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Hong Kong*:  Nov 1 2011 Share

The Hong Kong paradise fish (top) and the rice fish require conservation. The only freshwater fish named after Hong Kong, identified recently as a new species, is already dwindling in numbers, spurring efforts by scientists to step up a breeding programme. The Hong Kong paradise fish, Macropodus hongkongensis, found only in the city, is threatened by man-made damage to its habitat. Researchers are now examining its genetic make-up with a view to aiding the government's breeding programme. Last year, Chinese University obtained funding of HK$854,440 from the Environment Conservation Fund for a three-year study to see if there are genetic differences within species of fish found in different parts of Hong Kong. Six species are being studied, including two that are of conservation concern - the Hong Kong paradise fish and the rice fish, Oryzias curvinotus. "Animals in the ocean or on land can go anywhere they like, but this is not the case for freshwater fishes in streams," Tsang Ling-ming, a post-doctoral fellow at the university, said. "You can have two streams that are very close together, but the water may be from different sources; the water could be different in temperature or pH level, which means one gene pool of fish may survive in one stream but not the other." The Hong Kong paradise fish is the only fish that breeds by attaching its eggs to bubbles and then stays with the eggs - an uncommon habit, because most parent fish will leave their offspring to fend for themselves. The fish can be found only in Tai Po, Sai Kung and parts of the New Territories where the land is not too hilly, so that the currents in the streams are more gentle. The Agriculture, Fisheries and Conservation Department has listed so far 21 fish species as requiring conservation. Tony Chan King-tung, a nature conservation officer with the department, said it was important to protect the genes of the fish, because they will determine whether newly bred fishes under the breeding programme will survive when they are reintroduced into a freshwater environment. "One species of fish may still have genetic differences," Chan said. "They adjust to the place where they live, and some fishes may have adjusted to more sunlight or a faster water current, and their bodies will become adapted to the environment over generations." It was therefore important to record the genetic information of the fishes found in each location, Chan said. "We definitely do not want fishes with different genes but of the same species mixing together in their habitats, because that may weaken their ability to adjust."

Hong Kong's currency was linked to China's silver dollar until 1935 when the value of silver became unstable. It then switched to a sterling standard, which remained until sterling became unstable in the early 1970s, and it was floated from 1974 until the currency crisis of 1983. As editor of the Asian Monetary Monitor at the time, I proposed linking the Hong Kong dollar to the US dollar. This system was adopted and has worked well for 28 years, but recent instability in the US economy has raised questions about its future. Instead of going over familiar arguments for keeping the US dollar link, I should first point out that Hong Kong is in a monetary union with the United States. Europe's monetary union, of course, is now faced with unprecedented pressure, which may end in the exit of one or more of the participants, or even the break-up of the union itself. Why has the European monetary union come under such immense stress after only 12 years of existence? Why is Hong Kong's monetary union with the US more robust? Economists have always cited these criteria for a successful monetary union: labour mobility; openness, capital mobility and price/wage flexibility; a central fiscal transfer mechanism to redistribute income; and similar business cycles between the participant economies. These are, in my opinion, necessary but not sufficient conditions for a successful union. Based on Hong Kong's experience, there are eight criteria for success: wage/price flexibility; labour and capital mobility; a limited welfare state; fiscal discipline; strongly capitalised banks; banks maintaining ample liquidity; low household debt; and low corporate debt. The first three conditions are necessary for an optimal currency area; the next five are needed to avoid bubbles or busts. Essentially, they require that the balance sheets in the major sectors - government, banks, households and non-financial corporations - must not be allowed to become so overleveraged as to precipitate a crisis. Hong Kong limits the build-up of leverage. Consequently, when a bubble bursts in Hong Kong, negative equity in the household sector or corporate bankruptcies are limited. In terms of fiscal discipline, since 1983, the Hong Kong government has maintained an average annual budget surplus of 1.4 per cent of gross domestic product, deliberately accumulating in good times a fiscal reserve that can be run down in recessions. The virtue of fiscal prudence has been repeatedly emphasised by successive financial secretaries. Banks in Hong Kong today generally maintain capital ratios of 14-18 per cent. Banking supervision in the city is widely admired in Asia, and loan underwriting standards are carefully monitored. Since 1991, Hong Kong has limited household leverage by imposing a maximum loan-to-value ratio of 70 per cent (recently tightened) on all residential mortgage loans by banks; the city has never permitted the 120 per cent "Ninja" loans - no income, no job or asset - of the kind seen in the recent US and British housing bubbles. In addition, since last November, loan-to-value ratios have been extended to commercial property loans, effectively restricting all property-related leverage. Since it is predominantly companies that buy commercial property, this restriction limits corporate debt. Applying these rules to, say, Greece, it is clear what it and other peripheral economies in the euro zone needed to do to be viable members of the monetary union. One could say that European monetary union was too lax in applying the Maastricht convergence criteria, which included a maximum 3 per cent budget deficit and a maximum 60 per cent government debt-to-gross domestic product ratio, and a maximum consumer price index inflation rate. The maintenance of a fixed exchange rate is not a purely technical matter. In Hong Kong's case, the authorities have long taken the view that while the exchange rate is fixed, the economy must be as flexible as possible, but that alone is not enough. They have therefore sought to ensure, in addition, that Hong Kong's institutions are as robust as possible to ride out the inevitable external shocks. I believe these eight fundamental rules accurately convey the spirit of the monetary and financial regime that Hong Kong is currently attempting to operate. I know some in Hong Kong are investigating the idea of linking the HK dollar to a "basket of currencies", but I basically agree with those who, like former government economist K.C.Kwok, argue that Hong Kong has many other problems to fix and should not focus on fixing this one: "If it is not broken, don't fix it!"

LifeTech chairman Xie Yuehui answers questions about its upcoming offering on the GEM. Trading in the stock begins on November 10. Biotechnology company LifeTech Scientific Corp aims to raise up to HK$282.5 million through an initial public offering on the second board today to fund new manufacturing and product development. The Shenzhen-based company, which specialises in implants for treating cardiovascular disorders, will offer 125 million shares at a target price of between HK$1.91 and HK$2.26 each. LifeTech has earmarked 55 per cent of the expected net listing proceeds, or HK$88 million, for expansion of its production base in Shenzhen and a further 35 per cent, or HK$56 million, for product development. The remainder will support its sales and distribution network in emerging markets. The new listing comes as the Hong Kong stock market continues its roller-coaster ride, with the Hang Seng Index closing at 20,019 points on Friday, after falling to as low as 16,250 on October 4. LifeTech's shares, to be listed on the Growth Enterprise Market, will begin trading on November 10. The company, established in 1999, claims to be the world's second-largest provider of congenital heart defect occluders - devices used to close an abnormal opening in the wall between the two upper chambers of the organ as an alternative to surgery. Its net profit rose to 10.97 million yuan (HK$13.4 million) in the first four months of the year, from 1.84 million yuan a year ago. Turnover grew 40.9 per cent to 44.58 million yuan. Last year's net profit was 3.79 million yuan, against a loss of 4.49 million yuan in 2009, with revenue increasing 31.3 per cent to 104.7 million yuan. LifeTech is involved in a court case in India, in which a rival alleges copyright infringements on some occluders. LifeTech has rejected the allegation but warned of possible ramifications arising from the dispute. Forgoing sales in India might reduce gross profit by 13 per cent in the four months to April this year, LifeTech said. Cross examination of witnesses is expected to be completed by January 6. Lifetech Scientific (Shenzhen) operates as a subsidiary of EastBridge Investment Group Corp.

 China*:  Nov 1 2011 Share

Vice-Premier Li Keqiang on Thursday said negotiations on a free trade agreement between China and the Republic of Korea (ROK) should move at a faster pace, and said he hoped the two countries could expand their investment cooperation. "We have to speed up efforts to conclude a free trade agreement," Li told representatives from the Korea Chamber of Commerce and Industry and other business leaders at a banquet. He said the two countries agreed on the need for such a deal and the foundations had been laid through years of research. "A China-ROK free trade agreement will help us jointly cope with international economic risks and boost both countries' national welfare," Li said. He also suggested the ROK should expand its investment in China in the service sector and agriculture. He said the two countries should strengthen cooperation on banking and securities to jointly push forward the development of a securities market in the region. China is the ROK's largest trading partner, with annual bilateral trade surging to $188.4 billion in 2010 from $6.3 billion when diplomatic relations were established in 1992, Huh Chang-soo, chairman of the Federation of Korean Industries, said at the banquet. Huh called for more economic cooperation and personnel exchanges with China to expand trade and fuel growth. Prior to the banquet, Li met ROK Parliamentary Speaker Park Hee-tae at the National Assembly to talk about ways to promote regional security. According to the Seoul-based Yonhap news agency, Li briefed Park about his meeting on Monday with Kim Jong-il, the top leader of the Democratic People's Republic of Korea (DPRK). Li told Park that Pyongyang is willing to seek dialogue with Seoul and ease tensions on the Korean Peninsula in accordance with the principle of denuclearization. Li on Thursday concluded his tour of the Korean Peninsula, which included a three-day visit to Pyongyang. During his two-day stay in Seoul, Li met ROK President Lee Myung-bak and Prime Minister Kim Hwang-sik, and the two countries agreed to expand their currency swap agreement to the equivalent of $56.5 billion. Analysts say such a rare back-to-back trip to the DPRK and the ROK showed China has acknowledged the equal importance of the DPRK and the ROK and takes a balanced attitude toward them. Kang Jun-roung, a professor with the ROK's Hankuk University of Foreign Studies, on Thursday told a group of 200 visiting Chinese young people in Seoul that the rapid development of the China-ROK relationship is a great achievement since the two countries had only had diplomatic ties for 19 years. He said that people on the Korean Peninsula do not want a war and need help from both China and the United States to ensure this. AFP and Ma Liyao contributed to this story.

The overseas market may eventually contribute as much as 80 percent of ZTE Corp's total sales, said Hou Weigui, the president of China's second-largest telecom-equipment maker by sales. At a news briefing in Beijing on Friday, Hou said ZTE's overseas presence has expanded in recent years. The Shenzhen-based company took its first step toward globalization in 1995, when it established branches in Indonesia. Overseas sales amounted to 20.8 billion yuan ($3.27 billion) in the first half of this year, accounting for 55.7 percent of its total sales. Hou said the figure will continue to grow and may reach as much as 80 percent, but he did not predict when ZTE will realize that goal. "We are particularly interested in big countries, where market demand is large," said Hou. However, political concerns from foreign governments and currency volatility have already hurt ZTE's global expansion. Like its larger rival Huawei Technologies Co, ZTE has also faced difficulty in selling telecom equipment in the North American and Indian markets. Hou also claimed that the US government has hindered ZTE's sales because of concerns about national security. "It's useless making further efforts (to persuade the US government to trust the company). The problem cannot be solved," Hou said. He added that ZTE will only perform well in less sensitive areas, including the fields of mobile phones and enterprise IT solutions. Another challenge facing the company is that of currency volatility, which has eaten away at profits. The company reported net profit of 1.07 billion yuan in the third quarter, a year-on-year decline of 21.5 percent. However, the comparative weakness of the euro against the stronger yuan meant that earnings from European sales were lower than expected. "We cannot ignore the currency issues any more. Measures should be adopted to help avoid this risk," Hou said, without elaborating. Founded in 1985, ZTE has grown into a leading global vendor of telecom infrastructure equipment, along with Ericsson AB, Nokia Siemens Networks BV and Alcatel-Lucent SA. "ZTE's success is attributed to hard work, creativity and government support," said C.W. Cheung, Asia-Pacific consulting director at the researcher Ovum. "ZTE's competitiveness in low price and high quality helped it stand out amid the global financial instability of the last three years," Cheung said. However, given the weaker investment in telecom-network construction from global carriers, makers of telecom equipment worldwide have started to tap new fields to boost growth. Hou said ZTE has seen a fast growth rate in terms of its mobile-phone business. The company expects to ship 12 million smart terminals in 2011, with total terminal shipments reaching 120 million units, up from 90 million in 2010. He Shiyou, executive vice-president of ZTE, also said that the company wants to become one of the world's top three mobile-phone vendors by 2015. Hou said ZTE would like to rely on flagship products to increase its sales of mobile phones. The ZTE Blade V880, an Android-based smartphone, has sold more than 5 million units worldwide. The company said the number of ZTE Blades sold in China has so far surpassed Apple Inc's iPhone series.

China will adhere to its family planning policy so as to maintain a low reproduction rate, said the country's family planning chief on Sunday, expected to be the eve of the world's population reaching seven billion. "Over-population remains one of the major challenges to social and economic development," said Li Bin, director of the State Population and Family Planning Commission in an exclusive interview with Xinhua, adding that the population of China will hit 1.45 billion in 2020. Li said maintaining and improving the existing family planning policy and keeping a low reproduction rate, along with addressing the issues of gender imbalance and an aging population, will be the major tasks in the future. Li's words came just one day before Oct 31, the day on which the United Nations estimates the world's population will reach seven billion. Zhai Zhenwu, a leading Chinese demographer, said earlier this week that China's family planning policy had postponed this day for at least five years, as it prevented 400 million people from being added to the country's population, which is 1.34 billion at present. "The population of China would have hit 1.7 billion had it not been for the family planning policy, and it would have created difficulties for society," said Li. The most populous nation in the world, China introduced its family planning policy, often referred to as the "one-child policy", in the late 1970s to curb pressure on the environment and resources. Li said the policy has made a favorable environment for the country's economic development and social stability by alleviating demand for fundamentals including education, employment and housing. Thanks to the policy, China's average education term has reached nine years and its population's life expectancy 73.5 years. In addition, maternal mortality rates and infant mortality rates are among the lowest in all developing countries. "The Chinese government seriously fulfills the World Population Plan of Action and the Millennium Development Goals set by the United Nations, making positive contributions to the world's population development," said Li. However, Li said that besides overpopulation, China is still facing other population-related challenges, including gender imbalance and an aging population. For every 100 girls born in 2010, 118 boys were born. And 13.26 percent of China's population are aged 60 or above. It is expected the ratio will hit one third, or 440 million, by 2050. One fifth of the population will be 80 years of age or older in 2050, according to Li.

Hong Kong*:  Oct 30 - 31 2011 Share

A Maybach on display at the Mercedes-Benz dealership in Hong Kong. Maybach aficionados in Hong Kong have a more convenient spot to swoon over the luxury land yacht. Mercedes-Benz’s high-end brand vacated its seaside showroom in Repulse Bay and in August opened a more modest dealership in the commercial district of Wan Chai. Maybach set up shop in the corner area of what is now called the Mercedes-Benz Excellence Center, which also offers retail services for the AMG line of performance vehicles. Agnes Chung, a senior manager at Mercedes-Benz, said that the move was part of an effort to improve exposure for the brand, as the company looks to carve a larger slice of the ultra-luxury market. (The 62S model sells in Hong Kong for about 8 million Hong Kong dollars, or US$1 million, partly due to luxury taxes.) “We love Repulse Bay as a location, but if you looked at the accessibility, I would definitely say there is no comparison to where we are at the moment,” Ms. Chung said. “Within that Wan Chai area, we will be able to find target customers who are around, and would like to look for a car of that range.” The Maybach name isn’t as widely known (despite photo ops with Russell Simmons and an ill-fated appearance in a Kanye West video) as other luxury competitors such as Rolls-Royce and Bentley, and its sales have struggled, with fewer than 200 sold world-wide last year. In its current form, Maybach has been in the market since the late 1990s, as parent auto maker Daimler stepped up competition with BMW and Volkswagen.

Daniel Libeskind’s latest project, an angular, nine-story academic building, opens today in Hong Kong. The Run Run Shaw Creative Media Centre is located on City University of Hong Kong’s campus and named after the local media magnate who donated 100 million Hong Kong dollars (US$12.9 million) to the institution last year. The 263,000-square-feet building features several Libeskind design touches, such as reflective surfaces and irregularly shaped windows, and houses a theater, classrooms and exhibition spaces. According to the starchitect’s site, its design “enhances the spirit of limitless possibility and outside-the-box thinking.” Run Run Shaw’s opening comes soon after that of Mr. Libeskind’s remake of the Military History Museum in Dresden. And by the end of this year, his Reflections at Keppel Bay, a condominium complex in Singapore, are expected to be complete. Given how prolific he is, Mr. Libeskind has been questioned on whether his designs are borrowing too much from each other. The Toronto Star asked him about it earlier this week, pointing out the similarities between the Military History Museum and his project at Toronto’s Royal Ontario Museum, which he finished in 2007. “They’re completely different buildings,” he told the newspaper. “People see an angle in a building, and they think they’re all the same. They’re blind.” The Star’s architecture columnist, Christopher Hume, couldn’t resist a last shot at the architect, saying that the strip windows of the new Hong Kong building were “reminiscent — you guessed it — of the ROM.” Elsewhere in Asia, Mr. Libeskind is working on Haeundae Udong Hyundai I’Park, a mixed-use project in Busan, South Korea. When finished, the tallest of the towers, at 72 floors, is expected to be the loftiest apartment building in Asia. He’s not the only high-profile architect building up his Asia credentials. Austrian firm Coop Himmelb(l)au also took on a Busan project with its Cinema Center, and Frank Gehry told Bloomberg earlier this week that he hoped to work on a museum in China and a “spiritual kind of building” in India, not to mention his residential tower in Hong Kong.

 China*:  Oct 30 - 31 2011 Share

China said yesterday that the purchase of European Financial Stability Facility (EFSF) bonds would not be on the agenda of the upcoming G20 summit in France, but added that President Hu Jintao would focus on the lingering European debt crisis and commodity prices. Zhu Guangyao , finance vice-minister, said China needed more time to study the details of the EFSF's new initiative before deciding on investment and urged Europe to take investors' needs into account. Zhu made the remarks after a meeting with EFSF chief Klaus Regling, who was in Beijing yesterday to persuade China to help restore the euro zone economy after European leaders reached a last-minute deal to contain the bloc's crisis. "We need to wait for the technicalities to be clear and also to carry out serious study before we can decide on investment," Zhu told a press briefing on the G20 summit. He said the EFSF's guarantee amounts for treasury bonds of troubled countries and the composition of the special purpose vehicle would not be finalised for at least a month. "I don't think how the member states will contribute to the EFSF will be discussed at the G20. It will not be on the agenda," Zhu said. While stressing that the resolution reached by European leaders to increase the leverage of the EFSF could help stop the crisis from spreading, Zhu called on Europe to make greater efforts to implement its agreements. Deputy Foreign Minister Cui Tiankai told the briefing the G20 summit would focus on stabilising financial markets and tackling urgent problems, including the debt crisis, based on the principle of mutual benefit. Other issues such as global monetary system reform and increasing the representation of emerging markets would also be discussed, he said. European leaders reached a deal on Thursday after a meeting in Brussels that private banks and insurers would accept 50 per cent losses on their Greek debt holdings. The EFSF, set up last year to aid troubled European nations, will be leveraged to give it firepower of €1 trillion (HK$10.9 trillion) to put a safety net under bigger euro zone states. Ding Chun , a European affairs specialist at Fudan University, said China would also want to see how the markets respond to the deal before deciding how to invest. "Indicators such as whether the market is convinced by the deal will be used," he said. "There are other alternatives for China to help, such as doing it through the [IMF]. That is the other factor China wants to consider." Before meeting officials from the Ministry of Finance and the People's Bank of China, Regling said he expected the country to continue buying bonds issued by the EFSF, but added that a conclusive deal with Chinese leaders was not expected. He said 40 per cent of EFSF bonds were purchased by Asian buyers this year, with China a "good" and "loyal" buyer. "We all know that China has a particular need for investment as its surplus has to go somewhere. The EFSF can offer some commercially interesting products [for China]," Regling said. The EFSF chief said the European Union was trying to come up with new mechanisms for investment in the financial facility to restore market confidence in the debt-laden region. He will discuss with China and other investors how to structure a special purpose investment vehicle and explore the possibility of linking it to the International Monetary Fund. China had not set any conditions for buying the bonds and there were no "special deals" between the EFSF and Beijing, Regling said. Critics have suggested that the central government may press Europe for trade concessions or to refrain from human rights criticisms. Fu Ying , another vice foreign minister, said she hoped Sino-EU trust would be enhanced after the crisis and both sides would treat each other without "outdated prejudices".

Hong Kong*:  Oct 29 2011 Share

China Cosco was the worst affected, plunging deeper into the red as poor results from its container and dry bulk subsidiaries reflected lower freight rates and container volumes. Uncertain conditions in the container shipping and dry bulk cargo markets continue to affect the maritime sector, according to trading results posted by Hong Kong's leading shipping companies yesterday. The worst affected was China Cosco Holdings (SEHK: 1919), which plunged deeper into the red in the third quarter as poor results from its container and dry bulk subsidiaries reflected the impact of lower freight rates and container volumes. The firm posted a net loss of 2.1 billion yuan (HK$2.6 billion) in the third quarter on top of the 2.7 billion yuan net loss sustained in the first half. These combined losses of 4.8 billion yuan led China Cosco to issue a profit warning yesterday for the full year which it partly blamed on "the severe situation in the international dry bulk shipping market". China Cosco's container shipping operation, Cosco Container Lines, saw total revenue slump 21.3 per cent to 9 billion yuan in the third quarter despite a 14.2 per cent rise in container volumes to 1.89 million teu (20-foot equivalent units). This reflected the drop in average revenue per teu on key Asia-Europe, intra-Asia and transpacific trades. Dry bulk volumes of key commodities, including coal and iron ore, slipped 1.75 per cent in the third quarter. Although no operating figures were given, China Cosco has been mauled by a large number of toxic charters on which it was paying more than US$50,000 per day for ships when the spot daily charter rate was down to US$10,000-15,000. China Cosco was also hit by figures from its terminal subsidiary, Cosco Pacific (SEHK: 1199), which saw net profit climb to US$331.5 million in the nine months to September 30, up from US$289.9 million in the same period last year. But net profit in the third quarter fell to US$94.5 million, down from US$100 million amid slower throughput growth. Barclays Capital has forecast a full-year net loss of 3.98 billion yuan for China Cosco Holdings. Jon Windham, head of the firm's industrial sector research for Asia, said China Cosco had already booked a 1.4 billion yuan loss against its chartered-in dry bulk ships. "We would expect provisions to continue in the second half of 2011 and 2012 given the size of China Cosco's vessel operating leases and dry bulk freight rates," he said. "As of the second quarter 2011, China Cosco had 65 billion yuan of vessel operating leases outstanding." Tougher conditions also weighed on dry bulk shipowner China Shipping Development, which yesterday reported net profit of 815.2 million yuan in the nine months to September 30, down 44 per cent from 1.45 billion yuan in the period last year. The company, which specialises in hauling coal, iron ore and grain on international and domestic routes, said it generated just 130.8 million yuan in net profit in the third quarter, against a 478.3 million yuan net profit from July to September last year. Analysts said China Shipping's 72.6 per cent drop in profit reflected higher fuel costs and lower freight rates as the increase in vessel deliveries outpaced the increase in cargo demand to depress charter rates. There were brighter prospects for Pacific Basin Shipping (SEHK: 2343), which focuses on smaller Handysize and Handymax dry cargo ships of 28,000-55,000 deadweight tonnes. The company said that freight rates for Handysize and Handymax bulk carriers had risen by 12 per cent and 22 per cent respectively since June 30, "an earlier and stronger than anticipated improvement". On prospects, Klaus Nyborg, chief executive, said while there was "evidence of softening Chinese demand for some commodities", the company expected this "to be balanced by the seasonal resumption of fourth quarter US Gulf grain exports".

Henry Tang Ying-yen yesterday launched his personal website, in an effort to energise his campaign to become the next chief executive. The website (www.henrytang.hk)  features pictures from his childhood to his years as chief secretary and articles about his personal life. The businessman-turned-politician is apparently trying to convey the image of a man who knows what life is like for ordinary Hongkongers. The website mentions his wife, but makes no mention of the infidelity to which he admitted recently. Tang describes unforgettable moments from his childhood under the subhead "Henry 360{ring}". In one article he describes the mischief he got into as a boy. "Once I snuck out of my seat while the teacher, back turned to the class, was writing on the board. I erased everything he had written ... Consequently, I was punished and asked to stand outside for my naughty deed." Another article describes how Tang worked with ordinary labourers in the packaging department of his father's textile factory after graduating from a US university. Tang, who is seen as front runner for the top job, resigned as chief secretary at the end of last month but has yet to declare his candidacy. "Over the decade, people have recognised me from media [reports]. Now I'd like to use this website to share my thoughts and interact with you," Tang says on the website. The new website drew mixed reactions from political observers. Veteran public relations consultant Peter Lam Yuk-wah, former co-host of the radio programme Teacup In a Storm, said the site tries to erase Tang's image of having being born with a silver spoon in his mouth. "Obviously Tang wants to draw himself closer to the public. "But his website puts too much effort on image-building and does little to sell his policy ideas and past achievements." But he said the website was much better and more serious than a site Tang was preparing last summer. Gary Chao Yuk-ming, head of the Internet Professional Association, said the site was not interactive enough. "It looks dull and plain. It's more like a blog," said Chao.

Here comes the bride, and train of mega celebs - HK$100m wedding between Coco Lee and Li & Fung CEO means 2-day party - and possible Oprah sighting - Celebrity fever gripped the city last night as some of the world's biggest pop stars attended the first part of a two-day wedding between Hong Kong-born singer Coco Lee and Bruce Rockowitz, president and chief executive of Li & Fung. In what would easily be one of the most lavish weddings to take place in the city in years, the nuptials between the 36-year-old beauty and her Canadian partner of eight years set off a flurry of activity at the Ritz-Carlton hotel in Tsim Sha Tsui. Onlookers camped outside for days to catch a glimpse of the celebrity guests, which reportedly included Oprah Winfrey, Beyonce and Jennifer Lopez. Last night, Lee's management confirmed that a private ceremony was held at the Sky100 bar on the 100th floor of the International Commerce Centre, the tallest building in the city, but could not say who had attended. Lee, also known as Ferren Lee, and Rockowitz, 52, first met in Hong Kong in 2003 and were engaged in 2005. The singer reportedly took a year off work to plan the wedding, estimated to cost more than HK$100 million. About 200 people, mainly close family and friends, including American fashion designer Tommy Hilfiger, attended the 30-minute ceremony, before continuing to a dinner and show at the hotel. "There will be very big international acts and some of the hottest US artists performing tonight and tomorrow," a spokeswoman for Lee said yesterday. "Coco wore a dress by Vera Wang because she's a very good friend of the couple." Guests were reportedly flown in by helicopter, and the hotel confirmed that all the luxury suites, 80 in total, were fully booked yesterday and today. The wedding celebrations will continue tonight with a party at Shaw Studios in Tseung Kwan O, where a red carpet will be rolled out as guests arrive for the evening. The complex has one of the biggest soundstages in Asia and several banquet halls, but it is uncertain where the wedding party will take place. Lee's management said about 800 guests were expected at tonight's event but could not confirm exact numbers or the international guests. Born in Hong Kong, Lee moved to the US when she was a child. She studied biology before turning to singing. Lee, who sings in English, Cantonese and Putonghua, released her first album in English in 1995, and over the years, she has gained a big fan base in Taiwan.

Ko Chen-tung in Giddens Ko’s ‘You Are the Apple of My Eye.’ The popularity of this year’s biggest movie in Taiwan is spilling over into Hong Kong. “You Are the Apple of My Eye” (那些年,我們一起追的女孩) shot to No. 1 at the Hong Kong box office following its Oct. 20 debut. The coming-of-age comedy-drama pulled in 11.5 million Hong Kong dollars (US$1.5 million) in the four days ended Oct. 23, according to Hong Kong’s Motion Picture Industry Association. That’s a strong debut for this city of 7.1 million residents and puts it well ahead of the HK$4 million earned during the same period for Hong Kong director Johnnie To’s “Life Without Principle” (奪命金), which opened on the same day. The film has made nearly 400 million New Taiwan dollars (US$13.3 million) in Taiwan since its August release, according to local newspaper reports, making it one of the island’s biggest-ever hits for a domestic movie. “Apple” is getting additional foreign screen time at this week’s Tokyo International Film Festival. “Apple” is the directorial debut of Giddens Ko, who goes by the pen name Nine Knives (九把刀), and it is based on his best-selling autobiographical novel. The story, set in 1990s Taiwan, follows a decade in the life of a young man as he goofs off through high school with his buddies, finds a first romance with an honor-roll classmate, and grows into adulthood and maturity during his university years. The film grabbed four Golden Horse nominations earlier this month, including best new director, best leading actress (Michelle Chen), best new performer (Ko Chen-tung) and best original film song. The awards began in 1962 and are among the most prestigious film accolades in Asia. This year’s ceremony will be held on Nov. 26.

All Nippon Airways Co. made aviation history Wednesday with the world's first charter passenger flight of Boeing Co.'s 787 Dreamliner. ANA and Boeing executives clapped as the jetliner pulled away from the ground in Tokyo with a cabin full of passengers, officially ending the Dreamliner's long and oft-plagued journey from conception to customer. The flight from Tokyo's Narita International Airport took off in the early afternoon and landed about four hours later in Hong Kong—on time. It was a logistical trait that has eluded the Dreamliner's development, beset with production missteps. The 787 Dreamliner is the first commercial jet made largely of plastic-composite materials, instead of aluminum. The engineering advancement this change has permitted is why the jet has been considered a game changer by aviation geeks and industry executives since the revolutionary wide-body jetliner was but a whisper of an idea undergoing development eight years ago. Now more than three years behind Boeing's original schedule, it has become a loaded label as passengers finally had the opportunity to judge: Was it worth the wait? "There are no disappointments," said Mikiko Noda, a 45-year-old singer. Her ears were studded with silver Dreamliner-shaped earrings and a matching necklace, souvenirs from when she visited Boeing's production facility in Everett, Wash., to get a preview of the new aircraft before it was delivered to ANA late last month. She was one of the 100 passengers aboard Wednesday's flight who won a coveted economy-class seat through a lottery open to members of a frequent-flier program who also reside in Japan. ANA is set to begin regular domestic service flights on Nov. 1. It will be followed by the first long-haul overseas route from Tokyo to Frankfurt in January. The airliner plans to expand service to Europe and North America next year. On Wednesday, ANA CEO Shinchiro Ito mused that Switzerland and Belgium are some of the next destinations under consideration. ANA became the first carrier in line to receive the long-awaited jumbo jet. The Dreamliner's delivery is as much a milestone for Japan's largest carrier as it is for Boeing and aviation engineering. ANA, which has ordered 55 787s, plans to use the new aircraft as a springboard to become the leading airline in Asia amid a shrinking domestic market. The Japanese company, currently the 11th largest airline carrier in the world by passenger numbers, aims to boost operating income to ¥130 billion yen ($1.7 billion) by the end of fiscal 2012 through March, from ¥67.8 billion. Mr. Ito has said the jet will generate profit by helping expand its portfolio of routes and savings on fuel costs. Hours before takeoff on Wednesday morning, Scott Fancher, the vice president of Boeing who oversees the 787 project, urged reporters in Tokyo to later on board "Take a moment. Take a deep breath, and take it all in." The 787 Dreamliner is Boeing's first all-new jetliner in 16 years. The flight was a carefully orchestrated media event. ANA's Mr. Ito and other business executives donned Japanese "hapi" coats, light waist-length coats usually worn during festivals, as they raised wooden boxes filled with sake to celebrate at the gate prior to takeoff. Reporters made up roughly one-third of the 240 passengers on the charter flight. ANA and Boeing officials, VIPs, six business-class passengers who won the spots through online auctions and the 100 lottery seats comprised the rest. Flight attendants handing out wet towels struggled to maneuver around camera crews congesting the aisles. With official commemorative boarding passes strung around their necks, passengers boarded the plane with video cameras turned on and aimed down the long twin aisles. But the aircraft, though revolutionary in engineering, didn't have the same glitzy wow factor as when Airbus's giant A380, the first all double-decker jetliners, debuted in 2007. Gino Bertuccio, who paid the highest ticket price of about $33,500 through an online auction to nab a seat Wednesday, said his "expectations were just met." But the self-professed aviation enthusiast who flew on the inaugural A380 flight on Singapore Airlines said he will reserve his final conclusion until he can ride it again on a longer flight.

 China*:  Oct 29 2011 Share

The central government is set to launch a trial value-added tax for businesses next year, which is seen as a clear signal the leadership wants to support growth by easing the tax burden on business. Premier Wen Jiabao told a State Council meeting on Wednesday that a trial system designed to eventually replace the existing business tax regime with a value-added tax would be implemented in Shanghai from January. Under the existing system, firms in some industries may have to pay a business tax and VAT, resulting in extra tax burdens. That has contributed to price increases of products and services in certain industries. The trial would be first applied to the transport and service sectors in the city, with a nationwide launch expected later. The government said two new lower value-added tax rates, 11 per cent and 6 per cent, would be added to the existing 17 per cent and 13 per cent rates. This move is expected to lower the tax burdens for transport businesses, which now pay 3 and 5 per cent. "The effect is, to some extent, equivalent to fiscal expansion," China International Capital Corp said in a research report yesterday. "In the longer term, the reform will improve the tax system and boost the development of service industries." It said warehousing, postal services, computer services, information transmission and the software industry might also be included in the programme. But banks and insurance companies were less likely to benefit because of their already high profits and because of difficulties in imposing an accurate value-added tax on their business. Timothy Wong, a tax director of accounting firm Deloitte, said China was one of the few countries with a business tax. "The tax reform is a step in the right direction," he said. "However, how much a company can actually benefit from it will depend on the implementation details." He said further clarification was needed on what items were deductible and which rates would be applicable. Tax revenue on the mainland expanded by 27.4 per cent in the first three quarters, well above the initial 8 per cent annual tax revenue growth target set for the full year. "The central government has deep enough pockets to allow it to launch a series of tax reductions and targeted subsidies policies to support small and medium-sized enterprises," said Qu Hongbin, an economist at HSBC. "With this official start to a policy of selective easing, Beijing should and can use its strong fiscal position to strike a better balance between growth and inflationary concerns." The CICC report estimated that the tax burden of affected industries might fall by up to 70 billion yuan (HK$85.5 billion) if the reform was adopted nationwide.

The much-delayed but striking steel, concrete and glass headquarters for Chinese state television is finally expected to fully open in the new year, said Dutch architect Rem Koolhaas, whose firm designed the building, yesterday. The skyscraper, described by its chief architect Ole Scheeren as a "loop folded in space", is two towers sloped together and joined by a gravity-defying canopy equivalent to 80 storeys in height. Dominating the skyline of Beijing's central business district, the building was among several projects the city undertook to reinvent itself for the 2008 Olympics, along with Norman Foster's US$3.6 billion new airport terminal and French architect Paul Andreu's egg-shaped National Grand Theatre. But the Olympics came and went, and the state television building failed to open. Koolhaas said on the sidelines of a China-European Union cultural forum that a 2009 fire at a hotel being built next to the television tower had caused the delay. "The fire delayed a lot of things, but some parts are open. It's not officially open yet, but it will be at the beginning of the year," he said. "What was complicating things was that it was treated as the scene of a crime, so it needed to be kept for a long time without interference," he said of the hotel fire, in which one firefighter died. Twenty people were jailed for triggering the blaze with fireworks. The television tower has divided public opinion. While many people love it, others hate it, and Beijingers have taken to referring to it as "the big long johns". But Koolhaas says he is confident it will win people over, especially now that the screens are finally coming down, giving people a better idea of how the whole complex will look. "One should wait until it is finished. They are now taking the wall down and you can see that there is public territory in the building. And therefore the building is much more accessible and friendly than people think," he said. A pathway, planned to be open to visitors, will follow the loop of the building up to the canopy — where the glass-floored overhang will offer a view over the city from a dizzying 160 metres — before looping back down through the second tower. "It's a building that people have to get used to probably, but I hear actually a surprising amount of very positive feelings," Koolhaas said. While Koolhaas' firm is working on other projects in China, including the new Shenzhen Stock Exchange, he would ideally like to get involved next in preserving some of the classic architecture from the early part of the Chinese communist era. Beijing and most other Chinese cities are still dotted with examples of these angular, Soviet-esque buildings. Many have been demolished in the rush to modernise, while others languish in obscurity, crumbling and unmourned. "I would actually love to do a preservation project here, preserving a worthwhile building of the '50s or '60s as a kind of prototype," he said. "What I think should happen is that we don't only look at old buildings or at historical buildings, but that we also begin to define the '50s, '60s and '70s as historical ... so that the things that really define the character of a city like this one - and of course a lot of the character has been defined by its communist period - are kept."

A worker handling truck drive-train components at a factory in Changsha, Hunan province. China's industrial output is likely to expand about 11 percent next year, according to the Ministry of Industry and Information Technology. China's industrial growth will continue to slow in the coming months and in 2012. That's because of weakening economic forces, both domestically and overseas, according to an official from the Ministry of Industry and Information Technology on Wednesday. China is likely to see industrial output grow by around 11 percent next year, in line with a slowing trend from the fourth quarter onwards, Xiao Chunquan, an official at the ministry, told a news briefing. So far, growth has been decreasing on a year-on-year basis, from 14.4 percent in the first quarter, to 13.8 percent in the third. The figure rebounded slightly to 13.8 percent in September from 13.5 percent in August. "With the continuing uncertainties over global economic turmoil and domestic inflation, and increasing efforts in the reduction of emissions and the optimization of the economic structure, growth will keep falling in the coming months," Xiao said. Chinese factories are struggling to cope with rising operating costs, fuelled by a stronger yuan. Meanwhile funding difficulties are putting more pressure on small enterprises, the ministry said in a statement. Song Guoqing, a professor at the China Center for Economic Research at Peking University, said slowing industrial growth signals weak economic growth, as industrial output contributes about half of China's total GDP. Song said industrial growth of 11 percent for the next year was a "pessimistic prediction", but the trend of decline is unquestionable. "The central government should consider relaxing the tight monetary policy that it has followed since the beginning of the year, considering that prices are already falling," Song said. Data from the National Bureau of Statistics showed China's annual inflation dipped to 6.1 percent in September, retreating further from an almost three-year high of 6.5 percent in July. Meanwhile, GDP growth slipped to 9.1 percent in the third quarter from 9.5 percent in the second and 9.7 percent in the first. On Tuesday, Premier Wen Jiabao reiterated the message that fighting inflation is China's top priority, but said the country should maintain reasonable credit growth and improve levels of financing for business. A big part of the domestic demand driven by fixed-asset investment is weakening as the effects of the country's 4 trillion yuan ($629 billion) stimulus package in 2008 are fading, Xiao said. "The driving forces of China's economic growth are shifting from policy stimulation to internal forces, which suggests that the macro-control policies have played their part," Xiao said, emphasizing that export value growth was 11 percentage points lower than that of sales growth in the first three quarters. China's biggest e-commerce website, Alibaba.com Ltd, where businesses trade with each other, said overseas procurement activity has been affected by the economic crises in Europe and the United States, and the purchasing enthusiasm of overseas buyers has diminished. In a report on Tuesday, Alibaba.com said that the outlook for Chinese exports to Australia, Brazil, and North America will be better than for other destinations, based on trade data provided by sellers and buyers. The report cited Lideng Lighting Factory Co - a lamp maker in Guangdong province, one of the country's export bases. The company said its exports to Europe have fallen sharply this year, but orders from emerging markets, such as Brazil, have doubled. In a research document, Li Daokui, director of the Center for China in the World Economy at Tsinghua University in Beijing, said that the slowdown was an inevitable trend, and the key point is to move from the old development pattern, one that is highly dependent on overseas demand and a high investment rate. "We should still be confident in the potential of China's economic growth, which is guaranteed by the process of urbanization and deepening economic reform," Li said. But the slowdown will have a bottom line, and policymakers should follow the global trend closely to formulate appropriate policies, such as the introduction of large projects like further construction of public housing, to avoid a hard landing for the world's second-largest economy, he said.

Maria Sharapova's hopes of ending the year as world number one virtally evaporated on Wednesday when she was beaten 7-6 6-4 by China's Li Na at the WTA Championships. The Russian, who arrived in Istanbul still with a shot at toppling Caroline Wozniacki, fell apart in the first set tiebreaker on her way to a second consecutive White Group defeat at the $4.9 million year-ending tournament. Samantha Stosur, who beat Sharapova on Tuesday for the first time in 10 attempts, opened proceedings on Day Two in the Sinan Erdem Arena but came down to earth with a bump as she lost 6-2 6-2 to fired-up Belarussian Victoria Azarenka. Denmark's Wozniacki can seal the year-end No 1 ranking for a second consecutive year if she beats Russia's Vera Zvonareva in the final match of the day. World number two Sharapova, playing at the Championships for the first time since 2007, almost missed the event with an ankle injury and her lack of recent match practice was evident again as she let tournament debutant Li off the hook. Sharapova led 4-1 in the opening set and after seeing her lead evaporate she then moved 4-0 ahead in the tiebreak only to lose the next seven points with a run of unforced errors. Li, who beat Sharapova in the French Open semi-finals this year on her way to claiming a first grand slam singles title for an Asian-born player, moved into a 5-2 lead in the second set before an attack of the jitters almost proved costly. Serving for the match at 5-4 Li slipped 15-40 behind as Sharapova blazed away but she held her nerve to claim victory at the first attempt when her opponent hammered a backhand return over the baseline. While it is still mathematically possible for Sharapova to finish in the top two in the group her chances are hanging by a thread with a match against ther in-form Azarenka to come.

Hong Kong*:  Oct 28 2011 Share

A man samples wine ahead of the Hong Kong Wine and Dine Festival today. More than 280 booths offer premium food and spirits. Festival promises dishes, wine to tickle the fancy - Top-rated dessert wines, premium sakes, Michelin-star dishes and award-winning vintages will test the taste buds of visitors at the Hong Kong Wine and Dine Festival, which opens today. Running until Sunday at the West Kowloon Waterfront Promenade, the festival includes 211 wine booths and 76 food booths, up from last year's 172 and 63 respectively. Among the exhibitors is Adelaide Cellar Door, which will offer tastings of two Australian dessert wines, Muscat and RL Buller & Son Calliope Rare Tokay, both rated 100 out of 100 by eminent wine critic Robert Parker. The HK$950 sweet wines, both 80 years old, go well with chocolate and cheese. Unlike red and white wines which must be consumed within days of being opened, dessert wine can be kept for a year. "They are special for their complexity, luxuriousness, richness and intensity of fruit and flavour," winemaker Richard Buller said. Other wines with glamorous titles or special grapes may appeal to drinkers. Jokigen - whose Kiss of Fire was the first Japanese liquor used by Louis Vuitton at its events in Japan - has prepared 100 types of sake in the Riedel Grand Tasting Pavilion, an area accessible to holders of the HK$480 Grand Wine Pass. Yui Kee, meanwhile, will offer the Spanish red wine Joaquim Madeira, made from 14 types of grapes. From Germany comes the Konigswingert Ehrenfelser Auslese, a lighter dessert wine that goes well with sweet and sour pork. The local 8th Estate Winery will display W.H.Y 2010, a white wine laced with ginger. "Unlike traditional white wines, a little bit of the grape skins are left together with the juice during the fermentation process," sales manager Kevin Chik Koon-hung said. Those looking for delicious bites can try the pan-seared chicken with pumpkin dish at Ming Court, a Michelin two-star restaurant joining the festival. Also, the Paul Lafayet pastry shop makes its debut with macaroons and Hiang Kie Coffee will offer 200 free "truffle coffees" today. A Spanish Night and a Japanese Night featuring the countries' specialties will be held on Friday and Saturday respectively. A charity wine auction will also be held on Saturday.

A High Court judge said yesterday that the government could temporarily stop processing foreign domestic workers' applications for permanent residency until the conclusion of its appeal against an earlier ruling. That ruling, made last month, said it was unconstitutional to deny the helpers the right to apply for permanent identity cards after seven years of uninterrupted residency. The government decided not to seek a stay of that judgment after Mr Justice Johnson Lam Man-hon, in the Court of First Instance, said the administration would not be in contempt of court if it suspended processing applications for permanent residency. Lam made the original ruling on September 30. But legal experts warned that this could create confusion and lead to more legal challenges. Secretary for Security Ambrose Lee Siu-kwong said the government would push again for an accelerated hearing of its appeal. It was the latest twist in a complicated legal battle after the Court of First Instance ruled last month that Filipino Evangeline Banao Vallejos, a domestic helper in the city for 25 years, has the right to apply for permanent residency in Hong Kong because the immigration provision barring her from becoming "ordinarily resident" was unconstitutional. That ruling could open the door for other foreign domestic helpers to claim right of abode in Hong Kong. The government announced an appeal and said it would seek a temporary suspension of the court order until the case reached its conclusion. But Lam yesterday said such an application was unnecessary, as his original ruling does not compel the government to process claims by other helpers. But he did warn that the government may have to face more legal challenges for putting on hold applications by right of abode claimants. As for Vallejos, the judge yesterday sent her case back to the Registration of Persons Tribunal to reconsider whether she meets the requirements for permanent residency. Eric Cheung Tat-ming, a legal scholar at the University of Hong Kong, questioned the government's wisdom in dropping the suspension application. "The government cannot decide by itself to put on hold the processing of all right of abode applications [without facing consequences]. Such a decision would lack solid legal foundation," Cheung said. "All applications should be processed within a reasonable time." Cheung said it would be difficult for the tribunal to decide on the Vallejos case. If the tribunal granted her permanent residency now - but the government won its appeal later - it would raise the question of whether Vallejos' right of abode was still valid, he said. Lawmaker Regina Ip Lau Suk-yee, a former director of immigration, said the judgment would cause many problems in implementation and put pressure on frontline immigration officers. "It will be hard for the Immigration Department to differentiate other claims from the case that it has been directed to process," said Ip, chairwoman of the New People's Party. "It will give rise to a lot of complaints, and if the Immigration Department is flooded with a lot of similar applications it will require additional resources from [Legco]." The secretary for security said he was not worried about the possibility of more judicial challenges arising from the government's decision to stop processing applications temporarily, calling it a fundamental right of people living in Hong Kong. Lee said there had been a significant increase in the number of right of abode applications filed to the Immigration Department. In the past it received on average one application every month; it received 20 applications on Tuesday alone.

New People's Party lawmaker Regina Ip Lau Suk-yee edged closer to joining the race to be the next chief executive yesterday by revealing plans to form an exploratory committee to consider a campaign. But she insisted any decision to run would be subject to the approval of party members after next month's district council elections. The former secretary for security ranked fourth among potential candidates for the city's top job with 13.8 per cent support in a recent University of Hong Kong survey for the South China Morning Post (SEHK: 0583). Former Executive Council convenor Leung Chun-ying topped the poll with 29.1 per cent, Rita Fan Hsu Lai-tai was second on 19.2 per cent and former chief secretary Henry Tang Ying-yen third with 14 per cent. "My support rate was comparable to Tang," Ip said yesterday. "But bear in mind that I have yet to start my campaign. The situation will be very different once I start." Ip said the new committee would explore her chances of winning enough support from the 1,200-member Election Committee, which will select the next chief executive in March. The committee will comprise former high-ranking officials and people from the professional and business sector, but Ip declined to give any names. She said she had received strong support from civil servants and the information technology, medical and education sectors. "The only sector I have yet to seek support from is the tycoons," Ip said. However, she was confident that some would support her. Fan, a member of the National People's Congress Standing Committee, appears to have stepped up her efforts to join the race after hiring a public relations firm - Vis Communications Consultancy - to help her plot a media strategy. Felix Poon Kam-chuen, managing director of Vis, said: "Mrs Fan didn't say exactly that she sought our help for running in the chief executive election. "But we will help her sound out her views on various issues in the near future," he said. Poon, a former journalist, took part in Tung Chee-hwa's campaign for chief executive in 1996 when working for public relations firm Burson-Marsteller Hong Kong. Fan, who earlier pledged support for Tang's candidacy, said this month she would not rule out the possibility of running if Tang looked like he was failing to win sufficient backing on the Election Committee. Poon said he would have further discussions with Fan when she returned to Hong Kong at the end of the month. She is currently attending the six-day meeting of the NPC Standing Committee in Beijing, which closes on Saturday.

 China*:  Oct 28 2011 Share

China has other levers that it is already pulling to fine-tune its economic policy beyond the yuan's value. Measures are being rolled out to support smaller companies, which have been starved of access to credit. And Beijing may move to lift restrictions on bank lending, analysts say. Stronger stimulus measures like interest rate cuts don't look likely, with inflation still alarmingly elevated. In his comments on Tuesday, Mr. Wen reiterated that maintaining price stability remains the government's top priority. Chinese officials frequently point out that the country's trade surplus has been shrinking as a percentage of its economy, aiming to reinforce the case that China is already rebalancing toward domestic demand. In the first nine months of the year, China's trade surplus accounted for around 2% of gross domestic product, compared with 3.1% in 2010, Ministry of Commerce officials said last week. The dollar late Wednesday was at 6.3533 from 6.3604 late Tuesday, with the yuan higher against the dollar for the fourth straight trading day. Traders said the currency is rising partly due to expectations that the U.S. will keep applying pressure for appreciation during visit by U.S. Deputy Secretary of State William Burns to Beijing on Thursday. The yuan has risen 3.7% against the U.S. currency so far this year and 7.4% since June 2010, when China essentially unpegged its currency from the dollar.

China Calls Rapid Yuan Rise Impossible - Unusually Strong Wording Signals Beijing May Put Brakes on Currency as Growth Concerns Edge Out Inflation - China said that rapid yuan appreciation in the near term is out of the question as it would harm China's economic growth, in one of the strongest responses yet to U.S. pressure for a faster rise in the currency. The comments by a spokeswoman for the Ministry of Foreign Affairs on Wednesday reflect China's growing anxiety as its domestic economy slows and demand for its exports is threatened by economic stagnation in Europe and the U.S. The comments also come after Chinese Premier Wen Jiabao on Tuesday called for China to "fine-tune" its economic policies to support growth, adding to speculation that China may at some point shift away from its focus on curbing inflation. Yuan appreciation could be one way to offset inflation, but a return to a growth focus could lead to Beijing considering slowing the trend as a way to help China's exporters. China now faces a dilemma, as some economists have begun arguing that the country's situation justifies slower yuan appreciation, while external pressure on China to keep the yuan rising is likely to remain intense. Since 2005, the yuan has risen around 30% against the U.S. dollar, and it is now "close to a reasonable equilibrium level," Foreign Ministry spokeswoman Jiang Yu said at a regular press briefing. "In the short term, pushing for rapid yuan appreciation is not possible. If Chinese economic growth slows, it will reduce global aggregate demand," Ms. Jiang said. In public comments about the issue, Chinese officials have stressed that yuan reform will be gradual, but haven't explicitly said that rapid appreciation is off the table. Standard Chartered economist Stephen Green projected Tuesday that the yuan's appreciation against the dollar will slow to 3% to 4% in 2012 from 5.5% in 2011, due to China's slowing economic growth. On Wednesday, Bank of America-Merrill Lynch economist Lu Ting said that due to recent dollar strength, the yuan has actually appreciated by 4.1% against a broader basket of currencies since the end of July. "We will expect the room for [appreciation against the dollar] to be quite small in the near term, though depreciation is equally unlikely given the pressures from the U.S.," Mr. Lu said in a note to clients. Economists aren't expecting a catastrophic slowdown for the Chinese economy. Standard Chartered's Mr. Green forecasts that the Chinese economy will grow 8.5% next year, down from 9.4% growth in the first three quarters of 2011. Political pressure on China from abroad to allow faster yuan appreciation is unlikely to abate in the near future. A U.S. Senate bill that would penalize China for its currency policies may be stalled in the House of Representatives, but the U.S. presidential elections in November 2012 are likely to keep the issue in the headlines for at least the next year, with Republican presidential hopeful Mitt Romney already pledging to declare China a currency manipulator.

Positions at foreign firms less attractive - Vincent Chen is ready to change jobs, moving from a world-famous foreign aircraft manufacturer to a State-owned aviation group. And three colleagues are going with him. A 27-year-old engineer, Chen often complained to friends about his low salary compared to others in the same field, but it is not the 20 percent pay increase that makes him so determined to quit. "It depends on where I can get to in the State-owned company. If I work hard, the chances are that I'll get a generous bonus at the end of the year," Chen said. "Counting on a fixed wage won't do, you know." Over the past 18 months, about half of Chen's colleagues in Beijing have left their jobs. Seventy percent ended up in State-owned enterprises. Chen's case is part of a wider trend seen by some headhunters and human resources consulting firms: multinational companies are losing luster as the most attractive career destinations for young and senior professionals in China. "Chinese firms are luring talented managers and executives away from multinational corporations by offering generous compensation, more decision-making power and a faster career track," said a report published in June by The Korn/Ferry Institute, the world's largest executive search firm. For years, multinational companies have been vigorously tapping into China's vast market and benefiting from the country's fast economic growth. They have attracted numerous Chinese professionals with competitive salaries, handsome benefits business training opportunities, and the possibility of an overseas assignment. All seem to be irresistible for ambitious Chinese professionals eager to improve their social and career mobility. "What they (multinational companies) seem not to have anticipated is that Chinese companies might poach their critical managerial talents," the report said. The pre-IPO lure - Now, in a changing business sphere where big Chinese companies rise both domestically and internationally, Chinese employers have begun to offer similar benefits, making fresh university graduates and senior executives alike view Chinese enterprises as a legitimate, even preferable career option. "I recently lost an employee who went to a Chinese enterprise for four times the pay," said a global food and beverage company's head of talent recruitment for greater China who was quoted in the Korn/Ferry report. "And there is no way we would ever match that." While a good salary provides motivation for switching jobs, the prospect for financial gain when a Chinese company goes public is even more enticing. Such initial public offerings have made many people millionaires overnight. The Korn/Ferry Institute surveyed 43 senior executives and managers working in China and found 45 percent of them would consider joining a pre-IPO Chinese company. Others switched from foreign companies to State-owned companies for a better sense of security, even if it meant a smaller salary. Betty Xin, 26, of Beijing quit her job at a foreign investment bank as soon as she decided to get married last year. She joined a Stated-owned securities company, at the cost of about 30 percent of her income. "I was exhausted at the previous job, working six days a week, half of them over 12 hours a day. "Working for a foreign company is not as cost-effective as it used to be," Xin said. "The tempo of work is more intense, but the pay does not rise accordingly. Competition is fierce, so colleagues are scheming against each other, making me completely exhausted both physically and mentally. "Now my working hours are fixed at 9 am to 5 pm, five days a week. And I can finally have a life!" Meanwhile, the global recession has forced many multinationals to give priority to reducing operational costs, which means the employees have to face shrinking salaries and bonuses, or even being fired, according to the institute. In contrast, Chinese companies, especially those owned by the government, are known for offering stable positions and pay. Besides, Chen said, there are many barriers to Chinese employees being fully accepted by some foreign companies. "We don't get access to many files and materials," Chen said, "and it has nothing to do with rank. Co-workers in Europe at my level can read those files any time they wish."

Pondo Water Control Project blocks the river stream in Tibet autonomous region, Oct 26, 2011. A major water control project in Southwest China's Tibet autonomous region on Wednesday blocked the river stream, marking the commencement of the dam's main construction. Pondo Water Control Project, the largest in Tibet, is located in Lhunzhub County, and dammed the Lhasa River at 10:30 am on Wednesday, said Kelsang Tsering, vice-chairman of the regional government. Comprised of a reservoir and a power station, the project is designed to irrigate 435.2 square kilometers and generate 599 million kilowatt hours of electricity annually. The project is expected to start operation in 2013.

Shuangcheng Nestle Co, a subsidiary of Nestle SA, said on Tuesday it would improve its measurement practices in response to several farmers' claims that the Swiss food giant had been collaborating with local vendors to shortchange them for years. The dispute centers on milk that farmers deliver to Nestle facilities. Wang Lixin, a 45-year-old farmer in Shuangcheng, said she delivered 1,450 kilograms of raw milk to Nestle last month, but the company paid her about 1,000 yuan ($157) less than the agreed-upon price. According to the original agreement, Wang's milk should be sold to the dairy giant's local branch for 3 yuan per kg, in this case 4,350 yuan. However, after the milk was weighed, Wang was told it was worth only 4,100 yuan. She said company officials also told her the milk contained an excessive level of an antibiotic and withheld another 800 yuan as a penalty. Wang said the company never explained why her milk fell short of standards. "This has happened every month since 1996 and I've gotten used to it," she said. Most dairy farmers in Shuangcheng, Heilongjiang province in Northeast China, have suffered from such "unfair treatment" from the Nestle plant over the previous decade or longer, Xinhua News Agency reported over the weekend. Local dairy farmers told Xinhua "the company juggled their scales and intended to withhold a fraction from farmers for years". The farmers also complained that the company said some of their raw milk was substandard without further explanation and that local authority forbade them from selling milk to other dairy companies outside Shuangcheng. The company's branch issued their standards for milk quality in 1996, six years after it established its base in Shuangcheng. The company runs 74 collection spots in the city. On Tuesday, Shuangcheng Nestle Co said it would improve it weighing procedures. The announcement said the local government would provide new scales to each collection spot by Wednesday to guarantee fairness and the company would ensure that farmers' milk was fairly weighed. It also said the government would enhance supervision of the collection spots and the company would set up a hotline for farmers' complaints. Shuangcheng Nestle Co said there were two other dairy companies in the city and farmers were not forced to deliver to Nestle. A pact signed in 2002 between the city and Nestle said that Shuangcheng, which is home to more than 20,000 dairy farmers, should have no other dairy firms and that all milk produced in the city must be delivered to Nestle, Xinhua reported. He Tong, spokeswoman for Nestle China, said on Monday that the company would work with the local government to investigate the problems. She said Nestle had contributed to the city's economic and social development over past 20 years. According to the local city farming bureau, Nestle paid 280 million yuan in tax to the local government last year, while the county's total tax income was 1.6 billion yuan. However, some local dairy farmers, such as 43-year-old Fu Peng, were taking their business elsewhere, secretly selling milk to buyers outside the city. "Though the offered price is not as favorable as Nestle's, I always got fully paid on time." Wang Dingmian, chairman of the Guangzhou Dairy Association and a key figure in the national dairy industry, said the local government was responsible for protecting farmers' interests in conflicts with dairy firms. "If they don't help dairy farmers negotiate with the companies, the farmers' interests have no way of being protected," he said.

Chinese Vice-Premier Li Keqiang (L) shakes hands with South Korean President Lee Myung-bak in Seoul, Oct 26, 2011. Li is on a two-day official visit to the Republic of Korea (ROK). Visiting Chinese Vice-Premier Li Keqiang met here Wednesday with South Korean President Lee Myung-bak for talks on bilateral ties and regional issues. During the meeting, the Chinese Vice-Premier said China and South Korea had seen rapid development in exchanges and cooperation in various areas, and bilateral relations had been promoted to a new level since the two countries fostered diplomatic relations nearly 20 years ago. Leaders of the two countries exchanged visits and met frequently, he said, and mutual political trust was deepening constantly. The two nations also established a strategic cooperative partnership. Bilateral trade volume surpassed the target of $200 billion in 2010, two years ahead of schedule, and it was expected to achieve new breakthroughs this year, while people-to-people exchanges had also been very active.

Hong Kong*:  Oct 27 2011 Share

The legal challenge to construction of a bridge across the Pearl River estuary to Macau and Zhuhai is over. Yesterday's deadline for the plaintiff, 66-year-old Tung Chung resident Chu Yee-wah, to take the case to the city's top court passed without her lawyers receiving any instruction to do so. Chu, a public housing tenant, secured a judicial review of the Hong Kong- Zhuhai-Macau bridge, arguing that the government's environmental impact assessment of the project failed to meet its own standards for gauging the likely effect on local pollution levels. Her lawyers said the assessment should have included a study of the estuary environment's condition if the HK$83 billion bridge was not built. The bridge will start from a point on Lantau island near Tung Chung. The case was upheld in the Court of First Instance but overturned on appeal by the government in September. It cost the Legal Aid department HK$1.4 million and added an estimated HK$6.5 billion to the cost of building the bridge, according to the Transport and Housing Bureau. Alan Wong Hok-ming, a lawyer for Chu, said he had heard nothing from her before yesterday's deadline. "We have told her the legal considerations in the case and it was up to her to decide," he said. Chu had been quoted as saying that she regretted launching the challenge. The government will now be able to press ahead with the project. An environmentalist said the case had raised public awareness of the complex assessment process and opened an avenue for a review of the law. "The judicial review arose from some grey areas in the law that have to be looked at from a bigger perspective, given that the impact assessment law has been in operation for more than 13 years," Edwin Lau Che-feng, a member of the Advisory Council on the Environment, said. The council wants a meeting of experts in the field to identify areas for improvement, in particular how to increase transparency and public participation in assessments. Lawmakers will now discuss a request from the government for funding to build the bridge and related works. Officials have put the cost of a border post, to be built on 130 hectares reclaimed from the sea, at HK$33 billion and say a link road will cost HK$16 billion. The bridge was not the only project affected by April's ruling in favour of Chu. Environmental impact assessment reports on a planned waste incinerator and the Sha Tin-Central rail link have been submitted to the environment chief for reconsideration.

Office rents in Hong Kong, the world's most expensive office market, could fall by 40 per cent if the economy suffers a hard landing, according to one property analyst. The uncertain economic outlook spells a correction for the market, said Andrew Lawrence, Hong Kong property analyst at Barclays Capital. Hong Kong’s office rents have shot ahead by one-third over the last year. The city has the tightest office market in Asia, according to property brokerage Colliers International, with vacancies at just 3.7 per cent. Tight supply remains a supportive factor for office rents, Lawrence said, but he estimates that rents would fall 10 to 15 per cent over the next two years if Hong Kong’s economy pulls off a soft landing, as economists expect. The pace of decline will escalate to between 35 and 40 per cent if it suffers a hard landing, the analyst said in a report on Wednesday. Any rental falls are likely to be subdued this year and Lawrence forecast a drop of at most five per cent in the second half of this year. But the rate will likely accelerate to as much as 25 per cent next year and rents could lose another 20 per cent in 2013, depending on how Hong Kong’s economy progresses, he said. Of the major Hong Kong developers, Hang Lung Group (SEHK: 0010) has the highest exposure to Hong Kong office space, which makes up 33 per cent of its net asset value, Lawrence said. Sino Land also has a sizeable exposure, at 22 per cent of net assets. The average exposure across major Hong Kong developers is 15 per cent, the report said. Among investors, Champion Reit has the highest exposure, with Hong Kong offices making up 79 per cent of its portfolio, it said. Hongkong Land has 62 per cent of assets in Hong Kong office space. The Hang Seng Properties Index was down 1.5 per cent at midday on Wednesday, compared with a 0.1 per cent drop in the broader Hang Seng index. Despite a recent rally in Hong Kong property stocks, “we believe the market has rightly priced in an increasingly negative view of rents and prices given our economic scenarios,” Lawrence said. “Despite the recent improved sentiment, the outlook for economic growth remains highly uncertain, making portfolio positioning and stock selection increasingly difficult.” On Monday, property brokerage Colliers International said Hong Kong office rents remain the most expensive in the world, at an average of US$213.70 per square foot per year as of mid-year. That was an increase of 32.3 per cent over the last 12 months. The brokerage’s head of research in Hong Kong, Simon Lo Wing-fai, said he has changed his forecast for Hong Kong’s office market, and now expects a decline of 8 per cent in rents between the third quarter and the same time next year.

Boeing's new 787 Dreamliner for All Nippon Airways (ANA) sits on the tarmac at Narita Airport prior to its departure for Hong Kong on Wednesday. Boeing's new 787 Dreamliner made its first commercial flight on Wednesday, giving a handful of deep-pocketed passengers the chance to fly into history on what is touted as an aviation breakthrough. The lightweight, fuel-efficient 787 is the first mid-sized plane able to fly long-haul. But critics had said it might never take off as its development ran three years behind schedule and billions of dollars over budget. With corporate VIPs and excited members of the public aboard, the All Nippon Airways (ANA) flight departed from Tokyo’s Narita airport bound for Hong Kong, where it was scheduled to land around 4.30pm. Wearing traditional Japanese jackets, ANA chief Shinichiro Ito and Boeing vice president Scott Fancher broke open barrels of sake with small hammers and handed the wine to passengers before they all embarked at Narita. ANA, the Dreamliner’s launch airline, auctioned six business-class seats on the inaugural flight, with one selling for US$34,000 – around 13 times the price of a regular business-class ticket between Tokyo and Hong Kong. The winner of the eBay auction was 48-year-old Miami businessman Gino Bertuccio, according to the Wall Street Journal, which said he had mistyped his maximum bid amount but was still enthralled at being on the flight. The newspaper said another delighted passenger was Thomas Lee, a 59-year-old California executive who flew on the maiden commercial flights of the Boeing 747 in 1970 and the Airbus A380 superjumbo in 2007. Touting the 787’s green credentials, ANA said proceeds from the online auction would go to international environmental groups. ANA also sold 100 economy-class seats as part of a tour package including one night at a hotel in Hong Kong for 78,700 yen (US$1,000) per adult. At travel agencies in Japan, a discount ANA return economy ticket on the route in late October costs around 45,000 yen. Painted in the blue and white ANA livery with red highlights, the first Dreamliner was delivered on September 28, three years after it was originally promised to the airline. Production delays and technical mishaps cost US-based Boeing billions of dollars in lost or cancelled orders, giving an edge to its fierce European rival Airbus. But Ito, the ANA president, who travelled on the 330-seat jet from the United States after receiving it from Boeing, declared himself “delighted” with the aircraft’s touchdown in Tokyo last month. ANA is planning to use the 787 on regular flights to Beijing and Frankfurt, as well as Hong Kong. In common with other high-end carriers, the Japanese airline is facing increasing competition from budget companies and is banking on the 787 to boost demand and cut costs. Boeing says the twin-aisle 787’s construction, partly from lightweight composite materials, means it consumes 20 per cent less fuel than comparable planes, an attractive proposition for airlines facing soaring fuel costs. The Chicago-based aerospace and defence giant has also been touting the larger windows, bigger luggage storage bins and greater cabin humidity than conventional jets, a factor it says will reduce traveller fatigue. Boeing is hoping the Dreamliner will be a hit with passengers it says want more non-stop travel, and says it is already the fastest-selling twin-aisle airplane in aviation history, with more than 800 orders since 2004. With an average list price of US$202 million, the plane is the firm’s first new design in more than a decade.

The Court of First Instance on Wednesday rejected a government application for a stay on the legal ruling stating it was unconstitutional to prevent foreign domestic helpers from seeking the right of abode in Hong Kong. On September 30, the court ruled that a provision in the Immigration Ordinance excluding Filipino domestic helper Evangeline Banao Vallejos from applying for right of abode contravened the Basic Law. The government appealed against the ruling, and has suspended the processing and approval of all right-of-abode applications filed by domestic helpers until the court rules on its appeal. On Wednesday, David Pannick SC, a government counsel, asked for a stay of the ruling, telling the court a suspension might constitute contempt, in the absence of a stay preventing the right-of-abode ruling from being applied in the interim. Pannick also noted that processing residency applications according to principles laid down in the ruling might lead to irredeemable damage, if a higher court did later reverse the judgment on appeal. However, Judge Johnson Lam Man-hon said there was no need to put a stay on the ruling because it applied only in Vallejos’ case, he said. The government’s suspension of processing right-of-abode applications would, therefore, not raise concerns about contempt of court, Johnson said. Foreign domestic helpers, whose applications were not processed, could take legal action against immigration authorities on their own behalf, Johnson added. The Security Bureau said it was studying Wednesday’s ruling.

The visit of Chinese Vice Premier Li Keqiang, right, to the campus of the University of Hong Kong last August may have hastened the departure of university President Lap-Chee Tsui, left. The president of Hong Kong's oldest university said he won't accept another term in office, a surprise decision that is spurring speculation he is being forced out over the treatment of protesters during a recent campus visit by a top Chinese official. Lap-Chee Tsui told University of Hong Kong students and faculty in an email late Tuesday of his intentions to retire plans to step down when his second five-year term expires next August, though he was mum on his reasons. "I firmly believe that HKU, like all other enduring institutions, must have constant renewal, fresh ideas and new perspectives to lead a sustainable development," Mr. Tsui said in his email, which was seen by The Wall Street Journal. "We must go through successions in evolution in order to achieve the next level of excellence." The university said Mr. Tsui had no immediate comment on his announcement. "We need to find out whether he is stepping down to take responsibility for how the school handled the August 18 incident," said Cheung Man Kwong, a lawmaker representing the educational sector. Hong Kong's universities are mainly funded by the city's government, and Mr. Cheung said he plans to invite Mr. Tsui to the legislature to field questions on his departure. An acclaimed geneticist, Mr. Tsui has been under fire from university students and the city's lawmakers over police treatment of student protesters on campus during Chinese Vice Premier Li Keqiang's August visit. Protesters were roughed up, with one locked in a staircase by police for an hour, raising civil-rights concerns. Mr. Tsui was accused of having political motivations for allowing the unprecedented police intervention on university grounds. Mr. Tsui later apologized to students for the incident. Though a part of China, Hong Kong has its own set of laws and institutions, including a bill of rights enshrined in its mini-constitution, the Basic Law. Mass public protests are usually banned in mainland China. Vice Premier Li, widely expected to succeed Wen Jiabao as premier, delivered a speech at the university, during which he surprised an audience of top political and business leaders by speaking briefly in English. English is HKU's main language of instruction. The Shanghai-born Mr. Tsui, who became HKU president in 2002, received international acclaim in 1989 when he identified the defective gene that causes cystic fibrosis, an inherited disease that clogs airways with thick mucus, inviting bacterial infections and progressively robbing patients of their ability to breathe.

 China*:  Oct 27 2011 Share

Hong Kong may have blossomed as the largest initial public offering market worldwide in the past two years but global executives see it wilting under competition by 2020, with Shanghai and Mumbai surpassing the local exchange. Only 6 per cent of 1,000 executives of large international companies surveyed believe Hong Kong will stay as the most important market for fund-raising in 2020. Most - 44 per cent - see that position taken by New York, followed by Shanghai, 19 per cent; London, 14 per cent; and Mumbai, 7 per cent; by that time. Hong Kong, however, stacks up better than Frankfurt, 3 per cent; Singapore and Tokyo, 2 per cent each; and Shenzhen, 1 per cent. The survey, conducted in July and August, was commissioned by legal firm Allen & Overy. For some time, HKEx (SEHK: 0388) has been a popular choice for both mainland and international companies to list. It has ranked as the No1 IPO market in the past two years in terms of amount of funds raised, beating both New York and London. But all that may change. Many of those surveyed believe that although Shanghai still has capital controls and does not yet allow foreign companies to raise funds, it will emerge as an important destination for companies looking to raise money by the end of the decade. Shanghai has vowed to become an "international city" by 2020 and plans to introduce an international board for non-mainland companies. HSBC and Bank of East Asia (SEHK: 0023) have already expressed interest to list. "The international board is seen as offering a funding channel for foreign companies by allowing them to raise capital directly and speed up their development in China," the Allen & Overy report said. "What this shows is that the competition between exchanges has never been so fierce. Never before have businesses had such a range of options when it comes to choosing where to list." HKEx chairman Ronald Arculli remains upbeat on his exchange. "As of the end of August, Hong Kong was No1 globally in terms of funds raised. We have seen a slowdown in the number of companies conducting IPOs on our exchange, especially in the last month or two. Nonetheless, interest in listing in Hong Kong remains strong." Arculli said the local bourse still had a pipeline of more than 100 applications for IPOs. IPOs in Hong Kong raised HK$194.4 billion in the first nine months this year, up 21 per cent year on year. Of these companies, 71 per cent were international names such as Prada, Samsonite and Glencore, with the rest being mostly from the mainland. Mike Wong Ming-wai, chief executive of the Chamber of Hong Kong Listed Companies, said: "For Shanghai to rise by 2020, I think a key assumption or prerequisite is the internationalisation of the yuan and the lifting of foreign exchange controls, otherwise foreign companies would be less inclined to raise funds there. There will always be companies who prefer listing in Hong Kong and investors who prefer trading here for its openness, sophistication and reliability." Sally Wong, chief executive of the Hong Kong Investment Funds Association, said: "With the increasing clout of the BRICS (leading emerging market economies of Brazil, Russia, India, China and South Africa), we are moving into a new world order where the balance of power is changing. What is important is for the HKEx to continuously reinvent itself to embrace the global trends, and to position itself appropriately."

A surging crowd of shoppers yesterday welcomed the reopening of 13 Wal-Mart stores in Chongqing , two weeks after they were closed for violation of food and product standards. The US-based retailer said it had overhauled its service in China and promised not to repeat the blunders. Earlier this month city authorities accused Wal-Mart of fraudulently selling ordinary pork labelled as more expensive organic pork for 20 months and fined the retailer 3.65 million yuan (HK$4.46 million). Two employees were arrested and 35 others put under police investigation. The US' largest company according to the Fortune 500 list is struggling to regain confidence in a market where foreign brands are in competition with local ones to win over picky customers. Foreign brands used to be more highly valued by Chinese customers for perceived better quality but have been under tight scrutiny recently after a series of scandals. Yesterday another multinational suffered a setback when dairy farmers in Shaungcheng, Heilongjiang province protested against Nestle's dominant market position. They said that the Swiss food giant has been buying milk at below-market prices and underpaying farmers. Last month managers of Gucci's main store in Shenzhen were accused of treating salespersons as if they were in a sweatshop. Footage from Chongqing Television showed customers flooding to Wal-Mart's Dadukou store at 8am yesterday where they were met with numerous discount and promotion posters. A woman who bought four bottles of cooking oil said that one bottle was at least 10 yuan cheaper than before. Two women told TV reporters that they found a "noticeably more tidy environment". Del Sloneker, chief operating officer of Wal-Mart China, said Chongqing staff had received 30,000 hours of training during the past two weeks to comply with food laws and regulations. Each store has established a customer complaints counter. "We are determined to never let it happen again," said Sloneker. "We are determined to learn from our mistakes, to listen harder to our customers and associates, and solve our problem when they are small, not when they are large." Christina Lee, Wal-Mart China's senior director of corporate affairs, said the stores are holding back from selling organic pork until a review is completed. Sales of regular pork have resumed. A statement by Chongqing Administration for Industry and Commerce said it had found four errors in Wal-Mart operations during its investigation. They were insufficient inspections of products from suppliers, substandard food labelling, fake and substandard food, and cheating customers. The head of Wal-Mart's mainland operations, Ed Chan, resigned last week for "personal reasons". Industry analysts said the resignations were a "gesture of obeisance to the authorities". In Shuangcheng, farmers complained about manipulation of measurements and an unfair grade payment system by Nestle, leading to them being underpaid. Shuangcheng Nestle is a joint venture between the Swiss food giant and the city and contributed 17 per cent of the city's revenue last year. "Nestle doesn't cheat [farmers]. Nestle does not tolerate such practices," Nestle (China) spokesman Jonathan Dong said yesterday.

