China.Hawaii Chamber of Commerce ®
Hong Kong.Hawaii Chamber of Commerce ®
Asia Pacific California Chamber of Commerce ®

"Hawaii-China Guan Xi, We Get Things Done" - Trade Advocacy Organization

      061101-donald tsang.jpg (11044 bytes)   

 video  

 USA Small Business Administration (SBA) Selected Johnson Choi/HKCHcc 2008 United States National Champion

Click on the Logo to Join HKCHcc on   and follow us on 

 

Chinese business etiquette

Newsletter

Biz: China Hong Kong Hawaii SF

Seminar Material

What people said about us 

China Earthquake Relief

Tax & Government

Hawaii Voter Registration

Biz-Video

Hawaii's China Connection

Doing Business in Hong Kong & China

Share Hong Kong, China & Hawaii Biz*            

View HKCHcc and Hawaii Chinese Organizations Listing & Event Calendar
In Depth Look of Hong Kong - Past, Current & Future
In Depth Look of China - Past, Current & Future
To succeed in business in Hawaii, you must understand the islands
How to Do Business with China, through Hong Kong & Setting up Business in China?
Hawaii Failed Business Image and Continue Missed Opportunities

Skype - FREE Voice Over IP  View Hawaii's China Connection Video Trailer

Hong Kong, China & Hawaii News Archive for Year 2002  Archive Jan 1, 2003.........:>
January - April 2003  May - July  2003  Aug - Sept 2003  Oct - Dec  2003 January - Mar 2004  April - June 2004  July - Sept 2004
Oct - Dec 2004 Jan - Feb 2005  Mar - Apr 2005  May - Jun 2005 July - Aug 2005 Sept - Oct 2005 Nov - Dec 2005 Jan - Feb 2006 
Mar - Apr 2006 May - Jun 2006 Jul - Aug 2006 Sept - Oct 2006 Nov - Dec 2007 Jan - Feb 2007 Mar - Apr 2007 May 2007 June 2007
July 2007 Aug 2007 Sept 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008 Mar 2008 May 2008 June 2008 July 2008
Beijing Olympics Aug 2008 Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 June 2009
July 2009 Aug 2009 Sept 2009 Oct 2009 Nov 2009 Dec 2009 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 June 2010 Jul 2010
Aug 2010 Sept 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 June 2011 Jul 2011 Aug 2011 Sept 2012
Oct 2011 Nov 2011 Dec 2011 Jan 2012 Feb 2012
China Projects Bidding Information - update daily    Scholarship & Grants  News Archives in PDF Format 

Do you know our dues paying members attend events sponsored by our collaboration partners worldwide at their membership rates - go to our event page to find out more! After attended a China/Hong Kong Business/Trade Seminar in Hawaii...still unsure what to do next, contact us, our Officers, Directors and Founding Members are actively engaged in China/Hong Kong/Asia trade - we can help!

Are you ready to export your product or service? You will find out in 3 minutes with resources to help you - enter to give it a try

(approximate $ exchange rates: US$1 = HK$7.8, US$1 = RMB$6.8)

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

Wine-Biz - Hong Kong Brand Hong Kong Video

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

About APEC http://www.apec.org/apec/about_apec.html APEC 2011 November 2011 Honolulu Hawaii USA

http://www.apec2011usa.org/ Inside APEC http://www.hkchcc.org/insideapechkchccpresentation080810.ppt  

AmCham Shanghai latest Viewpoint - US Export Competitiveness in China - 2010 Washington DC Door Knock  http://www.hkchcc.org/viewpointusexport.pdf 

成功之道 武进制造 Wujin - Changzhou - Jiangsu Province - China http://www.hkchcc.org/wujin.htm 

 HK$6,000 will be given to each holder of a valid Hong Kong Permanent Identity Card 

Happy Chinese New Year - Year of the Dragon - January 23 2012

Honolulu Chinatown - Year of the Dragon 2012 Lion Dance with Firework http://www.youtube.com/watch?v=-VoFfOglJuI

President Obama's Lunar New Year Message - Year of the Dragon http://www.youtube.com/watch?v=C6gfkYAo5gE

Under the Hawaii State Law "Asian Lunar New Year Commemoration Week" The one week period following the day of the Chinese New Year shall be known and designated as the "Asian Lunar New Year Week of Commemoration in Hawaii". This week is not and shall not be construed as a state holiday. [L 2007, c 48, §2] click for more details

Share on Facebook

Hong Kong*:  Mar 1 2012 Share

Cathay Pacific will install premium economy seats on 87 long-haul aircraft before the end of 2013. Premium economy is increasingly being regarded as a new business class for airlines as the gulf between economy class and business class continues to widen. The product has created a new front for carriers to compete for passengers who want to skip "cattle class" but are not willing to pay a small fortune for business class ticket. While it is not a particularly recent innovation in the cutthroat world of passenger aviation, it is gaining in popularity as carriers attempt to boost their bottom line with new products. Cathay Pacific (SEHK: 0293) is the latest airline to jump onto the bandwagon and will deploy premium economy seats on routes to Toronto, Vancouver and Sydney in April followed by London in May. The seats will sell for between 50 per cent to 80 per more than economy fares. "There is a need in the market ....we've sold 1,000 (premium economy) seats in four days," said Ivan Chu, Cathay's chief operating officer, during the delivery flight of a Boeing 777 fitted with the new premium economy class. "The new product is expected to be paid back very soon." But premium economy can be a two-edged sword for airlines as it attracts both upgrades from economy as well as downgrade from the more expensive business class. When Qantas introduced its premium economy class in April, 2008, it had more downgrades than upgrades, said Freddy Li, Qantas regional general manager for greater China and Korea. "For now, our overall revenue has been enhanced due to more upgrades." Chu also expected revenue to be boosted from the new class. The 87 long-haul aircraft that Cathay Pacific is fitting with the new seats will spend 30 per cent of their flight time on intra-Asian routes due to aircraft rotation, Chu said. That fits well with Cathay's strategy to reinforce its connection within the region as demand for long haul routes is softening, Chu said. Demand for Korea and Southeast Asia routes will boom in the second half of the year, he added. Cathay needs transiting passengers from nearby cities to fill seats for its long haul routes. The carrier operates four daily flights to New York and Sydney as well as three daily flights to Chicago. It is hard to find distinguished advantages in Cathy's premium economy seats over Qantas and Virgin Atlantic, which have operated the class for several years. One highlight is a multi port connection for iPhones and other devices that allows passenger to plug in their gadgets and watch video and photos on the screen at the back of the seat. Cathay has also upgraded its long-haul economy class with improved, more comfortable seats. Priority check-in and boarding are available for premium economy passengers with Cathay, Qantas and Virgin. Mimicking the business class ritual, all three airlines will greet passengers with a welcome drink and serve a dedicated menu.

HKT group managing director Alex Arena says the earnings results exceeded expectations. HKT Trust and HKT, which owns the largest fixed-line network operator in the city, plans to launch high-speed 4G services before July after posting solid earnings for last year. "It is our intention to develop our mobile business substantially in 2012," HKT group managing director Alex Arena said yesterday. Arena said the availability of new smartphones that could support the company's 4G network based on the standard called long term evolution would determine how quickly the service would be launched over the next few months. Genius Brand, a joint venture between HKT and Hutchison (SEHK: 0013) Telecommunications, won a licence to operate 4G services on a block of 30-megahertz spectrum during the government's spectrum auction in January 2009. Huawei Technologies is building and deploying that network for the venture. Arena said HKT's stronger financial position after its listing as the city's first business trust in November last year allowed the company to pursue investments in well-established businesses and pursue further growth. PCCW (SEHK: 0008), which is controlled by Richard Li Tzar-kai, pocketed HK$9.3 billion from the spin-off of its telecommunications operations into HKT Trust. Subscribers received so-called share stapled units jointly issued by HKT Trust and operating firm HKT. "We're firing on all cylinders," Arena said, noting that earnings results for last year "exceeded expectations". Net profit rose 32 per cent to HK$1.22 billion from HK$925 million in 2010 due to strong gains in both its fixed-line telecommunications services and mobile business, savings from depreciation expenses and net finance costs, and lower tax expenses. Revenue increased 7 per cent to HK$19.82 billion from HK$18.52 billion. Earnings before interest, tax, depreciation and amortisation (ebitda) - representing net cash flows from the company's operating activities - rose 2 per cent to HK$7.41 billion from HK$7.24 billion in the previous year. That exceeded the forecast HK$7.38 billion ebitda made in HKT's prospectus. A final distribution of 3.36 HK cents per unit has been recommended by the directors of HKT Management, the business trust's so-called trustee manager. Chief financial officer Susanna Hui Hon-hing said final distribution was calculated based on the group's so-called adjusted funds flow (AFF), which last year climbed 18 per cent to HK$2.38 billion from HK$2.01 billion in 2010. That also beat the forecast HK$2.35 billion in AFF contained in its listing prospectus. Arena said the AFF in a business trust was "a critical factor that the market and in particular, our unit holders, are focused on". The AFF is defined as ebitda less capital expenditures, customer acquisition costs and licence fees paid, net finance costs paid, and adjusted for changes in working capital. HKT Trust dropped 2.2 per cent to close at HK$5.31 in trading yesterday, while PCCW fell 2.3 per cent to finish at HK$2.93. The share stapled unit was offered at HK$4.53 during the initial public offering.

Residents offered flat-for-flat compensation at the Pak Tai Street redevelopment project will have to opt for a new but smaller apartment, details unveiled yesterday by the Urban Renewal Authority (URA) show. Two-thirds of flats being built by the authority on the Ma Tau Kok site and at Kai Tak would be cheap enough to be covered by owners' cash compensation; some owners might have cash left over. Owner-occupiers choosing a larger flat on one of the higher levels would have to pay an additional HK$370,000 to HK$1.3 million, according to the valuation commissioned by the authority for its first flat-for-flat project. However, while most of the existing flats in the Pak Tai Street project are about 620 sq ft in saleable area, most flats made available by the authority in Kai Tak and the existing site will be smaller. The sizes range from 248 sq ft to 669 sq ft. The smaller size and the modest design allow the authority's flats to be more affordable than other developers'. But owners will have to find temporary housing until their flats are ready. The Kai Tak flats should become available by 2016 and those at Pak Tai Street by 2018. "The no-frills flats will not have extravagant clubhouse facilities or a huge lobby designed with expensive materials," William Wan, the authority's property and land director, said. Wan said the value of the flats was assessed by two independent surveying firms. The valuation took account of the prices at new developments nearby, including The Latitude, Prince Ritz and Grand Waterfront, but also the lack of facilities and cheaper construction materials used in the project's flats, which led to reductions of 2 to 8 per cent. While residents selling their flat to the authority will receive compensation of HK$8,939 per square foot of saleable area, the no-frills flats are priced between HK$9,003 and HK10,358 per square foot. The owner of an existing flat with 626 sq ft of saleable area will save more than HK$1 million if he or she chooses to buy a 465 sq ft flat in Kai Tak, the authority's figures show. It said the 40 owner-occupiers will be given 60 days to consider the offer. They will be able to choose from 50 flats in Kai Tak and 49 flats at the existing site. Mrs Ma, 80, who bought her flat in the 1970s, said she would opt for cash instead of a smaller flat, as she has a family of 10. "The new flat would be too small for my family," she said. "I'd rather live with my son and daughter-in-law" as she now does. Kowloon City district councillor Wong Yun-cheong, said the prices announced yesterday would calm residents' fears that they would have to pay more to get a new flat. But he said the option was still unattractive to most owner-occupiers, who are elderly. "They would rather take the cash and buy an old flat in the same area. This is their home, and they just want to stay." The government has advocated the building of such flats since 2010 in a bid to curb property prices. Developers must build no-frills flats in some projects tendered by the government. Both the authority and the Housing Society pledged to supply more modestly designed flats, but no clear definition has been given. URA chief Iris Tam Siu-ying said the authority had conducted a poll to gauge residents' views on the design of no-frills flats. Advice from the Hong Kong Institute of Architects was also sought. "In Kai Tak, we won't have special units with extravagant renovations on the top floor. Instead, there will be open space and a few facilities there so that more residents can enjoy the view," Tam said. According to the design, the development facing the plaza in front of Kai Tak MTR Station will comprise three high-rises of 21 to 22 storeys and a low-rise of five storeys. The top floor and rooftop of the three buildings will be connected and will feature a garden, and facilities such as a library and sports room. The low-rise flats are designed for elderly people, with bigger kitchens and showers instead of baths. Modest yet durable materials will be used and the smaller flats will not have balconies. Only three-bedroom flats will have two bathrooms. The area will have 30 per cent green coverage, and living rooms and lift lobbies will have windows.

Mainland women married to Hong Kong men should have priority over other non-local mothers in Hong Kong’s public maternity bed quota, lawmakers told a Legislative Council health services panel on Tuesday. The lawmakers said the existing policy was unfair and all beds should be assigned to women with Hong Kong husbands if the public system was overloaded. The Hospital Authority has said it will lower the present quota of 3,400 public-sector places for non-local mothers next year, raising concerns among mainland-Hong Kong families about being able to give birth in a public hospital. Tsang Koon-wing, from the Mainland-Hong Kong Families Rights Association, said that already about 70 women who were due to give birth in a few months had not been able to find beds in local hospitals. Cheung Man-kwong, of the Democratic Party, said the government’s present policy discriminated against women with Hong Kong husbands and their children. “The nature of the policy is against humanity,” Cheung said. Ip Kwok-him, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said the city should change its policy of putting these women in the non-local mother category in the maternity bed queue. Janice Tse Siu-wa, deputy secretary for food and health, said the government put local patients first, and changing the definition of “local” to include their spouses would have a great impact on services. Tse said the government would consider raising fees for those giving birth in emergency wards to deter non-local women from doing so. According to government figures, 179 non-local women gave birth in emergency wards in January. The projected figure for February is 111. Lawmakers criticised health chief Dr York Chow Yat-ngok for not attending the panel meeting.

