisers have been saying those days are over." China is becoming stricter about allowing new vehicle factories because of worries about overcapacity, according to Jincheng Zhou, a China specialist at car industry researcher Fourin in Nagoya. Earlier this year, Beijing imposed a monthly quota of 20,000 new vehicle licences in the city to ease traffic jams and air pollution. "Local Chinese brands and other foreign carmakers are also facing the same issue," Zhou said. China was facing "overheated investment" by carmakers taking advantage of incentives from local governments, Dong Yang, deputy head of the China Association of Automobile Manufacturers, said. The association last month pared its forecast for China, saying vehicle sales may grow about 5 per cent this year instead of its earlier estimate of 10 per cent to 15 per cent. Deliveries of cars, including multipurpose and sport-utility vehicles, to dealerships rose 6.7 per cent to 1.01 million units in July from a year earlier, the association said. The increase follows a 6.2 per cent gain in June and a 0.1 per cent sales decline in May, the first drop since January 2009. Inflation in China, which accelerated in July to the fastest pace in three years, might further damp the industry's sales, Matthew Tsien, executive vice-president of General Motors' China unit, said. Fuji Heavy shares have lost just over 20 per cent this year. Chery assistant general manager Jin Yibo declined to comment on the progress of the venture. The National Development and Reform Commission did not return calls or respond to a faxed request for comment. Yoshinaga said that while the government had yet to detail the conditions for approving the partnership, it might ask for specific transfers of technology, such as those for electric cars or reducing emissions. Even after approval was granted, Fuji Heavy and Chery have to work out details of the joint venture, including which models to build and how many, he said. The Forester sport-utility vehicle is Fuji Heavy's top-selling model in China, where the company's overall sales rose 28 per cent to 62,000 units in the year to March, according to the manufacturer. China requires overseas carmakers to work with local partners, who must own at least half of joint ventures. Fuji Heavy and Daihatsu Motor are the only Japanese carmakers without a vehicle-making venture in China. Fuji Heavy said it could not begin local production without sales of at least 50,000 units a year. Subaru has less than 1 per cent market share in China, where about 18.1 million cars were sold last year. Market leader GM, which formed its first joint venture in China with SAIC Motor in 1997, sold 2.35 million vehicles in the country last year. A 25 per cent import duty makes Subaru cars more expensive than locally built cars. The Subaru Forester starts at 220,980 yuan (HK$269,500), compared with 189,800 yuan for the locally built Toyota RAV4, according to pricing data compiled by Sina.com. Fuji Heavy was likely to cut prices by 15 to 30 per cent on cars made in China, Hidetoshi Kobayashi, corporate vice-president in charge of Subaru's global marketing, said. "Building in China will make Subaru cars more affordable for local buyers," said Masatoshi Nishimoto, an auto analyst at consulting company IHS Automotive in Tokyo. "The question is whether Subaru can provide the cars consumers want." The greatest growth in demand was expected in mid-size cars and SUVs such as the Forester, Nishimoto said. "I love to go to the suburbs over weekends and holidays with my car, which works very well on muddy roads and during rainy days," said Li Yuangang, 31, a bank employee in Beijing who bought his Forester in March. Local production also will reduce the yen's impact on Fuji Heavy as the currency is near a post-war high against the dollar. The carmaker loses five billion yen (HK$507.6 million) in operating profit for every one yen gain against the dollar. The company expects net income to fall 31 per cent to 35 billion yen this fiscal year to March. "Since our exports to China are denominated in dollars, beginning local production there would have a positive impact on our earnings," Yoshinaga said. "It will bring down our yen sensitivity." Investors have been buying the yen as a haven from sovereign debt concerns in Europe and the US, which had its AAA credit rating cut by Standard & Poor's last week. A strong yen cuts the value of Japanese carmakers' repatriated earnings from exports. "The biggest growth is coming from China right now," Yoshinaga said. "We want to enter as soon as possible."

China CNR Corp Ltd (CNR) will recall 54 high-speed trains used on the Beijing-Shanghai high-speed railway over safety concerns, the company said in a statement released on Friday. The Shanghai-listed train manufacturer said in the statement posted on the Shanghai Stock Exchange's website that it has asked the Ministry of Railways for approval to recall 54 of its high-speed CRH 380BL trains. The Beijing-based company previously decided to suspend the delivery of its CRH 380BL trains, as the company has stated that the trains have flaws in their automatic braking systems. The trains were assembled by the company's two subsidiaries, Changchun Railway Vehicles Co Ltd in northeast China's Jilin Province and Tangshan Railway Vehicle Co Ltd in north China's Hebei Province. "The trains are designed to automatically slow down or halt when quality problems occur to ensure safety. They will also send information to the control center and other trains on the tracks," said Zhao Minghua, vice-president of Changchun Railway Vehicles Co Ltd. A spokesman for the CNR blamed quality defects in outsourced parts and components for the problems, without elaborating where the parts and components came from. The spokesman also said the company will speed up an overhaul of its products in cooperation with its suppliers in order to put the trains back on the country's railways. The company's CRH 380BL trains were built based on technology used in Siemens CRH3 trains. The company said it will share the costs of the recall with its suppliers. The Ministry of Railways on Thursday unveiled a new plan to slow down the operational speeds of the country's high-speed trains. The ministry also cut the number of high-speed trains running daily between Beijing and Shanghai to 66, effective as of August 16. The State Council, or China's Cabinet, on Wednesday ordered increased safety checks for the country's high-speed railways in response to public complaints about railway safety. The two trains involved in last month's collision near the city of Wenzhou in east China's Zhejiang Province were not assembled by CNR, but by two subsidiaries of CSR Corp, Ltd, another Chinese train manufacturer. The State Council also decided to suspend the approval of new railway construction projects for the time being.

Young people from all over the world started their sports gala in Shenzhen, as Chinese President Hu Jintao declared the 26th Summer Universiade open in China's southern city on Friday. With the slogan of "Start Here, Make a Difference", the Shenzhen games attracted more than 7,800 athletes from 152 countries and regions across the world. It will be the largest-ever games in the history of Universiade. "The FISU Family, the athletes, coaches and administrators standing here before you tonight are honored and proud to be with you in Shenzhen and they look forward to performing their very best for you during this Universiade that is the biggest event ever organized in FISU's history," George Killian, president of the International University Sports Federation (FISU), said at the opening ceremony, which was held by the side of Shenzhen Bay. Established in 1949, FISU has promoted the sports values of friendship, fraternity, fair play, perseverance, integrity, cooperation and application among young people. The Universiade, which was inaugurated in 1959 in Turin, Italy, aims at providing opportunities for university students worldwide to communicate with each other and show their commitment to peace and friendship. "I expect that regardless of the duties and titles, you will have the opportunity to meet new people. We all know that you are here to compete, but international university sport is also about gathering people from different regions and cultures. So do not miss out on this unique opportunity," Killian said. It is the second time China has hosted the Universiade, which was held in Beijing in 2001. The opening of the huge "door of the world" at the back of the stage started the opening ceremony of the Shenzhen games at the Stadium of Shenzhen Bay Sports Center. In the shape of the sign @, the stage of the ceremony highlighted the youthful vitality that characterized both the image of Shenzhen and university students. "Shenzhen is a young city of miracles. I am sure that all of you will make a difference here and create your own miracles," said Yuan Guiren, president of the organizing committee of the Shenzhen games. Zhou Ziqian, a graduate of Shenzhen University, who bicycled across China to promote environmental protection and the Universiade, brought the torch of the games into the stadium. After being passed among another five torchbearers, including Olympic gymnastics champion Cheng Fei and ambassador of the Shenzhen Universiade, Deng Feifei, the flame was ignited in the main caldron by China's star hurdler Liu Xiang and four students from other continents. As one of China's sporting icons, men's 110m hurdler Liu gained his first world title in the Beijing Universiade in 2001 when he was 18 years old. Then he began to make history, from breaking the Asian and world records to winning Olympic and world championship gold medals. The torch of the Shenzhen Universiade was lit at Tsinghua University in Beijing. The torch relay started at Peking University, and 10 million netizens followed the torch relay on the Internet. The flame surged toward the sea, flying upward to ignite the 26-meter high cauldron, on which is engraved the history of 26 Universiades in the shape of piles of books. There are 306 gold medals on offer from 24 sports at the 12-day Shenzhen games. The Chinese delegation is the largest one with more than 800 athletes, coaches and officials. China ranked second in the medal tally at the last Summer Universiade in Belgrade, Serbia, two years ago, following Russia.

Hong Kong*:  Aug 13 2011  Share

James Murdoch, embattled son of media mogul Rupert, will speak in Hong Kong next month at what has been termed a question-and-answer session - but it is uncertain whether he will be taking any tough questions like those he fielded from British politicians last month. The chairman and chief executive of News Corporation Europe and Asia will speak at the Asia Media Summit in the Four Seasons Hotel on September 6. Organisers Media Partners said yesterday that a pre-arranged list of questions was being drawn up to be asked by the company's executive director, Vivek Couto, who will moderate the 30-minute keynote session. "Questions will be finalised nearer to the event," a spokeswoman said. "I am not sure if [Murdoch] will be taking questions from the floor." James Murdoch came under fire last month over claims by former executives of the News of the World that he misled British lawmakers about what and when he knew about the phone-hacking scandal that led to the tabloid's closure. Organisers of the Hong Kong event have no plans at this stage for special security precautions to avoid embarrassing incidents like the one in which comedian and activist Jonnie Marbles threw shaving foam at Rupert Murdoch during the British parliamentary hearing. "We have not been informed by his office that any special arrangements are needed, but there is still about a month to go, so closer to the date we will know more about those kinds of arrangements," the spokeswoman said. The 38-year-old Murdoch has in recent years been groomed as his father's heir apparent. In May 2000, he moved to Hong Kong after he was appointed head of News Corp's Asian satellite service Star TV, which at the time was losing £100 million (HK$1.27 billion) a year. In 2002, it turned a small profit and was poised for growth, thanks to new channels and distribution deals with India, China and Taiwan. On 13 February, 2003, he became a director of UK satellite broadcaster BSkyB and, later that year, its chief executive. During his brief spell at Harvard University he studied film and puppet animation. He has called himself a professional cartoonist, having penned strips for the university's satirical magazine Lampoon - "a job more to do with drinking than journalism", his father reportedly remarked.

Chief Executive Donald Tsang Yam-kuen – just back from holidays – began his first working day on Thursday at the new Tamar government headquarters. Tsang and his ministers arrived at his new office for a meeting despite ongoing construction work at the new complex that will house both the executive and legislative branches of the Hong Kong government. Tsang and his colleagues met in a conference room on the building’s third floor. Tsang said that since the building now accommodated most of the government’s departments, work efficiency and internal communications would be improved. Meanwhile, a group of protesters led by Association for Democracy and People’s Livelihood lawmaker Frederick Fung Kin- kee tried to assemble outside Tsang’s office. They wanted to protest the government’s latest proposals for the holding of by-elections in Hong Kong. But Fung said police officers stopped them on a footbridge linking Admiralty MTR station and Citic Tower and said they could not approach the Tamar site because it was “dangerous”. After appealing the restriction, the police allowed the protesters to proceed to the building’s main entrance. “There should be a legal area for protesters, which we didn’t have today,” Fung said.

Visitors from Taiwan can stay up to a month in Hong Kong under new arrangements announced yesterday. Currently, Taiwan tourists who have mainland travel permits get a seven-day visa- free stay in Hong Kong. The Hong Kong-Taiwan Economic and Cultural Co- operation and Promotion Council's honorary chairman, Financial Secretary John Tsang Chun-wah, said that from next month the stay will be extended to 30 days to further facilitate the entry of Taiwan visitors for business or leisure. "As long as we continue to further strengthen exchange and cooperation, there will be comprehensive developments in the two places [Hong Kong and Taiwan] as well as a boost in their competitiveness," he said. He made the announcement at the second joint meeting of the ECCPC and the Taiwan-Hong Kong Economic and Cultural Co-operation Council yesterday. The Taiwan council chairman Lin Chen-kuo said both sides will continue their cooperation regardless of any political changes in Taiwan, referring to next year's presidential elections. Tsang said the Hong Kong government is also working on arrangements to allow Taiwan visitors to register their entry beforehand through the internet free of charge. The fee for online registration through the iPermit Scheme is HK$50. Tsang said the Immigration Department will announce details in due course. Other issues discussed included the Hong Kong Tourism Board completing its application procedures for setting up an office in Taipei, which could open next month. Both sides agreed to consider proposals to strengthen exchanges and cooperation by law enforcement officers to combat crime. A spokesman for the Tourism Board said the new arrangements should provide more convenience and flexibility for Taiwan visitors. "The board will work with the industry to promote the new arrangements to Taiwan visitors," he said. According to the board, there were about 2.16 million Taiwan tourist arrivals in Hong Kong in 2010, a 7.7 percent increase over 2009. Tourism sector legislator Paul Tse Wai-chun said the move will facilitate more interaction. The Hong Kong Inbound Travel Association said the relaxation may benefit only Taiwan traders since visitors usually stay in Hong Kong for just two to three days.

The local bourse operator was severely criticized yesterday after suspending eight listed companies, including three blue-chip stocks, from trading following the breakdown of its announcement e-platform. "Our current assessment is that this is a result of a malicious attack by outside hacking," said Hong Kong Exchanges and Clearing (0388) chief executive Charles Li Xiaojia. Investors failed to cash out from HSBC Holdings (0005), HKEx (0388) itself, Cathay Pacific (0293), China Resources Microelectronics (0597), China Power International Development (2380), Dah Sing Banking Group (2356), Dah Sing Financial Holdings (0440), and a bond (4517), which were halted from trading even as the market rallied yesterday after six session of losses. Some of the companies, including bourse operator HKEx, were set to announce interim results yesterday - to be available on HKExnews.hk - the sole platform for all announcements of listed companies. Cathay Pacific chairman Christopher Pratt said he was upset that investors could not trade its stock yesterday. Dah Sing Bank executive director Gary Wang Pak-Ling said HKEx decided the suspension after his bank negotiated with the bourse operator. He urged the bourse to review the trading suspension arrangement. More than 400 related derivatives worth about HK$200 million were also suspended from trading. The exchange did not report possible hacking to the police until late evening. Haitong International Wealth Management associate director Alan Leung Wai-lun criticized the suspension, saying investors have to bear the risk overnight and investors have missed the chance to realize profits yesterday. The platform was down at 11.45am and was temporarily fixed during the lunch break, but it failed again. Li defended the suspension decision which, he said, was fair and equally bad for everyone. If the website remains unstable today, the exchange's bulletin board will be used for dissemination of information but the stocks will be not suspended. Li said the exchange immediately reported the incident to the Securities and Futures Commission, which said it is "following up the matter." The government is extremely concerned about the matter. Acting Chief Executive Henry Tang Ying-yen and Financial Secretary John Tsang Chun- wah urged the bourse to look into the matter and to prevent future occurrences. Raymond So Wai-man, dean of the School of Business at Hang Seng Management College, said the HKEx needed a backup platform for company announcements. He said Skyworth Digital (0751), also listed on the mainland was not suspended as it could release an announcement on its own website, which was recognized by the mainland regulator. He added suspension is inevitable and whether a piece of information is sensitive or not is a subjective matter. However, compensation for investors would be impossible as it is difficult to quantify the loss, said So.

The window for IPOs in Hong Kong hasn’t entirely shut, it seems, with a few gutsy souls pressing ahead even in this market environment. As Dow Jones Newswires reports, New China Life Insurance Co. has filed an application with the Hong Kong stock exchange to list in Hong Kong and Shanghai in October, in a deal that could be worth around US$4 billion. Nasdaq-listed Melco Crown Entertainment Ltd., and Carlyle Group L.P.-backed Century Hotel Group Ltd. are also seeking listings in Hong Kong later this year in deals worth as much as US$1 billion and US$400 million respectively. The news comes as the fate of more than US$19 billion worth of IPOs in Hong Kong hangs in the air, with some companies postponing their offerings in the last few weeks. “In this climate, the window for IPOs has shut for the moment. Investors are risk averse,” Barclays Capital’s head of investment banking for Asia Pacific, Matthew Ginsburg, told Dow Jones Newswires. But it’s still what happens to China Everbright Bank Co. that investors will be monitoring closely. The bank continues to gauge investors’ interest, but hasn’t started taking orders yet for an offering aimed at raising up to $6 billion – Hong Kong’s largest this year – with Sept. 31 set as a deadline, according to its listing application.

France’s Pain Makes Singapore, Hong Kong and S. Korea Lame - There’s a strong connection between France and Asia, and it’s not just about Asian nouveau-riche fondness for bottles of Bordeaux. It’s about money. French banks are big lenders to Asia, so when French banks are hunkering down, they are less likely to finance investments and lending, especially in places such as Hong Kong, South Korea and Singapore. The pain was made clear in markets Wednesday. France’s second-largest bank, Societe Generale, saw its stock plummet 15%. Credit Agricole fell 12%, and BNP Paribas SA declined 9%. For Asia, if French banks are forced to lick their wounds and retreat from foreign outposts, it means less lending and fewer bankers renting expensive houses on Hong Kong’s Peak. According to the Bank for International Settlements and Nomura, French bank lending was equivalent to 1.4% of GDP in Asia at the end of 2010. That doesn’t sound like much, but drill down, and you see the problem magnifying. In financial hubs Hong Kong and Singapore, French banks lend 12% and 9%, respectively, of GDP. To South Korea and Taiwan, it’s roughly 3%. It’s not just a French problem: What’s happening in France won’t stay in France, given the shared burden among euro-zone countries. So throw Germany and the rest of the euro-zone banks into the mix, and the numbers look even more dire. (And remember, this doesn’t include the U.K., which is outside the euro zone but has its own burning problems.) Euro-zone lending to Singapore is 26% of its GDP and 24% of Hong Kong’s. For South Korea and Taiwan, it’s 6%, and for Malaysia, it’s 5%. In India, it’s 4%, but because the country, unlike most of the rest of Asia, runs a current account deficit, it’s more vulnerable to external credit crunches. It’s worth noting that China is somewhat insulated, with lending from the euro zone accounting for just 1.2% of GDP.

 China*:  Aug 13 2011  Share

US reit buys control of mainland retail group - Thomas Tam, left, and Rene Tremblay are working together to capture the growing retail property opportunities on the mainland. United States-based real estate investment trust Taubman Centers is investing about US$24 million to acquire a 90 per cent controlling interest in Beijing-based retail property firm TCBL Consulting. Taubman said the deal equated to around 153 million yuan (HK$185.6 million) and was expected to be closed by October, subject to government approval and registration. "China is fast developing into one of the world's leading consumer markets, with exciting and diverse retail opportunities," said Rene Tremblay, president of Taubman Asia, who will serve as chairman of the new company. "Our investment in TCBL is a unique opportunity for Taubman to accelerate investment in the Chinese market, creating further value for our retailers and investors," he said. "We are optimistic that we will have an announcement in China in the next 12 months." The new company will be named Taubman TCBL, with its China headquarters to remain in Beijing. Founded in Bloomfield Hills, Michigan, Taubman Centers is a real estate investment trust engaged in the development, leasing and management of shopping centres, with a 61-year history. Its portfolio of shopping malls has sales per square foot averaging US$600 for the trailing 12 months ended June 30. Through its Taubman Asia subsidiary, which is based in Hong Kong and provides leasing and management services for IFC Mall in Yeouido, Seoul, it is extending the company's retail real estate expertise to international markets. The company said that Taubman TCBL would serve as a platform through which Taubman's future investments on the mainland would be made, giving Taubman Asia a 90 per cent ownership interest in these investments. TCBL Consulting was founded by Thomas Tam in 2005, after he left property heavyweight Cheung Kong (Holdings) (SEHK: 0001), where he was in charge of running the Oriental Plaza in Beijing. The consultancy has more than 200 staff in seven offices on the mainland, providing retail property consulting services to developers, retailers and institutional investors. Its clients include JP Morgan Asset Management Real Assets (Asia), Grosvenor and Morgan Stanley Real Estate Fund. Tam is TCBL Consulting's joint managing director, and will be appointed president and chief executive of the new company.

China's trade surplus in July grew faster than expected to US$31.5 billion, up 41 per cent from June's US$22.3 billion, China Customs data released yesterday showed. The rise exceeded economists' consensus of a US$27.4 billion surplus, after the value of China's exports rose 20.4 per cent to a record US$175.13 billion in July. This exceeded the 17.9 per cent growth recorded in June and economists' forecast of 17 per cent. Imports were up 22.9 per cent to US$143.64 billion, exceeding the forecast of 22 per cent and June's 19.3 per cent rise, the data showed. Trade with the US showed signs of a marked decline, with growth in Chinese exports to the US tapering off to 13.3 per cent in the second quarter of this year from 21.4 per cent in the first quarter, according to China Customs. The financial roller coaster in the US and EU in the past few days prompted Politburo leaders, led by Chinese Premier Wen Jiabao, to meet on Tuesday to discuss ways to contain risks and keep a close eye on unfolding developments. The meeting came on the same day that Federal Reserve chairman Benjamin Bernanke pledged to keep US interest rates near zero until mid-2013 in an attempt to calm global financial and stock markets. "These are words without actions," Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong said of Bernanke's statement. "The feel-bad factor of shoppers will sting manufacturers in coming months." As the US teeters on the verge of a double-dip recession and Europe's debt crisis shows no signs of easing, exporters and economists expect China to embrace the consequence of weaker demand this year. Mizuho Securities economist Shen Jianguang said the yuan would inevitably appreciate faster against the dollar following the bigger trade surplus and Standard & Poor's downgrade of the US sovereign rating. Spot yuan prices ended yesterday at a record of 6.4181 from 6.4306 against the dollar on Tuesday at China Foreign Exchange Trade System, a central bank unit. The currency has appreciated against the US dollar by 2.65 per cent so far this year. Economists said last month's strong growth in exports and imports showed China remained competitive as "the factory of the world" despite high inflation in raw material prices, higher wages, yuan exchange gains, and growing uncertainty in the euro zone. A Bank of America-Merrill Lynch research report said import growth faced downward pressure as commodity prices could decline and soften demand on the mainland.

Bank of America has held exploratory talks with the principal investment funds of Kuwait and Qatar about selling part of its US$17 billion stake in China Construction Bank (SEHK: 0939), three sources with direct knowledge of the talks told reporters. Bank of America, which owns about 10 per cent of CCB’s Hong Kong-listed shares and is scurrying to raise capital for its mortgage-scarred balance sheet, will be contractually free to sell the bank shares after August 29. BoA, the largest US bank by assets, is likely to sell half its stake to shore up its Tier 1 capital, one of the sources said. Analysts believe Bank of America needs about $50 billion to meet new capital requirements. Talks about the Chinese bank have been held with other investors in addition to the Kuwait Investment Authority and the Qatar Investment Authority, the sources said. If successful, the move to sell the shares to the sovereign wealth funds will alleviate concerns that BoA will be selling the stake in the open market through a block deal. Shares of CCB rose as much as 4 per cent, bucking a fall in the benchmark Hong Kong share index , as traders cut short positions and bet the huge overhang would now not have to be absorbed on the market. “The market must be thinking that BoA is going to unload their entire stake to Middle Eastern SWFs without showing anything to the street,” one Hong Kong-based trader said. Shares of the Chinese bank have fallen some 20 per cent, partly in anticipation of a BofA sale, traders said. The stock was up 1.3 per cent at the mid-session break compared with a 1.5 per cent fall in the benchmark index. It was unclear if any agreement with the sovereign wealth funds or other investors have been cemented. Sources said no talks are being held currently. Bank of America, whose shares have fallen 27 per cent in the past week, did not mention the China investment during a widely followed conference call that top executives held on Wednesday with thousands of investors. Chief Financial Officer Bruce Thompson said on the call that asset sales are being considered to boost capital. “These stakes will be sold eventually,” a second source said of the Chinese bank shares. “They have been shown previously to funds who matter.” Bank of America spokesman Jerry Dubrowski declined to discuss whether negotiations have been held, and officials at QIA and KIA were not immediately available for comment. “We continue to be a significant shareholder in CCB and we intend to continue the important long-term strategic alliance with CCB originally entered into in 2005,” Dubrowski said. The sources sought anonymity because they are not authorised to speak to the media. Bank of America has not been getting much support this year from its CCB investment. Last November, Bank of America sold its option to purchase additional shares of CCB that were available in a rights offering. Chinese banks have been pressured by slowing loan growth and mounting worries about bad debts. Last month, Temasek Holdings, a state-owned investment vehicle in Singapore that bought the CCB rights from BofA, sold US$3.6 billion worth of stakes in two large China banks. Over the past year, BofA has shed its stakes in banks in South America and Latin America, as well as a portion of its holdings in New York-based BlackRock Inc, the world’s largest asset manager. Last week, the Charlotte, North Carolina-based bank sold 400,000 residential mortgage loans with an unpaid principal balance of US$73 billion to Fannie Mae, the Wall Street Journal reported Wednesday, citing sources familiar with the deal. Middle Eastern sovereign funds are familiar with Chinese financial firms. QIA and KIA were cornerstone investors in Agricultural Bank of China’s IPO last year. KIA also invested US$1 billion in insurer AIA Group’s Hong Kong listing. BoA paid US$3 billion for a 9.9 per cent stake in CCB, the world’s No 2 bank by market value, before the Chinese lender’s IPO in 2005. The US bank then exercised an option to buy an extra 11 per cent for US$9.2 billion. BoA sold part of its stake in May 2009. The US bank is now left with 25.6 million shares, including 23.6 million that come out of a lock-up on August 29. It is free to sell the remaining shares in 2013. The US bank is eager to retain about half of the stake as a bet on growth in China, one source said. China’s top three banks went public in the middle of last decade, and each attracted large investments from US and European banks before their offerings. The investments were marketed as a strong selling point by underwriters, but several of the overseas strategic investors have partly or fully exited their stakes following the expiration of lock-up periods.

Owning an aircraft carrier has been the aspiration for generations of Chinese, especially within the People's Liberation Army. Even in the days of China's late paramount leader Mao Zedong –when China's modern shipbuilding industry was basically nonexistent – Chinese leaders had decided that the nation needed a true deep-water navy with aircraft carriers at its nucleus. The need was felt particularly following a clash with Vietnam in 1974 over the sovereignty of the Xisha , or Paracel, islands in the South China Sea. Aspirations were temporarily set aside when Deng Xiaoping launched his revolutionary economic reforms in 1978. Resources were diverted away from the military as economic development took priority. The PLA turned its focus to deterrence and coastal defence and spent its energy on less expensive goals, such as developing a submarine fleet. But the dream lived on. For many PLA leaders, building an aircraft carrier has been a holy grail. The founder of the PLA's modern navy and its chief from 1982 to 1989, Admiral Liu Huaqing , lobbied top leaders hardest to spare more resources to upgrade the fleet. Liu was the first to propose to the PLA's top Central Military Commission that it build the country's first carrier in the 1980s, helping earn his nickname as ''the father of the aircraft carrier.'' He died in January, aged 95. The PLA's top-secret carrier project was shelved for a time due to a lack of funds, although rumours of its perseverance continued to surface, especially after the navy put four modern destroyers into service in 2000. Finally, in June, PLA Chief of General Staff Chen Bingde , confirmed to a Chinese-language newspaper in Hong Kong that the PLA was indeed building one. Revelations followed that the carrier would not, in fact, be a new vessel at all, but a stern-to-bow overhaul of an unfinished Soviet ship. The 300-metre Varyag, was bought from Ukraine in 1998 for US$20 million through a shadowy Macau-based company, Chong Lot Travel Agency, under the pretense it would be a floating casino. Many expected her launch on August 1 – the anniversary of the PLA's founding. However, the maiden voyage was delayed after typhoon Muifa made landfall not far from the ship's berth in Dalian . She finally set sail yesterday. Wednesday. In every way, the trip represents a humble beginning to the PLA's aircraft carrier ambitions. The Ministry of National Defence stressed the ship's Soviet-era design and insisted the vessel was intended mainly for ''scientific research and training.'' The carrier, for instance, is propelled not by nuclear reactors like US carriers, but less-advanced steam turbines. The Chinese vessel also uses a ski-jump flight deck instead of the catapult-assisted take-off system used by US ships, noted Terence Yeung, a military expert who teaches at Hong Kong Baptist University. ''As a result, the variety of aircraft onboard the carrier would be limited,'' Yeung said. That also means that development of China's ship-borne fighter jet, the J-15 – said to be derived from Russian's Su-33 – could prove vital to establishing strike power for any potential carrier battle group. The J-15 made its maiden test flight in August 2009 and may not be ready for carrier-based testing until 2013, said Anthony Wong Dong, president of the International Military Association in Macau. However, Wong listed other PLA aircraft that would be available for service on the carrier, including helicopters like the Z-8, Z-9 and the Russian-made Ka-31. ''The lower-grade JL-9 trainer is most likely the only available choice for the PLA to train it pilots for landing and taking off from the carrier until the J-15s are in place,'' Wong said. The name of the new vessel is still a closely guarded secret. But Xu Guangyu , a retired PLA major general, who now works for the state-run China Arms Control and Disarmament Association, said the PLA navy traditionally gave warships geographical names, whereas training vessels normally took human names. One popular theory is that the ship would be carry the name of a historic figure. Apart from the front-running Huaqing, Wong said ''Sa Zhenbing '' was another popular choice within the navy. Not only was Sa (1859-1952) the son of a highly-respected national hero and warship captain who died in the first Sino-Japanese war, he was himself a well-known admiral who served in both the Kuomintang and the Communist Party. If such names were chosen, Wong said it would be a clue the carrier was intended largely for training. ''Carrier strike group operations will be of crucial significance for the navy,'' he said. Yeung said one of the ship's most important functions would be as a stepping stone for the navy's ambitious development of a global or ''blue-water'' fleet. ''You will never become powerful in a real sense if you keep buying advanced weapons from others without contributing your own commitment and innovative development,'' he said. ''You must learn your own lessons before you can grasp the military technology properly.'' Wong speculated the carrier would formally join the fleet on October 1, 2012 – the 61st anniversary of the People's Republic of China – following a year's testing. ''Carrier strike group operations will be of crucial significance for the navy,'' he said. Once the PLA is ready to become a member of the carrier club, comparisons between the navies of China and the US may become inevitable. But Wong said it would be wrong to think the PLA's carrier could compete with the US. ''The gap between the two forces, particularly in terms of the development of aircraft carriers, is too wide to be closed within a decade or two,'' he said. Indeed, the PLA will have to span oceans of maritime development before commanding a full-fledged carrier group ready for deployment. anywhere on the seas The US Navy – the world's largest seaborne military force – has 11 naval strike groups, with frigates, destroyers, cruisers, submarines and a carrier at their cores. That includes its Seventh Fleet based in Yokosuka, Japan, with additional units in Guam. ''In comparison with the US on the basis of carrier technology, China is at primary school stage, whereas the US is a postgraduate student,'' Yeung said. ''In that sense, the US need not worry at all.'' Still, securing the sea lanes between Chinese ports and the Indian Ocean have only grown in importance with China's emergence this year as the world's second-largest economy behind the US. Such routes are lifelines that carry the crude oil, minerals and exports vital to the mainland's development. Having a carrier battle group and more stronger navy in production would make the PLA more confident of handling maritime troubles, Wong said. ''That is, after all, Beijing's key consideration in securing a carrier strike group.''

The electronics retailer Media Markt, owned by the German group Media Saturn Holding, plans to have six or seven stores by year-end, all in Shanghai, a senior company official said. Former Chief Executive Officer of Media Markt China Ltd Ton Wortel left the position in August for "personal reasons", according to the company, about nine months after it opened its first store in Shanghai. Wortel's sudden departure led some observers to speculate that Media Markt's operations in China were not doing as well as expected. However, Frank Bussalb, the newly appointed CEO of Media Markt China Ltd, said: "We are completely on our plan and even a little bit more than we planned." He said he hoped the company will be able to open 100 stores a year sometime during the next decade, but he did not say what year it will be and what the total number of outlets will be. Bussalb said he hoped the target could be achieved "as fast as possible". Even if the company achieves that goal, it will still be very difficult for it to compete against local giants Suning Appliance Co Ltd and Gome Electrical Appliances Holdings Ltd, which each already have more than 1,000 stores now. Media Markt entered the Chinese market in November 2010. It now has three stores in Shanghai, with a fourth to open next month. Under an earlier plan, the company was to expand beyond Shanghai in 2013, with 100 stores nationwide by 2015. Bussalb said his company wouldn't focus on competing with the local giants solely in terms of store numbers. He said other factors could be used to evaluate the performance of a chain store, such as service quality and profitability. Given its recent arrival in China, Media Markt has said it would continue to develop its localization strategy and seek to understand Chinese customers. It would also vary its store sizes and offer products across a full price range to satisfy consumers' needs. "We are not setting up a German company here. We are local and customer-oriented", said Bussalb. The company also plans to seek growth through e-commerce, but Bussalb did not give an exact timeline. "Multi-channel (retailing) is a must. When it is appropriate, we will carry out our online business," he said.

Air tickets are too expensive, trains aren't always safe, cabbies are on strike and car purchases are still limited. For bank clerk Lian Ping, it seemed as if all travel options had run out for her birthday trip from Beijing to Shandong province. "It wasn't until a few days ago that I realized with my driver's license I could just rent a car and drive there," Lian said on Friday, four days before her 29th birthday. "The thought never crossed my mind before. I didn't even know people offered auto rental services here." She decided to rent a Dongfeng Citroen for $15 a day and drive to Qingdao on Monday. The total cost, at $60, was only slightly more than if she took a train, Lian said. "It'd be more fun to drive." The growth of car sales took an unprecedented downturn after officials withdrew stimulus policies and instituted measures to curtail traffic congestion, but corporate analysts and industry insiders say the auto rental market could become China's next big hope. "Emerging car rental businesses will become the best propellant for the entire (auto) industry. The prospects are enormous," said Zhang Xiaolin, chairman of Haina International Auto Leasing, a Sino-Japanese joint venture in the eastern Zhejiang province. By 2015, China's car rental market is expected to hit 400,000 vehicles and produce $2.8 billion in annual revenue, according to the China Taxicab and Livery Association. Consulting firm Roland Berger put that estimate at $5.9 billion. "It's like real estate. In the end, the volume of rentals will definitely surpass sales," said Zhang Ruiping, chairman and CEO of Shanghai-based eHi Car Service, a major player in the market. Once known as the bicycle kingdom, China turned into one of the world's largest automobile consumers in just a matter of years. Its civilian automobiles soared from 31.6 million in 2005 to 91 million last year. That number is expected to hit 200 million by 2020, said Wang Fuchang, deputy director of the equipment industry department in the Ministry of Industry and Information Technology. But after years of rapid growth, China's auto market, already the world's largest, is experiencing complex readjustments. In mid-July, Xinhua News Agency acknowledged that the car market "has created some serious problems: gridlock, pollution and energy shortages". As private auto purchases slow, car rental companies and advocates have picked up a 2009 government work report by Premier Wen Jiabao - which stated, for the first time, that the administration would "facilitate the development" of the car rental market - as a green light from the top. In this growing, fragile and loosely regulated sector, companies are fighting for market control. The biggest winner thus far appears to be Beijing-based China Auto Rental, the industry's No 2 player behind eHi until last summer, when it had about 6,000 cars in 28 cities. The tables have now turned, and China Auto Rental is operating in 58 cities, boasts a fleet of 22,000 and aims to almost double that figure by year-end. The company acquired two of its major competitors in October and April for a total of $14 million. Inside sources say it has also been negotiating to buy out the industry's third-largest player, TopOne Car Rental in Shenzhen, the industrial powerhouse in the south's Guangdong province. TopOne's chairman, He Weijun, said he has "never heard of the plan". In late July, China Auto Rental expanded into eHi's turf by opening a 24-hour store in the heart of Shanghai. But its ambitions are much higher. Lu Zhengyao, the company's chairman and CEO, said previously at a news briefing that increasing the size of the corporation was a priority over the next three years. When asked about the financial sustainability of its expansion, China Auto Rental's vice-president and regional manager in Shanghai, Hu Haibin, said: "We try not to lose money." The market is highly fragmented. However, as China Auto Rental deepens its dominance in the sector, it is seeking to "become one of the largest car purchasers and, in turn, a stakeholder that has an influence in the global auto industry", said its vice-president, Yang Yanying. China Auto Rental is blessed by Legend Holdings, parent of Lenovo Group. Last September, Legend Holdings injected $190 million into the company, bringing it under Legend's corporate umbrella.

Jon Landau is the most successful movie producer in the world. He might be the one who has lost the most money, too. “Avatar,” which Mr. Landau produced, “is the most pirated movie of all time,” he said during a recent trip to Singapore. Still, the 51-year-old American is not complaining too much — the 3-D film was also the highest-grossing movie of all time, according to Box Office Mojo. “It played for weeks in China. Piracy did not preclude it from the masses,” he said. These days, Mr. Landau — who also worked on “Avatar” director James Cameron’s “Titanic” — is excited about the role of Asia in driving box-office trends, as well as developments in 3-D technology. As chief operating officer of Lightstorm Entertainment, he’s adapting “Titanic” to 3-D and is also working on sequels to “Avatar.” He spoke to The Wall Street Journal from Singapore and the United States about the future of the motion picture industry in Asia. Anybody who looks to produce films realizes that it’s important to make films that relate and translate well to that part of the world. The film business is not driven by the North American box office anymore. It’s driven by the global box office, and Asia is certainly the largest or second-largest market in the world. [China and India are] emerging markets, and that’s what makes them interesting. It’s about going to cities and towns that never have had theaters before and putting theaters there and showing people what movies can do. It’s a great way to take a two-hour break from the world. We want our movies to have themes that are relatable to all parts of the world. Take “Avatar,” for example. Whether you’re in China or Japan or Korea, the idea that a guy in a wheelchair can become a leader and make a difference plays very well. The spirituality of the world of Pandora plays well. It’s part of Chinese culture. That’s what the state does. People have to find a way to work within it. But I don’t think we thought about it [the Chinese government pulling “Avatar” out of some theatres in order to screen “Confucius”] at the time we were releasing the movie.

Hong Kong*:  Aug 12 2011  Share

Hong Kong would relax restrictions on visitors from Taiwan starting from next month, Financial Secretary John Tsang Chun-wah announced on Wednesday. Tsang said Taiwanese people who have entry permits for the mainland would be granted a one-month visa-free stay in Hong Kong starting from September 1. This compares with the seven-day stay they are currently allowed. Tsang announced the new policy at a joint meeting of the Taiwan-Hong Kong Economic and Cultural Co-operation Council and the Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council. The two councils were set up last year in Taipei and Hong Kong, respectively, as semi-official bodies to promote exchanges between the two cities. “The new arrangement is to make it more convenient for Taiwan residents to visit Hong Kong, for both business and leisure purposes,” Tsang said. Hong Kong and Taiwan have experienced closer relations in recent years. For the first time, an agreement has been reached to set up an official representative headquarters in Taipei later this year to promote trade, investment and cultural exchanges. In return, the island’s de-facto consulate in Hong Kong, known as the Chung Hwa Travel Service, has also been granted official status after operating as a travel agent for 45 years. Although Beijing and Taipei have had separate governments since the civil war ended in 1949, the mainland government still regards Taiwan as a breakaway province.

