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

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Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) http://www.tid.gov.hk/english/cepa/index.html

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Happy Chinese New Year - Year of the Dragon - January 2 3 2012

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Hong Kong*:  Jan 2 2012 Share

Developer taps HK market - for a price - Dalian's Kai Shi China hopes to raise HK$180m despite facing listing charges of 30pc or more - Small mainland developer Kai Shi China, which owns two residential projects near Dalian, is tapping the Hong Kong equity market as it battles rising interest rates and tightening credit conditions in its home market. The mainland developer plans to offer 150 million shares priced between 87 HK cents and HK$1.20 each, and expects to raise up to HK$180 million through a listing on the main board. But listing costs will eat up a big chunk of the proceeds. After deducting underwriting fees and estimated expenses payable in connection with the share offering, Kai Shi said the net proceeds from the flotation would be HK$126.2 million. That suggests that listing costs will eat up HK$53.8 million, or 30 per cent of the HK$180 million target. This would be higher than the HK$49.6 million net profit it generated in 2010. However, the company was upbeat about prospects for this year, saying it expected net profit in 2011 would be at least 150 million yuan (HK$183.3 million). Han Liping, executive director and chief financial officer of Kai Shi, described the impact of austerity measures on its property sales so far as "limited". "Unlike major cities, Lvhsunkou is a third-tier city that's not subject to the restrictions on the number of home purchases," she said. At present, 46 cities, including Beijing and Shanghai, prohibit residents from buying more than two flats as the mainland authorities seek to curb speculation. As a result, property sales have plunged by as much as 70 per cent, sparking a nationwide price war among major developers. By August next year, Kai Shi will face a 475 million yuan construction bill for Kai Shi Xi Jun, one of two housing projects it owns in Lvshunkou, which should be completed before the end of 2013. Chairman Kai Chenglian said the firm's financial position was healthy. He expects the company will generate 570 million yuan in contracted sales when it releases the remaining homes in the second phase of Kai Shi Jia Nian next year. This, with its 100 million yuan in cash in the bank and on hand should be sufficient to meet its construction costs. About 80 per cent of the estimated proceeds of the share placement, or 101 million yuan, would be used to buy land in Beihaijiedao near the site of a second housing project in Lvshunkou.

Paul Y. Engineering Chairman James Chiu, left, and Deputy Chairman Tom Lau Ko-yuen, attend a special general meeting in Hong Kong in November. A Hong Kong construction company said on Friday that a plan to invest US$220.5 million in a Hollywood-China movie production venture is on hold because of rocky financial markets. Paul Y. Engineering (SEHK: 0577) said it couldn’t raise enough money from selling new shares to investors before a year-end deadline for the proposed – and unlikely – investment in Legendary East Limited - The construction company has said previously that the deal for a 50 per cent stake in Legendary East, which aims to make big budget films for worldwide audiences, was aimed at diversifying its business. Executives believe China’s increasingly lucrative film market has great potential. Chairman James Chiu said although the share sale had a “positive and substantial response” from investors, it was not enough to complete the share placement. “We anticipate that under the current difficult environment of the capital markets the placing will not be able to close before” the deadline of December 31, this year, Chiu said. The company said it will try again next year by working with the partners to modify the structure of the deal. Under the originally proposed deal, Hollywood production house Legendary Entertainment would have been left with a 40 per cent stake in Legendary East while China’s Huayi Brothers Media Corporation would have the remaining 10 per cent. Legendary East, a Hong Kong-based venture that was announced in June, plans to make one or two big budget movies a year starting in 2013 for global audiences that are also commercially viable in China. The movies will be mainly in English and feature themes based on Chinese history, mythology or culture. Legendary Entertainment has produced global blockbusters including Inception and the two Hangover movies. Huayi releases include the hit Feng Xiaogang disaster epic Aftershock , the kung fu drama Shaolin and the Tsui Hark fantasy epic Detective Dee and the Mystery of the Phantom Flame. Mainland box office takings surged 64 per cent to US$1.5 billion last year and are expected to grow 30 per cent this year to US$2 billion.

Facing continued criticism by the public and the government, CLP Power (SEHK: 0002) has further slashed its planned tariff increase for next year – this time to little more than half its original proposal. The city’s biggest power producer said on Friday that its average increase would now be 4.9 per cent, down from the 7.4 per cent figure put forward last week and a big reduction from the 9.2 per cent announced earlier in the month that sparked public outrage and an unprecedented plea by the government to scale it down. “The final package is a result of extensive discussions with the government and has addressed their concerns,” CLP vice-chairwoman Betty Yuen said. “We believe the government will find it acceptable.” Under the latest structure, the basic charge will fall from a proposed five cents a kilowatt hour to 4.2 per cent. CLP has also responded to protests from business customers by putting on hold a plan to scrap bulk discounts for heavy users, in a move that may upset environmental groups who say the discounts encourage wasteful use. The utility is also maintaining a 3.2 per cent fuel charge increase, although it earlier offered to reduce this to two per cent. The new charges will be introduced next year at a time to be announced. CLP, which supplies Kowloon and the New Territories, said it achieved the reductions by cutting capital expenditure and tapping into its tariff stabilisation fund. The company said it will also offer consumers a 3.3 per cent special rebate. The government, which has been negotiating with CLP Power for the past few weeks, initiated a Facebook campaign against the earlier proposals. It said last week that the company could do better, despite the first set of reductions.

Hong Kong's working class is finally enjoying the fruits of economic buoyancy as wages jumped 9.9 percent in September from a year earlier, according to government data - the fastest rise since March 1994. The Census and Statistics Department said 79 percent of the companies reported an increase in their average pay rates in September, while only 15 percent cut pay. After adjusting for inflation, the average wage rose 4.4 percent in real terms. Staff at Power Assets Holdings (0006) - previously known as Hongkong Electric - will be given a New Year's present. According to Sing Tao Daily, sister publication of The Standard, salaries will rise by 3 to 6 percent from January, while a bonus payment will be fixed later. The territory's other power company - CLP Power (0002) - will also raise salaries, but the hikes are yet to be determined, Sing Tao said. As for September, sector-wise, professional and business services had the largest pay rise, averaging 15.6 percent. Personal services and food and accommodation services wages rose 12.8 percent and 10.5 percent, respectively. A government spokesman said while wage hikes were across the board, those for workers in the lower segment saw more visible increases, bolstered in part by the statutory minimum wage. In addition to the new law, retail sales - a labor intensive industry - surged nearly 24 percent in September from a year earlier. Also, the local unemployment rate is around a decade low of 3.3 percent, which pressured wages. But Bank of East Asia chief economist Paul Tang Sai-on warned the wage hikes are unlikely to continue as unemployment increases and the impact of the minimum wage fades. Payroll per person, which includes bonuses and irregular payments on top of basic salaries, leaped by 8.3 percent in nominal terms and 1.6 percent in real terms in the third quarter of 2011 from a year earlier.

Public relations disasters often unfold along the same lines. They start with a problem in a service or product, which is video-recorded and uploaded onto the internet by the client. The clip goes viral on the web and the story is eventually picked up by the media. Things then swing out of control - turning into a public relations disaster. Earlier this month, FedEx staff, who were delivering a computer monitor, dropped the package through the gate without even ringing the doorbell. A closed-circuit TV camera recorded the entire process, and the irate customer uploaded the clip onto the internet, where it clocked up more than three million hits in just two days. Fortunately, the US logistics giant was quick to react and issued an apology within 48 hours - saying the employee seriously breached the company's core values. It also offered compensation to the victim and said it would use the clip for staff training to prevent a repeat. The prompt reaction by FedEx not only prevented a PR disaster but also won praise from many netizens. Earlier this year, something similar happened at a popular TV quiz show here in Hong Kong. One evening, there were two possible answers to a certain question and netizens began to complain. The TV station immediately issued an online apology and offered compensation later that night. Thus it not only prevented a PR disaster but also won applause from net users and fans. What was originally bad for the company became a good thing. In this internet era, bad deeds spread not only far and wide but also at great speed. To prevent PR disasters, a fast response is a must. US netizens may be more tolerant but, to me, taking action within 48 hours is too slow. In Hong Kong, it has to be within the golden 24 hours. Other than speed, there must be frankness, together with appropriate compensation and remedy. Netizens have a strong sense of justice. When a company does a good job in remedying a situation, it will be appreciated. Even if other people want to stir up trouble, they will be shouted down by netizens. Media guru KK Tsang, CEO of GroupM, takes a candid look at life.

We need a third runway at Chek Lap Kok to keep up with soaring air traffic - that's the official view of the people. It comes after a three-month public consultation exercise shows the controversial project has widespread support. A survey of 24,242 respondents by the University of Hong Kong has 73 percent backing a new runway and 11 percent in favor of expanding the existing ones. It also shows that 80 percent want the Airport Authority to make an urgent decision on expansion, with only 6 percent requesting more time. Authority chief executive Stanley Hui Hon-chung said yesterday the body will use all means to reduce and avoid any adverse effects of the expansion. The cost of the environmental assessment will be about HK$100 million, which he described as "not cheap at all." The thumbs-up for the project at Hong Kong International Airport will mean a 650-hectare reclamation the size of 34 Victoria Parks. Two more terminals and a train that connects them will have to be built. The authority's executive director of corporate development, Wilson Fung Wing-yip, reassured the public that construction will not go ahead before environmental impacts are addressed. The authority estimates existing runways will reach capacity by 2020. Hong Kong overtook Memphis, Tennessee, last year as the busiest air cargo hub owing to strong import and export growth in China. Construction costs are estimated at HK$136.2 billion, allowing for inflation - HK$86.2 billion in 2010 terms. The project is due to be completed by 2023. Secretary for Transport and Housing Eva Cheng Yu-wah said the consultation shows most people want the third runway, saying it can improve Hong Kong's competitiveness and create jobs. Cheng expects the government to make a decision in the first quarter of next year. The environmental assessment will take about 18 months. Organizations supporting the third runway include the International Air Transport Association, Cathay Pacific Airways and the Federation of Hong Kong Industries. Chief executive candidate Henry Tang Ying-yen is also in favor but believes the environmental impact needs to be minimized. However green groups such as Friends of the Earth and WWF criticized the "twisted" consultation findings. WWF Hong Kong director of conservation Andy Cornish said social and environmental costs as well as carbon emissions were not mentioned in the consultation. Construction will increase carbon emission by 5.3 million tonnes, Cornish said. Fears of how the airport will cope with increased traffic were raised earlier this year when The Standard revealed how three passenger jets were involved in two near misses. Pilots and air traffic controllers blamed understaffing at the Civil Aviation Department. But Hui said the department has set up a special task force on how to cope with increased air traffic in the Pearl River Delta.

Hong Kong's Renminbi deposit expanded by 1.4 percent to 627.3 billion yuan at the end of November 2011, according to statistics published Friday by the city's Monetary Authority. The figures showed the total remittance of Renminbi for cross-border trade settlement amounted to 184.99 billion yuan in November, compared with 161.46 billion yuan in October. Hong Kong's total deposits with authorized institutions increased by 0.8 percent in November. HK dollar deposits rose by 0.4 percent during the month. Foreign-currency deposits also climbed by 1.3 percent in November. Total loans and advances grew by 1.2 percent in November. Loans for use in Hong Kong rose by 0.8 percent and loans for use outside Hong Kong expanded by 2.1 percent. As HK dollar loans increased at a faster rate than deposits, the HK dollar loan-to-deposit ratio climbed from 84.7 percent at the end of October to 85.5 percent at the end of November. Seasonally adjusted HK dollar M1 rose by 0.8 percent in November and increased by 3.2 percent year on year. Unadjusted Hong Kong-dollar M3 expanded by 0.5 percent during the month and grew by 3.5 percent from a year earlier. (1 U.S. dollar = 6.29 yuan)

The Air Services Arrangement between Hong Kong and Taiwan was signed in Hong Kong Friday and came into immediate effect, said a press release issued by the city's government. According to the press release, the arrangement was signed by representatives of the Hong Kong-Taiwan Economic and Cultural Co- operation and Promotion Council (ECCPC) and the Taiwan-Hong Kong Economic and Cultural Co-operation Council (THEC) who had been duly authorized by the relevant authorities of the two sides. The Arrangement, being the first signed by the ECCPC and the THEC since their establishment, underlines the significance of air services between Hong Kong and Taiwan, and is a milestone in the two sides' civil aviation development. According to the document, the two sides agreed to set no limits on the number of airlines to be designated by both sides so that new airlines can enter the market. Moreover, the two sides agreed the passenger capacity will be increased by 28 flights per week for each side with immediate effect, and another seven flights per week for each side with effect from the 2012 International Air Transport Association (IATA) summer schedule, while the cargo capacity will be increased by 1, 100 tons per week for each side with immediate effect, and another 200 tons per week for each side with effect from the 2012 IATA summer schedule. Also, special chartered flights are allowed between Hong Kong and points in Taiwan including Taichung, Hualien, Taitung, Magong, Kinmen and Tainan and each side may operate a maximum of 28 flights per week on each route mentioned above. Hong Kong Secretary for Transport and Housing, Eva Cheng, welcomed the new arrangement, saying that the arrangement would provide room for the air services between Hong Kong and Taiwan to develop. She added that the new arrangement would not only benefit the development of the aviation, freight and tourism industries of the two places and strengthen Hong Kong's position as an international and regional aviation hub, but also promote further exchange and co-operation between Hong Kong and Taiwan, taking bilateral relations to a new level.

Hong Kong has approved a grant of 2 million HK dollars (about 257,000 U.S. dollars) for a relief project for typhoon victims in the Philippines. Announcing the grant Friday, a government spokesman said that Disaster Relief Fund Advisory Committee hoped the grant would help provide relief to the typhoon victims in the Philippines. "To ensure that the money will be used for the designated purposes, the relief agency has been asked to submit an evaluation report and audited account on the use of the grant after the relief project has been completed," the spokesman said. Hong Kong Disaster Relief Fund Advisory Committee is responsible for advising the government on policy and practices regarding the disbursement of funding for disaster relief from the Disaster Relief Fund, as well as advising on specific amounts to specific recipients, and monitoring the use of grants. 

Hong Kong's foreign currency assets at the end of November this year were 34.7 billion HK dollars (about 4.47 billion U.S. dollars) higher than at the end of October 2011, the city's Monetary Authority announced Friday. According to the figure, at the end of November 2011, Hong Kong 's total assets of the exchange fund amounted to 2,490.4 billion HK dollars, 33.2 billion HK dollars higher than at the end of October 2011. Foreign currency assets increased by 34.7 billion HK dollars while Hong Kong dollar assets decreased by 1.5 billion HK dollars. The release said the rise in foreign currency assets was mainly due to an increase in unsettled purchases of securities and purchases of foreign currencies with Hong Kong dollars. These increases were partly offset by valuation losses on foreign currency investments. The decline in Hong Kong dollar assets was mainly due to sales of Hong Kong dollars for foreign currencies and valuation losses on Hong Kong equities. The Currency Board Account shows that Hong Kong's Monetary Base at the end of November 2011 was 1,060.2 billion HK dollars, an increase of 1.6 billion HK dollars, or 0.1 percent, from the end of October 2011. 

The number of issuances of dim sum bonds has climbed at an exponential rate in the first full year since such bonds came on the market, but growth has slowed in the fourth quarter and should continue slowing early next year amid concerns that yuan appreciation is no longer a sure bet. Analysts say that could force issuers to start rethinking yuan fundraising strategies next year as reduced investor appetite raises their borrowing costs. The market for yuan-denominated debt issued in Hong Kong took off in earnest from July 2010 after Beijing relaxed some regulations on yuan use in the territory. New dim sum bond issuances this year totaled 104 billion yuan (US$16.4 billion) as of Dec. 22, almost triple the 35.8 billion yuan offered in 2010, according to data from the Hong Kong Monetary Authority. For much of the year, expectations of long-term yuan appreciation fueled robust demand for assets denominated in China's currency, making dim sum bonds popular even though they offered lower yields than yuan bonds sold onshore. Issuers included multinationals such as Volkswagen AG, McDonald's Corp. and Caterpillar Inc. But dim sum bond issuance in the fourth quarter fell 26% on-quarter to US$2.96 billion, according to Dealogic. From September, with the yuan's value fluctuating more significantly and the pace of appreciation slowing, some investors and fund managers got burned on their dim sum investments. A dim sum bond index compiled by BOC Hong Kong (Holdings) Ltd., the offshore yuan clearing bank, dropped to 96.12 Wednesday from its peak of 102.98 in June. The index was launched at 100 at the end of 2010. Bond funds suffer mark-to-market losses when the price of a bond falls below its issue price, which is usually at or near par. When a bond's price drops to, say, 70 from 100, the mark-to-market value of the bond shrinks 30%. For example, Guangzhou R&F Properties Co.'s 2.61 billion yuan three-year paper fell to around 77 this week after being issued at par in April. The yield jumped to 19% from 7% at the time of issue, due partly to concerns about Chinese developers' liquidity. A widening of bid-offer spreads in the slowing market has boosted costs for some dim sum issuers. Bankers and analysts say that could compel potential issuers to consider shifting to yuan-denominated bank loans next year. Some firms already have: Hong Kong-based consumer finance company United Asia Finance Ltd., which issued 500 million yuan in dim sum bonds in April, raised 300 million Hong Kong dollars in September from a syndicated loan involving both the yuan and Hong Kong dollar. The cost of the yuan loan, at around 1.5%, was significantly lower than the 4% interest rate the company is paying to holders of its dim sum bonds. Still, fund managers believe dim sum bonds remain an attractive investment. "As funds from Asia, Europe and the U.S. look to diversify their asset allocation, dim sum bonds are a relatively stable option as compared with the volatility in other asset classes," said Ronald Chan, managing director at Manulife Asset Management's fixed income division. Analysts and bankers generally expect dim sum bond issuances to continue growing in 2012, just more slowly. Tee Choon-Hong, head of capital markets for Northeast Asia at Standard Chartered PLC, said the total value of 2012 dim sum bond issues could reach 300 billion yuan. New rules to ease the transfer of yuan funds into mainland China, as well as a trial scheme to allow foreign yuan investments in domestic markets, also could support demand for the yuan and yuan-denominated bonds, the analysts say.

 China*:  Jan 2 2012 Share

The Ministry of Human Resources and Social Security says 24 provincial or regional governments have raised minimum wages by an average of 22 per cent this year amid official concerns over social unrest stemming from mounting labour disputes. Human Resources and Social Security Minister Yin Weimin also told a national conference yesterday law enforcement departments had helped recoup a total of 2.94 billion yuan (HK$3 billion) in back pay for 1.29 million migrant workers this year. Waves of strikes sparked by pay and compensation disputes have hit the Pearl River Delta and Yangtze River regions in the past year. The ministry, along with eight other central government agencies, including the Ministry of Public Security, launched a crackdown targeting back pay for migrant workers this month, which set a January 23 deadline, Lunar New Year's Day, for the settlement of most back-pay disputes involving migrant workers. However, Qiu Xiaoping , a Ministry of Human Resources and Social Security department head in charge of labour issues, admitted in an interview with Xinhua on Monday that addressing the back-pay problem would be difficult because of the layers of subcontractors who employed migrant workers, and a lack of legal leverage against rogue bosses. Ma Yang , director of China On Action, a workers' rights advocacy group, said mainland workers were more inclined to unite in pushing for their rights because they were more educated and more aware.

Construction started Thursday on a high-speed rail linking the city of Xi'an, home of the Terracotta Warriors, with the city's airport. The 27.3-km express rail with a construction budget of 9 billion yuan ($1.4 billion) will allow trains to run at 100 km per hour, and is scheduled to be completed in four years, according to sources with the provincial government of Shaanxi in northwest China. The rail, featuring both an overhead section and an underground part, is designed to have nine stations connecting the Xianyang International Airport with a high-speed railway station and the Beikezhan (north railway station) in Xi'an, Shaanxi's capital. The line will shorten the one-way trip to the airport from one hour to under 30 minutes upon its completion by 2015. The Xianyang airport on Wednesday became the latest in China to host the superjumbo Airbus 380, following airports in Beijing, Shanghai, and Guangzhou. The airport is currently undergoing an expansion of its T3 terminal. Once the expansion project is finished in March 2012, the airport will boast an annual passenger handling capacity of 50 million people.

The first "US Chinese New Year Gala" will be staged in New York's Hammerstein Ballroom during the Lantern Festival in early February 2012, according to the general director of the event. The four-hour gala will feature a wide range of performances that showcase Han culture, ethnic minority culture, Chinese opera, folk dancing, traditional music instruments, martial arts and acrobatics, said Chen Gang, the gala's general director here Monday. The non-profit event is sponsored by four major overseas Chinese community organizations: the Federation of Chinese Association of USA, the Fukien Benevolent Association of America, United Fujianese of America Association, and the Tsung Tsin Association. According to Chen, an expert panel is currently selecting programs submitted by various cultural heritage performance organizations and performing groups and individuals. "Cultural heritage usually played a supporting role in previous stage performances, but this time it will be the main theme," said Chen, who expressed the hope that the gala will show overseas Chinese's respect for Chinese cultural heritage as well as their determination to protect such heritage. Hundreds of overseas Chinese, American politicians and business people are expected to attend the event, and highlights of the show will be broadcast on Channel 4 of the China Central Television, according to Chen.

A Kunqu opera singer gives out Fu signs to commuters in Nanjing, Jiangsu province, Dec 29, 2011. Kunqu opera singers performed on Nanjing's subway Line 2 and handed out the paper signs featuring the Chinese character Fu, which means blessings, in celebration of the coming New Year.

Guidelines welcome foreign money - Government officials and experts said the new guidelines are in keeping with proposals contained in China's 12th Five-Year Plan (2011-2015), which seeks to lay the foundations for a more innovative and greener economy. China will encourage foreign companies to invest more in domestic industries to further make good on the country's commitment to open its economy, according to guidelines released on Thursday. In a new version of the Foreign Direct Investment Industry Guidelines (2011), the Chinese government is encouraging foreign investors to put money into advanced manufacturing, the service industry and certain business concerned with energy conservation, advanced technology, renewable sources of energy, new materials and advanced-equipment manufacturing. Government officials and experts said the new guidelines are in keeping with proposals contained in China's 12th Five-Year Plan (2011-2015), which seeks to lay the foundation for a more innovative and greener economy. On Thursday, the Ministry of Commerce and the National Development and Reform Commission (NDRC) issued the guidelines, which will replace a previous version of the rules that was published in 2007. They are expected to come into force on January 30. Compared with the 2007 version, the new guidelines encourage foreign companies to invest in a greater number of industries and reduce the number of industries that are off limits to such investment. "The new version indicates China's strong commitment to opening its market wider," said Wang Zhile, director of the ministry's research center for transnational cooperation. "It's absolutely a positive signal." In the new guidelines, the Chinese government will encourage foreign enterprises to invest in new technology and equipment for the textile, chemicals and machinery-manufacturing industries. The guidelines also call for the encouragement of investment into nine service industries. Among them are those concerned with charging electric vehicles and swapping their batteries, protecting intellectual property rights, cleaning up offshore oil pollution and vocational training. China will also allow foreign companies to invest in medical institutes and various other industries that were previously off limits to them. Dirk Moens, secretary general of the European Union Chamber of Commerce in China, said foreign investors are likely to take heed of the government's investment guidelines. This "will indeed facilitate decision-making for foreign investors thinking of coming to China", Moens said. Kong Linglong, director-general of the National Development and Reform Commission's department of foreign capital and overseas investment, had similar thoughts. "Looking at the changes in the new version, we can tell the way in which the Chinese government would like to transform its industrial structure," Kong said. "And another message is that China is now placing more value on the quality of foreign investments rather than their scale." The government will also prevent foreign companies from building or operating refineries that have the capacity to distill fewer than 200,000 barrels of crude oil a day. That is up from the previous limit of 160,000 barrels a day. China, meanwhile, has removed industries from the list of those it encourages foreign companies to invest in. No longer part of that group are automakers, large coal-to-chemical operations and manufacturers of polycrystalline silicon. "The restrictions generally apply to industries that have excessively large capacities and that pollute the environment," said Zhang Xiaoji, senior researcher at State Council's development research center. "But they will probably be a source of their (foreign companies') complaints about transparency in China's market for foreign investment. To alleviate their concerns, China should try to provide detailed information about what will be restricted." China issued the first version of its guidelines governing foreign direct investment in 1995. They are now amended every four years. China released a draft version of the new guidelines in early April, seeking the public's suggestions and comments. "We have made reasonable changes in response to foreign companies' opinions," Kong said. For instance, the draft version said foreign investors could take no more than a 50-percent stake in joint ventures that produce all of the chief components needed in new-energy vehicles, a proposal that led to heated discussions in the auto industry. The final version changed the stipulation about "all chief components" to one that only concerns "fuel cell batteries". Giving a keynote speech in December at a celebration ceremony for the 10th anniversary of China's entry into the World Trade Organization, President Hu Jintao said China will continuously open its economy to the world. He said that is especially true for industries concerned with advanced manufacturing, strategic emerging industries, services, agriculture and modern culture. In April, China issued a directive that encouraged more investment in the high-tech, renewable energy and service industries, and for more attention to be paid to the country's western and central regions. The directive marked a turning point in China's policies concerning foreign direct investment. China is now the second-largest destination for such investment in the world and the largest among developing economies. In 2010, the value of foreign direct investment into China hit a record high, increasing to $105.74 billion, a rise of 17.4 percent from the year before. In 2009, it decreased by 2.6 percent. From January to November, the value of China's foreign direct investment increased by 13.15 percent from the same period the year before, reaching $103.77 billion.

Nomination signals Washington's 'focus on Asia-Pacific' - Chinese experts said that US President Barack Obama's nomination of navy Admiral Samuel Locklear as commander of US Pacific Command (USPACOM) on Wednesday is a sign of the US government's growing attention to Asia-Pacific affairs. If confirmed by the Senate, Locklear will replace Admiral Robert Willard as head of the largest of the six US military Unified Combatant Commands. USPACOM has about 325,000 service members, or about one-fifth of the US military strength, and covers an area stretching from the waters off the US west coast to the western border of India. Liu Lin, a researcher with the Academy of Military Science of the People's Liberation Army, said the nomination of the well-known figure to some extent reflected the US government's growing attention to Asia-Pacific affairs - Locklear directly commanded the operation in Libya which made him popular. "Because there are several emerging countries in the Asia-Pacific region, such as China, India and Indonesia, the USPACOM's strategic importance is rising rapidly for US troops," Liu said. Locklear, a graduate of the US Naval Academy, is currently commander of US Naval Forces Europe, commander of US Naval Forces Africa, and commander of Allied Joint Forces Command in Naples, Italy. Since the Obama administration took office in early 2009, it has realized the strategic importance of the region and adopted a back-to-Asia strategy in a bid to maintain the US leadership in both economic and security arenas in Asia, Liu said. Liu said the admiral, as chief of Pacific Command, would likely continue the policies of his predecessors, and focus on China's growing economic and military strength and the uncertainty on the Korean Peninsula, especially after Kim Jong-il's death.
"Actually, soon after the Cold War, the US already decided to transfer its strategic focus to the Asia-Pacific region, but the anti-terrorism war then came to the top of the focus list, " said Liu, adding that Obama announced last month the deployment of up to 2,500 US Marines in Australia, another piece of its Asia-Pacific strategy adjustment. The disadvantage of Locklear, compared with his predecessor Admiral Robert Willard, appointed in October 2009, is that Locklear has never dealt with any matters in the Asia-Pacific, Liu said. "These senior military officers to some degree are also diplomats, so before he actually gets familiar with the region, it is too soon to speak of specific impacts of the nomination," she added.

Hong Kong*:  Jan 1 2012 Share

Daily patronage on the Star Ferry has dropped by 25 per cent since 2006, and the company is considering further fare increases. The Star Ferry company is hoping to boost its sagging revenues by tapping the fine-dining market. It will turn one of its old vessels into a floating restaurant, the ferry operator said yesterday. A retired Star boat will be refitted to convert the lower deck into a kitchen and the upper deck into a dining area. It will offer mostly Western cuisine as well as views of the harbour and city skyline. Frankie Yick Chi-ming, the director of Wharf, which owns the ferry business, told a media gathering yesterday: "This is going to be up-class, fine dining. People will find their time well spent there and they will enjoy a dinner that they will never forget." Wharf is now looking for suitable food and beverages to offer on the vessel, which will initially be tied up at a pier in the harbour. Later it may find a different location along the new waterfront that is currently under construction. Yick said it was too early to estimate how much profit Wharf might make from the operation. But he hoped it would be enough to help revive the ferry's fortunes, plagued by a nearly 25 per cent drop in daily patronage - from 50,000 to 38,000 - since the Central ferry pier was relocated in 2006. The dwindling patronage dealt a serious blow to the ferry operation, pushing a profitable operation into the red: it recorded accumulated losses of HK$17 million in the three years up to 2009. Fares went up in 2009 and again last year. The introduction of the minimum wage has made the losses bigger, Wharf says. The firm earlier proposed two options for fare increases for its Wan Chai-Tsim Sha Tsui and Central-Tsim Sha Tsui routes. One is to raise the weekday upper-deck fare by up to 30 cents to HK$2.80, and weekend and holiday fares by up to 60 cents to HK$3.60. The second option is to raise fares by 30 cents on weekends, on condition that the government compensates it for the HK$5 million it loses each year by providing free rides for eligible elderly people. The ferry firm is asking for what it calls "compensation" after Chief Executive Donald Tsang Yam-kuen decided to reimburse outlying-island-ferry operators for fare concessions. The Star Ferry is excluded from the new arrangement because officials say it does not provide the same, essential commuting services as operators on island routes. Yick defended a proposed HK$20 charge for bringing bicycles on board ferries, saying the cost of running the service was HK$370,000 a year. The cycle service can break even only if at least 51 cyclists use it every day, but only about 40 people are using it regularly. The two fare options are still being studied by the government, but the ferry company has warned it could still register a HK$3 million loss next year even if fares go up. While the 123-year-old business' financial future looks grim, Yick sees some grounds for optimism in the relocation of the maritime museum to a public pier in Central in 2013, and the completion of the harbourfront promenade and development - due by 2015 at the earliest. "The worst may be over, and there might be some slight rebounds in future," Yick said. Wharf would continue to negotiate with the government on relaxing lease restrictions at the Central pier and for its rooftop development at the Tsim Sha Tsui pier, as well as expanding its boat tours in the harbour, he said. On the environmental front, the ferry operator will apply for over HK$10 million under the Green Transport Fund, to develop a new emission-control device for ferry exhausts that will be fitted onto its nine vessels. The device will combine two anti-pollution technologies. One has been shown to cut sulphur dioxide emissions by 90 per cent and significantly clean up dark smoke; the other reduces nitrogen dioxide emissions by 70 per cent.

Kwong Ki-chi (left) is reported to have had a brush with Lau Ming-wai. A former chief executive of the stock exchange has had his Jockey Club membership suspended for a year, reportedly after a dispute with a property tycoon heir. All membership rights of Kwong Ki-chi were suspended for 12 months from December 12, the club said in a strongly worded notice posted at its Happy Valley Clubhouse on Shan Kwong Road. "During the period in which the member's rights are suspended he also cannot enter the club's areas as a guest of other members," the notice reads. Kwong is one of about 200 voting members of the 20,000-strong club who have the power to recommend new members. The club would not confirm media reports published yesterday that said Kwong had a difference of opinion with Lau Ming-wai, vice-chairman of Chinese Estates Holdings (SEHK: 0127) and eldest son of the company's chairman Joseph Lau Luen-hung, when they were using the swimming pool at the clubhouse in June. The reports said Kwong was absent from a disciplinary committee hearing held afterwards. A spokeswoman for the club said its disciplinary committee met before the notice was issued, but declined to comment further. "In view of privacy concerns, the club will not disclose any information regarding this case or the individual in question," she said. "All club members are obliged to observe the rules of the club. Penalties are imposed according to established procedures and such authority is delegated to the disciplinary committee." It is understood that Kwong is barred from all club areas apart from the public venues at the two racecourses, in Happy Valley and Sha Tin. The younger Lau could not be reached for comment yesterday. He has been a supporter of chief executive candidate Henry Tang Ying-yen, flanking him at most campaigning events. But he was absent during Tang's visit to the Brands and Products Expo at Victoria Park yesterday. Kwong was a high-flyer in the civil service, last serving as secretary for information technology and broadcasting, before he joined Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) in 2000. In 2006, he was tipped as a candidate for the Jockey Club chief executive post, which later went to Winfried Engelbrecht-Bresges.

Hong Kong's trade deficit rose to the biggest on record in November as export growth slowed on faltering European demand for Asian goods. Overseas shipments rose 2 per cent from a year earlier to HK$278.6 billion and imports gained 8.8 per cent, the government said yesterday. The deficit of HK$44.1 billion was the highest since records began in 1952. The outlook for exports is also clouded by a slowdown in the mainland's economy as Premier Wen Jiabao prolongs a crackdown on property speculation. "Hong Kong's export growth momentum has faltered," said Raymond Yeung, an economist at Australia & New Zealand Banking Group. "Downside economic risks are high in China, coupled with a slowdown in Europe," he said before the release. Yesterday's exports figure compared to an 11.5 per cent jump in October and a median estimate of 3.9 per cent increase of six economists in a Bloomberg survey. "Cooler Western demand is set to hold back the city's growth in the fourth quarter, and will likely continue to do so through the first quarter of next year," said Donna Kwok, an economist at HSBC. The Hang Seng Index closed 0.7 per cent down, before the trade data were released. Exports face "strong headwinds" on deepening European crisis and weakness in advanced economies, the government said. Shipments to Britain fell 8.3 per cent last month from a year earlier. Exports to the mainland rose 2.5 per cent, while those to the United States slid 7.5 per cent. Exports to Asia as a whole grew by 4.4 per cent, the government said. The Trade Development Council warned earlier this month that growth in the value of Hong Kong's exports may slow to 1 per cent next year, saying traders' confidence has fallen sharply. Almost all Hong Kong's exports are re-exports from the mainland, where officials have warned that the euro-zone debt crisis and sluggish recovery in the United States threaten the world's second-largest economy. Mainland export growth has fallen from 31 per cent in 2010 to an annual rate of 21 per cent in the January to November period of this year, and is predicted to slow further next year.

Michael Suen removes his mask after leaving hospital yesterday following a 12-day stay. Education chief Michael Suen Ming-yeung was released from hospital yesterday after a 12-day bout with legionnaires' disease. He expects to resume work on January 9, but given the strong suspicions he caught the potentially deadly bug at the new government headquarters in Admiralty, some of the civil servants who work there are said to be terrified about returning to the Tamar office complex. The 67-year-old, who is on kidney dialysis, announced he was "fully recovered" as he left Queen Mary Hospital in Pok Fu Lam and said he plans to complete his term of office, which runs to June 30. On Wednesday, health officials found traces of the legionella bacteria that causes the disease in the private washroom in Suen's office - making the site a likely source of his exposure. Suen said he never used the shower in the washroom, but did use the basin to wash his hands after using the toilet. He could not remember if he had ever washed his face there. The recently completed HK$5.5 billion government headquarters remains in use and the Centre for Health Protection says that for the time being it is not necessary to suspend the water supply. Some civil servants were not reassured, though. They fear the plumbing at the complex may be contaminated. "We are receiving a few calls from members saying they feel terrified," said Leung Chau-ting, chairman of the Federation of Civil Service Unions. "It feels a bit like Sars all over again. We can wear masks and wash our hands to prevent Sars - what can we do for legionnaires' disease?" Leung said: "More information should be disclosed so that we know which floor is contaminated, and which area is safe." Sars - severe acute respiratory syndrome - killed 299 people in Hong Kong in 2003. Dr Kitty Poon Kit, undersecretary for the environment, whose office's pipes connect with Suen's, said she had faith in the government's measures. Microbiology professor Ho Pak-leung said the disease would normally pass only from the environment - usually pipes - to people, and that sufferers could not pass it to others. There was no need to worry too much, he said, as the disease usually infects the elderly or patients with existing health problems. The legionella bacteria is usually found in older buildings where pipes are old. However, it was found in four samples taken from Suen's office on the 11th floor of the new complex's east wing.

 China*:  Jan 1 2012 Share

Alibaba is considering acquiring all of Yahoo in partnership with private equity firms, and has hired Washington-based Duberstein Group to allay US government concerns. Chinese internet giant Alibaba (SEHK: 1688, announcements, news) Group has hired a lobbying firm headed by former White House official Kenneth Duberstein as part of its bid to buy Yahoo's 40 per cent stake in Alibaba. Alibaba engaged Washington-based Duberstein Group to prepare for the possibility that it might acquire Yahoo, possibly in partnership with private equity firms. Duberstein is a former chief of staff of the late US president Ronald Reagan. His firm counts clients such as BP America, Goldman Sachs and Pfizer. Japan's Softbank is listed as an affiliate of Alibaba, according to the lobbying firm's disclosure. Yahoo owns 35 per cent of Yahoo Japan, of which Softbank is the majority shareholder. Yahoo is now considering a proposal by Alibaba and Softbank to buy shares that it owns in Alibaba and Yahoo Japan in a complex deal valued at about US$17 billion, people with knowledge of the matter told Reuters last week. Alibaba declined to comment. Wang Ran, chief executive of China e-Capital, a Beijing-based investment bank, said a company would only hire a lobbyist in the United States if it wanted to acquire an American company. "The ultimate purpose of Alibaba is to buy back its stake. But in the market all kinds of deals may take place. You need to have a Plan B," Wang said, adding that Alibaba could partner with private equity firms to make a bid for all of Yahoo. Xie Wen, former president of Yahoo China, said: "A lobbying firm can help Alibaba on several things. It will persuade the major shareholders of Yahoo, explaining to them that it is a good deal to sell the Alibaba stake. It will also do some public relations work to ward off possible interference from the US government." Xie said a Chinese firm buying back its stake owned by a US firm was "to some degree a sensitive issue, and the US government may say it is violating this law or that". However, Xie said he did not think Alibaba planned to acquire all of Yahoo. "Business is pragmatic. [Alibaba Group founder] Jack Ma may say things that he doesn't really want to do," said Xie. Ma said in September that he was keen to buy all of Yahoo if the opportunity arose. The lobbying registration - a filing required by lobbyists for new clients - lists law firm Wachtell, Lipton, Rosen & Katz - a specialist in mergers and acquisitions - as an intermediary between Alibaba and its lobbyist. Alibaba's registration was received by the US government on December 23 and was then posted online. However, Duberstein's work for Alibaba probably began earlier. Under US law, a lobbying firm is required to file a public disclosure within 45 days of crossing certain thresholds, such as making contacts with a public official. The filing for Alibaba showed it was effective as of December 1. Some analysts said earlier this year that Yahoo's stake was worth at least US$9 billion.

Beijing said three new rockets under development will make their first flights in the next five years as the country moves closer to a manned space station and lunar exploration. The Long March 5 rocket will more than double China's payload capacity to 25 tonnes for near-earth orbit, National Space Administration spokesman Zhang Wei said yesterday. Zhang did not specify when the rockets would be ready. hina will need to lift heavier payloads into space to meet its goal of launching a manned orbiting station by 2020. The country made its first successful manned flight in 2003, becoming the only nation after Russia and the US to launch a manned spacecraft into orbit. "The development of the next-generation launch vehicles has made significant progress," Zhang said. "The future of China's space industry is promising, but it still has a long way to go." Beijing plans to put a capsule on the moon in 2013 and to develop the technology for a manned lunar mission by 2020, Xu Shijie, a member of the Chinese People's Political Consultative Conference, said in March. Beijing said last month it had completed its first space-docking mission. The unmanned Shenzhou-8 spacecraft docked twice with the Tiangong-1 space lab module, Xinhua reported. "The Long March 5 is the most powerful rocket that China has ever developed, and without it they would be unable to achieve any of their medium-term space-flight goals," said Morris Jones, a Sydney-based space analyst and author of books about China's lunar ambitions. "It's not just a big rocket, it's the fulcrum of all of those objectives." This week, a Chinese satellite navigation system began providing services as the nation seeks to end its "dependence" on the United States' Global Positioning System, Xinhua reported yesterday. The Long March 6 and 7, which are also under development, will be able to carry smaller loads into orbit, Zhang said. He declined to give an update on the timeline for a manned lunar mission. China in the next five years will "conduct studies on the preliminary plan for a human lunar landing", according to a white paper released by the State Council yesterday. China has launched 79 spacecraft into orbit, including two unmanned lunar probes, since 2006, Zhang said. The space program seeks to strengthen international exchanges and co-operation, he said. "The programme serves all sorts of different purposes - prestige, defence, scientific research, economic benefits like communications, navigation and monitoring the environment," Jones said. "All the benefits of space flight which have accrued to America over the years will be accruing to the Chinese programme for exactly the same reasons."

Chinese buyers' long march on Manhattan - Cashed-up Chinese companies are finding property bargains in the US, the land of opportunity but also of risk, as wealthy Japanese buyers discovered in the '80s - Chinese companies are set to become the main overseas property buyers in New York, where they are generally welcomed. With real estate prices in the US souring, Chinese investors are marching to the heart of Manhattan. HNA Property Holdings, the real estate arm of China's HNA Group, in June paid US$265 million for a prime office building in Manhattan. The group itself - parent of Hainan Airlines and Hong Kong Airlines, with additional investments in shipping and real estate - has declared its intention to buy more property in the US and Europe using a 40 billion yuan (HK$49 billion) line of credit. Other Chinese companies are scouring New York and other major US cities, where commercial property prices have dropped about 40 per cent during the financial downturn. Among the suitors are Soufun Holdings, which operates the mainland's largest property website, and China Investment Corp (CIC), the country's sovereign wealth fund, which manages US$300 billion. "No doubt Chinese investors are set to become the biggest buyers in US commercial properties this year, up from second place last year," said Allen Wu, managing partner of law firm Wu & Kao in New York, which is representing HNA in its acquisitions. Unlike energy and telecommunication companies, which are often deemed strategic assets that carry national security concerns, the US real estate market is open to most foreign investors. So far, foreign investment in US property have not stirred widespread objections from politicians or the industry. In fact, HNA, which owns China's fourth-largest airline, has been embraced as something of a "white knight" after it saved the owner of a prime office building at 1180 Sixth Avenue in Manhattan from bank foreclosure. "HNA is a saviour to me," Norman Sturner, president and chief executive of Murray Hill Properties, the co-owner of 1180 Sixth Avenue, told the Post at his New York office. Under the new arrangement, HNA bought 90 per cent of the 23-storey building. It bought 85 per cent from the Carlyle Group and 5 per cent from Murray Hill, leaving the latter with a 10 per cent stake. Murray Hill will continue to manage the building. Early this year, Murray Hill and Carlyle had a hard time obtaining refinancing for the tower. The two were required to put up an additional US$60 million or face foreclosure because the loan-to-value ratio had declined from 85 per cent to 65 per cent due to falling prices. Carlyle decided to sell its stake, Sturner said. The joint venture had bought the prime office building for US$300 million at the top of the market in 2007. Taking advantage of the slump, HNA set its sights on another property, the Cassa Hotel and Residence - a four-star hotel that was seeking bankruptcy protection as the owner was unable to continue repayments to creditors. HNA bought the hotel, a block from Times Square in the city's Theatre District for US$126 million, its second acquisition in two months. According to a research firm, Real Capital Analytics, sales of commercial property in the city to foreign buyers rose to US$6.7 billion last year, from US$3.8 billion in 2009. Purchases by Chinese buyers soared to US$127 million last year from US$18 million in 2009. The data, however, does not include purchases through property funds, a route commonly used by Chinese buyers. "It is the beginning of Chinese large enterprises invading a market that was monopolised by Westerners," said Wu. Adam Tan, executive director of HNA, said: "It is good time to buy when US commercial property prices drop to such a low level, particularly New York. We think it will provide an enormous upside potential." Tan, a Harvard Business School graduate, said the group would continue investing selectively in New York's property market. HNA is not alone. Soufun Holdings bought a 250,000 sq ft office at 72 Wall Street, the former AIG training centre, for US$46 million, three months after its US$124.1 million listing on the New York Stock Exchange in September last year. In January, CIC, the sovereign wealth fund, reported it had joined forces with Area Real Estate Finance of New York to buy an unspecified preferred equity stake in 650 Madison Avenue. The 27-storey building is headquarters to fashion label Polo Ralph Lauren. The amount of the investment was not revealed. Lee Wee Liat, regional property head of research at Samsung Securities, said Chinese enterprises, particularly state-owned enterprises (SOEs), were expanding overseas with encouragement from the central government to diversify overseas. "If they focus on investing domestically, the cashed-up SOEs will bid up asset prices, which is definitely not what the central government wants to see," he said. The aggressive property acquisitions were helped by the fact buyers from mainland China face fewer restrictions on investment in the sector than in the telecommunications, oil and natural gas sectors, which remain difficult to penetrate due to US national security concerns, he said. China's acquisition binge in the US real estate market has alarmed some observers. They say it increasingly resembles Japan's painful lesson when it entered the US property market aggressively during the 1980s through high-profile acquisitions such as the Rockefeller Centre in Manhattan and Pebble Beach golf links in California. Japanese investors, who bought at the top of the market, lost billions when prices fell. "That memory should be cautionary for investors because you really need to understand the [US real estate] market and you need a local partner," said Joseph Rubin, principal of transaction advisory services at Ernest & Young. "The US is a land of opportunities but also a land of risk." As an example, he citied the problems the US real estate market is facing now. In the US, a typical benchmark is that each office job occupies 250 per square feet space, he said. "Think about nearly eight million job cuts, which means a loss [of demand] of two billion square feet of office space," he said. "Although not all jobs lost are office jobs, the message is clear that the loss of jobs has a huge impact on office demand." But Wu, of law firm Wu & Kao, argues that China is coming into the US on a different acquisition path. "Chinese enterprises are entering US at a time of market slump," he said. "Commercial properties in Manhattan will be more resilient than the other states amid global financial crisis." In the case of HNA's acquisition of Cassa Residence and Hotel, Wu said HNA not only conducted comprehensive due diligence but also sent several of its staff, who spoke fluent English and had studied abroad, to stay at the hotel for several days to appraise the business. HNA's purchase comes as a flood of Chinese companies seek listings on the New York Stock exchange and tourist flock to the city. "One hundred and sixty Chinese companies have listed on US stock exchanges," he said. "There is strong demand for commercial space as these US-listed Chinese firms will need an office in New York. If each firm needs a 5,000 to 15,000 square feet for its operations, HNA's building will be sought after, since most Chinese enterprises prefer to lease space at buildings owned by mainland companies." He said tales are common of Chinese enterprises and big Chinese banks facing problems securing grade-A office space in the heart of Manhattan and being charged higher rents than US firms. "Mainland enterprises expanding their presence in Manhattan will provide solutions for these Chinese companies," he said. Flush with cash, Chinese companies could find a warm welcome in the US real estate market, since many distressed projects need large amounts of capital to keep them afloat, said Sonny Kalsi, a former Morgan Stanley investment banker who cofounded GreenOak Real Estate, a US investment and advisory firm. "Chinese are very smart investors and I have been working with them for 15 years," he said. "They do due diligence and like to be very hands-on in their property acquisitions." 

SOHO China Ltd has agreed to pay 4 billion yuan (US$632 million) for 50 percent of a commercial project on Shanghai's historic Bund - once China's most expensive real estate - from its debt-laden owners. The deal marks the latest effort by cash-rich Soho to acquire commercial property projects in big cities like Shanghai and Beijing when other Chinese developers are selling assets after the government's crackdown on escalating home prices eroded sales. The 45,472 square-meter site, or Bund 8-1 Land, is designated for mixed office, retail, financial and cultural development, Soho said in a statement to the Hong Kong stock exchange. The developer has 17 billion yuan of cash and will continue to seek other acquisition targets, Chairman Pan Shiyi said in a conference call yesterday. Shanghai Zendai Property, one of the debt-laden owners, bought the plot in February last year for 9.22 billion yuan, making it the most expensive piece of real estate on the Chinese mainland at that time. In a separate statement, Greentown, which holds 10 percent of the site, said it will receive 1.04 billion yuan from the sale, which would "improve the gearing level and strengthen the financial position of the group." Greentown shares have tumbled 60 percent over the past year amid the government's tighter policies on the property market and concerns about its funding ability. The company's aggressive expansion and heavy borrowing in the past have forced it to focus on property sales instead of buying land. Shanghai-based Fosun International Ltd, China's top private conglomerate, will continue to hold the other 50 percent in the Bund project.

China will begin preparations to put a man on the moon within the next five years, the Chinese government said yesterday in a white paper on the development of space industry. The country is planning to send rovers to survey the lunar surface and send back samples, according to "China's Space Activities in 2011," the third white paper on space activities following those issued in 2000 and 2006. The country's lunar probe projects have achieved several breakthroughs since 2006, with the successful launching of two lunar probes, the Chang'e-1 on October 24, 2007, and Chang'e-2 on October 1, 2010. The first probe retrieved a great deal of scientific data and a complete map of the moon while the second created a full higher-resolution map of the moon and a high-definition image of Sinus Iridium, the area chosen as a landing site. On July 21, 1969, American astronauts Neil Armstrong and Buzz Aldrin stepped on the moon with Armstrong making the famous "giant leap for mankind." To date, only the United States have put men on the moon, a total of 12. Other major tasks listed in the white paper for the next five years include satellite launches, manned spaceflights and deep-space exploration. The country will launch the Shenzhou-9 and Shenzhou-10 spacecraft and achieve space rendezvous and docking missions with the orbiting Tiangong-1, a module of the country's planned space lab, in 2012, Zhang Wei, a China National Space Administration spokesman, told a press conference yesterday. China launched its unmanned spacecraft Shenzhou-8 on November 1 and completed a second space docking test with the Tiangong-1 two weeks later. "At least one of the next two Shenzhou missions will be manned," said Wu Ping, spokeswoman for China's manned space program. She said China's spacecraft will conduct two more docking missions in 2012, with plans to establish a space lab around 2016 and a manned space station four years after that. China will also build a space infrastructure composed of Earth observation satellites, communications and broadcasting satellites, and navigation and positioning satellites, according to the white paper. Zhang said China would also conduct primary plans for other deep-space projects, including an exploration of Mars. "China is still working with Russia to try to salvage the country's first Mars satellite, Yinghuo-1, that failed to reach its intended orbit in November," said Zhang. The Chinese probe was to discover why water disappeared from Mars and shed light on other environmental changes. Zhang said that China had exported communications satellites to Nigeria, Venezuela and Pakistan, and had contracts with countries including Bolivia, Belarus, Indonesia and Laos. He said China was willing to provide space products and services to more countries, especially developing nations.

In 2012 the Chinese mainland will implement the second phase of tariff reductions on the goods and services listed in the early harvest program of the cross-Straits Economic Cooperation Framework Agreement (ECFA), a mainland spokesman said Wednesday. The second phase of tariff reductions, which starts from Jan 1, 2012, will be the largest degree of decrease and includes most products among imports from Taiwan, Yang Yi, the spokesman for the State Council's Taiwan Affairs Office (SCTAO), said at a regular press briefing. He said tariffs on more than 94 percent of the goods and services listed in the ECFA will be reduced to zero, including metallurgy, medical care, and auto parts as well as instruments and meters, without specifying what types of instruments and meters. The tariff rate on another 30 items, whose current rate is over 15 percent, will be reduced to five percent, he added. "Relevant departments in the mainland have made full preparations to ensure the smooth implementation of duty reductions," Yang said. "We have adjusted the import and export tariff and updated the work system." At the briefing, Yang also expressed China's determination to enhance cross-Straits cooperation on environment protection and sandstorm management. According to the SCTAO, exports worth $3.45 billion from Taiwan to the mainland enjoyed a tariff reduction of $102 million in the first 11 months in 2011, the spokesman said.

China's first expressway, which was built in 1984 in Shanghai, will operate toll-free from the beginning of 2012, the municipal government announced Thursday. The Municipal Commission of Urban and Rural Construction and Communications said the 18-km expressway linking Shanghai's downtown with the Jiading district in its western outskirts will have its toll stations dismantled and operate toll-free from Jan 1, 2012. Expensive expressway tolls have been criticized by the Chinese public for years, as people believe expressways should be toll-free once investors recoup their investments and charge enough for road maintenance. The Shanghai commission did not disclose when the investment of 230 million yuan ($36 million) for the construction of the Shanghai-Jiading Expressway was recovered. The toll exemption has been seen as the local government's response to a circular jointly issued by five Chinese ministries in June to check expressway toll collections. He Jianzhong, spokesman of the Ministry of Communications, said earlier this month that 30 Chinese provinces and regions, except Tibet, have charged toll fees at expressways. He urged local authorities to conduct self-examinations before the central government launches a nationwide crackdown against toll-collection disorder. The Shanghai commission said Thursday that in addition to the Shanghai-Jiading Expressway going toll-free, all other expressways in Shanghai will see tolls halved from Jan 1, 2012. Prior to this, other major cities, including Beijing and Nanjing, also cut toll fees on certain expressways. Beijing's Airport Expressway, for example, halved the one-way toll fee to 5 yuan per car in July. Although some people say the reduced fees have resulted in more severe traffic congestion, the public still expects to see tolls eliminated on more roads.

Hong Kong*:  Dec 31 2011 Share

Diamond prices are poised to rise for the next four years, as increased spending on luxury goods in China, India and the Middle East outpaces supplies of the precious stone, analysts said. The average price of rough, or uncut, diamonds will probably rise 9 per cent to US$145 a carat next year, 1.4 per cent in 2013 and 4.8 per cent in 2014, BMO Capital Markets analyst Edward Sterck said. The gem should gain 2.6 per cent in 2015 and 3.2 per cent in 2016, he said. Gold is forecast to decline for three years starting in 2013, following a 19 per cent gain next year, according to the median of seven analyst forecasts compiled by Bloomberg. Demand for diamonds may grow at double the pace of supply through 2020 because of an expanding middle class in China and India, Bain & Co said this month in a report that didn't give price forecasts. The two nations, and the Middle East, will account for 40 per cent of global diamond demand by 2015, compared with about 8 per cent in 2005, said Anglo American, which agreed to boost its stake in De Beers, the world's largest diamond miner, to 85 per cent last month. "We expect emerging nations, first and foremost India and China, to drive the demand for diamonds in the upcoming years, while consumption of developed nations is likely to moderate somewhat," said Vladimir Sergievskiy, an analyst at Moscow-based Finam Investment. Global demand for diamonds will probably outstrip supply by 7 million carats in 2016, compared with a shortage of 1 million carats this year, Sergievskiy said. Prices are expected to climb 9.7 per cent next year, 2.7 per cent in 2013, 3.3 per cent in 2014, 3.2 per cent in 2015 and 3.1 per cent in 2016, he said. Rough diamonds advanced 24 per cent this year, according to an index compiled by PolishedPrices.com, helping OAO Alrosa, the world's largest diamond miner by output, and Anglo American post profit gains. The price of rough diamonds may fall an average 5.1 per cent next year and remain little changed in 2013, said Richard Platt, managing director of UK-based WWW Diamond Forecasts. Polished diamonds will perform better, reflecting growing Asian demand for diamond jewellery and "flattish supply," said Platt, who expects prices to increase 4.7 per cent next year, 9.3 per cent in 2013, 6.6 per cent in 2014 and 4.4 per cent in 2015. "The current gold price doesn't reflect the underlying supply and demand fundamentals," said Rob Henderson, chief economist at National Australia Bank. "It much more reflects an artificial demand for gold as a hedge and as a store of value against inflation. That means the market is prone to a pretty substantial correction in the future." Global demand for diamonds is expected to expand an average 6.4 per cent a year to almost 247 million carats by 2020, while production is likely to grow an annual 2.8 per cent to 175 million carats, the Bain report said. Output reached 133 million carats last year. Demand for diamond jewellery will climb to more than US$100 billion by 2015 from US$73.6 billion last year, Platt said. "Diamond prices have not been inflated by artificial demand to the same degree," Henderson said. "Therefore, as countries like China and India keep growing and the size of the middle-class population rises, more people will be able to afford diamonds." While demand for polished diamonds is expected to grow in the "low single digit" in the US for the next decade, it should increase as much as 15 per cent in China and India, said Laxmi Deepak, an analyst at Mape Securities in Mumbai. China, where demand rose 25 per cent last year, overtook Japan to become the biggest buyer behind the US, which saw demand rise seven per cent, according to De Beers. "You can see in the Asian market, just walking around Hong Kong, demand for luxury goods is clearly very buoyant," said Rob Edwards, chief metals analyst at Renaissance Capital.

Standard & Poor's withdrew Cheung Kong (SEHK: 0001) Holdings' long-term corporate credit rating yesterday, to which the Hong Kong developer said it had discontinued the agency's services two years ago because it did not need it any more. "Given our conservative financial profile, our ability to satisfy term funding and our low gearing ratio, it is not necessary for us to maintain a ratings service," said Wendy Tong Barnes, chief corporate affairs officer at Cheung Kong Holdings. Withdrawing Cheung Kong's A-rating yesterday, which was based on publicly available information because it had "no access to the company management for the past three years", S&P said in a statement that it could not "accurately assess" the credit quality of the developer. "We can't evaluate Cheung Kong's liquidity accurately due to recent revisions to our liquidity criteria, as the company has made material acquisitions in the past 12 months and continues to be active on the acquisition trail," analysts Christopher Lee and Bei Fu wrote in a statement. But Tong said that since Cheung Kong had discontinued S&P's services, the company could not, under law, meet S&P executives to give them "privileged information", adding that S&P also had not approached Cheung Kong for such information. Hong Kong's second-biggest builder by market value, controlled by 83-year-old Li Ka-shing, has spent more than HK$22 billion on public land sales in the city this year, the company's data show. It was also seeking acquisitions on the mainland as the liquidity crunch there made it a "golden time" for Cheung Kong, executive director Justin Chiu said last month. S&P also withdrew the cnAA Greater China credit-scale rating on Cheung Kong. It maintained the A-rating and stable outlook on Hutchison Whampoa (SEHK: 0013), 49.9 per cent owned by Cheung Kong. The A- "unsolicited" rating on Cheung Kong was supported by the company's "strong financial flexibility", according to the statement. Cheung Kong has the equivalent of US$1.78 billion in bonds and US$771.6 million in loans outstanding. Of that, US$939 million matures before the end of 2013. The company last sold bonds last month when it issued HK$300 million worth of 3.35 per cent notes due next year. The developer's shares have declined 22 per cent this year, compared with a 23 per cent drop in the Hang Seng Property Index, which tracks the city's seven biggest builders including Cheung Kong.

Citic Pacific head Chang Zhenming - Citic Group finishes cleaning house in step towards US$10b IPO - Citic Group, the mainland's biggest and oldest financial conglomerate, is a step closer to a possible Hong Kong listing of more than US$10 billion after completing restructuring aimed at preparing for an IPO. The firm said in a statement late on Tuesday that the State Council had approved the structuring, which involved a realignment of its businesses, and that the new firm, Citic Ltd, would have registered capital of 128 billion yuan (HK$157 billion). A source at Citic Group said the move was a "step forward" for the company's plans for an initial public offering. Media reports have said Citic is seeking a listing on the Hong Kong stock exchange, a deal expected to raise more than US$10 billion. The planned IPO could clash with the fund-raising plans of several other Chinese banks and insurance companies, many of which need to replenish capital to fund strong growth. But a share sale by Citic will be a sought-after deal among underwriters. "This is the 800 pound gorilla," said a source who worked on several Hong Kong IPOs. "This has been a big deal in the background for a while and mooted as next year's business," added the source, who was not authorised to speak to the media. Citic Group chairman Chang Zhenming was quoted as saying in March that there was no specific IPO timetable and it would depend on whether the group was eligible for listing after restructuring. The Beijing-based conglomerate was founded in 1979 by former Vice-President Rong Yiren with the aim of attracting and utilising foreign capital, introducing advanced technologies, and adopting global operation and management practices. It controls 44 companies, including the mainland's leading brokerage house, Citic Securities; Citic Resources Holdings (SEHK: 1205); Citic Pacific (SEHK: 0267); and mid-sized lender China Citic Bank (SEHK: 0998). Its overseas holdings include an oil exploration firm in Canada and a coal mining business in Australia. With total assets of 2.54 trillion yuan at the end of last year, Citic Group is the country's biggest financial conglomerate. Citic Securities in September raised a less-than-expected US$1.7 billion in a Hong Kong listing amid weak investor demand for new offerings and global market turbulence. Bankers expect Citic Group to predominately use Chinese underwriters, led by Citic Securities, for the deal. The securities arm was the sole global co-ordinator for its offering, with banks such as BOC (SEHK: 3988) International, Bank of America Merrill Lynch and Credit Agricole's CLSA unit helping to underwrite the deal.

Despite increasing economic integration, locals are viewing themselves more strongly as Hongkongers rather than Chinese citizens than at any time in the past decade, a survey has found. The poll asked 1,016 city residents to rank the strength of their feelings as "Hong Kong citizens" on a scale from zero to 10, and found an average rating of 8.23 points, a 10-year high. Asked the same question about their identity as "Chinese citizens", the average rating was 7.01 points, a 12-year low. The poll was conducted from December 12-20. The University of Hong Kong's public opinion programme has conducted such surveys from time to time since the 1997 handover. Dr Robert Chung Ting-yiu, the programme's director, said: "This [trend] is contrary to the [direction of] China's economic development in recent years, so it must be due to factors beyond economic development." But he stopped short of speculating about the reasons behind the fluctuations in these figures. The pollsters combined all the survey results into an identity index on a scale from zero to 100. City residents' strongest feelings of identity are as "Hong Kong citizens", at 79.1 points, followed by "members of the Chinese race" at 72.5 points. Then came "Asians", at 72.1 points; "Chinese citizens", at 67.9 points; "global citizens", at 67 points; and finally "citizens of the People's Republic of China", at 61.1 points. "The feeling of being `citizens of the PRC' was the weakest among all identities tested," Chung said. Dr Leung Hon-chu, principal lecturer at Baptist University's sociology department, said some recent issues might have discouraged Hongkongers from identifying themselves as Chinese citizens. He cited the vote-rigging scandal following Hong Kong's recent district council elections, allegedly linked to the central government's influence in local affairs; and Beijing's crackdown on dissidents such as artist-activist Ai Weiwei. The controversial security arrangements during Vice-Premier Li Keqiang's visit in August could also have affected Hongkongers' impressions of the mainland, he said. "The sense of identity is not determined by the economic growth [of a place]. Rather, it is related to whether they feel engaged in or contributing to the development [of society as a whole]," Leung said. "The narrowing of the difference between Hong Kong and the mainland in the political and cultural arenas may prompt fear among locals that democracy and human rights, honoured in the city, could be weakened," he added. Political scientist Dr James Sung Lap-kung said the weakening local sense of a "Chinese citizen" identity could be tied to a wide range of factors to do with China's diplomatic relations as well as social and economic developments. The recent Wukan protest over confiscated farmland, and demonstrations over a proposed power plant in Haimen , Guangdong, could have affected Hongkongers, Sung said. The small-circle chief executive election might also weaken people's sense of engagement, making them believe Beijing was exerting its influence over the city, he said.

A bird's-eye view of the area earmarked for the West Kowloon Cultural District in Yau Tsim Mong. Poll rivals share vision of cultural bureau for city - Front runners for top job Leung and Tang both say HK needs an agency devoted to arts and culture. The next government will probably create a bureau to promote the city's cultural industry, because the two front runners for the top job made that pledge yesterday. Former Executive Council convenor Leung Chun-ying said he would consider forming a cultural bureau and start a matching fund to support artists. His rival, Henry Tang Ying-yen, vowed to consider adding a bureau to oversee the development of cultural and creative industries. Leung made the pledge yesterday morning after being interviewed on TV by Ko Chi-sum, a member of the culture sub-sector within the 1,200-strong Election Committee - which will select the city's next leader in March next year. Tang pitched a similar idea in the afternoon after a separate meeting with 10 members of the sub-sector earlier that day. Adding a culture bureau to the existing 12 was one of the expectations for the next chief executive raised last month by the Democratic Alliance for the Betterment and Progress of Hong Kong. The party holds 147 votes in the March 25 election and has yet to endorse a candidate. Leung openly said yesterday he would consider setting up a culture bureau if elected. It is still not clear if he can get the minimum 150 nominations from committee members required to contest the election. "What matters most is whether we have a suitable candidate who is devoted, has a vision for Hong Kong's arts and cultural development for the future, and can lead a rather small bureau," he said. Leung said he put a high value on the arts and culture industry, saying Hong Kong not only needed economic growth, but also a thriving arts and culture scene. Tang later said: "I value the cultural industry highly. It not only adds colour to life but is also an important part of our economy." He said Hong Kong could develop as an Asian centre for cultural exchange, since the government planned to develop the West Kowloon Cultural District. Tang became chair of the district's management authority in 2008, when he was chief secretary. Tang also revealed he was planning to restructure the division of work among government bureaus. This would include re-establishing the Commerce, Industry and Technology Bureau. Tang was its chief between 2002 and 2003. The bureau was replaced by the Commerce and Economic Development Bureau in a government restructuring in 2007. As for funding artists, Leung said: "I think the government and the community can set up a matching fund, supported by donations and subsidies, to help young artists in particular as a kind of encouragement so that they can have venues, and the funds, to develop. "Besides, there is the other issue of cultivating and educating audiences," he said. Ko said he believed Leung was concerned about art and cultural development, but stopped short of endorsing him. He said he would invite other chief executive candidates for talks before deciding who to nominate.

The Hong Kong public has shown a clear preference for Hong Kong International Airport to have a third runway, an independent survey released Thursday. The survey was conducted and analyzed by the Hong Kong University. 24,242 questionnaires were received during the three-month survey between June and September. Among the respondents, 73 percent said they prefer to have the third runway, with 11 percent opting to maintain the two-runway system and 16 percent remaining neutral. The survey also indicated that the majority of respondents agree or strongly agree that Airport Authority Hong Kong (AAHK) should make a decision urgently on the airport's future expansion plans, while just 6 percent hold the opposite view. The Board of AAHK on Thursday submitted its recommendation to the Hong Kong government to adopt, for planning purposes, the three-runway option as the future development option for the airport. The board also recommended proceeding with the statutory Environmental Impact Assessment process and the preparation of associated design details. "We are very pleased to have received so many valuable views from the public and a wide range of stakeholders about the two development options we presented for HKIA(Hong Kong International Airport)," said Marvin Cheung Kin-tung, Chairman of AAHK. "There is a clear consensus on the need to make a decision regarding HKIA 's expansion as soon as possible, and it is also clear that the majority of those who participated in the consultation prefer the third-runway option." Commenting on way forward, Stanley Hui Hon-chung, Chief Executive Officer of AAHK, said, "We are taking another important step in a long journey. We will continue our efforts to carefully plan ahead and engage our stakeholder groups as we prepare for the subsequent phases of work." The public survey generated extensive, in-depth discussion across the community on a broad range of issues, including the two-runway and three-runway development options for HKIA. Respondents to the quantitative survey were asked to evaluate eight key considerations affecting AAHK's decision on expansion, including HKIA's connectivity, Hong Kong's competitiveness, environmental impact, financial cost and others. The survey confirmed a consensus among stakeholders that enhanced air connectivity results in increased economic growth, competitiveness and job creation. Respondents were also aware of the negative impact that could result from failing to build a third runway, with little in the way of dissent. The primary areas of concern were the environmental impact of the third runway and whether there was enough information in the consultation documents to adequately evaluate the impact of the options. There was consensus that the statutory Environmental Impact Assessment should commence as soon as possible to allow the necessary informed debate about how the environmental impact could be mitigated. "While a clear majority of respondents prefer building a third runway, we understand how important it is for us to avoid, minimize, mitigate and compensate for the environmental impact that could result," added Hui. "No effort will be spared in addressing each of these issues, particularly marine ecology, aircraft noise and air quality. After the completion of the three- month consultation, we have continued engaging with our stakeholders, including professional bodies, young people, green groups, other NGOs and more. This dialogue will continue as we proceed further."

Macao recorded a trade deficit of 5.58 billion patacas ($697.5 million) in November, as merchandise import soared by 51.9 percent year-on-year, according to the figures released on Thursday by the city's Statistics and Census Service (DSEC). Total merchandise export for November amounted to 651 million patacas, with value of domestic export increasing by 16.1 percent to 219 million patacas, the figures showed. Meanwhile, total value of merchandise export in the first eleven months of 2011 dropped by 2.8 percent year-on-year to 6.24 billion patacas, of which value of domestic exports and re-exports declined by 1.2 percent and 3.6 percent respectively. Analyzed by destination, value of merchandise export to Hong Kong, the Chinese mainland and the United States in the first eleven months of 2011 decreased by 1.2 percent, 3.6 percent and 31.2 percent, respectively, year-on-year, the DSEC said. In the first eleven months of 2011, value of merchandise import from Chinese mainland (17.05 billion patacas) and the EU (13.96 billion patacas) expanded by 38 percent and 59.5 percent year-on- year, respectively, the figures indicated.

A divorced couple would share joint responsibility for their children rather than fighting for sole custody in the courts, under proposed legislation put forward by the government for public consultation yesterday. The "joint parental responsibility" model, first devised by the Law Reform Commission in 2005, calls for both parents' consent on important decisions for children - such as emigration, travelling out of Hong Kong for more than a month and changing their surname. Permanent Secretary for Labour and Welfare Paul Tang Kwok-wai said the model, already adopted in common-law jurisdictions such as England, Australia and New Zealand, would have a far-reaching impact on family law. "It is more child-focused, emphasising parents' responsibilities instead of rights. There are hopes it will reduce hostility between parents, as they would no longer need to fight for sole care of their children in the courts," Tang said. Under the existing law, courts arrange the parental rights of a divorced couple through custody orders. It may make a sole-custody order, empowering only one parent to make important decisions about the child, or a joint order that shares the power. The proposal would make joint responsibility a default arrangement. The parent winning a "residence order" to live with the child would need the other parent's consent over important decisions relating to the child. He or she would also have to notify the other parent on issues such as the child having a major operation or long-term medical or dental treatment, a change in schooling, religion, marriage and moving house. Joint care would not be applied to children from families with a history of violence. The commission did not recommend any penalty for a breach by a parent. "The loss of a say over the child's well-being may be a big enough penalty for the parent," Tang said. But the government "had no stance" on whether the concept, now set for four months' consultation, should be promoted by legislation or through education, because there was still no social census, he said. Officials' informal meetings with stakeholders in the past few years have found diverse views. While the legal sector supports the legislation, social workers and women's groups have reservations. They say that under existing law, a court can already effectively make a joint-custody order. They fear the proposed arrangements might be used by hostile parents to obstruct or harass the other spouse, leading to even more litigation. Commission studies found that England and Australia are still having problems after introducing similar laws. The number of court disputes increased and relevant arrangements were abused by trouble-making parents. Singapore has not introduced such a law. Paulina Kwok Chi-ying, supervisor of the Caritas Family Crisis Support Centre, said the proposal should come with counselling and mediation sessions to further help divorcing parents develop a co-operative attitude.

The family of one of the three Hong Kong residents crushed to death outside the Luohu Commercial City mall in Shenzhen has accepted the compensation offered by the bus company involved. The other two families are holding out for a better offer, but are expected to reach a decision today. A representative of the Hong Kong Federation of Trade Unions office in Shenzhen said the family of the 45-year- old man, Lee Wai-man, accepted the compensation. He refused to disclose how much. He also said the bus firm, Shenzhen Yunfa Group, has offered more than what is required by law, but the other two families want more as they claim their loss is great. But he said the company has offered the most it can afford, and shown its sincerity by sending the general manager and deputy general manager to discuss terms. The meeting lasted five hours. The other Hong Kong residents killed were Tsang Siu-king, 60, and Chan Choi-yuk, 65. A four-year-old boy from Dongguan, Zhang Haoji, and a 33-year- old woman, Luo Qunying, from Sihui were also killed. The Immigration Department said it is in touch with the relevant mainland departments to get the death certificates issued as soon as possible. An officer said he is hoping the bodies can be transported back to Hong Kong in one or two days. Chan's family hopes to take her body back to her hometown in Haifeng county. About 40 family members of victims went to the crash site yesterday morning to pay their final respects. Many broke down in tears as they knelt on the ground. Chan Lam-chak demanded the bus firm explain why Tsang, his nephew, was killed and who is responsible. Others complained they could not contact the relevant SAR departments in Shenzhen when the incident occurred, saying even the FTU offered help faster than the government. Undersecretary for Security Lai Tung-kwok said officers were dispatched as soon as the government received a request for help on Tuesday, but that it took time to travel to the scene. The FTU, on the other hand, has an office in Shenzhen. Witnesses said the coach arrived from Guangzhou and stopped outside the mall. After all the passengers were off, the coach suddenly lurched forward for about 20 meters, running over several people and stopping only when it hit the curb and roadside railings.

 China*:  Dec 31 2011 Share

China outlines new investment sectors - China no longer wants foreign-funded automobile factories or polysilicon plants, but would welcome overseas investment in hospitals and financial leasing firms, according to updated inward investment guidelines published on Thursday. The 29-page list – published on the website of China’s economic planning agency, the National Development and Reform Commission – outlines sectors where foreign investors will be encouraged, restricted or completely banned. The guidelines, effective from January 30 next year, are the basis for a range of policies regarding foreign investors in China, from project approval to tax treatment and other items. “The focus is to optimise the foreign investment structure, push forward technology innovation and industrial upgrading,” the NDRC said in a statement. Investments that bring new technology and know-how to China, as well as “green” businesses in areas like battery recycling, will be particularly welcome, NDRC added. Foreign direct investment (FDI) inflows have been a key driver of China’s economic growth in the last three decades. China drew US$103.8 billion in FDI in the first 11 months of this year, up 13.2 per cent from the same period last year.

Vice-President Xi Jinping is likely to make his highly anticipated visit to the United States in late February, say Sino-US specialists. Professor Jin Canrong, a Sino-US affairs expert at Renmin University, said the White House was keen to receive Xi - who is expected to replace Communist Party general secretary Hu Jintao in October and rule for the following decade - as soon as possible. Jin said Xi had made an impression on US Vice-President Joe Biden when Biden visited China in August. "I was one of five Chinese Sino-US experts invited by Biden to share our opinions with him on his last day in China," Jin said. "He told us that he was moved by the government's hospitality during his trip, with Xi accompanying Biden on most legs of his visit, from addressing a trade forum to his near two-day tour of Chengdu in Sichuan." Xi is something of a mystery to the rest of the world and Biden stressed before his visit to China that he wanted to build up personal ties with Xi. Jin said Beijing was ready for Xi's US trip any time, but the US Department of State was hesitating over a date. "The Department of State is worrying that some political elites are going to stir up anti-Chinese sentiments and Xi will become a target to be attacked," Jin said. Another Beijing-based expert, Professor Shi Yinhong, also said that Xi was likely to visit Washington before March. "It will not be a surprise if Xi decides to visit the US in late February because his trip will help the two countries to ease current potential tensions," he said, referring to anger on the mainland over America's renewed focus on Asia and its involvement in territorial disputes between China and Southeast Asian countries in the South China Sea. Professor Jia Qingguo, from Peking University's school of international studies, said with Taiwan's presidential election on January 14 and Beijing having to deal with the annual meetings of the National People's Congress and Chinese People's Political Consultative Conference in March, Xi was likely to opt for a late February visit.

Yangtze River Bridge of Nanjing greets 43th anniversary of opening - Photo taken on Dec. 29, 2011 shows the Yangtze River Bridge in Nanjing, capital of east China's Jiangsu Province, Dec. 29, 2011. As China's first self-designed and self-constructed highway-railway bridge, the Yangtze River Bridge of Nanjing greeted its 43th anniversary of opening on Thursday since it was completed and opened to traffic on Dec. 29, 1968.

A Chinese billionaire whose efforts to buy a major chunk of land in Iceland were thwarted by the government there said on Thursday that he was turned away because of nervousness over his membership in the Communist Party. Huang Nubo, a 55-year-old property tycoon, said the Icelandic government’s blocking of his proposed $8 million land purchase smells of anti-China and anti-Communist Party sentiment. “Maybe the world isn’t ready yet for to embrace Chinese entrepreneurs,” he told a small group of reporters Thursday in Shanghai. He was speaking after a ceremony honoring him for a 10 million yuan ($1.58 million) pledge to China Europe International Business School, where he obtained a degree in 1996. His five-year pledge will fund a chair in service management at Ceibs. “In China,” he explained, “we have a very weak sense of service.” Iceland’s pushback overshadowed the event. At time time, Iceland’s Ministry of the Interior said Mr. Huang’s attempted conquest, through his company Beijing Zhongkun Investment Group, would amount to almost 0.3% of the nation’s territory. The official rejection notice says Mr. Huang’s land purchase proposal is structured in ways that conflict with local laws. The note also makes clear sovereignty is a consideration. “In the opinion of the Ministry, it is impossible to ignore how large an area of land, i.e. 30,639 hectares, is involved in the purchasing plans of the company, and there is no precedent for such a large area of Icelandic land to have been placed under foreign control.” Mr. Huang’s land-purchase proposal was eye-catching, and the decision over the proposal riveted Iceland. He has said a college-age friendship with an Icelandic man made him fond of the country, and he came to regard it as the right place for a resort that would feature the kind of golf resorts his company has built in China. The land he picked is located in the Grimsstadir a Fjollum region at the northern end of Iceland, more than 450 kilometers from the capital. What may make Icelandic officials nervous – the decision maker, Interior Minister Ögmundur Jónasson, didn’t respond to a request for comment this week – is how Mr. Huang’s past work in the Communist Party’s Propaganda Department and his continuing membership might figure into his Arctic Circle ambitions. Analysts say politicized investment is a concern of many governments as China’s outward foreign direct investment nears its intake of foreign money. While there is no evidence Mr. Huang is working with the government, Beijing is pursuing various projects at the world’s poles, which analysts see as long-term positioning for military footholds and natural resources. Mr. Huang on Thursday said he could just as easily make an investment in Denmark or another nation if Iceland doesn’t want his money. The U.S., he said, is more welcoming. Referring to Iceland’s recent economic crisis, he said, “They are ill, and when they’re weak a young and robust man comes that frightens them.” He said that as Chinese businesses go global they need to respect international norms but that considering political party affiliation is Cold War thinking. “I feel proud to be a Communist Party member,” Mr. Huang said.

Preliminary statistics showed China created more than 12 million new jobs in cities and towns this year and kept the registered urban unemployment rate below 4.6 percent, Yin Weimin, minister of human resources and social security, said at a conference on Thursday.

China's southernmost island province of Hainan is estimated to have received more than 800,000 overseas tourists this year, according to a local tourism official. Russian tourists were a major group traveling to the island's resorts to enjoy tropical sceneries this year, with a record high of 200,000 in the past eleven months, up 51.9 percent year-on-year, said Sun Ying, deputy head of the Hainan Provincial Tourism Commission. Tourists from Europe and America reached 390,000 and 40,000, respectively, each showing growth over 20 percent, Sun said. Meanwhile, with 13 direct round-trip flights between Hainan and Taiwan available each week, the number of tourists from Taiwan exceeded 100,000 this year. The increase in overseas tourists has been partly attributed to the visa-free entry policy. Travelers from 26 countries, including Russia, Germany, the Republic of Korea and Malaysia, can join tour groups and register with authorities just one day ahead of their scheduled departure times. Hainan has recently been building itself into a world-class travel destination, and tourism revenues have been bolstered by the increased number of tourists. Revenues this year are estimated to total around 32 billion yuan ($5.06 billion), according to statistics from the provincial tourism commission.

According to a report by the National Development and Reform Commission, companies contributed more than 70 percent of the funds in China for research and development in 2010. The country has the world's largest number of researchers, with 2.55 million people working to facilitate industrial upgrading. More enterprises are enjoying the benefits of China's innovation-friendly environment as the volume of funds invested in research rise. However, the quality and global influence of the country's industrial innovations still need to be improved, officials and experts said. "There are 20 percent more companies benefiting from the incentives they can earn by investing in innovation than in 2010. And China is seeing research investment grow by 20 percent year-on-year," said Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission (NDRC), at a forum sponsored by Economic Daily in Beijing on Wednesday. Zhang said investment in 2011 will be equivalent to 1.83 percent of China's GDP, which will equal approximately 795 billion yuan ($125.7 billion) if the world's second-largest economy grows by 9.2 percent this year. Since 2006, many companies have boosted investment in research and development (R&D) after China vowed to build an "innovation-driven country" and issued more than 80 incentive measures for innovation. According to an NDRC report, companies contributed more than 70 percent of the funds for R&D in 2010. And China has the world's largest number of research personnel, with 2.55 million people working to facilitate industrial upgrading. China also became the world's top filer of patents in 2011, overtaking both the United States and Japan, according to Thomson Reuters. Published applications from China's patents office have risen by an average of 16.7 percent annually, from 171,000 in 2006 to nearly 314,000 in 2010. That has seen Chinese companies outpace foreign businesses in the patents boom, the report showed. However, Zheng Xinli, vice-president of the government think tank China Center for International Economic Exchanges, said there is still room for improvement and the country should play a bigger role in the patents market globally. Even with the 20 percent rise in numbers and attractive incentives, fewer than 50 percent of all Chinese businesses engage in R&D work on their products, Zheng said. Liu Shijin, deputy director of the Development Research Center of the State Council, said that many businesses have moved away from the manufacturing sphere and are addicted to investing in the financial and property markets, where there is a higher rate of return. Both markets should be subject to greater regulation, he said. "Also, the government should not interfere too much with the innovation process," Liu said. In the meantime, compared with a boom in the overall number of patent applications, overseas applications are more difficult to obtain and therefore, should be given a higher priority, said Zheng. "The number of international patents filed by the US is still 3.6 times higher than in China," Zheng said, adding that the gap will not be closed before 2015. Patents filed by companies in Japan and the US accounted for 34 percent of the Chinese market in 2010, but China's share in overseas markets is almost negligible, he said. Private businesses currently contribute 68 percent of Chinese applications for overseas patents, and Zheng urged State-owned enterprises to become a major force in future growth. "The authorities should consider granting certain allowances to companies applying for overseas patents, as in Shenzhen," Zheng said. Shenzhen, where more than 60 percent of local output is generated by high-tech industries, was awarded the "most innovative city" by the Economic Daily. Two of the city's leading companies, Huawei Technologies Co Ltd and ZTE Corp, jointly contributed 28 percent of China's overseas patents applications last year.

China's largest offshore wind power plant began operation in Rudong county, East China's Jiangsu province, Dec 28, 2011. Constructed by the GD Long Yuan Power Technology & Engineering, it has a gross capacity of 150 MW. 

Local government debt in the mainland is likely to be higher than the official estimate of 10.7 trillion yuan (HK$13.16 trillion) and poses a "major" risk to the nation's financial system next year, Bank of China (3988) warned yesterday. "The official data did not take debts extended to county governments, especially those in coastal cities, into calculation," bank economists wrote in a report, mainly focused on China' economic outlook for the first quarter of 2012. The China Banking Regulatory Commission is aware of the rising numbers of "unauthorized" financing platforms created by local governments, the report said. "The financial system will be subjected to [a lot of] risks as [many of the] debts are due in the next two years," it warned. Despite the debts, the State Asset Supervision and Administration Commission still expects cumulative net profit at state-owned enterprises to exceed 900 billion yuan this year compared to 852.3 billion yuan in 2010. But "[such] enterprises should get ready for harsh winter in the next three- five years, as the global economy turns [more] sluggish," SASAC deputy director Huang Shuhe told China National Radio. Bank lending, meanwhile, continues to ease. New loans issued by the top four state-owned banks totaled 130 billion yuan for the first 25 days this month, the 21st century Business Herald reported, citing officials of the four lenders. Full-year lending for all the banks may total 7.4 trillion yuan with one-third coming from the big four, said Peng Wensheng, chief economist at China International Capital Corp. Agricultural Bank of China (1288) has reportedly expanded its pilot scheme to maintain lower reserve requirement ratios at some branches in four more provinces on top of the 12 provinces already in the trial. Currently, some branches of Agbank in the 12 provinces are allowed to keep their RRR at one percentage point lower than the 21 percent national standard. Mainland banks showed the first deficit in their balance of payments in November since monthly data were published in January 2010. Domestic banks bought US$128.9 billion (HK$1 trillion) for clients, but sold US$129.7 billion last month, turning a deficit of US$800 million, according to figures released by the State Administration of Foreign Exchange.

Hong Kong*:  Dec 30 2011 Share

Beijing Censors Hong Kong Cannibal Drama - Charmaine Sheh of the Hong Kong drama “When Heaven Burns,” at an award show in Seoul in August. A controversial Hong Kong television drama depicting scenes of cannibalism has touched the nerve in Beijing, for reasons that may go much further than a mere disapproval of its violent content. “When Heaven Burns,” a bleak portrayal of humanity produced by broadcaster Television Broadcasts Ltd., has been banned in mainland China in what the Hong Kong media said was the first such move against a Hong Kong soap opera in more than two decades. With just four episodes to go, Chinese state censors ordered TVB’s mainland sub-licensees, online video companies Youku.com and Tudou.com and nine other website operators to remove the show from their sites, the television station said. TVB said Wednesday it is trying to seek clarification from Chinese authorities. While the reason for the censorship remains unclear, the move is set to intensify an already heated online discussion about the show because of its unusual plot point: cannibalism. The 30-episode series centers on a fictional tragic incident in 1992. During a mountaineering trip in the Chinese region of Xinjiang, four young, aspiring pop musicians become stranded on a snow-capped mountain. Out of desperation, three of them eat and kill the fourth. The story looks at how the three survivors and the people close to them are haunted by the experience years later. The story also laments a lack of originality in popular music and stresses the need to stay true to one’s dreams despite the suppression of society. Those features might make it easy to see why Beijing’s censors would stop the show, given their focus on programming that steers away from controversy. But the ban also follows comments by the show’s screenwriter that might have given authorities other reasons to step in. In an interview with Hong Kong’s Apple Daily on Monday, show screenwriter Chow Yuk-ming said that the story was inspired by the events of the Tiananmen Square crackdown in June 1989. He said he moved the date of the cannibal incident in the drama to 1992 from 1989 to avoid stirring controversy. Discussion of the 1989 failed student democracy movement remains taboo in mainland China. His statement spurred a flurry of speculation in Hong Kong as to whether other elements of the show also allude to the Tiananmen crackdown, with some local pundits speculating that the decline of original music in Hong Kong represents the city’s forgetfulness of past events. TVB on Wednesday acknowledged that Mr. Chow’s show nodded to Tiananmen as well as other historical events, though it said that doesn’t necessarily mean the plot of the drama is a metaphor of the June 4 crackdown. Whatever influenced the censors’ decision, the ban on “When Heaven Burns” could attract further debate and help boost what has so far been mediocre ratings in Hong Kong. Though the drama has attracted somewhat of a cult following among younger viewers, older viewers have largely dismissed the program. Many have complained that the drama’s unique storyline– accompanied by unconventional filming techniques that include frequent scenes of the main characters gulping down pieces of near-raw steak–are hard to follow, and that the subject matter is too deep.

Citic Group, China's biggest and oldest financial conglomerate, is a step closer to a possible Hong Kong listing of more than US$10 billion after completing restructuring aimed at preparing for an initial public offering. The firm said in a statement late on Tuesday that China’s State Council or cabinet had approved the structuring, which involved a realignment of its businesses, and that the new company, Citic, would have registered capital of 128 billion yuan (US$20.24 billion). A source at Citic Group told reporters that the move was a “step forward” for the company’s plans for a listing. Media reports have said Citic is seeking a listing on the Hong Kong stock exchange, a deal expected to raise more than US$10 billion. The planned IPO could clash with the fundraising plans of several other Chinese banks and insurance companies, many of which need to replenish capital to fund strong growth. But an IPO by Citic will be a much sought after deal among underwriters. “This is the 800-pound gorilla,” said a source who has worked on several Hong Kong IPOs. “This has been a big deal in the background for a while and mooted as next year’s business,” added the source, who was not authorised to speak to the media. Citic Group Chairman Chang Zhenming was quoted as saying in March that there was no specific IPO timetable, and it would depend on whether the group was eligible for listing after restructuring. Headquartered in Beijing, the conglomerate was founded in 1979 by former Chinese Vice-President Rong Yiren with the aim of attracting and utilising foreign capital, introducing advanced technologies, and adopting international operation and management practices. It controls 44 companies, including China’s leading brokerage house Citic Securities, Citic Resources (SEHK: 1205) Holding, Citic Pacific (SEHK: 0267) and mid-sized lender China Citic Bank Corporation (SEHK: 0998). Its overseas holdings include an oil exploration and production operation in Canada and a coal mining business in Australia. With total assets of 2.54 trillion yuan at the end of last year, Citic Group is the country’s biggest financial conglomerate, followed by Everbright Group, which manages 1.6 trillion yuan in total assets. Citic Securities in September raised a less-than-expected US$1.7 billion in a Hong Kong listing amid weak investor demand for new offerings and global market turbulence. On Wednesday, its Hong kong-listed shares were trading at HK$12.80, below the HK$13.30 IPO price. Bankers expect Citic Group to predominately use Chinese underwriters for the deal, with Citic Securities expected to take the lead role. Citic Securities was the sole global coordinator for its offering, with banks including BOC (SEHK: 3988) International, CCB (SEHK: 0939, announcements, news) International, Bank of America Merrill Lynch and Credit Agricole’s CLSA unit helping to underwrite the deal.

New mortgage loans drawn down in Hong Kong totalled HK$10.6 billion (US$1.36 billion) in November, down 8 per cent from a month earlier, Hong Kong Monetary Authority (HKMA) data showed. The value of new mortgage loans approved in November declined 4.7 per cent from the previous month to HK$11.9 billion, the HKMA said. Loan approvals for new property in November rose 0.9 per cent from the previous month to HK$2.2 billion, while loan demand for mortgages on existing properties fell 10.3 per cent to HK$7.4 billion. Approvals for refinancing loans rose 11.9 per cent to HK$2.3 billion from October. Following is a summary of data from the authority for November compared with October: The number of new mortgage applications rose 7 per cent to 7,074 cases against the previous month’s 6,613 cases. The outstanding value of mortgage loans increased by 0.2 per cent to HK$802.3 billion. The proportion of new mortgage loans priced with reference to Hong Kong interbank offered rates (HIBOR) decreased to 19.2 per cent from 28.1 per cent in October, mainly reflecting upward adjustments of mortgage rates by banks. However, new mortgage loans approved in November priced with reference to best lending rates rose to 79.2 per cent from the previous month’s 69.7 per cent, with the largest portion priced in the range of 2.25 per cent to less than 2.5 per cent. The mortgage delinquency ratio remained unchanged at 0.01 per cent in November and the re-scheduled loan ratio was steady at 0.02 per cent.

Public hospital emergency wards received more patients than usual during the Christmas break, figures released on Wednesday showed. Attendance at the Accident and Emergency Departments of public hospitals during the three-day holiday saw an increase of 8.5 per cent from the daily average this month, according to Hospital Authority figures. The daily average attendance from December 25 to 27 at emergency wards of 15 Hong Kong public hospitals was 6,025, compared with a daily average of 5,551 from December 1 to 24. Last year’s Christmas holiday saw fewer emergency ward patients with a daily average of 5,656, slightly lower than the daily average in that month.