 China*:  Mar 1 2012 Share

China yesterday called "totally unacceptable" US Secretary of State Hillary Rodham Clinton's denunciation of its stand on Syria, and a top newspaper said that, after the Iraq war, Washington was "super arrogant" to claim to speak for Arab people. China's angry words came after Clinton on Friday called the Chinese and Russian veto of a UN resolution on Syria "despicable". "They are setting themselves not only against the Syrian people but also the entire Arab awakening," Clinton said of China and Russia, which have resisted Western and Arab calls to push Syrian President Bashar al-Assad from power. China's defence of its policy was also vehement. "This is totally unacceptable for us," Foreign Ministry spokesman Hong Lei told a daily briefing. "China has always determined its stance on the Syrian issue proceeding from the peace and stability of Syria and the Middle East, and from protecting the long-term, fundamental interests of the Syrian and Arab peoples." The spreading bloodshed in Syria, where government forces have been bombarding neighbourhoods held by opposition forces, has turned into a broader test pitting Western powers against China and Russia over how forcefully the world should intervene in civil turmoil. The Communist Party's People's Daily newspaper said: "The United States' motive in parading as a `protector' of the Arab peoples is not difficult to imagine. The problem is, what moral basis does it have for this patronising and egotistical super-arrogance and self-confidence?" "Even now, violence continues unabated in Iraq and ordinary people enjoy no security. This alone is enough for us to draw a huge question mark over the sincerity and efficacy of US policy," it said. Beijing and Moscow are traditionally resistant to international intervention in domestic upheavals. The commentary in the People's Daily repeated China's argument that its unwillingness to take sides in Syria's conflict best reflected the interests of that country's people.

Shanghai will raise the minimum monthly wage by 13 per cent from April, becoming the latest city to increase base pay as officials across the country try to combat labour shortages and worker unrest, according to Xinhua. Shanghai’s monthly minimum wage would rise to 1,450 yuan (HK$1,790), Xinhua reported on Tuesday, quoting the city’s human resources and social security bureau. The increase follows a 13.6 per cent minimum wage hike in Shenzhen since February and a rise of almost 9 per cent in Beijing from January. In Sichuan province, where salaries are lower than in the big coastal cities, base wages also increased by at least 23 per cent in January, Xinhua said. The moves follow a series of strikes across the mainland since November in protest against low salaries, wage cuts and poor conditions amid company cutbacks due to the global economic slowdown.

McDonald’s Corporations, the world’s biggest hamburger chain said it plans to increase the number of franchised stores in China as it ramps up expansion in one of the world's fastest-growing consumer markets. McDonald’s relies heavily on franchises in more mature markets such as the United States, but has almost exclusively opened self-operated stores in China since entering the market two decades ago. It has 36 franchised stores in the country, the company’s website showed. “Right now, it’s a low percentage. But I think that over a very short time, you can get to quite a good mix of stores being franchised,” McDonald’s China Chief Executive Officer Kenneth Chan told reporters on the sidelines of a conference on Tuesday, without giving specific targets. “At the end of the day, McDonald’s is a franchise company,” he said, stressing though that the pace of franchising in China depends largely on whether the company can find the right partners. McDonald’s lags rival Yum Brands Inc in opening outlets in China. Yum has opened about 4,500 restaurants under brands including KFC, Pizza Hut, East Dawning and Little Sheep in the country, which is now Yum’s biggest earnings driver. In comparison, McDonald’s owns more than 1,400 restaurants in China, and ranks the country as its third-biggest market in the world. In a bid to compete for market share, McDonald’s opened a record 200 new stores in China last year, and has unveiled plans to boost investment in the country by 50 per cent this year, aiming to open another 225-250 new outlets this year. In addition to store expansion, building customer loyalty is also important to gaining market share, Chan said. “We’re not looking to be the largest in terms of the number of restaurants ... but we want to be the best-quality, best-service restaurant,” he said. “Thus, we will get more market share versus our competitors even though we have fewer restaurants.” To lure more customers, McDonald’s has over the past few years made its food more affordable in the mainland despite inflation and adapted its menus to local taste. “It’s not about trying to grow at breakneck pace, but at a pace that .... can be sustainable in the long term,” Chan said.

Mr. Shu designed the Ningbo History Museum. Wang Shu, an architect based in Hangzhou, China, on Monday received this year’s Pritzker Architecture Prize. “This is really a big surprise,” Mr. Wang, 48 years old, said in a statement. “I suddenly realized that I’ve done many things over the last decade. It proves that earnest hard work and persistence lead to positive outcomes.” Mr. Wang and his wife, Lu Wenyu, founded Amateur Architecture Studio (the name he explains as “for myself, being an artisan or a craftsman, is an amateur or almost the same thing”) in Hangzhou in 1997. His work includes the Wenzheng College library at Suzhou University, which received the Architecture Arts Award of China in 2004; the Ningbo Contemporary Art Museum and Ningbo History Museum; and in Hangzhou, the first two phases of the Xiangshan campus of the China Academy of Art and the Vertical Courtyard Apartments. Mr. Wang heads the architecture department at the China Academy of Art in Hangzhou and has taught or lectured at Harvard, UCLA, the University of Pennsylvania and the University of Texas. “The fact that an architect from China has been selected by the jury represents a significant step in acknowledging the role that China will play in the development of architectural ideals,” Thomas J. Pritzker said in the prize announcement. “Over the coming decades China’s success at urbanization will be important to China and to the world. This urbanization, like urbanization around the world, needs to be in harmony with local needs and culture. China’s unprecedented opportunities for urban planning and design will want to be in harmony with both its long and unique traditions of the past and with its future needs for sustainable development.”

Hong Kong*:  Feb 29 2012 Share

Mainland shoppers queue to enter a Hermes store in Canton Road. The French luxury group lost a lawsuit aimed at cancelling a trademark that bears similarities to Hermes' Chinese name. French luxury group Hermes International has lost a lawsuit against China's Trademark Appeal Board over the board's refusal to cancel a trademark that bears similarities to Hermes' Chinese name, the Shanghai Daily reported on Monday. Hermes, which is known as “Ai Ma Shi” in China, has appealed repeatedly to the trademark board since 1997 to get the board to cancel a trademark held by a menswear firm in southern China. Hermes said the trademark registered by the Guangdong province-based menswear company could mislead buyers, but the trademark board said it had approved the trademark under normal legal procedures. The court ruled against Hermes, saying it did not provide evidence that the trademark had been acquired illegally or prove that the trademark was well known among mainland consumers, the newspaper reported. A Hermes spokesman could not be reached for comment. Hermes is not the only foreign company having trouble in China over trademarks. Apple Inc has faced lawsuits from a Chinese technology firm over its use of the iPad trademark, which the Chinese company claims to own. Last week, basketball legend Michael Jordan sued a Chinese sportswear company over the unauthorised use of his name.

HSBC Holdings (SEHK: 0005), Europe's biggest bank, made a US$21.9 billion profit last year, the largest among western banks, as its strength in Asia helped it cope with a euro zone debt crisis that has plunged many rivals into huge losses. HSBC, which makes more than three quarters of its pretax profit outside Europe and north America, said on Monday it expected Asia, Latin American and Middle Eastern markets to continue growing strongly this year, albeit more moderately than last year. Banks across Europe have been posting billions of dollars of losses as the euro zone sovereign debt crisis has eroded the value of their government bond holdings and hit their trading operations, and as they strive to meet tough new rules at preventing a repeat of the 2007-09 banking crisis. HSBC, with around 7,200 offices in 80 countries, said pretax profit rose 15 per cent, just below analysts’ average forecast of US$22.2 billion in a Reuters poll. The figure fell short of the group’s record profit of US$24.2 billion in 2007, but beats all other western banks that have reported so far for last year, including US rival J.P. Morgan , which made a US$19 billion profit. The world’s most profitable banks in recent years have been China’s ICBC, which made US$32 billion in 2010, and China Construction Bank (SEHK: 0939), which made US$26.4 billion. HSBC’s profits were boosted by US$3.9 billion of gains on the value of its debt. Stripping that out, underlying pretax profit fell 6 per cent to US$17.7 billion, due in part to rising wages in emerging markets and to restructuring costs. Chief Executive Stuart Gulliver is reshaping HSBC to cut annual costs by US$3.5 billion, lift profitability and sharpen its focus on Asia, and he said he will step up the execution of his plan this year. At 4.40pm HK time, HSBC shares in London were up 0.5 per cent at 577.3 pence, outperforming a 0.6 per cent drop on the UK’s benchmark FTSE 100 index. HSBC said profits at its investment bank fell 24 per cent to US$7 billion, hurt as the euro zone debt crisis slowed capital markets activity in the second half of last year. However, loan impairment charges and other credit risk-related provisions fell US$1.9 billion to US$12.1 billion.

Lawmaker Regina Ip Lau Suk-yee and Legislative Council President Jasper Tsang Yok-sing on Monday. Legislative Council president Tsang Yok-sing confirmed on Monday he would not run for chief executive. Tsang said that with just one month to go before the election there was not much time for him to launch a proper campaign to canvass support from the public and the Election Committee. “After 10 days of serious consideration, I have to tell my supporters I will not take part in this election,” he said. Tsang, a member of the Beijing-loyalist Democratic Alliance for the Betterment and Progress of Hong Kong, had signalled his intention to run on February 17. That move followed the uproar over an illegal basement at a family home of chief executive hopeful Henry Tang Ying-yen, as well as rival Leung Chun-ying’s alleged conflict of interest as a judge in the 2001 West Kowloon arts hub design contest. Tsang said on Monday that because he entered the race at such a late stage, he and his party had not been able to thoroughly assess how his candidacy could affect his party in the upcoming Legislative Council elections later this year. “If I decided to run now, it would be a very hasty a decision that might lead to consequences we cannot foresee. That would not be a wise decision,” he said. Another chief executive contender, Regina Ip Lau Suk-yee, said on Monday she might not necessarily benefit from Tsang Yok-sing’s exit from the race. Ip said she had previously met Tsang to discuss the election but there was no agreement on whether one would support the other if either of them pulled out. A total of 344 members of the 1,200-strong Election Committee have yet to cast their nominations for the city’s next leader. The nomination period ends on Wednesday and the committee will choose the next chief executive on March 25. Tang secured 378 nominations, while Leung received 291. Pan-democratic candidate Albert Ho Chun-yan had 184 nominations. Of the undecided members, the DAB and the Federation of Trade Unions hold about 140 votes.

Sing Tao News chairman Charles Ho Tsu-kwok said he had done nothing wrong when he gave Chief Executive Donald Tsang Yam-kuen a lift from Macau to Hong Kong on his luxury yacht. After confirming media reports that he gave Tsang the ride earlier this month, he said the trip did not involve any transfer of interests or “government-business collusion”. He said Tsang paid HK$500 for the trip, and the ride was something a person would do for a friend. “The boat trip was not specifically intended for Tsang. My boat would have had to go back [to Hong Kong] anyway. Would it be illegal to give a ride to a friend?” he said. Tsang has faced accusations he may have breached bribery laws by accepting trips on yachts and jets owned by his tycoon friends. He has also come under fire over a lease on a Shenzhen penthouse flat owned by a mainland property mogul. The chief executive earlier admitted that during one private visit to Macau from February 17 to 19, he and his wife, Selina Tsang Pou Siu-mei, “stayed” on a yacht at a friend’s invitation. Tsang said he paid for the trip “at the market price” – the equivalent of a ferry trip – but critics said that price did not equate to a trip on a luxury yacht.

 China*:  Feb 29 2012 Share

China on Monday called for steps to address the euro zone debt crisis, high oil prices and volatile capital flows, adding that Group of 20 nations should focus on ensuring a global economic recovery and financial market stability. At the G20 meeting, leading economies told Europe it must put up extra money to fight its debt crisis if it wants more help from the rest of the world, piling pressure on Germany to drop its opposition to a bigger European bailout fund. Some non-European countries, led by China and Japan, seem willing to give more cash to the International Monetary Fund but only if Europe moves first. Xinhua news agency quoted vice finance minister Zhu Guangyao as reaffirming Beijing’s pledge to help Europe to cope with the crisis. “China’s position is very clear. We will provide necessary support [to Europe] by joining the international community under the framework of the IMF and G20, on the premise that Europe makes full efforts itself,” Zhu was quoted as saying. Chinese leaders have repeatedly said they remain confident about Europe’s ability to cope with the debt crisis and have pledged to continue to invest in euro zone government debt. The statement after the meeting of finance chiefs in Mexico City summarised key issues at the meeting and speeches made by China’s central bank chief Zhou Xiaochuan and Zhu. “Facing the severe and complicated world economic situation, the G20 should strengthen co-operation and make the task of promoting financial market stability and (economic) recovery and growth its top priority,” said the statement which was published on the central banks’ website. “It should make efforts to tackle the euro zone debt crisis, rising oil prices and disorderly capital flows,” it said.

Beijing on Monday hit back at Hillary Clinton over her criticism of China and Russia’s stance on Syria, calling the US Secretary of State’s comments unacceptable. Clinton said on Friday that the international community must work to change the positions of Moscow and Beijing, which have faced intense criticism for vetoing two UN resolutions condemning Damascus for its deadly crackdown on dissent. “It is quite distressing to see two permanent members of the Security Council using their veto when people are being murdered,” said Clinton after a meeting of Arab and Western foreign ministers on Syria in Tunisia. “It is despicable and I ask whose side are they on? They are clearly not on the side of the Syrian people.” Asked for China’s response to the comments, foreign ministry spokesman Hong Lei said Beijing “cannot accept that at all”, and criticised the international community for trying to “impose a so-called solution” on the Syrian people. “China has been calling on the Syrian government and all parties in Syria to immediately and fully stop all acts of violence and launch a political dialogue process with no preconditions attached,” he told a regular briefing. “We believe the international community should fully respect the sovereignty, territorial integrity and independence of Syria... We also hope, within the framework of the Arab league, that the Syrian crisis will be resolved through political dialogue.” China has a long-held policy of non-interference in other countries’ affairs and has repeatedly defended its stance on Syria, where rights groups say more than 7,600 people have died in 11 months of bloodshed. Last week it followed Moscow in boycotting a “Friends of Syria” meeting of more than 60 foreign ministers gathered to discuss ways to end the violence. Both countries have frustrated efforts to rein in the regime of Bashar al-Assad, whose forces have for weeks waged a deadly assault on the rebel city of Homs. Hong’s comments came on the same day the People’s Daily – mouthpiece of China’s Communist Party – published a commentary saying the United States had “no right” to criticise China and Russia over Syria. Moscow – a key ally of Assad – has also fiercely defended its stance on Syria, whose citizens on Sunday voted on a new constitution unveiled by Assad earlier this month, in the latest step in what he says is a cautious process of reform. Russian Prime Minister Vladimir Putin on Monday slammed the “cynical” West over Syria, accusing it of “lacking the patience to work out an adjusted and balanced” resolution that also required opposition forces to cease fire.