China hopes the European Union takes effective measures to restore market confidence in tackling its debt crisis, the Foreign Ministry said on Wednesday, while also again defending the yuan’s exchange rate. Leaders of the 17 European countries using the euro will meet later on Wednesday to try to pin down a comprehensive response to the escalating sovereign debt crisis. “I hope that the measures the EU adopts can effectively counter debt problems that some countries are facing and help in recovering market confidence and promote stability in Europe,” Chinese Foreign Ministry spokeswoman Jiang Yu said. Doubts are emerging as to whether the plan, intended to reduce Greece’s debt burden, fortify European banks to withstand bond losses, and scale up the euro zone rescue fund to prevent market contagion, will yield concrete steps. China already has an estimated 600 billion euro (US$834 billion) exposure to euro zone debt, courtesy of the 25 per cent or so of its US$3.2 trillion of foreign exchange reserves that analysts believe to be invested in euro-denominated assets. China’s relative lack of options on where to store its vast reserve of foreign exchange wealth give it strong reasons to press Europe to surmount divisions, contain the debt crisis and thereby protect Beijing’s stake in its biggest trade partner. Klaus Regling, head of the European Financial Stability Facility, will visit Beijing on Friday, the EU’s delegation to China announced. The euro bloc’s crisis has already taken a toll on Chinese exports, which grew at their slowest pace in seven months in September. Exports were a net drag on China’s economic growth in the first nine months of this year. China’s top leaders have voiced regular support for European efforts to solve the debt crisis, though many analysts now say there are better ways for China to support Europe and its own economy than simply buying up high risk debt from euro zone governments struggling to stay solvent. On a second economic issue that has caused political headaches for China, the value of its yuan currency, also known as the renminbi, spokeswoman Jiang said its rapid appreciation would not be good for the world economy. The US Senate has passed a bill that aims to pressure Beijing to raise the value of the yuan more quickly. The yuan has risen about 3.6 per cent so far this year and 7.4 per cent since it was depegged from the dollar in June last year. “Our policies fit our national situation and are beneficial to the stability and development of the global economy,” Jiang said. “Demanding the renminbi appreciate drastically over a short period of time is inappropriate. A slowdown in China’s economy would decrease global demand, and would be detrimental to the world economy.”

Paulson: U.S. Should Think Twice About Forcing Yuan Issue - China should embrace a faster appreciation of its currency but U.S. policy makers should be wary of taking punitive actions to force the issue, former U.S. Treasury Secretary Henry Paulson said Tuesday. Paulson, speaking during an appearance in Washington, said the U.S. and China could both benefit from Beijing taking on much-needed structural changes to its financial markets. “I believe … very strongly that it is in China’s best interest to reform and move to a market-determined currency that reflects economic conditions,” Paulson said. He was critical, however, of ongoing efforts in Congress to pressure China to allow its currency, the yuan, to appreciate at a faster pace. The Senate in recent weeks passed a measure allowing U.S. officials to target Beijing’s currency policy through trade penalties and various international organizations. “I don’t think that an approach that could lead to a trade war … is the right way to go,” Paulson said. Mr. Paulson's speech http://online.wsj.com/public/resources/documents/paulson_speech102511.pdf 

Models present creations for the NE TIGER 2012 Haute Couture collection with the theme "Tang Dynasty" (618-907) during China Fashion Week for Spring/Summer 2012 in Beijing Oct 25, 2011.

The Shenzhou VIII spacecraft is assembled with the Long-March II-F rocket at the Jiuquan Satellite Launch Center in Northwest China's Gansu province on Oct 23, 2011. The unmanned Shenzhou VIII, part of China's first spacecraft rendezvous and docking mission, was reported to be launched in early November.

Hong Kong*:  Oct 26 2011 Share

Henry Tang greets members at a Chinese Civil Servants' Association seminar yesterday with association president Peter Wong Hyo. Adultery can be "forgiven", Chief Executive Donald Tsang Yam-kuen said in a TV interview aired yesterday, touching on a subject that has plagued his possible successor Henry Tang Ying-yen. "The important thing is," Tsang told interviewer Michael Chugani on Asia Television's Newsline, "as a Catholic, I've learnt to forgive. If somebody sincerely tells you what has happened, I think it's for us to accept that, and try to be as forgiving as possible." When asked for his views on extramarital affairs, he replied: "All you need to do is read up the Catholic catechism on this, to tell you what it is all about ... As I said, it's not a question of right or wrong. I've just learned that everybody is entitled to lead his own life." Tsang countered some comments from Tang supporters who said no more than one candidate from the pro-Beijing camp should run in the next chief executive election. "I think in any election, any number is good, whether it's one, or two, or three," he said. "It's up to ... whether people want to run in the election, and how the political system allows multiple candidates. Our system is a very liberal one." Chugani asked Tsang, whose devout Catholic beliefs are widely known, if he ever needed to turn to his faith to seek help. Tsang said: "I do it very often; I do it every night. Every night, my prayers." Commenting on Cardinal Joseph Zen Ze-kiun's receiving donations from Next Media (SEHK: 0282) chairman Jimmy Lai Chee-ying, Tsang said: "As a religious man, he's entitled to receive things like this." Concerning his image, Tsang said many people had suggested he put on an act in public, to seem less serious. But he said: "Whether I'm in office or in front of a camera here, or whether I'm in the august chamber of the Legislative Chamber, I just try to be myself. I can't act." Asked about the legislative session a week ago in which Wong Yuk-man was expelled from the chamber, he said: "To me it hurt; [it] always reminds me that we are witnessing that the very important civil traditions of the Legislative Council, built up over the years, are being trampled upon ... I felt more than that." Meanwhile, Tang and Leung Chun-ying, two of his former colleagues and almost certain contenders to fill his shoes, shared their views on civil servants and education yesterday. Leung, former Executive Council convenor, called for a clear line between civil servants and politicians. "The responsibilities of political issues should not be shouldered by civil servants, who are supposed to execute policy orders," he told a forum run by the Chinese Civil Servants' Association, which was also attended by Tang. "Political leaders should have the courage to offer better support for civil servants facing unreasonable demands and criticisms." The association's members can run in the subsector election for membership in the 1,200-member Election Committee that will pick the next chief executive. At a teachers' forum earlier yesterday, Tang refused to express his views on the June 4 military crackdown in 1989. "I understand the public has sentiments on the incident," he said. "Our country has been improving in various aspects and we should work for our country's progress."

The government may face a large claim for compensation and a lawsuit after declaring the Ho Tung Gardens a historic monument. Secretary for Development Carrie Lam Cheng Yuet-ngor said on Monday the Antiquities Advisory Board had endorsed the declaration after accepting the views of two commission reports confirming the site’s historic and architectural value. The board advises the government on historic sites. The decision comes after Ho Min-kwan, the owner of the building and granddaughter of the late tycoon Sir Robert Ho Tung, rejected an exchange proposal put forward by the government to settle the issue. The government intended to preserve the 82-year-old mansion and gardens at 75 Peak Road, but Ho had plans to demolish it and build about 11 three- or four-storey residential blocks. The redevelopment value was estimated to be HK$3 billion. In January, the minister declared the property a provisional monument after learning of Ho’s plan. Lam said on Monday she had been negotiating with Ho since May over the land exchange proposal, which involved amalgamating two adjacent “green belt” sites with the tennis court and the carport of Ho Tung Gardens’ to form a plot big enough to exchange. Ho had rejected the proposal, Lam said. “Unfortunately the owner, based on an architectural appraisal by her advisers, said our land exchange option was not desirable because of various restrictions and limits and also because of the procedures [required] in terms of re-zoning,” she said. Lam said the declaration was the only remaining way to preserve the mansion because the provisional monument status would expire in January, allowing Ho to redevelop. Ho has one month to oppose the declaration and can go to District Court to file a claim for compensation from the government. Lam said she hoped Ho would continue to negotiate and not take the case to law. The mansion and gardens was built by legendary Jardines’ comprador Sir Robert Ho Tung for his second wife. It is one of the oldest Chinese Renaissance buildings remaining in Hong Kong.

Hong Kong Nightlife Heads for Hainan - Hong Kong’s latest export to China? Its party zone. Lan Kwai Fong Group, the Hong Kong developer that hatched the nightlife district by the same name, has teamed up with golf-course developer Mission Hills Group to build a new 2 billion yuan ($314 million) shopping and entertainment complex in Haikou, the capital of China’s Hainan province. Synonymous with the after-hours scene in Hong Kong for nearly 30 years, Lan Kwai Fong was dreamed up by entrepreneur Allan Zeman. It now occupies a stretch of bars and restaurants in the city’s Central neighborhood, though it started with California, a restaurant Mr. Zeman opened in 1983. He has since built Lan Kwai Fong Chengdu, a similar development in Chengdu that opened in December. The Haikou project will be his second one in mainland China. “Every day, I get approached by different cities in China, asking me to put a Lan Kwai Fong in their cities,” said Mr. Zeman. Potential next cities for future nightlife zones include Guangzhou and Hangzhou, he said. Mission Hills, also a Hong Kong-based company, has completed the first phase of the Haikou development, which at more than 80 square kilometers (31 square miles) is bigger than Manhattan. Mission Hills already runs the world’s largest golf facility in nearby Shenzhen, which boasts 12 courses, each with 18 holes. Mission Hills-Lan Kwai Fong-Haikou, which breaks ground next year, will be a 2.6 million square-foot complex. At its center will be a manmade lake that serves as a backdrop for nightly performances, but unlike the Hong Kong and Chengdu versions, Haikou will also feature retail strips and six hotels. “I’m a day-club operator, and you’re a nightclub operator. That’s a good match,” said Ken Chu, Mission Hills’s chief executive, pointing at Mr. Zeman, his partner in the project. “It’s about how we make it more fun for tourists.” Hainan is touted as the Hawaii of China, and the Chinese government is pushing tourism in a big way. Already, Chinese fleeing the cold are going in droves: In the first half of this year, 14.4 million tourists came to the island province, a 12% increase from the same period in 2010. While the economic outlook remains uncertain, the two developers are cheery about their prospects, saying that the emergence of a Chinese upper and middle class has created a legion of potential visitors. “Consumer spending is still up,” said Mr. Zeman. “The country is going through a massive change into a consumer economy, and there’s opportunity for us.” Corrections & Amplifications: Mr. Zeman was born in Germany, not Canada, as an earlier version of this article incorrectly said.

Hong Kong's highest court on Monday rejected an application by feng-shui adviser Tony Chan to appeal a ruling that denied him the multibillion-dollar estate of late businesswoman Nina Wang, marking an end to the yearslong battle over one of Asia's great fortunes. The decision by the Court of Final Appeal thwarts any hope for the 51-year old to overturn decisions made in the city's lower courts, which have repeatedly criticized him for bringing a dishonest case and questioned the authenticity of a will that purports to give Ms. Wang's fortune to him. "We are disappointed about the result today but there's nothing we can do now. It's the end of the road," said Clive Grossman, an attorney representing Mr. Chan. Mr. Chan couldn't be reached for comment, but earlier told a local television station he respects the ruling and declined to discuss his next move. The self-styled feng-shui master grabbed headlines in 2007 when he declared after Ms. Wang died of cancer that he was the sole beneficiary of her estate. Ms. Wang, who was chairwoman of unlisted developer Chinachem Group Corp., named her charitable foundation the sole beneficiary in a 2002 will but Mr. Chan produced another, dated 2006, leaving everything to him. There is a continuing criminal case for forgery of the 2006 will against Mr. Chan. He has denied the charges. Married with two children, Mr. Chan claimed he was Ms. Wang's longtime lover in a relationship that began in 1992 when the heiress hired him for feng-shui work. Hong Kong's High Court in February last year ruled in favor of the Chinachem Charitable Foundation Ltd., with the presiding judge saying at the time he believed the 2006 will produced by Mr. Chan was a forgery. The ruling was upheld by the Court of Appeal in February 2011. Kung Yan-sum, executive director at Chinachem and Ms. Wang's younger brother, said Monday the ruling demonstrated yet again that justice prevails. He said a "conservative estimate" of Ms. Wang's fortune stands between 50 billion Hong Kong dollars (US$6.43 billion) and HK$60 billion, and added he will now transfer her estate to the foundation. Keith Ho, a lawyer for the foundation, said it will take at least six months for the assets to be transferred. The foundation, Ms. Wang said in her will, was intended to create a type of Nobel Prize for China that will be administered by the United Nations secretary-general, the Chinese premier, and the chief executive of Hong Kong. Ms. Wang, who died at 69, was known in Hong Kong for appearing in public in bright miniskirts and bouncing pigtails that earned her the Cantonese nickname Siu Tim Tim, or "Little Sweetie." Ms. Wang inherited the estate of her late husband, Teddy Wang, after winning her own battle of competing wills against her father-in-law. Teddy Wang, who founded Chinachem, was kidnapped in 1990 and declared dead in 1999. His body was never found. The court battle over his estate involved three competing wills.

 China*:  Oct 26 2011 Share

The mainland's controversial new social security tax on foreign workers, which was supposed to take effect across the country on October 15, has come into force only in the capital. But even there, the deadline for registration is still unclear. Provinces and cities across the country that have their own localised versions of tax regulations, such as Guangdong and Shanghai, are expected to roll out their versions of the law within a month, a person close to the situation said. Under the tax, foreign nationals working on the mainland will pay up to 11 per cent of their salaries, to a maximum of 11,688 yuan (HK$14,190). Employers must also pay - up to 37 per cent of their foreign employees' salaries - to the same maximum of 11,688 yuan a month, according to the regulation published by the Ministry of Human Resources and Social Security. The South China Morning Post (SEHK: 0583, announcements, news) previously reported that local governments were caught off guard by the new tax, complaining of having too little time to implement it. In Guangdong, a spokesman for the provincial Department of Human Resources and Social Security said they would follow regulations and guidelines laid out by the central government. "There will be no deviation when the regulation is carried out in Guangdong. The regulation [in Beijing] has only just gone into effect, but it does not set a deadline for businesses to register," he said. The province, he said, needs more time to gather the information required to launch the tax. Beijing's version of the law, which was made public on October 14, does not specify the deadline for registration and tax payment, the person said. "It isn't very clear when the contribution should begin. We asked and they said the contribution would begin once the registration is completed," he said. "But they haven't made it clear whether the taxpayers have to make up the difference, say, if they miss this coming month's deadline." In Shanghai, a spokeswoman for the Municipal Human Resources and Social Security Bureau said they could not comment on the issue. Central authorities may be taking a lenient approach to start with, and might step up enforcement as awareness of the law grows, the person close to the situation said. Registration requires hard copies of the taxpayers' personal documents, "which take some time to produce", he said. All Chinese nationals from Hong Kong, Macau and Taiwan are exempted from the new tax. Nearly 600,000 foreigners live on the mainland and 231,700 have work permits, according to the 2010 census. The tax will be a burden to many firms and staff, and will give a clear cost advantage for Chinese staff over foreigners. Hongkonger Paul Wong Tai-long, who runs a textile trading firm in Dongguan with five foreign workers, said he might replace them with locals or Hongkongers, for whom he won't have to pay extra. "It is a difficulty for many companies: 50,000 yuan a year for an expat worker is not a small amount of money, especially when I have several of them," he said. Similarly, a consultancy firm in Xiamen , Fujian will likely lay off staff next year to offset rising costs, its human resources manager told China Daily. Germany and South Korea have made deals with Beijing to exempt their nationals from the tax. At least 10 other countries, including the United States, Japan and Russia, are negotiating similar deals.

Imported beverages at an international food exhibition in Zhengzhou, Henan province. China's drive to increase imports could provide a boost for the crisis-ridden global economy. Foreign firms are eyeing the Chinese market as they try to beat the downturn. While Europe struggles with its sovereign debt crisis and recovery falters in the United States, China is becoming the focus of attention for global manufacturers hoping to increase sales in the world's second-largest economy. While the global recession has made buyers reluctant to place long-term orders at the 110th Canton Fair in Guangzhou, exporters said that the country's huge consumer market and its rapid economic growth have inspired confidence in the future of global business. Attending the country's largest trade event for the first time, Ronny Laux was excited. "I met the Chinese Premier when I participated in the Canton Fair," said the Asia sales director for Masa (Tianjin) Building Material Machinery Co Ltd. On the opening day of the fair on Oct 14, Premier Wen Jiabao visited the International Pavilion, which was established to promote Chinese imports.Wen stopped at the Masa booth during his walkabout and talked with the German businessman. As the world's largest manufacturer of building-materials machinery, Masa sees China as a strategically important market and, although it is based in Germany, the company also has a subsidiary in Tianjin. "The business is still small here, but we hope 25 percent of our global orders will come from China in the future because the market is so huge," he said. As the global debt crisis prompts a slowdown in export growth, China is focusing on increasing imports and boosting domestic consumption to shore up its economic growth. In September, China's exports grew by 17.1 percent year-on-year, the lowest rate of growth since February, while imports increased by 20.9 percent. During his keynote speech at the opening ceremony of the trade fair, Wen said: "China will expand imports and stabilize exports to maintain balanced foreign trade." On Tuesday, the National Bureau of Statistics said that China's economy expanded by 9.1 percent in the third quarter from a year earlier, and by 9.4 percent during the first three quarters. "China is one of the places that US retailers are looking to for growth," said David G. French, senior vice-president of government relations at the US National Retail Federation (NRF). As an executive of a body that represents more than 2,500 US retailers, French spent his first visit to China attending the Canton Fair to assess the business opportunities for member companies. Together with some NRF colleagues, French met officials from Chinese retailing associations. "They have confirmed our conception of what is going on in China, the opportunities and the challenges," he said. The US garment retailer Gap Inc, an NRF member, announced last week that it will expand its network in China and increase the number of its stores to 45 next year from the current 15. "That trend is set to continue (among retailers)," said French. The European Union is attempting to resolve its sovereign debt crisis, while in the US the high unemployment rate and a collapsed housing market are weighing on demand. For global companies and exporters, China - whose growth is expected to be six times that of the US and the euro area, according to estimates from the International Monetary Fund - will be a key market as they attempt to weather the global financial downturn. To promote imports, the organizers of the fair set up the International Pavilion a few years ago. The display area of the pavilion for the October event was 20,000 square meters, the largest ever, and 529 companies from 49 nations and regions, including the US, Spain, Japan and South Korea, applied to attend the fair and display their goods. The organizers plan to hold a series of seminars and forums during the fair to help the companies make contact with global purchasers and Chinese buyers, said Liu Jianjun, deputy director-general of the China Foreign Trade Center at the Ministry of Commerce, who is also a spokesman for the fair. According to Customs data, China's imports increased by 26.7 percent year-on-year to $1.29 trillion between January and September. During the first nine months of the year, imports from Vietnam surged by 52.5 percent, while those from the United Kingdom rose 29.3 percent. Imports from Germany also rose by 29.1 percent, and Canada by 51.8 percent. Imports from Russia increased by 52.5 percent and South Africa 139.4 percent. Last month, Zhong Shan, vice-minister of commerce, said that in the next five years, the country will try to import more from emerging nations and economies with a large trade deficit with China in a bid to balance trade. Meanwhile, the nation will also prioritize imports of a range of products, including advanced technical equipment, key parts, commodities and raw materials and consumer goods, he said. China not only possesses a huge consumer market, it also has high demand for commodities and energy-related goods, thanks to its rapid economic growth and limited resources. In 2010, imports of soybeans accounted for 92 percent of national domestic consumption, while cotton was 26 percent and crude oil 54 percent. Iron ore at 6 percent and bauxite at 50 percent underlined the important role imports are playing in the country. As the largest global energy consumer, China has "huge potential as a market", said Juan M. Martin Baranda, manager of international business development at Repsol YPF, the largest Spanish oil company. "Not only do we want to sell more goods to China, but we also expect to expand here by producing locally," he said.

Chinese Premier Wen Jiabao (center) attends the opening ceremony of the eighth China-ASEAN Expo in Nanning, capital of South China's Guangxi Zhuang autonomous region, on Friday. Premier Wen Jiabao on Friday urged China and ASEAN to increase the scale of currency swaps, pledging to boost the imports of competitive products from the regional bloc. "China is willing to have close cooperation with ASEAN to expand the scale and range of currency swaps to further enhance the region's ability to tackle global financial risks," Wen said while addressing business leaders and government officials at the opening of the eighth China-ASEAN Business and Investment Summit. He promised to build a China-ASEAN commodity trade center in the capital city of South China's Guangxi Zhuang autonomous region to serve as an exhibition platform and logistic base for both sides. "I hope the ASEAN enterprises will take advantage of this platform to win an even bigger Chinese market share," Wen said. Though Wen did not specify how China and ASEAN will expand currency swaps, Reuters quoted unnamed sources that the two sides plan to sign a framework agreement to settle trade in yuan late this year or early next year. It said once the deal is signed, China would then negotiate individually with ASEAN members and sign currency swap agreements, allowing non-Chinese companies to settle their yuan-denominated transactions with banks in their own countries, rather than doing so through Hong Kong. China already has swap agreements with three of the ASEAN members: Indonesia, Malaysia and Singapore. Yuan Bo, with the research institute under the Ministry of Commerce, told China Daily on Friday that the international settlement of the renminbi will help reduce transaction costs and losses resulting from the fluctuation of exchange rates for traders both from China and ASEAN members. "If China and ASEAN could settle trades in yuan late this year or early next year, it will be an example and a very good opening for other free-trade areas and the internationalization of the renminbi.

A man holds a copy of the Chinese language version of the authorized new biography Steve Jobs, about the co-founder of Apple Inc, at a bookstore in Wuhan, Hubei province on October 24, 2011. The book, written by biographer Walter Isaacson, emerged from scores of interviews with Jobs. It is expected to paint an unprecedented, no-holds-barred portrait of a man who famously guarded his privacy fiercely but whose death ignited a global outpouring of grief and tributes. Jobs, counted among the greatest American CEOs of his generation, died early this month at the age of 56, after a long battle with cancer and other health issues. The book debuted in China on October 24. 

Hong Kong*:  Oct 24 -25 2011 Share

The government has received two bids from developers for a large hotel site in Sai Kung which surveyors expect to be sold for up to HK$980 million. A spokesman for the Lands Department said the 193,104 sq ft site at the junction of Wai Man Road and Sha Ha Road in Sai Kung drew two submissions by the time its tender closed yesterday. "It's not unusual that there were just two bids for the site because the scale of the project is quite large, which we expect to exceed HK$1 billion including the land price and construction costs," said Alvin Lam Tsz-pun, a director at Midland Surveyors. "It's quite far too... plus hotel investment and operation is a long-term investment with high cost." Lam said he expected the site would be turned into a resort hotel as it is close to the sea and has a beach nearby. The site went for sale after an applicant guaranteed a minimum bid of HK$580 million, or around HK$2,002 per buildable sq ft, said the Lands Department in August. Alnwick Chan Chi-hing, executive director of property consultancy Knight Frank, said the plot could be used to build a four-star hotel with up to 750 rooms. He forecast the site could sell for HK$980 million as the plot is located near Sai Kung town centre and has a full sea view.

Wing Lee Street may have been saved from demolition a year ago but conservation is difficult because the Urban Renewal Authority has been able to acquire and renovate only four of the 12 tenements. The others are in the hands of property-acquisition companies and have been left to decay. None of the owners have responded to the authority's subsidy offer to revamp the buildings. The Sheung Wan street has one of Hong Kong's last remaining clusters of Chinese-style tenements. On a tour of the four renovated tenements yesterday, the authority's planning and design director, Michael Ma Chiu-chi, said staff had tried to keep original materials, like floor tiles and staircase railings. But they were only able to retain the characteristic tiles in three flats, as those in the other were too badly damaged. "Our aim is to preserve the ambience of the terrace and the low-rise streetscape. We are not running a museum. While the facades will not be changed, the interiors should be adaptable to a new use," Ma said. A kitchen has been added to each renovated flat. The authority is inviting architectural conservationists to live in a block to do research and will rent the remaining three to overseas artists and non-government organisations at a nominal price. In March last year, the authority scrapped redevelopment of the street in the face of strong opposition to its plans. It decided to zone the street as a conservation area to prevent redevelopment, renovate the blocks it had acquired, and offer subsidies to other owners to refurbish. Tenants affected have been relocated with compensation or to an authority housing block in Sheung Wan. Lee Chak-yue, a tenant who has run a printing workshop for more than 30 years, said it was good to see the neighbouring blocks renovated. Lee, in his 80s, said he had decided to retire. "There used to be eight printing workshops in Wing Lee including mine," he said. "I hope the authority will set up a printing museum to remember our history."

Users of PCCW (SEHK: 0008)'s internet service, Netvigator, have voiced anger at an announced price increase of more than 30 per cent for people who pay on a monthly basis. Users have received a letter informing them of the biggest increase in years - a monthly rate of HK$218, up from HK$150. The change applies to those who have not signed a long-term contract with PCCW but pay month by month. The letter touts Netvigator's 98 per cent network coverage and awards it has won, then goes on to say: "We regret that because there has been a substantial increase in our costs, price adjustments for some of our services have become necessary." Ian Watson, who lives on Lamma Island, used to pay HK$162 a month. He is angered at having to pay about 35 per cent more. "I pay HK$218 for three megabits per second," Watson said. "Those in Taikoo Shing pay HK$266 and get 300Mbps." Data transfer rates are much slower in small establishments than high-rise buildings because few users share the costs of setting up the infrastructure. Other users have posted their grievances online. One who lives in an old, stand-alone building in Kwun Tong wrote in a forum that he had no other service providers to choose from. Another wrote that he had submitted a complaint to the Consumer Council, saying that tens of thousands of people living in old blocks or remote areas have no choice but to stick with Netvigator. According to a PCCW hotline, the new rate of HK$218 per month applies to 6Mb or 8Mb plans. Affected users are urged to sign an 18-month contract. Those who do still have to pay HK$218, but get a HK$400 Wellcome supermarket coupon. "These are normal commercial activities," a PCCW spokeswoman said. "We need to take into consideration the costs and the market situation when reviewing our tariff plans." PCCW competitor i-Cable (SEHK: 1097) offers a service to only part of Lamma, a hotline staffer said. A 24-month contract with that company costs HK$80 per month for a 10Mb plan and HK$149 for a 50Mb plan. Hong Kong Broadband does not offer service on the island. Its website lists different prices for various estates, with 100Mb services starting from about HK$169 a month. The Consumer Council received 1,802 complaints about internet services in the first nine months this year, 13 per cent fewer than the same period last year. The highest number, 689, concerned quality of service. Another 552 were over price disputes. Connie Lau Yin-hing, the council's chief executive, said she would not comment on individual cases. Consumers had the freedom to choose services considered to offer good value for money, she said. Service providers would fail in their social responsibility if they imposed a fare hike on consumers left without a choice, she added.

Wang Yue and her mother - The death yesterday of a two-year-old who was ignored by more than a dozen passers-by after she was badly injured when two drivers ran her over in Foshan , Guangdong, triggered an outpouring of grief and widespread soul-searching on the mainland. Wang Yue , known to her family as Yueyue, died at 12.32am in the Guangzhou Military District General Hospital from severe multiple organ failure and brain damage. Dr Su Lei, head of intensive care at the hospital, told a brief press conference early yesterday that the hospital had done its best to save her life. Yueyue's parents could not be contacted. Hospital officials said the parents were devastated. Guangdong party boss Wang Yang told a high-level provincial meeting that the tragedy should be a "wake-up call" for society and that such an incident should never be allowed to occur again. "We should look at the ugliness in ourselves with a dagger of conscience and bite the soul-searching bullet," he said. Yueyue's death became the most discussed topic online yesterday. Million of messages condemned the negligence that led to her death and reflected on the lessons that had to be learned. "The girl used her small and short life to wake up the conscience of the Chinese people," a posting by one internet user said. "What else is greater than this and what else is more despicable than this?" Many said that although the economy had powered ahead in recent decades, the country was ethically impoverished. Yueyue was struck in an alley outside her parent's shop in Foshan, first by a minivan and then a truck. Eighteen people passed her as she lay bleeding in the road but none went to her aid until an elderly woman scavenger pulled her aside and then helped to locate her mother. The accident, on October 13, triggered a national outcry when surveillance footage of the incident was posted online two days later.

Three lawmakers wore June 4 T-shirts yesterday when they posed with the chief executive for the first group photo session in the new Legislative Council building. Cyd Ho Sau-lan, of Civic Act-up, Lee Cheuk-yan, of the Hong Kong Confederation of Trade Unions and Leung Yiu-chung, of the Neighbourhood and Worker's Service Centre, donned shirts with a logo marking the 22nd anniversary of the June 4 crackdown to attend a lunch with Donald Tsang Yam-kuen at the new complex in Admiralty. The pan-democrats then joined the group picture with the chief executive in the lobby. Ho said: "It might be the last time the chief executive takes a group photo with us at the new complex. I want to leave a historical record by wearing the T-shirt." She said she wanted to let Tsang know that people would continue to strive for the vindication of those who died in and around Tiananmen Square on June 4, 1989. Lee tried to give a T-shirt to Tsang during the lunch, but Tsang declined to accept. "Thanks, but no, thanks," Lee recalled Tsang as saying. It was the first lunch to be held in the new complex and most of the 60 lawmakers attended, though radical pan-democrats Wong Yuk-man and "Long Hair" Leung Kwok-hung were absent. Tsang also joined a tour of the facilities in the complex, which include a children's education centre, the Legco library and the public gallery in the chamber. At one point he stumbled and almost fell down the steps as he was leaving the gallery, but he said the new complex was much better than the old building in Central. Meanwhile, several labourers working on construction of the adjacent government headquarters staged a protest at the Legco building when Tsang attended the lunch. They complained that their contractor owed them more than HK$200,000 in wages and mandatory provident fund payments. They failed in their attempt to hand a petition to Tsang.

 China*:  Oct 24 - 25 2011 Share

The State Council is mulling a plan to allow some foreign insurers to sell third-party liability insurance to mainland car owners in the hope their expertise can help turn the struggling sector around. The China Insurance (SEHK: 0966) Regulatory Commission recently submitted a plan to the State Council to open the market to qualified foreign insurers to curb losses, industry sources said. Foreign insurers would need to meet criteria for profitability, solvency, the size of their parent companies and operating history in China. Third-party insurance is compulsory for mainland drivers in order to provide financial protection against physical damage and bodily harm arising from traffic accidents. Since it was made mandatory in 2006, the insurance industry has reported consecutive annual losses. Last year, the mainland's 33 property insurers posted a combined 7.2 billion yuan (HK$8.7 billion) in losses on third-party liability insurance for car owners, equal to 9.6 per cent of their earned premiums. The American Chamber of Commerce has said the closed nature of the compulsory-car-insurance business "effectively blocked" foreign insurance companies such as American International Group from tapping the world's biggest car insurance market, as drivers tended to choose the same company for both optional and compulsory coverage. Mainland insurers mostly rely on selling optional car insurance products to make profits. "The new policy would have limited market impact," said Zhang Ying, an analyst at Industrial Securities. "This is a stable market with established domestic insurers and premiums set by the regulator." Foreign property insurers, which have about a 1 per cent share of the market, were not keen about moving into car insurance as there was limited scope for competition, the industry sources said. The car insurance sector has been profitable overall since 2009 as regulatory controls on price competition have been tightened. Vehicle insurance premiums accounted for about 75 per cent of the 400 billion yuan of property insurance premiums on the mainland market last year. In the case of PICC (SEHK: 2328) Property & Casualty Company, the nation's biggest non-life insurer, the figure was 80 per cent. Deliveries of cars, including sport-utility vehicles and minivans, rose 8.8 per cent to 1.32 million units last month, the China Association of Automobile Manufacturers said.

Students at Liaocheng University in Shandong province join a memorial service on Friday to pray for Yue Yue, who died more than one week after being run over. Yue Yue, the 2-year-old girl who was run over by two vehicles last week and ignored by numerous passers-by, died in hospital on Friday. She died of brain failure at the General Hospital of the Guangzhou Military Command in South China's Guangdong province, doctors said. Her death triggered a nationwide wave of mourning, as the incident has been closely followed by people who are concerned about a seemingly lack of morality in Chinese society. Chinese netizens mourned Yue Yue and wished her well in another world. "I hope her departure will bring concrete changes to society," said one. Yue Yue's case, which has aroused attention and heated discussions across the country, has become far more than a traffic accident. Commentators and the public have reflected on what is missing in the morality of society. As heart-breaking footage from a surveillance camera shows, 18 people who passed the accident scene in a hardware market in Foshan, Guangdong province, ignored her. A full seven minutes after the first vehicle ran over the girl, a 57-year-old rag collector spotted her and found the parents. The public has poured out its anger on the indifferent passers-by and hailed the woman who tried to save her as the only one showing a conscience. Both she and the girl's family have been offered donations. The incident once again raised the possibility of legislation against those who refuse to help others in danger at accident scenes. Many have said the system of protecting those who help others in danger needs to be reinforced, after controversial court verdicts in a number of cases where the rescuers were sued for causing the accidents. Comments have also pointed to the negligence of Yue Yue's parents and insufficient parental care of many small children. The media as well has been scrutinized for negative reporting of such accidents, which is deemed as partly holding the public back from helping others in danger. As a sign of change, the past few days have seen a lot of news about cases of people helping others in danger. A Guangzhou-based media group has called on society to "say no to indifference and awaken true love." The Guangdong provincial authorities organized three rounds of panel discussions by people from various fields on helping people in need. Wang Yang, Guangdong Party secretary, urged at a provincial Party committee meeting that "with the participation of the public, a system, conditions and social environment be created to promote good and punish evil." "Efforts should be made to lift the morality of the whole society and the conscience of everyone and to avoid similar things from happening again."

China holds military drill at new heights - A soldier in the People's Liberation Army shoots an anti-aircraft missile during a joint drill of the army and air force in China's western plateau region in Chengdu, Southwest China's Sichuan province, photo released on Oct 21, 2011.

A Chinese cargo-transport plane loaded with aid materials lands at a military airport in Bangkok on Oct 22, 2011. The aid materials, including canoes, water-purifying equipment, sandbags and solar-powered flashlights, are the third batch of relief materials sent by China to Thailand, which was hit by floods. China has sent 40 million yuan ($6.26 million) worth of relief materials to Thailand.

Hong Kong*:  Oct 23 2011 Share

Rising numbers of mainland and foreign enterprises have been setting up operations in Hong Kong, according to government data. While the United States led the ranks of countries with regional offices totaling 525, mainland firms headed the list of nations with the highest number of local offices, numbering 557. An annual study by Invest Hong Kong and the Census and Statistics Department found that 6,948 firms set up offices in the SAR, up 5.9 percent year-on-year. A quarter of the companies said they plan to expand their business over the next three years. The data show that 19 percent of firms have set up regional headquarters and 35 percent and 46 percent have formed regional and local offices, respectively. US firms operate the most regional headquarters, followed by Japan and Britain. Mainland companies set up the highest number of local offices, followed by Japan and the United States. A large majority said they are drawn to the SAR by the simple tax system and low tax rate. But soaring costs of housing and office rents were negative factors. Meanwhile, Singapore beat the SAR again as the easiest place in which to operate a business. The World Bank's Doing Business 2012 report said Singapore has advantages over "Asia's World City" in the areas of starting a business, registering properties, protecting investors, trading across borders and resolving insolvencies. The top five rankings are unchanged from a year ago - Singapore, Hong Kong, New Zealand, United States and Denmark. China ranked 91st, down from 87th a year ago.

Hopewell Holdings boss Gordon Wu Ying-sheung said retired Cardinal Joseph Zen Ze-kiun should come clean on how he spent tycoon Jimmy Lai Chee- ying's HK$20 million donation. Wu, a Chinese People's Political Consultative Conference delegate, said that while it is hard to judge whether it is right or wrong for Zen to accept Lai's money, the cardinal should provide details of the donations and how these were spent. Zen has said some of that money went to mainland underground churches. The cardinal, Wu said, was evasive in his public statements and should have nothing to fear if he used the donations in the interests of Hong Kong. Zen did not answer questions when meeting the press and other people yesterday. The diocese staff member organizing the meeting said it was Zen who decided not to answer questions during a three- day fast - to protest a policy on church-sponsored schools - that will end tomorrow morning. But Zen, who has diabetes and high blood pressure, did say he is still healthy. Albert Ho Chun-yan and Emily Lau Wai-hing, lawmakers from the Democratic Party that also received Lai donations, were among the visitors.

A senior Beijing official has said the choice of the next chief executive is in the hands of the Hong Kong people and not his. Hong Kong and Macao Affairs Office director Wang Guangya made his remarks in Beijing when meeting with visiting Financial Secretary John Tsang Chun-wah. "I believe the several elections in the coming year in Hong Kong will be held in an orderly manner under the leadership of the SAR government in accordance with the Basic Law and the related Hong Kong laws, and the election results will come out smoothly," Wang said. Asked if he has an ideal candidate in his mind, he said: "The choice is in your hands, not mine." The upcoming races for votes include district council polls next month, the subsector ballot of the Election Committee in December and the chief executive and Legislative Council elections next year. During the three-day visit by Li Keqiang to Hong Kong in August, a series of measures was announced to promote local economic and social development. Wang said yesterday the wide range of initiatives may further deepen bilateral cooperation and help boost the economic and financial development of the two sides - and are mutually beneficial. He also thanked the SAR government and its top officials for ensuring Li's visit went smoothly. Meanwhile, in Hong Kong, possible chief executive hopeful Henry Tang Ying-yen said he believes the government should not leave small and medium-sized enterprises to battle on their own. The former chief secretary, who resigned to consider contesting next March's top leadership race, said it is now time for the government to study how to further help local brands to establish themselves in the international market. He made the remarks after visiting a watch manufacturer in Cheung Sha Wan and an environmental technology company in Yuen Long Industrial Estate. Tang also urged the government to consider providing tax concessions to the environmental industry. In a separate development, Hopewell Holdings chairman Gordon Wu Ying- sheung yesterday played down reports of the sex scandals Tang finds himself at the center of. Wu said most people commit mistakes at some point and that what matters is to be willing to admit such errors. He added men would have wasted their teen years had they not been libertines. What is important is that Tang is back on the right track, with his wife forgiving him, Wu said.

Hong Kong may be best-positioned in the mainland's booming green product market as locally made food and related products not only enjoy higher demand than those produced over the border but also have price competitiveness against foreign products. A survey conducted by the Trade Development Council has found mainland consumers are willing to pay up to 11 per cent more for environmentally friendly products made in Hong Kong when choosing between them and unfriendly ones. Green products made on the mainland had to be priced within 6 per cent of non-green ones to attract consumers. Green products made overseas carried the greatest margin, at 16 per cent. "Although demand for overseas green products is the highest, their prices are usually two to three times higher than non-green items because their products were charged with high import tax," said TDC economist Alice Tsang. This means they are more expensive than the 16 per cent mainland customers are willing to pay. "Hong Kong has an edge in this regard as locally made products are tax-free in China under the Closer Economic Partnership Arrangement." Ahead of a Hong Kong trade fair on eco-friendly products, and Guangdong's first green product trade show starting next month, the TDC polled 2,400 consumers from six mainland cities in June on their spending pattern on environmentally friendly products, such as food, clothing and electronic gadgets. Ninety-five per cent of the respondents said they have bought green-labelled food, while 90 per cent have purchased energy-efficient appliances like power-saving light bulbs - a big hit on the mainland. The time frame for having made the purchases varied but extended to three years. Nearly three in five said they had bought clothing made from natural materials and 53 per cent were interested in natural skin products. Less than half have spent money on green household cleaners. Among the food categories, parents are willing to pay the highest margin - 19 per cent - on green baby food. Consumers also named a number of eco-friendly products they would like to try - including solar-powered re-chargers and water boilers, and mobile phone cases made from environmentally friendly material, Tsang said. "At present, only a tenth of products sold in the retail market are eco-friendly products, and most of our respondents said they have only started buying these items in the past three years, so there is huge room for future development," she said.

Hong Kong's inflation rate rose slightly by one percentage point to 5.8 per cent in September, government figures released on Friday showed. The composite consumer price index last month increased from 5.7 per cent in August, figures from the Census and Statistics Department showed. In July, inflation hit a record high of 7.9 per cent. The underlying inflation rate, which nets out the effects of all government’s one-off relief measures, was 6.4 per cent in September. This was also slightly higher than August’s 6.3 per cent, the department figures showed. A department spokesman said the increase in prices was mainly due to the enlarged increases in private housing rents. “The underlying inflation rate went up marginally in September, thanks to the slight ease-back in food inflation after its almost uninterrupted rise over the past year. Meanwhile, private housing rentals showed an enlarged increase, reflecting the continued feed-through of higher fresh-letting private residential rentals,” he said. Among various goods surveyed last month, food (excluding meals bought away from home) rose 11.3 per cent year-on-year, the department figures showed. Clothing and footwear increased by 8.7 per cent while housing rose 8.3 per cent. Meal bought away from home and transport also went up by 5.7 per cent and 5.3 per cent, respectively. Taking the first nine months together, the composite CPI rose by 5.1 per cent over a year earlier, the spokesman said. A government spokesman said inflation was likely to climb further in the near term as the lagged effects from earlier surges in international food prices and market rentals continue to filter through.

Hong Kong will pay HK$11.2 billion to continue importing water from the Dongjiang, or East River, in Guangdong under a three-year deal that locks in the flow of up to 2.46 billion cubic metres as competition for water grows among Chinese cities. The city will pay HK$3.5 billion in 2012, HK$3.7 billion in 2013 and HK$3.9 billion in 2014 each year to maintain the current maximum supply of 820 million cubic metres - representing increases of between 5.7 and 5.8 per cent a year. Inflation and the strengthening of the yuan are behind the increases. This year, the city paid HK$3.3 billion for the same amount of water. The deal with the Guangdong government means each cubic metre of raw water will cost HK$4.30 next year and HK$4.80 in 2014. The cost will be even higher if Hong Kong, as it has in recent years, draws less than the maximum volume permitted under the deal, which promotes flexibility of supply based on actual demand. The deal also allows Hong Kong to raise the maximum amount of water it draws from 820 million to 1.1 billion cubic metres per year if the need arises. Li Wenfeng, assistant general manager of the Guangdong Yue Gang Water Supply Company, a subsidiary of Hong Kong-listed GDH Limited, the Guangdong provincial government's investment window company in Hong Kong, said operating costs had risen due to inflation but refused to say by how much. Despite the price rise, water officials said they had no plan to raise water tariffs, which have not changed since 1995. But they pledged to continue studying the possibility of adjusting the progressive tariffs for water use, under which the first 12 cubic metres are free and customers are charged HK$4.10 per cubic metre for the next 30 cubic metres used. Water from the Dongjiang is piped 70 kilometres to Hong Kong, and provides 80 per cent of the city's water. Domestic reservoirs supply the remainder. The government has proposed building a water desalination plant at Tseung Kwan O, which would initially be able to produce 50 milliion cubic metres of potable water a year - but at a price of HK$12 per cubic metre compared with HK$7 per cubic metre, including treatment costs, for Dongjiang water and local supplies. Officials say there are no plans to replace the water supplied from the Dongjiang through desalination. Professor Terrence Chong Tai-leung, of Chinese University's economics department, said that while the price rises for Dongjiang water seemed reasonable, officials should overcome the political obstacles to raising the price for customers in order to conserve water. "Water is now priced too cheaply to encourage people to save water," he said. Hong Kong's per capita water use is among the highest in Asia; it was about 371 litres per day in 2009, compared with 308 litres in Singapore and 311 litres in Seoul. A Development Bureau spokesman said maintaining a reliable supply for the city was a top priority amid growing competition for water from cities in Guangdong, whose supplies were already subject to quotas. He said a reserve capacity was needed to cope with dry years like this year. The bureau spokesman disagreed with suggestions the proposed desalination plant would be used as a bargaining chip in a future round of water negotiations. The government would continue to promote water conservation, he said. One initiative was to complete the replacement of old water mains by 2015, which would reduce the amount lost to leaks from 25 per cent to 15 per cent.

A damaged First Ferry vessel is removed from the scene of its crash on Friday. More than 70 passengers were injured when the ferry hit a mooring pillar outside Cheung Chau typhoon shelter early on Friday morning. At least 74 passengers and crew on board a ferry from Cheung Chau were injured after the vessel crashed into a concrete mooring block off the island on Friday morning. Fire Service Department’s marine and offshore islands division officer Chan Wai-ho said the ferry struck the concrete structure – which was located about 400 metres off Cheung Chau typhoon shelter. The accident happened around 5am and a few minutes after the Central-bound First Ferry vessel set off from Cheung Chau pier. It was carrying 140 passengers and five crew members. It was the first ferry leaving from Cheung Chau on Friday morning. Two passengers on the first row allegedly fell from their seats and suffered serious injuries, Chan said. “They probably hit hard objects – such as railings in the front part of the ferry,” he explained. The other 72 people mainly suffered minor injuries, mostly scratches and bruises, Chan added. The injured included three ferry crew staffers. Some were treated at the pier and others hospitalised. Two people with serious injuries were taken by government helicopter to a hospital on Hong Kong Island. Some passengers told local media the scene on the ferry deck became chaotic after the accident. “Many people shouted for help and anxiously dialed 999,” one passenger said. “Most people had been asleep. Suddenly, we heard a loud bang and ... the ferry came to an abrupt halt. The impact caused most people to jolt forward,” another said. The ferry’s captain, surnamed Cheung, told local media he could not see the concrete block because it was still quite dark and there were no lights on it. “I immediately stopped after the collision. We depend on lights to navigate, but there was no light on the [concrete] block. This affected my judgment,” the captain said. Local TV showed film footage showing damage to the front of the ferry. Chan said the Marine Department would investigate the cause of the accident.

New York-based hedge fund Perry Capital, which manages about US$8 billion, is shutting down its Hong Kong office and will cut 30 jobs globally as it concentrates on the US and European markets, a source with direct knowledge of the matter said on Friday. The first major closure in Asia by a global firm after the regional hedge funds suffered losses in August and September contrasts with a flurry of overseas hedge funds setting up offices in the region which has drawn the likes of GLG, Soros Fund Management, Paulson and Fortress. The job cuts include the entire 16-member staff in the firm’s Hong Kong office, including Alp Ercil, a partner and the head of the firm’s Asia operations, who declined an offer from Perry to relocate to its other offices in London and New York. Ercil had resigned and planned to start his own hedge fund next year with some Perry Capital staff, another source with direct knowledge of the matter told reporters. Perry Capital has decided to “concentrate primarily in hedge funds investing in Europe and America,” the source said. The firm, founded by star hedge fund manager Richard Cayne Perry more than two decades back, manages hedge funds, real estate and private equity funds. It has decided to significantly reduce its real estate and private equity operations and manage Asia exposure in its hedge funds from offices in New York and London, the source said. New York-based Michael Neus, a managing partner and general counsel for Perry Capital, declined comment. Ercil declined comment when contacted by reporters.

 China*:  Oct 23 2011 Share

A summit between the European Union and China that had been scheduled for next Tuesday in Tianjin to discuss trade relations, the euro-zone crisis and the November G20 meeting has been postponed, an EU official said on Friday. The official gave no reason for the decision, but leaders of Europe’s single currency zone are now expected to hold a meeting in Brussels on Wednesday on efforts to deal with the financial crisis. Chinese and EU leaders – including Premier Wen Jiabao, European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy – had been scheduled to meet on October 25. Their talks were meant to cover the financial crisis, the G20 summit in early November and the possible launch of negotiations for an EU-China investment treaty that would promote and protect investment flows in both directions. EU companies drawn to China’s growing economy have been frustrated by Beijing’s restrictions on inward investment, which often require that foreign groups enter joint ventures and share their know-how with Chinese businesses. China is also a big purchaser of euro-denominated assets. Analysts estimate that these account for about a quarter of China’s USD$3.2 trillion in foreign exchange reserves, the world’s biggest.

The chief executive of Swedish Automobile, owner of troubled car maker Saab, said on Friday he had turned down a full-blown takeover offer from China's Zhejiang Youngman Lotus Automobile and Pangda Automobile. “The token offer was unacceptable because it would trigger every conceivable change of control clause and that would possibly mean the end of Saab,” Swedish Automobile CEO Victor Muller told reporters in a telephone interview. Muller would not disclose the value of the offer. As the two Chinese car makers were still interested in Saab, they should stick to the terms of a deal signed in July that would see them take a combined 53.9 per cent stake in Amsterdam-listed Swedish Automobile, he said. Both Youngman and Pangda declined to comment. The administrator in charge of Saab’s reorganisation asked on Thursday that a Swedish court pull the plug on bankruptcy protection, just hours after an investment firm pledged new cash to help keep the struggling car maker alive. This has not discouraged race car aficionado Alex Mascioli, who told reporters on Friday that his US investment firm, North Street Capital, was pressing ahead with a US$70 million deal that will allow Saab to keep the lights on. “I expect the deal to go ahead. I’m willing to do what I can with my resources for Saab,” North Street Managing Partner Mascioli said in a telephone interview. Muller said he expected the court to hear the case next week. He added that he did not think the Swedish government was interested in taking over cash-strapped Saab. “There is always a Plan B,” Muller said when asked what he would do if the Chinese companies walked away. Asked what the plan was, he said he would reveal it “only if we resort to it.” “It’s Victor’s call. He has put a lot of effort into trying to save this company. At the moment there is a deal with the Chinese,” Mascioli said when asked if he was prepared to step in should the deal with Pangda and Youngman fall through. Saab is an undervalued asset that will survive and from which Mascioli expects to turn a profit, he said, adding that North Street had the capacity to take over Saab should it wish to do. Amsterdam-listed Swedish Automobile has accepted a US$10 million equity investment and a US$60 million loan from North Street Capital, a private equity and hedge fund manager, to fund Saab’s ongoing reorganisation. Youngman and Pangda finalised a deal in July to invest 245 million euros in Saab. Youngman is also behind a bridge loan to Saab that has been partly paid out. Question marks have dogged the Chinese investments from the start, not least whether authorities in that country would give the go-ahead. Swedish Automobile has struggled for months, seeking new investors and selling off various assets in a bid to pay suppliers and employees and resume production at its Saab plant in Sweden. North Street agreed to buy the luxury sports car business of Swedish Automobile in September.

Two-year-old Wang Yue, known to her family as Yueyue, is caoptured ojn CCTV video just before she was hit by a white van seen in the background in Foshan. The video prompted soul-searching over why people didn't help the child who died in hospital on Friday morning after a week of treatment. 

Hong Kong*:  Oct 22 2011 Share

Hong Kong's anti-graft agency said Monday it charged May Hao, a former executive of New Zealand's UBNZ Assets Holdings Ltd., with offering bribes to seal the company's recent takeover of Hong Kong-listed Natural Dairy (NZ) Holdings Ltd. The Independent Commission Against Corruption said Ms. Hao offered more than 73 million Hong Kong dollars (US$9.39 million) and two properties in New Zealand to Chen Keen, a former executive director of Natural Dairy, between May 2009 and March 2010. Ms. Hao, formerly known as May Wang, was also charged with money laundering totaling 150 million New Zealand dollars (US$119 million) between December 2009 and December 2010. Ms. Hao, who is scheduled to appear in a Hong Kong court Tuesday, couldn't immediately be reached for comment. A Hong Kong court on Monday issued an arrest warrant for Mr. Chen. Natural Dairy said Tuesday that Mr. Chen isn't in Hong Kong and didn't comment further. UBNZ Assets Holdings also couldn't immediately be reached for comment. The charges follow a joint investigation into Natural Dairy by the Serious Fraud Office in New Zealand and the ICAC in Hong Kong.

Highly driven Tsang sees potential for strong growth across China. Judging from appearances, Katherine Tsang is not the typical boss of an international bank that can measure its history back more than 150 years. Her obvious feminine tastes and her delicate face, resembling that of famous Chinese actress Zhou Xun, a winner of the best actress award at the 15th Paris Film Festival, belie the need for an acute eye for the bottom line essential in the rough-and-tumble world of investment. She arrives dressed immaculately in a neat white suit, with a heart-shaped brooch on her left collar featuring a circle of pink tiny artificial roses surrounding the word "love". An ornate ring adorns her index finger with another silver and gold one on her ring finger. Tsang, 54, is the younger sister of Hong Kong Chief Executive Donald Tsang. She has worked for Standard Chartered Bank (SCB) since 1992 and was appointed as its chief executive officer in China in March 2005. In July 2009, she was promoted to the role of chairperson for Greater China, a newly created position viewed as a step by the emerging markets-focused lender toward strengthening its business in the region. While she was CEO, SCB's revenue from operations in China increased 12-fold. "Under her strong leadership, we have developed a clear strategy and built a strong foundation for growth," said Jaspal Bindra, SCB's group executive director and CEO, Asia. "Before I came to the mainland, I thought I already knew the market well enough, because I had been doing business related to the mainland since the 1980s. But later I discovered how ignorant I was - as a Chinese I had to learn how to be a real Chinese," said Tsang, referring to the market disparity and cultural conflict she experienced when she started to work on the mainland. Tsang was the first CEO with SCB (China) Limited, one of the first foreign banks to locally incorporate in China back in April 2007. "When we started, it was like crossing a river by feeling for the stones. The stones were very slippery sometimes and we couldn't see them. Only when we took each step would we know whether we had made the right move." Tsang attributed her success to the abundant business opportunities made available after the mainland opened up to foreign banks as part of its promises for joining the World Trade Organization. "Our development was very rapid. Shortly after the opening-up, we had the opportunity to develop a renminbi business, to set up a local bank, to extend branches and to get various licenses - this was a kind of luck. I cherish it and, therefore, I've always worked hard." Tsang confessed that sometimes she felt worried and restless when faced with high uncertainty in the market. "I was very afraid that something bad would happen. Luckily I am getting old and my memory of these things is fading." To Tsang, her current position is a new start of great significance as interaction between the mainland, Hong Kong and Taiwan improves dramatically. "The situation is different and the clients' demand for capital has also changed. For example, previously they just sold bonds on the mainland. Now the channels have multiplied and they (businesses) could go to Hong Kong and Taiwan to raise capital." Tsang expects SCB's business related to Taiwan to grow faster after it established a Taiwan desk in five mainland branches following the acquisition of Hsinchu International Bank in November 2006. The move made it an international bank with the largest network in Taiwan. As China accelerates its pace to float the yuan globally and encourages domestic enterprises to explore overseas market, she believes great opportunities are lying ahead for leading international lenders such as SCB to make good profits in the region. "We think there is good business potential across the region driven by these two predictable changes," said Tsang. The financier wants the Chinese government to promote wider use of the yuan in trade settlement with overseas importers and to extend other global offshore centers for yuan internationalization by getting those centers to sign contracts with Hong Kong in order to achieve the hub-and-spoke effect and make the whole process more controllable. As one of the first foreign players in Hong Kong participating in yuan trade settlement pilot projects, SCB was the first international lender that processed two-way settlements between the mainland and Hong Kong. It was also the first foreign bank that issued yuan-denominated corporate bonds in Hong Kong. On this aspect, SCB is strengthening its cooperation with the Agricultural Bank of China Ltd (ABC), one of the country's Big Four lenders, to combine its global network with ABC's extensive domestic network and its sound client basis. Standard Chartered PLC invested $500 million in ABC's IPO in 2010. "We take a long-term view of the partnership. ABC offers plenty of scope for mutually beneficial cooperation given our complementary strengths and footprint. ABC has some 2.6 million corporate clients, more than 320 million personal customers and nearly 24,000 branches, but virtually no international network. This is where we found a niche in which we could play to our strengths," said Tsang. She said SCB has already become ABC's preferred partner for trade and cash, and it has seen a significant increase in trade volume with ABC. The two sides are working on several high-end projects under the so-called China-Africa corridor program, and a number of deals in equity capital markets, debt capital markets and third party syndications. "The pipeline looks good," said Tsang. Standard Chartered PLC's income in the mainland grew year-on-year by 16 percent to $404 million in the first half of 2011. Including Bohai Bank, in which it has a 20 percent stake, profits in the mainland increased by 76 percent to $137 million during the same period. "However, this significantly understates the impact of China on the group as a whole. Quite apart from Hong Kong, where the business is increasingly intertwined with the mainland, China generates income across our network," said Peter Sands, group chief executive of Standard Chartered PLC. He said China's action to moderate the pace of economic growth and squeeze inflation is having some limited effect on the business growth momentum, and the lender will continue to invest and grow rapidly in the country. Currently the lender has 19 branches, 51 sub-branches and 1 village bank in China, and employs more than 5,500 staff. It had opened nine branches or sub-branches this year on the mainland as of Aug 3, taking the total to 71. The bank opened a new branch in Xi'an, capital of Shaanxi province, on Aug 30, a key step for SCB's expansion in Western China. "As for our network on the mainland, we ranked third among foreign players. The focus of individual institutions usually varies. For us, we put more emphasis on balanced development," said Tsang, adding that SCB had not invested less than other players, but its investments mainly went to personnel, especially professional staff who displayed an ability to find their way through various uncertainties in the market. To Tsang, SCB is like a strong, vibrant, well-experienced and reliable marathon runner who shows great patience when entering a new race (meaning an emerging market). "Standard Chartered has been developing in China for 152 years, but it was only in 2005 that we started to learn how to become a Chinese bank. We wish to be a part of China. The only difference is that we brought knowledge and experience from abroad." The bank is researching the possibility of setting up a joint venture with a Chinese securities player, as some foreign banks have already done, and remains confident about its retail banking business, although foreign banks only hold a market share of around 1.8 percent, said Tsang. Despite the rising uncertainties in the market, such as white-hot inflation, economic slowdown and a higher reserve requirement, Tsang said she is confident about China's economic prospects, the huge business opportunities lying ahead and SCB's continued commitment to the world economic driver. "I like challenge. Unimaginable difficulties can often trigger a strong willingness to overcome them." Tsang was born in Hong Kong and educated in the former British dependent territory and Canada. She holds a bachelor of commerce degree from the University of Alberta, Canada. Before joining Standard Chartered, she worked in several organizations including Acro Chemical Asia Pacific, Kowloon-Canton Railway and the Hong Kong government.

 China*:  Oct 22 2011 Share

Doctors say Wang Yue, the toddler who made global headlines after she was hit by two cars and left unassisted as more than a dozen pedestrians passed her by, has died. The two-year-old, who had been in critical condition since arriving at the hospital a week ago, died of multiple organ failure at the General Hospital of the Guangzhou Military Command at 12:32 a.m., the hospital said in a press release. A woman answering the phone in the hospital’s intensive care unit Friday morning confirmed that the girl had died after midnight but declined to offer further details. The child, who local media had taken to calling Little Yueyue, set off a painful round of soul-searching in China after a local TV station broadcast chilling security camera footage from a market in the southern city of Foshan that showed her being hit, first by a delivery van and later by a truck, and left lying in the street for an agonizing seven minutes as 18 pedestrians walked passed her. Yueyue was finally pulled out of the street by an elderly scrap peddler, who then went door-to-door to find the girl’s parents. In attempting to explain the apathy that could lead so many to ignore a severely wounded child, Chinese Internet users and members of the press have cited everything from the trauma of the Cultural Revolution to fear of legal action to Chinese culture itself. Some, meanwhile, blame the country’s single-minded pursuit of economic growth. “People’s sense of morality turns as quickly as the gearwheels of the economy, always shifting,” one user of the popular Twitter-like Sina Weibo microblogging service wrote Friday in response to the news of Yueyue’s death. “People who recognize this, please exercise your moral duty. Help those people who need help.” Concerned citizens have been bombarding Yueyue’s family with donations –a total of 270,000 yuan ($42,000) by Wednesday, according to local media (in Chinese) — to aid the medical effort. It wasn’t immediately clear what would happen with that money now that the girl has died. Yueyue’s parents couldn’t be reached Friday afternoon. News of Yueyue’s death hit hard on Weibo, where it was the most discussed topic with more than 2.3 million posts early Friday evening. “She’d only been in this world for two years,” reflected one user writing under the name Chaniang Kuai. “She didn’t have time to enjoy the beauty the world has to offer, but she was a first-hand witness to how cold society can be.” Others responded by searching out a silver lining. “Poor Yueyue is gone,” wrote Chen Chunli, “but she will always be there to force Chinese people to remember this disgrace that should have never been.”

China cuts holdings of US debt - China divested $36.5 billion of its net holdings of US Treasury debt in August. The move was the biggest sell-off of dollar assets by Beijing this year, despite a surge in foreign demand for US financial assets as investors sought a safe haven amid the European debt crisis. Analysts said that the reduction of its holdings of US debt indicated that China has adjusted its foreign-exchange investment portfolio after the US credit rating was downgraded by Standard & Poor's in August. "It is a normal market-based operation by the Chinese government. It has to do with the volatile market conditions after the downgrade of the US credit rating," said Guo Tianyong, director of the China Banking Research Center at the Central University of Finance and Economics. China currently holds $1.137 trillion of US Treasury debt, meaning that the country is still the largest foreign owner of US debt, according to data released by the US Treasury Department on Tuesday. The August reduction was the first time that China had trimmed its US debt holdings in five months after a net purchase of more than $8 billion in July. Some analysts said that the sell-off does not necessarily mean that China has lost faith in the US dollar. Instead, they said Beijing may want to allocate more assets to US corporate bonds, which offer more stable returns. Analysts were also unsure as to whether US Treasury data, known as TIC data (Treasury International Capital System), will reveal an accurate picture of China's holdings of US debt. They argued that China buys some of its US Treasuries in London. Initial TIC estimates often attribute the purchases based on the location where they are made instead of the origin of the buyers. Despite China's reduction of US debt holdings, other major foreign investors significantly boosted their holdings in the same month as they sought a safe haven amid the growing European debt crisis. The United Kingdom boosted its US Treasury holdings to $397.2 billion in August, a rise of 2.4 percent compared with July. Japan's holdings rose to $936.6 billion, up from $914.8 billion in July, according to data from the US Treasury Department. Analysts said that dollar-denominated assets remain a safe and liquid investment option given the volume of China's purchases and the lack of alternative investment options in the market. However, Yuan Gangming, a researcher at the Center for China in the World Economy at Tsinghua University in Beijing, said that the diversification of its huge foreign-exchange reserves remains a challenge as China seeks to protect the safety of its dollar-denominated assets. In September, Beijing held talks with Rome over a possible purchase of Italian debt amid the European crisis. Meanwhile, last week China bought more Japanese debt holdings than it sold for the first time since October 2010. "China should also diversify its rapidly accumulating foreign reserves by allowing enterprises to use them to acquire resources and expand overseas investment," Yuan said. "It's the rights of China to manage its reserves suitable," Robert Hormats, a visiting US under secretary of state for economic, energy and agricultural affairs said in Beijing on Wednesday. He said his level of confidence in the US financial system is high and the quality of the US Treasury remains sound.

Malaysian Prime Minister Najib Tun Razak (C), Wan Jifei, Chairman of the China Council for the Promotion of International Trade (2nd R), and Chinese Vice-minister of Commerce Gao Hucheng (2nd L) attend the roundtable dialogue between the Malaysian leader and CEOs of Chinese energy, forestry, communications, water and environmental protection companies in Nanning, capital of Guangxi Zhuang autonomous region. They were meeting on the sidelines of the eighth China-ASEAN Expo and the eighth China-ASEAN Business and Investment Summit on Oct 21, 2011. Bilateral trade between China and Malaysia now accounts for a quarter of all trade between China and the 10 ASEAN countries, according to Wan. China has become Malaysia's largest trading partner, while Malaysia is China's largest trading partner in ASEAN. 

A worker at a Center Group factory, China's largest manufacturer of spectacles by production. Approximately 600 former employees have returned to work after the company restarted limited production on Thursday with the help of the local government, accounting for about 60 percent of the original staff. The company suspended production after its president absconded because of a localized credit crisis in Wenzhou, Zhejiang province. Zhejiang Center Group, China's largest manufacturer of spectacles by production, resumed limited manufacturing on Thursday. The company ceased operations after its owner - one of the biggest debtors in a localized credit crisis in Wenzhou, Zhejiang province - absconded. Hu Fulin, the company's president, fled to the United States on Sept 21, leaving behind debts of up to 2 billion yuan ($313 million), including 1.2 billion yuan in high-interest loans from underground banks. He returned to Wenzhou on Oct 10 to restructure the company with the help of the local government. "We've tried to help the restructuring and reopening of Center Group in the ten days since Hu's return, providing financial support and negotiating with suppliers," said Zhou Leguang, an officer of the media department of Ouhai district of Wenzhou, where the company is situated. Managerial staff spent five days registering returning employees and recruiting new workers. Approximately 600 former employees have returned to work, about 60 percent of the original work force. A temporary information desk was set up at the factory gates early on Thursday morning, with managers continuing the registration and recruitment work with a crowd of applicants. "One of the six production lines has been operating normally since this morning and the other five will be ready for work tomorrow, with all the management returning to their positions," said the manager of the materials department, surnamed Hu. He said that he had always been confident about the company's future, and had insisted on waiting for the return of the chairman, along with other staff members. "The reopening of the factory means a lot to us and we believe that we can overcome this tough period with help from the local government," said Wu Haonan, the manager of the packing department. Meanwhile, the factory has enough orders to provide work until April 2012 and the chairman is living at the factory to work on a strategy to ensure a stable future for the company. "I think the reopening of the Center Group will serve as an example to other struggling companies to help them regain confidence and recover from their troubles with local government help," said Zhou Dewen, chairman of the Wenzhou Small and Medium-sized Enterprises (SME) Development Association. In response to the city's credit crisis, the local government has released a draft plan for financial reform, according to reports from the Xinhua News Agency. An eight-part plan was formulated to regulate the private financing system and build the city into a financial development region. Under the provisions of the plan, the number of small lending companies will rise to 50 from the current 30 by the end of this year, offering loans worth 12 billion yuan. The number of lending companies will reach 100 by the end of 2012. To encourage the SMEs with regular loans, the plan will also ensure that five more authorized lending agencies are launched this year to offer private loans to SMEs. In addition, the first round of a 200 million yuan private equity fund for Wenzhou enterprises, will be distributed by the end of the year, prior to the launch of a private equity investment association. More detailed plans are still under discussion and will be unveiled by the local government in due course.

Hong Kong*:  Oct 21 2011 Share

Rarely does a Hong Kong government revitalisation plan create a buzz in the air, but its proposal for the area between Kwun Tong and the old Kai Tak airport site to be rebranded Kowloon East has done just that. With plans for a HK$12 billion monorail and the moving there of 11 government departments, it is being portrayed as a second central business district, a place for offices, green schemes and street art. This is precisely what the run-down and largely uninteresting part of our city needs and authorities have done well to put vision where there has been little but industrial wasteland. Having whetted appetites, they must now ensure that their ideas turn into innovative projects that quickly go from drawing boards to reality. The lack of office space in Central and Wan Chai has long been putting pressure on resources and neighbourhoods. An end to harbour reclamation put paid to one avenue of expansion, which led to the renewed threatening of places of heritage and conservation value. The trend is especially prevalent in Wan Chai, where places of character and vibrancy that have served residents and visitors so well for decades are being torn down to make way for more skyscrapers. Kowloon East will save homes and livelihoods and ease overcrowding. Being twice the size the area of Central, it offers 5.8 million square metres of total floor space. It is, in effect, a blank canvas on which an entirely new part of our city can be created, a chance to innovate and shine. The nine-kilometre monorail, to be emissions-free and with 12 stops, certainly fits that thinking. Hong Kong's developers have a reputation for turning proposals to reality in double-quick time, but the government does not have so good a record when it comes to revitalisation projects. It took a decade to decide what to do with the Kai Tak site. Time is obviously needed to canvass creative ideas and plan properly, but excessive delays after such an exciting announcement will sap energy and enthusiasm. It is in all our interests that the idea promptly takes root and blossoms.

Giving out free samples of milk formula for newborns will be banned under a new code of practice drawn up by manufacturers, an industry association said yesterday. The self-governing code, to be rolled out by the end of this year, would apply to babies up to the age of six months, the Hong Kong Infant and Young Child Nutrition Association said. The group was formed by formula brands Mead Johnson, Nestle, Wyeth, FrieslandCampina, Danone and Abbott. Public hospitals stopped giving out free milk formula samples last year but some manufacturers continue the practice in private hospitals and will have to stop once the code comes into effect. Under the code, complaints can be filed with the association and the complaint will be passed to the named manufacturer, which should respond within 14 working days. If the complainant is still not satisfied, the case will be heard by a committee comprising a trade member and two from outside the business. Companies can be fined up to HK$100,000 under the code. Repeated breaches will lead to suspension or cancellation of membership in the association and that will be announced in newspapers. The Society of Hospital Pharmacists complained in April about misleading adverts that claimed milk formula could promote brain development and prevent constipation. But the new code will not apply to them, since those products are aimed at infants over six months old. Association president Clarence Chung Chi-wai said: "The code is formulated based on the World Health Organisation's International Code of Marketing of Breast-milk Substitutes, which set the limit at six months old." Singapore and New Zealand hadadopted similar codes, he said. Breastfeeding advocates said the code would be of little significance unless its coverage was broadened. Tang Miu-chi, vice-chairwoman of the Breastfeeding Mothers' Association, said the ban's effectiveness would be limited because of the similar packaging used on milk formula for babies and infants. "Most people can't tell the difference. When they watch ads for infants' milk formula, they will associate them with those targeting babies younger than six months old," she said. By claiming milk formulas make babies healthier and wiser, the ads would discourage breastfeeding, she said. Australia and the Philippines banned all formula adverts, she said. Dr Ip Lai-sheung, chairman of the Baby Friendly Hospital Initiative Hong Kong Association, said most hospitals would stop distributing free samples before the code's launch. By the end of this year, the government will start a consultation on regulations overseeing the marketing of breast milk substitutes.

Rich splash the cash despite boom or bust - Hong Kong's affluent are the top consumers in the region for financial products, watches and high-definition televisions - and they appear to be recession-proof - From fine wines to swanky watches, Hong Kong's most affluent consumers are leading the way in the region when it comes to splashing the cash. They are the top consumers, among 10 other markets across the Asia-Pacific region, for items such as high-definition televisions, watches and financial products. The Pan Asia Pacific Cross Media Survey, conducted annually by global market research firm Synovate, polled 20,000 affluent Asians, including 1,747 Hongkongers. Fifteen years after its first edition, the survey confirms that the rich are not only recession-proof but are also early adopters of new technology. In 1997 - the year that the survey started - more than half of Hong Kong's wealthy already owned a mobile phone; the figure now is 95 per cent. "Our findings have shown that this affluent group of consumers is a pillar in supporting many brands and product categories, who continue to spend despite boom or bust," said Steve Garton, managing director and global head of media at Synovate. Forty-eight per cent of affluent consumers in the region owned a laptop or desktop computer in 1997. That figure is now close to 80 per cent. Ownership of high-definition televisions went from 36 per cent in 2009 to 65 per cent this year, making Hong Kong's elite the top consumers in this category. A luxury watch is also a must-have here: one in three affluent consumers have a watch that costs more than US$1,000, which is more than twice the regional average. Quality wine consumption has also tripled in the region since 1997. Even if Sydney and Melbourne are the top consumers at over 60 per cent, Hong Kong ranks fourth at 27 per cent. More than half of the city's affluent consumers hold stocks, securities and bonds which is above the regional average of 33 per cent.

Media tycoon Jimmy Lai Chee-ying has defended multimillion-dollar donations to Hong Kong's pan-democrat community and Catholic Cardinal Joseph Zen Ze-kiun after details of his charitable giving were leaked this week. A spokesman for Lai's private office said the tycoon's private donations to political groups were entirely legal, and "consistent with Mr Lai's well-known support of an open and free Hong Kong society". While his office would not comment on specific donations, documents have surfaced on the file-sharing search engine Foxy which show that the billionaire Next Media (SEHK: 0282) mogul spent more than HK$60 million from 2005. Zen was the biggest recipient, receiving more than HK$20 million. It was also stated that the Democratic Party received HK$13,690,000 from 2006 to last year and the Civic Party was given HK$14,566,500 for the same period. The radical League of Social Democrats was awarded HK$1 million last year, while former chief secretary Anson Chan Fang On-sang received HK$1.3 million from 2007 to 2009. A purported cash-flow forecast, printed on another leaked document, also showed the Civic Party would be given another HK$2 million from July to September this year, while the Democratic Party would receive HK$3 million. Past donations made amount to more than HK$60 million, the documents state. Other officials close to Lai said they believed private commercial records had been circulated for political motives. They claim the resultant media frenzy serves as a diversion from more worrying issues for Hong Kong's political establishment. In the longer term, the revelations could be used to smear Zen and his allies across the democratic camp - even though all parties and churches in Hong Kong are free to accept local donations without making them public, they said. A senior cleric with the Hong Kong Catholic Diocese, Vicar General Father Dominic Chan Chi-ming, said that Zen could receive donations and spend them at his own discretion. "This is his private matter. We cannot investigate," he said. It is understood Zen has spent donations on supporting official and underground religious workers on the mainland, as well as on religious and charity programmes in Hong Kong. He has helped various projects on the mainland, including infrastructure construction in underprivileged areas. Sponsorships have also been provided for followers who embark on spiritual trips to Rome. Zen could not be reached for comment yesterday but his secretary, Teresa Fung, said the cardinal often directly supported followers financially. For example, he has funded a charity programme in Hong Kong which sends mooncakes to prisoners and the elderly. Anthony Lam, a senior researcher at the Holy Spirit Study Centre, a Hong Kong think tank funded by the church, said Zen would not be the only one who received funding from private donors. Top religious leaders such as cardinals and bishops often received donations from the wealthy, and distributed funding to religious workers in developing countries, such as the mainland, he said. "I believe Cardinal Zen is helping everyone in China, both official and underground church members," he said. Zen has actively pushed for universal suffrage in Hong Kong over the past few years and has been seen as closely linked to the pan-democratic movement. Democratic and Civic Party officials have refused to comment, seeking to protect the identity of their donors. The Civic Party said it did not accept funds that came with conditions. The documents show a variety of other Lai donations, including sums given to the club and fashion impresario David Tang, conservative Washington think tank the American Enterprise Institute, and the World Wide Fund for Nature. The prominent US China scholar Perry Link was also on the list.

Chief executive hopeful Henry Tang Ying-yen said yesterday a drop in popularity was "a whip" to get him to do better. The remarks came after a University of Hong Kong poll commissioned by the South China Morning Post (SEHK: 0583) found that his support as the presumed frontrunner has been flagging since his confession of infidelity. Tang now stands 30 percentage points behind another potential candidate, Leung Chun-ying, if they were in a head-to-head competition, according to the poll. "Public opinion is an indication for me," Tang said after visiting a secondary school in Kowloon Tong. "Increasing popularity is an encouragement, while a decreasing rating is a whip that will remind me to further perfect what I have been doing now. I will not comment on the speech and attitude of the other aspiring candidates. I need more contact with society - to seek better understanding - before making a decision." Meanwhile, another potential candidate, Regina Ip Lau Suk-yee, a lawmaker for New People's Party, said again yesterday she was still considering joining the race. "I am still determined to serve the Hong Kong people," she said. But she admitted she might lack support from the members of the Election Committee - the 1,200-strong body tasked to choose the next chief executive in March. In a separate development, the deputy secretary general of the Standing Committee of the National People's Congress, Qiao Xiaoyang, met Hong Kong's delegates to the NPC and Chinese People's Political Consultative Conference in Shenzhen yesterday. Another member of the NPC Standing committee, Rita Fan Hsu Lai-tai, who has not ruled herself out of the race, did not attend yesterday's meeting. A HKU follow-up survey, conducted last Thursday and Friday, found that one in four people were dissatisfied with the chief executive's last policy address - seven points more than the instant poll conducted when the policy address was delivered on Wednesday. Forty-seven per cent said in the follow-up poll that they were satisfied - four points lower than in the instant poll. The latest rating of the policy address was 56.1 points out of 100, dropping three points from the instant survey. The poll, which interviewed 520 people by phone, also found 83 per cent supported the resumption of the Home Ownership Scheme. Pollster Robert Chung Ting-yiu said the drop was normal and it still received positive comments. Chung said he would keep track of the policy address rating.