Despite a year-end uptick, the IPO market in Asia struggled through the second half of 2011, leaving a big backlog of companies hoping to go public in 2012. At the same time, poor performance by this year's class of IPOs has made investors grumpy, potentially forcing those on the waiting list to lower their expectations for raising capital. All of the top 10 Asian initial public offerings this year are trading below their offering prices. Half, including the two largest, Glencore International PLC and Hutchison Port Holdings Trust, are down at least 25%, well below the 19% decline of Hong Kong's Hang Seng Index. "Investment banks have been selling overpriced IPOs to investors this year and this is going to backfire on them in 2012," said Alex Au, managing director of Richland Capital Management Ltd., a pan-Asian hedge fund based in Hong Kong. "I think there will be a buyer's strike in IPO in the first half, as we're all disappointed, and want better deals, more reasonable valuations and cheaper prices." Bankers have a lot of stock to sell to these reluctant investors. Ernst & Young LLP said it expects fund-raising in Hong Kong alone will be US$32 billion in 2012, roughly in line with 2011. "Every bank has a strong pipeline next year—we have around US$18-US$20 billion worth of Asian IPOs as clients," said an IPO banker at a U.S. bank. "But a big chunk of that is the same stuff we were supposed to do this year." Among those waiting to go public are Erdenes-Tavan Tolgoi Co., a giant coal miner owned by the Mongolian government; People's Insurance Co. (Group) of China Ltd., a state-owned property insurer; and U.K. football club Manchester United Ltd. Investors expect a wave of financial companies to try to raise money as well, to offset loan losses and to boost capital before stricter rules take effect. "There's no question there's a massive capital requirement across Asia given the growth and investment needs in the region. There is also a very sizable backlog of deals that exists and continues to grow," said George Pavey, co-head of the Global Markets Solutions Group for the Asia-Pacific region at Credit Suisse Group. "But issuers that don't have to come to market will hold off, as there's a big gap between what investors, who are reluctant to part with their cash, will pay issuers, and what issuers want." That split, along with markets' volatility in the second half of the year, led to the postponement or scrapping of 146 IPOs worth US$25.4 billion in the region this year, according to Dealogic. "When investors participate in IPOs, they hope to invest in companies with growth potential and reasonable valuations," said Pauline Dan, chief investment officer at Samsung Investment Management (Hong Kong) Ltd. "This year, a lot of the IPOs failed on both counts." The four biggest IPOs to be canceled or postponed have been Hong Kong listings: a US$6 billion IPO by Shanghai-listed lender China Everbright Bank Co.; an offering for up to US$3.6 billion by Australian coal and iron-ore miner Resourcehouse Ltd.; an IPO by Shanghai-listed construction-machinery company Sany Heavy Industry Co. meant to raise up to US$3.3 billion; and, in early December, a US$1.67 billion IPO by Shanghai-listed brokerage Haitong Securities Co. China Everbright, which is trying to raise funds to expand its business and meet potentially stricter capital rules in the coming years, is now trying to revive a smaller deal of around US$2.5 billion-US$3 billion by offering fewer shares, a person familiar with the situation said. Those companies whose deals weren't delayed have had to accept lower prices than they had hoped. This month, shares in Chow Tai Fook Jewelry Group Ltd. were sold at the bottom of the range indicated to investors. That contrasted with the beginning of 2011, when Glencore International sold stock at the midpoint of the announced range in the biggest IPO of the year. Last week, Chinese clean-energy firm Guodian Technology & Environment Group Corp. said it planned to cut the size of its Hong Kong IPO to US$303 million from up to US$646 million. Still, even though 2011 wasn't a banner year for IPOs in Hong Kong, the city could keep its title as the world's top venue for new listings for a third year. Hong Kong trailed New York for most of the year, but the total raised through new listings here had risen to US$35.7 billion as December neared its end, ahead of New York's US$31.4 billion, according to Dealogic.

China's domestic rating agency Dagong Global Credit Rating Co Ltd decided Wednesday to maintain the local and foreign currency credit rating of Hong Kong at AAA with a stable outlook, and to maintain the credit rating of Macao at AA+ with a stable outlook. Influenced by the sluggish performances of major developed economies, Hong Kong's foreign trade could contract in the short term, but the improvement of residents' income and the favorable labor market will support the continuous growth of private consumption, Dagong said. The agency predicted that the real economic growth rate of Hong Kong will fall to 5.5 percent and 4 percent in 2011 and 2012, respectively. Given strong domestic demand and the relatively stable export of services, Dagong predicted that the economic growth rate of Macao in 2011 and 2012 will reach as high as 21 percent and 16 percent, respectively. However, Dagong warned that a lack of core competitiveness, leading industries' high dependence on external economies and tightening labor conditions are likely to restrict Macao's growth in the long term. Dagong said the Hong Kong government has sustained a strict fiscal discipline, and favorable economic prospects will guarantee an average 1 percent annual fiscal surplus in the next 5 years. Given the good prospects for Macao's economic growth, Dagong expects the fiscal surplus of Macao in 2011 and 2012 will be equal to 22.1 percent and 18.4 percent of the domestic GDP, respectively.

US investigation into assets abroad affects overseas Chinese - Foreign media reported on Dec. 26 that the U.S. government is stepping up the investigation into U.S. citizens’ overseas accounts and assets. Once assets are found hiding abroad, the owner will be severely punished. Experts said that this move of U.S. administration will greatly affect overseas Chinese. Yu Hao, the observer of United States from Global Chinese Broadcasting Cooperation said that U.S. investigation into American overseas assets will have a strong influence into overseas Chinese. China has the largest emigration group to the United States all over the world, and about 2.5 million Chinese people are first-generation immigrants who have more or less economic ties with their hometowns. After the United States launched its first overseas assets surrender plan, many Taiwanese residing in the United States became uneasy. Many people would rather choose to preserve their assets in Taiwan at the cost of giving up their U.S. nationality and green card. But according to the U.S. tax laws, even if a U.S. citizen gives up his nationality, the U.S. government still has the right to demand him to pay the evaded tax and fine of the hiding overseas assets in the previous five years. After Internal Revenue Service announced the rules, accounting firms run by overseas Chinese in the United States have got more businesses. Many people come to ask for information and others continue to wait and watch.

 China*:  Dec 30 2011 Share

Chengdu Shuangliu International Airport introduced their third US airline company - Federal Express Corporation (FedEx), after United Parcel Service (UPS) and Evergreen International Airlines, opening the first direct airfreight route from Chengdu to the United States. On the morning of Dec 6, the MD-11F cargo aircraft with a giant panda painted on its body, made a smooth landing at the Chengdu Shuangliu International Airport. The FedEx aircraft was dedicated to freight transport between Chengdu and the United States. The route is Delhi-Chengdu-Guangzhou-Anchorage, and the flight number is FX16. There are five flights from every Tuesday to Saturday. The aircraft arrives at Chengdu at 1:30 am and takes off at 3:30 am after two hours of cargo unloading and loading. The first flight of FedEx carried a total of 37 tons of cargo, all of which were exporting electronic products.

The government in Beijing warned Taiwan's pro-independence Democratic Progressive Party on Wednesday that its stance on relations with the mainland could threaten a hard-won state of peaceful coexistence as elections on the island draw near. Beijing has slowly ramped up the rhetoric ahead of Taiwan’s January 14 presidential and parliamentary polls, offering both economic incentives for the self-ruled island and making veiled threats that a vote for the DPP would harm vital trade ties. Beijing will be hoping the incumbent pro-Beijing President Ma Ying-jeou, who has signed a series of landmark agreements with the mainland since he became Taiwan’s leader in 2008, gets voted back into office and continues his policy of engagement. Beijing has made little secret of its distaste for the DPP, even as its candidate, Dr Tsai Ing-wen, tries to lay out a more moderate line than former president Chen Shui-bian, whose strong support for independence infuriated Beijing. Speaking at a regular news briefing, Yang Yi, spokesman for China’s Taiwan Affairs Office, said a return to those days would be a disaster. The DPP’s Chen held office from 2000 to 2008. “Upholding the ‘Taiwan independence’ platform of one country on either side of the Taiwan Strait would be a step backward into the era of Chen Shui-bian, and that would inevitably threaten the peaceful development of cross-strait ties,” he said. The authorities in the mainland have also warned that any attempt by the island to formally announce independence would lead to war, which could also drag in Taiwan’s main backer, the United States. Yang repeated that whoever is in charge on the island must accept the “1992 consensus”, referring to Beijing’s cherished “one-China” principle, which includes Taiwan. Beijing and Taipei agreed to their own interpretations of the “one-China” principle and both sides held landmark talks in Singapore in 1993. But the DPP does not recognise that a consensus was reached then, even as Tsai has said an administration led by her would pursue a “balanced, stable and moderate” policy towards the mainland, shying away from the party’s previous strong anti-Beijing position. “Denying the ‘1992 consensus’ will wreck the basis for cross-Strait consultations, which will of course be unable to continue,” Yang said. “I will not make any comments about the election, [but] we still hope that compatriots on both sides of the Strait will work hard to maintain the current good trend of the peaceful development of relations,” he added.

In China's first Hello Kitty theme restaurant, newly opened in downtown Beijing, two girls play with a big doll modeled after the cartoon character on Saturday. China's first Kitty restaurant attracts more than it can seat - China's first Hello Kitty theme restaurant was launched recently in the capital. It's so crowded at all times that it's advisable to call ahead and reserve a spot before reaching the venue. Expectedly, it's all pink and sweet inside the restaurant, authorized by the Japanese parent company Sanrio. The tablecloth is pink, as are the chairs, ceiling and floor, even the lamp light shines soft and rosy. Waiters are in white shirts with a red bow and blue rompers, while waitresses wear pink dresses. The whole restaurant is designed like a dining room in a fairy tale. A Christmas tree stands in the middle of the room, surrounded with Kitty balloons - a favored spot for taking pictures in the restaurant. Dining at Hello Kitty Dreams Restaurant, which opened on Dec 23 at Sanlitun Village shopping zone in Beijing, costs 160 yuan ($25) on average per person. Sanlitun Village is regarded as one of the city's most charming areas, lined with bars and international brand-name stores. Duan Yahui, a 21-year-old woman from East China's Shandong province, celebrated her birthday with her boyfriend at the restaurant. "I was so happy to celebrate my birthday at the Kitty theme restaurant," she said. "It's like being in Disneyland." Duan was very satisfied with the food, and showed off her Kitty-shaped birthday chocolate, sent by the restaurant. "It's too cute to eat," she laughed. "My friends in my hometown who also love Kitty are jealous about my experience," she joked. "I will bring them here when they visit me during the Spring Festival." Duan was lucky to get a spot by calling for reservation weeks ago. But other fans weren't as lucky. Han Yang and her friend were stopped at the entrance on Christmas Day. "I came particularly to have a Christmas brunch with my friend," said Han, staff member at China Mobile Limited Company, who drove all the way from the fringes of the city with a friend but was unable to get in, not having a reservation. "I understand its popularity since it's the first Kitty theme restaurant in China," she said and booked for lunch on Jan 3. Hello Kitty is a Japanese cartoon character that has thousands of fans all over the world. Kitty has been portrayed as a white girl cat with a pink bow and been widely accepted and loved in Asia since it was created. It's now a big global brand. Kitty - The first 10 customers are admitted without reservation during afternoon teatime, according to Sarah Wang, CEO of the restaurant. But it's obviously not enough. "How sad! Only customers with reservation can get in, but the phone is busy all the time," complained a netizen who goes by the name Yumeili on Dec 23 in a post on Sina micro blog, the nation's largest micro-blogging website. The restaurant's hotline (010-84059021) is busy at all times. Wang said they applied for more hotlines to ensure greater convenience to customers. Although the restaurant could accommodate 100 customers, Wang reserved a table against each order during the trial run to maintain high-quality service. Wang is not keen to open a chain of restaurants, in spite of the overwhelming success of the pilot outlet. "It's my first time in gourmet business and I wish to go about it carefully," Wang said.

A worker at a bio-energy company displays a jar of gutter oil (left) and a jar of bio-diesel made from the oil. The company is able to produce 980 kg of bio-diesel from 1 ton of gutter oil. The crackdown on gutter oil for edible use by the Ministry of Public Security in the past three months has proved a boon to bio-diesel companies in Guangdong province. Zhou Kequan, deputy general manager of Foshan Zhenghe Bio-Energy Co Ltd, said many companies, which stopped producing bio-diesel from waste oil when the demand for recycled gutter oil from restaurants made it too expensive, now plan to restore production because the price of gutter oil has dropped in the wake of the crackdown in the past few months. "Due to the crackdown on recycling gutter oil as cooking oil, most of the gutter oil is being used by bio-energy companies," Zhou told China Daily on Monday. "The price for a ton of gutter oil is now less than 5,000 yuan ($793), compared with 6,000 yuan three months ago," Zhou said. Gutter oil is made from the old oil discarded by restaurants and other eateries and it is so called because it is sometimes salvaged from sewers. Following a special campaign launched across the country in September, police have smashed 60 gangs and criminal networks producing and selling gutter oil as edible oil and seized more than 60,000 tons of gutter oil. There has been a dramatic reduction in the use of gutter oil for edible use after the crackdown in the past two months, police sources said. Zhou predicts good prospects for bio-diesel companies if the gutter oil is no longer used for cooking. "Now a ton of bio-diesel made from gutter oil sells for only 7,000 yuan, while the price of a ton of diesel refined from crude oil has increased to about 8,500 yuan," he said. Established in 1999, Zhou's company, which has a production capacity of more than 50,000 tons a year, is the largest of its kind in Guangdong province and one of the top five in the country, which has more than 300 bio-diesel companies. Dong Huaqiang, a professor from Foshan Academy of Sciences, urged local governments to introduce a new system to collect swill and gutter oil for bio-diesel use. "Only licensed and qualified companies should be permitted to collect swill and gutter oil from local restaurants, hotels and canteens and it should only be sold to bio-energy companies," he told Nanfang Daily. "Those who have violated the regulation should be seriously punished and receive heavy fines," he said. Chen Wenshan, a white-collar worker in Guangzhou, said government departments should give more preferential policies to support the production of bio-diesel while further standardizing the operation of major restaurants. "The government should let bio-energy companies and gutter oil producers reach a win-win deal to prevent the gutter oil from returning to the dinner table," he told China Daily.

Rare earth exports waiting to be loaded at a port in Lianyungang, Jiangsu province. China accounts for more than 95 percent of the world's output of the 17 rare earth metals, which are used in the electronics, defense and renewable energy industries. China has set the first tranche of rare earth export quotas for 2012 at 10,546 metric tons, the Ministry of Commerce said on Tuesday. The ministry said the first tranche only included export quotas for those enterprises that have passed stringent environmental inspections. Quotas have been reserved for other firms - including China's biggest producer, Baotou Steel Rare-Earth Hi-tech Co - but will be released only if they are found to have complied with regulations. The ministry said that overall export quotas for the whole of 2012 would be unchanged from 2011 "to guarantee international market demand and keep rare earth supplies basically stable". The full-year quota for 2011 was 30,184 tons. However, actual exports totaled only 14,750 tons in the first 11 months amid a nationwide inspection and crackdown on illegal activities in the sector. China accounts for more than 95 percent of the world's output of the 17 rare earth metals, which are used in the electronics, defense and renewable energy industries. It has been cracking down on illegal producers and traders since August, aiming to bring the sector under the control of a handful of enterprises. China's attempts to restrict output and exports have caused alarm overseas, but the government has said that its attempts to impose order on the sector were primarily motivated by environmental concerns and were in compliance with World Trade Organization rules. Analysts have said that the nation's policies are also meant to give priority of supply to domestic consumers and encourage foreign consumers - mostly from high-technology strategic sectors - to relocate their operations to China. China also set the first tranche of export quotas for coke in 2012 at 4.24 million metric tons on Tuesday, the commerce ministry said. The total quota for 2011 was 8.42 million metric tons, issued in two tranches over the year. China is the world's largest producer of coke, which is used in steel production, but it has begun to restrict coke exports as part of an effort to cut pollution. The government has imposed a 40 percent duty on coke exports, which has contributed to falling exports in recent years. Coke and semi-coke exports in the first 11 months of 2011 stood at 3.2 million metric tons, up 6.59 percent year-on-year, according to customs figures. The Ministry of Commerce also said that the first tranche of silver export quotas in 2012 would amount to 3,232 metric tons. Export quotas for tin and tin products were set at 10,800 metric tons. The first batch of 2012 export quotas for indium was set at 139,000 kg. China is the world's largest producer of indium, a vital component in the manufacture of flat-screen TVs and computer monitors, accounting for almost three-quarters of world reserves and about half of output.

Under the contract, China National Petroleum Corp, one of the largest energy companies in the country, will give up to 70 percent of its profits from the project to the Afghan government. Approval marks second large deal between two countries since 2008 - Afghanistan's cabinet has cleared the way for the war-torn state to sign a deal with China National Petroleum Corp (CNPC) for the development of oil blocks in the Amu Darya basin, the Afghan president's office said on Monday. The deal concerns drilling and a refinery in the northern provinces of Sar-e Pul and Faryab. It will be the first agreement pertaining to international oil production that the Afghan government has signed in several decades. It also marks the second large deal China has brokered in Afghanistan after the Metallurgical Corp of China signed a contract in 2008 to develop the huge Aynak copper mine south of Kabul, where production is to start by the end of 2014. "The Afghan cabinet has ordered Mines Minister Wahidullah Shahrani to sign an oil exploration contract for Amu Darya with China National Petroleum Corporation," the statement said. Jawad Omar, a spokesman for the mines ministry, said the contract will be signed on Wednesday. The State-owned CNPC and the joint-venture partner Watan Group - a diversified Afghan company - will look for oil in three fields in the basin: Kashkari, Bazarkhami and Zamarudsay, which are estimated to hold about 87 million barrels of oil. Under the contract, CNPC will agree to pay a 15 percent royalty for oil, a 20 percent corporate tax and give up to 70 percent of its profits from the project to the Afghan government. The mines ministry said in October that the deal was likely to bring the government $5 billion in revenue during the next 10 years. Indian and Chinese bidders have been front-runners in the competition for deals to develop Afghanistan's vast mineral deposits, which are valued at $3 trillion, worrying Western companies that have hesitated to invest in the country as a result of concerns about security. Experts have warned that mining projects in Afghanistan are likely to be targets for insurgents, that production and transport costs there will be high and that sovereign risk is a serious concern. But China and India, where the demand for energy and industrial supplies is booming, are willing to take risks to secure what they need.

The foundation for the world's second tallest building has been completed in Shanghai, Dec 27, 2011. Work crews have completed the foundation for the world's second tallest building one month ahead of schedule and are now rushing to construct the ground structure of the 632-meter Shanghai Tower, second only to the 828-meter-tall Burj Khalifa in Dubai. Located in China's financial hub of Shanghai, the building is expected to grow by 400 meters next year, with an average of seven days spent on the construction of each floor, said Kong Qingwei, board chairman of the development firm Shanghai Tower Construction and Development Co. Ltd. Kong said Wednesday that it took three years to complete the foundation, and he estimated it will take another three to finish the ground structure. Once completed, the Shanghai Tower will be the tallest structure in China as well as a new Shanghai landmark alongside the 420.5-meter Jin Mao Tower and the 492-meter Shanghai World Financial Center. The three skyscrapers in Shanghai's Lujiazui Financial Zone will be connected by subways. Kong said the Shanghai Tower will be a "vertical city" as it will house hotels, offices, malls and other facilities and will be capable of holding more than 50,000 people.

Hong Kong*:  Dec 29 2011 Share

Hong Kong remained a key market for mergers and acquisitions (M&A) in 2011, as Chinese companies snapped up Hong Kong firms and Hong Kong companies shopped on the mainland for bargains. Hong Kong accounts for 14 per cent of the Asia-Pacific M&A market, according to data from Thomson Reuters, despite underperforming the region. The value of Hong Kong M&A deals this year dropped 9 per cent to US$78.1 billion, while M&As for the overall region fell just 6 per cent to US$574 billion. But acquisitions by Hong Kong companies across the border rose 18 per cent to a record US$16.1 billion for 331 deals. The energy and power sector remained the most popular industry for acquisitions by Hong Kong companies. The biggest was the US$7.5 billion buyout of Northumbrian Water Group by a company controlled by Hong Kong conglomerate Cheung Kong Infrastructure (SEHK: 1038). The second largest deal of the year was the US$3.1 billion acquisition of China Gas Holdings by a consortium of mainland investors. This deal also made China the largest buyer of Hong Kong companies this year. According to separate data from deal-tracking firm Dealogic, Hong Kong accounted for 12 per cent of mainland acquisitions in 2011, with Australia and Brazil accounting for 14 per cent each. China's overseas acquisitions reached US$54.4 billion through 387 deals, up 9 per cent from US$50 billion, outpacing mainland equity and capital market transactions, which dropped 48 per cent to US$90.4 billion from US$174.7 billion in 2010. Europe was the most hotly sought-after targeted market for mainland companies, accounting for about a quarter of total Chinese acquisitions, reaching US$13 billion, compared with US$4.6 billion last year. Ernest and Young has predicted a surge in M&A volume as a result of the euro zone debt crisis. Shares in Europe were trading on low price/earnings, making them attractive acquisition targets, Ernst & Young said in a report. The Euro Stoxx 50 Index is down almost 25 per cent from its February peak. Edward Au, Deloitte partner in charge of national public offerings, predicted a growing trend of mainland investors acquiring international businesses through a Hong Kong-incorporated company to make use of the city's international image, and sidestep protectionism. "Mainland companies have always been interested in outbound M&A as a way to internationalise their business," Au said. "However, some of the countries really pride themselves on their own industries and the heritage of their own brands. They may not be willing to sell to China. But they are more open to investors from Hong Kong because its image is more neutral." He also said resources would continue to be the most active target sector for China's M&A next year as it sought to satisfy surging demand generated by growing urbanisation.

Alex Lau, head of mould-making firm Hermon Industries, sees many reasons to return much of the company's production to Hong Kong. Model firm breaks PRD production mould to join flight back to HK - Amid rising costs across the border, some companies like Hermon Industries are shifting back to the city. Alex Lau Shing-pui stands proudly in front of a gigantic machine churning out small moulds to mass produce plastic toy characters from The Simpsons, Shrek and Toy Story. The boss of Hermon Industries said the machine, which takes up one-third of his 3,500-square feet factory at Fo Tan, requires just two technicians to operate but produces the same number of moulds that would normally take 60 workers to produce at the group's semi-automated factory in Dongguan. Lau's company is among the small number of Hong Kong factories returning to the city from the Pearl River Delta (PRD) and helping in the process to rekindle the "Made in Hong Kong" toy industry. Hong Kong dislodged Japan in 1971 to become the world's biggest toymaker, but rising costs forced most factories across the border in the 1980s and 1990s. However the PRD, long a cost-effective haven, is now suffering a production flight of its own amid rising wages and inflation. Instead of following most factories relocating to remoter parts of the mainland or to Southeast Asia, Lau has chosen to bring back to Hong Kong production that was moved to the PRD two decades ago. Lau established Hermon in 1995 to manufacture moulds for the toy industry. Lau said costs had swelled so much on the mainland that the gross profit margin of toy mould makers across the border had shrunk to about 10 per cent from about 30 per cent three years ago. Guangdong's newest industrial policy, which aims to upgrade manufacturing activities by getting rid of labour-intensive, resource-intensive and environmentally-unfriendly factories, is behind a lot of the rising costs. Guangdong party secretary Wang Yang described the policy as "emptying the cage and setting the birds free". "Wages are going to double in five years in Guangdong, which brings the gap closer with Hong Kong," Lau said. "Guangdong is emptying its birdcage by setting the birds free, so why not fly back to Hong Kong? "Relocating some production back to Hong Kong is not only an option for manufacturers, but gives more job opportunities to the younger generation." Just behind the main door of Lau's spartan Fo Tan workshop, two designers in their 20s are working shoulder to shoulder on computers to digitalise two-dimensional images into 3-D ones. With the press of a button the mould-making machine produces samples. If the samples are flawless, they push another button to mass produce the moulds. Lau said the Fo Tan workshop, which opened four months ago, employed about five people in all, with most of the work done by machines. The Dongguan factory, by comparison, had 220 workers. He said the average pay of the Hong Kong staff was about HK$8,000 per month, which was not much higher than that of a well-trained technician in Dongguan, who earned about 5,000 yuan (HK$6,100). Wages keep rising on the mainland as a result of the combined effect of yuan appreciation, labour shortages and a mandated increase in minimum pay as part of the 12th five-year plan to 2015. The relocation thus makes business sense for Lau as wages account for half of the cost of making a mould in Dongguan, but only a quarter in Hong Kong. Most of the investment in Hong Kong was in the German-made machine, which cost €800,000 (HK$8 million). Lau said Hong Kong also had other advantages. It offers better protection for intellectual property, a crucial factor for a manufacturer producing popular toys pitched to a mass audience. In 2000, Hermon became the first company in Asia to use computer technology to produce moulds but four senior managers at the Dongguan factory subsequently left, taking the technology with them. They then separately set up about 60 companies to compete with Hermon. Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong said Hong Kong was now a viable location for factories relocating from Guangdong. "Industries with higher levels of technology and automation, and which take up less space are suitable for relocation," he said. "Other than mould making, watch components can be produced in Hong Kong, too." Danny Lau urged the Hong Kong government to offer more incentives to attract manufacturing activities back to the city, which would help create jobs. He called on the government to grant smaller firms cheaper land at industrial estates in Tai Po and Tseung Kwan O.

Mainland censors banned a controversial 30-episode Hong Kong-made television drama series that has built up a large following across the border - with just five episodes to go. A director at TVB (SEHK: 0511) said When Heaven Burns, a bleak portrayal of humanity and Hong Kong society, was the first local TV drama series to be banned on the mainland in a decade. A source at the channel said the State Administration of Radio, Film and Television (Sarft) ordered TVB's sub-licensees on the mainland - youkou.com and tudou.com - to stop showing the series and remove all its content from their websites. He said a similar order was issued to TVB's other licensed online video providers on the mainland. "TVB is concerned about the matter. It is waiting for an official notice before making any comment," the source said. The ban comes as Sarft starts to limit the number of televised entertainment programmes and replace them with "moral preaching" programmes from next year. A source at sohu.com confirmed that episodes of the TVB drama were removed from its website yesterday. Along with other mainland video providers, sohu.com paid TVB a fee for the right to show the series. The exact reason for the ban was not immediately apparent, but the series is known for its controversial storyline, which features cannibalism. It has low ratings but draws a cult following among young viewers in Hong Kong, where it is still being shown. It is one of the most discussed TV series in the online community. The series is popular among young viewers on the mainland because of its A-list cast including actors such as Bowie Lam, Moses Chan and Charmaine Sheh. The ban has baffled fans north of the border because the series makes no direct reference to contemporary affairs on the mainland. Most people believe it is due to the depiction of cannibalism, which the censor may have deemed inappropriate. Many viewers criticised Sarft for inconsistency, with one mainland blogger asking: "If they think the drama has problems, why did they ban it halfway through?" The series, which began airing last month, centres on the lives of three former band members after a tragic adventure in Xinjiang 18 years previously left them trapped in snowy mountains. The three kill and eat the flesh of a fellow band member in order to survive. The story tells how they are haunted by guilt and struggle to come to terms with their lives. Apart from the cannibal scene that regularly appears in flashbacks, the story portrays a bleak view of humanity. Characters in the drama cheat each other and enter into casual sexual relationships. A mainland commentator said it was popular because it was not the usual type of Hong Kong TV drama, which often focuses on a family feud or love story, rather than touching upon the dark side of human nature. A quote in the series that "this city is dying, you know?" has become a Facebook hit phrase for young people disillusioned with Hong Kong society. A search for Chinese titles of When Heaven Burns on the video sub-site of Baidu, the largest search engine on the mainland, last night found nothing but a line saying the phrase "could involve content that is in breach of relevant laws and policies". Jonathan Chik, the drama's director, said on Facebook: "Who can stop the wheel of times from moving forward? When Heaven Burns is so far reaching that its impact is beyond what we expected. No one should give up showing the remaining episodes, now it's coming to an end."

Shoppers wait in line yesterday outside the Louis Vuitton shop in Tsim Sha Tsui. Holiday chill warms retailers' pockets - Cold weather and cash handouts combine to boost sales by 20pc at top shopping malls over the Christmas weekend. Cold weather and HK$6,000 cash handouts from the government are helping retailers sing a happy tune this year as the numbers of shoppers, and their spending, have risen sharply during the holiday season. Local shoppers are buying generously with the extra handout cash in their pocket, while mainland tourists are flocking to the city to experience a Western-style Christmas, managers of malls and stores said. Twelve malls run by Sun Hung Kai Properties (SEHK: 0016), Wharf's Times Square and the Yata department store all expect sales to be 20 per cent above last year's, managers said. Vernon Ma Wai-lock, marketing manager for Times Square, said about 200,000 people entered the Causeway Bay landmark on Christmas Eve, about 10 per cent more than last year. The coldest Christmas in 27 years apparently boosted people's shopping spirits. "The festive mood is pretty intense this year because of the cold weather," Ma said. "More people are drawn outdoors to celebrate, and they are tempted to buy more winter clothes and shoes." He expected to record a 20 per cent increase in sales for the four-day Christmas break from Saturday to yesterday. Tourists are a big reason for the increase in revenue: they accounted for 40 per cent of total sales, up from 30 per cent a year ago. Tourists spend more than locals on luxury goods, watches, cosmetics and electrical appliances. "More and more mainlanders love coming to Hong Kong during Christmas, because it is merrier here with all the lighting and themed decorations," Ma said. Sun Hung Kai malls had 6.4 million shoppers over the same period, up 20 per cent from last year, said Maureen Fung Sau-yim, general manager for leasing. Locals spent an average of HK$1,900 each, while tourists spent HK$4,800 to HK$8,000, she said. There are some "super" shoppers out there, too. One customer spent more than HK$100,000 on watches, gold and diamond jewellery for his company's lucky draw. Another bought five iPhone 4S smart phones, which cost at least HK$5,088 each. Yata's senior marketing manager, Rebecca Tse, said people were buying more after they received the government's HK$6,000 handout. Sales of festive hampers were double last year's level, she said. Exhibitions are also attracting more people. The Asia Game Show, which ended on Monday, reported 472,000 visitors - 4 per cent more than last year. The same increase was reported by the organiser of two other exhibitions that ended yesterday - the Food Festival and the Mega Showcase, at the Convention and Exhibition Centre. As of 3pm yesterday, about 869,000 had visited the two shows. Meanwhile, the week-long Computer Mall Festival, offering discounts for information technology products, kicked off in four Sham Shui Po malls yesterday. About 400 people queued up early in the morning for products priced at HK$1.

The profit motive is a part of Hong Kong's culture. The territory may not be known for the creation of fine art (although it does have such a tradition), but it has a well-deserved reputation as a center for commercial design - often highly imaginative. Another part of the local culture is charitable giving. And as charities have become more sophisticated over the years they have adopted modern methods from the business world to get their messages across. For a great example of how commercial-standard design can promote a charitable cause, take a look at Oxfam Hong Kong's "Just Bite" website and brochure. It is part of a campaign to highlight poverty right here in Hong Kong. Twenty poor households give examples of how they attempt to overcome high food prices. The fact is that many of them struggle, and some of the examples are thought-provoking and sad. That is, of course, the whole purpose of design in marketing: to appeal to the emotions. In this case, however, the idea is to sell the idea of helping the less fortunate rather than selling some fancy consumer goods. You see the old rice cooker a family relies on in their partitioned flat, the lunchboxes given out by a church, the bags of leftover buns a baker leaves hanging on his neighbors' doors late at night. High-quality design - as good as those luxury brands use - combined with the serious subject matter create real impact. Bernard Charnwut Chan, chairman of the Antiquities Advisory Board, sees culture from all perspectives.

Rising levels of yuan liquidity in Hong Kong are likely to have a profound impact on China's domestic interest and exchange rates, the Chinese Academy of Social Sciences said in its annual report yesterday. However, the lack of yuan- denominated investment products in the SAR will continue to hinder its development as the premier offshore center for trade in the currency, the academy said. The lack of yuan products leads to "extremely low interest rates" for offshore yuan deposits, Beijing's top think- tank said in a report, pointing out that 60 percent of the yuan funds in the SAR is invested in low-yielding time deposits. It is rare for mainland agencies to make negative comments on Hong Kong's role as an offshore yuan center. The think-tank recommends more channels be created to let yuan floating overseas flow back to the mainland. Also, the scope of the renminbi qualified foreign institutional investor scheme, which allows offshore yuan to be invest in China's securities markets, should be limited, it said. The academy also urged authorities to take advantage of the world slowdown to promote the internationalization of the yuan. It also warned of further downside risk to the global economy, warning that global growth will come in at just 3.8 percent next year compared with 4 percent in 2011. Francis Lui Ting-ming, an economics professor at Hong Kong University of Science and Technology, said the report is not alarming. "I do not think one report from an academic body will be very influential to central government's policymaking, even if that body is backed by the state." He added that while different researchers may have different opinions, some could be speaking for special interests. Beijing has designated Hong Kong as the sole offshore yuan center in the 12th five-year plan for between 2011 and 2015. But before that, Shanghai and Tianjin had applied to take the role. As for the yuan, it retreated yesterday after reaching new highs against the US dollar on Monday. The currency strengthened 0.3 percent on Monday after reaching an all- time high of 6.3162 following the signing of a deal in Beijing by Japanese Prime Minister Yoshihiko Noda on Sunday to expand use of the yuan and yen in bilateral trade. Yesterday the yuan slipped to 6.3219.

A computer shop said it was punished by its distributor for selling electronic tablets at less than the recommended price. Pang Wai-sing, director of A Grade Technology at Golden Computer Arcade, Sham Shui Po, said Jebsen & Co suspended its supply of the Archos 70 tablets for two weeks about five months ago after he sold them at HK$3,288 instead of the suggested HK$3,388 price. Pang said the distributor at first told him that it had run out of stock when he asked for additional supply. But later it informed him that another company had complained about the lower price set by Pang. "Of course it is unreasonable," Pang said. "He said [my price] is too low, and I have to follow the market price." Although Jebsen & Co did not say who lodged the complaint, Pang suspects it is one of the big electronics stores because only they have the power to bargain with distributors. Pang said the distributor did not give him a suggested retail price when the tablets first arrived. He surfed the internet and found that HK$3,288 was a reasonable price. "The difference was only HK$100. I adjusted that immediately. Other stores were selling the tablets for a few hundred dollars more but they were not told to adjust their prices," Pang said. He had only bought 10 tablets from Jebsen & Co at that time. "I don't do business with them anymore. I don't understand why this is such a big deal," he said. Pang is a vice chairman of the Hong Kong Computer Association. Another vice chairman of the association, Lui Kin-chung, said he knew of similar cases. "It happened to other small stores which dared not speak up. They felt they could not do anything about it," Lui maintained. Such tactics make it hard for small businesses to survive. "There are 200 to 300 stores in the Golden Computer Arcade and many of them sell the same gadgets. If all sell them at the same price, the customers will only visit the big chain stores," said Lui, stressing the importance of free market competition. He said distributors usually suggest they sell the gadgets at 15percent higher than the cost. But Lui said 8 to 9percent is more suitable as 15percent may be too expensive for some customers. Jebsen & Co could not be reached for comment last night. The latest incident follows a complaint by a popular snack chain store, 759, which said its supply of Coca-Cola and instant noodle Demae Itcho was suspended after the store sold the products at a lower price than most supermarkets.

 China*:  Dec 29 2011 Share

China's first 3D TV channel will start a trial run on January 1, a spokesman from the State Administration of Radio, Film and Television said. After the test-run stage, the channel will be officially put into operation during Spring Festival later in January. The satellite channel will offer 3D programs daily from 10:30am to midnight. Producing the 3D channel's content will be China Central Television, Radio and Television Beijing, Radio and Television Shanghai, Radio and Television Tianjin, Radio and Television Jiangsu Province and Shenzhen Television Station. The programs will include animation, sports, documentaries, TV dramas, entertainment and live broadcasting of big events such as CCTV New Year's Gala and the London 2012 Olympic Games. To watch the 3D programs, consumers need to buy a 3D TV set and install Capable TV's high-definition set-top-box. The channel will charge no viewing fees during its early phase of running. TV fan and local company worker Jeffrey Qiu said 3D programs can create a more stunning visual experience. "3D TV is expected to be an inevitable trend," Qiu said. "However, it will still take a long time for 3D TV to be popular around the city because of the expensive equipment like the 3D TV sets." According to Professor Gu Xiaoming, a TV and film expert from Fudan University, it is not necessary to remaster all TV programs into 3D, especially given the relatively high production and programming costs. "The 3D technology is not a must and it should not generate too much extra expenditure," Professor Gu said. "I hope the authority can provide more economic assistance for the first group of 3D TV audiences." Eye experts suggest viewers limit their 3D experience to one hour at a time because too much may cause dizziness, nausea, headaches and myopia.

Many of the at least 80 million jobs related to exports are held by migrant workers and so are key to social stability, Huo Jianguo noted. China needs annual export growth of at least 15 per cent to ensure stable economic expansion as the rate of domestic investment cools, the head of the trade ministry's think-tank said in comments published yesterday. "We just can't tolerate the simultaneous fall in investment, consumption and exports," Huo Jianguo, head of the Ministry of Commerce's research unit, told the Shanghai Securities News. "A growth rate of 15 per cent [in exports] is basically a benchmark and any growth below that would start to affect employment." Beijing has pledged to stabilise exports and boost imports next year to balance trade as part of efforts to bring equilibrium back to the economy and insulate it from the effects of deteriorating external demand. Many international economists believe China's growth has been fuelled by a reliance on investment spending, creating asset bubbles and overcapacity problems that pose more serious structural challenges than shifting external trade conditions. But Huo said concerns about falling exports were growing. "In fact, the investment-driven model of 2009 has changed, exports are playing an incremental role in overall growth - so when export growth eases, people get nervous." Huo noted that at least 80 million jobs are related to exports - many of them held by migrant workers and therefore vital for social stability. Slowing exports were a net drag on China's overall rate of economic growth in the first nine months of the year, according to official data. Annual export growth last month eased to 13.8 per cent, the first time it had fallen below 15 per cent since February due to the Lunar New Year.

The mainland would speed the vetting of merger and acquisition proposals next year, to handle a fast-growing number of domestic and cross-border deals, a commerce ministry official said yesterday. Shang Ming, who heads the anti-trust division of the ministry, said the sluggish global economy had slowed organic business expansion and pushed companies towards increasing sales through M&A deals. "The M&A cases have increased at a very fast pace this year, so we are studying how to improve our methods and work efficiency next year to shorten the time for evaluating a deal," Shang told reporters at a media briefing. He said his ministry had received 194 applications for M&A deals from domestic and foreign companies between January and mid-December, up 43 per cent from a year earlier. The ministry had finished vetting 160 cases, with 94 per cent of them being approved, Shang said. He also rejected criticism that the anti-monopoly law on the mainland had been used to unfairly block the expansion of foreign and private-sector companies. "We have always implemented the anti-trust law fairly on all types of companies, including state-owned, private and foreign firms," he said. Beijing's rejection of deals, such as Coca-Cola's bid to buy fruit juice maker Huiyuan in 2010, has attracted sharp criticism from foreign commentators. However, Beijing appears to have relaxed its anti-trust vetting this year. The commerce ministry has approved Nestle's plan to buy a Singapore-listed Chinese candy maker, Hsu Fu Chi International, and also given the green light to Yum Brands' takeover of Little Sheep. The mainland launched its anti-trust law in 2008.

China must give its hundreds of millions of rural people a much bigger share of profits from farmland seized in the cause of economic growth, Premier Wen Jiabao said a week after a standoff that dramatized widespread tension over land. Wen, now casting himself as a defender of the farmer, also warned officials not to force villagers to give up their land rights even if they join the rising tide of migrants heading to cities and towns for work. Wen's speech to an annual rural policy conference yesterday highlighted how acute land problems have become for Beijing, struggling to balance the pressure of urbanization and industrialization against worries about rural inequality and unrest. After decades of rapid growth underwritten by farmland taken for relatively little compensation, Wen said, it was time to tilt in favor of rural folk and "dramatically increase the share of gains that goes to farmers from enhancing the value of land." Wen, who has just over a year before retirement, also said that "the slightest misstep in agriculture would damage the wider situation of economic development and social stability" as he vowed to push through rules to combat abuses in farm requisitions. But whether those rules can rein in local governments dependent on seizing farmland to attract investment is uncertain. For 10 days up to Wednesday of last week, villagers in Wukan, Guangdong, drove out officials and protested over confiscated farmland and the death of a organizer. Protests ended after officials made concessions. Yet less publicized protests and mass petitions over farmland are common in many areas.

The Shenhua Group, parent company of China Shenhua Energy Company (1088), plans to build Asia's biggest thermal power plant in the southern region of Guangxi, the official Xinhua news agency reported yesterday. The plant, to be located in the coastal city of Beihai, will consist of eight one gigawatt power generators and will be constructed in "about five years," the report said. As part of the project, four docks with a handling capacity of 100,000 tonnes each will be built to receive coal from the top coal producer's mines in Indonesia and Australia, it added. China's total installed generating capacity stood at 966 GW by the end of last year, including 710 GW of thermal power. According to forecasts by the China Electricity Council, the total will increase to 1,437 GW by the end of 2015, and Beijing will need to build another 257 GW of thermal power projects over the period. Shenhua Energy closed 2.37 percent higher on Friday at HK$34.6. Meanwhile, China has unveiled a pilot scheme of natural gas pricing that will apply to Guangdong province and Guangxi region, the National Development & Reform Commission said yesterday. The city-gate prices in these two regions will be linked to alternative fuels.

Tibet will kick off construction on the world's highest-altitude airport next year, according to a government work report at the ongoing regional economic work conference. The airport, planned at an altitude of 4,436 meters in Nagqu prefecture, will be 102 meters higher than Bamda Airport in Tibet's Qamdo prefecture, currently the world's highest, the report said. The airport is designed to cover an area of up to 267 hectares. The Tibetan Branch of the China Civil Aviation Administration has said the airport is expected to cost 1.8 billion yuan (285 million U.S. dollars) with a three-year construction period. Regional aviation authorities will add more flights next year to connect major cities in Tibet and also link the plateau region with other major cities nationwide, according to the document. The increase in flight services is expected to help Tibet's airports handle 2.2 million passengers and 15,000 tonnes of cargo in 2012, it added.

The U.S. Treasury Department on Tuesday declined to name China as a currency manipulator, saying that it would closely monitor the pace of RMB appreciation. The latest Semi-Annual Report to the Congress on International Economic and Exchange Rate Policies released on Tuesday highlighted the need for greater exchange rate flexibility, most notably by China, but also in other major economies. "Based on the ongoing appreciation of the RMB against the dollar since June 2010, the decline in China's current account surplus, and China's official commitments at the G-20, APEC, and the U.S.-China Strategic and Economic Dialogue (S&ED) that it will move more rapidly toward exchange rate flexibility," the Treasury concluded that China did not meet the standards of a currency manipulator. "Treasury will closely monitor the pace of RMB appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth," noted the Treasury.

Hong Kong*:  Dec 28 2011 Share

Photo taken on Dec. 27, 2011 shows the American aircraft carrier USS Carl Vinson in Hong Kong, south China, Dec. 27, 2011. The nuclear-powered supercarrier berthed in the water area of Hong Kong on Tuesday, starting a three-day visit for replenishment.

More than 1.8 million people have travelled outside Hong Kong to spend the Christmas holiday this year, while 1.54 million have flocked into the city, according to government statistics at immigration control points between December 23 and 26. The boundary-crossing point at Lo Wu is the busiest spot, recording 674,888 people going to the mainland and 550,755 coming in to Hong Kong. Both the overall departures and arrivals have seen an increase from last year, which recorded 1.39 million people going out and 1.13 million coming in over the holiday.

Beijing has, for the first time, expressed its concern over mainland women giving birth in Hong Kong, Chief Executive Donald Tsang Yam-kuen said yesterday. Speaking during his four-day briefing in the capital, Tsang said his discussions with Premier Wen Jiabao marked the first time the issue had been raised at central government level. Tsang briefed Wen on the implications and difficulties that Hong Kong faced as a result of the influx of pregnant mainlanders and how his administration would deal with it. "For the first time, I raised our concerns over the mainland mothers issue [with a state leader], especially pinpointing the illegal deals of middlemen," Tsang said last night. "Wen acknowledged the high concern of Hong Kong people over the issue. I told him we hoped to enhance co-operation with mainland departments to tackle the middleman agencies." At the centre of the issue is the right of abode granted to all children born in Hong Kong. The Hong Kong government has capped the number of maternity beds for non-local mothers in public and private hospitals at 34,400 next year but there have been reports that some mainland agencies are helping women to abuse the system and gain admission to the city's hospitals via accident and emergency wards. Tsang, who is making his last duty visit to Beijing before his term expires in June, said he also briefed state leaders on his administration's preparations to roll out more relief measures to help grass-roots groups and small businesses amid the dim economic outlook for next year. He promised he would ensure that the transition to the next administration would be smooth. In their meetings earlier in the day, state leaders advised Tsang that he should be prepared for more complicated situations in the last six months of his term. President Hu Jintao said "the social atmosphere is getting more harmonious and rational" in Hong Kong following the smooth progress of district council and Election Committee elections this year, adding that the city's economy was improving. The central government approved of the work of Tsang and his governing team and said Tsang's final policy address - delivered in October - had heeded the demands of the community and introduced measures to improve people's livelihoods. Tsang met Wen in Zhongnanhai, the residential compound for the senior leadership, where he was told by Wen that he would have to fulfil his duties scrupulously to meet challenges to the city's long-term stability and prosperity (SEHK: 0803). Veteran China watcher Ching Cheong said: "The state leaders have spoken highly of Tsang's performance. He [Tsang] should have been content with that." Ivan Choy Chi-keung, a political scientist at Chinese University, said the state leaders' remarks were largely focused on economic and livelihood issues, and avoided touching on political issues. That was to avoid speculation that the central government was influencing the chief executive election to be held in March.

Video-game vendors have good reason to celebrate the Christmas season after record crowds visited the Asia Game Show, snapping up the latest consoles and trying out new products. More than 110,000 people visited the exhibition yesterday, its last day. The four-day show attracted a total of 472,000, up 4 per cent from last year, event director Evette Chan Yee-wai said. Total sales increased by 5 to 7 per cent to HK$28 million, with one big spender shelling out HK$30,000 to buy 10 PlayStation 3 consoles. Sony's PlayStation Vita gaming device was the hottest item at the show, with all 100 consoles available yesterday snapped up by 11am. James Hong of Sony Computer Entertainment HK, the show's biggest exhibitor, said its sales had grown by 12 per cent over last year, reaching HK$26 million, and accounting for almost all the show's sales. He attributed the unexpectedly strong increase in business to the Hong Kong government's HK$6,000 cash handouts to permanent residents, and enthusiastic shoppers from the mainland. "Mainland shoppers are spending on average HK$5,000 each," Hong said. "Vita isn't available on the mainland yet, so they are especially keen. The cash handout has also help boost our sales. Local young people are spending 20 per cent to 30 per cent more." Mainlanders accounted for an estimated 70 per cent of Sony's sales, Hong said. The show attracted more women than normal, and they made up as much as 30 per cent of all visitors this year, Hong said. "We have observed more women coming with their boyfriends and families." Many gamers who arrived in the last hour of the show were disappointed, as vendors had already started packing up their goods after strong sales.

Philanthropist Laura Chen has an ambitious goal. She wants to eradicate hepatitis B. Chen, head of the Zeshan Foundation, a private philanthropy arm of the Chen family, which made its fortune as a property developer through the Hang Lung Group (SEHK: 0010), is confident the goal is achievable, although it will take time. "It is technically feasible. What makes eradicating hepatitis B so difficult is people and society. For example, some hepatitis B carriers may not realise they are carriers. But I am confident, with patience, the right education, through tests and vaccinations, I can reach the goal," Chen said. The foundation, established in 2003, followed on from the legacy of the Si Yuan Foundation, set up by her parents. The five Chen siblings make all major decisions together but, as executive chair, Laura Chen runs the day-to-day operations, which include reading through hundreds of submissions for funding. Though the foundation mainly focuses on mainland philanthropic projects, such as sponsoring health, education, disaster relief and community rebuilding, it has been a big donor to Operation Santa Claus since 2005. "Operation Santa Claus has scale and well-established tradition. It has been a major part of Hong Kong's philanthropy," Chen said. "Its beneficiaries are mainly the small charities that our foundation hasn't met. So by supporting Operation Santa Claus, we can help Hong Kong's smaller non-governmental organisations. I also like Operation Santa Claus' transparency." Operation Santa Claus is a holiday fund-raising appeal jointly organised by the South China Morning Post (SEHK: 0583) and RTHK. Since being set up in 1988, the campaign has handed donations to more than 100 groups. Money raised this year will benefit 16 Hong Kong-based charities. Chen said the Zeshan Foundation focused its mainland programmes where it could fill a policy gap. Since 2005, it has made the effective control and eventual elimination of hepatitis B a long-term goal. The number of hepatitis B carriers on the mainland is 100 times larger than the number of HIV carriers but government resources allocated to hepatitis B are only a fraction of those allocated to combatting Aids. The foundation provides vaccinations to children who have missed out on government-funded injections. It pioneered a method to stop mothers from transmitting the disease to their babies. Its programme provides screening for pregnant women not just for the hepatitis B virus, but also HIV and syphilis. The success of the programme prompted Beijing to carry out an 800 million yuan (HK$975 million) pilot project on testing to stop mother-to-child transmission.

Hongkongers may have the opportunity to show their preference for the city's next chief executive under a simulated vote. Veteran pollster Dr Robert Chung Ting-yiu, head of the University of Hong Kong's public opinion programme, plans to hold a citywide vote two days before the Election Committee's 1,200 members choose Hong Kong's next, Beijing-approved leader. Under Chung's plan, permanent residents aged 18 and over will be able to cast a ballot on March 23, with results to be announced later that day. It won't have any legal or official significance but it will be a powerful indicator of what the public want, and could sway committee members who will cast their votes in the real election on March 25. With the Chung plan, people will use an electronic voting system, accessible from their computers or mobile devices. They will also be able to use terminals at polling stations to be set up by Chung and his team. The sophisticated system will verify a voter's identity but at the same time protect their privacy. It is similar to internet-based voting systems used in Australia, Brazil, India and Estonia. "We expect 80,000 to 100,000 people to take part in the e-polling initiative," Chung said. In recent months, his HKU team has conducted frequent public surveys on the chief executive election. But Chung said the simulated vote would have a higher reference value than opinion polls, as its scale would be much bigger. An opinion poll typically involves 500 to 1,000 people. "Those Election Committee members who promise to take into account public opinion when they consider which candidate they will support should consider the results of e-polling seriously," he said. The cost of administering large-scale e-polling of more than 50,000 people would be around HK$1 per voter. Chung plans to raise about HK$500,000 for the project - his most optimistic forecast is that half a million people will take part. "We hope to get four or five sponsors to share the cost," he said. The three main candidates for chief executive - Henry Tang Ying-yen, Leung Chun-ying and a pan-democrat candidate (the camp will choose between Frederick Fung Kin-kee and Albert Ho Chun-yan) - would be asked to sponsor the poll. Chung said he would decide by early March whether to go ahead with his plan. The project would not need approval from HKU. Many will see the plan as a referendum on choosing the chief executive. In January last year, the Hong Kong and Macau Affairs Office said any so-called referendum in the city would be a blatant challenge to the Basic Law and the central government's authority.

Simulated voting may sound like a novel idea to many, but it has been tried with some success in Hong Kong before. In 1993, Dr Robert Chung Ting-yiu from the University of Hong Kong led a simulated poll on whether the government should make voting compulsory. While it was done in the old paper-and-pencil fashion, this time Chung wants to replace it with an internet-based system to let people make their choice for as chief executive. This would provide instant results and save on the costs of vote-counting. Chung said the system was well-tested and could produce credible results. In 2005, Estonia became the first country to offer internet voting nationally in local elections, with about 9,300 people voting online. Under Chung's proposal, voters would have to key in their Hong Kong identity card number and a mobile phone number on a designated webpage for e-polling. The identity card number would be converted by the computer system into a chain of codes to protect voters' privacy and prevent repeat voting. The system would then show a telephone number for verification, to which voters must send a blank SMS using their registered mobile phone number. Upon receipt of the blank SMS, the system opens a voting interface for voters to cast ballots. If a voter's ID number or mobile phone number has already been used, the system will not open the voting interface. Chung said at least one polling station would be set up as a safety valve to prevent fraudulent voting. If voters found their ID number had already been used in off-site e-polling, they would be allowed to vote but would be told that the previous offsite voting record would be disqualified. Off-site e-polling through computer terminals or mobile devices would take place from 8am to 8pm on March 23. On-site e-polling at polling stations would take place from 9am to 9pm on the same day. 

Flight attendants wearing character-themed aprons smile in the elaborately decorated Hello Kitty cabin, December 26, 2011. The Hello Kitty Jet of Eva Air is open for reservation between Taipei and Tokyo.

 China*:  Dec 28 2011 Share

Electrical goods maker Havells India said it had formed an equal joint venture with China's Shanghai Yaming Lighting to set up a lighting products plant in China that it expects to generate revenue of US$100 million in three years. The joint venture, called Jiangsu Havells Sylvania Lighting, would initially invest US$50 million, with the possibility of raising the figure to US$100 million over three to four years, Havells joint managing director Anil Gupta said yesterday. The plant was scheduled to begin production by April, he said. The venture will produce energy-efficient and green lighting products for the Chinese and international markets. "Manufacturing in China is commercially more viable," Gupta said, explaining the reason for setting up the joint venture. Shanghai Yaming Lighting, a unit of Shanghai Feilo Acoustics, makes various types of lamps and lighting products in China, Japan, Belgium and the United States. Havells, which gets half its revenue from Germany's SLI Sylvania, which it acquired in 2007, said in July that it was looking for a joint venture partner in China to boost sales and set up a manufacturing facility. Havells already exports products to China, generating US$5-6 million of revenue per year. The company has 12 plants in India with a further six overseas. Gupta said the initial investment would be funded internally, although the joint venture might consider a debt issue in China later as it increased production.

The top legislature has begun discussing a draft law aimed at cracking down on foreigners illegally entering, working or staying on the mainland. The law will also set out how qualified foreigners can secure permanent residency. Xinhua reported yesterday that in a bid to settle the thorny and lingering issue of illegal aliens, the Standing Committee of the National People's Congress yesterday discussed a draft law that would enable law enforcement agencies to detain suspects and examine their cases. Deputy Public Security Minister Yang Huanning , who briefed the lawmakers, said: "Practically speaking, quite a number of foreign suspects who are not in possession of legal documents refuse to give their real names and that's why police have sought legal support for much-needed investigation, which usually takes time." Apart from authorising detention, the law would also give agencies the power to repatriate offenders. Foreigners who work illegally would be fined between 5,000 yuan and 20,000 yuan (HK$6,000 to HK$24,300) and might be detained for up to 15 days for serious violations. Those who illegally provide job-placement services for foreigners or illegally employ them would be also fined. Once expelled, they would be barred from returning for five years. The proposed law also says foreigners who make outstanding contributions to the economic or social development of the country could be entitled to permanent residency. Professor Ong Yew-kim, from the China University of Political Science and Law, welcomed the draft law, saying it was a significant step in keeping up with the times and improving immigration management. "In a stark contrast with previous ambiguous principles, the new law will show foreigners how they can work and earn a living, while China, in turn, will also be able to bring in talent with a more transparent residency scheme, to its economic and technological benefit." Ong said it also might improve relations between China and other countries. As its economy has boomed over the past three decades, the mainland has been attracting more and more foreigners to visit or stay for various reasons, ranging from business trips and study to sight-seeing and economic migration. The Beijing-based Fangyuan Magazine, affiliated with the Supreme People's Procuratorate, quoted figures provided by the Public Security Ministry as saying there were half a million foreigners living on the mainland at the end of 2009.

China’s home-grown satellite navigation system launched a limited positioning service on Tuesday, the official Xinhua news agency said, as the country seeks to break its dependence on foreign technology. China started building its space-based navigation network in 2000 to stop it having to rely on the US-controlled Global Positioning System (GPS), and previous reports have said it will provide a worldwide service by 2020. The Beidou, or Compass, navigation system was now providing services for China and “surrounding areas”, Xinhua said, and Beijing would launch another six satellites next year to expand it to most of the Asia-Pacific region. The first Compass satellite was launched in April 2007, after four other experimental satellites were placed in orbit earlier in the decade. It is not clear how many satellites have been launched so far. Once completed, the system will have 35 satellites developed using Chinese technology, and will provide services for mapping, fishery, transport, meteorology and telecommunications, state media have said. http://www.beidou.gov.cn/

CHINA'S Beidou satellite navigation system started to provide continuous navigation and positioning services to users in China and neighboring countries on a trial basis from Tuesday. The system, called the Big Dipper in Chinese, currently consists of 10 satellites and will eventually have 30-plus satellites. It has an accuracy of about 25 meters during the trial run, said Ran Chengqi, director of the China Satellite Navigation System Management Office, at a press conference. The accuracy will be improved to around 10 meters by the end of next year after six more satellites are sent into orbit. By then, the service will cover most of the Asia Pacific Region, Ran added. Beidou's services are now available in regions between 84 degrees and 160 degrees East Longitude and from 55 degrees South Latitude to 55 degrees North Latitude. Accuracy of its time service stands at 50 nanoseconds, Ran said. Compared with the satellite navigation systems developed by the United States (GPS), Europe (Galileo) and Russia (Glonass), Beidou is the only one that also offers telecommunication services and its cost is cheaper than GPS. Beidou is expected to provide global service by 2020 and will be used in more areas from engineering monitoring to traffic management to rescue missions, besides navigation service.

Passengers take pictures as one of the first high-speed trains between Shenzhen and Guangzhou leaves Shenzhen yesterday. The first northbound train took just 28 minutes to arrive. The line, which will eventually extend to Hong Kong, was due to open in August but was delayed after a high-speed train ran into another in Wenzhou, killing 40 people. New Shenzhen trains off to a speedy start - Delayed rail line finally opens with successful 35-minute train trip to Guangzhou. Passengers hail convenience, but see a few hitches in the service. The first high-speed trains between Shenzhen and Guangzhou began operating yesterday, completing the 102 kilometre journey in just 35 minutes. The line, part of the Guangzhou-Shenzhen-Hong Kong high-speed rail link, was originally scheduled to open in August but was delayed after a high-speed train ran into another in Wenzhou , Zhejiang , in July, killing 40 people. The HK$60 billion Hong Kong-Shenzhen section of the link is scheduled to open in 2015. The first train heading north, carrying Railways Minister Sheng Guangzu and top Guangdong officials, left Shenzhen North railway station at 10.40am yesterday and arrived at Guangzhou South in 28 minutes. During the non-stop journey, the eight-carriage G6126 unit hit a top speed of 310km/h. The central government had set a maximum speed limit of 300 km/h, down from 350 km/h, after the Wenzhou crash. The first train for the public's use left Shenzhen at 11.20am and made a one-minute stop at Humen before arriving in Guangzhou at 11.56am. It reached a top speed of 297km/h. The trains will complete the trip twice as fast as conventional trains on the 139 kilometre journey between Guangzhou East station and Luohu station in Shenzhen, according to the Guangzhou Railway Group. A one-way first-class ticket costs 100 yuan (HK$122), while a second-class ticket costs 75 yuan - 5 yuan cheaper than on the slower line. Many passengers said they were satisfied with the "reasonable" and "attractive" fares. But others found the service and the food on board wanting. Train attendants, they said, had to apologise frequently for bumping into passengers as the train wobbled when it hit nearly 300km/h. Some passengers said their ears popped due to a sudden change in air pressure as the train sped through tunnels. "Making phone calls is a big problem on the train," said He Xuewen, a manager at a state-owned enterprise in Shenzhen. "The mobile signal appeared very weak. Telephone calls were often cut off and internet connection through my 3G USB modem was frequently disrupted." However, He said the new train was still "very convenient", especially for businessmen travelling between the two cities. Passengers arriving at Guangzhou South could transfer directly to the inter-city line to Zhuhai and the high-speed trains to Changsha in Hunan and Wuhan in Hubei . Guides were waiting on the platform to assist passengers who needed to change trains. Cai Huajie, a Hunan native who works in Shenzhen, took the trip from Shenzhen to Guangzhou at 11.20am and then rushed to transfer to another train to Changsha at 12.15am. Cai was scheduled to arrive at his destination three hours later. "It's become so efficient," Cai said. "I had lunch in Shenzhen and will arrive in my hometown in the afternoon. In the past, it took at least 12 hours. "I called my wife just now and made a joke that, in the future, we can have breakfast in Changsha and shop in Hong Kong at noon." The high-speed rail link is a key part of Guangdong's plan to improve rail travel in the Pearl River Delta. In the next five years, it is committed to ensuring that no trip between any two cities will take more than an hour, with the railway network eventually connecting nine delta cities. Other high-speed rail lines will connect Guangdong with Xiamen in Fujian , and Nanning in Guangxi . The high-speed line between Guangzhou and Wuhan, which opened last year, will be extended to Beijing next year.

Korea to Chinese Tourists: Thanks - Shoppers in Myeongdong, one of Seoul’s landmark shopping districts, on Dec. 25. A common sight for visitors to the Myeongdong area in downtown Seoul are busloads of foreign tourists, mostly from China and Japan, filing into shops and malls. The traffic jams caused as a result can be a headache for those trying to pass through the area, but new data shows how much of a boon all that shopping has been for the South Korean economy. According to the Bank of Korea, without a surge in spending by foreign visitors seen in the third quarter, South Korea’s economy would’ve grown 0.5% from the previous three months, instead of the actual 0.8% rise. Increasingly important are Chinese tourists as the yuan’s rise against the Korean won boosts their purchasing power. The value of the Korean currency has fallen about 7% against the yuan so far this year. The won has also weakened significantly versus the yen, helping to keep Japanese tourists among the top foreign shoppers in the country. Overall spending by foreign nationals in Korea soared 37.4% in the third quarter after a mere 2.7% rise in the second quarter, the BOK data showed. The number of Chinese tourists visiting South Korea has jumped since 2009 with the corresponding rise with the country’s wealth, but such growth was particularly pronounced in the third quarter of this year, largely due to the won’s weakness. According to United Nations World Tourism Organization data, Chinese tourists spent $54.9 billion overseas in 2010, making them the world’s third largest overseas spenders after Germans and Americans. Shop owners in the Myeongdong area are responding to the rapid rise in Chinese tourist numbers by hiring native Chinese staff, or those who can speak Chinese fluently.

A wide-ranging currency agreement between China and Japan is expected to give the Chinese yuan a more powerful role in international trade, but Beijing still must make substantial changes in how it manages its economy before the yuan becomes a currency powerhouse on the scale of the dollar or euro. Economic woes in Europe and U.S. have undermined market confidence in the dollar and euro, but investors looking for a safe place to store their money have few other currency options. China, among other nations, has objected to the primacy of the dollar in international trade, and has suggested other ways to run the international monetary system, including giving a bigger role to the International Monetary Fund and a wider role for the yuan. Those discussions have largely been theoretical. But during a visit to China by Japanese Prime Minister Yoshihiko Noda, which ended on Monday, China and Japan announced a series of deals that promote the use of the yuan in trade and investment between the world's second- and third-largest economies, which would limit somewhat the use of the dollar in Asia, the world's fastest growing region. Specifically, the two countries agreed to promote direct yuan-yen trade, rather than converting their currencies first to dollars, and also for Japan to hold yuan in its foreign-exchange reserves, which are now largely denominated in dollars. Japan "seems to be acknowledging implicitly that there will be a single dominant Asian currency in the future and it won't be the yen," said Barry Eichengreen, a University of California at Berkeley economic historian. Harvard University economist Jeffrey Frankel said that "this hastens a multicurrency world, but this is just one of 100 steps along the way." A Japanese government official said that in the future, Asian currencies "may become more important than they currently are". But Japan hasn't necessarily decided to buy Chinese government debt based on the view that the yuan is likely to become more popular and dominant than the yen. "The yen's role will rather become more important to other countries if we deepen our relationships with them," the official said. The pact comes at a time when the yuan has faced downward pressure as investors and businesses have lowered their expectations for a continued rise in the currency. The accords suggest that China is looking to speed up its efforts to raise the yuan's profile overseas. That's especially evident in Tokyo's decision to buy up to $10 billion worth of Chinese government debt for its reserves. Though that represents only about 1% of Japan's $1.3 trillion foreign-exchange reserves—the world's second-largest after China— it's important symbolically as a sign that Japan will diversity away from the dollar in the future. Even so, the move is likely to be quietly welcomed by the U.S. government, which has encouraged China to seek a bigger role for the yuan. That's because U.S. government officials realize—as do Chinese reformers—that for the yuan to play a much bigger role, China needs to broadly revamp its financial-sector policies. Morris Goldstein, an economist at the Peterson Institute of International Economics in Washington D.C. said those policies would include sharply reducing its exchange-rate intervention, liberalizing interest rates, reducing restrictions on capital flows and putting its banking system "on a more market-oriented basis," so the yuan can trade freely. Such policies are likely to put upward pressure on the yuan versus the dollar, which has long been U.S. policy. According to Chinese state television, Japanese officials notified Washington of the agreement ahead of the announcement and reiterated Japan's confidence in the long-term prospects for the dollar. A U.S. Treasury spokesman didn't comment. The deals with Japan also are in line with the goal of the Group of 20 industrial and developing nations to make the Chinese yuan more flexible. But the agreements are unlikely to have any significant effect on the yuan's global role anytime soon. Neither China nor Japan has announced any timetable for implementing the plans. Authorities in both countries have agreed to set up a working group to discuss how to put the measures to work. So far, China has taken some incremental steps toward setting the yuan free. Hong Kong, the only place outside mainland China where the yuan can trade freely, has become the world's fastest-growing currency market in the world. The new agreements with Japan include measures aimed at making it easier for companies to convert the Chinese and Japanese currencies directly into the other, without requiring an intermediate conversion into dollars, the current common practice. The change should reduce costs for the companies involved. About 60% of all Japan-China trade is currently settled in the dollars. The package also includes "pilot program" to allow the government-affiliated Japan Bank of International Cooperation to sell yuan-denominated bonds on the mainland market. No detail on the size or timing of any JBIC offering has been disclosed. JBIC, a lender charged with helping Japanese firms doing business abroad, would be the first foreign-government entity to take such a step, as China's domestic bond market—totaling more than 20.1 trillion yuan in debt outstanding ($3.2 trillion), has largely been off-limits to foreign issuers. Thus far, the Asian Development Bank and the International Finance Corp., the financing arm of the World Bank, so far have been the only foreign issuers of yuan bonds in China. Neither is affiliated with any foreign government. Choosing mainland China to issue bonds, rather than Hong Kong, where interest rates on yuan bonds are generally lower, "shows the commitment from the Japanese side to promote the yuan," said Woon Khien Chia, an Asian analysts at the Royal Bank of Scotland. In recent weeks, Beijing has unveiled a number of steps to promote the use of the yuan overseas, including starting to allow foreign firms to invest yuan accumulated overseas in mainland China. The People's Bank of China, the country's central bank, has also been using so-called currency swap deals with other central banks so that foreign banks could supply more yuan to their customers. Currently, the PBOC has such deals with a dozen foreign central banks including Thailand, South Korea and New Zealand, totaling 1.2 trillion yuan. The most significant measure China has taken so far is allowing cross-border trade to be invoiced and paid in its currency. Yuan-settled trade now accounts for about 10% of China's total trade, compared with less than 1% a year ago. Analysts at Deutsche Bank AG predict that yuan-settled trade would amount to 3.7 trillion yuan next year, or 15% of China's total trade.

Gold displayed at a shop in Shanghai. As of December, China ranked sixth worldwide in gold holdings, with about 1,054 tons, says a report released by the World Gold Council. China should further diversify its foreign-exchange portfolio and make more gold purchases when the metal's price dips but is still at a relatively high level, a senior central bank official said on Monday. "The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation," said Zhang Jianhua, director of the research bureau affiliated with the People's Bank of China (PBOC). He made the remarks in an article in the Beijing-based Financial News, a newspaper run by the PBOC. The spot gold price declined 16 percent over the past three months to less than $1,600 an ounce last week. It touched a record of more than $1,900 in early September. Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors' confidence. He said that gold had become the only "safe haven" for risk-averse investors. "No asset is safe now. The only choice to hedge risks is to hold hard currency - gold." Zhang didn't specify what proportion of China's $3.2 trillion foreign reserves should be held in gold. China is the largest foreign holder of US Treasury securities, having invested about one-third of its foreign reserves in those bonds. About 20 percent has been invested in euro-denominated assets. As of this month, China ranked sixth worldwide in gold holdings, with about 1,054 tons. The value accounted for about 1.8 percent of the country's total foreign reserves, according to a report released by the World Gold Council (WGC). The US topped the list by holding more than 8,133 tons of the metal, 76.6 percent of its foreign reserves by value, while Germany ranked second by holding 3,396 tons, 73.7 percent of its reserves. In 2011, countries including Russia, Thailand, South Korea, Bolivia, Colombia, Kazakhstan and Venezuela purchased the metal to increase gold holdings of their central banks' reserves. China didn't sell or buy gold from 2010 to 2011, according to WGC statistics. "The PBOC may have realized that its euro-denominated assets are in greater danger than it expected and started to eye gold," said Li Jie, director of the foreign-reserves research center at the Central University of Finance and Economics. "But it's impractical for China to put its foreign reserves into commodities, including gold, because all these markets are too small for such a big hoard. "For example, China's purchasing gold would push up the price of the metal and increase its own cost," said Li. Li added that there was no easy way for China to get as much gold as it wished because major economies such as the US hold the majority of gold and market supplies are very limited. China produced 31.75 tons of gold in October, the Ministry of Industry and Information Technology said on Monday. Gold production gained 5 percent in the first 10 months of this year to 290.752 tons. Driven by increasing demand from risk-averse investors, the international price of gold repeatedly reached new highs in 2011. Central banks made their biggest gold purchases for a single year in 2011 since the Bretton Woods system dissolved in 1973 and major currencies began to float against each other without being pegged to gold. China has vowed to further diversify the nation's foreign-reserve portfolio amid growing global financial uncertainty. In October, it cut holdings of US Treasury securities by $14.2 billion to $1.13 trillion, the lowest level this year. Media reports have said that the PBOC plans to create a fund worth $300 billion to invest the country's foreign reserves in the US and European markets. The fund will reportedly seek to invest in real assets and company shares, rather than government securities.

A batch of milk produced by Mengniu Group has tested to have excessive aflatoxin, a cancer-causing substance, over the weekend. Cai Mengsha bought two boxes of milk produced by the Chinese dairy giant Mengniu Group over the weekend. But she was having second thoughts after learning excessive levels of a cancer-causing toxin were found in a batch of milk manufactured by the company. The General Administration of Quality Supervision, Inspection and Quarantine on Saturday published the result of a random check of 200 dairy products in 21 provinces, and two products, including one manufactured by Mengniu, were found to contain excessive aflatoxin. Despite the company's declaration on Monday that the entire tainted batch was destroyed in its branch plant in Meishan, Sichuan province, before it could reach the market, Cai, a college student in Zhejiang, said she was still confused as to whether the milk she had bought was safe to consume. While the national standard allowed a maximum of 0.5 micrograms carcinogenic content in a kg of milk, the official test found 1.2 micrograms of the toxic substance in the Mengniu sample. The sample product was a 250 ml pack of pure milk produced on Dec 18, according to the test result published on the website of the general administration. Aflatoxin is virulent in terms of toxicity and is classified as a first-class carcinogen by the World Health Organization. "Experiments on animals have demonstrated a strong carcinogenic effect of the substance, and studies about epidemic diseases indicate that the content of the substance in food is relevant to the incidence of liver cancer," said Fan Zhihong, associate professor with China Agricultural University's college of food science and nutrition engineering. She also says the carcinogen can accumulate in the human body, and is resistant to heat. "It dissolves when the temperature reaches nearly 300 C, which means high temperature disinfection or pasteurizing (a common disinfection method used in the dairy industry) cannot kill it at all." Dairy experts said the source of the problem might be traced to cattle feed being contaminated by aflatoxin. "Cattle feed, such as corn, rice and soybean, will produce the poison after having been stored for a long time," said Wang Dingmian, chairman of the Guangzhou Dairy Association. It is mandatory to have the carcinogen levels in raw milk and end products tested by manufacturers. Lu Jianjun, a spokesman for Mengniu, said: "We inspect every batch obeying the country's requirement." However, experts said the appearance of faulty products meant the company omitted to check some of the batches. "If the company carried out checks and didn't find a problem, then their case is suspect," Wang said. Mengniu apologized to consumers on its website on Sunday, without mentioning the cause of the incident. Lu told China Daily the company has checked other batches, and no faulty products were found. "Now Mengniu products in the market are all safe," he said. But some consumers have lost faith in the brand. "Manufacturers always claim they do not allow substandard products to enter the market, but how could one be so sure that the numerous products on the store shelves have all passed the test?" asked Chen Kai'en, a 23-year-old freelancer in Shanghai. Fang Zhouzi, a famous Chinese blogger known for his efforts toward exposing academic fraud, reminded consumers to keep away from products manufactured by brands with counterfeit records. "A stained history means the company has problems in its professional ethics, so we shouldn't trust it anymore," Fang wrote on his Sina micro blog on Monday. The company got entangled in a string of scandals in recent years. In 2009, experts claimed a high-end milk product manufactured by the brand could cause cancer. Later that year some batches of the brand were found containing melamine, an industrial chemical added to dairy products to make them appear to have a higher protein content. Two incidents occurred in April 2010 and April 2011, that sent more than 200 children to hospitals after consuming milk at school that was produced by Mengniu.

Foreign visitors may be fingerprinted under draft legislative proposals being considered by the top legislature on Monday. The draft law on entry and exit procedures, for the first time, allows the Ministry of Public Security and the Ministry of Foreign Affairs to put in place a system to gather biological identification data, such as fingerprints, on foreign visitors. The draft also stipulates that foreigners should be fingerprinted by public security departments when they apply for a residential certificate. The regulations currently stipulate that foreigners staying for longer than a year should apply for a residential certificate, while the proposed draft requires visitors to do so within a month after entering China, "if their visa requires". Liu Guofu, an immigration law professor with the Beijing Institute of Technology, said foreigners who stay longer than a year are usually foreign employees and overseas students. "Visas for temporary trips, such as sightseeing, usually permit a stay no longer than half a year," he said. Liu said some European Union countries have also imposed similar fingerprint regulations on foreigners. Yang Huanning, vice-minister of public security, told lawmakers at their bimonthly session that fingerprints and other biotechnology information are "effective measures" in identification and can speed up arrival and departure procedures at customs. The draft, an integration of the current separate rules for foreigners and Chinese citizens, aims to "facilitate exchanges while making sure that those who should not enter are kept out", Yang said. Rapid development has brought both economic opportunities and "new situations and problems", setting a higher standard on social management. China witnessed 260 million arrivals and departures from January to September. This represented a massive increase from 12.1 million in 1980. The number of arrivals and departures has been increasing by 10 percent annually since the 1990s, according to the ministries of public security and foreign affairs. A number of countries, including the Republic of Korea, Switzerland and Norway, have started encoding fingerprint information in their digital passports. China is also promoting digital passports. Robin Tsukada, a Japanese student at Tsinghua University, said an increasing number of foreigners are coming to China for work and study, and it's necessary to streamline the procedures. A Norwegian man in his 50s, who has been a resident of China for about 10 years, said taking fingerprints was "fashionable" in Western countries.

China should reduce its reliance on overseas rating firms by encouraging large financial institutions to strengthen their research and make their own judgments, the country's central bank governor has said. The nation is also considering establishing credit-rating companies backed by the government, governor Zhou Xiaochuan said at a financial forum in Beijing on Sunday. Zhou's remarks reflect Beijing's desire to seek alternatives to the top-three global rating companies - Moody's Investors Service, Standard & Poor's and Fitch Ratings - amid scepticism among officials about the firms' independence. Beijing set up its first rating company that makes investors rather than borrowers pay, China Credit Rating, last year. "With the rapid expansion in China's bond market, we need rating companies that are familiar with the Chinese situation," said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank. "We see comments from rating companies during this round of the crisis have influenced the financial market to a large degree. It's no surprise China is paying attention to them." Overseas rating companies' earnings models cause "a strong beneficial alliance between the issuer and the ratings agency that cannot avoid influencing the agency's independence", the National Association of Financial Market Institutional Investors said in a recent draft report. The association was formed by the central bank in 2007 to help develop the country's over-the-counter financial markets. One possibility for nurturing local rating companies is to require that a domestic firm also rate a local financial product if one of the international companies does so, said Zhou, the governor of People's Bank of China. Domestic rating firms can play a larger role by researching the finances of local or municipal government, an area in which foreign companies lack expertise, Zhou said.

Hong Kong*:  Dec 27 2011 Share

Premier Wen Jiabao has acknowledged Donald Tsang Yam-kuen's efforts over the past year but has warned him to prepare for more complicated circumstances in the remaining six months of his term as chief executive. Tsang would have to scrupulously fulfil his duties to meet expected challenges, Wen told the outgoing leader at Zhongnanhai, as Tsang visited to capital to deliver his last annual report. “In the remaining half year of the SAR administration, it has to further explore Hong Kong’s development potential, especially to develop the economy, improve livelihood and put forward the Basic Law,” said Wen, meeting Tsang with Vice-Premier Li Keqiang. “It has to rely on Hongkongers’ wisdom and ability to solve economic and social problems, maintaining social stability and prosperity (SEHK: 0803).” Rounding up this year – a year he called “unusual” amid the global financial crisis and Euro debt crisis – Wen fully acknowledged Tsang’s efforts in advancing the economy and improving “tremendous livelihood issues”.

Chinese President Hu Jintao (R) shakes hands with Donald Tsang, chief executive of the Hong Kong Special Administrative Region (SAR), in Beijing, capital of China, Dec. 26, 2011. The Hong Kong SAR government leader was in Beijing to report his work to central authorities. President Hu Jintao said that the current overall situation in the Hong Kong and Macao special administrative regions (SARs) is good, urging both regions to ensure future prosperity and seek benefits for their citizens. Hu made the remarks while hearing work reports from the chief executives of the two SARs, expressing his appreciation for the work of the HKSAR and Macao SAR governments this year. While meeting Chief Executive Donald Tsang, Hu said that Hong Kong sustained steady economic growth as well as a comparatively low unemployment rate. Hu said the policy address of the Hong Kong SAR government actively responded to people's appeals and put forward a number of policies to improve their livelihoods that won positive public feedback. He hopes that Donald Tsang and the HKSAR government continue to work wholeheartedly to fulfill their duties in the remaining term and lay a solid foundation for the long-term stability and prosperity of the HKSAR. "The central government is satisfied with the work of Tsang and the HKSAR government," Hu said. In a separate meeting with Macao SAR Chief Executive Fernando Chui Sai On, the president said that Macao maintained rapid economic growth and a harmonious and stable society last year. "The Macao SAR government improved its administrative capabilities and implemented effective measures in a timely manner to alleviate people's living pressure brought by the inflation," Hu said. Hu expressed his hope that the Macao SAR government would strive to promote sound and fast development of Macao to improve people's livelihoods in the coming year.

Christmas is a day of sombre remembrance for veterans of the second world war battle of Hong Kong, which fell to the Japanese on this day 70 years ago after 18 days of desperate fighting. Hopelessly outnumbered and outgunned, allied troops from Britain, Canada, Hong Kong and India fought to defend the territory from Japanese forces which had attacked from the mainland on December 8, 1941. The assault came a day after Japan landed what it hoped would be a killer blow on the United States at Pearl Harbour. By the time Hong Kong Governor Sir Mark Young surrendered on what became known as “Black Christmas”, around 4,000 soldiers from both sides had been killed in the battle. But instead of bringing peace, the surrender began almost four years of brutal Japanese occupation in which allied prisoners were tortured and abused, local villages razed and women raped on a large scale. Hong Kong Ex-Servicemen’s Association vice chairman Kenny Yau, a former British army captain, said about 20 veterans from the Hong Kong infantry and artillery units who fought to defend their city were still alive. “They just want world peace 70 years on,” he said. “They wanted an apology from Japan a long time ago but as they have aged and their memories fade, I haven’t heard them discuss that for a while.” Not so the Canadians, who held an emotional wreath-laying ceremony at Sai Wan war cemetery earlier this month to mark the start of the battle. Hong Kong was the first action for Canadian infantry in second world war. After the commemorative ceremony, Canadian Veterans Affairs Minister Steven Blaney and a delegation of veterans travelled to Japan to accept a formal apology for their treatment in captivity. Blaney called the apology a “crucial step in ongoing reconciliation and a significant milestone in the lives of all prisoners of war”. “It acknowledges their suffering while honouring their sacrifices and courage,” he said in a statement released this month. The intensity of the fighting and the Japanese soldiers’ combat skills took many of the British-led defenders by surprise. Canadian Sergeant Major John Robert Osborn was posthumously awarded the Victoria Cross, the Commonwealth’s highest medal for bravery, after throwing himself on a Japanese grenade to save his men on December 19th. In the same action, Brigadier John K. Lawson became the most senior Canadian officer to be killed in action in the second world war when he left his besieged headquarters to “shoot it out”, according to official records. About 290 Canadians were among the roughly 2,100 allied troops killed in the battle. Hundreds of survivors endured years of abuse and starvation as prisoners of war, leading to more than 260 additional Canadian deaths. Yau described Japan’s apology to the Canadians as “a good sign”. But he added: “They should have apologised a long time ago”. In a strange coincidence, police on Thursday detonated seven second world war-era grenades found near a popular hiking trail on the south of Hong Kong island, where some of the most intense hand-to-hand fighting took place. Two British M36 grenades and five Japanese Type 91 grenades were discovered near the Wilson Trail between Stanley and Repulse Bay, a key route over the mountainous hump dividing Hong Kong between north and south. The Museum of Coastal Defence is showing a photographic exhibition saluting the territory’s Canadian defenders to mark the battle’s 70th anniversary. “As many Canadians fought to the last man, and the gallantry of the soldiers deserves special mention, this pictorial exhibition pays tribute to the Canadian troops who defended Hong Kong,” a government statement said.

 China*:  Dec 27 2011 Share

Shanghai will require microblog users to register under their real names from Monday, state media said, the latest local government in the mainland to implement the rule after a spate of violent protests. Beijing and Guangdong have also ordered users of weibos – microblogs similar to Twitter – to register using their real names, as the authorities tighten their grip on the internet. The move comes amid a surge in social unrest that has been concentrated in the wealthy manufacturing area of Guangdong. Residents protesting against land seizures and a power plant in the province recently posted photos and reports of their demonstrations on weibos, defying official efforts to block news of the incidents spreading. With more than half a billion in the mainland now online, authorities are concerned about the power of the internet to influence public opinion in a country that maintains tight controls on its traditional media outlets. Shanghai said the new rules aim to “foster a healthy internet culture” and improve management over social networking, the official Xinhua news agency reported late Sunday. The guidelines will apply to both private and corporate users in Shanghai. Previously, users have been able to set up weibo accounts under assumed names, making it more difficult for authorities to track them, and allowing them to set up new accounts if existing ones are shut down by censors. Despite official censorship of the web, ordinary people in the mainland are increasingly using weibos to vent their anger and frustration over official corruption, scandals and disasters. A weibo user is believed to have broken the news of a deadly high-speed rail crash in Wenzhou in July that provoked widespread condemnation of the government – much of it online.

Fan Bingbing's red carpet glamour in 2011 - Check out the glamorous looks of Chinese actress Fan Bingbing when she was on red carpets of various awards in 2011.

China's cultural icons in foreigners' eyes - Chinese culture is one of the world's oldest and most complex. So what are the chinese cultural icons in foreign people's eyes?

The Chinese city of Zhengzhou will help Foxconn Technology Group recruit more than 100,000 workers next year for its local factory, matching the number it helped the maker of Apple Inc iPhones and iPads hire in 2011. An employee of Hon Hai Precision Industry Co Ltd, which uses the trade name Foxconn, works on a production line in the Longhua Science and Technology Park in Shenzhen. Terry Gou, chairman of Foxconn Technology Group, reduced the long-term growth target for the largest contract manufacturer of electronics in the world by 50 percent as the demand for Apple Inc iPhones and iPads failed to compensate for slowing computer sales. Zhengzhou has a large workforce, and its labor costs are about two-thirds of those in China's wealthier coastal cities, Zhengzhou Deputy Mayor Xue Yunwei said in an interview. That has given Zhengzhou, the capital of Henan province, an advantage in luring investment from manufacturers, he said. "You can't find entry-level workers in Shanghai offering only 1,500 yuan ($234) in monthly salary," Xue said in Beijing. "But we can." Economic growth has averaged 10 percent in the past three decades and that may be sustained by work to sway companies such as Foxconn, Intel Corp and Ford Motor Co to invest inland instead of moving their production to countries such as Vietnam and Bangladesh as wages rise in China's coastal areas. In addition to helping in the recruitment of workers, authorities are trying to attract companies by offering reduced tax rates and preferential access to land. "In the past 30 years, China created what might be the world's greatest miracle by attracting global capital to its coastal cities," Xue said. "The new story for the next few decades will be the inland story." Zhengzhou's economy may grow 13 percent this year and maintain a double-digit pace of percentage growth for the "next few years," Xue said. The national economy may grow 9.2 percent this year and 8.5 percent in 2012, a prediction based on responses made by 15 economists surveyed by Bloomberg. Foxconn, which began exporting goods from its Zhengzhou factory in August, has contributed much to the city's growth, Xue said. The value of Zhengzhou's exports and imports combined will exceed $15 billion this year, triple what it was in 2010, he said. Foreign direct investment in the city, which has a population of more than 8 million, has grown 43 percent in the first 11 months of the year, Xue said. In the whole country, foreign investment gained 13 percent during the same period. To help Foxconn, Nissan Motor Co's local vehicle venture and other companies find workers, Xue said, the Zhengzhou government has encouraged some of the more than 21 million people from Henan working in other parts of China to return to the province. The government has also organized students from 40 universities and more than 100 technical-training high schools in Henan to do internships at plants in the city, he said. Edmund Ding, a spokesman for Hon Hai Precision Industry Co, the Taipei-based flagship of Foxconn, didn't answer several calls to his mobile phones on Friday. Intel announced plans in February 2009 to close down its assembly and test operations in Shanghai and move the work to the western city of Chengdu, capital of Sichuan province. In September of this year, Alan Mulally, CEO of Ford, broke ground on an engine transmission plant in the western municipality of Chongqing. This past year, the average annual wage that private companies paid to urban manufacturing workers in coastal Guangdong province was 21,644 yuan, compared with 16,391 yuan in Hunan and 15,495 yuan in Henan, according to government data. "Nobody was available to meet us three to five years ago when we wanted to persuade them to do business here," Xue said. "But now, all kinds of foreign and domestic companies visit us every week." To make Zhengzhou even more attractive, Xue said the city also wants to spend as much as 30 billion yuan in the next decade to expand its airport to accommodate more cargo transport. The National Development and Reform Commission, China's top economic planner, and the nation's aviation regulator have already approved plans to start building a second runway at Zhengzhou's airport next month, he said. Local authorities want five runways as part of a 30-year blueprint for developing the city, Xue said. The local government hasn't taken on much debt to make these investments, Xue said. Zhengzhou plans to merge about 10 companies the city set up to finance products into three larger entities, each having assets valued in the tens of billions of yuan, he said. These three companies will concentrate on investing in selected industries, infrastructure projects and property development, he said, without giving more details. Xue said the city government wants to make Zhengzhou an industrial base, a transportation hub and a large metropolis. "That's our vision," he said.

World's 1st hotel on aircraft carrier to open - A luxury hotel built on a former aircraft carrier in North China's Tianjin municipality will open at the end of this month, making it the world's first aircraft carrier hotel. It has 148 rooms in total, including two presidential suites, three VIP guest rooms and 137 standard rooms. The aircraft carrier was once the pride of the former Soviet Union's flagship pacific fleet and was sold to Tianjin International Recreation Port in 2000.

Premier Wen Jiabao welcomes Japanese Prime Minister Yoshihiko Noda in Beijing on Sunday. A stable Korean Peninsula is in the interests of both China and Japan, prime ministers of both countries said on Sunday, amid signs of political and financial cooperation as Japan seeks to buy Chinese government bonds. The determination expressed by the two leaders on the peninsula issue is "an achievement" as the death of the Democratic People's Republic of Korea (DPRK) leader Kim Jong-il created uncertainty in Northeast Asia, experts said. Premier Wen Jiabao and his Japanese counterpart Yoshihiko Noda made the call for stability during talks at the Great Hall of the People. Noda kicked off his overnight China visit on Sunday noon, making him the first foreign leader to visit China after Kim's death was announced on Dec 19. This is also Noda's first official visit to China since he came to power in September. "Kim Jong-il passed away, so we are currently facing a new situation in East Asia," Noda told Wen at the start of the talks. Japanese media said Kim's death had shifted Noda's focus from various disputes in relations with China, including territorial disputes in the East China Sea, to the situation in the DPRK. "Both sides believe maintaining peace and stability on the Korean Peninsula is in line with the common interests of all relevant parties," the Ministry of Foreign Affairs said in a press release after the meeting. The statement said Beijing and Tokyo hope relevant parties will continue efforts for an early restart of the Six-Party Talks. The talks, which also involve the DPRK, the Republic of Korea (ROK), the US and Russia, focused on Pyongyang's nuclear program. The DPRK pulled out of the talks in 2009. Liu Jiangyong, an expert on Japan studies at Tsinghua University, said Japanese leaders rarely travel in times of major international events, like the demise of Kim.

China's largest rail vehicle maker, CSR Corp. Ltd, over the weekend launched its first test train that features speeds reaching up to 500 km per hour. The six-car train with a fairshaped head is the newest in the CRH series. It has a maximum tractive power of 22,800 kilowatts, compared with 9,600 kilowatts for the CRH380 trains currently in service on the Beijing-Shanghai High-Speed Railway, which hold the world speed record of 300 km per hour. The grey-color train carrying testing and data processing facilities was designed and produced by CSR Sifang Locomotive & Rolling Stock Co, Ltd (Sifang Locomotive), a CSR subsidiary based in the coastal city of Qingdao in eastern Shandong province. Ding Sansan, the company's chief technician, said the concept of the the super-speed train design was inspired by China's ancient sword. The bodywork uses plastic materials reinforced with carbon fiber. Shen Zhiyun, a locomotive expert and academician with both the Chinese academies of sciences and engineering, said the testing of the super-speed train with speeds of up to 500 km per hour will provide useful reference for current high-speed railway operations.

Hong Kong*:  Dec 26 2011 Share

Despite its heavy debt burden, China Tianrui Group Cement got the thumbs-up from investors yesterday on its debut, with its share price soaring 22 per cent. The mainland company plans to grow through acquisitions. The cement producer's share price closed at a high of HK$2.94 yesterday when it started trading on the main board of the Hong Kong Stock Exchange, with 1.6 million shares changing hands. Tianrui's offer share price of HK$2.41 was at the low end of its price range, and raised net proceeds of HK$914.6 million. The company plans to use 95 per cent of its initial public offering proceeds to repay debts to JP Morgan and International Finance Corporation (IFC), a member of the World Bank, according to its prospectus. Tianrui had previously breached debt covenants with JP Morgan and IFC, but said that on Tuesday it had obtained waivers from the breaches. IFC has lent US$50 million to Tianrui, which also has a 1.68 billion yuan credit facility from JPMorgan. "We will definitely repay our bank loans on time," Tianrui executive director Liu Wenying said during its listing ceremony yesterday. But, the prospectus warned, the group was "highly leveraged, and our business could be adversely affected by our indebtedness". As of June 30, the company's borrowings totaled 5.38 billion yuan and its gearing ratio was 57 per cent. Tianrui would raise more funds through issuing new shares and bonds, as well as through bank borrowings, Liu said. It also planned to acquire other cement companies. Tianrui has an unused credit facility of 2.8 billion yuan, Liu said. "The government supports our growth, so banks will finance us." Meanwhile, SPT Energy also made its debut on the HKEx (SEHK: 0388) main board yesterday, when its share price rose to HK$1.25 from its offer price of HK$1.23. The private mainland provider of oilfield services raised HK$349.4 million net proceeds from its IPO, and 15 million SPT shares changed hands. SPT would make acquisitions in China and overseas, chairman Wang Guoqiang said, without elaborating.