Hong Kong*:  Feb 28 2012 Share

Chinese mines 'unfairly' criticised over safety - Watchdog fuelled racist stereotypes, say academics, and ignored other companies' equally bad records Two Hong Kong social scientists claim a Human Rights Watch report had a political agenda in accusing Chinese-owned mining of having the worst safety records in Zambia. The independent global organisation labelled the Chinese mines "bad employers" in terms of meagre pay, marathon working hours, poor safety records and lack of union rights. The China Non-Ferrous Metal Mining Co was singled out for particular criticism. However, Barry Sautman, a professor from the Hong Kong University of Science and Technology, and Yan Hairong, an anthropologist from Polytechnic University, found that multinational mining firms placed workers in just as deplorable conditions. They say in a counter-report that the claims by Human Rights Watch, which were widely reported in November, served to fuel the racist Western stereotype of Chinese people as abusive employers. They wrote: "There should be improvements across the board for mine workers in Zambia, who still receive a subsistence wage and live in underserviced communities, a possibility made less, rather than more likely when Chinese firms are singled out and erroneously accused of being the worst." They argue that there were multinational firms that should have been assessed, such as the British and Indian-owned Konkola Copper Mine and the Swiss and Canadian-owned Mopani Copper Mine, which is partly controlled by commodities giant Glencore, itself having had a long history of controversy over the safety and environmental impact of its mining operations. The two academics will be presenting their paper at a seminar detailing the methodological errors of the Human Rights Watch report on March 9 at HKUST. The Hong Kong office of the New York-based rights group has been invited to the debate but has yet to decide whether to attend. The rights group said Zambian miners were threatened with losing their jobs unless they risked their lives by tolerating unsafe conditions, long working hours and low wages - compared to more humane working conditions under multinational firms. The local academics say that Chinese firms may appear to be more dangerous because they have more deep underground operations where there is lower copper content, therefore it is more labour intensive with lower productivity. They argue that the clearest way to see if a firm has been paying attention to miners' safety is to look at the fatality rate. Out of 217 mining-related fatalities in Zambia between 2001 and August last year, Chinese firms were responsible for 25 only. Sautman and Yan also point out that Zambia did not even rank in the top 60 most dangerous countries for miners. They add that Chinese-owned firms have invested a lot of money in opening up mining opportunities in challenging locations at a time when many miners were being laid off. In response, Human Rights Watch said: "The organisation has consistently reported on abuses by Western companies and governments with the same vigour." It added that it was evident from interviews that unlike safety officers at multinational firms, those at Chinese-owned mines would not halt mining activities when safety fears were raised.

Four contenders jockeying for Hong Kong's top job and striving to win back the public's attention amid a litany of political scandals have outlined their vision on key issues. At the request of the South China Morning Post (SEHK: 0583), the four chief executive candidates spelled out their policies in six key areas, including how they would improve air quality, alleviate the lack of international school places, attain universal suffrage and solve the land shortage. The contenders have yet to engage in head-to-head debates. Former Executive Council convenor Leung Chun-ying and New People's Party chairwoman Regina Ip Lau Suk-yee share common ground on what they would do on their first day in office should they win. "I shall gather my team of political officers to meet with and listen to senior civil servants," said Leung, the most popular choice in opinion polls since October. "My aim is to establish a people-centred government and build a team that shares a service-oriented culture." Ip, a former security minister, said she would hold separate meetings with principal and senior officials. "I will re-emphasise the importance of upholding a clean and effective government with high standards of integrity," she said. Former chief secretary Henry Tang Ying-yen, Leung and Democrats chairman Albert Ho Chun-yan are confirmed as candidates, while Ip is struggling to win the required 150 nominations from the 1,200-strong Election Committee, whose members will select the chief executive on March 25. The two-week nomination period closes on Wednesday. Answers from Leung and Ip to the Post's six questions were more elaborate than those from Tang and Ho. Tang, who has been embroiled in a growing scandal over an illegal basement at his Kowloon Tong home, said he would introduce his team to the media and public on his first day. "I will make it my urgent task to set out the main issues of public concern," he said. Asked whether he would adopt the World Health Organisation's toughest air-quality standards, Leung pledged to adopt them as the "long-term goal". Hong Kong's clean-air targets will be toughened for the first time in a quarter of a century from 2014, but they will still fall short of the WHO's 2006 standards. Tang said: "It will be folly for me to pledge that I will adopt the toughest air-quality standards set by the WHO because I know it would not be realistic to do so." He said he would introduce measures, such as encouraging wider use of electric or hybrid vehicles, with a view to ultimately reaching the WHO standards. Tang and Leung, the two front runners, were short on details on how to attain universal suffrage. Both emphasised the need to consult the public on the matter, if elected. Leung said the main consideration in determining the nomination thresholds in a chief executive election under universal suffrage would be to maintain a balance between the right to stand and "a manageable number of candidates". According to a National People's Congress Standing Committee decision in 2007, universal suffrage will be allowed in 2017 for the chief executive election and the Legco thereafter. Pan-democrats have warned of "fake universal suffrage", as there is a dearth of details on a "one man, one vote" system. All four agreed to continue subsidising the English Schools Foundation (ESF). Ip urged the government to negotiate with international schools to ensure there were adequate places for foreign investors. In July, the government proposed that the ESF consider becoming private amid concerns over efficient use of public money. Ip and Ho, who have no realistic chance of winning the top job, had innovative proposals. Ip suggested a HK$200 billion city wealth fund to invest in emerging and knowledge-based industries, while Ho proposed HK$150 billion for infrastructure projects and social investments.

 China*:  Feb 28 2012 Share

If a Sino-US deal did not drive home the message that food security is one of Beijing's priorities, Xi Jinping's return to America's agricultural heartland this month surely did. During Xi's trip to the US, China and the United States signed a five-year agreement to guide talks on food security and safety. The vice-president also revisited the farming family that hosted him in Iowa 27 years ago, quizzing them on the challenges of growing crops. A few days later in China, the issue came to the forefront again when mainland authorities released a draft of the country's first grain law for public consultation. The law is designed to guarantee an adequate amount of safe food for the country's expanding population, giving government agencies greater power to intervene in the agricultural market. It sets rules on the production of grain to its storage, sales and processing. But critics say the legislation neglects the most important factor in the food chain: farmers. Huang Dejun , general manager of Beijing Orient Agribusiness Consultant, says farmers' enthusiasm for their work has been dampened in recent years by surging costs - something the draft does little to address, failing to tackle the government's long-standing policy of keeping grain prices low. The authorities do have a safeguard - the official minimum grain purchase price that government-designated food companies will pay farmers for grain if the market price falls below the benchmark - but it doesn't keep pace with costs. "Every year, the National Development and Reform Commission (NDRC) raises its minimum grain purchase prices by several pitiful fen. Can't it just raise it a bit more?" Huang said. "We understand that the government keeps the grain price low out of fear of inflation, but it ought to rise properly because you need to encourage farmers to farm." Zheng Fengtian , from Renmin University's school of agricultural economics and rural development, agrees. He says that since most of the country's farmland is in the hands of farmers, the key problem of food security lies with them. Zheng blamed government control on prices for discouraging farming. "The government gives fixed guiding prices, which grow very slowly each year ... the cost of land leases, farm supplies and labour have all soared, but grain prices are still like a woman with bound feet who takes small steps," he said. Zheng cited two migrant workers, who each owned 920 square metres of farmland back home, whom he paid 700 yuan (HK$858) each to paint his house. Their wage for one day's work in the city would take the pair half a year of farming to earn. "If we can't let grain growers earn an average income, who should we expect to grow grain in the future?" Zheng said. Huang suggests the government's minimum purchase price should be altered to keep pace with farming costs, and subsidies should be increased to shield the urban poor from price rises. Huang also expressed worry that the draft law's focus on government intervention rather than a freer market would breed corruption. If the law is adopted, individuals and firms will have to apply for permits from quality supervision departments to become grain processors. "There is always corruption where there's supervision," Huang said. He suggests the provision likely stemmed from concerns about price manipulation and the growing involvement of foreign firms in grain buying and processing in China. Another potential problem with the draft is the discord on certain issues between the Ministry of Agriculture, in charge of grain production, and the NDRC, which oversees the grain market and has spearheaded the drafting of the law. Analysts worry these disagreements could lead to ineffectual implementation of the law. Huang Dafang , deputy director of the State Agricultural GM Crop Bio-Safety Committee, says that as a supporter of research on genetically modified crops, the ministry might oppose the ban on GM crops. "The draft says [any individual or organisation] should not apply GM technology to major crops without official approval. I think it's unscientific to say this because many GM research projects involve the application, dispersal and production [of GM organisms]," he told the 21st Century Business Herald. He said the ministry should take a clear stand on the issue while it was seeking public consultation. The grain law was first placed before the National People's Congress Standing Committee in 2004. Drafting began in 2009 under the NDRC and State Administration of Grain's guidance.

At the age of 37, Hello Kitty is losing her cool in her home market of Japan. However, the mouthless cartoon cat with a red bow is still popular among the youth in China, where Hello Kitty branding opportunities abound. That's good news for KT Licensing, a member of Hong Kong's trading firm Li & Fung. This month the company secured master licensing rights to Hello Kitty and more than 200 other cartoon characters from Japanese brand owner, Sanrio. KT now hopes to get more Chinese consumers to know and love the cartoon kitty, and spend their money on branded products. Lee Sang Kil, KT general manager, said the company would open more Hello Kitty-themed shops, especially in second- and third-tier mainland cities. It's also set to take advantage of Li & Fung's strength in sourcing, trading and retailing to offer a wider range of products, and adjust its pricing strategy to expand the customer base. Another plan is organising more activities that allow Hello Kitty fans to meet up with their idol. "There's tremendous growth potential for Hello Kitty products in China, considering the high popularity of the little cat and the relatively low penetration of the products in this market," said Lee. "I don't think Chinese consumers will grow tired of this brand for at least 10 years." Created by designer Yuko Shimizu in 1974, Hello Kitty has been a global marketing phenomenon over the past three decades. Its parent company Sanrio has licensed the use of the Hello Kitty image in Japan and other countries, and the character now appears on products from stationery and kitchenware to diamond jewellery - even an Airbus owned by Taiwanese airline Eva Airways. Sanrio amassed an operating profit of 21.1 billion yen (HK$2.1 billion) in the 2010 financial year, and 80 per cent of its revenue came from Hello Kitty licensing fees. However, after decades of developing the wildly popular icon, the appeal in Japan has started to wane, and sales of Hello Kitty-branded products have begun to slow. In a ranking of Japan's most popular characters based on sales data by the Tokyo-based research firm Character Databank, Hello Kitty lost her long-held spot as Japan's top-grossing character in 2002 and has never recovered, Bloomberg reported. But the picture in China is different. Sanrio, which formally entered China in 2003, has about 100 local licensees running businesses like gift shops, groceries, clothing, publishing and financial services. Latest projects include a themed restaurant that opened in Beijing last Christmas, and a near-100,000 square metre amusement park, which is expected to open in Anji County, Zhejiang, in the heart of Yangtze River Delta, in 2014. CYF China, the only Sanrio licensee with rights to open branded gift shops on the mainland, said revenues from its stores in Beijing and Tianjin jumped 30 per cent last year, and there was double-digit growth in other major cities. "Our fans are increasing very fast," said Daisy Dai, general manager of CYF. The retailer has about 150,000 regular customers, and nearly a third of them joined last year. Similar to Japan, about 80 per cent of consumers were female and most are students and so-called office ladies, she said. "Some are attracted by Kitty's cuteness, purity and innocence; some are nostalgic about Kitty, which hearkens back to a time in their childhood; and some simply adore Japanese pop culture," said Dai. She added that bags, wallets, figurines and watches were the most sought-after items. One evening last week, in one of Beijing's Vivitix gift shops - a Sanrio retailing brand targeting young girls - Li Mingjing, 26, was struggling to choose between a dozen make-up bags featuring the cartoon feline in different designs. "I started to love Hello Kitty when I was in primary school. At that time, stationery was the only Kitty products I could find," said the flight attendant. Last year, she spent more than 5,000 yuan (HK$6,000) buying a set of Hello Kitty accessories for her car's interior, so far her biggest spending on Kitty. "I think my love for Kitty will not change. If I have a daughter someday, I'm pretty sure she would become a fan as well," she said, before leaving the shop with two make-up bags that cost her 428 yuan. Encouraged by strong sales performance, CYF plans to open 100 to 150 stores annually on top of its existing 120 outlets in the next two years. Most of the new stores would be franchises in lower-tier cities. Lower priced items would also be available in this market. Meanwhile, it is also trying to diversify its portfolio and promote other characters popular in Japan, including My Melody, a rabbit born in the forest of Mari Land; and Little Twin Stars, a pair of angelic siblings. The cartoon industry has been a fast-growing sector supported by the Chinese government in recent years. The trend is particularly strong among the young generation because of increasing wealth and influence of animation culture. Other characters that are linked to animated films may give Hello Kitty some competition. Walt Disney, owner of brands such as Mickey Mouse and Winnie the Pooh, is on track to open its first store in China this autumn, and is committed to opening 25 to 40 stores in the next three years. Pleasant Goat, a cartoon character created by a Guangdong animation company, has met huge success in the China market. Its related products could fetch up to 1 billion yuan for the company and its licensees.