Hong Kong’s acclaimed film director Johnnie To is heading to Venice once again. His latest movie, “Life Without Principle,” will be screened as part of the Venice International Film Festival, which starts on Aug. 31, as one of the 22 films vying for awards in the competition. This will be the fourth time Mr. To has shown at the Italian fest: “Mad Detective” and “Exiled” were screened in 2007 and 2006, respectively, and participated in the competition. In 2004, his film “Throw Down” was screened but did not compete. Mr. To, who is best known internationally for his action thrillers, is taking a less flashy route with his latest work. The movie, set in Hong Kong, touches on familiar themes of moral dilemmas that surface when money, friendships and family collide, set against the backdrop of the 2008 financial crisis. “Life Without Principle” is about how a bag of 5 million Hong Kong dollars (US$640,000) unites three unlikely characters in need of money: a bank teller who is forced to sell high-risk securities to meet her sales target, a small-time thug who tries his hand with futures trading for easy money to bail out a friend in jail, and a policeman who is desperate for cash once he finds out his wife has put a down payment on an apartment that he can’t afford. Given the downturn in the markets and the economic uncertainty, as well as Hong Kong’s rising property prices, this film could touch a nerve once it screens in his hometown. No date has been given yet for the movie’s wide release.

Cathay Pacific Airways Ltd. on Thursday reported that first-half net profit fell 59% from a year earlier due to tepid demand and rising fuel costs and cautioned that the slow economic recovery world-wide may lead to weakening air cargo demand. The weak earnings and cautionary outlook show that fragile consumer confidence and high fuel costs are clouding the prospects of the Hong Kong-based carrier. Still, in a sign of confidence in Asia's aviation market, Cathay also announced plans for fleet expansions. "Obviously, if there's a sustained recession and consumer demand remains very weak in the larger Western economies, it will add pressure on our freight rates," Chairman Christopher Pratt said. Cathay Pacific's net profit for the six months ended June 30 fell to $2.81 billion Hong Kong dollars (US$359.9 million) from HK$6.84 billion a year earlier, while revenue rose 13% to HK$46.79 billion from HK$41.34 billion. The net profit figure came in lower than last year due to a lack of noncore gains from asset disposals as well as falling air cargo volume because of softening demand. The carrier's jet fuel costs in the first half averaged US$128 a barrel, or HK$19.53 billion, which was 50% higher than a year earlier. Fuel costs account for more than 40% of Cathay's total operating costs. The Hong Kong-based carrier and its China-focused unit, Hong Kong Dragon Airlines Ltd., carried a total of 835,880 metric tons of cargo during the first half, a 4.1% decline from a year earlier. However, the total number of passengers carried grew 1.7% to 13.18 million passengers, helped by a revamp of its business and first-class cabins, which boosted premium traffic. Chief Executive Officer John Slosar said the carrier's total capacity growth for 2011 is slightly below its earlier target partly because it trimmed freighter schedules in the first half due to weaker cargo demand. Mr. Pratt warned that high fuel prices are increasing costs and that recovering them through higher tariffs may affect demand. Around 30% of its oil purchases are hedged for this year, and around 20%-22% of oil purchases are covered through 2012, Cathay said. Still, the blue-chip carrier said it plans to expand its fleet with an order for 12 Boeing Co. widebody jets. Cathay said it will buy 12 passenger aircraft and freighters from Boeing at a total catalog price of US$3.28 billion, as part of the airline's expansion plans.

Market's strength to outlast caution - While prices and demand for Hong Kong homes and offices may slow, market's underlying strength remains a big draw for local and foreign buyers - A recent report pinpointed Hong Kong as the top city for business. Investment demand for Hong Kong property will slow as a result of the current turmoil on global asset markets, but a mass exodus from the market is not on the cards, say analysts and estate agents. "Commercial property prices are still considered healthy as the high prices are backed by a rental growth scenario," said Marcos Chan, head of research for property advisory firm Jones Lang LaSalle's Greater Pearl River Delta office. "Although the current subdued sentiment may affect business expansion plans a little as corporates turn cautious, the low-vacancy environment together with tight future supply will ensure that rents hold relatively firm," Chan said. His comments came amid continued heavy falls on the world's stock market as investors sold shares in the wake of the credit rating downgrade for the United States and concerns about a double-dip recession. In Hong Kong, the Hang Seng Index has fallen more than 1,615 points in the past two days. Reacting to the negative sentiment, some wary local property investors had begun offering price discounts of 5 to 10 per cent on homes, agents said, but there were no signs so far of bigger foreign investors seeking to sell either their residential or commercial properties at discounted prices. On the institutional investment front, Chan said demand for en-bloc acquisitions - which had been running at a high rate so far this year - would likely fall as investors awaited the outcome of the current wave of negative sentiment sweeping markets worldwide. "As such, this will likely lead to a reduced volume of large-cap deals, even though overall sales volume would not be seriously affected because of foreign investors walking away from the market," he said. Jones Lang LaSalle's global real estate health monitor - which tracks the performance of commercial property in 11 key cities including London, New York, Paris, Singapore and Shanghai based on vacancy rates, capital gains and yield - ranked Hong Kong second after Frankfurt at the end of the second quarter this year. The city's grade A office rents recently posted new records, with asking rents at One and Two International Finance Centre above Hong Kong Station, Central, at HK$207 per square foot. While uncertainty will have an effect on investor sentiment and demand, residential property remains in demand by owner-occupiers and end-users across the Asia-Pacific market, said Stuart Crow, head of Asia-Pacific capital markets at Jones Lang LaSalle. "We do envisage some impact on transaction volumes given the global market volatility, although given the underlying strength of the real estate markets this will be short term," Crow said. Goodwin Gaw, the founder of Gaw Capital, shared this view. "Transaction volumes should thin out as people wait to see what happens around the world," he said. The negative sentiment could see a fall in the number of large deals, particularly since banks in Hong Kong had begun scaling back large loans intended for property investment in order to minimise their risk exposure, said one investor. "Banks are very strict in assessing loan applications these days. This will have a direct impact on the investment market once they turn down the tap for credit,' he said. Edward Farrelly, head of research at property advisory firm CB Richard Ellis, said current investor demand was driven largely by the attraction of capital gains. A change in sentiment, regardless of its source, could dampen demand and affect prices. "However, unless we encounter significant changes in external factors any correction is likely to be moderate," he said. "While demand is exposed to a possible hike in interest rates, Hong Kong does not suffer from the oversupply which characterised many other markets prior to a severe price correction," Farrelly said. He noted that it was not only international investors who are attracted to Hong Kong, but also global occupiers. "This was highlighted in a recent CBRE global survey which pinpointed Hong Kong as the number one destination for international businesses. "Current events should not change how the market is perceived," he said. Nick Axford, head of Asia-Pacific at CB Richard Ellis, said it was still too early to say what the wider impact would be from the US ratings downgrade, but it had clearly introduced some short-term volatility into the market. "One immediate implication is that it has refocused investors' attention on weaknesses that still haven't been ironed out of the US economy," Axford said. "We have seen in the past that it is precisely at such times that interest in emerging markets comes to the fore. With the strong growth outlook for Asia, Hong Kong is well positioned to take advantage of this. "Were the situation to worsen considerably, this would undoubtedly have an impact on the market. However, this is not the current baseline scenario," he said.

Exporters fear U.S. slowdown - Hong Kong factory bosses worry 'emotional' markets will affect orders in the vital pre-Christmas period, after days of turmoil on exchanges worldwide - Manufacturers in the Pearl River Delta fear slowdowns in their biggest export markets. Hong Kong manufacturers say they are bracing for an "emotional summer" and "a shaky Christmas" based on growing fears of an economic slump in the US and Europe. The ripple effect of the US debt downgrade, the European debt crisis and a global stock market rout had sparked "impulsive" reactions across the supply chain in the Pearl River Delta, said Hong Kong Textile Council chairman Willy Lin Sun-mo. Some US importers are asking for deliveries to be suspended while manufacturers put on hold plans to add machinery, he said yesterday. "The financial market is very emotional," Lin said. "The emotions may calm down next week." But manufacturers are worried about Christmas, for which some orders are already being produced. Last-minute deals are traditionally expected in September. HSBC (SEHK: 0005) chief US economist Kevin Logan said the US financial turmoil, sparked by the nation's sovereign debt rating downgrade by Standard & Poor's would have an "adverse wealth effect" on consumers. "The effect may be direct as households increase savings as a precautionary measure," he said. Toys Manufacturers' Association president Cheung Tak-ching said the Christmas outlook was "shaky". "The orders for Christmas, which are due for delivery from now to the first week of October, are very cautious already," he said. "Toy exports are getting tougher and tougher towards the end of this year." Cheung said some manufacturers complained in the past few months that more European importers had delayed payment by as much as 60 days, suggesting cash-flow problems. He said toy sales had shrunk by at least 15 per cent in the year to date on the back of rising costs and raw materials prices, the strength of the yuan against the US dollar and wobbly consumer confidence. The yuan drifted marginally lower from its historic high yesterday of 6.433 yuan to the US dollar, up 2.34 per cent this year and 6.01 per cent from June last year when it was delinked from the dollar. Charles Chan, a Hong Kong factory boss who produces apparel in the Pearl River Delta for the US and Europe, said the outlook would become clearer later this month as clients returned from holidays. "Some buying agents rang me and asked if there was any room to cut factory-gate prices," Chan said. "They are taking precautionary measures, but the real impact will surface in a few months." He noted that overseas orders slowed to a trickle in early 2009, four months after the onset of the global financial crisis in September 2008. Bank of America-Merrill Lynch economist Lu Ting forecast that the mainland's monetary tightening and slowdown in exports would drag down its industrial production growth to 13 per cent in coming months from the average of 14.3 per cent in the first half of this year. Industrial production grew 14 per cent in July, below economists' consensus of 14.6 per cent growth.

The auction of a site for luxury housing in Sha Tin drew a tepid response from developers yesterday, with the site sold for the opening bid of HK$5.5 billion - a price far below market estimates - against the backdrop of global stock market turmoil. In contrast to the fierce bidding at land sales earlier this year, yesterday's auction began with nearly two minutes of silence. It wasn't until auctioneer Graham Martin Ross warned that he might withdraw the Kau To site lot that the consortium of Kerry Properties (SEHK: 0683), Sino Group and the Manhattan Group made the first and only bid of HK$5.5 billion, which equates to HK$5,332 per buildable square foot. The auction closed within five minutes. The price was 24 per cent lower than the lowest estimate of HK$7.24 billion from five surveyors polled last week; their highest estimate was HK$9.27 billion. It was also below the revised forecast of HK$6.68 billion issued yesterday by one of the five as the Hong Kong stock market plummeted again. "There's very little interest and the sentiment was rather poor," Ross said after the auction. "It's rare to have such a situation but it's not unprecedented. So I'm a little surprised, but we are always prepared to sell at the price we considered to be the market price." The last time the government sold a site at its first bid was in September 2002, when Chinachem Group bought a site in Kowloon City with an opening offer of HK$290 million. Property agents said the auction might prompt some property owners to cut prices by at least 10 per cent, while developers would be less aggressive in the coming land sales. Midland Realty said the owner of a property at The Grandville in Kau To Shan slashed the asking price by more than 10 per cent to HK$7 million after the auction, while another homeowner at Royal Ascot lowered the asking price by 6 per cent to HK$7.8 million. Kerry Properties executive director Steven Ho Shut-kan said he was a bit surprised by the low price, but the adjustment in the property market would only be temporary and the market would rally again. "The change in the market makes us feel that this is a suitable investment opportunity for us. We are very happy to be able to get this site. It's a very good price," Ho said. The Kau To site allows a maximum gross floor area of slightly over 1.03 million sq ft. Ho said the costs - including the land price and construction costs - for the luxury development would be below HK$10,000 per square foot. Kerry and Sino Group will each have a 40 per cent stake in the project, while the Manhattan Group will hold the remaining 20 per cent interest. Centaline Surveyors executive director James Cheung King-tat said the surprisingly low price might be due to the uncertainly of the global economy, as well as the government's requirement the buyer build at least 970 flats on the site, which limited the size of the flats and the potential of the development. Cheung Kong (SEHK: 0001) executive director Grace Woo Chia-ching suggested that development restrictions were more of a factor in the price than the stock market, given that the block was on a hill and would only allow one parking space for every 13.3 flats. "If you live in Kau To Shan but there is insufficient parking space, it's quite a challenge to develop the site," she said. Donald Choi Wun-hing, managing director of Nan Fung Development, did not think developers were pessimistic about the market outlook. He said other sites were coming on sale and developers would choose those that were best for them. Shocked that the auction ended so soon, Midland Realty deputy chairman Albert Wong Kam-hong said the selling price did not match the reality of strong demand and limited supply for luxury sites. He said developers, owners and buyers would adopt a wait-and-see approach until the outlook became clearer. Financial Secretary John Tsang Chun-wah said the auction reflected the market situation and the government would continue its land sales.

New PolyU centre to safeguard HK's food - Food safety has a new ally in the shape of Polytechnic University. To boost confidence in the safety of food supplies, the university's department of applied biology and chemical technology launched a food safety and technology research centre yesterday, the first run by a higher-education institution in the city. Centre director Professor Wong Wing-tak said he wanted to focus on research, training and consultancy. "We will have a bachelor-degree programme for students and also a workshop for people who are already in the field to keep them updated on developments, particularly the scientific and technological aspects," he said. Two laboratories, one at the Hong Kong Science Park and one in Shenzhen, will be dedicated to research. Hong Kong imports 90 per cent of its food - 60 per cent from the mainland. Food-related incidents are common, with radioactive vegetables from Japan and Taiwanese drinks containing carcinogens making headlines this year. The centre plans to promote a "fast testing kit" that can be used to check levels of bacteria and antibiotics in milk products. The centre will complement the government's Centre for Food Safety, which operates under the Food and Environmental Hygiene Department. The Centre for Food Safety, set up in 2006, collects about 65,000 food samples a year to ensure that imports are safe. "The setting up of this centre will provide additional incentive for us to co-operate with tertiary institutions," Food and Environmental Hygiene Department director Clement Leung Cheuk-man said. "Hong Kong people demand quality ... and value for their money."

Fury over evictions from Central Market arcade - Nine small businesses told to make way for emergency repairs to a building that has been designated for major renovations - Kwan Siu-wai, a tailor in the Central Market arcade, says he will resist eviction. "If officials come, I can only let them throw my things out and I'll sleep just outside there." Small businesses in the historic Central Market arcade are furious at a decision by lands officials to evict them with barely a month's notice. The businesses say they were told by the Lands Department this week to leave by September 9 for emergency repairs that must be carried out ahead of the Urban Renewal Authority's (URA) renovation of the building, which will probably begin only next year. The businesses' worries are compounded by fears that if they do move out voluntarily they will not be allowed to return once the emergency repairs have been completed. Most of the nine shops in the busy arcade that leads to the Mid-Levels escalator have been there for more than 16 years, including clock and shoe repairers, a photo studio and a tailor who specialises in traditional Scottish outfits. Yesterday, at a news conference to outline their grievances, the business owners said the Lands Department had given them the ultimatum to move out only on Monday. "I've put lots of effort in this shop. I don't want to see my skills vanish. I feel so helpless and cheated," said Bonny Yuen Pong-koon, who moved into the arcade with his brother in 1994 after working at Stanley Fort for 20 years as a contractor making uniforms for the British military forces. A specialist in making suits, tuxedos, Scottish outfits, kilts, tartan waistcoats and trousers, Yuen, 56, said he had customers from around the world and that Central was the best place for his business. "But if you ask me to find another place in Central, the rental will be 10 times higher. I don't want to work day and night only to give a chunk of my income to developers at the end of the month," Yuen said. "I very much hope we can stay after [the emergency repairs have been completed]. After all, we are shops of character. Isn't the future market intended as a place of interest?" Central Market, a grade-three historic site, was built in 1939. In response to public pressure, the government in 2009 scrapped a plan to demolish the building and sell the site and appointed the URA to renovate it for public use. The authority will commission architects to work on a final design and will look for a business operator by the end of the year. Work on the new design will start only after town planning approval has been secured, probably next year. Kwan Siu-wai, another popular tailor next door to Yuen, said the month's notice to make way for emergency repairs was too short. "If officials come next month, I can only let them throw my things out and I'll sleep just outside there." District councillors from the Democratic Party, who are helping the businesses, said that at Monday's meetings lands officials had refused to show flexibility and insisted the shops be vacated so that ceilings could be repaired. "Officials can ask the businesses to move into the other empty shops on the arcade during the maintenance work, or help to relocate them during the renovation. But what they are doing now is tearing apart the community," said Hui Chi-fung, the Democrats' consultant in Central district. A spokeswoman for the Lands Department said concrete was falling from the ceilings of the nine shops and from other parts of the building and that urgent repairs were necessary for the safety of tenants and customers. She could not say how long the repairs would take. "The district lands office may allow the tenants to come back and reoccupy the premises for a temporary period until Central Market is taken up by the permanent renovation," she said. Asked whether the businesses could return to the arcade after the renovation, a URA spokesman said: "It is too early to say because we don't have a clear plan on the tenant mix at this stage." They were still looking for a business operator. An earlier public consultation on a new use for the site found locals and tourists wanted the area to provide green open space, cheap restaurants and arts and cultural facilities.

Li Keqiang's HK trip will affirm he'll get Wen's job - Vice-premier's first trip to the city reflects concern about economy and social development - Vice-Premier Li Keqiang is expected to succeed Premier Wen Jiabao in 2013. He will use his trip to introduce himself to Hongkongers. Vice-Premier Li Keqiang begins a three-day visit to Hong Kong that a veteran China watcher says is another gesture to confirm he will succeed Wen Jiabao as the country's premier. Li will arrive from Shenzhen after officiating at the opening of the Universiade, or world university games. It will be his first official visit to Hong Kong. Dr Willy Wo-lap Lam, a China watcher and a senior fellow at the Jamestown Foundation, said the trip was aimed at reaffirming Li's status as the nation's next premier. Wen is expected to retire from his party position next year and step down as premier in early 2013. "It is almost certain that Li will succeed Wen after the 18th party congress next March," Lam said. "As Li is a relatively unfamiliar face to Hongkongers, the visit can offer a chance for people here to understand more about the next premier." The vice-premier, who is in charge of economic affairs, will attend a forum in Hong Kong on the nation's 12th five-year plan and economic, trade and financial co-operation between the mainland and Hong Kong. He will also take part in a ceremony to celebrate the centenary of the University of Hong Kong. Li will also visit various institutions and community facilities to "inquire about Hong Kong's economic situation and people's livelihoods", the government said. Lam said Li's visit showed Beijing's concern about Hong Kong's economy and social development. While Li's itinerary is expected to include a meeting with local business and political leaders, he has no plan to meet the city's legislators - which some see as a snub. Democratic Party vice-chairwoman Emily Lau Wai-hing said she may write a letter to Li expressing her discontent. "No central government official has ever formally met the Legislative Council. It is not a good practice to marginalise and alienate the legislature," said Lau. "The Democrats may write to him expressing our concern over the recent intervention by Beijing officials in local affairs." She was referring to recent remarks by the State Council's Hong Kong and Macau Affairs Office director Wang Guangya on topics such as Filipino maids' bid for residency rights, and the shortcomings of local civil servants. Although Li will reportedly be officiating at the opening ceremony for the new government headquarters at Tamar in Admiralty, the government would not say if that was part of his itinerary.

 China*:  Aug 12 2011  Share

The Shanxi provincial vinegar business association has refuted the claim that "Shanxi aged vinegar" was blended with cheap acid, an allegation that put consumers back on edge after a string of food safety scandals. The disputes occurred after Wang Jianzhong, former vice chairman of the association, was reported to have said that 95 percent of "aged vinegar" made in north China's Shanxi Province was blended with glacial acetic acid, an additive that reduces the fermenting time from over one year to just one month. Wang was reportedly blasted by the association for making the personal remark. The Shanxi vinegar business association rebutted Wang's allegation with an official notice that said "all Shanxi aged vinegar is entirely brewed from grains, and none is blended with industrial acid." The number "95 percent" was groundless as the eight largest companies brewed over 70 percent of vinegar in Shanxi, and none of them blended their products with industrial acid, said Cao Wenjie, chairman of Shanxi vinegar business association. "We guarantee that our vinegar is 100 percent grain-brewed. We would like to open the plants to the public," said Wu Zhengxing, president of Shanxi Shuita Group, a vinegar giant in the province. As for the accusation that "Shanxi aged vinegar" has preservatives, Cao responded that certain amounts of preservatives, between 0.06 to 0.1 percent, was allowed by the national standard for vinegar production and was "not harmful to human health." About 94 percent of Shanxi vinegar met the standard, according to the latest examination of Shanxi Province Bureau of Quality and Technical Supervision, the province's goods quality watchdog. Shanxi food quality inspection center issued a notice on Saturday, saying "Shanxi aged vinegar" was safe and void of additive abuse. Wang Jianzhong, who has been expelled from the association for his "irresponsible speech," said his words were misinterpreted. He meant to say over 95 percent of "Shanxi aged vinegar" had additives, which were legal to use. Shanxi Province brews 600,000 tons of vinegar each year, or one fifth of the national output.

Foreign Minister Yang Jiechi speaks to the media as his Sudanese counterpart Ali Karti (right) listens in Khartoum on Monday. Foreign Minister Yang Jiechi arrived in the Republic of South Sudan on Tuesday to strengthen ties with the world's newest country one month after it declared independence. In an interview with South Sudan's Al-Masier newspaper, posted on the Chinese Foreign Ministry's website on Tuesday afternoon, Yang said his visit "gives testimony to the importance China attaches to cultivating friendship and cooperation with South Sudan". He said he has conveyed to South Sudan's President Salva Kiir an invitation from President Hu Jintao to visit China. Yang was on the last leg of an eight-day tour of European and African nations. During a visit to Khartoum on Sunday and Monday to meet with Sudanese President Omar al-Bashir and Foreign Minister Ali Karti, Yang said Beijing would continue its economic and political support "no matter how the regional and international situations change". He urged both Sudan and South Sudan to resolve their differences. Beijing has had strong links with Khartoum in recent years, but it has also made an effort to improve ties with Juba, the BBC reported. Asked by Al-Masier how China would balance its relationship with the two, Yang said it has consistently supported and contributed to the peace process. "We have always believed that the north and the south are interdependent, and we hope to see that - proceeding from the fundamental interests of their peoples and the stability of the region - they stick to the peace option and address the issues through dialogue," Yang said. He said China will continue to aid South Sudan, as its ability permits, and will support and encourage Chinese enterprises to invest and start businesses in the country. According to Yang, opportunities and challenges facing Sino-African relations are increasing. "My government's policy toward Africa is consistent and firm. China is ready to work with African countries, South Sudan included, to move the China-Africa strategic partnership of a new type to still a higher level," Yang said. South Sudan became independent one month ago after decades of north-south conflict. Before it was divided, Sudan was a large oil exporter to China. Now, more than half of the oil resources belong to South Sudan. But South Sudan must export oil via the north because it has no port or refineries. The two countries have so far failed to agree on transit fees, or how to share oil revenue. "We hope that Sudan and South Sudan will have good neighborly relations based on the exchange of benefits," Yang said. According to Dai Yan, former Chinese counselor to Republic of Ghana, Yang's trip shows China's intention to treat the two equally. "China wishes to develop good relations with both countries and hopes they can have good terms with each other. After all, China has important economic interests in both," he told China Daily. According to Mohamed Ahmed Mukhtar, deputy director of the Center for Peace & Development Studies at the University of Juba, the visit by a key figure in the Chinese government shows China's intention to help maintain peace and stability in the region. "I am very sure that the visit will succeed to bring the two parties together to discuss timely issues," Mukhtar told China Daily. Regional peace and stability were high on Yang's agenda. He said earlier that China would continue its efforts with the international community to find a solution to the issue of the disputed border area of Abyei. Khartoum and Juba have yet to agree on who will control Abyei, stirring fears that the issue could sour the secession and spark a broader conflict. Yang said the situation in Darfur, another region where rebels have fought the Khartoum government, could be resolved only by eliminating poverty and through development, which would lead to peaceful coexistence among tribes.

China‘s trade surplus widened sharply to $31.5 billion in July, its highest monthly level since January 2009, government data showed Wednesday. Exports were surprisingly strong, rising 20.4% from a year earlier, while imports rose 22.9%, below expectations. Analysts weigh in: The expansion of China’s structural surplus will certainly add more pressure for RMB appreciation. Moreover, both a weakening USD and a softening inflation outlook in China will allow authorities to step up the pace of nominal appreciation against the dollar, whilst maintaining a smoother trend on a real effective trade-weighted basis. – Xianfang Ren and Alistair Thornton, IHS Global Insight; This strength in external demand is providing significant support to Chinese growth and reinforces our view that China is not seeing a “hard landing” despite some pullback in the manufacturing sector in recent months. Looking forward, weaker growth in the United States and Europe clearly represent a major risk to the outlook for Chinese exporters, but this will be offset by significant drivers of domestic demand, including ongoing infrastructure spending and public housing construction. – Brian Jackson, Royal Bank of Canada; All these robust readings are also above consensus, suggesting that both China’s competitiveness (regarding exports) and domestic demand (regarding imports) are in relatively good shape…Historical correlation shows that US quarterly GDP growth leads China’s export growth by about 2 quarters. So the pain of US growth deceleration could be gradually felt by China exporters in the rest of this year and early 2012. Import growth will also trend down on the back of declining commodity prices and soft landing of domestic economy. – Ting Lu, Weijun Hu, Xiaojia Zhi and TJ Bond, Bank of America-Merrill Lynch; The rise in trade surplus partially reflects seasonal factors (trade surplus tends to rise within the year) but much more importantly, the relative weakness in domestic demand growth versus external demand growth. This is typically the case when the Chinese government tightens policy forcefully as it has been the case over the past several months. We believe the rapid rise in the trade surplus explains the recent moves in the CNY exchange rate which we expect to continue especially in light of the rise in perceived risks associated with overseas assets.

The Tongmuling public rental house project in Guiyang, in southwest China's Guizhou province. Concerns around China's low-income-housing push have increased. China launched its huge low-cost housing push to bolster the economy and stave off social unrest. But it's being plagued by a shortage of funds and concerns over developers taking dangerous shortcuts. WSJ's Andy Browne and Dinny McMahon discuss. Cracks are starting to appear in China's drive to build low-income housing as concerns rise that a rush to meet government targets is making for shoddy construction, fears made more intense after a train crash last month highlighted the speed with which China carries out many of its infrastructure projects. The massive state-led investment was supposed to head off social unrest as urban home prices spiraled out of reach of ordinary workers. And many economists forecast that the spending on cheap housing would cushion the impact on the Chinese economy as the government tried to deflate a bubble at the luxury end of the market. But far from being a magic bullet, the low-income housing push is creating its own problems at a time when a stubbornly high inflation rate is constraining China's ability to spend its way out of another global downturn. Premier Wen Jiabao rolled out grand plans in March for 36 million units of public housing as part of China's current five-year plan from 2011 to 2015. But a report by the state-run Xinhua news agency in May raised alarm bells about the plans' progress, saying construction had begun on only 30% of this year's target of 10 million units. Since then, the push appears to have sped up. In July, Premier Wen said construction on more than half of the 10 million targeted units had begun. In recent weeks, several reports of shoddy workmanship on low-income housing have appeared in state media, raising concerns about safety and suggesting that the flagship project may have to proceed more slowly than expected. "If low-income housing construction is blindly devoted to speed, then like the frequent accidents we've seen recently, problems will keep occurring...and potentially even end in tragedy," said an article in the People's Daily, the official mouthpiece of the Chinese Communist Party, on July 27. 

General Motors, China's largest overseas carmaker, introduced its first sedan under a new China-only brand to cater to entry-level buyers in the world's largest auto market. The four-door, 1.5-litre Baojun 630 sedan went on sale yesterday, with prices from 62,800 yuan (HK$76,169) to 73,800 yuan (HK$89,511), the company said. The car will be available in three variants and sold to 120 dealers in eight cities, including Zhengzhou, Nanning, Jinan, Changsha, Shijiazhuang, Nanjing and Harbin. GM joins Honda Motor, Japan's third-largest carmaker, in creating cheaper China-only brands to boost sales among first-time buyers. The moves follow an overall slowdown in vehicle deliveries this year after the Chinese government phased out incentives and imposed ownership restrictions to curb traffic congestion. The Baojun brand is targeted at "young professionals and young families" in so-called second- and third-tier cities, said Matthew Tsien, head of the carmaker's China unit. China overtook the US as the world's largest car market in 2009. Sales jumped by 32 per cent last year, and grew 3.4 per cent in the first six months, the China Association of Automobile Manufacturers said. Industry sales will likely grow about 10 per cent in 2011 as deliveries of small commercial vehicles fall, Kevin Wale, president of GM's China business, said last month. This compares with his forecast last November for a gain of 10 per cent to 15 per cent. GM's China deliveries fell 1.8 per cent to 173,398 vehicles in July, as deliveries of commercial vehicles declined. Sales by GM's Chinese joint venture, SAIC-GM-Wuling, fell to 77,944 units from 90,658 a year earlier, the company said. Honda will sell its Li Nian S1 compact sedan from 69,800 yuan (HK$84,660) in China, the company said in April. Based on the City platform, the S1 targets entry-level consumers with its 1.3 litre and 1.5 litre engines, the company said.

China's politically sensitive trade surplus expanded to US$31.48 billion in July as exports rose by a fifth to hit a new record high, the customs agency said on Wednesday. Exports were up 20.40 per cent year on year to US$175.13 billion – a fresh monthly record – while imports rose by 22.90 per cent, the agency said on its website. The trade surplus – a major point of tension for China’s key trade partners, the United States and Europe – outstripped June’s figure of US$22.27 billion. It also exceeded a Dow Jones forecast of US$26.00 billion, based on a poll of economists. The surge in exports came despite manufacturing activity in China contracting for the first time in a year in July due to Beijing’s efforts to slow the economy and weakening overseas demand, according to HSBC (SEHK: 0005) data. However, some experts said consumer confidence in the United States and Europe were likely to hit China’s exports in the coming months. “The data is slightly above expectations with the wider trade surplus,” said Tang Yunfei, Beijing-based economist with Founder Securities. “But given the situation in the US and euro zone, consumer confidence there is likely to slide in coming months and negatively impact the exports. “However, if China takes effective counter-measures such as more pro-growth policies, maybe it will drive the recovery of confidence globally.” Alistair Thornton, a Beijing-based China analyst at IHS Global Insight, said July’s export rebound was partly due to seasonal factors. “Exports of many labour-intensive products, such as garments, normally pick up in the third quarter, reflecting demand for Christmas-season orders overseas,” he said. “Given that most orders for the next few months have already been placed, it is unlikely that the drastic downward shift in global sentiment will have too big an impact on exports through the short run. “Nonetheless ... the recent market turmoil will certainly feed into the data towards the end of the year.” The expansion of the trade surplus is expected to add further pressure for the Chinese currency to appreciate. China’s major trading partners have long complained that the yuan is deliberately undervalued to give Chinese exporters an unfair advantage.

A vinegar industry association leader has resigned under pressure for being a whistle-blower. Wang Jianzhong, vice-president of the Shanxi Vinegar Industry Association, resigned after reporting that most vinegars advertised as the well-known "Shanxi Mature Vinegar" were actually blends of undiluted acetic acid, water and additives. Cao Wenjie , the association's president, said he accepted Wang's resignation because his remarks had hurt the local vinegar producers, Shanxi Evening News reported. Last weekend, Wang told China National Radio that 95 per cent of the so-called "extra aged vinegar" made in Shanxi was produced by blending chemicals and sodium benzoate, a preservative, rather than through a process of natural fermentation. Both men later clarified that the national standard allows vinegar products to be blended with fermented vinegar, edible acetic acid and food additives. On Sunday, the association said it might consider suing Wang because his "irresponsible comments" had severely damaged the province's vinegar industry. Also, Cao told mainland media on Monday that the association would "ask Wang to resign". Liu Youqian , deputy director of the Federation of China Trade Associations and Chambers of Commerce, said Wang was speaking up to improve the industry. Sacking Wang would be a temporary measure to resolve the issue, Liu said. Instead, the association should do more to eliminate fake products and improve quality, he said. A Ministry of Health spokesman yesterday said the controversy boils down to the definition of vinegar rather than the safety of vinegar products. He said the national standard allows for two types of vinegar: the first being purely fermented from grains or fruits. The other is a blend of at least 50 per cent fermented vinegar, acetic acid and addictives.

Hong Kong*:  Aug 11 2011  Share

The new government headquarters at Tamar continues to fill up - with the Chief Executive's Office moving in over the weekend. It is the second administrative office to relocate to the HK$5 billion complex and follows the Commerce, Industry and Tourism Branch of the Commerce and Economic Development Bureau that moved in last Monday. Chief Executive Donald Tsang Yam-kuen is on holiday but will be back at work on Thursday. The 100-strong staff from his office occupy the third floor. Chief Executive's Office director Raymond Tam Chi-yuen assured the public there will be sufficient room for protesters and the media at the new building. Tam said when Executive Council meetings take place on Tuesday mornings, protesters may make their voices heard on both sides of the main entrance while, at the same time, providing councillors space to enter the building. Exco meetings will resume next month. "Each and every Executive Council member passing through the main entrance will have sufficient opportunities to hear what the people have to say and to receive petitions, and this arrangement is no different from what we have been doing on Tuesdays," he said. Tam also said the new headquarters provides more space and facilities for staff. Construction of the new building began in February 2008. It can accommodate around 3,200 staff. Other government departments are expected to move in before the end of the year. Around half the Tamar site is set to become public open space where community events can be held.

A man walks past a panel displaying the blue-chip Hang Seng Index during morning trading at the Hong Kong Stock Exchange August 9, 2011. Stock markets plunged on Tuesday and the Swiss franc held near a record high as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States. Hong Kong stocks lost 1,232.06 points, or 6.01 percent to close Tuesday's morning session at 19, 258.51 points.

A luxury residential property auctioned Tuesday garnered only one bid, for much less than analysts had expected, in the clearest signal yet that the city's long-sizzling property market is finally cooling amid a global equities correction and rising mortgage rates. The 5.5 billion Hong Kong dollar (US$704.5 million) winning bid by a local consortium led by Kerry Properties Ltd. and Sino Land Ltd. came in below the HK$7.1 billion-HK$8.25 billion range forecast by five analysts polled by Dow Jones Newswires. The auction began with a minute of silence, with none of the developers present showing any sign of interest in the site—a sharp contrast from what would normally be a heated bidding process. A representative for Kerry Properties and Sino Land raised his bidding card only after the auctioneer warned that the site would be withdrawn from the auction if there wasn't any interest, a lackluster response the auctioneer would later characterize as rare. "What you see in the property market today is only a temporary correction. We are confident that the market is going to go up again," said Ho Shut-kan, executive director of Kerry Properties. Hong Kong Financial Secretary John Tsang said that despite the tepid response, the government's land sale plans for the remainder of the fiscal year will proceed as scheduled. Tuesday's auction is the fourth public land auction for the fiscal year that began in April. James Cheung, a surveyor at Centaline Surveyors Ltd., said many developers chose to stay on the sidelines because of the uncertainties in the U.S. and European economies. "Developers consider the risks of buying land now very high, with so much uncertainty ahead of us," he said. With the benchmark Hang Seng index declining 5.7% to its lowest since May 2010, the Hong Kong stock market has entered bear market territory, falling 21% from its April 8 high. Surveyors had earlier lowered their price forecasts for the site after rating firm Standard & Poor's on Friday downgraded the U.S. government's triple-A sovereign credit rating to double-A-plus, as they expect Hong Kong's land-hungry developers to adopt a more reserved stance in the face of the growing global economic uncertainties. The unprecedented U.S. downgrade has also damped property sales in Hong Kong. Midland Realty, one of Hong Kong's biggest realtors, recorded only 24 transactions in the city's 10 most popular private housing estates on Saturday and Sunday, down 23% from 31 transactions the previous weekend. Home prices in the city rose 14% in the first six months of this year, following a 56% surge between 2009 and 2010 due to abundant liquidity, record-low interest rates and a flood of investors from the mainland. To rein in property prices, the government has pledged to increase land supply in the current fiscal year by making a total of 52 residential sites available for sale. In addition, the Hong Kong Monetary Authority, the city's de-facto central bank, introduced more stringent underwriting standards for mortgage loan lending in June. The measures, along with higher mortgage rates since early this year amid rising borrowing costs, have in recent weeks begun to help slow property sales, as highlighted by a 37% drop in the city's property transactions in July from June.

 China*:  Aug 11 2011  Share

Bolivian President Evo Morales is visiting China to review Beijing's growing investment in the South American nation, a senior adviser said on Monday. “This is a strategic trip, given that the country is promoting a series of … strategic ‘mega project’ developments related to diversifying the economy,” Presidency Minister Carlos Romero told reporters. The investments include iron ore and lithium mining projects. Morales, the leftist leader of one of poorest countries in the Andes, flew to Beijing along with senior officials, including Planning Minister Viviana Caro and Economy and Finance Minister Luis Arce. In December, Bolivia and China signed a deal to build a US$300 million communications satellite to be launched into space within three years. Construction of the Tupac Katari satellite, named after an 18th-century indigenous hero who fought Bolivia’s Spanish colonisers, will receive 85 per cent financing from Beijing. Bolivian and Chinese technicians are also assembling six K-8 jet warplanes for use in the South American country’s war on drugs, according to military officials. The warplanes were acquired through Beijing’s credit and will be the first of their kind in Bolivia. Up until now, the Bolivian Air Force has only had cargo aircraft for training.

Mainland sportswear chain Anta Sports (2020) posted a better-than-estimated 22 percent jump in first-half net profit to 927.3 million yuan (HK$1.12 billion), or 37.18 fen per share from a year back. "The government has a supportive policy on urbanization and wage increases and this has created opportunities for sportswear retailers," chairman Ding Shizhong said yesterday. Anta opened 295 new stores in the mainland during the first half of the year, taking its total to 7,844. It plans to open another 350 during the rest of the year. Ding expects same store sales to see single-digit growth by the end of the year. Revenue rose 28.9 percent to 4.45 billion yuan in the first six months, but gross profit margin dropped 0.9 percentage points from a year ago to 42.8 percent. Meanwhile, supermarket operator Beijing Jingkelong (0814) saw net profit rise by 21.9 percent to 103 million yuan in the first six months of the year. Earnings per share hit 25 fen while total revenue reached 4.1 billion yuan - up 18.3 percent from a year back. "Same store sales growth surged from 5.7 percent to 10.4 percent year-on-year, thanks to rising CPI in the first half," said chairman Wei Tingzhan. "We are confident of maintaining growth in the second half." Gross profit margin, fueled by strong wholesale business performance, rose by 1.4 percent to 15.4 percent in the period.