Hong Kong-listed shares of Yanzhou Coal Mining (SEHK: 1171), China's fourth-largest coal miner, jumped yesterday, buoyed by its acquisition of Gloucester Coal, the mainland's second-biggest Australian takeover deal. The transaction, which helps Yanzhou secure more coal mines and gain port access in Australia, is the latest sign that Beijing intends to increase outbound investments in keeping with the country's rising economic might. Yanzhou will merge its Australian assets with Gloucester to create Yancoal Australia, which will be listed on the Australian Securities Exchange. Shareholders of Gloucester will be paid A$3.20 (HK$25) for each share and get 23 per cent of the combined Yancoal Australia, which values the acquisition at A$2.1 billion. The remaining 77 per cent of Yancoal Australia will be held by Yanzhou. The takeover, subject to approvals by shareholders and regulators in China and Australia, follows Yanzhou's A$3.1 billion buyout of Felix Resources in 2009, the mainland biggest acquisition in Australia. "The acquisition paves the way for Yanzhou's aggressive expansion in Australia," Changjiang Securities analyst Ge Jun said. "In the short run, the takeover is not expected to bring handsome profits but the consolidation will generate huge profits in the long term if the Australian businesses are well managed." Yanzhou's H shares climbed 6.62 per cent to HK$16.74 yesterday and the mainland-listed yuan-denominated A shares rose 1.41 per cent to 21.58 yuan. Gloucester, which has mines and projects in New South Wales and Queensland, as well as port assets, jumped 22 per cent to A$8.55 yesterday, the biggest single-day increase in 20 months. Yanzhou is required to list at least 30 per cent of its local assets in Australia by the end of next year, part of the commitments it made to the regulators for the approval to take over Felix. Rising demand for coal in China has prompted Yanzhou's overseas activity. The company, which also has pending projects in Inner Mongolia and Shaanxi, plans to increase output by 25 per cent a year by 2015. Based on the acquisition price of Gloucester, Yancoal Australia shares will be valued at A$10.16. The Chinese company promises to compensate shareholders as much as A$3 a share if Yancoal Australia's price drops below A$6.96 in the 18 months after the deal is sealed. "Chinese companies' overseas acquisitions are always difficult," said Professor Zhou Dunren, of Fudan University. "It all comes down to whether the Chinese bosses can efficiently manage the foreign assets after the close of the deals." Dealogic data shows Yanzhou's bid for Gloucester was the country's seventh-largest outbound acquisition deal this year. The total outbound acquisitions this year amounted to US$61 billion, up 20 per cent from last year. Singapore-listed commodity trader Noble Group, which owns 64.5 per cent of Gloucester, said it would book a one-time gain of about US$200 million over the deal.

Luxury hotel operator Shangri-La Asia (SEHK: 0069) says it will build a multi-use complex, including a Traders Hotel, on a recently acquired site in Hung Hom. The 15-storey hotel, which will be its fourth in Hong Kong, will have 698 rooms with a minimum size of 344 sq ft, most offering unobstructed views of Victoria Harbor. The complex will also include two podium floors for retail, lifestyle and entertainment facilities to support the surrounding office and residential buildings. A transport interchange within the building would offer access to surrounding areas including the upcoming cruise terminal at Kai Tak, it said. "The area around Hung Hom Bay is going through a redevelopment, and with the facilities offered at the new complex we will be able to offer valuable amenities to back the surrounding community," it said. On Thursday, the Lands Department announced the hotel site had been awarded to Shangri-La Hotel (Kowloon), a wholly owned subsidiary of Shangri-La Asia, for HK$2.33 billion. The site has a potential gross floor area of 62,495 square metres, of which 17 per cent will be used for the transport interchange. The group operates and owns two five-star hotels - the Kowloon Shangri-La in Tsim Sha Tsui East and Island Shangri-La in Admiralty - and the four-star Traders Hotel in Western. Shares of Shangri-La Asia rose 1.5 per cent to close at HK$13.52 yesterday. Shangri-La is part of the Kerry Group, which publishes the South China Morning Post (SEHK: 0583) through the SCMP Group. Meanwhile, Sino Land confirmed it secured a low-density residential site in Mui Wo, Lantau Island, for HK$55 million, or HK$1,113 per sq ft of developable gross floor area. The market had expected the winning bid to be at least 53 per cent, and up to 215 per cent, higher. The site will provide a total gross floor area of 4,590 square metres, of which 1,580 will be designated for commercial use. A maximum of 50 homes can be built on the site.

Get on with it - that was one of the main messages from people who responded to the third and last round of public consultation on the West Kowloon Cultural District proposals. They also showed more interest in the "software" - the artistic direction and programming for the arts hub - than in the buildings, or "hardware", said the chairman of the consultation panel, Professor Stephen Cheung Yan-leung. "Their view is that we should implement the project as soon as possible. People are going to be fed up if there is yet another round of consultation," Cheung said. "We should start discussing the cultural software now that the hardware development is about to start." He said a quarter of the 1,172 submissions received during the month-long exercise - the highest proportion - related to the future operational issues of the arts hub. These respondents were concerned with the artistic direction, programming and financing of the hub and called for more collaboration with professionals to design a practical cultural policy. Only about 17 per cent of the feedback touched on the overall layout. Most of the comments were in support of the development plan for the 42-hectare site, devised by British architect Norman Foster, which features a large park with more than a dozen arts venues and museums. The respondents also welcomed the addition of floating arts platforms and piers, elements of rival designs by Rocco Yim Sen-kee and Rem Koolhaas. Three per cent of the submissions called for early implementation of the project, which has been on the drawing board for more than a decade. There is also a strong preference for small businesses rather than megastores in the commercial areas. The design blueprint for the cultural district would be submitted to the Town Planning Board by the end of the month after the design team refined it in light of the submissions, said Dr Chan Man-wai, project delivery director of the West Kowloon Cultural District Authority. Changes will include improving the north-south connection on the site by adding more roads, along with more open space to improve air flow. Competitions will soon be arranged for the design of several buildings including the Cantonese opera centre and contemporary arts museum, M+. While more changes were suggested in the submissions - such as a theme for the park, minimising the residential area and moving the buildings further away from each other - Cheung said the project would have to start because "people are suffering from consultation fatigue".

A customer at the SK-II counter in Seibu, Mong Kok. Aggressive campaigns last month in the property, cosmetics, jewellery and other retail sectors propelled advertising spending in Hong Kong to a new record high this year. Media-monitoring firm admanGo estimated that advertising expenditure last month grew 15 per cent to reach HK$3.3 billion, up from HK$2.87 billion a year earlier. "Advertisers escalated their ad budgets to target the rising number of mainland travellers visiting the city and the early celebration of the Lunar New Year holiday next month," Jennifer Ma, the director of sales and marketing at admanGo, said. That buoyant market sentiment helped the total amount of advertisement spending from January to November rise 16 per cent to an all-time high of HK$32.45 billion from HK$27.89 billion in the same period last year. More than 90 per cent of advertising each month this year went to campaigns on television and in newspapers, magazines and outdoor media. The city's banking and investment services industry remained at the top of the league last month, with campaigns totaling HK$328.46 million. This group, however, saw a 1 per cent year-on-year decline in advertisement spending due to a decrease in budgets for marketing credit cards and warrants. Advertisers in the property industry registered the biggest jump in expenditure last month, with a 51 per cent year-on-year increase to HK$188.31 million. Ma said 65 per cent of that spending went to campaigns for residential properties. The MTR, operator of Hong Kong's urban railway system and one of the biggest property landlords, was the city's No 1 advertiser last month. The company spent HK$27.06 million, most of which went to help promote its latest residential-property joint ventures. These are Festival City 3 in Tai Wai and The Wings in Tseung Kwan O. The cosmetics and skincare industry registered the second-highest year-on-year growth in advertising spending last month, up 37 per cent to HK$302.65 million. SK-II, a brand of consumer goods giant Procter & Gamble, led all advertisers in the cosmetics group, with campaigns totalling HK$24.37 million. Advertisers in the jewellery, watches and luxury products group posted the third-highest year-on-year rise in advertising spending, up 34 per cent to HK$164.56 million. Chow Tai Fook Jewellery led the sector with HK$17.55 million in advertising campaigns. The company, controlled by New World Development chairman Cheng Yu-tung's family, raised HK$15.75 billion in its initial public offering this month. Spending by the retail group last month rose 22 per cent year on year to HK$161.31 million. Supermarket chain ParknShop was its industry's leading advertiser with campaigns totaling HK$25.46 million.

Christmas lights have been shining in Hong Kong for weeks already and ahead of the big day tomorrow this couple took time out yesterday to stare longingly into each other's eyes, silhouetted against the backdrop of the Christmas tree in Statue Square, Central. With time fast running out for buying opportunities, last-minute shoppers thronged the city's malls in search of presents for family and friends, glad to be in the warm as temperatures across the city fell, with the minimum for Christmas Day forecast to be 10 degrees Celsius.

Fanny Chan fostered Google, one of the dogs, and says it's hard to understand why instructor Raymond Cheung has claimed ownership. A row has broken out over the custody of Hong Kong's only two guide dogs, Google and Iris. Raymond Cheung Wai-man, the city's sole licensed instructor, resigned from the board of the Hong Kong Guide Dogs Association on Tuesday after he told Google's foster family he would take the animal for seven days' training. In his e-mail announcing his move, he also claimed ownership of both dogs. While Cheung said the dogs, donated by the Taiwan Guide Dog Association, had always belonged to him, the Hong Kong association said it considered the dogs "stolen" and threatened to sue him. Google was flown to the city in January, and Iris arrived three months later - the first guide dogs in Hong Kong since 1975. They have been staying with foster families. Tsang Kin-ping of the Hong Kong association said it would take legal action if Cheung refused to return the dogs to them. "We've sought legal advice, and we think it's a strong case for us," Tsang said. "Legally we own the dogs. Now it's like they're stolen." The association would look for a new instructor overseas, he said. Cheung confirmed the two dogs were with him, and said the Taiwan association gave him the dogs because of his qualification as an instructor. They were never directed to be given to the Hong Kong group, a recently established non-governmental organisation. He quit because he did not agree with its vision, but declined to elaborate. "From the very beginning, the dogs belonged to me. I will continue to train the dogs and they will be ready around June." Cheung said he would give the dogs to people and associations in need when they were ready, but would not say how he would communicate with the Hong Kong association on the arrangement. Fanny Chan Yim-fan, who fostered Google, said Cheung had requested the seven days of training a week ago, and she handed the dog over at 5pm on Tuesday in Causeway Bay. About half an hour later, she received an e-mail from Cheung who said he would leave the association and the dogs belonged to him. "I'm very worried. I treated him like my son," she said. "It's really difficult for me to comprehend what's happening. I haven't been able to sleep." She said she met Cheung on Wednesday when Google was taken to a vet, who found the tendons in his hind legs injured. Cheung refused the family's request to let them celebrate Christmas with Google, Chan said. William Chen, general manager of Taiwan Guide Dog Association, said it donated the dogs to Cheung because they believed he could train them well. "If it had not been for Raymond, we wouldn't have sent the dogs to Hong Kong." According to the Society of the Blind, about 11,500 Hongkongers are completely unable to see. But guide dogs have yet to become common, with regulations banning canines from many public areas.

 China*:  Dec 26 2011 Share

Chinese investors' share of prime London home purchases in the most expensive neighbourhoods fell by more than half in the third quarter as stock market declines hurt spending power, Hamptons International said. Buyers from the world's second-largest economy accounted for 4.9 per cent of sales in Chelsea, Kensington, Knightsbridge and Belgravia, down from 12.6 per cent in the previous quarter, said Adam Challis, of the London-based property broker. "A lot of Asian wealth that's spent on property is tied to the performance of equity markets," Challis said. "When they wobble, there's less money to spend." Chinese buyers have been increasing their share of London home purchases since Beijing acted to cool the real estate market and avoid a bubble. Foreign investors have also been attracted to London since the British pound lost value against a basket of currencies since the housing market peaked in the third quarter of 2007. Buyers from Asia accounted for most new home purchases in central London for the first time in the six months to the end of April, according broker Knight Frank LLP. Most were from Hong Kong and Singapore. Challis predicts values in expensive neighbourhoods may end up rising as much as 13 per cent this year as buyers compete for a limited number of properties. "Prime owner-occupiers move less often, further restricting the supply of properties at any one time," he said.

The purchase by China Three Gorges of the Portuguese government's stake in utility EDP for US$3.5 billion highlights China's appetite for physical assets in troubled economies and its ability to make its bids attractive with the promise of financial support. China is looking to pick up assets such as infrastructure and utilities in places like Europe at a bargain, rather than only buying the bonds of countries facing economic difficulties. To win such deals, it is able to harness a formidable advantage that few other countries or companies possess - alliances between its state-owned industrial firms and state-owned banks, with the backing of the government. In the case of Three Gorges, what it said was its first overseas acquisition amounted to a whopping €2.7 billion for just over a fifth of EDP, bought at a 53 per cent premium to EDP's share price. "More and more Chinese companies are looking for investment opportunities in Europe and basic infrastructure projects could be a good choice, as the heavily indebted euro-zone members tend to offer relatively low pricing of their assets," said Zhang Zhiwei, chief China economist at Nomura in Hong Kong. "Just as happened in the 1997 Asian financial crisis and the 2008/2009 global financial crisis, another window of opportunity is opening for Chinese companies to make more overseas investments, following the unfolding euro-debt crisis." The Three Gorges deal comes just two weeks after another development that suggests Beijing is keen not to rely too much on investments in European and other government bonds. China's central bank planned to create a new vehicle to manage investment funds worth US$300 billion that would be focused on improving returns on the world's largest stockpile of foreign exchange reserves, a source said. In a further sign of the government's keenness to diversify its foreign exchange reserves, China Investment Corporation (CIC), the US$410 billion sovereign wealth fund, is set to receive additional funding of up to US$50 billion, two sources said. The deal by Three Gorges serves as a reminder that such investments will not come only via the central bank or sovereign wealth fund, but also from state-owned firms, many of which are sitting on piles of cash themselves. Beijing hopes such investments will not run up against the kind of resistance that CIC might meet if it looks to buy up infrastructure or other assets in Spain or Greece, for instance. "Let's stick to it being a commercial deal and not politicise it," said Li Junfeng, deputy head of the Energy Research Institute under the National Development and Reform Commission, the economic planning agency. Relationships with some of the banks appear to have proven crucial as bargaining chips. As part of the agreement, Three Gorges said it would promote lines of financing for Portuguese banks and other companies, potentially including capital for Millennium bcp, the country's largest listed bank.

The mainland will upgrade to the next generation of internet by 2015, clearing the biggest obstacle to surpassing the United States as the biggest nation in cyberspace. Premier Wen Jiabao held a State Council meeting yesterday to lay down a timetable for the transition from to internet protocol version 6 (IPV6) from the current IPV4. Developed by the US military, IPV4 now provides more than four billion IP addresses, all of which had been carved up by countries, with the majority going to the US. IPV6 is a new generation protocol developed by an international web-standards group known as the Internet Engineering Task Force and could provide a practically unlimited number of IP addresses, giving everyone and everything on earth a place in cyberspace. China's official timetable requires regional trials to be completed by the end of 2013 and country-wide deployment of IPV6 by 2015. Some developed countries, such as Japan and South Korea, have already finished the upgrade and allow their internet infrastructure to support IPV4 and IPV6 simultaneously. The US, with so many IPV4 addresses in stock, has lagged behind other developed countries in preparing for the change, but the federal government has promised to start the transition by 2014. However, its presence on the internet has been severely limited by the number of IPV4 addresses available to it - a fraction of those available to, say, computing giant IBM. IPV6 will significantly increase China's presence, and thereby influence, on the internet, according to information technology experts. A professor at Tsinghua University who was involved in the construction of China's first experimental IPV6 network said IPV6 would also result in the tightening of government control on cyberspace. Because China had a limited number of IPV4 addresses at present, many internet users appeared on the internet using the same internet identity, making it difficult for the government to trace the whereabouts of content producers. "Under IPV6 every internet user has a unique identity and every packet of information they send can be traced to its origin," the professor said, requesting anonymity. "That simplifies censorship."

Vice-president Xi Jinping speaks to a class of schoolchildren in a village on the outskirts of Bangkok yesterday watched by Thai Prime Minister Yingluck Shinawatra. Vice-president Xi Jinping and Thai Prime Minister Yingluck Shinawatra visited a school in a village near Bangkok yesterday that was forced to suspend classes in late October because of severe flooding, giving students tablet computers and souvenirs. The Chinese government has offered a US$400 million loan to help Thailand rebuild areas hit by severe flooding since July. The worst flooding in half a century swamped more than two-thirds of the country and affected millions of people. On Thursday, the first day of Xi's visit to Thailand, he and Yingluck agreed to deepen co-operation in areas including finance, trade, infrastructure construction and water projects. The two sides signed two agreements and four memorandums of understanding on Thursday, including a 70 billion yuan (HK$86 billion) currency swap and a high-speed railway construction deal, the Bangkok Post reported. The high-speed railway project, which will link Bangkok and Chiang Mai, will have other routes added later, the report quoted Thai government spokeswoman Thitima Chaisang as saying. The currency swap agreement, which will last for three years but could be extended, aims to strengthen financial co-operation and boost trade and investment between China and Thailand, China's central bank said in an announcement on its website on Thursday. Analysts believe the agreement is also a positive sign for the internationalisation of the yuan. Other agreements covered water use and clean energy in rural Thailand, the Bangkok Post report said. At Thursday's meeting with the Thai prime minister, Xi said China was willing to participate in Thailand's flood relief effort and its long-term disaster relief planning. Xi reiterated a bilateral trade target for 2015 previously set by the two countries and said they should explore more ways to co-operate economically so that bilateral trade volume could reach US$100 billion by 2015, Xinhua reported. According to Chinese customs data, trade between China and Thailand totalled nearly US$53 billion last year. Xi suggested the two countries should enhance collaboration in railways, finance, disaster relief, marine and military affairs and law enforcement. He also expressed hope that order and the safety of ships and their crew along the Mekong River could be guaranteed by greater co-operation between the two countries. The two governments should at the same time deepen collaboration in culture, language teaching and tourism, he said. For her part, Yingluck suggested more bilateral co-operation in infrastructure construction, water resources, the development of cheap, clean energy, human resources and education. She hoped for great annual growth in bilateral trade, investment and tourism and said Thailand was willing to maintain safety on the Mekong River. She added that she is planning to visit China later.

Hong Kong*:  Dec 25 2011 Share

Ian Fok Chun-wan, second son of late tycoon Henry Fok Ying-tung, broke his silence yesterday over the lawsuit filed by his younger brother in a fight over their father's estate. He said he was distressed over the misunderstandings caused by accusations against him by his brother Benjamin Fok Chun-yue, the third son from Henry Fok's first marriage, according to a statement released by his solicitors. The accusations were "not consistent with the facts" and might have been caused by individuals' misunderstandings, he said. "Ian Fok pledges to seniors, friends and members of the public who care about Henry Fok's unblemished reputation that he has been acting in accordance with Henry Fok's instruction and last wishes over the years. He has been executing his duties loyally and honestly. And he has been doing the best to maintain the family's unity and harmony," the statement said. Ian Fok deeply regretted any damage to his integrity or disrespect to Henry Fok brought by the case, and he hoped it would be resolved soon, it said. On Monday, Benjamin Fok filed a writ in the Court of First Instance aiming to dislodge Ian Fok from his role as executor of their father's estate. He claimed Ian Fok had pocketed HK$1.4 billion from the estate. He also sought to remove his 85-year-old aunt as co-executor. He named 14 other co-defendants, including his 11 other siblings, with Henry Fok's eldest son, lawmaker Timothy Fok Tsun-ting among them, his mother and Henry Fok's two other widows, who are all beneficiaries of the estate. Henry Fok, a former vice-chairman of the Chinese People's Political Consultative Conference and a businessman who won the trust of mainland authorities, died in 2006. He had three wives and 13 children. Worth an estimated US$3.7 billion in 2006, Forbes then ranked Fok the 181st wealthiest person in the world. Benjamin Fok alleges Ian Fok distributed and took assets from the estate without other executors' knowledge or consent and failed to provide the information and authorisation needed for its administration. He is seeking to recover for the estate 350 ordinary shares registered in the name of a company that is part of the late tycoon's empire, the entire shareholding in three offshore companies and assets held in three offshore accounts. He alleges that Ian Fok distributed assets of the estate to himself and "issued threats" to co-executors and other beneficiaries. Ian Fok said he would not comment further on the case at this stage.

Anglican archbishop Paul Kwong on Friday accused Fa Yuen Street hawkers of being selfish and "cold-blooded" for protesting against plans to dismantle hawker stalls at night. In a Christmas message discussing topical issues, Kwong said recent fervent protests showed the hawkers were more worried about their businesses then the victims of a fire that killed nine people. “I simply cannot imagine that Hong Kong people have become so cold-hearted as to place properties or making a living above life,” Kwong said, describing the “pervasiveness of the individualism that upholds vested interests only” as the “most worrying phenomenon in Hong Kong”. The government proposed dismantling hawker stalls after business hours as a safety measure following the early morning inferno on November 30. It dropped the idea after hawkers agreed to remove their goods at night. The hawkers have since complained that other measures, such as losing their licences for repeated breaches and stricter enforcement of existing rules, were too harsh and could hurt their business. Kwong said that the Fa Yuen Street fire was no “trivial matter”. “All life is precious,” stressed the archbishop. He also said selfish attitudes were evident in the right-of-abode issue involving foreign domestic helpers. “Upholding personal interests and being self-centred is the breeding ground for xenophobia,” Kwong said. He urged Hongkongers to not to think foreigners would “take away our resources, job opportunities and welfare”. In his Christmas message, Catholic Bishop John Tong Hon also urged people to “get rid of selfishness”. He cited the case of a two-year-old mainland girl left lying in the street in Foshan, Guangdong province, in October. The child had been run over by two cars and was left to die while being ignored by passers-by. Tong said this was “a warning call” to be more concerned about people in need. Tong also said the faithful should pray that the government, the wealthy, and businesses would work together to resolve Hong Kong’s housing problems.

West Kowloon Cultural District Authority Chief Executive Officer Michael Lynch - Get on with it. That was one of the main messages from people who responded to the third and last rounds of the public consultation on the West Kowloon Cultural District proposals. They also showed more interest in the “software” – the artistic direction and programming for the arts hub – than the buildings, or “hardware”, consultation panel chairman Professor Stephen Cheung Yan-leung said on Friday. “Their view is that we should implement the project as soon as possible. People are going to be fed up if there is yet another round of consultation,” Cheung said. “We should start discussing the cultural software now that the hardware development is about to start.” Cheung said more than 1,100 submissions were received during the month-long exercise. A majority supported the overall layout of the development plan for the 42-hectare site, devised by British architect Norman Foster. This features a big park with more than a dozen arts venues and museums. A quarter of the submissions were about artistic direction and programming. The design blueprint for the cultural district will be submitted to the Town Planning Board by the end of the month. This is after the design team has refined it using feedback from the consultation. Changes will include improving north-south connection on the site by adding more roads and adding open spaces to improve air flow.

Testing the air quality next to traffic on Lockhart Road in Causeway Bay. There was little change in the readings before and after the ban as most drivers had already started switching off their engines. The ban on idling engines could improve air quality by at least 30 per cent, according to a test conducted a day before and a day after by the South China Morning Post (SEHK: 0583). However non-compliance as a result of lax enforcement and polluting vehicles could also offset these potential benefits. The Post took measurements at idling hot spots between 7pm and 9pm on December 14 and 16, in Causeway Bay and Mong Kok, to assess the effectiveness of the ban, introduced on December 15. Using a hand-held device that automatically registered air quality data every two seconds, the Post measured the carbon monoxide reading at each hot spot for about four to five minutes on both days. Air quality improvements were recorded in parts of Tung Choi Street, Mong Kok, where red minibuses line the left and middle lanes on a 100-metre stretch between Fife Street and Argyle Street. On the day before the ban was introduced, about eight out of 15 red minibuses parked on the street had their engines idling. The new law allows idling for a maximum of six buses for the three bus routes operating from the street. On the second day, only six out of 16 buses were found idling. Readings taken during a four-minute walk along the street showed carbon monoxide readings had dropped by 30 per cent from 7,400 micrograms on the first testing day to 5,200 micrograms. There was also a noticeable improvement near a news stand close to the end of the street, where the average reading fell from 7,300 micrograms to 3,100 micrograms. The stand owner said he felt the street was becoming "a lot more peaceful" than before. But air pollution readings fluctuated outside an electronic product shop in the middle of the street, rising from 7,200 micrograms to 7,700 micrograms. There was also an increase in Fa Yuen Street near Tung Choi Street, possibly due to more buses idling. However, a semi-covered red minibus station next to Langham Place in Mong Kok remained a hot spot despite the ban, with more than 12 minibuses inside the station running their engines on both days the measurements were taken. Average readings from a five-minute air sampling at one of the passenger queuing areas hit more than 18,000 micrograms on the first day, and a huge 59,000 on the second day. The Environmental Protection Department (EPD) sets the maximum hourly allowable carbon monoxide levels at 30,000 micrograms. A spokesman said the Post's findings, based on these short periods of measurement, should not be benchmarked against the department's objectives. Dr Lau Ngai-ting, who is with the University of Science and Technology's environment division, said longer measurement periods would be needed to ascertain the benefits of the ban. But he wondered if other emission sources, including moving vehicles, might have overshadowed the improvements. "No doubt there are incremental benefits if engines are switched off, but these can also be offset by other factors like moving traffic nearby," Lau said. This idea was supported by the Post's findings. At one point on the second day, the maximum reading soared to a maximum of 157,000 micrograms as a diesel minibus overtook a LPG-powered bus and closed in on the air sampling device. "The reading was quite consistent until the diesel bus came closer and pushed the reading to this extremely high level," said Nancy Fong Siu-pui, a research student who helped the Post with the measurement. Lau said clamping down on idling engines was just one way of reducing pollution. Other measures, such as tighter vehicle emission standards and monitoring of ageing and polluting vehicles, were also required. People working in the area said they had not yet seen officers enforcing the ban. One elderly worker said the pollution was better in the cooler weather, but worse in summer. "I am used to it," he said. The EPD did not respond directly when asked if officers patrolled the bus station and issued warnings to drivers breaching the ban, but it promised to refer the issue to the Transport Department. Across the harbour in the section of Lockhart Road between Cannon Street and Percival Street, there was little change in the pollution readings. This was because most drivers had already started switching off their engines before the ban, with no need for air conditioning now the weather has cooled down.

The Link REIT (0823) strengthened its foothold in Tseung Kwan O yesterday after agreeing to buy Maritime Bay Mall for HK$588 million from Sino Land (0083). The mall - consisting of a gross floor area of 63,466 square feet - is the trust's second acquisition in the district. The REIT currently has a portfolio of 11 million sq ft of retail space and about 80,000 parking spaces. So the mall will account for just 0.8percent of its total assets. But the acquisition is "a good investment opportunity," consistent with its "yield accretive" investment policy, The Link said. Rental yield of Maritime Bay mall is estimated a 4.8percent - slightly above the trust's overall rental returns. The mall generated after-tax profit of HK$109.4 million for the year ended June. The Link will pay for the purchase by cash and existing loan facilities, pushing up its gearing ratio to 17.4percent from 16.7percent. The deal is expected to be completed by January 20. In June, the trust bought Nan Fung Plaza - also in Tseung Kwan O - for HK$1.17 billion where rents have already risen 4percent. The Link units rose 0.4percent to HK$28 before the announcement.

Holidaymakers are having to pay up to double for Christmas and Lunar New Year package tours as demand soars. Wealthy mainlanders with a yen for travel have added to the Christmas crush at holiday hot spots in the region, pushing up flying costs and the prices of getaway resorts. Travel Industry Council figures show revenue from outbound package tours reached up to HK$900 million in the first two weeks this month - 27 percent up on last year. The council said earlier that demand for early Christmas tour packages has risen while those for Lunar New Year are at a peak. The first day falls on January 23. Some travel companies are charging up to HK$20,199 for a five-day tour to South Korea over the Lunar New Year, double the usual price. A five-day tour to Beijing has risen 90 percent to HK$13,888. Hong Thai deputy general manager Daniel Chan Kin-pang said the South Korea tour is a special case - tourists get to travel with a celebrity, stay in a five-star hotel and fly business class. The prices for most tours over Christmas have risen less than 10 percent, he added. Taiwan and Korea are the most popular Christmas destinations. Taiwan tours started to get fully booked before the end of October. The biggest price increases are on tours over the Lunar New Year and to long-distance destinations such as the United States, Australia and New Zealand. The increases are more than 30 percent for these three, and the main reason is the rise in air fares. Another spokeswoman said a six- day tour to Dubai costs HK$11,999 while a 10-day tour to Northern Europe is about HK$40,000. The price increases are about 10 percent higher than usual, she added. Wing On Travel assistant general manager (China) Daisie Sin Pui-fong said Shangdong province and Hainan Island are the most popular mainland destinations for Christmas and were fully booked last month. Prices have increased by almost 10 percent. Wing On has organized a new five- day tour to Hokkaido in Japan on which tourists will be taken to Michelin-rated restaurants. Sin said the tour costs almost HK$30,000 but was fully booked last month. Sin attributed this to the HK$6,000 handout from the government. Meanwhile, the Immigration Department estimates that arrivals and departures will hit 7.8 million people from today until January 3 - an 11 percent increase year on year. Lo Wu counters will reach peak use on Sunday, with 185,000 people leaving Hong Kong through the border crossing. The good news is new ticketing rules will cut disruptions if red or black outbound travel alerts are issued. Travelers will get more time and flexibility to make arrangements, provided they hold Cathay or Dragonair tickets bought online or through travel agents. All ticket types can be rebooked or rerouted with no handling fee. However, only those holding T1 tickets - shown on e-ticket itinerary receipts - will have the handling fee waived should travelers cancel trips and seek refunds.

The Hong Kong government said a dead bird found in New Territories tested positive for the H5N1 avian flu virus, the second case in a week. The carcass of the Oriental magpie robin, a common resident bird in Hong Kong, was found at Tin Shui Wai on Dec. 17, the government said. The government added it will continue to conduct inspections of poultry farms to ensure that precautions against avian flu have been implemented. On Wednesday, Hong Kong health authorities culled all 17,000 live poultry in a wholesale market after a dead chicken there tested positive for H5N1, the first new case since 2008. The city's government has raised the alert level regarding the virus to "serious" from "alert," and suspended live poultry imports for three weeks. Hong Kong has occasionally detected bird flu in poultry, but there have been no major outbreaks since 1997, when the virus killed six people and led to the slaughter of 1.5 million birds in the territory.

 China*:  Dec 25 2011 Share

A worker at a traditional Chinese medicine store in Shandong Province weighs herbal medicines during yesterday's winter solstice. Chinese people take herbal medicines in winter to dispel the coldness.

A NEW bridge expressway running across the Yangtze River will open tomorrow to facilitate traffic flows between Shanghai and Qidong as well as other cities in neighboring Jiangsu Province. The construction authorities said the bridge expressway, also part of the national G40 expressway between Shanghai and Xi'an in Shaanxi Province, is scheduled to open tomorrow, on Christmas Eve. The Chongming-Qidong Bridge link will enable significantly shortened driving times between Shanghai and Qidong and will work as an express gateway to boost logistics and travel, said local government officials. The 52-kilometer bridge complex starts from Shanghai's Chongming Island, runs across the Yangtze River and ends at the coastal city of Qidong in Jiangsu. The road will connect to the local Yangtze River Tunnel Bridge expressway that runs between the Pudong New Area, Chongming and Changxing islands. The new link means a drive from downtown Shanghai to Qidong and some nearby Jiangsu cities will be cut to around one hour, less than one-third the current time needed. Shanghai's container ports in Pudong will be only about 35 minutes' drive away from Qidong. The route will also benefit air travelers heading from Jiangsu to Pudong International Airport as a drive from Qidong to the Pudong airport will take only 45 minutes, officials said. Officials said the planned toll charge will be 0.6 yuan per kilometer on the bridge – equal to the rate on other local expressways. The project cost about 8.2 billion yuan.

China's railway ministry plans to cut its annual railway investment by 15 per cent next year to 400 billion yuan (US$63.10 billion), Xinhua news agency reported on Friday. The moderate scale-back in spending comes after a deadly crash between two Chinese high-speed trains earlier this year that sparked public fury and forced Beijing to slow the country’s rapid railway expansion. Slower investment could reduce financial strains on the heavily-indebted Railway Ministry, China’s largest bond issuer after the treasury and with outstanding debt of 2.23 trillion yuan (US$351.8 billion) as of the end of September. Railway infrastructure investment directly accounted for only about 3 per cent of China’s overall capital spending last year. To support the cash-strapped sector, Beijing has cut taxes for buyers of the Railway Ministry’s bonds between this year and 2013. Xinhua said the Railway Ministry would start construction of 6,366 kilometres of new train lines next year. Since the train accident in July which killed at least 40 people, construction of new high-speed trains in China has ground to a near halt.

Vice-President Xi Jinping's itinerary during his three-day visit this week to Hanoi, Vietnam's capital, underscored Beijing's determination to improve bilateral ties amid maritime territorial disputes. However, Beijing also took care to avoid a domestic backlash from those accusing it of sidelining China's national interests. Video footage of Xi and Vietnamese Communist Party chief Nguyen Phu Trong hugging each other before their talks on Wednesday was not aired on China Central Television's main news bulletin. Analysts said that showed Beijing was exercising caution to avoid controversy at home. Xi yesterday met Vietnamese Prime Minister Nguyen Tan Dung, who said last month that China used force nearly four decades ago to occupy the disputed Paracel Islands in the South China Sea. Dung softened his tone yesterday, saying he was thankful for China's support of Vietnam. For his part, Xi reiterated his intention to enact an agreement - reached between President Hu Jintao and Trong in October - to maintain peace over the disputed isles. Xi, who ended his visit with a meeting with young communists from both countries, said both countries ought to strengthen bilateral co-operation. "Continuing the friendly ties between China and Vietnam from generation to generation is the historic duty that is unshakeable to the leaders, people and especially young people of the two countries," Xi said. Chinese officials said Xi's trip was aimed at bolstering bilateral ties and that the South China Sea disputes should not be a major focal point. Some Chinese commentators and internet users have criticised Beijing for not taking a tough approach against Vietnam. A commentary published in September by the nationalist Global Times even said Beijing should declare war in the South China Sea. "China wants to set aside disputes first, and there is concern that Vietnam will be more inclined to the United States if China is too tough," said Ni Lexiong, a Shanghai-based military analyst. "Some people may find it hard to see Beijing and Hanoi becoming too friendly." Xi and the Vietnamese leaders he met pledged to maintain stability in the South China Sea, Xinhua reported. Vietnam News, a state-owned newspaper, reported yesterday that Hanoi had affirmed its readiness to resolve the territorial disputes through peaceful negotiations.

The annual container traffic of Shanghai port has reached 30 million TEUs on Friday, which is a world record high, according to the China Communications Ministry. Shanghai port, which started container traffic in 1978, has witnessed fast development of container traffic, with the container traffic volume reaching 10 million TEUs in 2003 and 20 million in 2006. The port became the world's busiest port in 2010, with the largest goods volume handling capacity and container traffic volume. Experts point out that fast development of the container traffic in Shanghai port underscores the impact of China's sustained economic growth on global trade patterns, as well as the port's own efforts to upgrade its traffic system and port environment to gain a better competition edge. Statistics from the ministry show that during the Jan-Nov period the country's above-designated-size ports had handled 8.32 billion tonnes of goods, an increase of 13 percent to that of the last year, and the container traffic was 149.1 million TEUs, an increase of 12 percent. Enditem 

Photo taken on Dec. 21, 2011 shows a delicate teacup in "Porcelain Capital" Jingdezhen City, east China's Jiangxi Province, Dec. 21, 2011. Jingdezhen's percelain has been famous not only in China but in time it became known internationally for being "as thin as paper, as white as jade, as bright as a mirror, and as sound as a bell." 

EDP-Energias has plants in Brazil and the U.S. Above, its Lisbon offices. Portugal's government said on Thursday that China Three Gorges Corp. won the bidding for its 21% stake in EDP-Energias de Portugal SA with an offer of €2.69 billion ($3.51 billion), in the first of a series of sales of state-owned assets under its austerity program. The deal marks the first time a mainland Chinese firm acquired a significant stake in a southern European company and may portend other such moves as cash-strapped European governments from Madrid to Athens have been clamoring for Chinese funding to help them finance gaping budget deficits. For government-controlled China Three Gorges, which operates the $23 billion Three Gorges dam on the Yangtze River, the transaction opens doors to EDP's renewable-energy assets in Brazil, a key emerging power. The Portuguese company is a major power producer there, operating a sizable fleet of hydroelectric plants and supplying more than two million customers with energy. The investment will help China Three Gorges "showcase its superiority in hydropower, clean energy project construction and power production," Chairman Cao Guangjing said in a statement. It also shows how Portugal's centuries-old links with Brazil and Africa are now making the cash-strapped country an attractive investment for Chinese companies, underscoring a shift in world power that has seen emerging economies asserting their might over newly fragile developed countries. Portugal is selling its crown jewel assets as part of a €78 billion bailout agreement it entered into with the European Union and the International Monetary Fund. Under the terms of the rescue, Portugal has committed to cut government spending and its budget deficit. "The privatization program is not only important because it gives us access to a source of financing," Portuguese Finance Minister Vitor Gaspar said on Thursday. "It also shows that one can diversify such financing sources." Portugal's treasury secretary, Maria Luis Albuquerque, said Chinese banks behind China Three Gorges are willing to provide financing to other Portuguese companies. The Chinese firm, which outbid German heavyweight E.ON AG and Brazil's Centrais Elétricas Brasileiras SA, has big ambitions but a small international profile for now. Portugal's government expects China Three Gorges to invest over €8 billion in EDP to support its expansion plan. The Chinese company also wants to tap EDP's experienced management team to develop its international businesses. As weak euro-zone economies shed prized assets through ambitious privatization programs to cut debt, Portugal is attracting significant investments from China because of its presence in former colonies that are resurfacing as red-hot markets, rich in natural resources. Portugal's Galp Energia SGPS SA, for example, recently closed a $5.19 billion deal to sell a 30% stake in its Brazilian unit to China Petrochemical Corp. Galp needs cash for future investments linked to its 10% share in Brazil's largest oil project. "Portugal has big attractiveness because it knows Africa and South America well," said Ricardo Salgado, chief executive of Banco Espirito Santo SA, which recently received a $300 million credit facility from China Development Bank Corp. "Portugal is today a platform for investments to those countries," he added. Like its domestic peers, Banco Espirito Santo controls a bank in oil-rich Angola, BES Angola. BES and its Chinese counterpart agreed to cooperate in Portuguese-speaking markets, where the Asian giant and its companies are doing an increasing amount of business. China bought $57.7 billion in goods from eight Portuguese-speaking markets, led by Brazil and Angola, from January to September, up 23% from a year ago, according to Chinese government data. Chinese exports to those countries rose 34% in that period to $28.8 billion. Following EDP's stake sale, the next asset up for grabs in Portugal is power grid operator Redes Energéticas Nacionais SGPS SA, expected to be sold early next year. For Portuguese companies, investments from a deep-pocketed country with a high-growing consumer market are welcome at a time when domestic demand and rising unemployment are hammering profitability. Portugal's economy is expected to contract through 2013. In Europe, EDP produces and distributes electricity in Portugal, its largest market, and Spain. It also will provide China Three Gorges with sizeable renewable energy assets in the U.S. with a total capacity of 3,323 megawatts. EDP's other shareholders include Spain's power utility Iberdrola SA, which holds 6.8%, Spanish savings bank Cajastur with 5% and Portuguese group José de Mello with 4.8%. The company has a market value of more than €8 billion.

World Chocolate Wonderland in Shanghai. Chocolate sales in China are worth about 7 billion yuan ($1.1 billion) a year. Sales of the sweet rose 35 percent in 2010 and another 30 percent in 2011. Sales of chocolate in Shanghai have picked up greatly in the days leading up to Christmas. Observers see that as a sign that the city is becoming more international and foreign chocolate makers are trying harder to enter the Chinese market. Thomas Meier, managing director of the chocolate maker Lindt & Sprungli (Asia Pacific) Ltd, said the company sees its chocolate sales increase the most in China around Christmas and Chinese New Year. "In fact, the sales become bigger as early as September with the Mid-Autumn gift-giving season," he said. "The chocolate peak season represents more than 50 percent of our annual sales." The company's most popular product in China is Lindor Swiss Milk Truffles. It comes in a gift box and sells for 95 yuan ($14.8). In central Shanghai's chic shopping and entertainment center, Xintiandi, chocolate is selling quickly at a time when the Christmas spirit has pervaded the city. Although many here are gloomy about the stock and property markets as the year draws to an end, most chocolate vendors do not feel such pessimism. Bonny Wang, a saleswoman with the Belgian chocolate brand Godiva, said the company's business has increased markedly in the past week. "This Christmas gift box is extremely popular," Wang said, referring to a series of chocolate that sells for between 450 yuan and 850 yuan. "It was sold out several times this past week. "Most of our customers are Chinese youngsters, but more foreigners and companies are buying chocolate from us these days." The shop was opened in 2010 and saw its business steadily pick up in 2011. The Italian chocolate maker, Cova, opened its first branch this year in Xintiandi and its business is thriving. On Wednesday, Ivone Leung, a Hong Kong resident, bought a large gift basket containing chocolates, pastries and wine from Cova's store there. She said she was "very happy and surprised that she can now buy her favorite chocolate brand in Shanghai". According to a report by AC Nielsen, a marketing research firm, chocolate sales in China now bring in 7 billion yuan a year, having risen by 35 percent from 2009 to 2010 and another 30 percent from 2010 to 2011. Even so, the average Chinese person still consumes less chocolate than residents of many other countries - only about 50 grams a year. In contrast, the average amount of annual consumption for each person comes to 12 kg a year for the Swiss, 7 kg for the French, 5.5 kg for US residents, and 2 kg for the Japanese. Meier said that suggests there is much room to increase chocolate sales in China. Meier said that Lindt began selling premium chocolate in China in 1996. Sales of the product continue to proceed at a good clip as the demand for premium chocolates increases. He said that is true "especially among key chocolate lovers - females aged between 25-45 years old, who are our target consumers". "Chocolate consumption in China may be small as compared to Europe. It has great potential especially for (the) premium quality chocolate segment because appreciation and a natural taste for the finest food has always been part of the Chinese culture and history." From this past week to February, a large-scale chocolate exhibition will be set up in the Himalayas Center in Pudong, Shanghai. Among the things on display will be chocolate versions of famous tourist attractions such as the terracotta warriors and Shanghai landmark buildings, as well as of commonplace objects such as shoes, clothes and handbags.

A golden dragon made of thousands of soda cans is installed in front of a shopping mall in Harbin, capital city of Northeast China's Heilongjiang province, Dec 22, 2011, to welcome the upcoming Year of the Dragon on the Chinese lunar calendar. 

Vice-President Xi Jinping, accompanied by Thai Prime Minister Yingluck Shinawatra, reviews an honor guard in Bangkok on Thursday. Xi is on a three-day visit to the Southeast Asian nation. China-Thailand ties have brought benefits to the people of the two countries and made an important contribution to regional peace and development, Vice-President Xi Jinping said during his visit to Thailand on Thursday. Xi met Thai Prime Minister Yingluck Shinawatra on Thursday. The two leaders witnessed the signing of agreements on Memorandums of Understanding on the development of a high-speed railway between Bangkok and Chiang Mai, the development of a railway system connecting Association of Southeast Asian Nations member countries and flood and drought prevention measures, according to Thai media. Thailand is the second and last stop of Xi's ongoing Asia tour, which also took him to Vietnam. Xi is scheduled to meet Thai Princess Maha Chakri Sirindhorn and heads of the Privy Council and the National Assembly of Thailand on Friday, and he will also visit a local middle school in a region hit by the recent flooding. China donated $1 million and supplies worth a total of 80.6 million yuan ($12.7 million) after the country was hit by its worst floods in 50 years, according to the Chinese embassy in Thailand. The "healthy and stable" nature of China-Thailand ties is reflected in flourishing bilateral trade, according to Vice-Minister of Commerce Chen Jian. China has become Thailand's largest export market and its second-largest source of imports. Thailand also serves as an important partner for China among members of ASEAN, according to Chen. In the first 11 months of 2011, bilateral trade reached $59.44 billion, up 24.4 percent year-on-year, said Chen, who is also a member of Xi's delegation. As Asia continues to enjoy rapid economic development and ASEAN speeds up its integration process, this offers the two countries increased opportunities, said Guan Mu, Chinese ambassador to Thailand. Xi's trip, the first by a Chinese vice-president to Thailand in 11 years, is also the first visit by a top Chinese leader to the Southeast Asian country since the new Thai government took office in August.

The US Consulate General in Shanghai is adding to its facilities to meet the rapidly increasing stream of US visa applications it processes. "We recently signed a lease to expand our consular facility by increasing the number of interview windows from nine to 20. Then we can interview more applicants on a daily basis," said Robert Griffiths, US consul-general in Shanghai. By Wednesday, US consular officers in China - the embassy in Beijing and consulates in Shanghai, Guangzhou, Shenyang, and Chengdu - had processed more than 1 million non-immigrant visa applications this year, 30 percent of them in Shanghai. The Shanghai consulate is one of the busiest in the China, receiving applicants mainly from the city and neighboring provinces, including Zhejiang, Jiangsu and Anhui. Since February 2004, when it opened at its current Westgate Mall location, it has issued more than 1 million non-immigrant visas - its current approval rate stands at 90 percent. "The consular section in Shanghai is so crowded, with at least 100 people standing in the line and sitting on the benches, waiting to be called to submit documents or be interviewed," said Ke Xixi, a resident of Wenzhou in Zhejiang province who got a visitor visa to the US in November. Ke had to wait nearly three hours to hand in her documents and be approved. "The process itself is actually rather quick, but I think there aren't enough consular officers on hand to shorten the waiting time or enough space to handle the crowd of applicants," Ke said. To accommodate the increasing number of visa applications throughout China, 50 more staff positions will be added to the consulates starting in spring, according to the Shanghai consulate. "The expansion of the Shanghai office will at least double the current ability to handle visa applications, and more staff will be recruited to facilitate growth, especially during peak seasons, like summer," said Wylita Bell, information officer and spokeswoman for the US Consulate General in Shanghai. Bell said they hired temporary staff members from Washington last summer to streamline the application process and they probably will again next summer. The consulate suggests applicants should apply for an appointment for a visa at least a month in advance, and about three months if they want to travel between April and June. "We encourage applicants to plan ahead, apply well in advance of intended travel, and for those applicants renewing a current or recently expired US non-immigrant visa, they should use the drop-box, which is a convenient way to submit a visa application through the mail and often does not require an interview," Griffiths said. More than 1 million US visas for Chinese applicants have been processed this year, 34 percent more than the previous year.

Hong Kong*:  Dec 24 2011 Share

USA's Nancy Ryan named as 40 millionth visitor to Hong Kong - Nancy Ryan from the United States, the 40 millionth visitor to Hong Kong this year, holds her gifts in a welcoming ceremony in Hong Kong, south China, Dec. 21, 2011. Nancy Ryan was named as the 40 millionth visitor of the year by Hong Kong Toursim Board and was given generous gifts, including business class return tickets and a stay in the 5-star Peninsula Hotel.

 

Cocky Bar, located in Tsim Sha Tsui, is a short ferry ride from Hong Kong’s Central district. Nanhai’s crispy rice in a creamy lobster broth dish. Another spot away from Kowloon’s chaos is Vibes, located at the Mira Hotel. A cheaper option for panoramic drinks is Cocky Bar, located on the 18th floor of the One, a shopping complex in Tsim Sha Tsui, a Kowloon neighborhood just across the harbor from Hong Kong’s Central district. While not as high as the Ritz, it is popular with locals on dates who want to watch the sun set from its outdoor patio. Dinner at Nanhai No. 1, located on the 30th floor of the nearby iSquare shopping center, is Cantonese food with a contemporary twist. Dishes like crispy rice in a creamy lobster broth, or scallops stir-fried with morel mushrooms, show a chef who isn’t afraid to stray from convention. The latest Michelin Guide awarded it with one star, and you won’t have to wait two weeks to get a table. Shopping is the lifeblood of Kowloon, particularly the neighborhood of Mongkok, one of the most densely populated ones in the world. Its street markets stay open until around midnight. Tourists flock to the cramped Ladies Market on Tung Choi Street, but unless you’re looking for vinyl Prada knockoff wallets or fluorescent Yankees caps, skip it. The offerings at the Temple Street markets (starting north from Jordan Road) aren’t too tempting either – electric razors and tube socks, anyone? – but the street scene, with stalls and outdoor restaurants side-by-side, is why you go. Continue north to the corner of Public Square and Temple streets, and you’ll find the local fortune-telling hub, where dozens of soothsayers are eager to tell you about your love life and investment returns for the year ahead. For about 200 Hong Kong dollars, of course. For bar-hopping at street level, a night out can either start or end on Hart Avenue, perhaps Kowloon’s most debaucherous street and home to a string of pubs whose patrons spill, sometimes literally, onto the sidewalk. To see how locals kick back, head to a basement bar called UFO. Cantopop blares, dice is played, and glasses of beer are quickly drained. The best of the strip is a small tavern called Hair of the Dog. In addition to Guinness, it has a jukebox, so you can listen to something besides the Katy Perry and Lady Gaga tunes that dominate the city streets. Elsewhere, live jazz is always on tap at Ned Kelly’s Last Stand, a popular expat hangout. A younger crowd lingers across the street at Castro’s, a Cuban-themed bar on the second floor of a building. Neighborhood hipsters squeeze into Phonograph, one of the only bars in Kowloon that will play a Radiohead album in its entirety and features drinks made with Yakult, a Japanese dairy drink with a yogurt-like tang. For calmer options, head to the outdoor lounges of the area’s hotels. The Backyard, in Mongkok’s Langham Place, and the fifth-floor patio at Vibes in the Mira Hotel offer rare tranquility. There you can collapse into a sofa, listen to the city hum and relax with a cocktail, wondering how Kowloon ever got a bad rap. Ozone, 118/F, The Ritz-Carlton, Hong Kong, 1 Austin Rd. West, West Kowloon Cocky Bar, 18/F, The One, 100 Nathan Rd. Nanhai No. 1, 30/F, iSquare, 63 Nathan Rd. The Backyard, Langham Place, 555 Shanghai St. Vibes, 5/F, Mira Hotel, 118 Nathan Rd. The Hair of the Dog, Supreme House, 2A Hart Ave. UFO, 11 Hart Ave. Ned Kelly’s Last Stand, 11A Ashley Rd. Castro’s, 16 Ashley Rd. Phonograph, 2 Austin Ave.

The Backyard, located in Langham Place, offers a respite from the crowds. The best thing about Kowloon, according to jaded expats, is its view of Hong Kong Island. But Kowloon — the tiny peninsula connecting Hong Kong to mainland China — offers more than simply a vantage point. It is often the more bustling side of town, and though it has long been associated with outdoor markets and teeming crowds, in recent years it’s taken a step toward the upscale. Hong Kong Island remains the territory’s commercial heart, but Kowloon is now home to many of its most luxurious hotels, including the Peninsula and InterContinental, and contains some of Hong Kong’s most interesting nightlife. Start at the top: the 118th floor of the Ritz-Carlton at the International Commerce Centre. There you’ll find Ozone, located on the roof of the “highest” hotel in the world and the tallest building in all of Hong Kong. The Ritz opened earlier this year, and Ozone provides the closest thing to an aerial view of Victoria Harbour without chartering a helicopter (not that that’s out of the question — just head to the Peninsula). Ozone stays open till 1 a.m. on weeknights, so expect to see a lot of suits who work in the lower floors of the building, sipping well-made, high-priced classic cocktails. It goes till 2 a.m. Friday and Saturday nights.

The Hong Kong Monetary Authority (HKMA) welcomed the announcement by the China Development Bank (CDB) on its issuance of renminbi bonds in Hong Kong through the bond tendering platform of the Central Moneymarkets Unit (CMU) of the HKMA. n HKMA spokesperson said Wednesday that CDB will be the first Mainland financial institution to make use of the CMU platform to issue renminbi bonds. It signifies a continual deepening of financial cooperation between the Mainland and Hong Kong, and widening of channel and enhancement of methodology and environment for the issuance of renminbi bonds in Hong Kong. We look forward to seeing more issuers to make use of the CMU platform to issue renminbi bonds in the offshore renminbi market," said the spokesperson. The CMU is operated by the HKMA. It serves as a platform for tendering, clearing and settlement of bonds. China Development Bank Corporation (CDB) said Wednesday that CDB proposes to issue RMB bonds in Hong Kong through the CMU BID service for the first time. According to a CDB release, the financial institution signed the "Acceptance of the Terms and conditions and the Operating Procedures in relation to the CMU BID"on Wednesday, marking further expansion of its RMB bonds issuance channels in Hong Kong. CDB said that in 2011 CDB will be approved to issue RMB bonds in Hong Kong with the principal amount up to 6 billion yuan ($0.95 billion). The quota is valid for a year from the date of approval. As a quasi-sovereign rating issuer, CDB was the first Mainland bank to issue RMB bonds in Hong Kong. The aggregate amount of RMB bonds issued by CDB in Hong Kong is 13 billion yuan ($2.06 billion). This time CDB is planning to issue bonds through both CMU BID and book building methods in early 2012 subject to market condition. Gao Jian, Executive Vice President of CDB, said, "CDB takes the initiative to issue RMB bonds through CMU BID as the first mainland financial institution. This is a positive exploration in the mechanism of bonds issuance and is a meaningful measure to facilitate market development." "In the future CDB will continue to issue bonds through CMU BID and fulfill its commitment to promoting offshore RMB business by leveraging on its sound market performance and innovative capabilities," he added.

Joseph Lau of distributor Inchcape has big plans to boost Jaguar Land Rover's profile locally and on the mainland. Jaguar Land Rover, the British car maker owned by India's Tata Motors, aims to double its sales in Hong Kong over the next five years with an eye on boosting its profile both locally and in the mainland market, according to Joseph Lau, Hong Kong general manager for the brands at official distributor Inchcape. "Hong Kong is a unique market because it is not very big ... but there are so many affluent Chinese visitors coming here," said Lau. "They see what is popular among Hong Kong people and view those brands as high quality. That way they get automatic recognition on the mainland." Inchcape is using local launches of new Jaguar Land Rover models to also target prospective mainland buyers, buying up space on prominent outdoor billboards in areas popular with tourists, like Causeway Bay, and also advertising at the airport. The strategy is part of a bigger regional push to grow the brands, which Tata acquired from Ford Motors in 2008 for US$2.3 billion. Inchcape has long been the local distributor of Jaguar cars, and starting from this month replaced Sime Darby - Ford's local importer - as the official distributor of Land Rover. Inchcape recently opened a new showroom for Land Rover on Gloucester Road, renovated its Wan Chai Jaguar showroom and added a second service centre for both brands in Kwai Chung. The company hopes to double local sales of JLR vehicles in the next five years, up from an expected 135 Jaguar deliveries this year and 250 Land Rover deliveries. The British carmaker would launch 40 new models over the same time period, Lau said. The mainland is set to overtake the US as JLR's biggest market after the UK as early as this year. Land Rover's mainland sales rose 54 per cent in the first 10 months of the year to 27,761 units, while Jaguar's rose 91 per cent to 4,382 cars. JLR plans to open 100 mainland dealerships by the end of the year, up from 80 at the end of October. Demand for some Land Rover models, such as the newly launched Evoque, is such that mainland buyers ordering a new car may have to wait up to one year for delivery. The company is also tailoring its line-up to the market. Jaguar previously introduced a 3.0 litre, six-cylinder version of its executive XJ model that is exclusive to the mainland. The model already came with an extended wheelbase option, a must for the mainland executive car market, but its original gas-guzzling, eight cylinder variant did not catch on like the smaller-engine version has, according to Lau. Inchcape is a London-listed global car distributor that traces its roots to Scottish businessmen in 1840s British India. It is in the process of spending around HK$2 billion to add 16 new mainland dealerships by 2016 to the four it now operates there. In Hong Kong, Inchcape's third-biggest market globally, the company also operates as Crown Motors and is the sole official importer for Toyota and Lexus. "What we see for Jaguar is local buyers getting younger and younger," said Lau. "Previously if I asked a 30-year-old gentleman to get into a Jaguar he would have a lot of hesitation, like he would be driving Daddy's or Grandpa's car. But the new cars are very different and stylish. The driving performance and tuning is getting sportier, which is more suitable for young people."

Developer Sino Land on Thursday agreed to sell a Hong Kong shopping mall to property investment fund Link Real Estate Investment Trust for HK$588 million (US$76 million). Link reit is buying Great Land (HK), which owns the mall at the Maritime Bay development in the Hang Hau neighbourhood of Tseung Kwan O New Town in Sai Kung District. The space generates monthly rent of about HK$2.3 million, meaning the deal will produce a yield of 4.7 per cent based on the purchase price. The 63,466 square foot mall, built in 1998, was fully let, the Link reit (SEHK: 0823) said in a release. Link reit was the first real estate investment trust to go public in Hong Kong. According to trade group Aprea, it is the largest reit in Asia, excluding Australia, with a market capitalisation of US$8.0 billion as of November. Sino Land shares were up 0.8 per cent on Thursday afternoon, while Link reit shares were 0.5 per cent higher, bucking a 0.3 per cent decline in the Hang Seng Index.

The final cylinder is put in place in Zhuhai yesterday to complete the framework of a man-made island for the HK$83 billion Hong Kong-Zhuhai-Macau bridge project. Eight days after Hong Kong began long-delayed construction of the massive bridge over the Pearl River estuary, Zhuhai yesterday completed the frames for two man-made islands for the project. Mainland engineers said their part of the work for the Hong Kong-Zhuhai-Macau bridge was on schedule, but feared Hong Kong engineers would have difficulty making up time lost through a judicial review that lasted nearly a year. The HK$83 billion bridge, to be built jointly by authorities from the three jurisdictions, was supposed to be finished by 2016. Zhuhai and Macau began their work in late 2009, but Hong Kong only on December 14. The priority for Hong Kong, officials said, is building a 150-hectare artificial island for new boundary-crossing facilities. They plan to adopt a new reclamation method similar to that used on the man-made islands whose frames have just been created. The islands are part of a link which will involve six kilometres of tunnel and bridge sections totalling 50 kilometres. Their frames are huge metal cylinders sunk 20 metres into the sea bed; water is pumped out and replaced with soil and sand. This method takes about two years less than traditional dredging, officials said, but Hong Kong hopes to compress the work even more than that. Engineers say Hong Kong will have difficulty speeding up the pace of work, partly because of airport height restrictions which will force large vessels to use detours to enter and leave the area. Yu Lie, deputy director of the Hong Kong Zhuhai Macau Bridge Authority, said trying to get the work done too quickly could raise safety concerns. "The addition of equipment, workers and money could quicken the progress, but there is a limit," Yu said. "Efficiency does not increase in direct proportion to the resources you add: with extra workers you need better safety management. Hong Kong's stringent environmental standards and height limits in areas around the airport also pose extra hurdles." Officials say the delay will force Hong Kong to spend an extra HK$6.3 billion to meet the 2016 deadline. Some engineers have expressed doubts the work - building a 150-hectare, man-made island, boundary facilities, 12.6 kilometres of bridge and connecting roads - can be completed within five years. Zhu Yongling, chief of the bridge authority, said he was confident Hong Kong would meet the deadline. Work on the mainland part of the project was on track, he said, including boundary facilities, a 29.6-kilometre main bridge with a six-kilometre tunnel, connecting roads and three artificial islands. Chief design engineer Lu Yongchang said tunnel-digging would begin around August next year, after two of the man-made islands are finished. The six-kilometre tunnel will be made of steel tubes manufactured on an island not far from the site. How many vehicles will use the bridge is uncertain. The government is planning a pilot scheme to give local drivers temporary licences to cross the border.

The New York Stock Exchange has caught up with Hong Kong this year as the top destination for initial public offerings, according to Ernst & Young. Total IPO proceeds this year from the local exchange is expected to be HK$260 billion - down a sharp 42 percent from 2010 and just over the HK$259.85 billion expected to be raised on the NYSE, the global accounting firm said. Last year, IPO proceeds from the local bourse reached HK$449 billion while that on the NYSE hit the equivalent of HK$291.75 billion. The SAR is expected to continue its reign next year although total proceeds are expected to slip further to only HK$250 billion. "Many companies are in the listing pipeline of 2012. They will take action as long as the global capital market stabilizes," Ernst & Young assurance partner Jacky Lai Wan-fung said. On a monthly basis, December is seeing the largest wave of IPOs in Hong Kong, Lai noted. Big names to have already listed this month include Chow Tai Fook Jewellery Group (1929) and CITIC Securities (6030), which together soaked up HK$26 billion from the market. Meanwhile two companies started their IPO exercise yesterday, with one of them, mainland yarn maker China Weaving Materials (3778), pricing its shares at HK$0.70. In the gray market, China Weaving opened 5.7 percent higher at HK$0.74. But it finally closed at HK$0.72, representing a paper gain of HK$80 for one board lot of 4,000 shares. As for Beijing Jingneng Clean Energy (0579), more than 95 percent of its 1.14 billion shares were allotted to institutional investors, with each share priced at HK$1.67. However, no transaction was recorded in the gray market last night. Separately, Techcomp (Holdings) (1298), which listed in Hong Kong by way of introduction, started trading yesterday. It closed at HK$2.43 compared with S$0.40 (HK$2.40) on the Singapore bourse on Tuesday.

Global economy in 2012 may be worse: IMF chief economist - With downside risks in advanced economies increasing and policy environment uncertain, the world economy may see worse conditions in the coming year, warned chief economist Olivier Blanchard of the International Monetary Fund ( IMF) on Wednesday. In an IMF blog, Blanchard wrote that the global economy in 2011 started in recovery mode with hope. However, it is ending with growth standstill and confidence loss. "As the year draws to a close, the recovery in many advanced economies is at a standstill, with some investors even exploring the implications of a potential breakup of the euro zone, and the real possibility that conditions may be worse than we saw in 2008, " he said. His article released at a time when IMF Managing Director Christine Lagarde said that the Washington based international financial institution is almost certain to cut its world growth forecast for 2012 due to the euro zone debt crisis. "I am almost certain... that the forecasts will be revised down " in January, Lagarde said during her visit in Africa on Wednesday. In its Sept. World Economic Outlook report, the IMF projected that global economy would grow 4 percent in 2012. As the debt crisis in the euro area worsening and decision making in major advanced economies becoming more uncertain, the world economy prospect seemed much less optimistic. The IMF called for further actions to tackle the challenges in order to avoid another global meltdown. "If nothing is done, the crisis in confidence... and this sort of spiral of doubt, will just get worse in all countries... all the countries of the world will suffer the consequences without exception," Lagarde said. Blanchard also noted that "incomplete or partial policy measures can make thing worse." He warned that "putting the recovery back on track will be harder than it was a year ago." It will need bold and stronger policies, including credible but realistic fiscal consolidation plan, liquidity provision, implementation of announced plans, and much more effective collaboration among all involved. The chief economist said he hoped that the proper actions will be taken. "The alternative is just too unattractive," he added.

Hong Kong recorded a 23.6 billion HK dollars (about 3 billion U.S. dollars) surplus in its Balance of Payments account in the third quarter, representing 4.8 percent of the Gross Domestic Product (GDP), said the authority on Thursday. According to figures released by the Census and Statistics Department, a current-account surplus of 33.7 billion HK dollars was recorded, with a net outflow of financial non-reserve assets amounting to 54.5 billion HK dollars. With imports of goods rising faster than exports, the visible trade deficit rose from 60.1 billion HK dollars in last year's third quarter to 99.9 billion HK dollars in this year's third quarter. The invisible trade surplus rose to 135.9 billion HK dollars, as exports of services increased faster than imports. Overall, a combined visible and invisible trade surplus of 36 billion HK dollars was recorded in the third quarter. For factor income flows, the external factor income inflow amounted to about 244.7 billion HK dollars while outflow stood at about 238.7 billion HK dollars, yielding a net inflow of 6.1 billion HK dollars in the third quarter. (One U.S. dollar is about 7.8 HK dollars.) 

Hong Kong's Immigration Department estimated on Thursday that 7.78 million passengers will pass through land, sea and air control points during the Christmas- New Year period, 11 percent more than last year. About 2.74 million passengers, 305,000 daily, will pass through Lo Wu, the busiest control point, said the report. For outbound traffic, the busiest day at Lo Wu is expected to fall on December 25, with 185,000 passengers leaving Hong Kong. Inbound traffic will be heavy on January 1, with 172,000 people arriving. Passenger traffic at Lok Ma Chau, Lok Ma Chau Spur Line and Shenzhen Bay control points will also be heavy, with forecast daily averages of 105,000, 118,000 and 95,000 passengers, respectively. The department will man a joint command center at Lo Wu with Police, Customs and the MTR Corporation to monitor traffic conditions. It advises cross-boundary passengers to plan their trips in advance and travel during less-busy periods in the late morning and early afternoon, and monitor radio and television broadcasts on traffic conditions. Immigration Department staff are bracing for almost eight million border crossings during Christmas and New Year – up 11 per cent from last year. This is the estimate the department is working on as it prepares for the start of the holiday season. Department assistant director Chan Man-lang said the border would be very busy and staff would be under considerable pressure. He suggested tourists avoid peak hours. “We are aware that in some periods, like weekends, the waiting time is relatively long at the border,” he said on Thursday. “We will do our best to make a better deployment of staff during peak hours,” he added. Chan said the service pledge was that 95 per cent of non-local travellers could pass the border within 30 minutes, while 98 per cent of local residents could do so within 15 minutes. Leave has been minimised and extra counters will open to cope with the load. Additional security guards will also be on duty. The busiest day for outbound travel is Christmas Day when 185,000 tourists are expected to leave Hong Kong. For inbound travel the peak is expected to be on January 1, when 172,000 people are expected to enter the city. Lo Wu will be the busiest control point. Chan said he did not expect more mainland women would try to come to Hong Kong to give birth during the holiday season. But he said the department would enhance training for frontline officers – already on alert to curb the influx. The department had rejected 281 pregnant mainland women trying to pass the border without making a maternity appointment last month, up from an average of 120 to 150 a month in the first half of this year.

 China*:  Dec 24 2011 Share

Xi Jinping feeds the fish at the former home of late Vietnamese leader Ho Chi Minh, the founder of modern Vietnam, in Hanoi yesterday. He is on a three-day official visit. China's vice president was ending a visit to Vietnam on Thursday, part of an effort to consolidate ties that deteriorated following recent tensions over the disputed South China Sea. Both sides said Xi Jinping’s three-day visit to Hanoi “further consolidates and promotes relations between the two parties, countries and people,” according to the Vietnam government’s website late on Wednesday. The communist neighbours have had a long-standing dispute relating to sovereignty over the Paracel and Spratly Island groups, which are in oil-rich waters straddling vital commercial shipping lanes in the South China Sea. On this matter, “the Vietnamese side agreed to be ready, with China, to solve disputes through peaceful negotiation, respecting and paying attention to each other’s legitimate benefits,” the report said. The official Xinhua news agency added that the two neighbours “agreed to earnestly implement the consensus and the agreement in order to maintain stability in the South China Sea”. Relations sank to their lowest point in years in May and June when Vietnam said vessels from China twice interfered with its oil survey ships inside the country’s exclusive economic zone. In July a warship from China confronted an naval vessel from India in waters off Vietnam and demanded it explain its presence. Vietnam Communist Party General Secretary Nguyen Phu Trong visited Beijing in October, where both sides agreed to keep in frequent touch on the maritime issues. But last month Vietnam’s premier reaffirmed before the National Assembly his country’s sovereignty over the two archipelagoes. For the first time, he condemned China for using violence to take the Paracels from Vietnam in 1974, a year before the end of the Vietnam war. Beijing says China has sovereignty over essentially all of the South China Sea, where its professed ownership of the Spratly archipelago overlaps with claims by Vietnam, the Philippines, Taiwan, Brunei and Malaysia. Chian and Vietnam fought a brief border war in 1979 before normalising relations in 1991. China has been Vietnam’s leading trade partner since 2004, and two-way trade has risen from US$32 million in 1992 to US$30 billion last year. On Wednesday, China committed a US$300 million preferential credit for Vietnam’s infrastructure improvement.

THE US Consulate General in Shanghai is preparing to expand its office capacity to cope with the fast growth of US visa applications. The local consular section officials said construction is to kick off very soon to expand its visa-application facility inside the Westgate Mall on Nanjing Road W. "The Consular Section in Shanghai is committed to increasing its ability to handle the exponential growth in visa application numbers. We have recently signed a lease to expand our current consular facility in order to increase our capacity to interview more applicants on a daily basis," the US Consul General in Shanghai Robert Griffiths said yesterday. Nick Larsen, the local non-immigrant visa chief, added that visa applicants need not fear longer wait times or any other disturbances during the construction period because it will take place in another part of the office floor. Larsen told Shanghai Daily the expansion is expected to at least double the current ability to handle visa applications, as the number of interview windows will be increased from nine to 20. He said the office is preparing to land more visa interview officers and staff to facilitate the capacity boost. The effort means great relief to crowded conditions during busy application seasons. The officials said they would have the project completed as soon as possible to help cope with the rapid growth in visa applications. The success rate for non-immigrant visa applications from the Shanghai office has improved to above 90 percent, nearly the highest among all the US consular sections in China, with the applicants mainly coming from Shanghai and its nearby Zhejiang, Jiangsu and Anhui provinces, according to the local consular section. Applicants from this region turn out to be well-traveled and well-educated and such qualities tend to make them "naturally qualified" to be approved, Larsen explained. He noted that the local consular section follows the same visa application screening rules as other sections in China. Applications in China this year increased by a "phenomenal" 34 percent over last year to more than 1 million, according to the US authority. About 30 percent of these applications were handled by the Shanghai consular section, officials said. 

A duty free store has opened its doors Wednesday in Haikou, China's Hainan province. It's the second of its kind to open on the island following the duty free store in Sanya. The new duty free store is located inside the Haikou Meilan International Airport, conveniently allowing tourists to purchase items just before boarding their plane, whereas the Sanya store is located downtown. The Sanya store ships the items to the airport where they are collected by customers. According to China's policies to build Hainan into an international tourism island, the province enjoys a number of preferential policies which allow it to have duty free stores. Tourists to the island can buy duty free commodities valued up to 5000 yuan, or about 780 US dollars during each visit. The new duty free store in Haikou is divided into two sections selling different categories of products including food, clothes and cosmetics. Shoppers can find familiar international brands such as Armani, Gucci, Prada, etc. The store is operated by a company owned by Hainan province and the tax refund rate is in accordance with the one duty free store in Sanya. The Sanya store is run by the state-owned China Duty Free Group.

Prices on display at the Shenzhen Stock Exchange. The exchange raised 181 billion yuan ($28.6 billion) in 243 IPOs in 2011, according to the accounting firm Ernst & Young LLP. China will continue to lead the global IPO market next year, despite the dramatic weakening in new offerings in the second half of 2011, accounting firm Ernst & Young LLP (E&Y) said on Wednesday. The Shenzhen Stock Exchange was the world's most active IPO market in 2011, ranking first in the number of issues and second in the amount of capital raised in the first 11 months of this year, according to E&Y. "There will be a rebound of IPOs in the first half of next year and the Shenzhen Stock Exchange will be a key driver," said Edward Ho, managing partner of assurance services at E&Y. "The IPO pipeline of Chinese issuers remains healthy and we expect the total amount of capital raised in the first half of next year to be at least 300 billion yuan", or about $47.6 billion, he said. The Shenzhen exchange, including the small and medium-sized enterprise board and the startup board ChiNext, raised 181 billion yuan in 243 deals in 2011, according to E&Y. China's main board, the Shanghai Stock Exchange, ranked fourth globally in terms of capital raised after the stock exchange of Hong Kong. Global IPO activity has declined significantly since mid-2011 due to market concerns about the eurozone debt crisis and the downgrade of the US sovereign debt rating. Volatile equities markets have also undermined investor and issuer confidence, E&Y said. Capital raised through IPOs for the first 11 months totaled $155.8 billion globally, down 39 percent year-on-year, it said. China's A-share market saw a 42 percent year-on-year decline in IPO capital raised. "In addition to global economic uncertainties, tighter domestic regulations - such as new rules that require listed companies to pay higher dividends and the tougher delisting requirements - may also be contributing to the decline in IPO activity," said Sophie Chen, assurance partner at E&Y. Ho said that he remains optimistic about next year's IPO situation, with increasing liquidity in the markets as China gradually loosens monetary policy to support growth. "We think that the worst has passed," he said. "There still is a healthy pipeline of private companies waiting to go public as soon as market conditions improve." He added that a speedy resolution of Europe's debt crisis would help stabilize global markets and restore investor confidence, which would lead to a recovery of the IPO market.

More than 200 singers of different ages perform Christmas songs in the "Love Changes Everything" Southern California Chinese Community Charity Show in Pasadena, California, on Dec 18. The renowned Liang Wenyin and Wang Zhilei sung and shared their life stories with the audience. The event aimed to raise $50,000 in order to send 50 children with heart disease from Tibet to Beijing for treatment. Chinese Consul-General Qiu Shaofang spoke and donated in the charity show.

China has urged the United States to stop imposing countervailing duties on Chinese products while refusing to recognize China's market economy status. The comment followed a ruling by a US court against the US Commerce Department's imposition of such duties on Chinese tires. "The US has been imposing countervailing duties on Chinese products for many years, which is against World Trade Organization (WTO) rules and US law," the Ministry of Commerce said in a statement on its website on Wednesday. "We hope the US corrects the wrongdoing as soon as possible when it holds China as a non-market economy," said a spokesman for the ministry's Bureau of Fair Trade for Imports and Exports. The statement came one day after the US Court of Appeals for the Federal Circuit in Washington said US law does not allow the Commerce Department to impose countervailing duties on products from non-market economies such as China. The US court rejected the argument by Titan International Inc, the biggest US maker of off-road tires, and the AFL-CIO labor federation, against imports of tires from China. Titan and the labor group filed the case in June 2007, and they were supported by the US International Trade Commission in August 2008, when it ruled in favor of anti-dumping and countervailing duties. "The latest US court ruling is a great victory for Chinese companies, which have been the victims of endless anti-dumping and countervailing investigations by the US Commerce Department," said Tu Xinquan, associate director of the China National Institute of the WTO at the University of International Business and Economics. "The rejection of countervailing duties will reduce the pressure on the Chinese government and enterprises and help China develop a better export environment." Since November 2006, the US Commerce Department has started 30 anti-dumping and countervailing investigations that were not in accordance with US law, according to the ministry's statement. "The frequent use of trade-remedy measures reflects trade protectionism. The US Commerce Department imposed countervailing duties against Chinese enterprises in addition to the anti-dumping duty under the subrogate country system, which is unfair to Chinese enterprises," said the statement. Anti-dumping duties apply to goods sold overseas at or below the price in the home country while countervailing duties aim to offset the benefits of government subsidies to industries. As the global debt crisis deepens and the US is troubled by high unemployment, trade-remedy cases, including anti-subsidy cases started by the US against Chinese goods, have been rising. In a recent case, the US imposed additional duties on Chinese solar cells on Dec 2, saying that subsidies for the products harmed equipment makers such as the US unit of SolarWorld AG. Zhong Shan, vice-minister of commerce, said recently that China's exporters will have to face a much more severe business environment, because of shrinking global demand and rising trade protectionism, especially from the US. Although Chinese companies that were subject to countervailing duties in past years will not get their money back, Sun Zhenyu, chairman of the China Society for World Trade Organization Studies, said that "the US will not easily start countervailing investigations in the future". Chinese exporters have incurred huge losses from US anti-dumping cases. For example, additional duties on Chinese solar cells could mean a loss of $2 billion for domestic producers, the Beijing Times newspaper reported in November. Despite the court ruling, the US government still has ways to penalize Chinese imports, warned experts. "It is more likely the US Commerce Department will push Congress to change the relevant laws to penalize products from China," Tu said.

Beijing has pulled the red carpet from under the feet of Christian Bale, the Oscar-winning actor who stars in China's latest box- office hit, after he tried to visit a detained dissident. The foreign ministry yesterday accused Bale of "fabricating news" after the Hollywood actor made international headlines last week when he tried to visit a blind lawyer-dissident being held under house arrest. The British actor, who was in China to promote his Nanjing Massacre film The Flowers of War, was stopped last Thursday on the outskirts of the village in eastern China where the activist Chen Guangcheng is being detained. Asked by reporters if China was embarrassed by Bale's actions, foreign ministry spokesman Liu Weimin said: "I think it is the relevant actor who should feel embarrassed instead of the Chinese side. "The Chinese side will not welcome him to make news in China," Liu added, suggesting that Bale would not be allowed back into the country. Bale, describing Chen as a personal "inspiration," invited a CNN crew to accompany him on an eight-hour drive from Beijing to the village in Linyi district, where he was stopped by guards. Chen, who exposed abuses in the "one-child" population control policy, has been under house arrest since September 2010.

Hong Kong*:  Dec 23 2011 Share

Swire Pacific said on Wednesday that the spin-off of Swire Properties by way of introduction would be achieved by a distribution of shares in the unit to existing shareholders, with a market debut scheduled for January 18. In a filing to the Hong Kong bourse, Swire Pacifuaryc said it would distribute Swire Properties shares to shareholders in the proportion of seven Swire Properties shares for every 10 Swire Pacific A (SEHK: 0019)-shares held, and seven Swire Properties shares for every 50 Swire Pacific B (SEHK: 0087) shares held. In October, Swire Pacific said it had applied to the Hong Kong stock exchange to list its unit Swire Properties and would distribute 18 per cent of Swire Properties shares to qualifying shareholders. The planned listing is by way of introduction, meaning it will not sell Swire Properties shares in conjunction with the listing. Swire Pacific A-shares rose to HK$95 in early trading on Wednesday, the highest in more than two weeks.

Court battles over the estates of Hong Kong's richest just keep coming - the latest in the shape of a legal battle between two brothers over the fortune of the late tycoon Henry Fok Ying-tung. Fok, who was always one step ahead in investing on the mainland and rose to be a vice-chairman of the Chinese People's Political Consultative Conference, died from cancer aged 83 in 2006. He was married three times and had 13 children. Forbes ranked Fok the 181st wealthiest person in the world with an estimated wealth of US$3.7 billion in 2006. It ranked his descendants collectively in ninth place in a list of Hong Kong's 40 richest in 2008, with US$4.5 billion. Now one of those sons is accusing the other of breaching his duties as executor of the estate. Benjamin Fok Chun-yue has lodged a lawsuit in the High Court seeking to dislodge his brother, businessman and Silver Bauhinia Star winner Ian Fok Chun-wan, from his role as executor of their father's estate. Benjamin and Ian, sons by Henry Fok's first wife, are two of the estate's four executors and trustees. The court filings say Henry Fok's last will, dated 1978, also named a sister and brother-in-law of the tycoon's as executors and trustees. The brother-in-law has died and Benjamin Fok also wants to remove Henry Fok's 85-year-old sister, who he says has not helped in the administration of his father's estate since his death. He is seeking for the court to appoint someone to act in her and his brother's place. He is also seeking court rulings about various offshore companies, accounts and records. The court battle among the city's moneyed elite is the latest involving the estate of a wealthy tycoon. Recent legal brawls include those over the fortunes of late Chinachem chairwoman Nina Wang Kung Yu-sum and late Bossini founder Law Ting-pong. When reached by phone yesterday, legislative councillor for sports, performing arts, culture and publication Timothy Fok Tsun-ting - the brother of Benjamin and Ian, and Henry Fok's eldest son - declined to comment. Benjamin Fok, who was travelling on the mainland yesterday, also declined to comment. Ian Fok could not be contacted last night. Benjamin Fok alleges Ian distributed and took assets from the estate without the knowledge or consent of the other executors, and failed to provide the information and authorisations needed for the proper administration of the estate. Benjamin Fok says he is trying to recover the shareholding of several offshore companies, the assets in a few offshore accounts and shares in Henry Fok Estates, a company that is part of the late tycoon's business empire and asset base. According to Benjamin Fok's filings, Ian Fok said the funds in the offshore accounts amounted to about HK$736 million and the assets in the offshore companies totalled about HK$700 million. Benjamin Fok says Ian Fok claimed he paid for 350 ordinary shares in Henry Fok Estates, which has 750 ordinary shares and 4,650 preference shares. But Benjamin Fok says the shares are held by a company for their father. Benjamin Fok says Ian Fok sought acknowledgment from the family that the 350 shares, the funds in the accounts and the offshore companies and their assets belonged to him. The families by the second and third marriages have signed a document acknowledging Ian Fok's ownership of the various assets. Ian Fok, he claims, has given those families HK$509 million from the offshore companies. Benjamin claims Ian told them that unless they signed the acknowledgement, they would not receive anything besides the fixed sums under the will. No one in the family by the first wife signed besides Ian Fok, he says. He says Ian Fok had funds, including US$2 million and C$1.3 million, transferred from the offshore-company accounts to his own accounts. He also says Ian said their father had jewellery worth HK$90 million that was not mentioned in a previous list of assets. Benjamin Fok wants Ian Fok to make an affirmation on the inventory of property of their father.

Bowing to public and government pressure, CLP Power (SEHK: 0002) has made concessions on its planned price increase for next year and will now only raise the average rate of power prices by 7.4 per cent – not the 9.2 per cent rise it had originally planned. “We have carefully listened to the views expressed,” CLP managing director Richard Lancaster said on Wednesday morning. He said the change was made possible after the firm decided to accept a bigger deficit in its fuel clause account – which represents the difference between the actual fuel cost CLP pays and the fuel cost billed to customers – from HK$800 million to HK$1.4 billion. “This is not sustainable in the long-term as we have to manage our fuel clause account in a responsible manner,” he said. Lancaster did not respond to questions whether the company had made the change under pressure and whether the adjustment could have come earlier. The concession came a week after the city’s largest power supplier announced the increases which drew widespread criticism. Last Friday, the firm was still insisting there was no room to reduce the increase, although this claim was challenged by the government. The executive council also appealed to the firm to reduce what it said was an excessive rise, although the city’s top governing body had no power to veto the increase. The concession came as lawmakers were raising emergency questions about the power price rises in the Legislative Council on Tuesday morning. Hong Kong Electric (SEHK: 0006), CLP’s smaller counterpart and supplier to Hong Kong and Lamma islands, last week announced a 6.3 per cent rise which it said it had reduced from an average 8 per cent before the announcement at the government’s request. Hong Kong Electric also offered concessions that lowered the increase for low consumption users.

Hong Kong’s former chief secretary Henry Tang Ying-yen appears at an election campaign rally in Hong Kong on Monday. As the race for Hong Kong’s top post heats up, both frontrunners have this month launched their election campaigns with the kind of fanfare rarely seen in a place that doesn’t yet elect its leaders via the popular vote. Henry Tang, Hong Kong’s former number two official, has enlisted support from a star-studded cast that includes Stephen Chow, a famous local comedian, and Canto-pop singer Leon Lai, along with other big names in local business and politics. These people, plus around a thousand other supporters, took part in a high-profile rally this week to back the 59 year-old son of a successful textiles businessman. Meanwhile, Mr. Tang’s rival, former top government advisor Leung Chun-ying, has secured backing from many of the city’s powerful real estate tycoons, thanks to his background in the property business. In land-strapped Hong Kong, where property trumps all other assets, this support has clearly helped the 57-year-old surveyor: he remains ahead in key popularity polls by several percentage points in some polls. While Messrs Tang and Leung have for years been groomed as contenders for the job as part of Beijing’s succession plans for the city, there remains no clear indication as to which candidate China prefers, leaving many pro-Beijing politicians unsure as to whom they should support. In earlier chief executive elections, Beijing’s pick had been apparent even before the race officially started. It’s not the case this time around, even with the election just three months away, creating an atmosphere conducive for competition. But is this a sign that Hong Kong is moving closer to true democratic elections for its own leader? Perhaps. But a more plausible explanation for the hitherto unseen level of excitement surrounding the race may be that China’s leaders themselves haven’t made up their minds. Senior members of the Democratic Alliance for the Betterment and Progress of Hong Kong—the city’s main pro-Beijing political party—have appeared at rallies supporting both candidates. Embarrassed by the split within his camp, DAB’s chairman has banned members from attending certain events organized by any candidate. The chief executive is chosen by a committee consisting largely of Beijing-backed representatives from different professional sectors, almost assuring that the winning candidate will have Beijing’s blessing. Amid public pressure, Beijing has promised universal suffrage in Hong Kong from 2017 onwards. It appears, then, that as long as the Beijing officials remain undecided on their choice of Hong Kong’s next leader (or as long as they haven’t conveyed their preferences to their local cronies), the two candidates will have to keep the show going.

More than 17,000 chickens started to be culled at a poultry market in Hong Kong Wednesday after a chicken carcass there tested positive for the H5N1 avian influenza virus. A health worker culls a chicken at a wholesale poultry market in Hong Kong December 21, 2011. The Agriculture, Fisheries and Conservation Department of the Hong Kong Special Administrative Region government declared the Cheung Sha Wan Temporary Wholesale Poultry Mark an infected place which would be closed until January 12. York Chow, the city's secretary for Food and Health, raised the city's response level for bird flu to 'serious' from 'alert' after the discovery of the virus in the carcass. Chow announced Tuesday that a chicken carcass sample taken from the Cheung Sha Wan Temporary Wholesale Poultry Market was tested positive of the highly pathogenic H5N1 avian influenza virus during regular surveillance of the Agriculture, Fisheries and Conservation Department. The city's government is tracing the source of the carcass and it is not known whether the chicken was from a local farm or imported. All 30 chicken farms in Hong Kong were inspected on Tuesday. No abnormality was detected. Local farms are prohibited from sending chickens to the market for 21 days. The Agriculture, Fisheries and Conservation Department will step up farm inspections and collect more samples for tests. Meanwhile, imports of live poultry including day-old chicks would be suspended for 21 days. "It is unfortunate that an avian influenza case is detected before the winter solstice, necessitating a halt to the supply of live chickens," Chow said. "I understand that it will cause inconvenience to the public, and the poultry trade will also encounter losses. However, to safeguard public health, we need to adopt decisive and effective measures to prevent and control the spread of the virus." 

The government said on Wednesday that it plans to sell five residential sites by tender early next year, as it had achieved its land sales target for this fiscal year four months early. The government sold 22 sites between April and December, the first three quarters of the fiscal year ending March. The sales provided land for more than 20,000 flats by the end of November, achieving the target of an annual average of 20,000 flats set by Chief Executive Donald Tsang Kam-yuen. “In order to maintain and ensure adequate land supply, and especially to provide confidence for the market, we haven’t changed our [land] strategy,” said Secretary for Development Carrie Lam Cheng Yuet-ngor at a press conference on Wednesday. Land in Hong Kong is leased from the government, which has committed to increasing supply in a bid to check rapid gains in property prices. Lam said the government would push ahead with the sale by tender of five residential sites and one commercial site in the last quarter of the fiscal year, meaning the sales will occur between January and March. The new sites include four low-density residential sites on Repulse Bay on the south side of Hong Kong Island, Clear Water Bay in Sai Kung, Peng Chau Island, and Tuen Mun. The fifth, a larger residential site, is on Ap Lei Chau. Lam said the government was launching the sites because low density residential sites had found favour in the market. The sole commercial site is in the town of Tin Shui Wai, in the northwestern New Territories, where the government hopes to boost the economy. The suburban high-rise town has been dubbed the “City of Tears” in local media because of its high rate of social problems. Lam said the land sale plan for the next fiscal year ending March 2013, included a large-scale commercial and residential site, formerly North Point Estate. Eva Cheng, secretary for transport and housing, told lawmakers on Wednesday that the government aimed to ensure a supply of 40,000 residential properties per year. The total will consist of 20,000 private units, 15,000 public housing flats and 5,000 flats under the city’s reintroduced home-ownership scheme. Shares of major Hong Kong developers finished higher on Wednesday, with Sun Hung Kai Properties (SEHK: 0016), the largest developer in Asia, up 2.4 per cent and rival Cheung Kong (Holdings) (SEHK: 0001) up 2.2 per cent, outpacing a 1.9 per cent rise in the Hang Seng Index.

HSBC, Europe's biggest bank, is retreating from Japan's private banking market, selling a business that serves the wealthy to Credit Suisse, which is raising its profile in the world's second-largest market for millionaires. The sale is part of a strategy outlined by HSBC in May. CEO Stuart Gulliver wants to cut annual costs by US$3.5 billion and sharpen the bank’s focus on Asia by quitting countries or businesses where it lacks scale.  HSBC said the gross assets of the business being sold were worth US$2.7 billion at end-October, but it gave no sale price. “HSBC is focusing on raising its return on equity and cutting costs, so it will focus on the high growth business,” said Daniel So, Sun Hung Kai Financial strategist in Hong Kong. “They probably don’t see much growth potential in the Japanese market, so will do better to focus resources in other countries in the Asia-Pacific region.” Asia is a battleground for global and local private banks competing for market share in a region that is fast outpacing the United States and Europe in economic growth. Powered by China and India, Asia-Pacific’s millionaire ranks rose 10 per cent to 3.3 million last year, just behind the 3.4 million in North America and ahead of Europe’s 3.1 million, according to a Merrill Lynch/Capgemini Asia-Pacific wealth report. Asia’s combined wealth rose 12 per cent to US$10.8 trillion last year to overtake Europe and close in on North America, where wealth rose 9 per cent to US$11.6 trillion. More than half the world’s millionaires are still to be found in the United States, Japan and Germany. Asia’s private banking industry has seen consolidation recently as the market turmoil dampens growth, and rising regulatory and staffing costs dent profitability. Swiss private bank Julius Baer said in October it was buying the Asian private wealth portfolio of Australia’s top investment bank Macquarie Group. HSBC will sell its top-tier Japanese private banking business, which covers clients who hold more than 200 million yen (US$2.57 million) in financial assets, said an official at HSBC Japan, who spoke on condition of anonymity. But it will retain HSBC Premier, the private banking service that covers clients who hold more than 10 million yen in assets, the official said, declining to provide details on the number of staff involved in the bank’s top-tier private bank section. Credit Suisse said it plans to expand client coverage through integrating new offices in Nagoya and Osaka in western Japan and aims to boost profitability. Currently the Swiss bank, which has targeted Japanese investors holding more than 1 billion yen in assets, has an office in Tokyo. Japan has 1.7 million millionaires in dollar terms, and is by far the single largest market for high net worth individuals in the Asia-Pacific region, accounting for 52.5 per cent of the region’s millionaires and 38.2 per cent of its wealth at end-last year, according to the wealth report. Japanese millionaires had assets of about US$4.135 trillion at the end of last year, the report said. Junya Tani, head of private banking for Credit Suisse in Japan, said the deal showed the bank’s “commitment to build a leading private banking business in Japan, acquire assets and drive profitability.” “Since we began our onshore private banking business in 2009, progress has exceeded expectations, and we are looking forward to building on this success with this acquisition.” Credit Suisse said its private banking business in the Asia-Pacific region has been among the fastest-growing of its international wealth management businesses, with annual double-digit growth in net new assets. Rival UBS has also been strengthening its business in Japan and Asia-Pacific. Still, the Japanese private banking industry is dominated by local banks, analysts said. HSBC last month reported a 36 per cent fall in third-quarter profits as the euro zone debt crisis hit investment bank income, while strains in the US economy saw bad debts there jump by almost US$1 billion, the first rise in two years. HSBC has said it will retreat from 14 countries, including selling its US credit card business and branches in New York state, retail businesses in Russia and Poland, and its Canadian brokerage business. “It’s just indicative of the bank trying to become a little more lean, a little more focused,” said Daniel Tabbush, regional banking analyst at CLSA. “It shows how big this bank really is. They’ve got things everywhere and could divest some.” HSBC also said on Wednesday that Dar Es Salaam Investment Bank, a 70.1 per cent-owned subsidiary of HSBC Asia Holdings, sold its near-20 per cent interest in Iraqi insurer Dar Es Salaam Insurance to Gulf Insurance for about US$1.3 million. HSBC shares were up 2.25 per cent in Hong Kong. The acquisition, which needs regulatory approval, is expected to close in mid-next year.

 China*:  Dec 23 2011 Share

Shanghai Zendai paid a record price for a site near Yu Garden, now sold. Cash-strapped mainland developers are resorting to selling land as they battle to repay debts - and that is drawing a growing number of foreign real estate funds into a hunt for bargain-priced properties. "It's the time for cashed-up investors to look for acquisition opportunities," said David Ma, a director and general manager of Hon Kwok Project Management, a subsidiary of Hon Kwok Land Investment. Faced with growing liquidity pressure, some developers would be willing to offload either their projects or land at discounted prices, he said. Goodwin Gaw, co-founder of Gaw Capital, which oversees private equity funds of more than US$1 billion, echoed Ma's view. "We have seen a lot more deals in the past few months at more reasonable pricing. Greater opportunities are emerging in both first- and second-tier cities, and it is also a good time to buy development sites in second- and third-tier cities because of reduced competition," he said. Dealogic data shows 373 deals so far this year worth US$24.75 billion, compared with 437 deals at US$23.88 billion for the whole of last year. Last month, Hong Kong-listed Shanghai Zendai Property, was forced to offload a majority stake in a project company it set up to develop a site on the Bund in Shanghai, saying "the massive capital needed for the development of the land parcel will be a financial burden". It sold the project company to Shanghai Haizhimen Property Investment Management, in which it holds a 35 per cent interest, effectively leaving it with a remaining 35 per cent interest and the balance held by its new partners and shareholders. The sale price was 9.57 billion yuan (HK11.73 billion), but since most of that would be used to repay debts, ratings agency Standard & Poor's responded to news of the deal by saying it would not change its B minus rating. Shanghai Zendai's share price, which has fallen from HK 30 cents in December last year to close at 12.3 cents yesterday, continues to tumble on speculation it is looking for a buyer for its remaining 35 per cent stake in the development site. Yesterday it issued a statement to the stock exchange confirming speculation that it is in talks with possible buyers. The site is located between Yu Garden, a popular tourist spot, and Shiliupu, and would provide total gross floor area of about 270,000 square metres and an additional 100,000 square metres of underground space. Shanghai Zendai, which paid a record 9.22 billion yuan for the site in February last year, said the estimated net gain from the land disposal would be just 138,000 yuan. Separately, Chinney Alliance Group said it acquired a stake in a commercial property, Binjiang Intelligence Port in Hangzhou, for HK$38.57 million from LaSalle Asia Opportunity, a fund sponsored by LaSalle Investment Management.