Global banks are pushing new ways to lend the more than $95 billion worth of yuan-denominated deposits that are largely idling in Hong Kong, illustrating a significant barrier to giving the Chinese currency a greater international role. While trade-related lending has jumped, bankers are working to make yuan-denominated loans in other areas as a way to put their holdings to more profitable use. Their pitch to borrowers: Yuan-denominated loans offer rates competitive with loans in other currencies and potentially lower than what companies would pay if they issue "dim sum bonds," or bonds denominated in yuan.

A consortium led by Hong Kong billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings said Sunday it has completed its £2.41 billion (US$3.93 billion) deal to take over Northumbrian Water Group PLC, one of the U.K.'s largest water-services companies. The consortium includes Mr. Li's property and infrastructure company, Cheung Kong Holdings Ltd.; its unit Cheung Kong Infrastructure; and Mr. Li's charitable foundation. The deal comes as Mr. Li increases investments in overseas utilities amid limited expansion opportunities in Hong Kong, where he controls several companies, including one of the city's two electricity producers. Northumbrian Water holds a significant portfolio of clients in northeastern England, where the company serves 2.6 million people with water and sewerage services.

Hong Kong Chief Executive Donald Tsang said Wednesday he sees "high likelihood" of a global recession and says the financial turmoil will likely slow the pace of appreciation in the Chinese currency. "I'm afraid all the ingredients for another slowdown in the global economy are coming," Mr. Tsang said in an interview. "The lack of investor confidence and the slowdown of consumption both in Europe and America are not good signs." He also said he believes the Chinese government, which has been allowing its currency to rise, will change course due to the decline in global trade caused by the slowdown. The yuan is now trading at an "optimal level," he said. Mr. Tsang has pushed to make Hong Kong the center for trading the yuan, also known as the renminbi, as the Chinese government moved to open up its currency. The yuan is now freely traded in the city, and Hong Kong residents have been snapping up the currency in the belief it will appreciate in value. The yuan now accounts for 10% of total bank deposits in Hong Kong. But Mr. Tsang said he believes that given the slowdown in global trade, the yuan is fairly valued. The currency has risen 3.2% against the U.S. dollar this year and is up 7% since the government allowed it to resume its rise just over a year ago. "I think, maybe the renminbi at the present trade pattern has reached a more optimal level," said Mr. Tsang. "But of course I'm speculating, and I'm sure it is national policy to look at these things in the interest of China itself." Mr. Tsang added that he believes China is "engineering the appreciation of the renminbi in relation to the trade portfolio without causing any serious rupture in the domestic economy." While he holds no position in the Chinese government and isn't involved in the decisions affecting the yuan, Mr. Tsang is in constant contact with Chinese officials and makes frequent visits to Beijing. As China's main international financial hub, Hong Kong bore the brunt of recent market volatility, with the benchmark Hang Seng Index down nearly 20% since the start of July. A career civil servant who was awarded a British knighthood before the handover, Mr. Tsang, 67, proved his mettle during his tenure as the city's finance chief by staving off currency speculators and short-sellers during the 1997-98 Asian Financial Crisis by buying billions of dollars worth of stocks in Hong Kong-listed companies. "At the time, the market collapsed. There was manipulation in our securities, futures and currency markets. So we did some extraordinary things," Mr. Tsang said. He said Hong Kong's banks, companies and economy are much stronger now than they were before that crisis and he doesn't expect the government "to do anything extraordinary" this time around. The government expects Hong Kong's economy to continue expanding at a brisk pace of around 5%-6% this year, albeit slightly down from the 7% growth in 2010. Still, Mr. Tsang said the government won't hesitate "to do what's necessary" to restore order in the market. Speculators "know that we are efficient, we are capable of clobbering them if they try to do something funny to us." Mr. Tsang said the amount of trade denominated in the yuan will continue to grow rapidly because of the uncertainties over the volatility in the U.S. dollar and the euro. But he said full convertibility in the yuan will take longer than many would expect. "We are not talking about months, we are not talking about years, we are talking about decades. "But the Chinese leadership is very bright, they may do it quickly," Mr. Tsang said. Mr. Tsang took over as Hong Kong's leader in 2005 when his predecessor, Tung Chee-hwa, resigned two years short of finishing his second term in the wake of widespread protests over government policies. Mr. Tsang completed the remainder of Mr. Tung's term after an uncontested election and later won support from Beijing for a full five-year term, which will end June 30, 2012. Hong Kong's leader isn't democratically elected. Instead, the chief executive is selected by a 1,200-member committee consisting mainly of people backed by Chinese authorities in Beijing. Though a part of China, Hong Kong has its own set of laws and institutions enshrined in the city's mini-constitution, which calls universal suffrage the ultimate aim in the development of the former British territory's political system. Addressing calls for greater democracy, China earlier promised to organize elections for the chief executive via universal suffrage from 2017. Speaking in his new offices on Hong Kong's harborfront, Mr. Tsang, sporting his signature bow tie, said he has no plans to join the private sector after leaving office. "I'm an old man and I want to look forward to my retirement in the true sense of the word."

 China*:  Oct 21 2011 Share

Chen Xianmei , the rubbish scavenger who came to the aid of a two-year-old girl who was run over by two vehicles and ignored by more than a dozen passers-by in Foshan , Guangdong, on Thursday, has been awarded 20,000 yuan (HK$24,000) by local governments. The Nanfang Metropolis Daily reported yesterday that Chen wanted to donate part of the prize, awarded on Monday, to help care for Wang Yue . Known to her family as Yueyue, the toddler was struck by a minivan and then run over again by a truck on Thursday afternoon. More than a dozen people had earlier passed by without stopping to help. But a spokesman for the General Hospital of the Guangzhou Military Zone, where she is being treated, said it could not accept donations. "We have the best doctors and are using the best medicine to save Yueyue, hoping that a miracle might happen," the spokesman said. Yueyue was on a respirator and being given drugs to boost her blood pressure. The director of the hospital's intensive care unit, Dr Su Lei , said Yueyue could die at any time. "The chances of survival are slim," Su said. The 10 days following such an injury are critical. Yueyue's cerebral cortex and brainstem reflexes had been severely damaged and her pupils were dilated. The incident has sparked widespread discussion online.

In another change of policy on one of the thorny issues dogging cross-strait relations, Taiwan has proposed the eventual opening of formal liaison offices in Beijing and Taipei. Dr Lai Shin-yuan, chairwoman of the island's Mainland Affairs Council, said yesterday that it was something that should be encouraged and pursued gradually. Her comment came a day after Taiwanese President Ma Ying-jeou announced that he would consider signing a peace treaty with Beijing in the next decade. That statement won him praise from some Taiwanese lawmakers for being a responsible leader, but was criticised by the pro-independence camp for setting a timetable for reunification. Lai, pictured, told a news conference in Taipei that the opening of liaison offices would be the end result of institutionalised talks between the two sides of the Taiwan Strait over the past three and a half years. "In the process of gradually promoting the exchange of representative offices, this would make the mainland take note of the fact of the existence of the Republic of China [Taiwan's official title]," she said. But Lai also stressed the need for cautious review and "overall evaluation" before proceeding, saying it should be done on a step-by-step basis within 10 years - when the time was ripe. She said the travel bodies of the two sides had already opened liaison offices on the other side of the strait and the next step would be for their negotiating bodies - the Straits Exchange Foundation in Taipei and the Association for Relations Across the Taiwan Strait in Beijing - to open liaison offices. Then, finally, the two sides could set up multi-function representative offices. "But of course, it takes two to tango, given that the mainland must recognise our sovereignty before our two sides can sit down to talk about this issue," Lai said. Her comment signals a shift in policy, with the island's authorities previously having been evasive on establishing liaison offices in the two capitals. Just three months ago, when Taiwan set up representative offices in Hong Kong and Macau, Lai said their establishment had nothing to do with paving the way for the opening of formal offices representing the two sides of the Taiwan Strait. Pundits said that opening formal liaison offices was not as politically sensitive as Ma's peace treaty idea, which has drawn fire from Taiwan's pro-independence camp, led by the island's Democratic Progressive Party (DPP). Cross-strait expert Professor Edward I-hsin Chen, from Tamkang University, said that if the mainland agreed to open such offices, it would mean that Beijing accepted Taiwan's sovereign status. That would involve years of discussion and a number of compromises. President Hu Jintao said in Washington in January that Taiwanese issues "concern China's sovereignty and territorial integrity, and they represent China's core interests". Tamkang University's Chen said: "Some DPP local government heads might even welcome this idea as such offices could help facilitate exchanges and interactions." Chen said he did not expect the opening of such offices to become a target of attack by the DPP ahead of the island's presidential election on January 14. The DPP yesterday continued to heap scorn on Ma's goal of signing a peace pact with the mainland in 10 years, accusing him of setting up a timetable for eventual union with the mainland. "Without obtaining general support from the public, it is highly risky for Ma to promote such an issue, given that it would further split society and create political confrontation," DPP chairwoman Dr Tsai Ing-wen said. She is Ma's main rival in the presidential poll.

Foreign direct investment into China jumped 17 per cent in the first three quarters from a year earlier as firms brushed aside global economic uncertainties to push ahead on expansion plans in the world’s fastest-growing major economy. Foreign direct investment (FDI) climbed to US$86.7 billion from January to September, up 16.6 per cent from the same period last year, the Commerce Ministry said on Wednesday. In September alone, China attracted US$9 billion in FDI, the largest since June and up 8 per cent from last year, putting the country on track for another record year of FDI inflows. As in previous months, FDI growth in the nascent but rapidly expanding services sector outpaced that of the manufacturing industry. Firms invested US$40.2 billion in the services sector, up 20.1 per cent from a year earlier. The manufacturing sector also drew US$40 billion in funds, but the annual growth rate was a more moderate 13 per cent. Underlining economic strains in the United States and Europe, investment by US companies in China fell about 10 per cent in the first three quarters to US$1.9 billion compared with the same period a year ago. European firms also trimmed their FDI in China. Investment dipped 2 per cent in the first nine months to US$4.2 billion compared with last year. Investment inflows, which surged in the years after China joined the World Trade Organisation in 2001, have recovered strongly after being hit hard by the global economic slowdown.

Chinese airlines that used to boast about ambitious international expansion plans are now turning their focus back home as the weakening global economy hurts demand for long-haul air travel. China Eastern Airlines Corp, the country's second-largest carrier by aircraft numbers, announced on Monday night it was canceling its order for 24 Boeing 787 Dreamliners in favor of 45 smaller 737s, which will be delivered between 2014 and 2016. The airline cited the delay in the delivery of the Dreamliner and a weakening world economy, which is hurting long-haul international air travel, as the reason for the cancellation. "We are not optimistic about the international market in the next two years, for the weakening global economy hurts air travel," said Luo Zhuping, secretary of the board of China Eastern. "We are making rapid moves to serve domestic demand, which is still robust at the moment," Luo said. The Shanghai-based carrier is the first Chinese airline to cancel orders for the 787. The list prices for the 787 and 737 orders are comparable, but the carrier will pay significantly less than the $3.3 billion list price for the 737 order, China Eastern said in a statement. It will also deduct compensation Boeing Co offered for the delivery delay from the price. China Eastern will also return five A340-300s to Airbus SAS in exchange for 15 smaller wide-body A330s, which could be operated on domestic routes, Bloomberg reported. The total value of the A330s is $2.53 billion, the carrier said. China Southern Airlines Co Ltd, Air China Ltd and Hainan Airlines Co Ltd also have confirmed orders for 35 Dreamliners. China Southern may scrap its 10 orders for the 787 after delivery of the first plane was pushed back to July 2012, Bloomberg reported on Tuesday. Xu Jiebo, chief financial officer of China Southern, told Bloomberg that the carrier will seek compensation from Boeing for the delay. China Southern, the country's largest carrier by fleet, also will adjust its international strategy in some areas, since economic growth is slowing in the West, but the carrier will still invest in its international routes, an official with the airline told China Daily on condition of anonymity. "We keep an eye on the global economy so we can adjust our strategy at any time," she said. Boeing delivered its first 787 Dreamliners to All Nippon Airways Co Ltd on Sept 25, three years after the original delivery date. Air China has no plans to cancel its orders for the 787, Rao Xinyu, secretary of the board, said on Tuesday. Repeated calls to Hainan Airlines' public relations department were not answered. Boeing remains confident about the 787's prospects in the Chinese market since the manufacturer still has 38 orders, pending government approval, from Xiamen Airlines Ltd and Hong Kong Airlines Ltd. "The other Chinese airlines with orders remain committed to the 787," said Wang Yukui, vice-president of communication of Boeing China. International passenger traffic contracted in August by 1.8 percent compared with July, according to the International Air Transport Association. Historically, the aviation industry has delivered collective losses when GDP growth fell below 2 percent - on Oct 4, Goldman Sachs Group Inc cut its 2011 global growth forecast to 3.8 percent from 3.9 percent. However, the economic slowdown in the West will affect only the international market, not the domestic Chinese market, analysts said. China's airlines will still significantly invest in the domestic market, after the international market contracts, said Li Lei, an aviation analyst with CITIC Securities Co Ltd. "The budget for long-distance planes will be cut to smaller ones," he said.

Hong Kong*:  Oct 20 2011 Share

At an estimated cost of more than HK$10 billion, smaller developers showed little interest in the Nam Cheong project in West Kowloon. The tender of the MTR's prime residential and commercial site above Nam Cheong station on the West Rail line has attracted four bids from developers, a result within market expectations. "We believe developers are optimistic about the market outlook and we will announce the result as soon as possible after reviewing all the bidding documents," a spokeswoman for MTR Corp said yesterday. Among the bidders were Sun Hung Kai Properties (SEHK: 0016) and Henderson Land Development (SEHK: 0012). The tender closure came a month after 13 developers or consortiums including Cheung Kong (Holdings) (SEHK: 0001), Sino Land and Nan Fung Development submitted expressions of interest in developing the West Kowloon site. Hang Lung Properties (SEHK: 0101) earlier said it submitted an expression of interest seeking details of the sale, but had no intention of bidding. Surveyors said the site might sell for HK$13.04 billion to HK$15.85 billion, or HK$5,000 to HK$6,000 per square foot in terms of gross floor area. "Receiving four bids from developers is within our expectation and not bad. The project is located in the city centre and offers a sea view, plus it is above the MTR station so it's rare," Centaline Surveyors executive director James Cheung King-tat said. "The land price of more than HK$10 billion has limited the interest of small- and medium-sized developers. However, the large and active developers have bid for it which shows their confidence in the market." The 497,300 square foot site will yield a total gross floor area of about 2.64 million sqft once developed. A government condition requires that 75 per cent of the flats must be smaller than 538 sqft. The remaining units can be an average of 1,572 sqft. The tender of another government site near Wai Man Road in Sai Kung will close on Friday. Surveying firm AG Wilkinson & Associates' valuation director Ringo Lam Chun-chiu estimated that the site would fetch HK$793 million, or HK$2,738 per buildable square foot. The site can be used to build a hotel with a total gross floor area of 289,659 sqft and no more than three storeys, Lam said, adding that the site would be suitable for a three- or four-star hotel.

Dr Sun Yat-sen's granddaughter is doing her best to keep her ancestor's revolutionary spirit alive. She aims to donate 100 statues of the father of modern China - and yesterday gave away the 73rd bronze likeness to the Hong Kong Institute of Education. Dr Lily Sun Sui-fong, president of the Dr Sun Yat-sen Foundation for Peace and Education, also gave a talk about her grandfather's guiding principles. She said Hong Kong schools are not teaching students enough about Sun's "Three People's Principles" - government of the people, by the people, and for the people. She hopes every statue she donates will remind young people of the values of peace, dignity and filial piety - the foundations of modern China. "Dr Sun's ideology is rooted in Confucius; these are values that are not from the West but belong to our very own Chinese culture," she said. Sun, 76, was joined at yesterday's unveiling ceremony by her two sons and professors from the Institute of Education, Sun Yat-sen University in Zhongshan and Taipei's National Taiwan University. Sun praised Taiwan for developing along lines closest to the Three People's Principles: "They have done well in social welfare, health care and elderly services. The older generation is familiar with the Three People's Principles, but they should still do more to educate the youth." This year marks the 100th anniversary of Sun's revolution, and to celebrate that milestone the foundation set out to donate 100 of the 1.9-metre bronze statues beginning in March last year. Each is engraved with four Chinese characters that encapsulate Sun's ideology - "the world is for all" - and shows Sun holding a book inscribed with the words "Three People's Principles". Yesterday, Sun sprinkled water on the statue and whispered a prayer in a ceremony inviting her grandfather's spirit to the campus. Her youngest son, Charles Wong Tsu-yew, said: "Today's China is still following Sun's modernisation revolution, but the Chinese government doesn't give any credit to Dr Sun. "They claim it as their own achievement. They say the birth of China was on October 1, 1949, [the establishment of the People's Republic of China], but what about the 1911 revolution? The problem is that between 1911 and 1949, there are 38 years of history that are in danger of being eliminated."

Second domestic helper abode case in court - The High Court on Tuesday has reserved judgment in the second judicial review over whether foreign domestic helpers should be granted permanent residency in Hong Kong. The judicial review was launched by a Filipino couple seeking right of abode – following a landmark case last month where the High Court ruled that it was unconstitutional to stop foreign domestic helpers from applying for permanent residency in the city. Irene Domingo and husband Daniel Domingo are seeking to overturn an Immigration Department decision to deny them a right-of-abode application. They were given the right to an unconditional stay four years ago. The couple will be eligible for permanent residency by 2014 after meeting Hong Kong’s standard requirement of seven years of residency. But their lawyers told the court on Tuesday the couple should be granted right of abode now because they had been living in Hong Kong for almost 30 years. They argued that their previous agreement to withdraw an appeal against an unsuccessful application for permanent residency in 2006, which granted them the unconditional stay, did not mean they had agreed that their new official period of residency would start on the day they accepted the offer should they ever decide to make a new application for permanent residency. But the government disagreed saying it would not consider whether the couple’s stay in Hong Kong, before they took up the offer, constituted “ordinary residency” under the terms of the agreement. Even if the agreement was not valid, the Immigration Department said Irene Domingo’s stay had not satisfied the requirements for applying for permanent residency. This was because she had stayed in Hong Kong unlawfully after she was terminated by her former employer and remained without a visitor’s visa for more than 11 months. Lawyers for the government said this broke her seven years of continuous stay immediately before the date of the application. The government also maintained that a provision under Immigration Ordinance stipulated that foreign domestic helpers were excluded from being ordinarily residents in Hong Kong – despite the court ruling last month that the law was unconstitutional. But lawyers for the couple said their case was different because they had had habitual residency in Hong Kong, and all their family members lived here.

Rita Fan officiating at the Fourth Hong Kong Volunteer Award presentation ceremony held at the Hotel Nikko in Tsim Sha Tsui yesterday. Ding Zilin , an advocate for parents who lost their children in the Tiananmen Square crackdown in 1989, yesterday denounced Rita Fan Hsu Lai-tai's refusal to apologise over her description of the event as "unfortunate". Ding, founder of the Tiananmen Mothers whose teenage son was killed in the tragedy, earlier demanded that Fan make a public apology and challenged her to an open discussion. But Fan remained defiant yesterday, insisting that she said only what she believed was right. A member of the National People's Congress Standing Committee, Fan made the remarks at a seminar held at Chinese University where she was asked by students for her stance on June 4. She described the event as unfortunate and said she was not sure what really happened, adding that she had no authority to comment on whether the June 4 movement should be vindicated. In a statement that Ding wrote last week, she accused Fan of "having no regard for facts and talking irresponsibly". She also questioned if Fan was trying to please Beijing because she wanted to become Hong Kong's next chief executive - a post Fan has expressed interest in. In response, Fan said: "I understand the pain Ms Ding has over the loss of her son, and I respect her views. But what I said all these years is what I believe. So I do respect her, but I maintain my own stance." Fan said she only got to know the news about the crackdown from watching CNN as she was in Hawaii when it happened in June 1989. She later also saw reports by non-American news agencies that showed people singing as they left Tiananmen Square. "So I really can't prove what actually happened in Tiananmen [Square] ... I can only say I'm unclear what happened at that time," she said. "I don't think my statement was offensive nor did I say Ms Ding was wrong in any sense." Ding told the South China Morning Post (SEHK: 0583, announcements, news) : "If she is so stubborn, if she is so determined to be a stooge [of Beijing], that is her choice. If her own son was killed during the June 4 massacre, would she have said that? "She is a politician, she is not a victim. She might be full of hope for her political career. But this just shows that she is extremely stubborn and that she is a politician who has no sense of conscience or humanity." Ding and other parents have campaigned to have the 1989 massacre reassessed. They want an independent probe into the bloodbath, compensation and the prosecution of those found to be responsible. The Tiananmen protests were led by students and academics urging political reform and democracy. There was widespread international condemnation of the government's use of force against the protesters. Fan also said yesterday that she would not rule out taking part in the chief executive election next year but maintained her comments on June 4 had nothing to do with the election. A poll commissioned by the Post showed she is the second most popular choice for the next chief executive.

The world's first offshore yuan-denominated spot gold market was launched in Hong Kong yesterday, opening a new window for trading the Chinese currency and enabling the city to strengthen its role as a global gold market. The contract traded at 346.47 yuan (HK$420.18) per gram, or the equivalent of US$1,690.80 an ounce, according to data on the Chinese Gold & Silver Exchange Society's website yesterday morning in Hong Kong. That compares with 347.55 yuan on the Shanghai Gold Exchange and US$1,681.60 in London. "It provides a new alternative in leveraged trading of renminbi, which has been lacking until now," said CGSE president Haywood Cheung. Individual investors can trade kilobar gold, which is priced at 347,000 yuan per unit, by paying a deposit as low as 16,000 yuan. The Chinese Gold & Silver Exchange has 27 members who are designated traders for yuan bullion. The practice is similar to the margin trading of London gold in Hong Kong, but may carry higher risks as investors also bear the risk of yuan trading. "The risk of leveraged trading on yuan bullion is twofold - the fluctuation in gold prices and yuan movement," said Robert Lee, an executive committee member of the exchange. "We recommend our member traders conduct investment education before selling the product to individual investors," he said. Yuan deposits in Hong Kong surged to 609 billion yuan in August, accounting for 10 per cent of total deposits in the city's banking system. However, these yuan deposits usually sit idle in the bank since there are not enough investment channels apart from dim sum bonds, or yuan bonds issued in Hong Kong. "By attracting both local and international investors, it is a significant step towards increasing the liquidity of yuan in the city and the internationalisation of the yuan," Cheung said. Yuan bullion in Hong Kong is particularly attractive to mainland investors as they can cash in on the price difference between Shanghai and Hong Kong and take profit through arbitrage, said Fung Chi-kin, a veteran financial consultant. International investors could also conduct yuan arbitrage by buying bullion in foreign currency and selling it in yuan. It is estimated that yuan bullion transactions could hit 100 million yuan per day at the start and surge to 300 million yuan in Hong Kong over the next six months, Cheung said. Hong Kong is the world's third-largest gold-trading centre, with average daily transactions at 10 million ounces, after London and New York. The design and specifications of yuan kilobar gold in Hong Kong are on par with the Shanghai bourse, allowing trading between both markets in the future, said yuan bullion designer William Lee Tak-lun, the chief executive of Grand Finance Group.

New World Development Co. said on Tuesday that it plans to raise up to 12.34 billion Hong Kong dollars (US$1.59 billion) from a rights issue in Hong Kong to fund the growth of its China property unit and strengthen the group's long-term capital base amid volatile market conditions. The Hong Kong-listed blue-chip developer said in a statement it expects to issue up to 2.172 billion shares on the basis of one rights share for every two existing shares. The subscription price is HK$5.68 each, representing a 37% discount to the stock closing price of HK$9.00 on Monday. In a separate statement on Tuesday, New World China Land Ltd., in which New World Development holds a 70.54% stake, also proposes a rights issue to raise up to HK$4.35 billion (US$557 million) by issuing up to 2.917 billion shares at HK$1.49 each. The net proceeds from the rights issue will fund the company's property development project in China and general working capital. "The key reason for New World Development's rights issue is to support its subscription to New World China's rights issue to fund the latter's development of mainland property projects amid the ongoing tightening policy in China," said Jeff Yau, an analyst at DBS Vickers. Mr. Yau said he expects part of the remaining proceeds of New World Development's rights issue would go to the development of its Hong Kong land reserves. As of June 30, New World Development has a landbank in Hong Kong of more than 9.6 million square feet of total attributable gross floor area for immediate development, and a total of more than 19.8 million square feet of agricultural land reserve pending conversion. At midday on Tuesday, shares in New World Development were down 18% to HK$7.38 and shares in New World China fell 17.4% to HK$1.85 as investors are wary of the dilution impact of the rights issues. The benchmark Hang Seng Index was down 3.3% at midday after China reported slower-than-expected 3rd-quarter GDP growth.

A Hong Kong airport worker has been convicted of people smuggling for helping a young Chinese asylum seeker board a flight to Canada disguised as an elderly Caucasian man. The unidentified Chinese national boarded a flight from Hong Kong to Vancouver last October wearing a detailed silicone mask, then removed the disguise in a washroom during the flight. The Hong Kong district court found Monday that airport ground services worker Chau Pak-kin was guilty of taking part in a conspiracy to smuggle people with false passports and boarding passes. Mr. Chau will be sentenced at a later date. The disguised man was freed from detention in Vancouver in February on a $5,000 bond and has to report weekly to the Canada Border Services Agency. The passenger in question, undisguised—with his face partially obscured by Canadian authorities—and as he looked boarding the plane.

Hong Kong's anti-graft agency said Monday it charged May Hao, a former executive of New Zealand's UBNZ Assets Holdings Ltd., with offering bribes to seal the company's recent takeover of Hong Kong-listed Natural Dairy (NZ) Holdings Ltd. The Independent Commission Against Corruption said Ms. Hao offered more than 73 million Hong Kong dollars (US$9.39 million) and two properties in New Zealand to Chen Keen, a former executive director of Natural Dairy, between May 2009 and March 2010. Ms. Hao, formerly known as May Wang, was also charged with money laundering totaling 150 million New Zealand dollars (US$119 million) between December 2009 and December 2010. Ms. Hao, who is scheduled to appear in a Hong Kong court Tuesday, couldn't immediately be reached for comment. A Hong Kong court on Monday issued an arrest warrant for Mr. Chen. Natural Dairy said Tuesday that Mr. Chen isn't in Hong Kong and didn't comment further. UBNZ Assets Holdings also couldn't immediately be reached for comment. The charges follow a joint investigation into Natural Dairy by the Serious Fraud Office in New Zealand and the ICAC in Hong Kong.

 China*:  Oct 20 2011 Share

Two-year-old girl Yueyue in a military hospital in Guangzhou. A two-year-old girl fighting for her life in a Guangzhou hospital after being run over by two vehicles and ignored by more than a dozen passers-by was unlikely to survive, a hospital spokesman said yesterday. "She is close to brain dead ... We're doing our best to rescue her but she has a very slim chance of survival," said a spokesman at the General Hospital of the Guangzhou Military Zone. "Children tend to recover quickly ... but she was heavily wounded and there is a 99 per cent chance that she might die." The toddler, Wang Yue, known to her family as Yueyue, ran into an alley from her parents' metalware shop in Foshan, Guangdong, late on Thursday afternoon. She was struck by a minivan, which then drove off. Lying in blood while people walked past, she was run over again by a truck whose driver apparently failed to see her. Guangdong media, which obtained closed-circuit footage of the incident, reported that more than a dozen passers-by then walked or drove past the girl without stopping to help. A rubbish scavenger finally came to her aid and helped locate her mother, who rushed her to hospital, reports said. The hospital spokesman, who declined to give his full name, said Yueyue was suffering from severe cerebral haemorrhage and showed no brainstem reflexes. He said her heartbeat and blood pressure were normal, but apart from a brief moment of unaided breathing yesterday morning, she had to rely on a life-support machine. "If she does improve, it's likely that she will be in a vegetative state ... the chance of a full recovery is almost next to none," he said. Yueyue's father, who declined to give his full name, clung to the hope that she would survive. "I hope it won't be real," he said, his voice choking up on the phone, commenting on the possibility that his daughter might be brain dead. "I really hope she will get better soon." He had earlier said that he felt helpless and angry at the people who did not stop to help his daughter. The hospital spokesman said the delay in getting her to hospital had reduced her chances of survival. The incident has prompted outrage on social media websites. "What has happened to people these days? Where has their conscience gone?" said a posting on Weibo, a popular Twitter-like microblogging service. Quoting local police, the Yangcheng Evening News reported yesterday that the two drivers who hit the girl had been arrested.

China Eastern Airlines (SEHK: 0670) said it has terminated an order for 24 Boeing 787 Dreamliner planes due to delivery delays and will instead spend US$3.3 billion to purchase 45 new Boeing 737 aircraft. In a filing with the Hong Kong stock exchange on Monday, the Shanghai-based Chinese carrier also said it would buy 15 Airbus EADS A330s worth US$2.5 billion, due for delivery from 2013 to 2015. While the narrow-body 737 is not an obvious replacement for the wide-body 787, the A330 is a competitor to the Dreamliner. The purchase of the A330s by China Eastern may put new pressure on Boeing to produce the overdue 787s rapidly to avoid more order cancellations. “China Eastern is using the delays as an excuse, and Airbus came in with a very aggressive price,” said Alex Hamilton, managing director of EarlyBirdCapital. “That said, all this highlights the risk to the 787 backlog, especially if they can’t get to 10 per month,” Hamilton said referring to Boeing’s 787 production target. “This is the first time we’ve seen this,” he said. “My guess is they sort of expected this to come.” Boeing said the 24 787s, which list at US$185 million each, were part of an agreement between Boeing and the Chinese government for the purchase of 60 787s. “China Eastern Airlines made the decision based on operational considerations,” Boeing spokesman Marc Birtel said. “We will continue to work closely with the Chinese government and customers to find solutions that meet the future fleet needs of the Chinese airlines.” An Airbus spokeswoman did not immediately respond to a request for comment. The Boeing Dreamliner is about three years behind its original schedule because of kinks in the sprawling global supply chain. But Boeing still has more than 800 orders for the lightweight, carbon-composite aircraft on its books. The company made first delivery of the Dreamliner to a customer All Nippon Airways last month. In its Monday filing, China Eastern also said it plans to dispose of five A340-300s. Shares of Boeing were down 2 per cent at US$62.66 in midday trade on the New York.

Workers and relatives of Wang Baowei harvest rice at his field in Heilongjiang province. He expects a record harvest. A combine harvester rumbles back and forth across Wang Baowei's rice field in Jiamusi, Heilongjiang, on a balmy autumn day, occasionally dropping bags of golden grain out the back. "It has been a good year, with timely wind and rain, so the yield is better than usual," Wang said, tramping through the field to check the grain. He expects a record harvest from the 1.3 hectares he works on the 180 square kilometre, state-owned Lianjiangkou Farm. The most important grain-producing base on the mainland, the northeastern province of Heilongjiang contributed a tenth of total grain output last year. This year's harvest is expected to rise by nearly 15 per cent. With farmers across the country still busy with their autumn harvest, the Ministry of Agriculture has already announced that grain output will increase for the eighth straight year. It says the summer harvest rose slightly and predicts a higher autumn harvest, which accounts for 70 per cent of annual output. Chen Xiaohua, vice-minister of agriculture, said late last month that this year's grain output was expected to exceed 550 million tonnes, thanks to a bumper autumn harvest. "The good situation in agriculture and the rural economy provides strong support to managing inflation well, guaranteeing people's daily lives and maintaining a steadily growing economy," Chen said. The mainland has been facing mounting inflation since last year, with the consumer price index increasing by more than 6 per cent in the past three months. Rising production costs are eating into farmers' earnings as well. "Labourers charge more, and the land rent is growing, too," Wang said. "If you have your own sowing and harvesting machines, you may earn 7,000 to 8,000 yuan (HK$8,489 to HK$9,702) for 10 mu (6,660 square metres) of rice, but if you don't, then it's hard to say." Wang said he would probably earn about 15,000 yuan from his rice fields this year. "But in some years when the weather is bad, I lose money," he said. "In that case, I have to do some odd jobs in the neighbourhood. For example, working on construction sites, to make ends meet." Another farmer at Lianjiangkou, Li Yingwen, complained that land rent, water charges and the prices of pesticide, fertiliser and seeds had all increased and farmers' incomes had not improved. Chen, citing surveys by the National Development and Reform Commission, said last month that the cost of growing rice, wheat and corn - the three most important grains on the mainland - had surged by 10 per cent a year between 2004 and last year. For most farmers in Heilongjiang, which is gripped by winter for half the year, the single rice season is their major source of income for a whole year. "There's nothing to do but grow rice. Farm work for half a year, and stay idle for the other half," Wang's brother, Wang Baofeng, said. Ji Bingxuan, Heilongjiang's party secretary, told the Farmers' Daily that an absence of droughts and floods meant that state-owned farms and major grain-producing areas in the province were looking at "quite big growth in output". But other parts of the mainland have not been so lucky this year. Droughts plagued parts of the north in winter and spring, the middle and lower reaches of the Yangtze River in late spring, and the southwest in summer. Most parts of the south suffered several rounds of flooding. That has led to some observers expressing doubts about the government's prediction of yet another increased harvest. "The point is how much more. If it's just a few million tonnes, then the figure must have been modified," said Chen Shuwei, an agricultural analyst at Citi Futures. Li Guoxiang, a researcher at the Chinese Academy of Social Sciences' Rural Development Institute, said that consecutive growth in grain production was not sustainable. "It largely depends on the weather," he said. "Before 2003, the output fell every three years as, on the one hand, farmers' enthusiasm was dampened when food supply became ample and prices dropped. And on the other hand, a big disaster usually struck every three years." Output has remained high since 2003 because price increases for grain and preferential government policies encouraged farmers to grow more. In places like Heilongjiang, lower-yielding crops, such as wheat and soya beans, have been replaced by higher-yielding corn and rice. The Ministry of Agriculture acknowledges that the changing structure of crop production is one of the major challenges facing the ministry. "Consumption of soya beans is growing quickly while domestic production has stagnated, so dependence on imports is increasing," it said. Li said the mainland's imports of grain would exert a decisive influence on the global market, as its grain production accounted for a quarter of the world's total and was double the amount of grain traded internationally. "That's why its output has drawn so much attention," he said. The government releases grain production statistics every summer and autumn, but how much grain the mainland has in reserve is considered a state secret. That also contributes to some observers' doubts about the reliability of annual output figures. "It would help market projection if the data was open, and in some way it would help stabilise prices," Chen said. "How big the figure [for grain output] is, is not important. What's important is you know the actual situation."

Ed Chan - Former president and chief executive of Wal-Mart China, which has 353 stores and nearly 100,000 employees. He joined Wal-Mart in 2006 from Dairy Farm Group, where he had been regional director for North Asia since 2001. He also worked for Bertelsmann Music Group and McKinsey & Co. Mr. Chan has a bachelor's degree from University of Chicago and master's degree from Sloan School of Management, Massachusetts Institute of Technology

Wal-Mart Stores Inc. faces a crisis in the important growth market of China as the departure of its top executive in the country added to challenges that include sluggish sales and store closures by regulators. The world's largest retailer by sales said Monday that Ed Chan, president and chief executive of Wal-Mart China, resigned for personal reasons. Scott Price, the president and chief executive of Wal-Mart Asia, will serve as interim CEO until a successor is found. A company spokesman declined to comment further. Mr. Chan had held the post for nearly five years and oversaw an expansion that took Wal-Mart to 353 China stores from about 70 in 2006. He couldn't be reached for comment. Wal-Mart also announced the resignation of Clara Wong, its senior vice president for human resources in China. She also couldn't be reached. The division already had gone through management turmoil. Roland Lawrence, Wal-Mart's chief financial officer for China, and Rob Cissell, its chief operating officer in the country, resigned in May. Wal-Mart cited personal reasons for their departures, as well. The departures announced on Monday added to other recent upheaval in China. Officials in the southwestern city of Chongqing last week ordered the temporary closure of all of Wal-Mart's 13 stores in the city, arrested two employees and detained 35 others, saying Wal-Mart fraudulently labeled ordinary pork as a more expensive organic variety. Wal-Mart said it is cooperating with authorities and offered to compensate customers who believe they were misled. Also on Monday, a spokeswoman for the Chinese city of Changsha said regulators there last week fined Wal-Mart and France's Carrefour SA for selling food on which the production dates had been changed in order to keep items on the shelves longer. While the fines came to only 10,000 yuan ($1,570) for each company, it amounted to another public blow to Wal-Mart's reputation in China. Carrefour has since removed all such products from its shelves and is examining all products carefully, a company spokesman said. Wal-Mart couldn't be reached for comment on Changsha's action. In February, China's central government fined Wal-Mart and Carrefour a combined 9.5 million yuan ($1.5 million) for deceptive pricing. Wal-Mart's business also is suffering. The Bentonville, Ark., company reported a quarterly loss it wouldn't specify for China over the summer and said customer visits declined 8.2% from the year before. Wal-Mart blamed a delay related to its acquisition of Chinese retailer Trust Mart. The company's sales in Chinese stores open at least a year dropped annually for the past three years, according to China-based research firm LinkShop. Wal-Mart doesn't regularly break out sales results by country, and executives declined to comment on the LinkShop figures. High-level executive changes could offer the company a chance at a fresh start with customers and regulators, analysts said. "This is a way to move forward," said Tian Guanyong, an independent retail consultant in Beijing. Wal-Mart said in an investor conference in March that its China arm posted $7.5 billion in revenue in the fiscal year ended Jan. 31. Though that amounted to only about 2% of Wal-Mart's global sales, it made Wal-Mart the nation's second-largest retailer, behind Sun Art Retail Group Ltd., according to market research company Euromonitor International. Sun Art, shares of which are listed in Hong Kong, is a joint venture between Taiwanese conglomerate Ruentex Group and France's Groupe Auchan SA. Wal-Mart in its most recent annual report attributed its strong international sales growth largely to China, Brazil and Mexico.

Tsingtao Brewery Co Ltd's facility in Qingdao, Shandong province. The beverage company will open its first overseas plant in Thailand in 2013. Experts say emerging markets are the latest battlefields for global brands. China's brewery giant Tsingtao Beer announced on Monday that it plans to set up its first overseas plant in Bangkok, the capital of Thailand, as a significant step towards globalization for the century-old brand, which was introduced by the Germans 108 years ago. The plant, which will begin operations in early 2013 with an estimated total investment of $100 million, will have an annual production output of 200,000 liters and will create hundreds of local jobs, said Jin Zhiguo, chairman of Qingdao, Shandong-based Tsingtao Brewery Co Ltd. The company's branch in Thailand, operating as Tsingtao Beer (Thailand) Co Ltd, will be the sixth-largest brewery in terms of production output in the world. "The exploration of the Southeast Asian market will be the first stop for Tsingtao beer in the quest to expand to European and Oceania markets," Jin said. "It is a solid step towards multinational management after careful preparation and accumulation." The establishment of the Thai plant aims to ride on the enormous market volume and growing demand. "Thailand has an important geographical location among the 10 ASEAN countries, with a complete market economic system, an open investment environment and a climate for all-year-round beer consumption," Jin said at a signing ceremony on Monday morning in Bangkok. The brewery exports beer to more than 70 countries around the world. The overseas plant is expected to expand its market share in the Southeast Asian and European markets, according to a statement from the company. Jin said the company's first step towards internationalization traced back 100 years ago, when the British and German merchants brought yeast and beer-making techniques to Qingdao. Three years later, the beer company won a gold medal at the Munich Beer Festival. The Thai project marks another step towards further capital internationalization and the globalization of resource allocation and supply chain management. "Localized production for local supply will provide greater efficiency in management and supply chain, improve product freshness and quality, and enhance international competitiveness," Jin said. "It is the time to go global to introduce our beer to different countries. We want Tsingtao beer to penetrate people's lives through the value we create to local consumers, communities and governments," Jin said. Economic and cultural exchanges between China and Thailand have been growing rapidly, laying the foundation for Chinese companies to invest in Thailand, said Li Qun, the mayor of Qingdao. Local sources said beer consumption in Thailand has been on the rise along with growing tourism. "As a world-renowned brand, Tsingtao beer enjoys a great reputation among the Thai people for its century-old traditions of beer making. The project will bring us not only quality beer, but also advanced technologies and management methods, thus contributing to our nation's beer industry," Witoon Simachokedee, permanent secretary of Thailand's Ministry of Industry, said at the ceremony. The project will likely benefit Thailand's agricultural industry, as Thailand abounds with rice, an important raw material of beer. Zhang Yi, associate professor of the University of International Business and Economics in Beijing, said emerging markets, including China and ASEAN (Association of Southeast Asian Nations), are the latest battlefields for global brands. "Emerging markets not only have a great potential for consumption, but also provide favorable policies and preferential tariffs, which can bring concrete benefits to companies," he said. "After Tsingtao Beer establishes its branch in Thailand, tariffs can be avoided, logistics can be shortened and freshness of the beers can be guaranteed. It will lower tax rates for Tsingtao Beer in the Southeast Asian markets," Zhang added. Chinese investment in Thailand has been growing. China invested $830 million in Thailand in the first eight months of this year, exceeding last year's total investment, said Guan Mu, Chinese ambassador to Thailand. He added that bilateral trade reached $49.4 billion in the first nine months of this year.

First Chinese American in US Medical Academy - Wang Cunyu works in the laboratory at UCLA on Oct 17, 2011. Wang Cunyu, the first Chinese American from the mainland chosen for the US National Medical Academy in 30 years, works at University of California Los Angeles (UCLA) on Oct 17, 2011. Dr. Wang's research focuses on understanding the molecular mechanisms of inflammation, apoptosis and oncogenesis. 

Crab season is around the corner. Crab coupons have long been sold on the Internet and are popular as gifts. However, cheating practices including giving false crab weights often occur. Experts recommend that crab coupon selling should be supervised.

The slowdown was a desired outcome of China's macro-economic regulations as the government continued its efforts in curbing soaring property prices, reining in inflation and regulating local government financing vehicles, said Lian Ping, the chief economist with Bank of Communications. Lian expected the country's GDP growth to remain above 9 percent this year. China's economy expanded 2.3 percent on a quarterly basis in the July-September period, NBS spokesman Sheng Laiyun said at a press conference. According to preliminary statistics, the country's GDP reached 32.07 trillion yuan ($5.01 trillion) in the first nine months, up 9.4 percent year-on-year, Sheng said. He noted the country's economic performance was "generally good" and had developed according to macro-economic regulations in the first nine months. Despite challenges and uncertainties both at home and abroad, it is likely that China's economy would maintain its stable and relatively fast growth in the coming period, boosted by a strong growth momentum, Sheng said. He said there was an obvious trend of the country's economic development shifting from a stimulus policy-driven growth to a self-initiated mode. Industrial value-added output rose 13.8 percent year-on-year in September, up from the 13.5 percent growth in August. Fixed assets investment rose 24.9 percent year-on-year in the first nine months, compared with a 25-percent gain in the January-August period. In September, the country's retail sales expanded 17.7 percent from a year earlier, following an increase of 17 percent in August. Sheng said the country's consumer price increase had been "preliminarily contained" as the growth of the consumer price index (CPI), a main gauge of inflation, had fallen for two consecutive months. It is quite likely that consumer price increase would continue to ease in the last quarter of the year, he said. The government made curbing consumer prices a top priority in this year's macro-economic regulations and vowed to keep the annual growth of CPI at around 4 percent this year. To mop up the excessive liquidity that helps fuel inflation, the government implemented a prudent monetary policy this year. The central bank has raised the benchmark interest rates three times this year and hiked the reserve requirement ratio for commercial banks six times. The central bank may not relax the prudent monetary policy in the short term with the inflation rate still at a high level, said Liu Ligang, director of the economic research department of ANZ Greater China. He added that the central bank is likely to enhance financial support for capital-strapped small and medium-sized enterprises. "The country's economy is heading for a soft landing," Liu said. Although exports would continue to moderate on weaker demand from developed economies, growth would still be supported by domestic demand, investment and consumption, he said. Liu estimated the country's economic growth would stand at 9.4 or 9.5 percent this year.

A flock of sheep graze beside Qinghai Lake, the largest lake in China, in Northwest China’s Qinghai province, Oct 18, 2011. Thanks to an increasing precipitation and ecological protection measures, the lake has been expanding for seven consecutive years to an area of 4,353 square kilometers, the largest coverage in 11 years. It is also the largest salt water lake in China.

Hong Kong*:  Oct 19 2011 Share

Leung Chun-ying has about three times more support than his key potential opponent in the chief executive race among professionals and better-educated Hongkongers, according to a poll commissioned by the South China Morning Post (SEHK: 0583). Leung's lead over Henry Tang Ying-yen spans almost every demographic category. Among poll respondents who have completed or exceeded tertiary education, Leung leads 28 per cent to 10 per cent; among those who completed secondary school, 30 per cent to 13 per cent. Leung and Tang tied for support among respondents with primary school education or less, at 25 per cent each. Roughly the same pattern emerged among occupational groups. More than 30 per cent of respondents who are managers, administrators and professionals supported Leung, who is a veteran surveyor, while just under 9 per cent of this group chose Tang. Among general workers, 31 per cent favour Leung, more than double the support for Tang. The pattern was broken only by students, who favour NPC Standing Committee member Rita Fan Hsu Lai-tai. She won the support of 38 per cent of student respondents, followed by Leung with 23 per cent and Tang at 21.5 per cent. Leung's dominance extends across respondents of both sexes and most age groups. He is backed by about 34 per cent of 30 to 49-year-olds, and almost 29 per cent of those over 50. But Fan is the most popular among the 18 to 29 age group, with nearly 30 per cent support. Overall, Leung had a wide margin of support in the survey conducted by the University of Hong Kong's public opinion programme last Tuesday and Wednesday, winning the backing of 29 per cent of 533 respondents, with Fan on 19 per cent and Tang 14 per cent. As for the priorities facing the next chief executive, the top choice was narrowing the wealth gap, picked by almost 63 per cent of respondents. The second priority, picked by 56 per cent, was restarting the Home Ownership Scheme to make home purchases more affordable. About 37 per cent selected the introduction of a health care financing scheme, followed by 34 per cent who wanted the next leader to set up a universal retirement protection scheme. Respondents were asked to choose a maximum of three policy issues. Relaunching national security legislation was seen as the least urgent task, with 6.3 per cent support.

Apple's iPhone 4S was on sale on Hong Kong’s grey market at the weekend, attracting hundreds of fans paying up to six times official prices to get their hands on the latest model. The smartphone, released in seven countries on Friday, was not yet officially for sale in city but dealers had imported them, mainly from Australia and Japan, for resale to local customers. The phones are retailing for between HK$10,000 and HK$12,000 (US$1,300-1,500) on the grey market. Depending on their memory capacity they are priced between US$199 and US$399 in the United States with a two-year contract. “I have sold about 100 iPhone 4S since yesterday,” dealer Ma Hui of Chu Lok Telecom in the bustling shopping district of Mong Kok said on Sunday. “Several customers bought 10 of them to resell to others,” he told reporters, as he brought the new phones into his shop before opening for business. But Ma said the demand for the 4S was less than the frenzy that accompanied the launch of the iPhone 4. The latest Apple product will be released for sale in another 22 countries on October 28 but dealers in Hong Kong, which has many enthusiastic Apple followers, only expect it to be launched there towards the end of the year. The Chinese-language Apple Daily News reported on Sunday that one mainland customer had spent HK$861,000 for 82 new phones.

Hong Kong’s Chinese Gold and Silver Exchange Society (CGSE), a membership-based physical market, started trade of yuan-denominated gold bars on Monday as it aims to expand volumes. “International investors can do gold and yuan arbitrage. These are double safe havens,” Haywood Cheung, president of the exchange, told reporters. The product, renminbi kilobar gold, is expected to increase CGSE’s gold trading volume by 30 per cent from an average daily trade of about 10 million ounces, with transactions expected to reach 100-300 million yuan a day, Cheung said. Cheung said the yuan-denominated gold would help expand Hong Hong’s role as the world’s largest yuan offshore market. He said the product would allow international investors to sell gold to obtain yuan and mainland investors to hedge their gold positions on the Shanghai Gold Exchange and Shanghai Futures Exchange. Cheung said CGSE had no plan to work or merge with the Shanghai Gold Exchange, though the new product had the same specifications as the exchange’s gold forwards. CGSE plans to launch a yuan-denominated silver product, Cheung said, without providing a timing. CGSE, which has an open outcry trading floor and an electronic trading system, also trades Hong Kong-dollar-denominated gold and US-dollar-denominated London gold and silver. Bank of China (Hong Kong), the offshore yuan clearing authority in the city, and Wing Hang Bank (SEHK: 0302) are the settlement banks for the yuan-denominated gold. Twenty-seven out of 171 CGSE members are entitled to trade the product for investors through CGSE’s electronic trading system.

Eighteen-year-old John Ling Tin-yu beat 978 competitors to win Hong Kong's first cross-harbour swim in 33 years yesterday, completing the 1.8-kilometre event in 20 minutes and 34.4 seconds. "It means a lot to me because it's the first time after the competition resumed," he said. "It's the happiest day of my life," said the student who is studying in Britain. The women's champion was 19-year-old Natasha Tang Wing-yung, a student at Diocesan Girls' School, who finished the course in 23 minutes, 7 seconds. She is the Hong Kong record holder for the women's 1,500 metres freestyle and has taken part in open-water races since she was 14. Gary Claydon, the previous champion in 1978, was given VIP treatment by organisers but was not allowed to take part because he is not a Hong Kong resident. "It would have been a great memory for me. It's a lost opportunity," said the 49-year-old doctor who lives in Australia and watched the race from an official boat as a VIP guest. "Still, I'm thankful to the organiser for letting me watch it. The competition looks a big success." The Hong Kong Amateur Swimming Association said priority was given to Hong Kong residents as there was a quota of 1,000 this year, but said it might accept overseas swimmers next year. "Definitely we'll try to accommodate as many people as possible next time," said the association's secretary, Ronnie Wong Man-chiu, who is also a cross-harbour swimming champion. Claydon said that in 1978 the route was shorter - around 1.5 kilometres from Tsim Sha Tsui ferry pier to Queen's Pier in central - and he finished the race in about 20 minutes. The cross-harbour race was first held in 1906 and was suspended after 1978 because of increased pollution and harbour traffic. The oldest swimmer yesterday, Chong Sing-leung, 68, said he liked the new route from Lei Yue Mun to Quarry Bay Park. However, he complained about having to wait in the cool water for a while before the race started. "I liked it better when we used to jump into the water all at once," he said. Wong said the E coli bacteria count had been within the maximum acceptable level of 610 per 100 millilitres over the past few days. Chong and several other swimmers said the water quality was good and they did not see any rubbish. One of the youngest swimmers, Lo Cheuk-ling, 12, said big waves made it difficult for him, but he was happy his mother cheered for him from the shore.

 China*:  Oct 19 2011 Share

Oracle Corporation, the world's largest supplier of business software, expects to accelerate hardware sales behind strong adoption of its high-performance "engineered systems" line in Asia, especially by large mainland companies. Chief executive Larry Ellison said that global sales of Oracle’s flagship hardware product, the Exadata database machine, are forecast to reach around 3,000 units in its current fiscal year to May 31 from 1,000 units installed as of the end of May this year. “We think this product is just going to take off,” Ellison said at his company’s OpenWorld conference in San Francisco. “We certainly deliver the fastest computer for business that’s ever been built.” “The idea of engineering the hardware and software – all of it – so it works together gives us the opportunity to deliver better performance and lower cost, better ease of use, better security and better reliability across the board,” Ellison said. He described iPhone and iPad-maker Apple as an example of a company in the consumer space that is “doing a pretty good job designing hardware, software and online services that work together”. Oracle’s engineered systems line are pre-configured computer platforms – contained in steel cabinets roughly the size of big household refrigerators – that integrate software, servers, storage and networking systems to handle complex business workloads inside data centres run by enterprises or service providers. Following its purchase of computer maker Sun Microsystems for US$7.4 billion in January last year, Oracle stepped up development and marketing of its engineered systems line to create a new product segment in enterprise hardware technology. Oracle’s first version of Exadata was co-developed with Hewlett-Packard and released in 2008. In Asia, where Oracle has around 80,000 customers, Ellison pointed out that large companies such as China Mobile (SEHK: 0941) are providing “interesting” examples of improved business performance as they deploy Exadata. “We see our engineered systems being used to address cloud computing by telecommunications companies and outsourcing providers,” said Steve Au-yeung, the executive vice-president at Oracle Asia-Pacific. Cloud computing enables companies to buy, lease and receive over the internet software, information and other shared information-technology resources, such as storage, that are remotely hosted in data centres. “Cloud” refers to the internet, which is depicted in that form in computer network diagrams. The other big-ticket engineered systems products that support users of Exadata are Exalogic and the newly launched Exalytics. Adrian Jones, the senior vice-president for hardware sales at Oracle’s Asia-Pacific and Japan operations, said the company was keen to expand its investments in marketing and hardware distribution coverage to the mainland’s second-tier cities. “That represents 21 per cent of the total available market for IT in China today. That’s US$1 billion [worth] of IT spending,” Jones said. On the mainland, the adoption of Oracle’s engineered systems is being led by the telecommunications, manufacturing, financial services and public sectors. Roger Li Hon-cheung, senior vice-president at Oracle Asia-Pacific’s technology business unit, said China Mobile, China Unicom (SEHK: 0762) and China Telecom (SEHK: 0728) are among the biggest users of Exadata machines on the mainland. Other prominent mainland users include giant household appliances maker Haier, aviation industry technology provider TravelSky, China Metallurgical Group, Shenhua Group and Huawei Technologies, the world’s second- largest telecommunications equipment manufacturer. “We’ve sold many systems to the Chinese government,” said Marcus Tsoi Hon-fai, the senior vice-president for Oracle’s Fusion Middleware business in the Asia-Pacific. Tsoi recalled that in the beginning, the mainland’s information-technology purchasing policy strictly separated hardware and software acquisitions. “So engineered systems were not on the list,” Tsoi said. “As soon as they realised the value of the product, they changed the policy.” Carter Lusher, the chief analyst for enterprise applications at market research firm Ovum, said: “China is an especially good opportunity for Oracle because Chinese companies are growing rapidly and require infrastructure that can scale up in a relatively easy manner.” In a report published in August, market research firm IDC said: “Customers needing more IT horsepower – for example, to run complex data warehouse setups and heavy transactional applications – have adopted Oracle Exadata.” Technology analyst firm Gartner projected worldwide data centre hardware spending to reach US$98.9 billion this year, up 12.7 per cent friom US$87.8 billion last year. Data centre hardware spending includes servers, storage and networking equipment. As of September 15, a top-of-the line Exadata database machine X2 costs US$1.650 million. Its most prominent competitors are IBM’s Power 795 server and HP’s Superdome. The merger with Sun has also helped Oracle to increase the number of its corporate customers worldwide to nearly 380,000 and global revenue to US$35.6 billion in its past fiscal year ended May 31. Oracle has made some 70 acquisitions since 2005. It spends more than US$4 billion annually in research and development.

Trade between China and the European Union (EU) totaled 35.6 billion euros ($49.4 billion) in July, allowing China to overtake the United States as the EU's largest trade partner, the Ministry of Commerce said, citing the latest statistics from Eurostat. The overall value of China-EU trade in July exceeded that of the EU and the United States by 800 million euros, accounting for 13.4 percent of the region's total imports and exports, according to data released by the EU's statistics office. However, bilateral trade shrank for a second consecutive month in July, falling 0.8 percent from the same period last year. Meanwhile, China remained the EU's second largest export market. EU exports to China totaled 11.7 billion euros in July, up 12.3 percent year-on-year, which is higher than EU's total export growth rate of 4.1 percent. The EU imported 23.9 billion euros in Chinese goods, down 6.2 percent from the previous year. But China still held the top spot as the region's import source, making up 17.4 percent of the EU's total imports. The EU reported a 12.2-billion-euro trade deficit with China in July.

Europeans attending job interviews at a recent overseas talent fair in Beijing. China's rising economic development provides better career opportunities for both Chinese and overseas people. But, along with the increasing number of overseas staff at Chinese companies, demand for managers who are familiar with the social cultures of their foreign colleagues and competent at communicating with them is also rising. More people head to China seeking out job opportunities as Western economies suffer hardship. To hear him on the telephone, you would think Johan Bjorksten was Chinese born and bred. But it's that name. It gives away his Swedish roots. Bjorksten is not just fluent in Putonghua, he knows many Chinese idioms and old sayings. Having lived and worked in the country for 25 years and run his own business for the past 17, he has inevitably picked up a nickname. It's "Dalong" and means "big dragon" - a reference to the year in which he was born, 1964. An increasing number of foreigners are being attracted by China's prosperous economy and have come to work in the country. Figures released by the Ministry of Human Resources and Social Security showed that 231,700 foreigners were employed in China at the end of 2010, compared with 223,000 in 2009. "When I first came to China in 1986, it was a rather poor and undeveloped country. My reason for choosing to start my career in China was that I saw opportunities here. In my opinion, this is a country full of opportunities," said the Swede. "Also, I have never felt like I was being excluded from anything. I've always felt very comfortable and it's easy for me to live here." Foreigners are finding jobs in China on the back of its strong economy, which is performing vastly better than that of the United States or Europe, said Carter Yang, managing director of Robert Walters Talent Consulting Ltd China. "This year, China's average gross domestic product increase is about 8 to 10 percent. This has created more opportunities, especially within the financial services, pharmaceutics as well as the retail industry," said Yang. "The country provides an abundance of bigger career platforms and opportunities. We have witnessed both international investment companies and local Chinese companies focusing on expansion plans within the past decade. Besides the strong need for international talent to grow their businesses in China, they also require top-tier candidates for their businesses in international markets." The talent consultant added there was a rising trend for local Chinese companies capable and willing to offer international compensation packages and benefits that are targeted for expatriates working in China. Helen Fung, managing consultant of recruiting company SHL Group Ltd China, shared the same view. "Talent mobility across national borders is a common practice that most multinationals in China are experiencing today. At the same time, more Chinese national and private enterprises are expanding internationally and need to recruit top talents from different parts of the world," she said. Fung pointed out that managing skilled people from other cultures posed a special challenge to companies because it is essential to be fair and culturally sensitive to both nationals and expatriates, especially given that talent management is the top priority for most chief executive officers today. "Respect is essential in a multicultural environment, and employers should open up to different ideas," she said. Chinese bosses should firstly pay more attention to the recruitment process when hiring foreign employees, according to Fung. It is imperative that Chinese employers are familiar with company policies and impart their knowledge to prospective foreign employees during interviews and orientation sessions. In this way, foreign employees will understand the company's expectations and can avoid many of the pitfalls caused by misunderstanding and cultural confusion. Fung added that in day-to-day management, in addition to providing a better job development platform and a clear career path, Chinese bosses should always keep two words in mind: equality and respect. Equality means to guarantee equal treatment not only between Chinese and foreign employees, but also between Chinese bosses and foreign employees. It means implementing company policies and procedures consistently so all employees feel that they are treated fairly and equally. Chinese managers should make an effort to learn the social cultures of their foreign workers and how best to communicate with them, said Fung.

The head of Wal-Mart Stores Inc's China business has resigned citing personal reasons, after the world's largest retailer ran into trouble with Chinese authorities leading to store closures and employee detentions. The departure of China CEO Ed Chan, along with Senior Vice-President of Human Resources Clara Wong, is another setback for Wal-Mart which is facing stiff competition from local firms in the strategically important market. The company, which recently celebrated its 15th anniversary in China, closed more than a dozen stores in central China last week following allegations they sold regular pork as organic pork over the past two years. Authorities in Chongqing have arrested two Walmart China employees and detained 37 others over the incident. Both resignations announced on Monday were for personal reasons and had "no correlation" with the investigations in Chongqing, Walmart Asia spokesman Anthony Rose said. "We have used the last few days to put in place corrective actions in our stores," Rose said, adding that the stores would reopen by Oct 25. This is the second round of top-management resignations at Walmart China in less than five months. In May, its chief financial officer and chief operating officer resigned "to explore other opportunities", the company had said. "It's really hard to say whether this (Monday's resignations) is a consequence of that (pork scandal) ," said Torsten Stocker, a China retail analyst with Monitor Group. "It might be, but I think at the end of the day, it is still not clear what really happened in Chongqing," he said. "Obviously what happened in Chongqing is impacting their business in Chongqing and presumably ought to be having some impact on the grand overall business. Any type of leadership change like this, it's never a good thing."

Two animal protection organizations paid about 83,000 yuan ($13,000) to a dog trader in Southwest China's Sichuan province to rescue nearly 800 dogs that were due to be delivered to restaurants in South China's Guangxi Zhuang autonomous region. The deal was clinched in the city of Zigong on Saturday night after two-days of negotiations. Qiao Wei, 26, who works for Sichuan Qiming Companion Animal Protection Center (SCAPC), a Chengdu-based animal welfare organization, told China Daily that the money was paid for humanitarian reasons and not used to buy the dogs. The SCAPC and the Love of Home Animal Rescue Center (LHARC) in Chengdu would not have paid the dog trader Tang Daguo a cent if they had not taken into consideration his economic plight, Qiao said in a telephone interview. "A deputy Party chief of Gongjing district in Zigong, surnamed Zhu, told us Tang was very poor," said Qiao. The deal was clinched between the SCAPC and LHARC with the help of Gongjing district, Qiao added. The dog trader, Tang Daguo, has now promised to give up dog trading. All the dogs will be taken away by dog protectionists without any compensation if he does not mend his ways according to a written agreement signed by Tang, the two animal protection organizations and the local district government. The initiator of the dog-rescue campaign, a volunteer who gave the name "Wenzi", said none of the volunteers felt it was reasonable to pay the dog trader but they ran out of choices during the standoff as dogs were dying in the truck. Eight dogs died in the crowded cages during the standoff. "The dog trader refused to let us release the dogs from the cages," Wenzi said, adding Tang asked for 120,000 yuan for the dogs at first. Dog lovers found caged dogs were being loaded on two trucks and two tricycles in a village on Friday evening. When they and their supporters arrived at the scene, one truck with about 500 dogs left the scene, but they managed to stop another truck and the two tricycles, said Zhou Xuan, a 29-year-old dog lover in Zigong. The dogs are now being cared for by the SCAPC and LHARC in Chengdu. Chen Yunlian, 62, founder of LHARC, said she rushed to Zigong on Friday night and sent the dogs distributed to her organization to its newly established base in Shuangliu county in Chengdu. "Our organization has only 12 staff members. And I will be the only one available to take care of the rescued dogs on Monday," she said. Chen said most of the dogs are in poor health after two-days without food and water, and some have broken legs as the cages were crowded. "We are providing the dogs with water and food which they had been deprived of because of the narrow space in the truck," Qiao said. He said that health checks would be conducted on all the rescued dogs and any sick dogs would be separated from the others. Some of the dogs were stolen from their owners as two pet owners went to the spot and found their dogs in the cages, and many of the dogs failed to meet the quarantine standards, which would have posed health risks for consumers, Chen said. An Xiang, a lawyer in Beijing, said he did not applaud the volunteers' behavior of buying the dogs from the dog trader as it encouraged wrongdoing. More people should press the government to strengthen its supervision in the sector, An said. In a previous case, volunteers stopped a truck in April carrying 520 dogs on the Beijing-Harbin Highway and finally paid 100,000 yuan to save them from being butchered and sold as meat after a 15-hour standoff. The case also aroused much controversy among the public. 

Yao Ming sits in the passenger cabin of China's first A380 that will start its maiden voyage from Beijing to Guangzhou, Oct 17, 2011.

Hong Kong*:  Oct 18 2011 Share

While many of us worry about a slowdown, nothing could be further from the minds of the 60-plus well-heeled Hongkongers waiting to take delivery of Automobili Lamborghini's new 700-horsepower supercar. Orders for the newly launched 12-cylinder Aventador, which has a top speed of 350 km/h and retails for an eye-watering HK$6.31 million, will help boost the Italian sports-car maker's Hong Kong sales to a record this year, according to Lamborghini's Southeast Asia and Pacific sales manager, Andrea Baldi. Concerns over plunging stock markets and the prospect of a potential recession in Hong Kong appear to have been left behind in the dust. With the first local deliveries of the new model set to begin this month, prospective buyers now face an 18-month waiting list. "The rich are getting richer, and actually the number of orders for the Aventador are increasing every day," Baldi said yesterday. "We haven't really seen any slowdown." Lamborghini, whose local dealer for the past two decades has been Kingsway Cars, is on target to deliver 57 cars in Hong Kong this year, beating the previous record of 45. That includes 17 Aventadors, which have replaced the 10-year-old Murcielago as the brand's flagship model in the 12-cylinder engine size sector. The new car has a carbon-fibre shell, burns 27.3 litres of petrol per 100 kilometres of city driving and accelerates from zero to 100 km/h in a blistering 2.9 seconds. The Italian carmaker, part of Volkswagen's luxury Audi unit, will also deliver about 40 of its only other production car, the Gallardo, a 10-cylinder model, which starting at HK$3.2 million is a comparative bargain. As with rival super car brands like Ferrari and Aston Martin, Hong Kong has long been one of Lamborghini's richest markets on a per capita basis. Singapore, too, is experiencing a sales boom . The Lion City is on target for a record year, with Lamborghini projecting 60 deliveries. But the marque has seen its fastest growth on the mainland, which may overtake the United States this year as Lamborghini's biggest market globally. The company sold 138 cars on the mainland in the first six months of the year, up 60 per cent from a year ago. Lamborghini is in the process of doubling its mainland dealerships from nine showrooms and service centres at the end of last year to a targeted 20 by the end of this year, including new stores in Taiyuan, Shanxi province, and Shenyang in Liaoning province. In July, the company opened its first dealership in Macau, where it expects to sell around 10 cars this year. Lamborghini is also talking with some Macau casino hotels which are interested in rounding-out the typical fleet of Rolls-Royce, Bentley or Mercedes-Benz chauffeur cars. "They are interested in having our cars as something special for their guests," Baldi said. He could not name another place where hotel car fleets include Lamborghinis. "I think only Macau can be so extreme," he said.

A news-stand operator who has been working on the same pitch in Central for almost three decades is an "incorrigible" obstructor, according to a building owner who is mounting a legal challenge against a government decision not to revoke the operator's hawker licence. In a writ filed with the High Court, Inglory, the owner of Luen Shing Building in Queen's Road Central, outside which the stall sits, alleges that years of obstruction have caused it losses of more than HK$9 million. Inglory claims licensed hawker Tang Kwai-kiu has been extending her stall illegally on a pavement in front of the building. The writ describes Tang as a "recalcitrant" and "incorrigible" offender, claiming she has made no improvements to her news-stand despite being prosecuted by the Food and Environmental Hygiene Department for obstruction offences more than 26 times between June 2008 and February this year. The document says those prosecutions do not include another 74 oral warnings issued to her. Tang said she found out about the threat of eviction only when told by the media yesterday. "I am willing to move if there is a place for us, but the owner has not approached us to complain about or discuss the matter," said Tang, 55, who started the stall in 1983. Inglory acquired the building in 1987. "We have shrunk our stall size by more than half, but the prosecutions have gone on non-stop since 1987." She said the booth brought in about HK$8,000 a month for her family. Court records show Tang has a licence under the Public Health and Municipal Services Ordinance to operate a news-stand with a designated area in the front of the building. The paper says Inglory made two complaints in 2009 and last year to the Ombudsman, who found the department's follow-up on Tang's obstruction ineffective and asked it to consider cancelling her licence. Inglory's lawyers wrote to the director of food and environmental hygiene on June 24, also urging him to revoke her licence. Inglory said the department's repeated prosecutions were no more than "superficial" and "half-hearted". In reply, the director refused to revoke Tang's right to run the stand because the department did not have any policy to take away a hawker's licence based on obstruction-related convictions. The writ says: "[Tang] has demonstrated by her conduct over the years past that she is determined to flout the law, no doubt motivated by her own selfish interest and the fact that it is far more profitable for her to contravene rather than obey the law." It says the director is empowered to revoke Tang's licence as she has violated conditions attached to the permit to hawk. Inglory wants the court to quash the director's decision and order him to revoke her licence.

The World Health Organisation has handed Hong Kong a key role in the global battle against smoking, in recognition of the city's success in cutting tobacco consumption. A combination of higher taxes, social factors and effective anti-tobacco campaigning has seen the number of people aged 15 and above who smoke in Hong Kong drop to a current level of 11.1 per cent, down from 12 per cent in 2009, and one of the lowest rates in the developed world. The low rate of smoking has won praise from the WHO, which says Hong Kong's achievements can serve as an example not only to the mainland - which is home to the highest number of smokers in the world - but the wider region. Senior WHO adviser Susan Mercado told the Sunday Morning Post (SEHK: 0583, announcements, news) that, from next year, Hong Kong will host the international organisation's global collaboration centre on tobacco control. Hong Kong will become the first "non-country'' to take up the training role, normally only reserved for sovereign states. It will see health professionals from around the region coming to the city to be schooled in smoking-cessation skills. The collaboration centre, which will come under the auspices of the Hong Kong Tobacco Control Centre, will train 50 health professionals each year. A particular target of their work will be the mainland's moderate and heavy smokers. It is the WHO's fourth collaboration centre on tobacco control in Asia, after Japan, Singapore and mainland China. "Hong Kong is doing very well, particularly in terms of enforcement. It can set an example for China," said Mercado, the WHO regional adviser on Tobacco Free Initiative. As home to one-third of the world's population of smokers, the mainland is seen as an important target for the stop-smoking message. According to the WHO, at least half of the mainland's male population smokes, compared with one in five in Hong Kong. Overall, the proportion of mainlanders who smoke - 28.1 per cent - is nearly three times that of Hong Kong. Mercado said she was "excited by what would be a world-class facility" in the city. Hong Kong has banned smoking in most indoor areas, including entertainment premises such as pubs and sauna parlours, as well as beaches. Offenders face a fixed penalty of HK$1,500. Countries in Asia are striving to lower smoking rate, as cigarettes have proven to be a major risk factor for cancer and cardiovascular diseases. During a WHO regional meeting held in the Philippines last week, WHO director general Margaret Chan Fung Fu-chun - a former Hong Kong health chief - said the mainland was making progress on tobacco control but that authorities expected to face challenges from the industry.

Tsang opens up about frustration of being the chief - After the much publicised clash in Legco last week, he admits he has trouble expressing his feelings Chief Executive Donald Tsang Yam-kuen yesterday gave a candid assessment of his imperfections, saying he was not good at conveying how he felt and hiding negative emotions. "I am bad at expressing my feelings and emotions," the chief executive admitted yesterday. "My smile looks a bit embarrassing and stiff, and I sometimes look stern." Tsang provided fresh evidence of his weakness on Thursday, when he accused People Power lawmaker Wong Yuk-man of "thug-like" behaviour and said the Legislative Council was "not a place for triad societies" in response to Wong's provocative questioning. After 44 years of public service he has barely eight months left as chief executive. And Tsang told RTHK's Hong Kong Letter his tenure had not always been easy. "I felt frustrated sometimes," he said, referring to the numerous crises the city experienced since he took office in 2005. These included the global financial meltdown and paranoia sparked by mutation of the influenza virus in 2009. "I faced heavy criticism for expanding the political appointment system [in 2007] and social sentiment piled up when property prices soared," he said. Tsang said his seven years at the helm had been a great challenge. "The chief executive's job is to work with the interests of different strata and different political stances, striking a balance between various demands," he said. "You need patience, endurance and confidence to get the job done." The heated exchange on Thursday prompted Legco president Tsang Yok-sing to expel not only Wong, but also League of Social Democrats lawmaker "Long Hair" Leung Kwok-hung when Leung tried to raise a question under Legco's rules. The president admitted yesterday there had been a misunderstanding. He confessed: "I thought the one yelling `shameless' was Leung Kwok-hung, but then it turned out to be Albert Chan Wai-yip when I checked the recording."

Monchu, a golden retriever who helped the agriculture bureau bust illegal pet hotels, was one of those cited at the Dog Devotion Awards. Monchu does not need a disguise when she goes undercover because she already has the perfect camouflage: her fur. Twelve-year-old Monchu, a quiet and tame golden retriever, has helped the Agriculture, Fisheries and Conservation Department bust illegal dog hotels which offer temporary housing for pets while their owners are away. One of her biggest breaks came four years ago when she and her partner, field officer Matthew Chung Tat-ming, helped bring down an unauthorised pet hotel in Sai Kung. With Chung posing as a customer and Monchu as his pet, they checked in at the venue, a pig farm that was converted into pet accommodation. Departmental officers later turned up and told the hotel owner he would be prosecuted. "It was only because Monchu and I appeared to be close to each other that the operator let his guard down," Chung said. For her hard work, Monchu was rewarded yesterday when she won an outstanding service award at Animals Asia Foundation's Dog Devotion Awards in Tsuen Wan. The golden retriever joined the government team five years ago when her owner had to relinquish her because she moved to a public housing estate that banned pets. Now retired from undercover work, Monchu keeps other abandoned dogs company at animal centres. "When we check the dogs to see if they are suitable for adoption, Monchu tries to calm their nerves," Chung said. Another dedicated dog honoured yesterday was Coby, a female Labrador who works for the police. Last year, the eight-year-old helped authorities locate a mother who dumped her newborn baby in a rubbish bin. "She sniffed the bag which contained the baby and tracked the blood dripping from it," dog handler Ip Kwok-wing said. "After searching along many flights of stairs, she led us to the mother who lived on the 17th floor [of an apartment]." Recently, the tracker dog found 1.2kg of ketamine worth HK$140,000. Coby also helped save an elderly person with dementia who wandered from home and fell into a river. Police say Coby's sniffing skill is honed through weekly practice. "Officers walk along a route and leave something and then she has to retrace the route an hour later and locate the object," Ip said.