China's capital Beijing will begin construction this year of an airport that is likely to replace Hartsfield-Jackson Atlanta International Airport in the United States as the world's busiest, local media said on Sunday. The online edition of Caijing magazine put the cost at 30.2 billion yuan ($4.80 billion). It did not say how it would be funded. With nine runways, the new airport will handle more than 130 million passengers and 5.5 million tonnes of cargo annually, China Radio International said. The airport, yet to be named, will cover an area of 2,680 hectares (6,620 acres), the online edition of Beijing Youth Daily said, quoting an unidentified airline executive. Located in Daxing, 46 km (28 miles) south of Tiananmen Square, construction is due to be completed in October 2017. Beijing's two exisiting airports have reached their maximum handling capacities.

Revenues of China's software and information technology (IT) service industry rose 32.4 percent year-on-year to 1.84 trillion yuan ($292.23 billion) in 2011, the Ministry of Industry and Information Technology (MIIT) said. The rise was 4.4 percentage points higher than the industry's average growth rate during the 2006-2010 period, according to an MIIT report released at an ongoing forum held in the northeastern province of Heilongjiang. The country's software exports increased 18.5 percent from a year earlier to $30.4 billion last year, the report said. The industrial scale of the country's software and information service outsourcing sector surged 39.5 percent from the pervious year to hit 383.5 billion yuan ($60.9 billion) in 2011, with software outsourcing exports up by 40.3 percent to $5.9 billion, the report said. The report attributed the expanding industrial scale to the economy's steady growth as well as rising demands from domestic and global markets.

Hong Kong*:  Feb 27 2012 Share

Hong Kong stands to gain from recent amendments of a new US tax law that cracks down on non-US financial institutions that help Americans hide their wealth, a tax expert says. The United States Foreign Account Tax Compliance Act takes effect next year and seeks to prevent US citizens or permanent residents from shirking their tax obligations by using offshore accounts. The law was aimed at forcing these institutions to become quasi-auditors for the US Internal Revenue Service (IRS). But it fell foul of client confidentiality regulations in some territories - including Hong Kong. Following complaints from a number of countries, the US Congress amended the law. Instead, the US will ask other governments to seek such information from banks in their countries. "If this had not happened, the IRS would have had to speak to Hong Kong authorities to see how they'd get round the legalities of it all here," said Kurt Rademacher, international tax practice director at Butler Snow. "In Hong Kong, like Switzerland, it's illegal to disclose financial information. Banks here would be more willing to disclose information to the Hong Kong government than the US government. "This is the model that the IRS wants to now use in Europe and will in all likelihood do here." A fortnight ago the US released a new draft of the act after bowing to pressure from firms and large financial institutions. It led to the US Department of the Treasury issuing a joint statement with Britain, Germany, France, Spain and Italy that announced the easing of the compliance burden for non-US financial institutions. Through a series of bilateral arrangements, such institutions will be permitted to issue compliance details about their clients to the government in the country they are domiciled, rather than to the IRS. In turn, the US would also exchange the financial information of foreign nationals with accounts in the US to their governments. The US is reportedly negotiating similar arrangements with China and Japan. Given the number of prominent financial institutions based in Hong Kong, it is likely that the US will pursue a similar agreement with Hong Kong. HSBC, the Hong Kong Association of Banks and the Royal Bank of Scotland declined to comment. Rademacher said the revised US approach was the best way to address foreign privacy laws.

The exhibit "The Underground Scene" at Studio Kim Tak in Jordan features pictures shot surreptitiously on the MTR by amateur photographer Lai Yatnam during his daily commute from Sheung Wan to Kowloon Tong. The photos, which he shot using the popular iPhone photo app, Hipstamatic, will be on display at the Nathan Road studio until March 25. While most of us use our smartphones to check the news or keep up with friends during MTR rides, one photographer is turning train carriages into his photography studio - and you could find yourself an unwitting model. In a city where more people have mobile phones than just about anywhere else, the top-quality lenses on the latest smartphones have made everyone a photographer, as well as a photographer's subject. For the past year, cinematographer and amateur photographer Lai Yat-nam, 33, has been taking candid images of train commuters with his iPhone on his daily trip from Sheung Wan to Kowloon Tong. He takes the photos stealthily to ensure his subjects do not shift their stances because they know someone is watching - in defiance of MTR rules that ban photography without the subject's prior permission. The results show a spectrum of unguarded moments of city life; from a young woman applying lipstick to a couple stealing a kiss while they wait for their train. There are moments of repose with heads resting on hands and eyes closed or office workers staring into the distance, deep in thought. For Lai, the train carriage is his photo studio and with the use of a smartphone application, or app, called Hipstamatic, his urban travel diary is now on show at a new exhibition called "The Underground Scene". It runs until March 25. A spokesman for the MTR Corporation (SEHK: 0066) said photography was banned on platforms and trains without prior approval. He noted that closed-circuit cameras installed on platforms and some trains could catch offenders. The spokesman did not respond to questions about Lai's show. Lai said he had never been stopped from taking pictures by security or asked to stop by commuters. "No one's told me to stop; they just walk away if they don't want you to take a photo," he said. It was a different story when he tried to take photos on the subway in Paris, where some passengers shouted at him to stop. While some of the Lai's images, like the black and white picture of a couple kissing on a platform in Kwun Tong, appear posed, he said they are often just the result of patience. "I was going home and walking around the platform and I saw them kissing. I pretended to walk around before I took two photos," he said. "People don't notice and the images tell so many stories. You don't have to buy a Leica [camera]. The main thing is what you see and how you think." Not all photo-taking on the MTR has such an innocent purpose. Reports of smartphones and hidden cameras being used to take pictures up the skirts of women passengers have risen in recent years and several men including a former corrections officer and an immigration official have been fined or sentenced to community service for the offence in recent years. Lai's show is the opening exhibition at a new photography studio in Jordan set up by the founders of an online photography site called Photoblog. Earlier this month, a panel of smartphone photographers gathered for a talk as part of Social Media Week, an annual event run by US-based Crowdcentric and its local partner, Cohn & Wolfe ImpactAsia. The speakers discussed ways to use the camera without someone noticing and also of the many apps that give smartphone photos an extra kick, which speaker Tyson Wheatley described as being like having "a darkroom in your pocket".

Queuing at Shan Loon Tse Kee for fish ball noodles, dubbed the area's best. Rising prices will force the restaurant to close next month. A quiet street became a hive of activity yesterday as diners flocked from far and wide to savour one last taste of fish balls dubbed Aberdeen's best. Since news broke that Shan Loon Tse Kee fish ball restaurant is to close next month, large queues have formed at the tiny street-side shop, also noted for delicacies such as fried fish skin and fish cakes. The 65-year-old restaurant's owners said they had been forced to close it because the top-quality ingredients they needed were no longer available at a reasonable price. Inflation has also made it harder to recruit staff. But they have not ruled out reopening if conditions improve. One of the shopkeepers was reluctant to comment on its closure. "Is it such a big deal?" said Rainbow Tse as she watched from behind the cashier's desk while press photographers vied with diners for space. Tse, who married into the family that started the restaurant in the 1940s, said she was thrilled by the extra business but less interested in publicity. "I just want to finish my job now." The frenzy built after actor and singer Eason Chan Yik-shun, a frequent customer, told his followers on the Sina Weibo microblog website the restaurant was to close. But for hungry diners waiting up to an hour for a seat, it was not just about the food. It was about the memories. "I read in the newspaper that it is only open until next month so I wanted to come here and eat," Constance Wong, a housewife, said. "When I was very young, my mum and dad used to bring me here." Nick Klaus, who lives in Sai Kung, said: "I am sad to hear that [it's closing]. It's an icon of Hong Kong." The German said he first went to the shop more than 10 years ago." The fish ball business started as a back alley food stall before building its reputation and moving to a permanent venue on Old Main Street in the 1970s. To honour its humble origins, the shop's owners adopted a name that means "fish balls of Tse's mountain cave". Yesterday, police had to be called in to control the crowds and cars. Diners took pictures in the queue, and staff came out to offer those waiting the chance to get their food as a takeaway. It is not the first popular attraction to be forced out by the rising cost of doing business. Indonesian restaurant 1968 closed its main Causeway Bay location when rents rose, while the UA Cinema was ousted from Times Square, apparently to accommodate a luxury retailer. The number of Hongkongers working as fishermen and living aboard their boats has declined from 6,000 to 1,000 in the last decade, according to the Census and Statistics Department. The restaurant is due to close on March 31.

The lives of refugees residing in Hong Kong have been thrown into further turmoil after the UN abruptly slashed the monthly allowance they receive to HK$300 - an 80 per cent cut. Despite receiving generous financial support from donors in Hong Kong, the cash-strapped United Nations High Commissioner for Refugees decided last month it could no longer afford to pay the HK$1,500 that 180 refugees living in the city were getting to help pay expenses. The Hong Kong government has stepped in to provide the recipients with HK$1,200 worth of food each, but refugees say the remaining cash payment falls far short of what they need to pay for rent, clothes, utilities and other essentials. Refugees, who spoke to the Sunday Morning Post (SEHK: 0583, announcements, news) on the condition that their names or countries were not identified, say the allowance cut has left them in a struggle to survive. "I'm a recognised refugee and I will lose my room this week," said one man from North Africa. "What can I do? Who can help me? I'm not a beggar." Another refugee from central Asia said he was unable to pay his electricity and water bills and was "very, very desperate". Activists' anger over the cuts has been stirred by the fact that the UNHCR's own website shows it received private contributions of HK$20 million from Hongkongers in 2010 and HK$16 million as of September 19 last year. "What matters for refugee families is `dollars in hand' - nothing else," said Cosmo Beatson, executive director of Vision First, a non-governmental organisation working with local refugees. "The problem is not fund-raising, but the allocation of money trustingly donated by our fellow citizens. The big picture remains disingenuous." The UNHCR said funds raised in Hong Kong were used to support its humanitarian work around the world, which have stretched the body's financial resources to the limit. It was therefore unable to continue its "material assistance" for refugees. "My office had to secure an alternative source of support to refugees and approached the government for assistance," said Choosin Ngaotheppitak, head of the UNHCR's Hong Kong office. "This [humanitarian assistance] programme is in line with the standards set by the government." He said the government programme would also give refugees access to allowances for rental, utilities and clothing. These welfare services, however, were already available to refugees when the UNHCR was still paying them the full allowance. Human rights lawyer Mark Daly believes the UNHCR is not doing enough. "They're effectively caving in to a government programme here that doesn't meet the standards that the UNHCR themselves think other countries should be meeting elsewhere," he said. "You have to ask: what are they thinking?" The UNHCR's global budget for this year will be a record US$3.59 billion and 93 per cent of its funding comes from government sources. It serves some 10.5 million refugees, half of them in Asia.

Chief Executive Donald Tsang Yam-kuen will set up a high-powered independent panel headed by former chief justice Andrew Li Kwok-nang to carry out a sweeping review of the rules governing the conduct of Hong Kong's top officials. In an article published exclusively in the Sunday Morning Post (SEHK: 0583) today, amid growing public anger over allegations of top level corruption and collusion with business tycoons, Tsang says recent events have taught him a "painful lesson". This led him to the conclusion that the rules governing integrity and transparency at the highest levels of government must be tightened to meet the expectations of the Hong Kong people. "As the chief executive, it is my solemn duty to address these important issues head-on. Otherwise, it will not only erode confidence in my integrity - more significantly, confidence in the office of the chief executive, on which the integrity of the entire government hinges, will also suffer. I cannot allow that to happen," Tsang says in the article entitled "It's time to rewrite the rule book". In a move to address critics who have attacked him for taking trips on private jets and luxury yachts, his post-retirement property in Shenzhen and what happened to an expensive wine collection, Tsang last night also released to the Post new details of payments made by himself and his wife. The outgoing chief executive has come under increasing pressure to deal with bribery allegations after he accepted luxury yacht trips to Macau and flights on the private jets of city tycoons, as well as securing a bargain lease deal for a plush penthouse in Shenzhen from telecoms tycoon Bill Wong Cho-bau. "As a lifelong public servant, I know only too well that we must not only stay well clear of any suspicion of impropriety, but be seen to do so. We need to be whiter than white. I have reflected deeply over these recent events again and again over the past few days ... These reports have allowed me to better understand public expectations and where I may have fallen short," Tsang writes. "I accept that my previous assumptions in this regard need to be adjusted - it has been a painful lesson - and that the applicable rules also need to be revisited." Having "humbly learnt that the level of transparency expected extends beyond simply complying with the rule book", Tsang points out that while the existing code for officials requires political appointees to seek approval from the chief executive if they have doubts about accepting gifts, such rules do not apply to the chief executive himself. "Although I have endeavoured to follow the same rules, there is no approving authority that I can naturally turn to. This is unsatisfactory and evidently does not meet public expectations," he writes. To address a public crisis in confidence, Tsang says he invited Li to chair a five-member independent committee to conduct a full review of the rules to identify potential flaws and point to areas of improvement. The secretariat of the committee will start work tomorrow and aim to finish the review in three months, before Tsang's term as chief executive ends on June 30. Tsang also speaks of his personal feelings about the controversy. He writes: "There is no doubt that I have been hurt and at times frustrated by the questions about my actions and integrity. "After all, I am only human and it is a natural response when your integrity is called into question." Last week a stony-faced Tsang said he was saddened as the media looked at the allegations in "a negative way or by a conspiracy theory". But he writes that he tried to remain dispassionate while studying press reports and drawing lessons from them, adding: "The message is loud and clear." He said it would be unrealistic to expect a chief executive to sever all links with heads of industry as he has to meet people from all walks of life. But he says his office will try its best to address questions raised by the media over the past week. Tsang admitted last week that he had taken a total of four private jet and yacht trips offered by his friends. But he denied there was a conflict of interest because he had paid the "market price" - the cost of a standard ticket on a commercial jet or ferry - for the excursions. The revelation that he would move to a luxury flat in Shenzhen on retirement, paying a rent critics said was far below the market rate, stirred further criticism.