Despite high government debt, mainland authorities will invest hundreds of billions of yuan in infrastructure projects over the next few years as part of its "go west" policy to develop poorer western provinces. The northwestern province of Gansu, for example, plans to invest 139.9 billion yuan (HK$170 billion) by 2015, of which 131.1 billion yuan will be invested in highways, 7.2 billion yuan in airports and 1.6 billion yuan in tourism projects, according to a bond prospectus issued by the Gansu Provincial Highway Aviation Tourism Investment Group. The group, a company owned by the Gansu transport bureau, will contribute 47.8 billion yuan of this amount, 92.1 billion yuan will come from bank loans and the remainder will be invested by the Ministry of Transport and the Gansu government. The company plans to issue 2 billion yuan of one-year bonds, with 40 per cent of the proceeds used to repay bank loans and 60 per cent for operational purposes. Investing in and operating Gansu province's highways, developing its airports and building tourism projects has resulted in a shortage inworking capital of 800 million to one billion yuan, the bond prospectus said, and the company planned to use 800 million yuan of the bond proceeds to make up that shortfall. Although the company's gearing ratio decreased from 67.7 per cent at the end of 2010 to 54.6 per cent on September 30, its financing costs rose from 1.26 billion yuan to 1.6 billion yuan. Its long-term bank borrowings rose 31 per cent to 53.55 billion yuan at September 30, the prospectus said, adding: "The company's debt burden is heavy and its financing costs are large. In the next three to five years, it faces heavy financing pressure." For the first nine months of this year, financing costs ate up 46 per cent of its revenue. The debt disclosed by all 231 local government financing vehicles that sold bonds up to December 10 totalled 3.96 trillion yuan, more than the size of the European bailout fund, according to Bloomberg. The debt load of 47 of the 56 local financing companies that issued bond prospectuses from October 1 to December 10 had increased this year, despite repeated warnings by the banking regulator of the need to control debt risks and speed up repayments. This year, 22 new major projects under the "go west" policy were launched with a total investment of 207.9 billion yuan, according to the website of the National Development and Reform Commission (NDRC). They include highways in provinces such as Gansu, Yunnan and Guizhou, metro rail projects in Nanning, the capital of the Guangxi Zhuang autonomous region, and an airport in Lhasa, the capital of Tibet. From 2000 to 2011, 3.1 trillion yuan has been invested in 165 projects under the policy, the NDRC said. Luo Ping, its director of transport planning, said: "The `go west' policy is a major focus of China's economic strategy, because the government wants to rebalance the economy and slow exports. Investments in the `go west' policy should not slow down in the next few years." However, Gary Wong, an analyst at Guotai Junan Securities, said: "Projects in western China may not be completed at the scale originally announced. The `go west' policy may not reach its investment target in 2012. Major infrastructure companies like China Railway Group (SEHK: 0390) are not that optimistic about fixed asset investment in the coming year." In the central city of Chongqing, investment in infrastructure including electricity, gas, water and transport rose 20.5 per cent to 164.4 billion yuan in the first 11 months of this year, 2.7 percentage points slower than in the first 10 months, according to the city's website.

Companies from the Chinese mainland have invested 174.6 million U.S. dollars into about 200 projects in Taiwan since the island allowed mainland investments on June 30, 2009, Taiwan's economic department said Tuesday. The department said in a report that mainland investors pumped 42.79 million U.S. dollars into the island from January to November this year, down 54.45 percent year-on-year. During the 11 months, the number of new mainland projects in Taiwan reached 98, up 28.9 percent year-on-year, it said. Meanwhile, Taiwanese companies invested in 530 projects on the mainland in the same 11-month period, up 30.54 percent year-on-year. The value of these investments reached 12.41 billion U.S. dollars, up 2 percent year-on-year, it said.

A Chinese scholar of foreign trade said Wednesday that a ruling by the U.S. Court of Appeals for the Federal Circuit (CAFC) was an "epoch-making" victory for Chinese exporters who have long suffered unfair countervailing duties from the United States on top of anti-dumping duties (AD). The CAFC decided Monday that countervailing duty (CVD) law should not apply to "non-market economy" (NME) countries in line with the U.S. Congress legislatively ratifying consistent interpretations that government payments cannot be characterized as "subsidies" in a NME context. "The ruling has provided clear judgment on the suitability for the U.S. to levy both anti-dumping and countervailing duties against a non-market economy," said Tu Xinquan, associate director of China National Institute of WTO at the University of International Business and Economics, in a comment reported by the Shanghai-based daily China Business News. The CAFC decision came after Chinese tire maker Hebei Starbright Tire Co. Ltd. and its U.S.-based parent company GPX International Tire Corporation appealed to the U.S. Court of International Trade (CIT) following a decision by the U.S. Commerce Department to levy a 14-percent CVD on Hebei Starbright Tire in August 2008, the newspaper reported. The CIT had ordered the U.S. Commerce Department not to impose CVD on goods from China because of the high likelihood of "double counting" when both CVD and AD were applied against goods from NME countries. Sun Yong, an expert for legal matters with Double Coin Holdings Ltd. said this ruling showed that Chinese tire companies have the right to seek their rightful interests, and that the legal judgement of a "double slapping" of both CVD and AD by the U.S. Commerce Department is not sound. However, Tu Xinquan warned that similar tricks from the U.S. government will not be stopped in future if its political motives for trade protection remain. CBN reported that a government official of China's Ministry of Commerce had told the newspaper Tuesday that the ministry has learned of the CAFC ruling and that it is currently addressing the case. 

With more Chinese investors like this, Europe’s outlook might not be so bleak after all. “When I go to Paris, it feels like I’ve returned home. My wife jokes that 400 years ago in a previous life I was French,” said Adam Tan, director of closely held HNA Group and chairman of its HNA Capital Holding financial-services arm. “She says that I have a romantic heart. I have a deep love for France.” The sharply dressed and English-speaking Mr. Tan is in the driver’s seat of an aggressive international expansion by HNA. Chinese money has become ubiquitous around the globe, but privately-held HNA’s approach differs from that of the predominately state-owned firms that have been snapping up mines and energy resources in recent years. HNA, which focuses on transport, logistics and tourism, is buying into the services sector, an area Chinese firms have traditionally neglected overseas. And whereas Chinese investment has until recently been focused on emerging markets, HNA is more interested in developed economies. Nominally that’s because the legal system makes it easier to do business, but there seems to be more to it than that. “Personally I really like Europe. My dream is to help my Chinese countrymen see such beautiful places” as Spain, he said. HNA’s flagship airline, Hainan Airlines, offers flights to Madrid and Barcelona. That affection stretches to HNA deals. HNA last week backed out of deal to take a 20% stake in Spanish hotel chain NH Hoteles, paying $15 million breakup fee. But Mr. Tan holds out hope that the two firms can still come together. “You know the song ‘Will you still love me tomorrow?’ I still love NH Hoteles, and will still love them the day after tomorrow,” said Mr. Tan. He said that love comes from NH’s ability to turn itself around and gradually reduce the size of its losses. He expects the company to post a profit in its next earnings report. He said the feels NH Hoteles still loves him too.

Baidu’s efforts to make nice with copyright owners may be starting to pay off. The U.S. Trade Representative, or USTR, has removed Chinese search giant Baidu from its name-and-shame list of “notorious” markets for piracy, and praised the company for resolving its years-long battle with the music industry through an agreement to post links to licensed music tracks from major record labels. Baidu’s removal from the list highlights how Chinese Internet companies are increasingly becoming the partners, rather than the enemies, of copyright owners seeking to distribute content in China. Chinese online video websites including Youku and Tudou were also once accused of providing unauthorized streaming of television shows and movies, but now license much of this content and provide it legally and even carry on intellectual property battles among themselves. Baidu also has an online video venture called Qiyi, which allows users to watch high-definition licensed content. In some cases, the websites have become the only channel for the content owners to distribute their content in China because of government restrictions on foreign content in theaters and on television. This year’s list “highlights positive developments,” the office said in a statement. “USTR applauds Chinese site Baidu, one of the world’s most visited sites and previously identified as an example of a site linking to infringing content, for entering into a licensing agreement with U.S. and other rights holders in the recording industry.” Remaining on the list from China are Alibaba Group Holding’s online shopping brand Taobao, which USTR said carries listings of “pirated and counterfeit goods” despite Taobao’s “significant efforts to address the problem.” Sohu.com’s search unit Sogou was listed for providing links to unlicensed music, while Beijing’s Silk Market and the China Small Commodities Market in Yiwu were listed as offline sources for infringing consumer goods. Alibaba Group spokesman John Spelich said in a statement that the company’s consumer-to-consumer website Taobao Marketplace and business-to-consumer website Taobao Mall “stand firmly in favor of protecting customers and sellers, as well as the IPR rights of brand owners.” He noted that brands including Coach, Ray-Ban, Procter & Gamble and Uniqlo list their products on Taobao.

Pundits once mocked Shanghai's Pudong district, a purpose-built version of Manhattan, as overdesigned and underoccupied, evidence in steel and glass of a property bubble of historic proportions. Deng Xiaoping sparked the transformation of Pudong's riverfront of warehouses with a 1990 utterance: "Shanghai is our trump card." A decade later, Pudong was Exhibit A for critics of an urban-development model guided by state planners, a soulless district where 70% of the buildings stood empty. Visiting economist Milton Friedman called it "a statist monument for a dead pharaoh on the level of the pyramids." Today, as worries of a Chinese property crash are back in force, there is an unlikely bright spot: Pudong. The district's transformation into a vibrant nexus for finance, trade and entertainment is testament to factors like the strong momentum of Chinese migration toward urban centers. Pudong was conceived as an international gateway—fronted by a world-class skyline—but its foundations today rest on domestic trends, including leaders' development plans and an expanding middle class. For watchers of China's property fluctuations—the focus of much angst since shocks in the world's second-largest economy could reverberate around the world—Pudong's ascendancy serves as a reminder of still-vast demand in China for new office and apartment buildings. One big question is whether Pudong's "build it and they will come" approach will work as well in cities without Shanghai's advantages: a strong industrial base, widespread prosperity and favorable geography at the mouth of the Yangtze River. As grandiose new skylines sprout across China, new urban centers are also replicating the infrastructure that was crucial to making Pudong's makeover viable. Apartment prices have started to weaken across China in recent months, including in Pudong. Still, Chinese cities are riding a powerful urbanization trend. Each year, 17 million people move from rural to urban areas in China—equivalent to the populations of the four biggest U.S. cities. Pudong's planners were able to harness this vast internal migration, attracting armies of workers who built the infrastructure, provided a pool of labor for its factories and filled its apartments. Two million people moved to Pudong in 10 years. Pudong was advertised as China's international window, a marketing tactic now widely copied. Hardly any Chinese downtown lacks a World Trade Center or plans for global finance. In fact, analysts say locals were far more important to Pudong's evolution than were foreigners, as they will be in newer urban areas. Sam Crispin's bullish reports on Pudong a decade ago made the property analyst a contrarian. Now, as director of China real estate at PricewaterhouseCoopers LLC, Mr. Crispin says growing talk about China's unoccupied "ghost cities" reminds him of the doubts many had about Pudong. "A lot of the commentary frankly was quite similar to the ideas that are being bandied about for the property market today," he says. "The reasoning is quite similar—who's going to occupy all those buildings?" Mr. Crispin argues that the lesson of Pudong is how badly Chinese demand was underestimated. Real-estate development, he says, tends to produce "sensationalist" viewpoints. Within weeks of Mr. Deng's 1990 endorsement, the government unveiled a blueprint and earmarked billions of dollars to pay for it. A garish rocket-shaped tower higher than the Empire State Building was the kickoff project. Positioned at Pudong's tip, the Oriental Pearl Tower was a cartoonish totem for China's race into modernity and an emphatic counterpoint to the Bund, a strip of colonial-era buildings on the opposite Puxi bank of the Huangpu River. Twice the surface area of Manhattan has been constructed in Pudong since 1995 —120 million square meters of floor space by the official tally, including more than 70 skyscrapers. But according to international real-estate agency Jones Lang LaSalle, less of Pudong's grade-A office space is empty than Manhattan's—9.5% versus 10.3%. The space leases for $693 per square meter annually, nearly a tenth more than Midtown Manhattan. Initially, Pudong drew snickers faster than tenants. "The Shanghai Bubble," a 1998 essay by Joshua Cooper Ramo, compared the city's building "explosion" with Europe's postwar reconstruction. "The result is a kind of what-is-wrong-with-this-picture economics," the then-magazine editor wrote. Today, Mr. Ramo, vice chairman at Kissinger Associates Inc., calls Pudong the capital of Chinese "exceptionalism" and attributes its rise to the central government's use of the massive economic tools at its disposal. Gordon Chang, author of the 2001 book "The Coming Collapse of China," charged that Pudong's glitz masked an unsustainable model. "I'm definitely in the not-impressed category. You can always get growth when you spend money," he says. Still, spurred by 25 river crossings and other infrastructure, Shanghai's center of gravity has shifted. "You came to see they actually did what they said," says Stephen White, managing director of iaction, an architectural firm that initially built Pudong offices for international banks but now sees mostly Chinese take-up. Apple Inc. chose Pudong for its first Shanghai store. Walt Disney Co. is erecting the biggest-ever Cinderella Castle there. Citigroup Inc. and HSBC Holdings PLC own Pudong towers. Also arriving were tenants like the trade-development office of Changzhou, a Chinese city that uses Pudong "like a bridge" to engage foreign investors, says its director Thomas Zhang. Filling the district hinged on mindset changes for Shanghai natives like Yao Wei, a 40-something real-estate executive who long swore by the adage "Rather a bed in Puxi than a house in Pudong." Ms. Yao made one of her first visits to Pudong in 1994 to check a client's plan to rent restaurant space atop the yet-uncompleted Pearl Tower. "It's too early," she advised. A decade later, she offered the same advice to another client. But Ms. Yao now owns a modern riverside apartment in Pudong and marvels at its affordability compared with London. The twinkling cityscape from her balcony mesmerizes guests, she says. "They come to the building and say, 'Oh, this is Shanghai."

Knowing the "secret" of cutting prices in Chinese will help you enjoy your shopping fun. An expert shopper isn't always an expert bargainer. Learn the tricks of the trade from Zhang Ayi, a woman who's a legend at both. 购物行家不一定就是砍价高手。让我们跟随张阿姨一起,学习砍价秘籍吧。 I was never very good at bargaining. Every time girlfriends asked what I paid for a new jacket, which always happens here, I'd lie, offering up a third of what I actually paid. They'd still tell me, with an obnoxious sniff, that I was pranked. This smarts. My humiliation lasted until I met Zhang Ayi, who is a born bargainer. Zhang Ayi can walk into any tourist market, anywhere in the world, and always emerges with amazing local crafts and an almost-unscathed wallet. She used observation, performance, drama, and guts to cut prices. She embarked on long, arduous battles that put patience and energy to the test. Once you're in the stall, that's when the techniques and scripts start to matter. First, remember never to show you're interested. For such a widely known rule, this is always the first to be forgotten.

China's Vice President Xi Jinping (L) talks with Vietnam's General Secretary of the Communist Party Nguyen Phu Trong at the Party's Office in Hanoi December 21, 2011. The Ho Chi Minh Communist Youth Union (HCMCYU) and the Communist Youth League of China have affirmed their determination to boost the development of the two countries' youth relations. First secretary of the HCMCYU Central Committee Nguyen Dac Vinh and first secretary of the Secretariat of the Communist Youth League of China Central Committee Lu Hao made the affirmation at a working session here on Tuesday, which took place within the framework of the 12th Vietnam-China Youth Friendship Meeting program. The two sides agreed that their youth unions would increase exchange and jointly realize policies and common perception of the two countries' leaders about people-to-people exchange. They underlined the role of youths in upholding the friendship between the two parties, states and peoples. The two sides spoke highly of the efficiency of the youth cadres' training program, the exchange of practical experience and research results and the annual organization of the Vietnam- China Youth Friendship Meeting, and the exchange for youths in the border areas which, they said, have attracted the participation of thousands of the two countries' youths.

US court concludes tariffs on Chinese goods illegal - US companies from steel to paper makers may lose a tool they've used to fight perceived undervalued Chinese imports after a US appeals court rejected the imposition of duties to offset alleged foreign government subsidies. US law doesn't let the Commerce Department levy duties on goods from nations, such as China, that lack a market to set prices, a US Court of Appeals in Washington said on Monday in a unanimous ruling. Congressional action is needed to give the agency that power, the judges ruled. The decision rejected arguments by Titan International Inc, the top US maker of off-road tires, Bridgestone Americas Inc, a unit of Tokyo-based Bridgestone Corp, and the AFL-CIO labor federation. It may take years for the companies to appeal or press for legislation, said George Thompson, a lawyer at Neville Peterson LLP in Washington. "Usually something of this magnitude is going to be part of an overall trade bill, and I don't see any of those coming down the road anytime soon," Thompson, who has represented both US and foreign companies, said in an interview. "You'd be foolish to start a case, based on the likelihood that this is going to be the final decision," he said. The United States uses more than 300 anti-dumping and countervailing duty orders to shield American-made goods, from honey to bedroom furniture, against global competition. About half the orders target iron and steel products. China cases - China accounts for one-third of all US cases, the most of any country, including about 100 anti-dumping and more than two dozen countervailing duty orders, according to the US International Trade Commission. Anti-dumping duties are applied to goods accused of being sold overseas at or below the price in the home country. Countervailing duties aim to offset the benefits of alleged government subsidies to industries. In laws passed in 1988 and 1994, "Congress adopted the position that countervailing duty law does not apply to non-market economy countries", Judge Timothy Dyk wrote in the decision posted on the court's website on Monday. "If Commerce believes that the law should be changed, the appropriate approach is to seek legislative change." The three-judge panel upheld a US Court of International Trade decision that found the Commerce Department action on Chinese tires was illegal. Charles Miller, a spokesman for the Justice Department, which presented the US case, declined to comment on the ruling. A phone message for Joe Dorn, an attorney with King & Spalding LLP representing Bridgestone Americas, wasn't returned. A spokeswoman for Representative Kevin Brady, who heads the House Ways and Means Committee's trade panel, said the Texas Republican is reviewing the decision. Congressional action - "I've always felt that if the courts were to ultimately declare that the administration cannot apply the anti-subsidy law to China, Congress will act within about a week to make it clear that the administration can," said David Spooner, a former Commerce Department official now at the law firm Squire Sanders & Dempsey LLP in Washington. The Commerce Department under former US president George W. Bush reversed course on more than two decades of precedent and allowed both anti-dumping duties and countervailing duties against imports from China. The decision essentially "throws out" the countervailing duty cases filed against China at the Commerce Department since 2007, said Daniel Porter, a lawyer at Winston & Strawn LLP in Washington who argued in favor of the Chinese producers. The solar-power industry has been among those petitioning for tariffs on Chinese imports. The US International Trade Commission on Dec 2 took the first step toward imposing added duties on Chinese solar cells, saying alleged subsidies for the products harm equipment makers such as the US unit of SolarWorld AG, which filed a case at the Commerce Department

Hong Kong*:  Dec 22 2011 Share

Estate battles involving Hong Kong’s richest families never seem to end. This time, the dispute involves the fortune of late tycoon Henry Fok Ying-tung, vice-chairman of the Chinese People’s Consultative Conference before his death from cancer in 2006 at 83. In a lawsuit launched on Tuesday, one of Henry Fok’s sons, Benjamin Fok, filed to have his brother, Silver Bauhinia Star winner Ian Fok Chun-wan, removed from his role as co-executor of their father’s estate. Henry Fok was known for his pioneering efforts in developing Nansha as a future hub of the Pearl River Delta. Forbes magazine listed his descendants collectively in ninth place in a list of Hong Kong’s richest in 2008. Benjamin and Ian are brothers from the first of Henry Fok’s three marriages, which together produced 13 children. The lawsuit says Henry Fok’s last will, dated 1978, had named the two brothers, their aunt – Henry Fok’s sister Fok Mo-kan, and a brother-in-law of the late tycoon as executors and trustees. The brother-in-law has since died.

http://www.youtube.com/watch?v=wXb8RjGLcZk

First division Citizen AA's Nigerian central defender Festus Baise scores a spectacular own goal from an overhead kick on December 16, creating an internet sensation for the Hong Kong football team. A Hong Kong footballer is the talk of the soccer world after scoring one of the most amazing own goals ever recorded , becoming an internet sensation in a matter of days. Last Friday night, Sunray Cave JC Sun Hei played Citizen AA in the Hong Kong First Division. Citizen AA were leading 3-0 in the second half when Sun Hei’s Jack Sealy raced down the right wing and crossed the ball. Citizen’s Nigerian central defender, Festus Baise, raced back and instinctively leaped to clear the ball away with a headlong scorpion-kick – by acrobatically diving heels-over-head to connect with the ball. But instead of a spectacular clearance, it ended up as one of the most memorable own goals of all time, as the ball soared high over his goalkeeper’s reach, dropping snuggly into the top corner of the net. The 957 fans who had gathered at Mong Kok Stadium to watch the encounter knew they’d witnessed something special, but they weren’t the only ones. The game had been televised, and soon it was being shown over and over again on the internet. It has since become a YouTube phenomenon, receiving over half a million hits already – and the number is growing. “It was a beautiful goal, but a painful one,” the 31-year-old Nigerian defender laughed. “So many people have been calling me about this. It’s funny, but it’s terrible too. This is the first time I’ve scored an own goal.” Baise explained he was trying to get back into defence and cover the incoming cross, but the ball came in just behind him, and he could only clear it by doing a scorpion-kick. “I want people to know I’ve scored other beautiful goals but for my team, not for the opposition,” he said. Baise has played in Hong Kong for the past six and a half years – the first six months with South China, followed by six years with Citizen AA – and he won the Hong Kong Senior Challenge Shield last season with Citizen AA. Luckily for Baise his own goal in the 79th minute did not affect his side’s chances as Citizen went on to win the match 3-2.

Shares of Hang Ten Group Holdings jumped more than 55 per cent to a one-year high after Li & Fung (SEHK: 0494) (Retailing) offered to buy the apparel and accessories retailer for HK$2.7 billion (US$347 million) in a bid to beef up its presence in Asia. Privately held Li & Fung (Retailing), a sister company of listed trading company Li & Fung Limited, said on Monday that it had made a conditional offer for all shares of Hang Ten at HK$2.70 each, a 59 per cent premium over the last traded price on December 15. “It’s a good deal for Hang Ten shareholders as it offers a way for them to cash in their investment,” said Ample Capital analyst William Lo. “The company’s network in Asia is attractive for Li & Fung (Retailing), which wants to beef up its presence in the region, but the pricing is a bit high.” Analysts said they saw synergy in the deal, while major Hang Ten shareholders were also expected to be happy with the offer. Major shareholders, including YGM Trading, representing an aggregate 69.06 per cent of Hang Ten had accepted the offer from Li & Fung (Retailing), Hang Ten said in a filing to the Hong Kong bourse. In a separate statement, fashion retailer YGM, which holds licences for Aquascutum in Asia and French fashion brand Guy Laroche, said it had accepted an offer from Li & Fung (Retailing) to buy its 21.8 per cent stake in Hang Ten and expected a gain of HK$340 million (US$43.7 million) from the deal. YGM shares rose to a three-month high of HK$19.48 on Tuesday morning. At 11.49am, they were trading at HK$18.58, up 5.5 per cent. Hang Ten shares surged 55.3 per cent to a year high of HK$2.64. The Hang Seng Index was up 0.52 per cent. Analysts said the bid would have a neutral impact on listed Li & Fungd, manager of supply chains for retailers including Wal-Mart Stores Inc and Target Corp, which was not involved in the deal. Li & Fung (Retailing) is an indirect subsidiary of privately held Li & Fung (1937), parent of Hong Kong-listed exporter Li & Fung. The retailing businesses under Li & Fung (Retailing) are unrelated to the listed company. Li & Fung (Retailing) said in a statement that the planned acquisition would allow it to enter the growing mass market segment for casual fashion brands, and to increase its presence in key Asian markets. “Hang Ten, which does not really stand out from the crowd, is set to benefit from the involvement of the new shareholder,” said Conita Hung, head of equity research at Delta Asia Financial Group. “The expertise of Li & Fung (Retailing) in the field is likely to boost Hang Ten’s prospects.” At the end of March, Hang Ten operated about 790 retail outlets under the brands Hang Ten, H&T and Arnold Palmer in mainland China, Hong Kong, Macau, Malaysia, Singapore, South Korea and Taiwan. Li & Fung (Retailing), which owns convenience stores and cake shop operator Convenience Retail Asia and luxury menswear retailer Trinity Limited, had recently planned a joint venture with retailer Toys R Us focusing on Southeast Asia and Greater China. Li & Fung (Retailing)’s operations extend from Greater China to Indonesia, Malaysia, Singapore, South Korea, Thailand and other Southeast Asian countries through a combined network of more than 1,100 stores.

Hong Kong braces for mainland luxury spree - As the Christmas season and New Year approach, customers from the Chinese mainland are expected to swarm into Hong Kong to purchase luxury items. Gifts for business associates play a big part of the shopping spree, according to the latest China Luxury Market Study released by Bain & Company. With an increasing number of individuals with high net worth and rising disposable income among affluent households and the middle class, sales of luxury goods in the Chinese mainland will grow by 25 to 30 percent overall in 2011. More than 60 percent of the purchases will come from first-time buyers of luxury goods, said the report. "Different from other cultures, who often send a bottle of wine or flowers, Chinese people prefer to send luxury gifts for a better business relationship," said Sheng Lei, managing director of the Shanghai Top Marques Luxury Show. "To get after-sales service or make it easier to exchange items, 80 to 90 percent of luxury item buyers make their purchases in China," Sheng told the Global Times. The second generation of rich families has also become the mainstay of the mainland luxury market and will be the most important driving force over the next five to 10 years, according to Sheng. "The average age of Lamborghini owners is less than 30 years old. Different from their parents who buy luxury goods for business purposes, the younger generation is more willing to spend money on its own needs," said Sheng. "In less than five years, the Chinese consumer has transformed from a niche emerging market to a core target for global luxury brands," said Bruno Lannes, head of Bain's Consumer Products and Retail Practice in Greater China and lead author of the study.

The Chinese People's Liberation Army garrison in Macao holds the national flag raising ceremony to celebrate the 12th anniversary of Macao's return to the motherland in Macao, south China, Dec. 20, 2011.

Late Taiwanese tycoon Wang Yung-ching's eldest son yesterday filed a claim in Hong Kong's High Court for US$4 billion, saying it was the start of a worldwide fight. According to a writ filed by Wang's eldest son, Winston Wong Wen-Young, an independent investigation has put the true value of Wang's global estate at over US$17 billion. The investigation has also found the value of assets identified in Hong Kong to be in excess of US$4 billion, and include the Zhangzhou Houshi Power Plant in Fujian province , the Hua Yang Luoyang Electric Power Company in Henan and the 530-room Hua Yang Plaza Hotel in Luoyang . The power plants and the hotel are owned or partially owned by Hua Yang Investment (HK) Ltd, a Hong Kong-registered company, in which 10 management or employees were named as defendants, including Susan Wang Ruey-hwa, a businesswoman in Taiwan; Sandy Wang Ruey-yu; and Diana Wang Ruey-huei - all daughters of Wang and his third wife. Hung Wen-hsiung and Jack Jao Chien-fang, both from Taiwan and long-time Formosa Plastics Group finance employees who were entrusted to manage Wang's personal finances, were also named as defendants. Jao is the sole director of Hua Yang Investment. The writ says the defendants have wrongly siphoned off Wang's assets by using Hong Kong-based and other corporate vehicles purportedly owned by various trusts that were not subject to public scrutiny. These trusts were essentially a series of businesses owned and controlled by some of the defendants to the detriment of Wong, and other heirs and beneficiaries of Wang's estate. Wong said the international investigation had uncovered "a web of deception intended to conceal his assets and deny the majority of his heirs, including my brother and sisters, their rightful legacy". "My legal team and I intend to show the Hong Kong court how businesses and assets belonging to my father were wrongfully diverted into shadow corporations, bank accounts and secretive off-shore trusts," Wong said, adding: "As Wang's eldest son, I will carry this fight to other jurisdictions wherever necessary." Wong is an elder brother of Cher Wang, a shareholder in Hong Kong's dominant free-to-air broadcaster TVB (SEHK: 0511) and co-founder and chairwoman of Taiwan-based smartphone maker HTC Corp. Both Wong's office and the Formosa Plastics Group declined to comment on the lawsuit. The late Wang had three wives, but only the first wife, Kuo Yueh-lan, was registered as his official wife. Kuo does not have any children and has legally adopted Wong, who is from Wang's second wife, as her official son.

 China*:  Dec 22 2011 Share

Japan is in talks to purchase Chinese government debt to strengthen economic ties, Japan's finance minister said on Tuesday, a tentative step toward diversification of Japan's large foreign exchange reserves. No formal decision has been reached yet, but leaders of both countries will need to discuss the matter at a summit this month, Finance Minister Jun Azumi said. Japan’s trust in dollar assets remains unshaken, Azumi was careful to point out. Economists and traders have often said Japan’s reserves, the world’s second-largest after China’s, are ripe for diversification as they are believed to be mostly held in dollars. “It is true to say that we are discussing the matter, but no formal decision has been made yet,” Azumi told reporters. “Should we proceed with this plan, I don’t think it would cause excessive disruption. There is no change to our trust in the dollar.” Japan’s foreign exchange fund special account may buy up to 780 billion yen or $10 billion of yuan-denominated government bonds as part of a proposed bilateral currency and financial agreement, the Nikkei newspaper reported on Tuesday. The two countries may sign the agreement when their leaders meet for a summit on Sunday, the Nikkei said. China already has Japanese government bonds as part of its foreign exchange reserves, it added. China issued 1.4 trillion yuan ($220.90 billion) worth of government bonds in 2009, up 55 per cent from the previous year, the Nikkei said. Japan, which now holds most of its reserves in dollars, will also aid Chinese efforts to nurture an offshore market for yuan-denominated transactions, the daily added. Japan has accumulated dollars in its reserves due to regular currency intervention to weaken the yen, and diversifying away from the dollar has always been a sensitive subject for Japanese policymakers who worried that mere talk of the matter could push the yen higher and hurt exports. The dollar was little changed at 78.00 yen as traders eyed a looming funding crisis for some European governments. Japan intervened at the end of October and sold its currency after the dollar hit a record low versus the yen and has repeatedly said it is prepared to intervene again if necessary. To ensure ample firepower, the government decided to raise its intervention war chest to 195 trillion yen ($2.50 trillion) from 165 trillion yen for the fiscal year ending in March, according to a statement.

Photo taken on Aug. 10, 2011 shows containers at the harbor of Ningbo, east China's Zhejiang Province. The latest statistics showed that the total foreign trade in Zhejiang Province from January to November this year reached 281.45 billion U.S. dollars, increasing 22.6 percent year on year. The imports and exports of private enterprises were up to 154.19 billion U.S. dollars, rising 27 percent compared with last year and accounting for 54.8 percent of the total volume.

‘Flying Swords of Dragon Gate’ was outpaced by ‘The Flowers of War’ at the Chinese box office. Christian Bale won the first round against Jet Li (李连杰). “The Flowers of War” (金陵十三钗) scored big with moviegoers on its opening weekend in China, pulling in 152.1 million yuan ($24 million) for the four days ended Sunday, according to media-research firm EntGroup. (The film’s official release date was Friday, but movie theaters got a jump on the highly anticipated film and began showing it on Thursday.) In director Zhang Yimou’s (張藝謀) historical drama, the Batman star plays an American swept up in the events of Japan’s brutal occupation of Nanjing in 1937. That beat “Flying Swords of Dragon Gate” (龍門飛甲), which came in second during the same four-day period with 141.7 million yuan. Mr. Li stars as a Ming Dynasty general in director Tsui Hark’s (徐克) 3-D martial-arts actioner. Both movies rode waves of publicity. “The Flowers of War” got an extra shot of hype late last week when Mr. Bale was roughed up by several security officers outside the home of a prominent Chinese human-rights activist. CNN video showed plainclothes security men pushing around the Hollywood star as he attempted to visit the home of Chen Guangcheng, a blind legal activist being held in his home in eastern China. Mr. Bale eventually left without meeting the activist. The news of Mr. Bale’s chilly encounter with security detail was widely circulated on the Internet, but it got limited attention in China. Searches for his Chinese name were blocked on the popular Sina Weibo microblogging site. There’s much at stake for “The Flowers of War.” With a budget of nearly $100 million, it’s the most expensive movie ever made in China. Likewise, “Flying Swords” is one of the costliest 3-D movies produced in the country. While China’s box office continues to grow — revenue for this year through mid-December stood at more than 12 billion yuan, up from 10.17 billion yuan in 2010 — both movies still have a long way to go to compete for box-office supremacy. “Let the Bullets Fly” (讓子彈飛), an action-adventure movie that was released a year ago this month, holds the title of box-office champion for a Chinese-language movie in the domestic market, earning roughly $100 million. “Avatar” remains the biggest earner in China, having taken in more than $200 million during its release two years ago.

Chinese athlete Li Ning captured attention at the 2008 Beijing Olympics as he soared high above National Stadium with torch in hand during the opening ceremony, showcasing China's aspirations as well as his own ambitions to create a major global sports-apparel brand. Three years later, Mr. Li has come back to Earth. His eponymous Li Ning Co.—which made a big push into the U.S. by signing high-profile endorsers like basketball star Shaquille O'Neal—has watched profits drop. It's also endured an exodus of designers and other employees from its main U.S. outpost in Portland, Ore. Its Hong Kong-listed shares have responded in kind, having fallen 63% this year, far outpacing the market's overall 29% drop. Li Ning's troubles underscore the difficulty China has had in creating new global brands to match its manufacturing prowess. Some have made progress, such as computer maker Lenovo Group Ltd., though it was helped by the purchase of International Business Machine Corp.'s personal-computer business in 2005. Most have made scant advancements in the face of sophisticated global competitors and a stubborn lack of name recognition. Beyond China's borders, 83% of consumers can't name a Chinese brand or company, according to research from agency Millward Brown and media company WPP PLC. In China, Li Ning ranks third in sales among sportswear companies, behind Nike and Adidas. Now, the 22-year-old Beijing-based company is overhauling its approach in the U.S. market - "The problem is that they are building overseas at a time when they've lost so much of their vision at home," said Shaun Rein, founder of Shanghai-based consulting firm China Market Research Group. Mr. Li, the sports-apparel company's founder, and its executives declined to be interviewed, saying in a statement that "we remain committed to developing the Li Ning brand." But a new U.S. partner plans a marketing relaunch in the U.S. under the name Digital Li-Ning Co. that will first focus on online sales before an anticipated opening of brick-and-mortar stores. "We're being calculated about our approach, analyzing online data to understand the U.S. market before we expand further," said George Lu, chief executive of Digital Li-Ning. "We want this brand to connect with Americans." Li Ning unveiled the new effort Monday. The redesigned U.S. website says the company is "the biggest brand you've never heard of." Mr. Li, who won six medals, three of which were gold, in gymnastic events at the 1984 Olympics in Los Angeles, is one of China's most famous athletes. Still, the company has struggled to broaden awareness. An abundance of inventory has caused many retail outlets to sell Li Ning apparel at a discount, hurting the brand's aspirations to compete with Nike, according to analysts at Barclays. Li Ning's profit fell nearly 50% in the first half of 2011 from a year ago, the most recent measure of its performance. Revenue for the first half dropped nearly 5% to 4.3 billion yuan, or roughly $678 million. The company doesn't break out U.S. sales data. Li Ning's U.S. push included endorsers such as Mr. O'Neal, who last played basketball for the Boston Celtics, and Evan Turner of the Philadelphia 76ers. It opened a global design center in Portland, not far from Nike's headquarters in Beaverton, four years ago to design shoes for the U.S. market. Two years later it built a Portland showroom. Li Ning has tried to find its niche, striking distribution deals with U.S.-based badminton clubs, according to one Li Ning employee. It even added a ping-pong parlor at its showroom to draw in trendsetting customers. Last year, the company also struck deals with Foot Locker Inc. and its subsidiary Champs Sports to get its products to market. But the Portland operation has faced difficulties. About half of the 30 designers and other employees brought in to create tennis shoes and apparel for the U.S. market, have exited this year. Li Ning executives declined to comment on the matter. The new Digital Li-Ning push involves Acquity Group, a Chicago-based brand-consulting and private-equity firm. At the beginning of this year, it signed a joint-venture agreement with the Chinese company, giving Li Ning a 20% stake in the new venture. Li Ning has terminated the distribution deals with Champs and Foot Locker and has taken over management of its website. It is unclear how Mr. Lu's venture will fit in with the Portland-based effort. The two divisions representing Li Ning have appeared at trade shows with separate booths, according to the Li Ning employee. Li Ning executives said the expansion into the U.S. market has been experimental, allowing them to explore the needs of American consumers. Mr. Lu says he has hired his own staff of 20 to design a new image for Li Ning aimed at tapping into the common view in the U.S. that Eastern culture understands nature, balance and a mind-body connection. He has designed his own product line that isn't sold in the Portland showroom. A men's running shoe for $80 is made of a mesh material that "accommodates natural gait," the company website says. Lotus yoga pants sell for $55 and are good for "precision asana alignments and of course, the post-workout latte." Through Mr. Lu's plan, U.S. consumers will learn about the brand through community events with Mr. O'Neal and at sporting-goods stores. The joint venture may be the right move for Li Ning, said Mr. Rein of China Market Research Group. Other multinational companies, such as McDonald's Corp. and Starbucks Corp., have avoided risk by letting separate companies build their businesses abroad, he said. Earlier this year, Starbucks bought out its Chinese joint-venture partner Maxim's Caterers Ltd., giving the U.S. coffee company full ownership of Starbucks retail outlets in six Chinese regions.

A government-backed blue book unveiled Monday estimated that the country's urban population will outnumber the rural population by the end of 2011 at the current speed of urbanization. According to China's latest nationwide census that wrapped up in 2010, China's urban population accounted for 49.68 percent of the total population. "If the rural population really outnumbers the urban population, it will be a significant breaking point for China in changing its thousand-year-old farmer-dominated population structure," the blue book said. It will not only mean a simple alteration in the percentage figure of the urban population, but will also mean profound changes in people's lifestyles, employment, consumption and even values, it said. The blue book said China's millions of migrant workers had acquired increasing income growth, but more than 60 percent of them lived separately from their family members. With a rapid rate of urbanization since China adopted an opening-up and reform policy at the end of the 1970s, millions of farmers left their rural homes to find seasonal jobs in the construction and service industries. Estimates put the country's number of migrant workers at over 240 million people, a number roughly equal to the entire US population. Compiled by the Chinese Academy of Social Sciences (CASS), the book said that about 40 percent of migrant workers had chosen to relocate their families to urban areas, while 60 percent left either their spouse or children in rural homes. "Even migrant workers who have settled family members in urban areas may live in different cities than their families," said Li Wei, a researcher with the Institute of Sociology of the CASS. Meanwhile, Chinese farmers who have not left rural areas are also seeing increasing incomes. The book said that urban residents' disposable income per capita was 16,301 yuan (2,574 US dollars) in the first three quarters of 2011, marking a 7.8 percent jump compared with that of 2010. Rural residents' cash income per capita during the period was 5,878 yuan, marking a 13.6 percent increase that has outpaced the income increases for urban residents.

Yabuli Ski Resort in Northeast China's Heilongjiang province is the nation's top ski spot, and it serves as the primary training venue for national teams. China's nascent skiing industry has been building up in the past decade to experience its current boom. In 1996, there were fewer than 10,000 skiers and nine small-sized ski resorts across the country. At the end of last year, there were about 5 million skiers and 200 resorts, figures from the China Ski Association show. Previously seen as an elite sport, skiing is now being embraced by people from all walks of life. The number of people skiing in China is expected to double between now and 2015. The industry output value will be nearly 4 billion yuan ($629 million, 469 million euros) at that time, industry research firm CIConsulting predicts. The sport is also spreading from the north to locations further south, reaching out to more people. Although ski resorts here are still not as well-known as their established counterparts in Europe, skiers have found that these emerging destinations offer decent slopes with lower prices. They are also considered to be great places to meet other skiers.

December 14th, at the United States Embassy in Beijing, American Ambassador to China Gary Lock (fourth from left) and six Chinese citizens who received visas to America take a group photo. Number of visas to America processed in the mainland reaches 1 million, Gary Locke personally presents visas. December 14th, at the United States Embassy in Beijing, American Ambassador Gary Locke (first on right) issues visas to visa-applicant Mr. Yu and his family of three. That day, the American Embassy Consulate announced that as of last week, the number of visa applications Mission China has processed this year reached 1 million, an increase of 34% from last year. To celebrate this special occasion, the embassy held a special visa issuing ceremony where American Ambassador to China Gary Locke personally handed visas to several Chinese applicants. December 14th, at the United States Embassy in Beijing, American Ambassador to China Gary Locke (first on right) interviews American visa applicant Mr. Yu’s and his family, the couple planning to take their child to Disneyland in the United States. Minister Counselor for Consular Affairs Charles Bennett says that China currently makes up 11% of the total visa workload for the United States around the world, and that this year Mission China has issued visas to 90% of visa applications.

Hong Kong*:  Dec 21 2011 Share

Soldiers and officers from the People's Liberation Army Hong Kong Garrison visit residents of a nursing home of Yan Chai Hospital in Hong Kong yesterday to jointly celebrate the upcoming Christmas. Representatives from the PLA Hong Kong troops will also meet children at the kindergarten section of Hong Kong's Munsang College today to send them season's greetings.

The stamp duty and charges for inbound mainland tour groups will likely be increased to finance new regulations for the travel industry. The Commerce and Economic Development Bureau is set to establish a new independent statutory body to regulate the travel industry. It will take over the tourism regulatory functions of the Travel Industry Council of Hong Kong, according to a source. The total operating costs of the new measures are expected to be more than HK$50 million a year, compared to the HK$24 million annual expenses of the council. Once the new body is set up, the reallocation of stamp duty and charges for mainland tour groups will be subject to detailed discussion. The bureau conducted consultations and a thorough review of the council's regulatory structure six months ago. It reviewed the role of the council in the wake of several serious disputes involving local tour guides and mainland tourists in recent years. The incidents were due to unacceptable behavior of the local guides. Results will be released this afternoon. The purpose of setting up the new body is to confer the regulatory power of the council in four main categories namely licensing, monitoring, inspecting and penalizing travel agencies that violate laws. The bureau will draft legal regulatory powers for the new body to be submitted to the Legislative Council. The new authority will essentially function on the current set of guidelines. It will consist of more than 70 staff with the number of non- industry practitioners being greater than those in the industry. But the exact ratio of industry practitioners to council committee members is still under negotiation. However, the council will retain the power of training young talent, advertising and crisis management. If Hongkongers are involved in accidents overseas or non- regulatory duties require to be performed in the travel industry, the government will still consider providing financial aid to the council.

Boeing 747-8s at a factory in Washington state. The freighter's large capacity can make it hard to fill during economic downturns. Cathay Pacific Airways (SEHK: 0293), the largest global cargo airline, has cut capacity growth to 10 per cent from the planned 17 per cent next year by deferring delivery of two new freighters amid a bleak industry outlook. Six of the 10 Boeing 747-8 freighters, which were to join Cathay's fleet by the end of next year, will now be delivered in two phases - four by next year and two in 2013. However, four of these freighters, delivered earlier, have already been deployed on the transpacific routes. Three of the freighters were seen parked yesterday, reflecting the sluggish air cargo market. The freighters can hold 16 per cent more cargo than B747-400Fs and can carry up to 134 tonnes, as they have a wider fuselage and are more fuel-efficient. But the larger capacity also makes it more difficult to fill them to capacity in market downturns. The outlook for air cargo demand appears dim for the first quarter of next year, especially as the Lunar New Year falls on January 23 rather than in February, which is usually the case. The earlier-than-usual festive season means mainland factories will close for holidays in January. Freight forwarders, the brokers between airlines and companies shipping their goods, are refraining from signing minimum-guarantee contracts with airlines for new cargo space, as they are struggling to find shippers to fill the existing contracted cargo space. "We will be very prudent in negotiating the terms with airlines," said an executive from a Hong Kong freight forwarding firm, who did not want to be named. "We will slash the committed volume and the contract price for next year." Cathay and other airlines usually sell cargo space using contracts and spot prices to secure more balanced sales due to the peaks and troughs of air cargo demand. Some freight forwarders are set to suffer big losses this year, as they had signed contracted volumes at HK$20 a kg kilogram of shipment earlier this year, while the spot price has now dived to HK$15 a kg for long-haul routes to Europe and the United States. The air cargo business is highly cyclical. In the last downturn in 2008, Cathay had to park two freighters as cargo demand from North America fell sharply. Currently, Cathay has yet to make a decision on grounding its freighters. Including the HK$5.5 billion cargo terminal under construction at Chek Lap Kok airport, Cathay has set aside HK$20 billion for its investment in freighters and cargo-related facilities by 2015. The airline remains bullish on the long-term outlook of the cargo business in the region because of the mainland's growth potential. In the longer term, global air cargo traffic is expected to expand at about 6 per cent annually, with much of the growth coming from Asia, according to a Cathay company newsletter last month, which quoted chief executive John Slosar.

A graphic showing how this year's display might look. The government has given the Tourism Board HK$3 million to help pay for it. The New Year's countdown fireworks show will be on the taxpayers' tab this year, as two property giants decided to stop sponsoring the event after four years of support. The end of their support will also mark the last time the spectacular is held on the landmark 88-storey Two IFC, a joint development by Sun Hung Kai Properties (SEHK: 0016), Henderson Land (SEHK: 0012) - the two sponsoring developers - and Towngas (SEHK: 0003). The two companies announced in October that they would stop sponsoring the HK$8.5 million event, but would provide the same venue for this year. That led to a frenzied search for new sponsors by the Hong Kong Tourism Board, Anthony Lau Chun-hon, the board's executive director, said yesterday. "Time was tight, so my colleagues had to work longer hours to try to find sponsorship for the event, but until today we had not found any suitable sponsor," he said. That is why on top of the HK$5.5 million that the board was prepared to pay, it had obtained funding support of HK$3 million from a government fund, he said. "We are grateful for the government's support." Despite the sponsors' withdrawal, Lau said the board was determined to continue putting the show on because "it is worth it". "The amount of media coverage it gets every year will help promote Hong Kong to people all over the world," he said. After this year, the show would probably be held on one of the famed buildings flanking Victoria Harbour, he said. The event's budget would not be reduced, because "events like this are to be made bigger and better every year", he said. The theme of the display, which will begin seconds before next year arrives and continue for four minutes into the new year, will be "Soaring dragon with a happy heart". This year's fireworks would include, for the first time, the words "Happy New Year" spelled out in pyrotechnics above Victoria Harbour, Lau said. Spectators will see fireworks shooting out from three sides of Two IFC, the city's tallest building. Fireworks will be launched from 10 landmark buildings on Hong Kong Island. An LED display on Two IFC will count down the last minute of this year, then the fireworks will run for four minutes. A Tourism Board spokeswoman said good vantage points would be the Cultural Centre in TST or Golden Bauhinia Square in Wan Chai. When asked in October about the sponsors pulling out, Cynthia Leung of the Hong Kong Tourism Board - which organises the event - said that as far as the board knew, it was a commercial decision.

Rents for luxury homes are expected to decline as corporations cut housing allowances. Rents for luxury homes, which have skyrocketed over the past two years, are coming down to earth as economic conditions worsen and corporations cut costs here and abroad. Prestige home rentals in Hong Kong could fall between 5 per cent and 20 per cent as demand from previously cashed-up tenants, particularly those in the banking and finance sectors, softens. "The top end of the luxury segment will see a deeper decline as housing allowances are expected to be adjusted further," Landscope Realty managing director Koh Keng- shing said. Koh said houses that were usually rented out to regional heads of financial institutions or fund managers would be hardest hit in the wake of the slowing financial industry. He expects luxury homes leased for HK$50,000 or more could fall as much as 20 per cent next year because of the global economic turmoil. Financial institutions such as HSBC, Bank of America, and Barclays have all announced plans to reduce staff worldwide. HSBC, Hong Kong's biggest bank by deposits, will cut 3,000 jobs in the city over the next three years as part of its plan to trim expenses throughout its operations. Hong Kong's economic growth in the third quarter slowed to 4.3 per cent from 5.3 per cent in the previous three months. Total exports of goods slackened to a year-on-year decline of 2.2 per cent in real terms from a year ago in the third quarter. Landlords had become more flexible about lease terms, with some agreeing to cut rents by between 10 per cent and 20 per cent to retain good tenants, Koh said. "Tenants are looking for cheaper flats as their housing allowances have been cut," Koh said. Colliers International said an easing in the number of expatriate arrivals, particularly in the banking and finance sector, would slow demand for luxury residential leasing. "In the next 12 months, luxury residential rents are projected to drop 6 per cent," the property consultant said in their recently released research report. Jones Lang LaSalle said growth in rents for luxury homes decelerated over the third quarter, with a 1.2 per cent gain against an increase of 4.9 per cent in the first half. The company expected rents would drop 1.8 per cent this quarter. Rents in upmarket housing estates across the city fell 1.4 per cent from October to November, according to data complied by Ricacorp Properties. The rental index based on 35 luxury-housing estates fell to 122.8 last month against 124.57 for the preceding month. Alva To Yu-hung, head of consulting at DTZ, believes luxury home rents would be flat or drop less than 5 per cent next year. "I don't think rents will drop sharply," To said. "Demand from end users will be strong as the property market outlook is uncertain. They would rather rent a flat than buy one."

Six protesters, who object to the construction of a high-rise tower block development in Mei Foo Sun Chuen, agreed to be bound by an injunction sought by the developer. Outgoing district councillor Wong Tak-chuen and five Mei Foo residents, who took part in a lie-down protest that drew 500 people in April, consented last week not to prevent Billion Star Development from carrying out construction on a proposed 20-storey block in the estate. The six were due to appear in the Court of First Instance yesterday to respond to an injunction sought by the developer. Billion Star, which residents believe is backed by New World Development, also seeks to prevent other unnamed protesters and three politicians from interfering with its right to use the access road to the site, the last remaining plot space at the housing estate in Lai Chi Kok, Kowloon. Residents oppose the project because they say it will block air flow and sunlight. In a separate case, they argue the developer does not have full ownership of the site. The five residents are Yip Siu-chau, a retired teacher, Lo Chung-cheong, a design teacher, Cheung Chi-yin, a merchant, Yu Wai-kan, a pastor, and Lee Wai-kuen. They said they bowed to the developer because they were worried about the tremendous legal costs arising from litigation. The developer said the group formed a human barricade to block the only access road leading to the construction site, stopping its trucks from getting in or out, a number of times since March. Councillor Wong told the South China Morning Post that he and the other defendants decided to settle with the developer because of money pressure. "Some of us and also other Mei Foo residents are worried we will lose in the end and have to pay the legal costs," he said. "It's all about money. If you don't have money, you can't fight this game." Residents were pessimistic, he said, because they earlier lost a judicial review, in which they argued the tower Billion Star planned to build was illegal. They were seeking an appeal in that case. While agreeing to be bound by the injunction, the six did not consent to paying the HK$1.4 million the developer claims it lost due to delays in construction. The backdown by the councillor and the residents left lawmaker Leung Kwok-hung, also known as "Long Hair", Claudia Mo Man-ching and Tsang Kin-shing as defendants in the injunction hearing. The three became involved after claiming they took part in the protest. Leung and Mo argued the injunction was an attempt to smother freedom of speech, assembly and rally. But Benjamin Yu SC, for the developer, said: "This is not a case of freedom of assembly or freedom of speech. "People exercising such freedom cannot go to the extent of stopping [the owner] from doing some lawful activities [on its land]. "The rally was not lodged peacefully," Yu said. Referring to the three politicians, Yu said: "They are not residents of Mei Foo. They don't have right of way. Even if they have right of way, it's not a right to obstruct our right to use our property." Leung said the lie-down protest on April 3 lasted for only three minutes and was approved by police, meaning it was lawful. He said no one from the developer's office stopped them or called the police that day. He said he participated in the rally to respond to grievances voiced by the residents, thus fulfilling his duty as a lawmaker. Mo said she was "completely baffled" by the injunction sought by the developer. She said shop owners would not seek injunctions against people who took part in the annual July 1 march on the grounds that they obstructed their business. Mr Justice Thomas Au Hing-cheung reserved his ruling. A written judgment will be handed down later at a later date.

Henry Tang addresses his supporters, including major business figures, at the Convention and Exhibition Centre in Wan Chai. If the reputations of supporters are any guide, Henry Tang Ying-yen will win hands down in the chief executive election. Unlike archrival Leung Chun-ying, the former chief secretary has the strong support of the business and industrial sectors. Leung, former Executive Council convenor, meanwhile, is mainly backed by professionals, former officials and people with grass-roots backgrounds. Tang's election office is chaired by Bank of East Asia (SEHK: 0023) chairman David Li Kwok-po, who also directed Donald Tsang Yam-kuen's campaigns for the top job in 2005 and 2007. Former chief executive of the Monetary Authority Joseph Yam Chi-kwong will act as Tang's senior adviser, while former permanent secretary for financial services and the treasury Kelvin Ho Chi-ming will serve as the secretary general of the office. Leaders of the city's four major business chambers, political heavyweights, pop stars such as Leon Lai Ming and "king of comedy" Stephen Chow Sing-chi, well-known local athletes and ethnic minorities were among more than 1,000 people who packed a hall at the Convention and Exhibition Centre to show their support. It was far more than the several hundred supporters who showed up for Leung's campaign rally last month. Taking it slowly with the help of a walker was another former Executive Council convenor Chung Sze-yuen. He said: "If he [Tang] has the chance to become the chief executive, I am very confident that he will make a bigger contribution to Hong Kong. So I am throwing my support to him. I am already 95. I can hardly walk and have to rely on this walker. I came here today to say a few words to show my sincere support for Henry Tang Ying-yen to become the chief executive." Pansy Ho Chiu-king, the daughter of Macau gambling mogul Stanley Ho Hung-sun, was another supporter. "My father has long supported Mr Tang and believes that he has done many constructive things," she said. Tang's father, influential textile industrialist Tang Hsiang-chien - a former member of the Standing Committee of the Chinese People's Political Consultative Conference (CPPCC), also attended with Tang's wife, Kwok Yu-chin, and four children. Other big names included HSBC Asia-Pacific chief executive Peter Wong Tung-shun, former financial secretary Antony Leung Kam-chung and General Chamber of Commerce chairman Anthony Wu Ting-yuk. Wong said Tang won his support, because he had worked as financial secretary and chief secretary and had experience handling economic turmoil. Other heavyweights included Dickson Concepts chairman Dickson Poon, Tourism Board chairman James Tien Pei-chun, Chan Wing-kee, a member of the CPPCC Standing Committee, Lu Gong, son of former director of the Hong Kong and Macau Affairs Office Lu Ping, former secretary for economic development and labour Stephen Ip Shu-kwan and Dah Sing (SEHK: 0440) Banking Group chairman David Wong Shou-yeh. Leung's campaign office is chaired by Urban Renewal Authority chairman Barry Cheung Chun-yuen, while former education minister Fanny Law Fan Chiu-fun serves as director. Former chief executive Tung Chee-hwa is understood to be one of Leung's supporters.

 China*:  Dec 21 2011 Share

SHANGHAI has the largest population of foreign nationals among all domestic cities and provinces in China, with about 143,200 expat residents living in the city, the Shanghai Statistics Bureau announced yesterday. Nearly one in every four foreign residents in the country lives in Shanghai, according to the sixth national census conducted in November 2010. Shanghai is home to a total of 208,300 overseas residents, which adds people from Hong Kong, Macau and Taiwan to the foreign nationals population. That is second only to Guangdong Province. The overseas population accounts for nearly 1 percent of the city's total residents - 23.02 million people. Last year marked the first time that China included overseas residents in the national census. "More and more overseas residents are attracted to move to Shanghai, an international economic hub, since the economic crisis in 2008," said Ren Yuan, professor at Fudan University's School of Social Development and Public Policy. He said overseas residents accounted for only about 0.56 percent of the city's population 10 years ago, according to one of his studies. Pudong New Area, Changning District and Minhang District have the greatest number of overseas residents living in international communities, according to the bureau. The top three home countries of foreign residents in Shanghai are Japan, the United States and South Korea, as most foreign residents come from developed countries, not developing nations. More than 60 percent of expats in Shanghai are engaged in jobs which demand great skills or managerial experience, according to the census. "The city sees few labor immigrants from overseas as domestic migrant workers fill the vacancies in the labor-intensive industries," Ren said. "The overseas residents and migrant workers make up for the structural labor shortage of the city," he added. With more foreign people coming to the city, cross-border marriages are increasing. About one fifth of the 110,000 overseas households are based on cross-border marriages, in which one spouse is not from Chinese mainland. Meanwhile, more than half of the overseas households are single-person households. Most overseas residents are young or middle-aged people, and the average age of the overseas resident is 33. More than 50 percent of overseas people come to the city to work or do business while about 20 percent come to study. The rest visit relatives, immigrate to the city or come for other purposes.

China successfully sent a Nigerian communication satellite into orbit with its Long March-3B carrier rocket from southwest Xichang Satellite Launch Center at 00:41 Beijing Time Tuesday. 

Giant panda Mei Xiang, on loan from China with Tian Tian, another giant panda, eats a fruit at the US Smithsonian's National Zoo in Washington on Dec 19, 2011. The US Smithsonian's National Zoo on Monday announced that it received a 4.5-million-dollar donation to fund the giant panda program for the next five years, providing funds to conservation efforts in China, reproductive science, professional training programs, as well as giant panda care and upgrades to the zoo habitats. The donation was from David Rubenstein, co-founder and managing director of private equity firm The Carlyle Group. "We are honored to be part of a cherished program that brings joy to millions of people and draws together two great nations working to preserve these magnificent and gentle giant pandas," Rubenstein said at a ceremony at the zoo, which was based in Washingtong, D.C. Rubenstein told reporters that by giving the gift to researches on giant panda, a high-profile endangered species loved by millions around the globe, he hoped to draw more people to the idea of conserving pandas and other endangered animals, and encourage others to give as well. Zhang Yesui, Chinese Ambassador to the United States, thanked Rubenstein for his gift for protection of the giant pandas, a national treasure of China, saying that China and the United States have worked closely to protect the endangered species, and the joint effort has proved to be successful. The gift allows the National Zoo's animal care and the Smithsonian Conservation Biology Institute's scientific team to proceed with the five-year science plan established with their Chinese colleagues from the China Wildlife Conservation Association. The scientists hope to examine the creation and impact of corridors to link fragmented habitats that will benefit giant pandas and other wildlife species, as well as to examine how to restore habitats, especially those where pandas appear to be making a comeback. They are also eyeing to provide advice on giant panda reintroduction, examine potential impact of transmissible diseases on giant pandas and other wildlife species, and continue research on giant panda reproduction and management. The National Zoo houses Mei Xiang and Tian Tian, a pair of giant pandas on loan from China. They produced a cub Tai Shan, via artificial insemination in 2005. Tai Shan now lives in China. Established in 1889, the 163-acre zoo in the heart of Washington, D.C. now exhibits living animal and plant collections and conducts research in the broad discipline of conservation biology. It is home to about 2,000 animals representing nearly 400 species. Nearly a quarter of the animals at the zoo are endangered species, including giant pandas.

Central bank adviser Li Daokui calls for company dividend rules. An adviser to the mainland's central bank has urged regulators to require listed companies to pay cash dividends, saying it must be a priority if Beijing is to improve its ailing stock market. Prominent economics professor Li Daokui, a member of the central bank's monetary policy committee, told a financial forum in Beijing that the absence of a dividend policy was a major corporate governance problem, China National Radio reported. "Public companies have raised funds and spent them on investment without paying a return to the investors," Li said. "A rule to force them to distribute enough cash dividends should be published." The adviser's remarks followed similar comments by Chongqing mayor Huang Qifan this month, a fresh sign that regulators may try to step in to restore investor confidence in the bearish market. Retail investors have suffered severe losses as the mainland's benchmark stock index has fallen back to the level of 10 years ago, even though the country's economy has been on a fast track for the past decade. Two-thirds of mainland investors who responded to a Sina survey said they lost more than 20 per cent of their equity investments this year. The finding just adds to investor anger towards the mainland regulators because fast-tracked initial public offering approvals had diluted existing holdings. But Li said he thought cash dividends could be an answer to the troubled market. Stock investors should share the profits generated by listed firms, rather than trying to trade shares to make money, he said. On the mainland, there is no rule that requires public companies to pay cash dividends. Only companies looking to issue additional shares in refinancing deals are forced to pay at least 30 per cent of their total profits in the previous three years in dividends before they are eligible for share placements. The Chongqing mayor said listed companies should be required to distribute at least 30 per cent of profits to investors even if they had no plans to raise additional funds. According to Shanghai Stock Exchange chairman Geng Liang, dividends paid out by Shanghai-listed companies represented about 23 per cent of their total profits. Haitong Securities analyst Zhang Qi said: "You can whet investors' buying appetite by sharing more profits with them. A stock market isn't a stock market if listed firms refuse to distribute enough dividends to investors." The statements by Li and Huang cemented investor belief that Guo Shuqing, the former China Construction Bank (SEHK: 0939, announcements, news) chairman who was appointed chief of the China Securities Regulatory Commission in late October, would take drastic action to safeguard the interests of retail investors. Mainland media have reported that Guo is considering drawing up new rules to benefit retail investors, including urging larger cash dividends. Ensuring market stability is seen as a political task by the securities regulator because millions of individuals invest years of savings in the volatile stock markets.

Dominique Strauss-Kahn's thoughts turn to Europe's problems during an economic conference organised by NetEase.com in Beijing yesterday. Former IMF chief Dominique Strauss-Kahn delivered yesterday in Beijing his first public speech since quitting the post amid allegations of sexual assault. In a keynote speech to an annual conference of economists organised by NetEase.com, a mainland news portal, Strauss-Kahn shared his insights on the euro-zone debt crisis. He called for greater integration of European Union countries to solve the present economic crisis, which he said could continue for a further five to seven years if effective measures were not implemented. He refused to mention his arrest in May after being accused of sexual assault by a New York hotel maid or his subsequent resignation from the International Monetary Fund. Prosecutors dropped the case in August, saying his accuser was not a credible witness because of lies she had told, but the scandal badly damaged his reputation. Formerly perceived as a likely strong challenger to Nicolas Sarkozy in the French presidential election next year, Strauss-Kahn said in an interview with a French television station in September that he was now unlikely to join that race. However, he did not rule out the possibility of returning to political life. Focusing on Europe's economic malaise yesterday, he projected a pessimistic outlook, saying the euro zone lacked integrated fiscal budgets, monetary policies and a central financial organ. "We need to have the European Union be a real union. That is the only way to solve the crisis," he said. "A monetary union without a central budget is something that doesn't make sense." Talking to prominent Chinese economist Li Daokui after the speech, he said the European economy could face a rather long period - probably five to seven years - of low growth if no strong decisions were made. He said China should and could help the euro zone get out of trouble, because it was in its "own interest" in a globalised economy. "I think the Chinese could help through the IMF, or directly," he said. "We're now in a globalised world, and there's no way for any single player to believe it can solve a problem without the help of others." Li, an adviser to China's central bank, said many Chinese people still supported Strauss-Kahn despite the scandal, because of the IMF's contribution to the country's economic growth while he was in office. "Beijing might be the place that welcomes you the most," he said. Strauss-Kahn said the yuan is still undervalued and the central government should continue moving towards growth driven more by domestic consumption than exports, which could lead to a revaluation. He said that when the yuan's value was decided by the market, it would certainly become a currency in the Special Drawing Rights basket - a synthetic currency created by the IMF - which now includes the US dollar, the euro, the Japanese yen and the British pound.

SHKP will launch the second phase of its HK$10 billion Shanghai IFC Mall in the third quarter of next year. Shanghai shop rents are showing signs of catching up with those in Hong Kong, buoyed by growing demand from big global brands hoping to capture a slice of wealthy mainland shoppers' demand for luxury merchandise. The mainland's commercial capital could soon rival Hong Kong as a luxury shopping destination, according to Maureen Fung Sau-yim, a general manager in the leasing department at Sun Hung Kai Properties (SEHK: 0016) (SHKP). She said rents for prime retail space in Shanghai were about half that of Hong Kong but the gap was steadily narrowing. "The gap in rentals between the two cities will narrow, based on the huge potential in the vast mainland market. China's luxury goods sales will remain robust and give a boost to top-quality shopping malls," Fung said. SHKP, Hong Kong's largest developer by market capitalisation, has announced it will launch the second phase of its HK$10 billion Shanghai IFC Mall in the third quarter of next year. It expects to bring a dozen or more new brands and restaurants to the buoyant market. "We have seen a rising ardour from international brands for prime retail space in Shanghai since the global economic woes have had such a huge impact on their businesses," Fung said. "It is safe to anticipate a flourishing mainland retail market in the coming years." About a quarter of the 60 tenants signed up for the second phase of the Shanghai IFC Mall at Pudong's Lujiazui area would be new entrants to the mainland, Fung said. She forecasts the annual rental income for Phase 1 could reach HK$400 million. Commercial rents at Lujiazui are between 25 and 40 yuan per square metre per day, according to the property consultancy Savills. Shanghai, although larger than Hong Kong, still lacks high-end shopping malls with modern infrastructure and efficient management. The consulting firm Bain & Co expects the mainland's luxury goods market to grow as much as 30 per cent, to 113 billion yuan (HK$137 billion) this year, the fastest growth worldwide. The IFC Mall in Pudong has attracted thousands of newly affluent shoppers from other parts of the mainland who are eager to own luxury watches and handbags. When SHKP opened the shopping centre last year, analysts called it a breakthrough because it changed the retail landscape of the eastern side of Huangpu River. It was the first new high-end shopping mall in Pudong in the past 10 years. Lujiazui, a finance and trade zone, is home to the Shanghai Stock Exchange and the Shanghai headquarters of the central bank. It is also the commercial hub of the Pudong district, Savills said in a report. "The rents for commercial properties at Lujiazui are set to climb amid the increasing occupancy rates in the region's office buildings," it added. SHKP, along with Hong Kong rivals such as Kerry Properties (SEHK: 0683), are accelerating expansion on the mainland despite the slowing economy. Kerry will launch its 450,000 square metre mix-use development, Jing An Kerry Centre, in Puxi next year. "A slowdown is not a primary concern now since the government has decided to expand domestic demand to boost the economy," Fung said. "As the authorities continue their efforts to restrict home purchases to cool the residential property market, well-to-do mainlanders will in future have more cash to spend on luxury goods."

Hong Kong*:  Dec 20 2011 Share

The central government's relaxation of foreign direct investment (FDI) rules in October has led more companies to seek to borrow in yuan, Standard Chartered Bank Hong Kong chief executive Benjamin Hung Pi-cheng says. The People's Bank of China announced on October 13 a rule change allowing foreign investors to use offshore yuan funds to make direct investments into China. Since then an increasing number of companies have asked banks to arrange yuan loans or underwrite yuan bond issues to raise funds to finance their mainland projects, said Hung. The new FDI rule also speeded up the approval time to repatriate yuan raised in Hong Kong to the mainland. "If all documents are ready, it may now take only five days to get regional governments to approve funds transfers," Hung said. "Before the rule changes, this could take months as the approval of many mainland departments was needed." Since the rule change, a total of 16.53 billion yuan (HK$20.1 billion) has flowed into 74 projects, Commerce Vice-Minister Wang Chao told a Hong Kong business forum last week. Seventy per cent of that total had come from Hong Kong. The new FDI rule allows companies to issue yuan shares offshore to raise funds to finance domestic projects, but stockbrokers said so far few firms had shown an inclination to do so, since sentiment on stock markets was depressed. No new yuan share issues have been made in Hong Kong since the rule change. The first yuan initial public offering in the city - the Hui Xian Real Estate Investment Trust - had a poor debut in April. Edward Chow Kwong-fai, deputy chairman of the Business and Professionals Federation of Hong Kong, said FDI rules should be relaxed further to allow firms to use offshore yuan for working capital and wages. "If China would allow companies to repatriate funds to China for their daily operations, they would be encouraged to issue yuan bonds or yuan shares in Hong Kong," he said. Monetary Authority chief executive Norman Chan Tak-lam said it would seek a further review of mainland FDI rules. The October rule change was greeted by analysts as an important step towards freeing the yuan to become an internationally used currency. While the yuan is not yet fully convertible, Beijing has allowed some companies to settle cross-border trades in yuan since mid-2009, and since July last year companies have been allowed to issue yuan bonds, shares, and insurance policies. "FDI to China reached US$105.7 billion last year, including 57.3 per cent from Hong Kong. If some of these investments are made in yuan, there will big demand for yuan loans and bonds," said Hung. In the first 11 months of this year, 76 companies issued 99.1 billion yuan worth of "dim sum" bonds - yuan-denominated bonds issued outside the mainland - in Hong Kong, almost a threefold increase on the 2010 figure.

"We want branches to serve wealthy mainland clients when they travel here," says Stanchart HK chief Benjamin Hung Pi-cheng. Standard Chartered Bank plans to open new branches in tourist hotspots in the city over the next five years in a bid to market its wealth management services to wealthy mainland visitors to Hong Kong. The bank's chief executive, Benjamin Hung Pi-cheng, identified the Canton Road upmarket retail strip in Tsim Sha Tsui, as well as Nathan Road in Kowloon and the nightlife mecca of Lan Kwai Fong in Central, as the ideal locations for an expanded branch network. "We want to have branches to serve wealthy mainland clients when they travel here," Hung told the South China Morning Post (SEHK: 0583). Our wealth management services are not only aimed at local tycoons who live on The Peak, but mainland tourists who come to shop and dine in the city.'' Stanchart has budgeted HK$100 million to be spent on opening the new branches. Hung said: "Our branch in Lan Kwai Fong looks more like an airport lounge than a bank branch. There are no counters and it has sofas and pictures on the walls. "We want to provide services to the customers in a friendly atmosphere where they can discuss their financial needs with our relationship managers, as well as their insurance and investment plans, or apply for mortgages loans." Hung said he did not have a target number on how many more new branches will open in the next few years. After opening branches in Lan Kwai Fong and Wan Chai recently, it now has 78 branches in the city. While some US and European lenders are shutting down branches and shifting customers to mobile banking or internet banking, a number of rivals in Hong Kong besides Stanchart are opting to expand their branch networks, Citibank and Bank of East Asia (SEHK: 0023) among them. Data from the Hong Kong Monetary Authority shows the number of bank branches in Hong Kong at the end of October was 1,418, up from 1,379 in 2009 and from 1,307 in 2006, but down from 1,507 in 2001. Hung said: "Bank branches cannot be replaced. While customers may well like to use the internet or telephone to manage their bank accounts, they still like to talk to bank staff face to face when they are handling their investments. "They may not always go to a branch but they like to open accounts at banks that have a branch close to them." Stanchart, which has its headquarters in London but a dual listing in Hong Kong and London, does most of its business in Hong Kong, Asia, Africa and the Middle East. This has to some degree insulated it from the 2008 financial crash and the European sovereign debt crisis. While other banks such as HSBC and Bank of America have announced plans to lay off thousands of people over the next few years, Standard Chartered recruited 2,000 more staff this year, to bring its global headcount to 80,000. Hung said he expected tough times ahead for banks. The European debt crisis would continue to haunt the market next year, he said, leading some European banks to withdraw from lending to the market. In addition, China may continue to tighten credit to control inflation and this would result in some enterprises finding it difficult to secure bank loans. Hung said: "It is going to be a tough time ahead on a macro level as developed Western markets show no signs of a quick recovery. However, since we have experienced growth in deposits since the financial crisis, we will continue to lend to small and medium-sized clients next year. "If we support them through the tough times, they could become our loyal customers for the long term."

Taha Bouqdib, president and co-founder of Singapore-based TWG Tea Company (left) and chairman and chief executive Manoj Murjani. After launching its first gourmet tea salon in Hong Kong this month, luxury brand TWG Tea will soon set up outlets on the mainland and in Taiwan as part of an ambitious international expansion program. The Singapore-based private firm and its corporate partners plan to spend more than US$30 million to launch between one and two new salons every quarter next year in different markets. Founded in 2007, TWG Tea opened its first eponymous outlet - TWG Tea Salon & Boutique - in Singapore in 2008. Since then, it has become the world's premier tea supplier to major hotels, international airlines and fine food retailers, such as Harrods in London and Dean & Deluca in the United States. "This salon in Hong Kong marks our first step to the whole of north Asia and strengthens our resolve to build a global brand," said Manoj Murjani, chairman and chief executive of TWG Tea, referring to its 1,800 sq ft shop at the IFC Mall in Central. The upscale shop has an intimate, 50-seat dining area and offers more than 1,000 single-estate harvests and exclusive tea blends from every major tea-producing country. A pot of its popular `Singapore Breakfast Tea' costs HK$75. It is a blend of green tea, black tea, rich vanilla and select spices that yields a sweet, complex flavor. "We believe that our customers in Hong Kong, with their rich tea culture and refined palates, will appreciate our extensive range of teas from all over the globe," said TWG co-founder and president Taha Bouqdib. TWG Tea also sells its famous loose-leaf teas by weight, starting at 50 grams, in colourful artisan tea tins and smaller boxed packages. Among the least expensive packaged tea products is the medium-bodied `Mist of Milanje Tea', from Mozambique in Africa, that costs HK$50 per 50 grams. The `Yellow Gold Tea Buds', known as the world's most expensive tea from Sichuan province, sells for HK$2,688 per 50 grams. A rare tea, it is harvested at a single mountain location only once a year. Its leaves are painted with 24-carat gold flakes that supposedly provide nutritional benefits. Murjani, a co-founder, said TWG Tea, which had total revenue of US$40 million last year, was committed to opening a salon each in Beijing, Shanghai and Taipei by the end of next year. Those will come after two more shops are set up in Hong Kong, and new outposts in Dubai and other markets in the Middle East are established. "TWG Tea has selected partners in each of the major geographic markets," said Murjani, adding that the firm had a long-term plan to open new salons every quarter from now through 2014. It has formed a joint venture with Osim International, the Singaporean maker of electronic massage chairs and other lifestyle products, to cover Hong Kong, the mainland, Taiwan and South Korea. In April, Osim bought a 35 per cent stake in TWG Tea for about US$25 million. "We found that Osim has built great [retail] infrastructure across China that we can leverage," Murjani said. On the mainland, Osim has 269 outlets in 42 cities. It plans to open an additional 60 to 80 new stores. TWG Tea's partner in the Middle East is the United Arab Emirates' Emaar Properties, developer of the Dubai Mall, the world's largest shopping mall with a total retail floor area of 3.77 million sq ft. TWG Tea's rivals include French suppliers Fauchon, Mariage Freres and Kusmi Tea, as well as Fortnum & Mason of Britain.

US casino tycoon Sheldon Adelson's Macau unit, Sands China, said it has been cleared by Hong Kong’s securities regulator after an eight-month investigation, a boost for parent Las Vegas Sands Corp which is embroiled in a lengthy US federal and state investigation. Las Vegas Sands announced in March that it was being investigated by US authorities over its compliance with the Foreign Corrupt Practices Act (FCPA), which prohibits US companies from bribing or making payments to foreign officials to obtain favourable treatment. Analysts said they had expected the US$22 billion Macau unit to be cleared by the Securities and Futures Commission (SFC), as the Hong Kong investigation was solely focused on whether Sands China had submitted accurate statements to the stock exchange. Depending on the outcome of the Las Vegas Sands investigation in the United States, Sands China could have to comply with further requests for information, lawyers said. “The SFC investigation concluding will be good news (for Sands China and Las Vegas Sands). However, there are multiple investigations by various regulatory bodies in several jurisdictions. The conclusion of one investigation will not mean the other ongoing investigations would end or necessarily reach the same conclusion,” said a Hong Kong-based lawyer familiar with the case. It is a step in the right direction however, he added. Sands China is one of six licensed casino operators in Macau, the world’s largest gambling destination. Its gondola-filled Venetian property and Sands Macau, a towering gold edifice, reaped a hefty third-quarter net profit of US$281 million, up 41 per cent on the year. Sands China shares were down 3 per cent by 11.30am in Hong Kong, in line with peers Wynn Macau and local player SJM Holdings. The broader Hang Seng Index was down 2.15 per cent. “The decision was more or less expected,” said Kenneth Fong, an analyst at J.P. Morgan in Hong Kong, adding that it would be incrementally beneficial for the stock. “The SFC and the US Securities and Exchange Commission and FCPA investigations have been an overhang on Sands China’s share price performance this year.” Sands China is due to open a new US$4 billion casino in the first quarter of next year, the only Macau operator expected to open a new property.

Adverts for infant formula, baby food and feeding utensils will come under a new set of government guidelines next year to curb exaggerated and misleading claims. Although the guidelines will not be legally binding on suppliers, all public hospitals will boycott the products of sellers who defy them, a source close to the working group drafting the guidelines said. But that does not go far enough for advocates of breastfeeding, as well as some leading formula brands, who want Hong Kong to restrict advertising by law. The International Code of Marketing of Breast-milk Substitutes, issued in 1981 by the World Health Organisation, calls for advertising of infant formula, baby food, beverages and feeding utensils to be banned. At least 32 countries have incorporated the code, intended to prevent the promotion of breastfeeding substitutes, in legislation. Many local doctors have expressed concern over exaggerated ads for baby formula, which encourage mothers to switch from breastfeeding to bottled milk. The ads claim the formulas boost babies' IQs and brain development, even though their health effects remain in dispute.The source said it would make "perfect sense" for the Department of Health to restrict advertising on related products such as milk bottles and feeding utensils. "Manufacturers should not promote a pacifier in a way that suggests `it is better than a mother's nipple', as the idea may create the notion that a mother's breast is only the next preferred choice for babies," the source said. Drafting of the guidelines will be finished by early next year, and the new code will be implemented later in the year. Paediatrician Dr Alfred Tam Yat-Cheung said breast milk was the best and healthiest choice for babies. "Breast milk includes every nutrient that a child needs," he said. "It is complete nonsense to suggest babies who are fed with infant formula will become more intelligent and healthier in future." Kelly Chan, vice-chairwoman of the Hong Kong Breastfeeding Association, welcomed the guidelines, but insisted only legislation would help boost the city's low breastfeeding rate. Legislation is also supported by the Hong Kong Infant and Young Child Nutrition Association - which includes formula brands Mead Johnson, Nestle, Wyeth, FrieslandCampina, Danone and Abbott - which said a law would ensure that makers toed the line. The Consumer Council warned parents last month that formula nutrient labelling might be misleading or exaggerated. The Society of Hospital Pharmacists reported this year that there was no scientific basis for most of the health claims made by seven popular milk formula brands sold in Hong Kong. Lawmaker Fred Li Wah-ming, the Democratic Party's spokesman on consumer affairs, said milk formula manufacturers should be banned from advertising their products at all. He suggested the non-legally-binding guidelines be test-run for a certain period of time. If they were not working well, the government should consider drafting legislation on the issue, he said.

The government could face a HK$7 billion compensation claim if it declares Ho Tung Gardens a monument, warns the granddaughter of late tycoon Sir Robert Hotung, who built the landmark on The Peak. Yesterday's warning by Ho Min-kwan, the mansion's current owner, came one day after Secretary for Development Carrie Lam Cheng Yuet-ngor said the government was prepared for a legal battle to preserve the 83-year-old mansion. Lam said the government had until the end of next month to discuss the matter with Ho, who has been offered a land exchange so she can develop another property near the mansion. In a statement issued last night, Ho criticised the government offer as an effort "to persuade me to give up my home". "I have no desire to trade Ho Tung Gardens for a piece of land as if it is a business deal," Ho said. The mansion had no historical or architectural value, and "plans have been approved to demolish the existing main building ... to build 10 smaller homes". Citing estimates by "reputable professional valuers", Ho said the market value of the completed project would be HK$7 billion. "If Ho Tung Gardens is declared a monument, all or most of this value will be lost," said Ho. "The point here, too, is that citizens of Hong Kong should not be obliged to pay damages by way of compensation, and they will not have to unless the government declares Ho Tung Gardens a monument." She stood firm against any land exchange, saying it was her wish to "retain Ho Tung Gardens" as her home. "The government is asking me, the granddaughter of Sir Robert, to give up family legacy for pieces of land which have no meaning to me ... this is unfair." In a letter she released in October, Ho said the parts of the site that were special, the gardens, the pool and the pagoda, would not change. "The main house is not special. My grandfather didn't spend more than a few nights there during his entire life," she wrote. The mansion was built in 1927 as a residence for Sir Robert's second wife, Clara. Earlier this year, the Antiquities Advisory Board supported the government's decision to declare it a monument, thus protecting it from redevelopment. But Ho said yesterday she had inherited the land from her grandfather. "As a Hotung, no one has a greater interest in preserving any heritage value Ho Tung Gardens may have than I do," she said

Leung hosts his first public consultation in Sheung Shui. Chief executive candidate Leung Chun-ying pledged to stem the influx of mainland women giving birth in Hong Kong as part of an election platform he unveiled in piecemeal fashion yesterday. At a meeting in Central with media representatives, Leung also touched on economic development, housing and other issues. As chief executive, he said, he would consider banning mainland mothers-to-be from giving birth in Hong Kong if they block local women's access to medical services. Immigration officials at border checkpoints were empowered to block their entry even if they had bookings at local private hospitals. "We should review the quotas for mainland pregnant women giving birth in Hong Kong if local mothers-to-be face difficulties in booking hospital beds for their delivery," he said. Last year, 40,000 of the 88,500 babies born in Hong Kong were by mainland mothers, of whom 80 per cent were not married to a local man. The heavy demand meant many local pregnant women were unable to book hospital beds for deliveries. The government announced in June that it would cap the number of births by non-local women at 34,400 next year - 31,000 at private hospitals and 3,400 at public hospitals. Leung's proposal for tougher limits on mainland mothers-to-be is part of his plan to map out a population policy. He said during a public manifesto consultation in Sheung Shui that the lack of a comprehensive population policy has led to mounting pressure on obstetric services. He criticised the government for not having a policy on population planning, despite pledges made years ago and the formation of a steering committee on population policy - once chaired by Leung's rival, then chief secretary Henry Tang Ying-yen. On economic development, Leung said if he was elected, his administration would take more steps to promote growth and help Hong Kong companies capitalise on opportunities on the mainland. He suggested setting up a unit under the Chief Executive's Office to co-ordinate economic co-operation between Hong Kong and the mainland. On housing, Leung said the government should study the number of people living in cubicles and subdivided flats. That would give the administration the data needed to devise long-term policies to meet the housing needs of people on low incomes. Leung said indiscriminate cash handouts to Hongkongers made little sense, after the government announced in March its plan to offer HK$6,000 to every adult permanent resident. "The government should spend public money in an appropriate manner. I don't think the government should offer HK$6,000 to people like me." He will not be applying for the handout, he said. He also said he had donated HK$18,000 to charity after the government announced its give-away plan, to show his willingness to help Hongkongers. Tang, his rival in the election, will hold a rally at the Convention and Exhibition Centre today.

Labor advisers expect to resume reviewing applications to import foreign workers as early as Tuesday – after the government responded positively to their suggestions for resolving an impasse which has blocked companies’ applications for more than a month. This follows a meeting on Monday morning between Labor and Immigration Department officials and employee representatives on the Labor Advisory Board to discuss the representatives’ refusal to process applications for overseas workers. The boycott by employee representatives comes after they found companies had been by-passing the board and importing workers through the Immigration Department – which has a more lenient policy. The Labor Department said in a statement after the meeting that the board’s labor representatives had agreed to resume reviews and had accepted the government’s proposals. Employee representative Leung Chau-ting said although the bureaus did not state so clearly in the meeting, the statement implied the government had accepted their suggestions. He believes the Labor Department will hand over the necessary application documents at a meeting on Tuesday. “If the two bureaus agree to our demands, then we’ll resume reviewing applications again,” Leung said. Another employee representative Stanley Ng Chau-pei said after Monday’s meeting that the government had responded positively to their suggestions to increase the transparency of the Immigration Department’s review system and to improve its review criteria. They have added these on top of the government’s proposal which requires employers when applying through the Immigration Department to declare whether they had applied through the Labor Department in the past 18 months, to prevent employers from turning to the Immigration Department after failing to get through the Labor Department. The six labour representatives on the board and three labour-sector lawmakers had proposed that when reviewing foreign labor imports through its General Employment Policy, the Immigration Department should consider whether there were already jobs for them in Hong Kong, the number of workers imported, their wage levels, and whether the type of work involved a transfer of skills to local workers. They also suggested it should release figures on the applications and approved numbers to the Labor Department each quarter. The Labor Department’s statement did not say whether the three points were accepted. But it said the Immigration Department would consult the Labor Department when processing applications that might overlap with those which should be reviewed through the Labor Department. The board must process and approve companies’ applications to import workers under the Labor Department’s Supplementary Labor Scheme. But board members found that most companies opted for the Immigration Department’s policy – which targets higher skilled labor, but had a higher rate of approval. Due to the labor representatives’ boycott since October 31, 49 applications submitted last month had been held up, of which 30 were for nursing staff at care homes. Some homes have complained of staff shortages as a result of the boycott.

Chief executive candidate Henry Tang Ying-yen on Monday unveiled a number of his campaign’s core policy goals – including working towards universal suffrage and improving the plight of the middle class. The former chief secretary was speaking at an election rally in the Convention and Exhibition Centre in support of his pledge for “a better tomorrow”. He spoke to an audience of hundreds, including several well-known supporters. Tang said he would work towards delivering universal suffrage, strengthening governance and providing more public housing units. He pledged to establish a committee to help resolve the problems of the middle class, which include housing, health care and education. “We have to prevent the middle class from suffering from downward mobility,” said Tang. “But the government’s definition of the middle class – those with HK$10,000 to HK$40,000 monthly [household] incomes – is too low … this could be expanded to include those earning as much as HK$80,000,” he added. Tang said his election slogan was “We Are Tomorrow”. His campaign colours were red, blue and green, representing “warm, rational and environmental”, respectively. Guests included: Angela Leong On-ki; Pansy Ho Chiu-king, the fourth wife, and the daughter of casino mogul Stanley Ho Hung-sun; former senior government ministers Antony Leung Kam-chung and Stephen Ip Shu-kwan; and former Executive Council convener Chung Sze-yuen. Hong Kong’s “king of comedy” Stephen Chow Sing-chi, singer Leon Lai Ming and members of Tang’s family also attended.

Hong Kong's unemployment rate increased from 3.3 percent in August-October to 3.4 percent in September-November while the underemployment rate fell from 1.6 percent to 1.5 percent, the authority said on Monday. According to the news released by the Census & Statistics Department, increases in the unemployment rate were mainly observed in the foundation and superstructure, and warehousing and support activities for transportation sectors. As for underemployment, decreases were mainly seen in the decoration, repair and maintenance for buildings as well as the food and beverage service activities sector. Secretary for Labor & Welfare Matthew Cheung said the total employment rose by about 11,000 to reach a new record high of 3,651,100 in September-November, partly because of a seasonal rise in labor demand towards the year-end. He said since the implementation of the statutory minimum wage, the number of private-sector vacancies recorded by the Labor Department has stayed at a high level of more than 3,000 per working day on average, and this level has been maintained in December so far. In November, the number of private-sector vacancies recorded by the Labor Department increased 20.3 percent from 85,716 to an all-time high of 103,107, up 46.1 percent over the 70,576 recorded in the same period last year. Referring to the short-term prospects, Cheung noted that the employers generally tend to stay cautious towards recruitment in face of a more uncertain external environment stemming from the evolving Euro Zone sovereign debt crisis and fragile fundamentals of the advanced economies. "Nevertheless, the prevailing strength of domestic demand and inbound tourism should render some cushion to upward pressure on the overall unemployment rate in the near term, especially with the seasonal surge in consumption in the run-up to Christmas and New Year," he added. 

 China*:  Dec 20 2011 Share

Apple's share of the mainland's booming smartphone market has risen sharply in the past two years, but for now it is being outpaced by nimble rivals. It is not that iPhones and iPads are losing favour among Chinese consumers. They are flying off the shelves at Apple's five flagship stores in Shanghai and Beijing, unauthorised sellers, and even from fake shops that look eerily like the real thing. The problem facing Apple seems to be timing. Network technology is not sufficient to fully support iPhone and iPad capabilities, while other handset makers supply phones that support the various mobile standards used on the mainland. A tie-up with another telecoms service provider would help catapult Apple sales. But the biggest by far, China Mobile (SEHK: 0941, announcements, news) with more than 600 million subscribers, may not have matching technology in place commercially until late 2012 or 2013. In the absence of that, Apple's relatively rigid global pricing structure and limited range of models are allowing more flexible competitors to grab market share at a faster pace. Apple's smartphone market share has more than doubled since the first quarter of 2010, but others are doing better. Samsung's market share has more than quadrupled over the same period. "Apple's strategy in China is to capture the higher-end segment, which is a big enough market for it to tackle," said Jane Wang, an analyst at UK research firm Ovum. "It has cut prices of some of its products, which will definitely be more affordable for some budget-conscious consumers, but it's only going to go so far in lowering prices." Although Apple makes laptops, desktops and iPods, it generated about half its sales from iPhones in the fourth quarter, making the product key to success on the mainland. Sales in China - the mainland, Hong Kong and Taiwan - have skyrocketed. Fourth-quarter revenue increased fourfold to US$4.5 billion, out of a global total of US$28 billion. The relatively high price of iPhones is a major deterrent, giving market inroads to rivals such as Samsung and local rivals Huawei Technologies and ZTE (SEHK: 0763), analysts say. Mainland consumers can buy a smartphone from other brands at below 2,000 yuan (HK$2,450). A basic iPhone 4 costs double that - 3,988 yuan. Apple is selling its lower-end iPhone 3GS at 2,888 yuan, which will likely draw some budget-conscious consumers. But it has not been enough. In the third quarter, Huawei overtook Apple as the No 3 smartphone vendor. Apple now trails Nokia, Samsung and Huawei, which all have a wider range of products targeting various segments of customers. In fact, Apple's smartphone market share shrank to 10.4 per cent in the third quarter from 13.3 per cent in the previous quarter. Samsung's shot up to 19.2 per cent from 14.6 per cent and Huawei to 11 per cent from 7.3 per cent. Nokia, the market leader, is fast-losing traction. It holds top slot with 26.8 per cent share but that has dropped from 36.2 per cent in the previous quarter and 71.4 per cent a year earlier. "At the end of the day, Apple will only go so far to lower the pricing because if they go too low, it's going to damage their iconic brand," said Michael Clendenin, managing director at technology advisory firm RedTech Advisors in Shanghai. The real missing link is a tie-up with China Mobile, the country's top mobile carrier by far, analysts said. Apple's current partner, China Unicom (SEHK: 0762), is a distant second with 192.4 million mobile subscribers. "I think a good strategy for Apple is to try and seal deals as soon as possible with the other two China telecom (SEHK: 0728) operators," said Ovum's Wang. However, so far negotiations with China Mobile and fixed-line giant China Telecom have been protracted. The main sticking point has been the terms of the agreements, which could range from revenue sharing that would allow both parties to split money from data charges to simple bulk purchases. However, even with another partner, Apple must contend with a further barrier - the mainland's slow uptake of 3G technology. Only about a tenth of mobile phone subscribers use 3G. Most users make phone calls and send text messages. The best immediate option for Apple may be China Telecom, which uses a CDMA technology that the iPhone can use. China Mobile, though, uses home-grown proprietary 3G technology called TD-SCDMA. To tap that, Apple would have to design an iPhone just for China Mobile's network. "It's quite meaningless for China Mobile and Apple to sign an agreement based on the current TD-SCDMA network. Using the 4G TD-LTE technology that China Mobile is developing will be more feasible," said Kevin Wang, research firm iSuppli's director of China research. China Mobile is conducting trials on its 4G network, with a commercial launch expected to take place late next year or early in 2013. Its commercial 4G rollout will be a precursor to an agreement with Apple, analysts say. "Apple still has the upper hand. Even though Jobs is not around anymore, Apple's products will still remain quite popular, so they have more bargaining power," said Wang from Ovum.