The photo of the Cathay Pacific captain asleep in the cockpit on a flight from Dubai to Hong Kong in August. The airline employee who took it leaked it to a journalist for use in a newspaper. Cathay Pacific (SEHK: 0293) has launched disciplinary proceedings after a captain was photographed asleep at the controls of a passenger flight from Dubai to Hong Kong. The pilot complained his privacy was invaded when the snapshot of him asleep, with his seat reclined and his arms folded while the Airbus A340 cruised at 11,000 metres, was circulated among airline staff and published in a newspaper. He complained to management and the colleague who took the picture - believed to be either a co-pilot or a flight attendant - is now facing disciplinary action. The airline insisted the sleeping pilot was doing nothing wrong, as "controlled rest" is permitted in exceptional circumstances on long-haul flights. A Cathay Pacific spokeswoman said the colleague who took the picture had breached the company's guidelines that prohibited the taking of photographs on the flight deck of its aircraft. The picture, taken in August, was sent out with the unidentified pilot's face disguised to avoid identifying him. But the captain knew it was him. He lodged a complaint when the picture was leaked to a journalist who supplied it for publication in an article about pilot fatigue in the China Daily earlier this month. The airline spokeswoman said: "We can confirm the picture was taken by a Cathay Pacific employee without the knowledge or consent of the pilot on one of our aircraft. "There are guidelines and policies at Cathay Pacific relating to the unauthorised taking and release of photographs from the cockpit. "These are known to all employees. We are following procedures relating to those guidelines." She stressed: "This photograph should not be taken out of context as it would appear to illustrate controlled rest, which occurs in the cockpits of many of the best airlines in the world. "This includes Cathay Pacific, which allows controlled rest under strictly controlled conditions, permitting one pilot of a two-crew aircraft to take a short rest during low workload periods. "The remaining pilot assumes the role of both pilots in monitoring the aircraft controls and automated systems for a short period that must not exceed 40 minutes." The spokeswoman added: "Controlled rest is basically a fatigue mitigation strategy to ensure that alertness is not degraded at critical times of the flight - for example during the approach and landing phase - when pilots are required to be fully alert and perform to a high standard. "It must also be stressed that controlled rest is used only in exceptional circumstances where a short rest period will assist the pilots in maintaining an appropriate level of alertness when needed. "In layman's terms it is a `power nap' used to recharge the batteries," the spokeswoman said. The photograph was leaked to the journalist by someone claiming to be an employee in flight operations. It was accompanied by an e-mail which alleged there was growing concern within the airline about pilot fatigue. The employee said in an e-mail: "Cathay currently operates a significant number of flights whereby the pilots are often falling asleep, simply because of the flight schedules that force them to operate with less and less sleep between flights. "I and colleagues in the company would never allow my family to fly anywhere on Cathay if it is a nighttime flight because I know how tired the pilots are ... I am sending this because many pilots fear it is only a matter of time before a crash may occur because of pilots sleeping." However, the airline spokeswoman said Cathay Pacific had a fatigue risk management system in place to monitor and control fatigue risk which "far exceeds" Civil Aviation Department requirements.

From Wall Street to Exchange Square, the anti-capitalism movement that started a month ago in the US spread across the world yesterday and, compared with other Asian cities, the turnout in Hong Kong's financial district was high. Some 500 protesters demonstrated on a podium next to Exchange Square in solidarity with the Occupy Wall Street movement that began in New York on September 17 and has since spread to scores of North American cities. Police put the number of protesters in Hong Kong at 190. Organisers said there were 500. In Sydney, about 2,000 protested, while in Auckland, New Zealand's biggest city, 3,000 people chanted and banged drums, denouncing corporate greed. In Tokyo, the movement attracted about 100 demonstrators; in Seoul, about 70 turned out and in Taiwan just over 100. Tens of thousands, calling themselves "the indignant", marched in European cities from Sarajevo, Bosnia, to Stockholm. Violence broke out in Rome, where riot police fired tear gas and water cannons at a small group of violent protesters who set a defence ministry annexe on fire. The "Occupy Central" crowd included people from groups that often protest on the city's streets, but featured some less likely participants, too - such as Frankie Yan Man-sing, 50, who has worked in merchant banking for a decade. "Even though I am one of the members of the finance industry, [I can say] it doesn't operate very well. There must be more severe trading laws," he said, such as a cap on short-selling. The demonstrators were vocal in support of their cause. "Down with capitalism," several chanted into megaphones. "There is high emotion today," said Sally Tang Mei-ching, 22, a member of Socialist Action, the Hong Kong branch of the Community of Workers International. "If there are enough people, we should extend the protest to Monday when the stock market opens." Her group was one of half a dozen or so with an organised presence. Another group, Left21, took centre stage, holding a public forum that lasted almost four hours. A former securities trader and first-time protester, Matthew Wong Kai-ming, 38, taped fake US dollar bills marked "dirty money" across his mouth and carried a placard declaring banks were a cancer. Lee Chun-wing, 29, a member of Left21 and a social sciences lecturer, said the movement had begun gaining traction in Hong Kong about 10 days ago through online forums. While the US protests were an actual occupation, the Hong Kong version was different. "We are not doing that. Today is an experiment for people to show how determined they are." The protest later moved from Exchange Square to an area outside HSBC headquarters, where some said they intended to spend the night. Lee said it was ironic that the square would today be a stop on the Central Rat Race, an annual charity event. "In a society where wealth is more equally distributed, we wouldn't need these types of events because the banks would be taxed properly," he said.

 China*:  Oct 18 2011 Share

Jazz Shanghai Festival kicks off - The 2011 Jazz Shanghai Festival kicked off at the World Expo Park in Shanghai on Saturday.

Chinese Navy hospital ship "Peace Ark" sails in the Pacific on Sept. 26, 2011. Chinese navy hospital ship "Peace Ark" sailed across the Pacific for the first time as it arrived in the Gulf of Panama during a task on Oct. 14. 

Chinese Premier Wen Jiabao (2nd L, Front) talks with a Japanese exhibitor as he visits the exhibition area of the 110th Session of China Import and Export Fair, also known as the Canton Fair, in Guangzhou, capital of south China's Guangdong Province, Oct. 14, 2011. 

Premier Wen Jiabao has reiterated that the yuan's exchange rate will remain stable to protect exporters. His statement was broadcast yesterday - after the US government delayed a declaration on whether China is manipulating its currency. Speaking in Guangzhou at a meeting with Guangdong's leading entrepreneurs on Thursday, Wen said Beijing would keep "a basically stable exchange rate" to buffer exporters against excessive turbulence. "The international financial crisis is not over, and compared to the last one, it is in a different form. It is more confusing and complex," Wen said. China National Radio reported his remarks only yesterday. The premier also spoke the following day at the opening of the Canton Fair - the mainland's oldest trade fair. Wen used his address to call for rational efforts to combat rising trade protectionism. On Friday, as US Democratic lawmakers tried to overcome Republican opposition to a bill that would punish Beijing for its currency policies, the US Treasury Department said it would delay until later this year a ruling on whether China is manipulating its currency. The semi-annual report to Congress was due yesterday, and the decision to delay it came days after the Senate approved a bill like that now before the House, which its backers say would pressure Beijing to let the yuan rise in value faster. The delay "will give us a chance to assess progress following several international meetings", the Treasury Department said. The White House has stopped short of endorsing the currency bill, but has voiced clear sympathy with lawmakers' contention that China undervalues the yuan to give its companies a price advantage in global markets. "China has been gaming the trading system to hold down the value of its currency to give its companies a leg up. Its currency has appreciated, but not enough," Secretary of State Hillary Rodham Clinton said in New York on Friday. Also on Friday, Vice-Premier Li Keqiang told former US secretary of state Condoleezza Rice during a meeting in Beijing that if the bill became law it could hinder global recovery. Li is most likely to succeed Wen, who retires as head of government in early 2013. "China expresses its serious concern about the bill on the renminbi exchange rate passed by the US Senate," Li told Rice, Xinhua reported. "Politicising economic and trade problems will not solve America's economic and employment problems, but will only harm Sino-American economic and trade ties while hindering global economic recovery and sustainable development." Wen also told the entrepreneurs on Thursday that the government would expand credit to exporters and improve financial services to small and medium-sized enterprises. Wen recently visited Wenzhou in Zhejiang province - famous for its private sector and exports - where company bosses have fled from their mounting debts to loan sharks they turned to after being starved of official credit.

Hong Kong*:  Oct 17 2011 Share

A multibillion dollar project is being planned to turn Kai Tak, Kowloon Bay and Kwun Tong into a second central business district with an elevated monorail linking the three areas. Secretary for Development Carrie Lam Cheng Yuet-ngor yesterday said the district will provide an area of 540,000 square meters for domestic and nondomestic use. She said the government realizes the Central business district is reaching capacity and a second one is needed. The three-phase project, which will be twice the size of Central, is expected to be completed in 2021. Other features will include an 11-kilometer promenade, entertainment facilities, outdoor performance areas and water sports activities. The HK$12 billion monorail project will be nine kilometers long with 12 stations. It will be connected to the existing Kwun Tong and Kowloon Bay MTR stations, passing through the waterfront, cruise terminal, Metro Park, Station Square and sports hub. There will also be elevated walkways along some routes. Lam said construction of the monorail will be completed in 2023, but the government will first conduct a public consultation to determine if the public prefers other modes of transportation to link the three areas. "The fact that it is zero-emission is another characteristic of the whole Kowloon East redevelopment project," Lam said. Permanent Secretary for Development (Works) Wai Chi-sing said the monorail will bring tremendous economic benefits to Hong Kong, although the cost of construction will be high. The first phase of the redevelopment, which will be completed in 2013, will include a cruise terminal building, berth and some public housing. The first batch of offices to move into the site in 2014 will be 11 government departments. In the Hoi Bun Road redevelopment section, the government will relocate the existing waste recycling center and vehicle examination centers to release about 6.4 hectares of government land for development. In the Kwun Tong Ferry Pier waterfront redevelopment, nine sections of underdeveloped government land totaling about five hectares will be used for redevelopment. The government will also establish a zero- carbon emission building, and upgrade existing open space. Meanwhile, Lam said the government will speed up the application process for redevelopment or the wholesale conversion of industrial buildings. A multi-disciplinary Kowloon East Development Office in the Development Bureau will be set up to steer and monitor the project. Lam admitted that there are challenges facing this project, such as the fragmented ownership in many industrial buildings in the area.

Young renters may have limited time in 'hostels' - Tsang Tak-sing: still working on the details. Young, single people renting a home in the hostels proposed in the policy address may have to save money and move out in five years, the home affairs minister said yesterday. The "hostel" idea, announced by Chief Executive Donald Tsang Yam-kuen on Wednesday, is seen as a move to appease young protesters who are getting more vocal on social issues. The target group would be aged between 18 and 30, well-educated but yet to save enough to rent or buy their own homes. "There is awareness that many young people want to have their own living space," Secretary for Home Affairs Tsang Tak-sing told lawmakers. "Some non-government organisations have suggested using their own land zoned for community use to build hostels. We will positively consider their applications." The Tung Wah Group of Hospitals and the Girl Guides Association have announced interest in the plan. Tsang said these NGOs could set a limited tenancy, say five years, and require residents to save in order to buy their own flats after moving out. But lawmakers said they were confused about the policy objective. James To Kun-sun, a Democrat, said: "If you say this is for youth development, does that mean there will be training and activities - like a music camp for the tenants?" Cheung Man-kwong, also a Democrat, suggested the hostel plan be linked to the public rental home scheme or the subsidised homes for sale scheme, so that the young people could become eligible applicants after moving out. "Otherwise the hostels will only be temporary accommodation, unable to solve the root of the problem," he said. At present, single people, except the elderly, are given a far smaller quota than families with two or more members in applying for public rental homes. There are currently 66,000 single people on the waiting list. Out of the 25,000 households that were allocated to public rental homes last year, no more than 2,000 of them were single non-elderly people. Tsang said officials would work out the details with the organisations, taking account of concerns.

A diver jumps into the water off Sam Ka Tsuen in Lei Yue Mun to clear oyster shells around the pier ahead of tomorrow's race. Only a typhoon will stop harbour swimmers now - With bacteria levels down, 1,000 people will take the plunge in tomorrow's race - the first in over 30 years. A significant drop in bacteria levels and fine weather bode well for tomorrow's cross-harbour swim. Latest water quality tests, released by the Environmental Protection Department, show E coli levels of 520 per 100 millilitres in water near the race route from Lei Yue Mun to Quarry Bay. The maximum acceptable level for a Hong Kong bathing beach is 610. The level on Monday was as low as 280, compared with 1,200 - the highest this year - last week. The organiser of the first such event in more than 30 years, the Hong Kong Amateur Swimming Association, said only a typhoon warning or a red rainstorm warning or higher would stop the race now. The Observatory's weather forecast for tomorrow is "mainly cloudy with a few rain patches". Temperature will be around 22 to 25 degrees Celsius. No typhoon or rainstorm is expected. A department spokesman said the deterioration of water quality at the eastern end of Victoria Harbour last week was temporary - mainly brought about by the strong wind and heavy rain of the two recent typhoons, leading to an increase in surface run-off. The department yesterday carried out the last water quality test in the area before the race, and will release the result today. In the event of worsening water conditions or bad weather, the race would be postponed to mid-November, the association said. A total of 1,000 swimmers will begin the race from Lei Yue Mun to Quarry Bay Park - a route the organiser expects the fastest batch of swimmers to complete in around 20 minutes. The race - a Hong Kong tradition from 1906 - used a route between Tsim Sha Tsui and Queen's Pier in Central but was suspended after the 1978 event because of increased pollution and harbour traffic. Concerns were raised again in recent weeks with the Green Harbour Actions group warning that 15 out of 1,000 participants could suffer diarrhoea due to the high level of E coli. "The water is never too clean here in Victoria Harbour, but I don't think a once-in-a-blue-moon event like this will do much harm," said Ng Yuk-fai, who lives near Lei Yue Mun Ferry Pier. "It will be amazing to see a thousand swimmers in this stretch of water that I walk past every day."

Esprit may have lost its soul, as the company's chief executive said recently. But the Hong Kong retailer denies it has lost count of its stores. Fears of fraud lurking in Chinese markets have reached fever pitch. Allegations surfaced in Hong Kong media Wednesday that Esprit did not have as many outlets in China as it claimed. On top of a raft of recent bad news, the allegations sent Esprit's stock plummeting 7.5%. Management was quick to deny it had misled investors. On Thursday, the stock rebounded 16%. Essentially, shareholders in the biggest Hong Kong-listed clothier were sent on a wild ride after reporters at a local news outlet tried to make phone calls to some of Esprit's Chinese stores but couldn't get through. In the current climate, that's enough to cause some panic. The Chinese business environment is haunted these days by stories of fake Apple stores that look like the real thing or established companies that purport to own vast tracts of Chinese forest but can't actually prove it when challenged by short sellers. Against that background, companies with strong links to China—even established ones like Esprit, which has been around since the 1960s and has been listed in Hong Kong since 1993—are vulnerable as investors question Chinese data more closely. The retailer is especially prone given recent difficulties; profit fell 98% in the year ended June 30. Chief Executive Ronald Van der Vis said last month that Esprit had "lost its soul," as he outlined plans to rebuild the brand and invest heavily in China in particular. The retailer aims to double its store presence on the mainland over the next four years to 1,900 points of sale. Presumably, making sure each new store has a working phone line will be a priority.

 China*:  Oct 17 2011 Share

Hypocrisy is the defining element in all the wrangling over China's currency. The debate seems deceptively simple: as China booms and America implodes, how much blame does Beijing's undervalued currency get for chronic US unemployment? China says none - it's a developing nation and needs to create the hundreds of millions of jobs to keep the peace and satisfy its citizens. A vocal chorus in Washington says China's trade advantage hogs all the growth. The trouble with these disparate views is that they are both partly correct. The yuan does hinder growth, as Federal Reserve chairman Ben Bernanke points out. It's "blocking what might be a more normal recovery process in the global economy", he said last week. Meanwhile, the risks of social upheaval in China are rising. Subsidising exports is an obvious way to avoid it. The real question is: what can Americans do? Three things: blame the Jon Huntsmans in their midst, focus on trade access and rediscover their entrepreneurial soul. The doublespeak from Corporate America is breathtaking, and few personify it better than Huntsman, the Republican presidential candidate. As Huntsman pledges to create millions of American jobs and touts his business acumen as proof he'll deliver, the namesake Huntsman Corp, a chemical maker, downplays the central role that cheap Chinese labour played in building a fortune partly "Made in China". After the US, China is Huntsman's biggest market. Sure, Congress can slap tariffs on Chinese goods. More success may come from naming and shaming the politicians, business leaders and companies making piles of money by moving jobs to China and, out of the other side of their mouths, demanding lower taxes and denouncing President Barack Obama as an economic simpleton. The US long championed the globalisation model that it now blames for its woes. Hypocrisy is also at play in how Bernanke and his Chinese counterparts are embroiled in a race to the bottom. "It's pretty evident that a weaker dollar is part of US policy, so they are hardly in a position to throw the first stone," says Simon Grose-Hodge, of LGT Group in Singapore. "Even though China overtly manages its currency, a stronger yuan isn't going to bring back the jobs American companies willingly exported." Perhaps the real indignity for Washington is that, as it ponders a trade war with its biggest creditor, China is winning the currency war. Lawmakers facing re-election next year will find China a convenient scapegoat for bad economic data. For all its growth, China's model isn't benefiting the world as some had anticipated. Market access, not exchange rates, is the critical issue. If the yuan jumped 30 per cent, Germans would sell more cars, French more wine and cheese, Italians more shoes and handbags, Australians and Canadians more raw materials. The US would sell China more soy, corn, cotton and apples. What kind of wealth does this trade create as firms move jobs to China? Apple would love to sell more iPads and iPhones in China. But then, much of the content in these products is made by low-wage workers there who can't afford the finished goods. And Americans would lose it if the cheap wares they gorge on suddenly cost a lot more. Corporate America will just shift jobs to India and Vietnam if costs in China go up. Here, it's worth noting a recent report from the San Francisco Federal Reserve Bank. Economists Galina Hale and Bart Hobijn argue that "Made in China" isn't taking over US consumption as much as believed. Of every dollar US consumers spend on a Chinese-made product, about 55 cents pays for services in the US. Think about it. When you spend US$90 on a pair of Nike sneakers, only a fraction of it flows to China and even less to workers there. The real issue is US companies creating jobs at home and gaining access to Chinese markets. It's challenging for the US corporations to compete in China, bid for contracts and protect intellectual property. China lavishes advantages and subsidies on national champions and limits access of foreign financial firms. Corruption complicates business. Valid concerns all around, and none of them hinge on the dollar-yuan rate. If the US could compete on even terms, there would be ample money to be made in China and jobs would be created back home. Sadly, Congress is more obsessed with exchange rates than trade talks that might actually boost job growth. China's ascent should spur and motivate the West. Earlier this year, Obama called China's rise another "Sputnik moment", recalling how the Soviet Union's 1957 space launch unnerved America. The US needs to relocate the entrepreneurial passion that made it the biggest economy and created some of the best companies. The extraordinary reaction to the death of Apple's Steve Jobs reminds us how America loves its innovators. China's growing influence should be a call to arms to do what the US has typically done best. Rather than being inspired to think big or forced to reconsider their unreflective policy stands, many US lawmakers are pointing fingers eastward. It's hypocritical to blame China for what ails America's economy. If you think currency rates alone are going to restore US prosperity (SEHK: 0803, announcements, news) , think again.

Sports shoes and apparel maker Li Ning (SEHK: 2331) yesterday said same-store sales in the third quarter improved slightly, following a dramatic decline in earnings in the first half. Same-store sales grew by "a low single-digit" between July and September, from the same period last year. The pace of sales continued into the National Day holiday from October 1 to 7. Li Ning said it expected overall same-store sales to maintain a "low single-digit growth" for the full year. The Beijing-based firm has been struggling of late. Net profit in the first half plunged 50 per cent to 294 million yuan (HK$357 million) as orders from distributors fell for three consecutive quarters. Li Ning is reorganising its distribution channel to improve operating efficiency by cutting single-store distributors and opening more stores. By the end of last month, the brand's number of outlet stores and discount stores reached 218 and 285 respectively. It also said it had completed consolidating 300 single-store distributors. "The distribution channel reform, in general, has been progressing in line with the group's expectations," said chief executive Zhang Zhiyong. The average retail discount for Li Ning products rose slightly from the first half because of the firm's efforts to clear inventory, Zhang said. Retail inventories had declined from the peak in the middle of this year, he said. In a filing to the Hong Kong stock exchange, Li Ning said it had appointed Lu Ning, former general manager of sales, as its chief operating officer. Three senior executives, including the former chief operating officer, left the company in May. Li Ning shares fell 8.89 per cent to close at HK$6.97 yesterday.

Observers see this week's endorsement of flamboyant Chongqing boss Bo Xilai's red culture campaign by the party mouthpiece People's Daily as part of a balancing act by some top leaders in Beijing keen to win favour from resurgent "new leftists". They also said Tuesday's main front-page story heaping praise on the southwestern municipality's controversial campaign could be seen as further confirming Bo as a rising political star in the run-up to next year's top-level leadership reshuffle. The People's Daily story, which spilled to an inside page, praised Chongqing as a model and hub of the country's cultural construction. "It is an endorsement of Bo Xilai's red culture campaign and it is worth noting as the article came just a few days before the party's ruling elites are to meet to discuss cultural development matters," said Professor Hu Xingdou, a Beijing Institute of Technology economist. "Cultural reform" is the sole agenda item for the sixth plenary session of the 17th Party Congress, which will begin tomorrow in Beijing. Bo, currently a Politburo member, is a frontrunner for promotion to the more senior Politburo Standing Committee, the pinnacle of the party's decision-making hierarchy, as part of a once-a-decade leadership transition at the 18th Party Congress next autumn. Other contenders for promotion to the Politburo Standing Committee include Guangdong party chief Wang Yang and his Shanghai counterpart Yu Zhengsheng. Bo has won widespread praise for smashing Chongqing's crime syndicates. But he also gained notoriety for his nostalgic embrace of "red culture" - which includes not only the mass singing of revolutionary songs but also bureaucrats being sent to the countryside to work alongside farmers and quotations from Mao Zedong being sent to millions of mobile phones. His campaign has made him a hero of the country's "new left". Hu and Liu Kang, a China watcher at Duke University in the United States, said the article was something of a balancing act. "The article reflects the top leaders' desire to please the left-leaning masses who supported Bo's campaign," Hu said. Liu, also the dean of Shanghai Jiao Tong University's school of communications, said the new leadership after the 18th Party Congress would face a different legitimacy problem compared to current party general secretary Hu Jintao, who was designated as Jiang Zemin's heir by Deng Xiaoping. Xi Jinping, the heir apparent, lacks the same "supreme mandate" and will need a different legitimacy strategy when setting up the new Politburo Standing Committee. "The power balance of different sects and interest groups seems to be the utmost concern," Liu said. In this respect, Bo, the left-wing "commander-in-chief", and Wang, his predecessor in Chongqing who apparently stands for the liberal, pro-market wing in the Politburo, would represent the two extremes of the political spectrum, and were likely to enter the ruling body together, he said. "Pragmatism is the order of the day," Liu said, adding that people should not worry too much about ideological restrictions or a further tilt to the left if Bo won promotion. "Power games will go with the tide, and countervailing forces such as Wang Yang will for sure constitute a check and balance, Chinese-style."

Sichuan authorities have claimed victory in the rebuilding of earthquake-ravaged areas despite glaring inadequacies and key questions that remain unanswered more than three years after the country's worst natural disaster in decades. An official statement issued yesterday by the provincial government said nearly 99 per cent of reconstruction had been completed, at a cost of 857 billion yuan (HK$1.04 trillion). However, apart from the rebuilding of infrastructure, critics said there was little to celebrate, with Beijing's hasty rebuilding efforts unable to soothe anger and grievances that run deep in the quake zone. The authorities appear keen to wrap up three years of reconstruction with such triumphal assertions and put behind them bitter memories of the magnitude-8 quake that struck on May 12, 2008, claiming more than 87,000 lives. Hopes of resolving a wide range of outstanding problems that were largely glossed over in the official statement have further dwindled, analysts warned. The rebuilding process, which Beijing saw as an opportunity to showcase its rising power, has been overshadowed by the misuse of rebuilding funds, controversy over the construction quality of newly built homes and thousands of distraught parents who have been harassed and silenced by local authorities for seeking justice for their dead children. The National Audit Office reported in June that the embezzlement and misuse of 188 million yuan had been discovered in 36 reconstruction projects, with analysts saying it was only "the tip of the iceberg". According to the Sichuan government statement, more than 5.4 million families have moved into new homes or reinforced houses and nearly 3,000 schools and 1,360 hospitals had been rebuilt by last month. A total of 4,600 kilometres of new highways and some 28,000 kilometres of rural roads have also been rebuilt at a cost of nearly 120 billion yuan. Communist Party mouthpiece People's Daily published an article by Sichuan executive vice-governor Wei Hong yesterday hailing the success of the reconstruction effort. "Party organs and governments at grass-roots levels have effectively prevented and solved a large number of disputes in the wake of the disaster and enhanced their abilities to maintain stability," he wrote. Beijing-based political analyst Professor Hu Xingdou said the self-congratulatory claims of victory in the rebuilding effort stood in stark contrast to the widespread discontent and grievances among quake victims. "It is ridiculous to see the party trying to turn the calamity and people's sufferings into its own victory," he said. It was "extremely inappropriate" to call it a triumph, he said, as many issues - such as student death tolls and the shoddy state of school buildings - had been kept secret or deemed taboo topics. "Despite the talk of scientific development, Beijing remains obsessed with the most unscientific addiction to covering up truth and favouring lies in the name of maintaining stability and social harmony." Parents whose children were crushed to death when their shoddily built classrooms were reduced to rubble three years ago said the so-called rebuilding success had come at a stunning social and economic cost. "It is shocking to see how local authorities have resorted to intimidation and a heavy-handed crackdown to intercept so many defiant parents who tried to petition the ... governments," said Liu Yuting, whose son was killed at school.

The downturn in the Beijing property market and a sharp fall in commission revenue forced the closure of 12 per cent of the capital's property agents, after home-purchase restrictions killed demand, a survey said. Homelink, one of the largest property agencies in Beijing, said 700 agency outlets had closed since the municipal government restricted residents from buying more than two homes to curb demand and price growth. The number of property agency outlets dropped to 5,310 last month, down 12 per cent from 6,029 in February, it said. With only 8,750 properties changing hands last month, down 67 per cent from the recent peak level of 26,412 sales recorded in September last year, estate agents' commissions have fallen sharply. "Obviously, many agents are suffering losses," said Zuo Hei, a director at Homelink. Kenneth Pak Kei-yuen, a senior general manager at the Beijing office of Midland Realty, said he believed the worst was not yet over. "It would not surprise to see more closures if the poor market conditions persist," Pak said, adding that "tens of thousands" of people could be axed during this crisis. Midland closed 10 branches because they were losing money and staff were being moved to outlets with better sales, he said. The company now operates 38 outlets. The slide in sales volume was also triggered by the Beijing municipal government's decision to require non-local residents to prove they had paid taxes in the city for five years before they could buy a home there. "The rule immediately hit buying demand as non-local residents account for nearly 70 per cent of total transactions in Beijing," Pak said. Then last month, the municipal government cut the maximum commission chargeable on the sale of homes in the secondary market to 2 per cent from 2.5 per cent. Centaline Property Agency also closed 40 branches in Beijing, involving 800 job losses, because of the deteriorating market condition and reduced its network to 160 outlets. "There are 10 to 20 branches under observation. If they fail to achieve break-even point for the next two months, we will close them too," said Sherman Lai Ming-kai, the chief executive of Centaline. Beijing had registered the worst performance of the group's 1,100 outlets in mainland cities. Lai said smaller operators would suffer most in this changing market.

Beijing has issued guidelines allowing foreign companies to use yuan held offshore instead of US dollars to finance their mainland projects as it steps up moves to internationalise the Chinese currency. The development could encourage more companies to issue yuan-denominated bonds or shares in Hong Kong, which is emerging as the world's major yuan trading centre. Hong Kong's yuan investors have profited from the appreciation of the currency, which has gained more than 20 per cent against the US dollar since 2004. But companies have been reluctant to issue yuan shares or bonds, fearing they could not repatriate the funds back to the mainland. Capital controls mean only US dollars can be used for foreign direct investment (FDI), which stood at US$105.7 billion last year, including 57.3 per cent from Hong Kong. So far no yuan shares have been issued by companies in Hong Kong. The first yuan initial public offering in the city - the Hui Xian Real Estate Investment Trust, a spin-off of Li Ka-shing's Beijing Oriental Plaza - had a less-than-stellar market debut, down 9.35 per cent on its debut in April. Hui Xian is a trust so does not issue shares. Yuan bonds have had a better reception, with 49.6 billion yuan (HK$60.32 billion) worth of "dim sum" debt issued in the city in the first seven months of the year. But most firms still prefer to issue bonds in US dollars as it is easier to repatriate to the mainland under the FDI rule, to fund projects or acquisitions. Companies will remain banned from using offshore yuan to invest in mainland stocks or bonds or as loans to mainland firms. Hong Kong lenders handling the repatriation also need official approval for the FDI. The latest move is one of the 30 measures announced by Vice-Premier Li Keqiang during his three-day visit to the city in August. Beijing wants to boost international use of the yuan, which is not yet fully convertible. Government restrictions prevent if from being freely exchanged with other currencies. Since 2009, Beijing has been gradually relaxing restrictions on the currency, allowing companies to use yuan to settle cross-border trades and to launch investment products in yuan. Mike Wong Ming-wai, chief executive of the Chamber of Hong Kong Listed Companies, said the guidelines were a good move but more needed to happen, noting that firms must still have approval for FDI to be repatriated to the mainland. Kenny Lee Yiu-sun, chief executive of First China Securities, said although it was a breakthrough "we need to wait to see if it really is so simple for companies to bring the money back to the mainland". Joseph Tong Tang, executive director of Sun Hung Kai Securities, supported the move. "It means many companies would now consider issuing yuan shares or bonds for their FDI projects as it will cut down their currency risks," he said. "In the past, companies had to raise funds in US dollars and then repatriate them to the mainland to exchange into yuan there, which involves currency risks."

US-based marketplace for business expertise Gerson Lehrman Group (GLG) has jumped into China’s nascent professional networking space by taking a minority stake in Ushi, one of a handful of social media sites that aims to build itself into the Chinese version of LinkedIn. GLG’s investment came as part of a recent $3 million financing round for Ushi, which comes on top of $1.5 million the Chinese company raised in an earlier funding drive. GLG said in a press release Friday that it plans to partner with Ushi in developing it’s main Ushi.cn site as well as Ushi Answers, a new invitation-only Quora-like question and answer site focused on topics related to doing business in China. Professional networking sites still occupy a relatively small niche in China, where other forms of social media, microblogging in particular, have exploded. The sites have nevertheless begun to attract attention, analysts say, in part because they offer marketers access to the country’s growing white-collar elite. Launched in 2010 with 100 charter members, Shanghai-based Ushi says its member base now includes more than 50,000 CEO- and CTO-level executives and boasts representatives from more than 85% of China’s venture capital and private equity firms. While the partnership with GLG may boost Ushi’s chances of eventually becoming the LinkedIn of China, the company faces stiff competition in the world’s largest Internet market, including from LinkedIn itself. LinkedIn said in June that it had one million members in China, despite not having set up operations in the country. Paris-based professional networking company Viadeo, meanwhile, has managed to attract 6 million users to its Chinese subsidiary Tianji. Ushi also has to contend with a homegrown competition in Jingwei, a site launched jointly by Nasdaq-listed “Chinese Facebook” Renren and jobs website Zhaopin. Whether or not Ushi ends up beating the competition, the new partnership stands to benefit GLG in at least one respect: It can now mine the Chinese company’s membership for new experts to add to its own network.

Premier Wen Jiabao on Friday called for joint international efforts to combat rising trade protectionism, which he said is damaging the world economy amid ongoing global economic turbulence. "We should embrace opening-up and development, instead of closed doors and stagnation. This is a general trend," said Wen at the opening ceremony of the 110th Canton Fair in Guangzhou. The forum falls on the 10th anniversary of China's entry into the World Trade Organization. "The current challenge is that there is growing trade protectionism worldwide and more trade frictions are politicized, which casts a large shadow over and hurts the global economic recovery," Wen told exporters in a speech carried on State television. "China and the other nations should work hand-in-hand to open up markets to each other, with more sincerity and determination, firmly beating down trade protectionism." Wen said countries should be rational in dealing with trade disputes as the world grapples with a mounting debt crisis. "The shadow of an international financial crisis can be removed as soon as possible ... only if we properly handle international trade friction in a more rational way," he said. Wen made no specific mention of the United States, but his remarks followed a storm of protest in China over a bill that Beijing has warned could start a trade war between the world's top two economies. Early this week the US Senate passed legislation aimed at charging duties on Chinese exporters, alleging China was holding down the value of its currency. The European Union recently launched a series of trade remedy cases against Chinese exports of tiles and bicycles. "Nations tend to focus on narrower objectives such as on boosting exports especially in difficult situations," said Harsha V. Singh, deputy director-general of the WTO. "Open markets create multiple win-win conditions for all," Singh said. "It is extremely important for nations to work together and further improve the mutually supportive international conditions." The 110th Canton Fair has attracted more than 23,700 export-oriented enterprises to display their goods, and 280,000 global buyers applied to enter. But the Ministry of Commerce said the prospects for China's exports are not optimistic, citing the gloomy global economy and rising yuan and labor costs in China. According to the General Administration of Customs, China's exports experienced their smallest growth since February and the trade surplus dropped to its lowest since May. "China follows the policy of expanding imports and stabilizing exports. We never intentionally seek a large trade surplus," said Wen. Wen said China's becoming a member of the global trade body has proven to create win-win benefits for both China and other nations. Despite the achievements that China has made since its entry into the WTO a decade ago, "China will continue to push forward its reform and opening-up policy with incomparably firm determination and courage," as China is still a developing nation characterized by imbalanced economic development, said Wen. "Trade development and investment promotion is a key factor in reviving the global economy," the premier said. While stabilizing exports, China pledged to expand imports to balance trade as part of its 12th Five-Year Plan (2011-2015), with the combined imports volume in the next five years expected to reach $8 trillion. China's yearly trade surplus has been falling since the financial crisis began. The figure dropped 34 percent from 2008 to $196 billion in 2009, further sliding to $183 billion last year. The nation's trade surplus will account for less than 3 percent of its gross domestic product this year, Wen predicted. China also vowed to encourage Chinese companies to invest overseas, besides continuously welcoming foreign business to invest, especially in China's central and western areas. "Those qualified and reputable companies play the major part in the going-overseas strategy," said Wen. Its large foreign exchange reserves makes it possible for China's overseas direct investment to grow. The People's Bank of China, or the central bank, announced on Friday that China's foreign exchange reserves exceeded $3.2 trillion at the end of September. It is vital for the world that China maintains open markets as the world will continue to benefit from China's growth, said Singh. Success for all "China's becoming a member of the WTO is a success not only for China, but also the world," said Wen. China became the largest exporting nation in 2009, and it has been the most popular destination for foreign direct investment among developing nations for 19 years. The accumulated foreign direct investment reached $760 billion in 2010. During the past 10 years, China's overseas direct investment grew 40 percent annually, reaching $68.8 billion in 2010. China is now the largest destination for exports from emerging markets including Brazil and South Africa, and the least developed nations.

The first Airbus A380 delivered to China Southern Airlines gets a water cannon salute upon arriving at Beijing Capital International Airport October 15, 2011. China Southern Airlines became the first Chinese operator of the Airbus A380 Superjumbo. The Guangzhou-based airline will start flying the double-decker aircraft on commercial routes on Oct 17. It will begin flights from Beijing to Guangzhou and Shanghai between Oct 17 and 29. 

Hong Kong*:  Oct 16 2011 Share

Alternative investments such as jewellery are expected to double next year as the rich revise their portfolios because of the global slump. Hong Kong records sharpest rise in the number of rich people but expected toll from global economic downturn on stocks and property clouds prospects - Growth in the number of millionaires in Hong Kong, the mainland and Asia-Pacific as a whole is expected to cool next year as the global economic slowdown takes its toll on stock and property prices. Merrill Lynch Wealth Management and Capgemini yesterday released their Asia-Pacific wealth report, a regional version of the world report it released in June. Hong Kong posted the fastest growth globally in the number of millionaires last year for the second consecutive year. The number of high net-worth individuals rose 33 per cent to 101,300, while their wealth expanded 35 per cent to US$511 billion. High net-worth individuals are those with US$1 million or more investable assets, while those with US$30 million or more are classified as ultra-high net-worth. The number of such wealthy people in the region and their total asset value grew the fastest in the world, by 14.9 per cent and 16.8 per cent, respectively. There were 23,000 ultra-rich holding assets of US$2.7 trillion. The mainland's wealthy population rose 12 per cent to 535,000 last year, thanks to robust macroeconomic growth and the strong performance of equities and real estate. They were the second-largest group after Japan, which had 1.74 million. But the region may already be losing its lustre as a wealth generator. In 2009, it boasted 14 of the fastest growing wealthy populations. Last year, only eight were from the region. The property bubble, global slowdown and declining exports were eroding the high-growth economies of the mainland, Singapore and South Korea. The report said these countries would experience slower growth this year and next, compared with last year. Alistair Scarff, the head of financial institutions equity research at Bank of America Merrill Lynch in Asia-Pacific, said growth in Hong Kong, the mainland and the rest of the region would slow, although he ruled out a possible contraction in the wealthy population. "Much wealth creation was attained through initial public offerings and business valuation," Scarff said. However, the turmoil in markets "could impact [high net-worth individuals] who are linked to equity activities". Last year, 57 per cent of such individuals in the region obtained their wealth from business ownership, against 48 per cent in 2009 and the global average of 46 per cent last year. Stocks and property were the most popular assets in the region, except for Japan, where 29 per cent of wealth was in cash deposits. On average, Asia's rich invested 27 per cent in real estate, 26 per cent in equities, 22 per cent in fixed income and 22 per cent in cash. The region was expected to cut investment in real estate and cash holdings in favour of fixed income and equities, the wealth report said, because of high inflation and the looming threat of a property bubble. Alternative investments - art, jewellery, luxury cars and yachts - were expected to double to 6 per cent next year. In Hong Kong, the rich invested 31 per cent of their wealth in equities and 21 per cent in real estate, which may be revised respectively to 39 per cent and 20 per cent next year. On the mainland, 42 per cent went into equities, 27 per cent real estate and 15 per cent cash or deposits.

Hong Kong Women's long road to liberation - Women's position in Hong Kong has been transformed in a century, from people without a name to working professionals. Their challenge is how to juggle it all. Just 100 years ago, Chinese women in Hong Kong were treated as half humans. Many did not even have a name; they took their husband's last name when they married and that became their identity for life. It reflected the convention that their place was in the home. With few exceptions, women were rarely seen outside the household. They cooked, cleaned and reared children - for themselves or as servants for rich families. Most were illiterate. Women's status and role changed radically in the ensuing century. From being family- and house-bound, women today can graduate from university, own property, participate in politics, and work. "Hong Kong women are gutsy. This city has been through so much change in the past century and despite all odds, women of this place somehow survived and flourished, built connections and made use of opportunities," said Susanne Choi Yuk-ping, director of Chinese University's Gender Research Centre. The ability to adapt and juggle multiple roles allowed Hong Kong women to survive the pace and flurry of the city. Even in their traditional mould, the city's women were never completely helpless and useless. It was the women who influenced how homes were run and how the household's hierarchy operated. As mothers, they made a powerful mark on how children were brought up. "Women commonly did not own property, nor were they included in family inheritances. Their domain was the home - but through their homes, they could exert influence over decision-making," said Dr Victor Zheng Wan-tai, research fellow at the University of Hong Kong's Institute for the Humanities and Social Sciences. With the second world war, and Hong Kong's transformation into a hub for business, trade, commerce and industry in the 1950s, women's roles underwent a major shift. Hong Kong's rapid industrialisation gave common people new opportunities for work. With huge demand for labour, women joined in, venturing out of the house and into the city's textile factories. Or they worked at home; the economic and industrial boom was so explosive that the city fell short of factory space. Industries had to be creative, and one answer was to farm out work to people's homes. Women benefited from the arrangement. They could work from home without neglecting their traditional obligations as mothers and homemakers. Mrs Chiu is in her 80s. She never learned how to read and spent most of her life raising nine children. She remembers the "jobs" she did at home to help feed the family when the children were young. "We folded paper bags and clipped plastic flowers. I would bring the material home, and the children and I would make them, and receive a few cents for a box of finished goods. The little money adds up, you know," Chiu said with a smile. Chiu, who did not want her full name published, does not look back on these as hard times. "It's what we had to do to survive - I don't see it as suffering - and look, we survived." However, many women remained illiterate, or had the lowest level education, until 1971, when the six-year compulsory education was introduced. Education was further extended to a compulsory nine years in 1978. The 1970s and 80s saw an increase in women taking up jobs as clerks and office ladies, with some even in professional roles. There were no statistics before 1961 on women's labour participation, but Chinese University's Choi estimates it to be extremely low, as it was not widely accepted for respectable women to have a "full-time job outside". By 1961, almost 37 per cent of women aged 15 and above were participating in the labour force. That grew to 41 per cent in 1966. By 2006, the female labour force participation rate was 52 per cent. Today, women can be seen working in almost all professions, and also making marks in the political, academic and scientific fields. But it remains a challenge for many women to balance their traditional role of home-carer and mother with their modern role of working individual and professional. "Women have the ability to form connections and networks - and use them for their jobs as mother, as wife, as a member of a community, in their career," said Dr Khun Eng Kuah-Pearce, a sociology professor at the University of Hong Kong. Kuah-Pearce said Chinese women have been doing this for a long time. Back when women were confined to the home, they formed gatherings - book clubs, mahjong or tea dates with other women. Now, women meet at parent-teacher meetings and talk about their children. Kuah-Pearce said networking is a major part of women's lives and an important key to success. "Many Chinese women relied on their ethnic connections with other Chinese women when they first emigrated overseas and their husbands returned to Asia for work," she said. "And even more commonly, women rely on familial support - grandparents, unmarried siblings - for raising children, especially if they have to work. These support groups are essential in helping women juggle multiple roles and identities." Choi said that society needs to change; men will have to share child-rearing and household obligations. "Ultimately, the cultural mindset has to change for women to advance. No one can complete two full-time jobs - that of a mother / carer and a professional with only time for one. "There needs to be a more balanced view on family role and obligation - it is not only up to the female to 'carry the family's burdens'."

A special charitable fund set up following the overwhelming response to a plea for HK$1 million to help a mainland baby receive a life-saving operation may also give hope to other people in need of liver transplants. The offers poured in after the South China Morning Post (SEHK: 0583) reported the plight of Li Liuxuan (pictured) earlier this week. Li was born with a blocked bile duct, but as a mainlander he is not entitled to subsidised medicine in Hong Kong. The Liver Transplant Charitable Fund, set up yesterday, has started accepting donations to pay for Li's operation. Professor Lo Chung-mau, director of Queen Mary Hospital's Liver Transplant Centre, said any excess cash may be used to help pay for other transplant operations. Li's parents said they were overwhelmed by the kindness of Hong Kong people but needed time to decide on going ahead with the transplant. They had initially expected treatment other than major transplant surgery, but were told that was the only way to cure the 17-month-old baby's condition. The parents plan to go home to rural Henan to discuss the transplant with the baby's grandparents. "There are so many kindhearted people here," father Li Xianfeng , 32, a worker from Shenzhen, said yesterday. "It's like all of a sudden we arrived in heaven from hell. We need to go home and calm down a bit." As the baby's condition was more stable, he said he and his wife wanted to go home and work on restoring Liuxuan's health with Chinese medicine, so his body would become stronger to undergo the surgery if they decided to do it. Last month, the baby was in hospital in Guangzhou for two weeks due to intestinal bleeding. Lo advised the surgery be done as soon as possible. Liuxuan and his parents came to Hong Kong on Monday. They had travelled across the mainland looking for a cure. Donation offers have poured in, among them a wealthy reader who offered a substantial sum of money. "We were very excited but kind of upset at the same time. We don't know what to do," Li said. They plan to stay in Hong Kong until Sunday when their travel visas expire. The Post has received 50 inquiries about donations. Many offered money for the surgery and some were willing to pay for the family's expenses in Hong Kong. Donations will be passed on to the HKU fund. Donations can be sent with a cheque made payable to the University of Hong Kong. Donors need to specify if the donation is only for Li Liuxuan. These would be refunded if Liuxuan did not receive surgery, Lo said. The address is: Department of Surgery, 2/F Professional Block, Queen Mary Hospital, 102 Pokfulam Road, Hong Kong.

The war of words between China and the United States over the work of the US consulate in Hong Kong was stepped up a notch yesterday as Beijing warned Washington it was watching closely. The row was sparked by whistle-blower website WikiLeaks' release of 960 cables to Washington from US diplomats in the city. A spokesman for the commissioner's office of the mainland's Foreign Ministry in Hong Kong said yesterday that it had taken note of a US diplomat's comment on continuous "deep engagement". "We wish to emphasise again that Hong Kong is China's Hong Kong and we do not allow intervention by any external force in Hong Kong's affairs. We will continue to follow the situation," the spokesman said. He was referring to remarks made by US Assistant Secretary of State Dr Kurt Campbell to the South China Morning Post (SEHK: 0583) this week. Campbell, who was in Hong Kong as part of an Asian tour, said the US consulate would continue its "deep engagement in all aspects of life" in the city, and its role was "understood and appreciated" by Beijing, Asked if Beijing's criticism would prompt changes by the US, he said: "We will continue the deep engagement in all aspects of life here, and I think that role is welcomed by the Hong Kong people, the Hong Kong government and, frankly, also understood by the Chinese." The Foreign Ministry commissioner's office in Hong Kong rebuked the US consulate late last month, citing the cables released by WikiLeaks. These showed that the consulate was interfering in the city's constitutional development by holding meetings with various people, it said. An office spokesman accused the US of contravening the Vienna Convention on Consular Relations, which forbids diplomats from interfering in the internal affairs of host states. WikiLeaks released 960 diplomatic cables from the US consulate in Hong Kong at the end of August. Some messages mentioned discussions on democratic development, the city's financial markets and how it handled waste and water. A spokesman for the US Consulate in Hong Kong said: "We have nothing to add to Assistant Secretary Campbell's interview at this time - it speaks for itself."

China has formalised a pilot scheme to allow foreign businesses to invest in the country with yuan legally obtained overseas, as the country moves to internationalise its currency. The People’s Bank of China (PBOC), China’s central bank, and the Ministry of Commerce on Friday issued documents detailing rules aimed at governing yuan foreign direct investment (FDI). The PBOC said the new rules, which guide foreign businesses and banks in processing yuan FDI, will make “procedures for related financial services more convenient.” The formalisation of yuan FDI marks a big boost to Hong Kong’s standing as an offshore yuan hub, analysts said. “The main message is that it confirms the legitimacy,” said Frances Cheung, analyst at Credit Agricole CIB in Hong Kong. “This adds to incentives for potential issuers to issue Dim Sum bonds when the market stabilises, pushing up Dim Sum bond yields gradually, in the longer term,” she added, referring to yuan-denominated bonds issued in Hong Kong. China, ambitious to push for wider global use of its own currency, has taken steps to support Hong Kong’s role as an offshore yuan hub. Some multinational companies with a heavy presence in the mainland, including Caterpillar and McDonald’s, have issued yuan bonds in the territory. Norman Chan, chief executive of the Hong Kong Monetary Authority, said that the new rules were “an important measure” for the development of offshore and onshore yuan markets. The new rules “will significantly increase investment options for yuan funds in Hong Kong, promoting fundraising via yuan-denominated bond issuance in Hong Kong,” he said in a statement. The Ministry of Commerce separately detailed definitions and application procedures for yuan FDI in a notice posted on its website. Among other stipulations, the notice said all applications for yuan FDI worth 300 million yuan (US47 million) or above must be submitted to the Ministry of Commerce for approval. As part of its efforts to increase the influence of the yuan, China first launched a yuan trade settlement scheme in July 2009 in a few cities and expanded it to 20 provinces a year later. However, businesses have complained that they are facing difficulty investing their yuan revenues due to China’s capital controls. Trade settled in yuan swelled 33.7 per cent in June from the previous month to 205.1 billion yuan (US$32 billion) in Hong Kong, which helped drive the territory’s yuan deposits to 553.6 billion yuan in the month.

About 20,000 babies born to mainland parents in Hong Kong were expected to live in the city in future, Chief Secretary Stephen Lam Sui-lung said on Friday. Lam, who is responsible for population policy, told local radio there were on average 80,000 babies born in Hong Kong annually and about half of them – 40,000 – were born to mainland parents. Under Hong Kong law, babies born in Hong Kong automatically have a claim to right of abode in the city. Lam said the government estimated that about half of these 40,000 babies would eventually come to Hong Kong and settle here, creating new burdens on the city’s education and other services. “We will have to prepare for their coming,” he said. In recent years, Hong Kong has seen an influx of mainland women giving birth in its hospitals. They are attracted by the quality and low fees of the city’s medical services, as well as the prospects of their children gaining citizenship in the territory. Hospital managers have said the influx of expectant mothers had already strained medical resources to the limit. In April, the Hospital Authority announced it would not cater for any more deliveries this year by women from the mainland – including spouses of permanent residents.

A HK$12 billion monorail system and the rebranding of a "dull and remote" district are key elements in plans to turn Kowloon East into the city's second central business district (CBD2), double the size of Central, officials said yesterday. The area which includes Kwun Tong, Kowloon Bay and the old Kai Tak airport site will be home to offices - including 11 government departments - spanning 5.8 million square metres of total floor space, or double the area provided in Central, Secretary for Development Carrie Lam Cheng Yuet-ngor told a news conference yesterday. But the area will not rival Central for the most prestigious, prime office sites, officials said. The new site will become the best choice for grade-A office space for companies that do not need a base in the traditional but overcrowded business districts like Central and Wan Chai. "This is not Central the second. The most important business district will remain in Central," Lam said. "From the perspective of positioning, it is essential for most financial institutions to stay in Central. For one thing, the West Wing of the government headquarters will be turned into offices of the Securities and Futures Commission, which will be a nominated tenant in the lease. That will keep many institutions close to it," she said. In his policy address on Wednesday, Chief Executive Donald Tsang Yam-kuen said increasing the supply of office space was vital to maintain Hong Kong's competitiveness, but Central lacked room for expansion. Rising demand pushed up rents and lowered the vacancy rate last year. Another key attraction for the new district, renamed Kowloon East, will be its nine-kilometre, emission-free monorail system with 12 stops connecting Kowloon Bay and Kwun Tong MTR Station via Kai Tak. Officials said the rail system would cost about HK$12 billion to build. Subject to public consultation and detailed design, the system - operating at an interval of two minutes with expected daily passenger traffic of about 200,000 - could start operating by 2023. Lam said a footbridge system, to be financed by five private developers, would link major business towers in Kowloon Bay. The government will consider other pedestrian connections there and in Kwun Tong. Lam said rebranding was also key to the planned CBD2's success because the former industrial area had a reputation for being dull and remote. "The first thing we have to do is to remove a road sign outside the [Eastern Harbour Tunnel] that tells motorists they are heading to Kwun Tong industrial district," she said. Architecture, street art and green projects will also play a role in helping the area evolve into a quality business district, the secretary added. David Tse Kin-wah, from the Royal Institution of Chartered Surveyors, said he supported the scheme, adding that the monorail was the "most crucial" element for success. Kowloon East, he said, was likely to attract architectural firms, construction companies, bank back-up services, information technology outfits and logistics operators who favoured larger floor spaces, which would be in ample supply in the district's renovated industrial buildings.

 China*:  Oct 16 2011 Share

The United States yesterday said it had processed a record number of US visas on the mainland. Gary Locke, US ambassador to China, said the US had processed more than 1 million US visas for mainland applicants during the fiscal year ended September 30, up 34 per cent from the previous fiscal year. The announcement follows comments by top US officials that more mainlanders would be allowed to visit America in a bid to tap mainland consumers' rising buying power. The visa applications were processed by the US embassy in Beijing, and four consulates in Shanghai, Guangzhou, Shenyang and Chengdu. Figures from the US Department of Commerce also showed that more than 801,000 mainlanders visited the US last year, adding more than US$5 billion to the US economy. "The US-China relationship is profoundly important, and welcoming Chinese visitors to the United States strengthens our cultural and commercial ties," Locke said in a press release. The embassy said the US would continue inviting mainland tourists, students and businessmen to visit the country, while reducing visa interview wait times by adding staff members. It also urged Beijing to extend visa reciprocity and allow US travellers to stay longer in China. Mainlanders have long complained of difficulties in getting a US visa, citing long visa-processing times and a high refusal rate as the main frustrations. Sabrina Zou flew from her hometown in Lanzhou, Gansu province, to the embassy in Beijing last month as she was planning a trip across the US. It took her hours to submit her application, which required that she declare her income and assets, before queuing for four hours for an interview. "The officer just asked about the purpose of my travel, with whom I wanted to travel and whether I was married. The interview took just a few minutes," Zou said. "But to my despair, I just got a note saying my application had been rejected, without an explanation. I went through all the hassles and tussles for the application, and I was rejected. I don't think I want to go to the US anymore." US officials have repeatedly said they wanted to attract mainland tourists and investments to create jobs for the sluggish US economy. Speaking to a US business group in Shanghai yesterday, Locke said the embassy planned to lead several trade and investment missions to China over the next year. During his visit to the mainland in August, US Vice-President Joe Biden said that it took too long for mainlanders to obtain US visas, adding that the situation was not in America's interest. US Senator Tina Rose Muna Barnes lobbied in March to include China and Russia in the US Visa Waiver Program for Guam, which allows people to travel with only an online travel authorisation instead of a visa. Lu Wei, a Beijing-based overseas education consultant, said the US embassy had taken measures to facilitate visa applications, including shortening interview times.

China's Premier Wen Jiabao on Friday took aim at what he called “rising trade protectionism”, saying trade disputes were hampering a global economic recovery. “What is worrying is that... trade protectionism is rising sharply,” Wen said in a televised speech. “Trade protectionism will only slow the pace of world economic recovery.” The Chinese leader made no specific mention of the United States or other countries, but his remarks followed the US Senate earlier this week passing legislation aimed at punishing China for its alleged currency manipulation. Some US lawmakers and officials say China’s currency is undervalued, giving the country an unfair trade advantage by making its exports cheaper. The politically sensitive US trade deficit with China rose to a record level of US$29 billion in August, the US Commerce Department said on Thursday. The figures are likely to fuel allegations China keeps its currency artificially weak. Wen, who was speaking at a trade fair in the southern city of Guangzhou, said countries should be “rational” in dealing with trade disputes. “The shadow of an international financial crisis could be removed as soon as possible... only if we properly handle international trade friction in a more rational way,” he said. Although leaders in the US House of Representatives have signalled they would block the currency bill – meaning it will not become law – anti-China sentiment is on the rise ahead of US elections in November next year. Beijing has denounced the bill as a “ticking time-bomb” that threatens to blow up trade ties between the economic superpowers, and US House Speaker John Boehner has said he would block the bill to prevent a “trade war”. China’s overall trade surplus actually narrowed to US$14.51 billion in September as exports slowed, hit by economic turmoil in the United States and Europe, according to official figures. The country’s exports rose 17.1 per cent year-on-year to US$169.7 billion, slowing from a 24.5 per cent rise in August. Worries over slowing overseas sales will prevent China from allowing its currency to appreciate more sharply, amid fears this would hurt exports, which are a major driver of economic growth, analysts said. China defends its exchange rate regime, saying it is moving gradually to make the yuan currency more flexible. The yuan has risen more than seven per cent against the dollar since mid-last year, when Beijing relaxed a de-facto peg to the US currency, imposed in 2008 to protect its exporters during the global financial crisis.

While China was still in a holiday mood last week, Beijing gave local governments something to really cheer about, announcing through state media that they will soon be able to raise money by selling bonds directly. For more than 17 years, this was a closely guarded privilege of Beijing, which sometimes issued debt on behalf of local governments but never let them charge ahead on their own. China’s local governments have a reputation for problematic bank borrowings from investments that often don’t work out. Much of their investment is in real estate and now that the property market looks like it might be in trouble, the issue is even more acute. Major credit rating firms are warning of risks to the banking system. Letting some of the better managed local governments issue bonds directly has long been a subject of debate. Local governments want more access to funds but Beijing sees a need to keep a tight leash on their borrowing. Some economists contend there are local governments up to the task. Former Premier Zhu Rongji, known as Boss Zhu prior to his retirement in 2003, knows the Beijing dilemma. In 1998, it was Mr. Zhu who took on the task of cleaning up the financial mess from the collapse of Guangdong International Trust and Investment Corp, better known as GITIC and effectively the borrowing arm of the Guangdong provincial government. When GITIC was unable to repay its loans, many of them from big foreign banks, Zhu surprised foreign creditors by saying that Beijing would not stand behind the company. Mr. Zhu’s message to GITIC and its nervous bankers: China has the money to pay but shouldn’t get stuck with this bill. Creditors eventually received 12.5% for GITIC and 11.5% to 28% for its main subsidiaries. Things are a bit different today. For one, the stakes are much higher as local governments have much bigger appetites. While local governments are not supposed to be borrowing from banks they have been able to get around restrictions through special financing vehicles — companies that have been set up to back specific projects. Local government financing soared under a massive government stimulus program after the 2008 global financial crisis, and it reached 10.7 trillion yuan by the end of 2010, according to the National Audit Office. Not all of that has — or will — go bad, but the sums are enough to raise eyebrows. Zhejiang province will be the first to tap the market, selling 8 billion yuan ($1.25 billion) worth of three- and five-year paper as part of a trial program that will let wealthier provinces and cities tap domestic bond markets, according to the state-run Xinhua news agency. Ratings firm Moody’s Investors Service has given a thumbs up to the idea of letting some local governments sell bonds. “Such a program is credit positive as it will enhance local administrations’ discipline and transparency in managing their debt, and more importantly, will expand their sources of funding, which to date have relied on bank loans to so-called ‘local government financing vehicles,” Moody’s wrote in a recent report. There is also plenty of support for the idea in other quarters. Lu Ting, economist at Bank of America Merrill Lynch, agrees, arguing that not all local government borrowing is bad and that Zhejiang will use the funds for infrastructure and badly needed social housing. These types of investments don’t produce much cash flow to repay debt anyway, he wrote in a recent report,, and should not be classified as standalone projects. Moreover, keeping the debt at the provincial level rather than in local government financing vehicles will improve financial transparency. Lu notes that Zhejiang alone has 759 such local government financing vehicles. Zhejiang has impressive economic muscle. According to Mr. Lu’s report, the province’s GDP in 2010 was 2.7 trillion yuan with growth of 11.9% and a per capita GDP that ranked behind only Beijing, Shanghai and Tianjin. But some critics are still worried. They maintain that Guangdong’s economic prowess didn’t prevent GITIC from misusing funds and going bust. Moreover, Beijing needs to ensure that provincial level debt actually replaces other less transparent borrowings – and does not just open up a new funding channel. If Beijing’s current political leaders can find a way to sort out local government financing without creating a fresh round of spending abuses, they will have solved a longstanding problem. Though there would be a debt of another kind – one of gratitude to Boss Zhu.

More than 65 percent of entrepreneurs at companies with annual sales of at least 30 million yuan ($4.72 million) believe that the credit crisis in Wenzhou was inevitable, given the little-supervised private lending system, according to a survey released on Thursday. Severe financial problems experienced by companies in Wenzhou "could be seen as a process of economic development, which could happen anywhere when businesses must rely on high-interest loans, either to finance normal production or for more profit," said Nan Bo, the founder of the China Oriental Culture Broadcast Institute, which carried out the survey of 1,207 businesses during September and October. Among the interviewees, 42.7 percent admitted that they had used private lenders, including 55.6 percent of respondents from Zhejiang province. A further, 51.3 percent of the companies surveyed had put extra money into the underground banking system to make a profit. "A majority of those entrepreneurs participated in the underground banking system because tight loan conditions left them no choice. "What they actually need is to be able to make money from their businesses and obtain regular loans", said Nan. A majority of the enterprise owners said they believed that the situation would be eased with the help and attention of the central government. "I think the government took immediate action to avoid the collapse of the underground banking system in Wenzhou, which is a relief to all (small companies) in other regions," said Qiu Zhiming, the president of Ningbo Beifa Group Co Ltd. The quarterly China SME Confidence Index, jointly issued by Standard Chartered Bank China and CBN Research on Thursday, showed that small and mid-sized enterprises in China were generally pessimistic about domestic economic conditions, following widespread failures among companies in Zhejiang province. The index covers more than 1,400 SMEs in 16 cities across the country. It has four categories: the macroeconomy, business operations, investment and financing confidence. The index ranges from 0 to 100, with 50 considered as neutral. The SME confidence level in eastern areas of China was the weakest, coming in at a mere 44.28 - far below the national level. "In this quarter, SMEs in China had relatively weak confidence in the domestic macroeconomy, and they are divided in their views about the trend of credit policies in the coming quarter," said Li Wei, an economist at Standard Chartered Bank PLC. "Most SMEs in East China are export-oriented, and they are heavily influenced by the economic situation and related policies in the US and European countries," Li said.

The 110th Canton Fair, officially known as the China Import and Export Fair, opened Friday in the city of Guangzhou, capital of the southern province of Guangdong. Delegates attend the Forum on the 110th Canton Fair in Guangzhou, capital of South China's Guangdong province, Oct 14, 2011. Since this year marks the 10th anniversary of China's entry into the World Trade Organization (WTO), the country is willing to give the world a signal of expanding its imports at the fair. A total of 529 enterprises from 49 countries and regions are scheduled to attend the import exhibition at the fair. A series of bilateral seminars between Japan and Sweden, as well as seminars among Central and South American countries and China will be held to boost trade relations and prompt the world to learn more about China. China's effort for expanding its imports will play a significant role in the world's economy recovery, said Harsha Vardhana Singh, deputy director general of the WTO, at a sideline forum at the fair. Canton Fair is China's largest trade fair and a key indicator of the country's trade and economic development. The fair is held biannually in Guangzhou every spring and autumn since 1957.

China's consumer price index (CPI), a main gauge of inflation, rose 6.1 percent in September year-on-year, the National Bureau of Statistics (NBS) said Friday. On a monthly basis, consumer prices rose 0.5 percent in September, said the NBS in a statement at its website. In the first nine months of this year, China's CPI climbed 5.7 percent from the same period last year, up from 5.4 percent year-on-year in the first half, said the NBS. Food prices, which account for nearly one third of the basket of goods in the nation's CPI calculation, was up 13.4 percent in September from a year earlier and 1.1 percent month-on-month, according to the NBS. China's CPI hit a 37-month high of 6.5 percent in July this year, which was far above the Chinese government's full-year target of 4 percent for 2011. September PPI rises 6.5% year-on-year. China's Producer Price Index (PPI), a major measure of inflation at the wholesale level, rose 6.5 percent in September year-on-year, the National Bureau of Statistics (NBS) said Friday. September's PPI growth was lower than August's 7.3 percent increase, the NBS said in a statement on its website. By the end of September, the outstanding broad money supply (M2), which covers cash in circulation and all deposits, rose 13 percent year-on-year to 78.74 trillion yuan, the statement said. The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, increased 8.9 percent year-on-year to 26.72 trillion yuan by the end of last month, the statement said. It also said China's foreign exchange reserves totaled $3.2017 trillion by the end of September, compared with $3.1975 trillion by the end of June.

Hong Kong*:  Oct 15 2011 Share

More home comforts are on the way for Hongkongers after the chief executive's final policy address - but they may have only a minor impact on the property market as global gloom deepens. Donald Tsang Yam-kuen promised a new supply of subsidized housing for first-time buyers and more land for private residential projects. Tsang, who steps down next year at the end of his second term, pledged that on average 40,000 flats of various types will be made available every year. In the four years from 2016 to 2020, the government plans to build 17,000 flats under the revived Home Ownership Scheme. Under an improved My Home Purchase plan, 5,000 flats will be built. While acknowledging that the revived HOS should have been launched six months ago, Tsang said he understands people's aspirations, adding: "We have to look at the big picture. "While taking care of the first-time homebuyers, there are still millions of homeowners we have to care about." Analysts said the policies will only have a minor impact on the property market. "The quantity of HOS flats is rather small compared with the total demand of 37,000-40,000 flats every year," said Credit Suisse property analyst Cusson Leung Kai-tong. He described the policies as "rather mild." Midland Realty estimates the supply of private flats this year at 11,000. Real estate developers welcomed the initiatives. Sun Hung Kai Properties (0016) said: "The new HOS will help stabilize the property market, where first-time homebuyers will find it easy to own a flat." Cheung Kong (Holdings) (0001) executive director Justin Chiu Kwok- hung said the government is not interfering in the property market, and the real estate industry can adapt. But some analysts expressed caution. Australia and New Zealand Banking Group senior economist Raymond Yeung Yu-ting, said this is not the right time to boost supply too much too quickly as the market has corrected over the past few months. Prices in the mass market have fallen more than 16 percent from their peak this year. Midland Realty vice chairman Albert Wong Kam-hong said a huge number of small and medium-sized flats will come on the market and will affect prices of units of that size. "The measures will force home prices into two extremes - the smaller flats will become cheaper, while luxury flats will cost much more," he said. Centaline Property Agency executive director Louis Chan Wing-kit said those eager to own a small or medium- sized flat are likely to wait for HOS flats. The new initiatives also gave rise to concerns that the door has been opened for property speculation at public expense. Eddie Hui Chi-man, deputy director of the Research Centre for Construction and Real Estate Economics at Hong Kong Polytechnic University, said taxpayers' money is being used to fund speculative activities. Explaining his policies, Tsang appeared to ease some concerns, saying: "I believe most of them would be end- users. "I don't think it is appropriate to refer to them as drawing benefits from the scheme."

The HK$18.8 billion sale of Swire Pacific's Festival Walk shopping centre in Kowloon Tong was the biggest of the quarter. The number of major property deals completed in the third quarter in Hong Kong dropped more than 55 per cent compared with the previous quarter. Investor appetite was soured by uncertainties over the global economy and tighter credit on the mainland, according to property consultant DTZ. However, the total value of all deals priced at HK$100 million or more was up 31.5 per cent to HK$30.38 billion, largely due to the HK$18.8 billion sale of office-retail development Festival Walk in Kowloon Tong by Swire Pacific (SEHK: 0019) in August. The development was sold to Mapletree Investments, a unit of Singapore's Temasek Holdings. Excluding the big deal, the total value of major sales recorded in the third quarter was just HK$11 billion, compared with HK$23.11 billion in the second quarter, reflective of a cautious sentiment among investors, said Alvin Yip, co-head of investment, China at DTZ. "If we take a closer look at the market in the third quarter, we can see that property deals of various sizes were affected by the drop in activity, whereas property prices did not suffer big falls that would have resulted from widespread distress sales," said Yip. "The few significant transactions in the quarter also showed that investors, in this case foreign investors, continued to treasure-hunt in the Hong Kong market and found prime investment opportunities in various sectors." A range of factors led investors to defer buying decisions, said Yip. These included tumbling share prices, the troubled outlook for the world's economy, a rising spread on loans based on the Hong Kong Interbank Offered Rate, increasing costs of investment and concerns about negative cash flows. A tightening of credit and funding on the mainland also had an impact on the local investment market. The result was that sales of major luxury residences fell from 30 in the second quarter to only seven in the third quarter. The value of such deals shrank 75 per cent to HK$1.96 billion in the third quarter, from HK$8.1 billion in the second quarter. "Potential buyers of luxury residential property turned more conservative. [Sellers] were generally not prepared to offer big discounts." Yip said there were signs that yields on industrial properties may have begun rising slowly due to changes in their capital value. "Judging from recent events, although the outlook for the fourth quarter does not call for a definitively positive development, we expect that investors will continue to watch the yield movement of various sectors but will be conservative in making their moves."

Airlines are bracing for a double whammy as falling demand for passenger and freight business cut into profits and confidence is undermined by the global downturn. Cathay Pacific Airways (SEHK: 0293) expects tough times ahead, saying its cargo business, which accounts for about 30 per cent of revenue, is hard hit. Hong Kong's flag carrier cut its freighter service to long-haul destinations and launched new regional services to offset weakening US and European demand. It also sees a potential decrease in business travel as banks reassess travel policies. On the cargo side, Cathay cut Europe flights to 22 per week this month, from 28 at its peak last year, and cut transpacific flights from 40 flights a week to just 34. "We all know that when a downturn comes, it hits aviation hard and fast," John Slosar, chief executive of Cathay Pacific, said in the company's newsletter yesterday. "We need to be ready for that, but I believe we are in a better position than most because our balance sheet is strong." The airline was "disappointed" by cargo demand levels in the first half of September, traditionally the start of peak season, said James Woodrow, Cathay's general manager for cargo sales and marketing. He said the carrier still had a glimmer of hope for a pickup in air freight during the last quarter if the euro zone debt crisis stabilised and US consumer confidence rose. Taiwan's China Airlines, which also has a strong cargo business, suffered a more than 10 per cent year-on-year drop in cargo volume in September, following a similar fall in August, according to its Hong Kong general manager, Tong Huai Ming. "I can't see a recovery in cargo demand in the fourth quarter," she said, adding that new freighter capacity worsened the situation and put freight rates under great pressure. Shanghai-based China Eastern Airlines (SEHK: 0670) said the outlook for international cargo and passengers was bleak. Lao Zhuping, a director at the airline, said the company was considering changing its plane orders by buying smaller planes - in demand because of strong regional and domestic traffic in China - rather than big aircraft. In contrast to sluggish cargo demand from the West, intra-Asia traffic shows promise. Cathay said its new Bangalore service, launched in August, had exceeded forecasts. The twice-weekly freighter service to Chongqing was also "going well" and may be doubled to four weekly flights in November, it said. A freighter service to Chengdu, which has a growing technology industry, is set to launch next week. Cathay carried 131,448 tonnes of air cargo in August, down 11.8 per cent year on year, following an 8.6 per cent drop in July. On the passenger front, the airline said economy class yields were under pressure due to overcapacity. There is high demand for first-class and business-class travel, but investment banks may cut back in that sector after they reassess travel schemes. Long-haul premium traffic was a key part of carriers' business and any drop would have a profound impact, transport analyst Kelvin Lau said. During the 2008 financial crisis, Cathay's premium traffic dropped nearly 20 per cent. The International Air Transport Association issued a warning earlier this year that both passenger and freight demand were slowing significantly. In August, passenger growth slowed and global air freight shrank by 3.8 per cent.

South Africa's exchange joins bourses from Brazil, Russia, India, the mainland and Hong Kong. Hong Kong Exchanges and Clearing (SEHK: 0388) and six bourses from the BRICS economies - Brazil, Russia, India, China and South Africa - intend to cross-sell each other's products. The seven stock markets will cross-list each other's benchmark index derivatives from June next year. For the HKEx, it will mean the Hang Seng Index and H-shares index futures and options will be traded on those markets. Later on it will develop other products, such as exchange traded funds, to track the BRICS exchanges. The alliance, the first of its type, was announced yesterday at the annual meeting of the World Federation of Exchanges in Johannesburg. Besides HKEx, the other participants are BM&FBOVESPA from Brazil, MICEX from Russia which is in the process of merging with RTS Exchange, the Johannesburg Stock Exchange, and the National Stock Exchange of India and the BSE. These seven exchanges represent a combined 9,481 listed companies with a total market capitalisation of US$9.02 trillion. Their combined monthly turnover stands at US$422 billion, and they represent 18 per cent of all listed derivative trading worldwide. "The alliance enables more investors to gain exposure to the BRICS bloc of emerging economies, with its increasing economic power," said Ronald Arculli, chairman of HKEx and of the World Federation of Exchanges. Arculli said the cross-listing would be traded in local currency. Joseph Tong Tang, executive director of Sun Hung Kai Financial, said more products would be a good move. "However, Hong Kong investors know far too little about these emerging markets so that interest in trading their derivatives may not be high. These are emerging markets so they tend to be more risky than developed markets," Tong said. Brian Fung Wei-lung, chairman of the Hong Kong Securities Association, said the alliance was positive for Hong Kong, but it was difficult to gauge local interest in products offered by overseas exchanges.

The Court of First Instance has thrown out a man's attempt to halt construction of the new MTR South Island Line, branding it an abuse of process and ordering him to pay HK$95,000 in costs. Wong Fuk-tim, a South Horizons resident and solicitor, claimed that the construction would lead to noise and dust pollution, and the influx of migrant workers from the mainland would affect his personal safety. Wong argued the government had failed to protect the environment, properties and residents, and - together with the secretary for transport and housing and the secretary for financial services and the treasury - had failed to adequately monitor the MTR Corporation (SEHK: 0066). He said the rise in the annual number of deaths in the city, from 25,000 in 1987 to over 40,000 last year, was due to immigration from the mainland - one of several arguments which a sceptical Mr Justice Johnson Lam Man-hon called "totally irrelevant" in the September 23 hearing. "The mainland Chinese cause harm to the public. There have been too many deaths. Deaths take place every day," Wong said at the hearing. "From 1988 to now, Hong Kong's population has also increased significantly," Lam replied. "Certainly there would be an increase in the number of deaths." In yesterday's judgment, Lam said: "It is plain and obvious to this court that the plaintiff's claim has no proper basis in law and facts. As such, the action is an abuse of process and ought to be struck out accordingly." He said Wong should have applied for a judicial review. Instead, he made a private claim, reasoning that the decision to approve the line violated the government's duty not to harm him. If he had sought a judicial review, the court would have considered whether the challenge had a chance of success before allowing it to go ahead, which Lam said was an important step in avoiding abuse of the courts. Moreover, judicial reviews normally have to be filed within three months of an event. The construction plans were gazetted in July 2009, which would make Wong's claim late. The judge also noted that Wong should have voiced his concerns during public consultation on the South Island Line (East) from Admiralty to South Horizons. His complaints on the planned Sai Ying Pun to Wong Chuk Hang line could be heard at a future consultation.

The government on Thursday unveiled new plans to develop Kowloon East into a central business district. At a press conference, Secretary for Development Carrie Lam Cheng Yuet-ngok said land for commercial offices in Central, Wan Chai and Causeway Bay was near saturation – but demand was still growing. This was because to increased presence of multi-national companies in Hong Kong, she said. Lam said the development plans would involve turning four million square metres of land in the former Kai Tak site, Kowloon Bay and Kwun Tong into commercial offices. A HK$12 billion, environmental-friendly monorail would be built to connect the three places, she said. Lam said the government would also move 11 departments to Kai Tak in 2014. Construction of the first government office in Kai Tak would start next year. Offices now in three other government complexes in Wan Chai would also move to Kai Tak later to release more space for commercial offices, Lam said.estoration in future".