The Chinese Ministry of Finance announced on Tuesday that it would hold a tender of four types of treasury bonds in Hong Kong on Aug 17 and settlement will be done on the next day. Listed for the planned tender are three-year, five-year, seven-year and ten-year Renminbi (RMB) sovereign bonds , according to an announcement of the Chinese Ministry of Finance posted at the website of the Hong Kong Monetary Authority (HKMA) on Tuesday. A total of 6 billion yuan ($932 million) three-year bonds, 5 billion yuan five-year bonds, 3 billion yuan seven-year bonds and 1 billion yuan ten-year bonds will be made available for competitive tenders on a coupon-bid basis by any qualified Central Moneymarkets Unit (CMU) members through the CMU BID, a bidding platform for RMB bonds, said the document. The bonds will be issued at par value and will mature in 2014, 2016, 2018 and 2021, respectively, on the last interest payment date of the relevant series of bonds. Each series of bonds will bear interest at the uniform annual issue interest rate for the relevant series determined through the competitive tender, (i.e. the highest accepted interest rate for the relevant series), payable semi-annually in arrears. Each tender must be for an amount of 500,000 yuan or integral multiples thereof and the difference between any specified tender interest rates should be at least 0.01 percent, rounded to two decimal places. The Ministry of Finance has appointed Bank of Communications Co Ltd Hong Kong Branch as the Issuing and Lodging Agent to administer the tender of the bonds on its behalf. The tender results will be disclosed on the website of the HKMA (http://www.hkma.gov.hk) and the CMU Bond Price Bulletin https://www.cmu.org.hk   said the announcement.

China's Consumer Price Index (CPI), a main gauge of inflation, accelerated to 6.5 percent in July, the National Bureau of Statistics (NBS) said on Tuesday. China's inflation accelerated to a 37-month high in July on surging food costs, putting the government in a tough position with worsening global liquidity in sight. Shoppers select vegetables at a supermarket in Yinchuan, Northwest China’s Ningxia Hui autonomous region, on Aug 9, 2011. China's Consumer Price Index (CPI), a main gauge of inflation, accelerated to 6.5 percent in July, the National Bureau of Statistics said on Tuesday.

A former aircraft carrier, once the pride of the former Soviet Union’s flagship pacific fleet and now located in North China’s Tianjin municipality, is being turned into a luxury hotel complete with two presidential suites, August 8, 2011.Two attendents clean the Presidential suite of Tianjin Aircraft Carrier Hotel in Tianjing on August 8, 2011.

China reported unexpectedly high consumer inflation of 6.5% in July—its highest level in over three years—magnifying concerns that the country won't be able to bail out a faltering global economy as it did after the 2008 financial crisis. The July consumer price index topped the 6.4% year-on-year level reached in June. Still, many economists maintain that inflation has likely peaked and will come down gradually in the coming months, partly due to falling oil and commodity prices and a recent slight decline in Chinese pork prices. Also Tuesday, China statistics officials said the nation's value-added industrial output rose 14% in July from a year earlier, slowing substantially from June's 15.1% increase, and much slower than market expectations of 14.8%. China's main stock-market benchmark, the Shanghai Composite Index, ended flat after falling as much as 3.5% intraday, on hopes that Beijing won't launch further tightening measures. However, just as global markets are buckling under concerns of a "double-dip" recession in the U.S. and sovereign debt woes in Europe, Tuesday's data show that inflation in China is still accelerating despite more than a year-and-a-half of monetary tightening. The rise in the key inflation gauge exceeded the median 6.3% gain forecast by 13 economists in a Dow Jones Newswires survey. The unexpectedly high number means that China has no room to loosen policy in response to global market downturns, says Wei Yao, economist at Societe Generale. With weak global sentiment, however, China's policy makers have few other options. "This is the kind of data that should trigger interest rate hikes, but given uncertainties in the global market, they are likely to pause," Ms. Yao says. If inflation remains high and global growth falters, "that would be a very uncomfortable combination for China's policy makers," Ms. Yao added. Other economists echoed the concern. "The room for China to stimulate itself out of the problem will be smaller than 2008/2009," wrote Vincent Chan and Peggy Chan, analysts at Credit Suisse. Massive Chinese spending after the 2008 financial meltdown helped drag the global economy out the depths of its crisis. Chinese investment in high speed railways, highways and ports spurred demand for everything from iron ore from Australia and copper from Chile—and boosted the bottom lines of Western multinationals selling equipment and technology to China. The government has already conceded that it won't be able to meet its official inflation target of 4% this year. Some Shanghai traders saw a silver lining in the global market turmoil, concluding that weak sentiment will keep authorities from further monetary tightening, at least for the moment. That drew some investors back into the market, analysts said. A sharp sell-off in global oil prices was another boost for import-reliant China and the share market, as Brent crude oil fell below the key $100 a barrel mark to a six-month low of $98.74 before recovering to about $101.68. The biggest culprit in China's rising inflation was food prices, which rose 14.8% from a year earlier, up from 14.4% in June. Meanwhile, the producer price index, an indicator of upstream inflation pressures, rose 7.5% from a year earlier in July, quicker than June's 7.1% year-on-year rise and in-line with economists' expectations. The inflation data add to concerns among Chinese policy makers about growth following the credit downgrading of the U.S. by Standard & Poor's. Despite years of effort to stimulate consumption in China, the economy is still highly dependent on exports to the U.S. and Europe. Official Chinese media have poured vitriol at Washington, accusing it of financial mismanagement. Separately, China's retail sales in July rose 17.2% from a year earlier, compared with a 17.7% rise in June, data from the National Bureau of Statistics showed Tuesday. The retail sales rose 1.26% last month from June, after they rose 1.38% in June from the previous month, according to the data.

The market for Chinese stamps remains hot. This weekend’s Zurich Asia auction, estimated to be worth $3.2 million, could prove collectors are getting more sophisticated as well. In the rarified world of stamp collecting, there’s an even smaller niche for collectors focused on used envelopes with rare stamps on the covers. This subgenre is called postal history, and the collectors are among the most dedicated philatelists. “I find collecting postal history more interesting than collecting just regular stamps,” said Louis Mangin, director at stamp-auctioneer Zurich Asia, “and the demand for this kind of material is going up substantially as Chinese collectors are getting more sophisticated.” The boom in Chinese stamps keeps growing: Last month, British stamp dealer Stanley Gibbons said it would open a Hong Kong office to expand its presence in the area. In March, an auction by Interasia Auctions sold 3,000 lots of stamps for a total of 98.7 million Hong Kong dollars (US$12.6 million). Zurich Asia’s auction, which starts Saturday, is its biggest to date. While stamps have fallen in value or remained stagnant in Western countries as the hobby has declined, the Chinese market has exploded in the past five years, thanks to both genuine collectors and investors who see the stamp market as a better place for their money than equities, Mr. Mangin said. Zurich Asia holds the record for the most expensive single Chinese stamp sold at auction — an 1897 Red Revenue stamp that fetched HK$2.6 million in 2009. The all-time record among Chinese stamps was a rare block of four Cultural Revolution-era stamps that sold for HK$9 million at the Interasia auction in March. This weekend’s auction includes a special sale from the collection of Lim Eng Kwen, a Singaporean doctor well-known in stamp circles, who consigned 180 envelopes with Zurich Asia. But the showpiece among the postal-history artifacts is an envelope sent on November 13, 1968, from Canton (now called Guangzhou) to West Germany with several different Cultural Revolution-era stamps on its cover. A strip of five stamps, each with a small portrait of then-leader Mao Zedong and quotes from the Communist chief, are on the cover of the envelope. The auction house estimates it to be worth as much as HK$60,000. “Letters sent out of China at that time were very rare,” said Mr. Mangin. “There were very few foreigners in China at that time, and communication broke down. Nothing was functioning properly at the time.” Other star lots on offer include a full sheet of 80 Golden Monkey stamps in mint condition. While not a rare item — the Chinese government printed 5 million of them in 1980 — they remain the benchmark of the Chinese stamp scene, as they are the most popular item among Chinese collectors, Mr. Mangin said. The sheet has an estimated value of HK$1.1 million to $1.2 million. Some observers say that the Chinese stamp market is in a speculative bubble — an opinion that Mr. Mangin once shared but has since reconsidered. “The market has really accelerated in the last two years,” he said. “There are unlimited buyers. I constantly find new buyers every month. There is strong fundamental demand.”

Hong Kong*:  Aug 10 2011  Share

Cogo Group, a leading supplier of information-technology components to mainland manufacturers, has moved a step closer to a planned listing in Hong Kong, after last week completing a change of domicile to the Cayman Islands. In a conference call with analysts, chairman and chief executive Jeffrey Kang said the change of Cogo's corporate domicile, from the United States, would allow the group to list shares in Hong Kong while continuing to trade on Nasdaq and "maintain existing levels of regulatory scrutiny and financial transparency". The Caymans, a British overseas territory in the Caribbean, is a popular offshore tax haven with a flexible corporate regime. According to offshore law firm Walkers, "companies registered in the Cayman Islands, British Virgin Islands, Bermuda, and Jersey to some extent, feature strongly among the listings on the Hong Kong stock exchange". Shenzhen-based Cogo, which was founded in 1995 and listed on Nasdaq in 2004, is the mainland's largest supplier of custom-designed embedded hardware and software used by manufacturers of smartphones, media tablets, high-definition television set-top boxes, personal computers, smart meters, medical equipment and cars. It provides products from 400 information-technology companies - including Microsoft, Freescale Semiconductor and Broadcom - to 1,500 small and medium-sized enterprises and 100 large manufacturers, such as ZTE (SEHK: 0763), a telecommunications equipment maker, and BYD, a maker of rechargeable batteries and cars. "We believe that this dual listing of shares will broaden our shareholder base and consequently be a positive catalyst for the stock," Kang said. He did not provide the exact timeline of the listing, but said the process could take "a few months". Will Davis, Cogo's chief marketing officer, projected that its third-quarter revenue would be in the range of US$130 million to US$140 million after posting what the company described as its "strongest-ever second-quarter results". Revenue in the second quarter rose 47.9 per cent to US$134 million, from US$91 million a year earlier, due to significant sales in the telecoms equipment and industrial sectors. Net income grew 4.1 per cent to US$4.2 million.

Chungking Mansions turns 50 - It had a grim reputation as a dangerous ghetto, but after a multimillion-dollar transformation Chungking Mansions will soon celebrate its 50th birthday - A sign advertising a "de luxe hotel" on the exterior wall of Chungking Mansions in Nathan Road. The notorious landmark has left its dangerous reputation in the past and is regarded by many as a significant and iconic feature of Hong Kong's heritage. Visitors in the ground-floor shopping mall. The first two floors are given to commercial use and feature an array of shops and food stores.

Hong Kong's shipping chief yesterday warned that the carrying of weapons on merchant ships would escalate pirate attacks and place crew at greater risk - even as he attempted to justify such actions. Director of Marine Roger Tupper also told a regional seamen's union conference in Mong Kok that international navies should take tougher action against the mother ships now giving Somali pirates expanded reach across the vital Indian Ocean shipping lanes linking Asia to Europe. Noting the vastness of the ocean distances now involved, he said more "proactive" rules of engagement were needed "such that pirate mothers can be intercepted when detection is easiest - as they enter international waters after leaving their bases in Somalia". Ship masters and owners "cannot rely on rapid naval response to attacks in the open ocean as is the case in the Gulf of Aden," Tupper told the 28th Asian Seafarers' Summit. "In principle, the Marine Department does not encourage the carriage of weapons ... as we believe their use will lead to an escalation of the situation and greater risk to the crew. "However, in the absence of stepped-up naval action, [we have advised] that where ships are passing through known piracy areas with no naval protection, in the interests of ... security, weapons may be carried for protection". Tupper's comments come as the shipping industry braces for a surge in attacks by Somali pirates in the autumn calms - attacks which appear to be growing more violent. Both Hong Kong and mainland shipowners have joined international counterparts in showing a greater willingness to used armed force - mainly via private security complements - when plying pirate-infested waters. Reverend Stephen Miller, senior chaplain at the Mission to Seafarers in Hong Kong, said the initial objection to having armed guards on board was that it would lead to an escalation of violence. But he said violence against seafarers had already escalated: around 480 cases have been reported of seamen being tortured as their captors waited on ransom payments. Peter Cremers, chief executive of Anglo-Eastern Ship Management, had been against the use of armed guards, but changed his mind due to pirates roaming over wider areas and becoming more willing to hurt seamen. Cremers, who manages about 350 ships on behalf of ship owners, said Anglo-Eastern "strongly recommended" that owners use "armed guards on high risk ships transiting the piracy-prone areas." Cosco Shipping said it will spend some US$12 million (HK$94 million) this year on armed guards and other measures to protect its ships and crews. The Marine Department issued guidelines back in February detailing the need for due diligence of firms offering armed services, sound legal advice and clear rules of engagement. Tupper also noted that the UN's International Maritime Organisation had issued detailed guidance on the use of armed guards "whilst maintaining its stance, as we do, that this is not a real solution". Captain Tao Weigong, who co-ordinates the PLA navy's escorts of commercial shipping off the Horn of Africa, told the conference that since China started its deployments in 2008, no ship under escort had been successfully attacked.

Steering clear of gossip is the key to a long life, a 113-year-old Singaporean woman says. Returning to Hong Kong in a wheelchair seven decades after she left the city, Teresa Hsu Chih said keeping a peaceful mind was her secret to longevity. A well-known social worker in the Lion City, Hsu said she still occasionally did counselling work. She was speaking as a guest at event held by the Hong Kong Health Care Association on Aging a few hours after flying in from Singapore. Assisted by a care-giver, she can communicate slowly in Cantonese, Putonghua and English. Daily meditation was also important, Hsu said. "You just sit in peace. Think about what pain people suffer and what you can do to share your love," she said. Staying single may also have helped. "I am not married. There's no guy there to yell at me," she said with a broad grin. A vegetarian diet with lots of fruits is another secret to Hsu's longevity. She starts a typical day by eating two raw eggs, with the yolk used as a facial mask. She likes soft fruits, such as melon, papaya and avocado. Hsu said she did not have any disease common among the elderly, such as diabetes and osteoporosis. Taking the flight yesterday, however, raised her blood pressure a little, as a doctor found when he measured it at the event. Hsu is often referred to as the Mother Teresa of Singapore, where she started a non-governmental organisation to help the aged and sick in 1961. She was born in 1898 in Guangdong and moved to Hong Kong aged 16, working as a cleaner while taking evening lessons in English. During the second world war, she quit her job as a secretary and bookkeeper and went to Chongqing as a volunteer. At 47, she began to train as a nurse in Britain, where she worked for the next decade. In 1961, she settled in Singapore and began her lifelong vocation of helping the needy. Hsu returns to Singapore today.

China's Ministry of Finance (MoF) on Monday launched the roadshow for a 20 billion yuan bond issue in the offshore yuan bond market in Hong Kong, sources close to the issue said. The deal marks the MoF’s third issue of so-called dim sum or yuan-denominated bonds outside China, although it is bigger than the previous two tranches combined, which reached 14 billion yuan. Top officials from major Chinese banks and the central government were expected to attend a ceremony next week for the launch of the offer, underscoring Beijing’s determination to build Hong Kong into an offshore yuan trading hub, the sources said. China has taken a series of steps to promote the use of the yuan overseas and internationalise the currency. Analysts say the MoF’s latest offer would likely draw strong demand from institutional investors due to growing risk aversion following the downgrade of the US sovereign rating by Standard & Poor’s. Frances Cheung, senior strategist at Credit Agricole CIB, said the MoF offer and other Asian bonds could benefit from potential asset reallocation driven by the US downgrade. The MoF offer consists of a 15 billion yuan institutional tranche and a 5 billion yuan retail tranche, IFR, a Thomson Reuters publication, has reported. The institutional tranche is split into a 3-year 6 billion yuan, 5-year 5 billion yuan, 7-year 3 billion yuan and a 10 year 1 billion yuan tranches. Cheung said he expects the MoF’s 3-year offer to be priced at around 1-1.2 per cent, 5-year at 1.4-1.5 per cent, 7-year at 1.7-1.85 per cent and 10-year at 2.1-2.3 per cent.

Hong Kong has no plans to change its currency peg with the US dollar, despite Standard and Poor’s stripping the United States of its top-tier AAA credit rating, the head of the city’s de facto central bank said on Monday. “The Hong Kong dollar peg has been working well since its adoption in 1983. It’s the foundation for the stability of the currency and financial system in Hong Kong so we have no intention to make any change,” Hong Kong Monetary Authority Chief Executive Norman Chan told reporters. Since 1983, the Hong Kong dollar has been pegged to the US currency at a rate of HK$7.75-HK$7.85 per dollar. Calls for a repegging of the Hong Kong currency to the strengthening yuan or a basket of currencies have gained momentum since the United States implemented its loose monetary policy. Chan said the downgrade by Standard and Poor’s would have little impact on US treasuries and the status of the US dollar as the world’s reserve currency. “I think the downgrade should not affect the yields of US treasuries. International investors will continue to treat the US treasuries as the safest and the most liquid investment tool,” he said. Chan added he expected international markets to remain volatile as a result of the downgrade, and he hoped the European and the US governments would take further decisive measures to solve their economic and financial problems.

Homebuyer sentiment in this Chinese territory was further hit over the weekend by Standard & Poor's Ratings Services unprecedented U.S. rating downgrade, a move that sent analysts rushing to cut their price forecasts for a major government land sale scheduled later in the week as part of efforts to boost long-term housing supply. Midland Realty, one of Hong Kong's biggest realtors, said Monday the city recorded only 24 transactions in the 10 most popular private housing estates on Saturday and Sunday, down 23% from 31 transactions the previous weekend. In Hong Kong, most residential property transactions take place over holidays and weekends, when prospective buyers aren't at work. The lower transactions figure represents added caution over the property market's outlook, Midland Realty said, noting it had earlier recorded on average around 40-50 weekend transactions over the past few months. Because Hong Kong's currency is pegged to the U.S. dollar, the city is directly affected by events that have an impact on the value of the dollar, such as the S&P downgrade. "Some potential homebuyers have retreated from the property market following the U.S. downgrade on Friday, though the actual impact on the property market remains to be seen," said Buggle Lau, chief analyst at Midland. He said the movement on property prices will depend on how the city's economy fares amid the turbulent markets. Home prices in Hong Kong have risen 13% in the first five months of 2011, following a 56% surge in the last two years due to record-low interest rates and a flood of Chinese investors. The government has implemented measures to cool the price increase, such as raising land supply, to address housing affordability. Such government measures, along with higher mortgage rates since early this year amid rising borrowing costs, have in recent weeks begun to help slow property sales, as highlighted by a 37% drop in property transactions in July from June. MF Global analyst Adrian Ngan said some home sellers could be forced to lower their asking prices in the short-term following the S&P downgrade. Meanwhile, surveyors and analysts expect the S&P move to damp bidding interest in Tuesday's land sale, when the government will auction off a residential site in a densely populated district in the New Territories. Centaline Property Agency said Monday it expects a selling price of 8.2 billion Hong Kong dollars (US$1.05 billion), the bottom of its original forecast range of HK$8.2 billion to HK$9.3 billion. "The situation in the U.S. will make many Hong Kong developers more cautious. I believe the competition for the site won't be as heated as we had earlier expected," said James Cheung, a surveyor at Centaline.

Hong Kong Financial Secretary John Tsang said Monday he doesn't see much impact on the city's economy from the Standard & Poor's downgrade of the U.S. government debt rating, adding that the local financial system is robust with ample liquidity. "Most Asian economies are robust. Internal demand from many of these markets are strong, lending much support to Hong Kong," Mr. Tsang said. "Hong Kong's internal environment has maintained its strength; the fundamentals are good. We are thus able to withstand these external volatilities." Because Hong Kong's currency is pegged to the U.S. dollar, the Chinese territory has a particularly direct connection to events such as S&P's downgrade that affect the U.S. currency's value. The rating agency late Friday cut the U.S. sovereign credit rating to double-A-plus from the top-notch triple-A. Hong Kong government has reiterated in recent days that it intends to keep the fixed exchange rate, which dates back to 1983, despite suggestions by some that it ought to review the system. Mr. Tsang said the city's de facto central bank has conducted stress tests on banks and other financial institutions. "These tests show that each institution has the ability to withstand very high-risk stresses," he added. "But we still need to be prudent, and be on the watch for changes in the external economy and financial markets." he said. HSBC economist Donna Kwok said she doesn't think the downgrade should warrant any immediate downgrades to Asia's growth outlook "Rather than the downgrade, the bigger risk is sluggish U.S growth, but that is something we have already been talking about for a while and hence not new," Ms. Kwok said. "Indeed, rising uncertainty in the West will allow Asian policy-makers to slow their pace of tightening of little, which means that as capital pours into the region, Asia growth should rebound nicely in second half of 2011," Ms. Kwok said.

 China*:  Aug 10 2011  Share

An earthquake warning system developed by a hi-tech start-up in Sichuan province has won a contract from Haiti, giving China a foothold in a field dominated by Japan. Meihuan Technology, based in Chengdu , signed a strategic co-operation agreement on Sunday with I.Trade, an international trade company in Haiti, to provide the hardware and technology that would give Haitian residents an earthquake warning of up to 30 seconds before the arrival of its devastating impact, Huaxi Metropolis News reported. Haiti was hit by a 7.0-magnitude earthquake in 2010. Meihuan founder Dr Wang Tun said yesterday that his company's system performed to a very high standard during trials in Sichuan and passed the provincial authorities' quality inspection. An investment of US$3 million could provide earthquake warnings for the whole of Haiti while offering the same, if not better, speed and accuracy of a rival system from Japan. "Our research and development aims for high accuracy, low cost and a simple-to-use interface," Wang said. "Even farmers can understand, operate and maintain the equipment." I.Trade president and CEO Hantz Fevry, told Huaxi Metropolis News his company would hold a six-month trial of the system in an area of 4,000 square kilometres, about 15 per cent of Haiti's total area. It would take about two years to extend the service to the entire country. "I have studied many earthquake warning systems around the world and found the Chinese system most suitable to Haiti," he said. "Japanese warning systems need the internet to transmit information, but this system only needs radio, which is more suitable for Haiti." Fevry said I.Trade planned to take the system to other earthquake-prone countries. Japan spent decades developing its early warning system. The Japan Meteorological Agency launched a nationwide programme in 2007 to integrate it throughout the private and public sector. Bullet trains stopped automatically seconds before March 11's magnitude-9.0 earthquake. Wang said Meihuan's system worked in similar fashion. In the event of an earthquake, seismic detectors pick up pressure waves that travel fast but cause no harm. They send an alarm via the cell phone network, internet and communication satellites to wall-mounted or hand-held devices, giving people up to 30 seconds warning before the arrival of slower, but far more destructive, "shear" waves. The firm set up 70 detectors along the fault zone from Wenchuan to Qingchuan created by the huge earthquake in Sichuan in May 2008. Since April this year, the system has issued more than 60 warnings and made only one mistake. Wang said the central government included setting up an earthquake early warning system in its new five-year plan and he hoped Meihuan's technology would be among the first to be applied. But Fan Xiao , chief engineer at the Sichuan Geology and Mineral Bureau in Chengdu, said implementing the technology would face more challenges and uncertainties on the mainland than in Japan. "Japan's early warning system is built on a solid foundation. It works very well with highly efficient government, good citizen education and impeccable building quality," Fan said. "But China has none of these supporting elements, especially building quality. People will have nowhere to go after receiving a warning because no shelter is safe."

The quality of Chinese products has greatly improved and consequently, the number of recalls of Chinese products has dropped significantly in the U.S. in recent years, according to a U.S. official. Richard W. O'Brien, director of International Programs and Intergovernmental Affairs of the U.S. Consumer Product Safety Commission (CPSC), made the remarks at a news briefing at the U.S. embassy in Beijing Monday afternoon. According to O'Brien, the number of CPSC recalls of products from China dropped to 220 in 2010 from 346 in 2008. The current number for 2011 stands at 120, and O'Brien is optimistic for a continuing decline. One of the purposes of O'Brien's China visit is to learn the latest trend of Chinese product safety and extend cooperation with China's main product safety body, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). O'Brien emphasized the importance of safety for children's products, explaining that manufacturers, importers, retailers and distributors of children's products in the United States must comply with the new federal limit for total lead content from August 14, 2011. Moreover, children's metal jewelry must undergo independent third party testing. "Both sides should know the safety standards for children's products, and information sharing is vital to reduce the recalls," O'Brien said. The commission established its first overseas office in Beijing this year, and O'Brien stressed the importance of maintaining a positive relationship with AQSIQ that includes greater information sharing with provincial-level inspection administrations.

The yuan hit a record high versus the dollar on Monday after the People's Bank of China set a historical high mid-point following a drop in the dollar index after Standard & Poor’s downgraded the US credit rating. The United States lost its top-notch AAA credit rating from Standard & Poor’s on Friday in an unprecedented reversal of fortune for the world’s largest economy. Dealers expected the yuan still had potential to hit new highs in the near term as the European Central Bank announced steps to ease tensions in the euro zone debt market, which could support the euro and yuan. “Now the global market will lead the yuan’s trade,” said a dealer at a Chinese commercial bank in Shanghai. “It’s clear that today’s jump in the yuan is in line with the downgrade of the US” Spot yuan hit a record high of 6.4268 on Monday, stronger than Friday’s close of 6.4404. It has now appreciated 6.21 per cent since it was depegged from the dollar in June last year and 2.53 per cent so far this year. Before trade began the PBOC fixed the yuan’s mid-point at an all-time high of 6.4305 against the dollar, stronger than Friday’s 6.4451. China’s central bank raised its mid-point fixing for the yuan by 0.2 per cent per dollar, the biggest rise since mid-November. The dollar/yuan exchange rate may rise or fall 0.5 per cent from the mid-point each day. But traders also said the pace of yuan gains was likely to slow as global commodity prices, the benchmark Reuters Jefferies CRB index , slumped more than 11 per cent since early May, raising fewer worries over imported inflation. The authorities used the yuan’s exchange rate to help fight inflation. The yuan has risen 0.59 per cent since the start of July, but its gains in the third quarter are likely to remain confined to around 1 per cent, analysts said. Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) were bid at 6.3730 at midday, weaker than 6.3830 at the previous day’s close. Their implied yuan appreciation in a year’s time fell to 0.90 per cent from 0.74 per cent.

Citywide Universiade torch relay kicks off - Famous singer Song Zuying (L), passes the Universiade flame to Kenneth Fok, a famous Hong Kong entrepreneur during the Torch Relay of the 26th Universiade in Shenzhen, Aug. 7, 2011. 

A customer shows mahjong-shaped chocolate in Suzhou, East China's Jiangsu province August 7, 2011. The mahjong-shaped chocolate, made by a chocolate shop located in Suzhou, attracts many customers due to its bold idea.

About 10,000 people play card and chess games simultaneously in Shanxi University, North China's Shanxi province, August 8, 2011, to celebrate National Fitness Day. The activity even attracted foreign players from Japan and Australia.

Hong Kong*:  Aug 9 2011  Share

Airlines are giving the thumbs up to the proposed third runway in Hong Kong, but they have been less enthusiastic in dealing with an issue that is equally important in maintaining the city as an international aviation hub - training local pilots. Since Hong Kong has no aircraft manufacturers and, of course, no air force, it lacks a natural pool of pilots and does not even have its own training school. Airlines are forced to rely on sometimes-fickle overseas hires. "Foreign pilots are as mobile as mercenaries and jump to other international airlines very easily, as long as the new employer has a deeper pocket," said Zhong Guosong, vice-president of Hong Kong Airlines, a regional carrier with 18 aircraft serving 21 destinations across Asia, including mainland cities. "I have come across extreme cases in which the foreign pilot just shipped back the uniform to us, even without a formal resignation before leaving," Zhong said. The HNA Group-backed airline faces challenges in filling its cockpits as it plans to expand its fleet to 32 next year, meaning the airline must hire 140 captains (pilots) and first officers (co-pilots) in the coming year. "The problem was pretty acute when we started to hire pilots for the newly delivered A330 in the middle of last year," said Stanley Kan, general manager, human resources and administration, for Hong Kong Airlines. To counter its overreliance on expatriate pilots, Hong Kong Airlines is in talks with the Civil Aviation Department and Polytechnic University about setting up a pilot training school, which would be the first in the city. The proposed flying school will enrol up to 20 students a year, providing a one-year academic programme at the university, followed by flight training in Australia or the United States. "We will hand our commercial proposal to CAD in the middle of next year," Zhong said. "Hopefully the first batch of trained pilots will join us by 2014." Cathay Pacific Airways (SEHK: 0293), the largest carrier in Hong Kong, started a pilot cadet programme in 1998 in which students are sent overseas to a flight training school. Since the programme started, Cathay has hired 400 of its graduates, who now make up 16 per cent of the airline's pilots. Although Cathay has doubled the enrolment of cadet pilots to 60 per year, it is far short of the 250 pilots that the airline will hire this year. As far as Cathay Pacific was concerned, letting its cadets train at a well-established flight school in Adelaide, Australia, was more efficient than running its own flying school, said Carolyn Leung, a company spokeswoman. But in terms of training cost, Hong Kong Airline's flying school may be more economical than Cathay's model. Putting each cadet through a 14-month training course at Flight Training Adelaide cost Cathay HK$1.2 million, the company said. Zhong said the "all-in" tuition fee for his proposal would be about HK$600,000 to HK$800,000, including 250 to 280 flying hours at the overseas flight school. "The local flying school can provide more chances for Hong Kong people to pursue their dreams of flying," he said. It could also fill in a void in the city's aeronautical industry. Cathay, on the other hand, said it was more concerned with the quality of a new pilot regardless of where he or she came from. In June 2009, the airline lifted the requirement that cadets hold a Hong Kong ID card, which opened it to applicants from around the world. "We have received thousands of applications from young people for the cadet pilot scheme, but we are also concerned about the need to recruit the most appropriate candidates," Leung said. As a well-established international airline, Cathay offers competitive pay packages. Since April of this year, all new pilots have received same pay, regardless of nationality, and all are entitled to a monthly allowance that includes an education allowance for children attending international schools. A housing allowance, given only to foreign pilots, has been discontinued for new hires. A locally employed first officer with two children in an international school will receive an annual package of HK$1.2 million to HK$1.6 million. As a new, regional airline, Hong Kong Airlines' pay package can't compare with top tier carriers such as Cathay Pacific and Singapore Airlines. Its pilots earn between HK$600,000 to HK$840,000 a year. But Cathay still needs to brace for competition from other fast-growing airlines in Asia-Pacific and the Middle East and find a way out to secure a supply of pilots in the long run. Emirates, for example, one of the fastest-growing carriers in the world, has been hiring pilots at the expense of other airlines, including Cathay Pacific, to fill the cockpits of its expanding fleet.

Hong Kong Exchanges and Clearing (SEHK: 0388) this Wednesday will report its first interim results after it extended trading hours in March, though brokers and analysts say the longer hours have failed to translate into higher turnover or profits for them. Brokers believe the exchange is likely to report a profit of about HK$2.48 billion, up about 10 per cent from last year's HK$2.26 billion. Several investment banks only gave full-year forecasts, which indicated the bourse operator would show full-year profit growth of 9 per cent to 15 per cent. The HKEx, the holding company of the stock and futures markets as well as three related clearing houses, earns money from listing fees paid by companies, trading fees paid by investors on stock and futures transactions, as well as fees paid by information vendors for stock information. "The stock exchange extended trading hours in March and that affected brokers' lunches and the restaurant business in Central," said Louis Tse Ming-kwong, director of VC Brokerage. "Four months on, the longer trading time has done little to boost turnover and hence its profit." Tse believes the exchange will record less than 10 per cent profit growth in the first half. A Credit Suisse report showed that in the second quarter the turnover in the stock market, which traded for five hours, was down 11 per cent from the first quarter, when the local bourse only traded four hours a day. However, on a year-on-year comparison, average daily turnover for the first six months showed a 15 per cent increase to HK$73.58 billion from HK$63.83 billion in the first half of last year. The extension of trading was accomplished by opening 30 minutes earlier and cutting the two-hour lunch to one hour and 30 minutes. The exchange plans to extend trading by another 30 minutes starting in March next year by cutting the lunch break to one hour. Before the extension, the city's exchange had one of the shortest trading periods in the world, matched only by the Shanghai and Shenzhen exchanges, though it was longer than the Philippines' exchange, which trades for only 2.5 hours a day. Major markets, such as New York and Nasdaq, trade for 6.5 hours a day, while London is open for 8.3 hours without a lunch break. HKEx wanted the extended hours to boost its competiveness, but it came at a bad time, as global stock markets were hit hard by the European and US debt crises. However, Tse said the exchange's interim profit would be boosted by the large number of new listings. Funds raised by initial public offerings for the first six months stood at HK$171.199 billion, an increase of 240 per cent compared with HK$50.41 billion for the same period last year. Big names, such as fashion brand Prada and the first yuan real estate investment trust Hui Xian, were listed in the first half. Credit Suisse said it believed China listings on the HKEx would continue to be a driving force for its futures growth and it predicted its full-year profit would reach HK$5.54 billion, up 10 per cent. "The key investment case for HKEx is longer-term growth, as the China listed market continues to evolve with the HKEx as the key global gateway having strong operating leverage," said Arjan van Veen, a research analyst of Credit Suisse. "However, in the short term, HKEx's fortunes are much more linked to current market volumes, which have notably weakened." Kenny Lee yiu-sun, chief executive of First China Securities, expected the exchange would only record a 10 per cent profit growth in the first half of this year. He said he believed the fee income related to turnover and investment income earned by the exchange from its reserve investment would not be good. "The US and European debt crisis hurt the investment market worldwide," he said. "The HKEx is not going to make a good return from its own investment." UBS predicted the HKEx's full-year profit would rise 16 per cent to HK$5.84 billion. "HKEx continues to be the most expensive exchange in the world despite the recent correction," the UBS report said. Lee noted the HKEx now traded at a price equal to 30 times earnings, compared with the global average of listed exchanges at 17 times. "We believe some of this is justified by its exposure to mainland China's strong IPO pipeline," the UBS report said. "However, we think the premium also captures expectations of significantly higher growth on the renminbi theme and longer trading hours - expectations we think are unlikely to be met." JP Morgan believed the exchange's full-year profit would increase 9.23 per cent to HK$5.5 billion.

A new commercial building at a prime site in Causeway Bay will feature large openings and sky gardens in an attempt to reduce the canyon effect it could bring. Hysan Place, a 40-storey retail and office tower in Hennessy Road, is nearly finished and will open in the middle of next year. The building's design has won a provisional "platinum" certificate from the US Green Building Council, which runs an internationally recognised rating programme called LEED, or leadership in energy and environmental design. The tower is the first property in Hong Kong that has been given the top recognition in the "core and shell" category, covering the building's structure and its ventilation and air-conditioning systems. "The problem with Causeway Bay is that there are always lots of people, and traffic and pollution is serious," said Chan Lai-kiu, project director of Hysan Development (SEHK: 0014), the largest commercial landlord in Causeway Bay. "We are trying to minimise the canyon effect our new building could bring by opening up large urban windows." She was referring to how some large buildings create poor air flow, trapping pollution and heat. Chan, an architect, said there were several large openings in the body of the building to enhance natural air flow in the neighbourhood, especially the low-rise area around Pak Sha Road. Although no floor area was lost in making the openings, Chan said the developer had forgone some of the most profitable space, as the openings were located on the lower floors in the mall. The openings would come with four sky gardens amounting to a total of 1,800 square metres of space. Chan said the plan was to provide more open space to the public. "On weekdays, we welcome people working nearby to come up with their packed lunch. We will not be charging them. On weekends, the space will become a performance and exhibition venue," she said. One of the sky gardens would include a pond, planted with water plants, to recycle used water from washing basins and kitchens. There are also energy-saving features. Chan said the green design raised the construction cost by 5 per cent. "If you simply look at how much time it takes to recoup the costs, it won't make sense because water and electricity fees in Hong Kong are low," she said. "But if you take a long-term perspective and consider the life cycle of the building, the green features will save maintenance costs and in turn help slow down building depreciation. This is helpful to a developer that is holding the property on a long-term basis rather than selling it on completion."

Dr Margaret Chan Fung Fu-chun has defended her record as head of the World Health Organisation in the face of mounting pressure by member states for reforms of the UN agency. Chan, who is seeking a second term, said in an interview with TVB (SEHK: 0511) yesterday that her performance as the director general in the past few years was "widely recognised". The controversial former director of health in Hong Kong said: "The WHO director general is like an international civil servant. "The constitution and the appointment document do state that I have to act in a fair and just manner. After 4-1/2 years, member states agree that I have been acting impartially." Likening herself to a "modern Robin Hood", she promised to secure more funding to help upgrade the health-care services of developing countries if she could serve another five-year term. But she said she would favour the poorer countries. "Sometimes, some of my decisions are not welcomed by all countries. "But at the end, they still agree that my decisions are for the interest of the underprivileged groups, for the developing countries and for the poor countries, and they respect me," said Chan. "That is why I travel a lot to visit [poor] countries to see for myself what the real situation is like there. If I only sat in the office in Geneva, seeing the beautiful scenery, without any frontline experience, what I say cannot be convincing." This year, Chan acknowledged the agency had to embark on reforms, especially in financial accountability, amid pressure from member states. The WHO slashed its budget by nearly US$1 billion for the next two years and cut 300 jobs at its headquarters. But its partnerships with the private sector and foundations that provide a growing share of voluntary contributions have led activists to fear the WHO's independence could be compromised. Chan visited Beijing last month where she secured China's full support for her re-election. Chan, 64, took office as the WHO's chief in January 2007, becoming the first Chinese to lead a United Nations agency. Her term will end next June. Chan's career has been dogged by controversies, such as her handling of the swine flu crisis in 2009 when she was accused of "overreaction". She took the step of raising the WHO's pandemic alert level to phase five for the first time in history, meaning that a global epidemic was believed to be emerging. In March, a WHO-appointed group of experts published a report criticising the agency's handling of the epidemic, saying the agency failed to dispel confusion even in the most basic definition of a pandemic. Last year, she paid a brief visit to North Korea and praised its immunisation coverage and mother and child care. She also said she saw no shortage of doctors and nurses in the reclusive totalitarian country. In 1997, Chan ordered all 1.5 million chickens in Hong Kong to be killed during the bird flu outbreak - two weeks after she tried to dismiss public fears by boasting that she ate chicken every day. In 1996, she said a ban on British beef was not needed during the mad cow disease scare - two days later the government announced an immediate ban on all imports. Chan was also accused of failing to respond in time to the outbreak of severe acute respiratory syndrome in 2003. A critical Legislative Council report said she was not "proactive".