China endured its second month of capital outflows in four years in November as a slowing domestic economy and mounting global uncertainties led some investors to withdraw speculative funds. Data showed China’s central bank and commercial banks sold a net 27.9 billion yuan (US$4.4 billion) of foreign exchange last month, pointing to capital outflows as Beijing usually buys foreign exchange on a net basis to rein in the yuan. “It is very rare for the forex purchase position to drop for two months in a row, showing that the capital outflow is increasing,” said Qiao Yongyuan, an analyst at the CEBM in Shanghai. That capital is leaving China also reflected the country’s shrinking trade surplus and slowing foreign direct investment in recent months as a festering euro debt crisis chilled activity, some analysts said. Slowing exports narrowed China’s trade surplus to US$14.5 billion last month from October’s US$17.0 billion. For the year, the trade surplus is seen shrinking to US$150 billion this year, from last year’s US$185 billion, Commerce Minister Chen Deming was quoted as saying in local media. Qiao from CEBM said capital outflows may prompt China’s central bank to cut banks’ reserve requirements again to inject new money into the banking system. “The forex purchase figure may raise the chance for the central bank to cut the reserve ratio for banks in the coming months,” he said. The People’s Bank of China cut banks’ reserve requirements by 50 basis points in November for the first time in three years in an attempt to shore up economic growth in the face of easing exports and industrial activity. Some economists say an exit of capital from China is likely temporary and therefore not alarming as it could be driven by investors seeking safety as Europe struggles with its debt problems. “At some point Europe will stabilise, and then we will probably see currencies in these emerging markets begin to stabilise and therefore capital will come back to China,” said Paul Cavey, economist at Macquarie in Hong Kong. To hold down the yuan, Beijing typically buys foreign currencies flowing into China through trade, foreign direct investment or illegal speculative bets. China’s foreign exchange reserves rose just US$4.2 billion to a record of US$3.2 trillion in the third quarter. The pace slowed sharply from US$152.8 billion in the second quarter.

The Chinese currency Renminbi, or the yuan, strengthened 49 basis points to 6.3303 against the U.S. dollar on Monday, according to the China Foreign Exchange Trading System.

Foreign Head of Chinese Bank Sees Need for Efficiency - Richard Jackson, one of the few non-Chinese nationals to have served in top management in China's state-run banking industry, has an insider's view of the effects of China's policy on business. Mr. Jackson, president of the midsize Shenzhen Development Bank Co., says Beijing's measures to slow credit growth will check the proliferation of nonperforming loans, but they come with risks in the long run. The Chinese government has long addressed inflation by slamming the door on bank lending—besides imposing an overall credit-growth limit on the sector, it also increases reserve ratios at individual banks thought to be making too many loans. But the effect on small private business is to drive them to the informal lending market, where they face annualized interest rates as high as 100%. "Over the next 10 or 15 years, the biggest challenge facing the whole financial sector is how we allocate capital and credit more efficiently," says the 55-year-old Briton. Mr. Jackson spoke with Rose Yu in Shenzhen about the challenges on the horizon and his optimism about being a small fish in the ocean of China's banking sector. The following interview has been edited. Analysts at foreign banks tend to be bearish on China's banks, citing exposure to local-government financing vehicles. Do you find such exposure risky? Mr. Jackson:If I compare China with other trading blocs, I think China still has some advantages. First, China has financial resources, so it has some flexibility. One of the problems in Europe is they have no flexibility as they've exhausted their resources. Second, China has a strong system of governance; when the government decides something, we will really see it done. The third thing is China still has growth although the growth rate is slowing. Europe doesn't have growth. If we look at the U.S., we are seeing a little bit of growth returning to the economy. But it's an election year, so politically it will be very difficult for the U.S. government to do anything. The problem we have is the efforts that have to be taken to stimulate the economy usually end up with more and more investment in fixed assets. There's only so much fixed assets that you can absorb, and then after that they become nonproductive. That's the challenge that China faces. How do you mitigate the impact of slower growth? Mr. Jackson: After the merger, we will be a big bank with 1.2 trillion yuan ($189 billion) in assets. But our share of China's banking market is still very small. If you are very small, it's like you are a small fish in the ocean. It doesn't really matter whether the tide is in or out. You're always going to be able to swim somewhere there's food. We need to be careful but we should also be looking for opportunities. I don't think it will affect our performance too much. Mr. Jackson: The Chinese banking industry is still largely a domestic commercial banking business. The risk profile is very different to that of some big multinational banks. That's why China's banking industry was protected from the 2008 crisis. In the next 10 to 15 years, it will probably change a little bit. Big Chinese banks are beginning to go international with their corporate customers. That's how the U.S. and European banks became international. The question is whether or not Chinese banks will follow the Western model completely and whether they will embrace investment banking. That was a big mistake in the West. Chinese banks sometimes get differential reserve ratios or "punitive bonds" if they are thought to be lending too much. This happens behind closed doors. What do you make of this government operation? Mr. Jackson:The use of administrative measures helps promote stable development in the industry, but in the longer run it will have some disadvantages in terms of the allocation of resources.

People walk in a corridor of lights built in front of a department store in Zhengzhou, Central China's Henan province, Dec 10, 2011. As Christmas and the New Year's Day approached, various decorations have been built by shopping malls, hotels and so on to warm up for festival sales promotions. While Westerners are cutting their budgets and spending less on Christmas products, Chinese customers are, on the contrary, more generous and demanding over the holiday. "In general, orders from domestic companies are by no means comparable with foreign ones," said Chen Jinlin, secretary-general of the Yiwu Christmas Products Industry Association. "But, in most cases, they are more interested in expensive items, always asking for 'something more extravagant', while regular and traditional products are more popular with foreign customers." Both sides are equally important. The festive mood seems more evident this year as businesses in many Chinese cities jumped in to the Christmas spirit earlier than before. Malls, restaurants and bars in Beijing put up Christmas decorations as early as late November. Castle of colorful lights, corridor of lights and Christmas wall are built in front of department stores. Anyone who walks in the business districts and shopping centers in most Chinese cities today can enjoy the pleasant contrast of the red glow of Chinese lanterns and the deep green of Christmas trees. The two colors are a perfect match for the Chinese.

Black-headed gulls cram the water of the Cuihu Park in downtown Kunming, Southwest China's Yunnan province, Dec 17, 2011. 

Capsules on display at a pharmaceutical exhibition in Nanjing, Jiangsu province. The government's control of the price-setting system is a major cause of the high cost of drugs, some experts say. His working hours are different from those of most people. He starts before 8:00 am, saying hello to his clients. He spends the rest of the morning catching up on other items, and then has a working lunch or chats with his clients at noon. In the afternoon, he either attends professional conferences and meetings or rests. Then in the evenings, he attends business dinners with clients, maybe followed by drinks and some karaoke. Feng Bin, 28, is always in close contact with his clients - hospital doctors. He is a medicine representative for a multinational pharmaceutical company. He graduated from a national-level medical university in Beijing three years ago and has a master's degree. He's not complaining about his remuneration package either - his basic monthly salary is 3,000 yuan ($472), plus a performance-linked monthly bonus of between 3,000 and 6,000 yuan and a yearly bonus which can be as much as tens of thousands of yuan, plus subsidies for transport and telecommunications. However, he says he doesn't feel good that doctors receive money for prescribing the medications he promotes, or at witnessing patients paying over the odds for a drug selling at several times more than its manufacturer's price. Liu Yuan, Feng's former classmate, has been working at a major State-owned hospital in Beijing for three years. She told China Daily that she has received money from Feng: After all, he promotes treatments for high blood pressure and Liu works in a cardiovascular unit. "Our doctors do have many choices when prescribing medicines, from domestically produced drugs to products by foreign companies," said Liu. "His (Feng's) company is a big international drugmaker, the brand is reliable, our patients like products from foreign companies and he is an old friend. Although all drugmakers offer rebates (commission to doctors who prescribe the company's products), I, of course, choose what Feng recommended. Why not?" However, when asked if she would swap brands if another company offered a larger rebate than Feng's, she did not answer. Liu's monthly salary is between 4,000 and 5,000 yuan when basic and performance-related payments are added together. "It (receiving rebates for pharmaceutical sales) is very common in hospitals. I have not accurately calculated how much I can earn every month. But I don't think it's more than my salary," Liu said. Jiang Bingkun, 58, is Liu's patient. He has been suffering from high blood pressure for more than 10 years and has to take medication on a daily basis. Over the past few years, his monthly expenditure on drugs has increased to more than 300 yuan, from around 40 yuan in 2001, the Beijinger said. "I noticed that the government set up lists of basic drugs and forced reductions in the prices of some medications for chronic diseases, which is really good. However, I have found that some cheap and effective medicines are not available at the hospital anymore. So, in general, my expenditure on medication hasn't fallen at all," he said, adding that doctors sometimes recommend new treatments to him, saying the new products are more effective and have fewer side-effects. "I am really confused. It's difficult to make a decision, because, at my age, my health is the top priority, more important than money. On the other hand, I don't know that the drugs they recommended - usually the higher-priced ones - are really as good as they said or whether the doctors have received money to promote the new products," Jiang said. The prices of medicines in hospitals are much higher than in the factories, sometimes as much as 10 times higher, according to investigations by some Chinese media. The case of Clindamycin phosphate, a treatment for chronic bronchitis, provides an effective example: The manufacturer's price is 0.6 yuan, but the injection is sold to the pharmaceutical representatives by distributors for 4 yuan. The price of the drug on Beijing's essential drug list (EDL) is 11 yuan, but it is sold to patients at top hospitals for 12.65 yuan. Many people have claimed that the pharmaceutical companies, medicine representatives, hospitals and doctors are driving up the prices and earning fat profits. On Dec 1, the National Development and Reform Commission (NDRC), which is authorized to set prices, launched a nationwide investigation into the pricing of medicines.

Hong Kong*:  Dec 19 2011 Share

Finland's Rovio - creator of the world's most popular video game, Angry Birds - appears to be shunning New York for Hong Kong as its listing destination in 2013, according to a report yesterday in the Finnish weekly Tekniikka&Talous. Local analysts were puzzled by the move. Internet game developers - including major mainland firms, like NetDragon and Perfect World - have preferred listing in the United States since it tends to offer better valuations for technology stocks. Rovio has been clear about its intention to move its flock of antimated birds beyond the virtual world. In addition to numerous gadgets, clothing and merchandise that bear the birds' colourful images, the brand plans to soon develop its own theme parks and movies. Finnish playground company Lappset said on Thursday the firm has agreed to build the world's first two Angry Birds parks in Espoo, near Helsinki, and the northern Finnish city of Rovaniemi by April. Eventually the company wants parks across Europe, Asia and North America. Rovio's chief executive Mikael Hed said in May that the company was aiming for a stock listing in New York within two to three years. But on Friday, its marketing chief, Peter Vesterbacka, told the Finnish weekly that it aimed to list in Hong Kong by 2013. He said its target was to build a media firm with a market capitalisation similar to that of Walt Disney, whose shares are valued at US$65.3 billion. Rovio's sales are expected to reach US$100 million this year - nine times that of the previous year. Soh Szu-wei, chief executive of Hong Kong-listed Imagi International - the brand manager of the mainland's top-ranking cartoon, Pleasant Goat and Big Big Wolf, which planned to launch a number of computer games next year - said the arrival of Rovio on Hong Kong's gaming scene will provide more scale and depth to the industry. Veteran market analyst Chan Wing-luk said that while Rovio might get a higher valuation on the New York stock market, it may choose Hong Kong for its future expansion into the mainland. "My only concern is whether its characters could be as long-lasting as Mickey Mouse and Donald Duck, or its games would remain popular through 2013." Angry Birds, in which players use a slingshot to attack pigs who steal the birds' eggs, has topped the charts since it was launched for Apple's iPhone in 2009. It reached a record 600 million downloads in two years. Rovio has said it hopes to launch five or six more games with the same characters.

Newly-weds use the bright facades of Shek O homes as backdrops for wedding photos. There is nothing like a good wedding, but the trend in recent years for happy couples to have their photographs taken in idyllic Shek O has worn a bit thin for some living there. The beachside village located on the southeastern corner of Hong Kong Island has become a haven for newly-weds looking for romantic photographs. There is no law against having your picture taken from a public thoroughfare in front of someone's house if you find it attractive. But the frequent appearance of such formally clad couples and their entourages has become too much for some. One resident who lives in a brightly coloured, orange house that couples regularly select as a photographic backdrop is beginning to tire of the perceived intrusion. The resident, who preferred to remain anonymous, said she had nothing against the couples being photographed outside her house, but took issue with the entourages they normally brought with them. "It's the photographers and their assistants that can cause problems," she said. "At times they stop traffic and can be a nuisance. If you have any pets like dogs it can be upsetting for them as well." The resident was in the process of painting her house a different colour, but denied that this was because of all the attention it attracted from enthusiastic wedding couples. Another resident complained about wedding couples being a nuisance, but also preferred to remain anonymous, saying: "I came to Shek O to live a quiet life, so putting my name in the paper is not going to give me that." Byng Hum, who has lived in Shek O for 23 years, takes issue not with the wedding couples but the "pseudo-models". Such amateur models, who appear annually at Hong Kong's Book Fair promoting themselves by selling books of their pictures, also flock to Shek O to have photographs taken around town. "They come with this herd of photographers and their assistants following them and pose all over the place for photographs," he said. "Most people here think it is funny and don't really pass any remarks. They're not doing any harm. The only complaint is if they leave a mess behind them after they've finished." The Southern District councillor for Stanley and Shek O, Chan Lee Pui-ying, said that those who had been affected by either wedding couples or pseudo-models posing for photographs outside their premises should "consult their lawyer or visit the Office of the Privacy Commissioner for future action".

A charitable shopper hands over a HK$5 donation to a charity flag-seller, becoming one of the first to donate by Octopus. The tentacles of the Octopus card reached into the world of charity for the first time yesterday as flag sellers were allowed to accept the card instead of cash donations. Reactions were mixed. Some people were happy to replace their donations of spare change with the familiar "dood" sound as a fixed HK$5 donation was deducted from their card. But others preferred sticking to cash. The first charity to go digital with flag-selling was the Baptist Oi Kwan Social Service Group - a Christian organisation serving underprivileged young and elderly people. The charity had 5,000 volunteers, of whom 100 used Octopus readers while the rest carried regular cash collection bags. Each volunteer carrying an Octopus reader paired up with one carrying a cash bag in order to provide donors with an option. The 100 volunteers, who spread out to 11 busy MTR stations across the city, were trained by Octopus Cards on how to use the card readers. For example, the machines must be laid horizontally to work properly and are not waterproof, so volunteers must seek shelter in the event of rain. One donor who used his Octopus card, was pleased with the new method of donating. "I notice which organisations are selling flags every Saturday," he said. "But in the past, I wouldn't donate if I was only carrying a HK$100 bill. Now there is nothing stopping me." A woman who made a donation using her Octopus card outside Central MTR station said she liked the fact the volunteers told her very clearly the amount that would be taken off the card, but she was a bit wary of the design. "When you place the card on the machine, it actually covers the digital screen where it says the amount that will be taken off - unlike regular card readers," she said. "I'd like to be able to see it on the screen for myself, because who knows if the machine is actually programmed to take HK$5." Ricki Wong, a volunteer assigned to use the machine, said many people were hesitant to donate through the card reader because of its unfamiliar appearance, but would give it a try after some explanation. The Hong Kong Council of Social Service will be charging organisations a rental fee of HK$35 per day for each of the 100 machines, which will cover the cost of charging the machines' batteries and calculating and transferring the amount raised. Christine Fang Meng-sang, chief executive of the council, said non-profit organisations had agreed to this fee, saying it was reasonable. Four more organisations had already been scheduled to sell flags using the 100 machines in the pilot programme early next year. Octopus Cards waived handling, administration and transaction fees for the two-year pilot program. Last August, the former boss of Octopus Cards, Prudence Chan Bik-wah, resigned after a scandal in which she lied about the sale of card users' private data to various businesses for HK$44 million. Last year, the Charities Aid Foundation's World Giving Index ranked Hong Kong as the 18th most generous location out of 153 countries in the world in terms of giving money, giving time and helping strangers. The total amount raised from yesterday's flag selling was not available at the time of publication.

GPS tracking systems are to be fitted to some of Hong Kong's buffalo and cattle in a scheme that is costing millions of dollars. Hi-tech collars fitted to cattle in Sai Kung and buffalos on Lantau will feed information on the animals' movements to computers via satellite. The project is designed to find the best way to manage the feral cattle. However, one lawmaker described it as wasteful. Each collar costs around HK$20,000 and they will be attached to about 20 cattle and buffalo, according to the Agriculture, Fisheries and Conservation Department (AFCD). In addition, a dedicated team headed by a specialist vet is to be established to look after the medical health of the feral cattle and buffalo and carry out desexing. The AFCD said the project would cost around HK$2 million to set up and run for the first year in both Sai Kung and Lantau, then about HK$1 million a year afterwards in operational costs. The feral animals have become an increasing source of concern because of their growing numbers and their habit of roaming freely in urban areas and roads, particularly in Sai Kung. A statement from the AFCD justified the cost, saying it needed to devise a multi-pronged approach in managing the cattle, taking into account the varied views of the public. "We noted public views on stray cattle are divided. There are members of the community who consider the cattle a nuisance and demand the AFCD catch and remove them regularly," said a spokesman. "However, there is an equally vocal group who object to the capture and disposal of the cattle and request the AFCD resort to other population control measures. "Taking into consideration the above issues, we consider that there is a need to devise a balanced, multi-pronged approach which aims to achieve zero or negative growth in the number of stray cattle, in order to minimise public nuisance and public danger inherently caused by stray cattle, while at the same time safeguarding the cattle's welfare." The AFCD estimates there are about 1,200 feral cattle in Hong Kong, with about 200 in Sai Kung - descendants of cattle left when residents of the New Territories abandoned their farms and rural life decades ago. According to Dr Howard Wong Kai-hay, the AFCD's principal veterinary officer, there has been growing concern over the cattle following a series of traffic accidents earlier this year, with 20 complaints lodged with the department since August. To tackle the issue, the AFCD, in co-operation with Sai Kung Buffalo Watch, have been rounding up the cattle and relocating them to Sai Kung Country Park, he said. Previously, the policy was to send nuisance cattle to the slaughterhouse. Wong said they had taken advice from the conservation department which ran similar tracking operations with wild boar. It is hoped the tracking will provide crucial information on how to manage the population more effectively and determine whether the relocation programme is effective. "At the moment we don't have any real information. All we have is anecdotal evidence to say there are more of them. We are doing our best to minimise the nuisance but without the data we can only do so much," he said. "We have already started a cattle survey with a consultant in Hong Kong and recently went up in a helicopter to look for herds. "To come up with a proper management plan, you really need to know the make-up of the each population; how many bulls a herd has; how many females; what age they are and what the breeding rate is. We hope to track them for a minimum of one calendar year to take into account seasonal variations in their movements. "But once this survey is over we can look at different pockets of the population and work out how many bulls we need to neuter so we can prevent the population from increasing. It is a more responsible way to manage them. We hope the public appreciate our efforts. We don't want to see Hong Kong devoid of animals. We believe the cows in Sai Kung and Lantau are a part of Hong Kong." A spokesman for Sai Kung Buffalo Watch said last night: "Sai Kung Buffalo Watch is appreciative of all the work and support of AFCD to address the welfare of Hong Kong's feral cattle. We are fully in support of their current programme to monitor and control the population of the cattle situation in a humane and proactive approach." People Power legislator Albert Chan Wai-yip said that it was wasteful to spend so much money to study the herds and their movements and asked why it could not have been done by a non-governmental organisation. "They need HK$2 million to start the scheme. I really don't know why it takes so much money. Why do they need GPS? Cow movements are in fact very limited and many villagers are quite familiar with how they move," he said. But lawmaker Cyd Ho Sau-lan, who used to live in Sai Kung, said the scheme would allow cows and humans to live more harmoniously.

The mainland on Friday launched a pilot program that will allow overseas investors to use offshore yuan deposits to invest in the mainland's capital markets. Calling it a landmark move, experts said the deregulation will increase the popularity of the currency and expedite its internationalization. The initial quota of the program, known as the RMB Qualified Foreign Institutional Investor, is 20 billion yuan ($3.1 billion), according to the China Securities Regulatory Commission. Some securities firms and fund companies that have subsidiaries in Hong Kong are expected to take part in its trial run. According to the regulator, 80 percent of the quota will be allowed to invest in the mainland's fixed-income markets such as government and corporate bonds while only 20 percent will be allowed to enter the stock markets. The launch of the program comes as the mainland is experiencing emerging pressure of capital outflows and mainland banks have seen a decline in their yuan positions for foreign exchange purchases. The mainland's stock markets have also been burdened by the growing liquidity pressure, with the benchmark Shanghai Composite Index declining by more than 20 percent this year, making it one of the worst performers among major global markets. "The program will attract more offshore yuan to flow back to mainland markets, which could help ease the mainland's liquidity pressure and offset the recent outflows of US dollars," said Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology. Dong said introducing more mature institutional investors to the capital markets will help improve the investor structure of the mainland's stock markets, which are dominated by retail investors. "The participation of more institutional investors will help stabilize the market in the long run and curb speculation that usually leads to sharp fluctuations," he said. Analysts said that the launch of the program will help boost weak market confidence and shore up A-share market liquidity in the short run, but it can hardly be a market savior given the limited size of the initial capital pool. The mainland's stock market rallied toward closing on Friday with the Shanghai index rising 2.01 percent, or 43.94 points to close at 2224.84 points. "The program won't have substantial impact until the regulator gradually expands the current quota, which is too little to have any influence on the market," said Wang Jianhui, chief economist with Southwest Securities Co Ltd. But Wang said that the start of the program will benefit the fast-growing offshore yuan market in Hong Kong and help push forward the internationalization of the yuan. Analysts in Hong Kong expect that the scale of the program may grow to between 50 billion yuan and 100 billion yuan in the next two years. Guo Shuqing, chairman of the China Securities Regulatory Commission, said recently that the regulator will encourage more investments from Hong Kong and Macao to the mainland's capital markets, especially investments on the exchange-traded funds. The central government in recent years has stepped up efforts to create more investment channels for the offshore yuan. It is part of Beijing's ambition to raise the global profile of the yuan to reduce reliance on the US dollar in cross-border transactions. The government is also keen on developing Hong Kong into a key center for the offshore yuan. Vice-Premier Li Keqiang in August promised a basket of measures to boost the offshore yuan market in Hong Kong. Some analysts expect that yuan deposits in Hong Kong could reach 2 trillion yuan by 2014.

 China*:  Dec 19 2011 Share

As a slowdown in the property and stock markets threatens to affect demand for luxury cars, some dealers on the mainland are increasing discounts to boost sales. Mercedes-Benz and BMW dealers on the mainland offered bigger discounts on some models last month as slowing property and stock markets weighed on buying of luxury cars, according to a research firm. Average prices of Daimler's basic Mercedes-Benz C200 at Chinese dealerships were 16 per cent below the manufacturer's recommended price last month, compared with 14 per cent in October and 3.4 per cent in July, when the model became available, according to data from China Auto Market. BMW dealers sold the latest 320i car 11 per cent below the suggested price, more than triple the initial discount for the previous marque. Daimler, Bayerische Motoren Werke and Audi are looking to the world's biggest car market to support sales as European demand sags on concern over the region's sovereign debt crisis. A slowdown in China's property and stock markets will probably undermine discretionary spending, according to Credit Suisse and BNP Paribas. "Competition is getting fierce, especially in the entry-level luxury car segment," said John Zeng, a Shanghai-based director at researcher LMC Automotive Asia Pacific. "BMW, Mercedes and Audi are expanding their capacity in China and the majority of that capacity is used to make the entry-level models, and that's increasing the competition." Vehicle sales on the mainland have slowed from last year's record 32 per cent increase as inflation, higher interest rates and the end of a two-year stimulus plan deter buyers. Deliveries for 2011 may rise the least in 13 years, according to the China Association of Automobile Manufacturers. Mercedes-Benz's C200 sold at 292,800 yuan (HK$355,375) last month, compared with the recommended price of 348,000 yuan, according to China Auto Market, which surveys dealerships in Beijing, Shanghai, Guangzhou, Hangzhou and Chengdu. "There are phases when you offer customer discounts, like in the phase-out period," Klaus Maier, Mercedes-Benz China chief executive, said on November 21 at the Guangzhou Auto Show. "But currently I feel comfortable." Dealers offered 6.7 per cent off Volkswagen's 2011 Audi A6L last month, against 1 per cent in January at its introduction, the data showed. BMW's new BMW 5-series car, introduced last month on the mainland, sold at the recommended price of 797,600 yuan, according to the data. Audi and BMW did not respond to requests for comment.

China trimmed its holdings of US Treasury debt by $14.2 billion in October, driving its holdings to the lowest level this year. The move came against a backdrop of recent yuan weakness and on the declining positions of Chinese banks for foreign exchange purchases, an indicator of capital outflows. Analysts said that the move to cut the US debt holdings indicated an attempt by the People's Bank of China (PBOC) to increase its cash holdings of dollars in order to shore up the value of the yuan. The yuan has been faced with increasing downward pressure as investors sold the currency and sought a safe haven in the dollar amid a grim outlook for the global economy. "The low level of China's holding of US debt indicates the huge pressure of capital outflow that the country has been faced with," said Lu Zhengwei, chief economist with Industrial Bank Co Ltd. "The central bank is increasing its holdings of dollars in cash, preparing to sell them in the market if necessary to offset the impact of liquidity outflows," he said. The yuan traded higher on Friday after touching the low end of its permitted daily trading range for 12 consecutive sessions, the longest run of trading days in which the yuan had weakened. China held a total of $1.13 trillion of US Treasury debt as of October 2011, roughly accounting for 24 percent of total foreign holdings of US debt, according to the US Treasury Department. Despite the latest cut, China remains the largest foreign holder of US treasuries. Analysts said that China should continue to accelerate the diversification of its $3.2 trillion foreign-exchange reserves, amid growing global financial uncertainty. Currently, about one-third of China's foreign-exchange reserves is invested in US Treasury bonds. It was reported that the PBOC plans to create a fund worth $300 billion to invest the country's foreign-exchange reserves in the US and European markets. The fund will reportedly seek to invest in real assets and company shares, rather than government securities. Gao Xiqing, vice-chairman of China Investment Corp, the country's sovereign wealth fund, said recently that the fund is actively looking for investment opportunities in infrastructure projects in countries including Britain, the US, and Brazil.

An engineer tests a photo-voltaic panel in Zhejiang province. Officials said China needs to achieve a better balance of economic growth, economic transformation, energy conservation and reduction of emissions. China is set to unveil a plan to impose controls on total energy consumption, said Zhang Ping, director of the National Development and Reform Commission (NDRC) on Friday. The new plan, together with an energy-intensity target that has already been set for the period between 2011 and 2015, will provide policy guidelines for energy conservation and the reduction of emissions, said Zhang, without outlining a timetable. "We need to achieve a better balance between economic growth, economic transformation, energy conservation and emissions reduction," said Zhang, at the NDRC's annual work meeting, which came on the back of an extended two-week conference on climate change, held in Durban, South Africa. In Durban, emerging nations such as China were put under greater pressure to shoulder more responsibility for cutting emissions. "It will be an unavoidable dilemma that China will have to deal with in the coming years - continuing the processes of industrialization and urbanization while coming under pressure to act more in cutting emissions," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. China has set a target of cutting energy intensity - which is calculated as units of energy for each unit of GDP - by 16 percent by 2015 from the 2010 level. "The controls on total energy consumption will be tougher indicators than the energy-intensity targets, because there are loopholes through which local governments can achieve their energy-intensity targets by expanding the GDP base accordingly," said Lin. The controls will be allocated to provincial governments. The plan will not only have an impact on GDP growth but will also influence the energy structure and price. "Setting limits on energy use means putting limits on GDP," Lin said. Li Junfeng, deputy director of the Energy Research Institute affiliated with the NDRC, said China must switch to "healthy and qualified GDP", otherwise, it will take years to digest the "junk GDP" at a high environmental cost. Earlier this month, China laid out detailed plans to control greenhouse gas emissions in the coming five years, with the national target allocated to provincial governments. In addition, China will adopt more measures to save energy and reduce emissions by increasing the fines imposed for discharging pollutants such as nitrogen oxides, Zhang added.

Hong Kong*:  Dec 18 2011 Share

Visitors to the Design Institute in Tseung Kwan O admire the toys on display, some of which date from the Qing dynasty. Hong Kong's very own "toy story" is about to be told with an exhibition of retro toys that could set the scene for a museum showcasing the industry's 60-year history in the city. Organised by the Federation of Hong Kong Industries, the exhibition at the Hong Kong Design Institute in Tseung Kwan O displays about 1,000 toys from as early as the Qing dynasty (1644-1911) to the 1950s and onwards. The show refreshed collective memories about the toy industry, which helped trigger the city's economic takeoff in the 1970s, said Yeung Chi-kong, executive vice-president of the Toys Manufacturers' Association of Hong Kong. "We hope the show will raise public and government awareness of the importance of preserving the cultural heritage of the industry and keeping the legacy going," Yeung said yesterday. "We need more new innovation to keep the torch being passed on." Hong Kong's toymakers, who now primarily operate in the Pearl River Delta, are facing tough times amid rising wages and other costs. Guangdong's policy of pressing for industrial upgrades and the global economic downturn are also hitting the industry. China produces nine in every 10 toys sold in the United States. Yeung said toy-industry bodies were lobbying the government for a site in the West Kowloon Cultural District as the location for a planned toy museum. Toy collector Joel Chung Yin-chai, who loaned part of his collection to the exhibition, is interested in participating in the museum. First-generation toymaker L.T. Lam said that a toy museum would make an ideal permanent showcase for countless old "Made in Hong Kong" toys. "Some have said it is a sunset industry, but as long as there are children, there'll be demand for toys," he said. "The key is to add more innovation to the design of toys." A federation survey conducted last month, however, revealed yesterday that of about 150 Hong Kong toymakers, only 20 per cent planned to hire designers in Hong Kong next year. Yeung expects Hong Kong's toy exports to shrink by more than 10 per cent this year, with the bleak outlook spilling over into next year. The survey shows that the majority of the respondents plan to make forays into the mainland consumer market to offset weakened demand abroad. Yeung said that toy factories must raise their level of automation in order to survive. Guangdong provincial vice-governor Zhao Yufang said last week that the proposed minimum-wage rise in the province would be delayed from January 1 of next year to a yet-to-be-disclosed date. This follows strong opposition from Hong Kong manufacturers.

Average basic pay for investment banking and fund management staff in Hong Kong rose by 15 per cent to about HK$890,000 this year, but overall compensation is expected to drop because of smaller bonuses. In a survey of 630 investment banking and hedge fund staff in Hong Kong, Astbury Marsden, an international financial services recruitment firm headquartered in London, discovered that pay rises for staff in Hong Kong outpaced those for staff in London, who saw average rises of 12 per cent over the same period. The research showed that the biggest pay rises went to staff at managing director level. The increases were as much as 25 per cent, to approximately HK$2.5 million a year, if senior staff switched employers this year. "Generally banks are keener to invest in their teams in Asia than in Europe and the US and that has meant a bigger boost for Hong Kong bankers' base pay," said Mark O'Reilly, managing director of Astbury Marsden Asia Pacific. However, most of these pay rises were agreed earlier this year when confidence in a recovery was strong. More recently, pay increases have been rarer and more modest, and the strong growth in salary might not be repeated next year, O'Reilly said. In addition, even though base salaries have risen, bonuses remain unannounced. Banks have been increasing base salary in order to retain staff, and after government bail-outs during the financial crisis, investment banks have been put under pressure to cut down on their bonus payouts. "No one's expecting bonuses to be great this year," O'Reilly said, adding that overall compensation in the finance sector will probably drop. With the global economy still suffering and as the year comes to an end, investment banks have also slowed down their hiring or put a headcount freeze in place. But some hedge funds that have performed well are still recruiting. Staff at analyst level saw an average 20 per cent pay rise to HK$400,000 a year if they switched employers. Staff who stayed with their current employer and did not receive a promotion received an average pay rise of 9.5 per cent. O'Reilly said the reason senior staff pay increases surpassed the increases given to junior staff was because some banks and hedge funds were facing a shortage of trained and capable junior to mid-level staff after they cut their graduate or MBA intake during the financial crisis. Staff working in compliance teams, which make sure the banks meet regulatory requirements in their operations and products, reported the biggest pay rises. Compliance team staff said they received an average 21 per cent boost in salary. This was higher than the average 11 per cent pay rise among counterparts in London. Hong Kong banks have been expanding their product lines in the past few years. This created a surge in demand for compliance staff to ensure new products were properly monitored. Regulatory oversight in the city also became more stringent, O'Reilly said.

Mallesons' Robert Milliner (left) with Handel Lee and managing partner Stuart Fuller. Union of law firms will create Asian powerhouse - Beijing-based King & Wood and Sydney-based Mallesons plan to form a business association - King & Wood, the mainland's largest law firm, has agreed to merge its Hong Kong operation with that of Australian firm Mallesons Stephen Jaques, the firms said yesterday. It will share a common brand and collaborate on business development to create the largest network of lawyers among Asia-based law firms. The move is expected to prompt other mainland law firms to form partnerships with international firms, as an increase in mainland cross-border mergers and acquisitions and rapid overseas expansion has increased the demand for professional services. Effective next March, Beijing-based King & Wood and Sydney-based Mallesons will combine via a "verein alliance" structure, the first such union between a mainland and a Western law firm. In verein alliances, a form of business association common to legal and accounting partnerships, offices in different nations have unlimited liability, but stay independent and are bound only by local regulations. The combined firm, to be known as King & Wood Mallesons, will have around 1,800 lawyers, roughly half from each firm. The union would make it the world's largest law firm headquartered outside of the United States and Britain, the firms said. The firm would rank 37th among the world's top 100 law firms, said Mallesons managing partner Stuart Fuller. If the firms had combined last year, the united firm would have had annual revenues of over US$700 million, according to The American Lawyer magazine. After a full merger of their Hong Kong operations, King & Wood Mallesons will become the fourth-largest law firm in the city with 130 lawyers, roughly half coming from each firm. It will have over 900 lawyers on the mainland and 600 lawyers in Australia, working in separate offices but under one brand. "The combination is driven by the desire to support clients who are seeking a streamlined service to help them to realise the significant opportunities in Asia-Pacific markets," the firms said. "It reflects the need to re-orientate around Asia as the new economic centre of gravity." China's expanding business relationships with Australia were a major push for the combination, even though foreign firms are not allowed to practice mainland law. Mainland regulations prohibit foreign law firms from investing in and managing mainland law firms. They are also not allowed to form practice associations, share profits or set up joint offices with them. Fuller said the combined firm would have a joint management committee overseeing the implementation of the business plans of its various partnerships. "Mallesons is not coming to China to practice Chinese law, nor is this a merger," said King & Wood partner Handel Lee. "Everything we do is allowed under mainland law." King & Wood combined with Swiss firm SG Fffalen in Hong Kong last year, but the alliance broke down after less than a year due to a failure to integrate operations, the Swiss firm said. Lee would not comment.

Richard Lancaster, managing director of CLP Power. The two power utilities, under pressure from the government and the public over price increases unveiled this week, are determined to proceed with the rises. CLP Power (SEHK: 0002) and Hong Kong Electric (SEHK: 0006) on Friday defended their 9.2 per cent and 6.3 per cent average tariff increases, and said they would not be reduced further. CLP managing director Richard Lancaster reiterated that this was the best the company could do. “We have made the best efforts to defer and minimise the tariff increase,” Lancaster said. He said while it might look like a big increase, the tariff level was still lower than that in 1997, and was the approved rate in its development plan endorsed by the government. His comments come four days after the firm unveiled the increase, triggering fierce public opposition and a call from the government to reconsider. Officials said the level of increase – which the company said was needed to meet soaring fuel and operating costs – was unacceptable. While low consumption users will have a smaller increase, heavy users will be paying as much as 20 per cent more per bill. Hongkong Electric said a majority of its residential users would see their bills rise by no more than five per cent under a revised tariff structure. According to the partial information released by the company, the firm will lower the basic tariffs for the first 500 units of electricity consumed, including a 4.4 cent reduction for each of the first 150 units consumed. Including the fuel cost charge, which is a constant at 37 cents per unit, a household consuming about 900 kilowatt hours or units will see their power bills rise HK$53.2 or 4.97 per cent, which the firm says is lower than the inflation forecast of 5 per cent this year. The firm said about 90 per cent of its households would benefit from the arrangement. But it gave no further information whether high-consumption households will also enjoy a reduction in the basic tariff, or to what extent their power bills will rise. A spokeswoman for Hongkong Electric said it had already responded to calls by government officials to lower the increase, from the 8 per cent it had sought, to the announced 6.3 per cent. Even after adjusting the tariff structure, the spokeswoman said the increase would still average 6.3 per cent. The firm said commercial users of 1,700 kilowatt hours a month would pay an additional 6.08 per cent or HK$129.50. Hong Kong Electric supplies Hong Kong and Lamma Island and CLP the rest of Hong Kong.

The Hong Kong Exchange Fund lost HK$40.8 billion in the third quarter - its worst showing since the same period in 2008 - as global financial markets were at the "most volatile since the 2008-09 financial crisis." That was the explanation from Hong Kong Monetary Authority chief executive Norman Chan Tak-lam as lawmakers grilled officials over their "inability to protect [the] people's money." The figure translates to an average loss of HK$5,828 for the SAR's seven million residents - the first loss since the second quarter last year. Third-quarter losses in 2008 were HK$48.3 billion. The past quarter saw equity indexes tumble worldwide amid a historic downgrade of the United States' sovereign rating by Standard & Poor's in August and rising anxiety over the European debt crisis. The SAR's de facto central bank suffered heavy losses in equities - HK$28.7 billion in local stocks and HK$37.5 billion in worldwide markets - while foreign exchange losses came in at HK$20.1 billion. Losses would have been worse except for debt investments, which brought in HK$46.2 billion in profits. But the fund managed to show a gain of HK$5.6 billion in the first nine months of the year, thanks to a better first half. It paid out HK$9.2 billion to the government in the third quarter. "These are the returns before being adjusted for inflation," lawmaker Regina Ip Lau Suk-yee said. "If you give us your five-year return figures, I trust they would hardly look glittering." Responding to queries on why the authority did not scale back on equity investments, Chan said the fund tries to strike a balance in its asset allocation to ensure stable returns and risks. "We cannot make one-sided bets," he said, adding the fund has diversified investments into private equity for long-term returns. But Chan's outlook for the local economy is grim amid risks of Europe going into recession and US growth expected to stay sluggish. He said: "Downtrend risks for the Hong Kong economy are also rising." 

Chow Tai Fook Jewellery chairman Henry Cheng Kar-shun (right) presents a souvenir to Hong Kong stock exchange Chairman Ronald Arculli during the company listing ceremony on the bourse yesterday. CHOW Tai Fook Jewellery Group Ltd and New China Life Insurance Co yesterday fell on their debut in Hong Kong, reflecting a slump in demand for new equity as China's growth slows and Europe's debt crisis persists. Chow Tai Fook, the world's largest listed jewelry chain, dropped 8 percent to HK$13.8 after raising HK$15.8 billion (US$2 billion) in an initial public offering. New China Life, the country's third-largest life insurer, fell 9.8 percent to HK$25.7 at the market close after completing a US$1.9 billion IPO. New China Life had the worst debut among Hong Kong IPOs of at least US$1 billion since June, according to data compiled by Bloomberg News. Other companies selling stock for the first time, including Haitong Securities Co and Guodian Technology & Environment Group Corp, canceled or cut offerings in the past week as the economic turmoil sapped demand for equity. "Investors are holding on to their cash, doubtful about not only new stock, but also shares in the secondary market," said Ronald Wan, a Hong Kong-based managing director at China Merchants Securities Co, which oversees about US$1.5 billion. "Worries about Europe will keep investors cautious in months to come." Hui Xian Real Estate Investment Trust fell 9.4 percent on its April debut after raising US$1.8 billion in Hong Kong's first yuan-denominated IPO. Samsonite International SA, the world's biggest branded-luggage maker, lost 7.7 percent on its first day of trading in the city in June. Chow Tai Fook and New China Life fell even after pricing their IPOs at or near the bottom of ranges marketed to investors. Hong Kong's Hang Seng Index has fallen 6.3 percent since December 7, the day before New China Life priced its shares. "With the uncertain outlook for the macro economy, it's difficult to ask investors to buy newly listed stocks at the moment," said Alex Au, Hong Kong-based managing director of Richland Capital Management Ltd, which oversees US$300 million. Chow Tai Fook's offer price values the company at about 15 times estimated profit for the year ending March 2013, according to people with knowledge of the matter. Tiffany & Co, the New York-based luxury jeweler, trades at 15.4 times the average analyst estimate for 2012 earnings, data compiled by Bloomberg News show. Signet Jewelers Ltd, the world's second-largest jewelry chain, trades at 11.3 times. China Polymetallic Mining Ltd plunged 39.2 percent on Wednesday on its debut after raising HK$1.1 billion in a Hong Kong IPO. Baoxin Auto Group Ltd lost 14.1 percent on Wednesday in its debut after a HK$3.2 billion IPO. Chow Tai Fook expects "buying power of customers to weaken" Chairman Henry Cheng said yesterday.

Hong Kong's reign as the most competitive Chinese city is about to end with Beijing, Shenzhen and Guangzhou expected to surpass the territory by 2013. That prognosis was made by the China Institute of City Competitiveness after considering 277 parameters that include financial, productivity and technological competitiveness. Nevertheless, the territory continues to retain its top spot for the fifth successive year, followed by Shanghai, Beijing, Shenzhen and Guangzhou. Institute chairman Gui Qiangfang said the competitiveness of Shanghai, Beijing, Shenzhen and Guangzhou increased dramatically last year with the gross domestic product of Shanghai hitting 1.687 trillion yuan (HK$2.059 trillion) compared to the 1.430 trillion yuan of Hong Kong. Gui believes the GDP of Beijing, Shenzhen and Guangzhou will also surpass that of Hong Kong's in two years' time. On a more positive note, vice chairman Xie Xiancheng said Hong Kong's position as an Asian financial hub will be safe for the next 10 years because the restrictions on capital inflows into the mainland from other sources are still tight. Xie said the SAR government should intervene less in the financial market and adopt closer ties with Shenzhen and Guangzhou. In another ranking, Hong Kong was knocked out of the Top 30 Safest Chinese Cities for the first time. Chongqing topped the list, followed by Tianjin, Beijing and Shenzhen. The vice chairman said this is because the recent blaze in Fa Yuen Street, Mong Kok, in which nine people died, indicated there may be a triad problem. Also, the government has not done enough to fight pollution. Inbound Tour Operators Association chairman Simon Hau Suk-kei said it is unfair to be singled out just because of the fire. Hau also did not think this would prevent mainlanders from visiting the territory.

Hong Kong domestic exports fell 31.5 percent by volume in October from a year ago, although the total for the sector rose 4 percent, the Census and Statistics Department said yesterday. "Local exports are usually higher- end and priced higher than re-exports, which are mainly from the mainland," said Bank of East Asia chief economist Paul Tang Sai-on. "Amid a weak economy, people reduced spending on higher-end goods." Export volumes climbed 14.7 percent to Taiwan and 5.4 percent to the mainland. But volumes plunged 9.3 percent year on year to the United States and slipped 0.9 percent to both Germany and Japan. Prices, however, showed a 7.9 percent increase over a year earlier. The government announced earlier that SAR's exports in value terms rose 11.5 percent year on year. However, the Hong Kong Trade Development Council forecast a gloomy outlook for exports next year in the wake of uncertain economics. It estimated exports will see only 1 percent growth in value terms next but a 3 percent decline in volume. "Import demand in most traditional markets will be subdued in the United States and Europe," said chief economist Edward Leung Hoi-kwok. The TDC said this quarter's export index dropped to 40.6, down 8.9 percentage points from the third. "The decline in export sentiment is across the board," Leung said. A reading below 50 suggests a pessimistic sentiment during the quarter, and signals contraction in exports. Leung warned that local firms will continue to face pressure from higher mainland labor costs and a stronger yuan.

Minibus drivers along Tung Choi Street, Mong Kok, followed the rule and turned off their engines. Mild weather gave the long-awaited ban on idling engines a smoother start than many had expected yesterday as most drivers, not needing their air conditioning, switched off the ignition voluntarily. But a handful were found to have broken the rule that they have to turn off their engines after three minutes at a standstill, saying they forgot or found it impractical to follow. No tickets for the HK$320 fixed penalty were issued as traffic wardens and environment inspectors will just issue warnings for the first month of the ban. The enforcers gave out seven verbal warnings and received one complaint. With a maximum temperature of about 22 degrees Celsius and humidity below 60 per cent it was barely a taste of what the ban will be like in the heat and humidity of summer. In small streets around Flint Road and Oxford Road in Kowloon Tong, most drivers and parents waiting for children to finish school had their cars turned off. "We usually have [the engine] off in this kind of weather," said one driver named Lam. "It's OK now in the winter, but the three-minute rule is a bit harsh and will be harder still in the summer." Lam said that if a boss asked the driver to wait for five minutes, it seemed unreasonable for the driver to turn everything off for those few minutes. Also, cars heated up in the summer, and might take longer than three minutes to cool down. "Many bosses do not like stepping into a hot and stuffy car," he said. Across the harbour, outside the Fook Lam Moon Restaurant in Johnston Road, Wan Chai - known as the "tycoon's canteen" - at least two drivers violated the ban while waiting for their bosses with engines on for about eight minutes. "The idling engine rule is a bit vague to me ... since my boss says he is coming down how can I switch the engine off and on? This is also bad for the car," said the driver of a seven-seater private car. Under the ban, all drivers are given a total of three minutes exemption in a 60-minute period. Exemptions are also given to taxis in a queue, and the first two minibuses in their stands. At Tung Choi Street and Fa Yuen Street in Mong Kok - two idling hotspots - people working at shops along the streets finally got some peace and breathing space as dozens of minibuses lining the streets complied with the ban. "It's a big improvement. But summers can be bad - I pity them! Three minutes is kind of harsh I think," said Chan, a restaurant employee. Wong Man-kin, who drives a red-top minibus, said he was doing fine but was a bit worried about summer. "We usually turn it off in cool weather anyway to save fuel. Fuel is money too you know," he said. "But it'll be really tough in summer." In Johnston Road, three traffic wardens patrolled the street during the lunch hour but seemed more interested in illegal parking than idling engines. They asked drivers of private cars - including a Mercedes-Benz carrying tycoon Joseph Lau Luen-hung - that were illegally parked directly outside the Fook Lam Moon to leave. "Will you be waiting long? Are you ready to go?" a woman warden asked one driver stopped with an idling engine. Her presence caused at least one car to keep circling nearby streets. A white seven-seater car was seen passing the restaurant eight times until the warden left shortly before 2.30pm. Lau's car, and two other vehicles including a Rolls-Royce, also returned to the restaurant after all wardens left. They waited about 10 minutes before the tycoon and his friends came out. But it could not be verified whether their cars were switched on because of the noisy surroundings and heavy security. Along Hennessy Road at about 1pm, most cars had their engines switched off. A truck driver, however, was seen having lunch in his seat with the engine on and window closed near the Southorn Centre.

A treaty to eliminate double taxation between France and Hong Kong would take full effect next year, the French Consulate General said on Friday. At a press conference to explain the new measures, the Consulate General said the treaty meant French residents in Hong Kong would no longer face the possibility of having their income taxed twice. At the same time, Hong Kong residents’ withholding tax on dividends, interests and royalties will be reduced to 10 per cent on their French investments. The treaty will apply from next January 1 in France and April 1 in Hong Kong. Hong Kong has France’s second largest trade surplus, worth of 3.8 billion euros (HK$38.3 billion) last year, according the Consulate General.

Terminally ill patients may be allowed to withdraw their money from their Mandatory Provident Fund (MPF) accounts before the normal retirement age. 

 China*:  Dec 18 2011 Share

The mainland's luxury goods market is expected to grow by 30 per cent this year as young consumers snap up coveted watches and leather hand bags despite a slowing economy. Consumer confidence in the world's fastest-growing market remains high, though luxury brands are reducing the pace of their expansion, according to a report by the global consultancy Bain & Company. Sales of luxury goods on the mainland could hit 113 billion yuan (HK$137 billion) this year, up from 87 billion yuan last year, mainly driven by new customers, the firm said. The mainland is expected to become the world's fifth-largest luxury market, with the rate of growth well ahead of the largest market, the United States, where luxury spending is on pace for an 8 per cent increase. Japan, the second-largest market, is likely to record a scant 2 per cent growth this year. Bain partner Bruno Lannes predicted sales would continue to rise at a "healthy pace" next year, though growth will slow from previous years. "The China market is still supply driven," said Lannes. "New store openings create new demand." According to the report, spending by new customers will amount to 14.9 billion yuan this year, representing 63 per cent of the total luxury growth. Watches were among the bright spots in 2011 as aggressive marketing strategies by various brands appeared to pay off. Sales of watches are set to jump 45 per cent from a year ago, up from a 12 per cent last year. The Bain report found global brands were taking a cautious stance on further expansion on the mainland. Store openings among a select group of top luxury brands dropped to 90 this year from 160 last year. "There are still a number of expansions, but the pace is slowing down as the brands want to focus on how to maintain their exclusive images," said Lannes, adding that, "more and more growth will come from same-store sales".

The yuan jumped to a record high on Friday against the dollar on suspected intervention orchestrated by the central bank, its most explicit action in three months to deter speculators from betting on a fall in the currency. The People’s Bank of China (PBOC) offered large amounts of dollars via major state banks, propelling the yuan to a record high of 6.3294 per dollar, currency traders said. The yuan pulled back slightly by midday to trade around 6.35, but was still up sharply from Thursday’s close of 6.3735. “This is a clear intervention by the government to support the yuan and is in the PBOC’s recent moves to use the mid-point to prevent the yuan’s fall,” said a trader at a European bank in Shanghai. “The move indicates that the government is determined to maintain the stability of the yuan’s value in the near term, possibly even let it appreciate slightly.” Weakening export demand and worries about how China will weather a housing market slowdown have cast doubt on next year economic prospects. Economists widely expect China’s growth next year will pull back to the slowest pace in a decade. That has put added pressure on the yuan. Since late September, the central bank had been trying to deter bets for yuan depreciation by setting the daily dollar/yuan mid-point, which determines the starting point for trade, at stronger yuan levels. The suspected intervention on Friday, an ultra-rare example of the PBOC visibly supporting the yuan, seemed to achieve Beijing’s goal. The currency was likely to stabilise between 6.30 to 6.40 at least for the rest of this year, traders said. On Friday the PBOC fixed the mid-point at 6.3352 to the dollar, stronger than 6.3421 on Thursday. Trading of the yuan is limited to 0.5 per cent either side of the daily mid-point. Despite the PBOC’s attempts to set the yuan’s exchange rate higher via the mid-point, a shortage of dollars in the onshore China market and broad dollar strength in global markets have pushed the yuan down to the weaker end of its band nearly every day in December. That was an unusual bout of weakness for a currency that has largely been on a rising trend since a landmark revaluation in 2005. The yuan is up around 30 per cent since the revaluation. For several years, the yuan has been considered by investors as a sure-fire appreciation bet as China amassed large surpluses from trade and Beijing came under pressure internationally to let the currency rise. The PBOC has acted to cushion speculation of yuan appreciation from time to time since the 2005 revaluation but has rarely needed to intervene to support the yuan. But some investors are now speculating in the offshore forward markets that the yuan will fall in the near-term as China’s exports are buffeted by a weak global economy. “I’m not too surprised that the PBOC is taking it [the dollar] a little lower ahead of year-end,” said Andy Ji, currency strategist at Commonwealth Bank of Australia in Singapore. “USD/CNY is down by 4 per cent year-to-date and seems that the PBOC is committed to keep that pace of appreciation even with deterioration in the external environment.” Ren Xianfang, senior China economist at IHS Global Insight, said the downward pressure on the yuan was part of a global move by investors into dollar assets, triggered by debt restructuring risks in Europe and a consequent dollar shortage in the international financial system. “This is a global problem that is now being reflected in emerging markets worldwide. September was basically a turning point for capital flow for emerging markets,” she said, adding that there would likely be a major restructuring in the first quarter of next year and that will make the flight to dollars even more aggressive globally. Beijing seems wary of sharp swings amid weak external demand and financial market turmoil. Over the past few weeks, it has leashed the yuan within a tight range around 6.35 per dollar. During the 2008 financial crisis, it kept the yuan mainly in a range of around 6.80 to 6.85 against the dollar for about two years. A dealer said that the central bank’s intervention had had the impact Beijing desired. “Worries over yuan depreciation dispersed quickly, with the market now abundant with dollar liquidity,” said the dealer at an Asian bank in Shanghai. “The yuan is now expected to move mainly around 6.35 in the near term, possibly hitting a high of around 6.30 at the end of this year,” he said, echoing views held by many traders.

Cast members of "The flowers of war" turn up at premiere - The movie, helmed by Zhang Yimou, was nominated in the foreign language film category of the 69th annual Gloden Globe Awards.

Crazy about chocolate - A model presents a creation with adornments partially made of chocolate during a chocolate fashion show in Shanghai yesterday.

A scene from ‘Flying Swords of Dragon Gate.’ Originally posted on Scene Asia: “Flying Swords of Dragon Gate” (龍門飛甲), China’s most expensive 3-D movie ever made, opens today across the country, as director Tsui Hark (徐克) attempts to raise the bar for Chinese action movies. At $35 million, the “Flying Swords” budget is far lower than Hollywood’s average 3-D blockbuster, but it’s costly for China, where production costs have been creeping higher in recent years. Jet Li, Zhou Xun, Chen Kun and other cast members attended the premiere in Macau Thursday. “Flying Swords” features martial-arts star Mr. Li as a Ming Dynasty-era general who battles imperial assassins in the Chinese desert. Mr. Hark stays true to form, offering up his flair for visual effects, including a massive, swirling sandstorm where the climactic fight takes place. The movie is a sequel to 1992′s “New Dragon Gate Inn,” which Mr. Tsui produced and which itself was a remake of the 1967 classic “Dragon Gate.” “Flying Swords” goes head to head with “The Flowers of War” (金陵十三钗), also opening today. The film, from director Zhang Yimou (張藝謀) and starring Christian Bale, takes on the somber subject of Japan’s brutal occupation of Nanjing in 1937. With a budget of nearly $100 million, it’s the most expensive film ever produced in China. On Thursday, it received a Golden Globe nomination for best foreign-language film. China’s film industry is eagerly awaiting to see what audiences respond to this weekend: stylish entertainment or historical drama.

China lowered the average import tariffs on some goods on Thursday in order to boost imports and promote balanced trade, said an expert with the Ministry of Finance (MOF). "As global economic growth is slowing, many countries have taken measures to reduce imports. In this instance, China's move to cut tariffs shows its responsibility to the world," said Liu Shangxi, deputy chief of the Research Institute for Fiscal Science under the MOF. The average tariff on more than 730 kinds of imported goods will be lowered to 4.4 percent as of January 1, 2012, less than half the rate for the most favored nation under WTO rules, the MOF said in a statement on its website on Thursday. Imports covered in the low tariff catalogue for 2012 include energy products such as coal, refined oil and rare earths, sophisticated equipment-making products, and parts and facilities used in emerging industries ranging from high-definition cameras to high-voltage transmission lines. Farm produce, consumer goods like baby formulas, and public health products such as vaccines and serums are also included. Liu said the imported products enjoying lower tariffs will meet China's production needs and consumer demands. According to a statement released on Wednesday after the annual central economic work conference, China will strengthen and improve its work in regards to imports, actively boost the country's imports and promote balanced trade in 2012. After China became an official member of the WTO in December 2001, the general level of the country's import tariffs was lowered from 15.3 percent in 2001 to 9.8 percent in 2010.

Foreign direct investment (FDI) fell almost 10 percent last month from a year earlier, the first drop in 28 months, as Vice-Premier Li Keqiang called for a boost to domestic consumption on Thursday. Amid the "grim and complicated" global outlook, China needs to strengthen market capacity and growth by encouraging private investment, increasing investment in affordable housing projects and accelerating urbanization, Li said. The vice-premier also called for greater promotion of the service industry, which he said is the largest "employment creator and innovation driver". Experts said a growing and stable Chinese market will help lure foreign investment, and they predicted that the world's second-largest recipient of foreign investment will recover lost ground in the long run. According to the Ministry of Commerce, FDI fell 9.76 percent from a year earlier to $8.76 billion in November. China last witnessed a monthly drop in FDI in August 2009 amid the world's worst financial meltdown in seven decades. "The only thing that explains the drop in November is that the debt crisis in the European Union and the US economy have both taken a toll in the confidence of foreign investors," said Zhu Baoliang, chief economist at the State Information Center, a government think tank. From January to November, US investment in China dropped by 23 percent year-on-year to $2.74 billion, and investment from the EU rose marginally by 0.29 percent to $5.98 billion. Shen Danyang, ministry spokesman, said the monthly figure may not reflect the long-term trend, which he described as positive. "The drop in any individual month is not representative and does not define the general trend of Chinese FDI growth amid sluggish global investment," Shen said. A number of factors, including stable economic growth and domestic consumption potential, show China's long-term advantages and appeal to foreign enterprises, he said. He also said investment from developed countries will grow over the long term.

Hong Kong*:  Dec 17 2011 Share

First of three new upmarket developments destined for the area will be Hysan Development's 710,000 sq ft Hysan Place, at 500 Hennessy Road. Rents in Causeway Bay - the third-most expensive retail precinct in the world - look set to rise further as more big-name international brands are drawn to open for business in three new upmarket developments destined for the area. First to open will be Hysan Development (SEHK: 0014)'s 710,000 sq ft Hysan Place, at 500 Hennessy Road. The project is due to be completed in the second quarter of next year. Soundwill, meanwhile, has a 148,800 sq ft "Ginza-style" commercial project in mind for its site at 1-29 Tang Lung Street, one block from Hysan Place. The project is due for completion in 2013. And behind the area's landmark Sogo department store, the 46-year-old residential block Central Mansion, at the junction of Cannon Street and Jaffe Road, is to be knocked down to make way for another "Ginza-style" project - a 230,000 sq ft development by Phoenix Property Investors. Together, the three projects will increase the supply of retail space in the area by more than 1.08 million square feet in the next three years. "Causeway Bay will have its biggest facelift since the opening of Times Square [in 1994] as there has been no new supply for nearly two decades now," Soundwill director Victor Chan said. He said the total investment in the Soundwill project would be HK$1 billion. The group began assembling its site at Tang Lung Street in 2005 and three years later completed taking ownership of properties located at 7-19 Tang Lung Street for HK$490 million through a compulsory sale. It has since gradually expanded the site to its present 12,500 square feet. Chan said Times Square had become a Causeway Bay landmark and transformed the area into a shopping and nightlife district. A Mecca for cashed-up mainland visitors, Russell Street, in the heart of Causeway Bay, is the world's third most expensive retail precinct after Manhattan's Fifth Avenue and Avenue des Champs-Elysees in Paris, according to Colliers International. Soundwill's headquarters, Soundwill Plaza, is at 38 Russell Street. "Our proposed Ginza-style plaza is located at the back of Soundwill Plaza and will definitely benefit from the change," Chan said. Dickson Lau, financial controller at Soundwill, said two street-level shops in Tang Lung Street sold for HK$185 million and HK$147 million in October last year. "Excluding the above-ground space, the transaction prices will value our ground level shops in the proposed Ginza-style plaza at HK$1 billion at least," he said. Meanwhile, Emperor International said it paid HK$1.1 billion for retail properties at 22-24 Russell Street in July last year. Combined with adjoining retail space at 20 Russell Street, it will be a 3,200 sq ft site suitable for use as a flagship store. Jeannette Chan, a regional director of the retail department at Jones Lang LaSalle, said retail rents in Causeway Bay would continue to soar. "Retailers can afford to pay higher rent as long as the shops generate business," she said. "With more new international brands likely to set up their flagship stores there, they will certainly draw more shoppers." Among the retailers due to open in the area is US fashion chain Forever 21, which will open a 51,188 sq ft store in Capitol Centre after it signed a leasing contact of HK$11 million a month. Hysan Place will also bring in new retailers, including Taiwan's Eslite Bookstore, computer giant Apple, and duty-free outlet DFS.

Cathay Pacific Airways (SEHK: 0293), the world’s largest air cargo carrier, said cargo demand failed to peak in November for the Christmas season, with freight volume down 13.8 per cent and the passenger outlook uncertain for next year. Cargo and mail volume fell for an eight consecutive month in November to 132,430 tonnes, Hong Kong’s dominant airline said in a statement late on Wednesday. Cargo load factor fell 6.3 percentage points to 65.3 per cent as Cathay reduced capacity in the face of continued weak demand from its key Hong Kong and China markets. “November is traditionally the busiest time for our cargo business in the build-up to the Christmas season in the United States and Europe, but the peak simply didn’t arrive this year,” said Cargo General Manager James Woodrow in the statement. Factory output in China, Cathay’s major cargo market, shrank again in December after new orders fell, a preliminary purchasing managers’ survey showed on Thursday, entrenching expectations that manufacturers are struggling with waning global demand and tight domestic credit conditions. However, demand within the region remained relatively healthy and a new service to Zaragoza in Spain got off to a good start, Woodrow said. Passengers carried by Cathay and unit Dragonair rose 4.2 per cent in November to a total of 2.27 million, but growth was slower than the capacity increase, lowering the passenger load factor 2 percentage points to 78.5 per cent. “Bookings for the upcoming Christmas travel peak are in line with expectations, but the outlook for the early part of next year is still very uncertain,” said General Manager of Revenue Management James Tong. The airline also noted that economy cabins were seeing some yield pressure. “We believe passenger traffic growth will eventually dip into negative territory, prompting our sell rating on Cathay and a target price of HK$10,” said RBS analyst Andrew Orchard. Shares of Cathay eased 0.6 per cent to HK$13.08 on Thursday morning, outperforming a 1.9 per cent drop on the blue chip Hang Seng Index.

Henry Cheng Kar-shun, chairman of Chow Tai Fook Jewellery, poses with the gong mallet at the debut at the Hong Kong Stock Exchange on Thursday. Two blockbuster initial public offerings in Hong Kong, which raised a combined US$3.9 billion, fell on their trading debuts on Thursday amid global market volatility and fears of a euro zone meltdown. Chow Tai Fook Jewellery, the world’s biggest jewellery chain, dropped 8.4 per cent to close at HK$13.74 after its US$2.0 billion IPO was oversubscribed by investors seeking to cash in on China’s luxury goods market. And New China Life (SEHK: 2628) Insurance, China’s fourth-largest insurer by premiums, slumped nearly 10 per cent to close at HK$25.70, compared with its IPO price of HK$28.50. The broader Hang Seng Index ended down 1.78 per cent. The weak debuts in Hong Kong, the world’s biggest IPO market last year, came as Asian markets fell for a third straight session on growing doubts over last week’s European debt deal. Investors have also been spooked by a string of weak manufacturing figures from China. Growth in the world’s second biggest economy is forecast to slip below 9.0 per cent next year compared to 10.3 per cent last year. “It is unlikely for investors to hear anything positive from the euro zone or China in the short term,” Tanrich Securities investment manager Jackson Wong told Dow Jones Newswires. Chow Tai Fook, which has 1,500 outlets throughout Asia, had hoped to raise $2.8 billion from its public offering but scaled back its target in the face of prevailing market headwinds. The firm, a household name in China but virtually unknown in the West, sees the listing as a way to capitalise on the growth in personal wealth in China, where demand for luxury goods is soaring. The group has a large network of stores in the mainland plus outlets in Macau, Malaysia, Singapore and Taiwan. It also has diamond-cutting facilities in South Africa and China, and manufacturing plants in China and Hong Kong. It plans to increase its number of stores to more than 2,000 by 2016. New China Life Insurance meanwhile had raised US$1.89 billion ahead of its dual listing in Hong Kong and Shanghai, also pricing its shares near the bottom end of its marketed range with the retail portion undersubscribed. The stock will start trading in Shanghai on Friday. New China Life Insurance has more than 1,400 outlets in China and 24 million customers. Weak market sentiment has prompted some firms to delay or downsize their share sales in Hong Kong this year. A total of HK$218.72 billion (US$28.1 billion) was raised in IPOs on the Hong Kong exchange in the first 11 months of the year, down 45 per cent on the same period last year, according to exchange figures. Meanwhile, the Hong Kong-listed shares of China Gas Holdings ended flat at HK$3.38 on Thursday after the company criticised a joint takeover bid from China Petroleum & Chemical Corporation (SEHK: 0386) (Sinopec) and ENN Energy Holdings. The privately-run distributor described the bid as “opportunistic” and said it failed to reflect the company’s fundamental value.

The Consumer Council's chief executive talks to reporters about the rising costs of maternity health care in Central on Thursday. Hospitals must be more transparent about the services and charges included in their maternity care packages, the Consumer Council's chief executive said on Thursday. Connie Lau Yin-hing told a press briefing that maternity package costs have increased as much as 49 per cent in private hospitals over the past 18 months. She said the basis for the increase in charges was often unclear. “Parents hope to keep the price under control when they purchase maternity packages,” Lau said. “Hospitals should be more transparent about presenting their charges.” Some new parents were told that, when a mother is discharged, they must pay tens of thousands of dollars more than the price they were originally told, the council reported. In one case, a woman reserved a bed in February and agreed to pay HK$40,000 for a maternity package. She was due to give birth in August, but in July the hospital told her she would have to pay HK$50,000. She complained to the Consumer Council, and the hospital eventually agreed she could pay the original price. In the latest issue of its Choice magazine, the council criticised some private hospitals for not telling customers what services and costs were included in packages they offer. In some cases, parents were not told about extra charges for some services, such as using a breast pump or allowing fathers in the operating theatre. The council has received 26 complaints this year about maternity packages. Twenty-two of these complaints were over high charges. The council said it had received 14 complaints about maternity packages in July, alone.

New People’s Party chairwoman Regina Ip Lau Suk-yee on Thursday dropped her bid for next year’s chief executive election. The legislator and former secretary for security told reporters on Thursday afternoon it would be unlikely she would get enough nominations to enter the race. Ip said she came to her decision after a month of discussing her bid with some members of the Election Committee, which selects the chief executive. She had secured around 20 to 25 votes, falling short of the 150 nominations a candidate has to obtain from the 1,200-member committee, she said. “Counting the number of votes, I am unlikely to garner enough nominations for me to enter the election,” she said. “I consider it would be unproductive to pursue my candidacy,” she said. Ip said the votes she had secured included six members of her party and her think tank. She said her party had not decided whether these votes would go to any of the other two candidates, former chief secretary Henry Tang Ying-yen and former Executive Council convener Leung Chun-ying. She said her party would examine the pair's policy platforms, performance in election forums and executive ability before deciding. The 61-year-old also said she had no interest in serving in the next chief executive’s cabinet as chief secretary, as she had been asked to do. Ip said she would run for the chief executive in 2017 provided she remained in good health.

A slowdown in informal lending on the mainland may send Macau's booming high-stakes gambling segment on a losing streak, according to an analyst. An economic slowdown means growth of Macau's VIP segment "could well turn negative as VIP junkets would require a meaningful capital infusion simply to maintain current volume", said Wells Fargo Securities gaming analyst Cameron McKnight in a report. The credit-driven VIP segment, which accounts for around 75 per cent of total revenue in the world's biggest casino market, is "the critical issue in the sector at this juncture, given two years of outsized market growth and intense debate on the Chinese economic outlook", McKnight wrote. Recent months have seen several analysts highlight the risks to Macau posed by a potential credit crunch among VIP junket agents - the middlemen who bring high-stakes players to casinos, issue them credit and collect their debts in exchange for a hefty commission. Macau's big growth in the last two years - revenue shot up 44.1 per cent in the first eleven months of this year on top of last year's 57.8 per cent growth - has been largely driven by a surge in credit extended by junkets. Junket agents have been able to increase lending following an influx of new capital provided by the casino operators themselves - usually in the form of advanced commission payments - as well as by bringing in outside investors. With the real interest rates on deposits at mainland banks (after adjusting for inflation) running negative for the past two years, investors have sought better returns elsewhere. That includes investing in informal lending syndicates and Macau junket operations, which can offer returns of 1 to 2 per cent per month, or around 20 per cent per year. These inflows of private investment have bolstered the capital base for junket operators, who can then issue more credit to more players, boosting overall gaming volumes in Macau (see second chart). But recent signs that the mainland's underground financial system is coming under pressure, most notably a spate of high-profile defaults in the freewheeling eastern city of Wenzhou, have raised concerns that the junket agents underwriting Macau's boom face similar risks. "Many VIP junkets have been obtaining money lender licences in China as a means of legalising their lending and collection activities on loans related to gambling, legally taking collateral over loans, and preparing for the [junket] licensing process in Singapore," McKnight wrote. "Some junkets have been extending loans for purposes outside of traditional VIP gaming, which could mean they are more enmeshed with, and exposed to the same problems as, the shadow banking system." However, Macquarie Securities analyst Gary Pinge, after visiting Wenzhou in October to speak with informal lenders and junket agents, concluded that the positive macro environment was likely to buoy Macau.

 China*:  Dec 17 2011 Share

Beijing is proposing to ban movie content it says disturbs social stability and promotes religious fanaticism, the latest attempt by the government to tighten control over what people see in the media. According to a draft law posted on the Politburo Standing Committee website on Thursday, films must not harm national honour and interest, incite ethnic hatred, spread “evil cults” or superstition, or propagate obscenity, gambling, drug abuse, violence or terror. A total of 13 types of content are banned in the draft law, but no terms or phrases were defined. The proposal appears to be part of an overall tightening of cultural industries that are fuelling more independent viewpoints, particularly social media and hugely popular microblogs where citizens often vent anger and frustration. In recent weeks, users of China’s Twitter-like sites have blamed the government for the poor quality of rural school buses after a series of accidents and criticised local environmental bureaus for not reporting full air quality data. China announced last month that it was issuing orders to prohibit news media from reporting information taken from the internet or mobile phones without first hand verification, with serious infractions possibly leading to criminal charges. A media regulator said those rules were needed to restore government prestige and media credibility following a spate of reports based on “false information” – often a euphemism for reports the government would rather suppress. In October, a major Communist Party meeting asserted the need for strengthening social morality and boosting China’s cultural influence abroad – a recognition by the party that it is losing its power to dictate public opinion. A week later, the government said it planned to limit reality TV shows and other light entertainment fare shown on satellite television stations. Thursday’s draft law also bans content that harms national unity, sovereignty and territorial integrity, discloses state secrets and endangers national security, or jeopardises social ethics. It does not specify penalties for noncompliance, and it was unclear when the draft – which is open to public consultation – may become law. The draft as a whole covers a wide range of aspects, including banning movie theatres from showing advertisements after the film’s scheduled start time, supporting the development of the film industry in rural areas, and banning people from carrying explosives or radioactive items into cinemas.

Anti-dumping and anti-subsidy duties will be placed on vehicle imports from the United States for two years, the Ministry of Commerce said on Wednesday. The move is in accordance with domestic legislation and the World Trade Organization (WTO) rules, and shows China is finally learning how to protect its interests under international trade rules, analysts said. The ministry said in a statement on its website that it will start to impose taxes on cars and sports-utility vehicles made in the US with an engine capacity of more than 2.5 liters, from Dec 15, 2011 to Dec 14, 2013. "US vehicles benefiting from subsidies and dumping on the China market have substantially damaged China's auto industry," the statement said. General Motors and Chrysler will be affected most by the duties. Anti-dumping duties on GM vehicles will stand at 8.9 percent and at 8.8 percent for Chrysler vehicles. GM vehicles will also face anti-subsidy duties of 12.9 percent while Chrysler vehicles will face 6.2 percent anti-subsidy duties. US units of German automaker BMW and Mercedes-Benz will also be hit by duties of 2.0 percent and 2.7 percent, respectively, according to the statement. Currently, China imposes tariffs of 25 percent on imported passenger vehicles. Zhou Shijian, a senior expert on China-US trade from Tsinghua University, said that the move is a "proper and equal" counterattack to US trade investigations aimed at China. "It's reasonable self-defense for China," Zhou said as he cited the US targeting imports of Chinese tires with massive duties in 2009. "An eye for an eye is a sound way for China to face trade disputes with the US under WTO regulations." The Obama administration imposed a 35-percent anti-dumping tariff on imported tires from China valued at about $1.8 billion, over three years. It will result in cutting China's tire exports to the US by more than 50 percent, and lead to possibly 100,000 job losses in China's domestic tire industry. Li Zhongzhou, a former official from the Ministry of Commerce and a WTO expert from the EU-China Trade Project, also said that "China should strike back in its own good time as the US always stirs up investigations targeting China by routinely using trade remedy measures". And "it's good to see that China has learnt to better use trade regulations to protect itself and respond to trade challenges", Zhou said. However, Zhong Shi, an independent auto analyst based in Beijing, said that the duties will have a limited impact on US vehicle exports to China. GM Cadillac models do not have a large market share while Chrysler doesn't do much business in China, Zhong said. GM's import volume is less than half of one percent of its domestic production in China, a company statement said on Wednesday. "It's more of a signal that China is exerting pressure on US trade protectionist moves," Zhong said. China imported 905,000 vehicles up to the end of November, year-on-year growth of 31 percent. Imports for the year are expected to pass the million mark. European automakers dominate the segment with about 60 percent market share.

Top ten graceful ladies in China - Ten graceful women in China.

A Yangtze River bridge linking Shanghai's Chongming Island with Qidong, a boom city in Jiangsu Province has passed final examinations and will be opened to traffic soon. A Yangtze River bridge linking Shanghai's Chongming Island with Qidong, a boom city in Jiangsu Province has passed final examinations and will be opened to traffic soon, project officials said today. The 53-kilometer bridge will cut the trip from downtown Shanghai to Qidong City by two hours to about 90 minutes. It takes only 35 minutes to drive from Pudong to Qidong. The new bridge is a vital link between the Yangtze Tunnel-Bridge Project on Chongming Island and the Nantong-Qidong Highway in Jiangsu, officials said. It will make the Pudong International Airport and Yangshan Deep-Water Port more accessible to cities in the northern part of Jiangsu. The drive from Qidong to the Pudong International Airport takes only about 45 minutes. The new route also means that Jiangsu's seafood and agricultural products can be transported faster to Shanghai.

China continues to be an attractive destination for foreign retailing businesses, but not all companies who venture into the Middle Kingdom have found that life was easy. Many companies had taken on the Chinese market with great confidence, but ended pulling out of the country with their tails between their legs. In February 2011, for example, the United States electronics giant Best Buy said it would close all its nine stores, along with its Shanghai headquarters, after just a five-year presence. A month later, Barbie doll manufacturer Mattel said it would close its flagship store in Shanghai, and French decor maker La Maison shut all its seven stores in Shanghai in a complete withdrawal from the Chinese mainland market. All the companies said the change is part of their development strategies. Analysts said the potentially lucrative Chinese market is not where every foreign company can easily make a profit, although many of them have advanced management systems. The Chinese consumer market has been booming over the past decade, particularly since China joined the World Trade Organization in 2001. A report from consultant A.T. Kearney (ATK) said sales revenue generated from the retail sector reached 2.1 trillion yuan ($331 billion; 246 billion euros) in 2010, with growth rate remaining at 15 percent. Figures from consultant Euromonitor International showed sales revenue generated by hypermarket operators in China reached 444.66 billion yuan in 2010, an increase from 39.76 billion yuan in 2001. Revenue from other retail sectors such as home appliances and online shopping, has also recorded tremendous growth. China's WTO membership and the booming market demand provide tremendous opportunities for global retailing giants. Liao Yan, public relations manager of French retail giant Carrefour China, said while the company has brought into China some of Europe's advanced retail experiences, the country has become "one of the most important supporters for Carrefour's growth in the world". Carrefour operates more than 190 stores in China. The company, which entered the Chinese mainland in the early 1990s, is the country's fourth-largest retail giant with a market share of 8.1 percent in 2010, Euromonitor said. Figures from the China Chain Store and Franchise Association (CCFA) showed that in 2010, sales revenue generated by Taiwan-based RT-Mart reached 50 billion yuan, and the United States-based Walmart generated 40 billion yuan. The two are the leading hypermarket operators in China. For most foreign investors, China has become strategically important as any success here would mean they would have strong support for their growth. Howard Abe, who specializes in consumer goods and retail practice at ATK, said retailers need to control the speed of their growth at a rational level to better control the supply and distribution channels. Companies also need to better understand consumer preferences and better utilize resources, he said. Swedish furniture retailer Ikea has long had a test-and-trial strategy, and now is on an expansion phase after being in China for more than 10 years. "We need to understand the market in China and understand what people like," Gillian Drakeford, Ikea China retail president, said. "We need to know the factors that can make us successful. We cannot just come in and suddenly go big." ATK's Abe said: "No city is the same. Companies need to understand each city and understand consumer preferences." When companies expand too quickly, he said, they might find it hard to find the right suppliers and maintain sustainable growth. When competition in the larger cities gets too strong, many retail giants seek opportunities in smaller ones. However, not all have found this easy, with some larger giants forced to close stores in small cities to avoid further losses. Peng Jianzhen, deputy secretary-general of CCFA, said foreign retailers have been doing very well over the past decade and have strong presence in cities such as Beijing and Shanghai. However, their expansion might not have been as much as it was when they first moved into regional area, or smaller cities, Peng said. "Locally retailing companies might have better control over resources in regional areas and some have developed management systems that better fit the local market, so foreign companies might lose competitiveness in second- or third-tier cities," Peng said. After 10 years of growth, local companies have become more confident in competing with foreign companies and in building business models that better support development in China, Peng said. And compared with foreign companies, local companies might be more competitive in attracting talent.

The government in Beijing said on Thursday that its ambassador to Myanmar had had a rare meeting with pro-democracy leader Aung San Suu Kyi, in the highest level contact in two decades between China and Myanmar’s opposition. Foreign Ministry spokesman Liu Weimin also said State Councillor Dai Bingguo, would travel to Myanmar next week for a summit of Mekong River countries, weeks after US Secretary of State Hillary Clinton’s landmark visit there. Liu said that ambassador Li Junhua’s meeting with Nobel Peace Prize laureate was in response to a request from her. “Madame Aung San Suu Kyi has proposed a number of times her desire for contact with the Chinese side, and the Chinese ambassador to Myanmar’s meeting was in answer to this,” he said, declined to say when or where the meeting took place. Liu said the ambassador “listened to Aung San Suu Kyi’s ideas.” China has exchanges with people in Myanmar “from all quarters who support friendship and co-operation between China and Myanmar, on the basis of mutual respect and non-interference in domestic affairs,” he added. Suu Kyi has tried to reassure Beijing, who strongly backed the military regime which locked her up, that she does not consider it an enemy, making remarks to that effect almost immediately upon being released from house arrest last year. China’s then-ambassador Cheng Ruisheng, who served in Myanmar from 1987 to 1991, met Suu Kyi twice and had previously been the most senior mainland official to have contact with her, according to media sources. “China has always strived to develop a comprehensive strategic partnership with Myanmar and supports the Myanmar government’s efforts to advance economic and social development and promote domestic reconciliation,” spokesman Liu added. Liu did not say exactly when Dai, who outranks the foreign minister, would go to Myanmar nor if he would have any bilateral meetings with government leaders while there. Sources had said this week that premier Wen Jiabao would attend the Mekong River summit next week. It is not clear why Dai is going instead of Wen. Beijing has long been Myanmar’s closest partner. But relations have been strained after the former Burma suspended building a Chinese-funded dam in September, and have been further affected by Washington’s tentative moves to re-engage with the once-isolated country. Clinton met Suu Kyi this month as Myanmar’s new civilian government pledged to forge ahead with political reforms and re-engage with the world community. Clinton’s trip follows a decision by US President Barack Obama last month to open the door to expanded ties, saying he saw the potential for progress in a country until recently seen as a reclusive military dictatorship firmly aligned with China. With sanctions blocking Western investment, China has emerged as Myanmar’s biggest ally, investing in infrastructure, hydropower dams and twin oil-and-gas pipelines to help feed southern China’s growing energy needs. China has also counted on Myanmar as a bulwark against what Beijing sees as US attempts to surround China. That could be threatened now Washington has begun contacts with a Myanmar which is embarking on tentative political liberalization.

Hong Kong*:  Dec 16 2011 Share

Barges carry slogans that read "good luck with the job" (left) and "prosperity" at a ceremony marking the start of construction of the Hong Kong-Zhuhai-Macau bridge. Construction has finally begun on the giant Hong Kong-Zhuhai-Macau bridge after a legal challenge to its environmental assessment report delayed it by a year. That delay meant extra manpower and equipment would be needed to meet the 2016 deadline for the mammoth project, Chief Executive Donald Tsang Yam-kuen reiterated at a launch ceremony yesterday. The first stage involves building a 150-hectare artificial island that will hold boundary-crossing facilities, costing HK$30.43 billion, and a bridge linking Tuen Mun and Chek Lap Kok. The project was delayed after the Court of First Instance ruled that the environmental impact assessment for the project failed to meet the government's own standards. The ruling was overturned by the Court of Appeal in September, and the government said the delay had pushed up costs by HK$6.5 billion. Total costs are estimated at HK$83 billion. "Although the local construction work for the bridge was delayed for a year because of a judicial review earlier, we will tighten the schedule by altering construction methods and deploying extra manpower and machines, so the bridge can open in 2016 as planned," Tsang said. Sun Ziyu, president of contractor China Harbour Engineering, said more equipment was needed to speed up the transport of construction material, and additional workers had been hired, but he could not estimate the impact on costs. "There's some impact from the delay, but we will try our best to control costs," Sun said. "It's a challenge to finish such a large quantity of work in a limited period. We have to ensure airline safety and environmental protection." The artificial island will be created without dredging, using a method that will reduce the amount of mud churned up from the seabed and dumped elsewhere by 97 per cent and cause less disruption to the underwater environment. A series of interlocking steel cells will be sunk, penetrating marine mud and resting on firmer underlying layers of clay and gravel.

Vivien Chan, chairwoman of the Estate Agents Authority, is eager to help clarify the conduct and legal responsibilities of property agents and improve the industry's image. Vivien Chan, the chairwoman of Hong Kong's Estate Agents Authority (EAA), is determined to tighten regulations governing the sale of new homes during her tenure. "I really want to complete the work related to the regulation of the sale of first-hand properties, and give my full support to the government in its legislation over such regulations," Chan said. The veteran lawyer and businesswoman took up the leadership of the statutory body three years ago, at a time when the property market was hit by the global financial crisis. One of her first challenges arose in mid-2009, when the public questioned the suspected unlicensed estate agency work of The Link Management. The EAA investigated the matter and it later ruled that the firm had failed to ensure that at least one of its directors was a EAA license holder. The firm was consequently reprimanded and fined HK$10,000. It had also failed to notify the EAA in writing within 31 days of a director's departure, and received a reprimand. Chan said this incident, and the controversy over The Icon, a Mid-Levels project, which arose about a year ago, were some of the most memorable cases she came across to date as the head of the property watchdog. In the case of The Icon - of which Winfoong International was the developer and Centaline Property Agency the broker - several flat buyers complained of unfinished work. One had likened her apartment to a "rubbish dump". Buyers had also complained about misleading sales information. The EAA started an investigation, and is scheduling a disciplinary hearing to which Centaline may be summoned to appear. "If we don't treat this case seriously, it would leave unclear the standards of a new flat when it is handed to the buyer, as well as the conduct and legal responsibility of the estate agents," said Chan. The Icon incident had provided the industry with a cautionary example from which it could learn, Chan said. To be sure, regulating the property market has become more complicated because of trends such as the online sales of flats and the increasing number of mainland buyers. But Chan said she was happy that the EAA was helping to tighten regulations and improve the industry's image. "Having spent time and effort on the Estate Agents Authority in the past three years, I feel rewarded. I feel I've done something for Hong Kong," Chan said. Since she became chairwoman, the EAA has issued a total of 20 so-called practice circulars for property agents. The scope of the regulations ranges from the proper presentation of property information and land searches, to the protection of the personal information of buyers and sellers. Furthermore, the government had appointed an EAA representative to a committee to study the proposed legislation covering the sale of new flats to better protect new homebuyers. After receiving the committee's report, the government last month released a draft bill for a two-month public consultation. "We need the EAA because without it Hong Kong's property market would be immature. I think it is very important because almost every transaction involves an agent," said Chan. The EAA could protect agents by setting clear boundaries of what they should or should not do, she said.

Hong Kong is No 1 financial centre - City leapfrogs US and Britain to head the World Economic Forum rankings - Hong Kong has leapfrogged the United States and Britain to top the World Economic Forum's (WEF) Financial Development Index for the first time, after coming fourth last year. Hong Kong took the No1 spot ahead of a list of 60 countries. It scored 5.16 on a scale of 1 to 7, based on a vast amount of data intended to set standards for the world to follow. "This is the first time ever for an Asian financial centre to be given the top spot," said Financial Secretary John Tsang Chun-wah. Tsang said he was pleased that the WEF had acknowledged the city's strengths in access to capital, business environment and banking financial services, such as initial public offerings. "In the past, Hong Kong's status as a financial centre always fell behind New York, London or Tokyo," said Raymond Yeung, an economist at ANZ. "The change could be partly attributed to Hong Kong's geographic advantage of being close to mainland China." Analysts said Hong Kong's explosive listing volume, low tax rates and status as the key offshore yuan trading centre had boosted its ranking. Yeung said the city's new status would help attract more fund-raising activities and financial talent. "There is an increasing trend where we see people moving to Hong Kong because of the low tax rate," said Lu Ting, an economist at Bank of America Merrill Lynch. Lu added that he did not attach huge significance to Hong Kong's move to the No1 spot, adding that it would be hard to see any tangible benefits. Out of the seven components in which various financial centres were assessed, Hong Kong ranked first in financial access, and third in business environment and banking financial services. Institutional environment, financial stability, non-banking financial services and financial markets were also put under the microscope. The US ranked second overall, Britain third, and Singapore fourth. China was in 19th place. China, Canada and Singapore were singled out for praise for having increased their overall scores consistently since the index began in 2008.

Two mainland companies unveiled plans to go public in Hong Kong, targeting a total of HK$2 billion after earlier delaying their announcements due to poor market conditions. SPT Energy, a Beijing-based drilling and well-services provider, aims to raise up to HK$546 million by selling 335 million shares at HK$1.23 to HK$1.63 each. It is pitching its shares at 7.6 to 10 times this year's forecast earnings. Rival Anton Oilfield Services last traded at 10.2 times this year's estimated earnings. Meanwhile, China Tianrui Group Cement aims to raise up to HK$1.45 billion by selling 400.9 million shares at HK$2.41 to HK$3.61 each. It is pitching its shares at 3.8 to 5.6 times this year's projected profit. In this year's first-half, SPT sourced 31.5 per cent of its sales from drilling services, 18.3 per cent from well preparation and 50.2 per cent from output-enhancement services. Kazakhstan contributed 53.4 per cent of the firm's sales in the six-month period, with 30 per cent from the mainland. China National Petroleum Corp (CNPC (SEHK: 0135)), parent of listed PetroChina (SEHK: 0857, announcements, news) - the nation's largest oil and gas producer - accounted for 65 per cent to 72 per cent of its sales in the past three years. While having a state-backed giant such as CNPC as its mainstay customer has helped business growth in the past few years, it also brought operating risks, partly due to SPT's weak bargaining power against CNPC. After PetroChina disclosed that it found huge new reserves in its Jidong oilfield in 2007 - billed by the oil giant as one of the largest domestic oil discoveries in decades - it planned a huge investment budget and urged SPT to prepare for the project. SPT took the risk of buying 69.4 million yuan (HK$84.8 million) of inventory without having a binding order from PetroChina. The field's reserves turned out to be much less than expected, resulting in far fewer services required. SPT was forced to make a 58.5 million yuan write-down of the stock that could not be used elsewhere. Li Qiang, strategy-planning director, said SPT was cutting its reliance on CNPC and had won orders in Indonesia, Kazakhstan and North America from other clients. SPT has forecast a net profit of at least 177 million yuan for this year, up from 119 million yuan last year and 85 million yuan in 2009. It plans to use HK$145 million of the listing proceeds to buy manufacturing equipment, some of which are to execute orders for drilling gas trapped between shale rocks and coal seams. Some HK$83 million is earmarked for acquisitions to broaden its product line, another HK$83 million to pay back bank loans and HK$62 million to carry out research and build manufacturing facilities. China Tianrui Group Cement has forecast its net profit to be at least 1.25 billion yuan this year, up from 398 million yuan last year and 163 million yuan in 2009. It plans to use 95 per cent of net proceeds to repay loans. Chief executive Li Heping said he was upbeat about cement prices next year, citing Beijing's policy to phase out obsolete capacity and strictly control new plant construction.

Chief Executive Donald Tsang Yum-kuen speaks at the launching ceremony for works of the HK$83 (US$10.71) billion Hong Kong Boundary Crossing Facilities of the Hong Kong-Zhuhai-Macau Bridge. Construction finally began on the giant Hong Kong-Zhuhai-Macau bridge on Wednesday, after a year’s delay caused by a legal challenge to its environmental assessment report. That delay means extra manpower and equipment will be needed to meet the 2016 deadline for the mammoth project, Chief Executive Donald Tsang Yam-kuen said at Wednesday morning’s launching ceremony. “Although the local construction works for the bridge was delayed for a year because of a judicial review earlier, we will tighten the schedule by altering construction methods and deploying extra manpower and machines, so the bridge can open in 2016 as planned,” Tsang said. He spoke just before work started on a 150-hectare artificial island that will hold boundary-crossing facilities, costing HK$30.43 billion, and a bridge linking Tuen Mun and Chek Lap Kok. The project was delayed after the Court of First Instance ruled the environmental impact assessment of the project had failed to meet the government’s own standards. The ruling was overturned by the Court of Appeal in September, and the government said the delay had pushed up costs by HK$6.5 billion. Sun Ziyu, chairman of contractor China Harbour Engineering, which is in charge of the reclamation project, said more equipment was needed to speed up the transport of construction material, and more workers had been employed, but he could not estimate the increase in costs. “There’s some impact from the delay, but we will try our best to control the costs,” Sun said. “It’s a challenge to finish such a large quantity of works in a limited period. We have to ensure airline safety and environmental protection in the project, too.” The artificial island will be reclaimed with a non-dredging method that will reduce the dumping of mud by 97 per cent and cause less disruption of the underwater environment. A series of interlocking steel cells will be sunk, penetrating through the marine mud and resting on firmer underlying layers of clay and gravel. The project will take an estimated 50 months. Total costs are estimated at HK$83 (US$10.71) billion.