Lee Koon-tai asks why the bridge his great-grandfather built in Yuen Long can not be preserved. Heritage officials have failed to conserve a rare Qing dynasty granite bridge in Yuen Long, leaving it defaced and carrying an increasingly heavy load of traffic in a village being transformed by redevelopment. The Lee Tat Bridge was built in 1903 in an architectural style similar to the Lun Tsun stone bridge uncovered at the former Kai Tak airport site. The Lun Tsun structure was built in the 1870s, and the government is carefully restoring it. But a different fate has befallen the Lee Tat Bridge, in the village of Sui Tsan Tin and originally built for pedestrians. In 2005 it was widened, with layers of metal and concrete, to carry traffic. It provides the only vehicular access to the community. "If the Lun Tsun stone bridge deserves such a high level of attention, why should this one be ignored?" heritage activist Lee Koon-tai said. The bridge preserves the memory and civic contribution of his great- grandfather, Lee Luk-hop, a village leader who funded its construction in 1903. The 14-metre-long bridge originally enabled villagers to cross a fast-running stream in the low-lying community, which flooded after heavy rain - and still does. A stone tablet still stands near the bridge, bearing Lee Luk-hop's name. "We used to have a few historic structures here, but they have already made way for new houses," Lee said. "This bridge and the brick kilns are the last [bit of the past] ... If I give up fighting, it will be destroyed one day." He is concerned that pressures on the old structure will increase as new residential developments continue to grow. Professor Patrick Lau Sau-shing, the lawmaker representing architects, planners and surveyors, said the government had a duty to restore the bridge. "After all, a Qing stone bridge is not supposed to carry trucks. It should become vehicle-free as soon as possible." Lee has asked the Yuen Long district office to build a new bridge, but it turned him down because of the expense and technical difficulties of transplanting trees and building a retaining wall, he said. In 2002 he managed to stop the demolition of the old bridge. The Yuen Long office and some villagers were proposing to replace it with a wider structure that could support vehicles, including trucks, but Lee prevented that by complaining to the Antiquities and Monuments Office,(AMO), which called for the bridge's preservation. As a compromise, the district office, as an "urgent improvement measure", added metal and concrete layers on top of the old bridge surface for vehicles. But the AMO said the metal and concrete were "unsympathetic interventions", and gave the bridge a grade-three historic rating - recognising it as one of Hong Kong's six remaining traditional Chinese bridges. Its design is technically sophisticated, with angular edges that divert and slow the water flow - a feature also found on the bridge in Kai Tak. A Home Affairs Department spokeswoman was unable to explain the slow progress being made towards conservation since 2005, apart from noting there were different views among villagers. "The Yuen Long district office would be happy to further discuss the matter with villagers concerned," she said. The Commissioner for Heritage's Office, under the Development Bureau, will not say whether the bridge will be restored, but says the metal and concrete layers are "reversible for possible r

It was the first time Donald Tsang Yam-kuen had delivered his policy address in the new Legislative Council building at Tamar - and the last. But some things never change. On arriving shortly before 11am he was surrounded by dozens of journalists and cameras, and more than 100 protesters tried to confront him. Unusually, police and security guards failed to control the situation and several protesters were able to pass through barriers and get close to Tsang before being taken away. One almost managed to run into him and was stopped only steps away. Then in the chamber, it came as no surprise that League of Social Democrats lawmaker Leung Kwok-hung yelled at the chief executive. But this time "Long Hair" did not throw anything. Instead he caused a surprise by releasing a balloon with a banner stating: "Bowtie ruins Hong Kong, collusion between government and businessmen." No one could stop the balloon and it floated close to the chamber's ceiling throughout Tsang's speech. After being expelled, Leung explained that the rise of the balloon was meant to signify that "public voices cannot be silenced." Legco president Tsang Yok-sing started proceedings with opening remarks about the long planning and construction - which started in 1993 - of the new building. Then, Legco secretary general Pauline Ng Man-wah issued a call and Donald Tsang stepped into the chamber. During his two-hour speech, Tsang stuttered occasionally and wiped away sweat at least twice. "I sweated because of the four spotlights in the chamber ... and the energy generated from inside," he said later, joking: "I compliment the Legislative Council in maintaining a very environmentally friendly temperature of 44.5 degrees centigrade." At a press conference afterwards, he shared his thoughts on his 40-odd years of public service, serving more than six as chief executive. He also thanked journalists who waited patiently for him in the rain yesterday. "They knew I would not speak after my morning church session, but they still waited for me when it was raining cats and dogs. "I am really touched by their professionalism," he said. Tsang will return to the Legco chamber today to face lawmakers at a question-and-answer session.

 China*:  Oct 15 2011 Share

China has launched an intense lobbying effort in Washington to kill legislation that would punish it for its currency system, in the latest display of its more sophisticated approach to influencing US policy. A 12-member "congressional liaison team" inside the Chinese embassy has been meeting with aides to key lawmakers, making phone calls to congressional offices and speaking to the White House on the issue, according to Chinese and US officials. The Chinese embassy has also been paying a blue chip Washington law firm US$35,000 a month to lobby Congress on its behalf and to provide China with a greater understanding of congressional politics. The effort reflects how sophisticated China's lobbying in Washington has become. Just 10 years ago China routinely ignored Congress, with some of its officials believing the Senate and House of Representatives were mere mouthpieces for the executive branch. "China's position on this issue is very clear," a Chinese embassy official said. The official said embassy staff had been holding meetings on Capitol Hill with key aides. Orrin Hatch, a Republican senator who voted against the legislation, said it was important to listen to the Chinese. He described the Chinese representatives who came to Capitol Hill as "very concerned" about the currency legislation. "I did see some in the hallway, and all they did was encourage me with what I was doing," he said. Hatch had proposed an amendment requiring the administration to engage in multilateral negotiations with China, but it was not brought to a vote in the Democratic-controlled Senate. China began to realise the importance of lobbying after being repeatedly outfoxed on Capitol Hill by Taiwan, which had developed a sophisticated and effective operation to influence legislation. In 2005, the Chinese embassy retained Patton Boggs, one of the top lobbying shops in Washington.

Analysts say a US bill threatening Beijing with tariffs if it does not lift the value of the yuan is politically motivated and would do nothing to help reduce US unemployment or revive global economic growth. A 63-35 vote in favour of the bill in the US Senate on Tuesday revealed broad bipartisan support for accusations that an artificially undervalued currency has made Chinese products cheaper and contributed to the loss of American jobs. Still, the bill is unlikely to become law because it lacks the support of the Republican majority leadership in the House of Representatives. "I think, given the volatility in the world markets, given the uncertainty about the world economy, for the Congress of the United States to be taking this step at this moment in time poses a very severe risk of a trade war and unintended consequences that could come as a result," House Speaker John Boehner said yesterday. US President Barack Obama has also stopped well short of backing the legislation and has even expressed concern that it could violate World Trade Organisation rules. Prakash Sakpal, an economist with ING Asia, said the "China-bashing bill" was politically motivated and aimed at the US electorate. "The threat of a trade war will keep it from being passed," Sakpal said, highlighting strong resistance to the bill from the House Ways and Means Committee and the opposition of Boehner. Professor Tao Wenzhao , a senior research fellow with the Chinese Academy of Social Sciences' Institute of American Studies, said the sluggish US economy and high unemployment meant "it is more about politics than economics, because it is an American problem, not Chinese". Some Chinese analysts have characterised the US move as an ailing America forcing China to take medicine. Tao cited three reasons for the passage of the bill in the Senate: the need to find a scapegoat to blame for high unemployment; the trade imbalances between China and the US; and the massive outsourcing of US manufacturing to China. He said the drive to punish China for its currency practices had been going on since 2005, led by Democrat Senator Chuck Schumer, who has advocated similar legislation under both the Obama and Bush administrations. Tao said neither the Democrat Obama nor the Republican Bush administrations had approved such action and the US Treasury Department's twice-yearly currency reports had stopped short of naming China as a currency manipulator. Shen Jianguang, chief China economist with Mizuho Securities, said the bill, like previous ones introduced in 2007 and last year, was unlikely to be passed by the House and would have no impact on China's currency policy. However, Beijing yesterday reacted furiously to the Senate vote, saying it violated WTO rules and could trigger a trade or currency war. "Under the pretence of addressing the so-called `exchange rate imbalance', this resolution is in fact an act of protectionism, and seriously violates WTO rules," Foreign Ministry spokesman Ma Zhaoxu said. Commerce Ministry spokesman Shen Dayang said economic relations between China and the US "will inevitably be severely damaged if the bill becomes law". The People's Bank of China said US claims the yuan was significantly undervalued were erroneous and China would continue "reform of the exchange rate formation mechanism and increase the flexibility of the yuan exchange rate." The yuan has risen 7 per cent against the US dollar since June last year after the removal of a de facto peg to the US currency introduced following the 2008 global financial crisis. Bipartisan supporters of the Senate bill say China has not done enough.

Beijing and Moscow vowed yesterday to deepen mutual political trust and enhance strategic partnerships, signalling that the two powers may get closer at the United Nations, as Russian Prime Minister Vladimir Putin ended his two-day China visit. Putin, on his first overseas trip since announcing last month that he plans to serve again as Russian president, played up co-operation with China, saying the Sino-Russian relationship was at an all-time high, while describing the global dominance of the US dollar as "parasitic". He said in his meetings with President Hu Jintao and National People's Congress chairman Wu Bangguo yesterday that developing ties with China was the priority for Russia's foreign affairs. "Russia is willing to work hard with China to further enhance mutual strategic trust, maintain frequent high-level exchanges and deepen co-operation in various fields to push the development of the Sino-Russian strategic partnership," he said. Hu made a similar pledge at the meeting, and said he believed a series of documents signed by the two countries on Tuesday would strengthen bilateral ties. In an interview with Xinhua and China Central Television, Putin said bilateral ties had reached a historic peak and that the two countries could help safeguard each other's legitimate rights. He criticised the US economy, saying: "The US is not a parasite for the world economy, but the US dollar's monopoly is a parasite." He said the comment was offered constructively, and there was a need to find a common solution to the problem. China and Russia infuriated the West last week by blocking a United Nations Security Council resolution against Syria's crackdown on protesters. In a joint communique released after the visit, the two countries pledged to improve co-operation when handling international affairs in addition to strengthening cultural exchanges. "Both sides stress that the UN, with its Security Council, should play a core role in international affairs," the statement said. They said they would continue efforts to bring about a multi-polar world. They will also strengthen co-ordination on energy and food security and other global issues within the framework of the UN, the Shanghai Co-operation Organisation and the five-country BRICS bloc, which also includes Brazil, India and South Africa. The statement said a timetable for reforming the UN Security Council should not be set without the support of the majority of UN members. The two sides signed a series of documents boosting economic and trade ties, and agreed on Tuesday to co-operate on energy development, but a deal that will see Russia supply 68 billion cubic metres of natural gas to China.

China is expected to account for about one-third of global tool demand by 2020, despite worries about a slowdown in its economic growth, German metal-cutting tool supplier Walter AG said. "China is currently Walter's third-largest market ... (following Germany and the US). But its growth rate is the fastest, and it is only a question of time before China will be our second-biggest market," said Andreas Evertz, president of Walter. The Tuebingen, Germany-based company, currently employs about 200 people in China and plans by the end of the year to increase the number by 50 percent and more than triple it in the near future, Evertz said. In addition to organic growth, Walter is also interested in acquiring local companies in China, Evertz said. He added that Walter had contacted some local firms, but he declined to name them. Walter is looking at companies with high-quality products and strong sales networks around the country, he said. Founded in 1919, Walter provides high-end tooling systems for turning, milling and drilling. It entered China in 1996 and now designs and produces special tools for customers in a factory in Wuxi, in East China's Jiangsu province. The Chinese government's stated ambition of turning the country into a global R&D center has aroused a fair bit of skepticism. Innovation, after all, is not something that can be conjured out of thin air at the whim of a bureaucrat. Scratch the surface of China's impressive metrics, such as patent filing data, and there is often less genuine innovation there than meets the eye. That said, there's a difference between skepticism and scoffing. A visit to a large chemical plant about an hour's drive north of downtown showed me why it would be a mistake to dismiss China's innovation ambitions out of hand. My hosts, German chemical company BASF, are investing heavily in R&D in China. This multi-acre campus, already crowded with showrooms, manufacturing facilities and labs, is about to become more crowded with a new €55 million ($75 million) research facility and a new headquarters. The company expects to employ 450 professionals at the site when it opens next year. Even before the new facility comes online, research is already underway. The company manufacturers both high-tech plastics and polymers—chemical additives that make cement more water-resistant, say, or paint dirt-resistant—here. White-coat-clad Chinese technicians fine-tune chemical mixtures based on customer requests, making incremental tweaks to existing products. This is the "development" in R&D. But what of the "research"? That's where Stefan Dreher comes in, as BASF's scientist-cum-manager tasked with establishing the new innovation center. We speak on the phone after my factory visit because he happens to be in India at the time I'm in Shanghai. The first question is, Why, given the challenges, China? Mr. Dreher says it's because "you need to do R&D where the customers are." Old-fashioned proximity is a crucial way of collecting market intelligence and responding quickly to customer demands. Similar considerations are driving an uptick in BASF's R&D investment in India, Malaysia and even Indonesia. Projecting strong economic growth here, BASF and other companies conclude they can't not do research in China. Meanwhile, what of the costs (Mr. Dreher might prefer the word "challenges") of doing so? Some of Mr. Dreher's worries sound familiar. China produces a much-vaunted army of science grads, but the education system often leaves them unprepared to work in a modern research center. Mr. Dreher notes that despite recent improvement, too many grads still focus too narrowly on one branch of chemistry, for instance, depriving themselves of the broader scope successful research requires. Lack of English fluency is a big problem, especially for foreign companies whose China-based researchers must be able to collaborate with scientists around the world. Then there's personnel management. High staff turnover plagues many companies and will not be easily fixed. It's not only salary competition. Mr. Dreher cites fundamental differences in corporate culture as a big culprit. In the West, a researcher measures career progress not only in terms of job title but also with less tangible metrics such as whether he's able to take on greater levels of informal leadership responsibility over time. Chinese hires tend to be much more concerned about prospects for rapid promotion up a well-defined hierarchy. Western companies struggle to accommodate that mentality. This in turn is the main source of concern over intellectual-property protection—the fear of what inside knowledge workers take with them when they leave. Mr. Dreher notes that China is better at protecting intellectual property today than it was five years ago. And staff turnover is an IP danger anywhere in the world. But Mr. Dreher says he has to be more careful in China simply because of the high volume of turnover. The design of the new innovation center has included consideration of how to manage workers' access to various kinds of information to limit the leakage when any one worker leaves. Mr. Dreher raises one other challenge, and it's the most surprising one of all: the government. Despite Beijing's stated support, Mr. Dreher notes that at a practical level building the innovation center has been challenging simply because of the red tape involved in building anything in China. He points to the hassle of securing building permits and other licenses from various levels of local government. This implies that Beijing's message on innovation-encouragement hasn't always filtered down to the local level, or that local officials haven't always understood the relationship between "supporting innovation" and seemingly unrelated issues such as building permits. Indeed, in Mr. Dreher's telling government pro-innovation policy has been less significant that some might think. While BASF, like any rational company, won't argue with tax breaks or other benefits, Mr. Dreher insists market forces are driving the company's China research push. Despite the challenges, "there is no way around doing R&D in China," Mr. Dreher tells me as we conclude our chat. He's almost certainly right, which might explain much of the run-up in R&D work multinationals are shifting to China. China will presumably get a lot of mileage out of that fact even without any further reforms. But this case study—and BASF is by all accounts not unique—suggests that the change from necessary innovation center to desirable R&D hub will take more than a couple of five-year plans.

It also owns a technology center in Wuxi where it tests products and offers training courses for customers. It plans to open three more technology centers in the next 12 to 18 months - in Beijing, Shenyang in Northeast China's Liaoning province, and Chongqing or Chengdu in Southwest China - said Per Tornell, managing director for Walter Greater China. China is the world's largest machine tool producer, consumer and importer. The country currently accounts for 15 to 17 percent of the world's tool demand. China's metal-processing machine tool industry achieved output value of 98 billion yuan ($15.4 billion) in the first half of this year, up 32.9 percent year-on-year, according to statistics from the China Machine Tool and Tool Builders Association. The country imported machine tools valued at $9.69 billion during the same period, up 46.35 percent year-on-year. "Industries such as aviation, automotive, shipbuilding and energy will be the focus of China's machine tool market. They are creating huge demand for high-end computer numerical control machine tools and highly efficient cutting tools," Wang Liming, executive vice-president of the association, said during the EMO Hannover 2011 in late September. The two-yearly trade fair is one of the world's leading metal-working technology trade fair. The automobile industry has been the most important customer for the machine tool industry, contributing 30 to 40 percent of the global metal-cutting tool market. Thanks to the explosive growth of China's automobile market, Walter's sales in China surged 80 percent year-on-year in 2010, Evertz said. China overtook the US as the world's largest vehicle market in 2009. Its automobile market saw 32 percent year-on-year growth in 2009 and 46 percent in 2010, stimulated by government efforts such as tax breaks on purchases and subsidies on trade-ins in rural areas. But with the two-year incentive policies ending and car purchase limits enacted in some cities to protect the environment, auto sales growth in China is likely to slow to about 5 percent this year, according to the China Association of Automobile Manufacturers. "But this is only temporary. It is still growing, from a very high level," Tornell said. The automobile and energy industries together contribute about half of Walter's business in China, Tornell said. But the relative size of the railway and aviation sectors will increase, given the country's ambitious plans to expand the railway network and develop the aviation manufacturing industry, Tornell said. In April, Walter opened its Asia-Pacific headquarters in Shanghai, where its engineers can reach most of the locations in the region within five hours to provide customer support. Previously, they had to fly from Germany to solve technical problems for customers in the region. 

A report from Merrill Lynch Global Wealth Management, a division of Bank of America, has found that wealthy Chinese invested 42 percent of their wealth in stocks last year. The report on wealth management in the Asia-Pacific region published Wednesday said the number of rich Chinese, with net assets of at least $1 million (not including assets such as real estate and durable goods) reached 535,000 in 2010, ranking second in the region and fourth in the world. The total wealth of rich Chinese stood at $2.66 trillion last year, up 13.2 percent from 2009, it said. Regarding their preference for investment, the report found that stocks and real estate properties are their prime investment targets. It said by the end of 2010, their investment in the real estate sector made up 27 percent of their total investment, with 42 percent in stocks, much higher than the average investment level in such sectors in the region. The report predicts that in the coming year the investment proportion of wealthy Chinese in the real estate sector will drop to 39 percent due to concerns over the government's tightening control over housing prices; while their investment in stocks will decrease to 21 percent. It is predicted rich Chinese will reduce their cash holdings next year due to rising inflation, while their investment appetite for products with high risks and higher returns will grow, it said. A senior official at Merrill Lynch Wealth Management, who is in charge of the Chinese mainland and Taiwan market, said China's strong economic growth is the main reason for the rapid rise of the number of rich Chinese and their increasing wealth. There will be a large growth potential for wealth management institutions in the country because of the large scale of the Chinese market and its rapid growth, he said. Merrill Lynch is the wealth management division of Bank of America. By June 30, the total assets of the clients managed by Merrill Lynch exceeded $1.5 trillion.

The largest bulk carrier made by China was named and delivered to an American company in Shanghai on Oct 12, 2011. The carrier, with a tonnage of 206,000 tons, was christened Lan May. The ship is 300 meters long, 50 meters wide, and 25 meters deep, with a designed draft of 16.1 meters.

For every Apple iPad sold in the United States, the US trade deficit with China increases by about $275. Yet by far the most value embedded in the device accrues to Apple and sustains thousands of well-paid design, software, management and marketing jobs in the United States. By contrast, the value captured in China by the labourers who assemble Apple's products is a mere $10 or so, according to researchers led by Kenneth Kraemer of the University of California, Irvine, who crunched the data. Viewed through this prism, offshore manufacturing of electronic products like the iPad is a solution, not a problem, for the United States, and seeking to punish China for its purportedly undervalued exchange rate is wide of the mark. "Without China, Apple couldn't be so successful and Apple products wouldn't be so affordable," said Yao Shujie, professor of economics at the University of Nottingham in England. In the case of the iPad, China is the final assembly point for components imported from a host of countries and regions, including Republic of Korea (ROK), Japan, the European Union and the United States itself. There are no Chinese suppliers for the iPad. "China is sitting in the middle: It's processing goods for rich countries," said Yao. As such, he argued, it would be more accurate to allocate most of China's bilateral "iPad trade surplus" to those supplier countries. Kraemer agreed that trade data can mislead as much as inform. Statistical agencies are working on more accurate breakdowns of the origins of traded goods by value added, which would be attributed based on the location of processing, not on the location of ownership, he said. "This will eventually provide a clearer picture of who our trading partners really are, but, while this lengthy process unfolds, countries will still be arguing based on misleading data," Kraemer and fellow authors Greg Linden and Jason Dedrick said in a recent paper. Footloose manufacturers. Such economic niceties cut little ice with US politicians. The Senate on Tuesday passed a bill aimed at getting China to raise the value of the yuan in an effort to save American jobs. The legislation now heads for the House of Representatives, where its fate is uncertain. The bill would allow the US government to slap duties on products from countries found to be subsidising their exports by undervaluing their currencies. Fred Bergsten, director of the Washington-based Peterson Institute for International Economics, reckons a $100 billion improvement in America's current account deficit would translate into 600,000 new jobs. But Fredrik Erixon, director of the European Centre for International Political Economy, a think tank in Brussels, said America's trade deficit had deep demographic and other structural roots. As such, even a substantial rise in the yuan would lead to only a marginal increase in US jobs. "Multinational firms that think currency appreciation is going to have a big effect on their export capacity from China to the United States are going to shift to other countries, not to the United States," he said. Indeed, manufacturers are already exiting low-margin sectors in response to the steady rise in the yuan - up 30 percent in nominal terms against the dollar since 2005 - plus fast-rising costs for labour, land, energy and other inputs. Jonathan Anderson, chief emerging-markets economist for UBS in Hong Kong, said US and EU trade data showed that China's share of total low-end light manufacturing imports had peaked over the last 24 months and was now falling outright in the United States. Gaining at China's expense were its even cheaper neighbours, including Vietnam, Bangladesh and Indonesia, as well as Mexico, Anderson said. Strikingly, while overall US imports of apparel and furniture have continued to increase over the past two years, domestic American production has plummeted. Foreigners have gained, not lost, market share. Anderson said it made perfect sense that US workers were not the beneficiaries of rising Chinese wages. "If $300 per month for a 65-plus hour work week is too rich for, say, basic toy manufacturers, do they go to the US and pay $1,200/month plus benefits for a 40-hour week at the minimum wage - or do they go to Bangladesh or Cambodia, where workers put in Chinese-style hours for less than $100/month?" he wrote in a recent report. No easy fix. Only by forcing a massive rise in the yuan or imposing implausibly high tariffs could such a cost gap be closed. The threat of trade and currency wars, which is likely to be a refrain at this weekend's meeting of Group of 20 finance ministers in Paris, could then well become a reality. "The gradual concentration of electronics manufacturing in Asia over the past 30 years cannot be reversed in the short to medium term without undermining the relatively free flow of goods, capital, and people that provides the basis for the global economy," wrote Kraemer, Linden and Dedrick. They said they did not want to imply that there was no hope for US manufacturing. But it was design, computing and marketing, not snapping a moulded plastic case in place, that created high-wage jobs. In any case, next-door Mexico could already handle final assembly at a relatively low cost. "Bringing high-volume electronics assembly back to the US is not the path to 'good jobs' or economic growth," they wrote.

Hong Kong*:  Oct 14 2011 Share

The Hong Kong Institute of Surveyors said recommendations to regulate the sale of firsthand residential properties are reasonable and will help to better protect the interests of homebuyers. Lawrence Poon Wing-cheung, housing policy panel chairman, said the ban on developers citing gross floor area in price lists, sales brochures and promotional materials will prevent confusion among homebuyers. "The territory does not have a common GFA definition," Poon said. He added that some developers include clubhouses in the GFA while others have sky gardens. "That may confuse buyers. On the other hand, the salable area of a unit is constant." Poon said the proposal for developers to disclose transactional information within 24 hours of signing a preliminary sales agreement means homebuyers may quickly get information about the response of the market to properties. When asked whether the proposed payment of 5 percent of the purchase price is too high, Poon said this will stop homebuyers from arbitrarily canceling transactions. Concerning the policy address, institute president Wong Bay said he hopes the government will base the allocation of flats under the Home Ownership Scheme on the financial ability of applicants rather than a lucky draw.

Dads are set to get paternity leave at last - and the elderly can expect a boost from HK$2-a-ride transport and HK$2,000 a month as a care subsidy. On top of that, the HK$1,000 monthly social security allowance for the elderly will be available to Hongkongers living in Guangdong. Chief Executive Donald Tsang Yam- kuen is expected to fire these golden parting shots in his last policy address today. Many of the measures involve the elderly, who will be able to travel by MTR, bus or ferry for only HK$2, a move intended to help senior citizens maintain a healthy, social lifestyle and get out and about. After months of lobbying, the long- awaited paternity leave for fathers is expected to be from several days to a week. Civil servants will get the break first, then the government will look at broadening it to the private sector. Measures to help the elderly include a monthly care subsidy of HK$2,000 to hire local domestic helpers. At the same time, the number of places in public elderly centers will be increased to prevent overcrowding. The extension of the HK$1,000 monthly social security allowance for the elderly to Hongkongers living in Guangdong is a breakthrough. Under the old scheme, those leaving Hong Kong for more than 240 days could not collect the allowance. People receiving Comprehensive Social Security Assistance as well as old age and disability allowances may get an extra month's payment while public housing tenants are in line for a rent-free period. Government-funded food programs run by five welfare groups may also get a boost, with each user likely to get a supermarket voucher of HK$50 a week. Hong Kong Senior Government Officers Association vice chairman Kwok Chi-tak welcomed the paternity leave, saying it will help boost morale of civil servants. But Federation of Hong Kong Industries vice chairman Stanley Lau Chin-ho fears the paid leave will mean extra costs for companies. Society for Community Organization director Ho Hei-wah welcomed the assistance but said the care subsidy will put the elderly in a dilemma: it's not enough to hire a foreign domestic helper who can take care of them 24 hours a day, and only enough to hire a local domestic helper for an hour a day. "There are not a lot of things the helper can do in an hour," Ho said. Louisa Lee Mee-ling, service director of the Hong Kong Sheng Kung Hui Welfare Council, called on authorities to give extra funding to offer the needy fresh food through supermarket vouchers. Tsang's address, which will start at 11am, is expected to last for about two hours and will be followed by a press conference at 3.15pm and a non-public forum at 7pm. The policy address booklet will be light yellow in color to express energy and hope. The color also signifies the government has inherited the teachings of the past to inspire future action, the Chief Executive Office's Facebook page says.

Hong Kong’s Landmark opened a 60,000-square foot basement floor dedicated to menswear and guy-oriented gear. In Hong Kong, men now have a mall to call their own. At a runway show last week featuring actor Louis Koo, the Landmark mall’s basement was refashioned into a guy-oriented shopping hub. Called Landmark Men, the 60,000 square-foot space is dedicated to menswear, grooming and gadgets, with Thomas Pink, Gucci, Valentino Men and other retailers represented. Landmark Men is another sign of the major influence men have on Asia’s luxury markets. In China, men make up nearly half of luxury purchases, and brands such as Coach and Louis Vuitton see men as a bigger share of Asian sales than in other parts of the world. Coach, for example, said earlier this year that 45% of its bags sold in China are to men. While Chinese women are catching up in their luxury purchases — and surpassed men for the first time last year — guys are still the bigger spenders in categories such as clothes. According to Bain, men spent 7 billion yuan ($1.1 billion) on their wardrobes, far more than the 2.8 billion spent by women. Hongkong Land, which owns the Landmark, said it was looking to capitalize on the increasingly lucrative male shopper and came up with the idea for dedicating the space to men in early 2009. “I think there’s a unique segment of the market where men are buying for themselves. That market has always been there, but we’re tapping into it,” said Raymond Chow, executive director of commercial property for Hongkong Land. “Men can now go downstairs and sort of hide.” The firm said the mall is aimed at an international clientele that includes but also goes beyond the mainland Chinese tourist shopper, which has dominated the Hong Kong retail scene lately. “This is for all the men who come here — from Hong Kong, China, the Americas, Europe — for their bespoke shopping,” said Mr. Chow. “We wanted to make an area that they feel is theirs.”

PCCW Ltd. said Wednesday its shareholders approved a plan to spin off the firm's telecommunication assets in what is set to be the first non-real-estate-trust listing in Hong Kong. But in a sign that Hong Kong's dominant telecom operator is cautious about the timing of the listing, Chairman Richard Li told shareholders that PCCW will seek a listing once market conditions begin to stabilize. "We will only list the (trust) when we are able to create new value for our shareholders," he said. A number of initial public offerings have been put on hold in recent weeks across Asia as a result of tumultuous global markets and worries over China's economic growth, prompting concerns over whether the listing can be achieved in the short term. Hong Kong shares have fallen sharply since August, hitting a 28-month low last week. The Hang Seng Index has fallen more than 20% so far this year. PCCW's shares closed down 0.3% at HK$2.89 each Wednesday, and were down 16% since the start of the year, giving it a market capitalization of HK$20.87 billion (US$2.69 billion). The company, controlled by Mr. Li, the younger son of the city's richest man, Li Ka-shing, said more than 99% of shares held by the 586 shareholders who voted in a meeting Wednesday were in favor of the spinoff plan. The company needed 50% approval. PCCW has said it planned to raise more than $1 billion via a global offering in the form of a "share stapled units structure." The proposed spinoff includes a global offering of 25%-40% of the stapled units, each of which consists of a unit in the trust, as well as an ordinary share and a preference share in the holding company of the trust. Mr. Li said apart from the spinoff, PCCW plans to grow its remaining businesses—media and business solutions—by expanding to overseas markets but he didn't elaborate. The two-hour exchange between the chairman and shareholders Wednesday was mostly cordial, a sharp contrast to the confrontational stance shareholders took against PCCW management when Mr. Li tried to take the company private in 2009. But the passage of the listing proposal wasn't a surprise as PCCW's two biggest shareholders—Mr. Li and Chinese state-owned telecoms operator China Unicom Ltd., which together own 45.9% of the company—had indicated they would back the deal before the vote. Henry Chan, a minority shareholder of PCCW, said he and some shareholders chose not to take part in the vote because they didn't think their votes would impact the outcome. "Whether PCCW's media and IT solutions businesses will be as lucrative as Li portrayed remains to be an unknown. Let's hope his promises will materialize," he said.

Hong Kong Chief Executive Donald Tsang unveiled plans Wednesday to resume the construction of subsidized homes as property prices remain at record levels, in a move aimed at appeasing widespread social discontent over a growing wealth gap amid surging consumer prices and stagnant working-class wages. The plans involve the building of more than 17,000 homes over four years, starting from 2016-2017, he said. Analysts, however, said the number will fall short of demand. Mr. Tsang's announcement—his final policy address before he steps down at the end of June after serving the maximum two terms in office—comes amid mounting criticism that his administration hasn't been bold enough to tackle the city's housing bubble, and also reflects a reversal in his earlier policies against such intervention in the housing market. The chief executive has in the past resisted calls to re-start the city's Home Ownership Scheme, putting forward only incremental administrative moves such as tightening mortgage requirements. Mr. Tsang's administration softened its stance against resuming subsidized housing sales in June, following comments by senior Chinese officials urging the local government to address the low-income housing problems. The latest announcement is a modified version of the Home Ownership Scheme, a program abandoned in 2003 when developers complained that government interference in the property market had contributed to a sharp drop in residential property prices. Today, the city's private-home prices have surpassed their 1997 peak due to abundant liquidity and persistently low interest rates. Home prices jumped 12% in the first eight months of this year after surging 56% over the two-year period ending Dec. 31, 2010. Shares of Hong Kong's major developers reacted positively late Wednesday to Mr. Tsang's housing plans, which called for increased and sustainable land supply, while subsidized housing will be introduced only gradually over several years. "As expected, the focus of the housing policy fell mainly on meeting the housing needs of the lower income groups and ensuring that the government will have sufficient land supply to meet demand," brokerage Daiwa said in a note Wednesday, noting the policy address doesn't have measures against the private property market. "The clearing of one uncertainty could be a positive catalyst for property stocks." Among developers, Kerry Properties Ltd. rose 6.7% to 28 Hong Kong dollars (US$3.60), Swire Pacific Ltd. gained 4.1% to HK$91.90, Sino Land Co. added 3.3% to HK$11.26, and Sun Hung Kai Properties Ltd. rose 2.3% to HK$98.65. Meanwhile, the benchmark Hang Seng Index ended the day up 1%. Presenting the housing plans in his address, Mr. Tsang, 67 years old, acknowledged the difficulties faced by many of the city's low-income residents in buying their own homes, and pushed for the authorities to step in. While upholding the city's laissez-faire economic principles, he said the government should intervene as necessary "when the market fails." "The wealth gap generated by globalization is all the more acute in a city economy like Hong Kong," Mr. Tsang told lawmakers Wednesday, noting that the government aims to "ease the resulting tensions through various policy measures." The chief executive's final policy address comes at a critical time for the city—tensions are brewing over surging inflation and sky-high property prices. Hong Kong's underlying inflation hit a three-year high of 6.3% in August, up from 5.8% in July. A career civil servant, Mr. Tsang took over as Hong Kong's leader in 2005 when his predecessor, Tung Chee-hwa, resigned two years short of completing his second term following a slew of public protests over unfavorable government policies. Mr. Tsang completed the remainder of Mr. Tung's term after an uncontested election and later won Beijing's blessing for a full five-year term, which will end June 30, 2012. The complicated nature of Mr. Tsang's role—managing both the priorities of Beijing and the expectations of Hong Kong residents—is particularly pronounced on issues such as the pace of Hong Kong's democratization. Analysts said Mr. Tsang's term in office has been tumultuous, with his administration frequently getting chastised by lawmakers and academics for its lack of broad plans to resolve social and political tensions. Indeed, in his Wednesday address, the chief executive didn't provide long-term solutions to social issues but offered short-term measures such a two-month waiver on public housing rents and additional social security allowances, they said. "He has so far failed to launch effective policies to combat structurally built-in poverty and the widening income gap," said Dixon Sing, associate professor of social sciences at the Hong Kong University of Science and Technology. Opposition lawmaker and attorney Ronny Tong said he doesn't see Mr. Tsang leaving any major legacies. "I can only think of two concrete achievements: the implementation of minimum wage laws and the proposed competition law," Mr. Tong said. In his speech Wednesday, Mr. Tsang told lawmakers he expects the city's economic growth to remain at 5%-6% this year, but noted he isn't optimistic about the global economic outlook for 2012. Thus, the government will consider further measures including tax concessions to help the public cope with the possible economic downturn, he said.

 China*:  Oct 14 2011 Share

Foshan in southern China's Guangdong province announced late Tuesday that it postponed the easing of its property tightening measures it had announced earlier in the day. Foshan decided to postpone these easing measures to seek further public opinion and to make a comprehensive assessment on the effects of such measures, Foshan's housing ministry said in a statement on its website, which didn't provide further details. Foshan had been the first city in the country to announce an easing of its curbs on the property market amid mounting concerns that the once red-hot real-estate sector is in trouble. The moves were going to include a relaxing of restrictions on purchases of multiple homes. Since early last year, authorities have been struggling to engineer a soft landing for the property market, which is crucial to the China growth model and directly affects the huge construction sector. Some analysts have cautioned that China's property market may be reaching a "tipping point" and said they expect authorities to start relaxing or fine-tuning controls in the coming months. Shares of China developers have slumped of late in Shanghai and Hong Kong, and investor confidence has taken a hit. Private data provider China Real Estate Index System said property sales in big cities during the "Golden Week" holiday in the first week of October fell sharply from a year ago. It also reported that average housing prices declined for the first time this year in September, normally the strongest month of the year, as prices in 100 cities in China slipped a modest 0.03% from August.

AstraZeneca PLC, one of the world's leading pharmaceutical companies, said it would invest $200 million to launch a new manufacturing facility in China to meet growing demand, including in rural areas. Construction work on the project, in the China Medical City in Taizhou of East China's Jiangsu province, is scheduled for completion by the end of 2013, creating approximately 600 jobs. This will be London-based AstraZeneca's largest single investment in a manufacturing facility globally. The new plant will produce intravenous and oral solid products, the company said. "The new facility will significantly enhance our capacity and allow us to meet the growing healthcare demand of the Chinese population, and help us expand into the 900 million (rural) people outside of the big cities and hospitals," Mark Mallon, president of AstraZeneca China, told China Daily in an exclusive interview on Monday. "It will also allow us to free up some capacity at our existing manufacturing facility in Wuxi, Jiangsu, to bring on more new innovative products that will be launched over the next few years," he added. The Chinese pharmaceutical market grew from $10 billion in 2004 to $41 billion in 2010, according to market research agency IMS Health Inc, and it is expected to reach $102 billion by 2015. Mallon said that he believes the Chinese government's focus on healthcare reform and investment in improving healthcare infrastructure and expanding insurance coverage will continue to drive the company's business growth and increase access to quality medicines over the longer term. AstraZeneca will launch two new products, Faslodex, a treatment for breast cancer, and Onglyza, a new treatment for Type-2 Diabetes, in China this year. Mallon also mentioned that the company is planning to launch Brilinta, an oral antiplatelet treatment for acute coronary syndrome, next year in China. With an enhanced manufacturing capacity and the launch of more innovative new medicines, the company is planning to produce more affordable medicines for Chinese patients. It will adopt a multi-channel approach to sell its products to markets beyond big cities and hospitals. Aside from the medical sales representatives who deal with individual physicians in big cities, the company has developed a team of about 100 customer service representatives who organize educational programs for small clinics and community health centers in China's rural areas. It will also set up an inbound and outbound call center to reach out to healthcare professionals through phone calls, helping them learn more about AstraZeneca products, he said. The company, which entered China in 1993, has invested about $500 million in the country, including an innovation center in Zhangjiang, Shanghai.

President Hu Jintao met Russian Prime Minister Vladimir Putin Wednesday in Beijing to exchange views on the development of the strategic relations of cooperation and partnership between China and Russia. Hu welcomed Putin's visit, calling the Russian prime minister "an old friend of the Chinese people." Hu categorized the 16th regular meeting between the two countries' prime ministers that Putin co-chaired with Premier Wen Jiabao on Tuesday as pragmatic and productive. "I believe your visit will further promote the development of the China-Russia comprehensive strategic partnership of cooperation," Hu said. Echoing Hu's views, Putin hailed the rapid growth of bilateral relations, noting that Hu's visit to Russia in June injected new momentum for the two nations to foster ties. Putin told Hu that he reviewed the current cooperation between the two countries in various fields with Premier Wen during the regular meeting on Tuesday, and the two sides also proposed plans for future cooperation. "Prior to the regular meeting, business representatives from our two nations had signed a series of cooperative agreements with a value of over seven billion US dollars," Putin added. He also extended greetings from Russian President Dmitry Medvedev to Hu. As Wen's guest, Putin arrived in Beijing on Tuesday for a two-day official visit.

Hong Kong*:  Oct 13 2011 Share

Shop until they drop - retail sales, boosted by mainland tourists, surged 26 per cent in the eight months to August. Pan Jingdan, like many of her compatriots, travelled to shop in Hong Kong during the mainland's `golden week' holiday. Unlike the thousands of tourists who lined up outside luxury stores, she stuffed her bags with shampoo, cosmetics and shower gel. "It's so much cheaper here, especially if you buy at the local pharmacies," said Pan, a 23-year-old property agent from Dongguan who regularly visits Hong Kong's Sheung Shui district. "The quality is also better. China is a country full of fakes." The city's retail sales, boosted by mainland tourists, surged 26 per cent to HK$264 billion in the eight months through August. Visitors from the mainland, whose spending power has been boosted by the yuan's climb, account for 67 per cent of the city's tourists and are also the biggest group of spenders, said James Tien Pei-chun, chairman of the Hong Kong Tourism Board. "Mainland Chinese also stock up on lower-value items like toothpaste and shampoo, because just like luxury products, they're significantly cheaper in Hong Kong," Matthew Marsden, director of consumer and retail research at Daiwa Capital Markets, said. "They're also more assured of quality and authenticity when they shop here." Sales for Hong Kong's merchants may have grown 15 per cent to 20 per cent during China's week-long holiday that began October 1, compared with the same period last year, said Caroline Mak, chairman of the Hong Kong Retail Management Association. Shopper Zhang Zuoru said it was well worth waiting in line to buy a bag in the Chanel store on Canton Road, Tsim Sha Tsui. She paid 33,000 yuan (HK$40,172), at least 20 per cent less than she would have paid on the mainland, she said. "I go to Beijing often, but it's very expensive," said Zhang, 23, who travelled to Hong Kong from Inner Mongolia with her parents. The yuan has gained more than 7 per cent since June last year, when Beijing ended a two-year peg to the US dollar. Hong Kong's currency is pegged to the dollar and the city doesn't impose taxes on luxury goods, while the mainland does. Mainland tourists are the biggest shoppers in Hong Kong, spending an average of HK$7,800 a trip, according to Tien of the tourism board. The currency's advance also benefits Belinda Hong, a 25 year-old housewife who lives in Shenzhen. "I feel more assured about products here," Hong said, standing with a group of friends, each with a rolling suitcase in tow. She bought cosmetics, milk powder, chocolate and biscuits. Chen Chao, 34, travelled from Guangzhou to buy medicine and hair dye in Mong Kok. Similar products over the border can cost 20 per cent more and are of inferior quality, said Chao, who added he was considering visiting a Louis Vuitton store. Mainlanders visiting Hong Kong to buy luxury goods can also purchase daily necessities "to use up spare luggage capacity in their new Samsonite suitcases", Daiwa's Marsden said.

Unless you count yourself among Hong Kong's wealthiest citizens, it's likely that you fell behind economically in the last few years - and fell hard. Between 2005 and 2010, Hong Kong's gross domestic product grew by 26 per cent, and the top earners did well. The average household income of the top 10 per cent of the population increased by 21 per cent, to HK$104,900 a month, according to Hong Kong Census and Statistics Bureau. But incomes for the lowest-earning 10 per cent of households dropped by HK$100, to an average of HK$2,500 in 2010. And the 80 per cent of the population in between saw their incomes grow only marginally, well below the 14 per cent increase in the Consumer Price Index. "There is hardly a middle class in the city at all," said statistician Dr Paul Yip Siu-fai, a senior lecturer at the University of Hong Kong. A Hong Kong household earning HK$55,000 a month or above could be classified as middle class, Yip said. Yet only about 10 per cent of the 2.4 million households in the city earn that much, according to government figures (an average household has 3.2 persons). "Our GDP increased by more than 25 per cent, but wages for most people, even the middle class, have not risen at all," Yip said. "And they are constantly living in fear that they may be out of a job any time." Most Hong Kong people were not sharing the success of the city's economic growth, he added, but were instead continuously exploited by property developers and the very rich. The slide coincides with the term of Chief Executive Donald Tsang Yam-kuen, who took office in 2005. It explains why so many people in the middle class - the core of Hong Kong's social fabric traditionally regarded as apolitical - are today resentful and restless. Many believe Tsang's policies have overly favoured big business and created uneven growth, often at their expense. "It seems that we have not gained anything from that economic growth, and there has not been a single government policy dedicated to our needs," says Johnny So Chun-man of New Century Forum, a middle-class advocacy group. The middle class believed the government had done little to address their problems, So said: "We pay taxes but we get nothing from the government. We have to take care of everything on our own - housing, education and medical care." A family earning HK$55,000 a month hardly means a comfortable life in Hong Kong, one of the world's most expensive cities. According to the Hong Kong Monetary Authority, the income-gearing ratio (defined as the ratio of mortgage payments for a typical 540 sq ft flat to the median income of households living in private housing) reached 53 per cent in June this year, compared with 51 per cent six months earlier. That ratio, which indicates how much of one's income is spent on housing, is "pushing toward [its] 1997 peak", the HKMA said.

The chairman of the government's advisory board on historic treasures called for both the mansion and gardens at Ho Tung Gardens on The Peak to be preserved. Bernard Chan said saving only one part of the landmark property, built by legendary Jardines' comprador Sir Robert Ho Tung for his second wife, would mean the property was "incomplete". The present owner, one of Ho Tung's granddaughters wants to knock down the 82-year-old mansion but has offered to keep the Chinese garden that surrounds it. "I would prefer it if both could be preserved. I think the relationship between the two is quite intimate," Chan, chairman of the Antiquities Advisory Board, said after a board meeting yesterday. "Before I went to Ho Tung Gardens, I also thought it was just a garden, but it's not - it's a whole estate. So if you say one of the two no longer exists, it will be a lot less complete." However, he said, that left the cost of keeping both sites to be addressed. At yesterday's meeting the authors of two consultations on the historical and architectural values of Ho Tung Gardens presented their reports, commissioned by the Antiquities and Monuments Office. Assistant professor Lee Ho-yin, director of the University of Hong Kong's architectural conservation programme and an author of one of the reports, said cultural heritage comprised both the tangible and intangible. "If you don't have the estate to hold it, as an anchor point," he said, referring to the mansion, "the intangible will be lost very easily." The future of the 1927 villa has been in contention in recent months. The granddaughter, Ho Min-kwan, wants to develop the site into about 10 three- or four-storey residential blocks. She has offered to keep the Chinese landscaped garden but still plans to knock down the mansion. Negotiations are under way between Ho and Development Secretary Carrie Lam Cheng Yuet-ngor, who in January halted demolition by provisionally declaring the property at 75 Peak Road a monument. That bought a year for conservation talks. According to the reports, the villa is of high historical and architectural value. One noted that General Ho Shai-lai, one of the couple's children, moved in with his family after he returned to Hong Kong in the 1960s and that former US president George W. Bush was one of many important figures to visit. The discussion of the consultants' reports, which highlight the merit of total preservation of the site, is an attempt to pave the way for the government's declaration of the gardens as a formal monument. A declaration is the only way to save both the buildings and the garden, as the owner is not interested in a land swap. An event will be held later this month to gauge public views as to whether the government should spend taxpayers' money to compensate the owner. The site was estimated to have a redevelopment value of HK$3 billion. Following that, the board will meet again to decide whether to endorse the declaration plan.

China's sovereign-wealth fund stepped in Monday to buy shares of the country's battered banks, which have been caught in a selloff that analysts say reflects a broader loss of trust in the integrity of corporate earnings and government statistics. The skepticism of investors comes as China has become increasingly exposed to global markets, largely through stock listings of its state-owned enterprises and other companies, but more recently through its currency and bonds, which are now traded in Hong Kong. The market rout began among a group of small U.S.-listed companies accused by investors of misrepresentation and has quickly spread to other Chinese assets available to overseas investors. Stock investors are fleeing China's state banking giants partly on fears that they aren't coming clean about their bad-debt problems after several years of blow-out lending. Investors also are selling highflying Internet companies such as Baidu Inc. amid questions about obscure ownership risks. And they are fleeing property stocks on fear that Beijing's inflation-fighting efforts have left developers and buyers in hock to illegitimate financiers. Sentiment has even turned more cautious on China's currency, the yuan. Though it hit a high Monday, its unusual volatility has reinforced to some that yuan appreciation is less a sure thing than had been thought. Enthusiasm is waning for Chinese bonds issued in Hong Kong, so-called dim sum bonds, that Western bankers have been touting as the next big story. Three years ago, amid the financial crisis, key Chinese bank shares quickly halved in value. Unlike their international peers, Chinese bank stocks were climbing again by late in 2008 as Beijing used the institutions to engineer a big stimulus program. This time, fewer analysts believe China's government can repeat that kind of economic magic. And indeed, investors are wondering if market stumbles highlight fundamental trouble in the No. 2 global economy. Analysts say that after years of downplaying risk, some investors now appear fearful that other aspects of China's economy may not be as they seem. They are questioning the credibility of official numbers that show continued rapid growth in one of the last remaining major engines of the global economy. Pessimism about China's prospects has grown so deep that some investors are betting against not only its stocks but its government debt, which by all accounts is safe. The net value of credit default swaps on Chinese government debt doubled at the end of September from a year earlier, according to data from New York-based Depository Trust & Clearing Corp. "People don't trust the government statistics, they don't trust corporate earnings, they don't trust [comments] from government officials," said Daiwa Securities Ltd. economist Sun Mingchun. Skepticism about Chinese statistics isn't new, and over the years Chinese stocks listed overseas have been hit by periodic bouts of selling as waves of China euphoria turned to anxiety about the government's ability to sustain rapid growth. Many Chinese and foreign economists forecast Chinese economic growth of around 9% this year and say the selloff is overblown. They are confident banks could cope with a spike in nonperforming loans, and if necessary Beijing could bail them out. China keeps a tight control on capital flows across its borders, and foreigners have only limited access to stocks and bonds listed on mainland Chinese markets. That means an investor selloff overseas doesn't pose a direct risk to the domestic economy. Still, the sudden turn in investor sentiment could be costly for both China and the global economy. At stake is the prestige of a rising economic superpower that aspires to turn its companies into global leaders, and its currency into a rival to the U.S. dollar and the euro.

 China*:  Oct 13 2011 Share

Russian Prime Minister Vladimir Putin said negotiations with China on a huge natural gas supply deal would soon enter the final stage, after talks with Premier Wen Jiabao yesterday, when both sides gave an upbeat assessment of bilateral ties. Putin, on his first overseas trip since announcing last month that he was ready to return to the Kremlin, witnessed the signing of a series of documents with Wen on strengthening co-operation. If reached, the natural gas deal would see Russia supplying 68 billion cubic metres of gas to China each year for the next 30 years, under a framework signed in 2009. Both sides are still working out pricing terms. "We are nearing the final stage of work on gas supplies," Putin said. "As far as the economy and trade are concerned, issues of pragmatic nature are being resolved, and this is good. "Those who sell always want to sell at a higher price, while those who buy want to buy at a lower price. We need to reach a compromise that will satisfy both sides." In remarks made at a press briefing after the talks, Wen said the two sides would promote co-operation in oil and natural gas based on a mutually benefit basis. Russian Deputy Prime Minister Igor Sechin said "significant" progress was made in the gas talks with Vice-Premier Wang Qishan , but added that the gas deal must clear plenty of negotiating hurdles before it became a reality, Reuters reported. The two sides vowed to co-operate on nuclear energy, gas field drilling and exploration, and building an oil refinery in Tianjin . They also agreed to step up joint border development and facilitate bilateral investments. The talks between Putin and Wen were held after Russia and China signed 16 economic and trade deals worth more than US$7 billion at a summit on Monday. China became Russia's top trading partner for the first time last year, with trade volume reaching US$59.3 billion. The two expect to boost trade to US$200 billion by 2020. Wen pledged to advance pragmatic co-operation in various areas to spur development in both countries, and to make contributions towards global peace, stability and development, Xinhua reported. "The visit of Putin and the prime ministers' meeting carry a significant meaning," Wen said. "Our talks are held in frank, friendly and pleasurable sentiment. The conditions for developing Sino-Russian ties are exceptionally gifted, and the opportunities ahead are unprecedented. I am fully confident about the future development of Sino-Russian ties." Tian Chunsheng , an expert on Russian affairs, said Putin would seek to strengthen political ties with China, given the difficulty in reaching the natural gas deal. "The two may reach consensus more often on international political issues, and Russia may be more supportive of China when it is having problems on the global stage," she said. Putin's trip came amid concerns that Sino-Russian ties have weakened because China is less dependent on Russia for arms and energy imports, a report by the Stockholm International Peace Research Institute said. Russia also revealed last week that it had been holding a Chinese national for the past year on espionage charges related to its S-300 surface-to-air missiles. A commentary published by the overseas edition of People's Daily said Putin's visit was significant as he had announced his intentions to return to the Kremlin. Putin will meet President Hu Jintao and National People's Congress Standing Committee chairman Wu Bangguo today.

China’s yuan hit its strongest level against the dollar in more than a year on Tuesday as US lawmakers prepare to vote on a bill aimed at punishing Beijing for alleged currency manipulation. Beijing typically allows the yuan to strengthen against the greenback ahead of key events involving its major trade partners to deflect criticism from its controversial exchange rate policy. The US Senate is expected to vote on the proposal, which calls for retaliatory duties on Chinese exports if the yuan’s value is unfairly “misaligned”, later Tuesday. China’s central bank set the yuan central parity rate – the midpoint of the currency’s allowed trading band – at 6.3483 to the dollar on Tuesday, compared with 6.3586 on Monday. It was the strongest rate since Beijing pledged in June last year to allow the unit to trade more freely against the greenback, Dow Jones Newswires said. The yuan is allowed to trade 0.5 per cent on either side of the central parity rate. Beijing has let the yuan strengthen more than seven per cent against the dollar since last year’s promise as it struggles to rein in stubbornly high inflation. A stronger currency makes Chinese imports cheaper. But lawmakers of both major US parties continue to charge that China keeps the yuan unfairly cheap against the dollar, giving its goods as much as a 30 per cent edge over comparable US products. China has repeatedly expressed its “firm opposition” to the currency bill and vice foreign minister Cui Tiankai has warned of a trade war if the proposal is passed into law. “It would be detrimental to the development of economic ties and might have an adverse impact on bilateral relations,” Cui was quoted by the China Daily saying Tuesday. Even if it is passed the bill still faces an uncertain future in the House of Representatives, where Republican Speaker John Boehner, who has voiced his own concerns over it, has signalled the legislation will die. US President Barack Obama has expressed concern the bill could violate World Trade Organisation rules, but he has been highly critical of China’s currency policies.

Nike Inc. wants to jolt sales of athletic apparel in China. To do so, it has to alter ideas of fashion and help foster a culture of everyday-citizen sports that extends beyond the country's lauded Olympic teams and professional players. Nike hopes to roughly double China sales by 2015 to reach a target of $4 billion annually, said Don Blair, chief financial officer and vice president, in an interview. To get there, the Beaverton, Ore., sportswear giant plans to open more stores, put a renewed focused on recreational sports such as running and snowboarding, and emphasize its stable of local endorsers such as Chinese Olympic track-and-field star Liu Xiang and Chinese tennis player Li Na. But the Chinese consumer himself presents a major obstacle, market watchers say. Field sports such as soccer and baseball have limited appeal in crowded urban areas, while health clubs are traditionally seen as the province of the rich. "China has one of the biggest populations who are tuned in to sports, but they aren't yet participants," said Mr. Blair. Chinese people take their exercise in different forms than most Americans. While many bike to work, they do so in their street clothes. Spandex is nowhere in sight. School children have 40 minutes of government-mandated calisthenics each day, but it involves stretching rather than sweating. Gyms have grown in popularity in China in recent years and sports-gear retailers have enjoyed increasing sales, but market watchers say a significant amount of the population doesn't harbor a Western-style passion for working out. Li Guanqun, a 27-year-old editor for a government website in Beijing, is emblematic of the challenge Nike faces, especially with women. Ms. Li says she might buy one pair of athletic shorts a year, though she doesn't use them often. "Running is just so tiring," she says. "The challenge is formidable," says Torsten Stocker, a partner in the Hong Kong office of market-research company Monitor Group. Nike—often seen as a fashion brand in China—also faces increased competition from traditional apparel companies, such as Gap Inc. and Swedish brand Hennes & Mauritz AB. And like all companies in China, it also has to contend with rampant name-brand counterfeiting. Nike and rival Adidas AG were among the first foreign apparel makers to expand across China. Nike has tapped into China's basketball craze, sponsoring NBA stars like LeBron James who are popular in China. It's now the No. 1 sportswear company by sales, according to market-research firm Euromonitor International, which estimates Nike's sales grew 8% last year to 13.54 billion yuan ($2.12 billion) from a year earlier. Nike doesn't break out detailed China sales figures. Nike says it can build Chinese sales on its existing basketball fans, but its growth could be juiced if it can replicate an individual and team-sports culture like the one that exists in North America. "A decade ago, no one would have thought a Chinese athlete could have become a global star," said Charlie Denson, president of the Nike brand, also in an interview. "But China is putting more people in the global game, creating more interest in sports," he added. Last month Nike launched a running-gear collection inspired by Mr. Liu, the track star, in hopes that he will inspire consumers to buy merchandise such as 899 yuan ($141) Nike LunarGlide LiuXiang Storm Fly running jacket. Nike won't say how many stores it plans to add. There are 7,500 outlets in China that sell its products, including its franchised stores. Mr. Blair said the company plans to take its gear into China's smaller cities to sell sneakers and sweatbands to consumers who are just learning about the brand. In August, the company opened in Shanghai its first Chinese action-sports store, selling equipment for skateboarding and snowboarding, and it says it has other locations under consideration. To build an appetite for snowboard apparel, it is planning in 2012 a snowboarding competition at a snowpark outside of Beijing and will build its own course. It plans to fly in snowboarding legacies to build excitement around the emerging sport in China. Last year, Nike flew in Finland's Peetu Piironen to show off his half-pipe skills. In the coming years, the company plans to increase its partnerships with the government, developing school athletic programs and expand running clubs at universities. In 2009 it launched running clubs at 11 universities in six cities, and it says it has seen membership rise. To attract women, Nike in August held special training classes targeting female consumers in gyms across seven cities in China, such as Nanjing and Chengdu.

Most of Wal-Mart's Chongqing branches have been ordered to pay heavy fines and suspend their business for 15 days after being found to have sold ordinary pork as high-quality pork. According to administrative penalty regulations, 12 of the retail giant's 13 stores in the city must pay fines worth five times as much as the income they made from illegally selling ordinary pork under the guise of a more expensive type of meat that comes from pigs fed and raised in accordance with high standards. The outlets were found guilty of putting incorrect designations on 60 tons of the pork they had sold over the course of 20 months. "By now, nine of the outlets have been fined nearly 2.7 million yuan ($430,000)," said Huang Bo, head of the Chongqing administration for industry and commerce, at a news conference on Sunday. "This is the highest of all of the fines that have been imposed on supermarkets in recent years." Of the 12 stores that are accused, seven have gone through legal procedures and began their 15-day suspensions on Sunday. They can only reopen if they pass an inspection by Chongqing's market watchdog. Those seven stores were each suspected of using false advertising to sell more than 50,000 yuan worth of ordinary pork, an amount that made their violations serious enough to be deemed criminal. Wal-Mart China put a statement on its official website on Sunday, saying a taskforce from the company's China headquarters has been dispatched to Chongqing to ensure the company's stores there follow strict inspection and management policies. "We will take all necessary steps to ensure this does not recur," the notice stated. "Wal-Mart is committed to protecting the rights of consumers." Since coming to the city in 2006, Wal-Mart has not remained unknown to regulatory authorities. Official statistics show that Chongqing's market watchdog has punished the company's outlets 21 times for selling expired and substandard food, as well as for using false advertising. Several customers said stricter penalties should be imposed on businesses that make illegal profits. "A 15-day suspension is more effective than imposing a fine, since it affects not only daily turnover but also consumers' trust," a man with the surname Feng said in front of a closed Wal-Mart outlet in Yubei district. "The punishment this time will help deter potential law breakers." Some said they have little confidence in retail businesses. "Retail giants such as Wal-Mart have many flaws, not to speak of small, less well-known dealers," said Wang Chenshuang, a 24-year-old Chongqing resident. "The reason that others are not being investigated is only that their problems have not been found or reported." Consumer rights experts said customers in a developing economy often have various attitudes about how markets should be supervised, but the public should not lose confidence. "More up-to-date supervision techniques and stronger supervision, sophisticated laws and regulations and a non-discriminatory attitude toward foreign and domestic brands will bring us a better market environment, with more integrity," said Qiu Baochang, head of the China Consumers' Association's lawyer group.

The Italian brand Gucci became the subject of criticism after five former employees at its Shenzhen flagship store publicly released an open letter claiming that the company was a "sweat shop". In the letter, which was addressed to Gucci senior executives, the five former workers said they had been maltreated at Gucci's Shenzhen outlets in the previous months. They contended that they had to work overtime without fair compensation and had to obtain permission before they could drink water or go to the washroom. As result of the overtime and late nightshifts demanded at the outlets, more than one pregnant saleswoman had a miscarriage, said the letter, which was published online in late September. The five employees have since resigned. The letter also claims that workers at the shops had to stand for more than 12 hours a day and would still not receive overtime pay. The company's outlets usually close at 10 pm but, according to the letter, workers had to stay from 2 am to 3 am to conduct inventory checks. One of the letter writers, who would only state his surname, He, said that if wares were stolen from a certain store, employees there had to pay the company compensation. Staff members at Gucci's Shenzhen stores lost more than 70,000 yuan ($11,111) from their salaries when 16 items in their charge were found to have disappeared from 2009 to the end of August. He said that happened even though Gucci had had its products insured. "Gucci gets double compensation (from its staff and the insurance company) when its products are stolen or lost," He was quoted by Xinhua as saying. In the letter, the five employees asked for the overtime pay they said is owed them and for compensation for health damages. Gucci China declined to comment on the case, only saying by e-mail on Monday that the company is investigating the accusations. According to Xinhua, Gucci has issued a notice asking staff members to avoid speaking to reporters about the matter. Insiders said the accusations will impede Gucci's expansion in the Chinese mainland. "Chinese people should no longer purchase Gucci products," said a netizen who used the name "an angry bird". Yang Qianwu, a lawyer from the Shenzhen-based Dacheng Law Firm, encouraged the city's labor supervision departments to take steps to protect workers' legal rights and interests. "Relevant labor departments have the right and obligation to help workers and protect their legal interests," Yang said. Wang Hongli, deputy director of the Shenzhen Trade Unions's rights and interest protection department, said many international companies never allowed their employees to form unions in Shenzhen, making it difficult for union officials to collect evidence in labor disputes. He encouraged Gucci employees to report maltreatment to the Shenzhen Trade Union. An official from the Shenzhen Luohu district bureau of labor and human resources has promised to investigate the case.

Tencent, China's largest instant messaging service provider, on Tuesday officially launched an English version of its microblog service or Weibo, the Chinese equivalent of Twitter, in a move to meet the social networking needs of English-speaking users. The English version of Tencent Weibo is the first of its kind in China, and has all the basic functions of posting, topic discussions, private messaging, photo and video uploading, and online chatting. Xing Hongyu, general manager of the Tencent Weibo Business Unit, said that Tencent Weibo will deliver a high-quality user experience with the company's 12 years of experience in Internet services. Xing said the English version of Tencent Weibo will enhance the company's influence globally. Currently, the English service can be automatically accessed when the system recognizes a user's IP address as a foreign IP address. Users can also choose to change the setting and select the English service. Weibo users in China are rapidly expanding, with the number increasing to 195 million, up 208.9 percent year-on-year in the first half of 2011, according to the latest data from the China Internet Network Information Center.

Putin starts official visit to China - Russian Prime Minister Vladimir Putin arrives in Beijing for an official visit to China, Oct 11, 2011. Premier Wen Jiabao and visiting Russian Prime Minister Vladimir Putin pledged Tuesday to make more efforts to boost bilateral ties during a talk held at the Great Hall of the People in Beijing. Premier Wen Jiabao (4th L) and Russia's Prime Minister Vladimir Putin (3rd R) hold a meeting at the Great Hall of the People in Beijing Oct 11, 2011. Co-chairing the 16th regular meeting between the two countries' prime ministers along with Putin, Wen said that the Chinese government is willing to work harder with the Russian side to build a comprehensive strategic partnership featuring equality, mutual trust, mutual support and common prosperity between China and Russia. He also pledged to advance pragmatic cooperation in various areas, as well as boost strategic coordination in a comprehensive way in order to prompt the development of both countries and make contributions to global peace, stability and development. Putin hailed the unprecedented highs that have been reached in political cooperation and cultural exchanges held between the two countries. The two sides are willing to seek new solutions for "occasionally occurring" problems, Putin said. Before their talks, Wen hosted a red-carpet welcome ceremony for Putin, who is in China for a two-day official visit. The regular meetings between Chinese and Russian prime ministers, first established in 1996, have become an important platform for guiding and coordinating bilateral cooperation.

Hong Kong*:  Oct 12 2011 Share

The US consulate in Hong Kong will continue its "deep engagement in all aspects of life" in the city, and its role is "understood and appreciated" by Beijing, a top US diplomat said yesterday. The comments by Dr Kurt Campbell, US assistant secretary of state for East Asian and Pacific affairs, come two weeks after Beijing warned the consulate to stop meddling in Hong Kong's affairs. Campbell is on a whirlwind tour of Asia that will end this week in Beijing. Campbell defended the consulate in an interview with the South China Morning Post (SEHK: 0583) yesterday, saying Washington was very pleased that it had been able to maintain a close partnership with Hong Kong through a "very strong consulate" deeply engaged in all aspects of life in the city. The Foreign Ministry in Beijing, through its Hong Kong office, rebuked the US consulate late last month, citing cables released by the anti-secrecy website WikiLeaks. These showed that the consulate was interfering in the city's constitutional development by holding meetings with various people, it said. A spokesman for the Office of the Commissioner of the Ministry of Foreign Affairs accused the US of contravening the Vienna Convention on Consular Relations, which forbids diplomats from interfering in the internal affairs of host states. WikiLeaks released 960 diplomatic cables from the US consulate in Hong Kong at the end of August. Some messages mentioned discussions about the city's democratic development, its financial markets and how it handled waste and water supplies. Campbell said of Beijing's accusations: "We all believe that the [US] consulate continues to play a vital role and function [in Hong Kong]. I think that role, frankly, is also well appreciated by Chinese friends." Asked whether Beijing's criticism would prompt changes on the US side, Campbell said: "We will continue the deep engagement in all aspects of life here, and I think that role is welcomed by the Hong Kong people, the Hong Kong government and, frankly, also understood by the Chinese." The commissioner's office in Hong Kong could not be reached for comment yesterday. Campbell ended his two-day visit to Hong Kong yesterday and is scheduled to meet Vice-Minister of Foreign Affairs Cui Tiankai tomorrow for the second round of US-China consultations on the Asia-Pacific region. The consultations are an outcome of the third US-China Strategic and Economic Dialogue in May. Campbell's trip to East Asia, which began on Wednesday, also covers countries including Japan, South Korea and Thailand. Asked whether he would prefer to see a contested chief executive election in March, he said Hong Kong had thrived because Hongkongers recognised competition as an "essential part of life". "Ultimately it is a matter for Hong Kong people to decide among themselves."

Ernest Ip Koon-wing, PricewaterhouseCooper's senior partner for China and Hong Kong. Ip is seeking a more balanced business mix. International financial services consultancy PricewaterhouseCoopers (PwC) plans to hire more staff and open new offices to capture a bigger share of business opportunities in the rapidly-growing Hong Kong and mainland markets. Ernest Ip Koon-wing, a 25-year veteran with the firm, will be spearheading the expansion. In July, Ip was appointed to the post of senior partner for China and Hong Kong. He was formerly the head of the Hong Kong and China assurance practice of the firm. The 50-year-old will oversee a significant expansion of staff in his new role, as PwC raises its headcount on the mainland and Hong Kong from the present 10,000, to about 15,000 by 2016. The firm also plans to have five new offices by 2016, lifting the total number of offices from 15 to 20. The firm's hiring plans are in contrast with ongoing staff cuts across the financial sector. HSBC has announced a plan to axe 30,000 staff worldwide out of a total of 296,000 by 2013 - including 3,000 in Hong Kong. Bank of America plans to cut 30,000 staff out of 290,000 in the next few years; and Credit Suisse and Lloyds Banking Group said earlier this year they would be cutting staff. The lay-offs come as the banking sector wrestles with higher regulatory costs and a bleak market outlook because of fears about Europe's sovereign debt crisis and the economic slowdown in the United States. Such worries are not shared by Ip, who told the South China Morning Post (SEHK: 0583, announcements, news) that his firm would continue to hire more staff to cope with the growing demand for accounting services on the mainland and Hong Kong. "We aim to recruit fresh graduates as well as experienced professionals from various industries since we need to continually build a team of professional people to maintain and grow our market shares in mainland China and Hong Kong," Ip said. Ip says he also wants to achieve a more balanced business mix in his new role. Currently, PwC is heavily reliant on audit work to bring new listing candidates to the market, and annual audits of listed firms' financial statements. Auditing services drive two-thirds of PwC's revenues, with taxation and other advisory services comprising the rest. "This is different from other mature markets such as those in the United States or Britain, where there is a more balanced mix of business across the audit, taxation, and advisory services. I would like to see a similar business mix across the three lines of services on mainland China and in Hong Kong," Ip said. Chinese financial reforms and the internationalisation of the yuan would mean more mainland financial institutions and other mainland firms would invest in overseas companies, or launch merger or acquisition bids, Ip said, noting that such moves would increase demand for advisory services. In addition, international regulatory changes, such as the Basel III banking guidelines, will increase the need for advisory services, while the mainland's growing middle class will increase demand for wealth management, insurance, and taxation advisory services. Audit work would remain an important part of PwC's business, as many mainland firms plan to be listed in Hong Kong and on the mainland, Ip said. However, PwC would be selective about accepting clients, given the number of high-profile accounting scandals relating to mainland firms' listings, he said. Ip is a Hong Kong success story, having been born in the city and educated at Polytechnic University. He has four elder siblings. "When I was at university in the 1980s, China had just begun its economic reforms, and many Hong Kong entrepreneurs went to the mainland to open factories. The investment market had started to develop and opportunities for the financial industry looked very attractive. This is why I wanted to be an accountant - as a stepping stone to get into the financial market." After graduating, Ip joined Coopers and Lybrand (which would later merge with PwC), and planned to stay in accounting for a few years before deciding on his next step. But the next step never came and he has now spent 25 years in the profession. What attracted Ip to stay were the exciting changes in the financial markets as Hong Kong was transformed from a trading port into an international financial centre, Ip said. As an auditor he was closely engaged in this transformation, helping many mainland firms - including big names such as Bank of China, and Bank of Communications (SEHK: 3328) - to list in Hong Kong. Ip was also a member of the Hong Kong stock exchange's listing committee from 2003 to 2009. During this period, he helped promote corporate governance reforms in Hong Kong. The key to being a good accountant, Ip said, was simple: "One has to have focus and come through a period of hardships. Success does not come overnight, but if you work hard and have the passion to do what you are doing, you will do it."

Bank Nurtures Asian Roots - By focusing on select customers, East West Bancorp is showing it can grow at a time when many banks are struggling to find a firm footing. East West, based in Pasadena, Calif., pays close attention to Asia. It seeks Chinese-American clients and attracts U.S. companies that do business in China. It also finances Chinese companies' expansion in the U.S. through trade finance and commercial loans. East West has "been smart enough to link to demographics in their ancestral homeland," said William Michael Cunningham, the owner of Creative Investment Research Inc., an advisory firm in Washington with a focus on minority banks. "It's better to be an Asian bank in California than a Hispanic bank in Texas," he said, referring to East West's reach into China itself. The bank's niche focus has helped it expand at a time when demand for loans around the country has been soft. The strategy is paying off at some other lenders as well. At SVB Financial Group of San Francisco, which specializes on start-ups and venture capital firms, loans rose 34% from a year earlier in the second quarter. Loan growth also has been strong at Encore Bancshares Inc. and Texas Capital Bancshares Inc., two banks specializing on Texas businesses and their owners, and at East West's Asian-American competitor Cathay General Bancorp of Los Angeles. With $22 billion in assets, East West was among the top 10 business lenders by volume in the second quarter, according to Keefe, Bruyette & Woods Inc. Its second-quarter income from lending—a tough number for banks to increase in an uneasy economy—rose 30% from a year earlier, to $241 million. East West's interaction with Borrego Solar Systems Inc. is typical. Since last year, the bank has lent the San Diego solar-power-installation company more than $30 million to finance four power-purchase agreements. Borrego Chief Financial Officer Bill Bush said "it's just much easier" to work with East West because the bank has a deposit-and-lending relationship with Borrego's Taiwanese parent, Walsin Lihwa Corp., and extensive knowledge of the solar market. Five years ago, most of East West's customers were U.S. businesses importing from China. "Today we see more exporting [to China] than we have ever seen," said East West Chairman and Chief Executive Dominic Ng in an interview. "And going forward...I would expect there will be much stronger interest in Chinese companies investing in the U.S." East West expands in "concentric circles" from its original niche into new markets, said Keefe Bruyette analyst Julianna Balicka. She calls its growth this year "phenomenal." East West's commercial-loan book grew 35% in the second quarter from a year earlier, and its profit rose 67% to $61 million. East West is more profitable than the average bank. Its net interest margin, the profit margin in lending, was 4.7% in the second quarter, up 0.04 percentage point from a year earlier. The average margin at banks contracted 0.15 percentage point, to 3.61%, according to the Federal Deposit Insurance Corp. East West was founded in 1973 as a savings bank for Chinese immigrants to the U.S. After five purchases of failed banks in the past two banking crises and 10 acquisitions altogether since 1999, it has grown to almost 140 branches in six states across the U.S., and three in China. For all its successes, East West has had its share of setbacks, too. The string of acquisitions left it with real-estate loans that went sour quickly when the financial crisis hit in 2008. The bank "made mistakes" in its own underwriting, Ng said. "We thought we [had] made safe construction loans" In 2008, East West had a loss of almost $60 million. But, unlike most other banks, East West raised capital early and sold bad loans fast. And it bought United Commercial Bank—including its business in China—from the FDIC when the banking subsidiary of UCBH Holdings Inc. failed in 2009. "That was just a home run," said Fred Cummings, president of Elizabeth Park Capital Management, an East West shareholder. "They eliminated their largest competitor" in "one of the best FDIC deals" any bank has done in the current financial crisis. The bank's moves have cushioned it some from investor pessimism about financial stocks. East West shares have dropped 23% this year, compared with a 32% decline in the Keefe Bruyette & Woods index of regional bank stocks. East West's biggest challenge now? "To stay focused," Ng said, "not to deviate, thinking that we can do in Europe what we can do in China." Any time a bank is increasing loans so much faster than the industry overall, analysts start to worry about how that lending is underwritten. "You wonder how long it's going to last," said Ms. Balicka of Keefe Bruyette. "But East West, for the most part, has a good track record." At Borrego, the solar company, Mr. Bush said he wants to do more business with East West. "They really distinguished themselves."

Hong Kong Exchange Gets a Boost From China - With its high trading costs, aging technology and history of bucking a decade-long consolidation trend, Hong Kong's stock-exchange operator stands out among its global peers. Yet it is the envy of many because it has something exchanges in the world's other leading financial markets lack: a tight link to China. As stock exchanges around the world struggle to innovate or rush to merge because of increasing competition, Hong Kong Exchanges & Clearing Ltd.'s connection to China has allowed it to stay above the fray. "Hong Kong Exchanges' future is strongly linked to the continued development of capital markets in mainland China," says UBS AG analyst Stephen Andrews. The bet on China has paid off so far. Chinese companies account for two-thirds of the equity-trading volume in Hong Kong. Global companies eager to associate themselves with the China growth story, and Chinese companies looking to raise their international profile, are all listing on the city-state's monopoly exchange. The result: Hong Kong is leading the world in total value of new listings this year, as it did for both 2009 and 2010. That has helped the exchange's operator, also known as HKEx, become one of the most profitable in the world, with pretax operating margins this year expected to reach 77%, compared with the global average of 63% and NYSE Euronext's 48%, according to research from Credit Suisse Group AG. Brewing Problems - The Hong Kong exchange's achievements come despite its relative lack of technological prowess and high trading costs—two issues at the forefront of competitors' minds. Hong Kong is as much as two years behind its rival Singapore Exchange Ltd. in terms of improving and updating its trading platforms and data centers, says Credit Suisse analyst Arjan van Veen, who covers both exchanges. "HKEx is currently undertaking a decade of IT investment over the next few years" in an effort to catch up, he says. A hefty government-imposed tax, meanwhile, makes it so expensive to buy and sell shares on Hong Kong's bourse that the high-speed traders who feature prominently in other markets can't operate there. The average cost of trading large-cap stocks was more than 40% higher in Hong Kong than it was in the U.S. in the second quarter of 2011, according to Investment Technology Group, a global broker and provider of independent trade-cost analytics. Meanwhile, critics say the very thing that has buoyed the Hong Kong exchange so far—its link to China—could become a big negative in the years ahead. Last year, HKEx announced plans to allow locally listed Chinese companies to prepare their financial statements using Chinese accounting standards and to have mainland auditors vet them. Some market participants have criticized the decision. They say bringing mainland audit firms to Hong Kong could erode investors' confidence in the quality of Hong Kong's capital markets, particularly amid allegations of fraud at some Chinese companies listed overseas, and reduce the regulatory power of Hong Kong's watchdogs. Hong Kong Exchanges Chief Executive Charles Li says investors shouldn't look at such initiatives in isolation but rather as part of a broader strategy to prepare Hong Kong to reap the benefits of the eventual opening of China's capital account, which he believes will spur massive investment in Hong Kong. "Our goal is to be the international exchange of choice for Chinese investors, and the China exchange of choice for international investors," he says. Two-Way Street? ot everyone believes Hong Kong will benefit once China opens it capital markets, however. Some say Hong Kong could be eclipsed by exchanges on the mainland once China loosens its capital controls. Their argument is that Hong Kong is helping China develop its capital markets, but once China is up to speed and its currency is fully convertible, who will care about the tiny territory? It's a double-edged sword, says UBS's Mr. Andrews. "If the capital account opens, there is just as much chance of liquidity migrating to Shanghai for dual-listed stocks as remaining in Hong Kong," he says. "There is no reason to believe the relationship between Shanghai and Hong Kong will remain 'friendly' when the two exchanges start competing directly for liquidity." Mr. Li prefers to describe the capital-account opening as a two-way street. "When people talk about China eclipsing Hong Kong they just talk about people investing in China, but they forget that Chinese investors will also come to Hong Kong," Mr. Li says. Ultimately the exchange will come out ahead, he says. "We will lose some of our market, but we will gain a lot more."