Rebecca Zhu (centre), a 23-year-old ballet dancer born in Jiangsu province, is crowned Miss Hong Kong Pageant winner last night. Hyman Chu (left), a 23-year-old programme host from Toronto, was first runner-up, and Whitney Hui, 22, who studies in London, was second runner-up. Nicole Leung, 26, a senior marketing officer, was named Miss International.

Law firms - with the help of the city's three law schools - have found a way to avoid paying the statutory minimum wage to interns who would otherwise have qualified for it. Using a loophole in the Minimum Wage Ordinance, the schools are endorsing some or all of their students as "student interns", who are exempt from the ordinance regardless of their age. This puts them in a different category to work-experience students, such as those who work for law firms during their summer break, who must be paid the minimum wage of HK$28 an hour if they are 26 or over. The endorsement for student interns recognises the internship as part of the university teaching program. Pay for interns not subject to the ordinance varies widely, from nothing to a few thousand dollars a month. But the universities say the endorsements were issued at the request of students who did not want to miss out on valuable work experience no matter what they were paid. All three law schools - the University of Hong Kong, Chinese University and City University - have issued letters of endorsement for some students while the University of Hong Kong has gone further by recognising all the internships as part of its teaching program, meaning letters are no longer required. The University of Hong Kong law dean, Professor Johannes Chan Man-mun, said the measure was hammered out by the Law Society and the universities because of the risk that older students might risk losing their opportunity to practise in law firms unwilling to pay them the minimum. "It would take years to have the law changed, but we couldn't wait and let our students squander their time for training," he said. Chan rejected suggestions the arrangement was being used to exploit older students. "This is a very valuable training experience for students. So we should look at the issue from a different perspective," he said. A doctorate student who identified himself only as Robert agreed. He now works nine hours a day for summer internship doing legal research for a law firm. He receives no pay. "Personally, I respect the tradition of doing summer interns with law firms and barristers' chambers for free. I see it more as exposure to the legal sector, gain the work experience, and build a network that would be helpful to my career in future." While older students are rare in other professions, there are hundreds in the three law schools. Chinese University has 308 students over 26 in its Juris Doctor program - a graduate-level law degree - accounting for two-thirds of all students in the program. City University is home to more than 250 full-time and part-time students over 26, including 98 per cent of those in its part-time Juris Doctor course. About a third of the University of Hong Kong's 70 Juris Doctor students are 26 or older. Chan said the situation pointed to a flaw in the law's drafting. "The Minimum Wage Ordinance lost sight of the growing trend of continuing education in Hong Kong and that a lot of mature students over 26 may be affected by the law," he said. His view was supported by lawyer-lawmaker Paul Tse Wai-chun, who said there were many flaws in the ordinance that needed to be addressed. But Democratic Party lawmaker James To Kun-sun defended the ordinance saying it was up to the universities to bargain with law firms for higher pay for interns if they believed their students deserved more pay. "Bear in mind that the interns are coming to learn and they may not be productive. In some cases, the firms need to spare extra time and manpower to teach those interns."

 China*:  Aug 9 2011  Share

Enterprise communications systems provider Avaya will pursue expansion activities on the mainland, nearly two years after it bought a key business unit of bankrupt rival Nortel Networks Corp. "We aim to put more resources in the mainland," said John Wang Yun, the managing director of Avaya Greater China. That would include establishing new offices across the country, boosting its distribution channel, and increasing recruitment of skilled employees in research, marketing and consulting services, said Wang, who heads United States-based Avaya's mainland, Hong Kong, and Taiwan operations. He declined to elaborate on privately held Avaya's investment plan for the mainland owing to the proposed public listing of its parent firm. Parent Avaya Holdings in June announced an initial public offering in the United States to raise as much as US$1 billion. Some of the net proceeds are expected to pay down long-term debt. It would be the second public listing involving Avaya, which was the business communications unit spun-off by telecommunications equipment maker Lucent Technologies in October 2000. Lucent merged with French firm Alcatel to form Alcatel-Lucent in 2006. Private-equity firms Silver Lake Partners and TPG Capital acquired Avaya in October 2007 for US$8.2 billion. Since being privatised, Avaya has restructured its operations to become focused on five business segments: so-called unified communications software and hardware, real-time video collaboration, contact centre, data networking, and related integration applications. It was another acquisition that led Avaya back on a growth path, especially on the mainland, during its fiscal year ended September 2010. In September 2009, it won an auction for the enterprise solutions business of Nortel for US$900 million. It completed that acquisition in December 2009, with about 6,000 former Nortel employees joining the company. "A big part of the 33 per cent year-on-year total revenue growth in Avaya's Asia-Pacific business in the past fiscal year was driven by that Nortel acquisition," Wang said. The company benefited from an expanded partner and distribution network, a broader product portfolio, more customers, and a greater ability to compete globally, he said. Avaya, which has its global headquarters in New Jersey, has introduced more than 60 new products to the market since last year. It counted more than 400,000 corporate customers worldwide. "We extended our sales coverage from the five major cities on the mainland to about 14 provinces and second-tier cities," Wang said, adding that Avaya had also widened its coverage of industries on the mainland since last year to include the utilities, government, hospitality, transport and internet services sectors. Fast-growing online travel services provider Ctrip.com, for example, has used Avaya for its Nantong City contact centre in Jiangsu province. Ctrip.com started with 2,000 agents at the centre in November last year, but forecast high demand will see that number rising to 12,000 in five years. Another big customer is Alibaba Group, which runs leading online shopping operator Taobao and Hong Kong-listed business-to-business e-commerce provider Alibaba.com (SEHK: 1688). Avaya, meanwhile, has remained strong in the financial services and telecommunications industries, where all the major domestic players are customers, Wang said. Its largest competitors on the mainland included Huawei Technologies, ZTE Corp (SEHK: 0763), Cisco Systems and Alcatel-Lucent. Wang said that the company's various offerings targeted rising domestic and international business opportunities. Avaya estimated that the total global market for business collaboration and communications systems, contact centre applications, and data networking equipment, as well as support and maintenance services, could attract up to US$77 billion of worldwide spending this year. In a report, Ovum senior analyst Ian Jacobs said: "We believe that Avaya's strong market penetration in the core contact centre infrastructure market places the company in a unique position to expand its services revenue stream." Avaya's revenue for its last fiscal year and the six months to March this year reached US$5.06 billion and US$2.76 billion, respectively. However, it posted a net loss of US$871 million and US$612 million in the periods, respectively.

First it was noodle soup, then soy milk. Now vinegar is leaving a sour taste in mainland consumers' mouths after reports of false advertising of many food products. Most of the vinegars advertised as the well-known "Shanxi Mature Vinegar" were actually blends of undiluted acetic acid, water and various additives, China National Radio reported over the weekend. Less than 5 per cent of the so-called "extra aged vinegar" made in Shanxi , China's vinegar production base, "is fermented from grains such as sorghum and barley and goes through several months of sedimentation and filtration according to manufacturing standards", an industry association leader was quoted as saying by the broadcaster. Wang Jianzhong , vice-president of the Shanxi Vinegar Industry Association, said most vinegar used by mainland consumers was blended and made with sodium benzoate, a preservative. "It may have the words `extra aged' on its package, but if you look at the ingredients in detail, you will find sodium benzoate," Wang said. "As long as there's sodium benzoate, you can be sure that it's not mature vinegar, because mature vinegar doesn't need preservatives." But the Shanxi Vinegar Industry Association later distanced itself from Wang's remarks, issuing a statement last night saying that all aged vinegar and extra aged vinegar sold by "authorised" Shanxi vinegar factories was real, natural and preservative-free. The association said Wang's "irresponsible comments" had seriously hurt the development of Shanxi's vinegar industry and tarnished its reputation, adding it might consider taking legal action against him. Vinegar is the latest food item that has been falsely advertised. Mainland media recently reported that "freshly ground" soy milk sold in several famous fast-food chains and "long-boiled" pork bone soup at a noodle chain were made from concentrates as well as powders. In 2000, the government introduced a national standard for blended vinegar, specifying that products must contain at least 50 per cent of fermented vinegar and edible acetic acid, plus food additives. Many vinegar brands, however, marketed products with no fermented vinegar at all, Wang Zhanyong , a senior engineer at the Beijing Jin Zhongtai Food Science and Technology Development Centre, was quoted as saying. Some manufacturers even used industrial acetic acid to replace edible acetic acid to lower costs, Wang said. Also, food safety agencies on the mainland were incapable of testing whether industrial acetic acid was used in blended vinegar. In an attempt to protect the industry's image, the Shanxi provincial Food Quality Supervision and Inspection Centre said yesterday in the Shanxi Daily that all mature vinegar produced in Shanxi was safe. It admitted preservatives were used, but not beyond the regulated amount. It said not all vinegar labelled "Shanxi Mature Vinegar" was produced by Shanxi manufacturers, and that it would co-operate with regulators in other provinces to clamp down on fake products.

The trademark clatter of machinery and the sight of workers pouring through factory gates at the end of their shifts in the industrial area of Dalang town, Dongguan, is undergoing a worrying change, says factory boss Wilson Shea Kai-chuen. Shea, who founded and chaired the 300-member Hong Kong Small and Medium Enterprise Association in April, said the industrial town, which was home to many members, had been growing steadily more quiet since June as orders slowed down. The outlook for China's export sector deteriorated further over the weekend on news that Standard & Poor's had stripped the US of its AAA rating with a "negative" outlook. This in turn increases corporate borrowing costs and sours consumer confidence. Worries about a double-dip recession in the US and the unsettled debt crisis in Europe sent global stocks tumbling sharply as last week drew to a close, and cast another cloud over the outlook for manufacturers and exporters in the area, he said. "The top two Chinese export markets are in trouble at the same time now. The prospects look even worse than the global financial crisis," he said. Shea, who runs a factory at Dalang producing gift and jewellery boxes and wrappings, said smaller exporters had frequently complained of overseas orders shrinking by as much as 30 per cent since April on the back of sharp inflation in costs and wages, a stronger yuan exchange rate and weakening consumer confidence. "Since a so-called recovery in the first three months of this year, overseas orders have slowed down," he said. Growing worries of a global recession worsened significantly in the past week even though the US raised its debt ceiling at the 11th hour to avoid default. "Exports will probably slow more quickly than we had expected," Deutsche Bank chief economist Ma Jun said. Exports and its related industries such as shipping, ports, raw materials and real estate faced "new downside risks", he said. For every one percentage point decline in the US and European Union's economic growth, China's exports would fall by seven percentage points and its economic growth would contract by one percentage point, Ma said. Daiwa Capital Markets chief economist Sun Mingchun said growth in the mainland's fixed asset investments in the manufacturing sector slumped to 18.7 per cent in June from a 51 per cent rise in May, underlying a lack of credit lending and confidence. Eddie Leung Wai-ho of the China Affairs Committee of the Chinese General Chamber of Commerce said smaller watch and clock manufacturers had been "screaming" for orders since April. "The US and European markets are jittery," Leung said. "The coming fourth quarter will be very tough."

China's Li Na poses as she goes to the Pacific Mall to interact with fans in Toronto, Canada, Aug. 6, 2011. No. 6 seeded player Li Na will compete in the 2nd round of the 2011 Rogers Cup.

Millions of hectares of arable land in central, eastern and southern parts of China are lying unattended in winter as villagers shun agricultural life, experts said. Rural residents are leaving the land amid rapid urbanization, according to official data. More than 46.6 percent of arable land in 16 provinces in southern parts of China - 21.5 million hectares - lies untilled in winter, according to statistics from the Ministry of Agriculture. The land used to be planted with rice. "Rice-planting areas in southern provinces have shrunk considerably in recent years," said researcher Lu Bu at the Chinese Academy of Agricultural Sciences' agricultural resources and regional planning institute. "On top of this, most rice varieties that can be harvested twice a year have been replaced by single-harvest rice, as farmers are not willing to spend time on the land and want to work in the cities for more money," he said. The average daily salary of farmers working in the cities is about 150 yuan ($25), far more than any income they could make from the land. In some areas of Hunan province, up to 15 percent of arable land was not planted for winter crops, said Li Maosong, director of the academy's agricultural information office, citing official statistics confirmed by satellite images. Of the national output of 546.4 million tons of grain in 2010, about 45.6 percent came from the 16 southern provinces, according to statistics from the China Agriculture Statistical Report. The contribution from the 16 provinces marked a sharp decline from almost 60 percent in the 1980s, official figures showed. At present, only six of the country's 31 provinces, municipalities and autonomous regions produce enough grain to support other provinces, Li said. The 16 provinces and regions in central and southern China, with the exception of the Guangxi Zhuang autonomous region and Yunnan, depend on grain from other provinces to feed their population, he added. An industry insider, who did not want to be identified, told China Daily that the country has been boosting shipments from the grain-rich northeast to the south in recent years, but no specific figures were provided. Meanwhile, to meet domestic needs, China has increased grain imports in recent years, focusing global attention on the country's target for grain self-sufficiency. The country imported 1.57 million tons of corn in 2010, a massive increase on 83,000 tons in 2009 and 49,000 tons in 2008, according to figures from the General Administration of Customs. Wheat imports were also higher last year, rising 36 percent to 120 million tons, the customs office said. Minister of Agriculture Han Changfu said in March that current grain imports were to adjust and enrich crop varieties in the domestic market. "China will not, and cannot, rely on imports to feed its population," he said during an exclusive interview with Hong Kong-based Phoenix Television. The agricultural information office's Li estimated that rice output could grow by about 10 percent if local governments made full use of arable land. Also, more drought- and cold-resistant varieties of crops, such as potatoes and Chinese cabbage, could be planted in winter in the central and southern regions to take advantage of local climate change, he said. "Many farmers have left the land, which is a potential risk to grain production," the academy's Lu Bu said. "An important task for the central government is to support farmers in improving the benefits they reap from farming." Despite unfavorable weather, China enjoyed a bumper summer harvest this year. Grain output hit 126.27 million tons, an annual increase of 2.5 percent, according to the National Bureau of Statistics.

Hong Kong*:  Aug 8 2011  Share

The departure of former arts hub chief Graham Sheffield disrupted plans to stage the first symphony concert at an open-air piazza in West Kowloon.
Yip Wing-sie, who conducted the first of six performances of Stargazing by the Sea with McDull at the Hong Kong City Hall last week, said the concert featuring the popular animated piglet had been conceived as an outdoor event at the site of the West Kowloon Cultural District. "During our brainstorming sessions with McDull's creators early this year, we agreed there was not a better place than West Kowloon to highlight the theme about stars, sky and the sea," said Yip. McDull, the much-loved animated piglet, has four films to his name since his debut as a supporting character to better-looking friend McMug in comics in the 1990s. Last month, he was honoured with statues at the Avenue of Stars at Tsim Sha Tsui and at Madame Tussauds at The Peak. Yip said organisers had hoped Sheffield, former head of London's Barbican arts centre, would find a way to host the large-scale outdoor concert at a temporary venue on the West Kowloon site. But the controversial departure of Sheffield, who quit in January after only five months in the job, citing ill-health, ended those plans. "Had Graham stayed, the project's continuity would have been maintained. As we can't do it this year, let's hope for next year," she said, quoting Michael Lynch, Sheffield's successor, as saying, "the stars and sea will still be around next year". Yip estimated that an outdoor concert would attract as many as 40,000 people, as opposed to 1,400 who crammed City Hall. Lynch, who was at Thursday's concert, hoped the event could be held outdoors next year, adding: "I love the idea of the piglet. "We'll be looking at a range of things for next year. We need to get absolute control of the space so that we can deal with the noise, the location and a whole lot of logistics." But before any of that can happen, organisers need a permit from the Lands Department to use any part of the West Kowloon site. That is no exception, even for bosses at the HK$21.6 billion West Kowloon Cultural district, which will contain arts venues, a piazza, a museum and exhibition centre when it is completed in late 2015 or early 2016. Thursday's concert ended with footage of McDull dancing on the West Kowloon waterfront, as the orchestra played Tales from the Vienna Woods by Johann Strauss Jnr. "I hope in the very near future we'll stage this programme by the sea and under the sky," Yip told the audience. "If you wonder where it will be, look for a clue in the footage we just showed you."

Injured officer hangs up his gun - Detective finds 'balance' with decision to leave the front line after devastating 1992 head injury - Detective inspector Chan Sze-ki, seen talking here to his doctor, is changing jobs two decades after a gunshot changed his life. Detective inspector Chan Sze-ki has never been one to sit out of the action. Three days after he was shot in the head by the leader of an infamous jewellery heist gang, Chan hopped out of his hospital bed and began searching for his revolver. Even surgery to remove the AK-47 bullet lodged in Chan's head couldn't give the prospect of a desk job any appeal. "This is what my mother and my wife hate about me most," he said. "The first thing I asked for [after the injury] was not to withdraw, but to retain my post," Chan said. "I am very stubborn. In my early life in the police force, most of the time I had been led by what I am interested in [criminal investigation]." He returned to the Kowloon East Regional Crime Unit in December 1992 after 128 days in hospital and two days later found himself fighting another gang of heavily armed robbers in Tsuen Wan Centre. He remained on the job for 19 more years. Tomorrow, however, Chan will finally walk away from the front line and join a crime prevention unit. His gun is likely to remain firmly in its holster. Reflecting on his 28 years in the police force, Chan says he devoted himself to service at the expense of his health and family. "I was a foolish loyalist," said Chan, 47 . "What I enjoyed most was my police work. I would not see how the management treated me. I was just blindly committed. I omitted my family, my wife and my daughter." Chan's decision to step back follows numerous health scares and battles for compensation for his injuries. Once seen as a rising star in the police force, Chan suffered his fateful wound on April 24, 1992, during a raid on a building on Li Tak Street, Tai Kok Tsui, serving as a safe house for a gang of armed jewellery thieves. Five robbers inside the flat opened fire with AK-47 assault rifles and threw grenades at the lightly armed officers. Five policemen and 14 civilians were injured. Chan tripped in front of the gang's leader, who shot him point-blank. The bullet passed through Chan's skull and the frontal lobe of his brain. It travelled down through his nostril and tongue and stopped just inches under the skin of his neck. Complications followed. He lost his memory, his temper and his bladder control. In 2001, Chan decided to quit detective work. He served a short spell as a trainer before joining the Kowloon East Regional Intelligence Unit in 2003, where he remains today. Meanwhile, Chan's relationship with his beloved police force deteriorated. He filed a lawsuit protesting the compensation he received for his injury - just HK$125,000 - and the Court of Appeal eventually awarded him HK$1.45 million, ruling Chan was poorly briefed before the raid. He suddenly sought an adjournment in 2007 just as the case was returning to a lower court to assess how much more damages he could claim for his loss of post-retirement earnings. Chan refused to explain the reason, describing the case only as an "unhappy experience." Chan now knows how to "make a balance" and says he is happy with his transfer. It will give him the chance to spend more time with his wife, a banker, and his 17-year-old daughter, who is studying in Britain. Police work, he said, is a lot like his favourite food: curry. "I sweat a lot when I eat curry," Chan said. "With much love and little hate, this sums up my job and my delicate affection for the force. I believe I have lived a life with no regret in the police force."

MTR says Shenzhen travellers at fault - Passengers caused recent problems with automatic doors and escalators, subway firm says, and pins overcrowding on red tape and its train supplier - Overcrowding has long been a problem on the Longhua line in Shenzhen. The MTR Corporation (SEHK: 0066) subsidiary that operates Shenzhen's subway network blames passengers for frequent breakdowns of automatic doors and malfunctioning escalators, and says delays by the trains' manufacturers - and not underestimates of passenger flow - have led to overcrowded carriages. MTR Corp (Shenzhen) said seven accidents over the past five months - including a signal failure and land subsidence - occurred because the network is in the early stages of its operation. Mainland media reported that an empty train was derailed and 125 metres of track damaged on the Shenzhen MTR's No4 Longhua subway line in March, while trains were delayed in May and June because of signalling failures and malfunctioning doors. In July, at least two passengers were injured while using a mainland-made escalator at an MTR station, which the company said had met official safety requirements. Last week, an automatic door suddenly opened for about a second on a running train before it stopped 10 seconds later. General manager Adi Lau Tin-shing said those incidents were probably a result of passenger behaviour. Lau said an investigation suggested the two passengers on the escalator fell, while the automatic doors had likely broken down because of passengers inside pushing against them. "The escalator resumed service after an inspection by the Shenzhen and Beijing safety watchdog showed it met safety requirements," Lau said, and stressed that safety was the operator's priority. Technicians adjusted the closing force of the doors from 150 to 200 newtons to avoid further breakdowns at peak times, Lau said. The number of trains would be increased from eight to 13 on the Longhua line from Monday, and the intervals between trains reduced from eight to six minutes, to meet demand of 220,000 to 260,000 passengers a day. The Longhua line - which starts at the Lok Ma Chau-Futian border crossing and links Shenzhen's city centre with its northern suburbs - has long been criticised for its overcrowded carriages and long waits for the tens of thousands of people who use it to commute to cheap housing on the city's outskirts. Passengers complain of the crush in carriages during rush hours and fear the overcrowded trains and platforms could compromise safety. Woo Shui-wah, deputy chief operations manager, said red tape and the capacity of the train manufacturer in Nanjing , Jiangsu were to blame for the limited trains. Woo said the company needs official approval before it can order trains - and that approval had been delayed. The train maker also had limited production capacity, he said. He denied the chaos was the result of MTR Shenzhen underestimating passenger flow. Lau said passenger numbers were expected to rise by 10 per cent during the World University Games, which will open in Shenzhen next week. The company will set up an emergency team to respond to any crisis. Shenzhen residents have complained that the MTR Corporation has failed to maintain its service standards there, saying the seven accidents in the past five months on the Longhua line were unacceptable, according to mainland media reports. "The MTR should respect its Shenzhen customers, too - not just be profit-oriented," one internet user said. "Its accident rate is even higher than mainland operators." Lau said a railway extension project to Guanlan in remote Baoan district would be postponed until after 2016 as the Shenzhen government has given priority to five new subway lines closer to the city. He also said the firm had taken part in a feasibility study for Shenzhen's proposed No6 line, although he couldn't say whether MTR Shenzhen would be part of the new line's operation.

The United States lost its top-notch AAA credit rating from Standard & Poor’s on Friday in an unprecedented reversal of fortune for the world’s largest economy.

Bank of East Asia (SEHK: 0023)'s first-half profit jumped 28.9 per cent on the back of strong mainland-related business, but analysts said they would be monitoring the bank's capital levels in the second half. Hong Kong's third-largest lender by market value said profit after tax reached nearly HK$2.76 billion in the first six months, beating market expectations. The family-run bank, controlled by chairman and chief executive David Li Kwok-po, said net interest income climbed 19.9 per cent to HK$4.4 billion year on year. Net interest margin, a measure of a bank's lending profitability, remained flat at 1.73 per cent compared to the end of last year. Despite Hong Kong's low-interest-rate environment, the bank was able to ride the tide of increasing loan demand from mainland companies. The bank's pre-tax profit on the mainland rose 64 per cent to HK$1.28 billion, accounting for nearly 36 per cent of total pre-tax profit. "Right now China is really under tightening ... and banks have much stronger bargaining power," said Adrian Li Man-kiu, deputy chief executive. Deputy chief executive Brian Li Man-bun said the bank's exposure to local government financing vehicles only stood at 2 per cent of loans on the mainland, reassuring investors that the bank's asset quality remained healthy. He said the bank could consider listing its mainland unit in Shanghai or in Hong Kong, but no detailed plans had been made at this point. The bank said its mainland unit was ahead of schedule in meeting the China Banking Regulatory Commission's mandated loan-to-deposit ratio of 75 per cent or below by the end of the year. The bank's ratio stood at 72 per cent at the end of June. But BEA has yet to raise its regulatory reserve, which stands at 1.05 per cent. The bank said it had struck a deal with the Hong Kong Monetary Authority on how much to raise the reserve by the end of this year. The figure was not disclosed. Analysts said the increase would not affect BEA's net earnings, but could lead to a drop in core capital adequacy ratio, a measure of a bank's common equity and retained earnings against risk-bearing assets. Regulatory reserves come from retained earnings, so BEA's core ratio is affected. The core figure dropped 0.4 percentage points from the end of the year to 9.4 per cent by the end of June, and the total ratio dropped 0.6 percentage points to 12.6 per cent. Steven Chan, MF Global Hong Kong head of Asian financial equity markets, said the fall raised concerns because the HKMA has yet to apply Basel III rules, which require even higher standards for capital adequacy levels. BEA's core ratio is below peers such as Hang Seng and Bank of China Hong Kong, said Michael Werner, a senior analyst at Sanford C. Bernstein, who added that BEA had raised funds several times in the past when capital levels weakened. The bank's share price rose 2.22 per cent, or 65 HK cents, to close at HK$29.95 yesterday.

Tang's right about me, Li Ka-shing says - Billionaire Li Ka-shing yesterday hailed as "good advice" a remark by Chief Secretary Henry Tang Ying-yen that young people should stop complaining and ask themselves why they could not be as successful as Li. "I think what Mr Tang said was correct. He said so because he loves Hong Kong and loves the young people," Li said. Tang was criticised for the remark, which he made in an interview with the South China Morning Post (SEHK: 0583) in May. Li was reported to have been annoyed at being dragged into the controversy. Li cited a speech he gave in June at Shantou University in Guangdong in which he said: "If one can learn from others' experience, it will be conducive to one's personal growth." The usually careful businessman was quick to say that he did not mean to show support to any of the "likely candidates" in next year's chief executive election. "Whatever I say, it will not be fair to [any of the candidates]," he said. Still, the Cheung Kong (Holdings) (SEHK: 0001) chief shared some of his insights into what makes a good leader. "He or she must win the trust of the Hong Kong people, and win the trust of the country. He or she must be pragmatic and know how to do real work. It is no use being able to talk only." He would also like the next leader to formulate policies with care. "It took a long time to make Hong Kong so successful but one [bad] policy could take all that away," Li, 83, said. He did not say what policies would be good or bad for Hong Kong. Li was long held up by people in Hong Kong as an icon of success but is one of several property tycoons to have been criticised recently by young activists for their excessive dominance of the city's economy.

Newly appointed arts hub chief Michael Lynch says he is determined to stay in his post much longer than his predecessor. Michael Lynch, CEO of the West Kowloon Cultural District Authority, meets the media at the West Kowloon waterfront promenade. Newly appointed arts hub chief Michael Lynch says he is determined to stay in his post much longer than his predecessor. The Australian arts veteran was keen to show off his energy yesterday, inviting the press to meet him at the West Kowloon site, 10 days into his job. It was the first press event held on site since the authority was set up for the cultural district. "I thought it was really important today to be able to talk to you on the site rather than in some boardroom," Lynch said. He said in the past 10 days he had met representatives from arts and cultural fields, board members of the West Kowloon Cultural Authority and government officials. When asked whether he would stay longer than his predecessor Graham Sheffield, who quit earlier this year on the grounds of ill health after five months in the job - only to land the post of arts director at the British Council within two months - Lynch said he was confident he would "stay much longer". He said his daughter was coming next month and his wife would be moving here at the end of October. "I absolutely give you my undertaking ... I look forward to being here when those buildings come out of the ground and we are able to celebrate the opening of the first building on the site," he said. Lynch said he met architect Norman Foster two weeks ago and the hub's final design would be released for the last round of public consultation and be submitted to the Town Planning Board for approval by the end of this year. He also vowed to organise a series of temporary arts events for the site before the first phase was completed in 2015. The first would be the Hong Kong International Jazz Festival in October followed by a Cantonese opera gala during Lunar New Year.

The government will consider seeking Beijing's interpretation of the Basic Law on the rights of abode of foreign domestic helpers only if it loses a landmark court challenge. The judicial review granted a group of Filipino maids is scheduled to begin on August 22. They are fighting to have current residency restrictions lifted - foreign domestic workers are exempt from Article 24 of the Basic Law, which grants permanent residency to anyone who has been "ordinarily resident" in Hong Kong for seven years. The government's position on the outcome emerged yesterday after the issue was discussed at a three-hour meeting of the Executive Council. Opinion remains divided among political parties on when or if the case should be referred to the mainland government for a ruling. No government officials spoke to reporters after the meeting, but a source said the administration, "out of respect for the judicial system of Hong Kong," would await the outcome of the case before considering seeking an interpretation. No decision had been made, the source said, adding that the government would definitely appeal if it lost and demand suspension of enforcement of the ruling while the appeal was heard. Seeking an interpretation in the event of losing the case would mirror the situation in 1999 when the Standing Committee of the National People's Congress overturned a decision of the Court of Final Appeal granting the right of abode to Chinese citizens born outside the city if one parent was a permanent resident. The Exco also discussed yesterday what administrative measures could be taken to minimise the impact on society should the domestic workers win their case. One measure might be to restrict the length of stay of foreign domestic helpers to less than seven years, the source said. New People's Party chairwoman and former security minister Regina Ip Lau Suk-yee said the government should seek an interpretation before the court made its ruling. "It is better to seek the interpretation from the NPC before the government loses the case," she said, adding that Hong Kong could not absorb the impact of an estimated 125,000 maids who would be entitled to permanent residency if they won. Civic Party lawmaker Alan Leong kah-kit opposed an interpretation in any circumstances. "No matter the ruling, the government should not ask Beijing to interpret the Basic Law, let alone before a ruling," he said. While the party would not comment on details of the case as it was sub judice, Leong said Article 24 and the Immigration Ordinance were clear to him. "To qualify for the right of abode, one has to pay tax, keep a habitual residence in the city, and have a reasonable means of income supporting herself and her family. She also has to have the intention to take Hong Kong as her permanent residence," he said. "How many maids in the city will be qualified? I do not think the number would be large," he added, criticising what he described as government scaremongering. Yesterday the results of a Liberal Party survey showed strong opposition to the right of abode for maids, while the Commercial Organisation and Domicile Services Employees Association also expressed its misgivings.

The Council for Sustainable Development said on Friday instituting a higher electricity tariff for heavy users might be a way for Hong Kong could save energy in future. The council – a division of the Hong Kong Government’s Environment Bureau – has launched a public consultation on energy saving because of the need to further reduce carbon emissions in the territory. Council chairman Bernard Chan Chi-sze said the careful management and efficient use of energy in buildings was an important way to combat climate change, because 90 per cent of Hong Kong’s electricity was consumed in buildings. “The council proposes focusing on four core building user groups: households, offices, retail, and catering,” Chan said. “These account for about 60 per cent of the territory’s greenhouse gas emissions,” he explained. In order to achieve its aims the council intends to ask the public whether heavy consumers of electricity should pay higher tariffs. The council believes this is a key method of saving energy. It also expects power companies to submit their own views. Chan added the council would consult the public on this and other suggestions, including encouraging companies to use energy-efficient appliances and conducting energy audits. “It is vital to engage the whole community in efforts to maximise buildings’ energy efficiency and to reduce carbon emissions,” Chan added. The four-month public consultation began on Friday and will last until December 4.

Sands China Ltd. has signed franchise agreements with Hilton Worldwide and InterContinental Hotels Group PLC. for hotels at the casino operator's $4 billion-plus resort in Macau's Cotai area, Sands said Friday, solidifying plans for the long-delayed expansion project. Hilton's five-star Conrad is expected to open at the Sands Cotai Central property in the first quarter of 2012 with more than 600 rooms, Las Vegas Sands Corp. unit said in a statement. A four-star Holiday Inn by InterContinental is also scheduled to open late in first quarter 2012 with more than 1,200 rooms, it added. Dow Jones in March reported Sands China was in talks with the hotelier amid a failed agreement with Shangri-La Asia Ltd. In July Las Vegas Sands Chief Operating Officer Mike Leven said Sands China plans to launch nearly 2,000 Sheraton-branded hotel rooms at the Cotai property in the third quarter, and that in early 2013 it should open an additional 2,000 rooms under the Sheraton Towers brand of Starwood Hotels & Resorts Worldwide Inc. Construction of the project, which Sands China has said will have 6,000 hotel rooms in total, has been slowed at least in part by government restrictions on how many foreign workers companies in the labor-starved territory can hire. The number of gaming tables at the resort has been a thorny issue as well since the government imposed a cap on tables until 2013. Mr. Leven last week said Sands Cotai Central will have as many as 530 tables versus the 670 the company was planning previously.

Underscoring the tremendous appetite for new listings in Hong Kong despite current market volatility, Carlyle Group L.P.-backed New Century Hotel Group Ltd. and Nasdaq-listed Melco Crown Entertainment Ltd. plan to raise up to US$1 billion in the local stock market. Word of the offerings came amid a global stock market rout, fueled by widespread concerns about the ability of the world's policy makers to revive the global economy and respond to the European debt crisis. Hong Kong's blue-chip Hang Seng Index fell 4.3% Friday to its lowest level in nearly a year. The index fell 6.7% this week. Stock market volatility has already prompted several companies to delay or drop plans to list in Hong Kong. In the latest case, China Shipping Nauticgreen Holdings Co. postponed its up to US$193 million offering, a person familiar with the situation said Thursday. That came after China Everbright Bank Co. postponed investor presentations slated for June 27 for its around US$6 billion IPO. Another person familiar with the matter said Thursday it isn't clear how much China Everbright will raise in the offering, or when it will be launched. The lender will continue to monitor the market, the person added. However, market volatility hasn't completely deterred companies looking to tap Hong Kong's IPO market, one of the world's busiest. New Century Hotel Group Ltd., in which U.S. private-equity fund Carlyle Group has a stake, plans to raise around US$400 million in an initial public offering ahead of a listing in the city in September, people familiar with the situation said Friday. Hangzhou city-based New Century Hotel's offering looks to take advantage of the strong demand for travel services in China. The company manages nearly 70 hotels with almost 20,000 rooms in key commercial and tourist cities, such as Beijing, Shanghai, Hangzhou, Nanchang, Chengdu and Kunming, according to its website. New Century aims to manage more than 123 hotels by the end of 2015, the company said. It wasn't immediately clear whether Carlyle, which has invested more than US$3 billion in equity in China, would sell its holdings in New Century Hotel. The private equity firm recently raised US$988 million by selling part of its stake in China Pacific Insurance (Group) Co. Melco Crown, which has applied to the Hong Kong stock exchange for a proposed dual listing, is planning to raise US$400 millioto -US$600 million in the fourth quarter in Hong Kong, a person familiar with the situation said Friday. Melco Crown Chief Executive Lawrence Ho said in a statement Thursday the proposed listing would put the company on par with its competitors, which have all listed in Hong Kong. Deutsche Bank AG and Morgan Stanley are handling the New Century Hotel's offering, the people said, while Credit Suisse Group and Deutsche Bank are handling the Melco Crown listing.

 China*:  Aug 8 2011  Share

"Hawaii of the East" - High luxury, fine service - A bird's eye view of the St. Regis Sanya Yalong Bay Resort, which offers exclusive access to more than 800 meters of pristine coastline. - Sunny Heng named new St. Regis GM - Starwood Hotels & Resorts has appointed Sunny Heng as general manager of the first St. Regis Resort in Southern China, The St. Regis Sanya Yalong Bay Resort, which is scheduled to open in November, 2011. A veteran hotelier with more than 30 years experience, Heng comes to the St. Regis after two years as general manager at the Westin Tianjin and, before that, six years as general manager of the Sheraton Tianjin Hotel. Heng began with Starwood Hotels & Resorts in 1991 as director of food and beverage at Sheraton Langkawi Beach Resort. St. Regis Sanya Yalong Bay Resort is yet another reason to visit the "Hawaii of the East". Dubbed the "Hawaii of the East", China's southern island of Hainan is a much-visited destination. It has become even more sought-after with the launch of the tax-rebate policy, which allows overseas travelers and visitors from Taiwan, Hong Kong and Macao to apply for an 11 percent tax rebate of their total purchases when departing from the island, this year. This November, the tropical island will embrace a brand new resort, the St. Regis Sanya Yalong Bay Resort, adding a unique luxurious hotel option to the island's beautiful Yalong Bay. "Our hotel stands on the last reserved piece of land in Yalong Bay. (And) the last place has to be the best," Sunny Heng, the hotel's general manager, says. Located on a generous stretch of land at the end of Yalong Bay, the hotel offers exclusive access to more than 800 meters of pristine coastline where guests can enjoy sun bathing, swimming and all kinds of water games. The resort is the only one in Hainan that has a yacht club. Guests can arrive by both limousine and yacht, offering a luxurious hotel experience from the very beginning. The hotel has 401 guestrooms and suites including 60 lagoon rooms and 28 beachside villas. The guestrooms start from 73 square meters in size and there is also a 1,050 sq m presidential villa. "The resort's architecture is inspired by the concept of two intertwined dragons," Heng says. "It presents a dynamic shape on the skyline and echoes the ridgeline of the surrounding mountains and waves." The interior of the resort has an elegant feel, and the guestrooms are equipped with modern facilities, such as a 46-inch plasma television, iPod docking station and high speed broadband Internet. The resort is stamped with the brand's defining features, such as its butler service. "The butlers, trained in the English tradition of service, provide personalized service in an ever-present yet discreet manner. We promise not only to meet any of the guests' needs at any time of the day, but also serve the guests according to their personal tastes and preferences," Heng says. A stay at a St. Regis hotel would not be complete without sampling their signature Bloody Mary cocktail. In 1934, St. Regis New York invented the cocktail and later whenever a new St. Regis hotel is born, a new Bloody Mary is created. Each one has a different flavor created from locally produced ingredients. This resort's Bloody Mary, named Sanya Mary, uses Hainan yellow chili, Hainan white pepper and lemongrass, which give the cocktail a unique spicy flavor. The resort's beachfront restaurant Driftwood offers freshly caught local seafood, which guests can enjoy along with unparalleled views of Yalong Bay. Besides, guests can also find authentic Cantonese and Sichuan dishes at the spacious Ming Xun Chinese restaurant and enjoy a wide selection of international delicacies at the all-day dining, Social. With its 2,088 sq m of meeting space, the resort can cater to all types of functions from formal events to intimate business gatherings. Its premier meeting facilities make the St. Regis Sanya Yalong Bay Resort an ideal destination for both leisure and MICE (meetings, incentives, conferences and exhibitions) guests. "I look forward to delivering the renowned St. Regis experience to our guests, including contemporary luxury and bespoke service, and taking Yalong Bay to the next level," Heng says.