Local insurance brokerage companies have been given the green light to set up shop in the mainland, after a new deal under the Closer Economic Partnership Arrangement. Signed yesterday, the latest supplementary agreement further opens up the mainland service- sector market with drastically lowered thresholds. Chief Executive Donald Tsang Yam-kuen witnessed the Hong Kong signing ceremony for the CEPA Supplement VIII between Financial Secretary John Tsang Chun-wah and Commerce Vice Minister Jiang Yaoping. "In view of rapid changes in the global economic environment, the local economy is expected to face lots of challenges and this cooperation will boost the confidence of Hong Kong enterprises in view of the future uncertainty," Tsang said. The deal will increase the number of liberalized service sectors under CEPA from 44 to 47, with 301 liberalizing steps, Jiang said. Under a pilot plan limited to Guangdong province, including Shenzhen, insurance brokerages may from next year set up wholly owned agencies if they have 10 years of relevant experience, HK$500,000 assets and been running a mainland representative office for more than a year. Earlier, non-mainland companies were subject to a capital requirement of US$200 million (HK$1.56 billion), 30 years of experience and a mainland representative office for three years, a government spokesman said. The SAR has about 590 insurance brokerage firms, many of which are keen on mainland business related to fire and non-life insurance. Hong Kong Federation of Insurers chairman Alex Chu Wing-yiu welcomed the deal, as "it provides greater opportunities for local insurance professionals to set up business in the mainland." Hong Kong General Chamber of Commerce chairman Anthony Wu Ting-yuk said: "We also welcome the relaxation of the definition of Hong Kong service suppliers, which will allow more flexibility for Hong Kong enterprises to expand into the mainland market and provide more diversified services through CEPA." The new system will allow SAR-based banks to sell and distribute mutual funds with any mainland-incorporated banking institution. With regard to yuan business, local companies may invest in mainland securities by means of the Renminbi Qualified Foreign Institutional Investor scheme. The criteria of "substantive business operations" in defining Hong Kong service suppliers has also been relaxed, offering greater flexibility and diversity to expand their scope. Service suppliers may set up wholly owned hospitals in all municipalities directly under Beijing and in provincial capitals, instead of just five earlier, namely, Shanghai, Chongqing, and the provinces of Guangdong, Fujian and Hainan. No hospital wholly funded by Hong Kong investors has yet been set up in the mainland. Also, qualified legal professionals may act as agents in civil litigation cases relating to Hong Kong residents and juridical entities, and more Hong Kong products will enjoy a zero-tariff arrangement. All measures take effect on April 1.

Registered voters who do not update their addresses within a certain timeframe may be fined under a new proposal. The move by the Constitutional and Mainland Affairs Bureau follows scores of complaints involving addresses with multiple voters in last month's district council election. Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen said a fine would be a suitable penalty, although the punishment should be greater for those who not only fail to report address changes, but still vote. "The sanction we guess will be more than just a fine. It may lead to a certain period of imprisonment," Tam said. He said details are still being worked out by the Department of Justice, but he agreed such penalties will be unpopular. Tam said starting from January, any person applying for registration as a voter, or when a registered voter applies for a change of residential address, must provide proof of address, such as utility bills, bank statements or university correspondence over the previous three months. If citizens do not have proof, they may ask those who are living with them and have such proof to sign a declaration to state that the voters are living there. Street sleepers who do not have address proof may take a formal oath to declare they live in the locality. Other measures include more random checks of voters' addresses, and on homes where four or more people with different surnames are registered. Currently, a check is conducted on an address with seven or more voters. The Registration and Electoral Office will liaise with the Buildings Department and the Rating and Valuation Department to conduct a survey of buildings which have recently been demolished, and those that will soon be demolished, to identify voters who may not report changes in their addresses. "The right to vote is a fundamental right, and voter registration is voluntary. The proposed improvements are aimed at preventing voter mistakes or fraud, in order to protect the integrity of the vote," Tam said. Lawmaker Lee Wing-tat of the Democratic Party welcomed the measures, but said the registration office can work with more departments that also have information of voters to cross-check addresses.

Chief Executive Donald Tsang Yam-kuen on Wednesday criticised two power companies for their price hikes, saying the rates they proposed were unacceptable. On Tuesday, Hongkong Electric (SEHK: 0006) announced plans for a 6.3 per cent increase in power prices from January, while CLP Power (SEHK: 0002) plans to increase charges by 9.2 per cent. Tsang urged the firms to consider their social responsibility and how much people could afford. “We have indicated there are certain elements that we do not find acceptable, but I hope the power companies will reconsider their position and make a wise decision before the end of the year,” Tsang said. The chief executive was speaking at a media session after officiating at the launch of work on the Hong Kong-Zhuhai-Macau bridge’s Hong Kong boundary-crossing facilities. The power increases, scheduled to take effect from January 1 next year, generally do not require approval from the Executive Council. On Tuesday, Secretary for the Environment Edward Yau Tang-wah said the Executive Council "has expressed reservations about the excessive tariff hikes". Yau said he had also asked both firms to reconsider their positions. 

Customs have seized 1.5 tonnes of untaxed pipe tobacco intended to be air-mailed to Britain, a spokesman confirmed on Wednesday. The spokesman said officials last week discovered 900 kilograms of the tobacco in 72 parcels received at the Airport Freight Forwarding Centre. The parcels were designated for London and other cities in Britain. Investigators then tracked records of the senders. On Wednesday, they raided a storage centre in Kwai Chung. They found another 600kg of the haul, alongside counterfeit British tobacco packages. Some of the seized tobacco was concealed in large tea bags, the spokesman said. He said customs believe the tobacco was imported from the mainland to be sold on the black market in Britain. Its value is estimated at HK$3.9 million. Three men were arrested in connection with the haul, the spokesman said.

 China*:  Dec 16 2011 Share

Occasional friction won't derail ties between China and the US, former US president Jimmy Carter said in an interview with China Daily in Beijing on Wednesday. When a 7-year-old farmboy in Plains, Georgia, opened a package from his seafaring uncle nearly eight decades ago, he found a delicate model of a wooden Chinese junk - and at that moment a lifelong fascination with China was born. "My uncle was in the US Navy here," former US president Jimmy Carter told China Daily on Wednesday, "and he would send me souvenirs from seaports where his ship visited. I got that package from Hong Kong, and others from Shanghai and from Qingdao. I still have that ship, it's in the bedroom of my boyhood home. "Then later when I was in the submarine force in 1949, I came here as a young naval officer to visit the same seaports, and I was intrigued with the people of China," he said, noting that when he became president he began the process of normalizing relations with China that began in the Nixon administration. "So it's been a long process in my life, involving China and my love for the Chinese people." That sort of exchange was the reason Carter has been in China for the past week, marking the 40th anniversary of Ping-Pong Diplomacy at a series of events. At a ceremony in the Great Hall of the People that he attended with Vice-President Xi Jinping, Carter said: "It was a very historic moment. But it was that breakthrough just with ping-pong players - that is people-to-people - that was really more important than the decisions of political leaders. And I think that is a stability that is going to prevail in the future." On Wednesday morning the former president was taping a television spot at the US embassy to support President Barack Obama's campaign for 100,000 Strong - a push to have 100,000 US students studying in China four years from now. "Now we have 165,000 Chinese students in American universities, and about 13,000 American students in Chinese universities. And in the future, they will be the leaders of our two countries. And they will also be knowing more about each other and the reasons for harmony and cooperation and mutual respect." Carter said that despite his decades of interaction with China, he's learning about it all the time. He said one reason for his current visit is China's interest in working with the Carter Center in Africa, for instance, in healthcare programs. A meeting with a Chinese official, who is in charge of healthcare assistance to Africa, informed Carter of the many programs that China has in Africa to improve healthcare there, involving malaria and many other diseases. "This was a surprise to me, and I think this is one thing that the rest of the world doesn't acknowledge - or know about - is how extensive China's programs are in improving the quality of lives of people in Africa and in poor countries elsewhere."

A branch of the Bank of Shanghai, which is among a group of mainland city commercial lenders that are seeking regulatory approval to list their shares. Beijing is expected to allow the listing of city commercial banks next year after shelving their planned initial public offerings for more than three years, offering hope to about 10 regional banks which meet the listing requirements. The China Securities Regulatory Commission (CSRC) is mulling the introduction of additional rules to prevent too many such lenders from raising funds in the capital markets. That includes asking banks to have at least 100 billion yuan (HK$122 billion) in assets to qualify for a flotation, according to bankers. The city commercial banks which are seeking the CSRC's approval for listing include Bank of Shanghai, Bank of Hangzhou and Bank of Chongqing. Zhang Haichuan, a CSRC supervision department director, said this month that the regulator supported the listing of any city commercial banks which could improve services to local small and medium-sized companies. The mainland's 147 city commercial banks control nearly 9 trillion yuan in assets, or 8 per cent of the assets that major mainland banks own. The CSRC placed their flotations on hold for three years to curb their expansion to other cities, which would have intensified competition. "A higher [asset] threshold for city commercial banks is needed, otherwise too many lenders would be listed, [which would] further pressure stock market liquidity," said Guo Tianyong, professor at the Central University of Finance and Economics. "Although the [city] banks are smaller than the nation's major lenders, they are still big compared with listed companies in other industries and their capital needs would not be small." In 2007, three city commercial lenders went public: Bank of Nanjing, in which BNP Paribas owns 19.2 per cent, raised 6.93 billion yuan; Bank of Ningbo, in which Singapore-based OCBC Group owns 12.2 per cent, raised 4.14 billion yuan; Bank of Beijing, in which Dutch lender ING Group owns nearly 20 per cent, raised 15 billion yuan. The A-share market is expected to be among the world's worst performers this year. The Shanghai Composite Index has slumped more than 20 per cent so far this year, compared with the average decline of 5.5 per cent of world market indices. Mainland listed banks' massive fund-raising efforts to replenish their capital contributed to the market's tumble. Li Fuan, the head of the Henan bureau of the China Banking Regulatory Commission, said earlier this month that the size of the assets of city commercial banks should not be a listing requirement because it would lead the lenders to expand aggressively. "A bank that serves its local community well could be a good listed firm with good investment value," Li said. "This should be recognised by the securities regulator and the Shanghai bourse."

Chinese ponytail beauties - Have a look at the Chinese beauties wearing ponytail.

More evidence of loosening in China’s macro-policy – this time from the banking regulator. On Wednesday, local media reported that the China Banking Regulatory Commission was planning to go slow on the implementation of Basel III capital requirements (in Chinese). That’s important because lower requirements make it easier for China’s banks to increase lending without tapping the capital markets for more funds. Capital levels at China’s big banks look healthy enough. Core capital for Industrial and Commercial Bank of China at the end of the third quarter was 10.03% and other big banks are in the same range. Relaxing the requirements in the bad times is also in the spirit of the new approach– intended to avoid aggravating cyclical shifts in the economy by forcing banks to contract lending when times are bad. But concern about asset quality at China’s banks is front and center for investors. Bank of China – most fragile of the big state owned banks – is trading at below book value. In the face of such uncertainty, going slow on implementing the new capital rules has costs as well as benefits.

China is the key to the outlook for commodities markets, but it isn't the only factor. Commodities prices could face upward pressure over the next 10 years if other countries start to consume anything like China did over the past decade. Take India. Compared with China, India consumes a small fraction of the world's commodities—for instance, 3% of the copper, compared with China's 37%, according to Barclays Capital—despite having nearly as many citizens. But that could change, because India is less developed than China, meaning it still has a vast amount of work to do on improving its infrastructure, particularly upgrading its power grid. It also wants to boost manufacturing, says Deepak Lalwani, director for India at Lalcap Ltd., a London-based consulting firm. He expects India's gross domestic product to increase fourfold by 2020. The list is long of other, smaller countries that consume fewer raw materials per capita than the developed world, leaving lots of room for global demand to grow. While some have been ratcheting up consumption, they haven't been doing so as fast as China, suggesting their appetites could get even bigger. For instance, between 2000 and 2010, copper consumption in Brazil, Indonesia, Russia and Turkey increased between 36% in Brazil and 172% in Indonesia, according to data from the International Copper Study Group, an intergovernmental organization. Over the same period, China's consumption nearly quadrupled. "The one trend that's clear to me is that people in undeveloped countries around the world want to live a better life," says Richard Adkerson, chief executive of Freeport-McMoRan Copper & Gold Inc. "The longer-term growth story goes beyond China, and hasn't really been scratched yet."

You want to know where the global commodities markets are heading in the coming years? Then it's probably best that you remember a single word: China. As the biggest and one of the fastest-growing of the world's developing economies, China has become a voracious consumer of industrial and agricultural commodities. Its shifting needs are now the most important driver in the prices of many of those goods. Producers often base massive capital investments largely on their expectations for Chinese demand for their products. Investors often make similar calculations before buying or selling commodities contracts or related securities. That's why no single factor is likely to have a more far-reaching impact on commodities markets over the next few years than how Chinese demand changes as the country's economy evolves. "That's the big question," says Richard Adkerson, chief executive of Freeport-McMoRan Copper & Gold Inc. So what's the answer? Here are three possible economic scenarios, and what each would mean for global commodities markets. If China's consumption of commodities continues to grow at the rate it has over the past 10 years, this is what the world would have to do to meet that demand in 2020, assuming that the rest of the world's collective appetite doesn't change at all: • Pump almost as much additional crude oil as Saudi Arabia now provides per year. • Grow more than three times as many soybeans as currently come out of Iowa, which alone provides 5% of global output. • Extract nearly three times as much new copper as the current annual production from Chile, which mines about four times as much as any other nation. And that's just for starters. Vast increases in supply would be needed for all sorts of other commodities as well. Prices that rocketed to record heights in recent years on Chinese buying could fly even higher. That would be good news for companies that produce those commodities and investors who have placed bets on them—unless high prices abruptly choke off demand or spur the Chinese and other buyers of commodities to seek alternative goods. Materials in tight supply or at risk of significant constraint, like crude oil, copper and palladium, could be vulnerable to sharp price increases. Their prices shot up 50%, 106% and 207%, respectively, in the five years through 2010. By contrast, aluminum is plentiful, cotton production is rising sharply and nickel output is climbing—at least for the moment—which can make them less vulnerable. It's also easier to produce some commodities in greater quantity when needed, which can limit price shocks. It takes less time, for example, to grow more corn than it does to find new oil beneath the ocean floor. Many analysts consider the fast-growth scenario improbable. The consensus is that China is headed for slower economic growth than it experienced from 2001 to 2010, when its annual rate of expansion ranged from 8.3% to 14.2% and reached double digits six times, according to the World Bank. If the consensus is right, the question becomes how much China's growth will slow. A growth rate of 4% to 6% would be a big leap forward for the U.S. economy and plenty of others. But not for China. That's the range of growth expected for the Chinese economy by around 2013 or 2014 by Roubini Global Economics LLC, a New York-based research and consulting firm. Shelley Goldberg, the firm's director of global resources and commodity strategy, calls that a "hard landing" after the far more rapid expansion of the past decade. "Obviously, it doesn't bode well for commodities," Ms. Goldberg says. Demand for steel, copper and other industrial metals could drop significantly if China does stall, because those materials are heavily used in construction—which would be at risk from weakness in the Chinese real-estate market—and because China often accounts for some 40% of global demand for those materials. Coal demand could also tumble, she says, because the fuel is heavily used in China to generate power. Some commodities could take a hit not because China uses more of them than anyone else but because it has been providing much of the growth in their markets. For instance, while China accounts for just 11% of global oil demand, according to Barclays Capital, it provides 60% of the growth in that demand. Similarly, a hard landing might hurt the soybean market more than the corn market, because China is a huge importer of soybeans but produces almost all the corn it needs at home, says Kevin Norrish, managing director for commodities research at Barclays Capital. Slower but Steady - For many China watchers, including Barclays, the most probable scenario is an economy that keeps expanding strongly but at a less blistering pace, with annual GDP growth rates in the high single digits. That would mean continued upward pressure on most commodities prices, with some possibly rising substantially, but in most cases not the soaring prices that a red-hot economy would produce. "We still see loads of reasons why growth is going to continue, but the rate of growth is going to slow over time," says Jim Lennon, who specializes in Chinese commodity markets as an analyst at Macquarie Group Ltd., one of the leading financiers for commodities producers. The first half of the current decade will see more rapid growth than the second half, in Mr. Lennon's view, as the main engine of the Chinese economy over time switches from massive infrastructure projects to consumer demand for durable goods. The result will be a tamer increase in consumption of base metals and other commodities, he says. Between 2000 and 2010, Chinese consumption of copper, aluminum, zinc, nickel and lead grew at compound annual rates ranging from 13.9% to 24.4%, according to a presentation Mr. Lennon delivered in October. For 2010 to 2020, the projected growth range is 5.3% to 9.3%, the presentation said. Even in a slower-but-steady world, demand—and prices—could shoot up for some commodities. For instance, China uses less natural gas per capita than many other countries, notes Neil Beveridge, a Hong Kong-based senior oil analyst for investment bank Sanford C. Bernstein. That will change, he says, as more people use the fuel to heat or cool their homes and greater volumes are consumed by industry. In 2010, China imported about 1.6 billion cubic feet of natural gas per day, according to the U.S. Energy Information Administration. Mr. Beveridge expects China's imports to grow to 10 billion cubic feet per day by 2015 and 20 billion by 2020, more than any other nation's at that point. Meanwhile, demand is likely to continue growing for some food commodities but shrink for others, says Scott Rozelle, a professor at Stanford University who studies Chinese agriculture. As China's growing middle class consumes more meat, animal feed such as soybeans and corn will continue to be in increasing demand, he says. But "the demand for wheat and rice will fall" as diets continue to evolve, Mr. Rozelle says, and China may occasionally even export some of those less-coveted staples, as it has over the past 10 years. One thing to keep in mind is that China is such a big market now that any increase in consumption—even in a slower but steady economic expansion—can create a big chunk of fresh demand, and push prices up accordingly. As Ms. Goldberg notes, "They still are 1.3 billion people."

Initial public offerings by Chinese companies in the United States next year might not rebound to the record level of 2010, but recent world market turmoil is unlikely to change the attraction of US exchanges for Chinese companies, a senior executive at the NYSE Euronext Group Inc said on Tuesday. Chinese IPO activity in the US has weakened significantly over the past six months because of market volatility and uncertainty about the global economy. The valuations of Chinese stocks traded in the US have also declined because of tighter regulations in that country and allegations of accounting fraud by short-seller Muddy Waters LLC. "I don't expect that there will be as many deals in 2012 as we saw in 2010," Scott Cutler, executive vice-president and co-head of US listings and cash execution at the NYSE Euronext Group, told a news conference in Beijing. The New York Stock Exchange has seen only seven Chinese IPOs, raising a total of $1.5 billion, so far this year, compared with 22 Chinese IPOs, raising $2.8 billion, in 2010, according to the US exchange. Cutler said the main reason for declining market valuations was investors pulling out of equities. But he said the Chinese IPO pipeline for the US exchange remained strong for 2012, including "some significant" companies. The poor performance of some Chinese technology companies in the US has led to speculation that some would delist from the US markets and go public in Hong Kong or Shanghai, where they could get higher valuations. In October, Shanghai-based Internet companies - Shanda Interactive Entertainment Ltd and China Real Estate Information Corp - announced plans to delist in the US, as their shares were trading at lower valuations than their Hong Kong-listed competitors. "Hong Kong, over time, will overtake the US as the preferred place of listing for Chinese technology companies," Bao Fan, chief executive officer of the Beijing-based investment bank China Renaissance Partners, was quoted by Bloomberg News as saying. But Cutler said that some delistings of Chinese companies from US markets did not represent a longer-term trend. He added that the US markets were open to Chinese issuers and remained important for international investors. "The US capital markets have been more robust than any other markets in the world. I do not see a trend of companies from other parts of the world coming to Asia more than the US," he said. Yang Ge, the chief representative at NYSE Euronext's office in Beijing, said Chinese companies from the technology, media and Internet sectors will continue to lead IPO activity next year in the US, which remains a primary market for them to gain access to capital.

Workers in a factory in Shandong province print clothes for export. If world conditions worsen next year, China will take measures to make its exports more stable, according to a senior official. With China's export growth continually decelerating and possibly falling to zero next year, the government is set to take action to prevent further declines, said the Ministry of Commerce on Monday. These measures include supporting exporters' drive to tap emerging markets, approving the establishment of 59 export bases, strengthening traditional industries and helping exporters in the central and western regions expand overseas. Conditions next year "will be more complicated and severe for Chinese exporters, and the task for the Chinese government in maintaining stable export growth will be harder" said Zhong Shan, vice-minister of commerce, during a foreign trade meeting in Beijing. His remarks came after the General Administration of Customs released November trade figures on Saturday. Export growth continued to decelerate, the figures show, and overseas sales were up just 13.8 percent year-on-year, the smallest gain since 2009. "Several difficulties and uncertainties do and will exist, and we will have measures in place to stabilize exports as noted in China's 12th Five-Year Plan covering the 2011-2015 period," Zhong said. Export growth is expected to "drop to zero in 2012", and that will have a "sizeable negative impact on the economy", said Wang Tao, economist at the Hong Kong-based UBS Securities Co Ltd, in a note. The predication came as top Chinese officials are mapping out economic policies for 2012 at an ongoing three-day annual Central Economic Work Conference in Beijing. According to Zhong, one large step that the government will take is to do more to help exporters develop and promote goods and services in emerging markets, especially those with large populations and rich natural resources. Statistics show that although emerging markets have made a much smaller contribution to Chinese exports than developed nations, their economies' growth is faster. In 2010, 36 percent of China's outbound shipments went to four markets: the United States, the European Union, South Korea and Hong Kong. But four emerging markets - Russia, Brazil, South Africa and India - accounted for a mere 7 percent of overseas sales, even though their economies showed faster growth than developed regions'. China on Tuesday approved and announced the establishment of 59 export bases to help maintain growth in overseas shipments. These include a garment exports base in East China's Jiangsu province, an apple base in Shaanxi province and a shoe base in Zhejiang province. They were the first group of exports bases officially approved. The idea is for important industrial participants to gather and work on improving their goods and services for export, investing more in research and development and become better competitors. The bases are generally located in a region or city that either has a strong industry chain for a specific sector or has abundant resources of some specific goods. Sources speaking on condition of anonymity said that the government will give "handsome subsidies" to the exporters involved. "Such bases make it easier to strengthen industrial chains and promote brands in different regions," Zhong said. "And it is also more efficient for global purchasers." Wang said that the export figures underline "shifts in the export structure - some traditional lower-end and labor-intensive sectors may be losing market share to cheaper producers."

Hong Kong*:  Dec 15 2011 Share

Hong Kong schools should embrace electronic textbooks to reduce the cost of school textbooks, a government task force on learning materials said on Tuesday afternoon. Speaking at a press conference where he released a report of the Task Force to Review Teaching and Learning Materials, Secretary for Education Michael Suen Ming-yeung said electronic textbooks had many advantages. “E-textbooks are more flexible because they can be updated without having to be reprinted, and they can appeal to different stages of learning, and they cut down costs for the consumer,” he said. The task force has been collecting views from educators since June, as part of the government’s long-running efforts to reduce the cost of school textbooks. A core problem is publishers’ resistance to selling textbooks separately from teaching and learning materials. One major initiative the task force recommends is developing electronic textbooks, which the government hopes will be widely adopted in future to replace print textbooks. Suen said the objective was to change e-textbooks from their current role as a supporting resource into a main resource, matched closely to curriculums. He said the government would also be assisting other publishers to enter the textbook publishing market. This is to introduce healthy competition into the currently distorted, monopolised market. It will provide assistance to train teachers in adopting electronic teaching resources, he said. Families will receive financial support for buying electronic devices to use as digital resources. Chaired by the undersecretary for education Kenneth Chen Wei-on, the taskforce has 11 members including principals, teachers and parents. Consumer Council chief executive Connie Lau Yin-hing and the head of the economics department at Hong Kong University of Science and Technology Professor Francis Lui Ting-ming are also on the list. No publishers were invited to participate. Lau said earlier this year: “Since 1994, publishers have raised textbook prices every year except two.” Textbook price rises over the past 15 years are ahead of inflation – as reflected by the Consumer Price Index – and the biggest jump was 8.9 per cent, placing a big burden on parents, she said.

CLP Power and Hongkong Electric will raise their power tariffs for next year by 9.2 per cent and 6.3 per cent, respectively.

Actor Peter Facinelli visited Hong Kong while promoting ‘The Twilight Saga: Breaking Dawn Part 1.’ Twilight is descending over Hong Kong. “The Twilight Saga: Breaking Dawn Part 1,” the latest installment of the hugely popular vampire-romance series, opens in Hong Kong on Dec. 22. The movie opened in the U.S. last month and has been playing in dozens of markets around the world, including the Philippines, Singapore, South Korea and Thailand. Actor Peter Facinelli, who stars as Dr. Carlisle Cullen, met with journalists at a news conference in Hong Kong Tuesday, and offered an attempt at a Cantonese greeting: “lei ho,” or hello. The 38-year-old New Yorker, who plays the vampire patriarch of the Cullen clan, said he was thrilled to be visiting the city for the first time and had already scoped out tourist attractions like the Peak and Victoria Harbour’s evening laser show. He was so taken with Hong Kong that he wants to make a movie in the city, he said. “I’m going to write [a script], and I’m coming back to film it.” “Breaking Dawn Part 1,” the fourth movie in a planned series of five, also stars Kristen Stewart as a human teenager who marries and becomes pregnant by a vampire, played by Robert Pattinson. It has earned $633.5 million globally, through last Sunday, since its Nov. 18 release, according to Box Office Mojo. “The Twilight Saga: Breaking Dawn Part 2,” the final film in the franchise, has completed filming and will be released in November 2012. Mr. Facinelli said he already missed working with his co-actors, but there was one thing he’s happy he doesn’t have to go through any more. “I’m not going to miss putting the makeup on,” he said, describing the physical transformation he goes through — including an ashen complexion, blond hair and uncomfortable contact lens — to project a handsomely ghoulish figure.

Health and beauty retail giant Watsons plans to open 2,000 stores on Chinese mainland during the next five years, a move made to maintain its market dominance in the personal care sector. "By the end of 2016, we will have 3,000 stores in more than 300 cities," said Christian Nothhaft, CEO of Watsons China on Dec 9. In 1989, the retailer entered the Chinese mainland by opening its first outlet and by 2009 it had 500 at the mainland. In 2011, the company has grown into Chinese mainland's largest health and beauty chain, with around 1,000 stores in more than 100 cities. "(The Chinese mainland) is a promising market...Watsons will maintain its high-speed development strategy", said Nothhaft. "We invest hundreds of millions of yuan into opening new stores every year," he added. Besides first-tier cities, Watsons will also cover other tiers, including those in the provinces of Fujian, Zhejiang, Anhui, Liaoning, Heilongjiang and Shaanxi. The company is planning a special focus on cities with high numbers of young people. Although economic development is limited in smaller cities, the Hong Kong-based retailer is confident about consumer power in smaller locations. "We are already in 150 cities, and our expansion has shown that these third-, fourth- and sometimes fifth-tier cities already have good markets," said Nothhaft. He attributed the rapid expansion to the company's strong foundations, flexible business model, knowledge of changing customer needs and good infrastructure. In addition to the network expansion, the company will also focus on store-by-store profitability. "Some companies may think, 'OK in china you just expand, and then you manage later', but we don't think like that. So, we would like to make every store a success, and also we always want to stay ahead of the market in terms of trends," said Nothhaft. The retail giant serves more than 3 million customers on the Chinese mainland every week, and has issued more than 20 million membership cards nationwide. The company is part of the A. S. Watson Group, the international health, beauty and lifestyle retailer with more than 9,700 stores in 33 markets worldwide. A.S. Watson Group itself is the retail arm of the conglomerate Hutchison Whampoa Ltd, which has major interests in ports, property, hotels, retail, energy and telecommunications. Meanwhile, Watsons' rival, Mannings health and beauty stores, has established more than 200 shops on Chinese mainland since 2004, according to its official website.

 China*:  Dec 15 2011 Share

Chinese ships taking part in antipiracy patrols have so far been using ports in Djibouti, Oman and Yemen to collect supplies, but the Chinese military has been strengthening ties with other countries in the region, and sent two frigates on friendly visits to Tanzania, South Africa and the Seychelles in April. Above, an antipiracy patrol in March 2010. China is considering a proposal from the Seychelles, a tiny island nation off the coast of East Africa, for Chinese navy ships to use its ports to rest and take on supplies while participating in antipiracy patrols, according to both governments. The Seychelles has also proposed that China base military reconnaissance aircraft and personnel at its main airport, from where the U.S. operates surveillance drones, the Seychelles' foreign minister, Jean-Paul Adam, said in an interview with The Wall Street Journal. If China were to use the Seychelles simply as a port of call it wouldn't necessarily concern the U.S. and its allies, which are keen for China to play a larger role in antipiracy efforts. Basing aircraft there could be more controversial as that would appear to be the first example of China basing military assets overseas. The Seychelles, an archipelago about 1,000 miles (1,600 kilometers) east of Tanzania with a population of about 89,000, is a potential strategic platform for China as it seeks to compete with the U.S. and India for naval dominance of the Indian Ocean, analysts say. China's Defense Ministry declined to comment on the aircraft and personnel, while its Foreign Ministry said it was unaware of that part of the offer, and any naval supply stops in the Seychelles or other countries would be "completely transparent and should not worry other countries." Navy Cmdr. Leslie Hull-Ryde, a Pentagon spokeswoman, said the Defense Department was aware of the press reports that China may conduct resupply visits to the Seychelles. "We welcome China's participation in the multinational efforts to combat piracy off the coast of Somalia," Cmdr. Hull-Ryde said. "We look forward to deepening our cooperation in the region including conducting exercises together in the Gulf of Aden." "If access to the islands helps China play a more effective part in the multinational counterpiracy effort, I say the more the merrier. We can't say we want to work with the Chinese on maritime security, then turn around and castigate them for putting adequate logistics in place to support the endeavor," said James Holmes, a China expert at the U.S. Naval War College in Newport, R.I. A senior U.S. military official said the presence of Chinese ships was "not a big concern" to the U.S. or to its drone base in the Seychelles. Pentagon officials declined to comment on speculation about Chinese military aircraft being based in the Seychelles. China has long denied that it plans to set up military bases overseas, but Chinese military experts have suggested for several years that the country needs to establish an overseas base—ideally in the Indian Ocean—as its navy expands operations far from China's shores, principally to protect the shipping lines that carry most of its oil imports. India, whose navy ships regularly visit the Seychelles, is especially wary of any Chinese inroads into what it sees as its strategic backyard, and many India media outlets responded to China's announcement by reporting that Beijing was establishing its first overseas military base. An Indian navy spokesman declined to comment, but Indian officials said in private they were watching the development with interest, although their understanding was that China had no current plans to establish an actual base in the Seychelles. China has already funded construction or upgrades of ports in Myanmar, Bangladesh, Sri Lanka and Pakistan, which some Indian and U.S. military officials believe could be used to provide Chinese navy ships with supplies and refuge in the event of a regional conflict. China says those ports are purely for civilian use, but its navy has been conducting operations far from its shores with increasing frequency since late 2008 when its ships joined the anti-piracy patrols—the first time Chinese military ships had visited the African coast since the 15th century. The Chinese ships taking part in the antipiracy patrols have so far been using ports in Djibouti, Oman and Yemen to collect supplies, according to the Chinese Defense Ministry. But the Chinese military has been strengthening ties with other countries in the region, and sent two frigates on friendly visits to Tanzania, South Africa and the Seychelles in April, according to the Chinese Defense Ministry. Mr. Adam, the Seychelles foreign minister, said his government had first proposed the idea of a Chinese military "presence" in his country in 2010, and that it was discussed during a visit there this month by Gen. Liang Guanglie, China's defense minister. Mr. Adam said the Seychelles had appealed to China and other countries to help it expand anti-piracy operations around the country's territorial waters. "This is a discussion on an open invitation to the Chinese," he said. "We'd welcome a long-term presence in the Seychelles, but that is not our expectation." He said his government had suggested that China based two or three planes—probably Y-12 twin-engine turboprop surveillance aircraft—at the main airport in the Seychelles along with enough personnel to maintain and operate them. Under the proposal, Chinese naval ships would regularly visit ports in the Seychelles to collect supplies, and allow their crews to rest, but they wouldn't be permanently based there, he said. "I know there's sensitivity to Chinese military growth but the Seychelles has offered a platform that is complementary for all partners," he said, adding that the European Union and the North Atlantic Treaty Organization had also operated aircraft from his country. This year, the U.S. Africa Command redeployed unmanned drones to the Seychelles. A spokesman for Africom said the drones could be configured for either "surveillance or strike." U.S. officials said that this deployment would include armed drones, used to both monitor and potentially strike terrorist targets in east Africa. China's Defense Ministry said in a statement on its website that the Seychelles had offered the use of its ports for "resupply, rest and reorganization," and that the navy was considering using ports there and in other countries in accordance with international practice. China's Foreign Ministry spokesman, Liu Weimin, at a daily briefing on Tuesday said: "Such acts are completely transparent and should not worry other countries." When asked if China was also discussing the offer to base personnel or planes in the Seychelles, Mr. Liu said: "I have not heard of this. On this issue China's position is clear. China has never set up military bases in other countries."

US envoy vows to extend common ground with Beijing - US special representative on Korean policy Glyn Davies speaks to the media in Beijing on Tuesday. During his three-day stay in Beijing, Davies is scheduled to meet with Chinese diplomats, including Foreign Minister Yang Jiechi, to discuss issues related to the Democratic People's Republic of Korea. US special representative on Korean policy Glyn Davies said he is looking forward to upcoming meetings with senior Chinese diplomats and will extend common ground between the two sides. Davies made the remarks on Tuesday afternoon at a hotel in Beijing upon his arrival. Davies is scheduled to meet Foreign Minister Yang Jiechi, Assistant Foreign Minister Liu Zhenmin and Special Representative for Korean Peninsula Affairs Wu Dawei during his three-day stay in Beijing, which marks the last leg of his first Asia tour since he replaced Stephen Bosworth as envoy in October. "All issues related to the Democratic People's Republic of Korea (DPRK)" will be discussed in meetings with Chinese diplomats, Davies said. Piao Jianyi, a research fellow on Korean issues at the Chinese Academy of Social Sciences, said one purpose of Davies' visit is to explain the US stance and listen to the views of the other three parties also involved in the talks. Before visiting Beijing, Davies also visited the Republic of Korea (ROK) and Japan, along with US Special Envoy for the Six-Party Talks Clifford Hart and several national security staffers from the White House. Davies held meetings with senior ROK and Japanese diplomats and discussed the prospects for the long-stalled Six-Party Talks. "The prospects for the nuclear talks have been unclear until now, since the US and the DPRK have had a hard time reaching a consensus on the preconditions for the resumption of the talks. The United States, however, should not aggravate the situation and push the DPRK out of the talks," Piao said. Nuclear envoys from Washington and Pyongyang met in New York in July and in Geneva in October, but reported no breakthrough. The ROK's Yonhap news agency said that a third meeting could take place this month. During recent contact, the two sides apparently narrowed differences on pending issues, including the DPRK's denuclearization steps and Washington's possible resumption of food aid to Pyongyang, Yonhap said. "Depending on the situation, a possibility of holding a third round of meetings between the DPRK and the US before the year's end can not be ruled out," a diplomatic source was quoted as saying.

Not all shopping bags are created equal. The ability to flaunt Gucci and Chanel shopping bags has long drawn Chinese shoppers to luxury labels. But now China’s high-end showoffs are figuring out that there’s no need to spend thousands of yuan for a bag that’s available online for a mere fraction of the price. According to a report in the state-run China Daily, shopping bags emblazoned with names like Hermes, Louis Vuitton, Chanel, Prada and Burberry have become the latest must-have among Chinese online shoppers — and in true China fashion, most of them are fake. Online peddler Wang Xuesheng sold more than 600 Louis Vuitton-logo sacks in one month on e-commerce site Taobao.com, the report said. Cost per bag: 3 yuan, or roughly $0.50. “I used to produce paper bags for people who had created their own brands for online stores but later I noticed an increasing demand for paper bags with logos from high-end goods,” the China Daily quoted Mr. Wang as saying. 

Baidu, China’s 6th most valuable brand according to MillwardBrown. Outside of China, the majority of consumers can’t name a single Chinese brand. According to research from agency Millward Brown and media company WPP on the top 50 most valuable Chinese brands, 83% of consumers beyond China’s borders couldn’t recall a Chinese brand or company. That message is significant, given that China wants badly to create its own global brands, said Adrian Gonzalez, head of Greater China at Millward Brown. Chinese companies like appliance maker Haier and computer electronics company Lenovo that aspire to global household names will need to better distinguish themselves to become more recognizable to the world’s consumers, Mr. Gonzalez said. At home, it’s a different story. The brand study, which analyzed financial information of listed companies’ brands and paired it with data from a survey of 35,000 consumers, reveals that value of Chinese brands has grown by to $325 billion in the past year, up 16% from a year earlier. The top Chinese brands–ranging from banks and telecommunications to fashion and food companies– are not only competitive in pricing, but are resonating and connecting emotionally with Chinese shoppers, the study said. Chinese companies are also narrowing the wide gap they once had with multi-national counterparts, which had for years built better trust and service for Chinese consumers. Dairy giant Mengniu (18) and its rival Yi Li (22) have proven themselves, even after having been implicated in a 2008 scandal in which the chemical melamine added to milk caused the death of an infant and illnesses in 300,000 others, to be on par with foreign competitors, such as Swiss food company Nestle SA, and are offering products of similar quality, Mr. Gonzalez said. Technology companies, such as Sina (25) and Baidu (6), are creating new programs and products specific to Chinese needs. Sina, which operates China’s most popular Weibo microblogging service, saw its brand value increase 244% compared with last year, according to the report. “We’re seeing in many cases now that foreign companies feel the best way to succeed in China now is through acquiring a Chinese company,” Mr. Gonzalez said, adding that a decade ago that was not the case. Results of the study reveal another shift occurring within China: a fall of the country’s state-owned enterprises. While China Mobile, the top Chinese brand, and state-owned banks still dominate the Chinese brand landscape, seven of the 14 brands on the list that lost ground with consumers were state-owned. China Mobile held on to its No. 1 ranking from last year but dropped 4% in value in 2011. Bank of China (4) fell 17%. “Government protectionism is starting to wear thin,” the study said – a marked contrast with the study’s 2010 results. Don’t expect the fall to transfer beyond state-companies, the study’s authors said. If there’s any wake up call to foreign brands—even outside of China— it’s that Chinese brands are on the rise. To see a list of the top 20 Chinese brands and how much they’re worth, click on the slideshow tab above.

Only in rare cases does McDonald's deliver food in the U.S. Above, a McDonald's at the train station in Shenyang in northern China's Liaoning province. When Americans are too busy or lazy to cook, they often place an order with their favorite Chinese restaurant. So who do people in China call when they want food delivered? Increasingly, McDonald's and KFC. Delivery is becoming an important part of the growth strategy at McDonald's Corp. and Yum Brands Inc.'s KFC chain in parts of the world where cities are too crowded and real estate costs too high to justify building drive-throughs. In cities like Beijing, Seoul and Cairo, armies of motorbike delivery drivers outfitted in colorful uniforms and bearing food in specially designed boxes strapped to their backs make their way through bustling traffic to deliver Big Macs and buckets of chicken wings. McDonald's Asia/Pacific, Middle East and Africa division, which accounts for more than a fifth of the company's revenue and showed same-store sales growth of 8.1% in November, is planning to add delivery service to many of the new restaurants it builds. Already, 1,500 restaurants out of the division's 8,800 in 15 countries offer delivery, and it plans to build more than 650 new restaurants next year, with up to 250 of those in China alone. Yum Brands, which says its Pizza Hut unit was the first Western chain to offer delivery in China, decided in 2008 to test whether chicken would prove as popular a delivery item. Now, KFC offers delivery in more than half its 3,500 restaurants in China, and Yum Chief Financial Officer Rick Carucci estimates delivery will be available in more than 2,000 new KFC restaurants in China over the next decade. The chicken chain also offers delivery in other Asian countries, the Middle East, Central America and Mexico. As the largest fast-food chain in China, KFC is relying on delivery to help broaden the reach of its brand even more. KFC is opening about 450 new restaurants in China per year, half of which Mr. Carucci says will offer delivery. At McDonald's, "we've used the slogan, 'If you can't come to us, we'll come to you,'" says Tim Fenton, president for the chain's Asia/Pacific, Middle East and Africa division. Sun Yu, who works for a media company in Beijing, says he orders from McDonald's or KFC two or three times per month because it's "more convenient than going to the restaurant, especially in bad weather." "We usually can get the food within 15 minutes after I order, much more quickly than a lot of Chinese food restaurants." Mr. Fenton says delivery sales have been posting double-digit growth every year in every country where it's offered. In Egypt, where McDonald's first started offering delivery in 1994, more than 30% of total sales come from delivery. And delivery accounts for nearly 12% of McDonald's sales in Singapore. For KFC, delivery accounts for a third of sales in Egypt and nearly half in Kuwait. Food delivery is commonplace in many Asian and Middle Eastern cities, from independent restaurants and local chains to hotels.

Hong Kong*:  Dec 14 2011 Share

Cathay Pacific is to introduce a new premium economy class next year, with more legroom, a better entertainment system, a designated check-in desk and special menus. Cathay Pacific Airways (SEHK: 0293) will change its economy class seats back to the traditional reclining variety on most long-haul destinations after the newer fixed-back shell type was criticised by passengers. The seats have been hit by problems since being launched in a refit programme in 2007, with claims that they were uncomfortable. It is not the first time that Cathay has retreated on new seating configuration after negative passenger feedback. The old herringbone business class seats were replaced by the new wider and longer business class seats in March after passengers said the older versions were "coffin-like". John Slosar, who succeeded Tony Tyler as the chief executive of Cathay in April this year, has been driving the retrofit programme. Slosar, who has an extensive background in fast-moving consumer goods during his time at Swire Pacific (SEHK: 0019)'s beverages division, appears more willing to listen to ideas from end users, in this case the passengers. The fixed-back shell economy seats, which are designed to prevent infringing the space of the person behind when reclined, allegedly compromise the leg room and comfort of passengers actually sitting in them. They will be changed back to traditional recliner seats on all Boeing 777-300ER and Airbus 330-300 aircraft. The first aircraft featuring the "traditional" seats will enter service in March, initially on routes to Sydney and Toronto. A total of 36 Boeing 777-300ER and 26 Airbus 330-300s will be fitted and refitted by December 2013. The extensive changes in Cathay Pacific's long-haul aircraft, including introducing a premium economy class, come at a time when airlines are facing a possible downturn in demand on long-haul routes to Europe. Slosar told the Aerospace Forum in Hong Kong yesterday: "We've seen airlines do pretty well with low revenue and low fuel prices, we've seen airlines do pretty well with high revenue and high fuel prices, but it will be really interesting to see how airlines go with low revenue and high fuel prices. That will be a real challenge to get over." In the first 10 months of 2011, Cathay carried 2.3 per cent more passengers year-on-year. Slosar said the turmoil in Europe had yet to dent passenger demand. Cargo, however, has been hit, with volume dropping by 7.7 per cent year-on-year in the same period. The drop widened to 17.5 per cent in October alone. The new economy class seat will feature a cradle mechanism: the footstep of the seat will rise simultaneously when the back is reclined, which will give more support to the back and leg to the passenger than the average reclined seats. The premium economy class will be available for flights from April 2012. The seat pitch in this class will be 38 inches, or six inches more than Cathay's economy class. Premium class passengers will also get a special menu and a designated check-in counter.

Leung Chun-ying found yesterday that public popularity does not necessarily translate into support among those who have a say in who will be the next chief executive. The opinion poll-dominating candidate for the top job and his allies suffered setbacks in the voting for sub-sector representatives on the 1,200-strong Election Committee - his known supporters winning 58 seats, little more than a third the tally for rival Henry Tang Ying-yen. Results yesterday from Sunday's voting showed Leung scraped in last for the main seats in his own sub-sector, for Chinese People's Political Consultative Conference members. The former Executive Council convenor declined to comment on the results, saying only: "My priority is to get 150 nominations [required from Election Committee members to join the contest for the top job]." "Then I will canvass support from each of the 1,200 members." Former chief secretary Tang saw more than 170 of his known supporters gain seats, while the pan-democrats' tally was 205. But with most of the members still playing their cards close to their chests, the outcome remains uncertain. Leung said he would deliver his preliminary policy platform soon, while Tang declined to comment. Release of the results came after more than 10 1/2 hours of counting. A provisional figure from the electoral office showed 27.5 per cent of the 237,000 registered voters cast ballots. The findings of a survey commissioned by the South China Morning Post and published on Thursday showed Leung led Tang in popularity ratings by a big margin. Some 47.3 per cent of 1,012 respondents polled by the University of Hong Kong picked Leung. Tang was backed by 23.8 per cent. The outcome of the subsector poll shows again the city's political elite and big business think very differently from the public. If the election results were any guide, Tang would win by a landslide in March. But more than 700 members remain publicly undecided and their preferences will depend on indications from Beijing. Sub-sectors of the committee inclined to back Tang include commercial, finance, financial services, wholesale and retail, industrial and tourism, and real estate and construction. Political commentator Johnny Lau Yui-siu said if Leung failed to secure enough nominations despite his lead in popularity ratings, some members of the public would interpret it as a sign of Beijing's rejection of his candidacy. Ivan Choy Chi-keung, a political scientist at Chinese University, thought Leung might approach committee members affiliated with the pan-democratic camp, the Beijing-friendly Democratic Alliance for the Betterment and Progress of Hong Kong, and the Federation of Trade Unions to nominate him. Asked under what conditions pan-democrats might give nominations to Leung, Democratic Party chairman Albert Ho Chun-yan said it would be a hard sell for Leung as his beliefs differed from theirs. Ho will contest the pan-democrats' primary election to run for the top job.

China's Hainan Airlines Co. plans to buy a 19.02% stake in sister carrier Hong Kong Airlines Ltd. for 842 million yuan ($132.4 million), the Shanghai-listed airline said on Tuesday, in a deal that will strengthen the Hong Kong carrier's financial position as it aggressively expands its network in the face of growing competition.

A drawing of the Central Police Station ‘revitalization’ project. Though it is home to a thriving auction scene, Hong Kong has long lacked a hub for contemporary art. The city’s historic Central Police Station, which is being refurbished to house art galleries, public space and a theater, could change that. Built by the British in 1864, this block is the site of former law-enforcement headquarters, a prison and dormitories, and is one of the few visible reminders of Hong Kong’s colonial past. The Hong Kong Jockey Club announced plans to fund the project last year, and architecture firm Herzog and de Meuron, which worked on London’s Tate Modern, will contribute two new buildings to the design. Hong Kong is increasingly of interest to the art world, with MCH Group, which owns Art Basel and Art Basel Miami Beach, buying a controlling stake in Hong Kong’s annual art fair, and Western galleries such as Gagosian and White Cube setting up shop in the city as well. David Elliott, a British curator and Asian art specialist, is advising on the Central Police Station project. Over his 30-year career, he has directed modern art museums in Tokyo, Stockholm, Istanbul and Oxford and written more than a dozen books, including “Bye Bye Kitty!!! Between Heaven and Hell in Contemporary Japanese Art.” “People in Hong Kong are looking for something different,” Mr. Elliott says. “I see my role as setting the whole thing up and programming it to a high international level. I think it can really break the ice.” He spoke with the Journal about the Central Police Station, which is scheduled for completion in 2014. Can you sum up your vision in a sentence or two? To create a really active, contemporary, visual-arts hub which doesn’t try to replicate New York, London or Paris, but that looks at the world from a Hong Kong perspective. Because Hong Kong has had so little exposure to international art there has to be an international program, but also a strong regional one on the same platform. I also think that one should not regard the public as idiots — museums sometimes tell people what to see and think. You should provide information to reinforce or contradict people’s opinions. What will the station look like when it’s complete? We’re bringing the site back to life as something entirely different. Herzog and de Meuron have designed a new Kunsthalle [an exhibition space for temporary or traveling works] and also a performance area and lecture hall at the other end. Underneath this, there’s a large screen in front of a wide flight of steps that will also provide seating. It’s like a cinema and could really be something. It’s really dynamic. There will be also space for local art nonprofits, and some commercial elements that will contribute to the ethos of the project. What are your impressions of Hong Kong and how the public feels about this project? It’s a place waiting to happen — everything else is here except a public forum for contemporary culture. It’s been botched, especially in terms of visual art. People are inventing and reinventing politics all the time here. “Heritage” is one of the buzzwords. “Who are we? What is our heritage?” You have the absurd paradox of a colonial jail — a symbol of oppression and possession that the British built — now being a site of collective identity, memory and nostalgia, because everything else has been bulldozed. Will it help the art infrastructure? Yes. We’re adding something totally new, and at the same time helping what is already here to grow and develop. That’s why it’s such a good project — one without the other is not right. I don’t think that it’s overdramatic to say that people desperately want and need spaces like this. There’s great anticipation. You talk about a “sense of place” for art. Can you elaborate? One of the big messages we have to get across is that value is not the price of something, but its aesthetic quality as art, which is far more important. If art is any good, you can’t really own it, just rent it for a while, because its influence is much larger than any one person’s desire. I believe that people have the right to access the best art of their time. How does your vision relate to exhibition culture across the world? Museums are made by people. You have to bring new thinking that’s right for there and then. This discovery is what makes a great museum director. It’s a personal thing, like making art. For me, the key is doing good thematic shows. And how do you plan to deliver this new art hub to the public? I talk to people about what they’d like to see, then try to distill this into a series of exhibitions and events. The opening show will break some rules but should also be a total pleasure. That’s the challenge.

 China*:  Dec 14 2011 Share

Fans in Beijing hold pictures of Christian Bale as they wait for him to appear for a red-carpet event for Zhang Yimou's The Flowers of War. Film director Zhang Yimou is making another bid for an Oscar with a new epic that has been likened to a big-budget Hollywood blockbuster, with its own A-list Hollywood star. The Flowers of War, starring Christian Bale, premiered in Beijing on Sunday to mixed reviews. The two-hour epic, set in Nanjing in 1937, is the most expensive feature-length film made in China. Bale was reportedly paid about 100 million yuan (HK$122 million), about a sixth of the film's total budget. It hits mainland screens on Friday, followed by a limited release in the US next week. The film centres around a mortician, played by Bale, who gets caught up in the Nanking Massacre and has to save a group of schoolgirls from the Japanese. He becomes involved with a high-class Chinese courtesan, finding love and personal redemption. Although few on the mainland have seen the film, which Zhang has been working on for five years, many say they are looking forward to it. However, Zhang's detractors have decried the hype associated with earlier flops and have accused him of turning away from the art house masterpieces of his earlier years. Han Haoyue, a Beijing-based culture critic who saw the film at a preview, said it was the best movie Zhang had made since the internationally acclaimed To Live in 1994. "It's also a film laced with so many elements of a Hollywood production ... It also strikes a balance between an alignment with the aesthetics of Hollywood films and due sensitivity to a tragic chapter of Chinese history." China says 300,000 were slaughtered by Japanese troops in Nanjing, then known as Nanking - an episode viewed by many as a national shame. Han said the film tried to inject a dose of patriotic pride by playing up the individual heroism of Chinese soldiers. But Bale thought it unfair to view it as a propaganda film. "It's a historical piece ... It's far more a movie about human beings and the nature of human beings' responses to crisis, and how that can reduce people to the most animalistic behaviour but also raise them up to the most honourable behaviour you could ever witness." Zhang has been nominated for an Oscar for best foreign language film three times but has yet to win. Bale starred in the 1987 second world war film Empire of the Sun, set in Shanghai and directed by Steven Spielberg.

China has confirmed it will consider using the Indian Ocean Seychelles islands as a supply base for naval vessels operating in the region. Foreign media reported earlier this month that Seychelles officials had invited Beijing to establish a military presence in the archipelago to strengthen the fight against piracy. The country comprises 115 islands off the east coast of Africa, just south of the pirate-infested Gulf of Aden, where the People's Liberation Army Navy has been part of an international effort to escort commercial vessels since 2008. The request was made during Defence Minister General Liang Guanglie's visit to the Seychelles, the first by a Chinese defence minister since the establishment of diplomatic relations in 1976. A report on the Ministry of National Defence's website said the Seychelles had invited the navy to use Seychelles for supply and rest stops as a token of gratitude for its efforts in ensuring the safety of the Indian Ocean and support for the country. "It is common practice for all navies of the world to seek supplies in nearby international ports while carrying out long-distance missions," a ministry officer said. "Since the Chinese navy began its escort mission ... it has obtained supplies in the ports of countries like Djibouti, Oman and Yemen. According to the needs of the escort mission and other long-distance missions, China will also consider obtaining supplies from, and resting at, suitable ports in the Seychelles and other countries." Shanghai military expert Ni Lexiong said the Seychelles was a good choice if a permanent base was needed. "The unprecedented visit by the defence minister ... could certainly be seen as a move of some sort," Ni said, adding it was only a matter of time before China would have to build a permanent base offshore.

China's main stock index closed down 1.9 per cent in thin volume on Tuesday, its lowest level since March 2009, as investors awaited the outcome of a policy meeting in Beijing.

Test flight of China's carrier-based fighter J-15 - A domestic military journal recently released some photos of China's carrier-based fighter J-15 conducting test flight.

Is it a good deal for wealthy Chinese to spend at least $500,000 buying a home in the United States in exchange for visas that could allow them to live in the country? In October, Charles Schumer, a Democrat Senator in New York State, and a Republican colleague in Utah State, Mike Lee, introduced a bill that would grant foreigners visas if they spend at least $500,000 on residential housing in the US. The answer, according to industry experts, might not as alluring as it seems to be. The proposed Visa Improvements to Stimulate International Tourism to the United States of America Act (also known as VISIT-USA-Act), submitted to the Congress earlier last month, obviously aims to stimulate the bleak property market and further speed up the staggering economic recovery in the country, said Ding Ying, a Beijing-based expert on emigration to the US. "It is so far only a proposal and needs approval from the president to be an act. Even if it is approved, the applicant would only get a visa to stay in the US for a limited period, not a visa for immigration as some people think," said Ding. According to the proposal, a new type of residential visa that could be renewed every three years would be created for overseas homebuyers, but it would not put them on the way to citizenship. The buyer could either buy one residence of at least $500,000 or two for $250,000 apiece or more. However, there are several restrictions in the proposed bill. The property would have to be bought in cash with no mortgage or bank loans involved. The buyers would have to pay US taxes if they lived at the property for at least 180 days. Because only a residential visa would be on offer, the buyers would have to apply for an additional work visa in order to find employment. Furthermore, some social benefits such as Medicaid would not be available to foreign property buyers. But the proposal is still attractive for some Chinese people because children of visa bearers would be entitled to enroll in public schools in the US. Children of foreign citizens are generally forbidden from enrolling in public primary and middle schools. One of the major reasons given for Chinese people emigrating is because it means the next generation can get a better education. Recent years have witnessed an increasing number of Chinese buying apartments and houses overseas, including in the US. This trend is further strengthened by the home-purchase restriction policies in China that are aimed at curbing a property market many believe to be overheated. Data from the National Association of Realtors, a US trade organization for real estate agents, showed that as of March this year, foreign homebuyers invested about $82 billion in the US' property market last year, of which 9 percent came from China in terms of transaction volume, compared with 5 percent in 2007. Canada at 23 percent held the top position. Stanley Lo, an agent with Green Banker, based in Burlingame, California, estimated overseas investment in the property market has quadrupled over the past two years. He said most of his customers were Chinese looking at real estate projects valued between $1 million and $1.5 million. Most wealthy Chinese prospective buyers choose to make purchases in cities that are densely populated by their compatriots, such as Los Angeles, San Francisco and New York, which helped keep property prices high there. Florida and Las Vegas saw large falls in home prices. According to an industry insider who declined to be identified, at least 17 billion yuan ($2.66 billion) has flown out of China in the past three years. "Many people want to come and live in the United States. They will be here spending money and paying taxes, and the most important thing is they'll sop up the extra supply of homes we have right now compared with demand, and that's what's dragging our economy down," Schumer said. The latest data released by the US Citizenship and Immigration Services showed that this year Chinese people accounted for 75 percent of the applicants for EB-5 visas for immigrant investors. According to the newly unveiled Private Banking White Paper 2011 jointly released by Hurun Research Institute and the Bank of China, about half the number of Chinese with at least 10 million yuan are considering leaving China, while 14 percent have emigrated or are in the process of applying to. "When purchasing homes overseas, most Chinese buyers aim to transfer part of their assets, spread risks or consider the education of their children," said a senior manager with realtor CBRE who declined to be named. "The yield, in fact, is not their primary concern. As the property markets in developed countries are generally stable and renminbi is expected to appreciate further, the return on such investments will not be attractive."

Experts call for reforms as ministry looks to restore confidence in rail network. Xin Dingding reports in Beijing. China's bullet-train ambitions hit a number of snags in 2011 and ultimately slowed down. It was not what the Ministry of Railways had pictured. Last December, when China became the first Asian nation to host a global high-speed rail summit, Liu Zhijun, the country's railways minister at the time, said China had 7,531 kilometers of railways running at 200 km/h and faster, including 4,322 km of newly laid track. More than 10,000 km of high-speed railways were also being rolled out across the country, he said, with the majority set to open to public in 2013. By 2020, China's high-speed network would increase by 16,000 km, he said. "People were excited and optimistic about the prospect," said Li Kun, a researcher specialized in railways at the comprehensive transport institute of the National Development and Reform Commission (NDRC), the country's top economy planner. "Soon after, though, they were gripped by a feeling of insecurity and sadness, and society began to question the development of high-speed travel," he said. First, Liu was investigated and subsequently removed from his post for graft in February, and then probes were launched into other senior railway officials. When it emerged that some unqualified contractors and suppliers could have won contracts through their special relationships with corrupt officials, people began to wonder how much of the new railway might have quality problems. To address the issue, Sheng Guangzu, who replaced Liu as railways minister, said in April that high-speed trains would be operated at slower speeds, adding that more services would also be laid on. On June 30, the landmark Beijing-Shanghai bullet train was launched, offering services at both 300 km/h and 200 km/h, both slower than its designed speed of 380 km/h. In its first month, the 1,318-km line reported some glitches, which fueled suspicion over its safety. Again, the Ministry of Railways moved to allay fears by calling the faults teething problems, and insisted its high-speed system had been built to the highest standards. Not long after that, a bullet train rear-ended another one on July 23 near Wenzhou, East China's Zhejiang province, killing 40 people and injuring almost 200 more. The tragic accident rocked the nation, prompting calls for authorities to carry out checks on high-speed rail services. Under pressure, the Railways Ministry ordered another slowdown, this time including the two short lines - Beijing to Tianjin and Shanghai to Hangzhou - that had been kept at 350 km/h as symbols of China's technological advancement. Then came the third scandal in October, when railway tunnel expert Wang Mengshu disclosed to the media that high-speed rail projects spanning some 10,000 km had been halted because of funding shortages. He said the money from the central government's stimulus plan, worth 4 trillion yuan ($586 billion at the time), had dried up, and that the ministry could not borrow any money from the banks due to its tarnished image after the Wenzhou crash and the country's tightened monetary policy. Insiders said the funding problem emerged at the beginning of this year. "Too many rail projects have been started in a rush since 2008," said the manager of a Beijing company that helps the railway authority get land permits for construction, who spoke on condition of anonymity. "The government needed as many railway projects to start as possible so that it could trigger demand following the global financial crisis," he said. The rush saw many projects start without careful planning, he said, and some routes that did not have on-site tests pass through land that could subside in the future. The manager added that his company had received no business from the high-speed railway sector since the start of 2011. Wang said that without the money from the ministry, contractors were left owing large sums to suppliers and had failed to pay workers' salaries for up to six months. In November, the central government allocated 200 billion yuan to helping the Ministry of Railways pay off its creditors. Wang and other experts said the money would be enough for the ministry to settle most of its debt, worth an estimated 250 billion yuan. To resume construction and complete the projects, however, observers said it would take at least another 200 billion yuan. "No one knows exactly what the central government will do about the railway sector," said Zhao Jian, a professor of transport at Beijing Jiaotong University. "It's something the government has to think carefully about."

Hong Kong*:  Dec 13 2011 Share

Some 7,500 parents and students visited the first admissions fair of 63 mainland higher education institutions that will admit students based on their Hong Kong exam results. The Ministry of Education and the Education Bureau jointly held the Mainland Higher Education Expo at Queen Elizabeth School at the weekend. The institutions will admit applicants based on their Hong Kong Diploma of Secondary Education Examination and Hong Kong Advanced Level Examination results, exempting them from taking the joint entrance exam for mainlanders. Assistant Secretary for Education Simon Wong Tin-pui said: "Studying in the mainland is an alternative option for students to map out social networks and acquire Chinese national development at large." Tuition fees and living expenses of less than HK$10,000 in total are affordable and appealing to locals, he said. Many are more attracted by booming career prospects and the ever-growing prosperous mainland economy. Charles Chan Ka-cheuk, a Form Five student at GT College, said he is thrilled at the prospect of being able to study Chinese medicine in 2013. "It is best to acquire professional knowledge and skills of Chinese medicine in the motherland, for it is the root of medical practitioners wanting to lay solid foundations," the 17-year-old said. Elaine Wong Hoi-ying, 25, is considering studying for a master's degree in the mainland. "I am eyeing Tsinghua University and Peking University. It is a trend to study in the mainland due to its enormous business potential." Yang Fan, a representative of the Tsinghua admissions office, said: "Most are concerned about admission requirements, application procedures and ranking of specific faculties. "The top three popular disciplines are commerce, law and journalism."

Veteran horse trainer John Moore pulled off the biggest shock in the history of the Cathay Pacific Hong Kong Cup yesterday when his nine-year-old, Able One, knocked out top challengers from around the world to pay a staggering HK$660 for a HK$10 outlay. Moore, however, pointed the finger at the fickleness of punters, saying Able One was the favorite for the same race last year before being pulled out at the starting gates when found to be lame. The year's delay did the horse no harm and earned an extra HK$2 million, as the winner's purse was increased from HK$9 million to HK$11 million in the 12 months since then. The previous highest dividend was HK$650 by Precision in 2002. The highest "international" dividend was HK$720 by New Zealand's Grey Invader in 1989 when the event was known as the Hong Kong Invitation Cup. Able One was ridden by Jeff Lloyd who quipped: "This win has given me the biggest buzz of my career, not just here in Hong Kong. A nine-year-old with a 50-year-old on his back, it's just great." Able One, owned by Cornel Li Fook- kwan, beat Britain's Cityscape, with Hong Kong's Xtension third. The win was one of three internationals for Hong Kong, with only the HK$14 million Hong Kong Vase going overseas in what was nearly a rerun of this year's Melbourne Cup. Jockey Club chief executive Winfried Engelbrecht- Bresges was ecstatic with the result, which exceeded expectations. "I had said before the race that two wins for Hong Kong would be great. Three is like a dream," he said, adding another "great" when told both turnover and attendance were up 20 percent from last year's International Races. Yesterday's attendance was 67,000, compared to 54,000 last year, while turnover of HK$1.24 billion topped last year's HK$1.05 billion. And it could nearly have been a clean sweep as Hong Kong's Thumbs Up finished second behind French runner Dunaden in the Vase. Dunaden won the Melbourne Cup last month, defeating Britain's Red Cadeaux, owned by former Jockey Club chairman Ronald Arculli - by a whisker. Halfway up the straight, it looked as though the two would fight out the finish again, but Red Cadeaux could not sustain his run, allowing Thumbs Up to spoil the party. In addition, he had to share third spot with another French runner, Silver Pond.

The rapid expansion of the domestic logistics market on the mainland will spur the growth of mainland logistics companies, and their expansion will pose serious competition to the big global logistics players, analysts say. "In 10 years or less, a Chinese company will emerge that will challenge the big logistics multinationals like DHL, UPS and FedEx, in the China market," said the China partner of the financial advisory firm KPMG, Jeffrey Wong. "Further down the road, the increased financial strength of some large Chinese logistics firms will help them go global and some may challenge the big logistics multinationals in global markets," Wong said. Until recently both mainland and foreign companies were focused on supporting mainland exporters, but both were now looking at the domestic logistics market. "Now it's not just about moving goods from a factory to a port. It's more about moving goods across China." One indication of the rapid growth of the domestic logistics market was its e-commerce business, which nearly quadrupled from 130 billion yuan (HK$160 billion) in 2008 to 476 billion yuan in 2010, Wong said. It was only in 2008 that delivery companies started collecting payment for goods delivered through e-commerce, thereby kicking off a fast-growing logistics business, KPMG said in a recent report. "From almost nothing in 2008, e-commerce has grown to a point where China's biggest online business provider, the Alibaba (SEHK: 1688, announcements, news) Group, is planning to invest US$4.5 billion to set up its own logistics firm." In 2009 and 2010, international express deliveries from the mainland grew 40 per cent, but this was beaten by the growth of domestic express services, up 57 per cent, the report said. "China's move to a more consumption-driven economy, combined with the improved accessibility of inland regions, has directed the logistics industry's focus from being externally oriented towards new internal markets," the report said. Anthony Wong, past president of the Hong Kong Logistics Association, said: "A lot of Chinese logistics companies have developed really fast, while multinationals have problems expanding in China. The chief reason is difficulties in finding human resources." In its report, KPMG said that a decision by DHL to divest its domestic express joint venture seemed to be an indication that the domestic delivery market would remain largely the preserve of local companies. "For domestic distribution within China, Chinese companies are the choice. They are able to do the job more effectively," Wong said. Logistics costs accounted for 18 per cent of mainland GDP, higher than in many developed countries, the KPMG report said. Logistics costs doubled to 6.1 trillion yuan in 2009 from 3 trillion yuan five years earlier, according to the Hong Kong Logistics Association. One reason for high logistics costs on the mainland is the fragmented nature of the sector, involving a mix of foreign, state-owned and domestic private players, the KPMG report said. Companies that span different parts of the supply chain must pay multiple taxes to different bodies, and tolls levied by local governments account for one third of trucking costs. "The outcome is an industry in which it is tough to survive," KPMG said. Jeffrey Wong added: "Logistics needs a wide network to be successful. Regional differences and provincial protectionism makes building that wide network more difficult."

 China*:  Dec 13 2011 Share

Frederic de Narp, Harry Winston Diamond jewellery retailer Harry Winston has finalised plans to launch three stores on the mainland next year, including its largest worldwide in Shanghai, to target more sophisticated clientele in the fast-growing luxury goods market. The New York-based luxury brand, which is owned by namesake Canadian mining and retail company Harry Winston Diamond, said opening a few stores was part of a calculated approach to build its mainland presence. "We are different from some other brand names, as we don't see China as the El Dorado for mass luxury at all," Harry Winston chief executive Frederic de Narp said, referring to the legendary lost city of gold that has long fascinated explorers. "We see it as the most exclusive destination." Compared with that strategy by the self-described "king of diamonds", luxury jewellery retailers Cartier and Tiffany are keen to expand their reach across the mainland. These high-end brands have announced plans to add more stores in the mainland's major metropolitan cities and its lower-tier cities over the next few years. In a conference call with analysts last Friday, de Narp said: "Harry Winston's unique diamond jewellery and heritage brand built upon quality, craftsmanship, design has untapped potential in China as consumers become more selective." "We treat China as our priority, and we treat Chinese for what they are: extremely sophisticated," he said. "So, we don't go with quantity. We go with quality." Harry Winston, which first mentioned its plan to establish from two to three new mainland stores 12 months ago, currently has a salon inside the Peninsula Beijing Palace Hotel at busy Wangfujing Street. In Hong Kong, it has a salon at The Peninsula in Tsim Sha Tsui. Cyrille Baudet, the group chief financial officer at Harry Winston's parent firm, declined to disclose the amount of investment to be made for the mainland expansion, but indicated that so-called normal revenue flow from a new store is typically achieved within its second or third year in operation. The new flagship Harry Winston store in Shanghai will open in the first quarter. It will have a retail space of 460 square metres and a 12-metre-high facade. A smaller salon will be built later next year inside the lobby of The Peninsula Shanghai, which is on the popular waterfront area the Bund. Management consultancy McKinsey has forecast the mainland to account for about 20 per cent, or US$27 billion, of global luxury sales by 2015. In parent Harry Winston Diamond's three recent fiscal quarters to October 31, luxury brand sales grew 41 per cent to US$298.1 million from US$212.1 million for the comparable period the prior fiscal year. Sales in Asia rose 77 per cent year on year to US$126.2 million, while sales in the United States increased 53 per cent to US$97.9 million. European sales decreased 4 per cent to US$74 million. Travelling luxury consumers from the mainland have apparently helped sales across Harry Winston's other salons worldwide. "Chinese clientele around the world ... ought to increase by 17 per cent [annually] for the next 10 years, and that will not stop," de Narp said. "We learn from them. For example, the percentage of bridal rings we sell from our London salon is extremely high to Chinese clients, which is unbelievable because we don't have visibility yet in mainland China." Harry Winston, which directly operates a total of 19 luxury jewellery stores worldwide, has started to hire more Chinese-speaking staff in select salons so they can attend to travelling mainland luxury consumers. "Two or three months ago, we had zero Chinese-speaking people in our salons," de Narp said. Chinese-speaking staff now serve mainland luxury consumers at Harry Winston salons in Las Vegas, Nevada, and at the South Coast Plaza and Orange County in California. There will be more Chinese-speaking staff added at salons in London, Paris and other international sites, de Narp said.

Ten years ago, foreign insurers were lining up to celebrate China's entry into the World Trade Organisation, eager to tap what was certain to become the world's next big insurance frontier. A decade on, it is mainly the local insurers that are celebrating. "Expectations have not been lived up to," said Chris Kaye, a Hong Kong-based partner at the Boston Consulting Group. "When you look at some of the business plans for entry and look at the actual delivery performance, there has been a big shortfall. What we're seeing now is a re-evaluation of what it takes to win." China's WTO entry did indeed herald a boom. Over the past 10 years, insurers have seen annual premiums jump sixfold to 1.5 trillion yuan (HK$1.8 trillion). There is room for further growth, backed by a rising middle class in a country with 1.3 billion people. That boom has produced clear winners, just not among the foreign players. China Life Insurance (SEHK: 2628, announcements, news) and Ping An Insurance (SEHK: 2318) have grown into the world's first and second-largest insurers by market valuation. On paper, China has played by the rules. It pledged to allow foreign firms "effective management control" in life-insurance joint ventures, but it limited foreign stakes to 50 per cent while letting them choose their partners freely. Beijing also promised to phase out geographical restrictions on where they could operate. Analysts say that while China has met the letter of the law, in practice, the playing field is not level. "Regulatory hurdles are a big challenge," said Alex Wong, Shanghai-based partner at PriceWaterhouseCoopers. Foreign insurance firms, for example, must endure lengthy and often inconsistent bureaucratic procedures to open a provincial branch, severely retarding their pace of expansion. Sino-foreign life-insurance joint ventures have seen their growth typically capped to two provinces a year, a pace that would require at least 17 years to build a nationwide network, Wong noted. Foreign banks have also faced similar regulatory controls over their expansion on the mainland, but their limited retail presence as well as their focus on lending to multinational firms, most of which are based in major cities, have made their business more profitable. But for insurers, which target individuals or companies on the mainland, having a large sales force is crucial, analysts say. "The licensing restriction has led to many other problems, such as inability to gain economies of scale, weak brand recognition and in some cases, disadvantage in talent wars," said Sally Yim, senior credit officer from the rating agency Moody's Investors Service. "These are the hidden costs that had not been expected by foreign insurers." In terms of ownership, foreign insurers can only enter the mainland life insurance market by setting up a joint venture with a local firm and their stake is capped at 50 per cent. Non-life insurers are allowed full control of their local unit, but are barred from selling compulsory third-party motor insurance policies, which puts them at a significant disadvantage in the lucrative autoinsurance sector. The life insurance sector, crowded with 61 players, is dominated by China Life and Ping An, which combined make up close to half of the entire market. The non-life space is dominated by PICC (SEHK: 2328) Property and Casualty, which holds a 37 per cent market share. Of 47 foreign insurers and joint ventures operating on the mainland last year, only 11 made a profit, according to Moody's. Despite their numbers, the foreign share of the life-insurance market on the mainland has shrunk to less than 5 per cent from a peak of 8.9 per cent in 2005. By contrast, foreign insurers command more than half the market share in both the life and non-life arena in Hong Kong, Singapore and Malaysia. On the mainland, their troubles have been compounded by an influx of local entrants in recent years, some of which now boast much wider sales networks. At the same time, major mainland banks have also made forays into the industry. Frustrated and disillusioned by the slow pace of deregulation and increasing local competition, firms such as AXA and Sun Life Financial have reduced ownership in their mainland joint ventures over the past year. New York Life quit the mainland completely in January.

Workers unload materials for the Cathay Industrial Biotech factory in Jining, Shandong. Beijing is keen to control more of the wealth generated by private companies like Cathay. Feted innovator now fighting the state - Founder of hi-tech firm Cathay is locked in a battle for survival after accusing ex-executive of stealing secrets and starting rival firm with Beijing's blessing - It was the kind of entrepreneurial breakthrough that China counts on to make it a global leader in innovation. Cathay Industrial Biotech, a private company in Shanghai, developed a way to ferment hydrocarbons and turn them into advanced nylon ingredients for use in lubricants, diabetes drugs and other 21st-century marvels. Cathay's patents prompted chemical giant Dupont to become one of Cathay's biggest customers. And the US$120 million that Goldman Sachs and other backers have pumped into Cathay in recent years primed investors to eagerly await a public stock offering planned for earlier this year. They're still waiting. According to Cathay, a factory manager stole its secrets and started a rival company that has begun selling a suspiciously similar ingredient. Cathay is now struggling to stay in business. In China, employees steal commercial secrets almost daily. But according to Cathay, this was copying with a special twist: The new competitor, Hilead Biotech, is backed by Beijing. Court documents show that Hilead was set up with the help of the state-run Chinese Academy of Sciences. And because the project fit national and local government policy goals, Hilead received a US$300 million loan from the government's China Development Bank. The loan came after the company won the approval of the party secretary of Shandong province, one of the country's highest-ranking public officials. "We created a great product and they stole it," said Liu Xiucai, Cathay's 54-year-old founder and chief executive. In a lawsuit, Cathay has accused Hilead of patent infringement and theft of trade secrets. Hilead has countersued, claiming Cathay stole patents from the Chinese Academy. The government has taken Hilead's side, stripping Cathay of one of its top patents. After more than a decade in which private companies have been the prime engine of China's economic miracle, Beijing is eager to control more of that wealth - even if that means running roughshod over private companies. Chen Zhiwu, a professor of finance at Yale University and a harsh critic of the state's dominant role in the economy, says the Chinese government is smothering the private sector. "When the government is involved in business, it's hard for private companies to compete," Chen said. Some prominent Chinese economists warn that the potentially corrosive effects of favouring government companies at the expense of the private sector could eventually stifle innovation. "If China doesn't deal with this problem and strengthen the private sector, this country's growth is not sustainable," said Xu Chenggang, a professor of economics at the University of Hong Kong. Hilead executives declined to comment and a Chinese Academy of Sciences spokesman said only that the lawsuit against Cathay was meant to protect his organisation's "rights and benefits". There are several reasons Beijing seeks an enlarged role in the economy: it fears that wealthy entrepreneurs could challenge the Communist Party and some leaders still believe the state is better at driving growth and redistributing wealth. For years, Liu seemed to be a favourite son of Beijing. He was one of the first bright Chinese students who went abroad with the blessing of then-premier Deng Xiaoping in the hope they would return to help the motherland close the gap with the West in science and technology. After earning a PhD in chemistry from the University of Wisconsin at Milwaukee in 1989, Liu collaborated with a series of state institutions, including the Chinese Academy of Sciences. His achievements included helping the government support the country's fledgling vitamin C industry. Today about 80 per cent of the world's industrially produced vitamin C is made in China. And in 1997, when Liu founded Cathay, it was showered with government tax breaks and other incentives. The company's initial success came in refining a manufacturing process that used microbes to turn a type of wax into diacid, a chemical building block of nylon. By 2003, Cathay says, it was the only company in the world making large quantities of polymer-grade diacids through biofermentation. Outsiders support that claim. Today, Cathay produces 13,000 tonnes of diacid a year - about half the world's industrial output. Along the way, Liu acknowledges, he probably made some enemies. He began making public accusations of corruption and scientific fraud in state-run industries and of government meddling in private companies. Beyond Liu's impolitic complaining, legal experts say, his biggest mistake may have been failing to protect his technology. Liu let a team of crucial employees depart a few years ago - and simply ignored the exodus. In its lawsuit, Cathay contends that the theft of its manufacturing designs took place in 2008. That was after Wang Zhizhou, deputy general manager at the company's diacid manufacturing plant, in Shandong province, decided to resign. Wang could not be reached for comment. But former colleagues say he had complained about being passed over for the top position at the Shandong plant and was dissatisfied with his US$1,500-a-month salary - about half what he could earn elsewhere, several experts said. Cathay's lawyers say Wang left with six other workers and, along with Chen Yuantong, a retired scientist from the Chinese Academy of Sciences. formed Hilead. Chen, now Hilead's chief scientist, denied Wang's departure from Cathay involved any theft of trade secrets. He said Cathay should have tried harder to retain Wang. A co-founder and the initial financial backer of Hilead was Cao Wubo, an entrepreneur with strong ties to the Shandong government who had already turned a military pharmaceutical maker into a Nasdaq-listed company. According to court papers, Cao said in early 2009 that Hilead had promising technology and deserved strong government support. He got it. In May 2009, the Shandong party secretary - one of the nation's most powerful leaders - helped put the project on the fast track. With the Academy of Sciences blessing Hilead, the China Development Bank agreed in 2009 to lend it US$300 million and last year Hilead opened its huge biotechnology plant making its own diacid. Hilead quickly began offering its products to big purchasers of nylon components, including Dupont, and promised to slash prices to compete with the market leader, Cathay, according to court documents. Hilead quickly acquired an estimated 10 per cent share of the global market. "They had called all our clients and claimed to have the world's best technology," Liu said. "That was the first time we heard about them." Only after filing his lawsuit earlier this year did Liu realise the forces he was up against. Tapping his own government ties in the city of Jining, where his diacid factory is located, Liu persuaded the local courts to authorise a police inquiry. In September, a court sent officers to Hilead's factory in Laiyang to investigate whether the company had copied Cathay's production techniques. But when the court officers arrived at the factory gate they were told that Beijing had designated Hilead a national security interest. No outsiders could enter the complex. "Personally, I will not give up on this dream," Liu said. "I'm Chinese, you know, so the Chinese government should want me to contribute. We're pioneers. If the Chinese government does not allow me to do this, I will find another place."

A slowdown in the strengthening of the yuan against the US dollar is not necessarily a bad thing, according to a government official who says currencies are not a one-way street. "It is always good for the market to have two-way trading," said Secretary for Financial Services and the Treasury Chan Ka-Keung. "It's normal for markets to have some participants who think the yuan will rise, while others expect it to go the other way." Some bankers are now forecasting that the yuan will slow its gains against the US dollar in 2012, but Chan said this would not hurt Hong Kong's ambitions to become an offshore yuan trading centre. "If the yuan only went up and up, it would be hard for companies to choose to settle their business in yuan," he said. Likewise, for companies wanting to issue yuan-denominated bonds, a continually rising yuan against, for example, the US dollar, would be a concern, because currency appreciation would mean the issuer of the bonds had to repay more in US dollar terms when it matured, he said. Beijing still has capital controls and the yuan is not yet fully convertible, but the mainland has been easing its currency regime. Since mid-2009, Beijing has allowed selected companies to settle cross-border trade in yuan instead of US dollars in a bid to boost the international status of the currency. Further relaxation followed last July, when Beijing allowed issuance of yuan bonds, and the launch of yuan funds and yuan insurance policies which have been popular with investors betting on a rising yuan. The currency has appreciated more than 20 per cent since 2004. But analysts predict the rally may end. Credit Agricole last week revised down its forecast for yuan appreciation to 3 per cent next year, from 5 per cent earlier, on the assumption of 8 per cent mainland economic growth and 3.4 per cent inflation for China next year. Andrew Fung Hau-chung, executive director and head of treasury and investment at Hang Seng Bank (SEHK: 0011), said the US dollar would likely rise next year as the European debt crisis prompted investors to flee the euro. "A stronger US dollar would mean the rate for the appreciation of the yuan would slow down," Fung said. "The yuan may well be flat against the US dollar next year." Brokers said this would cut down investors' interest in trading yuan products, which might affect some listed companies' interest in issuing yuan-denominated shares. 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 lacklustre market debut, down 9.35 per cent on its April launch. Yuan bonds have had a better reception, with 99.1 billion yuan (HK$121 billion) worth of "dim sum" bonds - yuan-denominated bonds issued outside China - issued in the city in the first 11 months of the year. That is nearly three times the 35.8 billion yuan issued last year.

South China travel site Sanya, the only Asian stopover for Volvo Ocean Race 2011-2012, has prepared well for the sailing event, slated on February 4-19. The activities including opening and welcoming ceremony, Lantern Festival banquet, award distribution ceremony, stopover city mayor forum, in-port race, farewell dinner party and departure ceremony. Except for the race activities, there will be orchid and rose exhibition, housing exhibition and other shows. 

Liu Ligang, head of Greater China economics at Australia and New Zealand Banking Group, said on Dec. 7 that the RMB exchange rate against the dollar has been lower than the central parity rate set by the central bank for six consecutive days, indicating that the recent exchange rate fluctuations have resulted from pure market forces. The sharp drop in the RMB's value in recent days is more of a boon than a bane and can have long-term positive effects on RMB internationalization and the Chinese economy. Liu believes that the recent drop in the RMB exchange rate against the U.S. dollar was mainly caused by three factors. The first factor is a modest capital outflow from China in recent days. According to statistics from the central bank, China's foreign exchanges that hedge capital inflows recently decreased, indicating a modest capital outflow. The second factor is the recent appreciation of the U.S. dollar. Under the influence of market forces, certain investors are selling off their RMB assets to buy dollar assets, leading to a major reduction in the RMB appreciation pressure. The third factor is the European debt crisis. Due to the crisis, RMB appreciation is losing momentum, and the majority of investors believe that the RMB exchange rate would drop, so the RMB exchange rate has hit the lower limit of the floating range set by the central bank for several consecutive days.

American-style school bus put into use in east China's Shandong - The Kangle Kindergarten in Yantai on Saturday put into use an American-style school bus, which is equipped with GPRS positioning system, stop signals, special seats for school children and other devices to ensure its safety. 

A sculpture of Daniel Dela Cruz is displayed at an exhibition in Hong Kong, south China, Dec. 10, 2011. Filipino artist Daniel Dela Cruz brought along 21 pieces of artworks made of brass and lead, reflecting women's characters of strength and tenderness.

Hong Kong*:  Dec 12 2011 Share

The cost of Hong Kong airport's midfield expansion project has risen by nearly 30 per cent to HK$9 billion following a number of changes that increase the size of an originally planned new concourse and improve the airport's green features. The groundbreaking ceremony for the project, which will add a taxiway, 20 flight parking stands and a midfield concourse by 2015, was held yesterday. Secretary for Transport and Housing Eva Cheng said the project was only a mid-term strategy that would allow the airport to handle air traffic growth until 2020, after which the airport would need a long-term plan, such as a third runway, to cope with any further growth. "Any delay in infrastructure projects is likely to increase the costs," Cheng said. "I hope [the midfield expansion] project will be finished on time, within budget, and in keeping with the safety requirements." Stanley Hui Hon-chung, the chief executive of the Airport Authority, said the project's construction cost jumped to HK$9 billion from HK$7 billion because of inflation and changes in the original expansion plan. "We have increased the size of the building and the apron areas, we extended the length and the scope of the automated people movers between terminals and we also added a number of green initiatives which allow us to recycle up to 60 per cent of the waste during the construction period," Hui said. An airport's apron area is where aircraft are parked, unloaded or loaded, refuelled or boarded. About 20,000 LED lightings will be used in the new concourse, along with daylight sensors, solar shading and more than 1,200 square metres of solar panels on the building's rooftop. The new building is expected to lower energy consumption by more than 20 per cent. Seawater will be used to flush toilets while rainwater and dirty water will be recycled for cooling purposes in the airport's air-conditioning system. The project will boost the airport's handling capacity to about 70 million passengers and 6 million tonnes of cargo a year. However, by 2030, the number of passengers is expected to reach 97 million and cargo tonnage swell to 8.9 million tonnes. The Airport Authority has finished processing the public's view on the third runway project and will submit a recommendation to the government before the end of this month. People with knowledge of the matter said the report found that most respondents to the consultation were in favour of building the runway. Hui also said air cargo volume continued to record a slight year-on-year drop last month, but the rate of decline is narrowing and he believed that growth would return eventually.

Hutchison Whampoa (SEHK: 0013)'s health and beauty chain Watsons plans to triple the number of its stores on the mainland to 3,000 in the next five years as it revs up expansion in a mammoth but competitive consumer market. Watsons, which opened its 1,000th mainland outlet in Shanghai yesterday, will also make inroads into an additional 150 cities and have a presence in 300 cities by 2016, said Christian Nothhaft, chief executive of Watsons China. "We've got a lot of logistics and management experience in China," Nothhaft said. "We are a big fan of the Chinese economy and we are fairly confident." The retail chain controlled by Hong Kong tycoon Li Ka-shing has doubled the number of its stores on the mainland over the past two years, adding 250 outlets each year. Under the new expansion plan, it will have 400 openings each year to reach its goal. The fast pace of store openings also reflects the mainland's increasing significance to Watsons. To date, the number of outlets it has there represents one-tenth of its global total - some 10,000 worldwide. Watsons would not provide details about its further expansion on the mainland, saying the investment would amount to several hundred million yuan, including spending to upgrade existing stores and its logistics network. Admitting that Watsons' pharmacy business on the mainland accounted for only a small portion of its sales, Nothhaft said the retail chain would look to further expand the service when the "legal framework changes". An increasing number of young mainlanders prefer to buy over-the-counter drugs at shops rather than in hospitals, but the pharmacy business is now heavily regulated, with state-owned companies playing a dominant role. The retail sector has been a bright spot for the mainland economy since the central government cut spending on infrastructure projects, following the stimulus package. Retail sales grew 14.8 per cent to 15.7 trillion yuan (HK$19.15 trillion) last year. "Obviously, there's more competition than ever before," Nothhaft said. "We are ahead of our competitors and we try not to be driven by competitors." Watsons targets shoppers aged between 24 and 30 on the mainland. It would add 50,000 jobs on the mainland next year, taking its workforce there above 220,000, Nothhaft said.

The Hong Kong government should be ready with a range of contingency measures if the global economic outlook continues to worsen, the International Monetary Fund said yesterday. While Hong Kong still enjoyed relatively strong income growth and low unemployment, fallout from the European sovereign debt crisis could crimp funding sources for banks, weaken exports and slow economic growth, the Washington-based bank said in a report. It forecast that the city's economic growth will fall to 4 per cent next year from 5.7 per cent this year and 7 per cent last year, and warned that a recession could not be ruled out. "Given the uncertainty about global growth prospects, a recession next year is a clear and tangible risk for Hong Kong," Nigel Chalk, the IMF's mission chief for China and Hong Kong, told the South China Morning Post (SEHK: 0583). Banking giant HSBC has also warned of the risk of recession. In October, it cut its growth forecast to 5 per cent from 6.5 per cent for this year, and to 4.5 per cent from 5.4 per cent for next year. An economy is technically in recession if quarter-on-quarter growth falls for six months. Hong Kong narrowly escaped a recession, with its economy growing 0.1 per cent in the third quarter from the previous three months, although it grew 4.3 per cent when compared to the year-earlier quarter. Economic output contracted by 0.4 per cent in the second quarter from the first three months. The IMF forecast that Hong Kong's net export growth would slow to 0.1 per cent next year from 0.4 per cent this year and 0.3 per cent last year, on weak overseas demand. Sean Craig and Andre Meier, theIMF's resident representatives in Hong Kong, said the main impact of the European sovereign debt crisis on the city would be higher US dollar funding costs, especially at European banks that faced a credit crunch in their home market. That meant they would have to reduce lending in Asia, potentially cutting new credit sharply, but Asian rivals would eventually absorb their market share. To pre-empt this, the Monetary Authority last month required banks to more closely match the duration of their loan portfolio with funding sources. Still, the government should consider adopting various contingency measures, the IMF said. "If the global outlook worsens significantly, fiscal stimulus, extraordinary support to the financial system, and a roll-back of recent macro-prudential measures linked to the property market could be considered," the IMF said yesterday. These include tax cuts, direct money transfers to households, using resources of the government's Exchange Fund to shore up banks' capital, and reintroducing a guarantee of bank deposits. Other measures would include scrapping extra stamp duty imposed for quick resales of property and a tightening of limits on loan-to-value and debt-to-disposable-income ratios for home loans. Financial Secretary John Tsang Chun-wah on Thursday told Bloomberg the government would take "counter-cyclical" measures in the housing market if the economic environment worsens. A government official said that was a reference to tighter loan-to-value ratio limits imposed last year. The same day, housing secretary Eva Cheng said special stamp duties imposed for two years might be reviewed earlier than planned. A spokesman later said she was merely restating existing government policy.

The tradition of singing Christmas carols is alive and well in Hong Kong. And it has been helped by the Kowloon Shangri-La Hotel, which invited the Singapore International School choir to sing at its tree-lighting ceremony for the fifth year running. The 50 pupils in the choir filled the hotel's halls with Christmas classics along with a rendition of Jingle Bells in French. "We want to celebrate Christmas in a traditional way," said Wolfgang Krueger, the hotel's area general manager. In this season of giving, nothing beats the tradition of helping the less fortunate. And the Kowloon Shangri-La will be raising money to help Operation Santa Claus (OSC) for the eighth year. It is selling personalised glass Christmas tree baubles and colourful glassware such as coasters and business-card holders, handmade by glassmaking artists from the Rainbow Mosaics studio. "We hope that by working with such an established charitable organisation as OSC, we can encourage our guests to donate because they know where their donations ultimately go," Krueger said. The hotel will also extend the Christmas cheer by hosting a glass bauble painting workshop for children and their families from the Po Leung Kuk Tin Ka Ping Harmony Land for Families - a community centre that brings the young and old together - next Sunday. Meanwhile, the Katterwall music group and law firm Linklaters also organised their annual carolling events to raise funds for OSC, and both saw big crowds gathering to join in the festive fun. About 250 people congregated in the Lan Kwai Fong amphitheatre last Monday with Katterwall to sing classics such as Hark the Herald Angels Sing and children's favourites like Frosty the Snowman. This year - the fifth time the music group has donated to OSC - also saw the addition of a brass band. "Thankfully, none of our neighbours complained," joked Katterwall general manager Celia Leung. The group raised money by selling carol booklets. "Because our carollers are becoming more familiar with this event, they know to bring a tablecloth to put on the ground for the whole family to sit on. And we even brought accessories to decorate the amphitheatre," Leung said. Long-time OSC supporter Linklaters led about 400 people in a carol service with other solicitors on Thursday at St John's Cathedral, a tradition that began in 1992. This year, the number of participating law firms doubled to 20 and all proceeds from tickets went to OSC. Jointly organised by the South China Morning Post (SEHK: 0583, announcements, news) and RTHK, Operation Santa Claus has supported more than 100 charities since it was founded in 1988. This year, it will raise money for 16 Hong Kong charities.

The government is under pressure to do a U-turn and increase commercial space along the new Central waterfront. Consortiums seeking to develop the waterfront say the limited commercial space, and conditions attached to the project, make it financially unviable. The government and the Harbourfront Commission recently began negotiating with potential bidders to develop the waterfront. People familiar with the situation said that, because of the concerns these consortiums have raised, the Development Bureau is considering ways to make the project more attractive. The options include injecting public money, increasing the amount of commercial space and extending the period of waterfront land leases to give the winning bidders more time to recover their costs and make a profit. The waterfront project comprises two sites. The successful bidders will be asked to design, build and operate facilities there. They will not be charged a land premium - the sum developers of a site usually pay, representing the difference between its present and developed value - but after an agreed number of years will have to pay a share of revenue to the government. The bureau also wants developers bidding for the sites to include non-governmental organisations and social enterprises in their consortiums. With negotiations at an early stage, none of the consortiums has spelled out specific objections to the government's plans. However, developers that expressed interest in bidding during a marketing exercise by the bureau in May said they would not be financially viable. They also questioned the uneven distribution of restaurants and shops between the two sites. While up to 7,500 square metres of a 9,300 square metre site north of City Hall in Central can comprise shops and restaurants, only 480 square metres of a much bigger, 9.9 hectare site stretching from the Star Ferry pier to the Convention and Exhibition Centre in Wan Chai is set aside for restaurants and fast food shops. No space in either area should be given over to global brands, the bureau says. The developers' claims were echoed by Raymond So Wai-man, a finance professor at Hang Seng Management College, who said the government's conditions were too restrictive to attract private sector partnerships. "Incentives like paying for the infrastructure or delaying profit-sharing are necessary," So said. However, he said the public might not support such arrangements, and there could be a "political risk" if the government gave the impression it was doing favours for developers. The new waterfront has been dogged by controversy since plans were first unveiled in 2005. When the government announced the reclamation of land from the harbour for a Central-Wan Chai bypass, it said the harbourfront would be a world-class amenity. But its initial proposal - to use much of the waterfront sites for big commercial developments, dubbed groundscrapers - sparked an outcry. It initially defended the plans, with the then permanent secretary for lands, Rita Lau Ng Wai-lan famously saying: "People don't go to the waterfront if they have nothing to do there." But it issued a revised proposal in 2008, in which the amount of commercial floor space was reduced by nearly a fifth, to 260,000 square metres. Bernard Lim Wan-fung, president of the Hong Kong Institute of Urban Design, fears that increasing the commercial scale of the projects now would diminish the chances of smaller bidders winning the tenders. "The project should be run by operators from a diverse background, not just a giant developer dominating the waterfront with brand-name products," he said. Lim added that the government could always settle for a smaller share of the profits. "A vibrant waterfront does not necessarily require huge investment," he said. "A bamboo pavilion selling snacks can be very attractive if the design is creative." A spokeswoman for the Development Bureau said the government had received seven submissions from different organisations. It had commissioned a consultant to examine the project's feasibility and come up with options.