 China*:  Feb 27 2012 Share

When it comes to tapping into the world's largest social media website, with 845 million potential customers, mainland advertisers aren't going to let a little obstacle like government censorship get in their way. The potential for profits by reaching out to Facebook's legions of regular users outweighs the risks and hassles of advertising with an online behemoth that is blocked on the mainland. That's the thinking of companies such as adSage, a Beijing-based online advertising firm that began a commercial partnership with Facebook in 2010. Late last year, adSage started helping mainland firms open Facebook accounts, while also offering the firms guidance on managing advertising campaigns on the networking site. Beijing has banned Facebook, largely out of fears it could be used as a rallying point for dissidents. Facebook can be accessed on the mainland by using special software that allows internet users to circumvent the "Great Firewall". "China is a large potential market for Facebook," the company said on February 2 in its US Securities and Exchange filing for an initial public offering. "We continue to evaluate entering China." This is not the first time the company has publicly shown interest in the mainland market. Facebook chief executive Mark Zuckerberg, 27, visited Beijing in 2010 and toured top internet companies in town. The trip was widely seen as a move to seek business opportunities. "We can start to figure out the right partnerships we would need to succeed in China on our terms," Zuckerberg said later in a speech at Stanford University. The company could not be reached immediately for comment. Based on the number of user visits, Facebook is the world's second-most-popular website, trailing only Google, according to the Alexa web-information company. China's Baidu ranks fifth. Businessmen such as adSage boss Tang Zhaohui see the potential, even now, of reaching out to people on Facebook. "Most Chinese advertisers [on Facebook] are from the gaming, education and tourism industries," Tang told the Sunday Morning Post (SEHK: 0583, announcements, news) . "The number of advertisers has tripled since the business started last year." He said about 3,000 companies used adSage's Facebook services, though he declined to name them. The company's media manager, Chen Tingting , explained that "putting advertisements on Facebook is still a sensitive issue" on the mainland", adding that "they want to keep a low profile on this". However, Tang said one of their largest advertisers on Facebook, from the computer gaming industry, might spend more than US$1 million a month to advertise on the site, making the company "one of the largest advertisers globally on Facebook". None of the advertisements posted by mainland companies had anything to do with politics - they were simply aimed at Western customers, he said. "The education companies want to attract more people to learn Chinese, while the tourism firms want Americans to use their service to book flights and hotels; and that's why they come to us." Acknowledging Facebook's difficulties in entering the Chinese market, Tang said "commercial co-operation [with mainland firms] could be a good start". "Facebook takes the Chinese market seriously," he said. "They can't do marketing out in the open, but they frequently visit big advertisers in private with us." Facebook opened a sales office in Hong Kong early last year, giving the company its second office in Asia after Singapore. The office is strategically located to serve both the Hong Kong and Taiwanese markets, and potentially mainland China. Because it offers its service free to users, Facebook's income comes largely from advertising revenue, which it said reached US$943 million in the fourth quarter of last year, accounting for 83 per cent of the company's total revenue in that period. Mainland companies don't have a big impact on those numbers, but analysts predict that could change as the advertising market continues to boom on the mainland. Joining adSage in recognising the benefits of doing business on Facebook is DHgate, an online trading platform with offices across the mainland. Hu Hao , a marketing specialist for DHgate.com, noting Facebook's size and global penetration, said his company's core markets included the United Sates and Britain, making the website the perfect platform to reach customers. DHgate started advertising on Facebook in 2010, hiring a team of social media professionals to explore user trends on Facebook in order to devise strategies to raise brand awareness and engage consumers directly. The company now has more than 22,000 "Likes" on its Facebook page. "Facebook serves as an alternate channel for the company's PR," Hu said. "We have key individuals within the community who were actively answering the questions of other community members on behalf of us. It is a great dynamic." But like adSage, DHgate needs special software to access its own Facebook page on the mainland. "Our Facebook users are all overseas buyers based outside China, so domestic policies were never a factor for us," Hu said. In October 2010, during his address at Stanford, Zuckerberg raised a key question that has yet to be answered. "How can you connect the whole world if you leave out a billion people?"

Ford Motor is on track to double the number of dealerships on the mainland by 2015, its country chief said yesterday, as it opens a half-billion-dollar plant and races to narrow the gap with foreign rivals in the world's largest vehicle market. Ford, which unveiled its new Focus model at the opening of a plant in this thriving southwestern municipality, was adding an average of two outlets a week to bring the total to 680 by 2015, said David Schoch, chairman and CEO of Ford's mainland operations. "Obviously, it's not only important for us to grow the production capacity and get the new products in, but we must also improve the retail distribution network," Schoch said. Ford, which steered clear of a bankruptcy filing and US government bailout in 2009, is a relative latecomer to China, where General Motors and Volkswagen have built a sizeable lead. It sold 320,658 vehicles on the mainland last year, compared with Volkswagen's annual tally of 2.26 million and GM's 2.55 million. In an effort to narrow the gap, Ford plans to introduce 15 new vehicles by 2015, starting with the new Focus, which is scheduled to reach showrooms across the mainland in the second quarter. The introduction of new models, said Will Periam, strategy director for Ford's Asia Pacific and Africa operations, would enable Ford to compete in about 50 per cent of the overall market segments on the mainland, up sharply from 22 per cent. Schoch said Ford also aimed to outpace the Chinese market, which he expected would increase between 5 to 10 per cent this year despite a steep downturn in January. He attributed Ford's 41.9 per cent sales decline in January to the timing of the long Lunar New Year holiday period as well as the company's lower-than-expected inventory in the wake of a strong December when it vastly outpaced the market's growth. In December, Ford's mainland sales rose 10 per cent from the year-ago period, compared with a 1.4 per cent industry-wide gain during the same period. "The combination of those two affected our sales performance last month," said Schoch, who has run Ford China since November 2011. "You almost have to look at January and February together." The 15-day Spring Festival marking the Lunar New Year is when most companies shut down for at least a week so workers can return to their home towns. The holiday disruption was also blamed for a 23.8 per cent drop in passenger car sales in January, the biggest monthly decline in more than three years. With the opening of the US$490 million Chongqing facility, Ford's annual capacity on the mainland will rise by 150,000 vehicles to a new total of more than 600,000. 

It is one of the mainland's biggest social headaches - too many men, not enough women, and a surfeit of bachelors that some have estimated will top more than 30 million by the end of the decade. But now a police station in Chengdu , Sichuan province, is taking matters into its own hands, soliciting dates for single male officers through an official website called Save a Single Policeman. The station is concerned that its young officers, many of whom are newcomers to the province, work long hours and have no family locally to help them find girlfriends. The campaign is led by Shi Yi, deputy director of Wuhou district police station in Chengdu, who runs the microblog website. "Police working hours are not stable, and they don't have much free time. They don't have time to look for a girlfriend," he told local media. Initially, Shi put forward five hopefuls in their mid-to-late 20s, most of them from other provinces. The squad notched up 38,771 followers in the first fortnight, although there is no information on the gender breakdown of their admirers. Female fans have turned up at the police station hoping to meet the officers. The site shows glossy photos of each guy at work above a caption asking readers to "rescue" them. All have macho microblog names, such as Ice, Snake and Rocky Priest. Two from Wuhou's armed response unit are pictured toting guns. Each officer has his own Twitter-style weibo account to chat with admirers. What goes on there is private, says Shi. "We don't control their personal life. How could you control their dates? It is their choice," he said. However, should any of his men get serious, "they should tell us once they have a girlfriend". Any marriages would be publicised, he promises. Clean-cut officer Wang, aka Rocky Priest, is a traffic officer who presents himself as solid husband material, saying: "I can't change the world, but I can change the traffic on Third Ring Road." More romantically, his tweets hint at a broken heart: "Today is my first girlfriend's birthday. Although she is married, and we don't contact each other, I want to send her my best wishes. Thank you for your company during my younger years." The 27-year-old from coastal Jiangsu province says he has been single for a year. He confesses to missing his parents, and hopes to find "an open-minded girl to marry". He has 10,443 followers. Wuhou is the first public security bureau branch to launch a microblog dating service. The attention has left Shi bashful about talking to the media. "I did not realise this event could gain so much attention. We just want to help them to find girlfriends," he said. He shrugs off any fears his officers might abuse their fame. "Those five policeman are mature, stable and responsible guys. It is not possible they will become womanisers."

Hong Kong*:  Feb 26 2012 Share

Ricky Wong is ready to change the face of free-to-air television in Hong Kong as he takes part in a ceremony for City Telecom's production centre at Tseung Kwan O. City Telecom's new free-to-air television channel will give veteran rivals TVB (SEHK: 0511) and ATV a run for their money and improve the industry in the city, says the company's chairman, dismissing the threat of a legal challenge to the channel's licence application by ATV. Ricky Wong Wai-kay yesterday pledged to spend HK$1 billion on programme production for the initial years of City's free-to air channel and to film 10 new series this year - starting with a musical drama. Filming would begin as soon as next month, Wong said, even as ATV makes a last-ditch attempt to block three free-to-air licences expected to be issued to City and subsidiaries of Cable TV and PCCW (SEHK: 0008). "I'm not worried about ATV's judicial review," Wong said. "The government had always planned to issue more television licences, and we have fulfilled every criteria for getting the licence." He was speaking at a groundbreaking event for City's HK$600 million television and multimedia production centre in Tseung Kwan O. The government has yet to formally announce that it will issue new licences, although the Broadcasting Authority submitted recommendations to the government last May. ATV announced earlier this month that it would seek a judicial review. Cable TV has urged the government to speed up the granting of the licences so it can offer Olympic Games coverage to non-subscribers in July. Wong is not concerned by ATV's move and says City is pressing ahead with the production of series. "The first series to be filmed will be a musical. I don't want every drama to be about a family feud," he said, hinting that repeating the formula that made TVB's Heart of Greed a huge hit in 2008 was not on his agenda. Wong said television production in the city had not kept up with international trends. Mainland broadcasters now bought more dramas from Thailand than from Hong Kong. He hopes to redress the balance with more on-location filming and tight, twisting plots such as those seen in US hits. The company's efforts would be aimed at improving the city's share of the regional television market rather than harming established players. City has recruited 140 artists, including former TVB stars Maggie Cheung Ho-yee, Bernice Jan Liu, Felix Wong Yat-wah and Frankie Lam Man-lung. Wong would like to increase the number to 250 by the end of this year. The stars would work locally, in Taiwan and on the mainland. Felix Wong is expected to start filming a science-based detective story around July. While he was coy on how much his new employer paid to lure him away from TVB, he hinted that he had more than doubled his previous salary. Better pay and working conditions would attract more talent to the industry, he said. "Everyone knows one station [TVB] has monopolised the market for years," Felix Wong said. "Improvement only comes when there is competition."

Mainland tycoon Wong Cho-bau yesterday denied claims of collusion by critics over his leasing out of a luxury Shenzhen penthouse to Chief Executive Donald Tsang Yam-kuen. Wong, who has extensive business interests in Hong Kong, is one of the principal investors in Digital Broadcasting Corp, a radio station headed by former legislator "Taipan" Albert Cheng Jing-han. Tsang earlier said his wife, Selina Tsang Pou Siu-mei, rented the suite in Futian's Donghai Garden - which was developed by East Pacific (Holdings) and owned by its chairman, Wong - as a retirement home after his seven-year term ends in June. Wong said the broadcaster is in the red and its business prospects are dire. "How could this be collusion?" said Wong, who is a member of the Chinese People's Political Consultative Conference. "I should make money [if there is any collusion]. Actually, I really want to quit the business." The Chinese-language newspaper Oriental Daily reported the Tsangs had rented a penthouse of about 10,000 square feet with a rooftop in the luxury residential complex. The penthouse contains more than a dozen rooms, an outdoor garden, a wine cellar and a gymnasium. The report said renovations cost about 14 million yuan (HK$17.2 million). The Tsangs are said to be paying about 1 million yuan to rent the unit for one year - which would translate into about HK$102,600 a month. Wong agreed there would have been less of a furor if the penthouse was rented to someone else. "I wouldn't have all this trouble if I rented the premises to a merchant and not a renowned politician," he said. Wong laughed off reports that he is spending up to 15 million yuan on renovations, saying "[the complex] is not located in Hong Kong. [The company] doesn't need to spend such a huge sum of money for renovations in the mainland." Last month, the Executive Council approved Digital Broadcasting Corp's application to allow former education chief Arthur Li Kwok-cheung to serve as its chairman and director. Li was originally barred from taking up the chairman's post under the Telecommunications Ordinance, because he is the brother of banker and lawmaker David Li Kwok-po, who has served as an independent non-executive director of rival PCCW. But the government said later that since Digital Broadcasting and PCCW Media, an associated company of PCCW Ltd, operate in two separate and distinct broadcasting markets, the Exco's approval would not undermine the competition landscape in the broadcasting industry. Separately, Tsang has admitted he took trips on private jets to Phuket and Japan as well as being entertained on luxury yachts off Macau twice during his term. But he stressed that he had paid the market rate for the travel expenses. Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen said the chief executive is bound by the code of conduct for principal officials, which bars them from accepting extravagant benefits. Tam said the code is aimed at reminding political appointees to avoid conflicts of interest, embarrassment or damage to their reputation. Some pan-democratic lawmakers have threatened to start the impeachment process if Tsang refuses to appear in the Legislative Council to answer questions on his holiday trips. Labor Party lawmaker Cyd Ho Sau-lan said the pro- democracy camp is planning to invoke the legislature's Powers and Privileges Ordinance to demand that Tsang disclose more details on accepting invitations from tycoons by using their private jets and yachts for personal travel. Ho also did not rule out initiating an impeachment procedure. However, Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker Chan Kam-lam said it is too early to talk about impeachment, since there is no clear evidence that Tsang accepted benefits from tycoons and violated the anti-bribery laws.