Low-tech smugglers' hi-tech trade - A wheel, a pulley, a fishing line and a bag - gang used basic tools to convey iPads and iPhones across border - Shenzhen customs officers examine the wheel and a smuggling bag on the 21st-floor footbridge in Shenzhen. A cross-border smuggling syndicate that used a 300-metre fishing line to ferry gadgets from Hong Kong to Shenzhen has been smashed in a joint operation by customs officers from both sides of the border. Its alleged mastermind, a Hong Kong man who was released from jail only last month after being convicted for identical crimes three years ago, was arrested with five mainlanders in Shenzhen on Wednesday, a customs official said yesterday. Law enforcers confiscated 100 Apple iPad2s and iPhone4s valued at more than HK$300,000 at the pick-up point in Shenzhen. Equipment, including a giant home-made conveyance wheel and a fishing line, was also seized. Hong Kong customs officers are looking for two other smugglers who fled in a seven-seater car from the uploading site in Sha Tau Kok, Hong Kong. A Hong Kong customs official said the investigation indicated that the syndicate started operating about two weeks ago, days after its mastermind was released from jail in Hong Kong. "Investigations showed that smugglers operated in the small hours of each morning in an attempt to avoid detection," the officer said. "A black nylon bag containing smuggled goods was tied to the black fishing line and pulled across the border. It is very hard to discover at night." The Hong Kong site was in the waterfront area near the Sha Tau Kok River off Lin Ma Hang Road, where a one-metre metal pole was planted in the ground and fitted with a pulley. The pick-up point was on the other side of the river on the 21st-floor bridge connecting two high-rise residential blocks, where the 1.5-metre-diameter wheel was installed. The fishing line was attached to the wheel and lowered from the bridge before being shot across the river and connected to the pulley on the Hong Kong side. "Only one bag containing either two iPads or several iPhones was uploaded to the fishing line in Hong Kong each time because the line was not strong enough to carry more," the officer said. "Smugglers in Shenzhen spun the handle of the giant wheel manually to pull the bag to the mainland side. They made 40 to 50 passes each night." Customs officers from both sides began investigating the syndicate after receiving a tip-off last week. In the early hours of Wednesday, mainland officers arrested five men and one woman and seized the haul at the bridge and a nearby apartment in Shenzhen. There were no arrests and no goods were found in Hong Kong.

The underworld that is China’s pirated online-game sector is a big drag on the country’s legitimate game market, affecting top titles like World of Warcraft and many others in the popular swords-and-sorcery genre. So how do you beat the pirates? Companies are generally aggressive about shutting down unlicensed versions of their games. But for China’s Shanda Games, the answer also includes efforts to win back users who have turned to unlicensed games – sometimes with help from former pirates themselves. The operators of pirated online games run them on what are called “private servers,” a term that simply refers to a privately-owned machine but which is common lingo for a server running an altered version of a proprietary online game. The pirates usually attract users both by offering the games free of charge and by changing the rules of the game. While someone playing the real World of Warcraft might have to grind for weeks to get their character up to the game’s highest level, the same feat may take just hours on a private server. Players can then dive right into the epic battles and treasure-hunting only available to top-level players. Analysts say Legend of Mir, a popular martial-arts adventure game operated in China by Shanda, is among the games most widely run on Chinese private servers. Shanda Games scans the Internet every day to find new private servers running its games and aims to shut them down, Chief Executive Alan Tan said in a recent interview. In rare cases, after a private server has been shut down, Shanda will set up its own server in the same geographical area in hopes of luring the private server’s users over to a legitimate Shanda game. Shanda may even rope the operator of the former private server into helping promote the licensed game. The other prong of Shanda’s strategy against private servers acknowledges user demand for the sort of games they offer—where the rules can be changed and players can level up without weeks of effort. For example, Shanda is developing a game platform called World Zero that will allow users to create their own game world and modify its rules, Tan said. A partner is also developing a game called “Jue Zhan Shuang Cheng” (roughly: “Decisive Battle of the Two Cities”) that imitates private server rules—allowing users to level up very quickly and engage in battles against other powered-up characters. World Zero may be tested next year and Shuang Cheng may be available this year, Tan said. Shanda’s strategy seems to have yet to catch on with the company’s biggest competitors in China. A spokesman for Netease.com said the Chinese online game company strictly combats private servers and won’t cooperate with their owners in any way. Netease operates the Chinese version of Activision Blizzard’s World of Warcraft through a licensing deal, but the company spokesman referred to Blizzard for questions about private servers running that game. Blizzard said in a statement it opposes the creation and use of unauthorized emulator servers. The private server market is sizable. Yu Yi, an analyst at Beijing research firm Analysys International, estimates the value of the online-game private-server market will be around 5 billion yuan ($776 million) this year, about one-seventh the size of the likely 36 billion yuan ($5.6 billion) legitimate market for online games running on software programs. The business can also be lucrative, as shown in a case last month in the western Chinese metropolis of Chongqing, where police said they broke up a circle called the “Knights Attack Group” that had distributed ads for private servers running a game called “Legend”—apparently referring to Legend of Mir. The group of 19 people, most of them born in the 1980s and either middle-school or high-school graduates, had made at least 70 million yuan in illicit revenue in about two years, the Chongqing police said in a statement. Among the group’s assets seized by police were several cars, including two Audis, a Porsche and a BMW. The Chongqing case also reflected how dirty competition can become in the private server business, where cyberattacks are common and victims are unlikely to seek police aid because their operations are illegal. The “Knights” group monopolized the market for Legend private-server ads because it disrupted rivals with cyberattacks, police alleged. At one point, all 20 of the top search results on Baidu for “Legend private server” were websites run by the group. The Chongqing police said they handed off the case to local prosecutors in June for further handling. The case was reminiscent of another in 2009, when police in Guangdong province said an attack launched by a private server operator escalated and, for unusual technical reasons, ultimately caused a brief Internet outage in areas of several Chinese provinces.

CapitaLand, Southeast Asia's largest property developer, expects to invest more than S$6 billion (HK$38.5 billion) this year, mainly in Singapore where it sees room for growth in the private residential market, and in China. "This year we will probably do more than S$6 billion worth of investments. The investment will still continue to be in our core markets," Liew Mun Leong, CapitaLand's president and chief executive officer, said yesterday. CapitaLand, about 40 per cent-owned by Singapore state investor Temasek, would seek opportunities for acquisitions whenever expectations of land prices had moderated, he said. Shares of CapitaLand have plunged about 25 per cent since the start of the year, weighed down by concerns that government measures to curb property prices in China and Singapore will hurt earnings. The Straits Times Index fell about 2.4 per cent over the same period. However, Liew said he was optimistic about demand for housing in China despite the measures, and that Singapore's private residential market still had further upside. "I think the private market [in Singapore] will still grow. If you look at sales now, volume wise it has not caught up, but prices are still good," Liew said. Singapore and China accounted for about 36 per cent each of CapitaLand's total assets as of the end of June. Although CapitaLand's sales volumes in China have fallen in the first half of the year compared to a year earlier, the average selling price of its flats had increased by 1,000 yuan (HK$1,200) per square metre in the same period, said Jason Leow, chief executive officer of CapitaLand China. The property developer expects to provide about 2,500 more flats in the second half of the year in China. It has already launched 1,700 flats and has a pipeline of 22,000 over the next four to five years, it said. CapitaLand said yesterday its second quarter net profit, excluding revaluations and impairments, rose 27 per cent year-on-year, helped by higher revenue from development projects in Singapore and China. CapitaLand earned S$171.3 million net profit, excluding revaluations and impairments, in the three months ended June, up from a restated S$135.3 million a year ago. The company restated its 2010 earnings downwards to make them comparable with its second quarter results that adopted a new accounting standard from January 1. The new accounting rule means CapitaLand's earnings from overseas development projects can only be recognised upon full completion, resulting in earnings that are more volatile and lumpy.

Beijing has dismissed a report by Japanese defence experts alleging increased naval activity by China as "irresponsible". The report has "ulterior motives", said the Chinese military. China accused Japan of trying to justify its own coastal defence build-up by saying that China posed a security threat. "The defence paper plays up the `China threat theory' and has ulterior motives. China expresses its strong opposition to that," defence ministry spokesman Geng Yansheng said yesterday. Foreign ministry spokesman Ma Zhaoxu said on Wednesday that the Japanese paper made "carping and irresponsible" comments on China's national defence. "China's development is offering significant opportunities to all countries in the world, including Japan," he said. "I hope Japan can learn from history and seriously reflect on its own national defence policy." Tokyo's report, which was released on Tuesday, said Japan is concerned with China's growing assertiveness in the South China Sea and the Pacific Ocean. It described China's stance over its conflicting interests with neighbouring countries as overbearing. The report also criticised Beijing for not fully disclosing its military budget. Xinhua said that the "China-bashing tradition" of Japan had done nothing but jeopardise relations with China and heighten tensions in the region. "It has also been trying to invoke China's rising power as an excuse to realise military expansion and shake off the yokes of a defence-oriented policy that has been carried out since its defeat in World War II," the article said. An article in the PLA Daily yesterday said the report was a reflection of "cold war mindset" among Japanese politicians. "They are concerned with China's military development and make groundless accusations because they want to find an excuse to build up their military in its southwestern region," the commentary said. China announced earlier this year that its military spending would increase 12.7 per cent to 601.1 billion yuan (HK$728.1 billion) in 2011. Both Geng and Ma said China's military modernisation program did not pose a threat. "China unswervingly adheres to the path of peaceful development, sticks to the policy of building friendship and partnership with neighbouring countries and pursues the defensive nature of its national defence policy," Geng said. Liu Jiangyong , a professor of international relations at Tsinghua University, said Japan had damaged ties with China. "Japan is not friendly to China," he said. "China's interest will be damaged if Japan moves further to strengthen security ties with the US."

US Vice President Joe Biden will travel to China later this month to help strengthen US ties with Beijing in a trip that will also include stops in Japan and Mongolia, the White House said on Thursday. “He will visit China at the invitation of Vice President Xi Jinping – the first of the planned reciprocal visits between the vice presidents announced during President Hu Jintao’s state visit to Washington earlier this year,” Biden’s office said in a statement. Biden will meet with Xi, Hu, and Premier Wen Jiabao during the trip and discuss “a broad range of bilateral, regional, and global issues,” it said. The trip comes shortly after Washington agreed a deal to raise its debt ceiling and reduce spending, a debate that drew concern from Beijing, which is the largest foreign holder of US debt. In Mongolia, Biden will highlight US support for the country’s “democratic development” and in Japan he will express Washington’s support for the country as it continues to recover from a devastating earthquake and tsunami that sparked a nuclear crisis. Biden will leave for the roughly 10-day trip on August 16.

I did not use Red Cross money, says scandal girl - Hermes-toting and Maserati-driving Guo Meimei, who claimed online to be a manager tied to the charity group, clarifies her expensive tastes - Images of Guo Meimei, with her mother Guo Dengfeng, during their appearance on Wednesday on the Larry Lang Live show over a scandal enveloping the Red Cross Society of China. Guo Meimei , the young woman who sparked a furore by claiming to be a manager affiliated with the Red Cross Society of China while flaunting her extravagant lifestyle online, says her possessions are not tied to the charity group. Guo, 20, who previously showed off her Hermes-toting and Maserati-driving lifestyle on Weibo, a Twitter-style microblog service, said she did not use donations intended for the poor and needy to fund her expensive tastes. She made her comments in an interview on Wednesday with economist Larry Lang for Larry Lang Live, a satellite news programme. Only two of the Hermes bags are authentic: one belongs to her mother, and the other was from Wang Jun , a Shenzhen real estate entrepreneur whom she called her "foster father". Wang, 42, resigned in June as a board member of Zhonghong Boai Assets Management, a commercial company that organises charity activities on behalf of the society. The company was one of many found to have had murky deals with a shadowy business arm of the Red Cross society, called the "Red Cross China Business System", which contracted Zhonghong Boai to market Red Cross first aid vans across the mainland. "Wang bought me the Maserati," Guo said. "A Mini Cooper was a gift from my mum for my 18th birthday." Guo said that Wang did not make any profit from his 10 million yuan (HK$12.11 million) investment in Zhonghong Boai, as the company had not opened for business yet. The money for the Maserati had no links with the Red Cross, Guo said, adding that Wang had planned to withdraw from the company. She also denied that Wang was deputy head of the Red Cross society. Internet users had suspected she got her self-proclaimed position as manager of the Red Cross Chamber of Commerce through her relationship with the deputy head, whose name was also Wang Jun. She said she made up the title herself out of vanity after Wang joked over dinner that he could get her a management position at Zhonghong Boai. The interview comes after the Guo saga seriously tarnished the reputation of the biggest charity organisation on the mainland, sparking allegations of corruption within the group. Police on July 7 ruled out any direct link between her and the society, but donations have plummeted. Beijing News reported that the Shenzhen Red Cross Society said they received only 100 yuan in new donations in the last month. After the interview, Weng Tao, the legal representative of Zhonghong Boai, repeated to Southern Metropolis News what he said on July 3, that Wang Jun was Guo's boyfriend. "Wang was not even that generous toward his own son. It might be a miracle if he were the foster father of Guo," Weng was quoted as saying. Guo's mother, Guo Dengfeng , who also appeared in the interview, said she was never short on money while raising her daughter as a single parent. She said she turned thousands of yuan into millions in a few months by buying and selling shares in 1990. Guo Meimei intends to seek a career in the entertainment industry.

China and Japan called for global co-operation on Friday after a financial market rout signalled fear that Europe's debt crisis could spin out of control and the US economy may slide into another recession. The comments from Washington’s two biggest foreign creditors pointed to growing concern of contagion as Asian stock markets tumbled following Wall Street’s steep dive a day earlier. European markets hit a 14-month low in early trading. French President Nicolas Sarkozy will discuss financial markets with German Chancellor Angela Merkel and Spanish Prime Minister Jose Luis Rodriguez Zapatero on Friday, Sarkozy’s office said in a statement. In Japan, Finance Minister Yoshihiko Noda said global policymakers needed to confront currency distortions, the debt crises and concerns about the US economy. “I agree that these subjects should be discussed,” he told reporters a day after Japan intervened to sell yen. “Each problem is important, but how to prioritise these issues is something to discuss from here on in.” Japan sold yen on Thursday to try to cap the currency’s rise, which puts its exporters at a competitive disadvantage. There was market talk that it had intervened again on Friday, although the currency bounced back quickly, which suggests Tokyo was not in the market. The yen has become a popular safe-haven bet as concerns about the United States and Europe grow. China Foreign Minister Yang Jiechi said US debt risks were escalating and countries should step up cooperation on global economic risks. Yang, who is visiting Poland, called on the United States to adopt “responsible” monetary policies and protect the dollar investments of other nations. The US Federal Reserve holds its next policy-setting meeting on Tuesday, and economists say there is little more it can do to try to spur growth. A flurry of weak economic data and Europe’s debt woes have fed fears of a fresh recession, triggering Thursday’s sell-off on Wall Street, which was the worst since the global financial crisis. Some US$2.1 trillion in market value was wiped off the MSCI All Country World Index this week as of Thursday’s close, and that total looked set to rise on Friday as Asian and European stocks fell. IHS Global Insight said there was now a 40 per cent chance the United States could slip into recession. The market rout extended into Asia on Friday, where markets skidded about 5 per cent. Chinese lender China Everbright (SEHK: 0165) Bank delayed a planned Hong Kong share offering of up to US$6 billion, sources told reporters. Japan and Switzerland are trying to reduce the allure of their markets as safe havens and after gold has more than doubled in price since the global financial crisis, many investors are having second thoughts about seeking refuge in the precious metal.

Shanghai's Jian Ye Li project is an experiment in historical preservation in a city that spends little time looking back. On a warm September day in Shanghai, Richard Jones donned a hardhat, stepped over puddles and ducked scaffolding to survey the progress on a new mixed-use complex. As chief operating officer of Atlanta-based Portman Holdings, Jones oversees certain projects in China for one of the first foreign developers to work in the country after its re-opening to the West in 1979. Portman Holdings, the development firm founded by Atlanta architect John Portman, is comfortable in Shanghai. As the city has become emblematic of China's rise, the company has designed many landmark buildings that lent credibility to its own ascent. Most are flashy high-rises anchored by swanky hotels or office spaces, but this one is markedly different - both for the Portman companies and for the city itself, Jones said. Portman Holdings is restoring one of the last remaining housing developments built in an architectural style known as shikumen, or "stone gate". A hybrid design of Chinese courtyard dwellings and British-style townhouses, the multi-level homes were introduced in the mid-1800s and reached their height of popularity in the early 20th century, when they housed the majority of Shanghai residents, from working class migrants to affluent families. No one paid them much attention until the 1980s, when they began disappearing to make way for taller apartment buildings and skyscrapers to accommodate the city's growing population and show off its newfound wealth. The Portman project, called Portman House - Jian Ye Li, is an experiment in historical preservation in a city that spends little time looking back. On one side of the grounds, the original brick structures have been restored and retrofitted to create 62 serviced apartments - almost like long-term luxury hotel rooms - geared toward expatriates on work assignments. The eastern side will incorporate 51 newly constructed luxury residences marketed to Shanghai's new rich. The development will also include shops and restaurants as well as underground parking facilities, a rarity in Shanghai. Portman's portfolio across China shows the range of opportunities available for foreign architects and developers in the fast-growing country. Although Portman was a pioneer in China, this trend isn't new. Most of the designs that transformed Shanghai were supplied by European, American and Japanese design firms, said Hanchao Lu, a modern Chinese history professor at the Georgia Institute of Technology who has studied how his native city has developed. He noted that China's unrelenting trend toward urbanization, called by some the largest migration to cities in world history, will open even more doors for foreign firms.

Mini moon cakes that only weigh 20 grams each are shown in Hangzhou, Zhejiang province on Aug 4, 2011. Various kinds of moon cakes have been already put on the market before the Mid-Autumn Festival, which is on Sept 12 this year. 

The alley leading to the Orchid’s entrance is like many bustling hutongs in Old Beijing: It has noise, restaurants with red lanterns, tables on the street, public toilets, a construction-supply store, and at night, people dressed in pajamas walking by. But tucked in a quiet spot a few steps away is a boutique hotel, where a run-down courtyard house has become a place aiming to offer visitors a blend of traditional and contemporary China. Wong Siu Ming, the Hong Kong-born architect based in Beijing who’s in charge of the renovation, says the design is like the concept of a village, where tradition and modern-day life intersect, and where people live in close quarters but have lives of their own at the same time. “I wanted to give people a story, a sequence of experiences,” says Mr. Wong, who for the past four years has been exclusively renovating small courtyard houses throughout China. He tells Scene Asia the elements he had in mind when building the Orchid, which opened in April. Old and new: In order to draw a clear distinction between the traditional and modern parts, the existing buildings kept the foundation and the wooden structure, and their ceilings were renovated using 300-year-old tiles from Chengde, in Hebei province. The new parts, however, used a concrete structure, flat ceilings and open-air terraces. “Simplicity was the key to create a flow to integrate traditional China with a modern one,” says Mr. Wong, who chose colors such as gray, brown and white based on Chinese architectural tradition. He selected cheap, readily available materials like brick, wood, concrete and stone for the construction project. In a further nod to modernity, the rooms, which start at 600 yuan (roughly $100) a night, include amenities such as free Wi-Fi, a media center, and in the higher-priced “Yin” and “Yang” suites, a local cellphone. In and out: In Beijing, traditional homes incorporate open spaces, so special care was given beyond the interior of the rooms, says Mr. Wong. The four “courtyard rooms” open up onto the main garden, the “three gardens” rooms have private outdoor space, “Yin” has a yard, and “Yan” has a roof terrace. “The Lookout,” located in the sunniest spot, has a view of the city’s Drum and Bell Towers. Up and down: The hotel’s terraces are positioned at different heights, creating discrete zones with a small space where people can see and be seen, Mr. Wong says. “You are connected with other people, but without your life being disrupted.” Exploration: “Sometimes visitors get lost in the labyrinths of corridors and stairs of this small place,” says Joel Shuchat, one of the Orchid’s founders. This place offers “glimpses that create questions,” Mr. Wong says, looking from the lobby to a moon gate in the main garden. “Here, you want to explore and learn more.”

Industrial and Commercial Bank of China Ltd. has established a beachhead in Argentina by buying 80% of Standard Bank's operations in the country, part of its effort to service Chinese clients as they expand globally. ICBC, the largest commercial bank in China, said in a statement it has agreed to buy an 80% stake in Standard Bank Argentina and in two other of the bank's Argentinean units for $600 million. The deal marks ICBC's second-biggest acquisition outside of Greater China following its purchase of a 20% stake in Johannesburg-based Standard Bank Group Ltd. for $5.5 billion in 2007. The deals have been designed to follow the bank's Chinese corporate clients as they look to secure natural resources to fuel the world's fastest growing economy. In Argentina, China's biggest offshore-oil producer, Cnooc Ltd., bought 50% of Bridas Corp. in 2010 for $3.1 billion and state-owned China Petrochemical Corp., or Sinopec, acquired $2.5 billion worth of oil and gas assets in 2010. ICBC Chairman Jiang Jianqing said in a statement the Argentina deal will "not only strengthen ICBC's branch and business network in Latin America…but also will better contribute to the fast-growing bilateral trade relations between China and Argentina." ICBC can use Standard Bank Argentina's platform to help Chinese companies expand in Argentina. The South American bank operated 101 branches that serve both retail and corporate customers and it is ranked No. 11 in the local banking system with 10.7 billion pesos ($2.58 billion) in deposits at the end of March, according to central bank data. Argentina is home to a large and thriving Chinese immigrant community, which accounts for a significant share of supermarket sales in the capital, Buenos Aires, and the surrounding urban area. But despite ICBC's size so far its foreign forays have been relatively small. ICBC's acquisitions have also been limited as capital requirements have risen and what is available has largely been invested in its domestic economy, which is growing at about 9% annually. ICBC's return on equity on its Chinese operations is higher than for its international operations, said analysts. ICBC's return on equity was about 22% as of May, but only about 14% for its overseas operations, according to an analyst at Barclays Capital. But small acquisitions around the world still make sense for ICBC as it seeks to diversify its footprint outside of China. The Chinese government intends to relax its control over interest rates at some point, in which case the Chinese banking market could become less profitable as competition heats up among banks to attract customers. "It is planting seeds around the world for when the domestic market becomes less profitable and more competitive," said a person close to the bank. "It wants to be one step ahead of its competition," he added. ICBC has been boosting its presence overseas. Early this year, it opened branches in Paris, Brussels, Amsterdam, Milan and Madrid. It also bought an 80% stake in the U.S. unit of Hong Kong's Bank of East Asia Ltd. in January. Standard Bank stands to reap a cash return of $380 million for the deal after buying a 75% stake in the bank in 2007 for $120 million. Myles Ruck, Standard Bank Argentina's current chairman, said that Standard Bank received about 10 unsolicited bids for its Argentina unit starting December. That group included HSBC Holdings PLC, Citigroup Inc. and Grupo Santander, said a person familiar with the matter. Spokespeople from the three banks declined to comment immediately. However, ICBC pulled ahead of the field given its four-year relationship with Standard Bank and a healthy premium. "Of all the indicative offers, ICBC's was the most attractive," Jacko Maree, Standard Bank Group chief executive. "We know ICBC well, work closely together and have developed a sound relationship with them." Standard Bank retains a 20% stake, in part to help maintain its presence in Argentina, but also to support ICBC. "ICBC are keen to partner with us in Argentina as they don't have any experience in the country," said Mr. Maree. As part of the deal to take control of Standard Bank Argentina SA, ICBC will also take an 80% stake each in a fund-management company and a commercial-services provider linked to the Argentine bank. Standard Bank will retain a 20% stake in Standard Investments S.A. Sociedad Gerente de Fondos Comunes de Inversion and Inversora Diagonal Sociedad Anonima. Credit Suisse advised ICBC on the deal. The Argentina transaction would see the country's Werthein and Sielecki families sell their 25% stake in the bank to ICBC, while South Africa-based Standard Bank would retain a 20% interest. Standard Bank said it expects the transaction to be completed in the first have of this year. The Chinese lender said completion of the acquisition is subject to regulatory approvals from domestic and foreign regulatory authorities.

Hong Kong*:  Aug 7 2011  Share

Hutchison Whampoa (SEHK: 0013), Hong Kong billionaire Li Ka-shing's flagship ports-to-telecommunications company, reported a more than sevenfold rise in first-half net profit, helped by a hefty one-off gain from the spin-off of its port assets. But the earnings lagged market forecast as analysts said Hutchison’s 3G business was not recovering as fast as expected. “It was a little disappointing. The market had been too optimistic about its earnings,” said Alex Wong, a director at Ample Finance Group. “It may be because of the 3G business, which the market had hoped would be a big help to its earnings.” Hutchison, whose businesses include telecommunications operator 3 Group and Watsons retail stores, reported net profit of HK$46.3 billion (US$5.95 billion), including a one-off gain of HK$44.3 billion for the first half. That compared with net profit of HK$6.32 billion for the first half of last year but lagged an average forecast of HK$51.2 billion from 10 analysts surveyed by Thomson Reuters. Hutchison said it booked an exceptional gain of HK$44.29 billion in the first half from the Singapore initial public offering of its southern China ports assets – Hutchison Port Holdings Trust. Its 3G arm posted an EBIT (earnings before interest and tax) of HK$767 million during the first half against an LBIT (loss before interest and tax) of HK$2 billion a year ago. Hutchison said its 3G customer base totals over 30.2 million worldwide, up only 3 per cent in the first half. Stronger performances of its energy, retail, property and infrastructure combined to increase its first half earnings, analysts said. “With core businesses performing well and generating cash, a stronger balance sheet and liquidity, the group is well positioned for continued growth and will continue to invest and expand its core businesses,” Chairman Li Ka-shing said. “The group’s diversified portfolio of businesses worldwide will continue to perform favourably. I remain confident in the group’s outlook and development in the second half of this year,” he said in a statement. Hutchison, an associate of Cheung Kong (Holdings) (SEHK: 0001), declared an interim dividend of HK$0.55 per share, up from an interim dividend of HK$0.51 per share that it has been distributing since 2000. Hutchison’s third-generation (3G) telecommunications business, which had been losing money over the past decade but broke even in the second half of last year, recovered further this year. Hutchison said it was expected to contribute to the conglomerate’s profits in the second half of this year. Hutchison’s telecoms business 3 Group includes 3G network operations in Britain, Italy and Australia, among other countries. It competes with Britain’s biggest mobile operator, Everything Everywhere – a joint venture of France Telecom’s Orange and Deutsche Telekom’s T-Mobile. It also competes with Telefonica’s O2 and Vodafone Group. Hutchison’s earnings were boosted by sharply higher contribution from its infrastructure investment arm Cheung Kong Infrastructure Holdings (SEHK: 1038) (CKI) and oil and gas unit Husky Energy. Husky last week reported a higher-than-expected second-quarter profit. It earned C$669 million (US$709.0 million) in the second quarter compared with C$179 million a year earlier. Last week, CKI posted a 96 per cent rise in its first half net profit, beating expectations, after stellar gains in its newly acquired UK operations. Hutchison’s retail, and property and hotels divisions each saw their EBIT grow 25 per cent year on year in the first half, while its ports division registered an expected 20 per cent drop in EBIT as a result of the spin-off of Hutchison Port Holdings. Hutchison shares ended 0.9 per cent lower on Thursday ahead of the results in a Hong Kong market down 0.5 per cent. Cheung Kong eased 0.08 per cent. Property developer Cheung Kong (Holdings), which holds a controlling stake in Hutchison, posted a 169 per cent rise in first-half profit to HK$33.26 billion, just beating an average forecast of HK$31.2 billion.

China giving HSBC Holdings Plc entry to its gold futures market, a first for a foreign bank, is likely a harbinger of a further opening to local and overseas institutions to trade the precious metal, Reuters reported Wednesday. For the Shanghai Futures Exchange, which has received tepid interest in its gold futures, having HSBC as a trading member is arguably one of the best endorsements to show that it will play a larger role in China's booming gold market. That process in turn will enhance the lagging role of futures in Shanghai's gold market -- an essential component to its hopes of becoming a major gold trading centre on a par with London and New York. But that opening up is likely to be confined to gold for now, analysts say, as China wants to keep a tight grip on the futures markets for other commodities from copper to soybeans. "It is a structural shift and has a deep symbolic importance," Chen Baizhu, a professor of finance at the USC Marshall School of Business, said of the HSBC move. "It sends the signal that Chinese regulators are ready to take the next step to develop its gold market and are ready to start linking up with international players." China's moves to free up its gold market will not only create more trading opportunities for foreign banks, but it will also allow them to tap growing local demand for gold investment products. In the longer term, being a major gold trading centre would boost the country's clout in setting global prices.

Hong Kong developers are poised to snap up land on the Chinese mainland at a time when the fiances of their mainland rivals are being sapped by government property curbs. Builders including Sun Hung Kai Properties Ltd and Cheung Kong (Holdings) Ltd took in HK$66 billion ($8.47 billion) from new-apartment sales in the six months ended June, a first-half record, according to Centaline Property Agency Ltd. Chinese developers face a shortage of credit and higher interest rates, prompting Standard & Poor's to cut its outlook on the sector. "Hong Kong developers should have an advantage in acquiring land while their Chinese counterparts are less aggressive," said Jack Ye, a Shanghai-based director of investment at property broker Cushman & Wakefield Inc. "Chinese developers have turned cautious on land purchases as the government measures tightened their liquidity." On July 29, Swire Pacific Ltd sold a mall in Hong Kong for $2.4 billion, yielding funds that Core-Pacific Yamaichi International Ltd analysts said will be deployed on the Chinese mainland. Hang Lung Properties Ltd said on the same day it has built up Chinese currency holdings of 20 billion yuan ($3.1 billion) for its projects in the country. Cheung Kong, controlled by Hong Kong's richest man Li Ka-shing, is scheduled to report interim earnings on Thursday, with analysts expecting a nearly threefold increase in net profit, helped by increased sales in Hong Kong. Hong Kong's developers are betting there's more upside in other Chinese cities as curbs at home stem a 70 percent surge in housing prices since the start of 2009. Average home prices rose 0.2 percent on the Chinese mainland in July from the previous month, with prices increasing in 66 out of the 100 cities surveyed by SouFun Holding Ltd. Builders in Hong Kong are among the world's most cash-rich after a two-and-a-half-year property boom in the city of 7.1 million people. The top 51 developers in the city have an average debt-to-common-equity ratio of 47 percent, compared with the average 126 percent of their counterparts on the mainland, according to data compiled by Bloomberg. Even the most indebted Hong Kong developer in the Hang Seng Property Index, Henderson Land Development Co, is better off than the least indebted among the mainland's 10 biggest developers, Soho China Ltd. Henderson Land's ratio at the end of 2010 was 34 percent, while Soho's was 55 percent, Bloomberg data shows. "Hong Kong developers have enough cash for countercyclical investments in other Chinese cities," said Dundas Deng, a Hong Kong-based analyst at Guotai Junan Ltd. "Hong Kong is facing a serious property bubble caused by its historically low interest rates. Hong Kong developers will need the mainland market to boost earnings, especially when interest rates rise at home." Home prices in Hong Kong may drop 30 percent by 2013, Barclays Capital said in an April 4 report, as borrowing costs rise. Concern that the Chinese economy may be overheating led the People's Bank of China to raise interest rates five times and the reserve-requirement ratio 12 times since the start of 2010 to tame inflation. Some cities have imposed property taxes, downpayments have been increased, and more second- and third-tier cities have announced measures to dampen housing prices. The Chinese mainland was unable to sell 353 parcels of land, including 163 pieces for residential development, at auction in the first seven months of this year, 242 percent more than the same period a year ago, the Beijing Times reported on Wednesday, citing Beijing Homelink Real Estate Co. The outlook for mainland developers was cut to "negative" from "stable" by Standard & Poor's on June 15. The ratings company said tighter credit and further government curbs may lead to rating downgrades in the next year.

China's Ministry of Finance unveiled plans to raise 20 billion yuan ($3.10 billion) in a sale of "dim sum" bonds this month, more than double the size of its previous offering and the biggest yet in the nascent offshore yuan bond market in Hong Kong. The move highlights Beijing's efforts spur the dim sum market, which has grown rapidly over the past two years from next to nothing, and promote the use of the yuan internationally. Dariusz Kowalczyk, senior strategist at Credit Agricole, said he was surprised at the large size of the proposed sovereign bond issue, but he noted it comes at a good time as dim sum bond issuance has declined in recent months after booming earlier this year. "This round of sovereign bond issue will significantly increase the supply of yuan-denominated bonds and will likely attract more demand," he said. The finance ministry said it will sell 15 billion yuan worth of bonds to institutional investors with maturities of three, five, seven and ten years. It will also offer 5 billion yuan of two-year bonds to retail investors. This will mark its third sale of dim sum bonds. In its last Hong Kong bond issue in November, the ministry allocated 5 billion yuan with maturities of three, five, and 10 years to institutional investors and 3 billion yuan of two year-bonds to retail investors. The ministry sold its first sovereign bond in Hong Kong in September 2009, raising 6 billion yuan. Analysts say the series of sovereign bond issues in Hong Kong reflects the finance ministry's plans to establish a benchmark yield curve for the offshore yuan market. A sovereign benchmark would make it easier for companies to price bonds. The ministry's latest offering comes amid calls from market participants to diversify investment options for assets denominated in the offshore yuan as local deposits in the currency have soared due to expectations of further appreciation. Yuan deposits in Hong Kong recorded a fivefold surge in July to 553.6 billion yuan from a year earlier, according to Hong Kong Monetary Authority data. China has allowed certain mainland financial institutions to sell yuan bonds in Hong Kong for several years, but the market for yuan-denominated debt outside the mainland only began to take off in the second half of 2010 after the government relaxed rules to allow foreign firms to issue yuan bonds in the city.

Lehman Brothers Holdings Inc. has struck a deal with liquidators of its Hong Kong affiliate to settle US$20 billion worth of intercompany claims, marking a key step forward in the failed investment bank's liquidation process. With the latest agreement, which is subject to approval from U.S. and Hong Kong courts, Lehman Brothers said it secured support from Lehman Hong Kong on the bank's liquidation plan, joining other creditor groups representing over US$100 billion in claims to support the proposal. Lehman and its creditors have been working towards gaining approval for a liquidation plan later this year. Lehman Chief Executive Bryan Marsal said in May that creditors of the bankruptcy estate can expect to recover US$65 billion, up $5 billion from an estimate earlier in the year. The Lehman bankruptcy is one of history's biggest and most complex. Before its collapse in Sept. 2008, Lehman Brothers had over US$630 billion of assets on its balance sheet. Its insolvency resulted in over 75 separate bankruptcy proceedings. Major Lehman creditors, including Goldman Sachs Group Inc. and hedge fund Paulson & Co., have proposed different liquidation plans in a bid to boost how much they will recover in the bankruptcy estate. Lehman said Wednesday the deal with liquidators of the Hong Kong affiliate is significant because Lehman Hong Kong represents one of the biggest groups of the bank's international affiliates. "This agreement is another milestone in the case," said Daniel Ehrmann, Lehman's head of international operations and a managing director at restructuring and professional services firm Alvarez & Marsal, restructuring advisers to the former Wall Street powerhouse. "As we have consistently stated, we remain focused on negotiating settlements with our international affiliates and to bringing the estate's plan to a vote and confirmation by year end," Mr. Ehrmann said in a statement. KPMG China, one of the liquidators for Lehman Hong Kong, said the deal marks a "quantum leap in the progress" of the Hong Kong liquidations. "The settlement, achieved without litigation, provides mechanics that will cut through many of the complexities of our multi-layered relationships, and will thereby materially speed up the liquidations, which can only be of benefit to our creditors," said Edward Middleton, a partner KPMG China.

Police have arrested over 1,000 people and seized dangerous drugs and illegal goods worth about HK$1.1 million in a cross-border operation, Organised Crime and Triad Bureau acting-superintendent Ng Wai-hon said on Thursday. Ng told a press conference the operation was carried out jointly by Hong Kong, Guangdong and Macau officers between July 1 and July 31. Codenamed “Thunderbolt 11”, the joint action targeted illegal cross-border activities by triads. Ng said during the operation officers searched nearly 2,500 locations, which included discos, amusement game centres, massage establishments, night clubs and residential units. “A total of 1,081 people were arrested for various offences, including triad-related offences, drug offences, managing vice establishments, breach of conditions of stay, illegal gambling, bookmaking, criminal damage, wounding and the possession and publishing of pornography,” he said. Those arrested included 567 men and 514 women. Of these, 347 were mainlanders. Police seized about 19.5kgs of ketamine, about 234 grams of cocaine, 227 grams of heroin, 156 grams of “ice” and quantities of other drugs, with a total value of about HK$3.54 million. About 190,000 pornographic and pirated compact discs worth about HK$5.8 million were also seized. The seizures also included HK$119 million worth of soccer and horseracing betting records, 100,000 contraband cigarettes and 12,000 litres of illegal fuel oils. “We will continue maintaining close co-operation with the mainland and Macau police and adopt an intelligence-led approach to combat organised crime and triad activities,” he added.

Chief Executive Donald Tsang Yam-kuen has pledged not to shy away from introducing long-term policies during his final year in office. Speaking after spending the past three days listening to the views of various groups, including the Democratic Alliance for the Betterment and Progress of Hong Kong, and the Hong Kong Federation of Trade Unions, Tsang said housing, an aging society and the wealth gap are main issues that have been clearly identified by the people. A common thread in the talks was for the administration to make sure that plans rolled out in October's policy address will not be "a stop gap," he said. Tsang, who hands over the reins to the next chief executive in July, is confident he can lay a good foundation for the next administration with precise long-term policies to tackle various social issues. "I will make sure that although it's my last policy address, I will do whatever I can to deal with any residual matters that members of the public and various organizations and political bodies believe that I should try my very best to resolve before I leave," he said. "As long as the policies are precise and can respond to the needs of the public, I do not worry that my successor will not continue with the measures." Tsang added that he was reminded the global economic situation is unstable and government policies must ensure employment and a stable economic performance in Hong Kong. Further discussions with other parties and civil groups will be held over the next two months. Tsang would not comment on the finger-pointing sparked by Hong Kong and Macao Affairs Office director Wang Guangya, who earlier said the former British colonial rulers had trained civil servants on how to serve, and so they "don't know how to be a boss" after the 1997 handover. The pro-establishment DAB yesterday presented a list of 105 proposals on the three areas that Tsang had mentioned. Party vice chairwoman and legislator Starry Lee Wai-king said high on the list is the resumption of 5,000 flats of the Home Ownership Scheme a year to address the housing needs of the sandwich class. Other suggestions include annual relief on rates of HK$8,000 per household, and an MTR transport subsidy for the elderly.