 China*:  Dec 12 2011 Share

China's central bank plans to create a new vehicle to manage investment funds worth a total of US$300 billion to improve returns on the world's largest stockpile of foreign exchange reserves, a source with knowledge of the matter said. The vehicle would operate two funds, one targeting investments in the United States and the other focused on Europe, said the source, who asked not to be named because of the sensitivity of the matter. The vehicle's goal is to make more aggressive overseas investments for higher returns, said the source along with a second, independent source, who also declined to be named. Details of the venture are still under discussion, but key personnel for managing the venture have been agreed upon, the sources said. The investment vehicle would be affiliated with China's State Administration of Foreign Exchange (SAFE), the part of the central bank in charge of the daily management of China's US$3.2 trillion in foreign exchange reserves. One of the funds would be named Hua Mei, or China-US, for investments in the United States, and the other is named Hua Ou, or China-Europe, for investments in European markets. The style of the funds will be similar to the low-key Hong Kong-based Hua An, also known in English as SAFE Investment, said the source, through which SAFE has purchased stocks in dozens of overseas listed companies. The People's Bank of China, the central bank, was not immediately available for comment. China's leaders have said recently that they will seek investments in the real economies of the US and Europe, apart from their routine investments in government debt. The second source said the new venture would likely be based in Shanghai and may also sell yuan bonds in the domestic market. "The company will issue yuan bonds," the source said. "Then it can use the yuan to buy foreign currency from the central bank or even commercial banks for overseas investment." When China created the China Investment Corporation (CIC), the country's sovereign wealth fund, in 2007, the Ministry of Finance issued 1.55 trillion yuan (HK$1.89 trillion) in special yuan bonds to swap yuan for US$200 billion worth of foreign currency from SAFE as the initial batch of funds for CIC to manage. A similar arrangement is expected for the new vehicle. CIC, which operates independently of the central bank, recorded a 11.7 per cent investment return last year. It has been applying for new funds from SAFE as it has developed its portfolio. In a public speech in April, Chinese central bank governor Zhou Xiaochuan said that China may set up new ventures to manage its foreign exchange reserves. "Don't put all your eggs in one basket," Zhou said. "One option is to create some new ventures to try new investment styles and fields."

Beijing will make the use of official credit cards for major purchases mandatory for officials from next year. The move is a bid to curb the abuse of public money and assuage public anger over corruption. The Ministry of Finance said on its website that 16 categories of business expenses will be required to be settled by official credit cards in order to introduce greater transparency. The categories include business travel and entertainment expenses, petrol and maintenance expenses of official cars, the procurement of office equipment and utility bills. From January 1, all government ministries, departments and party organisations must make credit card payments compulsory for such expenses, the ministry said. Although the official credit card system was introduced in 2007 to counter the lack of transparency in expenses payments, it was not mandatory and not widely implemented. However, cash payments will still be allowed for expenses less than 200 yuan and for other payment categories that cannot be settled by cards. Many mainlanders question officials' indulgence in lavish banquets, expensive trips abroad, extravagant gifts and the use of official limousines. Professor Hu Xingdou , an economist at the Beijing Institute of Technology, hailed the move as an important step to curb the waste of public funds. However, Hu said a stringent approval process was also required. "Centralised [credit card] payments will help facilitate the supervision of outgoing funds, but the monitoring of how the money is spent should be subject to stringent approval," Hu said. A sceptical internet user yesterday posted a commentary online: "If people are going to abuse public funds, who would care about the credit card restriction? The key is to identify who are enjoying those privileges and who are approving them." Beijing has also launched other measures to rein in widespread corruption among officials in recent months. Earlier this year, the State Council ordered 108 central government agencies to report their expenditure details on overseas travel, official cars and banquets - the most frequently cited areas of government spending abuse. Premier Wen Jiabao said in March that all government agencies must cut spending in those three areas and publicise the details of their expenditure. The General Administration of Customs said it spent 503 million yuan (HK$616 million) on overseas trips, cars and banquets last year, with 90 per cent spent on the purchase and maintenance of vehicles. The State Administration of Taxation said it had spent nearly 2.17 billion yuan on overseas travel, cars and banquets last year, with 665.87 million yuan spent on banquets to collect taxes.

Chinese telecommunications- equipment maker Huawei Technologies Co. said it will scale back its business in Iran, where the company provides services to government-controlled telecom operators, following reports that Iranian police were using mobile-network technology to track down and arrest dissidents. Shenzhen-based Huawei will "voluntarily restrict its business development there by no longer seeking new customers and limiting its business activities with existing customers," according to a statement Friday on the company's website. It said the company was making the move due to the "increasingly complex situation in Iran." Company spokesmen declined to elaborate.

Responding to a request from the United States for a World Trade Organization (WTO) panel to settle a dispute over duties on US poultry, Chinese experts said that China is aiming to provide a level playing field for domestic businesses, while the US government's move is aimed at winning votes from farmers in next year's presidential election. "Chinese poultry businesses have been seeking a fair and just environment because the large volume of cheap, imported poultry products from the US has seriously damaged the domestic industry, which is unfair to Chinese enterprises. Domestic poultry businesses are now enjoying a better environment after increasing their market share last year," said Ma Chuang, deputy secretary-general of the China Animal Agriculture Association. On Friday, Bloomberg News reported that the US Trade Representative Ron Kirk had asked the WTO to set up a panel to settle the dispute with China. In 2010, China imposed a five-year duty of as much as 105.4 percent on US broiler-chicken products claiming they were sold in China below market price. The move was China's first anti-dumping and anti-subsidy claim against the US. Kirk said China had not followed the correct WTO procedures and the move had hurt about 300,000 farmers in the US, Bloomberg reported. The negotiations, the first step in the case, ended in October but reached no conclusion. China imported 305,600 tons of US poultry products in the first half of 2009, a rise of 6.54 percent year-on-year, and products from the US accounted for 89.24 percent of China's total poultry imports or 10.96 percent of the domestic poultry market, according to the Beijing Times newspaper. "China's move did not violate WTO rules and the US dumping of poultry products, especially chicken feet and wings, reduced the profits of the domestic poultry industry, which is still in its infancy, and has affected the healthy development of the industry," said He Jinghua, director of the law firm, Beijing B&H Associates. Because of dietary differences between the two countries, chicken feet, which are not eaten in the US, are popular in China and "remain the main source of profit for domestic chicken farmers". He of B&H suggested that domestic poultry producers should use the time before the WTO makes a final ruling - a process that may take as long as three years - to improve and develop the industry. Yao Weiqun, associate president of Shanghai WTO Affairs Consultation Center, said the WTO may accept the US claims, but that both parties can appeal if they are not satisfied with the ruling. "The US move is, by nature, protective of the benefits enjoyed by its chicken farmers and it has a very strong political motivation towards winning votes from farmers as the US election approaches," Yao said. The poultry duty dispute may add more tension to trade frictions between the world's two largest economies. The US Department of Commerce (USDC) made a preliminary ruling on Thursday to impose an anti-dumping duty of between 5.08 percent and 26.23 percent on imports of Chinese-made high-pressure steel cylinders, US imports of which were worth $48.8 million in 2010. The USDC will make a final ruling on the matter in February.

President Obama has pinned his re-election hopes on a change of policy that threatens trade ties between the two countries Recent China-targeted initiatives by US President Barack Obama have soured Sino-US relations. At the just-concluded East Asian Summit, Obama reiterated an increased US presence in Asia and announced a stance on the South China Sea disputes that is at odds with the diplomacy of Beijing on the issue. In his preceding visit to Australia, he also unveiled a plan to station 2,500 US troops in the country within the next five years. These, along with the provocative remarks recently made by the Obama administration on China's renminbi exchange rate and a raft of actions that have harmed China's core interests, including an arms sales package to Taiwan, Obama's meeting with the Dalai Lama and Washington's increased anti-dumping and anti-subsidy investigations against China, have seriously affected the stable development of Sino-US economic and trade relations. Obama was once viewed by Beijing as a pragmatic US leader, as indicated by his efforts to set up the Strategic and Economic Dialogue mechanism with China and work with Beijing to tackle the global financial crisis and resolve other major global issues. However, the latest developments are an indication that there has been a change in the Obama administration's policy toward China in the face of the US' stubbornly high unemployment rate and weak economic growth. An escalation in tensions between the US and China is by no means wise at a time when China is the biggest holder of US national debt and its fastest-growing export market. A strengthened economic and trade relationship with China will undoubtedly help the US create more jobs and expedite the pace of its much-needed economic recovery. Although it has managed to pull out of a lingering recession, the US economy has failed to achieve a sustained recovery. The US' current unemployment rate remains at 9 percent and the Organization for Economic Cooperation and Development expects it to stay at around 8.9 percent next year. Plagued by such a high jobless rate, the US' economic growth rate in the third quarter, the most robust among this year's first three quarters, was only 2 percent. According to a September prediction made by the International Monetary Fund, the world's largest economy will have a growth rate of only 1.8 percent next year and will be unable to effectively withstand the effects of any major risks from the outside world. As US pollster Bill McInturff has observed, the average US consumer confidence index is usually 95 when a president wins re-election and 76 when losing the re-election contest. In November, the index was only 55, indicating Obama's prospects for re-election look particularly gloomy. Obama has vowed to double US exports within five years, but to realize such an ambitious plan, an average annual 15 percent growth rate is needed. But China has been the only market to which the US has maintained such a high export growth since 2000. Such a fast US export momentum has continued into this year, 18.3 percent in the first nine months. Washington should acknowledge the importance of a stable external market to the realization of such a target. It should know that stronger export restrictions on China will worsen the current international trade environment and make the goal unattainable. The current policy of containing China being pushed by the US Congress and the Obama administration, if kept unchecked in the future, will inevitably cause huge damage to the otherwise healthy advancement of relations between the two countries and will likely bring their economic and trade ties to the brink of a trade war. The reversal of the long-established win-win trade pattern will not only damage China's interests, it will also damage the interests of China-based American transnational companies. Statistics from the US Bureau of Economic Analysis show the sales revenues achieved by the subsidiaries of US' transnational companies with direct investment in China increased to $243.77 billion in 2009 from the only $3.23 billion in 1994. In the context of deepening globalization, the significance of the economic and trade ties between the world's two biggest economies goes far beyond the bilateral scope. Thus, a trade war between the two countries would have wide-ranging global effects. Sino-US cooperation has proved beneficial to both sides and thus the two countries should try to extricate bilateral economic and trade ties from any restrictive political factors. Antagonism and unilateral threats will do no good to the highly interdependent economic and trade ties between the two countries. Politicians in Washington should look at the US' economic and trade ties with China from a long-term, and even self-serving perspective, and try to curb their blame China tendencies. The author is a researcher with the Chinese Academy of International Trade and Economic Cooperation

Food giants begin to restructure in China - Nestle SA will suspend retail sales and cease operations at an ice cream factory in eastern China at the end of December, according to a company statement. The global food giant Groupe Danone SA has suspended production at a Shanghai plant and Nestle SA is closing one of its three ice cream factories on the Chinese mainland. The moves are part of the companies' separate strategies to restructure their business models in the Chinese market. "We've suspended production at a yogurt factory in Shanghai and we're now making internal adjustments to ensure that we will soon have a more focused market target in order to provide high-quality products for Chinese consumers," said Xu Jie, a spokesperson for Danone Dairy China. Danone will continue yogurt production at its Beijing factory and is refocusing its efforts to provide more sustainable development of fresh dairy products in China, according to a company statement emailed to China Daily on Friday. "As the next step, we will focus more on major cities in China like Shanghai and Guangzhou by adopting a more focused approach to building 'Bio', our yogurt brand, as a strong value-added brand," said Xu. Experts say China's dairy market has been controlled by domestic brands with major shares and the networking resources for market expansion. That has caused a slowdown in the development of foreign dairy brands. "That foreign brands like Danone have failed to compete with local brands like Yili and Mengniu in China is quite obvious, because the domestic brands have a wider networking system and higher market demand," said Zhang Guonong, a dairy expert and professor from the Institute of Food at Jiangnan University in Wuxi. The domestic company Inner Mongolia Yili Industrial Group Co has seen its share of China's 30 billion yuan ($4.7 million) ice cream market increase to 17 percent over the past five years. China Mengniu Dairy Co Ltd's share has risen to 15 percent over the same period, while the share held by Nestle has remained at around 3 percent, according to figures from the researcher Euromonitor International, as reported by the Financial Times. "It's very hard for foreign dairy brands to enter the domestic market in China. Their high-quality products and higher prices have resulted in low demand for their products and failed to generate enough profit," said Yan Qiang, an analyst and co-partner at Adfaith Management Consulting Inc. As part of its ongoing efforts to develop the ice cream business in China, Nestle will continue to build on its success in the northern and southern regions, maintaining the business in hotels, restaurants and cafes. It will suspend retail sales and cease operations at an ice cream factory in the east of the country at the end of December, according to Nestle's statement. Herv Cathelin, the global head of Nestle's ice cream business, said that the closure of the Shanghai plant was caused by a failure to meet domestic expectations and that changes will be made to overhaul the business model, the Financial Times reported. "It's very possible that both Danone and Nestle are trying to upgrade in China to focus on higher-end products to meet the demand from elite consumers instead of competing with local brands," said Yan. On Tuesday, Nestle received regulatory approval from the Chinese government to buy a 60 percent stake in the Chinese candy maker,Hsu Fu Chi International Ltd. "Nestle's recent strategy of buying shares in Yinlu Food Group and Hsu Fu Chi International indicates a new trend, where foreign food brands make money directly through successful local companies, as the next step in their investment in the Chinese market," said Yan.

Hong Kong*:  Dec 11 2011 Share

A worker sets up his stall at the fair, organised by The Chinese Manufacturers' Association of Hong Kong, which runs until January 2. To lure people outdoors, exhibitors will provide warm food and heaters as the Hong Kong Brands and Products Expo kicks off today. The expo, featuring 880 booths and 400 exhibitors, runs until January 2 at Victoria Park. Apart from the usual bargains, heaters may become a hit item, with the temperature dipping to 12 degrees Celsius today. One heater standing no taller than a sheet of A4 paper would be launched at the fair, said Alan Tsui King-hei, sales and promotion manager for appliance-maker German Pool. "Although it's small, it can warm up a room to 39-40 degrees Celsius after running for an hour or two." Five thousand will be on offer at a price of HK$398, but Tsui expects them to run out in two weeks as the mercury plunges. Another hot item is an electric steamer that takes 10 minutes to steam a pot of rice instead of the usual 25 minutes in a regular rice cooker. The kitchen appliance, priced at HK$980, is only the size of a thermal flask yet cooks rice in the time that previously was only possible in professional restaurant steamers the size of a wardrobe and costing thousands of HK dollars. Due to the proximity of Christmas to Lunar New Year, which falls in January, some exhibitors will also promote Lunar New Year products. Despite rising food costs, HK$1 bargains will still be available. Cooked abalone will be sold at that price to the first 50 people in the queue at the stall of Super Star restaurant group.

TVB general manager Stephen Chan speaks to the media about his resignation. The announcement follows that of TVB founder Run Run Shaw, who will step down from the board at the end of the year. TVB's Chan says resignation not linked to reshuffle. Executive denies he's forming his own company and says he will focus on study and exchange trips to US - TVB (SEHK: 0511)'s flamboyant general manager Stephen Chan Chi-wan yesterday confirmed his resignation, insisting that the decision had nothing to do with the recent management reshuffle at the broadcaster. Chan, 52, said that he wanted to take time off to focus on study and exchange tours to Silicon Valley and Las Vegas. He denied rumours that he was forming his own TV production company. "It is not related to any management reshuffle," Chan said, two days after TVB founder Run Run Shaw announced his resignation from the board at the age of 104 at the end of this year. Chan said he was pleased that executive deputy chairman Norman Leung Nai-pang would replace Shaw as executive chairman on January 1. TVB said it respected Chan's decision, saying that it appreciated his years of service. It said his resignation would not affect operations because the station was run under a well-structured system. The broadcaster underwent a change of ownership earlier this year. In March, Shaw Brothers (Hong Kong) sold its 26 per cent stake to an investor group formed by Charles Chan Kwok-keung, Cher Wang and Providence Equity Partners. However, Mona Fong Yat-wah, Shaw's wife, remains as TVB's deputy chairwoman and managing director. The Shaw Foundation and Fong together hold 3.9 per cent of TVB shares. Rumours of Chan's resignation have been brewing since his investigation by the Independent Commission Against Corruption in 2009. He was suspended from duty in March that year for nine months before being acquitted in September. It is understood that Chan tendered his resignation at the end of last month, and he is expected to leave his job in April. Chan, who joined TVB in 1994, helped resolve prolonged licensing disputes with five record member companies of the Hong Kong Recording Industry Alliance. He also hosted the talk show Be My Guest, which featured interviews with celebrities and politicians in restaurants. Chan did not rule out the possibility of returning to TVB. "If I am still interested in working in the TV industry after my study trips, TVB will be the first place that I'll apply to for a job," he said.

TVB (SEHK: 0511) general manager Stephen Chan Chi-wan, who was cleared of corruption and fraud charges in a high profile case in September, confirmed on Friday he had resigned from the television station. Chan told reporters he would go travelling overseas. He said he had submitted his resignation to the station’s board of directors and was now awaiting a decision on the day he would leave. Chan said his decision was not related to recent personnel changes at the broadcaster’s senior management and he had planned to go travelling for some time. Chan said he had no plans to set up his own company or join other broadcasters. He said TVB would be his first choice if he returned to the media industry. The 52-year-old Chan, his former assistant Edthancy Tseng Pei-kun and TVB marketing chief Wilson Chan Wing-shuen were found not guilty of five fraud and corruption charges brought against them in the District Court in September. At the end of the trial, a judge criticised his TV station for its poor internal management. Prosecutors had accused Stephen Chan of receiving HK$112,000 behind his employer’s back to perform in a live talk show. Chan and Tseng also allegedly concealed sponsorship arrangements in another book signing event and cheated, out of their commissions, five TVB stars, who had supported Chan free of charge at a show held in a shopping mall.

Pressure is building on Hong Kong banks to rein in lending and tuck away excess cash in a move prompted in part by European lenders retreating from the region as they deal with a debt crisis back home. The implications are serious for the future earnings of banks like Dah Sing (SEHK: 0440) Bank and Public Financial Holdings (SEHK: 0626), and for Greater China corporates seeking credit lines to keep operations running. With Hong Kong’s currency pegged to the US dollar, funding costs are expected to rise further as its main financial institutions keep a tighter grip on their money at a time when companies need it most. The pullback in loans and deposits from French and other previously aggressive European lenders is the latest blow to the city, which is already facing pressure from expectations of a Chinese slowdown and a property correction. “The overall downturn in Hong Kong is being exacerbated by the European banks deleveraging,” said Paul Schulte, head of financial research and strategy at CCB (SEHK: 0939, announcements, news) International. The worry among companies looking to borrow is that Hong Kong lenders, faced with rising loans and falling US dollar deposits, are no longer willing to assist corporates in need of new credit to keep business humming. “In the US dollar market, we’re already seeing pressure on the project financing front, whether it’s for aircraft or ships or infrastructure,” said Emmanuel Pitsilis, a director at McKinsey & Company. Banks around the region are facing similar pressure, although Hong Kong stands out in particular because it lent generously to fast-growing Chinese companies looking to borrow in the past two years when China was tightening monetary policy. Those factors pushed up loan to deposit ratios, as did soaring demand for Chinese yuan and a booming real estate sector paid for with cheap credit. LDR ratios, when they hit 100 per cent, means a bank is lending as much as it’s taking in. For small banks, the 100 mark can be a red flag because it means they have to raise funds through other ways such as debt issues to finance new loans. Loan-to-deposit ratios for the Hong Kong dollar stood at 85 per cent at the end of October, hovering around seven-year highs, according to data from the Hong Kong Monetary Authority. Worst-hit by the impending crunch is likely to be the smaller and mid-sized Hong Kong banks such as Dah Sing Bank and Public Financial Holdings, whose margins have been under pressure the past few years. For example, Public Financial’s operating profit margin fell to 32 per cent at end-June from 36 per cent at the end of last year. Other small and mid-sized banks are also facing the same problem. “The smaller banks just need to gather more deposits right now,” said Dominic Chan, a financials analyst with BNP Paribas in Hong Kong. “Loan growth will be restricted as long as they don’t get new deposits, which will continue to hit margins.” Best-placed to pick up the slack left behind by any departing Europeans would be the two city’s two biggest retail banks, HSBC and Standard Chartered, which have lower local currency LDRs as compared to their smaller rivals. BNP Paribas’ Chan estimates HSBC and StanChart’s Hong Kong dollar loan-to-deposit ratio at below 60 per cent. The two banks do not disclose their LDR numbers for Hong Kong. “If anyone leaves, the local guys who can afford it will come in and pick up some of the slack,” said Jim Antos, an analyst at Mizuho Securities in Hong Kong. “That’s going to be good for the big guys to pick up market share.” On a more macro level, credit as a percentage of GDP in Hong Kong stood at 200 per cent at the end of last year, according to World Bank figures, its highest in over a decade and surpassing levels seen just before the Asian financial crisis. By comparison, regional rival Singapore clocked in at 86 per cent. Singapore’s banks now seem healthier than their smaller Hong Kong rivals. For example, Southeast Asia’s largest lender, DBS , had a Singapore dollar loan-to-deposit ratio of about 62 per cent, Barclays Capital estimates, almost 25 percentage points lower than the average Hong Kong number. Other Singapore banks, such as UOB, also have similarly low local currency loan-to-deposit ratios, giving them the ability to ramp up their US dollar lending when others are pulling back. In both cities, European banks account for over 15 per cent of syndicated loans available. “What we’re seeing right now is that Hong Kong banks are afraid of being part of a syndication,” said Schulte at CCB International. “They don’t want to be the ones left holding the bag.” This has set off alarm bells at Hong Kong’s de facto central bank, the Hong Kong Monetary Authority. In November, it warned banks to set aside more in reserves to beef up what it called “countercyclical measures.” To appease the regulators, banks have pushed up deposit rates to attract fresh cash. HSBC, Hong Kong’s largest retail bank, has begun offering rates of 1.9 per cent for a two-month time deposit, almost 10 times that of the interbank lending rate of the same tenor. The higher deposit rates have, in turn, pushed up mortgage rates and hit the other lifeline of Hong Kong’s economy, the real estate sector. If mortgage rates rise, first-time buyers may be priced out of the market, which would then have a ripple effect on the secondary real estate market, Barclays Capital said in a note last month. “The cheap corporate credit enjoyed by Hong Kong developers is ending,” the brokerage’s analysts Andrew Lawrence and Tom Quarmby wrote. “Higher funding costs are clearly a negative for the property sector.”

Sing Tao News chairman Charles Ho yesterday. He said candidates for chief executive must be able to stand up to the media's scrutiny. Sing Tao News chairman Charles Ho Tsu-kwok yesterday said he would not ask chief executive candidate Leung Chun-ying to quit as a non-executive director of the media group despite Leung saying the group was using the press to smear him. Ho said he did not doubt Leung's integrity. "Otherwise, I would not have invited him to sit on the board." The drama took a new twist yesterday as Ho called an unscheduled press conference at which he attacked Leung and questioned his ability to govern Hong Kong. Ho dismissed Leung's accusation that the Sing Tao group had been conducting a smear campaign against him, calling the allegations "total nonsense". He said he had reread news articles carried by his group's Sing Tao Daily and Eastweek magazine which he thought had upset Leung, and found nothing wrong with them. Ho said the reports about Leung's business losses - and about a judge rejecting Leung's testimony in court in 2002 - were all based on correct information. He accepted that the choice of words in the headline of one Sing Tao Daily report last month "might not have been the best". It suggested Leung "lost all the money in his pocket in one go" after a business failure. "If [Leung] thinks we have made mistakes, he should have told people [what the mistakes are]. And he should have explained ... why he says his financial loss was not total. But instead he criticises my staff," said Ho. He also denied that his group favoured Henry Tang Ying-yen, Leung's rival in the election race. "My relations with Leung are better than those with Tang," said Ho. "When you run in the chief executive election, you should be prepared to accept the media scrutiny and face reporters' questions, however difficult they may be." Ho, a member of the standing committee of the Chinese People's Political Consultative Conference, said it was too early to say if he would vote for Leung in the election. Chinese University political analyst Ma Ngok said the dispute between Ho and Leung should not be viewed as a split in the pro-Beijing camp. "It is rather normal that different media would take different sides," he said. Meanwhile, lawmaker Frederick Fung Kin-kee of the Association for Democracy and People's Livelihood yesterday declared he would seek nominations to contest the chief executive election. He is the second pan-democrat to enter the race, after Democratic Party chairman Albert Ho Chun-yan.

Compressed air bottles and pellets in trees on Yeung Chau raised concern for black kites. Fears are mounting for one of Hong Kong's biggest populations of black kites amid reports that war-games enthusiasts are shooting at them with air guns on a small island off Sai Kung town in the New Territories. Conservationists are getting reports that a colony of the birds of prey - Hong Kong's third largest - on Yeung Chau, 500 metres off Sai Kung pier, are being targeted by "weekend soldiers" who flock to the island. They say the uninhabited island should be designated a nature reserve. War gamers are not new to the island, but recent developments have fuelled concerns among conservationists who have been closely monitoring the raptor population. "There are new plastic pellets embedded in many of the trees," said Ken Ching See-ho, from Eco-Education and Resources Centre. "A path has been opened up recently that allows war-game players to get closer to the forest where the raptors stay. We have received reports that the birds are being targeted." Ching suspects war gamers are using powerful air guns because compressed air bottles have been found shot through. "It is hard for us to tell if the cases of damage were organised vandalism," he said. Yeung Chau, a 50-hectare island, is believed to be home to Hong Kong's third-largest population of black kites after Magazine Gap and Stonecutters Island. Last month, birdwatchers counted 184 black kites there, about 30 higher than the previous year. Most migrate south for winter from mainland China. The island is zoned for any land use. Dr Man Chi-sum, chief executive officer of Green Power, said more protection was needed for the island before it was developed. A spokeswoman for the Agriculture, Fisheries and Conservation Department said it was a criminal offence to disturb or capture wild animals, and anyone convicted was liable to a fine of up to HK$100,000 and one year jail. She said they would arrange patrols on the island too.

More foreign shipowners and maritime-related companies should be encouraged to come to Hong Kong if the territory is to develop as an international shipping hub, says the new chairman of the Hong Kong Shipowners Association. But such an effort would require a high-level, policy-driven approach from the government and close co-operation between the public and private sectors, Alan Tung Lieh-sing said in a recent interview. Tung made his comments as concern grows that Hong Kong is losing ground to Shanghai, and especially Singapore, as the destination of choice for the overseas shipping industry including owners, charterers, maritime law firms and ship finance banks. Without mentioning the regional rivals by name, Tung said "it would be a pity to cede the accomplishment thus far to competing locations". But one Hong Kong shipping executive, who asked not to be named, was more specific. "Using a nucleus of ship owners and ship managers, Singapore has succeeded in creating a maritime cluster that is already difficult to compete with and will only strengthen over time," he said. While Hong Kong had benefited from its strong mainland links, "not everyone wants to be close to China. Singapore is seen as more international in outlook". The executive added that while iron-ore miner Vale listed in Hong Kong a year ago, its massive fleet of 19 very large ore carriers being built in China and South Korea will be registered in Singapore. Citing other examples, he said Citic Pacific (SEHK: 0267) had set up an entire shipping department in Singapore rather than Hong Kong to oversee the operation of its fleet of bulk carriers that will carry magnetite ore from Australia to China. Rival miner Rio Tinto had also established shipping operations in Singapore. "Singapore is now attracting charterers and cargo owners which made it easier for everybody - ship owners and operators, shipbrokers and lawyers - to get closer to their customers," the executive said. "Of course, the Singapore government offers financial incentives to shipping and maritime-related firms to set up there, which is something Hong Kong government will never do. But the more companies move there, the more others will be attracted as the maritime cluster grows." Tung, who is also a director of the privately owned Tung family shipping company, Island Navigation Corporation International, said the Hong Kong government had concentrated on developing Hong Kong's shipping register as its main contribution to the maritime sector. "I think it is important for the government to move past the registry focus and facilitate a business environment in attracting service activities as well as owning, operating and management activities," Tung said. "More importantly, there is room for further growth," Tung added, pointing out that 3 per cent of the global merchant fleet was owned, controlled or managed from Hong Kong last year, according to figures from the United Nations Conference on Trade and Development. This put Hong Kong eighth among the ship-owning jurisdictions of the world. Tung pointed out that China and Japan have almost doubled their merchant fleets in the past 15 years. "Given Hong Kong's unique positioning and the specific conditions within China and Japan, there is a distinct possibility for Hong Kong to become home to more owner and operator activities," he said. "This effort, however, will take close co-operation between the private and public sector, a high-level, policy-driven approach from government, and consistent follow-up by government." Tung said the appointment of a dedicated shipping minister might be a long-term goal. But he agreed it would be useful in the short-term for the shipping industry to have a single point of contact that could deal with issues affecting the maritime community. The idea of a troubleshooter was put forward last week by Peter Cremers, who was HKSOA chairman in 2008 and 2009. "I have always held the view that what we need is indeed one point of contact familiar with the business requirements of a specific sector who co-ordinates among the various departments," he said. "Not only shipping but other industries suffer from the iron curtains between government departments". Industry executives generally agree that the government has failed to tackle at least four thorny issues affecting the shipping and port industry. These include the lack of double taxation agreements between Hong Kong and other jurisdictions; immigration problems with seamen who stay in Hong Kong longer than 14 days; a need for greater liberalisation of cross-boundary trucking services, and providing additional back-up land for container storage.

Cantonese Opera married with contemporary visual arts and new media will be the theme of the first cultural event by the arts hub authority. Michael Lynch, chief executive of the West Kowloon Cultural District, said the centre's first cultural programme, as a blend of traditional and contemporary art, "gives some sense of what the future West Kowloon will look like". The performances and exhibitions will be held from January 20-23 in the 800-seat West Kowloon Bamboo Theatre, which will be erected on the site of the arts hub's Xiqu Centre, pending approval by the Town Planning Board. The city's main venue for traditional opera, the Sunbeam Theatre in North Point, closes in February after 40 years. That has led to calls for the arts hub to get the Xiqu Centre up and running quickly. It is scheduled to be ready between 2015 and 2017. Lynch said the performances would welcome the start of the Year of the Dragon on January 23 and pay tribute to local culture, with five operas starring some of Hong Kong's A-list artists - including Law Ka-ying, Yuen Siu-fai, Ng Chin-fung and Wan Fai-yin. The five productions to be staged over the four days are Prime Minister of Six States, Contention for the Seal, The Lady Marshal and the Rash General, The Fair Couples Welcome the New Year, and The Sassy Princess and Her Blunt Husband. Tickets will be HK$10 each, a low price that Lynch intends as a welcome gift to city residents, not an indicator of prices in the future. An English synopsis of each production will be provided at the site. The authority declined to disclose the budget for the event, but it was estimated that artists' fees and the construction of the bamboo theatre and footpaths could cost more than HK$1 million. Louis Yu Kwok-lit, the arts hub's executive director for performing arts, expects the event to draw more than 10,000 visitors. Yu said more cultural programmes would be staged next year. Design competitions for certain venues will also take place next year. Cantonese opera artists were thrilled by the opportunity to perform in West Kowloon, said Liza Wang, chairwoman of the Chinese Artist Association of Hong Kong. The art form was recognised in 2009 by Unesco as intangible cultural heritage. "It's been a long time since Hong Kong has had a bamboo theatre erected in the city centre," Wang said. "And because Sunbeam Theatre will close soon, we hope the Xiqu Centre will be completed soon." Five contemporary artists who work or live in Hong Kong, including the 86-year-old Gaylord Chan, painter Chu Hing-wah and photographer Michael Wolf, will create visual art for an exhibition at the bamboo theatre. Composer and multimedia artist Samson Young and new media artist Henry Chu are working on an iPhone/ iPad app, drawing sound and visual references from Cantonese opera.

Google, which celebrated breaking ground on its centre yesterday, said a combination of factors made Hong Kong an ideal location. Google has tripled to US$300 million its investment in a data centre in Hong Kong, one of three the company plans to establish in East Asia as part of an aggressive expansion programme in support of its growing business. The world's biggest internet-search provider, which had earlier committed to spend more than US$100 million on the Hong Kong facility, yesterday broke ground at its 2.7-hectare site in Tseung Kwan O, with operations expected to start by early 2013. The two other centres will be built in Singapore and Taiwan. "For Hong Kong, this is a key milestone in our development as a regional data-centre hub," Permanent Secretary for Commerce and Economic Development Elizabeth Tse Man-yee said. "Google's data centres are known for their energy efficiency, environmental friendliness and data security, and data centres are essential for sustaining the development of the internet economy." The government has actively supported data-centre projects to step up the city's adoption of so-called cloud computing, which allows the delivery of software, online storage and other resources over the internet. Simon Chang, head of Asia-Pacific hardware operations at Google, said operating the data centre in Hong Kong would lead to significantly faster access to all Google services by users in the region. Google vice-president John Liu, who heads its operations in the mainland, Hong Kong and Taiwan, said a combination of factors made Hong Kong an ideal data-centre location, including reliable energy infrastructure, a skilled workforce, a vibrant internet economy, cheap and ubiquitous ultra-fast broadband connections, a competitive telecoms sector and an environment that enabled "trade, finance and new ideas to flourish online by allowing information to flow freely". The United States-based company announced in September that it planned to spend more than US$100 million to build a data centre on a six-hectare site in Taiwan. The cost of building the facility in Singapore has yet to be determined. A data centre is a secure, temperature-controlled facility 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. The three new data centres planned by Google will be the first ones established by the company in Asia. It has six data centres in the US, with the average cost of each site US$600 million. It has also spent €250 million (HK$2.6 billion) on a facility in Belgium and €200 million on another in Finland. Large data centres in Hong Kong tend to cluster around the districts of Tsuen Wan, Kwai Chung, Sha Tin, Kwun Tong, Kowloon Bay, San Po Kong, Quarry Bay, Chai Wan and Tseung Kwan O, according to the Office of the Government Chief Information Officer, the agency that sets local policies for information and communications technologies. Tse said she gave "a personal guarantee" to Liu and other senior Google executives that "the government will go all-out" to help facilitate the smooth setting up of the company's Hong Kong data centre, which she expects to be the first to go online for Google in Asia. Google will pay the expenses for the data centre, including the cost of land, construction and technical equipment. It will have up to 25 full-time staff once completed.

Financial Secretary John Tsang Chun-wah yesterday signalled the government is prepared to unwind steps to cool down the property market if prices continue falling. The euro-zone debt crisis and global slowdown have unnerved investors. Tsang said housing prices were "slowly coming down". The trend "will continue for a bit and hopefully we will be able to achieve a soft landing", he told Bloomberg in South Africa. "When the environment trends downwards, we will surely take countercyclical measures." The city's biggest developer, Sun Hung Kai Properties (SEHK: 0016), which yesterday raised its target for home sales in the year to June, called for an end to the cooling measures. "Speculators have been eliminated by the curbs, and end-users now dominate our property sales," it said. Tsang was coy about the timing of the government's easing of market curbs. "Timing is a judgment call that I will have to make nearer the time," he said. The comments drew a swift reaction. Lee Wing-tat, the chairman of the Legislative Council's panel on housing, said the latest cooling measures had only been in place for four months and it would be premature to lift them now. A government official later said Tsang's comments referred to tighter limits on loan-to-value ratios for mortgages imposed last year. Earlier in the day, housing secretary Eva Cheng said the government might review earlier than scheduled special stamp duties imposed last year. They were meant to last two years. Later, a spokesman said Cheng was only restating the government's existing position. In November last year, amid an outcry over the unaffordability of homes, special stamp duties were imposed on quick property resales - 15 per cent for sales within six months, 10 per cent for those within a year and 5 per cent for those within two years of a purchase. In June, the government cut the maximum amount banks could advance on a mortgage loan for homes valued at more than HK$10 million by 10 percentage points to 50 per cent of the property's value. For properties of HK$7 million to HK$10 million, the loan-to-value ratio was lowered to 60 per cent, from 70 per cent. Home prices in the secondary market have fallen by 3.5 per cent from their peak in May, according to data complied by Centaline Property Agency. Home prices soared 75 per cent between January 2009 and May this year. "If I were the government, I wouldn't have made those comments just yet. They should have waited until home prices fell further," said Simon Lo Wing-fai, an executive director of research and advisory for Asia at Colliers International. He said the remarks would only cause confusion over government policy. Lee Wee Liat, regional head of property research at Samsung Securities (Asia), said the government must be ready to cushion the market against a sharp fall. "When prices start to correct, there's always a danger of overshooting on the downside as weakening investor sentiment feeds on itself, intensifying any downward price spiral," he said. Chau Kwong-wing, a professor at the University of Hong Kong, also said it was too early for the government to lift the property curbs. "It's still uncertain how the European financial crisis will affect the property market. Properties could still be an option for investors in a low-interest-rate environment," he said. Abrupt changes would give an impression the government was weak. Lo said speculators, who left the market after the property curbs were imposed, would return if they were lifted and prices would rise.

 China*:  Dec 11 2011 Share

CineAsia, an Asia film-industry organization, on Thursday named Li Bingbing (李冰冰) its female star of the year and veteran producer Terence Chang (張家振) its producer of the decade. Ms. Li has starred in a string of hits over the past decade with some of China’s best-known directors, including last year’s “Detective Dee and the Mystery of the Phantom Flame” (狄仁傑之通天帝國). Her two most recent movies, both released this year, are the English-language, China-set drama “Snow Flower and the Secret Fan” and “1911,” starring Jackie Chan. Two years ago, she won best leading actress at the Golden Horse Awards for the spy thriller “The Message.” While Ms. Li — who currently is in Canada filming the latest installment of the “Resident Evil” series — wasn’t present at the ceremony, Mr. Chang accepted his award with friends, colleagues and family members looking on. Mr. Chang told Scene Asia that the Hong Kong film industry had changed dramatically since his early days in the business. He described some of the films from the 1980s as “crude,” with problems such as inferior lip-synching and subtitles that didn’t match the dialogue. But he also said that films today aren’t as creative as they were during Hong Kong’s Golden Age, a term often used to describe the period from the late 1970s to the mid-1990s. There are fewer original ideas today, he said. Mr. Chang, who began his producing career more than a quarter-century ago and has worked extensively in Asia and Hollywood, is best known for his long collaboration with director John Woo (吳宇森). Together they made some of the industry’s biggest hits and most influential films, including “Hard Boiled” and “Mission: Impossible II.” Among the projects he’s currently working on is a 3-D English-language remake of Mr. Woo’s 1989 thriller “The Killer.”

In the next 20 years, Beijing will spend more than 200 billion yuan (HK$245 billion) upgrading river transport infrastructure as it seeks to boost domestic trade amid weakening export demand from the West. "With the intensifying debt problems in Europe and the US, the current shipping situation is very severe, which necessitates accelerating the change in the direction of our shipping sector," said Deputy Transport Minister Xu Zuyuan. "Expanding river transport is a major theme in this acceleration." For the 12th five-year plan to 2015, Beijing had prepared a 45 billion yuan fund to expand waterways and invest in river ports in central and western regions, Xu said. Five billion yuan was also set aside to standardise river shipping, Xu said. "Investing 45 billion yuan in waterways will lighten the burden on roads. For example, when ships can't pass through the Xi River [in Guangdong] in the dry season, the roads get congested," said Xu. He called on local governments to increase their investments in waterways. Hunan's government this month launched a 170 billion yuan plan to invest in expanding the landlocked province's river infrastructure over the next 20 years. To build waterways and ports, Hunan has budgeted 68 billion yuan for the next 10 years and 102 billion yuan for the following decade. Of the planned 170 billion yuan of investment, 132.7 billion yuan will be injected into waterways, including the Yangtze River and Xiang River, while 34 billion yuan will be invested in ports such as Yueyang and Changsha, the provincial capital. On November 23, Shandong province published its plan to accelerate river transport, under which 14 billion yuan will be invested by 2015. The northeastern province plans to renovate and build 350 kilometres of waterways to increase Shandong's navigable waterways to 1,500 kilometres by 2015, with throughput capacity exceeding 70 million tonnes and shipping capacity reaching 8.8 million deadweight tonnes. Shandong plans to complete a network of waterways linking the Pacific Ocean with rivers by 2020. This includes expanding the capacity of the Grand Canal from Hangzhou to Beijing to accommodate 2,000-tonne ships. "China has invested a lot in roads and bridges, but investment in rivers has been low. Developing river transport is necessary as it offers lower transport costs," said Li Zhongjie, logistics director of Wuhan International Container Transshipment Company. Transporting goods along the Yangtze River is at least 50 per cent cheaper than roads, said Li. "Rivers have the advantage of greater transport capacity than road and rail, but road transport is faster than by river." On October 27, Gansu province announced plans to construct 654 kilometres of waterways to extend the landlocked province's navigable waterways to 1,010 kilometres by 2015, and to further extend them to 1,346 kilometres by 2020. But Peter Bosshard, policy director of International Rivers, warned against the waterways drive, saying they would make floods more powerful. He said China should learn from Europe's experience of floods.

A fourth round of Sino-Indian defence and security consultations will be held today in New Delhi, and analysts hope it will help reopen delayed border talks and lessen the long-held mistrust between the two countries. General Ma Xiaotian , deputy chief of the People's Liberation Army's general staff, will lead a delegation to New Delhi for the talks with Indian Defence Secretary Shashikant Sharma and ministry officials, according to a report released by the Chinese Defence Ministry. The last such talks were held in January of last year in Beijing. Sun Shihai , a researcher at the Chinese Academy of Social Sciences, said today's meeting would help restart Sino-Indian border talks, which were supposed to have resumed on November 28. Those talks were abruptly postponed on November 25 because the dates clashed with the Global Buddhist Conference in New Delhi, The Hindu newspaper quoted an unnamed Chinese diplomatic official as saying. "The border dispute and India's political stance of supporting the Dalai Lama are still the key obstacles in Sino-Indian ties," Sun said. "But fortunately, both Beijing and New Delhi are keen on strengthening mutual trust, even though they realise that they are also competitors in economic and security issues." India and China, which together comprise more than a third of the world's population, had a brief border conflict in the remote Himalayan region in 1962. The contested area spans nearly 90,000 square kilometres that China calls Southern Tibet and which India administers under the name Arunachal Pradesh. Sun also said India's involvement in South China Sea oil exploration had complicated the security situation in the Asia-Pacific region, which he said would likely be one of the important issues at today's meeting. In October, India's state-run explorer, the Oil and Natural Gas Corporation, signed a three-year deal with to co-operate in the South China Sea, where China has territorial claims with many neighbours in Southeast Asia. D.S. Rajan, director of the Chennai Centre for China Studies, said Beijing and New Delhi's own geo-political perceptions had hinted at the positive development of ties. The meeting would help both parties build trust on the border issues. "A real improvement in bilateral ties is, however, far off, as key issues such as the border, the Dalai Lama, the China-Pakistan nexus, India's role in the South China Sea and New Delhi-Washington ties are likely to persist for a long time," he said. "The India-China trust deficit is not going to disappear soon." Professor Fu Xiaoqiang , of the government think tank the China Institutes of Contemporary International Relations, said Beijing and New Delhi need to come up with new strategies to solve their disputes. "It's impossible to solve the problems with just a meeting, but both sides need to work together for a long while," Fu said. "For India's part, I hope they do not stir up the so-called China threat any more, as it would only harm their ties with us."

The most senior U.S. defense official to visit China since the latest controversial U.S. arms sales to Taiwan said she sought to reassure Beijing that it wasn't the target of a U.S. strategic shift toward Asia, including the deployment of 2,500 Marines to Australia. Michèle Flournoy, the under secretary of defense for policy, said Thursday that China and the U.S. both wanted to move forward with their military relationship, and planned to re-schedule for next year joint antipiracy drills and other exchanges postponed by Beijing after the Taiwan arms sales were announced in September. But in a news briefing, she reported no progress over what she called the "critical issue" of the South China Sea, or over U.S. demands for greater transparency about China's military modernization program, including the development of an aircraft carrier and an antiship ballistic missile. Ms. Flournoy met Gen. Ma Xiaotian, the deputy chief of general staff of the People's Liberation Army, on Wednesday for the 12th round of Defense Consultative Talks, which were begun in 1997 but have often been disrupted by differences over Taiwan and other issues. China's state-run Xinhua news agency, one of the main government mouthpieces, quoted Gen. Ma saying Wednesday that the "the fact that the consultations took place as scheduled shows that both countries are sincere about maintaining military exchanges." China's response to the latest Taiwan arms sales has been restrained compared with last year's, which prompted it to suspend military ties with the U.S. for 12 months. That has raised hopes among U.S. officials, who have for years been pushing for a more stable military relationship. However, the U.S. strategic pivot toward Asia—unveiled during President Barack Obama's visit to the region last month—has raised fresh concern in China, where the Defense Ministry denounced the move as a product of "Cold War thinking." Ms. Flournoy said Gen. Ma's delegation had asked her to explain the U.S. decision to deploy Marines to Darwin, Australia. "The question did come up and we assured Gen. Ma and his delegation that the U.S. does not seek to contain China: We do not view China as an adversary," she said. "These posture changes were first and foremost about strengthening our alliance with Australia." She confirmed that China had responded to the latest Taiwan arms sales by postponing this year's plans for a joint antipiracy drill, medical exchanges, as well visits to China by a U.S. army band and the head of the Pacific Command, Adm. Robert Willard. But she said that officials from the two sides planned to meet to re-schedule most of the postponed exchanges for next year, and to organize new ones, including high-level visits and joint exercises. "We do envision those activities going forward in 2012," she said. "I think there was support on both sides to moving forward with the [military-to-military] relationship and coming up with a meaningful engagement and exercise program for the coming year." She said she had reiterated the U.S. position on the South China Sea, where China's territorial claims overlap with those of Vietnam, the Philippines, Malaysia, Taiwan and Brunei and where tensions have been rising over the course of this year. The U.S. says it doesn't take sides on the territorial disputes, but has an interest in protecting freedom of navigation, and reserves the right to continue its naval and aerial surveillance operations in the area, despite Chinese protests. China accuses the U.S. of encouraging claimant countries, especially Vietnam and the Philippines, to stand up to Beijing and push for resolving the territorial disputes through the Association of Southeast Asian Nations, rather than bilaterally, as China prefers. "I don't think there was any new ground broken, but I think we had a good exchange of views," Ms. Flournoy said, adding that she had encouraged China to work with the Association of Southeast Asian Nations on drawing up a code of conduct for the South China Sea. She said there had been no discussion of the Pentagon's recently unveiled Air Sea Battle doctrine—an coordinated air and naval defense strategy that many experts believe is aimed at China—but the two sides had "very candid discussions" on issues including North Korea, the Middle East and North Africa. "While we didn't agree on everything we discussed yesterday, we do agree that we have the common goal of preserving peace and stability in Asia now and in the future, and that we must cooperate on issues that will impact both of our countries," she said.

Vice-President Xi Jinping and former US president Jimmy Carter sign ping-pong paddles, in Beijing on Dec 8, at an event that marks the 40th anniversary of Ping-Pong Diplomacy, which broke the ice for Sino-US relations. Four decades on from their landmark match in Beijing that helped bring Sino-US relations out of the deep freeze, ping-pong maestros of the 1970s from the two nations reunited in the Chinese capital on Thursday. Champions from yesterday and today from China and the US met to play an exhibition game at the Great Hall of the People to commemorate the Ping-Pong Diplomacy in 1971 that helped to bridge the two countries. Vice-President Xi Jinping and former US president Jimmy Carter were among the hundreds in attendance to cheer them on. Among the 14 players between the ages of 66 and 20, several of them played in Beijing in 1971, and the rest were from the current crop of ping-pong stars from the two countries, including 35-year-old world champion Wang Liqin. Liang Geliang, 61, a former world champion who played in the 1971 exhibition match and is a household name in China, said it was exciting to play at the anniversary event. Connie Sweeris, 64, who played in the 1971 match, said many cultural exchanges have taken place since that landmark event. Noting that some Chinese sports stars are now playing in the US, and some US sports stars are now getting popular in China, Sweeris said "sports is a very good way" to promote understanding between the two countries. Judy Hoarfrost, 56, who also played in Beijing in 1971 and has visited China many times since, said she was astounded by the huge changes that have taken place in China over the past 40 years. "Everything we do on one side of the globe impacts on the other side of the globe, so strong and positive ties certainly benefit the two countries," she said. Hoarfrost partnered with Yang Jun, 63, in the women's doubles section during Thursday's match, against Sweeris and Chinese female ping-pong champion Qi Baoxiang. In 1971, nine US table tennis players attending the Nagoya World Table Tennis Championship in Japan were invited by the Chinese delegation to visit Beijing to play with their Chinese counterparts. This was a significant step made by China to reestablish contacts between the two countries, and helped to lay the groundwork for the eventual establishment of diplomatic relations between the two nations. US President Richard Nixon paid a visit to China in February 1972. The two countries eventually forged diplomatic ties in 1979 during the term of president Carter. Addressing the ceremony, Vice-President Xi said that there were now more than 40 dialogue mechanisms between the two countries and very close trade ties, saying that "it has been a proven fact that it is the only correct choice for the two countries to work together, and it has been an irreversible historical trend". Xi also urged the two countries to "seize the hour and the day" to enhance their dialogue, trust and cooperation. "We should also properly handle sensitive issues with caution and effectively manage our differences to ensure that bilateral ties move forward on a healthy track," Xi said. Carter said: "While the two countries have differences, for instance in the sectors of trade, these differences are trivial compared with the common interests of the two countries."

Hong Kong*:  Dec 10 2011 Share

Hong Kong property mogul and public personality Ronnie Chan is worried about the state of the world, especially China. With everyone focused on Europe, he fears the world is underestimating the potential severities of China’s economic problems. Mr. Chan, chairman of Hong Kong-based Hang Lung Properties and an active member of the city’s powerful real estate community, is thankful his company hoarded cash for a “rainy day,” because he says banks aren’t lending and the economy is slowing. “It’s raining,” he says. Ronnie Chan is firmly part of the China-U.S. thinking establishment, serving on various academic and think-tank boards. He’s co-chairman of the Asia Society, a nonpartisan cultural and political organization. On foreign relations, he says the U.S. is “encircling” China by enhancing relations around its borders in places like Vietnam and Myanmar, potentially raising tensions in the region. Mr. Chan sat down with The Wall Street Journal for a broad ranging conversation. Edited excerpts: WSJ: Europe is entering a critical phase in talks to save the euro and there’s fear of how the pain in Europe’s banking system is rippling to Asian markets. What’s your take? MR. CHAN: My business is pretty removed, but we are linked up whether we like it or not. We have collateral effects. Europe is more or less in hell…the U.S. is walking on the edge of the Grand Canyon and China is walking just a little bit randomly. That means you also have the danger of falling off the cliff. With all three places one way or another in a difficult place, I’m not sure how the world will be a particularly encouraging place. Hong Kong is feeling the pain for several reasons. One of the reasons being that the European banks are gone…Europeans lend more in Hong Kong than Americans. But Hong Kong is fortunate that we are not dependant on the European banks and even less so the Americans. There are three other groups active here. Hong Kong local banks, such as Hong Kong Bank [HSBC], Standard Chartered, Bank of East Asia, Bank of China. The other group are Japanese banks. And the mainland Chinese banks have become increasingly active. Thank God, Hong Kong is a little bit diversified in terms of banking services. WSJ: What makes you so pessimistic about China’s economic prospects? MR. CHAN: I’ve always been pessimistic about China. I can’t see China going on without economic or social issues. People say, ‘Ronnie you’ve been wrong on China for 10 years.’ My answer is I’m 10 years closer to being correct. Then people say, hey why do I invest so much in China? I don’t have a whole lot of strategic alternatives. I don’t know when China is going to get in trouble, and before that China might boom like hell, exactly like the last 10 years…We bet on China, we’ve done well with it, but we’re also cautious and hence we don’t borrow any money. We have zero [net] debt. A year ago, when I raised equity in the market, people said “What the hell are you doing? You are cash rich, you are sitting on 20 billion Hong Kong dollars.” Well I like to think I know the market. I don’t know when it’s going to come down but I know it’s going to, and problems are going to show. Now I have 10 billion Hong Kong dollars of cash. I raised 11 billion Hong Kong dollars a year ago. If I didn’t raise it, I’d be in a debt position today. And trying to borrow from the bank is not a pleasant thing today. In mainland China, it’s almost gone. In Hong Kong, it’s almost as difficult. And then on the other hand on the positive side, I may be staring at a huge buying opportunity in the next year or two…Anybody who laughed at us are now shut up. You have to prepare for rainy days. And it’s raining. WSJ: What your view on the state of U.S.-China relations? MR. CHAN: I can’t accept the fact that America isn’t trying to encircle China. You have India on the west, and you always got issues on Tibet. You have Myanmar, troops in Australia…Even Vietnam, which never had good relations with China. And you have Japan, which is an unsinkable aircraft carrier. My fear is China will feel isolated again. And it will really encourage certain elements in Chinese society. Chinese are not uniform. They have far right and far left too and this is really giving credence to elements in Chinese society that are suspicious of America. And suspicions feed on themselves. WSJ: Some say China is losing its way when it comes to reforms, that it’s become too timid. Has China lost its way? MR. CHAN: You need strong leadership to effectuate change and the easiest way is to keep everything status quo. And sometimes changes are necessary. If not, you build up too much potential energy. It’s not easy to have leaders with that really strong leadership…You have Obama with lack of leadership, and you have China that perhaps also lacks leadership. In America, if you have lack of leadership, you just gradually deteriorate. But in China, there is the possibility of things going very badly.

Hong Kong's View From the Top - This Hong Kong townhouse sits on Victoria Peak, with sweeping views of the city below.

 China*:  Dec 10 2011 Share

Hsu Fu Chi snacks on display in a supermarket in northeast China - China Opens Wider to Takeovers Antitrust Regulators Clear Nestlé's Candy-Maker Purchase, the Latest Foreign Acquisition to Gain Approval. China's antitrust regulators approved Nestlé SA's $1.7 billion offer for candy maker Hsu Fu Chi International Ltd., in one of the largest foreign takeovers of a Chinese company. It is another signthat China is open to foreign acquisitions. The Swiss food and beverage maker in July announced plans to buy 60% of Hsu Fu Chi in a deal that valued the Singapore-listed company at 3.5 billion Singapore dollars (US$2.7 billion). Buying the stake helps Nestlé gain on rivals in a fast-growing confectionery market by opening new distribution channels and tapping directly into local tastes. The approval came less than a month after antitrust authorities approved a plan by Yum Brands Inc. of the U.S. to buy hot-pot restaurant operator Little Sheep Group Ltd. "China is now saying that it's open to multinational companies," said Frank Schoneveld, a Shanghai-based partner at law firm McDermott Will & Emery. In the past, antitrust authorities have signaled that the closer foreign companies get to acquiring Chinese retailers or consumer companies, the more difficulties they will face, Mr. Schoneveld said. A bid by Coca-Cola Co. of the U.S. in 2009 to purchase juice maker Huiyuan Juice Group Ltd. was rejected on the assumption that Coca-Cola would crowd out smaller rivals and potentially monopolize the juice market, even though the two companies combined held only 20% of China's juice market. But lately, a number of foreign takeovers have been approved. The Ministry of Finance and Commerce in September approved Nestlé's bid for a 60% stake in China's Yinlu Foods Group Co., a privately owned drink and porridge maker. Regulators in June approved U.K.-based liquor giant Diageo PLC's takeover of a top Chinese white-spirit maker, though the clearance came about 16 months after the deal was announced. China's antimonopoly laws are no longer being used as a protectionist tool, said Marc Waha, a partner at law firm Norton Rose, who is based in Hong Kong. "China's regulators are now attempting to present a level playing field for foreign and domestic companies," Mr. Waha said, adding that in the past month, Chinese authorities have a stricter stance toward the country's own corporations. China's National Development and Reform Commission last month began an investigation of two major state-controlled companies over alleged monopolistic business in the market for broadband Internet service. The Ministry of Finance and Commerce approved a joint venture between General Electric Co. of the U.S. and state-owned China Shenhua Energy Co., applying conditions predominantly to Shenhua. The Nestlé approval makes the food giant the second-largest confectionery company by sales in China, after Mars Inc. of the U.S., according to market-research firm Euromonitor. Nestlé, which already sells a chocolate-covered wafer bar called Crispy Shark in China, will be moving into less-familiar territory. Hsu Fu Chi, founded in 1992, makes Chinese treats: cookies flavored like cucumber, and sweet onion, as well as hawthorn- or lychee-flavored gelatin custards that are sold in cups the size of ping-pong balls and slurped by Chinese children. Analysts said the deal will open Nestlé to new distribution that will help the company influence a small-but-ballooning candy market. China's 1.34 billion people ate 13.7 million metric tons of candy last year, according to Euromonitor. That is slightly more than half the 26.8 million tons eaten by the 310 million U.S. consumers. Annual sales in China's confectionery market—including chocolate, candies and gum—climbed 63% to more than US$9.2 billion from 2005 to 2010, according to Euromonitor. Nestlé plans to delist Hsu Fu Chi from the Singapore Exchange. Hsu Fu Chi, which is based in the southern Chinese city of Dongguan, indirectly will hold the remaining 40% stake, the company said on Wednesday. 

Billionaire philanthropist Bill Gates confirmed on Wednesday that a company he helped found is cooperating on the development of a new type of nuclear reactor in China. "TerraPower is working on what we call Generation-4 nuclear energy. And the idea is to be very low-cost, very safe and generate very little waste," Gates said at a news conference after he discussed cooperation with Ministry of Science and Technology officials in Beijing on Wednesday. "It is in an early stage," Gates said. TerraPower, co-founded by Gates several years ago, is working on the idea of new technologies with the China National Nuclear Corporation (CNNC), though Gates said adoption of the technology will not happen quickly. Under discussion is a traveling-wave reactor, or TWR, a new type of reactor that could reduce the need for the enrichment and reprocessing of uranium. If successful, TWRs would be smaller, cleaner nuclear reactors that would create less nuclear waste and could be used for years without refueling. Aware of the long-term risks of storing radioactive waste and of nuclear fuel being diverted to build weapons, scientists since the 1940s have tried to develop methods to recycle the waste by using it as fuel. TWRs are believed to be a possible solution - but only conceptually - because they have not been built or tested successfully, according to Xu Mi, chief expert of CNNC. Moreover, Gates said the development of the new reactor design may require investment of hundreds of millions of dollars in the coming years, and demonstration plans and construction would cost "billions". He also promised the new designs would be "totally safe" in all circumstances, "including earthquakes". Qian Jihui, professor of nuclear and new energy technology at Tsinghua University, said even though there are a lot of discussions about the new reactor, it is not expected to be available soon for commercial use. "There is not a unified definition for a 4G reactor," Qian said. "In my opinion, it mainly refers to the absolute safety of the reactor, which will never cause any disaster or accidents during operation." He said China is preparing to build the first demonstration projects of a 4G reactor with a capacity of 200,000 kilowatts. However, he said it is too early to expect that the 4G reactor can be used in China since the country has not lifted the suspension of new nuclear power projects, a ban imposed after leaks from a Japanese nuclear plant in March. The Ministry of Science and Technology said it is glad to join hands with Gates. "When we cooperate with Gates, what we value so much is not Gates' money, but his social influence, his rallying power and his innovation ability," said Zhang Laiwu, vice-minister of science and technology.

Noar (left) from Syria practices his oral Chinese with classmates at a language training center in Yiwu city, East China’s Zhejiang province on Dec 7, 2011. The class is split in two parts - one consisting of foreigners who come to learn Chinese and the other comprised of local Chinese businessmen who come to improve their English proficiency. The city, an international business hub, has seen a surge in expats studying Chinese in the cold winter months.

The Singapore Tourism Board said it has launched its customized marketing campaigns for the Chinese market on Wednesday. It will roll out a series of differentiated marketing campaigns in the coming months targeting key markets across the region such as Australia, India, Indonesia and Malaysia. The marketing campaign started with the New Discoveries campaign at the 798 Art District in Beijing, capital of China. Singapore singer Stefanie Sun shared her favorite spots in Singapore. The Singapore Tourism Board said the marketing campaign is tailored to the needs of the Chinese tourists. It said it found that "whilst Chinese still come on packaged tours, many are increasingly making their own online bookings and travelling as free, independent travellers. More significantly, they sought a greater depth of travel experiences that include new, unique experiences." The new approach, which is more targeted and integrated to focus on customer needs, marks a departure from the destination marketing strategy that the board used to employ, it said. The Singapore Tourism Board embarked on various in-market engagements with consumers and trade for an increased understanding of the cosumers from these initial launch markets, said Sophia Ng, executive director for brand and marketing of the board. "We believe that this visitor-centricity will increase the appeal and relevance of Singapore, and help build a stronger brand in the long term," she said.

Hong Kong*:  Dec 9 2011 Share

The award-winning film Titanic will hit Hong Kong and worldwide cinemas again in early April – this time in 3D. The 1997 American film, featuring Leonardo DiCaprio and Kate Winslet, will be reproduced in 3D to mark the centenary of the sinking of the ill-fated super-liner and the 15th anniversary of the film next year. Producer Jon Landau said the film crew began to develop the idea of a 3D version six years ago. They tried 12 different companies and invested US$18 million (HK$140 million) for the conversion, which took 60 weeks. “We want to drive people out of their homes into the theatres,” said Landau, who is in Hong Kong to promote the film. “Titanic is a movie that should be seen on a big screen. A whole new generation of movie-goers has not had the opportunity to do that. That’s why we are bringing Titanic back.” The film’s record-breaking box office takings of US$1.8 billion stood for 13 years until director James Cameron’s Avatar broke his own record with US$2.1 billion. “It depends on how many people are going to the theatres,” Landau said when asked about box office expectations for the new version. “I will be happy if any film can surpass Titanic’s record.” He said DiCaprio had watched the 3D version at a screening in Sydney on Sunday. “At the beginning, he was very verbal saying, ‘Oh my God, I don’t look like that any more!’ He had not seen the movie probably for 15 years,” Landau said. “But later he was caught up in the movie as if he was seeing it for the first time,’’ he added. The film won 11 Academy Awards out of 14 nominations, including best picture, best director, best actress and best supporting actress. Titanic sank on April 15, 1912.

Hong Kong will remain the favorite listing venue for mainland and international companies, but they may face challenges reaching their target prices as institutional and retail investors become more risk-averse, market experts said. David Chin, UBS's head of investment banking for Asia, said he expected total initial public offering (IPO) proceeds next year to reach HK$200 billion. This nearly matches his estimate for this year of HK$202 billion. But it would still be less than half the figure for last year, when Hong Kong IPOs surged to a record HK$444.97 billion. Chin said it would be difficult for companies seeking a listing in the next few months to attract a price-earnings ratio of more than 20 times because of macroeconomic uncertainties plaguing the stock market. Most of the mainland companies that listed in the fourth quarter this year missed their price target. Luxury handbag manufacturer Sitoy Group Holdings fixed its price at the bottom of its price range at HK$2.95 per share. It closed yesterday at HK$3.01 when it made its trading debut. Other mainland IPOs, including China Vehicle Components Technology Holdings, LifeTech Scientific and packaging company Jin Bao Bao Holdings also fell short of their target price. China Polymetallic Mining, which starts trading next Wednesday, expects its listing price to be at the lower end of its HK$2.22 to HK$2.54 price range. Chun also said cornerstone investors would be increasingly hard to find. "The market is so volatile that even IPOs with good fundamentals can drop beneath their initial listing price in a matter of months," Chin said. "Institutional investors may opt for buying the stocks in the secondary market instead of agreeing to be the cornerstone investors in the pre-listing stage." But Chin was optimistic that the stock market would continue to draw cash from institutional investors, as fund houses needed an outlet for their cash. He said Hong Kong would continue to attract mainland and international companies to list. Dilys Chau, assurance partner at Ernst and Young, predicted that total IPO proceeds would reach HK$220 billion next year, mostly from mid-cap mainland companies. Chau also said fund houses might review their investment strategy to place higher priority on maintaining liquidity, as more investors were likely to cash in their investments in fund products. "In this kind of market climate, where there is so much uncertainty with banks and governments, investors will be very, very cautious," Chau said. "They want to be able to make an exit when the market turns sour, and they are unwilling to have their cash locked up for months." "Fund houses are also becoming more cautious. They prefer defensive stocks because they want to avoid having to sell the stocks when the prices are down to provide the cash when investors redeem their funds." The Hang Seng Volatility Index closed 29.08 yesterday, up 2.6 per cent, implying a near-term fall in the market as a higher level of volatility is expected. Meanwhile, as many as 20 mainland companies planned to launch initial public offerings in Hong Kong by the end of the month, a stock exchange executive said, according to Bloomberg. About 110 firms were seeking to list their shares and about 40 had been approved, said Lawrence Fok, the chief marketing officer for Hong Kong Exchanges and Clearing.

Secretary for Financial Services and the Treasury Chan Ka-keung does not think the European crisis will lead to the collapse of the euro. European banks may withdraw their funding from global markets including Hong Kong because of the European debt crisis, warned Secretary for Financial Services and the Treasury Professor Chan Ka-keung. Chan said that while banks in Hong Kong did not have big holdings of European sovereign debt, the impact of the crisis on them related to the funding issue. "European lenders may well need to scale down their lending or investments in other markets. This is to meet the funding need of their home markets as well as the higher capital requirement under the new regulations introduced after the financial crisis," he said. The European crisis came under the spotlight yesterday after Standard & Poor's placed 15 euro-area nations including Germany and France on watch for potential rating downgrades, sending shock waves through the markets including Hong Kong. This came as euro-zone leaders planned a summit in an attempt to find a solution to the debt crisis. Chan said the crisis would continue to cause fluctuations in investment markets but he did not believe the euro would collapse. "The downgrade of S&P is not a big surprise as we know the problem already. The impact of the downgrade will be modest on Hong Kong markets. I also believe the euro will survive,'' he said. "If the euro does break down, it would seriously hurt the economies of Europe. There would be a very long period of recession in Europe. I do not think European leaders would take such risks." Chan said European leaders had got closer to reaching a consensus on rescuing the euro and restoring the economy. He said euro-zone countries would need to reform their pension schemes and employees would be expected to work longer before getting their retirement funds. Governments would need to cut their budget deficits but would have to keep short-term funding costs low. Chan said the Hong Kong Monetary Authority had kept a close eye on the situation and required banks to make sure their systems could cope with market fluctuations. Mark Konyn, the chief executive of RCM Asia-Pacific, said the S&P downgrade was not a surprise. "The S&P downgrade confirms what markets have been pricing for a while and is indicative of likely underlying economic weakness and the intense struggle to resolve the crisis and sustain the integrity of the single currency," Konyn said. Regarding the future of the euro, he said negotiations over the single currency had entered a critical phase.

Local companies could get left behind in a huge expansion of internet domain names to be launched next month, Internet Society of Hong Kong founding chairman Charles Mok warned on Wednesday. Mok said few local companies seemed to be aware of the expansion of internet domain names – or even interested. He said more Hong Kong companies should get involved because it was not known when the next big expansion would occur. This follows a landmark decision by the Internet Corporation for Assigned Names and Numbers (Icann), which governs the internet’s naming system, and allows applicants to make up their own domain name endings. These are the letters after the last dot: known as generic top level domains (gTLDs). Icann says the huge increase in the number of endings from the present 21, including .com, .org and .biz to an almost unlimited range will start a new internet age. But Mok said his dealings with Icann showed few Hong Kong companies were interested – apart from his own and “a couple of others”. However, mainland and Taiwanese firms were setting up in Hong Kong to take advantage of the city’s good regulatory practices, ease of financial transactions and Chinese language-based market. They were also preparing to register their own names, which can be a company title or any other combination of letters, he said. “We’re going to come to January next year and people are going to read about what’s happening with companies like Google, Facebook and the like getting in on the business and think, ‘oh that’s a good idea’, but by that time it’ll be too late,” warned Mok. “We don’t know when the second wave of registrations will be after this one. It may take years, so there’s a sense of urgency,” he said. Applications open in January for an initial three months. Mok said most interest in Hong Kong was coming from intellectual property lawyers. US-based Icann is charging US$185,000 for the initial applications, and US$25,000 a year for maintenance thereafter. Hirokatsu Ohigashi, executive director of the GMO Registry, a registry services specialist, estimated that one brand probably owned around 2,000 alternative domain names. This is to stop fraudsters trying to take advantage of their brand. But Charmaine Koo a partner specialising in intellectual property at Deacons law firm, said the cost of maintenance might not make it worthwhile to register for a gTLD. “It’s worth it if you’re going to really use it to interact with your community. If you don’t have the financial or marketing capabilities to do that, there’s no point,” she added.

Hong Kong has fallen in the global and Asian rankings as the most expensive city to live in, a new study released on Wednesday revealed. Dragged down by a weak United States dollar, the city has shown the most dramatic fall on the global scale – 26 points from 32nd to last year to 58th, the biggest drop of any Asian city according to the study by human resources consultancy ECA international. In Asia, it has dropped from sixth to ninth. But the survey, designed to help multi-national companies calculate expatriate salaries, excludes housing costs. If these are included, Hong Kong rises to second, the study says. Tokyo tops this year’s chart, followed by Oslo. “Hong Kong is pegged against the US dollar,” ECA International director Lee Quane said on Wednesday. “The weak dollar means the city is now cheaper than a number of other locations including Singapore, Beijing and Shanghai, where there has not only been significant price inflation, but also currencies have strengthened.” The survey compares the cost of a basket of consumer goods and services commonly purchased by expatriates in more than 400 locations worldwide. Quane said the survey did not take into account the cost of housing because multinational companies often provided this.

After a week-long investigation by more than 200 crime-squad officers into last week's fatal blaze in a Mong Kok market street, police say there is no evidence to suggest the fire was an arson attack. But arson had not been ruled out, police said yesterday, because laboratory tests on hundreds of items taken from the fire scene were not yet available. One policeman said it would probably take government chemists at least one more week to complete all the tests. The tests will apparently focus on whether a fire accelerant, such as a flammable solution, was found among the charred debris. Police were also investigating the theory that an electrical fault touched off the blaze, the officer said. An electrical fault could have ignited a hawker's stall and the wind might have spread the fire to booths on the other side of Fa Yuen Street. "To prove this, we have checked with the Hong Kong Observatory on the direction of wind in the district at the time the blaze broke out," the policeman said. Some booths in the area stored combustible materials such as non-leather handbags and plastic products, which probably caused the fire to spread quickly, he said. Local authorities were still collecting evidence at the fire scene yesterday. Police brought in Professor Ho Siu-lau, head of Polytechnic University's Department of Electrical Engineering, to investigate the city's deadliest fire in 15 years. Superintendent Brian Lowcock of the Kowloon West regional crime unit said five badly burned electric switchboards had been seized from damaged hawker stalls for tests. But it was too early to conclude an electrical fault caused the blaze, he said. As they investigate the possibility of arson, police are also helping the Coroner's Court prepare for an inquest into the deaths of nine people in the fire. Police will finish collecting evidence from the scene today and will then consider reopening the area and the six blocks of flats affected by the disaster. After the fire broke out last Wednesday, more than 200 detectives were deployed from the five Kowloon West regional crime units and three district crime squads from the Mong Kok, Yau Tsim Mong and Kowloon City police stations. Many officers were needed because police had to carry out a criminal investigation, while preparing for a possible inquest, an investigator said. Last night, five of the 34 people injured in the fire remained in hospital, three in critical condition and two in serious condition. Meanwhile, one of the men whose images were captured by security cameras at the fire scene has come forward of his own accord to speak to police. The man, 36, is seen dressed in white, walking in Fa Yuen Street at about the time the fire broke out in the early hours last Wednesday. He gave police "valuable information", Lowcock said. "The police now have a better picture in pinpointing when the fire happened." Yesterday, family members and hawkers took part in mourning rituals at the fire site, in memory of the victims. The mother and family of fire victim Chen Xianxian were the first to appear at the scene yesterday morning, to mourn and burn paper money and incense. About 200 hawkers gathered at noon to pay their respects to the dead. Of the four most badly damaged buildings, two had no fire safety systems or equipment, such as alarms and hoses, the Fire Services Department said. Fire safety instructions were sent in 2009 to buildings 192-194, 196-198 and 200-206, and last year to building 188-190, instructing owners to update and install fire service equipment, the department's spokesman said. But buildings 188-190 and 196-198 still did not have them last week.

Henry Tang hears from students Jacky Chan and James Hu during a visit to the Hang Seng Management College. Smear tactics hurting my public image, Leung says - Candidate for city's top job complains he is being targeted after reports on investment losses and his credibility as a witness - Chief executive candidate Leung Chun-ying says he is being "purposely targeted" by a local media company that reported alleged investment losses by him, as he faces bombardment from the press. Leung was responding to what he said was an untrue report published in the Sing Tao Daily yesterday. He said his public image would be undermined by the smear tactics, which also included recent criticism of his integrity following a revelation that witness testimony he gave years ago was seen as "not convincing" and "self-contradictory". He said a particular news organisation had deliberately attacked him every day through negative reports over the past two months. The former Executive Council convenor is non-executive director at Sing Tao News Corporation, which owns the Sing Tao Daily as well as East Week, a magazine that reported a week ago that a judge rejected Leung's testimony in court in 2002. Leung described as "unverified" and "seriously untrue" a Sing Tao report saying he lost all his investments in British property firm DTZ after it was bought by Australia's UGL and delisted two days ago. Media reports said Leung held seven million shares in debt-ridden DTZ and lost HK$300 million as the stock nosedived about 99 per cent. He refused to disclose the amount of DTZ stocks he owned. "You can't just read a brief description in a few paragraphs, then attribute it to me," he said. He said he feared the election had "deteriorated in quality" as he was enduring personal attacks. He might quit the post of non-executive director, he said. Siu Sai-wo, Sing Tao's chief editor, said the reports were aimed at "strengthening the public's right to know". Chinese University political scientist Professor Ivan Choy Chi-keung questioned why Leung did not point out specifically which part of the report was untrue. Choy said Leung could hardly expect to gain public sympathy in this case, as he had stayed silent on such media practices for a long time until he became a victim of them. East Week reported that in 2002, Judge Gerard Muttrie found Leung's testimony was riddled with "inherent improbability". Muttrie said: "Mr C.Y.Leung's explanations ... under cross-examination are not convincing." The judgment also said that another part of his testimony was "self-contradictory". Democratic Party chairman Albert Ho Chun-yan, a likely rival for the chief executive job, echoed the East Week report, prompting Leung to accuse the lawmaker of defaming him. Ho said contenders for such an important position ought to have been prepared for challenges on personal competence and integrity. Of the media furore, fellow candidate Henry Tang Ying-yen said he would not intervene in or comment on the stance of any newspaper. Instead, the former chief secretary conceded that his controversial remarks about the so-called post-1980s generation were too harsh. He was apparently referring to his January warning that radical behaviour from young activists could end up in a "fatal car crash". He admitted his words had been too strong. Asked if he would invite his rival Leung to join the cabinet should he become the city's next leader, Tang said when serving in the government, he had long recruited people only based on their talents.

 China*:  Dec 9 2011 Share

Westinghouse Electric Co. says it expects to restart negotiations with China early next year to further deploy its latest-model nuclear reactor, nine months after talks were mothballed when Japan's Fukushima Daiichi disaster raised widespread safety concerns in China. U.S.-based Westinghouse transferred technology for its most advanced reactor to China as part of a 2007 deal to sell four reactors to the Asian country. Nonetheless, Chief Executive Aris Candris said that in the next four or five years Westinghouse's business in China will be primarily building reactors, as local component manufacturers aren't yet able to produce necessary parts. Beyond that, the business "is going to be primarily through either wholly owned or [joint-venture] companies that participate in servicing the growing fleet," he said in an interview. Industry executives and experts said Westinghouse, a unit of Toshiba Corp. of Japan, is poised to benefit as China reassesses its nuclear program after the March 11 earthquake and tsunami in Japan triggered a radiation crisis at the Fukushima Daiichi nuclear plant. China suspended approvals for new nuclear reactors after the accident as it conducted a nationwide safety review. While Beijing hasn't released its results, industry executives expect China will more quickly phase out previously planned older-model reactors in favor of Westinghouse's most advanced reactor, the AP1000. Mr. Candris said he couldn't offer revenue projections for the China market, citing a number of unknowns including when the government would lift its moratorium on new reactor approvals and how quickly local manufacturers would be able to produce reactor components on their own. China is aggressively working to localize production of the reactor components, Mr. Candris said. Westinghouse's near-term China business relies in part on how rapidly local manufacturers succeed. "We had been in negotiations with the Chinese prior to Fukushima on exactly what that scope was and we expect to continue those discussions once we come back to the table with specifics on timing and locations," he said. China is pushing nuclear power as a clean source of energy. Choking pollution, partly created by coal-burning power plants, is stoking widespread social unrest, particularly along China's densely populated eastern seaboard. Industry executives say the Fukushima Daiichi disaster reinforced the idea that Beijing had much to learn from more experienced overseas nuclear-technology and -services companies, among them Westinghouse. China is attracted to the AP1000's safety features at a time when questions are being asked about whether China's plans to aggressively expand nuclear-production capacity could compromise safety. The Westinghouse reactor includes passive cooling systems designed to automatically keep a reactor cool and prevent a meltdown. Mr. Candris rejected comparisons between China's nuclear industry and its high-speed rail system, which has been plagued by safety concerns as a result of rapid expansion. A deadly high-speed train crash in July raised questions about whether local manufacturers cut corners in order to meet aggressive deadlines, and about how well China understands the cutting-edge technology it imports. "There is significant scrutiny on the part of the government, and nuclear is different. There's no question about it," Mr. Candris said. "In spite of their interest in schedule, obviously safety is always their paramount consideration. I don't expect that to change."

China Development Bank Corp, which funded a wave of Chinese investment into Africa and the developing world, is teaming up with some of the West's biggest private-equity players in a new venture aimed at driving investment into and out of China. Its newly formed CDB International Holdings Ltd. on Tuesday signed agreements with Permira, Kohlberg Kravis Roberts & Co. and TPG to seek opportunities for co-investing. Parent company China Development Bank holds a small stake in TPG. Zhang Xuguang, the chairman of Hong Kong-based CDB International, said in written answers to questions from the Wall Street Journal that it would concentrate on "companies and projects that can benefit from and promote China's development." "The globalization of Chinese firms has been getting faster and its scale bigger, giving CDB International broad scope to develop," he said. China Development Bank has pioneered China's loans-for-oil deals with Brazil and Africa, and helped Chinese construction companies win contracts around the developing world. But the focus of corporate China is now shifting to Western countries, an area where Chinese investment has typically been less welcome and where support from established private-equity players may be particularly useful. Western private equity executives often complain that corporate bureaucracies and a cumbersome government approval process often slow Chinese state-backed firms to the point that they miss an opportunity to buy a company overseas. Having CDB as a partner could speed those deals. The private-equity firms, meanwhile, could gain access to other deals in China through CDB's connections. With Europe mired in a debt crisis and the U.S. economy still struggling, China—with $3.2 trillion in foreign exchange reserves—is a potential source of funding for cash-strapped firms and governments. The U.K., for instance, is actively wooing Chinese investment in capital-intense infrastructure projects. Although it is early days, Chinese firms seem increasingly interested in finding Western brands and technology that could sell well in China, such as high-end consumer goods as well as areas like logistics, which the government's five-year plan has targeted as a key industry. China's sovereign wealth fund, China Investment Corp., tried a similar approach to CDB by taking stakes in Morgan Stanley and Blackstone Group LP. However, U.S. suspicions have lingered despite CIC's efforts to prove itself a good corporate citizen. Kurt Bjorklund, Permira's co-managing partner, says Chinese investors are becoming more sophisticated. "Chinese firms are learning how to address commercial and political sensitivities," he said. "Also, on the receiving end, U.S. and European companies are operating in a more capital-scarce environment, and they're realizing Chinese firms are emerging as globally competitive alternatives with something to offer." Mr. Bjorklund said teaming up with CDB "will provide us with access to deal flow in China that we would otherwise not see," and give its foreign portfolio companies better opportunities to expand in China. Permira puts a heavy focus on the companies in which it holds stakes developing their businesses in emerging markets like China. Stephen Peel, managing partner and head of Asia for TPG, said CDB has played an important role in the overseas expansion of Chinese firms. "The whole impetus for China to look at overseas acquisitions has accelerated over the last two to three years," he said. "CDB is part of that. It's been a natural partner for companies looking to do something overseas." TPG has been in China for years and has yuan-denominated funds in Shanghai and Chongqing with which it can buy Chinese companies. KKR, which also has been an active investor in China, declined to comment.

Coach aims to launch about 30 stores annually over the next few years, mostly on the mainland China. Coach reaches deal on e-fakes - US brand kick-starts online plans with agreement to stop counterfeits being sold on Taobao Marketplace - American luxury brand Coach has kick-started its e-commerce plans with a landmark deal intended to prevent counterfeits of its products from being sold on Taobao Marketplace, the mainland's largest consumer-to-consumer online shopping website. The agreement marks the first time that Coach, a New York-based maker of luxury bags and accessories, has collaborated with an influential e-commerce platform on the mainland to combat counterfeiting. The initiative will apparently pave the way for the company to start building its online shopping presence in the world's largest economy. Chairman and chief executive Lew Frankfort described e-commerce on the mainland as "a very substantial opportunity for Coach". "We plan to bring e-commerce to Hong Kong and the mainland within the next 12 months," Frankfort said. Expansion into the online retail market would follow the listing of Coach last week on the Hong Kong stock exchange {minus} the first United States-incorporated company to do so. The firm has forecast its sales on the mainland, Hong Kong, Macau and Taiwan to reach at least US$300 million in its current fiscal year to June, up from its previous guidance of US$250 million. Frankfort said Coach aimed to launch about 30 stores annually over the next several years, the vast majority of which would be on the mainland. These store openings are expected to continue driving the company's growth on the mainland, which is expected to become its second-largest market after the United States over the next few years. With its core North America market recording significant gains in traffic and sales on the internet, Coach is considering co-operation with yet-undisclosed e-commerce companies to help improve the visibility of its brand and widen the distribution of its merchandise on the mainland. "We are in active discussions with several different major players," he said. "In China, our business model is different than most other retailers because our proposition is not based upon special pricing. It's based upon affordable luxury." According to internet consultancy iResearch, the total online shopping market on the mainland will be worth 1.096 trillion yuan (HK$1.339 trillion) next year, up from an estimated 771.9 billion yuan this year. But that e-commerce opportunity has been tempered by the rise in counterfeiting, "which is damaging Coach's brand image, the interests of consumers, and those involved in the industry" on the mainland, said Victor Luis, president of Coach Retail International. Luis said the co-operation with Hangzhou-based Taobao Marketplace, a unit of privately held internet conglomerate Alibaba (SEHK: 1688) Group, would ensure strict measures to monitor and remove counterfeit product listings on the popular website. Under their agreement, Coach and Taobao Marketplace will also push for greater education of mainland internet users on anti-counterfeiting and closer cooperation with Chinese law-enforcement authorities.

Chinese and US officials launched a radiation detection system on Wednesday at Shanghai’s Yangshan port, one of the world’s biggest, as part of efforts to prevent the smuggling of nuclear materials for weapons or terrorism. The system is meant to provide comprehensive screening as part of the Megaports Initiative, a US Department of Energy effort to provide such scanning systems at 100 of the world’s biggest ports. The need for such precautions became evident after the September 11 attacks on New York and Washington. The Shanghai port shipped 3.86 million containers in January-October of this year, with 679,042 of them — or about 18 per cent — destined for the US. The US Energy Department’s National Nuclear Security Administration has faced criticism for delays in installing the detectors. Some countries have resisted their installation, saying they may slow traffic at ports.

China’s leader-in-waiting urged the United States to “curb its tendency of politicising economic issues”, state media said Wednesday, after Washington said it was probing solar panel makers in the mainland. Vice-President Xi Jinping made the comments in a meeting with Henry Paulson, the former US treasury secretary, on Tuesday, the official Xinhua news agency reported. “I hope the United States will… curb its tendency towards protectionism and of politicising economic issues,” said Xi, who is widely touted to take over from current President Hu Jintao in 2013, according to the report. The United States has recently stepped up criticism of what it says are Beijing’s unfair trade practices in the face of deep US voter anger over high unemployment and the state of the economy. Some US lawmakers have blamed China’s rise for job losses at home – criticism Beijing has rejected. Last month, the US Commerce Department announced it would probe complaints by a US firm that China was selling solar cells and panels in the US market at below the cost of production. There has also been increased criticism from both sides of the US political spectrum of China’s yuan currency, which many lawmakers in Washington say is grossly undervalued and costs jobs. Beijing rejects these claims.

New Beijing subway to reach train station - Beijing subway Line 9 will make a stop at Beijing West Railway Station. It is among nine stops on the planned new line, which will be opened this month.

China and the United States on Wednesday held their annual round of defense consultations in a bid to control risks and avoid misjudgment between their militaries. US Under Secretary of Defense for Policy, Michele Flournoy (L), chats with China's Deputy Chief of General Staff of the People's Liberation Army, Ma Xiaotian (R), during a bilateral meeting at the Bayi Building in Beijing Dec 7, 2011. The fact that the consultations took place as scheduled shows that both countries are being sincere about maintaining military exchanges," Ma Xiaotian, deputy chief of the General Staff of the Chinese People's Liberation Army (PLA), said at the start of the consultations. The consultations mark the first engagement between the defense ministries of both countries after the United States announced its $5.85-billion arms sale to Taiwan, including upgrades for 145 of Taiwan's fighter jets, in September. "Hopefully both sides will make the best of this opportunity to expand common ground, keep risks under control and avoid misjudgment," Ma said, calling for positive results to come out of the one-day consultations. "Like you, we place great value on this meeting," said Under Secretary of US Defense Ministry Michele Flournoy, who is leading the US delegation. The US delegation consists of nearly 20 representatives from the Defense Department, the State Department,the Joint Staff, the Pacific Command, Navy and Air Force. The topics of consultations include bilateral military relations and the US arms sale to Taiwan, as well as piracy and regional situations in the Korean Peninsula, South China Sea, Middle East and North Africa, Pakistan and Afghanistan. The annual consultations began in 1997, following an agreement between former President Jiang Zemin and his US counterpart Bill Clinton.

Hong Kong*:  Dec 8 2011 Share

Star-studded TVB Anniversary Awards 2011 - The TVB Anniversary Awards 2011 that celebrates the best in TVB programming was held in Hong Kong on Dec. 5, 2011.

Another financial heavyweight has come out in support of chief executive candidate Henry Tang Ying-yen - Antony Leung Kam-chung, the financial secretary from May 2001 to July 2003, said yesterday Tang not only has administrative experience and a working knowledge of the civil service, but he also knows how to communicate with people from various sectors. Leung's show of support comes after Joseph Yam Chi-kwong praised Tang. The former Hong Kong Monetary Authority chief is also expected to be in Tang's election team. Leung said in addition to the qualities he mentioned, the chief executive needs to have a good relationship with the central government as well as with top executives of mainland enterprises. Leung will attend Tang's election rally on December 19 at the Hong Kong Convention and Exhibition Centre but will not be part of his administration team. Tang's major rival, Leung Chun- ying, was the convener of the Executive Council but never served as a government official. But property tycoon Ronnie Chan Chi-chung, one of Leung's advisers, said leadership skill is more vital. Tang had originally planned to hold the rally at HKICC Lee Shau Kee School of Creativity in Kowloon Tong on Thursday but postponed it in view of the fatal blaze in Mong Kok. Meanwhile, the pan-democrats' Frederick Fung Kin-kee, a lawmaker of the Association for Democracy and People's Livelihood, announced he too is eyeing the chief executive position.

It's been a year of mixed fortunes for Cathay Pacific and Dragonair, with a 2.3 per cent rise in passengers as cargo volumes fell 7.7 per cent. Festive cheer for Cathay, Dragonair - Holidaymakers will boost advance passenger bookings for airlines as cargo business tails off - With the festive season looming, Santa Claus is unlikely to forget Cathay Pacific Airways (SEHK: 0293) and Dragonair, which are expecting strong growth in passenger numbers that should help offset a slowdown in cargo volume. James Tong Wai-pong, Cathay Pacific general manager for revenue management, said the "leisure market is still going strong with positive growth in advance bookings for both individual and group travellers" during Christmas and the New Year. He said there was also a rise in advance bookings among business and first-class travellers that was expected to outpace the capacity boost from new aircraft deliveries. Cathay Pacific is due to take delivery of six Airbus A330s and five Boeing 777s next year, as well as five Boeing 747-8 freighters. "Korea, Taiwan and Southeast Asia are the most popular destinations for holidaymakers from Hong Kong during Christmas," Tong said. "We also enjoy good growth on United States routes. Looking further ahead in January and February, growth is strong on China, Africa and Philippines routes." He said bookings by premium travellers to Europe, including London, were "robust" despite worries about a possible recession and growing concerns over the euro zone. There was also "significant" growth in the number of economy reservations on flights to South Korea. Dragonair expected a "strong performance" from leisure travel in the holiday periods. Destinations in Taiwan, Southeast Asia and mainland trunk routes to Beijing, Shanghai and other locations such as Chengdu and Chongqing would "perform well". But pointing to possible headwinds, one analyst said with just over three weeks between January and Chinese New Year "some people may only plan one leisure trip rather than two". Cathay Pacific and Dragonair have seen mixed fortunes this year with a 2.3 per cent rise in the total number of passengers carried to 22.85 million in the 10 months to October, while cargo volumes dropped 7.7 per cent to 1.37 million tons. Cathay Pacific Cargo director Nick Rhodes said the holiday season was unlikely to bring Christmas cheer for the airfreight business. "It looks unlikely that we will see the usual year-end peak," he said. "Business from Europe and North America into Asia is slowing down. "Business from Southeast Asia is relatively steady. Demand from Indonesia, Hanoi and the Philippines is encouraging and providing support to various destinations," he said. Rhodes noted that while the city's overall cargo throughput was down - falling 2.3 per cent to 3.98 million tonnes in the 12 months to October - transshipment cargo volumes rose by 5 per cent. This trend was likely to continue as cargo volumes from the Pearl River delta shrank and transshipment from all over Asia, particularly western China, increased. But he said: "Compared with this time last year we are already operating 15 per cent less freighter flights" on the transpacific and 25 per cent fewer freighter flights to Europe. Citi expects Cathay Pacific's earnings to fall 56 per cent this year to HK$5.1 billion, down from HK$14 billion in 2010, with a 30 per cent drop in net profit to HK$3.6 billion in 2012.

Now 86, Chow Tai Fook honorary chairman Cheng Yu-tung treasures the business he's worked on since 13. After leading Chow Tai Fook Jewellery for more than five decades, Cheng Yu-tung decided to give the family business a new look by listing it in the stock market. The 86-year-old Hong Kong tycoon, who is also in the property, transport, hotel and casino businesses, describes Chow Tai Fook as "the most valuable asset" for him as it is what he had started out with to establish a business empire. At just 13, Cheng was sent by his father from Shunde, Guangdong, to Macau in 1939 to work as an apprentice in a small jewellery shop called Chow Tai Fook. The shop was owned by Chow Chi-yuan, a friend of Cheng's father who established Chow Tai Fook in 1929. Chow later became Cheng's father-in-law. Cheng worked diligently and was promoted to the post of manager in three years, taking charge of the shop's daily operations. At 21, he was given the task of expanding Chow Tai Fook in Hong Kong. In 1956, he formally took over the company and started to develop the business in the form of chain stores. In the same year, Cheng launched 999.9 gold jewellery products in Hong Kong and Macau, making Chow Tai Fook one of the first players to promote high-quality gold jewellery in the two cities and winning customers' confidence. Cheng was also the first to implement a fixed-price policy, which was subsequently adopted by most players in the industry. In 1998, Chow Tai Fook opened its first mainland shop in Beijing and went on to establish its mainland headquarters in Shenzhen in 2003. The past five years has seen the company expand aggressively across the border. The number of shops almost tripled from fewer than 500 in 2006 to more than 1,400 by the end of September. Earlier this year, Cheng's eldest son, Henry Cheng Kar-shun, said he had taken over the company and would take it public in Hong Kong. Chow Tai Fook's shares will trade under the code 1929, the year the company was founded.