Precious old photos of Steve Jobs - Jobs' life undoubtedly had a profound impact on the tech industry and the way individuals interact with technology.

 China*:  Oct 12 2011 Share

Kevin Spacey’s first Chinese film held its world premiere at the Busan International Film Festival in South Korea over the weekend before a largely receptive audience. Daniel Wu (吳彥祖) stars opposite Mr. Spacey in “Inseparable,” a dark comedy set in the southern Chinese city of Guangzhou. Mr. Wu plays Li, a man whose life is going downhill: His relationship with his wife is strained, he’s behind on his mortgage payments, and his boss wants him to lie to securities officials about the company’s flawed product. Mr. Wu plays Li, a man whose life is going downhill: His relationship with his wife is strained, he’s behind on his mortgage payments, and his boss wants him to lie to securities officials about the company’s flawed product. Just as Li is wrapping a noose around his neck, his new American neighbor, Chuck, barges in, surveys the scene and decides to rescue Li. Chuck is the sort of guy who noses in on other people’s business and butts in where he isn’t wanted. He’s either a prankster or a life-saver, or both, and he decides to help Li turn his life around. Chuck and Li are soon donning handmade superhero outfits and fighting injustices around Guangzhou.

China's initial public offerings (IPOs) totaled 230.54 billion yuan ($36.59 billion) in the first three quarters of the year, down 40 percent from last year amid a market downturn, data from the Shanghai and Shenzhen bourses showed. During the January-September period, 227 companies launched IPOs, down from 196 last year. Of the total, only 84 companies went public on the country's SME (small- and medium-sized enterprises) Board, compared with 154 during the same period last year. Analysts attributed the decreases to a shrinking number of sizable deals this year. The Sinohydro Group, the builder of the Three Gorges Dam, was the only company who launched an IPO worth more than 10 billion yuan. Last year, five companies issued IPOs of similar size. The Agricultural Bank of China (ABC), one of the country's largest state-owned lenders, raised a record 68.5 billion yuan through their IPO. A lower price earning (PE) ratio on the SME Board also eroded the total value of the IPOs. The average PE ratio for the SME Board stood at 45.02 this year, down from 52.76 last year. "Fewer large IPOs will come to the market in the immediate future, as most large enterprises are already listed," said Zhang Xiang, an analyst with Guodu Securities. Meanwhile, small companies may choose to go public at a slower pace, given the gloomy market prospect, he said. The country's stock markets have performed poorly this year, with the government launching tightening measures to curb inflation and a faltering global economic recovery weighing on market sentiment. The benchmark Shanghai Composite Index has slumped 15.98 percent this year, ending at 2,359.22 points on Sept. 30, the last trading day before the weeklong National Day holiday starting Oct. 1. The market capitalization of the Shanghai and Shenzhen stock exchanges has dwindled by 3.38 trillion yuan to reach 23.16 trillion yuan as of Sept. 30. Sentiment towards stocks has been negative, according to a survey conducted last month by the People's Bank of China, the country's central bank. Only 9.2 percent of the survey's respondents indicated that they are willing to invest in stocks, the lowest level recorded since 2009. More than half of retail investors suffered losses of over 30 percent, the survey showed. Retail investors account for more than 90 percent of China's stock investors.

Free group wedding offered in E China - Couples attend a free group wedding ceremony in Jinan, capital of East China's Shandong province, Oct 10, 2011. 

President Hu Jintao yesterday made the celebration marking the centenary of the 1911 revolution a case for reunification with Taiwan, a cause he said served the best interests on both sides of the Taiwan Strait and should therefore be pursued as a common goal. Hu was speaking at a ceremony held at the Great Hall of People in Beijing for the 100th anniversary of the revolution, which ended the nation's long imperial history. The event was attended by all nine members of the Politburo Standing Committee of the Communist Party's Central Committee, as well as by former party secretary Jiang Zemin and several other former party elders. In his 20-minute speech, Hu said Beijing and Taipei should end antagonism, "heal past wounds and work together to achieve the great rejuvenation of the Chinese nation". "Achieving reunification by peaceful means best serves the fundamental interests of all Chinese, including our Taiwan compatriots," Hu said, adding that both sides should increase economic competitiveness, promote Chinese culture and build on a sense of a common national identity. "Working together to promote the peaceful development of cross-strait relations ... should be the goal of both sides," he added. The ceremony, which lasted about 40 minutes, featured 10 red flags that flanked a giant portrait of Sun Yat-sen, who led the 1911 revolution and became the president of the first republic in China. However, the ceremony began with the singing of the national anthem of the People's Republic of China, which was founded by the Communist Party 38 years after the 1911 revolution. Despite singing the praises of Sun in his speech, including calling him "a great national hero, a great patriot and a great leader of the Chinese democratic revolution", Hu barely elaborated on the key elements of Sun's political guidelines on nationalism, democracy and people's livelihoods, and instead went to great lengths to push the idea of national reunification by peaceful means. He emphasised that "Taiwan independence" must continue to be opposed, and once again called for the upholding of the "1992 consensus" - an informal, oral understanding that there exists only "one China", inclusive of the mainland and Taiwan, with both sides agreeing to differ on its precise political definition. The Communist Party hails the 1911 revolution as a milestone for the nation's development, but the party also says the event failed to change the nature of the country from a half-colonial and half-feudalistic society, characteristics the party says it was able to do away with on its ascension. Hu called Chinese communists "the most resolute supporters" and "the most faithful successors" of the revolutionary causes that Sun undertook and said the party remained vital for hopes of political unity. "To achieve the great revival of the Chinese nation, we must certainly firmly uphold the leadership of the Chinese Communist Party," Hu told hundreds of officials at the event. The mainland is now Taiwan's largest trading partner, its largest investment destination and home to a growing number of Taiwanese.

The process of opening-up linking the Xinjiang Uygur autonomous region with China's central and south Asian neighbors is set to accelerate, as the State Council on Saturday unveiled guidelines giving more support to the construction of two economic development zones in western and southern Xinjiang. Under the guidelines posted on the central government's website, the State Council will adopt measures such as fiscal subsidies and tax breaks to facilitate the construction of the Kashgar and Korgas economic development zones. "It's the first time that the central government has set out such a detailed policy outline for the development of the Korgas economic development zone since its approval in May 2010," Yang Jihong, a senior official of the zone, told China Daily on Sunday. "This is a long-awaited policy for us. Although more time is needed to work out and finalize detailed measures, the guidelines have a milestone significance for the zone's development." Covering 73 square kilometers, the Korgas economic development zone has focused on attracting investment and infrastructure construction. Taking advantage of its location connecting China and Kazakhstan, the port of Korgas handled 3 million tons of cargo in 2010 and received 550,000 inbound and outbound tourists. "Twelve projects representing total investment of 20.8 billion yuan ($3.3 billion) have settled in the zone, and a dozen companies from inland provinces are coming at the end of this year," Yang said. With respect to the construction of a rail facility at the port, Yang said that the construction plan was approved in March and work would begin soon. Upon its completion, the station will become "the biggest transshipment station in Asia" and "greatly increase the cargo transport capacity of Korgas", Yang added. The economic zone in Kashgar prefecture attracted 10.7 billion yuan of investment in 2010, up 52 percent year-on-year. From January to September, paid-in investment reached 10.8 billion yuan, with 8.4 billion yuan from outside Xinjiang. "Obviously, the Kashgar economic development zone is an engine for drawing investment and accelerating economic development," said Gulishan Aisha, director of the investment promotion bureau of the Kashgar prefecture. "We hope the State can set out more detailed guidelines for the zone's development." Under the guidelines, the central government will work to develop the two zones into new sources of economic growth in Xinjiang and develop the cities of Kashgar and Yining as regional hubs for China's opening-up to central, southern and western Asian countries as well as eastern Europe. The central government will offer subsidies every year through 2015 for the development of the two zones, exempt qualified enterprises from business income taxes for five years, subsidize fixed-asset investment and offer government loans to qualified companies at discounted rates. Qualified farm products processing enterprises and other labor-intensive companies will get discounts on electricity and transportation fees. "The guidelines show the State gives full play to Xinjiang's role as a bridgehead in China's opening-up to central and south Asian countries," said Wang Ning, director of the Economic Research Institute at the Xinjiang Academy of Social Sciences.

President Hu Jintao (L) and former President Jiang Zemin attend the commemoration of the 100th anniversary of the Xinhai Revolution at the Great Hall of the People in Beijing October 9, 2011. Former president Jiang Zemin made his first public appearance yesterday since intense speculation three months ago that he had died or was terminally ill. Frail, but apparently in high spirits, the 85-year-old Jiang almost stole all the limelight at the nationally televised gathering of incumbent and retired leaders in the Great Hall of the People, marking the centenary of the 1911 revolution. Analysts said Jiang's surprise appearance was clearly a well-planned move aimed at halting rampant rumours about his failing health, as well as to send out a message that he is still capable of wielding considerable influence ahead of next year's leadership reshuffle. The former leader was greeted with a standing ovation when he walked onto the rostrum, all smiles and waving, behind President Hu Jintao but ahead of more than a dozen current and former members of the Politburo Standing Committee. Apparently still recovering from an unspecified illness, he mainly walked on his own, but a little unsteadily, and sometimes with the help of an aide at his side. After his aides helped him sit down, Jiang engaged in a short, animated conversation with Hu, who sat beside him, and later offered a handshake after Hu finished his speech. Although he appeared to be tired at times during the 40-minute event, he sat mostly still listening to speeches, stood to the singing of the national anthem and applauded with others. Beijing-based political analyst Chen Ziming said Jiang's appearance underlined his lingering clout on major political decisions, especially in the lead-up to the leadership reshuffle at next year's 18th national party congress. "It's all about political influence," Chen said. "The message is crystal clear: as long as he remains well and kicking, he still has the ability to influence decisions regarding key personnel changes." Analysts noted that although Jiang has held no official post since he retired as party chief in 2002, as president in 2003 and as military chief in 2004, he had seldom been absent from major political manoeuvrings. But his conspicuous absence from a high-profile event in July marking the 90th anniversary of the ruling party triggered speculation about his health problems. Rumours culminated a week later with Hong Kong's ATV reporting on its prime-time news programme in early July that Jiang had died. Both Xinhua and the central government's liaison office lambasted the report as "pure rumour". Yesterday, ATV devoted more than 2-1/2 minutes of its evening news programme to cover Jiang's public appearance. Also in attendance at yesterday's ceremony were retired leaders including Li Peng , Song Ping , Li Ruihuan and Zeng Qinghong , who have rarely been seen in public since leaving office. Former premier Zhu Rongji and former top legislator Qiao Shi were absent.

Hong Kong*:  Oct 11 2011 Share

Hongkongers planning a trip to the snow can now get their moves honed before they hit the slopes. While the idea of skiing in a city which regularly tops 25 degrees Celsius in mid-autumn might seem hard to fathom, with the help of some smart machines and some imagination, winter sport has arrived in the concrete jungle. Play, a new sports centre occupying two floors in a Kwun Tong industrial building, opened yesterday, offering skiing, snowboarding and baseball practice facilities. The air-conditioned indoor venue can get a bit chilly, but real ice is nowhere to be seen. Inside there are two big machines with large slopes that appear pretty accessible when stationary, but, when they are switched on, the belts revolve and transform the slope into a downhill ride. Play founder Dr Robert Ho Ting-kwok said the HK$3 million machines, which were imported from the Netherlands, worked like running machines. Slope angle can be adjusted and the belts can run at speeds of up to 20km/h, depending on a skier's skill level. Beginners start by practising going up and down the stationary slope wearing the full ski gear, then progress to the moving slope. Learning how to snowboard or ski can be a problem for Hongkongers as the only way they can experience the sport is to go overseas. "People only have short holidays and if they are learning it means they have to spend the first day or two on the basics," Ho said. "They don't get to enjoy the sport to the full." "It is much better if they get things started on man-made slopes before heading overseas," he continued. As the sport grows in Hong Kong and on the mainland, Ho also wants to make skiing more accessible to local students. There are two other indoor skiing facilities in Hong Kong. Slope Infinity in North Point brought revolving training decks into the city when it opened in 2002 and Legende Royale, a luxury property in Tai Po, set one up for its residents last year. But to find more challenging slopes involves travelling to the Shenzhen theme park Window of the World, which offers 4,000 square metres of piste indoors. People are increasingly choosing winter sport holidays. Steve Huen Kwok-chuen from EGL Tours said the number of customers who joined skiing tours or bought travel packages had risen by 10 per cent a year over the past few years. Tour costs vary. A five-day tour to Korea would cost HK$3,000 to HK$4,000, while a trip to Hokkaido would cost at least HK$8,000, five per cent cheaper than a year ago. "Tourism has yet to recover in Japan, so hotels and resorts are offering a discounted price," Huen said. Skiing is also booming on the mainland, which now has more than 200 ski resorts, spread across the country to as far as Tibet, Inner Mongolia and Xinjiang province. Beijing has more than 10 ski areas.

Chief Executive Donald Tsang Yam-kuen says his popularity rating is "not too bad" considering he has been in the top job for nearly seven years. Speaking yesterday on a radio programme, Tsang also said Hong Kong had seen "significant improvements in people's livelihoods, economic and political situations" since he took the powerful post in 2005. But he admitted that the government had "made mistakes" in housing and land policy and acknowledged that that had fuelled grievances in society. He vowed to lay out a policy direction to alleviate the city's housing problems in his final policy address on Wednesday. With nine months until his term ends, a recent opinion poll by the University of Hong Kong found Tsang's support rating was 48.4 points out of 100. His popularity rating was 72.3 points when he first became chief executive in June 2005. "I am very lucky," Tsang said. "It's not too bad to have a support rating of more than 40 points after seven years. I thank the Hong Kong people for their support." He promised he would serve Hongkongers until the last moment of his term and shrugged off the personal criticism he has faced. "I don't feel that is a problem," Tsang told Commercial Radio. "Hong Kong is a pluralistic society. Even though I work 14 hours a day for Hongkongers, I would not expect their sympathy. "Certainly I am not happy with the criticisms, but I have to accept them because this is the political reality," he continued. But Tsang was quick to outline his policy achievements, including the introduction of a minimum wage, transport subsidies for poor families, and health-care reform. "There have been significant improvements in people's livelihoods, economic and political situations," he said, citing progress since his re-election. "The city's competitiveness and prospects are quite good compared with the situation in 2007." Still, he admitted the government had overreacted to the bursting of the property bubble after the Asian financial crisis in 1997. "There were mistakes in government policies in the past, such as suspending the supply of new land and the shortcomings in the land reserve policy," he said. "We could not anticipate that the economy would recover that soon and that property prices would rocket in one or two years." Tsang agreed high property prices had fuelled social grievances and said he would use his last policy address to try to ease housing problems. But the chief executive stopped short of saying whether he would bow to pressure for a revival of the Home Ownership Scheme. The programme, which provided flats for sale at below-market prices, has been suspended since 2003. New People's Party lawmaker Regina Ip Lau Suk-yee, formerly security secretary, said Tsang's admission of his government's mistakes had come a bit too late.

A worldwide advertising campaign featuring Cathay Pacific (SEHK: 0293) employees has finally been launched, two months after a sex scandal forced the airline to postpone it. The multimillion-dollar campaign was shelved in August, days before its planned launch, when photos of a uniformed female flight attendant performing a sex act on a pilot in the cockpit of a plane appeared on the internet. The adverts originally carried the slogan: "Meet the team who go the extra mile to make you feel special." But a new phase of the campaign began last week with a new slogan: "People. They make an airline." The campaign is part of the airline's highly successful "People and Service" marketing initiative which shows Cathay Pacific staff, including flight attendants, in their uniforms. They are also shown in informal poses, including one on a modelling catwalk, some playing sports and others casually dressed at home. The pilot and flight attendant involved in the sex scandal in August left the company after Cathay Pacific chief executive John Slosar described their actions as "totally unacceptable". He accused them of "behaviour that recklessly soils the reputation of our company". The Cathay Pacific plane on which the photos were taken was on the ground and was not in service at the time. The pilot later complained the images were personal pictures that were downloaded from his laptop and distributed without authority. Management sources said the marketing campaign was delayed because of fears that it would open the airline to ridicule in the light of the sex scandal, which made headlines around the globe. One source told the Sunday Morning Post (SEHK: 0583) that pre-booked commercials and billboard space were hurriedly cancelled for fear that they would be "misinterpreted, or ridiculed and lampooned" in the light of the incident. The delayed marketing campaign features seven print advertisements and six new television commercials. It will run until mid-December across Asia, Europe and North America, as well as in Hong Kong. Three flight attendants, one purser, an inflight service manager and a senior training captain feature in the television commercials while four flight attendants, one purser and a senior training captain feature in the print adverts. Slosar said of the new campaign: "I am sure it will have a big impact. We have released some previews of the new television commercials through Facebook and YouTube and the reaction so far has been very encouraging. "Personally I think the new ads are fantastic - they really stand out and tell a very positive story about our airline and its people. "The fact that we are using real Cathay people really comes across and the production values are superb." An airline spokeswoman said: "Behind every Cathay Pacific staff member there's a story, and it's our people that help to make the airline. "We are introducing a new campaign line - `People. They make an airline' - to tell our passengers that it's our people who set us apart from other airlines. "Cathay Pacific staff treat passengers as individuals because they are individuals themselves." The initial phase of the "People and Service" campaign, which ran from March to May last year, made mini-celebrities of flight attendants including Nancy Hui and Doris Wong, both of whom feature in the new campaign. Employees did not receive payment, but were given a set of framed photographs.

 China*:  Oct 11 2011 Share

Beijing has revealed details of its plan to fast-track special economic zones in two border cities in Xinjiang under its campaign of economic development to ease ethnic tensions in the far-western region. The move to set up the zones in Khorgos, in Yining , and in Kashgar was announced last year as Beijing revised its policies on Xinjiang in the wake of increasingly violent unrest, especially deadly clashes in the regional capital, Urumqi , in 2009, between minority Uygurs and Han that left almost 200 people dead. In a State Council document released yesterday by Xinhua, the government pledged to introduce preferential policies for businesses in the zones, including technological and personnel support, tax cuts and other incentives. It also vowed to open up the zones to the country's central and south Asian neighbours. Logistics, electronics, textiles, construction materials, metallurgy and renewable energy would be key industries in a 50 square kilometre development zone in Kashgar. Khorgos, where a natural gas pipeline from Turkmenistan, a major infrastructure project, enters China, would focus on chemicals, farm products and pharmaceuticals. The 73 square kilometre zone will also become an import point for cars. "Infrastructure construction will be basically completed for the zones by 2015," the plan said. "By 2020, they would see a great leap in competitiveness in these industries and overall economic strength." Beijing will also push for construction of cross-border railway routes to Pakistan, Kyrgyzstan and Uzbekistan and encourage Chinese and international airlines to open routes to neighbouring countries. Analysts said Beijing's latest push for economic growth in Xinjiang, especially the region's impoverished south, would achieve results in the long run. Most of those who took part in the 2009 unrest are believed to be from that area, where Muslim Uygurs make up most of the population. But they warned that economic development was unlikely to dramatically ease long-running ethnic tensions between Han and Uygurs, or the deep-rooted mistrust between the government and non-Han ethnic groups, citing deadly attacks that hit Kashgar and neighbouring Hotan in July. Top leaders made "leaps-and-bounds development" of Xinjiang a priority at a high-profile conference on the region last year. During a visit last month, Vice-Premier Li Keqiang said setting up special zones was a key to development. As well as replacing the region's hardline Communist Party boss, Wang Lequan , with the moderate and reform-minded Zhang Chunxian , Beijing also pledged to raise its per capita gross domestic product - US$3,690 last year - to the national average - US$4,628 - by 2015 and eliminate poverty by 2020.

Inside the 1911 Revolution Museum, newly built to commemorate the Wuchang uprising that sparked nationwide revolt. Wuhan has been one big construction site for the past three years. With city planners seeing the centenary of the 1911 revolution as a rare opportunity to promote the city to a wider world, the Hubei capital undertook an unprecedented facelift of historical sites. The city has been so aggressive in promoting itself as the "Capital of the First Uprising" because the revolt on October 10, 1911 in Wuchang - one of the three cities that merged to become Wuhan - was the first of a number of bloody revolts against the Qing dynasty to succeed, and soon led to the collapse of imperial rule. A two-storey building, commonly known as the "red chamber" that was a memorial hall for the 1911 Wuchang uprising, reopened in early September after six months of renovation. It is one of 28 sites renovated. "What has made the restorations unprecedented this time is that we've been trying to incorporate restoration work into an overall upgrade of the city's landscape," said Zhu Jin , a deputy director of the cultural bureau. Zhu said his bureau spent 43 million yuan (HK$52 million) on the restoration of three 1911 revolution heritage sites, including Li Yuanhong's tomb near the east gate of Central China Normal University. Li's tomb, once located in a crammed space of 1,300 square metres in a nondescript neighbourhood, has been expanded to nearly a hectare after residents were evicted from four buildings. And another site, known as the Uprising Gate - part of a dilapidated old city wall - also underwent major renovation. But the centrepiece of Wuhan's preparations for the centenary celebration is a 22,000 square metre revolutionary museum located opposite the memorial hall and built with a budget of 334 million yuan. The museum and memorial hall are now two landmarks in the newly revamped Square of the First Uprising, where much of the road traffic has been redirected to an underground tunnel. But some projects never saw the light of day. Work on a proposed four-sided prism monument, which the municipal government wanted to build next to the museum, did not start because of central government restrictions on monuments. The design had been chosen through an international competition in 2009. Authorities also shot down historians' proposal to instead build a high-rise tower - a defining landmark similar to the Eiffel Tower in Paris and the Statue of Liberty in New York. Some Wuhan officials said they were careful not to allow the 1911 celebrations to outshine the 90th anniversary of the founding of the Communist Party in July. Zhu said President Hu Jintao set the tone for the centenary celebration during a speech on July 1 to mark the party's establishment. Hu said the 1911 revolution, led by Sun Yat-sen, had been of great significance in moving the country forward, as it ended thousands of years of authoritarian imperial rule in China. "However, it failed to change the nature of the country as a half-colonial and a half-feudalistic society, and to shake off the misery of the Chinese people," Hu told Xinhua. Comparing their preparations to dancing in shackles, Zhu said they needed to be careful about what his department said and did, as it supervised dozens of cultural activities and community performances. For instance, he said Sun, a 1911 revolution pioneer and founder of the Kuomintang, cannot be referred to as "the father of the state" in plays or public performances, as he is widely regarded as such in Taiwan. And they also had to strictly follow guidelines vetted by higher authorities about what 1911 revolution artefacts are put on display in museums and how they should be presented. Earlier this year, Wuhan's upbeat mayor, Ruan Chengfa , promised to earmark 20 billion yuan for the centenary celebration, which helped the city gain the upper hand in a competition for the public limelight with other places associated with the revolution, such as Guangzhou and Zhongshan in Guangdong, and Nanjing in Jiangsu. Wuhan's gamble on the anniversary was recognised in a propaganda department decision last year, when it broadened the definitions of "red tourism sites" and "red culture" to include all progressive events since 1840, when the first opium war, against British forces, began, rather than those since 1921, when the party was established. Xu Xuqun , deputy director of the Wuhan Tourism Bureau , said the decision would mean more funding from higher authorities, resulting in more tourists. Xu said Wuhan had already enjoyed a tourism boom in the last two years, following the December 2009 opening of the Wuhan-Guangzhou high-speed railway and the upgrading of tourism infrastructure in recent years. More than 3.7 million tourists visited Wuhan during the National Day "golden week" holiday in 2009, and the number increased by 41 per cent last year. Xu said he expected visitor numbers to increase by 5 per cent to 10 per cent as a result of celebrations of the 1911 revolution. To prepare for more tourists, Xu, who is a member of one of the anniversary task forces, said the municipal government last year issued 2,000 new taxi licences - the first increase in 10 years - bringing the total to 15,000. He also said his department trained 1,123 travel agency staff, including more than 900 frontline tour guides specifically for the centenary anniversary celebration.

Former China President Jiang Zemin at the Great Hall of the People on Sunday. Jiang Zemin, the former Chinese president and Communist party chief, made a surprise appearance in public Sunday for the first time since he was reported to be seriously ill–and possibly dead–three months ago. Mr. Jiang, who is 85 years old, took a seat on stage among other Chinese leaders at the Great Hall of the People in Beijing during a ceremony to mark the 100th anniversary of the revolution that overthrew the Qing dynasty imperial government in 1911. State-run China Central Television showed Mr. Jiang, who retired as party chief in 2002 and as president in 2003, waving and listening to speeches during the ceremony, although his hair seemed to have thinned and at one moment he appeared to be falling asleep. Mr. Jiang, who came to power after the military crackdown on pro-democracy protests around Tiananmen Square in 1989, failed to appear at a similar ceremony in July to mark the 90th anniversary of the ruling Communist Party’s founding, sparking widespread rumors that he was either dead or at the point of death. The Chinese government is extremely secretive about the health of its leaders, not least because the deaths or funerals of previous party chiefs have often been triggers for political unrest, including the Tiananmen demonstrations in 1989. Chinese censors suppressed the rumors about Mr. Jiang’s health online and forbade state media from reporting them, but at least one media outlet in Hong Kong–a former British colony which is allowed greater media freedom–reported that he had actually died in early July. The state-run Xinhua news agency eventually published a rare denial, quoting “authoritative sources” saying the reports were “pure rumor.” Although Mr. Jiang hasn’t played an active role in day-to-day decision-making since his retirement, he has still been consulted on major party decisions, copied in on many important internal documents, and permitted to write notes alongside them, according to Chinese and Western political analysts. Those observers say he and other retired leaders also have a say in the selection of the next Party Politburo Standing Committee – the top decision-making body – which is due to see seven of its nine members retire next year in the biggest shakeup in a decade. Vice President Xi Jinping, 58, has already been anointed as the next party chief and president through his promotion to a key military post last year, but other seats on the Standing Committee are up for grabs and will be decided through horse-trading and maneuvering between various interest groups. Mr. Jiang helped to promote several key allies to the 25-person Politburo and the Standing Committee to preserve his political influence after he was succeeded as party chief by Hu Jintao in 2002, according to political analysts.

China's railways carried a record total of 67.3 million passengers from Sept 28 to Oct 7, as many Chinese went on a travelling spree for the weeklong National Day holiday, the Ministry of Railways (MOR) said Saturday. The figure was up 5.8 percent over the same period last year, with a daily record of 8.9 million passengers boarding trains on Oct 1, or National Day, the ministry said. It said high-speed trains saw passenger surges during the holiday and ticket supplies fell short of demand on some popular routes. A total of 2,453 additional trains operated during the holiday to meet travel demands, the ministry said. Difficulties in purchasing tickets have been a major source of complaints against the ministry in recent years, as demand for train tickets is always high during the holiday season. The ministry has promised to expand ticket booking by phone and online and cut fees for ticket refunds in order to improve service quality.

China is studying and launching concrete measures related to tax and procedures to increase imports. The move is part of a bid to enhance the country's industrial competitiveness and balance of trade, said Zhong Shan, vice-minister of commerce on Thursday. While the global debt crisis is hurting demand for Chinese goods and exports, "expanding imports will strengthen the competitiveness of the local industries, if appropriate moves are taken", said Zhong during a keynote speech at the China Import Forum 2011 in Shanghai. The country is stepping up efforts to research and draft six relevant measures, including "launching preferential tax and finance policies, simplifying and reducing relevant procedures, maturing domestic circulating channels and promoting (trade) fairs", he said. Meanwhile, the nation is also committed to optimizing the import structure, and importing more advanced technology, equipment and parts, resource-related and consumer goods in the next five years. On Thursday, the ministry also announced the establishment of the Shanghai Waigaoqiao tariff-free zone - China's largest zone of its kind in terms of imports - as a trial area for the promotion of regional imports and trade. China's year-on-year import growth during the first eight months has been increasing, resulting in a figure of 30.2 percent in August. Between January and August, imports grew by 27.5 percent, compared with 23.6 percent for exports. Experts attributed the growth to the nation's rapid economic rise and huge demand from across the world, and the "strong growth momentum will continue for the rest of the year, with the growth of imports expected to surpass that of exports", said Wang Shouwen, director general of the foreign trade department. "Without expanding imports, China cannot maintain sustainable development in foreign trade," said Zhong. China's exporters are facing the challenge of shrinking external demand and an increasing number of trade remedy cases, especially against the backdrop of worsening economic woes in more-developed economies. "More imports could help reduce the trade surplus and alleviate the pressures of trade protectionism," said Zhong. The 12th Five-Year Plan (2011-2015) said the country will pay equal attention to imports and exports, expanding imports of high-tech and energy goods, and also imports from the least-developed nations and countries that run large trade deficits with China. During the three decades since China's reform and opening-up policy, exports have registered double-digit annual growth and played a prominent role in the nation's economic growth. China overtook Germany as the world's largest exporter in 2009. However, imports are of strategic importance to the Chinese economy, and it is estimated that they account for 46 percent of China's growth in productivity, said Zhong. In June, the ministry said that China is expected to reduce tariffs on some selected imports of luxury goods, as a way of boosting imports. Imports of commodities such as minerals, energy-related and agricultural goods have also risen rapidly. In 2010, 29 percent of China's imports were commodity-based, while the figure was 17 percent in 2002.

Hong Kong*:  Oct 10 2011 Share

Storage boom as stores rush in - The allure of Hong Kong to the world's biggest retailers is pushing the warehousing and logistics markets to its highest levels in nearly a decade - Luigi Rapetti, the head of luxury brand distributor OM LOG (Asia), at the company's facility in Hong Kong. The company may expand in Asia. The accelerating march of international retailers into Hong Kong is sparking strong demand for warehousing space, pushing occupancy rates at logistics centres to record levels, and rents almost back to the peaks of 2008. "Demand for warehouse and logistic centres in Hong Kong is driven primarily by the storage and distribution requirements of retailers, supported by the insatiable appetite of the mainland shopper," Darren Benson, senior director of industrial and logistics services at property consultancy CB Richard Ellis Hong Kong, said. The resulting competition for warehousing and storage space between retailers as well as third-party logistics companies that provide such services has, in turn, pushed up rents. The Goodman Group, the biggest warehouse landlord in Hong Kong, is signing up tenants for its Interlink warehouse and distribution development in the Tsing Yi port district at HK$12 per square foot. (Rents for high-quality warehouse space range from HK$8 to HK$12 per square foot.) Valued at more than HK$4 billion, Interlink is still under construction; when complete, it will provide 2.4 million square feet of space. Among its major competitors in the warehousing and logistics industry in Hong Kong are Kerry Properties (SEHK: 0683) (a subsidiary of the Kerry Group, the largest shareholder of the SCMP Group, publisher of the South China Morning Post (SEHK: 0583, announcements, news) ), ATL Logistics and Mapletree Logistics. According to Benson, the most recent expansion in the sector saw international express delivery company TNT Express open a 100,000 sq ft specialist facility catering to the fashion industry within the ATL Logistics Centre at Kwai Chung. The deal pushed the warehouse and logistics centre market to record occupancy levels of 99 per cent, and rents have been climbing steadily because of the shortage of supply. Property consultancy CBRE said rents in the warehouse sector were almost back to their 2008 peak, with the average rent now HK$6.80 per square foot against HK$7 then. There have been some other big deals in the sector. A&F, an international fashion space retailer increased its warehouse space from 80,000 square feet to 100,000 square feet in ATL. Home furnishing group IKEA took up an additional 60,000 square feet of space in ATL, and Spanish clothing and accessories retailer Zara leased 45,000 square feet in the Texaco Centre in Tsuen Wan. The strong demand was also reflected in a record pre-commitment rate of 100 per cent at the new Interlink facility, even though the centre will not open until early next year. Philip Pearce, managing director for Greater China at Goodman Group, said retailers and third-party logistics companies had become prominent in the group's tenant mix. Three years ago they accounted for just 3 per cent, but now occupied about 20 per cent. Luigi Rapetti, managing director of third-party logistics company OM Log, said the company had been expanding over the past few years and now leased 550,000 square feet in Goodman's Western Plaza in Tuen Mun. "We are required by our clients to expand as they forecast they will expand business in Hong Kong and Asia," Rapetti said. OM Log, which provides warehousing and distribution services to fashion industry clients from the United States and Europe, would consider an expansion in Asia, including Hong Kong, in the near future as more international companies turned their attention to Asia in the face of the economic slowdown in the US and Europe, he said. Goodman's Pearce said storage requirements would stay high as long as mainlanders continued to visit Hong Kong. In August, arrivals from across the border grew by 23 per cent year on year to more than 2.91 million - the highest total yet in a single month. The sustained growth of the mainland economy and the appreciation of the yuan provided extra incentives for holidaymakers, especially families, to visit Hong Kong in the summer. Benson said the leasing market for high-quality warehouse space would continue to be strongly supported by limited supply. "Unless there is a total collapse of the global markets, we anticipate the strong demand for warehouse space to continue through 2011 and into 2012," he said.

Teresa Ko Yuk-yin talks about shepherding big mainland firms through IPOs, being a top player in the male-dominated field of coporate law and how she still manages to find time to spend with her two teenage children - Teresa Ko Yuk-yin in the Hong Kong stock exchange in Central. As a young girl growing up in Britain, Teresa Ko Yuk-yin dreamed of designing clothes. Instead, she has fashioned a career in law. In April, 51-year-old Ko was named the inaugural China chairman of Freshfields Bruckhaus Deringer, making her the international law firm's only head of a region and underscoring the mainland's importance. Founded in Britain 260 years ago, Freshfields employs 2,500 lawyers in 16 countries. Of its 470 partners, only 12 per cent are women, and Ko is the most senior female. In 2009, Ko became the first woman to head the Hong Kong stock exchange's influential listing committee. The committee, consisting of lawyers, stockbrokers, accountants, fund managers and the representatives of listed companies, meets weekly to approve new listings. Born in Hong Kong, she went to university in Britain. Her father objected to her plan to be a fashion designer, so she went into law, obtaining a first class masters degree in law from Jesus College at Cambridge, and then qualifying as a solicitor in Hong Kong, England and Wales. Her first job as a student in the Britain was clearing tables at a restaurant. She earned £5 for an eight-hour day. She joined Freshfields' Hong Kong office in 1988, and then handled the stock market listings of many of the mainland megafirms, such as Shanghai Petrochemical in 1993, and Industrial and Commercial Bank of China (SEHK: 1398) in 2006 and Agricultural Bank of China in 2009. Like for many professional women, achieving work-life balance is a challenge. Married to an architect and the mother of two teenagers, Ko says she puts in "too many" hours a week on the job, doable only because "I am fortunate to have a very supportive husband and family".

Henry Tang talks with students at the Kwai Fong Youth College yesterday, a visit aimed at bolstering his image after comments he made in January about twenty-somethings were widely criticised. Politician Rita Fan Hsu Lai-tai's backing for Henry Tang Ying-yen in the race for chief executive is wavering, with her saying she had no idea the former chief secretary had had an affair when she pledged last month to support him. Yesterday Fan, a member of the National People's Congress Standing Committee, said she would delay making a decision on who to support until after considering survey findings at the close of the nomination period. Fan's remarks came four days after she said she would not rule out the possibility of joining the fray if Tang's popularity failed to surpass that of other candidates. "But I will honour my promise [to back Tang's bid to be next chief executive], although I will closely monitor the issue until the nomination period," she said yesterday. Speaking after delivering a speech at Chinese University, Fan said Tang should strive to win support from more members of the public in the next few months. "I received many e-mails from members of the public after I promised to support Mr Tang," Fan said. "I can't ignore their views." Fan enjoys a wide margin in public support over Tang and Leung Chun-ying, former Executive Council convenor and another hopeful. She said Tang, who resigned last week to clear the path for his campaign, was "acceptable". "But I never said he is an ideal candidate or my favoured choice for the post." Responding to a student's question on whether she would run, Fan said: "I leave it to the members of the public to decide whether I should stand in the election. I will monitor the findings of opinion polls conducted by the University of Hong Kong and Chinese University." A supporter of Tang's said the change in Fan's stance would unavoidably affect his prospects, although it would not deal a serious blow. "What is more crucial is whether the negative effect of Tang's confession of marital infidelity will fade out in the next two weeks," they said. Ivan Choy Chi-keung, a political scientist at Chinese University, believes Fan's wavering indicates that some figures in the pro-establishment camp want to prevent Leung from becoming the camp's sole candidate in the event of Tang quitting in the wake of his scandal. "Those people want a plan B under which Rita Fan could challenge Leung," Choy said. "Such a development will put Tang in an unfavourable situation." The chief executive election will be held on March 25. In his first public function since his resignation, Tang yesterday visited the Kwai Fong Youth College to bolster his image among the students. In January, Tang was widely criticised after saying that twenty-somethings should not be "obstinate and self-opinionated" and that those "marching courageously forward could easily face a tragic end". Yesterday, he tried mending fences. "I chose to visit a youth centre as my first public function since I believe they are pillars of the future society," said Tang, who has still not announced his candidacy.

The development minister is confident a plan can be devised to breathe new life into the historic Haw Par Villa despite two previous failed attempts. The villa, once the centrepiece of the Tiger Balm Gardens, is now overshadowed by luxury high-rise flats. The former home of the legendary Aw business family has been included with three other historic buildings in the latest phase of a government scheme launched yesterday to revitalise heritage sites in partnership with private companies. Secretary for Development Carrie Lam Cheng Yuet-ngor said organisations would be interested in running businesses at the site as the government would support construction costs, including providing up to HK$100 million for restoration. "We require bidders to ensure public access and enjoyment in the tender exercises, which can limit commercial viability," she said. "But with financial support from the government, there is more chance organisations will be interested," she said. Possible uses listed for the ornate mansion include cultural facilities, an exhibition or convention hall or an educational institution. Other buildings involved in the third phase of the bureau's Revitalising Historical Buildings through Partnership scheme are the King Yin Lei mansion in Stubbs Road, Bridges Street Market and the former Fanling Magistracy. Non-profit organisations can make proposals. Haw Par Villa, a grade-one historic site in Tai Hang, was put forward for the scheme after two unsuccessful attempts to find a commercial operator to take it over. For King Yin Lei, a declared monument rescued from possible demolition after a public outcry, the bureau will allow the successful applicant to add a new building on the site of a disused swimming pool as few alterations to the main building will be allowed, limiting usable floor space. Meanwhile, the Hong Kong Campus of the Savannah College of Art and Design, housed at the former North Kowloon Magistracy under the scheme, has received an honourable mention in this year's Unesco Asia-Pacific Heritage Awards.

A scenic beach site defaced by massive excavation last year will be better protected under a government proposal to designate the Tai Long Sai Wan enclave as a country park - a move welcomed by environmentalists but lamented by local villagers. The proposal, to be discussed by the Country and Marine Park Board on Tuesday, could include the entire 17-hectare enclave currently not covered by Sai Kung East Country Park but within its boundary. It might include both private and government land. If supported, the plan will go for public consultation. The move comes as the Planning Department is in the midst of formulating a land-use zoning plan for the site. Last year it enacted an an interim zoning to freeze all development there following public outcry at the excavation works exposed by the South China Morning Post (SEHK: 0583). Environmentalists say the proposed designation would give the site more resources and better management from the government than a passive land-use zoning. But villagers are worried their tradition of developing small houses, which they claim as a right, will face restrictions because development within the park will presumably be forbidden. It looks unlikely the government will buy out the private sites because the law does not require this when designating a country park. But landowners affected can lodge objections to the proposal and seek compensation if existing or proposed uses allowed in land leases are prohibited by the government. The government has said the extent of development threats were crucial factors in deciding which of up to 77 enclaves - 40 of them already under permanent or temporary zoning - should be incorporated into country parks. But there are still outstanding issues to be clarified, including how small-house applications will be processed after the designation, and how the livelihood of the area can be improved under the country park system. Currently, all country parks are managed by Agriculture, Fisheries and Conservation Department. Lai Yan, Sai Wan village head, said he will oppose the designation. "We have been neglected in this poorly accessible area by the government for a long time and now what they are doing appears to be like a plot to further take our property away." Simon Lo Lin-shing, chairman of Mongolia Energy Corporation, who acquired nearly two hectares to develop as a private retreat last year, did not reply to inquiries about the proposal. Lo's site was heavily excavated last year to form two artificial lakes, which are still there. Cheung Hok-ming, deputy chief of Heung Yee Kuk, which represents indigenous villagers' rights, feared the proposal will see dozens of other enclaves made into country parks, too. "Officials should make clear what they are going to do with these remaining sites," he said. Dr Ng Cho-nam, a board member who supported the proposal, said: "Land-use zoning is too passive, and it is not backed by resources and manpower." Ng urged the government to come up with plans like eco-tourism to revitalise the area and ease opposition from local villagers. Wong Ka-chai, head of Wong T. Lap Foundation, which has hired an architect to draft a proposal for Sai Wan, cautiously welcomed the plan. He said that improving local livelihoods was crucial: "We don't want to see again villagers fighting each other over business disputes in the area."

 China*:  Oct 10 2011 Share

High-speed trains parked at a maintenance base in Wuhan, Hubei province. Financing problems are hampering huge expansion plans. The recently announced joint funding of a rail project in Guangxi Zhuang Autonomous Region may point to a move towards reforming the railways ministry and ease its heavy debt burden amid a cash crunch for such projects. China's National Development and Reform Commission recently approved the 22.7 billion yuan Hechi-Nanning rail project, whose funding will be equally shared by the railways ministry and the Guangxi local government, the Railway Gazette International has reported. "It's a sign of the reform of the railways ministry that the central government is trying to achieve. It's an interesting example of the ministry trying to decentralise authority to local governments," said Guotai Junan Securities analyst Gary Wong said. The move would disperse authority and investment in rail projects from the ministry to local governments, he said. The huge investment in China's high-speed rail network pushed the ministry's debt up to a whopping 1.9 trillion yuan (HK$2.3 trillion) at the end of last year, from 868 billion yuan in 2008, while its gearing ratio rose to 57.4 per cent from 46.8 per cent in 2008. Although joint funding of rail projects has occurred before, they are rare, and at least 90 per cent are totally funded by the ministry, which exercises a near-monopoly on the rail system. The ministry originally budgeted 700 billion yuan for rail projects this year. But Wong estimated at least 30 per cent would not materialise. "The situation is not good," he said. Wong said although there were safety concerns, especially after the July train crash and last month's Shanghai subway accident, the main reason why the funds would not be available was a cash crunch. "Banks are reluctant to lend to rail projects because the risk appears high after recent accidents and the returns are low," he said. "Since some high-speed railway segments have started operating, the cash flow hasn't been as good as expected." Wang said the Wuhan-Guangzhou high-speed railway had been expected to break even by the end of this year after its launch in December 2009, but it was now unlikely to break even in the next one or two years. "According to engineers acquainted with the project, the losses on the Wuhan-Guangzhou high-speed rail will amount to 3 billion yuan this year," he said. Zheng Tianxiang, a transport professor at Sun Yat-sen University in Guangzhou, said the number of jointly funded rail projects would rise because banks had tightened lending and the heavily indebted ministry had limited sources of financing. "The Chinese government wants more rail projects in less developed western regions like Guangxi and Xinjiang but the ministry is reluctant to fully finance these projects because the payback is low in these sparsely populated regions," he said.

Children play in front of the corns hanging on the wall in the Weicun village of Wenxian County in Jiaozuo City, central China's Henan province, Oct 6, 2011. The corn harvest season has come in recent days. 

France-made W3C communications satellite, carried by China's Long March-3B rocket carrier, blasts off from the Xichang Satellite Launch Center in Southwest China's Sichuan province, Oct 7, 2011. The European Eutelsat-W3C satellite will provide new capacity for broadcasting, telecommunications and broadband services. China's Long March-III2 rocket carrier sent a French-made telecom satellite into orbit from the Xichang Satellite Launch Center Friday afternoon, marking the first time for China to provide launch service for a European satellite operator. It was also the 148th launch for the Long March rocket family. According to information and data received by the Xi'an Satellite Measuring and Monitoring Center, the satellite and rocket carrier separated on schedule and the satellite is now in orbit. The launch marked the first time for China to cooperate with a European satellite operator since the signing of a Sino-French satellite launch agreement in 2008. The launch was carried out by the China Great Wall Industry Corporation and the China Institute of Rocket Carrier Technology, both under the China Aerospace Science and Technology Corporation, as well as the China Satellite Launch and Tracking Control General (CLTC). The W3C telecom satellite was built by Thales Alenia Space, a French satellite manufacturer, and is owned by Eutelsat, a leading provider of satellite communication services. The W3C has a designed lifespan of 15 years and will provide television, radio, broadband, video and Internet service.

China will reduce retail prices for gasoline and diesel by 300 yuan (about $47) per tonne starting October 9, the country's top economic planner said on Saturday. The benchmark retail price of gasoline will be cut by 0.22 yuan per liter and diesel by 0.26 yuan per liter, according to the National Development and Reform Commission (NDRC). The decrease marks the first fuel price reduction since June 1, 2010. Over the past 16 months, the NDRC has raised fuel prices four times following escalating global crude prices. However, a gloomy outlook for the global economic recovery has dampened crude prices. China's current oil pricing system was introduced in May 2009. The system gives the NDRC the right to adjust domestic fuel, diesel and gas prices when average prices for Brent, Cinta, and Dubai crude oil move by 4 percent within 22 consecutive working days.

An opening ceremony has been held for a newly built 328-meter-high hotel in Huaxi village, the richest village in China, in Jiangyin, East China's Jiangsu province, Oct 8, 2011. The hotel was built at a cost of three billion yuan (nearly $471 million) by raising 10 million yuan from each family in the village. It is a symbol of rural urbanization, according to Wu Renbao, former Party secretary of Huaxi village. 

Hong Kong*:  Oct 9 2011 Share

A property developer has asked for a delay in submitting its planning application for a housing project near the Mai Po reserve, amid mounting public concern over the development's environmental impact. The Town Planning Board had been scheduled to scrutinise a planning application for the Fung Lok Wai wetland housing project today, but will instead discuss a request for one month's delay submitted by the developer Mutual Luck, a subsidiary of the property giant Cheung Kong (SEHK: 0001). The project seeks to develop 5 per cent of an 80-hectare site, turning the rest into a wetland nature reserve comprising fish ponds and marshes to be run by an independent body. Mutual Luck is planning to build 19 residential towers containing 2,000 apartments on the site. To ease public concerns about a unique firefly species found on the site, the developer has agreed to commission an expert study on the species. WWF Hong Kong, Cheung Kong's conservation partner on the project, said it had asked for a study on the firefly to preserve the species, which had not been recorded in Hong Kong until a year ago. It remains unclear how long the study will take and who will scrutinise the results. A key concern is that the firefly's peak growth season is over the summer, and that a one-month delay in the planning application will be too short to allow a complete study. Eric Bohm, chief executive officer of WWF, said one possible solution was for the planning board to make a longer study a condition of approving the project, and the WWF would pressure the developer to enforce mitigation measures. But Yiu Vor, chairman of the Entomological Society, said Bohm's suggestion showed a "complete disregard of the planning system". He said the developer's request for a delay was just a tactic that showed no sincerity about resolving the problem. "It appears to be just buying time to wait for opposition to die down," he said. Yiu said the study should continue over a year, looking at the impact on firefly eggs and larvae, as well as on adults. The wetland project has placed the global conservation body's local arm, WWF Hong Kong, in a difficult position. Activists have warned that they might ask WWF's donors to withdraw their support if the group does not withdraw from the partnership with Cheung Kong. WWF Hong Kong yesterday received inquiries from two donors about its role in the project. One of the donors specifically asked how she could cancel her regular subscription to the group. No corporate donor has raised any question about the project. But WWF Hong Kong's stance remained firm yesterday, with Bohm saying its role in the project was related only to conservation, and that it stood to make no monetary gain. "I know they [the activists] do not like property developers, but I am not interested in that. I am only interested in bringing about conservation," he said. However, the green group seems to lack like-minded supporters. Mike Kilburn, Civic Exchange's head of environmental strategy, yesterday added more weight to the pressure on WWF. "The residential blocks should be built outside the wetland," he said. "It's better to make the effort to avoid [building the blocks within the wetland] now than to compensate for the environmental loss later on."

Global auctioneers Sotheby’s sold HK$3.2 billion (US$$447 million) worth of Asian and Chinese art, jewellery, wine and watches in its six day Asian sales in Hong Kong, its second highest tally for a sales series in the city despite volatile financial markets. The sales are considered a biannual barometer of emerging market demand in China and Asia for some of the world’s most expensive artwork and luxury goods, with voracious Chinese demand propelling Hong Kong into a global auction hub almost on a par with London and New York for Sotheby’s. The final result, which comes amid difficult market conditions in a week where global financial markets swung wildly as the outlook for the European debt crisis worsened, was cast as a success by Sotheby’s, exceeding a pre-sales estimate of some US$300 million for the 3,400 lots on offer. “In the now truly international marketplace of Hong Kong, collectors from all over Asia, in particular Greater China... have competed with one another and with Western collectors for this group of choice works,” said Patti Wong, Sotheby’s Asia Chairman, in a statement. The tally was lower than Sotheby’s spring Hong Kong sales in April, however, that netted US$447 million from 3,600 lots, while rivals Christie’s hammered off $469 million worth of luxury goods in the same Hong Kong season and faces a potentially stiff test in its upcoming autumn Asia auctions. Nevertheless, Sotheby’s said it was the first time annual sales in Hong Kong had reached US$1 billion, underscoring Asia’s increasingly vital role for revenue generation in global art. Of all the artwork on sale, Chinese and Asian contemporary art struggled the most, with unsold rates of over 20 per cent, including works sourced from the respected collection of avant-garde Chinese art owned by Belgian billionaire Guy Ullens. Prices for early works by prominent artists like Zhang Xiaogang, were still strong, however, including “Big Family No 1” that sold for US$8.4 million. As was the case during the 2008/09 global financial crisis, China’s formidable purchasing power in art circles was undiminished for the highest quality pieces, notably imperial Chinese ceramics and fine Chinese paintings. A near flawless Ming cobalt blue “meiping” vase with fruit and floral motifs fetched US$21.6 million, a world auction record for any piece of Ming porcelain and the most expensive item auctioned during Sotheby’s 6-day sales. The exquisite vase was part of The Meiyintang collection, a unique, respected assemblage of Chinese porcelain collected over nearly half a century by Swiss tycoons, the Zuellig brothers, that nevertheless saw around a fifth of works go unsold, with the market for flawed and medium tier ceramics far less robust. For older paintings, Wu Guanzhong’s “Gezhou Dam”, a work of stark lines and colourful dots that made HK$20.2 million, over twice its estimate, while Xu Beihong’s languid depiction of a pair of resting buffaloes made HK$18.02 million. For jewellery, two rare coloured diamonds; a fancy vivid orange and fancy vivid blue diamond each made record prices per carat for their specific categories but the broader fine jewels sales saw an unsold rate of 21 per cent for 359 pieces offered. Sotheby’s wine auctions over the weekend also showed a possible wrinkle in Chinese thirst for leading French wines. For the first time since Sotheby’s launched wine sales in Hong Kong in 2009 after the city abolished wine duties, it failed to sell out its wines at an auction to tap what has been considered to be an insatiable demand for luxury products from Asia, particularly China.

Luxury brand Shanghai Tang plans to move into a group of tents at a ferry pier after becoming the latest victim of soaring commercial rents in Central. The iconic Hong Kong clothing company is quitting the Pedder Building premises that housed its flagship store for 17 years after the monthly rent more than doubled to HK$7 million. It plans to move the flagship store to a four-storey building 350 metres east of the Pedder branch in March next year. In the meantime, Shanghai Tang will set up shop on the rooftop of Central Ferry Pier 4, where it plans to erect Mongolian tents, called yurts, in line with its Mongolian-inspired Christmas collection. These "pop-up" stores will operate from November 4 to December 31. "We hope there will be no typhoons," said Raphael le Masne de Chermont, the brand's executive chairman. The company decided to give up its 6,300 sq ft space on the ground floor and basement of the Grade II listed historic Pedder Building after losing a bidding war against American lifestyle brand Abercrombie & Fitch, which agreed to pay two-and-a-half times the previous rent. However, Shanghai Tang - known for its colourful cheongsams and traditional Chinese accessories - said it had rented a 2,000 sq ft shop on the building's sixth floor, which would also serve as one of its outlets until February next year. "Losing [the original store] at Pedder [Building] was not fun. It was unexpected," said Le Masne de Chermont. "But I hope people will realise Shanghai Tang is more than Pedder. We are a brand, not just a store." But the chairman said it was important for the brand to stay in Central despite an influx of Western brands that had pushed up rents. "If you want to be seen, you have to be in Central," he said. "All those brands from the Western world want to take a piece of the mainland market. Real estate went berserk and we had to adapt. "We are born and bred in Hong Kong. And we owe a lot to this city." He said their client base had evolved in recent years from mostly Western patrons to an "equal split" between Western and Chinese customers today. "Mainland customers are now 18 per cent of our customers, compared to only 2 per cent three years ago." Many famous names have shopped at its flagship store, including Britain's Prince Andrew, the Duke of York; Sophie, Countess of Wessex; US Secretary of State Hillary Rodham Clinton; fashion designer Giorgio Armani; and celebrities Richard Gere, Nicolas Cage, David Bowie, Bryan Ferry and Annie Lennox. Le Masne de Chermont said the new shop, to be called Shanghai Tang Mansion, will be twice as large as the two-floor flagship store. The firm - founded by David Tang, who has a knighthood, and bought by Swiss group Richemont in 1999 - has 42 stores worldwide, including seven in Hong Kong.

Tony Ching Siu-tung’s (程小東) moviemaking career started decades before CGI, but he has found new creativity with the advances of special effects in recent years. You can see it in his latest film, “The Sorcerer and the White Snake” (白蛇傳說之法海), which held its premiere at last month’s Venice Film Festival and is now showing in China, Hong Kong and elsewhere. Jet Li (李连杰) stars as a sorcerer roaming the world to rid it of evil spirits. One demon — a thousand-year-old white snake — falls in love with an unsuspecting mortal and transforms itself into a beautiful woman in order to experience human love, leading to a climactic battle against the sorcerer. The snake, played by mainland actress Eva Huang, has the body of a woman and a tail that loops around trees and across the emerald landscape. “The Sorcerer and the White Snake” is filled with other striking visual effects, such as an enchanted forest with talking animals, a village haunted by human-like bat demons and a threatening pagoda where evil spirits are held in captivity. The film is based on a well-known Chinese fable that’s been adapted numerous times over the years into movies, television and stage productions. “We all have heard this story since we were very young,” says Mr. Ching, who turns 59 at the end of this month. “This is a legend that is perfect for our type of production of action and special effects, mixed with a love story.” With a budget of $30 million, the film is one of the costliest Chinese productions in recent years because of its heavy use of CGI, which Mr. Ching says was crucial to the film’s dream-like nature. Its combination of special effects, martial arts, humor and melodrama is a mix that has served Mr. Ching well in his previous films, including his 1987 success “A Chinese Ghost Story” and its two sequels. Like many Hong Kong directors, he now works extensively in mainland China as the film industry there grows. Mr. Ching spoke with the Journal about mixing action with CGI, Hong Kong films and the next generation of Asian martial-arts stars.

 China*:  Oct 9 2011 Share

The European Commission hopes to sign a joint declaration of co-operation in tourism with the Chinese authorities by year's end, Commissioner for Industry and Entrepreneurship Antonio Tajani announced. “This declaration should mark the start of a profitable cooperation that will bring in profits to the European tourist industry and contribute to improving contacts between our peoples,” Tajani told an informal meeting of European tourism ministers at Krakow, in Poland, on Thursday. Tajani, a vice-president of the commission, went on: “The emerging markets present a potential for attracting and building up tourists to Europe.” He and Commissioner for Internal Affairs Cecilia Malmstroem had decided to set up a working group on visas in a bid to ease visa applications for would-be visitors to Europe, he added.

A male client has a Thai-style massage at the Banyan Tree Spa in Shanghai. Men in China have begun to care more about their appearance. A market once dominated by female customers is shifting ground as higher-tipping males enter it. The first time masseuse Jin Xiaoying had a male customer at the spa where she worked three years ago, she didn't know where to look. "I was even more awkward than him, and it was also a new experience for him," she recalled. Now Jin, having been in the spa industry for more than half a decade, is very comfortable seeing a growing number of men taking off their clothes, lying down on the massage bed naked and waiting for her to knead their bodies. In fact, she has become friends with quite a number of them, including that first customer, a 20-something good-looking man from Wenzhou, in Zhejiang province, a city generally considered to be the home of China's nouveau riche. They now come to me not only for a spa treatment but also for advice about relationships or suggestions for a gift for their mums' birthdays," said Jin, 32, who quit her job as a tourist guide and learned Thai-style massage in 2006. While male clients represent only 30 to 40 percent of her business, Jin, whose two sisters are also in the industry, said the number has been climbing steadily over the last few years, at the rate of 20 percent annually. Despite its robust growth during the past decade in China, at an annual rate of about 15 percent, according to an estimate by China Spa Association, it is traditionally dominated by female clients - although that is changing. Statistics from Banyan Tree, the famous luxury resort known for its exotic Southeast Asia Spa treatment, show that male clients now account for nearly half of its spa appointments at four of its locations in China. Although the numbers are lower than those in European countries, where spa treatments are as common as haircuts for men, Chinese males are quickly catching up, at the speed of 8 to 10 percent every year. Zhang Taiyu, features editor at ELLE MEN, a fashion magazine tailored for male readers in China and launched by French media conglomerate Hachette Group, has witnessed a similar rise among its readers in cities such as Shanghai, Beijing and Guangzhou. But instead of customers' "self-awareness", Zhang thinks it is instead a result of subtle "education" instilled by foreign cosmetic brands. "It all started in 2008, when the idea of skincare for men, implanted by multinational companies such as L'Oreal, began taking root in these big cities," said Zhang. "Since then, men have been taught to pay more attention to their appearance and, now, they are actively exploring ways to make themselves more presentable. Enjoying a spa treatment is a rather ideal method as it can achieve the effect of both skincare and the relief of stress."

Despite some challenges, China is becoming increasingly important to the future growth of American companies doing business with China, said a US business expert in Chicago on Thursday. John Frisbie, the president of the US-China Business Council, made the remarks in his speech titled "Current Issues in US-China Trade," at the first session of "Focus on China Series" organized by Chicago Council on Global Affairs. "China is the world' s second largest economy and the third largest export market for the United States. It is growing faster than many other major destinations for American goods and services," Frisbie said. Taking the state of Illinois as an example, the trade expert cited the extremely impressive growth rate of Illinois exports to China during his presentation. Illinois export to China has grown 496 percent from 2000 to 2010, hitting $3.18 billion in 2010, while the export growth rate to the rest of world is only 51 percent. As for Cook County where Chicago is located, the export growth rate to China is 332 percent from 2000 to 2010 while the rate for the rest of the world is only 26 percent. In addition, he said that US companies are establishing roots in China as never before to sell to the Chinese market, which results in creating jobs at their US operations and bringing high-quality global standards and business practices to China. Frisbie shared the US-China Business Council 2011 Survey on the operating environment in China for US companies. According to the survey, over 90 percent American companies operating in China are optimistic or somewhat optimistic on the five-year outlook for business in China. The survey result also shows that China remains a top strategic priority in terms of its prominence in overall company strategy. According to the annual survey, in 2011 about 73 percent US companies will accelerate their resource commitment to China over the next 12 months, which have returned to pre-downtown expansion levels. Regarding company objectives, the survey shows that the primary objective of 93 percent companies investing in China is to access and serve the China market. In terms of profitability, about 85 percent said that their companies' China operations are profitable while 88 percent said that their expected 2011 revenue from China will increase. On the other hand, the US trade expert added that "although it has resulted in economic benefits, the US-China trade relationship is not without its challenges." According to him, the top challenge for US companies operating in China is talent recruitment and retention, according to the survey. Other challenges are administrative licensing, cost increase and Intellectual Property Rights (IPR) enforcement, among others, he added. Frisbie, who has been the president of the US-China Business Council (USCBC) since November 2004, has more than 25 years of experience in business and government relations with China, including nearly 10 years living and working in Beijing. Frisbie's China background includes joint venture negotiations, trade and investment consulting, policy analysis and advocacy, government relations, and media relations. The session was moderated by Keith Williams, President and CEO at Underwriters Laboratories and Member of the Board of Directors at the Chicago Council on Global Affairs and the US-China Business Council. Founded in 1922 as the Chicago Council on Foreign Relations, the Chicago Council on Global Affairs is one of the oldest and most prominent international affairs organizations in the United States. Independent and nonpartisan, The Chicago Council is committed to influencing the discourse on global issues through contributions to opinion and policy formation, leadership dialogue, and public learning.

Cities prepare for returning vacationers - Passengers wait in line to enter a subway station outside the Beijing Railway Station, Oct 6, 2011. 

Hong Kong*:  Oct 8 2011 Share

Internet service providers are on the prowl for space in which to house data centres, as demand among their customers for data storage rises. "We are working on plans to acquire additional space for growth and expansion," said Alfred Tsim Wing-kit, chief executive officer of SUNeVision, the technology arm of one of Hong Kong's largest landowners, Sun Hung Kai Properties (SEHK: 0016). SUNeVision's subsidiary, iAdvantage, operates four data centres in Hong Kong - one on Hong Kong Island, two in Kowloon and one in the New Territories - that together occupy more than 500,000 square feet. Overall occupancy is approximately 87 per cent, the firm said. Last week, Google said it would invest more than US$100 million in Hong Kong to establish a new data centre - one of three it plans to set up in Asia under an aggressive infrastructure expansion program. More such moves may be expected from other providers, and the expansion plans could give a shot in the arm to the industrial property market, agents say. "New data centres can be built on greenfield sites or through conversion of existing industrial buildings," Tsim said. "Land is a precious resource in Hong Kong and data centre operators have to compete with other industries for land in the open market. "Industrial buildings have therefore become a very attractive and practical option as they are readily available in the market and offer diversity in terms of location, size and specifications to suit different requirements. They also offer a time-to-market advantage," he added. Tsim said there had been a number of successful cases where operators entered into long-term leases on industrial buildings for their operations, and this had been the most popular mode of expansion over the past year or so. Data centre operators had been appealing to the government to facilitate the conversion of industrial buildings into data centres because it could easily take a year or more to secure the necessary approvals from government departments, Tsim said. A data storage centre is a secure, temperature-controlled facility that is built and equipped to house large-capacity server computers and enterprise data-storage systems, which are maintained with multiple power sources and have high-bandwidth links to the internet. To house its data centre, Google has acquired 2.7 hectares of land on the Tseung Kwan O Industrial Estate, and expects to start using the facility within one or two years. It also plans to build data centres in Taiwan and Singapore. Another international internet service provider, NTT Com Asia, a unit of the Japanese telecommunications giant, also plans to build a HK$3 billion data centre on the Tseung Kwan O Industrial Estate. The complex is set to open in 2013. Raymond Chu Leung-hang, a director at Ricacorp Properties, said he believed Google, the world's largest search engine operator, could lure more international players to build data centres Hong Kong, which would serve as a springboard to the mainland. "We have at least five clients looking to buy industrial spaces for the use of data centres. We only began getting such inquiries early this year," he said. Chu said internet service providers were eyeing spaces from 30,000 square foot to entire industrial buildings that could be converted into data centres. Buildings with industrial power supplies, high ceilings, a high floor-load capacity and a flexible floor layout would be their first targets. "They prefer locations in Chai Wan, Kwai Chung or Kwun Tong, where the centres would be within an hour's travel to and from their companies," Chu said. John Siu, general manager for Hong Kong and southern China at property brokerage Cushman & Wakefield, said owners could raise their rent by between 150 and 200 per cent if they converted their industrial buildings into data centres. "Space could be leased for between HK$15 and HK$20 per square foot as a data centre compared with HK$10 per square foot for use as a warehouse," he said. Demand for such spaces had outstripped supply and he expected demand to continue growing over the next 10 to 20 years. At present, the industrial estates in Tseung Kwan O and Yuen Long, managed by Hong Kong Science and Technology Parks Corporation(HKSTPC), are major land sources for the development of data centres. However, a spokeswoman for HKSTPC said most of the 75 hectares of land at the two estates had already been sold. Only a 5,000-square-metre site on the Yuen Long Industrial Estate was still available for application, she said. Interested parties should submit an application with supporting information to assist the corporation in the assessment of projects.

Current plans for the 320-hectare Kai Tak site include 33,000 flats and 20 million square feet of office, retail and hotel space. The abandoned Kai Tak airport, idle for 13 years, may hold the answer to a space shortage in the world's costliest office market. Visible across Victoria Harbour from the banking heart of Central, the overgrown runway and dilapidated hangars on which the government plans to build housing and a stadium cover an area almost the size of New York's Central Park. The site could be redeveloped to add as much as 40 million square feet of prime offices by 2021, the founder of Hong Kong-based Professional Property Services, Nicholas Brooke, said. That's three times as much as London's Canary Wharf. In the past six months he had met the Asian heads of four of the world's biggest investment banks and been told the same message: if rents keep going up and Hong Kong doesn't build more prime office space, they will soon have to move parts of their operations to other Asian cities. "These are no longer threats but serious possibilities," said Brooke, a former managing director of Swire Properties, the biggest commercial landlord in the city's Island East district, another area attracting tenants from Central. "If we can't provide the answer to their entire needs, then they'll leave parts of their operations here and move some of the others to Shanghai or Singapore." Prime office rents in the financial gateway to China have risen 60 per cent since July 2009, according to CB Richard Ellis. Hong Kong rents in buildings considered of high quality were US$9.80 per square foot per month at the end of the second quarter, compared with US$8.40 in Singapore and US$3.90 in Shanghai, according to Cushman & Wakefield, the world's biggest privately held commercial brokerage. There was no new supply of prime office space in Central from 2007 to 2010, while this year developers may add 123,000 square feet to the district, CBRE research shows. That compares with more than 2.5 million square feet of new space added from 2002 to 2006. "We're getting close to a point when rents become unaffordable," the Hong Kong-based head of Asia research at Savills, Simon Smith, said. "If you look around other office markets in the world, they've all over time been forced to develop decentralised office areas." The prime office vacancy rate in Central, where HSBC and Goldman Sachs have regional headquarters, fell to 3.7 per cent in July from almost 6 per cent two years earlier, CBRE said. Rents in Central range from HK$60 to HK$170. In East Kowloon, home to the derelict airport, rents range from HK$14 to HK$32. "Hong Kong's office market is like a dragon dance," the Hong Kong-based executive director at Cushman & Wakefield, John Siu, said. "Any price change in Central would have a domino effect on other areas, but there won't be much change in the price gap." Financial services companies began moving parts of their offices to East Kowloon - an area of industrial complexes and middle-class housing spanning three MTR stations - in the late 1990s to save on rent. The 320 hectare airport site is about 12 kilometres across Victoria Harbour from Central. "We can really have a Canary Wharf here if the government gets its act together," CB Richard Ellis executive director John Davies said. After 10 years of public discussion, the government in 2007 came up with an outline for the redevelopment of the old airport site. The plan includes building more than 33,000 flats of public and private housing, 20 million square feet of office, retail and hotel space, a cruise terminal and a stadium. The development plan for Kai Tak "had evolved several times to meet changing community aspirations" before it was approved, the Civil Engineering and Development Department, which is in charge of redeveloping the old airport, said.

Quintina Ho and Char Kong plan to reduce their banquet by two courses when they wed in March. The food wasted at wedding banquets amounts to tossing out every dish served to three out of 20 tables of diners, on average, Friends of the Earth reported yesterday. "We visited wedding banquets and found that the last few dishes, usually fried rice and noodles, are left untouched," Michelle Au Wing-tsz, the green group's senior environment officer, said. Last year Friends of the Earth visited four banquets for weddings and companies, weighing the leftover food from 104 tables. They found that an average of 3.8kg of food was tossed away from each table - for a total of 76kg for a 20-table banquet - enough food to serve three tables, Au said. The group suggested courses be reduced from 12 to 10 at such events, an idea supported, it said, by almost 60 per cent of the 276 people it polled at a wedding gown expo in April. About 77 per cent of those polled - largely couples planning their weddings - said they had noticed the waste at banquets they had attended. But 83 per cent of respondents worried their parents and in-laws would object that serving two fewer courses would make the banquet look shabby. Even so, young couples are increasingly willing to opt for the less wasteful option, they said. It's a problem facing Quintina Ho Nga-yee and her fiance, Char Kong Cheuk-him, as they plan their wedding in March. "My parents didn't agree to 10 courses at first, but then I reminded them that they had gone through hard times too, and they understand that food shouldn't be wasted," said the 28-year-old bride-to-be. She added that although there will be fewer dishes, they will be serving more expensive fare such as high-quality seafood, to avoid feeling like they were being cheap. Angel Kwong Hung, president of the Wedding Management Association, said there was a growing trend to serve fewer dishes at wedding banquets, to reduce waste, and to use other environmentally friendly elements in weddings. They include outdoor venues to save on air-conditioning and lighting, using recycled or natural decorations, and eco-friendly gowns made from corn fibres. The association helped to organise more than 300 green weddings this year to September - an increase from about 210 for all of last year, said Kwong.

Steve Jobs, who transformed the worlds of personal computing, music and mobile phones, died on Wednesday at the age of 56 after a years-long battle with pancreatic cancer. The co-founder of Apple, one of the world’s great entrepreneurs, was surrounded by his wife and immediate family when he died in Palo Alto, California. Other details were not immediately available. His death was announced by Apple and sparked an immediate outpouring of sadness and sympathy from world leaders, competitors and other businessmen including Microsoft co-founder Bill Gates and Facebook chief executive Mark Zuckerberg. The Silicon Valley icon who gave the world the iPod, iPhone and iPad had stepped down as chief executive of the world’s largest technology company in August, handing the reins to long-time lieutenant Tim Cook. He was deemed the heart and soul of a company that rivals Exxon Mobil as the most valuable in America. “Steve’s brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve,” Apple said in a statement. “His greatest love was for his wife, Laurene, and his family. Our hearts go out to them and to all who were touched by his extraordinary gifts.” Apple paid homage to their visionary leader by changing their website to a big black-and-white photograph of him with the caption “Steve Jobs: 1955-2011.” The flags outside the company’s headquarters at 1 Infinite Loop flew at half mast. Jobs’ health had been a controversial topic for years and his battle with a rare form of pancreatic cancer a deep concern to Apple fans and investors. In past years, even board members have confided to friends their concern that Jobs, in his quest for privacy, was not being forthcoming enough with directors about the true condition of his health. Now, despite much investor confidence in Cook, who has stood in for his boss during three leaves of absence, there remain concerns about whether Apple would stay a creative force to be reckoned with in the longer term without its visionary. Jobs died one day after the consumer electronics powerhouse unveiled its latest iPhone, the gadget that transformed mobile communications and catapulted Apple to the highest echelons of the tech world. His death triggered an immediate outpouring of sympathy. “The world rarely sees someone who has had the profound impact Steve has had, the effects of which will be felt for many generations to come,” Gates said. “For those of us lucky enough to get to work with him, it’s been an insanely great honour. I will miss Steve immensely.” Outside an Apple store in New York, mourners laid candles, bouquets of flowers, an apple and an iPod Touch in a makeshift memorial. “I think half the world found out about his death on an Apple device,” said Robbie Sokolowsky, 32, an employee for an online marketing company, who lit a candle outside the store. Cook said in a statement that Apple planned to hold a celebration of Jobs’ life for employees “soon”. A college dropout, Buddhist and son of adoptive parents, Jobs started Apple Computer with friend Steve Wozniak in 1976. The company soon introduced the Apple 1 computer. But it was the Apple II that became a huge success and gave Apple its position as a critical player in the then-nascent PC industry, culminating in a 1980 initial public offering that made Jobs a multimillionaire. Despite the subsequent success of the Macintosh computer, Jobs’ relationship with top management and the board soured. The company removed most of his powers and then in 1985 he was fired. Apple’s fortunes waned after that. However, its purchase of NeXT − the computer company Jobs founded after leaving Apple − in 1997 brought him back into the fold. Later that year, he became interim chief executive and in 2000, the company dropped “interim” from his title. Along the way Jobs also had managed to revolutionize computer animation with his other company, Pixar, but it was the iPhone in 2007 that secured his legacy in the annals of modern technology history. Forbes estimates Jobs’ net worth at US$6.1 billion (HK$47.48 billion) in 2010, placing him in 42nd place on the list of America’s richest. It was not immediately known how his estate would be handled. Six years ago, Jobs had talked about how a sense of his mortality was a major driver behind that vision. “Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life,” Jobs said during a Stanford commencement ceremony in 2005. “Because almost everything − all external expectations, all pride, all fear of embarrassment or failure − these things just fall away in the face of death, leaving only what is truly important.” “Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

A 15th-century porcelain vase fetched 168.7 million Hong Kong dollars (US$21.6 million) after 10 minutes of tense bidding Wednesday in Hong Kong. The vase was part of the Meiyintang collection owned by Swiss businessman Stephen Zuellig. An earlier Meiyintang sale by Sotheby’s produced mixed results, with many lots going unsold, but this week’s reaped HK$560 million, with more than three-quarters selling. (All final prices quoted include the buyer’s premium.) Nicholas Chow, international head of Chinese ceramics and works of art at Sotheby’s, called the bidding “very aggressive.” Two phone buyers battled for the top lot, pushing the price far above pre-sale estimates of HK$120 million. The bidding war captivated a packed, standing-room-only room, with onlookers craning their necks to watch the number rise on a big monitor at the front. The room erupted in applause once the hammer came down to declare the winner. Mr. Chow, who was on the phone with the winning bidder, declined to share any information on the buyer. The blue-and-white, Ming-period vase is intricately decorated, and Sotheby’s says that the only known comparable work is currently in the Palace Museum in Beijing. Other top lots included a rare Qing dynasty vase decorated with two blossoming peach trees, which sold for HK$90.3 million. John Berwald, a London-based dealer, bought a blue-and-white “jue” dish stand for HK$26.7 million on behalf of an American investment fund. “It’s a great treasure,” he said. “These top pieces are always wanted and are fairly recession-proof. Supply won’t meet demand.” The willingness of deep-pocketed buyers to pay top dollar for porcelain antiques pushed aside many aspiring collectors. Later in the morning during Sotheby’s sale of fine Chinese ceramics and works of art, Hong Kong art dealer Anthony Lin attempted to buy an 18th-century Qianlong vase. It had a pre-sale estimate value of HK$7 million to HK$9 million. Mr. Lin bid, on behalf of a client, as much as HK$10 million before dropping out. The final price: HK$17.6 million. “Everybody has a limit. At some point, you let others take over,” he said, later adding that he was relieved to find out that the market for porcelains remained so robust. “The sale was very strong. It shows that the market is still very liquid,” he said. “People were nervous and worried because of the financial markets, but the market held.” While porcelains were a hot category, other antiques, such as enamel-covered copper artifacts and Buddhist statues, remained unsold. Just over half the lots from the fine Chinese ceramics and works of art sale were picked up. “There was disappointment in works of art that aren’t porcelain,” said Sotheby’s Mr. Chow. “The copper and Buddhist works — they’re a field that has been dominated by investors. We’ve seen a bit more caution in those areas.” Still, the two sales of Chinese antiques garnered a total of HK$961.77 million. The category remains the most popular among buyers in Hong Kong, outpacing sales of, for example, contemporary art. Later in the day at Sotheby’s sale of jewels and jade, a ring featuring a 6.01-carat blue diamond was the top lot, selling for HK$79 million. The total take from the jewelry category was HK$510.2 million.