 China*:  Aug 7 2011  Share

With microblogs, particularly Sina’s Weibo.com, playing an increasingly central role in public debate on China’s censored Internet, many have feared Beijing might move to shut them down. Instead, it appears the authorities may continue to cautiously embrace them. In an article posted to its English language website on Thursday, China’s state-run Xinhua news agency sang the praises of microblogs, saying that China’s some 195 million microbloggers have “become strong force to help those in need.” The article cited the story of how microblog users helped raise 600,000 yuan, or about $91,000, for a boy who needed skin grafts for severe burns on his head from an accident by circulating photos of the boy playing with his puppy while wearing his surgical mask. The Xinhua article follows a commentary appearing earlier in the week in the Communist Party’s flagship People’s Daily newspaper that also acknowledged the new role of microblogs in public discourse and encouraged officials to get better at using them. “In sudden-breaking events, the information tends to come from microblogs, and most of the public commentary arises from microblogs,” the commentary said, according to a translation by China Media Project. “More and more people are no longer looking on but are deciding to participate…This does not exclude government offices and leaders from various levels.” Neither piece made specific mention of last month’s deadly high-speed rail collision, described by some analysts as a watershed moment for Weibo after Chinese Internet users flooded the service to exchange information and lambast the government for its opaque handling of the accident. The People’s Daily commentary nevertheless appeared to take a lesson from that episode, arguing that the key to successful government microblogging is the release of “timely and accurate” information. Also key, it said, was the ditching of officialese in favor of plain language: “The 140-character limit means that you must speak concisely; only by spurning official-speak and pre-packaged formulas can you explain the facts and speak with meaning.” When communicating directly with the public, the People’s Daily added, “the consequences of speaking falsehoods and saying the wrong thing are ‘very serious.’” While the newspaper didn’t elaborate on what it meant by “very serious” consequences, it might have had in mind Ministry of Railways spokesman Wang Yongping, whose various gaffes in the aftermath of the rail accident have made him into a poster boy for government obfuscation among Chinese Internet users. Weibo and its ilk may not be out of the woods yet, however. Noting that the sector was “still in its infancy,” the Xinhua article warned further regulation of microblogs may yet be on the horizon. “There are no laws or regulations concerning how they are used, and the authenticity of information posted on microblogs can be hard for most users to verify,” the article said. In fact, China’s microblogs are already regulated. Like Chinese search engines and online video sites, microblogging services need licenses to operate and are subject to censorship. Politically sensitive posts are often removed while searches involving sensitive keywords sometimes come up empty. Interestingly, Weibo’s censors have displayed a relatively light touch when it comes to the train collision, deleting some of the more inflammatory posts but allowing the majority to stay on the site. Whether authorities have truly begun to rethink their approach to the Internet or are just paying lip-service public opinion in the wake of a tragic accident remains to be seen.

The Chinese central government has approved of a plan to upgrade the status of Hengqin Island in Zhuhai, Guangdong province, from “Special Economic Zone” to a “Free Trade Zone” similar to Hong Kong, the Shanghai Securities News reported on Thursday, citing sources. Hengqin’s new status could draw some business away from Hong Kong, and it would also likely draw new investments from abroad, analysts told the paper. Authorities plan to implement a “two-line customs management system” for goods entering the zone. “Line one” mode of customs clearance will apply to goods entering the zone from Macau, while “line two” will apply to goods entering from the mainland. No duty will be applied to foreign imports related to production, unless they are already on the list of non-eligible products for duty-free. Some enterprises operating out of the zone may also be eligible for a discounted corporate tax rate of 15 per cent. But those that wish to export goods out of the zone to the rest of mainland China will be subjected to normal customs clearance processes. Hengqin has also won approval to develop various industries to support the initiative, including retail, tourism, finance, healthcare and research and development.

US-based ice cream chain Dairy Queen (DQ) admitted the raw mix they use to make ice cream is produced and provided by Beijing-based Baxi, a Chinese company established in 1994. The company specializes in making milk products, Shanghai Evening Post reported. Reporters also discovered the so-called fresh jam and imported jam the ice cream maker uses may also come from a domestic provider in Tianjin. An anonymous person with the marketing department of DQ China confirmed Baxi was their supplier, but declined to admit they claimed all materials are imported, the report said.

Chinese officials and economists expressed concern about further uncertainty in the US economy despite the debt ceiling being lifted. A bipartisan bill to raise the debt ceiling by $2.4 trillion to $16.7 trillion and cut the deficit by $2.1 trillion over a decade was signed by US President Barack Obama at the White House on Tuesday just hours before the deadline. However, Chinese rating agency Dagong Global Credit Rating Co responded with a rating downgrade of US sovereign credit from A+ to A. The raising of the ceiling does not reverse the trend of debt growing faster than the US economy and actually marks a decline in the ability of Washington to pay its debts, Beijing-based Dagong said in a report. Zhou Xiaochuan, governor of the People's Bank of China, the central bank, said on Wednesday in a statement on the bank's website that the progress made in raising the debt ceiling and cutting the deficit was "welcome", but also urged the US to handle its debts responsibly. He added that any uncertainty or fluctuation in the securities market would undermine financial stability and hinder global economic recovery. "Meanwhile, we will continue diversifying our foreign reserve management and intensify risk control, so as to minimize the impact of fluctuation in global financial markets," Zhou said. China is by far the largest foreign holder of US debt, with holdings of $1.16 trillion in May, US Treasury Department data showed. It is estimated that 70 percent of China's $3.2 trillion foreign reserves are dollar assets. Ma Jun, chief economist for greater China with Deutsche Bank, said that a lower US rating will affect China mainly through trade, because if GDP in the US goes down by 1 percent, China's exports fall by 7 percent. Capital markets will also be affected as a downgrade will damage investor confidence in Hong Kong and A share markets on the mainland, Ma said. Regardless of whether the US is rated AAA or not, US Treasury securities are still a very secure asset, said Andrew Pease, chief investment strategist with Russell Investment Company, Asia Pacific. He insisted that the scale and depth of the US Treasury market is irreplaceable and even a downgrade would not result in a massive undersell. "But downgrading US credit would still put China in a difficult position," Pease said. "China would be unable to reduce its exposure quickly, so it faces bigger risks from capital losses both in terms of yields and a depreciation of the dollar against the yuan." Two out of three major global rating agencies, Moody's and Fitch, reacted to the debt ceiling being raised by maintaining the triple A rating for the US. The focus is now on Standard & Poor's, which has not yet made its decision public. S&P said earlier that a downgrade would be likely if there was no plan to stabilize debt as a percentage of GDP. The agency expected a $4 trillion deficit cut as a "good down payment" toward stabilizing US finances. Li Daokui, a member of the monetary policy committee of the central bank, said on his micro blog that the US rating would probably be downgraded in the next two months. "The deficit cut over the next 10 years is just a 'rainbow', as it could be altered or even overthrown at any time by the next Congress," Li added. Frank Lavin, former US ambassador to Singapore, said at a conference call organized by the US embassy in Beijing that even raising the downgrade question sends a signal to Washington to reconsider its fiscal policy. Dagong predicted that the US has to cut $4 trillion from its deficit in the next five years to sustain its current debt scale, and the debt will exceed GDP by the end of 2012. "A third round of quantitative easing (QE3) will drag the world into crisis and shake the very foundation of the dollar's status," the report said. Dagong downgraded the rating for the US from AA to A+ following QE2 in November. Dong Xian'an, chief economist with Peking First Advisory, also believes that the plan to cut the US deficit increases the possibility of a QE3. Zhuang Jian, senior economist with the Asian Development Bank, said that the US government has a number of choices to tackle the crisis, such as tax increases or QE3 as the last option.

The number of mainland travelers to visit Taiwan island this year is expected to reach 1.6 million, a remarkable rise over 2010, according to a Taiwan official in Anhui province. David W. J. Hsieh, the vice-chairman of the Taiwan Strait Tourism Association said during the Taiwan Tourism Briefings on the Mainland in the provincial capital of Anhui on August 3 he anticipated a bright future for cross-Straits tourism in years to come. During the first half year of this year, the number of mainland visitors to Taiwan had hit 600,000 trips after both sides allowed cross-Straits travel three years ago, he said. Ming-Ching Chiang, the deputy executive secretary of the Taiwan Strait Tourism Association, said he was sure that the promotion of Taiwan trips among mainland visitors would be a great stimulus to those intending to travel to Taiwan, which is branded as "the Heart of Asia", in the future. Zhang Xueping, the vice-president of the Anhui Tourism Association, said during the event's opening ceremony that she recalled Anhui Vice-Governor Hua Jianhui saying on August 2 while meeting visitors from Taiwan that she expected the number of visitors to Taiwan from Anhui province alone to climb to 100,000, five-and-a-half times more than the figure in 2010. The choice by the Taiwan Strait Tourism Association to put the first station in Hefei for their briefings on the mainland trips showed their best wish and sincerity in luring more visitors from Anhui, Zhang said. She said she was confident that Anhui will strive to increase the number of visitors from the province to Taiwan above the 100,000 mark. Dr. Yang Ruizong, the director of the Taiwan Strait Tourism Association Beijing Office, said that he anticipated mainland tourists to Taiwan would visit with different themes and would have a better look instead of a quick glimpse. Xu Daofu, the general manager of the Taiwan Entry Department of fly168.com, said all the people cross-Straits shared the same bond and mainland travelers would be treated to the full while touring Taiwan.

Hong Kong*:  Aug 6 2011  Share

Coach on track for Hong Kong listing - New York-based maker of luxury goods hopes to complete its 'listing by introduction' in the autumn, despite 'complex' discussions with the exchange - Coach, a maker of luxury leather goods and accessories, intends to list in Hong Kong this autumn and forecasts that its sales on the mainland will grow as much as 62 per cent in its current fiscal year. The New York-based company, which yesterday reported more than US$4 billion in global sales in its fiscal year ended June, believes it would be the first United States stock issuer to do a secondary listing in the city. In the company's proposed listing, technically known as "a listing by introduction", Coach will neither offer additional shares for sale nor raise capital. It would appear more like a marketing initiative that could help it in raising funds in future. In a conference call with analysts, chairman and chief executive Lew Frankfort said Coach "will accelerate new store openings with about 30 locations planned for the mainland", which he described as the company's "single largest geographic growth opportunity". "We're now projecting sales [on the mainland] of between US$280 million and US$300 million for fiscal year 2012, up from our previous guidance of US$250 million," he said. Frankfort estimated sales on the mainland reached US$185 million in the fiscal year ended June, up from US$108 million the previous fiscal year, on the back of new store openings and a double-digit increase in so-called same-store sales - a retail industry statistic that compares sales of stores that have been open for a year or more. Of the 30 new stores that Coach is slated to open in 12 months to June next year, "the vast majority will be dual-gender stores, given the size of the men's opportunity in China", Frankfort said. Coach added 25 new stores on the mainland in its last fiscal year to June to raise the total number of its retail shops in the country to 53, about 23 of which are "dual-gender stores," which also sell men's merchandise. The US firm's operations on the mainland, Japan and Singapore currently make up its directly owned international businesses. Frankfort said more than 85 per cent of Coach's merchandise this current fiscal year will be sourced from the mainland. "In fiscal year 2012, we will make significant investments towards increasing awareness in China, as we leverage our 70th anniversary campaign to build on our positioning as a New York fashion brand grounded in heritage and history," he said. "This integrated campaign will have several key elements, including an international brand ambassador, Gwyneth Paltrow, who has proven relevancy in China and other international markets." The profile of Coach is expected to rise further with the proposed dual listing of its shares on the Hong Kong stock exchange through the issuance of Hong Kong Depository Receipts. "I think we're looking probably for a listing sometime in the early fall," chief financial officer Michael Devine said. The company's Hong Kong listing, which it first announced in May this year, was "proving to be complex". "We're currently going back and forth with the [Hong Kong stock] exchange answering some questions based on the documents we've submitted," he said. Independent consultant Philippe Espinasse said a listing by introduction usually creates "orphan stocks" - shares with no liquidity and no local research following. Frankfort had earlier said that the listing, "if approved, will raise awareness of the Coach brand among investors and consumers in the China market as well as throughout Asia".

Civil servants to move desks to Kai Tak site - Government departments to move from Wan Chai as part of plans that may also see a watersports centre - Work has started at the former Kai Tak airport. Kai Tak will become a government office cluster, with a site reserved for relocating staff working in Wan Chai. The former airport site in Kowloon City may also see the development of a watersports centre at the runway, as harbour advisers supported a proposal from rowing and canoeing groups yesterday. The office cluster is among a series of land use changes made by the Planning Department in the zoning plan, which was tabled for the Town Planning Board to discuss tomorrow. A 0.88-hectare commercial site facing Prince Edward Road East is proposed for rezoning so that it will be one of the sites for relocation of some of the 27 government departments in Wan Chai. Other staff will be moved to Tseung Kwan O. The move is expected to speed up office development in Kai Tak. The gross floor area for office, retail and hotel uses has been increased by 5 per cent to 1.9 million square metres in the latest zoning plan. Residential space has also been increased to allow an extra 1,200 flats, bringing the total to 33,200 for a population of 89,800. To preserve the 280-metre remnants of the Lun Tsun stone bridge, built in the 1870s to welcome Qing dynasty officials and which was unearthed a few years ago, a 30-metre-wide corridor has been designated. Members of the Harbourfront Commission yesterday welcomed a joint proposal by the China Hong Kong Rowing Association, the Canoe Union and the Dragon Boat Association to set up a watersports centre on the Kai Tak runway. It is zoned for recreation, flats, a helipad and a cruise terminal, now being built. The groups suggested using the typhoon shelter as a sailing centre and the 2,000-metre channel next to the runway for rowing, canoeing, and dragon boat training and races. The planned park would be suitable for spectators, they said. Vincent Ng Wing-shun, architect and chairman of the watchdog's task force on Kai Tak, said most members agreed the government should explore possibilities with the sports groups. "It is good to see the community becoming aware of the potential recreational opportunities the harbourside can provide. The thing to do now is improve the water quality of the harbour so that it will not be an obstacle to sports," Ng said. Another suggestion at the meeting, from Designing Hong Kong, was to set up a marina. But some members were worried that giving space to yachts would amount to privatising the place. Task force members urged the government to review the design of a helipad for cross-border services, which will be built at the tip of the runway. "We felt that the tip, with the most beautiful views, should not be occupied by the helipad," Ng said. "We hope officials will work towards putting the helipad on top of something so that the ground space is open to the public."

A day like today has been one of elation and disappointment for generations of secondary school graduates. But the release today of results for the last batch of candidates who took the Hong Kong Certificate of Education Examination marks the end of an era in the city's education history. The public exam is being replaced by the Hong Kong Diploma of Secondary Education, under a 3+3+4 education system starting next year which cuts a year from secondary school and adds one to university education. "The HKCEE has finished a historic role," said Examinations and Assessment Authority secretary general Tong Chong-sze. "It is a collective memory." Four million pupils had taken the exam, Tong said, making it part of the social fabric of the city and a rite of passage for youngsters. The youngest candidates this year were two 13-year-olds while the eldest was 65. Some 26,573 pupils were involved with 22 subjects on offer - much fewer than the more than 100,000 in an average year as most were private candidates having another stab for a better grade. The best performer was a woman who got 4 As and 3 Bs, followed by two candidates who obtained 3 As. In all there were 490 As scored this year. A decades-old annual test each spring, the HKCEE became a symbol of the city's exam-focused education system. Since 1978, when the authority took over the exam from the government, more than a million personnel, as well as thousands of schools, had taken part in facilitating the exam, Tong said. He said some candidates had repeatedly taken the exam to challenge themselves. "There are people who see it as an intellectual challenge." More than 30 candidates who took part in this year's exam also took part in the first 1978 exam. Started by the colonial government in the 1930s, the exam was an important tool for the government to select the elite for higher education and the civil service. For many, a full cert (five passes including Chinese and English) usually led to a more comfortable white-collar career. Most companies in Hong Kong require their office staff to obtain five passes. This year, 536 pupils obtained passes in five subjects.

Accountants' lawmaker puts his money on Leung - Exco convenor has the right qualities for facing up to Beijing, says functional constituency's Paul Chan - Exco convenor Leung Chun-ying, one of three possible candidates for the city's next chief executive. Unlike his rivals Leung has wisdom, according to his backers. Another public figure has joined chief executive candidate Leung Chun-ying's support team - legislator Paul Chan Mo-po, who said the Executive Council convenor should run even without Beijing's endorsement. Chan, the non-affiliated lawmaker who represents the accountancy sector in Legco, said yesterday Leung would be a "good choice" for the top job. His praise came after Urban Renewal Authority chairman Barry Cheung Chun-yuen and Hang Lung Properties (SEHK: 0101) chairman Ronnie Chan Chichung had both expressed support for Leung - with the developer also indirectly pouring scorn on Leung's two likely rivals. Describing Leung "as a man of courage and stamina with the ability to bring change to Hong Kong", Paul Chan said: "The public is hoping for a change ... and Leung is appropriate." He cited an Executive Council with politically mixed membership as an example. "I agree the next Exco should absorb more diverse voices by including pan-democratic politicians," Chan said. "Leung has the courage to submit such a mixed Exco list to Beijing for endorsement." Backing Leung as a candidate even without Beijing's blessing, the lawmaker said it would be "good for Hongkongers" to have two choices for chief executive. "Although allowing a single candidate can ensure high votes in the election next March, it would not be respected if it was a result of compromise," Chan said. Backing the Exco chief on Monday, Ronnie Chan disparaged likely rivals Henry Tang Ying-yen and Rita Fan Hsu Lai-tai, without naming them: "I have never heard one sentence from two of the three likely candidates which make me feel they have wisdom," the tycoon said. Cheung had earlier called Leung "a very suitable candidate". None of the likely candidates has yet declared they will run. In the pan-democratic camp, Association for Democracy and People's Livelihood lawmaker Frederick Fung Kin-kee has expressed interest in running in the camp's primary election for the top job. "A primary election can help build a healthy political culture in Hong Kong - although the pan-democrats can never win in 2012," said Fung, referring to the pre-election idea conceived by the Democratic Party. In a related development, Chief Executive Donald Tsang Yam-kuen has vowed his last policy address, to be delivered in October, will not be a "stop-gap, short-term" one, despite his term ending in less than a year. After meeting pro-establishment groups in the last three days, Tsang said the opinions he heard so far indicated the public wanted him to map out long-term solutions to the city's problems in housing, the wealth gap and with the ageing population. Tsang also met legislators from the Democratic Alliance for the Betterment of Hong Kong, local deputies of the National People's Congress and delegates to Chinese People's Consultative Conference. "I'm sure all I am doing is to provide continuing improvement of the standard of living in Hong Kong," Tsang said.

 China*:  Aug 6 2011  Share

China's central bank governor yesterday urged Washington to act responsibly to deal with its debt issues, saying uncertainty in the US Treasuries market could hamper global growth. The remarks by Zhou Xiaochuan, head of the People's Bank of China, were China's first official response to the passage of a US deficit-cutting deal after weeks of bitter wrangling that alarmed financial markets and brought the country to the brink of a debt default. As the largest creditor to the United States, China is particularly vulnerable to its debt strains. Beijing's dollar investments are estimated to account for about two-thirds of its US$3.2 trillion in foreign exchange reserves. Zhou welcomed US progress in dealing with its debt problems but urged "concrete and responsible" measures to bolster confidence in US Treasuries. In a statement, he said: "Big fluctuations and uncertainty in the US Treasury market will influence the stability of international monetary and financial systems, thus hurting global economic recovery." US government bond yields are often the benchmark for the pricing of other financial assets around the world. A sharp spike in US yields may therefore roil markets and raise borrowing costs, imperilling global economic activity. Zhou made the remarks after US President Barack Obama on Tuesday signed into law a measure to cut spending and raise the US debt ceiling. Markets are now waiting to see whether credit rating agency Standard & Poor's cuts Washington's prized AAA rating. The debt plan calls for savings of US$2.1 trillion over 10 years, nearly half the amount S&P has said would be enough to justify the current rating. Moody's and Fitch have already confirmed their AAA ratings. Zhou's comments came as a Chinese ratings agency cut its credit rating for the US to A from A-plus, saying the debt deal does not improve the nation's debt-paying ability in the long run. China has said it intends to diversify away from US Treasuries. Meanwhile, some Chinese economists warned that US spending reductions might mean a slower recovery that could drag on China's own economic growth. "US consumption will be definitely hurt a lot by the austerity deal and we can no longer count on the once-biggest foreign market in the future," said Ding Yifan, a researcher at the Development Research Centre under the State Council.

Air China (SEHK: 0753) is heading for new heights after buying into Tibet Airlines - which has its headquarters at one of China's highest airports. Gonggar Airport in Lhasa, home to Tibet Airlines, is one of only a few landing strips in the world located at an elevation higher than 3,000 metres above sea level. The extreme altitude means low air density, which in turns demands greater thrust from aircraft engines. Only a few mainland aircraft are allowed to fly to into Lhasa, making the air tickets on the leg the most sought-after, especially during the summer season. After acquiring a 31 per cent stake in the airline from the Tibet Autonomous Region Investment Company for 86.8 million yuan, Air China became the second-largest shareholder in Tibet Airlines. The airline operates one Airbus A319 on routes from Lhasa to Ali, Chengdu, and Chongqing. A second and third aircraft will be delivered in the next two months and it plans to increase its fleet to 20 aircraft in the next five years. The co-operation between Air China and Tibet Airlines has expanded to the operational and marketing fields with an announcement yesterday that the two airlines have formed a joint frequent-flyer program. The arrangement allows Air China frequent travellers to earn mileage on all scheduled flights operated by Tibet Airlines and redeem tickets on all scheduled flights operated by Tibet Airlines from November 1. It came after a code-share arrangement between the two airlines which allows them to operate the same flight together. It is not the first time that Air China has bought into provincial airlines originally held by city governments or local investors. In March last year it doubled its stake in Shenzhen Airlines to 51 per cent and two years ago acquired the assets and staff of bankrupt East Star Airlines for a foothold in Wuhan. Latest industry news, meanwhile, is that two joint venture airlines are in the pipeline. Beijing Airlines, a corporate jet operator formed between Air China and the investment arm of the Beijing government, was granted permission by the Civil Aviation Administration to set up earlier this year, and Dalian Airlines, which will be owned 80 per cent by Air China, secured approval from the regulator last month.

China has become one of the first countries to win rights to explore the seabed for mineral deposits, as Beijing pushes ahead with a global search for resources to feed its fast-growing economy. The International Seabed Authority (ISA), an organisation under the United Nations, has approved China's plan to look for polymetallic sulphide deposits in a 10,000 square kilometre area of seabed in the Indian Ocean. A licence has been granted for 15 years, a spokesman for the Foreign Ministry said yesterday. China needs to map the seabed and identify suitable mining spots. In exchange, it will be given priority rights to mine these deposits. A contract is expected to be signed in November. The deal makes China one of the first countries authorised under the UN Convention on the Law of the Sea (Unclos) to explore for polymetallic sulphides - one of the most valuable metallic mineral sources, found around volcanic springs on the ocean floor. Deposits are believed to contain large quantities of metals such as gold, silver, lead, zinc and copper. According to a press release on the ISA's website similar rights were also awarded last month to two companies in Tonga and Nauru for the Pacific and to the Russian government for the mid-Atlantic ridge. "The refined metals from these deposits will help China meet our increasing demand for resources," Jin Jiancai, secretary general of China Ocean Mineral Resources Research and Development Associated, was quoted by state media as saying. Mainland marine experts said the deal marked Beijing's entry to an elite global club capable of tapping the rich resources in the deep sea. "It is a cake too big for any country to claim a monopoly on but only a few countries are capable of having a slice," said Professor Wang Xiutian , marine geophysicist with the Ocean University of China. Wang said China had taken great strides in deep-sea exploration and in some areas was ahead of Western countries. Last week it sent its first manned deep-sea submarine, Jiaolong, to a depth of 5,057 metres and it will test 7,000 metres next year. China still faces many challenges in mining the Indian Ocean deposits because of its distance from the country and because some of the ocean floor is 3,000 metres deep. There are also many environmental risks, experts said. They believed it would take years for any meaningful drilling to take place. "We should not start mining activities until we have solved the environmental issues. We may need to wait for years, if not decades, to see the first ship of ore arriving at a Chinese port," said Han Xiqiu , a researcher with the State Oceanic Administration's Second Institute of Oceanography based in Hangzhou, Zhejiang. To meet the surging demand for energy and resources, China has been investing heavily in deep-sea prospecting. In 2005, a government-sponsored expedition team found clues which led to the discovery of an enormous belt of polymetallic sulphides in a deep-sea rift south of Madagascar. Chinese scientists were thrilled as no other countries before had found anything in the region, Han said. China sent advanced equipment and researchers to collect and analyse data. Their hard work finally paid off in persuading the ISA to grant Beijing the deal, she said. The ISA, established under the authority of Unclos, has 162 member countries. Its mission is to co-ordinate activities on the seabed, ocean floor and subsoil beyond the limits of national jurisdictions. Han said that China started "decades behind developed countries" in deep-sea prospecting. It knew very little about polymetallic sulphides until recent years, while the US has been doing research on it for years. China must give up its claim on 75 per cent of the region by 2026. It is also under the obligation to launch scientific and environmental research to further understanding and protection of the region.

Hong Kong*:  Aug 5 2011  Share

The auction of a luxury residential site in Sha Tin next week is expected to attract keen interest from developers, despite a requirement that the winning bidder must build at least 970 flats on the site. Surveyors predicted that the site, near Lai Ping Road in the luxury district of Kau To, could fetch between HK$7.24 billion and HK$9.27 billion, or HK$7,019 to HK$8,987 per buildable square foot, when it is auctioned on Tuesday. "This site is in a luxury location and it has been a long time since there were sales of land parcels in that area," said Midland Surveyors director Alvin Lam Tsz-pun. "Although the government requires the successful bidder to build at least 970 units, the site is rare and sizeable. We believe it will attract large developers or consortiums because the investment amount involved is huge," he said. At 248,180 sq ft and with a plot ratio of 4.156, the site would support a maximum gross floor area of slightly over 1.03 million sq ft. Midland Surveyors said it was likely to fetch a winning bid of HK$9.1 billion or HK$8,822 per sq ft. Lam said the winning developer may provide mainly apartments and a small number of houses. Vincent Cheung Kiu-cho, a director of valuation advisory services at property consultant Cushman & Wakefield, was the most bullish of forecasters, predicting a winning bid of about HK$9.27 billion, or nearly HK$9,000 per sq ft. He expected a strong response despite a requirement to build a minimum number of flats. "Including this site, there are a total of seven plots of land available in the area. But this site is the largest and will comprise around 55.5 per cent of the total gross floor areas the seven sites can offer. Given its size, it's attractive to developers who may want to bid for neighbouring sites to combine development," Cheung said. The auction result would be a price indicator for six other government sites in the surrounding area, which have yet to be put on the market, as well as new development projects in the Sha Tin district, he said. David Chan Tai-wai, a director at Ricacorp Properties, said there were a total of 347 houses at Kau To. Many owners were long-term investors and as a result transaction volumes in the area were as low as 20 flat sales or less a year. Limited supply and prime location made the site more lucrative, he said. Ricacorp predicted the site would be sold for between HK$8.2 billion and slightly over HK$8.4 billion. But Ringo Lam Chun-chiu, valuation director at A.G. Wilkinson & Associates, who predicted the lowest price at HK$7.24 billion, said the site would have been more attractive if there was no condition on the minimum number of flats to be built. The winning bidder "will be restrained from developing a very high-end project", he said. A government plan to boost the supply of flats had led to the requirement that the winning developer should build at least 970 flats on the site, he said, which meant flats would be only around 1,063 sq ft on average. "That is not very big and affects how high-end the project can be and the type of flats it can offer. Also, only a small number of houses can be built on the site." Victor Lai Kin-fai, chief executive of Centaline Professionals, initially estimated the site would fetch from HK$8.2 billion to HK$9.3 billion but revised this down to HK$8.2 billion.

Golf carts roll past HK$2 million - Permit restrictions have turned the humble sporting vehicle into a must-have addition for the well-heeled in Discovery Bay and pushed values sky-high - Owning a good golf cart is a status symbol, like owning a Maserati or a Porsche, for the well-to-do residents of Discovery Bay on Lantau Island. The price of one kind of property continues to see massive escalation this year - the Discovery Bay golf cart. The latest transactions for the highly prized and highly restricted vehicles broke the HK$2 million mark. "You can pick up a studio apartment here for around HK$2 million," said Brian King, the principal of property brokerage Headland Homes. "So how ridiculous is that? Your golf cart may cost more than your apartment." The surge in demand for the carts pushed their value above what you would expect to pay for many luxury cars. Carts that were that were selling for HK$1.5 million at the start of the year are now HK$2.2 million. The doubling of price in two years has more than matched events in the property market. "It's a ridiculous amount of money, I know," admitted an airline pilot who bought a cart in June for HK$2 million. He did not want his name to be used because he is embarrassed about how much he spent. "But, I said, I have the cash. I can put it back into property, but the market is berserk. Sitting in the bank it's doing nothing. So I thought, why not? It's not a bad return." The carts rent for HK$8,000 to HK$9,000 a month, meaning that even at their current high prices they can generate a yield of around 5 per cent - better than most property purchases in Hong Kong. Cashing in on resales of carts has also become a popular transaction - the cart that the pilot bought cost only HK$1.5 million when the seller, another pilot at Cathay Pacific (SEHK: 0293), bought it at the start of the year. The Hong Kong Transport Department has capped the number of golf carts in Discovery Bay at 490. The number of cart permits has not changed significantly since the area was first developed in the 1980s, because the department was concerned the carts would overcrowd a road system that sees frequent bus traffic and the occasional delivery van. Hire cars are available in Discovery Bay, but residents complain of a half-hour wait at best to book the service, and believe the golf carts offer greater flexibility. This is causing the squeeze on prices.

Cathay Pacific (SEHK: 0293) is looking to secure a stable supply of cleaner fuels, which could include producing its own biofuels for aviation. The move comes as airlines face a looming European Union (EU) climate rule that threatens to cost the industry tens of billions of dollars in four months' time. Mark Watson, Cathay Pacific's head of environmental affairs, said the airline's solution is likely to be a mixed one, though a decision will not be made until later this year. The answer could involve more than one supplier and partnerships because no one has mastered the production of alternative fuels on a sufficiently large scale, Watson said. "Cathay Pacific is now looking at all options, ranging from being an end user - buying fuel in a conventional way - to going more upstream, which means being involved in the production of fuel or supply," he said. "Our linkages with the Swire Pacific (SEHK: 0019) Group is an interesting synergy that might need to be explored around supply and logistics." Efforts at diversifying the aviation fuel mix have been sped up by the looming threat of the EU's new emissions-trading scheme and escalating oil prices. In addition, the American Society for Testing and Materials in July approved a 50-50 mixture of conventional jet fuels and biofuels for use in commercial and military airplanes. Although biofuels are yet to be cost-effective, carriers saw the incentive to explore new fuels when oil prices reached a "trigger point" of US$90 per barrel, and when jet fuel prices hit US$134 per barrel since last month. "We have seen other airlines announcing contracts and deals. For the first time China has also started to look at biofuels," Watson said. "If we see more activity and more airlines like Air China (SEHK: 0753) getting involved, the scale of the industry will grow. That will make supply more sustainable and make prices drop." Air China, in which Cathay holds an 18.77 per cent stake, has reached an agreement with PetroChina (SEHK: 0857, announcements, news) and Honeywell International on the development and application of biofuels. It will launch its first test flight on a jatropha-derived fuel blend next Wednesday. Jatropha is a type of succulent plant that produces seeds with high oil content. It is seen as a promising biofuel source. Cathay declined to say whether any of its ongoing deals involve Air China and PetroChina. However, Watson said any biofuel refinery plants the airline might invest in would be close to its home base, so that the fuel produced could be easily shipped to Chek Lap Kok airport's permanent aviation fuel facility in Tuen Mun. The facility has eight tanks with a storage capacity of 264,000 cubic metres that is further expandable. As to the amount of biofuels that Cathay intends to use, Watson said it all depends on the fuels' availability, sustainability, and prices. It also depends on whether the EU would grant carbon credits to biofuel users and the amount of credits given. The International Air Transport Association, however, recently reduced its original target of having biofuels make up 15 per cent of the world's total aviation fuel usage by 2020. Land remains a major issue for mass production of biofuels. Jatropha, for example, requires large tracts of land to grow meaningful quantities. Algae, a possibly more effective solution, remain a subject of laboratory experiments. Waste oil could be another solution, but that would require large investments to create recycling systems. The new emissions trading scheme starting next January will require all airlines entering Europe's airspace to buy carbon credits if their emissions exceeded a certain cap. The cap is set at 97 per cent of the average annual emissions between 2004 and 2006. But the EU rule is facing legal challenge, and a verdict is expected to be reached around October. If the EU rule becomes law, Cathay Pacific could suffer, as it has Hong Kong's largest number of direct flights to Europe. They accounted for about 18 per cent of the airline's available seat kilometres last year.

China said on Wednesday it is planning to raise 20 billion yuan (US$3.10 billion) from its third and largest sovereign bond issue in Hong Kong this month. The latest issue comes as Beijing aims to turn the Chinese unit into a global currency. “The issuance of the yuan-denominated bond in Hong Kong is an important measure to support Hong Kong to become the offshore yuan trading centre,” China’s finance ministry said in a statement. The issuance will also strengthen Hong Kong’s position as an international financial hub, the statement added. The ministry said it will sell 15 billion yuan to institutional investors while the rest will go to retail investors. The institutional tranche comprises 6 billion yuan of three-year paper, 5 billion yuan of five-year paper, 3 billion yuan of seven-year paper and 1 billion yuan of 10-year paper. Beijing’s previous sovereign bond issues in September 2009 and November last year in the city – which maintains a semi-autonomous status with its own currency – raised six billion yuan and eight billion yuan, respectively. 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.

Around 70 per cent of students sitting this year’s HKCEE final exams passed their English and Chinese language papers, the Hong Kong Examinations and Assessment Authority said on Wednesday. The authority said the best candidate this year received four As in the final HKCEE or Hong Kong Certificate of Education Examinations – while 665 achieved a creditable five passes. The final HKCEE results would be released on Thursday. The authority said the 26,573 candidates would receive their result slips by post on Thursday. They can also view results online at: http://results.hkeaa.edu.hk/hkcee from 8am. Authority secretary general Tong Chong-sze said this year’s candidates differed from previous years. “The participants [for the HKCEE finals] are private candidates or repeaters who sat last year’s HKCEE. Forty per cent of them are current Form six students studying for the Hong Kong Advanced Level Examination (HKALE). Many aimed for result improvements,” he said. “Most candidates sat one-to-three subjects; only a handful took 10,” Tong added. Authority deputy-secretary general George Pook said 22 different subjects had been offered this year. The number of entries for Chinese, English and mathematics topped the list, but only 11 candidates sat the science and technology exam. Satisfactory results in the current round of HKCEE exams will enable those students who performed poorly in last year’s papers to continue on to secondary education. Students with sufficiently good HKCEE results are entitled to sit HKALE exams. Students who perform well in HKALE exams can apply to university. Most school candidates take eight subjects in the HKCEEs, but some sit 10. If students obtain six HKCEE A grade passes they are entitled to progress to university without sitting the HKALE tests. Under the new academic structure, Form six students completing three years of senior secondary education will next year sit the new Hong Kong Diploma of Secondary Education Examination.

The Hong Kong business and political elite generally treat the local currency’s peg to the greenback as an inviolable element of the city’s success as an international business and financial center. Heads are bound to turn, therefore, when the head of a powerful Hong Kong institution dares to suggest an alternative system for managing Hong Kong’s money. So it was that HSBC Holdings PLC Chief Executive Stuart Gulliver caused quite a stir when he said that the Hong Kong dollar could theoretically be pegged to a trade-weighted basket of currencies. Over the past year, mounting sums of renminbi in Hong Kong bank accounts has prompted some speculation that Hong Kong might eventually adopt the yuan or peg the local currency to the yuan instead of the U.S. dollar. Mr. Gulliver rejected the concept of a yuan peg, noting (as Hong Kong Monetary Chief Norman Chan has done in the past) that the Chinese currency needs to be fully convertible first for that to happen. The HSBC chief also dismissed the notion that Hong Kong could float its currency freely, something other analysts have noted would be impractical given the economy’s small size and broad exposure to foreign trade and capital flows. Mr. Gulliver certainly knows it’s impolitic for HSBC, a pillar of the local financial system and issuer of Hong Kong bank notes, to challenge the linked-rate system that dates back to 1983 and currently allows the Hong Kong dollar to trade between HK$7.75 and HK$7.85 to the U.S. dollar. He hedged his words appropriately, saying that the currency board arrangement has so far served Hong Kong “extremely well” and he didn’t see a need to change the system. Some argue Hong Kong’s currency peg leaves the city with few tools to fight asset-price inflation and appears anachronistic given the continuing misalignment of the Hong Kong and U.S. economies. Singapore uses an undisclosed trade-weighted basket of currencies to set a band within which the Singapore dollar trades. Since April 2010, it guided a steady appreciation against the currency basket. As might be expected, the Hong Kong Monetary Authority quickly responded in defense of the peg, saying that a currency basket “lacks the simplicity and transparency of the existing peg to the U.S. dollar.” Still, with the problems facing the U.S. economy and a trajectory of dollar weakness, questions about the future of the peg aren’t likely to disappear.

Who are the happiest people in Hong Kong? Apparently it’s men over 50 years old, who never studied beyond primary school, live in Wan Chai and make more than 400,000 Hong Kong dollars (US$51,000) a year. The ING LIFE Happiness Survey, by conducted by Lingnan University, assessed the “happiness” of more than 8,500 Hong Kong residents who volunteered to take an online survey in June. Overall happiness was measured by responses to questions that Lingan personnel divided into categories it called love, insight, fortitude and engagement, hence the survey’s name, according to Lok-sang Ho, director of the Centre for Public Policy Studies at Lingnan University, who headed the survey. While the study, not surprisingly, found that happiness generally increases with income and age, it also revealed that education can have a negative effect on happiness. People surveyed who had only a primary-school education are happier than their more-educated – and less-educated – peers, scoring 8.59 on Mr. Ho’s happiness index. The index runs from zero to 10, with zero being the least happy and 10 being the happiest. The second happiest demographic, in terms of education, has no formal schooling whatsoever, while the third is a tie between those who matriculated from senior secondary school and people who graduated from a university. “It’s surprising that education carries a negative coefficient on happiness,” Mr. Ho said. “It tells us that as educators, we haven’t done enough. These people are facing a lot of pressure and they don’t know how to cope.” Mr. Ho said that while 724 people below the age of 18 took the survey, it’s more likely that the older people, who tend to be happier anyhow, are the ones who skewed the happiness scale for those with only a primary-school education. The study also found that Wan Chai, the Hong Kong Island district known for its late-night bars and traditional restaurants and residences, is the happiest neighborhood in all of Hong Kong, with its residents scoring an 8.55 on the happiness index. Tai Po, in the New Territories, came in second at 7.69, while Kwai Tsing, also in the New Territories, scored the lowest of Hong Kong’s 18 districts, at 6.83. The average score was 7.11. Overall, residents living on Hong Kong Island are happier than those in the New Territories, who are in turn happier than residents living in Kowloon, the survey found. Women living in Hong Kong, who scored a collective 7.17 on the index, are also generally happier than their male counterparts, who averaged a score of 6.99. And Hong Kongers get happier as they get older – and richer. People surveyed below the age of 30 were the least happy while those aged 50 or above were the happiest. Men over age 50 are the happiest age/gender combo, with a score of 7.68 on the happiness index, while men below 30 are the unhappiest, scoring 6.74. By comparison, women over 50 scored 7.54, and women under 30 scored 7.06. Hong Kongers making HK$400,000 or above annually are the happiest of all income brackets, scoring 7.37. As for the reasons and explanations behind his findings, Mr. Ho simply said, “This is something that deserves our investigation.” This was the first year that the survey was conducted online and through Facebook, according to Lennard Yong, co-head of ING Insurance & Pensions for Hong Kong and Macau. He said that the survey, which has been conducted since 2005, got 10 times last year’s response.