Actor Shawn Yue (left) and director Pang Ho-cheung's film Love in the Buff will open the festival. Film festival offers global gems - Movie fans in for a treat with annual Hong Kong event screening more than 280 films in a salute to world cinema - and a few stars will drop by, too - Fans can look forward to new and classic films from around the world when the curtain goes up on the 36th Hong Kong International Film Festival next month. While there are fewer of the star-studded Chinese hits that have been a major part of the festival in previous years, those who love discovering big-screen gems from around the world will be in for a treat. The festival's opening night on March 21 will see the premiere of Hong Kong director Pang Ho-cheung's feature Love in the Buff at the Convention and Exhibition Centre. A sequel to Pang's acclaimed and widely popular local romance Love in the Puff, Miriam Yeung Chin-wah and Shawn Yue Man-lok reprise their roles as a pair going through relationship dramas, this time taking place north of the border. The closing film will be the latest offering by award-winning mainland director Wang Quan'an, White Deer Plain. An adaptation of Chen Zhongshi's controversial novel of the same name, the film, which was screened in competition at this year's Berlin International Film Festival and won the Silver Bear for outstanding artistic achievement, tells an epic story involving two families living in White Deer Plain in Shaanxi province. This year's film festival features 283 films from 50 countries or regions. While the latest works from big name stars and directors will feature, organisers are keen to salute world cinema. The Animation Unlimited section features Alois Nebel, a Czech Republic/German "animated crime noir" and Crulic - The Path to Beyond, the true story of the death of a young Romanian retold in animation. Highlights of the Reality Bites documentary section will include Paradise Lost 3: Purgatory, an Oscar-nominated film examining the legal fight to free three Americans accused of a string of child murders, and First Position, which follows the harsh lives of six gifted ballet dancers. One star who will be dropping in will be Keanu Reeves, who will present Side by Side, a documentary he produced, and meet the public at the Jockey Club Cine Academy master class on March 18 at the Convention and Exhibition Centre. Renowned Hong Kong filmmaker Peter Chan Ho-sun, this year's "Filmmaker-in-Focus", will also join an academy session on April 3. Acclaimed actress Charlotte Rampling will present the premiere of a new film about her, The Look. Festival executive director Roger Garcia said that he hoped to groom the next generation of film audience through some new initiatives. Three free screenings - Come Drink with Me by King Hu, I Wish by Hirokazu Kore-eda and Francois Truffaut's Small Change - will mark the 50th anniversary of City Hall, with some seats reserved for students. Garcia hopes that in future the festival, which receives HK$10.91 million in funding from CreateHK, can be expanded into the summer. "I hope to take films outside [the city centre] and do free shows for children," he said. The festival will run until April 5. For ticketing details visit hkiff.org.hk.

A Chinese firm trying to stop Apple Inc from using the iPad name in China has launched an attack on the consumer electronics giant’s home turf, filing a lawsuit in California that accuses it of employing deception when it bought the trademark. A unit of Proview International Holdings, a major computer monitor maker that fell on hard times during the global financial crisis, is already suing Apple in multiple Chinese jurisdictions and requesting that sales of iPads be suspended across the country. Last week, Proview Electronics and Proview Technology filed a lawsuit in Santa Clara County that brings their legal dispute to Silicon Valley. Some legal experts said there could be different outcomes from the US and Chinese cases, but a spreading of the lawsuit and delay in coming to settlement terms could hurt Apple more. “In relation to the US, Apple is going to somewhat have a homeground advantage,” said Elliot Papageorgiou, a Shanghai-based partner and executive at law firm Rouse Legal China. At stake for Apple is its sales and shipments in China, where its CEO Tim Cook said it was merely scratching the surface. Debt-laden Proview International, meanwhile, needs to come up with a viable rescue plan before mid-this year or else it faces delisting from the Hong Kong stock exchange. “Given the current timeline, Apple would have the greater impetus to come to settlement simply because the ability to disrupt shipments is more immediate than the pressure faced by Proview and its potential delisting,” said Papageorgiou. Proview accuses Apple of creating a special purpose entity – IP Application Development, or IPAD – to buy the iPad name from it, concealing Apple’s role in the matter. In its filing, Proview alleged lawyers for IPAD repeatedly said it would not be competing with the Chinese firm, and refused to say why they needed the trademark. Those representations were made “with the intent to defraud and induce the plaintiffs to enter into the agreement”, Proview said in the filing dated February 17, requesting an unspecified amount of damages. Apple on Friday reiterated its statement saying that it had bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago. It also said that Proview had refused to honour their agreement and a Hong Kong court had sided with the US technology giant in the matter. “Our case is still pending in mainland China,” Apple said. The battle between a little-known Asian company and the world’s most valuable technology corporation dates back to a disagreement over precisely what was covered in a deal for the transfer of the iPad trademark to Apple in 2009. Authorities in several mainland cities, such as Shijiazhuang and Huizhou, have already banned the sale of iPads, citing the legal dispute. Proview, which maintains it holds the iPad trademark in China, has been suing Apple in various jurisdictions in the country for trademark infringement, while also using the courts to get retailers in some smaller cities to stop selling the tablet PCs. Major electronics retailer Suning has resumed selling iPads online this week in China after it stopped sales last week due to a supply shortage, rather than because of the lawsuit, company executives said. China is becoming an increasingly pivotal market for Apple, which sold more than 15 million iPads worldwide in the last quarter alone and is trying to expand its business in the world’s No 2 economy to sustain its rip-roaring pace of growth. It now has a 76 per cent market share in China’s tablet PC sector, followed by Lenovo Group (SEHK: 0992) and Samsung Electronics that have a combined share of only 10 per cent, data from research firm IDC showed. The country is also where the majority of its iPhones and iPads are now assembled, in partnership with Taiwan’s Foxconn. A Shanghai court this week threw out Proview’s request to halt iPad sales in the city. But the outcome of the broader dispute hinges on a higher court in Guangdong, which earlier ruled in Proview’s favour. The next hearing in that case is set for Feb. 29. Proview lawyers said there might not be a decision immediately and it could take weeks or months before there was an outcome. “It is more appropriate for both parties to mediate. I think that is the best outcome,” David Chen, senior partner at Allbright Law Offices in Shanghai. China’s trademark system is a minefield of murky rules and opportunistic “trademark squatters” that even the world’s biggest companies and their highly-paid lawyers find hard to navigate. Legal experts say the onus is on companies looking to do business in China to understand how China’s trademark law works, as it differs greatly from that of the United States. Industry executives have said employing special-purpose entities to acquire trademarks is a frequent tactic in China.

Chief executive candidate Leung Chun-ying tried to block the release of confidential documents related to a conflict-of-interest row, a legislator claimed on Friday. Democratic Party lawmaker Lee Wing-tat said he had seen some of the documents submitted to the Legislative Council on the West Kowloon arts hub competition and they showed that Leung, who was on the competition’s judging panel, tried to stop the government from releasing several key records. Lee said the documents included Leung’s declaration of interest, his explanation to the judging panel on his failure to declare an interest, minutes of panel meetings in February 2002 that examined entries, and the jurors’ voting records. Leung, a former Executive Council convener, has been accused of failing to declare his business links to one contestant in the competition. He is accused of favouring a design submitted by architectural firm T.R. Hamzah & Yeang, which listed Leung’s surveying company DTZ as its property consultant. The row escalated when the government announced early this month that Leung did not declare the business link before the competition vote. In a statement on Friday afternoon, Leung’s election office said Leung had had no intention of blocking the release of any documents related to the contest. The confidential documents released on Friday showed Leung voted for the design by T.R. Hamzah & Yeang in two out of three rounds of voting. Leung told reporters on Friday afternoon that all entries remained anonymous to judges during the voting. He said that he was not the only judge who chose the T.R. Hamzah & Yeang design in the final round of voting. Eight other judges, out of a total of 10, also chose this design.

In Asia, a watch is more of a status symbol than a timepiece. Some advertisers use the watch you wear to assess your social standing. We take a trip inside a VIP watch-shopping room to look at what makes a watch go for hundreds of thousands of dollars or more.

 China*:  Feb 26 2012 Share

Sichuan province says it has virtually completed reconstruction work after a devastating earthquake almost four years ago - at a total cost of 1.7 trillion yuan (HK$2.09 trillion). At a State Council press conference yesterday, deputy Sichuan governor Wei Hong said 99 per cent of projects were completed. He defended a controversial plan to turn Wenchuan county's Yingxiu township - the epicentre of the magnitude 8 quake on May 12, 2008, that killed 86,633 people in Sichuan - into a top tourist site after criticism that making money out of a disaster was inappropriate. Wei said tourists could enjoy the region's ethnic culture and natural tourism attractions, and help to sustain the local economy. "No matter what approaches we use to promote and develop local tourism, we need to consult and listen to the local people," he said. "After all, they have to live their own lives there." One internet user expressed shock at the plan to develop tourism in the disaster zone. "People who travel are looking for fun and relaxation," they wrote. "Why on earth turn a post-quake zone into a tourist area? Chinese merchants are abandoning all morals." The deputy chief of Wenchuan's propaganda office, Xie Lushuang, was quoted by the Beijing Morning Post yesterday as saying that many businesses had moved away from Wenchuan and many locals had lost their jobs. "Developing tourism is the only way out," Xie said. Wei said 1.7 trillion yuan had been spent on reconstructing 142 counties in Sichuan after the quake. After more than three years of reconstruction work, Wei said 99 per cent of 29,692 projects were completed. He said housing problems had been resolved for more than 5.4 million households and more than 200,000 peasants had been relocated. The disaster had hit 9,524 families hard and resulted in 1,449 lone elders, orphans and disabled people. Sichuan received 20.1 billion yuan in public donations from the mainland and overseas. The money was being managed and monitored by the Sichuan charity association, the Red Cross Society of China and the provincial finance department. However, the credibility of the mainland's Red Cross Society has been hit by a series of scandals and Sichuan's earthquake disaster alleviation fund has also been compromised. In 2009, auditors uncovered 200 million yuan in embezzlement and falsified spending records after one trillion yuan was earmarked to rebuild cities and towns. Internet users urged the provincial government to publish detailed accounts online for public auditing in order to win people's confidence. A 36-year-old Wenchuan teacher and quake survivor said living standards had improved but she was not sure about converting Wenchuan into a tourist site because "how many tourists would like to visit a place filled with sadness and tears?" "But there is love around the place. Maybe others could experience it."

Bank of America, the second-biggest US lender, will accelerate its expansion in China after doubling profit and boosting its workforce in the world's fastest-growing major economy last year. The lender planned to add as many as five branches in China over the next two to three years, from three outlets in Shanghai, Beijing and Guangzhou currently, Huang Xiaoguang, president of Bank of America's China arm, said this week. He will raise growth targets in the unit's three-year strategic plan to be presented to top management next week. "We want to become a top player among China's foreign wholesale banks in terms of all metrics," said Huang. "We need to grow faster than our competitors to grab market share and stay ahead of them. What we achieved last year was significant, but we want to take it up a notch." The expansion in China contrasts with chief executive Brian Moynihan's sale of US$33 billion in assets and 30,000 announced job cuts elsewhere in the world amid stagnant revenue and rising costs from defective mortgages. China may become Bank of America's largest revenue and profit contributor in Asia-Pacific in two years, according to Huang, who declined to say where the business ranks now. The lender, which lured bankers from competitors such as HSBC Holdings (SEHK: 0005) and Citigroup last year to build its China business, will focus on multinational firms, financial institutions and Chinese enterprises seeking overseas expansion, Huang said. It now employed about 500 people in the country, he said. To make up for slower growth at home, foreign banks are also boosting investments in China, which is now the world's third-largest banking market, behind the US and Japan. HSBC said last week it sought to expand in China by either increasing its branch network almost eightfold to 800 or taking a bigger stake in partner Bank of Communications (SEHK: 3328) beyond a 20 per cent limit as regulations are eased. China opened its banking industry to overseas companies in December 2006, sparking competition among foreign lenders for the nation's corporate and household savings, which reached US$12.7 trillion in January. Combined assets at foreign banks exceeded one trillion yuan (HK$1.2 trillion) by the end of October, almost double from five years ago. Bank of America was looking at all options including a securities venture with a local partner to further tap into the nation's investment banking market, Huang said. To bolster capital, the US lender sold 10.4 billion shares of China Construction Bank (SEHK: 0939) in private transactions in November for a profit of about US$1.8 billion, leaving it with a 1 per cent stake.