In Hong Kong's shopping malls, the annual "Golden Week" holiday for mainland Chinese tourists can be like Thanksgiving and Christmas rolled into one. Hordes of consumers flood across the border to take advantage of lower taxes and better choice than they have got back home. Typically, there are line-ups outside Louis Vuitton and the Armani mall is packed. Mainland Chinese tourists spent about $950 per visit to Hong Kong last year. This year, the city's cash registers are still ringing loudly, though there are also tentative signs of a slowdown that support a darkening view of the mainland Chinese economy. Heading into Golden Week, which kicked off Saturday, the city's retail sales looked remarkably resilient. August retail sales were up 29% compared to the previous year, according to government data. It was the sixth consecutive month that sales grew by more than a quarter compared with the previous year. The city's tourist board forecast that the number of mainland Chinese visitors during the holiday period would be up 10% compared with last year. Government data also show that Chinese tourists spent about $950 per visit to Hong Kong last year, more than visitors from any other region. But there are also early indicators of a less positive future. August's retail sales growth was actually below most analysts' estimates. On a seasonally adjusted basis, monthly sales growth slowed, to 0.7% from 2.2% in July, HSBC noted. Monthly retail sales can be volatile. But there are other signs Chinese buyers are curbing their spending habits. Last weekend, at a Sotheby's wine auction Chateau Lafite Rothschild—traditionally a draw for wealthy mainlanders—failed to sell out for the first time in 17 consecutive auctions. The volume of property sales, another focus for rich Chinese in recent months, has also dropped off. Investors are already punishing some local retailers. Shares in jewelry retailer Chow Sang Sang Holdings have lost more than half their value since mid-August. For now, that is the exception rather than the rule. But a serious slowdown in purchases by Chinese visitors to the city would reflect a more disconcerting trend across the border.

 China*:  Oct 8 2011 Share

Premier Wen Jiabao has urged stronger financial support for cash-strapped smaller businesses, amid reports that many small and medium-sized enterprises are facing bankruptcy due to credit tightening. Wen (pictured) made the remarks during a visit to Wenzhou, a hub of private capitalism, in Zhejiang province on Monday and Tuesday, Xinhua reported. Wen's visit follows reports that the free-wheeling city is grappling with a credit crunch that has sent dozens of firms bankrupt and prompted their owners to flee. "Smaller enterprises should be a priority for bank credit support and enjoy more tax preferences from the government," Wen said, adding that banks should set targets for loans to small companies, reduce their cost of credit and allow a higher non-performing loan ratio. "Small businesses play an irreplaceable role in creating jobs and boosting economic growth," he said. "It is of overall and strategic significance to support their development." Small businesses, which create 80 per cent of the nation's jobs and produce 60 per cent of its industrial output, have long complained about difficulties in securing loans from state-owned banks. In a campaign to tame inflation, the central government has taken measures since the middle of last year to curb lending and implemented other steps to curb liquidity. Small and medium-sized businesses are feeling the pinch because they have traditionally not had the same access to funding from the state-owned banks enjoyed by major state-owned enterprises. Most small firms use inter-company funding, borrowing from relatives and friends. But some have to borrow from loan sharks or through a guarantee company, a kind of private lender, which often set sky-high interest rates, typically ranging between 15 per cent and 20 per cent a year, but in some cases, according to mainland media, hitting 100 per cent. Charging interest at more than four times the official rate is illegal. Some economists have warned that the trillion-yuan underground banking market might threaten the country's financial stability. Last week, Wenzhou stepped up measures to control private lending, capping interest rates for private lending at 1.3 times the central bank's benchmark rates, warning loan sharks against using violence to collect debts and ordering tighter controls on debtors trying to flee. The government also ordered banks to meet a target of issuing 100 billion yuan (HK$122 billion) new loans to small companies this year and promised to deal thoroughly with the cases of bosses running away due to mounting debt. Citing government data, Wenzhou Daily reported on Friday that private lending in the city had reached about 110 billion yuan, roughly 20 per cent of total bank loans in the region, and average annual interest rates have risen to 25.44 per cent, or nearly four times the benchmark one-year lending rate of 6.56 per cent.

Tourists visit the Badaling section of the Great Wall at night in Beijing, capital of China, Oct 4, 2011. The magnificent night view of the Great Wall attracted many tourists during the National Day holiday.

The White House on Wednesday expressed "concerns" over a controversial bill on the so-called " currency manipulation" by China. The legislation raises "concerns about consistency with our international obligations, and we are in the process of discussing those issues with members of Congress," White House spokesman Jay Carney said. "If this legislation were to advance, those concerns should be addressed," he said, without going into detail about the White House concerns. The US Senate on Monday cleared a procedural vote to advance the bill -- Currency Exchange Rate Oversight Reform Act of 2011 -- which sets in motion a process for imposing punitive tariffs on a country with misaligned currencies, noticeably Chinese renminbi, or yuan. Even if the measure passed a floor vote in the Senate, it needs to get approval from the House before it could reach the president to sign into law. Chances of the bill moving forward in the House of Representatives appeared doubtful as Republican House Speaker John Boehner came out against the bill on Tuesday. "It's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency," Boehner said. "This is well beyond what Congress ought to be doing, and while I've got concerns about how the Chinese have dealt with their currency, I'm not sure this is the way to fix it." Republican House Majority Leader Eric Cantor earlier warned an "escalation" in trade tensions could have painful "unintended consequences" and said President Barack Obama should use existing powers "if there are unfair practices going on." Immediately after the Senate vote on Monday, the Chinese government expressed its strong opposition to the US Senate move, warning that it "seriously violates rules of the World Trade Organization and obstructs China-US trade ties." US media, including the Washington Post editorial, said the Senate bill is "counterproductive" and will do more harm than good to the United States.

Hong Kong*:  Oct 7 2011 Share

These pig-nosed turtles, seized at the airport in January, may look like they would make cute pets, but they can grow to be up to 70cm long. They were flown into Hong Kong in substandard conditions, but today they're being sent home first class. About 600 freshwater pig-nosed turtles - a protected species native to Australia and New Guinea - were smuggled into the city in January, barely surviving dehydration in badly packed containers. Today, they are to be taken from their temporary shelter and flown to a new home in Indonesia, arranged with the help of animal rescue groups there. For the past nine months, the turtles have been cared for by officers at Kadoorie Farm and Botanic Garden. The animals have doubled in size to just over 10cm in length, gaining enough strength to face the challenge of adapting to their new home in a national park north of Merauke city in Papua province. The 600 small turtles are the survivors from an original group of 785 seized in a routine inspection at the airport's cargo terminal, said Alfred Wong Kwong-chiu, an endangered species protection officer with the Agriculture, Fisheries and Conservation Department. The animals were found in an overcrowded, waterless one-cubic metre wooden box, a clear violation of international guidelines on wild animal transfer. Nearly 200 of them soon died due to poor health. Wong said: "Most of these turtles were probably hatched not long before they were stuffed into the cargo plane. Since they were so small, they probably weren't sent for human consumption; they were more likely sent as pets because they're cute." The turtles are listed in appendix two of the Convention on International Trade on Endangered Species, which applies to species that are not necessarily threatened with extinction but may become so unless their trade is strictly regulated. Their population has declined by an estimated 50 per cent in recent decades, due to poaching and habitat degradation. The agriculture department has investigated the trading company that owned the consignment, but there was insufficient evidence to bring charges, Wong said. Under Hong Kong law, illegal trade in wild animals carries a maximum fine of HK$500,000 and one year in jail. Turtles ranked as the second most popular pets, after fish, in a 2005 poll conducted by the department, Wong said. But pig-nosed turtles are less popular than other turtles because they are more sensitive to temperature and water quality. Adults can grow to 70 centimetres in length - too big to make ideal pets. The number of protected turtles seized in Hong Kong has grown substantially in the past three years, from 155 in 2008 to 2,099 in last year. It is not easy to return wild animals to their original homes, Wong said. "It is not easy because most countries do not want to be involved in this and there are cultural and language barriers too." Dr Gary Ades, head of fauna conservation at Kadoorie Farm, said it had taken a lot of time and work to return the animals into the wild. They will be released in an area free of poachers. "We are going to release them in the upstream of the river, away from human activities," he said. Tan Kit-sun, Kadoorie's senior conservation officer, said it was important to transfer the turtles before they grew bigger, as larger turtles become aggressive and fight each other. The turtles stand a very high chance of surviving to maturity, he said, although it would be impossible to monitor them after they are released into the wild. The biggest threat they will face, other than poachers, is natural predators such as crocodiles.

Hong Kong should seek wider recognition for the patents it issues in an effort to support its creative industries, the government was urged yesterday. Businesses are particularly keen to get swifter protection for their products on the mainland, where it can take a year or more for a Hong Kong company to get a patent, compared with three months for a mainland firm. The call came at the start of a public consultation on whether the city, which provides local protection for a product only after it has won an overseas patent, should play a bigger role. "In offering protection to technological advancements in the form of inventions, the patent system is an important tool in nurturing creativity and encouraging developments in scientific and technical fields," Secretary for Commerce and Economic Development Greg So Kam-leung said. Under current arrangements a producer must apply for a patent in Europe or on the mainland before taking the approved patent to the Hong Kong government for consideration, a process manufacturers have described as inconvenient The government is asking if industry wants to apply for patents directly in Hong Kong without going overseas or to the national body. Director of Intellectual Property Peter Cheung Kam-fai said it might be inappropriate for Hong Kong to issue original patents as the local market was small. One option was to outsource the handling of patent applications to overseas examination authorities, as Macau and Singapore had done. But the chairman of the Hong Kong Invention Association, Cheung King-fung, said he wanted the government to give out original patents. It would elevate the city's status as an innovation hub and could shorten the application process, which now took as long as two years, he said. Others said it was more important for the government to help them get patent protection on the mainland. Wilson Shea Kai-chuen, from an association representing small and medium enterprises, said most businesses sought patent protection throughout China instead of Hong Kong alone. "The government should initiate negotiations with other bodies so its patents can apply in more regions, such as on the mainland, in Europe or in the US," he said. Sze Yan-ngai, founder of game developer Gameone, agreed that China was the bigger concern. He said it took a year or longer for local game developers to get a patent there while a mainland company needed only three months. The consultation will run until the end of December.

A joint television production by RTHK and the Social Welfare Department has won a nomination for television's version of the Oscars. Athena Chu Yan has been put forward for best actress in a category of the 39th International Emmy Awards for her role as a wheelchair-bound girl in the television series A Wall-less World. "I am so happy, I feel like I am dreaming," said Chu, who was notified by a call from her agent in the middle of the night. "I've been sleeping late from working so I actually thought I was dreaming." In the show, Chu makes the difficult choice of having a child while still keeping her career as a designer. The award is for television productions aired initially outside the United States. Winners will be announced on November 21 at an awards ceremony in New York. Chu said she would do her best to attend. "I wanted to ... help show the strength and endurance of the disabled, and so with this intention - the nomination is the greatest gift." Competing against her are three nominees from the United Kingdom, Sweden and Brazil, one of whom is Julie Walters for her role in British Channel 4 production Mo. The Hong Kong series has ten episodes depicting the struggles of the disabled, with each episode a different story dedicated to highlighting an article of the United Nations Convention on the Rights of Persons with Disabilities. Chu's segment, The Third Choice, aired on January 10 last year. Her character injures her spinal cord in a traffic accident that leaves her half-paralysed. But she remains independent and continues to live alone, working as a designer online. When she realises she is pregnant with her boyfriend's child, he gives her a choice: to give up either the child she is carrying or her career. Instead, she chooses a third option - to have both a career and a child - thus exercising her right to care for a child as stated in Article 23 of the UN Convention for the disabled. Chu said during filming, her spine was in constant pain from the body contortions she had to make. "I met the woman whom this story was based on, and she told me she suffers from pain in her spine every night and can't sleep well," she said. "I briefly experienced the pain she suffers every day, and I am so impressed with her astonishing endurance." Last year, the episode was recognised in the 46th Chicago International Film Festival with a silver plaque in the human relations and social interest category.

Former chief secretary Henry Tang Ying-yen and his wife, Kwok Yu-chin, face the media over rumours about his love life. Chief executive hopeful Henry Tang Ying-yen attempted to deflect a rising tide of speculation yesterday by admitting he had been unfaithful to his wife - something that has long been rumoured in political circles. Three days after describing the rumours as "very entertaining", Tang admitted he had "strayed". In a Chinese-language statement issued jointly with his wife, Kwok Yu-chin, Tang, 59, admitted having been unfaithful. A public relations firm which issued the statement later said part of it should be read in English as: "I have strayed in my love life and I feel deeply remorseful and guilty." The former chief secretary also said Kwok had forgiven him, for which he was "very thankful". Tang's statement was issued after weeks of gossip that he had had an affair with Shirley Yuen, his former administrative assistant and now CEO of the Hong Kong General Chamber of Commerce. Tang's statement did not name anyone and Yuen strongly denied she had been involved. She expressed "deep anger" at the rumours and insisted she had nothing to do with Tang's love life. Tang's statement came after Kwok, his wife of 27 years, responded to the gossip for the first time. In a report published yesterday in the Chinese-language magazine Eastweek, she said there had been "difficult times" which were now over. Less than two hours after Tang issued his statement the couple emerged hand in hand from their home on The Peak to meet reporters, but said they had nothing to add. The terse confession left some issues hanging in the air, including whether Tang admitted having more than one affair. The PR firm refused to provide a full English translation of Tang's statement. After the South China Morning Post (SEHK: 0583) sought clarification on whether Tang was admitting to "a mistake" or "mistakes", it said only that he had "strayed". Elizabeth Chan, who worked as Tang's personal assistant when he was a lawmaker, also strongly denied having an affair with him. "I and the other assistants had heard nothing about him having any extramarital affairs back then," said Chan, who now works in the PR industry. Analysts felt the episode would not affect Tang's chances of becoming chief executive, but some said his handling of the matter was not satisfactory. Chinese University political scientist Ivan Choy Chi-keung said the issue could dominate the media's agenda. "Whenever Tang shows up at any event, reporters will keep on asking [about his love life]," he said. While Tang's confession is unlikely to affect Beijing's perception of him, the fact that he has gone public could be inconvenient. The Communist Party in August banned the promotion of officials with a record of immoral behaviour, in an attempt to assuage public anger over corruption and unethical conduct among cadres. The rule applies only to mainland officials, but having a chief executive in Hong Kong with a tarnished reputation could be embarrassing to Beijing.

 China*:  Oct 7 2011 Share

The mainland is turning into a buyer's market for luxury cars as dealers for BMW, Daimler and Volkswagen's Audi offer discounts to maintain sales as demand cools. In Beijing, BMW dealerships have cut as much as 19 per cent off the price of a 3-series car, while some Mercedes dealers are selling the C-Class Elegance model at 20 per cent less than the retail price, according to cheshi.com, a pricing guide tracking more than 3,000 dealers in the country. BMW, Daimler and Audi, the three largest luxury carmakers, face slowing sales growth and falling prices on the mainland, the world's largest vehicle market, as some cities impose driving curbs and the central bank tightens lending. The growth in demand for high-end vehicles cooled to 29 per cent in the first eight months of this year from 48 per cent last year, according to researcher JD Power & Associates. "We're in a cycle of dropping prices," said Scott Laprise, an analyst at CLSA Asia Pacific Markets. "Dealers are worried about sales slowing and are cutting selectively in the luxury segment. They see where the overall market is going. They want to be preventive and keep sales going." A tightening economy may cause buyers, such as those in mid- to upper-level management jobs, to rethink or delay luxury purchases, Laprise said. The People's Bank of China raised interest rates five times in the past year to curb inflation, and in January Beijing started restricting the number of licence plates available as a means to fight the capital's pollution and congestion. The measures are contributing to slowing car demand, according to analysts at CLSA, JD Power and Booz & Co. BMW, Daimler and Audi are targeting record sales this year on growing wealth in China, which overtook Germany to become Audi's largest market this year. Rising affluence has helped luxury brands outperform growth in the overall car market, which the China Association of Automobile Manufacturers forecasts will slow to 5 per cent this year from 32 per cent last year. Even so, high inventory levels for luxury brands are pressuring Chinese dealers to cut prices, JD Power said in a recent report. "While we expect luxury to outperform the sector, we are seeing early cracks in [the form of] sales slowing and discounting," Laprise said. Audi's A6L, the mainland's most popular premium car last year, sells for as much as 16 per cent below the retail price in Beijing's Fengtai district, according to cheshi.com, which started tracking car prices in 1999. Chinese buyers can choose from 471 models across 94 brands, and softening demand has cut or eliminated waiting times for high-end models. The biggest discounts are offered in large cities such as Shanghai and Beijing, according to cheshi. com. In September last year, customers waited about three months for entry-level luxury cars, it said. Today, the wait for these models is gone. "Competition in the industry is stiff, and the carmakers are bringing in more vehicles," said artist He Guochang during a visit to a Mercedes dealership in Shanghai, where he was shopping for a sport-utility vehicle. "Luxury cars are cheaper, and there are vehicles readily available." Nine years ago, He had to wait two months for his first luxury car, a 480,000 yuan Mercedes-Benz E-Class, even after paying 80,000 yuan extra to speed delivery. Today consumers can drive away with a C-Class car for 7,000 yuan (HK$8,500) less than a year ago, data from cheshi.com shows. Daimler's prices are stable and the company expects "considerable" market growth to continue, said Arnd Minne, a spokesman for Daimler. "Mercedes-Benz has maintained its strong growth momentum during the first eight months of 2011 through sales of 123,590 units, an increase of 41 per cent," Minne said in an e-mail. Audi spokesman Martin Kuehl said the carmaker did not have "substantial incentive programmes" on the mainland. In the first eight months of this year, it sold 196,534 cars in the mainland and Hong Kong, a 29 per cent increase from a year earlier, he said. BMW was confident it would achieve record sales in China this year, said Lu Yi, vice-president of sales at its local unit. "It is predictable that the Chinese car market will keep growing at a comparatively lower rate," Lu said in an e-mail. "BMW has maintained a strong and sustainable growth." BMW increased deliveries 6 per cent for the month, compared with a 67 per cent surge to 169,058 vehicles during the first eight months of the year, Credit Suisse analysts wrote in a report last month. Mercedes-Benz sales on the mainland and in Hong Kong grew 3.2 per cent last month, the company said, down from 41 per cent in the first eight months. Audi sales on the mainland and in Hong Kong rose 26 per cent in August, according to the company, compared with 29 per cent for the first eight months. Luxury vehicle makers will need to expand into less developed cities to tap growing wealth and more developed cities restrict driving, said Bill Russo, a senior adviser at Booz. "Luxury brands concentrated in areas where they have historic strength, not in the areas that are growing the fastest," Russo said. "You have to look to the lower-tier cities for growth."

The 30 per cent sell-down in Macau casino stocks that began on Friday appears partly due to investors' worries that junket agents may cut credit for high-spending gamblers. But where do junkets, who issue credit to players and collect gambling debts (extrajudicially, in the case of the mainland), get their funding? This question was put to executives at Las Vegas Sands Corp, the parent company of Sands China, on Monday at an investors' forum in Las Vegas. "Unlike here where you think about bank financing or other alternative sources, these guys have just private investors - lots of them - and very happy investors, because the returns have been fat and happy for numerous years," Las Vegas Sands president of global gaming operations Rob Goldstein said. "[Junkets] have no problem accessing capital and they always tell me Americans don't appreciate how deep the Chinese pockets go," he said. That private mainland investors are bankrolling the junkets underwriting the growth of the world's biggest casino market is something of a revelation. Among their other sources, a reliance on such informal or grey-market financing would help explain how Macau's party has continued over the past year despite Beijing's tightening of the financial system, including nine reserve ratio increases and five interest rate rises. Investing in junkets may indeed look attractive to cashed-up mainlanders: real interest rates on mainland bank deposits have been negative for the past 19 months, while domestic stock and property markets continue to slump. But investors' concerns are growing about defaults in grey-market lending on the mainland, based on recent reports from freewheeling Wenzhou. The reliance on private investors marks a departure from Macau's previous boom, when junket operators tapped the Hong Kong stock market for funding. Goldstein said he was in Macau two weeks ago, where he met four or five of the top junket groups to screen candidates to operate VIP gaming rooms at Sands China's US$4 billion Cotai casino resort, which will open in phases from about March next year. "The sense I get is that at all levels, middle-class and upper-class people see this as a rational way to get a very, very fat return on their capital. And, they like the fact they're investing in gambling," he said. Macau's booms and busts over the past decade have been driven by the credit-backed VIP baccarat segment, which accounts for more than 70 per cent of total casino revenue. Before the financial crisis of 2008, listed junket investors including Amax Holdings, China Star Entertainment, Dore Holdings and Neptune Group raised a total of HK$14 billion from effectively reverse mergers with Macau junket operations. The result was a boom in VIP revenue growth in Macau, which peaked at 73 per cent in the first quarter of 2008. The subsequent bust occurred after the junkets overextended their lending just as the financial crisis began. That led to a contraction in VIP revenue on a year-on-year basis for the three quarters to June 2009. The current boom is even more reliant on VIP junket revenue, and on a much larger scale. Macau's VIP baccarat revenue rose 49 per cent in the first half of this year to 91.12 billion patacas - nearly 2.5 times the level of the previous peak in the first half of 2008. This time, the junkets have received capital from the casino operators, who will generally issue credit to junket agents equal to one month's worth of commission payments. That is a stable, incremental source of relatively new capital for junkets, though not huge in the bigger picture. But what happens if these private mainland investors start to feel a squeeze? Investor attention has focused on Wenzhou, where a recent People's Bank of China survey showed that 89 per cent of families and 60 per cent of corporates were involved in informal lending during the second quarter of this year. "Given the large proportion of private lending in Wenzhou, we note that defaults on private borrowing could trigger a negative chain effect throughout the lending system," analysts at Barclays Capital wrote on Monday in a research note. "In Wenzhou as in other parts of the country, private financing may initially help small and medium enterprises when bank lending turns tight, but after a while high interest costs are not sustainable for borrowers and defaults may increase," they wrote.

Yum Brands, owner of the Pizza Hut, Taco Bell and KFC chains, reported on Tuesday that its third-quarter profit grew thanks to strong sales in China and elsewhere overseas that offset another sluggish showing in the US. Yum said it added 138 restaurants in China during the quarter, and is on track to open a record 600 new units there this year. Operating profit in China was up in the single digits, adjusted for currency fluctuations, as the company faced rising commodity and labour costs. In Yum’s international division, operating profit rose 3 per cent, adjusted for currency fluctuations. And its franchise fees are on pace for a record year of more than US$850 million in the division, which excludes China. But in the US, operating profit fell 16 per cent and sales dropped at its three main brands. “We’re obviously disappointed in our US performance,” Yum Chairman and CEO David C. Novak said in a statement. Yum, based in Louisville, earned US$383 million, or 80 cents per share, for the quarter ending September 3. That’s up from US$357 million, or 74 cents per share, a year earlier. The company reported losses of 3 cents per share, stemming from decisions to refranchise its Pizza Hut business in the United Kingdom and its planned sale of the Long John Silver’s and A&W All American Restaurants chains. The company, which put the brands up for sale earlier this year to focus on its international business, said last month that it has found buyers for them but didn’t disclose financial terms. Excluding those special items, Yum posted a profit of 83 cents a share, which is one cent per share above what analysts were expecting. Total revenue rose 14 per cent to nearly US$3.3 billion, well above the US$3.08 billion in revenue analysts surveyed by FactSet were expecting. But revenue at KFC and Pizza Hut restaurants in the US open at least a year fell 3 per cent each, while Taco Bell had a 2 per cent drop. Taco Bell, which accounts for about 60 per cent of US profit for Yum, has been struggling to regain momentum after publicity from a now-dropped lawsuit questioned the beef content of filling in the chain’s tacos and burritos. Taco Bell called the accusations false and fought back with marketing on television and in newspapers. “It looks like it’s stabilising and we’ll get to the point next year where they’ll be bouncing up against some easier comparisons so that will help,” Edward Jones analyst Jack Russo said of Taco Bell. “They’ve got a job to do PR-wise to repair that.” The company is having better luck overseas. In its international division, which excludes China, Yum opened 193 new restaurants in 50 countries during the quarter and expects to open 900 new units for the year. In its key China business, operating profit rose 7 per cent, adjusted for currency fluctuations. Novak said the robust restaurant growth overseas puts Yum in position for strong growth next year and the performance in China, in particular, “gives us even more confidence our China business model is as strong as ever.” He said Yum plans to roll out new products along with productivity initiatives that he predicted will improve US sales and profits next year. The company reaffirmed its full-year earnings-per-share growth of at least 12 per cent. Yum operates nearly 38,000 restaurants in more than 110 countries and territories. Company officials will discuss the quarter’s results on a conference call Thursday morning. Yum reported earnings after the market closed. Its shares slipped 85 cents, or 1.7 per cent, to US$48.59 in extended trading. They had closed the regular session up 99 cents, or 2 per cent, at US$49.44.

Consumers will still face moderate grain price hikes this year, despite the country seeing a bumper harvest, a senior agricultural official said on Thursday. Grain output is expected to jump to a record high of more than 550 million tons, marking the eighth consecutive year for increased production, Chen Xiaohua, deputy agriculture minister, said at a news conference. China has been hit by fast-rising grain prices since 2007, which has sparked international concern about the world's biggest grain producer. "Prices will go up moderately due to higher farm costs, as well as the impact of international markets. But the rise will be limited," Chen said. The current price rise does not mean the country is suffering from a shortage of grain, he said, adding: "China did import an increased amount of corn last year, but it was mainly due to a price differential that made corn imports attractive." Official customs statistics show corn imports fell 26.2 percent from January to July this year compared with the same period last year. "We can basically satisfy the domestic market. Facing the increasing need for corn in the future, the government will make more efforts to balance supply and demand," Chen said. Since 2007, China's annual grain output has remained above 500 million tons, hitting 546.4 million tons last year, according to the National Bureau of Statistics. Partly due to global climate change, the country has experienced prolonged and severe droughts, as well as floods, both in northern and southern areas this year. "Thanks to favorable weather in its major crop-producing areas, as well as effective relief efforts, an increase of grain output this year is still foreseeable," the deputy agriculture minister said. For example, more than 70 percent of total grain output increase this year is expected to come from Northeast China due to favorable weather conditions, he said. Chen also said this year's harvest of autumn grain would be good because of expected growth in per-unit yields and enlarged planting areas. Autumn grain output always accounts for 70 to 75 percent of China's total grain output. As of Monday, about 21.3 million hectares had been reaped, 27.6 percent of the total autumn grain planting area, ministry statistics show. Meanwhile, on Wednesday, the National Development and Reform Commission, the nation's economic planner, announced it will raise the minimum purchase price for wheat from farmers in 2012. "The move aims to protect farmers' enthusiasm to grow grain and further stimulate production," Chen said at the news conference. Lu Bu, a researcher in agricultural resources and regional planning at the Chinese Academy of Agricultural Sciences, said on Thursday that improving the contribution made to grain output by farmers in South China is very important to the future growth of grain output. "The risk of decreased output is looming, as grain production capacity is now too concentrated in northern areas. When natural disasters hit those areas, the impact will be great," he said. "The central government needs to encourage farmers in southern areas in crop production, as many of them now prefer to work in the cities for more money, instead of spending time on the land," he said. The average per-capita income of rural residents was 3,706 yuan ($580) in the first half of this year, a 20.4 increase year-on-year, according to the National Bureau of Statistics.

Shanghai environmental-protection authorities said a battery factory operated by U.S.-based Johnson Controls Inc. that they ordered to suspend operations last month will remain closed through the end of the year, along with 14 more plants that also use lead. The moves suggest the city is rethinking the balance between economic growth and safety after a series of lead-poisoning scandals around the country. The Shanghai Environmental Protection Bureau began ordering temporary plant closures last month after routine back-to-school medical tests determined unhealthy levels of lead in the bloodstream of a small number of youngsters—and sparked a local outcry. The agency has stopped short of accusing any manufacturer of illegal lead emissions. It said the closures will give it time to examine the source of the lead poisoning. Anxious Shanghai residents have posted numerous comments of concern on websites like the Milwaukee-based Johnson Controls denies illegal emissions, saying its own standards are much tougher than China's. Shanghai authorities say the company has largely been in compliance with emission regulations, but that the plant already has exceeded annual production limits, which Johnson Controls doesn't dispute. Neither the company nor authorities have been willing to specify details of the production limits. Pollution from lead, a heavy metal, is a worrisome side effect of China's manufacturing boom. The country's environmental laws tightly restrict lead emissions, but experts say that while the law's provisions are adequate, enforcement is patchy. "It's encouraging in Shanghai that the government went ahead and shut down these plants," said Phelim Kine, a senior researcher with Human Rights Watch, which has studied lead poisoning in China. In June, the New York group published findings that weak government attention has made lead poisoning "among the most common pediatric health problems in China." Mr. Kine applauded Shanghai's decision to sacrifice at least a degree of economic growth that will result from the action while it tries to identify the problem, saying it contrasts with responses elsewhere in China. "Underpinning China's lead-poisoning epidemic is a tension between the government's goals for economic growth and its efforts to curb environmental degradation," says the June report, which is based on examination of the ill effects of manufacturing in selected provinces. Lead found in Chinese exports, including children's jewelry, has remained a concern in the U.S. The Consumer Product Safety Commission continues to find problems. Last month, for example, it recalled 1,900 toy cars imported to Florida from China that the agency says were colored with lead-based paint. Reports in China's government-run media suggest lead poisoning is getting more attention from policy makers, even as use of the material has surged, for example in batteries for electric-powered bicycles. News that lead was suspected in poisoning more than 100 villagers near Hangzhou this year got widespread domestic media attention and prompted a sweeping probe that included arrests of suspected polluters. As a direct result of that incident, a court in late September ordered the president of electric-bicycle battery maker Suqi Battery Co. to serve 15 months in prison, according to the Xinhua news agency. The company couldn't be reached to comment. The source of the lead poisoning in about 25 schoolchildren in Shanghai is unclear. The government says they tested positive for excessive lead in their blood during back-to-school medical tests in early September. Initially, the Shanghai Environmental Protection Bureau shut the Johnson Controls plant in the Pudong district, along with a small refurbishment business nearby. But authorities now say they have expanded the closure to more companies, without identifying them. Johnson Controls, which is expanding elsewhere in China, says its Shanghai battery plant operates to the same standards as its factories world-wide, and therefore has far tougher emissions standards than Chinese law requires, permitting one-seventh the amount release into the air as allowed in China and one-10th what China's water standards allow. "Based on the information we have at this time, we do not believe that emissions from our plant could have caused the level of lead contamination in the surrounding area," it said in a recent statement. Often lead poisoning is a legacy problem, only appearing when, for example, waste-storage containers burst after years. The Johnson Controls battery plant was purchased by the U.S. company in 2005.

Hong Kong*:  Oct 6 2011 Share

Credit Suisse , which ranks among Asia's top five private banks, signaled it may cut costs amid a tough business climate for the next two years and warned that private banks have slowed hiring in the region. Asia's private banking industry has been hit by rising costs and heightened caution among rich clients to invest in risky, high-margin financial products, derailing a recovery after the 2008/09 financial crisis. "In the last two or three years, client appetite for risky, longer-term investment hasn't returned to pre-2008 levels, Marcel Kreis, the Swiss bank's head of private banking for Asia-Pacific, said. "That, from a transactional income point of view, is challenging. Investors are still gun-shy." Kreis, who oversees the Asian business excluding India, said the bank had already announced it would cut costs by 1 billion Swiss francs (HK$8.5 billion) globally and the benefits will be realised in 2012. The cost cuts would also affect Asia as a proportion of its size to the bank's overall business, Kreis said, without providing details. "We review our cost base, we review the investments that we have made and we are going to make in light of what we think is a relatively challenging environment for the next two years," Kreis said. "Without a doubt every business will be looked at very carefully and the rationalisation and the efficiency measures have been taken for us in Asia-Pacific as well," he said. Credit Suisse managed about 78 billion Swiss francs worth of Asian clients assets as of June 30, or about 10 per cent of the group's global client assets. It has 370 private bankers in the region. In July, Credit Suisse reported a 52 per cent dive in second-quarter net income, hurt by a weak performance in investment banking. Kreis said Asia remained a growth market for the industry, but hiring has slowed due to lack of experienced bankers. "There is an acute shortage of qualified private bankers, with the new entrants and established ones recovering after 2008. The war for talent certainly continues," he said. Kreis said Credit Suisse had not seen a slowdown in net new assets from clients despite the turmoil in markets. The bank has received 38 billion Swiss francs in net new assets from Asian clients since 2008. He said the bank was looking for organic and inorganic opportunities to expand its private bank in China, where it does not have an onshore private bank.

Kwan Kee (left), chairman of the Hong Kong Amateur Athletic Association, Benjamin Hung Pi-cheng, chief executive of Standard Chartered Bank, and William Ko, of the marathon organising committee. The entry quota for next year's Hong Kong Standard Chartered Marathon has been increased by 5,000 to a record 70,000. Fifty wheelchair racers will take part for the first time. Although only 54,800 runners took part this year out of the 65,000 who originally entered, the organisers still want to expand the field "in response to the overwhelming enthusiasm of the participants". "We have been increasing the quota year by year but the demand is still there," said William Ko Wai-lam, chairman of the organising committee. "The 65,000 quota for this year was snapped up in just over two weeks, proving how popular the annual event has become. "We are confident the expanded quota will also be taken up soon and urge interested runners to enter the event as soon as possible." Entries will close on or before November 30 with a fee of HK$300. The event takes place on February 5. The marathon quota will be increased by 3,000 to 13,000 while there will be an additional 2,000 places for the half-marathon runners to 20,000. The 10-kilometre entries remain the same at 37,000. Prize money will be increased by almost 50 per cent to US$227,000, with the marathon champion taking US$50,000. "We want to attract some of the best runners in the world and have made a big increase," Ko said. "The Hong Kong marathon course is very challenging, even for top runners." The organisers decided to let wheelchair racers take part after calling off this year's 10-kilometre competition, which received only two entries. Wheelchair athletes complained the organisers allowed them too little time to submit their entries. Next year there will be a full marathon race for up to 20 wheelchair athletes, and a 3-kilometre race from Wan Chai Sports Ground to Victoria Park for 30 more. "We have taken sufficient safety measures for the wheelchair athletes with advice from the International Paralympic Committee," Ko said. "The marathon participants will have to be classified by the IPC, as the course is very challenging, while the 3-kilometre participants will need to go through a trial race in December." Ko said organisers were happy with the route, which was first used last year and separates the marathon and half-marathon runners in the early stages. Both start in Nathan Road and finish in Victoria Park. The 10-kilometre race takes place mainly on the Island Eastern Corridor and also finishes in the park.

Gambling revenue in Macau rose 39 per cent to 21.2 billion patacas (US$2.6 billion) in September compared to a year ago, signalling strength in the world's largest gambling destination despite a recent sell-off in Hong Kong and US listed gaming stocks over fears that credit for mainland gamblers is drying up. September’s revenue figure, released on Tuesday, was expected to fall short of August’s record US$3.1 billion due to a seasonal factors and because of a one-week national holiday in China that started October 1. Typhoon Nesat, which hit Macau on September 29, also made it difficult for gamblers to access the tiny enclave which lies an hour away from Hong Kong. Ferry services were halted and flights cancelled. Casinos stopped running shuttle buses to and from the border gates, a key entry point for mainland visitors eager to place their bets in China’s only legal casino gambling venue. “It was affected by the typhoon. It is at the lower end of estimates, but it is ok, not too bad,” said Victor Yip, an analyst at UOB Kay Hian brokerage in Hong Kong. “Usually before a holiday, it will be slightly quiet a few days before the holiday starts. It is very normal for the number to slow down a little bit.” In spite of bullish analyst forecasts that said October is likely to set a new monthly record, shares of Macau casino operators tanked on Monday on fears that a heightened credit squeeze on private firms in China will hurt Macau’s future revenues. Macau’s high-rolling VIP sector, which accounts for about 70 per cent of gaming revenues, is more exposed to the vagaries of credit availability through the opaque junket system. Analysts maintain that while souring loans in China may impact revenue growth in the territory, Macau junket operators and casinos still have ample cash to buffer a slowdown. Mainland gamblers, who make up the bulk of visitors to Macau, have so far shrugged off the deepening economic malaise. This has been a boon for US casino giants Las Vegas Sands, Wynn Resorts and MGM Resorts International , which have posted stellar half-year earnings through their Macau units Sands China, Wynn Macau, and MGM China. Despite staging a modest rebound on Tuesday, Hong Kong-listed gaming stocks have dropped between 36 to 58 per cent from their peaks only two months ago, after investors eagerly bought into the sector seeing it as a defensive play amid weakness in overseas markets. Analysts estimate Macau gambling revenues will hit US$34 billion this year while Las Vegas is estimated to reach US$6 billion. Shares of SJM were up 6 per cent on Tuesday after losing a quarter of their value the previous day. Shares of Galaxy rose 0.1 per cent, MGM China jumped 5.1 per cent, Wynn Macau rose 4.3 per cent and Melco International Development (SEHK: 0200) gained 0.1 per cent. Sands China dropped 1.4 per cent. Analysts say Macau junket operators, the middlemen who are key to Macau’s surging revenues, are well financed and run their own credit checks within their operations. A potential concern may be that the junket operators become more reluctant to lend rather than a lack of liquidity. “We believe that casinos and existing junkets have built up sufficient working capital over the last three years,” said Aaron Fischer, head of Consumer & Gaming Research at CLSA brokerage in Hong Kong. Strong balance sheets for the six licensed operators and healthy gearing positions mean the Macau casinos are in better shape than in 2008 when the financial crisis sent stocks tumbling. Macau’s gaming sector should be in net cash by the end of the year so there are limited refinancing issues, Fischer said. Media reports that a Korean junket operator, Grand Korea Leisure , had stopped extending credit to Chinese gamblers rattled nerves on Friday, but the move was seen as an isolated case due to its newly appointed chief executive wanting to take a step back. It is likely to resume extending credit in November, analysts said. At the same time Paradise Junket, which controls 40 per cent of the foreign market in Korea, said it was business as usual with Chinese gamblers.

 China*:  Oct 6 2011 Share

House Speaker John Boehner of Ohio on China Bill: ‘A Dangerous Thing’ House Speaker John Boehner of Ohio, right, accompanied by House Majority Leader Eric Cantor of Va., left, and House Majority Whip Kevin McCarthy of Calif., speaks at a news conference on Capitol Hill in Washington, Tuesday, where he dismissed a Senate bill that could punish China for undervaluing its currency. China may have a friend in the U.S. Congress after all. House Speaker John Boehner on Tuesday said it was “dangerous” for lawmakers to pass legislation aimed at addressing concerns about China’s currency, saying it goes well beyond Congress’s responsibilities. The Ohio Republican, in a sign the House might not take up the Senate legislation should it pass that chamber, said he didn’t support the effort. “It’s a pretty dangerous thing to be moving legislation through the U.S. Congress forcing someone to deal with the value of a currency,” Mr. Boehner said, speaking at weekly press conference.

Bankruptcies and multibillion yuan bank debts of Wenzhou's small and medium enterprises are not likely to pose an immediate danger to the mainland economy, economists say. "China has about 40 million SMEs, including several hundred thousand in Wenzhou. And only 100 SMEs in that city failed to pay off loans. The percentage is small," said Liao Qun, chief economist of CITIC Bank International. As long as the economy grows at a stable pace, SMEs will survive, he said, adding that debt pressures will lighten. Barclays Capital said banks have had fairly limited exposure to failed SMEs in Wenzhou, mainly through off-balance sheet credit commitments.The non-performing loan ratio will rise over the next few years, but not reach the previous record high of 20 percent, Barclays added. Meanwhile, China's official measure of its manufacturing purchasing managers index and HSBC's China services PMI rebounded in September. HSBC's China services PMI reading rose to 53, rebounding from an all-time low of 50.6 in August as it was boosted by new orders. "[The reading] rebounded meaningfully, pointing to a possible bottoming out of the services economy towards the end of the year," said HSBC chief China economist Qu Hongbin. The manufacturing PMI last month rose 0.3 percent from August to 51.2 percent. There were also indications yesterday that the Wenzhou municipal government is trying to bring private lending under control. "Any loans with a rate four times the benchmark rates are loan shark lending, and no legal protection will apply to such loans," the municipal government and the Wenzhou branch of the People's Bank of China said in a joint circular. The one-year benchmark lending rate is 6.56 percent. The warning came after operators of 26 Wenzhou-based small businesses absconded last month, unable to pay debts to loan sharks.

World Expo 2010 left Shanghai almost 19 billion yuan (HK$23.03 billion) out of pocket once construction costs are included, and organisers used nearly 13 billion yuan in bonds and loans to pay for it, an official audit report has revealed. Although the six-month mega fair made a 1.05 billion yuan operating profit, that was eclipsed by the 19.7 billion yuan cost of building the site. The expo, which ran from May to November last year, drew 73 million visitors, the highest number in the event's 160-year history. The Shanghai government hailed it as a major success, but there have been lingering doubts about its massive cost. The report, released by the Shanghai municipal audit bureau on Friday, showed the expo cost 31.7 billion yuan to build and run - 3.1 billion yuan more than its original budget. Ticket sales were the event's main source of revenue, accounting for 7.36 billion yuan of the total 13 billion yuan in income. A further 3.97 billion yuan from sponsorship and advertising was the next biggest contributor, followed by 674 million yuan in franchising agreements. The figures confirm the extent to which visitor numbers were driven by discounted and free tickets. Ticket sales work out at an average of just over 100 yuan per visitor, the price of a concessionary ticket. Standard tickets ranged from 200 yuan for full-price entry on specific days to 90 yuan for late entry in the evening. Even seven-day tickets cost 900 yuan, an average of 129 yuan per entry. The municipal government handed out at least 10 million tickets - one for every Shanghai household - just before the opening of the event, and it is widely understood that more free or discounted tickets were channelled via state-owned enterprises. It was also openly rumoured among staff at national pavilions that the official gate numbers were inflated, although this was denied by expo organisers. The audit report does not mention such factors. It does, however, show the lengths that expo organisers went to attract attention to the event following lacklustre visitor numbers in its opening month. The report says the original estimate for operating costs - 10.6 billion yuan - was "insufficiently detailed" and had to be revised at an unspecified date. The new figure put costs at just over 12 billion yuan. This revision was likely made in June, when organisers increased the number of live performances and staffing levels and had a marketing drive in neighbouring provinces to boost attendance. Shanghai Mayor Han Zheng said in August last year this would likely push costs over budget. Although the audit report said it found no severe cases of misappropriation, it did censure organisers on a number of issues - principally for failing to estimate operating costs in sufficient detail or revise budgets in a timely manner. However, construction costs were by far and away the main outlay, coming in at 19.7 billion yuan - 1.7 billion yuan over budget. The audit report said the greater costs were due to strong inflation in wages and construction materials over the 3-1/2 years it took to complete the 47 projects, coupled with a number of countries backing out of building their own pavilions and switching to using rented facilities built by the organisers. These costs were paid with 2.66 billion yuan from the Shanghai government's coffers, 2.86 billion yuan in commercial and social donations, 1.2 billion yuan from a dedicated cultural fund, and the sale of 5.5 billion yuan in expo bonds. The remaining 7.5 billion yuan was raised through loans from banks and capital funds and "other methods". The report says that bills for the construction have been "basically" settled or are in the process of being settled, but it does not state the repayment terms or period. The audit is restricted to the 5.28 square kilometre expo park. It does not take into account the massive investment made in the city's transport and other infrastructure in the eight-year run-up to the expo - which some estimates put at 400 billion yuan.

China's angry response to a U.S. Senate vote to move ahead with a bill to punish Beijing for keeping the value of its currency low reflects domestic pressures on the leadership to act tough, but is unlikely to result in any precipitous action, analysts and economists say. China's reaction Tuesday to the 79-19 vote was swift and coordinated. The People's Bank of China cautioned in a statement that passage of the bill won't resolve U.S. domestic economic difficulties but could instead "seriously affect" China's continuing exchange-rate reform and even lead to a trade war. It said that with inflation factored in, the yuan has appreciated "greatly" and is close to a balanced level. China's Foreign Ministry said the bill violates rules of the World Trade Organization, while the Ministry of Commerce described it as "unfair" and in violation of international practice. Economists say they don't expect the angry words will translate into policy shifts or retaliation, at least not while the fate of the bill is up in the air. Even though the vote advanced in the Democrat-controlled Senate, it faces an uncertain future in the Republican-controlled House. "I don't think China will make any big move in response," said UBS economist Wang Tao, adding she believes there is only a small chance the bill will become law. "China won't yield to the pressure from the U.S. or change its gradual approach to yuan exchange-rate reform," Ms. Wang said. The Senate bill seeks to impose tariffs on exports from countries with undervalued currencies. Supporters of the bill complain that China's yuan is undervalued, making its products cheaper on world markets. They say a higher yuan would boost U.S. exports and create thousands of American jobs. Opponents say the measure would accomplish little besides infuriating China, and that the U.S.-Chinese relationship faces far bigger issues. Senior Chinese officials have become increasingly forceful in their approach to the U.S. since the global recession, with many convinced that China is now in the ascendant and the U.S. is in permanent decline. Some feel China has the upper hand as the largest holder of U.S. debt—and the only major economy still growing rapidly. Chinese leaders say the U.S. is to blame for plunging the world into crisis as a result of economic mismanagement, and resent moves that America has taken to boost its recovery, including buying bonds to hold down interest rates —so-called quantitative easing—which they argue is debasing the U.S. dollar and pumping up inflation in China and other emerging economies. Pressure on the Chinese leadership also is coming from a nationalistic public outraged by continued U.S. arms sales to Taiwan and a more forceful U.S. diplomatic engagement with Southeast Asia, where several countries are in territorial disputes with China in the South China Sea. Still, balanced against Chinese assertiveness is a strong desire by China's leaders to avoid upsetting the relationship with the U.S. ahead of 2012, when there will be presidential elections in America and a leadership transition in China. They need external stability to focus on delicate transition politics. Chinese leaders also recognize that in a globalized economy, their own fate is closely linked to that of the U.S., and a trade war would likely be as damaging to China as the U.S.—perhaps even more so given China's greater reliance on exports. But under the surface of harsh response to the Senate vote, Beijing left the door open for reconciliation, reiterating its long-standing pledge to continue exchange-rate reforms. That is likely a sign of lingering hopes that the Republican-controlled U.S. House will vote down the currency bill. Indeed, both the Foreign Ministry and central bank also repeated Tuesday Beijing's standard rhetoric that China will continue to increase the yuan's flexibility over time. There are indications Beijing has been trying to keep the yuan's appreciation intact despite mounting global economic uncertainties caused by the debt woes in Europe and slowing growth in the U.S. In the face of heavy yuan selling last week, triggered by risk aversion and concerns that the Chinese economy will have a hard landing, the central bank kept supporting the yuan's value by setting the currency higher through a daily reference exchange rate. At 6.3859 yuan to the dollar ahead of China's week-long National Day holiday, the yuan was down 0.1% against the U.S. currency in September, but up 6.9% since June 2010, when China ended its currency's two-year peg to the dollar. The Senate's vote appeared to have little notable impact on the yuan in the less restricted offshore Hong Kong market, where the currency mostly tracked its regional peers and remained more or less steady versus the dollar on Tuesday. The Senate vote puts the White House in a delicate position. Like previous administrations, the Obama White House is wary of antagonizing Chinese leaders, whose cooperation it needs not just on economic issues but also on an array of national security matters. But criticizing China remains popular with the public, and many Democrats, including those from big industrial states, say China's currency policy is unfair to U.S. workers. "They use the rules of free trade when it benefits them, and spurn the rules of free trade when it benefits them," said Sen. Charles Schumer (D., N.Y.), a major sponsor of the bill. "For years and years and years, Americans have grimaced, shrugged their shoulders, but never done anything effective" to stop these policies. Opponents of the bill say that instead of potentially sparking a trade war, the U.S. should face its own problems, such as the burgeoning federal budget deficit. "It's like we know what we've got to do but we won't do it," said Sen. Bob Corker (R., Tenn.). "It's like we've got to find a bogeyman." Because House leaders are reluctant to bring up the bill, its future is uncertain. The House overwhelmingly passed a similar bill in September 2010, when Democrats controlled the chamber, but GOP leaders argue today that the new bill could have unintended consequences.

Hong Kong*:  Oct 5 2011 Share

Hong Kong doubled the quota for settling cross-border yuan trade to 8 billion yuan (US$1.25 billion) for the last quarter, in response to a squeeze in interbank liquidity in the offshore yuan market caused by global sell-offs. While the increased limits for the clearing authority – the Bank of China Hong Kong (BOCHK (SEHK: 2388)) – is unlikely to materially alter the weakness of the yuan traded in Hong Kong, it should calm unnerved investors who saw a sharp selloff in CNH markets in the last two weeks. The Hong Kong Monetary Authority (HKMA) said on Monday the total position that needs to be squared through the clearing bank in the fourth quarter may increase compared with past few quarters, but the total net position will not exceed 8 billion yuan. This is not the first time that the clearing authority’s quota has filled up. Authorites had increased limits last year too after heavy premiums commanded by the chinese currency in Hong Kong had led to a demand spike in offshore yuan, filling up the quota last October. Since early this year, the People’s Bank of China allots a quarterly measure of 4 billion yuan to BOCHK at the start of every quarter. Linan Liu, a senior strategist at Deutsche Bank said the increased quota may not be enough to turn the market around but the additional liquidity will help provide reassurance to worried banks. “As markets calm down, there will be more yuan inflows into Hong Kong as companies and investors will look to fill the wide gap between the offshore and the onshore market,” she said. A sharp selloff in Asian bonds and currencies caught up with the offshore yuan markets last month – where bets on yuan gains have been the most concentrated in recent weeks – causing a sudden surge in demand for US dollars and nearly bringing interbank trade in the CNH markets to a halt. That opened up a rare discount between the offshore yuan and the onshore market and as of Monday, the discount was still at more than 1.5 per cent.

The government should seek a central government interpretation of the Basic Law over the right of abode ruling concerning foreign domestic workers, lawmaker Regina Ip Lau Suk-yee said yesterday. She said the government was unlikely to win an appeal against the High Court ruling last week that it was unconstitutional to deny helpers permanent residency because Judge Johnson Lam Man-hon's judgment had been very clear. So the government should ask Beijing for its interpretation of "ordinary resident". Ip said she would meet security chief Ambrose Lee Siu-kwong this week to express her concerns. On Friday, Lam declared as unconstitutional the exclusion of foreign domestic workers from a rule that allows foreigners to apply for the right to settle in the city after seven years of uninterrupted residency. He ruled the provision in the Immigration Ordinance contravenes the Basic Law. The government said it would appeal and that officials would ask for the court's permission to suspend the processing and approval of all right-of-abode applications filed by domestic helpers in the meantime. The government says about 117,000 helpers have been working in Hong Kong for at least seven years. Speaking at the City Forum, Ip, chairwoman of the New People's Party, said the government could not deny permanent residency to foreign domestic helpers once their applications were ruled as being in line with the Basic Law. She said explanatory notes that imposed restrictions on the applications could not be added to the Immigration Ordinance under the Court of First Instance ruling. This meant information such as whether the applicant had reasonable means to support him or herself and whether they had paid taxes would be taken "for reference only" in processing the applications. Speaking at the same event, Joseph Law, chairman of the Hong Kong Employers of Overseas Domestic Helpers Association, said he feared the Immigration Department was powerless to stop an influx of domestic helpers. Law said that since 2003, about 200 foreign domestic helpers had filed applications for permanent residency, but none had been approved. Meanwhile, 8,300 applications had been filed by other foreign nationals last year and 7,000 this year, with a success rate of 90 per cent. Law said a survey of 200 domestic helpers carried out by the association had revealed that about two-thirds would apply for residency once they became eligible. Meanwhile, the Democratic Alliance for the Betterment and Progress of Hong Kong drew hundreds of people to a protest opposing the verdict and urging the government to immediately appeal. A party spokesman said many people feared a sudden increase in the number of permanent residents would put a heavy burden on educational, medical and housing services. Law Yuk-kai, director of the Human Rights Monitor, said the government should address the socioeconomic impact of the ruling rather than attempt to alter the court's decision by seeking Beijing's interpretation of the Basic Law, which would undermine the city's rule of law.

A buyer paid a record price of HK$800,000 for rare piece of calligraphy by the street artist known as the "King of Kowloon" in a Sotheby's sale last night. The recording-breaking work, Calligraphy on Utility Box No2, was one of two on sale at the Convention and Exhibition Centre to feature Tsang Tsou-choi's signature ink calligraphy on a 1.6-metre grey metal box. It resembled the iconic street calligraphy Tsang painted on electrical junction boxes across Kowloon. The work brought HK$650,000 when it went under the hammer, while the buyer also had to pay a premium of HK$150,000 to cover auction expenses. It was part of the sale of the Ullens Collection of Chinese contemporary artworks. The work, along with Tsang's Calligraphy on Utility Box No1, which sold for HK$596,000 last night, was created in 2000. Both lots were sold to an undisclosed Asian buyer from outside Hong Kong. They had an estimated price of HK$200,000 and HK$300,000 each. The previous record for a work by Tsang was HK$500,000 set in 2009. Jonathan Wong Kit-yu, contemporary Asian art specialist at Sotheby's Hong Kong, and artist Joel Chung Yin-chai, a long-time friend of Tsang, both hoped the works would be displayed in Hong Kong. Tsang's street calligraphy has been recognised as an important part of Hong Kong's identity. His works hit the international stage at the 50th Venice Biennale in 2003. Tsang was born in Guangdong province in 1921 and arrived in Hong Kong, barely literate, at the age of 16. At 35, he began to spread his graffiti around town and later worked on paper, household linens, and similar items. He died in 2007.

Executive Council convener Leung Chung-ying formally left his job on Monday to prepare for next year’s chief executive elections – after serving 14 years on the government advisory body. Leung resigned from the post last month, but stayed on to complete his work. One of Leung’s last tasks was to advise Chief Executive Donald Tsang Yam-kuen on his upcoming policy address on October 12. He had earlier revealed his plans to contest the chief executive elections early next year. The contest is expected to be between Leung and former chief secretary Henry Tang Ying-yen. Tang resigned last Monday, but has yet to formally declare his candidacy. After a lunch meeting at Exco, Leung told reporters on Monday it was a “little sad” to leave Exco, but he hoped he could serve Hong Kong in another capacity in the future. Leung said he was now working his election campaign. He plans to announce more details at a later date. Commenting on reports that the central government already had a preferred candidate, Leung said: “I haven’t heard that myself. I have not been told by Beijing not to participate in the forthcoming chief executive elections.” Some Chinese-language newspapers recently reported that Beijing has chosen Tang, quoting unspecified sources.

Hong Kong shares slumped 4.4 per cent on Monday, underperforming much of Asia, as mainland financials and property names dragged the Hang Seng Index to its lowest level in 2-1/2 years, with lackluster turnover and a flight to defensive stocks pointing to increased risk aversion. Some foreign funds were seen liquidating long positions in anticipation of redemption pressures and fears of a hard landing in China after some brokerages last week warned of risks in the economy and the Chinese banking sector. The reports came as a global market rout deepened, prompting many investors to ditch riskier assets for the safety of cash, particularly US dollars. The Hang Seng Index lost 21.5 per cent in the July-September period – its worst quarter in a decade. “I’m not sure whether holding more positions is something to show your clients. Cash is pretty much king and has been for a few months now,” said Benjamin Chang, chief executive officer of LBN Advisors, a firm that manages US$450 million worth of assets in two China funds. “If you are an investor, you either want to see your manager aggressively betting on a recovery or cut positions. Merely holding onto positions now doesn’t make sense at all,” Chang added. The Hang Seng Index finished at 16,822.2 points as turnover declined almost 15 per cent from Friday. Most other Asian markets lost between 1.8 and 3 per cent. The China Enterprise Index slumped 5.7 per cent, due in part to losses for Ping An Insurance (Group) (SEHK: 2318) of China that topped 13 per cent. The stock, which sank to its lowest in 2-1/2 years, has lost about half of its market value in the last quarter. On September 26, Ping An recorded its biggest daily percentage plunge in more than three years – 13.7 per cent – as it was hit by multiple rumours about HSBC selling down its stake and its exposure to the real estate trust business. On Monday, mainland property names also bled. China Resources (SEHK: 0291) Land and China Overseas Land & Investment (SEHK: 0688) each lost more than 11 per cent. Macau casino stocks plunged, with Galaxy Entertainment (SEHK: 0027) losing almost 19 per cent, on fears that a heightened credit squeeze on private firms in China could hurt gambling revenues. Among the few stocks that rose on Monday were defensive plays, such as Power Assets , which gained 0.7 per cent. It has gained nearly 23 per cent this year to date, compared to the 27 per cent decline on the Hang Seng Index. The stock is trading at 13.9 times forward 12-month earnings, compared to a historical median of 11.5 times, according to Thomson Reuters Starmine. Monday’s slump sank the Hang Seng benchmark to a 2-1/2 year low, dipping below the 17,000 level. Near-term chart support is next seen between the April 2009 high at around 15,977 and the September 2008 low at around 16,283. The 61.8 per cent Fibonacci retracement of its rise from the lows October 2008 to its cyclical peak in November last year, seen at around 16,148, is right in that range. Short-selling made up 14 per cent of total turnover last Friday alone and is expected to hover at similarly high levels, if the US dollar maintains its strength against Asian currencies, analysts said. A report by Data Explorers on Monday showed that long bets outnumbered short ones in Hong Kong by slightly more than five times last week, the lowest ratio in 2-1/2 years. This figure is less than half of the this year high, reached in January. Data Explorers said this decline was driven by a combination of short-selling interest that hit an annual high and institutional ownership that sank to a new low for the years last week.

 China*:  Oct 5 2011 Share

The world has done surprisingly well since the Great Recession began at not making things worse with trade protectionism. But that may soon change thanks to the U.S. Senate, which is expected to vote as early as this week on the most dangerous trade legislation in many years, the Currency Exchange Rate Oversight Reform Act. This is when an American President would normally step in and defend the U.S. and world economies, but Barack Obama is bobbing and weaving for his own narrow political ends. This is risky business. Senators Chuck Schumer and Lindsey Graham have pushed since 2005 to impose punitive tariffs on China if the value of the yuan doesn't rise faster. The legislation is now coming to the floor because Senate Democrats want protectionist political cover against unions in return for voting on the free-trade pacts with Colombia, Panama and Korea that President Obama finally sent to Congress yesterday. But what is cynical posturing in Washington may look more threatening to the rest of the world, and once trade wars start they can be hard to stop. Unlike America's last great trade blunder, the Tariff Act of 1930 (aka Smoot-Hawley), the China bill wouldn't raise tariffs across the board, but would instead allow companies to seek countervailing duties by treating a "misaligned" currency as a subsidy. This would nonetheless open the floodgates to applications from American companies, and the resulting tariffs would violate World Trade Organization rules. China would undoubtedly retaliate, meaning companies and consumers in both countries would lose. If other countries follow suit, there would be knock-on effects throughout the global economy. As the erstwhile leader of the world's trading system as well as one of its main beneficiaries, the U.S. bears a special responsibility to avoid this outcome. One reason we are so close to this ledge is that Washington has not led on global and regional liberalization. Free trade is like a bicycle, which needs to be pedaled forward or it tips over. When a President is AWOL on trade as Mr. Obama has been, U.S. politicians succumb to populist temptations. Instead of concentrating on domestic reforms to restore growth, Congressmen tell Americans that their lost prosperity was taken by China rather than by poor policy decisions. So now the U.S. will punish the biggest developing nation, and one of America's main goods suppliers, for its economic success. The last six years are proof that revaluing the yuan is not the key to reducing China's large and persistent trade surplus with the world. The yuan has appreciated by almost 30% since the middle of 2005, when Mr. Schumer was pushing for a 25% revaluation. But the Chinese surplus has mostly grown and occasionally shrunk during this period in response to other forces. This is a repeat of the 1980s, when Congress was bashing Japan for keeping the yen low and running large surpluses. As the yen rose from 360 to the dollar to 80 over 25 years, the surplus persisted and continues today, though it has shrunk in relative terms since the bursting of Japan's bubble. The U.S. can do more to help Beijing avoid Japan's bubble and bust by urging it to reform the financial system that has favored exports. There are already signs that China's state-directed credit explosion of 2009 is leading to an increase in nonperforming bank loans, as well as state firms and local governments in need of bailouts. Wages are also rising, making some Chinese exports less competitive. As China comes under economic and political strain, it's worth remembering that a major benefit of free trade is its stabilizing effect on rising powers like China. In 1930, Smoot-Hawley and the retaliation it spurred contributed to a collapse of world trade and deepened the global depression. So too did a series of competitive currency devaluations, another tool of trade war. The global economic collapse gave Japan and Germany a push toward fascism. Once trade with the developed world was closed off, ambitious Japanese officers took the initiative to expand the empire to secure markets and raw materials. Trade brinksmanship is always dangerous, but especially when the world economic recovery is beset by so many other problems. Yet the U.S. political system is now slouching toward protectionism less by design than by a general abdication of leadership. Democrats want to appease labor to hold the Senate next year. The White House wants to appease Senate Democrats and labor, so it has failed to speak against the tariff bill. White House spokesman Jay Carney says only that it is "reviewing" the legislation and that "we share the goal." Senate Republicans aren't about to stand in the way, especially when their Presidential front-runner, the supposedly business savvy Mitt Romney, is also calling for unilateral trade duties against China to give his candidacy a populist edge. John Boehner's House Republicans may be the last obstacle to such a destructive bill passing. 

Mainland shipyards are set to consolidate as declining orders coupled with tighter credit controls make it harder for smaller shipyards to compete with their larger rivals. "Shipyard overcapacity is a big problem and I see a lot of consolidation ultimately taking place," said Ong Choo Kiat, president of Taiwanese shipowner U-Ming Marine Transport. Ong said mainland authorities were "trying very hard to consolidate" the shipbuilding industry into around five companies that currently have 50 to 60 per cent of total shipbuilding capacity. These include the two largest state-owned groups, China State Shipbuilding and China Shipbuilding Industry, along with private shipbuilders such as China Rongsheng Heavy Industries. "I can't see how smaller yards can survive," Ong said, noting the higher labour and raw material costs, few orders and difficulty securing credit. This view was reinforced by figures from the China Association of the National Shipbuilding Industry, showing the volume of new orders fell 29.2 per cent to 23.58 million deadweight tonnes in the first seven months compared with a year ago. It said many shipyards had not received a single order in that period. The data was not as bad as 2009, when the volume of orders fell 70 per cent to 16.92 million dwt between January and September after bank credit and global trade came to a standstill following the 2008 financial crisis. Against this background, said Ong, smaller yards were likely to be taken over by bigger yards. His views echoed those of China Rongsheng chief financial officer Sean Wang Shaojian, who said there was scope for the industry to consolidate, with larger shipyards focused on higher-value vessels including those for the offshore oil industry. China Rongsheng has already reduced its order target for new ships this year from around US$3 billion in spring to US$2.3 billion in August. Dale Ploughman, chief executive of Seanergy Maritime Holdings, said the price of a 76,000 dwt Panamax dry bulk carrier was about US$29 million. "We cannot get the charter rate out of the market to make it worthwhile to order these ships," he said. Maritime classification societies, which oversee the construction of ships to ensure vessels meet international safety standards, estimate there are some 1,500 shipyards in China capable of building oceangoing merchant vessels, although shipping industry sources put the number at around 3,500. Since the shipping boom in 2003 there has been unfettered growth in shipbuilding capacity as mainland authorities made it a priority for China to become the world's largest shipbuilding nation by 2015. Ministry of Industry and Information Technology data show the mainland overtook South Korea last year to become the world's biggest shipbuilder. It said the country's shipyards built ships totalling 65.6 million deadweight tonnes last year, although actual shipbuilding capacity is estimated to be closer to 100 million dwt. But there has been a dearth of orders this year as shipowners hold back on new contracts, fearing there are already too many ships on order.

Shares of the world's No 2 insurer Ping An plunged by more than 12 per cent in morning trade on Monday, hitting their lowest levels in more than two and a half years, hit by funds selling out in preparation for redemptions back home. Ping An shares were down more than 12 per cent to HK$38.85, their weakest level since March 2009. By comparison, the benchmark Hang Seng Index was down 4.4 per cent. Other China-related financial shares also fell, with Bank of China, Agricultural Bank of China and China Merchants Bank (SEHK: 3968) all down more than 6 per cent, pushing the China Enterprise Index of top, locally listed mainland stocks down more than 5 per cent. One trader said that information from the Hong Kong bourse showed foreign securities firms were doing most of the trade in Ping An shares, likely selling on behalf of clients. Ping An, which is about 16 per cent owned by HSBC , has long been popular with many foreign funds. For example, Fidelity star fund manager Anthony Bolton’s China Special Situations Fund counted Ping An as its second-biggest holding at the end of August. Monday’s fall comes after Ping An recorded its biggest daily percentage plunge in more than three years on September 26, hit by multiple rumours about HSBC selling down its stake and its exposure to the real estate trust business. Ping An said then that all its operations were running normally.

China's Hanlong Mining has agreed to raise its offer price for Sundance Resources to secure an agreed takeover, valuing the Australian miner at more than US$1.5 billion, sources said Monday. A successful deal would give Hanlong control of a major iron ore mine in west Africa and help feed China’s demand for metals. Hanlong already owns 18.6 per cent of the company. Hanlong has increased its offer from its initial A$0.50-per-share bid made on July 18, three sources with direct knowledge of the deal told reporters. The new bid would likely be announced by Tuesday, after Sundance agrees to it, they said. The sources could not be identified because they were not authorised to talk to the media. A Chinese media report said Hanlong had upped its offer, worth around US$1.5 billion under its original approach, by 14 per cent. The deal comes despite an insider-trading probe involving several Hanlong executives which some investors had feared would jeopardise a successful takeover. “They are in the advanced stage of negotiations ... that certainly has not slowed down the process,” one of the sources said. Australia’s corporate watchdog last month launched an insider-trading probe into several executives at Hanlong, but both firms said the probe would not impact their talks. Hanlong’s initial approach was not backed by Sundance. The Australian miner earlier on Monday requested its shares be placed in a trading halt ahead of an announcement on Hanlong’s proposal by Wednesday. Sundance shares last traded at 43 cents. The sources did not reveal the new price, although another source familiar with the situation told Reuters in August that Sundance was holding out for 20 per cent more than the initial offer. China’s Sichuan Daily newspaper reported that the offer price had been raised to A$0.57. Sundance had been in talks with other parties on investments to fund the estimated US$4.7 billion needed for the Mbalam mine, its only significant asset, which straddles the Republics of Congo and Cameroon. The Mbalam project is still awaiting approval from the governments of Cameroon and Congo, one of the sources said Monday. Hanlong, which has stakes in explorers in Australia and the United States, wants to become the world’s fourth-largest iron ore supplier. In November last year, Export-Import Bank of China agreed to lend Hanlong, which also has interests in energy, real estate, pharmaceuticals, chemicals and technology, up to US$1.5 billion to fund overseas expansion. Earlier this year, it launched a separate bid for Bannerman Resources , which is looking for uranium in Namibia. Sundance declined to comment beyond its statement seeking a trading halt. Hanlong is being advised by Bank of America-Merrill Lynch. UBS is advising Sundance. Hanlong last month said it stood down three employees pending the outcome of the probe into insider trading in shares of Sundance. Sundance shares fell 10 per cent on September 13, when the Australian Securities and Investments Commission (ASIC) announced the probe.

Hong Kong*:  Oct 4 2011 Share

While most global businesses are keen to talk up their plans for Asia, fewer of them have yet shifted operations to this part of the world. Claire Huang, who runs marketing globally for all of Bank of America Corp.'s institutional business, relocated from Boston to Hong Kong earlier this year. "You don't have to be a brain surgeon to realize you better put some resources behind your business here," says Ms. Huang. "One half of the world's population, one third of the world's GDP, five of the top 10 countries for high-net-worth individuals. The facts are overwhelming." On home turf, Bank of America faces stiff challenges amid economic uncertainty. The bank recently announced plans to cut 30,000 jobs, its shares have lost more than half their value over the past six months, and the company is facing multiple shareholder lawsuits related to the financial crisis. But in Asia, Ms. Huang says there is a more optimistic economic outlook. "We don't negate the fact those things [in the U.S. banking sector] are going on. But our clients are interested in growing their businesses, so we just have so much work to do." Ms. Huang recently spoke with Duncan Mavin. The following interview has been edited: WSJ: Given the announcement of 30,000 layoffs at Bank of America, how is this affecting the business in Asia with regard to job numbers, expense constraints and morale? Ms. Huang: Developing our international business is a key strategic priority for us. In the short term, we cannot be immune to the many current uncertainties affecting the global economy, and our team understands that. Our market shares are increasing in many areas and that is encouraging. What motivates us most is hearing how we can help our Asia clients to achieve their goals, both here locally and around the world. WSJ: Is there a job to do in terms of communicating to staff and steadying the ship given the uncertainty in the U.S. banking sector? Ms. Huang: I think you'll find the mind-set of people here is that, "OK, I have an understanding of what's going on there, now let me get on with my job." It's a very quick shift because we have our hands full, because there's so much opportunity. Yes, we recognize that's going on, but we have to keep growing our business, so let's go do it. WSJ: Tell me about the decision to relocate from Boston. Ms. Huang: I think more of it will happen. In the industry, let alone our company, there will be more executives with global roles based in Asia. I don't have a crystal ball. But I think the idea of making sure the connectivity happens is the principle. I've only been here six months, so I'm kind of a test market. I would think other companies would think of similar moves. WSJ: Did you bring a team with you or hire a new one? Ms. Huang: It's a blend. I still have a team in Charlotte, Boston, London and New York. And I'm building a team here. We had a team here already but we need more help. And yes, I do have a lot of late-night calls. The difficult part is when they get you both ways. An early morning and an evening conference call. WSJ: Are there things that have surprised you since you moved here? Ms. Huang: I find Americans very direct. They speak a lot in meetings. And I like that. You come to China, and people listen more than they speak. You almost have to draw things out of people. I like that too because listening is a good thing. The best of both worlds would be somewhere in between. Also, I guess I had in the back of my mind that this is the United States of Asia. But it's not. That's such an American way of thinking. Every country has its nuances. WSJ: One of your roles is to lead the bank's corporate social responsibility efforts in the region. Do people here understand the value of CSR? Ms. Huang: It's a budding interest and depends on the country. But when people see it they say it makes sense. An example—in India, we're going to restore a 16th Century book of fables called the Panchatantra. It's a national treasure. Our partners and our clients see that it shows we're interested in their local culture, and it shows commitment to the country. When we give concrete examples, management gets it. We've had so much client interest in China to attend the Beijing Music Festival (which we also sponsor). People are starting to get it. WSJ: Is CSR even more important for Bank of America in Asia than it is in the U.S.? Ms. Huang: No one really understands how to make CSR blossom in Asia and make it an enabler to our business. I feel very strongly about that. I sit on the executive committee as well as the global board of our [philanthropic] foundation, to make sure this is in sync with the business. We need to show we're here for the long term and we're committed to our clients, and we're doing the right things for our local culture. WSJ: How do you measure the success of CSR projects? Ms. Huang: We have surveys that measure client relationships, the health of our brand and employee engagement. It's a little bit of an art and a science.

It was like the changing of the guard as Hong Kong's present and probable future leaders gathered to celebrate National Day yesterday. With both the men in the running to succeed him looking on, Chief Executive Donald Tsang Yam-kuen pledged to use his final policy address to tackle what he said were the city's most pressing problems. "There are various hurdles and conflicts during different stages of social development. What residents are concerned about is housing, the wealth gap and the ageing population ... I will seize the chance in the next policy address and propose pragmatic and practical solutions," Tsang said in his speech at a National Day reception at the Convention and Exhibition Centre in Wan Chai. Chief executive hopefuls Leung Chun-ying and Henry Tang Ying-yen struck contrasting tones in their race for the top job. Leung, the outgoing convenor of the Executive Council, joined Tsang on stage for the traditional toast, along with Tang's replacement as chief secretary, Stephen Lam Sui-lung. Leung, who announced his Exco resignation on September 20 to prepare for the race, said he would step down tomorrow. His campaign plans were going "smoothly" and he would announce his cabinet preferences soon. "I will unveil my cabinet after confirming all the names ... progress has been smooth" Leung said. "I will leave Exco on Monday." But likely rival Tang remained coy about his plans, despite resigning last week. "I am still considering [the bid] and hope to listen to more views. I have yet to reach the stage of forming a cabinet," said Tang, who attended the reception as a guest. Asked to evaluate his chances of beating Leung in the small-circle election, Tang said the public could judge him by his achievements. "I believe electors will listen to what one says and observe what one does," he said. The 1,200-member Election Committee will pick the next chief executive in March. Elsewhere, protesters gathered to denounce Lam's appointment as chief secretary. Never a popular figure, his ratings have plunged recently over his handling of the administration's plan to scrap Legislative Council by-elections. But most people's attention was focused on the fireworks over Victoria Harbour, which drew a crowd of 260,000 people, according to police. The 23-minute show cost more than HK$8 million. Crowds earlier turned out for the open day at the garrison run by the People's Liberation Army on Stonecutters Island. In Beijing, President Hu Jintao officially marked the start of the week-long holiday on the mainland with a ceremony in Tiananmen Square. An estimated 75.5 million people used land transport services, a 10 per cent increase over last year, Xinhua said.