Queen Mary Hospital will set up a special team to handle emergency organ transplants by the end of this year, in order to avoid seconding manpower from general wards and disrupting other scheduled services. A dozen doctors and nurses will be hired in the coming months to take care of all emergency organ transplants, said hospital chief Dr Luk Che-chung. Currently, some non-emergency services need to be delayed as nurses and doctors are seconded to do the transplants. The setting up of a special transplants team was part of the hospital's annual plan, which was announced yesterday. With a new batch of nursing graduates joining the workforce this summer, Luk said services could be extended. The hospital is hoping to bring back into use one or two beds in the intensive care unit. Four of the unit's 20 beds have been out of use since last year as a result of staff shortages. Luk, who is also the head of the Hospital Authority's Hong Kong West group of hospitals, said the group would recruit 180 to 190 nurses this year, and promote dozens of them to senior posts. "We would not just rely on fresh graduates. We are planning to organise careers fairs in Tung Wah Hospital every week to recruit those with experience," he said. Also part of Queen Mary's annual plan is the expansion of services for children with attention deficit hyperactivity disorder. The ADHD clinic was now serving 1,134 cases, but 410 children were still on the waiting list, according to consultant psychiatrist Dr Phyllis Chan Kwok-ling. The hospital is looking to admit 300 new cases this year, with seven additional staff members added to the team. "We insist that all new cases have to be seen thoroughly by the doctor on the first consultation, which takes three hours," she said. But she admitted that it was "optimistic" to hope that enough people would be recruited by the end of this year, as the general shortage of doctors and nurses continued. Chan said the demand for services had grown rapidly in recent years, as teachers and parents become more aware of the condition. Referrals from private doctors had climbed from some 30 cases per month in 2008 to over 100 last year. She said the condition was now detected in seven out of every 100 primary school pupils, but if treated properly, half would not need to see a doctor as they grew up. Meanwhile, the Hospital Authority held a special meeting yesterday with nursing unions to discuss the issue of a personnel shortage across public hospitals. Cecilia So Chui-kuen, a committee member of the Chinese Civil Servants' Association's nurses branch, said that the authority agreed to set up a special task force to work on staff requirements in the long term. "There should be an indicator of manpower required under different situations, such as acute or non-acute," she said.

 China*:  Aug 5 2011  Share

A sales clerk shows a commemorative gold medal featuring the 1911 Revolution in Beijing, capital of China, Aug. 2, 2011. A commemorative medallion set, which includes three gold medals, six silver medals and two bronze medals, has been released nationwide to commemorate the centennial of the 1911 Revolution. This year marks the 100th anniversary of the 1911 Revolution, which began with the Wuchang Uprising on Oct.10,1911. The great revolution led by Dr. Sun Yat-sen led to the collapse of the Qing Dynasty (1644-1911) and brought an end to the imperial rule in China. 

China's Huawei Technologies Co Ltd, the world's No 2 network equipment maker, launched new cloud-computing smartphones on Wednesday, looking to ride a mobile industry boom that drove a 64 percent sales rise in its devices unit in the first half, Reuters reported Wednesday. The company is betting cloud-computing smartphones will help it replicate its telecom gear success in the smartphone market and take on the likes of Nokia, Apple Inc and Samsung Electronics. Shenzhen-based Huawei and Chinese rival ZTE Corp, which have traditionally concentrated on the network equipment business, are aggressively muscling in on mobile devices. "Cellphones have been a cash cow for Huawei over the past few years, but I don't think it can replace its main business in network equipment," said Jane Wang, a Beijing-based analyst at UK research firm Ovum. "In a way, we saw cellphones as a key compliment to its business because it allows then to work more closely with telecom operators." Huawei launched its cloud-computing "Vision" smartphones at a media event in Beijing, with the new 9.9-mm, 121-g phone running on Google's Android 2.3 operating system and Qualcomm's Snapdragon chip. Cloud computing refers to data and software stored on computer servers rather than individual PCs and accessed over the Internet. Cloud computing smartphones will allow users to download applications without needing much storage space on their devices. Global sales from Huawei's devices division, which sells consumer products such as smartphones, mobile phones, tablets and wireless cards, grew 64 percent to $4.2 billion in the first half of the year from a year ago. Shipments jumped nearly 40 percent to 72 million units, Huawei said in a statement. Cellphones form the majority of its shipments.

Bouquets are seen in a florist shop in Jinan city, Shandong province, on August 2. Flower prices have surged with the approach of Chinese Valentine's Day, which is celebrated August 6, and the price is expected to jump three or even four times in the lead-up to the festival.

In his first public comments on Washington's debt deal, China's central bank chief welcomed the passage of the bill that avoided a U.S. default but called on the U.S. to adopt "responsible measures" to manage its debt issues and pledged to continue diversifying China's dollar-dominated currency reserves. The comments Wednesday by People's Bank of China Gov. Zhou Xiaochuan came as the country's state media continued to condemn Washington over its debt problems, and as one of China's smaller credit ratings companies downgraded its sovereign rating for the U.S. Mr. Zhou, in a statement on the central bank's website, warned that U.S. bond-market volatility could affect the stability of the entire international monetary system and "encumber the global economic recovery." He called on U.S. policy makers to "act in the interests of themselves and the whole world" in further addressing debt issues. He said China will watch developments while continuing to diversify and strengthen risk management of its foreign exchange reserves. The chaotic U.S. debt talks in recent weeks have aggravated longstanding concerns in China—the U.S.'s biggest foreign creditor and owner of the world's largest currency reserves, at more than $3.2 trillion—about its overreliance on the dollar. But the events have also underscored the paucity of serious alternatives China has to investing in Treasurys and other dollar assets. The state-run Xinhua news agency published a biting commentary on Wednesday saying the higher debt ceiling "failed to defuse Washington's debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer." Xinhua urged the U.S. to roll out measures to balance the federal budget, warning that failure to do so would damage U.S. credibility. Separately, Dagong Global Credit Rating Co. on Wednesday lowered its rating on U.S. sovereign debt to A from A+, with a negative outlook, saying the debt ceiling increase won't change the fact that the U.S. national debt is growing faster than the overall economy and fiscal revenue. Dagong has gained attention in the last year with a number of controversial calls on foreign government creditworthiness, although there is no evidence that the Chinese government or other major investors base their investment decisions on its ratings. Even before Wednesday's downgrade, Dagong ranked the U.S. as a riskier borrower than China. Chinese officials have talked for years about the need to diversify their reserves—at least two thirds of which, analysts say, have typically been parked in dollar assets, mostly Treasurys. (The composition of China's reserves is a closely guarded secret.) But it's been unclear just how much progress China has made in that effort. Japanese data over the last year or so have shown increased Chinese buying of government debt there, and Chinese officials have said they have increased purchases of European bonds. Some analysts have pointed to other signs that China may be channeling more of its new foreign-exchange reserves into Europe. Standard Chartered economists in June pointed to a gap of some $150 billion in the first four months of this year between China's total purchases of U.S. assets and its new foreign-exchange reserves, a larger gap than in previous years. They said that suggested China has reduced new purchases of Treasurys, and that "Europe is the only other place with a deep enough debt market to absorb a significant amount" of the total. Analysts at Capital Economics noted a similar trend in a July 19 report, pointing to data for May. But they emphasized that the impact of investing new reserves differently is less disruptive to markets than China changing the composition of existing reserves, which would require selling down dollar holdings. There is "a big difference in terms of potential market impact between diversifying new reserves (which China may be doing) and reallocating existing reserves (which China is unlikely to be doing)," the analysts wrote. Analysts at both firms acknowledged that such estimates are hard to pin down because they rely on data from the U.S. Treasury International Capital system, which is imprecise because it measures the country where purchases originate, not the country that actually owns the debt. Beijing often routes its purchases through places like Hong Kong and the U.K. Last week, a U.S. official said the U.S. doesn't see any significant change in the pattern of Chinese bond purchases. Some central banks have been ramping up their buying of gold as part of efforts to diversify their reserves. But gold isnt a significant alternative for China, because its reserves are simply too huge. New foreign-currency inflows into China's reserves last year totaled $469.6 billion, triple the $156.3 billion in total global demand for gold for the whole year, according to the World Gold Council. Official figures from the People's Bank of China show it held 1,054 metric tons of gold reserves at the end of June, unchanged since April of 2009, although some analysts believe the official figures may not give a full picture of the central bank's purchases. The State Administration of Foreign Exchange, the central bank arm that manages China's reserves, said in a July 20 statement that gold and other precious metals and commodities make poor investments for reserves because "price fluctuations are relatively large, market volume is relatively limited, and transaction and storage costs are high." A commentary Tuesday in the official Communist Party newspaper People's Daily complained about the dollar, but acknowledged that it will still retain its global importance despite the U.S. debt problems. It said that given the euro zone's sovereign debt woes, Japan's recent earthquake and inflationary pressures on emerging economies, U.S. Treasurys still retain their investment value. China has taken other measures to try to reduce its reliance on the dollar, such as promoting its own currency for use in foreign trade. But reserves have continued to grow substantially. Perhaps the most effective measure it could take would be to allow its own currency to appreciate, but Beijing has shown it is willing to move only gradually on that front. The yuan has gained only 6% against the U.S. currency since China untethered it in June of last year. While it's hard for China to meaningfully change the composition of its reserves quickly, even small moves that it makes can have big impacts on other countries because of the sheer enormity of China's reserves. Matthew Johnson, interest rate strategist at UBS, says that the Australian sovereign debt market is $195 billion compared to a $7.2 trillion market in the U.S. The differential in market size means that even a fractional increase in allocation to the Australian market would have a major impact.

Hong Kong*:  Aug 4 2011  Share

Regular diners at Maxim's may not have noticed it but they have been paying 3 to 5 percent more for some of their meals over the past few months. What's worse, the popular fast-food chain will raise prices even higher from next month. Maxim general manager John Sham Yuen-pang said prices of 40 percent of items on the menu have been raised in stages since early this year as the cost of food soared by 7 percent. "We adjusted our food prices, such as siu mei, in different phases during the first six months," Sham said. Prices have stabilized since June, but Sham said they could rise again in September depending on the cost of ingredients. The chain also has to factor in higher rentals. Apart from the increase in food prices, it is important to explore other ways to deal with rising operating costs, Sham said, In order to appease its customers, the group introduced short-term discounts and improved the quality of its service and food. Sham said implementing the minimum hourly wage from May had little impact on costs. Maxim's plans to organize four job fairs this year to cope with the planned expansion of its restaurants from 83 to 89. The group also plans to open two restaurants in Shenzhen next month. Over the course of the next two years Maxim's will have 12 restaurants across the border. To cater to the tastes of locals, 60 percent of the menu will have mainland characteristics. Despite the higher value of the yuan and the inflation there, Sham said operating costs in the mainland are 30 to 40 percent cheaper than in Hong Kong. Earlier, Cafe de Coral said it increased its food prices by 2 to 4 percent in July and that more increases can be expected in the next six months because of inflation and the minimum wage.

Mainland banks are taking advantage of a loophole to boost their reserves by tempting Hong Kong companies to put their money into their accounts, sources said. Many Hong Kong-based companies have been persuaded by major mainland banks - including at least one of the Big Four - to deposit a minimum of US$1 million (HK$7.8 million) in their non- resident accounts in China. The Hong Kong branches of the mainland banks then set up credit lines of the same amount for the firms. All local companies with manufacturing assets and which are involved in import/ export can set up a NRA account through which yuan to US dollar conversions are mostly hassle free. A source told The Standard many firms with mainland factories which make products going to a third country are more than willing to benefit from this "risk-free arrangement." It generates hefty gains as deposit rates are much higher in the mainland than in Hong Kong. The continuing appreciation of the yuan also helps. Hong Kong deposit rates currently stand at just above 0.01 percent. The funds deposited by local enterprises help to boost reserves at the mainland banks, which are reeling from six hikes in the Reserve Requirement Ratio this year. The RRR, which has been raised to tame inflation, currently stands at a massive 21.5 percent. Mainland banks are offering one- year deposit rates of at least 3.5 percent while some of their Hong Kong branches are setting up credit lines, charging prime rate plus 1.5 percent. Taking at least a 5 percent appreciation in the yuan versus the US dollar into consideration, the net gain is much higher than local deposit rates. Companies involved in this arbitrage must show transaction to and from their NRA accounts, sources said. This is not difficult as most companies have to import inputs from abroad while paying their mainland workers and suppliers in the yuan. So far, authorities have not made any moves on this matter. The source said China's banks strongly encouraged Hong Kong companies to do such a thing at the end of June when the People's Bank of China was reviewing the lenders' capital adequacy ratio which would determine how much they could lend in the second half of the year. Credit tightening in the mainland has forced some Chinese companies to borrow money from banks in Hong Kong. This prompted Hong Kong Monetary Authority chief executive Norman Chan Tak-lam to send a rare circular to lenders asking them to beware of rapid credit growth due to loans taken out by state-owned enterprises, red-chip companies and firms owned by provincial or municipal governments in the mainland. Hong Kong banks remain tightfisted on new lending amid more stringent supervision by the watchdog. The loans-to-deposit ratio in Hong Kong dollar terms rose to 84.3 percent at the end of June from 82.4 percent at the end of May, according to the HKMA.

Hang Seng Bank (SEHK: 0011, announcements, news) has no plans to follow its parent HSBC Holdings (SEHK: 0005) in laying off staff and will increase hiring following an improved first-half profit of HK$8.06 billion. That is up 16 per cent from a year earlier and better than analysts' forecasts for growth of 5 per cent to 15 per cent. The bank will pay a second-quarter dividend of HK$1.10, bringing the total interim dividend for the first half to HK$2.20. The bank, one of the largest retail lenders in the city, hired 223 people in the first half. Vice-chairman and chief executive Margaret Leung Ko May-yee said the bank would keep to its target of hiring 700 staff in Hong Kong and the mainland this year. Leung said the target would be comfortably met as Hong Kong would continue to benefit from tourist arrivals and gain from its role as an offshore trading centre for the yuan. "Many of our frontline divisions still have vacancies so we will hire about 500 more people in the second half. The question is whether we can find the right talent." HSBC laid off 5,000 staff in US and Europe in the first half and plans to lay off 25,000 more by the end of 2013 as part of a cost-cutting drive. Hang Seng Bank's trade finance lending rose 26 per cent in the first half as mainland companies' loan demand increased. Total loans grew by 6.5 per cent in Hong Kong and the mainland to HK$505.3 billion. Net interest income from advances increased by 50 per cent in the first half. Leung said the bank had been selective in its mainland clients as enterprises across the border are increasingly at risk because of tougher regulations and a slowdown in exports. "We have been cautious about potential bankruptcies in the Pearl Delta area. The pace of US recovery is slow while European countries have been hit hard by the debt crisis. This is likely to affect China as it relies on exports," she said. Leung said Hang Seng would check customers' client portfolios and the nature of their exports before granting loans. Loan impairment allowances as a percentage of gross advances stood at 0.33 per cent at the end of June, compared with 0.46 per cent a year earlier. Other driving forces are the bank's yuan business and mainland expansion. Mainland operations generated HK$1.43 billion in profit before tax, up 160 per cent on the first half the previous year. It was driven by a 22.2 per cent growth in retail customers and a 13.3 per cent growth in corporate clients. The lender's wealth management business saw fee income grow 12.3 per cent while insurance premiums grew 24 per cent. Louis Tse Ming-kwong, director of VC Brokerage, said Hang Seng Bank's focus on Hong Kong and the mainland helps it benefit from strong growth in the region while avoiding problems in the US and Europe. "Hang Seng Bank has always been very careful about its lending policies and expansion plans. It could be a safe haven for investors who want to invest for the long term," Tse said.

The Buildings Department has for the first time used legal powers to break into subdivided flats in a To Kwa Wan apartment block on Monday – to carry out safety inspections of unauthorised subdivided flats. Hui Siu-wai, an assistant director at the department, said it cited section 22 of the Buildings Ordinance as legal justification for entering the two units, with police support, to inspect suspected unauthorised building works in the sub-divided units – which the suspected to be contravening fire and structural safety regulations. The department took action after repeated attempts to contact owners and occupiers in the last month – by mail and in person – had failed. The eight-storey building received an occupation permit in 1959 for 14 flats on floors one to eight, with the ground floor used for retail purposes. According to the department’s investigation, there are a now 51 sub-divided flats on the premises. “If we cannot enter certain units, we would not be able to know if their front and rear entrances are connected or not,” Hui said. “We worked with a locksmith to break into the two flats. After the inspection, we left the doors locked. No damage was done,” Hui added. Hui said problems arising from subdivided flats lie mainly in the construction of partitions that narrow down corridors and in the installation of extra water pipes in washrooms. “Improper construction of water pipes would cause seepage affecting neighbours downstairs. Previous inspections suggested that the layout of these subdivided flats, particularly those with front and rear staircases, is affecting the buildings’ fire safety standards,” he said. The department plans to inspect 150 buildings, involving more than 1,300 subdivided units, per year as part of its safety campaign. Hui acknowledged the Building Department’s action could cause concern among owners and occupiers and he appealed for co-operation, “Sringent enforcement action would inevitably cause inconvenience and stress to the owners and occupants concerned. The public is also concerned about the nuisance or interference with private property rights caused by such action,” he said. Local media reported that the department has visited 48 buildings in the past three months and carried out inspections on more than 100 subdivided units following a fatal blaze in Ma Tau Wai that caused concern about similar safety threats in old buildings nearby.

Northumbrian Water Group PLC said Tuesday its board of directors will recommend shareholders to accept a £2.41 billion (US$3.93 billion) cash takeover offer from a consortium of companies controlled by Hong Kong tycoon Li Ka-shing. The offer to acquire one of the U.K.'s biggest water services companies comes as Hong Kong's richest man has been increasing investments in overseas utility companies in the face of limited expansion opportunities in Hong Kong, where he controls several companies, including one of the city's two electricity producers. Under the plan, Mr. Li's Cheung Kong Holdings Ltd. and its Cheung Kong Infrastructure Holdings Ltd. unit will each own a 40% stake in Northumbrian once the transaction is completed. Mr. Li's charitable group, Li Ka Shing Foundation Ltd., will own the remaining 20%. Northumbrian Water said it received irrevocable undertakings to vote in favor of the deal from major shareholder Ontario Teachers' Pension Plan Board, which has a nearly 27% stake in the U.K. company. The Cheung Kong consortium offered to pay 465 pence per share for the utility firm. The offer price was reached following a series of talks with Northumbrian directors, consortium leader Cheung Kong Infrastructure said in a separate statement Tuesday. In London, Northumbrian shares were trading at 468.22 pence, up 4.2%. The acquisition is subject to approval from Northumbrian's shareholders and U.K. regulators. Analysts said earlier that the deal would further expand Cheung Kong Infrastructure's utility business in the U.K. and boost the company's net profit for 2012. Cheung Kong Infrastructure said Tuesday it sold utility Cambridge Water PLC for £74.8 million to HSBC Holdings PLC ahead of the planned takeover, because U.K. regulations prohibit companies from having significant stakes in more than one regulated water utility. Cheung Kong Infrastructure said Thursday its first-half net profit nearly doubled to 3.98 billion Hong Kong dollars (US$511 million) from a year earlier, boosted by contributions from the U.K. electricity assets it acquired last year. In October, a consortium led by CKI and Power Assets Holdings Ltd. bought Electricite de France SA's U.K. electricity distribution networks for £5.78 billion. In May, CKI also bought a 50% stake in Seabank Power Station, a 1,140 megawatt gas-fired power station near Bristol in the U.K., for HK$2.4 billion. It now owns a 25% stake in Seabank Power after it sold half of its interest to Power Assets for HK$1.2 billion in June.

The number of property transactions in Hong Kong totaled 7,291 in July, down 37% from 11,601 in June, as rising mortgage rates and uncertainties over housing policy dampened demand, the Hong Kong government said Tuesday. From a year earlier property transactions were down 51% in July. In terms of value, property transactions totaled 42.4 billion Hong Kong dollars (US$5.4 billion) in July, down 40% from HK$70.5 billion in June and down 30% from a year earlier. The number of transactions involving residential units, which accounted for 72% of transactions in July, totaled 5,254, down 42% from 9,043 in June and down 60% from a year earlier. The value of July’s residential property transactions amounted to HK$31.8 billion, down 40% from HK$52.9 billion in June and down 39% from a year earlier. The decline in the number of residential property transactions comes as Hong Kong lenders have been increasing mortgage rates since early this year, and after the Hong Kong Monetary Authority, the city’s de-facto central bank, introduced more stringent underwriting standards for mortgage loan lending on June 10. The standards included a requirement that local banks limit the ceiling on mortgage loans for residential properties valued at HK$10 million or more to 50% of the value of the property. The 50% cap had previously applied only to properties worth HK$12 million or more. Government statistics showed that home prices in the city rose 13% in the first five months of this year, following a 56% surge between 2009 and 2010 due to abundant liquidity, record-low interest rates and a flood of investors from the mainland.

HSBC Holdings PLC’s results and staffing plans highlight the two-speed world with which global banks are grappling. On the one hand HSBC, which is dual-listed in Hong Kong and London, plans to cut 30,000 jobs by 2013 with hundreds already earmarked to go in the U.S., U.K., France, Latin America and the Middle East. On the other hand, HSBC’s chief executive Stuart Gulliver said the bank is likely to hire 3,000 to 5,000 people a year across emerging markets. The reason is clear. Asia generated 59% of pre-tax profits and its contribution is growing. While performance in Europe was sluggish, net fee income in Asia for the first half hit US$2.7 billion, up 17% from the same period a year earlier. Other banks such as Barclays Bank PLC and Japan’s Daiwa Securities Group Inc. are also looking to bulk up in Asia but they don’t have the head start enjoyed by HSBC, whose roots in Hong Kong date back to 1865. HSBC has managed to tap into some powerful trends in Asia that are driving its hiring plans in the region. Firstly, its private-banking business is growing in lock-step with the massive wealth creation happening in Asia’s fast-growing markets. It is also well placed to benefit from China’s gradual internationalization of the yuan. It has handled the largest volume of offshore yuan bonds in the year to date according to Dealogic, almost double the volume managed by the No. 2 ranked bank, Standard Chartered PLC. But it’s not Standard Chartered, a fellow British, emerging market-focused behemoth, which keeps HSBC up at night. In an interview with Dow Jones Newswires, HSBC’s North America head Niall Booker cites Citigroup Inc. as its closest competitor. Referring to HSBC’s ability to leverage relationships with global banking clients, Mr. Booker said, “I have one other competitor, and that is Citi…They are a feared competitor, but there is only one of them.”

Global banking giant HSBC (SEHK: 0005) said on Tuesday it would hire about 15,000 people in emerging markets by 2014 as it particularly looked to Asia's booming financial sector to power future growth. “The bank will be hiring three to five thousand people in emerging markets per year,” an HSBC spokeswoman told reporters in Hong Kong , confirming earlier remarks by the bank’s chief executive Stuart Gulliver. “That makes out to be around 15,000 in the next three years.” The British-based lender had announced on Monday that it would axe 30,000 jobs by 2013, about 10 per cent of its global workforce, as it looked to slash costs. It said the initial round of 5,000 job cuts would be in the United States, Britain, France, Latin America and the Middle East. More than a third of HSBC’s currently workforce of 300,000 people are already in Asia, and the lender emphasised in a statement Tuesday that its prospects in the region were expected to continue improving. Asia contributed 59 per cent of the group’s pre-tax profits in the first six months of this year, up 16 per cent from the same period last year, while net fee income grew 17 per cent in the region year-on-year, the statement said. “HSBC in Asia is on track to deliver on our strategy to create diversified revenue momentum from both quality asset growth and increased fee income,” Peter Wong, chief executive of HSBC Asia-Pacific said in the statement. “Our expertise in renminbi complements our leadership in global trade,” he added, referring to the bank’s position as a leading issuer of the offshore renminbi bonds. Beijing has been using Hong Kong as a test bed to internationalise the yuan, with an eye to challenging the US dollar’s dominance as a global currency. Daniel Tabbush, the Bangkok-based head of brokerage CLSA’s banks research, said the British lender’s continuing focus on Asia highlighted the lacklustre prospects for growth in the West. “It’s very clear the job cuts are concentrated in the OECD (Organisation for Economic Co-operation and Development) economies,” Tabbush said, referring to the group of 34 member countries based mainly in Europe. “It makes sense they would be hiring in Asia and focusing on commercial banking – that is where all the growth is.” Tabbush added that there was “probably enough demand for 10 banks” in corporate banking across the region, which meant HSBC could be picky when it came to doing business with borrowers who had the best credit. Shares in HSBC were 1.75 per cent higher in Tuesday afternoon trade in Hong Kong to HK$78.3 (US$10.04) as the broader Hang Seng Index was 0.66 per cent lower. HSBC’s latest plans come after the banking giant – which survived the 2008 crisis without state aid, unlike many of its rivals – announced in a strategic review earlier this year plans to save US$2.5-3.5 billion in costs by 2013. The bank said on Monday that its net profit soared to US$8.9 billion (6.2 billion euros) in the first half on lower bad debt and tax charges. Pre-tax profits rose 3.3 per cent to US$370 million compared with the first six months of last year, while total revenues edged ahead to US$35.7 billion. The bank also unveiled plans on Sunday to sell 195 retail branches, primarily in upstate New York, to First Niagara Bank for an estimated US$1 billion. HSBC was founded in Hong Kong and Shanghai in 1865, although it remains headquartered in London.

 China*:  Aug 4 2011  Share

Carlyle to buy 9% of Haier - Buyout firm Carlyle Group agreed to buy 9 percent of Haier Electronics Group Co Ltd (HEG) through convertible bonds, raising its stake in a Chinese company expanding into Japan and China's untapped markets, Reuter reported Tuesday. The deal comes days after Haier decided to buy Panasonic Corp's Sanyo Electric washing machine and refrigerator units in Japan and Southeast Asia for $130 million. Carlyle said it will invest up to $194 million in HEG, a Hong Kong-listed subsidiary of white goods firm Haier Group, China's largest maker of washing machines and water heaters. "It is a positive deal for the listed company as it secures a funding channel to finance its expansion," said Andrew To, head of research of Emperor Capital Group. "It is getting tougher to obtain financing in the Chinese mainland especially for a highly competitive market," he said. Carlyle, which has invested more than $3 billion in China, was likely to have been attracted by the rapid growth in China's consumer driven industry, analysts said. Carlyle will have a seat on the company's nine-member board. Carlyle's deal follows US private equity firm Kohlberg Kravis Roberts & Co's announcement on Monday to invest $114 million in China waste water treatment firm United Envirotech Ltd via convertible bond. The advantage of a convertible bond for the company is it gets an immediate injection of capital, while the investor agrees to buy its stock at a higher price in the future. The investor receives a coupon from the bond until the strike price is hit, when it can call the bond and convert it to shares.

Taiwanese technology giant Foxconn will replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency, said Terry Gou, founder and chairman of the company, late Friday. The robots will be used to do simple and routine work such as spraying, welding and assembling which are now mainly conducted by workers, said Gou at a workers' dance party Friday night. The company currently has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years, according to Gou. Foxconn, the world's largest maker of computer components which assembles products for Apple, Sony and Nokia, is in the spotlight after a string of suicides of workers at its massive Chinese plants, which some blamed on tough working conditions. The company currently employs 1.2 million people, with about 1 million of them based on the Chinese mainland.

Li Na, the first Chinese player to win a Grand Slam tennis title, will become the world's second-highest-earning woman athlete after signing endorsement contracts worth at least US$42 million. Since winning the French Open in June, the 29-year-old has signed seven deals worth between US$2 million and US$3.5 million each a year, her agent Max Eisenbud said. All seven contracts are for three years. "We could do five more endorsement deals but she doesn't have the time," said Eisenbud. "It's incredible." Former Wimbledon champion Maria Sharapova is the top earner. The Russian, who is also represented by Eisenbud, makes about US$24 million a year from prize money and endorsements, according to Forbes. Li, who has won US$3.1 million in prize money this season, became the first Chinese player to reach a Grand Slam final at the Australian Open in January. While Chinese women have won Olympic gold medals and grand slam titles in doubles, Li broke the singles drought when she defeated Italy's Francesca Schiavone in Paris. Her victory was watched by 116 million viewers in China, according to the WTA Tour. Since then, Li has signed deals with German carmaker Daimler AG's Mercedes-Benz brand and Chinese insurance company Taikang Life Insurance Co, Eisenbud said. "It was hard to set the price" after Li's triumph in Paris, Eisenbud said. "We had to change it a lot." She'll wear the Mercedes-Benz and Taikang logos as patches on the sleeves of her outfit, made by her clothing and footwear sponsor, Nike. She is the only tennis player allowed to do so by Nike. Eisenbud said her other new deals - which include two "blue-chip global brands" and a Chinese real estate company that will help Li build a tennis academy - would be announced later this year. Marketing experts and sport analysts said Li's personality and her emergence as a true international star made her an instant darling among foreign brands looking to break into China. "Her appeal is that she has the ability to crack the Chinese market, which is such an important and hard market for American and European brands to get into, or to establish a foothold," said Nigel Currie, director of London-based sports marketing agency brand Rapport. "The holy grail of marketing on a global scale is to crack the Chinese market." Professor Jin Can, a sports researcher at the Chinese Academy of Social Sciences, said: "There are just a handful of well-recognised sports stars in China. "After Yao Ming's retirement, top athletes such as Li Na will become a rare species and will be chased by an increasing number of international brands." Zhang Pingyi, marketing director of Double Edge Advertising, said Li's personality was also a big plus. She was seen by many as a bold, no-nonsense fighter with a sense of humour. Unlike many state-trained and state-controlled athletes, Li is more media-savvy and independent-minded. "Her [attractiveness] can only be matched by Yao Ming," Wu Rongzhao, chief executive of China Hongxing Sports, a leading sportswear maker on the mainland, said unlike stars in traditional Chinese sports such as table tennis or badminton, Li has managed to break into a sport long dominated by Westerners. Wu said that gave the star extra appeal. "It gives [Chinese] consumers a taste of global success. Now it is important to associate your products with a global taste in order to win customers," he said. Li's history-making run in Melbourne at the start of the season had already led to sponsorship deals with Swiss watch brand Rolex Group, the US-based ice cream maker Haagen-Dazs and Chinese website Sina.

Passengership numbers of the Beijing-Shanghai high-speed rail line seem to have fallen sharply, according to a Ministry of Railways website. Trains departing Beijing for Shanghai today have plenty of surplus tickets, with as many as 924 seats available on a train. That implies many near-empty carriages, according to the train ticket booking website. That is a sharp reversal of fortunes from the initial feverish demand for the service (which was launched on June 30), which subsided following frequent breakdowns and the train disaster in Wenzhou. More than 70 per cent of tickets for first- and second-class cabins of the Beijing-Shanghai route remain unsold since a string of power cuts caused long delays and the deaths of 40 people in the Wenzhou tragedy on July 23, Shanghai's Oriental Morning Post reported. The expensive business class seats were almost empty, the newspaper said. However, the railways ministry said in a statement yesterday that the passengers on the Beijing-Shanghai line averaged 170,000 passengers per day in its first month of operation, and has an "average daily attendance rate...[of] 107 per cent". For the airlines industry, demand for air travel between Beijing and Shanghai rose steadily near the 90 per cent level last week, amid concerns about the safety of high-speed rail travel, according to tourism consultancy firms. Hou Tao , vice-president of Beijing-based consultancy ENTravel, said that passenger travel rates at major airlines were gradually returning to previous levels from a low of about 4 per cent early last month - the initial period after the start of the high-speed rail service. Prior to the railway problems, many mainland airlines had predicted that it would capture some 20 per cent of the market, but the latest data suggested a smaller impact, Hou said. "We expect flights between Beijing and Shanghai to hit high attendance rates in the next four to six weeks," he said. Hou also said he believes that the high-speed train service is less likely to succeed in grabbing market share from the airlines by the end of the year before its problems are resolved. "But high-speed trains will remain a big threat to the airlines in the coming decade." Meanwhile, the airlines are cashing in on the public's shaken confidence in the high-speed rail service. eLong, an air ticket booking website, shows that more than 34 out of 46 flights departing Beijing for Shanghai are now being sold at the full fare of 1,130 yuan (HK$1,363) for economy class seats. Previously, air fares had fallen between 10 and 20 per cent due to competition from the high-speed rail service. The aviation route between Beijing and Shanghai is among the most lucrative legs for mainland carriers because the two-hour flight attracts many business travellers. That is despite the cost, which is twice that of the five-hour high-speed rail service. The Beijing-Shanghai high-speed train service has often declared emergencies after its launch, citing power failures or other problems. It has drawn heavy criticisms for wasting passengers' time and money.

China's central bank has halted offshore yuan borrowing by domestic companies, official media reported, a move seen as an attempt to clamp down on hot money flows at a time when the authorities are still tightening policy. The move is unlikely to slow the growth of the offshore yuan or “CNH” market in Hong Kong as Beijing still encourages the outward flow of yuan via trade settlements and foreign direct investment and has recently tweaked rules to encourage trade. Citing unidentified sources, the official Shanghai Securities News reported on Tuesday that the People’s Bank of China had told banks in mid-July that it would stop accepting applications for direct offshore yuan borrowing from mainland companies. The step is expected to hit a growing trend among mainland companies of borrowing relatively cheap offshore yuan in Hong Kong and remitting it home for business purposes to circumvent tight domestic cash conditions in the mainland. Borrowing rates in the offshore market are much lower compared with onshore because of a shortage of investable yuan-linked assets and due to strict barriers to cross-border capital flows. “At a time when the authorities are tightening policy, it seems odd that mainland companies can borrow cheap funds in Hong Kong and remit them onshore, so this seems like an extension of the tightening,” said a strategist at a European Bank in Hong Kong. On Monday, the central bank reiterated that fighting inflation remained its policy priority. Since October, it has raised interest rates five times and bank required reserves nine times to prevent rising prices from fuelling social unrest. But even with the steady tightening, China’s inflation hit a three-year high of 6.4 per cent in June. Tightening monetary conditions have forced small to medium-sized mainland companies to tap the shadow banking system where anecdotal evidence shows lending rates are as high as 18 to 25 per cent and of late the international debt and CNH markets. At US$14.3 billion year-to-date, high-yield issuances in the international bond markets have already eclipsed the last year numbers with China accounting for a nearly 70 per cent market share. Closer to home, HSBC (SEHK: 0005) estimates bonds of “sub-investment-grade quality” make up roughly a seventh of the 138 billion yuan in total outstanding offshore yuan debt. In the second half of last year, such issuances were virtually non-existent. With the cash squeeze showing no signs of abating, mainland companies have also resorted to raising cheap yuan funds from offshore banks via Hong Kong subsidiaries and remitting it back to the mainland disguising it as trade flows. Month-on-month growth in renminbi deposits in Hong Kong decelerated in June to a tiny 4.8 billion yuan (US$746 million), less than a tenth of the average monthly increase of 46 billion yuan during the first five months of this year, underscoring the rising trend of more Beijing-directed corporate flows. While the latest measures show China is intent on clamping down on hot money inflows disguised as trade, authorities have taken steps to boost trade-related activity. Last week, the Hong Kong Monetary Authority tweaked market regulations by allowing banks participating in offshore yuan business to consolidate their positions by including their trades in the foreign exchange market. “We think the regulation change to enable intra-group consolidation of trade-related yuan positions will help to facilitate the global expansion of yuan trade settlement,” Deutsche Bank strategists said in a note. Since landmark reforms last July allowed banks in Hong Kong to freely trade renminbi, trade settled in China’s currency has grown six-fold. Yuan-settled trade accounted for 7 per cent of China’s total trade in the March quarter compared with less than 1 per cent in the prior year.

China Mobile Ltd cut international roaming fees charged for 38 countries and regions by as much as 80 percent on Monday in the hope of maintaining high-end users' loyalty amid the increasingly intense domestic competition. The carrier, which had 616.8 million mobile subscribers by June, said in a company announcement that it cut the roaming charges in countries and regions including Australia, Germany, Canada and Singapore - popular destinations for Chinese travelers. China Mobile clients in Singapore will now pay 0.99 yuan (15 cents) a minute to call the Chinese mainland, a 75 percent decrease from the previous 3.99 yuan a minute. Data traffic fees in Canada were cut by 80 percent to 0.01 yuan a kilobyte. The reductions are China Mobile's fourth price adjustment since 2010. The company said it was able to negotiate less expensive roaming deals for its users with international operators because of the increasing number of Chinese going abroad. "China Mobile has an incentive to cut roaming fees because about 80 percent to 90 percent of profit was earned by foreign operator partners," said Xiang Ligang, a Beijing-based telecom observer who also runs an industry website. Chinese users have long complained about the steep roaming fees, so the operator responded, using its clout in the global mobile industry to negotiate a bargain, Xiang added. Meanwhile, the carrier faced stronger challenges from domestic rivals in competing for mid- and high-end mobile-phone users, who usually pay more than 200 yuan a month. China Unicom (Hong Kong) Ltd, the country's No 2 operator after China Mobile, has already cut international roaming fees twice this year. China Unicom customers pay about 2.8 yuan a minute to call China from most European countries and 1.5 yuan from the United States. China Telecom Corp Ltd, the nation's smallest carrier by subscriber numbers, cut international roaming charges in 17 countries and regions by as much as 80 percent by the end of 2010. Industry experts said that of the three Chinese carriers, China Unicom may have an advantage in Europe in securing a favorable international roaming fee because it runs a WCDMA network, the same as most European carriers. However, China Mobile has the clout in more countries and regions to negotiate a fair price. "This has been China Mobile's biggest roaming-fee cut in the past 10 years. I think it will help the company to maintain the loyalty of high-end users, or even win back users lost to rivals," said Ji Chendong, an analyst with the research firm Frost & Sullivan. He added that China Mobile gained relatively less benefit than its rivals from the development of the third generation (3G) mobile era because its homegrown 3G technology failed to attract enough industry partners. However, China Unicom and China Telecom have taken advantage of the rise of the 3G era and have started to grab bigger market shares in China. "The competition for the high-end users has been intense, especially when China Unicom draws a large number of 3G users through the hot sales of iPhones," Ji said. But iPhone users who subscribe to China Mobile, which runs on the 2G network in China - because iPhone does not support China Mobile's 3G standard - can access 3G WCDMA networks in European countries. "With the lower prices, some people may stick to China Mobile services," Ji added.