Chow Tai Fook Jewellery plans to raise up to HK$22.05 billion to support its aggressive expansion in what may be the largest initial public offering in Hong Kong this year. The jeweller, which is controlled by property billionaire Cheng Yu-tung, has set a price range of HK$15 to HK$21 for the 1.05 billion new shares being offered. Analysts said the offer price would give Chow Tai Fook a much higher price-earnings ratio than its rivals Luk Fook and Chow Sang Sang, but the price was still reasonable considering its leading position and strong brand name. Henry Cheng Kar-shun, the executive chairman and Cheng Yu-tung's son, said on Sunday that listing was the only way to expand the 82-year-old family business. He said the company would focus on expanding its retail network to benefit from the robust retail sales growth in the region. The company said in its prospectus yesterday that half the proceeds raised would be used to buy diamonds, gemstones, precious metals and watches. The rest of the funds would be mainly used to repay loans, refurbish and acquire shops and construct a new office building in Shenzhen. The jewellery chain, which has larger revenues than Tiffany & Co of the United States, had an extensive retail network of 1,421 jewellery stores or counters and 85 watch locations on the mainland, as well as in Hong Kong, Macau and other Asian countries as of September 30. It reported a turnover of HK$35 billion for the year to March, with more than 55 per cent generated from the mainland market. The retailing giant hopes to open 200 shops or counters a year over the coming five years to bring the total number of outlets to more than 2,000 by 2016. The company forecast that net profit for this financial year would be at least HK$6.3 billion while pro forma earnings per share would be about 63 HK cents. Eugene Mak, an analyst at Core Pacific-Yamaichi Securities, is bullish about the company's prospects. "As one of the earliest players in the mainland jewellery market, Chow Tai Fook has built a very solid base for itself over the past two decades. It has a good lead compared with other mass luxury jewellery sellers," Mak said. The combined turnover of Luk Fook and Chow Sang Sang, two of its major rivals, was less than half of that of Chow Tai Fook last year. Mak also expected the stock to be included eventually as a constituent of the Hang Seng Index. The mainland jewellery market has taken off over the past decade, fuelled by rising affluence and looser government rules on importing luxury goods. Jewellery is also regarded as an investment as gold and diamond prices continue to rise. A study by research firm Frost & Sullivan shows that the mainland's jewellery market is likely to outpace the growth of the country's gross domestic product over the next five years. It also is expected to pass the US as the world's largest jewellery market in that time, with an annual market value of HK$1.5 trillion. "We are confident that the company will continue to benefit from China's robust retail sales growth in the long term, and we'll focus on expanding our retail network in greater China," Henry Cheng said. Chow Tai Fook has 12.6 per cent of the mainland's jewellery market, and a 20 per cent share in Hong Kong and Macau, according to Frost & Sullivan. Meanwhile, as many as 20 mainland companies planned to launch initial public offerings in Hong Kong by the end of the month, a stock exchange executive said, according to Bloomberg. About 110 firms were seeking to list their shares and about 40 had been approved, said Lawrence Fok, the chief marketing officer for Hong Kong Exchanges and Clearing (SEHK: 0388). Between 10 and 20 companies would complete their offerings by December 31, he said. Chow Tai Fook will fix the share price on Friday and trading will start next Thursday.

A man filmed walking in Fa Yuen Street in Mong Kong on the night a fatal fire broke out on November 30 came forward to talk to police on Monday. One of the men whose images were captured by security cameras at the scene of last week's fatal blaze in a Mong Kok market street has come forward with “valuable information” about when the fire started. The white-clad man, filmed walking in Fa Yuen Street about the time the fire broke out in the early hours last Wednesday, came forward of his own accord, superintendent Brian Lowcock of Kowloon Regional Crime Headquarters said on Tuesday. “The man dressed in white from the photos released two days ago has contacted us and has given valuable information,” Lowcock said. “Police now have a better picture in pinpointing when the fire happened.” Lowcock was speaking as police continued to pursue a two-pronged inquiry: a criminal probe seeking to establish whether the fire resulted from arson, and assisting the Coroner’s Court in its preparation for the inquest into the deaths of the nine victims. In connection with the latter inquiry, police intend to test five badly burned switchboxes from stalls damaged in the blaze to see whether there is any connection with the fire. Lowcock said that, after DNA testing, all nine victims had been identified. Arson had still not been ruled out, he said. Family members and hawkers on Tuesday continued to hold traditional religious ceremonies in memory of the dead victims. After one ceremony by a group of relatives on Tuesday morning, about 200 hawkers gathered at noon opposite the roped-off fire scene, burning incense and approaching in threes to bow. The scene remained closed to the public. It was not known when it would re-open, Lowcock said.

Esprit Holdings Ltd. said Monday its chief financial officer, Chew Fook Aun, will resign for personal reasons effective June 1, as the fashion retailer presses on with a strategic overhaul aimed at reviving its brand and restoring its soul. That overhaul, announced in September, will require extended trips to Europe by its finance chief, the company said in a statement to the Hong Kong stock exchange, and the Hong Kong-based Mr. Chew "is unable to spend the required time in Europe in addition to his duties as group chief financial officer in Hong Kong due to personal reasons." Mr. Chew has served as chief financial officer since February 2009. The company will search both internally and externally for a successor, Chief Executive Ronald van der Vis said in a conference call after the announcement, adding that Esprit has no plans to move its financial headquarters to Europe. He declined to give any business updates. The retailer has been struggling in recent years to reinvigorate its performance through initiatives that include brand rebuilding and cost cutting. Its reliance on Europe for most of its revenue has been a burden lately, with persistent economic weakness there stunting growth. Esprit's shares have plummeted 68% this year, one of the worst performances among Hong Kong's blue chips. In September, after reporting a 98% plunge in full-year net profit, Esprit declared it had "lost its soul" and presented plans to divest itself of its North America business and drop retail operations in three major European countries. The company also said it would invest more than 18 billion Hong Kong dollars (US$2.32 billion) over the next four years to rebuild its brand, which competes globally with the likes of Hennes & MauritzAB's H&M and Inditex SA's Zara.

As banks cut staff around the world, they are fighting in China over a rare commodity: a banker licensed by the government to do stock and bond deals. Chinese securities rules require that every underwriter on a domestic initial public offering of shares or a bond sale have two qualified "sponsors" among the bankers working on the deal. The pair nursemaid the IPO from beginning to end and ultimately take responsibility for signing off on the company's books and business plan. The pressure on sponsors, already great, is increasing as the country's regulator steps up its efforts to root out accounting fraud by listed companies and cracks down on underwriters. Only about 2,000 sponsors are active in China, home to many of the world's biggest IPOs. Based on last year's deal flow, they are fully employed. China limits each to working on no more than two deals at a time, and deals can take a year or more to complete. Salaries, already high by local standards, are rising rapidly as firms compete for the relatively small number of people. To earn the title, bankers must show proficiency in accounting, law and finance through a written exam in Chinese that takes place once a year. Only about 10% pass, according to a banker who did pass as well as several senior bankers; the China Securities Regulatory Commission wouldn't disclose the rate. Bankers say all who pass are Chinese nationals, and most have studied abroad. "Ultimately this is a very coveted position, given there are a limited amount of sponsors and the exam is not easy," said Jonathan Penkin, co-head of equity capital markets for Asia, excluding Japan, at Goldman Sachs Group Inc. The 14 sponsors at Goldman's China joint venture Goldman Sachs Gao Hua Securities Co. report to him. China's government tightly restricts the ability of foreign firms to operate in its capital markets and requires them to do business through licensed joint ventures, in which they can hold a maximum stake of 33%. To keep their securities licenses, banks need to employ at least four sponsors. But for a firm to do a reasonable number of deals, it needs many more. That has led to a scramble as more Western banks set up securities joint ventures. J.P. Morgan Chase & Co., Morgan Stanley, Citigroup Inc. and Royal Bank of Scotland Group PLC have set up such ventures this year and are adding employees. Bankers complain the scarcity of sponsors is creating a bottleneck for deal making in China and driving up banks' costs. "There is a huge fight for [sponsors]," said one banker in China who works for a Wall Street firm. In one example, Morgan Stanley is in the process of hiring a team of roughly 20 bankers, about half of whom are qualified sponsors, from J.P. Morgan Chase's joint venture, according to people familiar with the matter. The switch may accelerate the plans of Morgan Stanley's Shanghai-based joint venture, Morgan Stanley Huaxin Securities, to add offices in Shenzhen and Beijing, one of the people added. A sponsor typically earns around 2 million yuan (US$300,000) a year, including bonuses, which is high for locally hired bankers, and rising due to strong demand. Chinese banks sometimes outbid Western banks because they often offer commission-based pay allowing a sponsor to double his base salary in a good year, the bankers said. "Once you have this license you are all set for life, even if you don't do deals," said the head of a Wall Street firm in China. Still, the life of a sponsor isn't easy. One 30-year-old sponsor said he lives in a state of constant anxiety. Getting detailed answers from massive, complicated state-owned Chinese companies to meet the regulators' deadlines is difficult, he said. In some fast-growing companies, records are incomplete and ownership opaque. Penalties for a sponsor who is found to have been negligent range from a warning to losing the license, fines and criminal prosecution, according to the securities regulator's website. Bankers complain that the system puts too much responsibility in the hands of young, book-smart but unseasoned bankers who may miss instances of fraud. Some even claim the regulator is deliberately restricting the number of sponsors so it can more easily control the flow of IPOs. The regulator, the China Securities Regulatory Commission, declined to comment. Now China's new top securities regulator is stepping up scrutiny of the industry. Local media have reported that Guo Shuqing, former chairman of China Construction Bank Corp., who was appointed to the job in October, has opened a record number of securities investigations. On its website, the CSRC says it has investigated 82 securities-market cases this year, of which half relate to insider trading. The regulator this year has disciplined 35 firms, including brokerage firms and handed out fines to some. The CSRC, which created the sponsor system in late 2003, has argued that holding specific people responsible can prevent fraud as well as accounting scandals. In the U.S., the norm is that the investment bank, not the individual, is held culpable for errors unless fraud is involved. While Chinese companies have been accused by short sellers of accounting fraud, most of the cases occurred in companies that used so-called reverse mergers to list in the U.S., a process that doesn't require a qualified sponsor. In November, the regulator stripped the licenses of two sponsors who worked for Chinese firm Ping An Securities, saying their due diligence on the IPO of Chinese rice-wine maker Shengjing Shanhe Bio-Technology Co. had been sloppy. The IPO was canceled earlier this year by the regulator because it said the company didn't disclose important information for investors. "The objective is to remind people they cannot hide behind the name of an institution if they make major mistakes in the listing process," said Heiner Braun, managing partner of law firm Freshfields' Shanghai office. 

 China*:  Dec 8 2011 Share

Hainan aims to be a medical tourism hub - Island adds a dose of medicine to its attraction as a holiday resort, with a planned branch of Beijing's elite 301 facility set to be one of the top draws - Luo Baoming (right) and Governor Jiang Dingzhi. Hainan, the southernmost province looking to be the "Hawaii of the East", has set its sights on becoming a medical tourism hub, bolstered by a new project with the People's Liberation Army's (PLA) top hospital. Provincial Communist Party secretary Luo Baoming said in Hong Kong yesterday that the PLA's elite Beijing-based Hospital 301 was set to open its first branch in Hainan late next month, which is likely to attract foreign and local patients. "We aim [to make] Hainan an international medical tourism resort by 2015," he said. Hospital 301 in western Beijing is an elite facility that has treated top communist leaders including the late Deng Xiaoping, former president Jiang Zemin and other leading cadres. Its Hainan medical centre, in the southern resort of Sanya, will provide medical and rehabilitation services for locals and tourists "who need top-quality medical service in a good environment", according to the provincial government. Luo and Hainan's new acting governor, Jiang Dingzhi, were on a roadshow in Hong Kong yesterday to promote tourism and trade. The Hainan Daily's website reported last year that the medical centre would occupy 186,000 square metres and provide 675 beds. Zhang Hui, head of Beijing Jiaotong University's tourism department, said the Hospital 301 branch was just the start in developing medical tourism. "It may need to offer a total service that includes health improvement and elderly care," Zhang said. The State Council unveiled a plan to transform Hainan into an "international tourism island" in late 2009 and designated the province as a test bed for tourism reforms. Last year, the central government introduced an 11 per cent tax rebate for overseas tourists on the island, including visitors from Hong Kong, in a bid to promote it as a world-class destination. However, most of its tourists are mainlanders, and the scheme was extended to domestic tourists from other provinces in March. In the aftermath of the global financial crisis, the island saw overseas visitor traffic drop by more than 40 per cent in 2009. But Luo said the euro zone debt crisis was unlikely to make a dent in visitor numbers. "I don't see much impact to us," he said. "Our main source of tourists is the mainland and most of our investments come from Asia. Having a tourist source of 1.3 billion people who are getting wealthier - it's a tremendous market and we are happy about that." The island was visited by more than 23.7 million people in the first 10 months of this year - 97 per cent of them coming from the mainland. Last year, it had 25.9 million visitors, with just 2.5 per cent from overseas. Luo said a new airport duty-free shop would open this month in the provincial capital, Haikou, and construction of a new high-speed railway line would start next year. But Professor Haiyan Song, a tourism expert from Hong Kong Polytechnic University, said Hainan needed to put in more effort. "There are many areas that the Hainan authorities need to improve, from service quality to product variety, from marketing strategy to branding," Song said. "It takes a long time to build up international reputation and it won't happen overnight."

Xie Zhenhua, China's chief negotiator at Durban climate talks, fields questions from reporters on Monday. China gave a jolt to United Nations-led climate talks by appearing to call for binding emissions cuts, prompting some industrial powers to reconsider their positions at a conference where few had expected real progress. Meetings that began last week in this steamy port city appeared destined to end as a well-advertised convention of environmental officials and activists swapping strategies on creating new national parks and shutter old coal-fired plants. Then China's comments by China's chief negotiator signaling a shift away from longstanding resistance to a binding emissions pact sent a charge through Durban's conference center. Speaking to reporters Monday, the country's chief negotiator in Durban, Xie Zhenhua, said major economies including China should be legally obligated to curb greenhouse gas emissions after 2020. "We accept a legally binding arrangement," he said. Mr. Xie, however, said China would agree to binding cuts only if the U.S. and other powerful nations take aggressive steps in the next decade to address climate change and some key negotiators wondered whether China was throwing down the gauntlet to shift pressure on to Western countries to address climate change. Nevertheless, Mr. Xie's comments were interpreted as a significant shift in China's earlier position of rejecting binding targets—except in the unspecified future. Officials said they would need to clarify Beijing's intentions in private meetings Tuesday with Mr. Xie. For the U.S. to agree to a binding deal, China would have to be ready to accept stringent cuts alongside the U.S., according to Todd Stern, the chief U.S. negotiator in climate talks. "No trap doors, no Swiss cheese," he said. While there is no expectation of a binding agreement to cut emissions in Durban by Friday, the last day in this year's series of talks that have been going on for almost two decades, China's challenge could raise hopes for a more ambitious timeline for further agreements than many foresaw when the conference opened last week. "It is China laying the cards on the table," said South Africa's foreign minister, Maite Nkoana-Mashabane. "I'm sure all the negotiators will also be laying their cards on the table now that [talks have] escalated." China's terms for entering a new deal, according to Mr. Xie, include extending the so-called Kyoto Protocol, a developed-world pact to cut emissions that is set to expire next year. It would also entail following through on plans to spend $100 billion annually to mitigate the effects of climate change in poor countries. "It's time for us to see who is acting in a responsible way," he said. The U.S. once sought a binding international commitment to cut emissions. But China backed out of talks toward that kind of agreement at the U.N.-led climate gathering two years ago in Copenhagen. China has said it was unfair to limit its emissions while rapid development is lifting millions out of poverty, when it was the U.S.—and other advanced economies—that contributed the most to elevated greenhouse gas levels. Washington has since favored national pledges to cut emissions rather than a global law. The U.S. never ratified the Kyoto Protocol, and its extension is in doubt after Canada, Japan and Russia already indicated they won't recommit to the 1997 pact. The European Union has said it would back an extended Kyoto pact only if developing countries agree to new emissions limits, too. European Union Commissioner and climate negotiation envoy Connie Hedegaard expressed skepticism over China's avowed shift. "Will a legally binding deal also mean that China is equally legally bound? That is the key point and that is where I think what we've heard...still needs a lot of clarification," Ms. Hedegaard said.

LA mayor paves way for students - United States students apply for visas at the Consulate-General of China in Los Angeles in August, months before they traveled to study in China. Los Angeles Mayor Antonio Villaraigosa vowed on Monday to provide more opportunities for LA-area high school students from underserved communities to study in China. "This program will create life-changing opportunities for our young people to travel to a new country, learn about a new culture and meet new friends," he said at a news briefing in Beijing. Most of them have never studied overseas nor even "been in an airplane before". Leading a delegation of 21, Villaraigosa started his Asian trip on Sunday in Beijing. The delegation will also visit Chongqing and Shanghai during the coming week. Villaraigosa announced a recently established partnership between LA and charitable foundations dedicated to promoting educational exchanges between China and the US at the news briefing. Los Angeles is the latest city to throw its support behind the "100,000 Strong Initiative", a program launched by the US Department of State to increase the number of US students studying in China over the next four years. Citing the strategic importance of the US-China relationship, President Barack Obama announced the "100,000 Strong Initiative" in November 2009. The national effort is meant to increase the number and diversify the composition of US students studying in China. Secretary of State Hillary Clinton launched the initiative in May 2010 in Beijing. The initiative aims to prepare a next generation of US experts on China who will be charged with managing the growing political, economic and cultural ties between the two nations, according to the US Department of State. It also strives to develop opportunities and funding sources for underrepresented students to study in China. The initiative is a public-private partnership, and private corporate and foundation donors have pledged more than $11 million toward it. The Chinese government has offered 20,000 scholarships for US students. The Los Angeles mayor's office will cooperate with two nonprofit organizations - Americans Promoting Study Abroad (APSA) and the Jackie Chan Charitable Foundation Beijing - to promote the program. "We believe strongly that young people from China and the US will be highly influential in the 21st century. Our two great nations have the opportunities now to work together to build a brighter future, and understanding and friendship between us will be crucial to making that dream a reality," Villaraigosa said. Ted Dean, APSA co-founder, told China Daily on Monday that APSA has helped more than 100 US high school students to study in China in the past four years. As for the new program, "students will be chosen from applicants who had studied Chinese in high school for one or two years", he said. He noted that APSA runs full-scholarship programs for US high school students from underserved communities to study in Beijing, focusing on languages acquisition, cultural understanding, leadership development and exposure to international careers. The Ministry of Education said this year that the country plans to use cooperative educational programs to draw 500,000 foreign students to China by 2020.

Hong Kong*:  Dec 7 2011 Share

Sinopec Kantons Holding plans to raise up to HK$3.5 billion (US$450 million) via a rights issue to fund its acquisition of equity interests in five joint ventures from its parent China Petroleum & Chemical Corporation (SEHK: 0386) (Sinopec), sending its stock down to a more than one-week low. The company said it would buy stakes in the five joint ventures for 1.81 billion yuan (US$284.60 million) as it moves to create one of Asia’s largest oil terminal businesses and tap China’s long-term energy growth consumption trend. Upon completion of the acquisition, the number of crude oil terminals controlled or jointly owned by the company will rise to seven from two, and the number of berths increase to 24 from 14, it said in a filing to the Hong Kong bourse late on Sunday. The annual design capacity of its crude oil terminals will rise to about 225 million tonnes from about 85 million tonnes, enabling the company to become the largest service provider of crude oil terminals in China and one of the largest in Asia, it said. “This will strengthen the group’s competitive advantage, significantly enhance core competencies, increase profitability, as well as position the company for the future overseas expansion of its oil terminal and storage business,” it added. Sinopec Kantons said it planned to issue one rights share for every existing share held, and the proceeds would also be used for the development and operation of crude oil terminals and the provision of logistics operations, and for working capital. Shares of Sinopec Kantons fell 8.9 per cent by 10.26am on Monday, their lowest since November 24. That compared with a 0.46 per cent gain in the broader market. ($1 = 6.3597 yuan)

The Broadcasting Authority has fined Asia Television a record HK$300,000 for its erroneous report of the death of former President Jiang Zemin. Announcing the penalty on Monday, the authority, an independent statutory body established to regulate the broadcasting industry in Hong Kong, said it had found complaints against inaccurate news reporting and the late correction of factual errors in connection with the ATV report in July to be justified. The authority also said the television station had “adopted an irresponsible approach” in responding to inquiries about the report. Authority chairman Ambrose Ho Pui-him said the fine was decided after considering that the news of Jiang’s death was important to the public, and the television station had not met its responsibilities to verify the accuracy of the report. Its testimony to the authority in the investigation was also inconsistent, he said. “We understand journalists have their codes of ethics to abide by. We are not requesting them to disclose their sources. We want to know how they manage the news, and what procedures they have taken to verify the news,” he said. ATV had been widely criticised over the report, which it broadcast on several news bulletins on July 6 and it did not formally retract until the following afternoon. The authority received 45 complaints. In the report on its inquiry the authority said the erroneous bulletin had followed a call to vice-president (news and public affairs) Tammy Tam Wai-yi from senior vice-president (corporate development and external affairs) Kwong Hoi-ying, who told her he had received reliable information about the death of Jiang and asked her to report it on the Home channel’s 6pm news – which was then being broadcast. Tam and her boss, senior vice-president Leung Ka-wing had tried unsuccessfully to verify the information and asked for more time, but Kwong had insisted – saying he and ATV would shoulder the responsibility. The report was first broadcast at 6.41pm and repeated in later news programmes on Home and the English-language World channel. On its midday news the following day, ATV quoted the Xinhua news agency describing the report of the death as “pure rumour”. But it did not issue a formal retraction until four hours later, which the authority said was “far from timely”. Leung said in an interview in September that he had come under pressure from a source he refused to identify to run the report but said he suspected the source may have been “just a messenger” for someone else. In imposing the penalty the watchdog said ATV was in breach of sections of the TV Programme Code requiring broadcasters to make reasonable efforts to ensure the accuracy of news content and to correct factual errors as soon as possible after the original broadcast. It also said the station’s decision to change the colour of its logo from orange to grey while the reports were being aired – which it said was done out of respect for Jiang – was confusing, but not in breach of the code. The authority made no comment about allegations of managerial interference in the station’s news department. It explained that editorial independence of the news team was not a matter it regulated. It also said it had no direct evidence of any role played by major investor Wong Ching in the incident, noting that a separate investigation into this was continuing. The authority also criticised ATV over two complaints about the intrusion of advertising and promotional material into financial programs. It issued the station with a serious warning about broadcasts on its “Wealth Blog” and a milder warning in respect of an edition of its “Corporate Excellence” programme in May, both on the Chinese-language Home channel.

The end of the year in Hong Kong means a few things—streets packed with shoppers, malls decked out in Christmas decorations and lots of initial public offerings. In a city where IPOs are the bread and butter of investment banks, taking the crown as top listing destination matters a great deal. Looking to be No. 1 for the third year in a row, Hong Kong has spent much of the year jostling with New York for the lead. And while a worrying IPO drought hit in October, the action has picked up lately, putting Hong Kong back in front—with some thanks to celestial mechanics. Companies are braving the market to raise funds, despite recently volatility, because the window for IPOs ahead is especially narrow. In 2012, Chinese New Year will fall early, starting on Jan. 23—shutting Hong Kong’s market until Jan. 26 and Shanghai’s stock exchange until the 30th. It’s a full 11 days earlier than Chinese New Year in 2011. “It’s hard to launch and close anything between Christmas and [Chinese New Year],” said Scott Jalowayski, partner at law firm Ropes & Gray in Hong Kong. “There will be a split between those companies who need cash, and those who can afford to wait until after February.” In addition to big hitters like Chow Tai Fook Jewelry Group Ltd., Haitong Securities Co., and New China Life Insurance Co., a host of tiny companies is keeping Hong Kong’s IPO ambitions alive. Hosa International Ltd., a Chinese sportswear maker, making its second attempt to list, is looking to raise US$82 million, down from its previous target of US$211 million, Dow Jones Newswires reports Monday. Two companies backed by private-equity titan KKR & Co., China Tianrui Group Cement Co. and China Outfitters Holdings Ltd., will be raising US$300 million to US$500 million and US$146 million, respectively. As for the big three, Chow Tai Fook, though priced dearer than some of its peers, is betting on its cachet as one of the largest jewelers in China, while Haitong has the attraction of being the second-largest brokerage in China. New China Life’s offering is cheaper than other insurers’, based on forecast 2012 embedded value. But Chinese banks, which do badly need the capital, are proving to be a hard sell. The huge IPOs of China Everbright Bank Co. and Guangfa Bank, seeking US$6 billion and US$5 billion, respectively, remain stalled. Investors are spooked by mid-sized lenders’ higher levels of exposure to local government loans, and Everbright is at the top of the exposure list.

Leading members of Hong Kong's arbitration community have sought to dispel fears that the city will lose its competitiveness as Asia's premier arbitration hub to Singapore, by clarifying the implications of a Court of Final Appeal ruling on what became known as the Congo case. "Some lawyers have the misconception that the Congo ruling has caused Hong Kong to score an own-goal against Singapore, hence making Hong Kong less competitive as an arbitration hub in Asia," said Peter Chow, a former vice-president of the Hong Kong Institute of Arbitration. The institute is responsible for the promotion and training of arbitrators in Hong Kong. "If this misconception prevails," Chow added, "some foreign clients may decide to shift their arbitrations out of Hong Kong." Hong Kong is currently the leading international arbitration hub in Asia, with neighbouring Singapore playing catch-up. Last year the Hong Kong International Arbitration Centre (HKIAC) handled 175 international arbitration cases, while the Singapore International Arbitration Centre handled 140. In a typical arbitration, each party appoints an arbitrator while a third is appointed by common agreement. The arbitration tribunal arrives at a judgment or award by majority decision. On September 8, the Court of Final Appeal handed down its judgment on the landmark Congo case, confirming a provisional ruling in June that a country's commercial activities are immune from litigation in Hong Kong. Three of the five judges supported the interpretation by the Standing Committee of the National People's Congress in August, while the other two opposed it. The case involved millions of dollars of debt owed by the Democratic Republic of Congo to FG Hemisphere, a US fund. FG took the fight to Hong Kong, where some of the assets it is owed are located, but Congo claimed immunity. "After the Congo case, a few people who were not in the know wondered if they should take their cases to Singapore," said Chow, a partner at law firm Bryan Cave, but HKIAC chairman Huen Wong said he had not seen any decrease in the number of arbitration cases in Hong Kong since the judgment. Recent data on the number of Hong Kong arbitration cases are not yet available, added Wong, who is a consultant with US law firm Fried, Frank, Harris, Shriver & Jacobson. According to Chow, rather than having an adverse effect on Hong Kong's arbitration standing, the Congo case had a positive one, since the Court of Final Appeal explicitly stated that the immunity defence did not apply to arbitrations in Hong Kong. The court's decision was about whether an arbitration award against a foreign state could be enforced in Hong Kong, said Wong, a former president of the Hong Kong Law Society. "The Congo case is only concerned with the enforcement of arbitral awards. It has nothing to do with where the arbitration was made. "If you have a contract with a foreign state, and that contract specifies Hong Kong arbitration, the Congo ruling does not affect the validity of that clause. In other words, a foreign state cannot claim immunity in front of an arbitration tribunal in Hong Kong, provided it agreed to an arbitration in Hong Kong. "The Congo case will not affect the jurisdiction of an arbitral tribunal and it makes no difference whether an arbitration is taken in or out of Hong Kong," Wong said. State immunity applied only to proceedings before court, not arbitration, Wong added. On November 1, Singapore's law and foreign affairs minister, K Shanmugam, said the Lion City intended to be at the leading edge of international arbitration, and its legal infrastructure was being strengthened to that end, according to media reports. Hong Kong is seen as an attractive venue for China-related disputes, while Singapore has successfully marketed itself as a forum for India-related disputes, which historically have tended to have been resolved in London, said Justin D'Agostino, a partner at international law firm Herbert Smith. According to Chow, the competition between Hong Kong and Singapore to be the leading arbitration hub in Asia is healthy. "It raises the standards of both arbitration centres. Singapore and Hong Kong can learn from each other. For example, the Singapore authorities are amending the Singapore arbitration laws and studying Hong Kong's newly revamped arbitration laws," he said.

 China*:  Dec 6 2011 Share

China launches 10th global navigation satellite - A Long March III-A rocket, carrying a satellite, blasts off from the Southwest China's Sichuan province, Dec 2, 2011. China successfully launched a satellite into space at 5:07 am Beijing Time Friday, the 10th one of its indigenous global navigation and positioning network known as Beidou, or Compass system, the launch center said. The satellite, launched from the Xichang Satellite Launch Center in the Southwest China's Sichuan province, was boosted by a Long March III-A carrier rocket into a geosynchronous orbit. It was also the 153rd launch of the Long March carrier rockets. The basic structure of the Beidou system has now been established, and engineers are now conducting comprehensive system test and evaluation. The system will provide test-run services of positioning, navigation and time for China and the neighboring areas before the end of this year, according to the authorities. More satellites will be launched before the end of 2012 for the Beidou network, and its coverage area will be expanded with upgraded services. The global satellite positioning and navigation system will be completed in 2020 with 30 satellites orbiting the earth. Started in 2000, the Beidou satellite navigation system is designed to break China's dependence on the US Global Positioning System (GPS).

CME Group, operator of the world’s leading energy, grains and precious metals markets, said it will start accepting the Chinese currency traded in the offshore market as collateral on all its exchange-traded futures products. By expanding its list of collateral to include the offshore yuan, or “CNH” as it is popularly known, a Hong Kong depositor can now use CNH deposits to take positions in a variety of futures contracts traded on the CME, a new avenue for using these funds. Jeremy Hughes, a spokesman at the CME, said the exchange will cap the amount of CNH it would accept at US$100 million. CME and European lender HSBC have built the operational framework enabling HSBC Hong Kong to hold CNH deposits from CME clients and to use these deposits as collateral, it said. CME is rapidly increasing its China-focused business. In August, it launched dollar-yuan futures for investors wanting to bet on the yuan’s direction. It even launched a micro-version of the yuan futures to attract more clients. CME, which operates the Chicago Mercantile Exchange, the Chicago Board of Trade, and the New York Mercantile Exchange, gets the bulk of its revenue from trading fees and sales of market data. Volume originating outside the US now accounts for 22 per cent of all CME Group volume, it said in a statement. China’s move to liberalise the offshore yuan market has picked up since its launch in June last year. At the end of October, total yuan deposits in Hong Kong banks swelled to more than 600 billion yuan, representing nearly 10 per cent of all deposits in Hong Kong banks, compared with less than 1 per cent in January last year.

Microsoft co-founder Bill Gates (pictured) is holding talks with the state-owned China National Nuclear Corporation (CNNC) to jointly develop a new type of nuclear reactor. "A company he [Bill Gates] founded is working with us and he will visit us in a few days for more talks on co-operation," said corporation general manager Sun Qin in a speech delivered at a forum in Beijing on Friday, which was later released on mainland news portals. "He is working with us to conduct research on a new type of nuclear reactor and jointly develop [it] with CNNC," said Sun, who heads China's top nuclear developer, overseeing military and civilian programs. While Sun did not give details about the new reactor technology, postings on the corporation's website show that TerraPower - of which Gates is chairman - has been talking with CNNC since 2009 about developing a travelling-wave reactor, or TWR. Gates has visited CNNC at least twice. TWR, a virtual design by TerraPower that has yet to be built or tested, is a new type of reactor that could reduce the need for the enrichment and reprocessing of uranium. If successful, TWRs would be smaller, cleaner nuclear reactors that would create less nuclear waste, and they could be used for years without refuelling. TerraPower has been trying to find a country willing to host the first TWR. It remains unknown whether the co-operation with CNNC means China will become the first country to experiment with such a reactor. Gates visited CNNC in June to discuss possible co-operation between the two companies. Three months later, TerraPower CEO John Gilleland held talks with Sun about co-operating on the TWR. The concept for TWR had been floating around for years until a former Mircosoft executive and a friend of Gates, Nathan Myrhvold, embraced the idea. Since Gates' retirement from Microsoft, promoting and developing clean-energy technology has been one of his pursuits. Lin Boqiang , director of Xiamen University's Centre of China Energy Economics Research, said the partnership would no doubt raise China's profile as it struggled with nuclear safety concerns after disaster-hit Japan's meltdown in March. "For Gates, China could not be a better partner to work with, given the country's vast market for nuclear energy," the professor said.

Yamaha Corp. plans to sell made-for-China gold-painted golf clubs with a price tag that is nearly double the most expensive golf clubs it sells in Japan. The golf gear, musical instrument and audio equipment maker said a driver and iron club set costing Y1.3 million, about $16,500, will hit Beijing store shelves by the end of the year in what will be the company’s first golf product tailored exclusively for Chinese consumers. Yamaha said it hopes the product will help establish itself as a high-end golf brand in China as it looks to grab a bigger market share – an aggressive plan that the company admits is late to the rush compared to domestic rivals like Maruman & Co. and Mizuno Corp. that have launched similar products at comparable price points. Yamaha spokesman Tsutomu Takizawa also said that the push outward is in part to cope with the stagnating market at home, where the company doesn’t foresee much growth. Yamaha’s share of the Japan golf market stands at just 7%, according to company estimates. Of the company’s Y370 billion in overall sales in the fiscal year ended March 31, 2011, only about Y6.7 billion stemmed from golf products. While the company has seen double-digit sales growth in China in its other major businesses like musical instruments it has yet to see a similar boom in its golf products. China sales last fiscal year totaled about Y20.2 billion. The high-end clubs, stamped with the company’s Impres X brand, are vastly different from what is on offer in Japan, where the most expensive set of clubs costs Y700,000. The company said it will trot out clubs more on par with these prices in China later on, but said it wanted to first cement itself as a solid brand for China’s wealthier classes.

Chinese photovoltaic (PV) solar companies are well-prepared for the preliminary ruling by the US International Trade Commission (ITC) that these enterprises are harming the US industry. Workers make solar cells that are to be exported at an energy company in Lianyungang, Jiangsu province. "Now, it is just the beginning of the investigation," said Li Lei of Sidley Austin LLP, who is representing the China-based solar industry. China's Ministry of Commerce expressed on Saturday its "deep concerns" over the preliminary ITC ruling, saying that the ruling was made without sufficient evidence showing the US solar industry has been harmed. "The ITC made the decision regardless of defense opinions from Chinese solar companies and the related US industry, which shows the United States' strong tendency for trade protectionism," the ministry said in a statement. It said the US should avoid abusing trade remedies, which will affect bilateral trade and cooperation in the new energy sector. Li said the ministry's statement shows that the Chinese government is making an effort to protect domestic solar companies and the industry, which is a positive sign for the Chinese companies. He told China Daily that because the requirements for being found to be "harming the industry" are low under US law, Chinese solar companies had expected this preliminary ruling from the very beginning. SolarWorld Industries America and six other undisclosed companies filed a claim with the US Department of Commerce saying that Chinese companies were selling solar panels in the US at unfair discounts and receiving illegal government subsidies. "For the Chinese companies, they don't need to change their planned schedule of defending the case," he said. "To keep on collecting the evidence and getting prepared for the field investigation in China by the Department of Commerce is what the companies are going to focus on next." As international players in the global market, the domestic solar companies will adjust their business strategies and market expansion plans accordingly to reduce losses caused by the investigation, he said. Fourteen Chinese solar panel producers, including Suntech Power Holdings Co and Yingli Green Energy Holdings Co, have decided to jointly raise a plea in response to the US probe. The companies have said that their success in the US lies in having more advanced manufacturing technologies, efficient management and larger production scales. Li Junfeng, secretary-general of the Chinese Renewable Energy Industries Association, said Chinese solar companies are part of the global solar production chain and have greatly contributed to its development, including creating thousands of jobs in US when many China-based companies have established factories there. "If any tariffs are imposed on Chinese PV solar cell products, regardless of the amount, that would inflict huge damage on the industry because the Chinese solar panel industry heavily depends on the overseas market and profits are not high," he said. Ministry of Commerce spokesman Shen Danyang warned last month that the anti-dumping and anti-subsidy investigation in the US could damage bilateral energy cooperation and impede the progress of global efforts to deal with climate change. The ITC voted unanimously on Friday that there was a "reasonable indication" that Chinese solar cell imports have harmed or threatened to harm the US solar industry. The Department of Commerce will make a final ruling on the anti-subsidy issue by November 2012 and an anti-dumping ruling no later than next July, according to Li.

A giant panda named Yang Guang chews on bamboo stems at its new home in the Edinburgh Zoo Dec 4. 

China has become Boeing Co's priority market amid the European debt crisis, said the US-based aircraft manufacturer as it launched a six-month world tour of its new aircraft in Beijing on Sunday. A Boeing 787 Dreamliner, one of the world's largest aircraft, arrives at Beijing Capital International Airport on Sunday to start its global tour. The plane will fly to Guangzhou and Haikou before heading to Africa. It is the first time that Boeing has launched a new aircraft tour in China. Through Dec 11, the Boeing 787 Dreamliner will stop in three Chinese cities - Beijing, Guangzhou and Haikou - before flying to Africa. "The managers at our headquarters had a heated discussion about the first destination and I insisted on China, because it is our largest single market besides the US," said Ihssane Mounir, the company's senior vice-president of sales and marketing for Greater China and Korea. Mounir said that China has the fastest-growing aviation market and will become the world's second-largest market, although it is also being affected by the economic slowdown in Europe and the United States. Mature markets in developed countries have only shown 3 to 4 percent annual growth recently, Mounir said, but Boeing's business enjoys growth of 8 to 12 percent a year in developing countries, especially China and the Middle East. Boeing didn't disclose its revenue in China last year, but Mounir said that the figure accounted for 50 percent of the market share in China. "China is one of our top rising markets," he said. Boeing is also promoting more wide-body aircraft, including the 787 Dreamliner, in China, said Marc Allen, Boeing China president, because Chinese carriers need to increase their competitiveness in the global market. He said that Boeing especially designated the three stops of the 787 Dreamliner tour in China, where the 787 Dreamliner's current main customers are based. "We want them to understand more about the aircraft before they receive it," Allen said. The 787 Dreamliner is a wide-body aircraft with 200 to 300 seats. Four Chinese airlines - Air China Ltd, China Southern Airlines Co Ltd, Hainan Airlines Co Ltd and Xiamen Airlines - ordered 41 787 Dreamliners. The first of these planes will be delivered to China Southern in 2012. Boeing expects to get new orders for 787 Dreamliners in the next 18 months in China, Mounir said. Air China, which ordered 15 aircraft, will start receiving its planes from the fourth quarter of 2015, Rao Xinyu, secretary of the board of the airline, told China Daily. Air China's 787 Dreamliners will mainly fly on the North American routes and some European routes, Rao said. Boeing has received 821 orders for 787 Dreamliners from 57 carriers worldwide, but the company only can produce two and a-half aircraft monthly on average. "We plan to enlarge our production capability to 10 a month by 2013 to meet the huge demand," said Randy Tinseth, vice-president of marketing of Boeing.

Retired Chinese basketball star and former NBA player Yao Ming has been elected vice-chairman of Shanghai Public Diplomacy Association, adding another crown to his already swelling title list. Yao Ming receives his letter of appointment as the "Honor Ambassador" of the Shanghai Public Diplomacy Association, Dec 5,2011. The association's council held its second session on Monday with the newly-appointed Yao as its vice-chairman, Xinmin.cn reported. The council also named Yao as the association's "Honor Ambassador". Yao said his new role as the association's vice-chairman will be a little different from his previous image ambassador posts for other causes and accepts he will need to do some "tangible" work. The 31-year-old father, who retired from basketball in July 2011, said he was looking forward to making a contribution to public diplomacy and sharinghis eight-year experience of living in US. The Shanghai Public Diplomacy Association was formed to help explain Shanghai and China to the outside world.

Hong Kong*:  Dec 6 2011 Share

Local computer scientists have developed software that improves wireless internet connectivity by 100 times and halves the cost. The software is part of a dynamic wireless access infrastructure network called LAviNet, which uses a set of innovative channel selection and routing algorithms to avoid traffic congestion and reduce signal interference. Gary Chan Shueng-han, associate professor of computer science and engineering at the Hong Kong University of Science and Technology, said the technology more than doubles the rate of data flow, and the signal strength is improved by 100 times. "Most of the existing wireless solutions are based on installing access points fixed in some places," he said. "In environments with obstructions and blind spots, they don't work well." A Wi-Fi access point, or hotspot, has a range of about 20 metres indoors and a greater range outdoors. Multiple overlapping access points can cover large areas. LAviNet is programmed to choose the best channels and paths to minimise interference and maximise throughput, according to Chan. And to address the blind-spot problem, it uses a flexible routing algorithm to switch rapidly to a backup path based on the wireless link quality measured in real time. When a router's connection is weak or disrupted and data cannot be transferred, the system automatically switches to other routers until it finds one that works. The system can be installed on most Wi-Fi access points and wireless routers without the need to replace the existing costly infrastructure. Research for the project, which began in 2007, used about HK$10 million in funding support from the Innovation and Technology Commission. The system has also been commercialised and used in airports and container terminals, where cabling between access points is "very costly and sometimes even impossible", according to Chan. Cheng Chung-keung, information technology services manager of cargo firm Modern Terminals, said the technology had helped his firm strengthen its wireless connectivity while halving the cost. He used to rely on conventional Wi-Fi to process data, but the connection could easily be broken, for instance, when a container occupied the space between the user's computer and the router. A conventional network covering a range of about two kilometres cost him about HK$400,000. Cheng said he was considering using the system in other parts of the terminals.

Competing to attain enlightenment? It could be a stretch. Yet some of the region's best yoga practitioners brought their poses to Hong Kong this weekend for the first major competition of its kind to be held here. The inaugural Dayal International Yoga Championship began on Friday and will end today at the Sheung Wan Municipal Services Building in Central. Organised by the Hong Kong Yoga Federation and Dayal Leisure and Cultural Association, the total prize money is HK$60,000 - the most offered for such an event in Asia. The tournament drew some 170 participants - and organisers expect that figure to rise next year based on the success of this year's event. Competitors from overseas are given subsidised accommodation and free board. Seven places are supporting the competition, with representatives from yoga associations and federadtions from India, Singapore, Thailand, Taiwan, mainland China, Macau and Vietnam. "Our ultimate goal is to foster a healthier and buoyant Hong Kong via the peace and happiness that yoga can bring," said one of the tournament organisers, Yuva Dayalan. "We want to build a platform for yoga practitioners to share their knowledge and experience via international teacher workshops, training programmes and championships which meet international standards." But does the idea of competing for money fit with the principles of yoga? Dayalan thinks so, arguing that from "time immemorial in India", yoga competitions like the one in Hong Kong have been staged, mainly so that participants could learn various techniques from each other. "These competitions teach individuals different styles and positions to fine-tune their final posture," he said. Dayalan, a practitioner who created a form of yoga that improves badminton players' form, claimed such events generated interest and encouraged more people to take up the ancient discipline. "The response we have had from local competitors has been very encouraging and they all obviously enjoyed taking part," he said. In the maiden championship, there are three main categories: individual competitions, artistic yoga and rhythmic yoga. In the individual category, the contestant is given a set of asanas, or yoga postures, to perform. Those in the artistic yoga category must perform eight to 10 asanas choreographed to music within three minutes. In rhythmic yoga, two female or two male competitors give a synchronised performance to music, and they also have three minutes to perform at least eight to 10 asanas. An overall Champion of Champions will be selected and there will also be categories for those competing at the under-18 level.

Sun Yat-sen's elder brother may have had ulterior commercial motives in supporting the 1911 revolution. And Sun's first wife was miserable at home because of his prolonged absence. These are some of the little-known details getting an airing by a local cultural group breathing life into the revolution's key players. Hulu Culture's tours in Central focus on the importance of Hong Kong's role as the setting of the 1911 revolution. The tour includes two short plays about the "Father of the Nation" by members of the drama group Theatre Space. With a park and a playground providing an outdoor stage, five members in period costume tell their version of small though consequential events that led to the end of dynastic rule a century ago. Sun's estranged first wife, Lu Muzhen, for example, could not accompany him on his revolutionary campaign because her feet were bound - and she could not bear his long absences from home. That's where Sun's concubine of two decades, Chen Cuifen, comes in. A staunch supporter of the revolution, Chen cooked and cared for Sun and his comrades while he was still married to Lu. Giselle Poon Ying-ying, a tour group member, said: "The performance made me feel like I had travelled back in time. Who would have thought that Sun's elder brother Sun Mei might have had ulterior commercial motives to support the revolution? We are only taught about how great he was, but this tries to show another perspective. The performance is actually quite objective because it shows the historical figures' strengths and weaknesses, like Sun's troubled married life." Nine-year-old history buff Catherine Chan Cheuk-tung was captivated by the tour, which she took part in with her mother. "I was a little scared when he yelled," Catherine said, referring to the part where Sun's elder brother yells at him for being too naive in his lofty revolutionary goals. "The drama was very interesting. It is much better than learning history from a book. My school does not teach that much about the 1911 revolution, but I love Chinese history because it is so relevant to our lives." At one point, the actor playing Sun stands on a park bench to give a speech about his revolutionary ideals, encouraging young people to educate themselves through reading and maintaining an open mind. Tour members gather around, watching and listening intently - just as Hongkongers in 1911 would have done. The 2-1/2 -hour tour is lead by staff from Hulu Culture who take the public along the Sun Yat-sen Historical Trail. They offer insight into the lives of Sun and other revolutionaries such as Yeung Kui-wan, a friend of Sun's who was assassinated in Hong Kong in 1901 by a Qing government agent, and Tse Tsan-tai, a co-founder of the South China Morning Post (SEHK: 0583).

The increasing politicisation of Hong Kong is adding to the burden on civil servants, says chief executive candidate Henry Tang Ying-yen. And the former chief secretary (pictured) suggested he had personally fallen victim to this trend. Speaking at a forum for civil servants, Tang referred to the HarbourFest saga, a series of concerts intended to help revive the economy in 2003 after the outbreak of Sars (severe acute respiratory syndrome) that turned into a series of blunders. "The city is getting more politicised. Out of 100 tasks, an official may have performed 99 of them excellently, and one of them slightly badly. But that single incident is usually picked out and criticised heavily," Tang said. "I've had this experience myself - you probably remember the HarbourFest incident." Tang said he had learned a lesson from the saga: "When you think something is the right thing to do and you can hold yourself and others accountable, then you should do it." At the time, Tang was the secretary for commerce, industry and technology. He was accused of failing to take responsibility for the fiasco, in which oversight of the concert budget was thought to have been mishandled. Tang arrived late at the forum and left early, but denied he was trying to avoid fellow candidate Leung Chun-ying. "I had other commitments before and after the forum," he said. New People's Party chairwoman Regina Ip Lau Suk-yee, who says she is considering whether to enter the race for the top job, also spoke at the forum, which was organised by the National School of Administration's Hong Kong Alumni Association. Leung invited civil servants to take part in drafting his manifestos. The former Executive Council convenor defended criticism of his lack of experience working with civil servants, saying he had been involved in civil service issues in his three decades of public service. Ip, a former senior official, said the next government needed to shoulder political responsibilities to reduce criticism from civil servants.

Forget the fact that there are only four others like it in the world and that it has a HK$100 million price tag. The first thing you'll notice about the star attraction at this year's Hong Kong International Boat Show is ... its colour. The Baia Argonauts vessel, owned by one of Hong Kong's most well-known tycoons, is purple. But while the yacht itself definitely stands out from the crowd, the owner is keeping his identity a closely guarded secret. Edwin Ho, of Starship Yachts, who exhibited the vessel on the mogul's behalf, said: "The tycoon only bought it six weeks ago, but was keen for it to be shown to the public, which is why it is here. "The fifth boat of this kind that was built was bought by the King of Qatar. It's a special boat." Built in Naples, Italy, it is 31 metres long and can cruise at up to 50 knots. Ho said its unique design, both inside and out, and its advanced engineering and technology make it a must-have for the rich and famous. He said there was a huge market for luxury boats in Hong Kong, but that space was a problem with berths at a premium. "Hong Kong's market for buying boats is steadily getting bigger, but there are fewer and fewer berths available," he explained. "Typhoon shelters are greatly underutilised and the government should make more available to pleasure crafts." The show, being held at Club Marina Cove in Sai Kung, is the largest in Southeast Asia and finishes today. Potential local and mainland buyers as well as water sports enthusiasts have been inspecting the 70 boats on display. The total value of the vessels - presented by more than 50 top makers and dealers from Italy, England, France, the United States, Australia, Taiwan and China - is more than HK$700 million. Now in its 17th year, the show features various brands that include not only new designs, but also advanced engineering and state-of-the-art technology. A wide array of water sports equipment and accessories are also on display at more than 50 booths.

Thousands of British passport holders in Hong Kong and on the mainland face being marooned because of little-known changes in renewal procedures. Regulations introduced last August mean that the applications are dealt with in Hong Kong but the passports are issued from Britain. Previous passports are cancelled as soon as the person applies for renewal, and the new passports are taking up to four weeks to arrive. That means business people across Asia can be stranded and unable to travel while they wait. One Hong Kong businessman was forced to spend HK$15,000 travelling to London to renew his passport or risk losing key deals in China and India because the Hong Kong processing centre could not guarantee the new passport would arrive before he travelled. The regulations are also severely affecting British passport holders who commute between Hong Kong and the mainland on an almost daily basis. They have to renew their 10-year passports as often as every 10 months because they are full. Officials in London say the move was prompted by security concerns and the need to save money. But British chambers of commerce in Hong Kong, Singapore and Bangkok are so concerned about the impact on business they have written to British Prime Minister David Cameron and several ministers calling on them to amend the system. They are also worried about further proposed changes, due to be introduced by 2014, that will force passport holders to apply directly to Britain for a new passport rather than to one of the seven regional passport processing centres around the world. The Hong Kong centre, covering north and southeast Asia, deals with around 53,000 applications a year, of which about 40,000 are for renewals. Brigadier Christopher Hammerbeck, executive director of Hong Kong's British Chamber of Commerce, said it was "unacceptable" there was no fast-track service to shorten the renewal time. He said the chamber had suggested an express service along with a larger, 96-page passport in a letter to Vince Cable, Britain's secretary of state for business. The chamber has also contacted three other government officials, including Foreign Office minister Jeremy Browne. The British consulate general estimates there are 250,000 British citizens in Hong Kong, including 30,000 expats and around 16,000 British nationals with mainland work visas. The changes also affect holders of British National (Overseas) passports, although out of around 3.4 million issued, only about 7,000 are renewed each year as travellers appear to prefer Hong Kong SAR passports. Tony Wines, director of Turnkey Consulting, spent HK$15,000 on a return air fare, a hotel and meals to renew his passport in London. Wines, whose passport had one page and eight years left, urgently needed a replacement because he was making visits to China and India inside a week to support bids for new contracts. "I had to go," he said. But when Wines applied at the British consulate in Hong Kong he found the passport would not be issued locally. Instead, he was told it would take a "minimum of three weeks and possible four" for the new passport to be sent from Britain. An emergency travel document could be issued, at a cost of about HK$1,300, but while it would be accepted by the mainland authorities, Wines said it would not be recognised by Indian immigration. With no fast-track service available, Wines decided to fly back to London, where a new passport was issued in 24 hours. He said: "It was a real hassle. The change in legislation has not been brought to people's attention. I don't understand why there is no premium service here." One British citizen, who became aware of the changes only when he checked the British consulate website said: "I work in Hong Kong and my family is in Shenzhen. "What am I supposed to do every 10 months when the time comes to renew my passport? Spend HK$800 a night for a hotel room for three or four weeks waiting for a new passport or try to work from Shenzhen?" Jo McPhail, head of the overseas passport management unit at the Foreign Office, said the passport operation was shifted back to Britain to economise and improve security by cutting the number of blank passports being moved globally. She said the majority of applicants received new passports within two weeks and that 28 days is the "maximum turnaround [time]". No express service was currently available outside Britain. McPhail said technology issues meant a person's passport was cancelled as soon as they applied for a new one.

Most young Taiwanese say they would be unwilling to take up arms to protect the island's self-rule. A survey published this week by Taiwan's CommonWealth magazine appears to confirm that Taiwan's process of demilitarisation is rapidly gaining steam. Based on a sample of students aged 12 to 17, it found only 38.7 per cent could see themselves or a family member fighting if war broke out with the mainland, while 44.3 per cent said they could not. The remainder had no opinion. "It goes without saying that the number of Taiwanese willing to fight has come down significantly in recent years," said former Deputy Defence Minister Lin Chong-pin. "I'm even surprised that the number of pro-defence people cited by the magazine is so high." The Defence Ministry declined to comment. While Taiwan plans to end its current system of 11-month mandatory male conscription in favour of an all-volunteer force by 2014, a lack of funds and difficulty in attracting recruits are almost certain to push back that date by several years. That will leave the military dependent on large numbers of apparently unmotivated draftees. Tamkang University military specialist Alexander Huang says the negative trends in volunteer force recruiting are especially worrying. "I have been asking university students for several years now whether they would be willing to join an all-volunteer military," he said. "I get positive responses from no more than 2 or 3 per cent." Taiwan, which split from the mainland amid civil war in 1949, has been engaged in a gradual programme of detente over the past two decades. This culminated in Taiwanese President Ma Ying-jeou's efforts to bring the sides ever closer together, mostly through a series of ambitious commercial initiatives. But Beijing has never renounced its long-standing threat to take over the island by force should it move to make its de facto independence permanent, or delay unification indefinitely. Despite the threats, Taiwan is now a remarkably un-militarised society, with few signs of a military presence. Uniformed military personnel are rarely seen in major cities, and while highlights of annual war games are shown on television to boost morale, few people outside of the armed forces take them very seriously. Both Huang and Lin ascribe the lack of military consciousness to the rapid improvement in relations with the mainland, which they said made it difficult for Taiwanese young people to conceive of the possibility of a return to the tension of the past. "The atmosphere in cross-strait relations is so relaxed now," Huang said. "It's difficult to envision a war."

 China*:  Dec 6 2011 Share

Private-equity executives say the time is good for investing in Asia. With a global economic downturn possibly looming and the financial industry roiled by the European debt crisis, credit is tight for companies looking to expand. That means there are plenty of potential targets looking for investors. X.D. Yang on differences between Asia-Pacific management styles: 'In Australia, something that takes two meetings and two months, in China can take six months.' Still, finding businesses that need help and figuring out which ones to give it to are not the same thing. For example, in recent months, several big funds have lost money on Chinese companies whose stocks tumbled amid allegations of fraud or accounting misstatements. "We're in a business where you'll always have some failures. It's important to keep things in perspective, learn and move on," says X.D. Yang, who for 10 years has been managing director and co-head of Carlyle Asia Partners, a unit of giant U.S. private-equity fund Carlyle Group. Mr. Yang spoke to Duncan Mavin about the challenges of managing portfolio companies—and an almost 200-strong private-equity team—across a diverse region. Every company we invest in, we generally have a very commercial, enterprising entrepreneur. But generally, because they've been growing so fast, the team structure and the management practices do not follow what you would typically see in a large company. Things are not so systematic. Decisions are based on instinct instead of analysis. A lot of entrepreneurs started with nothing, so it pains them to spend money on financial systems or information technology. But once they get to a certain scale, it's difficult for them to keep track of everything and to attract high-quality managers. We know China has a lot of opportunities, and it is one of the most attractive places we invest in the world. But it is also one of the most complicated, challenging places to make investments. If you meet with 10 companies, the probability some will not meet your standards is very high. Sometimes, you think you're investing in an apple but you get an orange. Investing in China, inevitably, if you do it for 10 years and invest in 30 or 40 companies, some of them will have problems. Overall, I think [exposing the problems] is good for the industry, for China. Government will become more focused, business people are more focused, the banks are more focused, capital markets are more focused. Mr. Yang: One of the things Carlyle has done since the beginning is to emphasize localization. So in each country, our team is natives of that country. We don't want a Chinese person doing deals in Australia or India. To be effective and understand local business and to be able to build relationships with local management, it's critical to have local staff. At the same time, we want to build one cohesive organization. Teamwork. I know everyone says that. But I think we genuinely try to find people from a personality perspective that can work well with each other. Private equity is very entrepreneurial and each person needs to be commercially savvy and able to make decisions on their own. On the other hand, we don't want people who are prima donnas. The relationships between management, board and owners are different. In Australia, managers are very professionally trained. They've worked in a business setting where things can be conducted very efficiently. In China, to get our views accepted takes a lot of back and forth. Our team spends a lot more time persuading the CEO to do things we believe to be the right way. In Australia, something that takes two meetings and two months, in China can take six months. We might say to the entrepreneur, "Your marketing person is not strong." He might say, "I know he's not strong but he's a good person and has been loyal." So it takes a long time. In virtually every company we invest in in Asia, we recruit management into the company. Sometimes it's a CEO who recruits his own team. Sometimes in China or India, we're a significant minority investor, the management is already in place—generally an entrepreneur—and we try to hire people into different functional areas, let's say finance or marketing. We may start off with 20 to 30 candidates. We narrow it down to 10 or so. We interview all of them. Then we select three or four that we think have the right background that may fit into the company. We try to talk to the majority shareholder. We try to assess if the candidate can survive in the culture. In every company, the entrepreneur's personality is different and dominating. We have to make sure the candidate and entrepreneur have good chemistry. Once the person is in, we do a lot of hand-holding. In the beginning my team will be in the company every week, maybe every day. We don't want to get in the way. It's easy to get too involved—you get in and you start to say, "This marketing brochure doesn't look right. Should there be two people or three people on the cover?" Then I think you're too involved. One of our founders, Bill Conway, taught me a lot about management and investing. One of the key things he taught me is to work on the important things. Generally people like to work on the urgent things—they confuse urgent with important. 

Vice President Xi Jinping has pledged stronger ties with Burma's military chief, days before US Secretary of State Hillary Clinton starts a historic trip to the country. Clinton will become the most senior US official to visit Rangoon in more than 50 years tomorrow, when she arrives on a trip seen as an attempt to advance US priorities in a country that has long enjoyed close ties to China. Xi proposed that the nations' militaries "enhance exchange and deepen cooperation" when he met the commander-in-chief of the country's armed forces, Min Aung Hlaing, in Beijing, Xinhua News Agency said. "The friendship, forged by leaders of the older generations, has endured changes in the international arena," Xinhua quoted Xi as saying. "China will work with Burma to further bolster the comprehensive strategic partnership of cooperation," he added.  Burma and the mainland have long been close allies, although the relationship is complicated. The country recently defied Beijing by shutting down work on an unpopular dam that would supply power across the border. Meanwhile, some Southeast Asian nations are resentful at Beijing's overwhelming economic influence and historic border conflicts.

Models prepare for 19th New Silk Road Final in S China's Hainan. Models pose for photos during a shooting activity of the 19th New Silk Road Model Final in Sanya, south China's Hainan Province, Dec. 4, 2011. To make preparation for the final which falls on Dec. 10, those models took part in the training, dress rehearsal and shooting activities from Thursday. 

What do jasmine, the pipa musical instrument, Louis Cha's martial arts classics and admiral Zheng He have in common? The answer is their link to Persia - present-day Iran. Today, when the mention of Iran brings images of terror, it is hard to remember that the region for the most part of its long history has been a well of inspiration and ideas. Chinese culture has benefited tremendously from the exchanges between the two ancient civilisations. This is the potent message brought here by Bruce Wannell - an Oxford-educated expert on Persia and modern Iran. Wannell was visiting Hong Kong and mainland China for the first time and gave talks here and in Beijing over the past week. Drawing from years of study, research and travel, Wannell painted a vivid picture of exchanges between Persia and China - starting from early in the Han dynasty (206BC-AD220), reaching a peak in the golden age of the Tang dynasty (618-907) and continuing until the Ming dynasty (1368-1644), when China clammed up. The exchange involved mostly trade - on camel caravans on the Silk Road or merchant ships braving the Indian Ocean. From China, traders brought silk, porcelain and handicrafts and from Persia came warhorses, musical instruments and worked metal. The trade was sometimes carried out via a third country - often in Central Asia - and was frequently disrupted by war, natural disaster or politics. But the traffic of goods and ideas always resumed and flowed both ways for centuries. Official contacts also started early. Chinese emperors since the Han regularly dispatched envoys to Persia. And in return, the Parthian and Sassanid empires sent envoys to China. Some Persian scholars were even employed in the Chinese court. "In many aspects of Chinese arts and culture we can find the traces of Persian influences," Wannell said. "Just as we can find strong Chinese influences the other way round. Many Chinese scholars in modern times have also made findings on the subject. Apart from Buddhism, the earliest foreign religion in China, Zoroastrianism, originated in Persia. It later greatly influenced and shaped the introduction of Christianity to the country. Two other Persian-influenced religions - Manichaeism and Nestorianism, also arrived in China shortly afterwards. Manichaeism in particular was to play a powerful role in China. Wu Han, one of the most important modern Chinese historians, linked Manichaeism to the Ming sect late in the Yuan dynasty (1279-1368). Zhu Yuanzhang, the founding emperor of the Ming dynasty, is believed to have been a member of the sect. He named his dynasty "Ming", meaning light, from Manichaeism, which worships the Light Buddha. Wu's theory gained much following, although it is disputed by some scholars, such as the Hong Kong-born historian Chan Hok-lam. Historians today are still debating the origin of the name Ming, but nobody disputes Manichaeism's influence on Chinese culture and religion. Louis Cha, or Jin Yong, based his popular martial arts classic The Heaven Sword and Dragon Sabre on that history. In the book, Cha used many verses written by the great Persian poet Omar Khayyam, whose work was introduced into China in the Yuan dynasty and became popular again in modern China. In 2009, a team of Chinese experts, including two from Hong Kong, found Manichaean shrines and relics in Fujian. Wannell believes these rich cultural dialogues between China and Iran should not only be a thing of the past. Despite the growing tension between Tehran and the Western world, the British scholar said China should keep an independent foreign policy. He believes both countries will benefit from open exchanges. "It's extremely important for China to pursue an independent foreign policy in its exchanges with [ancient civilisations] like Iran and India," he said in Hong Kong. "If you look back into history, no great civilisation or cultural movement can exist in isolation."

Delegates to the First BRICS (Brazil, Russia, India, China and South Africa) Friendship Cities and Local Governments Cooperation Forum reached a series of agreements in China's southern beach city of Sanya on Saturday. "On the principles of openness, solidarity and mutual respect, it is of great importance to promote common development of friendship cities and local governments of BRICS by introducing a long-term cooperative mechanism," said Li Xiaolin, president of the Chinese People's Association for Friendship with Foreign Countries. The two-day forum, which is an important supporting activity of the BRICS Leaders Meeting, included some key issues such as food safety, urban development and environmental protection, financial crisis, energy strategy and intercultural communication among BRICS sister cities. The forum, which will be convened annually by the hosting country of the BRICS Leaders Meeting, will give special attention to cooperation and collaboration and share experiences and practices to tackle challenges of urbanization of BRICS cities, Li said. The second forum will be convened in India next year. "The forum will strengthen dialogue and cooperation in the fields of provincial and local partnership, including infrastructure, community development initiatives, human settlements, green economy, educational exchange programs, culture, friendship cities and transfer of appropriate technologies," Li said. So far, 94 Chinese autonomous regions, provinces and cities have established ties of friendship with their Russian counterparts, and 48 with Brazil and 25 with South Africa. "Indian delegates have expressed strong willingness to work closely with China to share experiences and cooperate in the fields of economic and cultural development," Li said. Sergey Razov, Russian ambassador to China, said authorities in Russia are determined to develop closer cooperation with BRICS counterparts as his country is a major center of agriculture, new energy and industry. "The forum this time offers a very good chance for all BRICS members to share their experiences and skills in tackling problems that our cities are facing. We will do more next to learn from each other and better prepare for the next forum in India," he told China Daily. Razov said with rapid growth in trade and economic cooperation, more efforts should be put into expanding direct links between cities and regions to better achieve common goals in development. Albert Kleiman, chief of the International Advisory under Secretariat of Federal Affairs of the Secretariat of Institutional Relations of the Presidency of Brazil, said all BRICS nations are facing challenges from rapid urbanization, migration, food security and other issues, which needed joint efforts for resolution. "Local governments are responsible for better implementing central government's policies to improve people's well-beings," he told Xinhua News Agency.

Hong Kong*:  Dec 5 2011 Share

The simple menu and and competitive prices of Yoshinoya have seen it expanding across the mainland and in Hong Kong despite rising overheads. Hop Hing Group shares almost doubled after resuming trading in Hong Kong yesterday following news that it will buy the mainland operations of fast-food chain Yoshinoya from its chairman for HK$3.48 billion. While analysts generally believe the deal is expensive, they are positive the acquisition would help expand Hop Hing's portfolio and strengthen its financial position. The group, which produces "Lion and Globe" cooking oil, jumped 95.4 per cent to 86 HK cents at its highest, and closed 59.1 per cent higher at 70 HK cents. Other local fast-food chains, such as Cafe de Coral (SEHK: 0341) and Fairwood (SEHK: 0052, announcements, news) , have seen their profit margins squeezed by rising food costs, rents and wages. But Alex Wong Kwok-ying of Ample Capital group said that Yoshinoya's market positioning was better. "Cafe de Coral is not really so cheap any more for fast-food goers," Wong said. "Yoshinoya on the other hand not only has a simpler menu but is also cheaper." Patrick Yiu Ho-yin, of Cash Asset Management, said the acquisition provided Hop Hing with a new element for growth. "Hop Hing has always been a steady company making a few million dollars of profit every year," Yiu said. "The new business injects the concept of domestic consumption into the company and provides it with new growth momentum." The acquisition values the beef rice chain at 25.9 times last year's earnings, compared with the median of 15.54 times net income of 13 similar food-catering deals, according to Bloomberg. Hop Hing had a market capitalisation of almost HK$200 million before the acquisition. It has proposed raising the authorised share capital to HK$1.48 billion from HK$80 million, creating 14 billion shares to settle the payment. Hop Hing chairman Peter Hung is selling only Yoshinoya's mainland operations, held by a company called Summerfield Profits. The chain's business in Hong Kong, which is partially owned by the Hung family, is not included in the transaction. Yoshinoya has more than 300 shops on the mainland, although most of the business is concentrated in the northern region, including Beijing, Tianjin and Heilongjiang. Yiu said the company had probably done its research and found that the cuisine would be better received in certain areas. Summerfield's earnings grew 48.4 per cent to HK$120.4 million last year, from HK$81.1 million in 2009.

Organisers of this year's Hong Kong Brands and Products Expo expect the bargain hunters to be out in force as they try to beat inflation. And exhibitors are expected to make some HK$600 million from the event - HK$100 million more than last year, its organiser, the Chinese Manufacturers' Association of Hong Kong, said. The expo will run from December 10 to January 2 at Victoria Park. Visitors to the fair are expected to stock up on gifts and food for the Lunar New Year, which falls earlier than it did this year. With wider walkways between stalls there will be fewer booths - 880 this year, down from 900 last year. But the association is expecting 5 to 10 per cent more visitors this year, its president-elect Irons Sze Wing-wai said. Some 2.4 million people attended the expo last year. The fair will be divided into nine zones including food and beverages, groceries, noodles, dried seafood, beauty products, household tools, children's products and a food plaza. Bargains will remain the focus, with three periods during which hefty discounts will be offered on certain goods. From December 10 to 16, health products and drinks will be discounted, with bird's nest drinks, nutrition tablets and herbal supplements usually priced from HK$8 to HK$48 on offer at HK$1 apiece. From December 17 to 23 the discounts will shift to food, soup and seasoning, with sausages, olive oil, cooked abalone and noodles at HK$1. And from December 24 to 30, health-care and household products and clothing will be discounted by as much as 90 per cent. Some 4,000 families, including low-income households, as well as single elderly people and those with disabilities will get in free. Each family will receive a HK$500 subsidy to spend on anything at the expo.

The e-channel system at Lo Wu border control. Immigration chiefs will allow hundreds of thousands of frequent mainland travellers to cross the border into Hong Kong using self-service e-channels, a system originally designed to shorten waiting times and ease the pressure on border officials. However, there are fears it may be abused. One lawmaker fears city hospitals could suffer because pregnant women from the mainland without the required medical booking letters may use the scheme to cross the border and give birth. The e-channels allow travellers to bypass counters and one-on-one scrutiny by immigration officers. The scheme is aimed at mainland Chinese holders of multiple-entry visas who have visited Hong Kong three times or more over the past 12 months. But there are worries that with a potential 560,000 eligible people, 470,000 of them Shenzhen residents, women in early pregnancy would be able to register when it is not so easily noticed. When the time comes, they could then cross the border using the e-channels almost unchecked - as only three e-channels are guarded by one immigration officer. Lawmaker Emily Lau Wai-hing, a member of the Legislative Council's security panel, called the e-channel scheme a "worrying loophole" resulting from the department not fully considering the implications. "I understand [the department] needs more measures to cope with the stressful traffic at the border ports, but the government must state clearly how the potential [for pregnant women to enter without authorisation] could be fixed," Lau said. The government this year said it would cap the number of births to non-local mothers at 34,400 in 2012 - about 31,000 at private hospitals and 3,400 at public hospitals. Immigration officials dismissed the worries, saying the self-service channels would free up more officers when it started next month. Assistant director Corrado Chow said: "The officers will be able to spend more time checking and examining different individuals, rather than spending most of the time checking passports." Chow said travellers who were pregnant would have to show their hospital booking letters when registering for the e-channels, a process that is due to begin on Monday. Applicants must provide their fingerprints and photographs before e-channel access can be granted. The scheme will start at the Lo Wu and Lok Ma Chau spur line checkpoints, before expanding to six other places, including the airport, by 2013, where 85 e-channels will be installed.

Cathay Pacific flight attendants and ground staff will have a 5 per cent pay rise next year, the airline announced yesterday. About 12,000 employees - including ground staff, cabin crew and other Hong Kong-based workers - will benefit from the salary increase and a one-month year-end bonus. Pilots are excluded from the deal. The Cathay Pacific Airways (SEHK: 0293) Flight Attendants Union, which had demanded an 8 per cent pay increase, described the offer as "acceptable". It called upon other employers to follow the lead to help workers combat inflation. "Inflation is the worst nightmare for employees. I hope all employers will offer a pay rise to help them out," union secretary Tsang Kwok-fung said. A robust market over the past two years enabled companies to make healthy profits, he said, and that should be shared with workers. The airline, which has about 12,970 staff in all, awarded a 4.5 per cent pay rise earlier this year, to the union's dissatisfaction. Flight attendants threatened industrial action over the Lunar New Year holiday but ended up not pursuing it. Union chairwoman Dora Lai Yuk-sim said: "The process of negotiation this year was especially tough due to the dramatic ups and downs in the economic environment." The 6,000-strong union had pushed for the 8 per cent increase based on inflation and the company's profitability, but it compromised in recognition of global economic uncertainties and sluggish demand for cargo services. With the addition of new freight aircraft, Cathay's cargo capacity is expected to rise up to 20 per cent next year. But its cargo volume shrank more than 17.5 per cent year on year in October and its load factor - the percentage of cargo space occupied - dropped to 66 per cent. The revised salaries will apply to 3,600 flight attendants on monthly wages starting from January 1 and another 5,400 hourly rated employees in April. Similarly, Dragonair said its 160 Hong Kong-based ground staff would also get a 5 per cent wage rise and one-month bonus. Pay for cabin crew would be reviewed separately. According to a summer survey by the People Management Association, 66 of 92 local firms polled planned pay rises of, on average, 4.5 per cent for frontline staff and 5.1 per cent for supervisors. Association president Pauline Chung Hei-ching said the retail and construction industries were likely to live up to the forecast rises, compared to the finance and manufacturing sectors, which had been hit harder by the European debt crisis. Consumer prices rose 5.8 per cent in October, compared with the same period a year ago. Chinese University economics professor Terence Chong Tai-leung said inflation was unlikely to stop in the short term. "MTR and electricity charges are expected to increase next year," Chong said. Nevertheless, he said, workers would be in a strong position to bargain for more pay as unemployment remained low, at 3.3 per cent from August to October.

Zao Wou-Ki's 'Kite and Birds,' a 1955 abstract, went for $4.5 million at Christie's round of fall auctions in Hong Kong. Mr. Zao is becoming a favorite modernist of newly wealthy Chinese. Newer buyers from mainland China dominated Christie's round of fall auctions this week in Hong Kong, boosting prices for such favored objects as snuff bottles and painted scrolls—even as collectors from elsewhere in Asia showed signs of slowing down. Christie's sale totaled $904 million in a volatile week marked by price swings. Records were broken for 20 artists across a dozen sale categories, but the overall tempo was less fevered than in the spring, and a number of items failed to sell, including a Ming-era "moonflask" expected to go for at least $3.6 million and a Zhang Xiaogang self-portrait priced at above $3.2 million. At the market's peak this spring, an earlier work by Mr. Zhang topped $10.1 million at auction, still a record for a Chinese contemporary artist. (All figures are in U.S., not Hong Kong, dollars.) Dealers said that fears of a regional credit crunch may have spooked buyers in Hong Kong and Taiwan, typically big players here. After four seasons of steadily climbing prices, some of the price tags this time around also looked "greedy," added Anna Ning, a Hong Kong dealer. Across the board, auction items often struggled whenever mainland buyers bowed out. For example, Christie's says around 80% of its wine sales in Hong Kong traditionally go to collectors living on Hong Kong Island. Yet bidding at this week's three-day, $8.3 million wine sale was a somewhat sober affair, with 189 offerings going unsold. A mainland buyer did buy the two priciest lots—Prince Robert of Luxembourg's 28 bottles of Château Haut-Brion—for around $295,000 combined. "We're in a slightly cooling market," said Christie's wine expert David Elswood, adding that buyers "feel they can afford to wait and see where the market is going." Bidding was also thinner than usual for top-end porcelain and contemporary art, categories that aren't as universally coveted in Beijing as say, Chinese paintings. Painting prices continued to soar, from Qing-era landscapes and calligraphy on scrolls to modern oil abstracts by Zao Wou-Ki and Chu Teh-Chun. Mr. Zao is quickly becoming the nameplate modernist for the nouveau riche, thanks to his easily identifiable abstracts that often blend earthy hues with thick brushstrokes. Christie's got $4.5 million for his pink-black 1955 abstract "Kite and Birds," more than doubling its high estimate. Cui Ruzhuo's "Lotus," which was painted this year and consists of eight scrolls, sold for $15.9 million, an auction record for the artist. On the contemporary side, a mainland phone bidder paid $1.8 million for Zeng Fanzhi's 2004 ghostly portrait of Mao Zedong, "Tiananmen." In another highlight, a Qian-dynasty blue and copper-red meiping vase went for $5.9 million. Richard Kan, a Hong Kong engineer who collects everything from Greek coins to Chinese ceramics, said he doesn't expect mainland buyers' demand for scroll paintings to wane anytime soon: "They're easy to carry" back to the mainland, he joked.

 China*:  Dec 5 2011 Share

Commerce Minister Chen Deming said Friday that China-U.S. trade rose 17 percent year-on-year to reach 363 billion U.S. dollars in the first ten months of the year. The increase led to China and the United States becoming each other's second-largest trading partners, Chen said at a dinner held by the American Chamber of Commerce in China (AmCham-China). Trade between China and the United States will likely exceed 400 billion U.S. dollars in 2011 and the figure will further increase in 2012 according to forecasts from the ministry and customs authorities, Chen said. "Next year will be a difficult year (for global economy), and a year in which China and the United States should deepen cooperation and join hands in coping with the crisis," Chen told Chinese and American entrepreneurs who attended the banquet. Chen said the growth rate of the world's second largest economy will stay above 9 percent this year. China's GDP growth dropped to a two-year low of 9.1 percent in the third quarter of the year, down from 9.5 percent in the second quarter and 9.7 percent in the first quarter, according to the National Bureau of Statistics. To boost bilateral trade, China will make efforts to increase imports from the United States while China hopes the United States to relax its restrictions on high-tech exports to China, Chen said. While continuing efforts in promoting U.S. investment in China, the country also expects the United States to create a fair and transparent environment for Chinese firms that intend to invest in the United States, Chen added. He said the two countries should explore new cooperation opportunities in fields such as energy saving, environmental protection, information technology and biomedicine. The two countries should also strengthen cooperation in infrastructure construction. Chen said China is willing to turn the U.S. debt it holds into investment in the United States, which will help solve its employment problems. In the first ten months of the year, the United States invested 2.57 billion U.S. dollars in China, down 18.13 percent year-on-year. The decrease was 9 percentage points higher than in the first three quarters. Chen also said he expects the consumer price index (CPI), a main gauge of inflation, to slightly exceed 5 percent this year in China. The figure is above the government's target of 4 percent. The country's CPI increased 5.5 percent year-on-year in October, easing from a 37-month high of 6.5 percent in July. Analysts expect the November figure, which is due to be released next week, to drop under 5 percent.

A machinist at work in Changsha. Mainland industrial companies have been in a slump, making their stock attractive to some investors Pacific Investment Management Company (Pimco) has been buying raw-materials producers and Chinese industrial companies, some of the world's worst-performing stocks this year, as policymakers in the fastest-expanding major economy move to bolster growth. China, which reduced the amount banks must keep in reserve by half a percentage point to 21 percent on Wednesday, might cut the ratio by as much as three percentage points in the next 12 months, said Masha Gordon, the head of emerging-markets equity portfolio management at Pimco, which oversees about US$1.35 trillion worldwide. "We've seen the first clear shift from tightening to selective easing on the monetary side in China." The central bank is cutting lenders' reserve requirements for the first time since 2008 as the European debt crisis curbs export demand and inflation slows from a three-year high. "We started with light positioning in the cyclicals and have been selectively adding to companies in the materials and industrial space, where we believe valuations are pricing in extreme distress," Gordon said. Some stocks tied to economic growth in developing nations "are very cheap relative to their average earnings power if you take the view that growth in emerging markets on a secular basis isn't coming to a halt". Gordon, who runs the Pimco EqS Emerging Markets Fund, said she had a "defensive bias" for the overall fund and was using options to hedge against potential "extreme" market declines. The MSCI Emerging Markets Index, a benchmark for stocks in 21 developing countries, has dropped 17 per cent this year. The emerging-market raw-materials index has declined 24 per cent and the industrials gauge has lost 27 per cent. The Hang Seng China Enterprises Index, which tracks Chinese companies traded in Hong Kong, is down 19 per cent. "Given policy flexibility and a generally healthy state of government finances, China does have scope to cushion the downturn through fiscal and selective monetary easing," Gordon said. "The key, as always, is whether policymakers manage to stay ahead of the market. This may prove to be challenging." Gordon also sees buying opportunities in Brazil, where policymakers cut borrowing costs by 50 basis points, or 0.5 percentage points, for a third straight meeting on Wednesday. Gordon said she had been "selectively adding" to shares of Brazilian financial companies after valuations declined this year on concern that slower economic growth and rising loan losses would curb profits. Gordon joined Pimco last year from Goldman Sachs Group's asset-management unit.

A hi-tech oceanic research vessel was launched in Wuhan , heralding a push into deep-sea areas of the world's oceans. The Chinese Academy of Sciences announced the completion of the 100-metre-long Ke Xue (Science) on its website yesterday. Costing more than 500 million yuan (HK$610 million), it features state of the art design and cutting-edge equipment. Its maiden cruise is scheduled for the western Pacific in June, where it will explore deep-sea areas. Professor Wang Fan , a researcher with the academy's Institute of Oceanology in Qingdao , Shandong , and a member of the design team, said yesterday that when they drew up the blueprint they envisioned Ke Xue as being one of the three most advanced research vessels in the world. "Ke Xue is modelled on the RRS James Cook of Britain and the G.O. Sars of Norway, undisputedly the best research vessels ever built," he said. "It is built to be at least as good as them. "The first few missions will be limited to the western Pacific. But soon, our cruises will go global to more distant areas such as the Indian Ocean and Atlantic. "With the best multibeam echo sounder and Doppler scanners on board, we can see deep, really deep, into the ocean." As the world's biggest factory and fastest growing major economy, China has grown increasingly hungry for oil and minerals. The central government, driven by depletion of domestic land-based resources, has encouraged offshore projects with generous funding in recent years. A submersible, the Jiaolong (Sea Dragon), descended to a depth of 5,000 metres in the northeastern Pacific in July following an earlier descent to 3,700 metres in the South China Sea. China is involved in territorial disputes with several countries, including Vietnam and the Philippines, in the South China Sea. In August, China won a 15-year licence to explore for polymetallic sulphide deposits in a 10,000 square kilometre area of seabed in the Indian Ocean. The deposits are believed to contain large quantities of metals such as gold, silver, lead, zinc and copper. Professor Chu Fengyou , a researcher with the State Oceanic Administration's Second Institute of Oceanography and a veteran of Chinese explorations, said that despite the cutting-edge technology of the Ke Xue, China was still alarmingly far behind countries such as Japan and the United States in terms of the hardware needed in the fight for deep-sea resources. "Ke Xue is a general purpose research vessel. It is an impressive piece of hardware that will give China an edge in fundamental research but it is not so useful in large-scale resource exploration such as deep-sea drilling," he said. "In fact, we don't have a large-scale resource exploration vessel, whereas countries such as Japan have already built up a gigantic fleet. I don't think we can compete with them unless the government invests much more money and builds more ships." Capable of running for two months non-stop and with a top speed of 15 knots, the diesel-electric turbines of the Ke Xue were exceptionally quiet and would cause minimum disturbance to the scientific equipment on board, Wang said. All the equipment was dedicated to scientific research and had no military applications, he said. The vessel would also be used by scientists from other countries.

The mainland's grain output rose 4.5 per cent this year to a record 571.21 million tonnes, with corn output beating expectations, the National Bureau of Statistics said. The bumper harvest will help ease inflation after record corn prices drove pork and egg costs to new highs. It marks the eighth consecutive year of growth in grain output, the bureau said in a statement on its website yesterday. The world's second-largest corn consumer produced a record 191.75 million tonnes of the crop this year, up 8.2 per cent from last year's harvest. Market analysts had predicted a harvest of between 180 million and 185 million tonnes. The mainland's consumer price index (CPI) has risen more slowly in recent months after increasing by a three-year high of 6.5 per cent in July. October CPI growth eased to 5.5 per cent from September's 6.1 per cent. The government has launched a slew of measures to fight soaring prices this year, with Premier Wen Jiabao declaring inflation public enemy No 1 and saying that curbing price rises is the government's top priority. China National Radio yesterday quoted Li Guoxiang, a researcher with the Chinese Academy of Social Sciences' Research Institute of Agricultural Development, as saying that the harvest would help the government battle inflation amid economic turmoil in the US and Europe. "It [the harvest] is of great significance in regard to our efforts to achieve overall price stability and to consolidate our achievements in macroeconomic adjustment and control," Li said. Rice production increased 2.6 per cent to 200.78 million tonnes this year, with wheat production up 2.4 per cent to 117.92 million tonnes, the bureau said, citing subsidies - at 141 billion yuan (HK$172 billion) this year - and favourable weather conditions as reasons for the healthy harvest.

Hong Kong*:  Dec 4 2011 Share

Hong Kong's shoppers and millions of visitors on spending sprees splashed out HK$34.2 billion in October - more than HK$1 billion a day. The government said yesterday that retail sales increased 23.1 percent from a year ago in terms of value and they climbed by 15 percent in terms of volume. A spokesman said sales reflected "vibrant local consumption demand and tourist spending." Shoppers mostly bought durable goods, the sales volume of which soared 117.5 percent. Sales of jewelry, watches and gifts jumped 31 percent, while electrical goods and photographic equipment gained 19.6 percent. But furniture sales fell 7.9 percent. "Because of the disappointing performance of property and stock markets, people would rather spend their money on durable goods. Weak property sales meant very little furniture sold," said Paul Tang Sai-on, chief economist of Bank of East Asia (0023). Tang expects sales for this month will rise by 20 percent from the same period last year. The sales volume for food, alcoholic drinks and tobacco, excluding those sold at supermarkets, was down 4 percent from a year ago. In the first 10 months of the year, the value of retail sales increased by 25.2 percent from the same period last year. Sales volume was also up 18.8 percent. Meanwhile, DBS Bank revised the gross domestic product forecast for next year to 2 percent from 4.5 percent. Also, Standard Chartered Bank (2888) said bad debts of small and medium-sized enterprises are at a reasonable level. However, the lender sees an unavoidable decline in orders for SMEs, as the fourth quarter is a low season for exports.

Macau casino revenue has risen 44 per cent to 244.26 billion patacas so far this year. Macau's casinos posted a 32.9 percent year-on-year rise in gambling revenue last month, as high rollers continued to throng the high-stakes baccarat tables. While the casino take is typically soft in November, which falls between the holiday months of October and December, in absolute terms last month's 23.06 billion patacas ranked as the city's fifth-best month on record. Still, the growth rate of 32.9 per cent represented Macau's slowest pace of expansion since August 2009, due to strong growth in the final months of last year. In the first 11 months of the year, Macau casino revenue rose 44 per cent to 244.26 billion patacas, or US$29.9 billion—about as much as Las Vegas Strip casinos booked in the five years from 2006 to last year. Melco Crown Entertainment co-chairman Lawrence Ho Yau-lung said this week Macau's casino yearly revenue growth rates of 40-50 per cent were "unsustainable". Ho expects growth to slow to 15-20 per cent next year, an estimate in line with most analysts' projections, as regional economies slow and Macau starts to encounter the problem of growth-on-growth. Despite recent reports of rising bad debts on the mainland, especially in the underground lending market centred in the eastern city of Wenzhou, gaming industry executives say they have not seen any sign that Macau's VIP junket agents are pulling back on credit. Junkets are the middlemen who bring mostly mainland high-stakes players to casinos, issue them credit and collect their gambling debts in exchange for hefty commissions. Junkets dominate the credit-driven VIP baccarat segment, which accounts for more than 70 per cent of total casino revenue in the year to date. Mass market revenues, too, continue holding up well as mainland visitors continue flooding into the enclave. Visitor arrivals from the mainland rose 30.5 per cent in October to 1.47 million. Mainland arrivals were up 20.9 per cent in the first 10 months, to 13.22 million, accounting for 57 per cent of all visitors to the city. Analysts said Wednesday's move by the People's Bank of China to cut the required reserve ratio for banks was likely to boost investor sentiment towards shares in Macau casino operators, but its impact on actual revenue growth would be limited. The move will boost liquidity in the banking system and marks an about-face from almost three years of monetary policy tightening. "We suspect that this reversal in policy could have a greater impact on sentiment than on market forces," Union Gaming Macau analyst Grant Govertsen wrote yesterday in a research note.

Though his Superior Rice Roll Pro Shop didn't get a star, Wong Tim-fat's eatery was listed as good value. Freshness is key, says Umberto Bombana, chef-owner of 8-1/2 Otto E Mezzo Bombana at Alexandra House in Central. Chef Umberto Bombana is in top-class company. The much-watched Michelin restaurant guide has endowed his Central restaurant, 8-1/2 Otto e Mezzo Bombana, with three stars, the first Italian eatery outside of Italy to achieve the exceptional grading. "It's a dream come true," Bombana, an 18-year veteran of Hong Kong, said. The restaurant is just one of two Western eateries in the city - along with French contemporary L'Atelier de Joel Robuchon - to be elevated from two to three-star status in the 2012 edition of the Michelin Red Guide Hong Kong and Macau, due out today. They join two Four Seasons Hotel restaurants - the French outlet Caprice and Cantonese restaurant Lung King Heen - that retain the coveted three stars. Bombana, who worked his way up from washing dishes three decades ago, said freshness was the essence of Italian cuisine. "Hong Kong is now the best city in the world. I can get all ingredients here," he said. In all, the guide bestowed 62 eateries with a total of 80 stars, up on the 75 stars dished out to 60 restaurants last year. Ten eateries received two stars and 48 had one star. Anybody interested in trying the new entries to the one-star category should be prepared to pay a little bit more. Last year HK$100 might have been enough for a meal at one-star debutantes One Dim Sum or Hin Ho Curry, but diners should expect to pay at least HK$160 to eat at this year's one-star entrants, which are either located in hotels or malls. If that's too rich, the guide's Bib Gourmand category suggests a range of restaurants that are not quite in the one-star league but offer good value for money. The six-month-old Superior Rice Roll Pro Shop in Prince Edward is one of this category's new listings. "There were no eateries that specialised in rice rolls. Chinese restaurants usually offer rolls made with shrimp, beef and roasted pork, but I want to offer more choices," co-founder Wong Tim-fat said. He said the zucchini and mushroom rice roll was a particular favourite of Deanie Yip Tak-han, who won the best actress award at the Venice Film Festival for her role as a servant in A Simple Life. Food critic Walter Kei said the results were "normal Michelin choices" - new entries are usually mid to up-market restaurants. "For people who don't know about Hong Kong, [the guide] is OK," Kei said. However, he questioned the guide's selection criteria, which might only work for Western restaurants. "I'm surprised to see almost the entire chain of Lei Garden has been awarded one star. I've never seen such a phenomenon in other Michelin guides. Should I say Hong Kong's restaurant management has done so well that standards of different branches can be kept at the same level?" Kei said. Yung Kee, a popular dining haunt for the rich, lost its one star; while Felix, a European restaurant in The Peninsula, was listed in the guide for the first time but failed to get any stars.

A billion-dollar smile from Florence Tsang as she leaves court yesterday. The former wife of a tycoon was yesterday awarded a divorce settlement of HK$1.2 billion, after the High Court ruled she was entitled to maintain the lifestyle to which she had become accustomed. Mr Justice John Saunders also found that there may have been criminal conduct on the part of the ex-husband, Samathur Li Kin-kan, and his father, Samuel Tak Lee, also known as Samuel Lee Tak-yee, in their attempts to oppose the claim filed by Florence Tsang Chiu-wing. The judge found that the men had forged a loan agreement that transferred virtually all of the husband's assets to his father. He referred the case to the Director of Public Prosecutions for criminal investigation. Finding in favour of Tsang, the judge more than doubled the amount of HK$524 million which he had estimated she would need to fund the lifestyle she had enjoyed during her marriage. His award includes funds for a HK$250 million property in Hong Kong, a HK$30 million property in London, HK$2.5 million for buying two cars in Hong Kong and another HK$1 million for a car in London. The court also allowed HK$5 million for buying a yacht and HK$4.6 million to enable Tsang to join clubs in Hong Kong and England. Tsang, a solicitor, said after the hearing: "I'm delighted that the proceeding has now concluded." She read the judgment in a consultation room with her lawyers, then reacted with a cheer and a broad smile. Tsang had asked the court to depart from normal practice and grant her more than of half of her ex-husband's assets, which the court found to be HK$6.4 billion, so that she and their daughter could maintain the living standards they enjoyed before the eight-year marriage ended in 2008. But the judge chose not to grant Tsang half of Li's fortune, after accepting suggestions by Li's and his father's lawyers that "without the father's contribution, the husband would have been nothing". Samuel Lee is the head of Prudential Enterprise, which has a vast investment in real estate all over the world and is best known locally for the landmark Prudential Hotel in Nathan Road, Jordan.

Two men whose images were captured by a surveillance camera are being sought by police investigating the suspected arson attack in a popular Mong Kok market street on Wednesday that killed nine people. Their blurred photographs were issued by police last night as five of the 34 people injured in the Fa Yuen Street blaze remained in critical condition in hospital. Eleven are in stable condition. A senior police officer said a reward of HK$300,000 or more might be offered to people providing information about the early-morning fire that started in market stalls and spread to nearby flats. The men were filmed walking separately in the space of about five minutes at the junction of Fa Yuen Street and Bute Street about the time the fire broke out. "The two men may provide important information to us so we want to interview them," said Superintendent Brian Lowcock of Kowloon West regional cr