Washington and Hanoi Approach Cautiously - Vietnam is ready for a strategic partnership, but doesn't want to upset China. Reflecting its buzzing energy, Vietnam is eager to play a larger role in Asia. Given the challenges it faces, America would welcome another willing partner in an increasingly tense region. But the gap between Washington and Hanoi remains large, and unless both sides take the courtship slowly, the chance for a more meaningful relationship may be ruined. Sitting in a cafe or talking with officials in this city, it's easy to forget this is still a Communist country. Americans used to dealing with traditional allies find a very different reception in Hanoi. Instead of well-trod positions and oft-repeated talking points, officials in Vietnam seem genuinely interested in dialogue. They pepper a visitor with questions, seeking answers to development questions and trying to understand the nuances of American policy. There is a palpable sense of striving to develop the economy and society. Vietnam's nominal GDP per capita, according to the World Bank, was $1,224 in 2010, which is about a third of the size of China's, but is growing rapidly thanks to nearly 8% growth in GDP over the past decade. Official trade figures reflect the bustling commerce one sees while walking along Hanoi's streets. While China remains Vietnam's largest trading partner, topping $40 billion in 2011, trade between Vietnam and the United States more than quintupled between 2002 and 2011, from just under $3 billion to over $18.5 billion. The majority of U.S. exports to Vietnam were meat and cars, while Vietnam exported textiles, furniture and fishes. Of that $18 billion in trade, though, America ran an $11 billion trade deficit. This is one reason Washington welcomes Vietnam's participation in the proposed Trans-Pacific Partnership trade negotiations, of which China is not a member. But Washington's chief interest is strategic. Hanoi has perhaps the prickliest relations with China of any Asian nation. The two fought a border war in 1978 in which both sides claimed victory, and have had running disputes over maritime rights in the South China Sea. China has not only harassed Vietnamese vessels conducting seabed exploration, but has pressured foreign oil companies working with Vietnam to shut down joint ventures in contested waters. Vietnamese Foreign and Defense Ministry officials are quick to claim that they will not choose sides between Beijing and Washington in what they recognize is a growing competition for influence in Asia. Yet there are numerous indications of wanting closer military ties with the U.S., as long as it can be done quietly. The U.S. Navy held a week-long naval drill with Vietnamese forces in July, just a month after the Vietnamese Navy conducted live-fire exercises in the South China Sea as a warning to China. As one senior U.S. diplomat told me, "[Washington] can always move forward with Vietnam, but it can never move backward." Vietnamese officials remain leery of getting too close to the Americans, only to find the rug pulled out from underneath them. What the diplomat stressed was that U.S. steps in Vietnam have to be forward-looking, but cautious, since any U.S. retreat from agreements would immediately result in a greater Vietnamese withdrawal. Another American diplomat noted that there is a broad consensus in the country to do more regionally than just focus on trade. Given that, he suggested Washington needs to focus on Vietnam separately from China, and help its own national goals of improving health care, standards of living and education. That will buy the goodwill necessary to expanding a working relationship on regional issues, including security concerns. Where the two sides remain years apart is on the issue of human rights, especially for dissidents protesting Vietnam's Communist regime and religious protesters. Overall, one is struck not merely by how welcoming Vietnamese are to Americans, but how little time is spent talking about the Vietnam War. It comes up in discussions, but not as an impediment to exploring closer ties. Nonetheless, the war is ever present in the background and serves as justification for the ubiquitous signs of patriotism in Hanoi, especially the national flag, which seems to be hung from nearly every home and shop. Given its youth, growth rate and vibrant economic and social life, Vietnam offers greater potential than many other nations in Asia. An America eager for new partners in Asia will have to tread carefully given political differences between Hanoi and Washington, but there seems little question that Vietnam is irrevocably set on a growth path that will make it an ever more important player in Asia over the next generation. Whether this will result in a lasting relationship between two former adversaries remains an open question.

Two children taste fresh strawberries at the International Strawberry Symposium in Beijing's Changping district on Saturday. This was the first time that the four-yearly event, which ended on Wednesday, was hosted by an Asian nation. More than 100 types of strawberry were on display this year. If you step into one of Yu Li's greenhouses, you will smell what's growing before you see it. Green leaves cover the earth as sweet fragrance does the air, but crouch down and there lies the red fruit tucked beneath, dressed in sparkling dewdrops, like sleeping beauty waiting for her prince. Located in the Changping district of Beijing's northwest suburbs, Yu's family, like other local residents, started growing strawberries in 2005, and they have now developed it into a booming business. Indeed, the strawberry has brought prosperity to Changping in general and greatly changed the lives of local people. "We built three greenhouses at first," said 36-year-old Yu. "Now my family owns 20." All seven adult members of Yu's family are devoted to the strawberry business. "Planting strawberries has brought wealth to my whole family," she said. "I earned 15,000 yuan ($2,400) from each greenhouse last year." Previously, Yu had worked as an accountant in a local hospital where she earned 20,000 yuan a year. But looking after strawberries demands more time and effort than looking after numbers. "I have to be involved in every step, from buying seedlings, cultivating them, advertising, selling and so on," Yu added. "While as an accountant, I didn't need to worry much after 5 pm."

Hong Kong*:  Feb 25 2012 Share

HSBC on Thursday said it will pull out of the retail banking business in Japan, including the HSBC Premier service meant for clients who hold more than 10 million yen (US$124,500) in financial assets. The latest move by Europe’s biggest bank follows its retreat from Japan’s top-tier private banking business, which covers clients who hold more than 200 million yen in assets, selling the business to Credit Suisse in December. “I am writing to you today to inform you with regret that we will be discontinuing our HSBC Premier service in Japan,” HSBC said in a release addressed to the clients of the service. The decision followed its review of the company’s global business strategy, it said. Last year the company outlined a strategy in which CEO Stuart Gulliver said he 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. The bank said on Wednesday that it would stop accepting new deposits for its HSBC Premier service from Thursday. It would stop offering new investment products to its clients through the service from March 8. The bank plans to close a HSBC Premier branch in Nagoya, in central Japan, on April 27 and would close the rest of the branches on July 31. 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-2010, according to the wealth report. Japanese millionaires had assets of about US$4.135 trillion at the end of 2010, the report said. 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. Still, Asia’s private banking industry has seen consolidation recently as the market turmoil dampens growth, and rising regulatory and staffing costs dent profitability. 

Europe-focused retailer Esprit Holdings (SEHK: 0330) posted a 74 per cent fall in first-half net profit as a deepening euro zone debt crisis battered demand, but the result beat forecasts and sent its shares to a five-month high. The company said its plans to re-establish Esprit as a leading fashion brand and restore long-term profitability were on track, despite the continued difficult economic climate. “Going to the second half of the financial year, we will continue the rigorous and systematic implementation of our Transformation Plan in a continued challenging business environment,” Esprit said in a filing to the Hong Kong bourse. Esprit, whose rivals include Sweden’s Hennes & Mauritz, US group GAP and Spain’s Inditex , is in the midst of a costly restructuring after its chief financial officer resigned and the company admitted late last year that its brand had “lost its soul”. Esprit said it continued to face economic headwinds, especially in Europe, as a result of reduced consumer confidence and restricted credit facilities, which had hit its wholesale business and expansion. It also blamed high raw material costs and said it was in the process of setting up new sourcing offices in Indonesia and India, which would open in the second and fourth quarters of this year, respectively. Shares in Esprit, which has fallen in rankings to become Asia’s No 7 apparel retailer by market value from third place a year ago, was up 17 per cent by 2.24pm. It has risen more than 40 per cent so far this year despite a management reshuffle. The company’s shares plunged 73 per cent last year, weighed down by scepticism over its turnaround plan, lagging a 20 per cent fall in Hong Kong’s benchmark index. The fashion group, which is struggling to recover after last year’s 98 per cent earnings drop, said it targets to double sales and points of sales in China by June 2015. Esprit said in September that it aimed to double sales in China to HK$6 billion (US$772.12 million) over the next four years and expand its point-of-sales network to 1,900 from 1,000. It is withdrawing from some underperforming markets and spending millions of dollars to revive its brand. It said on Thursday its directly managed stores stood at 1,168 as of the end of last year, marking a net increase of 27, with 314 of these in China, an increase of 14. It added it expects its first-ever e-shop in the Asia Pacific to commence operations in China in the second half of the financial year. The company reported a net profit of HK$555 million ($71.57 million) for the six months ended December. Its earnings have fallen for nearly four years in a row. The result beat an average estimate of HK$193 million from three analysts polled by Thomson Reuters, and was lower than a net profit of HK$2.14 billion a year earlier. Analyst forecasts ranged from a HK$391 million profit to a HK$5 million loss for the fiscal first half. Turnover decreased to HK$16.70 billion during the six-month period from HK$17.69 billion the same period a year ago. Esprit, which also competes in Asia with Japan’s Fast Retailing, is investing more than HK$18 billion in the company until its fiscal year ending 2015 to rebuild its brand. It appointed Melody Harris-Jensbach, the former deputy CEO and chief product officer of Puma, as its Chief Product and Design Officer in January in a bid to ensure brand consistency and product efficiency. Esprit, which sells everything from bed sheets to jeans and depends on Europe for about 80 per cent of its sales, saw revenue from its retail business ease slightly to HK$9.84 billion from HK$9.96 billion a year earlier. Wholesale revenue fell to HK$6.73 billion from HK$7.62 billion. Last October, Esprit posted HK$8.56 billion in total sales for the July-September quarter, up 0.6 per cent from a year earlier in Hong Kong dollar terms but a decline of 8.2 per cent in local currency terms, amid weaker global demand. The company said on Thursday it would finalise the winding down of its operations in North America by March 31. Esprit had said earlier it was in the process of closing its stores in that region and may eventually close all its outlets there if it failed to find a partner to take care of the business. 

Hong Kong's Court of Appeal on Thursday overturned a decision the blocking the market regulator’s attempt to freeze assets of New York-based hedge fund Tiger Asia and ban it from trading in the city. The ruling marks a victory for the Securities and Futures Commission (SFC) which alleges the fund engaged in insider dealing. The case is seen as a major test of the regulator’s ability to bring investors or companies based outside Hong Kong to book. Tiger Asia has denied all allegations against it. The three Court of Appeal judges set aside a ruling by a lower court that the SFC had no jurisdiction to freeze Tiger Asia’s assets. The SFC was appealing against a ruling issued in June when the Court of First Instance said it was for the city’s criminal courts or Market Misconduct Tribunal to determine whether the fund had committed any wrongdoing. The SFC wanted to impose the order as Tiger Asia and all of its executives are based outside of Hong Kong, making it hard to pursue criminal proceedings. The appeal judges backed the SFC’s interpretation of a section of Hong Kong’s securities law which they argue provides them with an alternative non-criminal route to take action against market misconduct. That section “provides much needed ammunition to the commission to protect investors”, said Judge Robert Tang. Tiger Asia’s lawyers argued that the was case an “abuse” of the regulator’s powers and that the law did not allow the regulator to take punitive action against market misconduct in this way. The fund still has the option to take the case to Hong Kong’s Final Court of Appeal. The SFC first applied for the order in April 2010 following allegations that the fund and three executives – founder Bill Hwang, head of trading Raymond Park, and trading support officer William Tomita – had engaged in insider dealing in shares of China Construction Bank (SEHK: 0939) Corp and Bank of China Ltd in 2008 and 2009. The SFC had alleged that Julian Robertson seeded-Tiger Asia was given advance notice by third parties of forthcoming share placements by Bank Of China and CCB and shorted shares in the stocks ahead of the placements being publicly announced. An SFC spokesman said the regulator had no immediate comment to make on the case. Lawyers for Tiger Asia could not be reached for comment. 

Leung Chun-ying formally signed up to become a chief executive candidate on Thursday – with the backing of 293 members of the Election Committee. Accompanied by his wife and campaign team, the former Executive Council convenor handed in his documents and nomination papers to the Registration and Electoral Office in Wan Chai on Thursday afternoon. His 293 nominations were fewer than the 387 secured by scandal-hit Henry Tang Ying-yen, but were more than the 183 obtained by Democratic Party chairman Albert Ho Chun-yan. The minimum required to run is 150 nominations. Leung said he might gain more backing from those members of the 1,200-strong Election Committee who have not nominated anyone. “I will continue to exchange views with those Election Committee members and work to gain their support,” he said. Many of the city’s major tycoons have thrown their weight behind Tang. They include Cheung Kong (SEHK: 0001) Holding’s Li Ka-shing and Victor Li Tzar-kuoi, Sun Hung Kai Properties (SEHK: 0016)’ Raymond Kwok Ping-luen and Thomas Kwok Ping-kwong, Henderson Land (SEHK: 0012)’s Lee Shau-kee and New World Development’s Henry Cheng Kar-shun. Asked about his nominations from the business community, Leung said he had received more support than other candidates in certain commercial sectors, such as financial services. But he did not release details. Leung was the third candidate to submit his nominations, after Ho and Tang. New People’s Party chairwoman Regina Ip Lau Suk-yee has jumped into the race and is trying to drum up the required 150 nominations. 

 China*:  Feb 25 2012 Share

Lawyer Xie Xianghui, representing Shenzhen's Proview, dismissed Apple's evidence as old hat yesterday. A Shanghai court yesterday heard evidence in a Shenzhen-based electronics firm's infringement lawsuit against Apple, further escalating a battle over the iPad name. In the preliminary hearing at the Shanghai Pudong New Area People's Court, lawyers for Proview Technology asked the court to order Apple's iPad tablet computers to be pulled off the shelves in Shanghai stores pending the outcome of the suit. Proview contends that Apple infringed its "IPAD" trademark, registered in Taiwan, the mainland and several other places between 2000 and 2004. However, yesterday's four-hour hearing, with a packed gallery, did not result in any decisions or direct action from the court. Proview's lawyers said afterwards that it could take several months for formal hearings to begin, assuming the court would take the case. US-based Apple, founded by Steve Jobs, said it bought rights to the trademark from Proview's Taiwanese subsidiary, Proview Electronics, in 2009. This was thrown out by a Shenzhen court in December, when judges sided with Proview's argument that the subsidiary did not own rights to the trademark registered on the mainland. Similar lawsuits have been filed in other mainland cities. Authorities in at least four provinces moved earlier this month to pull iPads from shelves in response to the Shenzhen judgment, which Apple has challenged. A victory for Proview - which took legal action against the management of Apple-branded stores instead of the parent company - could prompt wider action on the mainland. Observers in the court, however, said deliberations also focused on whether cash-strapped Proview would be able to recompense Apple for lost earnings, should the ruling be unfavourable. Proview Technology went bankrupt in 2010. Its parent company said in October that it was about 3.8 billion yuan (HK$4.68 billion) in debt. Apple's lawyers did not speak to the media outside the courthouse and could not be reached for comment late yesterday. Mainland media reported that the deliberations were heated, with judges repeatedly ordering both sides to keep their tempers in check. China National Radio said Apple's lawyers presented documents - understood to be copies of e-mails earlier circulated to the media - which they claimed showed that Proview founder Yang Rongshan had approved the Taiwan unit's sale of the trademark. The firm's lawyers objected to the submissions. "I don't feel that Apple's lawyers produced too much in the way of new evidence in court," Proview lawyer Xie Xianghui said. Xie refused to speculate on the possibility of an out-of-court settlement as yet. Proview previously said it was seeking US$2 billion in damages from Apple, and threatened to file suit in the United States. 