Workers at a factory in Huaibei, Anhui province, process garments for export to Southeast Asia. The newly released official PMI fell to a 29-month low. China's official purchasing managers' index (PMI), a key gauge of manufacturing activity, fell for a fourth straight month to a 29-month low of 50.7 in July, while releasing positive signs for economic growth. According to data released by the China Federation of Logistics and Purchasing (CFLP) on Monday, the official PMI dropped by 0.2 point from June's 50.9. In May, it had fallen by 1.1 points from 52. A PMI of 50 or greater indicates growth and less than 50 indicates contraction. Cai Jin, deputy director of the CFLP, said the smaller decline signals that economic growth is stabilizing and in the rest of 2011 will accelerate appropriately, after a mild slowdown. Despite the figure's repeated declines, the better-than-expected figure and several subindices under the PMI jointly indicate a brighter picture than previous months, analysts said. The new-orders component rose from 50.8 in June to 52.1 in July, while the finished-goods inventory dropped from 51.0 to 49.2. And prices in the industrial sector remain under pressure as the input-price component fell slightly from 56.7 to 56.3. "Historical data show that the 'total new orders less finished goods inventory' holds some power in forecasting PMI for the month ahead," said Zhang Zhiwei, Nomura Holdings Inc's chief economist for China, in a research note. Zhang predicted that the PMI would reverse its downtrend in coming months. "The positive signals from the PMI in July reinforce our view that China is experiencing an economic soft patch, not a hard landing," Zhang said. Industrial production in June rebounded surprisingly despite weak PMI data in the past several months, he said, and if industrial production remains strong in July, the government is more likely to stay focused on controlling inflation rather than promoting growth. The seasonally adjusted HSBC PMI, also released on Monday, signaled deterioration in manufacturing sector operating conditions for the first time in a year. That figure fell to 49.3 from 50.1 in June, the lowest since March 2009, and total new order growth eased to near-stagnation amid reports of weak global demand. "This confirms the slowing momentum of growth in the manufacturing sector against the backdrop of sustained tightening and lackluster external demand. That said, the current level of the PMI is still consistent with a 12 to 13 percent growth rate of industrial production, which leaves room for Beijing to maintain its tightening policy through the third quarter to check inflation," said Qu Hongbin, chief economist for China and co-head of Asian economic research at HSBC. China's consumer price index, a key inflation gauge, rose 6.4 percent year-on-year in June, a three-year record high. To soak up liquidity and curb inflation, the central bank has raised interest rates three times and hiked the reserve requirement for commercial lenders six times this year. Concerns about over-tightening economic controls have arisen as inflation remains white hot, but industrial output and the PMI showed repeated declines. On Monday, the central bank emphasized that inflation expectation remains strong and the foundation for stabilizing prices is not yet solid enough, according to an article posted on its website. "Once the policies loosen, the prices are likely to rebound," the central bank said. It vowed to maintain price stability as its top priority and stick to responsive, pre-emptive, and flexible macro-control policies. It also highlighted the necessity of encouraging financial institutions to support small and medium-sized enterprises (SMEs) while controlling total credit. Although analysts are optimistic about manufacturing messages from the new PMI figures, some SMEs in the coastal region are still having financial difficulties.

Defense Minister Liang Guanglie proposes a toast on Sunday, July 31, 2011, during a grand banquet in Beijing celebrating the 84th anniversary of the founding of the People's Liberation Army, which falls on August 1, 2011.

Xinhua, the news agency run by Chinese government, joined Time Square’s glowing pantheon of corporate iconography Monday, taking the second-highest position in a tower of flashing displays for Prudential, Coca-Cola, Samsung and Hyundai. The huge LED sign measures 60 feet by 40 feet and replaces a billboard at 2 Times Square that had been leased by HSBC for the last decade. (No word on whether the move is part of HSBC’s just-announced round of cuts.) Xinhua’s ascension to one of the most visible billboards in the world comes on the same day that Al-Jazeera English, an affiliate of the global news organization owned by Qatar, began broadcasting on New York’s Time Warner Cable. For Xinhua, the billboard highlights its shift into more visible position in New York’s media landscape. The state-run news agency recently finalized a deal to move to the top floor of the 44-story skyscraper at 1540 Broadway — the same building that is now home to the huge Forever 21 store and near media giant Thomson Reuters. The company’s North American news operations had previously been headquartered in Woodside, Queens. “We are doing more coverage here,” Zeng Hu, Xinhua’s North America bureau chief, told WSJ’s Anton Troianovski in June. With the move to Manhattan, he said the agency may increase its New York staff. The billboard will bring new visibility to the news organization, but it won’t help spread Xinhua’s news to tourists and office workers hurrying through Times Square.

Urbanization is a cornerstone of China’s development strategy. But the relationship between a growing urban population and a sustainable growth path isn’t as straightforward as many investors believe. China’s urbanization, and its beneficial effect on growth, is taken as an article of faith. Concerned about a Japan-style collapse in China’s property sector? Don’t worry, a growing urban population underpins demand for apartments. Worried about China’s overreliance on investment as a driver of growth? Fear not, a growing army of city slickers will have higher incomes and consume more. The trend in the official data appears clear enough. China’s urban population has grown from 19% of the total in 1980 to 50% in 2010. That is still some way off an urbanization ratio above 70% in many developed countries, so there is more to come. Urban per capita disposable income in 2010 was more than three times income in rural areas, and 86% of retail sales came from urban areas, so the transition to city life should support higher levels of consumption. But as is often the case with China’s data, not all is what it seems. The crucial point is that rural residents can move to the city, but without an urban residence permit—known as an urban hukou—they are confined to the margins of city life. According to Professor Kam Wing Chan, an expert on China’s urbanization at the University of Washington, the share of China’s population that has urban residence rights is around 35%, substantially below the 50% of the population that live in the cities.

BMW AG said Tuesday its second-quarter net profit more than doubled due to booming demand for luxury cars in major markets such as China. The German vehicle manufacturer's net profit jumped to €1.8 billion ($2.57 billion), compared with €831 million in the same period a year earlier. Revenue rose 17% to €17.89 billion from €15.35 billion. BMW said it hopes to sell a record 1.6 million-plus cars in 2011, even though momentum is expected to slow in the second half due to model changeovers.

Hong Kong*:  Aug 3 2011  Share

Fears supersized carriers may corner market - Fleets owned by mining companies may lead to a majority control of China-bound iron ore shipments - When two shipyards in South Korea and China held naming ceremonies earlier this year for two 400,000 deadweight tonne iron ore carriers, they signalled a shift in the dynamics of the global ore transportation market. The two ships - Vale Brazil and Vale China - are among 19 sister vessels ordered by the Brazilian commodities company Vale, at a total cost of US$2.35 billion from Daewoo Shipbuilding and Marine Engineering and China Rongsheng Heavy Industries. Vale has also signalled its intention to charter a further 16 supersized ore carriers from other owners. These are more than twice the size of conventional Capesize dry cargo ships of around 180,000 dwt. But Vale's move has caused consternation among the shipping industry. The China Shipowners' Association recently warned of dire consequences for mainland shipowners and the country's steel industry if mining firms own ships. Zhang Shouguo, executive vice-president and secretary general of the association said that by owning ships, Vale and other mining companies intended to monopolise or control the majority of China-bound iron ore shipments because they would get to control freight rates along with iron ore prices. "If those mining giants monopolised China-bound iron ore transportation, it would severely impact the Chinese shipping community. It would also have an adverse impact on the development of the Chinese steel industry as well as the Chinese economy. The consequence would be very serious," Zhang said. This could plunge shipping companies into the red. Zhang said if Vale and other mining companies owned ships, if would mean less business for mainland, Hong Kong and other owners of large dry bulk ships. Fewer ships would be chartered because fewer cargoes would be transported by independent owners. This would depress freight rates at a time shipowners are already reeling from a slump in charter rates because so many new Capesize vessels have been delivered. Fewer cargoes would also reduce the number of cargo fixtures handled by shipbrokers, which could cut their earnings. "It is a big issue," said one Hong Kong shipbroker, who preferred not to be named. But while not understating Zhang's comments, shipbrokers said the volume of Brazilian iron ore imported into China fell last year and mainland steel companies and traders benefited from a pricing advantage of shipping ore from Australia. While freight rates are higher from Australia to China compared with Brazil, the voyage length is much shorter - about eight to 10 days compared with about 40 days from Brazil. Vale is building large ore carriers to generate increased economies of scale so it can more readily compete with the Australian ore producers. Shipbrokers also pointed out mainland steel mills had signed long-term contracts with shipping companies including China Ocean Shipping (Group), which had also reduced the number of charters available in the Capesize sector. One shipbroker said the impact on the dry bulk market from Vale's owned fleet would be felt in the next 12 to 24 months as the ships were due to be delivered between now and 2012. China imported 130.9 million tonnes of iron ore from Brazil in 2010, according to figures from the mainland's customs bureau. But this was down 9 per cent year on year, while iron ore imports from Australia climbed 1.4 per cent to 265.3 million tonnes. Imports from India were down almost 10 per cent to 96.6 million tonnes last year. China has also been importing iron ore from other sources including Ukraine and Venezuela to reduce its dependence on imports from the three main miners, Vale, Rio Tinto and BHP Billiton. "Zhang's comments should be seen in the context of what has been happening with China's iron ore imports and in the Capesize shipping sector," said one shipping source.

The new Tamar government offices welcomed its first occupants on Monday – as Commerce and Economic Development Bureau officials moved into the building’s West Wing. They are the first government department staffers to move in and will be located on the 23rd floor. To mark the event, a flag-raising ceremony was held on Monday morning, local media reported. Commerce and Economic Development Bureau Permanent Secretary Andrew Wong Ho-yuen said the interior work had been completed last week. Wong said tests had also been conducted on the building’s telecommunication and electrical systems. He said that while there were still some minor flaws, staff could now start work in their new offices. About 120 civil servants have now moved to the Tamar site, a HK$5 billion waterfront office tower, located in Admiralty. Other government departments will move in before the end of the year. The Legislative Council is scheduled to relocate to its own Tamar office complex on August 10.

Obama announces US deficit deal - President Barack Obama speaks at the White House about a deal being reached to raise the US debt limit in Washington on Monday. President Barack Obama on Monday announced a last-minute deal to raise the US borrowing limit and urged lawmakers to "do the right thing" and approve the proposed agreement to avert a catastrophic default. Laying out the endgame in the crisis just two days before a deadline to lift the US debt ceiling, the White House and both Republican and Democratic leaders in Congress said the compromise would cut about US$2.4 trillion from the deficit over the next 10 years. Now that top lawmakers have sealed a deal, both the Senate and House of Representatives are expected to vote on Monday. While Senate approval is likely, the agreement’s fate may be less certain in the House. After weeks of acrimonious impasse and with the final outcome hinging on support from recalcitrant lawmakers, Obama pressured both sides to carry to fruition the accord hammered out behind closed doors. “The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default – a default that would have had a devastating effect on our economy,” Obama told reporters at the White House. “I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days,” Obama said. The plan involved a two-step process for reducing the US deficit. The first phase calls for about US$900 billion in spending cuts over the next decade and the next US$1.5 trillion in savings must be found by a special congressional committee. Congress must act by December 23, this year, under the deal. Republicans had insisted on deep spending cuts before they would consider raising the US$14.3 trillion limit on US borrowing, turning a normally routine legislative matter into a dangerous game of brinkmanship. Financial markets showed immediate signs of relief after becoming unnerved in recent days as lawmakers neared an August 2 deadline to raise the limit on America’s borrowing or risk the world’s largest economy running out of money to pay its bills. The Japanese stock index rose 1.8 per cent, US stock futures built on earlier gains and the US dollar rose modestly against the yen and the Swiss franc. Gold fell more than 1 per cent, indicating investors had begun to shift out of safe havens. “For the rally to be durable, markets will need more than this downpayment agreement,” said Mohamed El-Erian, co-chief investment officer at PIMCO, the world’s biggest bond fund. “They will look to a more coherent fiscal reform to emerge from the second step and, more generally, for additional measures to remove structural impediments to growth and jobs,” he said. While the deal means the United States is unlikely to default, it is far from certain whether the plan agreed by the White House and lawmakers goes far enough in reducing the deficit to appease credit ratings agency S&P, which has threatened to strip America of its top-notch AAA rating. A deal would ease the immediate crisis but repercussions will be felt for years to come. Bitter brinkmanship has turned dysfunction seemingly into the norm in Washington, undercut America’s stature as the world’s capitalist superpower and set the stage for a deeply ideologically next year presidential race when President Barack Obama is seeking re-election. Congressional leaders will now have to gauge whether they have the votes to pass the deal – which has sharp spending cuts and no new taxes – in the Senate and the House. In the house the political calculus is complicated by the entrenched opposition of some members affiliated with the conservative Tea Party movement. House of Representatives Speaker John Boehner, who will face opposition from those conservatives in his ranks, told Republicans he backed the accord but that it was not the “greatest deal in the world.” Already, some conservatives in his party said they would not sign on. Democratic Leader Nancy Pelosi, a leading liberal considered crucial to delivering enough Democratic votes to offset Republican defections, suggested earlier that the terms under negotiation would be a tough sell in her party. But in the Senate, passage appeared more certain. “I am relieved to say that leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise,” Senate Democratic Leader Harry Reid said on the Senate floor. Senate Republican Leader Mitch McConnell followed, saying: “We can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations,” McConnell said. White House senior adviser David Plouffe said on Monday that he believes the newly minted deal to raise the US debt ceiling will pass both houses of Congress and be signed into law by President Barack Obama. Plouffe also appeared to clash with Boehner, who said on Sunday that the deal included no tax hikes. “That’s just not true,” he said. “If we’re going to do additional deficit-reduction in the fall, it should be tax reform, closing loopholes for the wealthy and big corporations.”

HSBC Holdings PLC on Monday said it is slashing around 30,000 jobs to cut costs and revamp its business, as the banking giant follows through on a May plan to withdraw from some countries and refocus its operations on high-growth markets. On top of 5,000 jobs already under the ax in the U.S., U.K., France, Latin America and Middle East, around 25,000 further roles will be cut between now and 2013, Chief Executive Stuart Gulliver told reporters. He said the bank is still hiring in some countries, though, and that the net headcount reduction could be much smaller. HSBC made the announcement as it reported first-half net profit attributable to shareholders rose 35% to $8.9 billion from $6.6 billion, mainly from the effect of previously-flagged lower tax charges. Revenue was flat at $35.7 billion, with weakness in Europe and HSBC's Global Banking & Markets division offsetting double-digit percentage revenue growth in Hong Kong, the rest of Asia Pacific and Latin America. North American revenue also sank as the bank's run-off U.S. consumer loan portfolios got smaller and produced less money. HSBC shares were recently up 4.7% after trading up by about 1.5% just before the announcement. European and Asian stock indexes rose Monday after the U.S. late Sunday announced a last-minute agreement to raise its debt ceiling, averting a possible default. Mr. Gulliver said the agreement is welcome and will hopefully foster more stability in financial markets. HSBC's job-cut plans were expected, after Mr. Gulliver in May presented a strategic plan for the bank to shave up to $3.5 billion from its annual cost base by 2013, exit retail banking in some countries and tap a growing base of wealthy consumers in target markets. Other major U.S. and European banks have also announced job cuts recently, as higher regulatory costs bite into their profits and amid a slump in revenue from bread-and-butter activities such as fixed-income trading. So far, HSBC has said it will stop offering retail banking in Russia and Poland, and has started reorganizing its operations in several other countries. The bank late Sunday said it was selling 195 retail-banking branches in upstate New York to First Niagara Financial Group Inc. for $1 billion in cash, a move Gulliver had said was under consideration in May.

Macau, the world's largest gambling market, blew past expectations to post a 48.4 per cent rise in July gambling revenue, underscoring unflagging demand from China's newly minted millionaires and burgeoning middle class. Cash-rich mainland gamblers, who contribute the bulk of earnings have helped the former Portuguese colony maintain stellar gaming revenue since the start of the year. July revenue was 24.2 billion patacas (US$3.01 billion), the second highest gathis year and just shy of May’s record 24.3 billion patacas that was attributed to a week-long public holiday and the opening of a new casino resort. Macau, a major market for US casino operators including MGM China Holdings, Sands China and Wynn Macau, is likely to post full-year revenue more than five times higher than that of rival Las Vegas. Analysts were surprised by the strength of July’s gaming numbers, with most predicting 22 billion to 23 billion patacas. “The Chinese are just too in love with gaming,” said Victor Yip, analyst at brokerage UOB Kay Hian in Hong Kong. “I think in the last week there was some very strong luck in one or two particular casinos that drove the whole gross gaming revenues up.” A maze of glitzy facades and kitsch interiors, Macau is the only place Chinese people are allowed to legally casino gamble. Since the arrival of US casino giants in 2004, Macau has evolved from a seedy hub rife with piracy and smuggling into a more upscale destination brimming with luxury shops and expensive restaurants. Casino shares skyrocketed on Monday with Galaxy Entertainment (SEHK: 0027) up 8.7 per cent, Sands China up 7.7 per cent, Wynn Macau up 6 per cent, MGM China up 4.4 per cent, SJM up 6.8 per cent and Melco International Development (SEHK: 0200, announcements, news) up 7 per cent by 3pm. Shares of Macau casino operators have surged over the past year. Galaxy, owned by Hong Kong property construction tycoon Lui Che-woo, has more than tripled in value and SJM, controlled by the family of Macau kingpin Stanley Ho hung-sun, has more than doubled. Billionaire Sheldon Adelson’s Las Vegas Sands and casino mogul Steve Wynn’s Wynn Resorts posted strong second quarter profits, bolstered by stellar growth in their Macau casinos. Macau operators are not without their risks. Heavily dependent on China’s high rolling VIP sector, which contributes 80 per cent of gaming revenue, the segment is vulnerable to a tightening of credit impacting the amount of liquidity available to China’s super rich. The VIP sector relies on junkets, middle men who act as loan sharks to Chinese gamblers, helping them bypass currency restrictions and taking responsibility for debt collection. The system helps operators, who pay junkets a chunky commission fee for their services, gain access to China’s elite as direct marketing of gambling is prohibited in the mainland. Uncertainty over the renewal of licenses for the six casino operators when they start to expire in 2020, is starting to impact the ability of firms to secure funding from foreign lenders. MGM China, Galaxy Entertainment, SJM and Melco Crown International are due to post second quarter earnings later this month.

 China*:  Aug 3 2011  Share

Guangzhou's quest for reinvention - The city stands poised for an industrial revolution over the next five years as it seeks to remake itself into a technology, research and development hub - Imagine it is a beautiful clear day in Guangzhou and the year is 2015. Businessmen are embarking on high-speed trains to Wuhan, Changsha, or as far as Xiamen; and while they keep their appointments, their wives spend time having high tea, having their hair done, or shopping. Trendy day-trippers in Hong Kong jump aboard the newly-commissioned Hong Kong-Shenzhen-Guangzhou express rail trains and arrive in Guangzhou within 50 minutes. They hunt for the latest fashion on sale in local stores, before pausing for a freshly-brewed cappuccino at swanky pavement cafes. Outside Guangzhou, in Panyu and Nansha, new industrial parks have sprung up. They have become home to car manufacturers and hi-tech product makers, as well as research and development companies. "Guangzhou will have become a regional hub, catching up rapidly with Shanghai in terms of affluence and living standards," said Dr Thomas Chan Man-hung, director of Hong Kong Polytechnic University's public policy research institute. "By 2015, it will have played a key role in the province's metamorphosis." Policies outlined in the city's 12th five-year plan for 2011 to 2015 call for an industrial revolution in the Pearl River Delta to drive the "factory of the world" up the technology and value chain, and to become a research and development hub. Manufacturers that use imported raw materials to process and produce exports, and are largely labour-intensive, energy-consuming and polluting in nature, are deemed unwelcome under the five-year plan. While they presently account for about 60 per cent of the city's exports and some 59,500 Hong Kong factory owners are prominent among them, their days are numbered, Chan said. "Labour-intensive and polluting factories will be wiped out sooner or later," he said. "Expect a tidal wave of runaway factory bosses in [the] coming months." When the polluting factories are finally gone, Guangzhou's blue skies would be restored, he said. Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong predicts the number of Hong Kong factory bosses in Guangzhou would decline over time rather than vanish overnight. But whatever the time frame, that outcome is certain, he said. "All factors point to the demise of labour-intensive and primitive industries," said Lau, whose factory in Dalang town in Dongguan produces curtain walls for skyscrapers. Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries (FHKI), expects one in every three Hong Kong factories across the border to be swept out of business by industrial reforms unless they upgrade themselves. A survey conducted by the federation two years ago found that there were about 59,500 Hong Kong factories in the Pearl River Delta. Some of those surveyed noted that even without industrial reforms, ballooning costs, the ongoing strengthening of the yuan, and an uncertain economic climate in the United States and Europe, left them with little choice but to add value to their products. Or they could migrate to lower-cost regions, build brands or develop products with their own industrial designs. The mainland's Ministry of Human Resources and Social Security said on July 25 that 18 regions had raised their minimum wages, with Shenzhen topping the nation's highest at 1,320 yuan a month. A growing number of Hong Kong manufacturers have meanwhile bet their future on domestic consumption on the mainland. They plan to plug into the thriving markets in Shanghai and Beijing, and booming regional markets such as Guangzhou, Jiangsu, Dalian and Wuhan. Mandarin Enterprises (International) - a textile firm that supplies fabrics to US first lady Michelle Obama and to high-fashion labels such as Burberry, Max Mara, and Lanvin - plans to collaborate with a group of exporters to penetrate those markets. Managing director Estella Kwan Tak-ying said a group of factory bosses were on the verge of forming a charity organisation, which would serve as a platform for Hong Kong manufacturers to exchange information and share retail and wholesale experiences on the mainland. "Manufacturing and retailing are two different industries," she said. "Most manufacturers are small- and medium-sized enterprises. A collective body will provide more resources and experience." TAL Group is a Hong Kong garment manufacturer with a factory in Dongguan. It sells one out of every six men's dress shirts sold in the US, and it chooses to maintain its focus on manufacturing as it has in the past 64 years. The company, however, said it would differentiate itself from rivals with innovative technologies and expanded supply chain services. Chief operating officer Roger Lee said the company plans to trial customised fashion next year by offering made-to-measure services for customers with deep pockets. For example, shoppers in Selfridges department store in London would be able to order customised fashion by choosing their favourite fabrics and designs, and have their size measured by a three-dimensional body scanner. The measurements would be digitalised, and the garments would be made in the company's factories in China, Vietnam, Malaysia and Indonesia, before they are shipped to customers. "The trend is customised fashion," said Lee, among the third-generation successors to his late great uncle C.C. Lee, the company's founder. "We see ourselves as scientists, not just garment makers." Although Lee concedes that customised fashion is expensive and cost-ineffective in the early stages, he reckons it would pay off upon reaching a certain economy of scale and technological advance. TAL Group, a manufacturer for fashion houses such as Brooks Brothers and Burberry, is capitalising on the engineering and forecasting expertise of Delman Lee, Lee's cousin and the firm's president and chief technology officer. The company invented a technology that uses its manufacturing and distribution experience to forecast and manage inventory for its customers, Lee said. FHKI's Lau said the Pearl River Delta would retain its reputation as the world's factory, but as one with better quality and technologically advanced products.

Thousands of taxi drivers in China's eastern city of Hangzhou went on strike on Monday over high petrol prices and traffic congestion, while drivers in Shanghai also protested over benefits. In Hangzhou, drivers parked their cars at several locations in the city, a major tourist centre, while others simply stayed on the road and refused to take passengers, state media and taxi company officials said. Some media estimates put the number of strikers as high as 4,000 drivers. Police declined to comment. Xinhua news agency cited a driver as saying his income had been hurt by high fuel prices and traffic jams, which limit the number of passengers he can pick up during a shift. “We know the strike is going on. We told our drivers not to participate,” an official from the Hangzhou Jingwei Taxi Company, who declined to be named, told reporters. Hangzhou, known for the scenic West Lake, deployed extra police and closed some roads because of the strike, whose start coincided with the morning rush hour. Calls circulated anonymously on the Internet for the Hangzhou strike to continue for a total of three days. In Shanghai, drivers from one of the city’s smaller taxi companies, Fuxin, parked along a major road in a western suburb with signs posted in their windows protesting what they claimed was a lack of retirement benefits, local media reported. The company said it was negotiating with the drivers. In April, truck drivers in Shanghai also went on strike over rising fuel costs, disrupting operations at the city’s ports. China’s consumer price index rose an annual 6.4 per cent in June, the highest level in three years, and the government is worried about the potential for rising prices to cause social unrest.

Remake, Remodel, Rebrand - for many overseas observers the company is still an unknown quantity. "I didn't know that Li-Ning was a sports-clothing brand until I saw my Chinese classmate wearing one of their T-shirts. I am not sure whether the brand suits mebecause I know nothing about the culture or spirit behind it," said Benit, the UK-based student. "In my opinion, Li-Ning's new brand promotion didn't achieve the desired effect after one year," said Ding Jiayong, a professor of advertising and consumer behavior at Nanjing Normal University. According to Tsinghua University's Bastin, Chinese companies need to reconsider their methods of gaining recognition from foreign consumers through their brand names, logos and billboards. "For example, 'Meters/bonwe' is a brand of sports clothing, but the name seems too long to remember. oreover, it has no meaning in English or any other language, which is confusing for foreign consumers," he said. Ding said that brand internationalization is the only way for a company to accelerate its overseas development. The lesson to be learned from some of the more successful campaigns is that communicating the brand's spirit in line with a global zeitgeist - such as happiness, bravery and energy - to the target consumers is the most important thing, he said. For example, Nike Inc's "Just do it" logo exemplifies a mixture of confidence and power that satisfies the psychological needs of young people. "Li-Ning doesn't have clear brand-positioning, and they are losing consumers under the age of 25," said Ding. Li-Ning launched its online store on eBay.com in July, 2010 in order to broaden its sales channels overseas. In the aftermath of the 2008 financial crisis, e-business helped Li-Ning reduce its marketing costs and improve its brand awareness internationally. The company's former Chief Financial Officer, Chen Weicheng, said that future international competition may not depend on the increase in product sales, but rather on quality and brand influence. Haier Group, a Chinese "white goods" manufacturer whose products include refrigerators, washing machines and air conditioners, won the largest market share for major appliances in the fourth quarter of 2009 after a promotional campaign as a sponsor of the US National Basketball Association. Haier was also one of the main sponsors of the Beijing Olympic Games in 2008, which broadcast the company's name to audiences on every continent. The company is now focusing on building its brand around an image of tech-savvy awareness. "Haier aims to create a world-famous brand in the age of the Internet, which features 'satisfying the personalized needs of users in a short time,'" according to its website. According to British Telecom's Kevin Taylor, a global branding campaign will also require Chinese entrepreneurs to improve after-sales services to handle customer queries, complaints and feedback in many languages, which is "a demanding and complex task". "Chinese companies will ultimately overcome these challenges, and the world's consumers will be richer for the choice Chinese brands will offer," said Taylor.

Valentine's gifts are hot items - A girl shows gifts meant for couples at a shop in Yangzhou, Jiangsu province, July 31. Because of the upcoming traditional Chinese Valentine's Day (the 7th day of the 7th month on the lunar calendar), shops are selling love gifts, which are popular among young couples.

Wang Yousheng, a fisherman, prepares the cormorants he trained for fish hunting in Jiedu township, Leping city, East China's Jiangxi province, July 31, 2011 and a cormorant catches a fish. As a traditional skill passed down for generations, hunting fish with cormorants is seldom seen in China anymore due to industrialization and people moving to live in cities. 

Hong Kong*:  Aug 2 2011  Share

More than 10 countries are in talks with Beijing to sign bilateral tax agreements that would exempt their nationals and companies from paying the new social security tax. Hong Kong, with hundreds of thousands of residents working on the mainland, will be most affected, with both workers and firms sharing the burden. But the government has only been "reflecting Hong Kong businesses' concerns to the mainland authorities through established communication channels", according to a government spokesman. The United States, Japan and Russia are among countries negotiating with Beijing. The final draft of the national Social Insurance Law - originally scheduled to be implemented on July 1 - has now been finalised. It is waiting for State Council approval, according to a person close to the situation. All foreign workers will have to contribute to social security insurance, which covers medical insurance, unemployment benefits, work-place injury protection, maternity leave and a housing provident fund. Under the plans, a foreign worker earning 10,000 yuan (HK$12,068) a month would pay 1,800 yuan in social security, plus 335 yuan in income tax - more than 21 per cent of their salary. In addition, with an employee on the same salary a foreign firm will pay 4,400 yuan a month in social security. The foreign contributors will only be able to get their money back after paying into the funds for more than 15 years. The regulation has caused concern among overseas workers. Hong Kong, Macau and Taiwan are considered by Beijing to be part of China - but they have different tax regimes and their residents working on the mainland are treated as overseas workers. "The details will be laid out in about two months - likely before [October 1] National Day. But as for when the law will take effect, it probably will take longer since it needs time for these instructions to get to the provincial and city level. A safe estimate is some time around the new year," the source said. Authorities have told parties involved in the consultation that the law should be made mandatory, because voluntary contributions would "defeat the purpose of protecting overseas workers", the person said. Many aspects of the new regulation remain unclear - such as whether it will apply to all foreign workers or just those who are on local contracts. But facing the uncertainty and the prospect of rising costs, many countries have started tax exemption talks with Beijing. Hideki Fukami, first secretary of the Japanese embassy in China, said his diplomatic mission wanted talks with the central government at the request of the business community. Japan has about 70,000 nationals working on the mainland. If all of them paid social security tax, it would cost about 58 billion yen (HK$5.88 billion) a year. A Japanese business magazine, Diamond Weekly, said negotiations between the two sides could take three years. A spokeswoman for the Russian consulate general in Guangzhou also confirmed that their government was looking into the possibility of signing a bilateral agreement with China. Sources have confirmed that the US is in a similar position. At present, only South Korea and Germany have agreements with Beijing that mutually exempt their nationals from paying local social security tax. Without an agreement, Hong Kong residents working on the mainland will have to fork out a large proportion of their salaries for a fund that few of them are expected to enjoy. But various government departments, including the Constitutional and Mainland Affairs Bureau and the Financial Services and the Treasury Bureau, said they were not seeking such an agreement and did not know which government department should be responsible. The Hong Kong General Chamber of Commerce has said it hoped the regulation would contain a special waiver for Hongkongers. Industry leaders have warned the move could push up operating costs and drive thousands of companies and professionals out of business. William Cheung, a partner at Ernst & Young's Human Capital practice in Beijing, said some businesses had commented on whether contributing to all five funds would be useful for foreign nationals living and working on the mainland. But he denied they objected to the idea, because there were pros and cons. But he said one thing is clear: "The launch of social security will definitely increase employment costs in sending people to work in the PRC. This will affect the cost efficiency for companies relying on lots of overseas management or technical people to support their PRC development." Cheung suggested the authorities provide a grace period to cushion the impact of the mandatory social security, such as six to 12 months. This would be similar to the two months' grace period for participants in Hong Kong's mandatory provident fund when it was launched. Cheung said this would reduce costs and administration if foreign nationals did not plan to stay on the mainland for long. It is estimated there are 600,000 foreign workers on the mainland, excluding 200,000 Hongkongers. Anyone evading the social security payments risks a hefty fine of up to three times the due contributions.

HK urged to push for top institutions - Dean of leading business school says places such as Singapore have taken steps to lure world-class universities like Yale to set up programmes locally - Hong Kong should take a more pro-active approach in attracting world-class educational institutions if it wants to become an international academic hub, the head of a leading business school says. Dipak Jain, the dean of Insead, told the South China Morning Post (SEHK: 0583, announcements, news) Hong Kong is competitive in attracting talent from abroad but needs to improve in nurturing its own talent, which is just as important. "You have the best facilities, which attract many talents to work in Hong Kong. But rather than only just attracting the talents, the city should also create educational institutions that can produce more such talents," said Jain, who became the head of the renowned business school this year. In the 2009 policy address, Chief Executive Donald Tsang Yam-kuen announced a plan to transform Hong Kong into an international hub for education, which he named as one of the six pillar industries vital for the city's long-term development. At the moment, degree programmes offered by the eight publicly funded universities can cater for only 18 per cent of students aged between 17 and 20, according to the University Grants Committee. Six sites have been earmarked for building private universities. The new institutions could increase the number of university places by 27,000. But none have been built. Jain, the former dean of Northwestern University's Kellogg School of Management, said Hong Kong can do better in attracting the best institutions worldwide as it vies for influence in a globalised world. Other places, he said, have been more proactive in doing so. For example, India has laid out plans to attract nearly a dozen world-class universities, while Singapore recently persuaded Yale University to start a four-year liberal arts programme in the city state. The marketing professor was speaking during his first trip to the region as Insead dean. The 54-year-old business school, based in Fontainebleau, France, has opened two campuses abroad - in Abu Dhabi and Singapore - and is planning to expand to the United States. Insead recently introduced a global executive master of business administration programme in Asia. Students can attend weekend classes on its Singapore campus and complete their studies with minimal time off from work. It will also bring its decades-old Advanced Management Programme to its Singapore campus. Jain said the school is determined to extend its reach to Hong Kong and the mainland because there is a huge "desire for education". It has developed a partnership with Tsinghua University in Beijing. Although Insead has no plans to build a second campus in Asia, Jain said the school is constantly looking for more partnerships in the region, including possible joint executive programs with local institutions such as the Hong Kong University of Science and Technology and Chinese University. Jain sits on the advisory board of HKUST's business school. He said Hong Kong was one of the options for the Insead management when it pondered opening a campus in Asia in the 1990s. "At that time they were looking at all the alternatives. Hong Kong was one of them. But they felt they were not sure about 1997," he said. "Also, I think the Singapore government has been very proactive in trying to attract world-class institutions to come and have a base in the city. It has been part of its vision to become a centre for global talent."

Tax-grab idea to fix budget alarms expat Americans - Ending the exclusion of US$92,900 from taxable income will put people off work abroad, critic says - Americans working in Hong Kong are alarmed about a proposed change in US tax legislation that would leave them substantially out of pocket. Amid growing divisions over the size of the US government budget and of its budget deficit, Oklahoma Republican Senator Tom Coburn this month released a proposal that he claimed would produce US$9 trillion in savings over the next decade. Among its measures is the elimination of the foreign earned income tax credit from which expatriate Americans benefit. The US taxes citizens and residents on their worldwide income, but those living and working outside the US are entitled to claim the exclusion, which reduces taxable income. For 2010, the maximum exclusion was US$91,500 per taxpayer, while for 2011 the maximum is US$92,900. The taxpayer may also exclude housing expenses in excess of 16 per cent of this maximum. Republicans Abroad Hong Kong held a lively discussion at the American Club, where Americans of all political leanings who are working in the city voiced their disgust at the proposed tax scheme. "It will affect more than just our personal incomes," Republicans Abroad Hong Kong chairman Chris Exline said. "This compels companies to reconsider sending Americans to work overseas. We understand the quest for additional revenue, but we also think it has to be balanced by meaningful reduction." Exline hoped that it was not too late to make a stand against the legislation, as he had been told by a US government relations firm that it was "almost a done deal". "Washington can be frighteningly swift when making things retroactive. In the current climate, there's such a voracious appetite for revenue it could get passed by Congress this weekend," he said. "This overarching need for revenue would see this legislation enacted sooner rather than later. That's why we have to discuss strategies now on how to make members of Congress aware that expatriates oppose this proposal." Tax expert Kurt Rademacher, international tax practice director at Butler Snow, also gave the initiative the thumbs down. He said the elimination of the exclusion had been proposed numerous times, but it had "never really gotten any legislative legs in the past". Rademacher felt the tax exclusion made sense for a variety of policy reasons. "Non-US resident Americans do not use or benefit from the same government-provided services that US resident Americans do, such as federally subsidised infrastructure, Medicaid, social security, or federal domestic law enforcement," he said. "Accordingly, it is patently unfair that non-US resident Americans should pay the same taxes as Americans who live within the borders of the US."

We're already our own bosses: Tsang - Chief executive answers Wang Guangya's criticism of civil servants by defending his team, and rebuts the claim city's leaders 'don't know how to be the boss' - Chief Executive Donald Tsang used a speech on leadership to address critical comments from Beijing about the city's civil servants. In his first public response to Beijing official Wang Guangya's criticism of the city's civil servants, the chief executive said Hongkongers had to "learn to act as their own boss". Donald Tsang Yam-kuen also defended his governing team, saying officials had been making long-term plans for Hong Kong's future - a process that required a consensus in society, which took time to deliver. He declined to respond when asked if he thought the criticism by Beijing's top man on Hong Kong affairs had been directed at him or his governing team. "Under `one country, two systems', Hong Kong people have to learn to act as their own boss ... it is, in fact, what is happening," Tsang said. "I have been working with my team in making short, medium and long-term plans in accordance with the situation in Hong Kong." Wang, director of the State Council's Hong Kong and Macau Affairs Office, was quoted as saying that colonial rule had trained civil servants to "listen to the boss", but that they "don't know how to be a boss" after the handover. Ironically, Tsang made his comments while speaking at a conference discussing leadership qualities, organised by the Bauhinia Foundation Research Centre, a think tank. Tsang said that in his six years as chief executive, the government had introduced major infrastructure projects, medical reforms, a minimum wage, policies to integrate the city's economy with the mainland, and a plan to develop six pillar industries that would bring long-term benefits to the city. He said public participation was important in the process of policy formulation, and therefore it might take longer to foster consensus in Hong Kong's society. "In order to balance the interests of various sectors and canvass their support, it's inevitable that it may need more time to reach a consensus," Tsang said. But Michael Tien Puk-sun, vice-chairman of former civil servant Regina Ip Lau Suk-yee's New People's Party, said there was a consensus that the city's development had slowed in recent years. He also questioned the progress made in the development of the six new pillar industries. Tsang said he had "a dedicated group of principal officials" in his governing team and praised the civil service as "one of the finest in the world". The government would continue to enhance training to nurture talented young civil servants, he said. So Ping-chi, chairman of the Senior Government Officers Association, said Tsang's response missed Wang's point. "General civil servants understand that Wang was not criticising them, but the leadership." At the conference, Tsang spoke of the personal qualities required to be a good leader. He said they included high moral standards, a passion for serving people and the ability to communicate and work with a team. He picked out humility and self-reflection as vital qualities for a leader in Hong Kong. "You must try to put your ego to one side and acknowledge and admit that other people may have a better proposal," he said. Tsang said a leader also had to be sensitive to the changing needs and priorities of the community, and put forward new ideas to address them. At a separate event, health minister Dr York Chow Yat-ngok responded to Wang's remark by saying that principal officials would humbly listen to criticism.

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