Fire Services Department chief Gregory Lo Chun-hung expressed relief as the curtain came down on his 38 years of public service yesterday. Lo, who joined the service in 1975 after two years as a civil servant, said the job of a fireman meant more than just picking up a pay cheque. "I have always told my colleagues that our job is not just for making money; we have taken a job from God," said Lo, who is succeeded by his former deputy, Andy Chan Chor-kam. During his four-year tenure as chief, the city suffered several deadly fires, among them the 2008 blaze at Cornwall Court in Mong Kok in which four people died, including two firefighters. These raised concerns about building safety and provoked criticism for the department's allegedly slow equipment upgrades. But the 57-year-old yesterday gave a stout defence of the service, saying that upgrades to equipment had always been in the pipeline. "There are some reports that we only change our equipment after disasters, but they were unjust," he said. "For example, before the Cornwall Court incident we had already obtained funding to change the breathing apparatus. But we just could not get the new equipment immediately," he said. Asked about unforgettable moments of his career, he talked about the grief of losing colleagues in the line of duty. "We as firemen are not afraid of tough tasks. But I admit that one thing I am afraid of is to see the relatives of deceased colleagues." Lo plans to spend his retirement hiking and doing voluntary work.

People visit a warship at a barrack of People's Liberation Army (PLA) Hong Kong Garrison in Hong Kong, on Oct 1, 2011. A barrack of PLA Hong Kong Garrison was open to public on Saturday in celebration of the National Day, which attracted some 15,000 visitors. 

 China*:  Oct 4 2011 Share

A video presentation featuring the ancient Chinese sage Confucius and his home province of Shandong began showing in New York's Times Square on Saturday (Beijing Time), according to the Information Office of the provincial government. In the 30-second video, Confucius greets the audience with a traditional Chinese courtesy by bowing with his hands folded in front. The black-and-white image of Confucius was taken from a painting by renowned Tang Dynasty painter Wu Daozi (680-759). A stone carving based on the original painting is kept at the Confucius Temple in Qufu, Confucius' birthplace in eastern China. The video also shows some of Shandong's scenery, including the Confucius Temple, Mount Taishan, the Yellow River and the port city of Qingdao where Olympic sailing competitions were held in 2008. Starting Saturday, the video will be shown on a 238-square-meter screen in the Times Square to promote a confident and gracious image of China. "I think the video will receive a warm welcome," said Liu Chang, deputy editor-in-chief of Nouvelles d'Europe and a professor at Communication University of China. Confucius and his school of thought are widely recognized throughout the world, he said. "When former French President Francois Mitterrand visited Confucius' hometown during a visit to China in 1983, he took out a French version of the 'Analects of Confucius' and read it aloud before the tour guide tried to explain who Confucius was." The sage, who lived about 2,500 years ago, has been at the center of Chinese civilization for nearly two millennia. China began setting up Confucius Institutes in 2004 to publicize Chinese language and culture throughout the world. More than 300 Confucius Institutes have been established in over 100 countries.

Li Na bows out of China Open first round - Li Na became the biggest seed casualty in opening round of China Open on Sunday, slumping to a 6-4, 6-0 defeat to unknown Romanian qualifier Monica Niculescu.

China's railways carried a record 8.928 million passengers throughout the country on Oct. 1, the country's National Day, the Ministry of Railways (MOR) said Sunday. Railway passengers soared 7.7 percent Saturday from the previous National Day, the MOR said. A surge in both long- and short-distance travelers contributed to the heavy traffic, according to the ministry. A total of 310 temporary trains were put into service Saturday, the first day of the country's week-long holiday, the ministry said. Train stations in major cities such as Taiyuan, Wuhan, Jinan, Guangzhou and Urumqi handled 20 percent more passengers Saturday than the same time last year. Traveling by railway is the primary transportation mode for Chinese travelers. The sector has the difficult task of catering to massive increases in travelers during the country's two week-long holidays, namely the Spring Festival and National Day.

Jack Ma, the founder and chief executive of Chinese e-commerce giant Alibaba (SEHK: 1688s), is keen on buying Yahoo if the opportunity presents itself, and has held discussions with other potential buyers about options. Acquiring Yahoo could help Ma expand his online empire into an important internet market. Asked whether Alibaba might like to pick up the ailing United States internet company, Ma, whose company is 40 per cent owned by Yahoo, told an audience at Stanford University that he would be "very interested in Yahoo because our Alibaba Group is so important to Yahoo, and Yahoo is also very important to us". Ma's existing relationship with Yahoo might give him an advantage in putting a deal together, said Brett Harris, an analyst at Gabelli & Co in New York. "It would make sense for Alibaba to be involved because they own such a large stake," Harris said. Yahoo shares leapt 5 per cent to US$13.80 in after-hours trading. Ma also said he planned to spend the next year in the US learning more about the country and its market. His company and Yahoo have a relationship which dates back to 2005. That relationship has become strained in recent years. Alibaba reached an agreement in July with Yahoo, following a four-month dispute initiated after Alibaba transferred Alipay - China's most popular online-payment service - to a Chinese company controlled by Ma. The latter's attempts to buy back some of Yahoo's stake in his company were rebuffed by former Yahoo chief executive Carol Bartz, who was sacked last month. Ma's role in the Alipay dispute might make it more difficult for his company to acquire Yahoo, said Laura Martin, an analyst at Needham & Co in Los Angeles. "Jack Ma has damaged his credibility in American capital markets by his transfer of Alipay," Martin said.

 

Portrait of Sun Yat-sen, the leader of the 1911 Revolution that ended imperial rule in China, is seen in Tian'anmen Square of Beijing, capital of China, Oct 1, 2011. The giant protrait was installed here Saturday to mark the 100th anniversary of the 1911 Revolution.

More and more couples are choosing exotic locations abroad for their wedding days, Guo Shuhan reports. The newlyweds stand on a polished marble floor covered with white-and-yellow frangipani, arm-in-arm, with joyful smiles on their faces. Fresh white roses are strewn along the aisle. Noon sunshine pours into the glass chapel, from which the blue Indian Ocean can be seen. In the evening, at a candlelit dinner on the beach, they sit on elaborately carved chairs, facing each other on either side of a 3-meter-long dining table and raise a toast. The scenes look as if they are from a TV drama, but they are actually wedding photos of Xun Lu and Men Mingren and were taken in May, in Bali, Indonesia. Like many other young couples they were tired of trite posed portraits taken in front of fake settings at photo studios and wanted more personalized and lively wedding photos. A picture of them running on the lawn beside the chapel hangs on their living room wall. "Satisfied, happy and unforgettable," says 25-year-old Xun of the wedding photo experience. Ke Lijuan, a customer representative of Wedding Tours International, which organized the couple's photoshoot and specializes in providing wedding services in Bali, says business has improved since the company first participated in the Marriage Expo, in Beijing, 2009, when few people gave their counter a second glance. "The next year people were curious about going abroad to do their wedding photos. This year, they started to compare our service with that of our counterparts," Ke says. "Wedding photos set in an exotic environment bring sweeter recollections. When people thumb through their photos, it's just like reviewing a romantic story." The customer representative says people are inclined to combine a holiday with a wedding ceremony and honeymoon, which is economic and saves time. Li Yang, Wedding Tours International's marketing manager, says the company assisted 26 couples with their wedding photos by September 2011, which is as many as it had served in 2009. The figure accounts for just 10 percent of the consultations it has, however, as many couples contact the company just a few weeks before their big day. However, preparations need to be made about six months in advance. Rejected visas and higher costs are the main obstacles for an overseas wedding, Li says. The most sought after travel destinations are Bali, Phuket Island in Thailand and the Maldives, where visitors can apply for visas on arrival and are cheaper than European countries. Men Mingren says his wedding trip was "fairly worthwhile", although it cost nearly 60,000 yuan ($9,400), which included a wedding ceremony in Bali, a 6-minute video clip, tourist trips and a honeymoon of 15 days, in total, to Bali and South Korea. Paris was one of Yang Yawei's dream destinations when she imagined her wedding in 2008, but the near-100,000 yuan cost was too much. The Beijinger instead went to Mount Siguniang, or Mount Four Sisters, in Sichuan province's Aba Tibetan and Qiang autonomous prefecture, as she had long been enchanted by the thrilling views of snow-capped mountains. Although she suffered from altitude sickness at more than 4,300 meters above sea level, which turned her lips blue and forced her to take frequent breaks, she managed to present a smiling face for the lens amid some breathtaking landscapes. "I knew it would be cold, but never thought about the sickness," recalls Yang. "I wanted a sense of grandness and dignity. And I thought the snow-capped mountain would produce a tremendous moment. It was quite romantic when the snowflakes drifted in the wind around us." The trend of going away for wedding photos emerged five or six years ago, says Shan Shan, manager of Vision Two Photographic Organization's flagship studio in Chengdu, Sichuan province. The company, established in 2004, claims to be the country's largest wedding photo studio for location shooting. Shan says that since 2008 her studio has taken nearly 1,000 wedding photos of couples at Qinghai Lake in Qinghai province. The company's studio in Sanya, Hainan province, received about 1,000 couples in 2007 from Yunnan, Guizhou and Sichuan provinces. Nearly 2,200 pairs have arrived during the first nine months this year. "Brides not only want themselves to be perfect in their wedding photos, but also seek natural and personalized backgrounds - ifferent from that of their relatives, friends and colleagues. Used to the scenes of Guilin, Guangxi Zhuang autonomous region, Huang Yu and her husband posed among groves of colorful lilies at Shixianghu Lake, near Chengdu, for their wedding photos. They also beamed with delight in Bali. "If possible, we plan to mark every wedding anniversary with a new set of wedding photos taken in different locations." Huang says. "It's not just simple travel experiences, these photos will also be testimonies to our lifelong companionship."

Troubles among small manufacturers in the bellwether Chinese city of Wenzhou are putting a cloud over a key part of China's economy, further shaking investor confidence and underscoring the stakes as Beijing tries to strike a balance between fostering growth and containing inflation. More than two-dozen small, private businesses in the eastern city known for its entrepreneurial success have gone belly up in recent days because they couldn't repay maturing bank loans, according to state media reports. Wenzhou officials on Thursday urged banks to limit lending rates and make more funds available to small businesses amid worries about a credit crunch. One of the businesses that closed this week was Zhejiang Xiang Yuan Steel Industry Co., state media said. A sales representative there who gave only his surname, Li, attributed the closure to pulled bank credit. He said the company had more than 100 employees, but he declined to comment further. Others expressed worry over the business environment in Wenzhou. "The government has promised support for private businesses for years, and I've heard enough of it," said Qu Guoning, who runs one of the hundreds of small makers of electric wires and cables in the city and is fretting about how he will fund a planned business expansion. The reports have added to downward pressure in China's stock and currency markets because Wenzhou was one of the first places to boom when China began to embrace private enterprise three decades ago and is considered the cradle of private-business ownership. "Numerous reports of debt distress in Wenzhou have contributed to the latest iteration of China hard-landing anxiety," said Tim Condon, Singapore-based chief Asia economist with ING Groep NV. "The fear is that Wenzhou is the tip of an iceberg." Further adding to worries over the small manufacturing sector, the HSBC China Manufacturing Purchasing Managers Index on Friday suggested manufacturing activity in September declined for the third straight time. The index is considered to be a gauge of the private sector's performance because it includes small companies. Analysts estimate the small- and medium-sized businesses in the private sector account for 80% of the country's jobs and more than half of economic output. Damaged also by broader global market turmoil, China's benchmark Shanghai Composite Index fell 6.12 points, or 0.3%, to 2359.22 points Friday, its lowest close since April 2009. In currency markets, traders sent the yuan lower against the U.S. dollar even as China's central bank guided the currency higher. The move tested the trading limits Beijing uses to quell currency volatility for the third straight day. China is constraining lending as part of its effort to tame inflation, which was spurred in part by its massive investment stimulus during the global financial crisis. But its clampdown on bank credit has put pressure on the private sector, leading to growing fears of a sharp slowdown of the economy that so far has served as a counterweight to weakened economies in the U.S. and Europe. Wenzhou, a city of more than 1.9 million people, rose to prominence over the years for making cigarette lighters but is now known for its heavy concentrations of everything from sophisticated electronics manufacturing to property development. Its 360,000 small- and medium-sized enterprises account for more than 90% of the city's industrial output, which amounted to 271.5 billion yuan ($42.4 billion) in the first eight months of this year, according to government estimates. But financial woes of its small manufacturers have intensified since last year, when China moved to rein in bank lending. Private companies—"which China's state banks have traditionally underserved in favor of lending to massive state-owned enterprises—have found financing increasingly hard to come by. In the first seven months of the year, Wenzhou enterprises posted a total of 640 million yuan (about $100 million) in losses, 220 million yuan more than a year earlier, according to local government data. Zhou Dewen, head of the Wenzhou Small- and Medium-sized Enterprises Promotion Association, a trade group, said "banks are lending at usurious rates" in some cases. A number of the businesses that have closed their doors in recent weeks are members of his group, Mr. Zhou said, though he declined to elaborate. Chinese officials have said repeatedly they don't anticipate a wave of small-company bankruptcies and have suggested ways to help the sector. In August, for instance, the National Development and the National Development and Reform Commission, China's top economic planning agency, unveiled new rules to encourage private companies to invest in what it calls "new strategic industries" including alternative energy, biotechnology and advanced equipment manufacturing, pledging that qualified private companies will be allowed to raise money by issuing bonds and stocks. Mr. Qu, owner of the company that makes wires and cables, said he is planning to expand his business into making household appliances, a line of business that promises greater profitability, but which would need "tens of millions" of yuan in investment. Financing, he said, is difficult to get. Mr. Qu said he is thinking about borrowing against the property he owns. "But the government's harsh crackdown on real estate has limited my ability to borrow using property as collateral," he said. 

Hong Kong*:  Oct 3 2011 Share

Shopping mall developer CapitaMalls Asia Ltd. has received approval-in-principle to proceed with a secondary listing on the Hong Kong stock exchange, jumping a key hurdle in its plans for tapping Asia's largest capital markets to fuel growth in China. The plan echoes recent moves by other Singapore companies to finance regional expansion via equity raisings in Hong Kong, a major financial center providing access to China's growing wealth pool. These companies include real-estate firm Ascendas Group, which is seeking regulatory approval to list a yuan-denominated real estate investment trust in the former British colony, according to people familiar with the situation. CapitaMalls Asia said in a statement on Friday that it expects to list by way of introduction—without any equity raising—on the Hong Kong bourse's main board on Oct. 18, subject to final approval by the exchange's listing committee. The company—a unit of Southeast Asia's largest property developer by market capitalization, CapitaLand Ltd.—said the listing complements its strategy in the key China market, which accounts for 42% of its total property portfolio. Like many other companies with significant assets in China, CapitaMalls Asia hopes a Hong Kong listing can raise its profile as a China play. "Our proposed secondary listing on HKEx will widen our investor base and make us more attractive to investors both in Hong Kong and China, which will augment our growth in China," CapitaLand Chief Executive Liew Mun Leong said in a statement. The listing "will enable us to tap capital from the top two financial markets in Asia in the future." CapitaMalls Asia either owns, manages or is developing 55 malls across 35 cities in China. On Thursday, it announced plans to invest about S$637 million in a 50% stake of a S$1.28 billion joint venture to develop a retail and office complex in the mainland's eastern Suzhou city. Earlier this month, people familiar with the situation said Ascendas China Commercial REIT is seeking Hong Kong stock exchange approval for its plan to raise US$300 million-US$500 million. Ascendas China Commercial REIT owns three commercial buildings in Shanghai, and its parent company—a subsidiary of Singapore government industrial infrastructure planning agency JTC Corp.—holds industrial and commercial properties across Asia, including China. China International Capital Corp. and JP Morgan are the joint sponsors of CapitaMalls Asia's proposed secondary listing.

 China*:  Oct 3 2011 Share

Even as some travel destinations struggle to attract tourists, flocks of Chinese are expected to go overseas during the National Day holiday, according to the country's top tourism think tank. The China Tourism Academy, a research institute, forecasts that 2.2 million Chinese tourists will travel overseas during the weeklong holiday that starts on Oct 1. The number of outbound tourists is expected to increase by a double-digit percentage above what it was in the same period this past year, the academy said. And travelers during the holiday are expected to spend $950 each on average, or $2.1 billion in total. "Outbound travel has become more attractive to the Chinese since some overseas destinations are not as expensive as domestic resorts, which are usually not comfortable places to visit because too many people go to them during the holiday," Dai Bin, head of the academy, said in an interview with China Central Television. According to the academy, the Maldives, Phuket Island in Thailand, Bali Island in Indonesia, Hong Kong and South Korea are expected to be among the destinations preferred by Chinese mainland tourists during the holiday. They will be popular because they can provide both good accommodations and tax deductions to Chinese tourists who buy luxury goods. Dai also noted that such places are offering more services in Mandarin. The holiday boom in travel has also helped the tourism industry to regain some of the momentum it lost during a year of natural disasters and political turmoil. "For the month of October, we have seen better sales of tours to Japan," said Yao Yao, marketing manager with the Beijing-based tour company China Comfort Travel. Yao said the country is recovering gradually from the devastating tsunami that hit its northeast coast and damaged a nuclear power plant in March, leading to a radiation leak. That steady improvement has helped to alleviate the public's fears about traveling in the country. Dong Xiang, deputy manager of China Travel Service's outbound tourism department, said the number of tourists who plan to go to Japan in October exceeds the number who went in the past three months, although it is still far below the number of tourists who went to Japan in October 2010. "The market has not completely recovered," Dong said. "But it has bounced back more quickly than we thought." Egypt, which was once the most popular destination in Africa among the Chinese, has also had trouble attracting tourists. Rather than disasters, though, its difficulties stem from unstable politics. Wang Di, manager of the Beijing Tourism Group's Middle East and Africa tourism department, said it has been difficult in recent times to sell tours to Egypt. "Clients think it's not wise to travel to a country where a government authority has not yet established," Wang said. Even so, Wang said tourists, rather than abandon their travel plans, will usually travel to alternative destinations. In Africa, that tendency has been a boon to countries such as Kenya and South Africa. Last year, the number of Chinese travelers going overseas hit 57.39 million, which was up by 20.4 percent above the number for the previous year, according to the China National Tourism Administration. According to the Pacific Asia Travel Association, a non-profit travel trade association in the area, travelers in China spend $55 billion abroad every year. Fifteen years ago, the figure was $8 billion. In 2010, China came in fourth in a ranking of countries whose citizens spend the most in their overseas travels.

Chinese national flag guards escort the flag across the Chang'an Avenue in Beijing, capital of China, Oct 1, 2011. 

Middle school students sing songs as they hold Chinese national flags during a ceremony to celebrate the National Day in Huaying, Sichuan province on Sept 30, 2011. 

Rapidly rising wages in China have reached the point at which foreign manufacturers need to give up on the notion of the country as a low-cost production base, a senior Hyundai Motor Co. executive said Thursday. Jae-Man Noh, head of Hyundai's joint-venture operations in China, said average manufacturing-worker wages in China—about 27,000 yuan ($4,200) a year per worker in 2009—are likely to double by 2015 from current levels. Auto makers are expected to be affected as much as other industries by the trend, if not more, Mr. Noh said, adding that wage costs for many foreign auto manufacturers already have doubled in less than a decade. He said that a rival foreign auto maker that Hyundai has researched has seen worker wages in China rise to 49,000 yuan a year per worker in 2010, up from 24,500 yuan a year in 2003. "We need to let go of our perception that the Chinese market is a low-cost production base," Mr. Noh told a group of reporters at Hyundai's office in Beijing. He didn't offer specifics on Hyundai's wage costs in China. Mr. Noh leads Beijing Hyundai Motors Co., a joint venture between the South Korean auto maker and Beijing Automotive Industry Holding Co. In contrast to earlier decades, when the flow of Chinese workers from the countryside pushed factory labor costs down, China's workers now are demanding higher wages and better jobs. Manufacturing wages, in fact, have begun rising "dramatically" since last year, according to Mr. Noh, with auto makers taking the brunt of it. The Hyundai executive pointed to a series of high-profile labor strikes that hit Japanese-run auto factories and others in China last year. Normally quick to break up organized worker walkouts, the government tolerated those strikes to a large extent last year, and minimum wages in some parts of China have been rising steadily since. China still offers other draws, including strong economic growth, an increasingly affluent population and a quickly growing car culture. Plus, Hyundai's average factory labor cost in China is still one-fifth of that in South Korea, Mr. Noh said. What concerns him most is the dramatic rate of increase, he said. This trend is "inevitable" as the Chinese economy grows and society improves, Mr. Noh said. Despite rising labor costs, China's auto exports will continue to increase in part because of excess auto-production capacity in the country, he said. China's central government will also continue to focus on automotive exports, he said.

Hong Kong*:  Oct 2 2011 Share

Several key issues involving the construction of the West Kowloon arts hub have yet to be resolved, planners said yesterday, as the cultural district's latest design went on display for public comment. The issues included determining the scale of the district's underground parking space, the cost of competitions to design several iconic buildings for the area and working with government departments on improving pedestrian access to the 42-hectare site, which has long been tagged by locals living in nearby areas as a "lonely island". Despite these concerns, British architect Norman Foster's latest design for the West Kowloon Cultural District was unveiled yesterday as a scale model, going on display at the Heritage Interpretation Centre in Kowloon Park as part of the HK$21.6 billion project's month-long public consultation. Bernard Lim Wan-fung, president of the Institute of Urban Design, said that while Foster's idea to put traffic underground to reduce pollution and create more open space was a good one, for cost reasons the West Kowloon Cultural District Authority needed to ensure the subterranean space was not too large. On Thursday, it became clear that the project would be delayed by at least two years, largely because of rising costs, a development which Lim believed had created new priorities. "Especially now, if they say there is a rising cost problem, the authority should put more emphasis on the use of public transport rather than private cars, and improve connections to nearby MTR stations," said Lim, an architect. "Underground space is costly to excavate and ventilate. The seaside location would make the digging work even more expensive." Lim also believed that the design competitions for several iconic buildings in the precinct, such as the Cantonese opera theatre, should set a budget for entrants. The latest design also includes several ground-level pedestrian paths, footbridges and subways linking the site to Austin Road and Canton Road, but it is not clear how these would allow pedestrians to cross the busy roads to reach the site. Vincent Ng Wing-shun, vice-president of the Institute for Urban Design, said the easiest way to improve access to the arts hub would probably be by water transport. The latest design has added two piers but by law they must be subject to feasibility studies as their construction will involve harbour reclamation. Any reclamation projects must fulfil an "overriding public need", according to a decision by the Court of Final Appeal in 2004. Ng, who is also a member of the Harbourfront Commission, said the watchdog would soon convene a taskforce to look at providing water transport from different points around the harbour. "We encourage the use of boats, like those in Sydney and Venice. I think this would be the quickest way to link West Kowloon to Hong Kong Island, and maybe even Tsim Sha Tsui," he said. Ng believed there would be little obstacle to small-scale reclamation as the most active opponent, the Society for Protection of the Harbour, said last month it would not pose any more legal challenges as long as small projects like piers were for public benefit. Michael Lynch, chief executive of the authority, agreed that water transport had advantages, and would persuade the harbourfront watchdog to support the initiative. Referring to the issue of costs, Lynch said the authority might seek extra funds to build the precinct's two biggest performance venues - one of 15,000 seats and a 2,000-seat musical theatre - through options such as bonds, bank loans or a public-private partnership. Such options were feasible as the two venues would be for commercial troupes, he said. The authority has also yet to work out interim and long-term cultural programmes for the project. An international jazz festival, the first of the interim programme, will be held on the site today and tomorrow. The project will be sent to the Town Planning Board after the public consultation.

Ashley Alder, the newly appointed chief executive of the Securities and Futures Commission, has vowed to help Hong Kong become the leading financial centre. Alder (pictured), a lawyer specialising in capital markets, mergers and acquisitions, regulation and compliance, is no stranger to the SFC. Between 2001 and 2004, he was executive director at the financial regulator's corporate finance division. The appointment comes at a time when Hong Kong is forging closer economic ties with the mainland and seeking to become an offshore centre for the trading of yuan, which is yet to be a fully convertible currency. The Hong Kong securities regulator has also resisted plans to allow mainland accounting firms to audit the books of Chinese companies listed in the city amid concerns investor protections cannot be enforced. A former SFC director who worked with Alder at the financial regulator believes he has what it takes when it comes to the tricky issue of dealing with the mainland officials and the Hong Kong government. "He[Alder] got on well with the enforcement department," said the former SFC director. "I think he'll make the listing procedure more user-friendly. He is in a good position to balance both ends [client interest and investors' protection]." Alder, who officially starts his new job today, said he wished to head back to the public sector once again to make a "positive contribution" after more than two decades of working with private law firms. Referring to criticisms from the press and the public, Alder - a senior partner with international law firm Herbert Smith before taking up the baton at the SFC - said: "I am not entering into a popularity contest." Both the SFC and the banking regulator the Hong Kong Monetary Authority were under fire for the Lehman Brothers minibond debacle in which retail investors lost their entire savings in complex credit derivative products they bought at Hong Kong banks and securities firms, leading to long-standing public protests and marches. Alder said his approach would not be significantly different from that of his predecessor Martin Wheatley, who now heads the consumer and markets business unit at the financial regulator in Britain, one of the epicentres of the euro-zone debt contagion. The SFC would monitor and react to the "second phase" of the financial crisis although Alder counted that as just one of the "sheer volume of issues" that he had to grapple with.

The government has vowed to follow all means of appeal against yesterday's landmark court ruling against an immigration law that prevents domestic helpers from seeking the right of abode. High Court Judge Johnson Lam Man-hon, sitting in the Court of First Instance, declared as unconstitutional the exclusion of foreign domestic workers from a rule that allows foreigners to apply for the right to settle in the city after seven years of uninterrupted residency. That provision, in the Immigration Ordinance, contravenes the Basic Law, Lam ruled. "The government respects but is disappointed with the ruling," said Secretary for Security Ambrose Lee Siu-kwong, adding that an appeal was imminent. A lawyer for plaintiff Evangeline Banao Vallejos, a Philippine domestic helper who has lived in Hong Kong since 1986, said they had told her of the court's decision. "We spoke to Ms Vallejos. She said, `Thank God'," said Mark Daly, adding that Vallejos was out of the city yesterday. "Today's victory is not just for migrant workers but also a victory for justice," said Eman Villanueva, for the Asian Migrants' Co-ordinating Body, which supported Vallejos's challenge. He said he was confident "not many" foreign domestic helpers would "rush" to claim right of abode in light of the judgment. But hours after cheers erupted outside the High Court, Lee said the government "firmly" believes that the immigration provision refusing to recognise domestic helpers as ordinarily resident even after seven years is constitutional and would soon file an appeal. The ruling carries far-reaching implications for 300,000 foreign domestic helpers in the city, possibly clearing their path to apply for permanent identity cards, which is required by all foreigners before they can settle in the city permanently. According to government sources, as of May this year there were about 125,000 domestic helpers who had lived in Hong Kong for seven years or more. Lee said the government would suspend the processing and approval of all right-of-abode applications filed by domestic helpers, but it would continue to accept applications. The government will ask for the court's permission for the suspension on October 26, he said, when both parties are due back in court. Lee brushed aside concerns that such a suspension would be contempt of court, because, he said, the court had decided only on the constitutionality of the Immigration Ordinance but did not order the government to do anything specific. He side-stepped the question whether the government would ultimately seek an interpretation on the definition of "ordinary residence" from Beijing, if its appeals through the courts were unsuccessful. Daly said: "We think it's irresponsible of them to be even thinking of going to Beijing. We think that an issue like this should be left to Hong Kong's court system. Have faith in the Hong Kong judiciary." The judge ruled in favour of Vallejos after the government's lawyers failed to persuade the court that excluding foreign domestic helper from the designation "ordinarily resident" was necessary for implementing immigration control. The government also failed in arguing that, while there was no definition of "ordinary residence" in the Basic Law, the legislature could create laws to clarify or refine of the meaning of such terms. The judge also rejected the government's claim that a helpers' residence in Hong Kong was "out of the ordinary". Conditions imposed on their stay - such as having to renew their contract every two years, live with their employers, return to their place of origin periodically and not bring dependants with them - made their circumstances different to other foreigners', it had argued. "In my judgment, these limits cannot alter the character of a foreign domestic helper's residence in Hong Kong during the time she is permitted to stay," the judge wrote. "She resides here for a settled purpose, that is to say, employment, and she comes and stays here voluntarily." Since 2003, about 200 foreign domestic helpers filed applications for permanent residency, but none was approved. By contrast, 8,300 applications were filed by other foreigners last year and 7,000 this year, with a success rate of 90 per cent. The lawyers will return to court on October 26 to discuss what relief measures Vallejos will be granted. Two other judicial challenges filed by foreign domestic helpers' families will be heard this month. They have been lodged on behalf of Daniel and Irene Domingo, a couple living in Hong Kong for 26 and 29 years respectively and whose three children were born in the city; and Josephine Gutierrez, a domestic helper since 1991, and her son, Joseph, who was born in Hong Kong in 1996 and now lives here on a student visa.

 China*:  Oct 2 2011 Share

National Day also marks the split between the mainland and Taiwan, but 62 years later the divide between Beijing and Taipei is shrinking thanks to tourists and students. Setting the scene for improved cross-strait relations is the mainland-friendly Ma Ying-jeou of the Kuomintang, who became the island's leader in 2008. On June 28, nearly 300 tourists became the first group of solo mainland visitors to travel to Taiwan in more than six decades. It came three years after the first mainland tour groups were permitted. Among the independent travellers was Wang Li, a 30-year-old businesswoman from Beijing, who had previously visited with a group in July of last year. "I remember the hospitality, politeness and friendliness of the Taiwanese people that make me want to come back again - of course as a solo visitor," she told the South China Morning Post (SEHK: 0583). Yang Liming, a 27-year-old backpacker from Xiamen , was impressed with Taiwanese manners. "They line up to wait for buses, buy tickets and get on the subway." The etiquette of the escalator was another surprise. "They just automatically stand on the right side to let those who are in a hurry climb up or down the stairs of the escalators," he said. He told how fruit vendors in Kaohsiung, southern Taiwan, offered him free produce when they realised he was from the mainland. The hospitality had also struck Wang Shijia, a Guangzhou native who attends the Graduate Institute of Business Management at Sun Yat-sen University in Kaohsiung. The city is a traditional stronghold of the pro-independence camp which often heaps scorn on the mainland. "My classmates are always very enthusiastic and helpful in showing me around so that I can get familiar with all the places near the university," said Wang, who is one of 980 students who comprise the first group from the mainland to attend regular classes in Taiwan in 62 years. In August of last year, Ma pushed through an amendment that would allow mainlanders to study in Taiwan beginning this semester. A limit was set at 2,000 students The newcomers are barred from applying for government scholarships, from working part-time and from remaining in Taiwan after they graduate. Also, they are allowed to study only in private universities for bachelor programmes, though they are permitted to attend master or doctoral programmes at public academic institutions. "This is one major reason that not many mainland students are interested in studying here," said KMT lawmaker Lai Shyi-bao, referring to less than half of the quota coming to study in Taiwan. Chen Zhen, who is studying for a doctoral degree at National Taiwan University, has been shocked by the TV political talk shows where guests and hosts can freely criticise even the island's leader. "It is incredible that people can talk so freely in TV programmes," she said. Asked about her impression of Ma and Dr Tsai Ing-wen, chairwoman of the rival Democratic Progressive Party, she said: "Oh, Ma Ying-jeou is very handsome and very gentlemanly, while Tsai Ing-wen is very smart and sharp."

China's bid to break the stranglehold by Airbus and Boeing on the global aircraft market is being hindered by a four-year delay in delivering the nation's first passenger jet. The 90-seat ARJ21 will not enter service this year as it is still undergoing safety tests needed to win certification from China's aviation regulator, Tian Min, chief financial officer of state-controlled Commercial Aircraft Corp of China (Comac), said last week. The plane was due to begin commercial flights in 2007. The ARJ21's failure to win regulatory approval almost four years after the first aircraft was assembled might hamper sales as customers cannot be sure when they would get planes, said Ken Zhang, a Beijing-based analyst with Founder Securities. The delay may also disrupt development of the larger 168-seat C919, which will compete with revamped Boeing and Airbus aircraft in a domestic market that may more than triple by 2030. "It's only logical for customers to slow orders when they don't know when delays will be resolved," Zhang said. "The problems just show that challenging experienced players is always easier said than done, especially in aerospace." Comac has 206 orders for the ARJ21, mainly from state-controlled companies in China. The plane, which competes with aircraft from Bombardier of Canada and Embraer of Brazil, has General Electric engines and a range of 2,225 kilometres for the standard model, according to Shanghai-based Comac's website. Chengdu Airlines, which is part-owned by Comac, is due to be the first operator of the regional jet. The carrier did not know when it would start receiving planes, a spokeswoman said. Shanghai Securities analyst David Wei said deliveries were unlikely to start before the second half of next year. "The delays for the ARJ21 highlight the difficulties in getting certification," he said. "The C919 delivery schedule may also be too tight." Comac is not alone in suffering delays in developing new planes. Boeing this week delivered its first 787 to All Nippon Airways three years late. Airbus postponed the handover of its A380 superjumbo by almost two years. Singapore Airlines received the first in 2007. Comac expects the C919 to make its first flight in 2014 and to enter commercial service two years later. The planemaker had won as many as 100 orders for the aircraft and it would announce "substantial" new deals this year, sales and marketing general manager Chen Jin said last week. Approval for the ARJ21 might be taking longer than expected because it is the first time that Comac has built a jet plane and the first time that the Civil Aviation Administration of China has had to certify one, said Wei. Zhang said a high-speed-train accident in July, which killed 40 people, and the crash of a Chinese-made propeller-aircraft in Indonesia in May that killed 25 people, might also have made the regulator more cautious. "The recent train crash is a setback for China's high-tech manufacturing," he said. "The CAAC may be even stricter with the new plane now." Two phone calls to the aviation regulator yesterday went unanswered.

Hong Kong*:  Oct 1 2011 Share

In a Movie That Marks a Career Milestone, Action Star Plays an Entirely Different Kind of Hero - For his 100th film, Jackie Chan (成龍) can add a new title to his résumé: revolutionary hero. His latest film is “1911” (辛亥革命), a sprawling epic about China’s Xinhai Revolution, which led to the downfall of the Qing Dynasty. Mr. Chan stars as Huang Xing (黃興), a true-life military figure who worked alongside Sun Yat-sen (孫中山)—China’s first president—in establishing the Chinese republic. The film also stars Winston Chao (趙文瑄), Li Bingbing (李冰冰) and Joan Chen (陳冲). The movie reaches a pair of auspicious milestones: It comes on the centennial of the October 1911 Wuchang Uprising, which sparked the revolution. It also marks the 57-year-old Mr. Chan’s 100th movie in a career that’s spanned a half century, including his early Hong Kong action comedies like “Drunken Master” (醉拳) and the hit “Rush Hour” series in Hollywood. Mr. Chan says that he was drawn to “1911” after the producers approached him to play the role of Huang Xing. “They explained the whole story,” he says in an interview, detailing the war, the human drama and the historical aspects of the revolution. He was struck by the stories of the revolutionaries, giving their lives in order to advance their cause. “Then I said ‘wow!’” The development of modern China, says Mr. Chan, is “because of these people. They died for something. They did not die for nothing.” He pushed aside work on another movie to hop on board, and it quickly became a passion project. “I’m so proud I’m involved in this movie, because I really learned something,” he says. Nowadays many Chinese people—both in China and around the world—aren’t familiar with the events of 1911 that changed the course of the country’s history, he says. “Not even my children—even myself—there are a lot of things I don’t really know,” he says. “But now, I realize how very important” the events of 1911 were—they “changed the whole of China.” Mr. Chan says the trappings of modern materialism have pushed aside interest in history. Children today just know “what kind of telephone they are going to buy, what kind of clothes, what kind of car, what kind of food,” he says. “No. Don’t forget what [the revolutionaries] did for us. … Don’t forget history.” The film marks another personal turning point in Mr. Chan’s career. In recent years, he has been stretching his talents beyond the action-adventure comedies that made him famous to take on more dramatic roles. Gone are the days of his trademark death-defying stunts, such as his mid-air leap onto a floating hot air balloon in 1986’s “Armour of God” (龍兄虎弟). But he still maintains a busy career, releasing a few films a year and alternating regularly between Asia and Hollywood. In 2009’s “Shinjuku Incident” (新宿事件) he played an illegal Chinese immigrant in Japan who gets caught up in Tokyo’s organized-crime gangs. It was a dark film without any of the traditional Chan stunt set pieces. Last year, he appeared in the Hollywood remake of “The Karate Kid,” winning strong reviews for his role as a handyman who mentors a young American boy in kung fu. The film was a huge hit, and Mr. Chan will soon begin work on a sequel. But he hasn’t completely abandoned action comedy, having also starred last year in “The Spy Next Door” as a secret agent living in suburban U.S.

A Hong Kong court on Friday opened the door to potentially giving thousands of foreign household workers in the city a chance to apply for permanent residency, a decision likely to fuel further tensions over immigration and could mark a major change in Hong Kong's labor market and social fabric. The legal victory by Evangeline Banao Vallejos, a Filipino maid who has lived and worked in Hong Kong since 1986, could pave the way for the city's 270,000 foreign domestic helpers to qualify for residency as other foreigners are allowed to do under the territory's Basic Law. Permanent residency in Hong Kong means a person can remain in the territory indefinitely, and can't be deported. Permanent residents also have the right to vote and to stand in elections. The divisive case has stirred up strong emotions in Hong Kong, where foreign laborers are widely seen as integral to its way of life. Most middle and upper-class residents have live-in helpers, who handle household duties and help with child care. And while the government makes some guarantees for domestic helpers, such as a minimum wage of 3,740 Hong Kong dollars (about US$480) a month, there is little oversight on their working conditions. Labor and human-rights advocates said the ruling in favor of Ms. Vallejos represents an important step toward dismantling the system that treats foreign maids—most of them women from the Philippines and Indonesia—as second-class residents. An Oct. 26 hearing will discuss how the judgment will be implemented. "Today is a victory, not only for migrant workers but also for justice and fairness," said Eman Villanueva, a migrant-rights activist. "But our fight doesn't end today." Mr. Villanueva and other activists have called on the Hong Kong government to review the labor policies that "have treated us like slaves," he said. In response to the ruling, Ms. Vallejos, who didn't appear in court Friday, said to her legal team "thank God." Defense counsel Mark Daly said that she was busy working and was pleased with the ruling, adding she had "clearly won her case." The case drew fierce opposition from some Hong Kong lawmakers and workers' groups who fear maids will bring their children and other family members en masse to the city upon receiving permanent residency, putting a strain on the schools, hospitals and housing market. Regina Ip, a pro-Beijing lawmaker, said the ruling has "severe implications for Hong Kong's long-term population policy." The Hong Kong government said it will appeal the ruling. Opponents protested outside Hong Kong's High Court on Friday, carrying posters and shouting in Cantonese that supporters of residency for domestic helpers "betrayed Hong Kong people." Don Wong, part of a group called Hong Kong Social Concern Group, said: "If migrant workers win, it's bad for Hong Kong's development, for example, in education, health care and housing." Activists dismiss the claim that the right of abode would open the floodgates for migrant families. Mr. Villanueva called the concerns "baseless" and "malicious." Mr. Lee said about 120,000 domestic helpers have lived in Hong Kong for seven consecutive years or more—the minimum stay required for permanent residency. Rights groups say that figure doesn't reflect the number of potential applicants because there are other eligibility requirements, and that many wouldn't necessarily want to apply. Both sides will return to court on Oct. 26 to discuss the practical implications of the ruling, including how it will be implemented, Mr. Daly said.

 China*:  Oct 1 2011 Share

Investors dumped the stocks of some of China's biggest Internet companies, as scandals with some smaller Chinese firms has shaken Wall Street's confidence in the country's businesses. U.S.-listed shares of China's leading search engine, Baidu.com Inc., and Sina Corp., the operator of the country's Twitter-like messaging service, plunged 16% and 18%, respectively, in the last two days of trading on the Nasdaq Stock Market even though these companies haven't been accused of wrongdoing. A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems. "If the whole sector's sentiment is negative, then investors tend to be panicking, and then they sell the most liquid names, regardless of whether there are really any problems," said Jeffries analyst Cynthia Meng. "We don't think that the flagship [Chinese] Internet names have accounting issues." For years investors, swept up in the broader China growth story, gave Chinese companies that listed their stocks on U.S. exchanges the benefit of the doubt on governance and regulatory issues. That was particularly true of the Internet sector. Investors were prepared to overlook unreliable Internet traffic data, pervasive censorship, and a reliance on an inherently risky corporate structure in their enthusiasm to profit from the explosive spread of social media, online shopping and search. The latest news to send investors running was a Thursday Reuters report quoting Robert Khuzami, the director of enforcement at the U.S. Securities and Exchange Commission, saying the Department of Justice is investigating accounting irregularities at Chinese firms. A person close to the matter confirmed the Justice Department is investigating Chinese firms, but declined to identify the companies. Along with Baidu and Sina, other major Chinese Internet companies plunged this week. Social-networking website Renren Inc. Friday fell 13% to $5.10 on the Nasdaq. Online video company Youku.com Inc., after losing 18% Thursday, gained 12 cents to $16.36 Friday. None of those companies have been accused of wrongdoing. A Youku spokesman said the company hasn't received any inquiries from U.S. regulators. A spokeswoman for Renren said the company hasn't been contacted by the SEC. Baidu, Sina and online-video company Tudou Holdings Ltd., whose U.S.-listed shares fell about 24% on Thursday and Friday, each declined to comment.

Rapidly rising wages in China have reached the point at which foreign manufacturers need to give up on the notion of the country as a low-cost production base, a senior Hyundai Motor Co. executive said Thursday. Jae-Man Noh, head of Hyundai's joint-venture operations in China, said average manufacturing-worker wages in China—about 27,000 yuan ($4,200) a year per worker in 2009—are likely to double by 2015 from current levels. Auto makers are expected to be affected as much as other industries by the trend, if not more, Mr. Noh said, adding that wage costs for many foreign auto manufacturers already have doubled in less than a decade. He said that a rival foreign auto maker that Hyundai has researched has seen worker wages in China rise to 49,000 yuan a year per worker in 2010, up from 24,500 yuan a year in 2003. "We need to let go of our perception that the Chinese market is a low-cost production base," Mr. Noh told a group of reporters at Hyundai's office in Beijing. He didn't offer specifics on Hyundai's wage costs in China. Mr. Noh leads Beijing Hyundai Motors Co., a joint venture between the South Korean auto maker and Beijing Automotive Industry Holding Co. In contrast to earlier decades, when the flow of Chinese workers from the countryside pushed factory labor costs down, China's workers now are demanding higher wages and better jobs. Manufacturing wages, in fact, have begun rising "dramatically" since last year, according to Mr. Noh, with auto makers taking the brunt of it. The Hyundai executive pointed to a series of high-profile labor strikes that hit Japanese-run auto factories and others in China last year. Normally quick to break up organized worker walkouts, the government tolerated those strikes to a large extent last year, and minimum wages in some parts of China have been rising steadily since. China still offers other draws, including strong economic growth, an increasingly affluent population and a quickly growing car culture. Plus, Hyundai's average factory labor cost in China is still one-fifth of that in South Korea, Mr. Noh said. What concerns him most is the dramatic rate of increase, he said. This trend is "inevitable" as the Chinese economy grows and society improves, Mr. Noh said. Despite rising labor costs, China's auto exports will continue to increase in part because of excess auto-production capacity in the country, he said. China's central government will also continue to focus on automotive exports, he said.

Hong Kong*:  Sept 30 2011 Share

Two major Hong Kong property agencies will stop organising flat-buying tour groups from the mainland during the "golden week" National Day holiday as credit tightening across the border starts to bite. In the past two years, the agencies have been aggressive in bringing in hundreds of busloads of wealthy mainland investors to boost sales during the period. "No group tours will be arranged this year, but our mainland branches will bring in individuals who are interested in visiting projects in Hong Kong," said Jeffrey Ng Chong-yip, director at Midland Realty. Flat-buying tourists are now far fewer than a year ago because of declining investment interest as a result of Beijing's lending curbs and the worsening global economic outlook. Furthermore, fewer new housing projects are being put up for sale in Hong Kong, contributing to lower numbers of flat-buying mainlanders visiting the city, Ng said. Indeed, the number of prospective mainland buyers has plunged by as much as 50 per cent, compared with the first half of the year, said Andy Lee Yiu-chi, head of the Shenzhen branch of Centaline Property, which has branches across the .mainland. "The increasingly tight credit conditions on the mainland have dampened buying interest [on the mainland] and in Hong Kong," Lee said. About eight to 10 customers had expressed interest in visiting Hong Kong properties during the week-long holiday, Lee said. However, the details had yet to be worked out, he said. As some mainlanders would only be interested in shopping and sight-seeing, organising small flat-buying groups would achieve better sales than bringing in busloads of prospective buyers, he said. Centaline would provide free transport for their clients, but they have to pay for accommodation if they decide to extend their stay in Hong Kong, he added. In 2009, Sino Land and Midland Immigration Consultancy organised a two-day tour group of 40 mainlanders to Sino's upmarket The Dynasty project in Tsuen Wan and The Palazzo in Sha Tin. They received complimentary accommodation at Sino Land's The Royal Pacific Hotel & Towers in Tsim Sha Tsui. Despite the end of the mainland tours, developers remain upbeat about the market outlook. Victor Tin Sio-un, general manager of sales and leasing at Sino Land, said the firm preferred to launch a road show in Shanghai during "golden week" to market its luxury residential projects. The flats are priced at HK$25 million. "We will give a briefing to mainland clients about the process of buying flats in Hong Kong," Tin said. "Nearly all the seminars, which will start on Sunday, have been fully booked. "Interest in Hong Kong properties remain keen."

Arthur Bowring says US is being vague. Hong Kong shipowners are urging "clarity and specifics" from the US treasury department as it intensifies pressure on the local industry to effectively shut out Iran's national shipping line from the city. Hong Kong Shipowners Association managing director Arthur Bowring said treasury department officials provided a list of 19 Hong Kong-registered ships they believe could be linked to Islamic Republic of Iran Shipping Lines (IRISL) but more information was needed on that and other concerns. "Being deliberately vague may help their agenda by spreading fear and getting the Hong Kong shipping industry to err on the side of caution," Bowring said. "But it doesn't help us ... it really makes life difficult for shipowners and others in the industry who have got to do business and figure out precisely where the dangers are. Some of these ships may have once been owned by IRISL but that does not mean they are still linked." The treasury's new terrorism and financial intelligence undersecretary, David Cohen, travelled to Hong Kong and Beijing this week to urge a more proactive approach to implementing UN sanctions against Iran passed in June last year. The US has also blacklisted 20 local front companies for IRISL links. Cohen's team met local shipping figures and bankers as well as government officials in both cities. The UN sanctions include the need for vigilance and reporting against IRISL ships, which a committee in 2008 declared had aided Iran's nuclear and military programmes. But Hong Kong shipping lawyers said the sanctions do not prevent the fleet calling in Hong Kong. Cohen said he wanted the ships ideally "completely shut out", even from basic operations such as refuelling, to further squeeze IRISL, which is now effectively barred from Europe. He also questioned their insurance - a key safety issue - noting their Iranian insurers could no longer lay off their risks internationally. A Marine Department statement confirmed that "certain issues" were exchanged with the treasury delegation and outlined local regulatory efforts to implement the UN sanctions. While it did not specify what action would be taken after this week's meetings, the department noted that: "If a Hong Kong-registered ship is found to be in violation of UN sanctions enforced in Hong Kong, the Director of Marine has the power to deregister the ship." It said that all ships visiting Hong Kong, regardless of flag, had to undergo the same port clearance procedures and meet the same safety requirements, including proper insurance coverage.

Construction workers will get pay rises ranging from 5 per cent to nearly 13 per cent from November, with more increases in the pipeline as demand for their services surges because of a building boom. However, the outlook for other trades is not so healthy amid a deepening euro-zone debt crisis and a fragile economy in the United States. The Construction Industry Employees General Union said a salary increase agreement, the biggest since 1997, was reached with contractors for 280,000 construction workers. "Overall, there is not a huge shortage of workers. But for certain workers like bar benders and carpenters, we really need more. This is why they will have a bigger pay rise," said Chow Luen-kiu, the chairman of the union. Bar benders are paid HK$1,100 a day, but they will receive HK$1,230 - 11.8 per cent more - from November, not August as reported previously. With an estimated shortage of 2,000 workers, their daily wage will rise to HK$1,360 in August next year and to HK$1,490 in 2013. The bar benders deal was announced in March. For carpenters working on formwork building construction, there is a shortage of 5,000. Their daily pay will rise from HK$950 to HK$1,000 in November, HK$1,300 next year, and HK$1,500 in 2013. Plumbers will see their daily wage climb 12.8 per cent to HK$880 from HK$780, while other workers such as plasterers and printers will get a 5 per cent rise. "It may be the best time for construction workers after so many years of hardship. We have to seize the opportunity," Chow said. Construction work in the private and public sectors is booming. Government infrastructure works alone rose from HK$20.5 billion in fiscal 2007-08 to HK$49.6 billion in 2010-11. Spending in 2011-12 will reach a record HK$58 billion. The union said a significant pay rise was needed to attract new blood to ease the problem of ageing staff. "Among the 280,000 workers, about half of them are aged 50 or above. We must act now," Chow said. Workers in other industries should consider switching to the trade, he said. The call may draw the attention of the 70 repair workers at Thyssen-Krupp Elevator. Earning a base salary of HK$7,000 a month, they have been on strike since Monday, as the pay at rival companies is HK$8,500. Talks with the management were continuing last night. Economist Andy Kwan Cheuk-chiu said although Hong Kong remained relatively unscathed by the global financial crisis, with the jobless rate falling to a 13-year low of 3.2 per cent, people should brace for rough times ahead. "Many workers got a 5 per cent rise this year but the global downturn may hit us from the beginning of next year. The banking industry has already started cutting manpower," Kwan said. HSBC announced earlier this month it would lay off 3,000 people - 10 per cent of its Hong Kong workforce - over three years.

Hong Kong's Henry Tang resigned Wednesday as chief secretary for administration—the city's second-highest government post—in a much anticipated move as he considers running for chief executive in March. If Mr. Tang, 59 years old, decides to seek the city's top job, he will compete against Leung Chun-ying, who announced his candidacy weeks earlier. Mr. Leung, 57, is a top member of the cabinet of current Chief Executive Donald Tsang, whose term ends next year. Both Messrs. Tang and Leung have for years been seen as leading contenders for the position as part of Beijing's succession plans for the city, which reverted to Chinese rule from the U.K. in 1997. "Recently, many people have encouraged me to run … I know deep in my heart that this will be a great challenge for me. I need time and space to seriously think about the suggestion," the U.S.-educated Mr. Tang said. He managed his family's textiles business in Hong Kong for years before entering politics in the 1990s. A change in Hong Kong's political leadership will come at a time when social tensions are simmering over surging inflation, sky-high property prices and a weakening local currency. Yet, Hong Kong's eligible voters won't have any say in the outcome of the next election, as the city's leader is selected by a 1,200-member committee consisting mainly of people backed by Chinese authorities in Beijing. The current setup more or less guarantees that the winner will have China's blessing. Members of Hong Kong's pro-democracy movement have for years sought a faster pace of democratization on the back of mounting criticism that Beijing is tightening its grip on the city. Though a part of China, Hong Kong has its own set of laws and institutions enshrined in the Basic Law, the city's mini-constitution, which calls universal suffrage the ultimate aim in the development of the former British territory's political system. Addressing calls for greater democracy, China earlier promised to organize elections for the chief executive via universal suffrage from 2017. To be sure, neither Mr. Tang nor Mr. Leung are particularly popular in Hong Kong, in large part because of their pro-Beijing ties and lack of a solid track record, academics and lawmakers contend. Mr. Tang was a member of the pro-business and pro-Beijing Liberal Party before joining the government in 2002, while Mr. Leung, a U.K.-trained surveyor by profession, has for years been a member of China's top political advisory body. Mr. Tang had an approval rating of 46.6% in the latest poll from the University of Hong Kong's public opinion program, released earlier this month. That compares with a 47.3% rating for incumbent Mr. Tsang. Similarly, Mr. Leung, as convenor of the Hong Kong Executive Council, had an approval rating of 48.1% in the university's latest poll conducted on him, released in July. "It's not a real choice, as there really isn't much difference between either candidate," said opposition lawmaker and attorney Ronny Tong, a member of the Civic Party. "I can't recall any significant achievement during Tang's nine-year civil servant career in promoting the administration's policies," Mr. Tong said. Mr. Tang was earlier financial secretary and in June 2007 became chief secretary, the post from which he just resigned. Donald Tsang Wednesday praised Mr. Tang for making "substantial contributions" in promoting Hong Kong's development. Meanwhile, Dixon Sing, associate professor of social science at the Hong Kong University of Science and Technology, criticized Mr. Leung for his loyalty to Beijing. Mr. Leung told reporters Wednesday he will continue to rally support for his campaign. He couldn't be reached for additional comment. Mr. Tang's office said he had no further comment on his resignation. A career civil servant, Donald Tsang took over from Tung Chee-hwa, who stepped down in 2005 before completing his second term amid mounting public disapproval that culminated in mass public protests.

Turmoil in global financial markets has taken a toll on one unlikely victim: the burgeoning market for Chinese-yuan bonds issued offshore. Over the past few days, investors have sold yuan-denominated debt that had been issued in Hong Kong—dubbed dim sum bonds—for the comfort of the U.S. dollar, according to traders and analysts. The selling has introduced some volatility into a nascent market that has been key to Beijing's effort to expand the use of its currency. The dim sum bond market previously had been booming, with investors betting on continued appreciation of the Chinese currency, and businesses and government entities raising capital to take advantage of the relatively low borrowing costs there. Any persistent selloff, analysts say, could complicate capital-raising efforts by China's state-owned banks, which have been among the biggest yuan-debt borrowers, at a time when they are planning fresh fund raising. "Even the dim sum market, the most resilient by far, has caved into the market contagion," said Becky Liu, a Hong Kong-based strategist at HSBC Holdings PLC who also said the selling has been broad-based. Trading volume in the young dim sum market remains thin, making it hard to get reliable valuations for such bonds. But HSBC estimates that total returns on dim sum debt for the year to date—including price and currency changes as well as coupon payments—had fallen to 1.2% in U.S. dollar terms as of late Monday from 4.5% a few weeks ago. Most of that decline came from weakening in the value of the yuan traded in Hong Kong, but analysts say selling pressure also pushed down debt prices. The selling has caused some issuers to delay planned dim sum debt issuance, including Khazanah Nasional Bhd., the Malaysian government's investment-holding arm, people familiar with the situation said last week. A Khazanah spokesman declined to comment Tuesday. Even bonds issued by China's government have been hit. The three-year dim sum bond sold in August by China's government with a 0.6% coupon is now yielding 0.85%. The bond is now selling for the equivalent of 99.3 cents on the dollar. Among the sellers have been some dollar-denominated hedge funds that bought dim sum debt with yuan converted from their dollar holdings, according to several market participants. Those funds typically would hedge their currency risk by trading derivatives that track the value of the yuan. But in the past week, selling pressure on the yuan traded in Hong Kong has made it difficult for those dollar funds to hedge their positions, leading some of them to liquidate their dim sum debt holdings. "They're forced to cut their positions as the hedging didn't work anymore," said a Hong Kong-based trader. Not surprisingly, debt issued by businesses with weaker credit ratings has especially suffered. Road King Infrastructure Ltd., a Hong Kong-listed operator of toll roads in China that sold 1.3 billion yuan ($203 million) of dim sum debt in February, paid 6% on the bond. Now, the bond is yielding between 13% and 15%, according to traders. Road King's debt is rated below investment-grade by both Standard & Poor's and Moody's Investors Service. Road King Executive Director Derek Zen Wei-peu said the selling of the company's bond was mainly due to investors trying to hold cash amid broader market panic. Since last year, a growing number of Chinese and foreign businesses, including banks, property companies and manufacturers, have loaded up on cheap capital denominated in China's currency by tapping the Hong Kong market. China's government encouraged the trend as part of its efforts to expand the use of the yuan beyond its borders. Today, dim sum bonds outstanding total about 198 billion yuan, or $31 billion. In recent months, Chinese banks, in particular, have flocked to the dim sum market. But the heightened volatility in the market could push up their borrowing costs going forward, analysts say. On Wednesday, Industrial Commercial Bank of China Ltd., the nation's largest lender by assets, said it plans to sell up to 70 billion yuan of subordinated, or junior, debt by June 30 to boost its capital base. The bank said it will sell the debt either in the mainland market or in Hong Kong, depending on market conditions. HSBC estimated in June that total new dim sum debt issuance this year would reach between 180 billion yuan and 230 billion yuan, as tight credit controls on the mainland would prod more Chinese companies to borrow offshore. While the yuan has weakened recently in Hong Kong, its value has remained strong in China's onshore market, which is controlled by the government. The yuan gained against the dollar in Tuesday trading in Shanghai, after the central bank set its daily reference rate just slightly below Monday's record level.

 China*:  Sept 30 2011 Share

Tuesday's crash on Shanghai's subway system has triggered a surge of fear and anger among mainlanders, with most pointing fingers at the government for the nation's public transport safety woes. Rail safety experts said the accident, together with the high-speed train crash in Wenzhou just over two months ago, had exposed weaknesses which, if they had been taken seriously by the authorities earlier, could have been avoided. Professor Ai Bo , deputy director of the State Key Laboratory of Rail Traffic Control and Safety, said yesterday that the Shanghai accident had exposed a series of well-known problems involving equipment, technology and management in the construction and operation of the mainland's passenger rail transport system. The accident, in which 280 passengers on the Line 10 trains were injured, should not have happened if these problems had been addressed, said Ai, also a professor at Beijing Jiaotong University. "For example, if we set up a system to enable trains to communicate directly with one another, we could have an anti-collision system similar to those on commercial airlines and avoid crashes, even with the failure of the central control system," he said. Ai said he could not reveal more details about the problems because he was not authorised to expose design, manufacturing and maintenance flaws publicly, but he believed that the Shanghai subway authorities were ultimately responsible. "The metro runs at 80km/h, maximum. That leaves less room for excuse than high-speed rail," he said. Li Jie , a commuter on Beijing's subway, said that like many of her fellow passengers she was worried about the safety of the capital's subway system after hearing the news from Shanghai. "As soon as I squeeze on to a train, I firmly grab a hand rail with both hands and stand in a rigid pose so that, regardless of whether a crash comes from ahead or the rear, I am somewhat prepared," she said. "Those standing at the centre of a compartment make me envious. They have the protection of a thick layer of human cushions." Shanghai's subway has had many problems in the past few years but they have been shrugged off because none of the previous operational glitches resulted in deaths or injury. On July 28, a malfunctioning signal device cause a train full of passengers to reverse an entire stop. The equipment supplier escaped punishment, saying a similar accident would not happen again. Professor Xie Xiaofei , a Peking University psychologist, said the public had good reason to feel angry and fearful - even if they did not take the subway often, they had parents, relatives or friends who did. "In most people's mindset, the metro is run on mature technology. Such kinds of public transportation have been running in other countries for many years without much problem," she said. On the internet, many people expressed their fury. "Should the same mistake not be corrected before it is repeated 100 times in the blood of ordinary people?" one blogger wrote. Professor Zhao Jian , a Beijing Jiaotong University economist, said that the Shanghai subway accident should not be used to argue against the development of subway systems in other mainland cities. "Public fury will decline over time," he said. "People will realise, sooner or later, that more than 74,000 people are killed on the roads in this country every year. The death toll on metros is zero."

On Sept 27, 2011, more than 1800 tourists boarded the "Legends of the Seas" luxury cruise docked at a pier of Zhoushan, a city in coastal Zhejiang province. From the city, they will start a direct four-day journey to Taiwan. The cruiser is the second ship that has set out from Zhoushan to Taiwan directly, after the Costa Cruise last year. 

China will launch the country's first space laboratory module between 9:16 and 9:31 pm on Thursday, paving the way for its own space station, a spokesperson confirmed. The unmanned Tiangong-1 will blast off from the Jiuquan Satellite Launch Center in the Gobi Desert in Northwest China. Final preparations are being made for the launch of Tiangong-1, or Heavenly Palace. A spokesperson with China's manned space program said Wednesday that fuel has been injected into Long March-2FT1 carrier rocket in preparation for launching the Tiangong-1 space module Thursday evening as planned. The Long March-2FT1 is the latest modified model of Long March-2 rocket series with more powerful thrust force, said the spokeswoman Wu Ping at a press conference in Jiuquan Satellite Launch Center in northwest China. Shenzhou VIII spaceship, also unmanned, will be launched in early November to rendezvous and dock with Tiangong-1. China is confident in the upcoming launch of its first space lab module Tiangong-1, although space launches are highly risky, said Wu. Despite August's failed satellite launch, China remains full of confidence and anticipation, Wu said. She said among the more than 1,600 space launches around the world since 1990, 93.7 percent were successful, while China has successfully conducted 94.4 percent of its nearly 130 space launches.

Over the past few weeks, observers of China’s real estate industry have been treated to songs of woe from analysts, regulators, and Standard & Poor’s rating agency. But the tune carries further when a Chinese real-estate rock star is singing the blues. Zhang Xin, the chief executive officer of Soho China Ltd., said Wednesday that in her 17 years in the residential property business she hasn’t faced such a tough market. “This by far the most challenging year in terms of what you can sell,” Ms. Zhang told the Foreign Correspondents Club Shanghai. Referring to the higher ends of the market, where Soho focuses, she said, “you’re seeing no transactions on the residential side.” The 46-year-old Ms. Zhang is half of the glamour couple that leads Soho, a Beijing-based developer known for apartments and office buildings that look equal parts IKEA and Star Trek. The former investment banker’s partnership in Soho with husband Pan Shiyi has made them among the country’s wealthiest people. Echoing complaints she and her husband have made on their Weibo accounts, Ms. Zhang pinned blame for the current slump on government policy, saying developers and buyers alike have no access to credit as Beijing takes aim at inflation and affordability. The industry is “so policy dictated,” Ms. Zhang said, “you spend more time guessing about policy than actually doing your own business.” She expressed discomfort at Beijing’s efforts to build vast quantities of social housing – “contrary to what they’ve been doing for 15 years” – scoffing that some apartments will rent as low as 70 yuan per month, or about $11. From Ms. Zhang’s PowerPoint slides, she made clear a preference for prices like the 50,000 yuan per square meter that Soho fetched for apartments sold in August, attracting a mob of buyers. Tight monetary and investment conditions won’t last in the Chinese property market, Ms. Zhang forecast. Pressed to predict when Chinese leaders will loosen their grip, she suggested a window of six months. “Very soon,” she said. Ms. Zhang kept her commentary spicy Wednesday–there is a reason 2.4 million users track the messages she blasts to Weibo from her white Blackberry. She spoke of a fast-consolidating property market that is stoking “social unrest,” governed by usurious 50% interest rates from underground banks–and, in some cases, she said, inciting suicide. Things aren’t all glum. Continued jack-hammering from the street outside the boutique hotel where Ms. Zhang spoke Wednesday attested to the fact that development hasn’t stopped in China. And Soho keeps buying and building, especially in Shanghai these days. Ms. Zhang showed a video of designs from architect Zaha Hadid with futuristic office buildings that roughly resemble the bullet trains that exit the railway station near where the development is just getting going, Shanghai’s Hongqiao Transportation Hub. Soho, Ms. Zhang said, has spent 11.4 billion yuan in 2011 making property acquisitions in Shanghai, all of it commercial. She said the government restrictions on residential development make office buildings a safer bet. The company branched into Shanghai from Beijing when, she said, Morgan Stanley unloaded some property in the east coast city in 2009. Soho is now looking at Guangzhou and Shenzhen, according to Ms. Zhang.

Hong Kong*:  Sept 29 2011 Share

Many Hong Kong employers were looking overseas to hire specialist accountants qualified to grapple with the increasing complexities of today's business world, as they could not find enough qualified people locally, a professional body warned yesterday. Some 30 per cent of the city's accounting employers are looking overseas for talent, according to a survey released yesterday by the Association of Chartered Certified Accountants and human resources agency Robert Half. The need for specialist accountants was being driven by the complexity of globalised business, and tighter regulatory control in many countries following the 2008 financial crisis, it found. Association chairman Rosanna Choi (pictured) said: "Currently, there is a mismatch in the supply of professionals in Hong Kong and the demand, particularly in the fields of compliance, risk management and internal control." The survey was conducted in Hong Kong in June, interviewing 645 people, including professionals and managers responsible for hiring. Local professionals could only benefit from the growing demand for manpower by upgrading their qualifications, one industry executive said. "The regulatory framework has been evolving since 2008 and professionals need to adapt to the ever-changing landscape. Corporates need people who can deal with multiple jurisdictions, to help them grow," the Hong Kong-based official of an investment bank, who refused to be named, said. Robert Half director Pallavi Anand said employers had complained about the difficulty of finding professionals in the finance and banking sector. She cited an earlier survey which found that more than 90 per cent of employers in Hong Kong said they had difficulties in finding skilled professionals. Despite economic uncertainty in Europe and the US, demand for those executives remained robust in Asia, she said. Denise Lim, managing partner of human resources consultant Experis, said the demand was greater for speakers of Putonghua who could meet the needs of mainland companies. The June survey found that 67 per cent of finance and accounting professionals hoped to work overseas, but only 8 per cent of employers offer regular overseas secondment. Choi said the gap between the desire to be relocated and the lack of opportunities could affect staff satisfaction and lead to high turnover.

Actress Cecilia Cheung Pak-chi was fined HK$2,500 yesterday after her luxury sports car knocked down an elderly street cleaner in Repulse Bay last year, breaking his ribs and leg. Cheung, 31, pleaded guilty to two careless driving summonses at Eastern Court through her lawyer. She was not in court. She was driving a HK$1.26 million black Range Rover when she hit Cheng Tak-yau, 68, at 2.30pm near a junction between Repulse Bay Road and South Bay Road on March 30 last year, the court heard yesterday. In a letter submitted to court, Cheung (pictured) apologised and expressed remorse. "I am deeply sorry that my careless driving manner affected others and troubled the court," she wrote. "I promise I will not drive carelessly in the future." The court heard that minutes before the accident, she had crossed continuous double white lines and driven against traffic flow to overtake a minibus, causing the driver to brake. Cheng was wearing a fluorescent working vest when he was hit. He spent 18 days in Queen Mary Hospital. Cheung passed a breath test. Defence lawyer Cheung Kam-wing said the actress was in a hurry to take her son to see a teacher at school. She hit the man as he emerged suddenly from a place where people were not supposed to cross the road. Cheung and actor Nicholas Tse Ting-fung announced the end of their five-year marriage last month. 

As economies in Europe and America slump, Western art dealers are turning their attention towards Asia. Next week, more than 20 galleries - from the United States, Britain, France and the Netherlands - will make their debut at Fine Art Asia in Hong Kong, a fair showcasing antiques and contemporary art. For the first time since the fair's founding seven years ago, the Western dealers will comprise more than 20 per cent of the 102 exhibitors this year. The galleries - which specialise in 17th to 19th century furniture, antique jewellery, silverware and paintings - hope to cultivate mainland patrons, having observed that Asian buyers, particularly rich mainlanders, have been acquiring Western antiques and valuable paintings by European old masters. Auctioneers Sotheby's and Christie's will also be showcasing Western antiques, as well as Impressionist and modern artworks at their pre-sale exhibition next week. Sotheby's will be exhibiting selective pieces from the Fabius Freres Gallery collection. It would be the first exhibition of a collection comprising a range of 17th to 19th century artworks and furniture. The items will be auctioned in Paris next month. Christie's will be displaying highlights from its upcoming sale of Impressionists, postwar and contemporary artworks in New York. "The market gears towards where the money is," said art critic Oscar Ho Hing-kay. "But seeing them coming here all at once ... you can smell the desperation of the market." "[China] is a potentially huge market," said Harry Apter, director of British antique furniture dealer Apter-Fredericks. "From history, when the wealth of a market suddenly exploded, like the Middle East and Russia, collectors will diverge into what they don't know. [The Chinese] have been collecting Chinese art, and the next step forward will be to expand their overseas collection." Andy Hei, fair director of Fine Art Asia, said it was natural to see mainlanders buy Western antiques and artworks after having bought Chinese antiques back to the mainland from international auctions. "Chinese people aspire to Western culture," Hei said. "Some wealthy Chinese families have been buying antiques, in particular furniture and silverware, in Europe and the US, but they just keep it low profile." Hei said that given the economic malaise in the West, he was not surprised to see the sudden surge in the number of Western dealers seeking Asian customers. Ho said, however, that whether the dealers would be bringing high quality artworks to the city will depend on the sophistication of the prospective buyers. "You can't rule out the possibility that some dealers might want to get rid of the unwanted stocks, but whether this would happen depends on how sophisticated and knowledgeable the buyers are," Ho said, warning that potential buyers should research the artworks thoroughly before opening their wallets.

The Real Estate Developers Association is warning the government not to overreact when deciding on a jail penalty in legislation to regulate the primary property market. Stewart Leung Chi-kin, chairman of the Reda executive committee, said yesterday that the government should clarify the circumstances that would incur a jail term. "In principle, we don't object to legislation," Leung said. "The most important thing is not to overreact. Regulation and penalty are necessary. But if it goes so far as to make us unable to do business and sell flats, it will be troublesome." He spoke a day after a government steering committee met for the last time to finalise a list of reforms for the property market. Leung is Reda's representative on the committee, which was formed in October last year. Leung said he represented a "minority view" on the panel. The reform in question is a seven-year prison sentence for a director in a development company who gives false information. Was this an overreaction? Leung did not reply directly, but said there should be distinctions in the degree of seriousness of an offence. "It is hard to define misleading [information] or misrepresentation," he said. "A mistake can also be a typo, or an advertisement so exaggerated that it becomes misleading. But if a staff member selling flats says something [wrong or misleading], is it the boss' responsibility? ... I don't believe this should involve the boss." Leung said senior management should be held liable only if the manager was "stupid enough to instruct" staff members to lie or mislead. The proposed legislation also calls for the set-up of unmodified show flats, immediate disclosure of transaction information, and the release of a price list and a sales brochure three and seven days, respectively, before the launch of a sale. The most serious penalty, seven years in prison, could apply to anyone at a developer's firm - whether a director, a senior manager or a salesperson - found to have given false or misleading information, verbally or in writing, to boost sales or prices. The reference is taken from the Securities and Futures Ordinance, which imposes up to seven years' imprisonment and a HK$1 million fine for giving false information when selling investment products. Another committee member, lawmaker Lee Wing-tat, said the panel also suggested the forfeiture of the deposit be reduced to 5 per cent from 10 per cent of the flat price, if a buyer chose to cancel the deal within three days of the purchase. The committee also decided that if a person or company sold only a single flat, say, a village house, they could be exempted from the proposed law. A spokesman for the Transport and Housing Bureau said: "Members' views have been fully expressed and debated in the various meetings. A report will cover all the issues dealt with and will give a faithful account of the main points considered." Government lawyers will draft a bill based on the report, which will be released for public consultation and then for lawmakers' scrutiny.

Hong Kong's roaring property market, which the government tried to rein in with measures such as higher stamp duties, may be headed for calmer times, according to Financial Secretary John Tsang Chun-wah. "Transactions have fallen and prices are starting to trend down slowly," he told Bloomberg on a visit to Chicago at the start of Cathay Pacific direct flights between the Windy City and Hong Kong. "There has not been a very violent reaction." As residential sales ease, the latest data show, new mortgages in August fell by more than a quarter, although new applications for home loans increased. Sales at new projects have fallen. At the weekend, sales were recorded at only two out of 10 benchmark residential projects. Developers, meanwhile, have urged the government to monitor sales before proposed new laws regulating transactions are drafted. "We hope that future legislation will not affect business," said Real Estate Developers Association executive committee chairman Stewart Leung Chi-kin. Legco's steering committee on regulation of sale of first-hand residential properties by legislation, has made several recommendations to the Transport and Housing Bureau. Some panel members have suggested criminal penalties be imposed on developers for misleading and deceitful information. The panel proposed a seven-year prison term. Also, a developer's representatives - managers as well as frontline sales people - could be held responsible for dubious practices. Lawmaker Lee Wing-tat, a steering committee member, said thethe proposals would "extend the regulation period until after the completion of flats and use the saleable area to calculate the per-square-foot price. "A three-day cooling period for buyers is also suggested, under which, if a buyer decided to cancel the deal he or she will have to forfeit the 5 percent deposit."

The government has got the go-ahead to build the giant Hong Kong-Macau-Zhuhai bridge after the Court of Appeal overturned a lower court ruling quashing the environmental protection director's approval of the project. Welcoming the decision, Secretary for Transport and Housing Eva Cheng Yu-wah said the government will soon seek funding from the Legislative Council. The aim is to start construction by the year-end so the bridge can be open for use in 2016, as scheduled. Also on the agenda is increased manpower and a revision of work methods to cut work time, though this could add a further HK$6.5 billion to the multi-billion-dollar project. The ruling means dozens of construction projects earlier put on hold will now likely go through the usual vetting process. A three-judge bench at the Court of Appeal unanimously overturned the Court of First Instance ruling - passed in April - on a judicial review alleging government failure to conduct proper environmental impact assessments of two key elements of the project. The review was filed in January last year by Tung Chung resident Chu Yee-wah, 65, a sometime Civic Party volunteer. Asked yesterday if she will lodge an appeal, Chu said: "I won't get involved in it any longer. I have no intention to stir it up. But they told me about it and I was unclear." As to who told her to file a review, she said: "Whoever told me to do it, I won't disclose it. I have been fooled. Let it be." She spoke of being worried earlier that work on the bridge's Hong Kong section would affect the environment, and thus the health of the elderly and children in particular. But she later felt upset on hearing that many job opportunities would not be created unless the bridge is built. Her counsel argued that the authorities failed to carry out a "stand-alone" assessment of likely environmental conditions without the proposed Hong Kong-Macau-Zhuhai bridge. The boundary-crossing project is to be built on reclaimed land in waters northeast of Chek Lap Kok and a nearby link road. Court of Appeal vice-president Justice Robert Tang Ching said in the written judgment that neither a government technical memorandum nor the study briefs of the projects required a stand-alone assessment in the EIA reports. He said they just require the Highways Department, as the project proposer, to conduct an assessment of the cumulative impact. Tang added: "It is often a question of professional judgment what information is required to be contained in an EIA report [to let environmental protection director Anissa Wong Sean-yee perform her duties]." The court, he said, cannot interfere unless the director's judgment is unreasonable. The Environmental Protection Department also welcomed the ruling. Green groups, meanwhile, urged that the government carry out a strategic environmental assessment on the cumulative impact of projects, including the proposed bridge and expansion of Chek Lap Kok airport.

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

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