"The Chinese have been very clear that they want to help, but they want to help through the IMF and they want to be seen to be helping if other countries also step up ..." Murtaza Syed, the IMF resident representative in Beijing, was quoted by Bloomberg as saying. "That's a pretty sensible approach. "There is a lot going on behind the scenes. There's a lot of negotiations happening." On Sunday, China and Japan agreed to coordinate their response to any request the IMF might make for additional money to help combat the debt crisis in the eurozone, Jun Azumi, Japanese finance minister, said after speaking with his Chinese counterpart, Xie Xuren, and Vice-Premier Wang Qishan. Premier Wen Jiabao said last week that China would continue to invest in euro debt, a plan that falls in line with the principles of security, liquidity and value preservation. He said the second-largest economy in the world will use the IMF, the European Financial Stability Facility and the future European Stability Mechanism as the means of offering aid in the debt crises. Syed said the $3.2 trillion China has in foreign exchange reserves will enable it to bail out European countries mired in debt troubles. "China has the kind of space that we would need to make a meaningful contribution." Europe's debt crisis is expected to be the chief subject on the agenda of the G20 meeting that will be held this weekend in Mexico. Even so, it is highly unlikely that the G20 will reach a concrete agreement on IMF assistance this month, Reuters cited one official from the bloc as saying without naming him. Wang Tao, chief economist with the financial services firm UBS AG in China, said the eurozone will probably enter into a "formal" recession in the first quarter because of the imposition of austerity measures and a reduction in credit. "But the confidence of manufacturers and consumers is recovering after the European Central Bank injected liquidity and stabilized financial markets ... in December." She said the euro will be shored up in the short term, but will continue to be weak in the long run since policymakers are still likely to reduce interest rates in the future. While the value of the euro tumbled, that of the Chinese yuan increased as the government continued to hold ambitions of making it an international currency. The expectation of further appreciation, though, is not as strong as it used to be. Syed said the yuan has appreciated greatly in the last six to eight months and the country's current account has come down very sharply as a percentage of its GDP. "If that happens for another two or three years, once the global economy recovers and China's current account is still in the region of 3 to 4 percent of GDP, it becomes much harder to argue that the exchange rate is substantially undervalued." He said having a market-oriented domestic financial system is essential if China is going to promote the use of the yuan as a global currency. The capital account needs to be freed up more. At some time, yuan appreciation will cease being the primary motive people have for possessing the currency, he said. "People will no longer want to hold onto the yuan unless they can use it to invest in assets on the mainland." And China should make sure the domestic financial system can absorb increasing capital flows without contributing to an asset bubble or a credit splurge, Syed added. 

As the United States government steps up its efforts to promote trade and investment, the prospect of whether it intends to ease restrictions of high-tech exports to China remains unknown. During his visit to the US a week ago, Vice-President Xi Jinping repeatedly urged the US to take measures to back off on its restrictions, saying it would be an effective way to rebalance bilateral trade and create opportunities for American businesses. Hans Klemm, the US senior official for Asia-Pacific Economic Cooperation (APEC), said Wednesday that he was aware that the topic was discussed. "Our export control regime is under constant review. As technological development and world environment permit, we'll make adjustment to the regime," Klemm said Wednesday at a panel discussion on US economic engagement with Asia, part of the two-day Global Business Conference hosted by the State Department. But he said he has nothing concrete to announce resulting from Xi's visit. Klemm, however, pointed out that senior US administration officials, from the president to the vice-president, have commented that the visit last week by Xi was very positive and constructive and resulted in either resolution or very important progress toward resolving some of the outstanding issues between the two countries. Again he did not mention what specific progress has been made. On the widespread concern in China that the US championed the Trans-Pacific Partnership (TPP) as a way to contain China, Klemm emphasized that participation in the TPP is open to any APEC members. But he acknowledged that the threshold for entering the free trade agreement is high. US Ambassador to ASEAN David Carden noted that the US has been involved with TPP for some years and it's a mistaken notion that it has anything to do with containing the economic rise of China. But at a meeting at the Americas Society in New York a week ago, former US commerce secretary Carlos Gutierrez, now vice-chairman of the Institutional Clients Group at Citigroup, suggests the US should play the TPP card against China. Columbia University professor and economist Jagdish Bhagwati criticized the TPP as a testament to the ability of US industrial lobbies, Congress and presidents to obfuscate public policy. Bhagwati was surprised that China is not a part of this agenda. In an op-ed piece last month, he described the TPP as "a political response to China's new aggressiveness, built therefore in a spirit of confrontation and containment, not of cooperation." The advocate for free trade believes that the US purposely includes numerous agendas unrelated to trade, such as labor standards and restraints on the use of capital account controls, to preclude China's accession. On another move that was also perceived by many as targeting China, Klemm noted the Trade Enforcement Unit announced by US President Barack Obama in his State of the Union address last month was a reorganization of the work that is currently spread across a number of government agencies in support of US exports, such as export financing and negotiations of new agreements. "I would not suggest these measures are undertaken to prepare the US to enter into a trade war with China or any other countries," he said. Obama mentioned the name of China while announcing the establishment of the enforcement unit. Many analysts believe that Obama's move is an election year response to Republican presidential hopeful Mitt Romney's attack that he has been soft on China. Speaking on Tuesday at the opening of the Global Business Conference, Secretary of State Hillary Clinton mentioned that the new Trade Enforcement Unit was established to go after unfair trading practices. She said the administration has already brought trade cases against China at nearly twice the rate of the previous government. Clinton suggested the US government is going to play a bigger role in the economy, despite the fact that Republican presidential candidate have always resisted such a notion. "We have worked to position ourselves to lead in a changing world where security is shaped in financial markets and on factory floors, as well as in diplomatic negotiations and on the battlefield," Clinton said. "That's why more than 1,000 economic officers on six continents are working with American companies, chambers of commerce, local businesses and local and national governments to open markets and find new customers. Our power in the 21st century depends not just on the size of our military, but also on what we grow, how well we innovate, what we make and how effective we sell." "Rising powers like China, India, and Brazil understand this as well, and we can't sit on the sidelines while they put economics at the center of their foreign policies," Clinton added. Clinton cited the example of Chinese heavy equipment manufacturers Sany's announcement of a $60 million investment in Atlanta, Georgia, with plans to invest an additional $25 million and to hire 300 engineers in the next five years as a major achievement of Obama's SelectUSA initiative to attract foreign direct investment into the US. 

Hong Kong*:  Feb 24 2012 Share

Dragonair gets more planes, eyes new routes - Airline to expand its fleet to 38 and intends to exploit room for growth on mainland market - Shrugging off the uncertainty in the global economy, Dragonair will undertake its first major expansion since 2006 by increasing its fleet size by a fifth to 38 this year. The wholly-owned subsidiary of Cathay Pacific Airways (SEHK: 0293) would add four single-aisle Airbus 320s and two wide-body A330s through leasing, in line with plans to expand its network, Dragonair chief executive Patrick Yeung said. The two new A330s, which Cathay had earlier ordered, would be "transferred" to Dragonair on market leasing terms, Yeung said. Some new mainland cities and regional destinations are in the pipeline, including Guilin, Xian and Taichung. Flights to these cities would start in the second quarter of this year. Dragonair was also considering resuming flights to Shenyang and Dalian this year, Yeung said. Dragonair only serves 17 of 56 mainland cities that are fully open to Hong Kong airlines. The carrier's passenger numbers increased 7 per cent year on year last year, compared with 5.9 per cent growth for its international traffic. In addition to the mainland, it is also looking at destinations in Thailand, Korea and Japan. Apart from the services to Beijing and Shanghai, Dragonair has seen demand for its services to second-tier cities rising as the mainland economy continues to grow. It has just increased the frequency of its Hangzhou flights to four a day from three. It also planned to replace the existing A320 with an A330 on its Qingdao route, its spokesman said. However, competition from Shenzhen threatens to undermine Dragonair's efforts to add more routes to mainland cities as a growing number of passengers prefer to take flights from Shenzhen rather than Hong Kong because of better connections and more choices. Because of this, Yeung was reluctant to provide a number for the mainland cities Dragonair hopes to add to its network. "It may not necessarily be adding new destinations, we can also increase the frequency on existing services ... it's a matter of balance," he said. Dragonair will also add to its workforce this year, recruiting 450 cabin crew, 40 pilots and 35 cadet pilots. A two-day recruitment drive for cabin crew will open on March 3 in Hong Kong, after a one-day drive in Taiwan last month attracted about 3,000 applicants.

Tsang Yok-sing's younger sister has made an emotional plea to the Legislative Council president to abandon the idea of running in the chief executive election. Janet Tsang Lai-yue said she knew her eldest brother was not the "power-hungry type" and that running for election would be damaging to their family and his private life. "I am not too keen on this idea. I will not try to interfere with his decision, but in my heart I would like him to abandon the idea because I believe in the saying 'all politicians end in tears'," she said. "At the age of 64, I think it's better for him to continue with his present job and enjoy retirement when the time comes. "People may say that I am selfish to think like that, but over the years our family has sacrificed quite a lot because of our involvement in politics," she said. Tsang, founding chairman of the Democratic Alliance for Betterment of Hong Kong, said on Friday he was seriously considering running for the top job after a "dramatic turn" in the race, obviously referring to the escalating scandal of Henry Tang Ying-yen's illegal additions to one of his homes. On Monday, Tsang said he would make a decision early next week and had begun assessing the possibility of seeking the required 150 nominations. Janet Tsang, who now lives in England, paid a heavy price for her accidental involvement in politics 45 years ago. In November 1967, she was arrested with 13 other students from Belilios Public School in North Point when they attempted to block teachers from taking away a student who was expelled from the prestigious government-run school. That student spearheaded a fund-raising programme for a fellow student whose Grantham Scholarship (an educational grant) was scrapped after writing an article ridiculing a teacher in the Youths' Garden Weekly. "What we did was peaceful and the handling by the police and the school was very unfair," said Janet Tsang, who was a Form Five student at the time. The 14 students, who were expelled from the school, were sentenced to one month's jail or a fine of HK$100. Seven, including Janet Tsang, went to jail after refusing to pay the fine. The incident took place against the backdrop of the 1967 riots staged against British colonial rule, which nearly brought the city to a standstill. Tsang Yok-sing said in an earlier interview that the colonial government had locked up his younger sister, who was just 16 at the time, even though she had caused no harm to anybody. Tsang Tak-sing, the Legco president's younger brother, was a Form Six student at St Paul's College at the time of the riots. He was jailed for two years for distributing "inflammatory leaflets". He joined pro-Beijing Ta Kung Pao after walking free from Stanley Prison in 1969. He became chief editor of the newspaper in 1988 and is now secretary for home affairs.

Fung shui master and playwright Li Kui-ming, who signed a four-year lease for the Sunbeam Theatre on Saturday, has grand plans. The playwright who saved the Sunbeam Theatre from closure at the last minute will turn the North Point landmark into a privately run cultural centre promoting the art of Cantonese opera - and much more. In an interview with the South China Morning Post (SEHK: 0583), Li Kui-ming said he hoped that when the theatre reopened in less than two months, it would stage a much wider range of performing arts than before. Performances would include not only various forms of Chinese opera by local and mainland troupes, but also drama, magic and even acrobatic shows. "We hope to bring something new to the theatre," said Li, who is also a fung shui practitioner and philanthropist. "When the theatre reopens, it's going to play an important role as a cultural centre before the West Kowloon Cultural District is built." Hong Kong's only privately run theatre has served as a mecca for Cantonese opera since its founding in 1972. Its operator, United Arts Entertainment, however, has blamed big losses on rising rents and decided not to renew its lease on the building when it expires later this month. The Sunbeam's show last Sunday was to be its last. But Li signed a four-year lease on Saturday after chief executive hopeful Leung Chun-ying put him in contact with its landlord, Francis Law Sau-fai. Li, whose has reinvented himself as a Cantonese opera playwright in recent years, is paying HK$1 million per month under the new lease, nearly 30 per cent more than the HK$698,000 paid by United Arts. His Prime Splendor Theatrical Troupe will manage the theatre and rehire staff who previously ran the Sunbeam. Li estimates the operation would cost HK$1.5 million per month - and fully expects to it to be a loss-making endeavour. The HK$35,000 nightly rental charge simply will not cover the bills. "I'm prepared to lose money," said Li, who holds a degree in communications from Baptist University and has worked in the media and wrote film scripts while making his fortune in fung shui. Reluctant to put up rental charges for already stretched opera companies or increase ticket prices, Li is vague about how he will minimise his losses. He said that "the only way to reduce the loss is to run more shows". The government allocated HK$3.6 million through the Arts Development Council in 2009 for opera troupes to stage performances at the Sunbeam. It has so far approved 40 applications and provided HK$3 million to support 259 performances. But the rental subsidy scheme ends with the old lease and the government says it wants to support publicly owned venues, rather than private ones. The theatre has two venues - the main theatre, with 1,033 seats, and a cinema, with 536 seats. In the main house, the focus would still be on Cantonese opera, which would make up 80 per cent of the performances. Li rejected claims that few local troupes would perform at the venue in the coming year, despite warnings from professional troupes on Saturday that they had already locked in deals with government-owned venues, which must be booked up to a year in advance. "Many of them want to return to Sunbeam now and give up on government venues," Li said. "We will also open the doors to mainland troupes." Li hopes the cinema would emerge as a venue for more intimate shows by pop singers and drama groups. He has been in talks with several local theatre companies, including Chung Ying Theatre. "They can do experimental theatre," he said. Chung Ying's artistic director Ko Tin-lung said he has been in talks with Li on projects allowing Cantonese opera and drama to cross over with each other. Ko, who's also the chairman of the Arts Development Council's promotion committee, said Sunbeam would be an ideal place to educate young people. Li expected renovation work to be kept to a minimum, although new carpets would be fitted on all floors and one male toilet would be converted into a female toilet. "We want to preserve things as they are, as part of Hong Kong's collective memory," he said. But Li wants the Sunbeam to be more than just a theatre. He hopes to develop exhibition spaces nearby to showcase the history of Cantonese opera. He has also been seeking props and costumes that he can someday exhibit. "I'd rather do it privately," Li said. "If we can't rely on the government, we can rely on ourselves. Hong Kong people have lots of potential."

Lau Wong-fat called Henry Tang "brave" - Having 378 votes of confidence at the nomination stage is no guarantee of support in the March 25 selection for chief executive, supporters warned Henry Tang Ying-yen yesterday. The caution came from one of his staunchest supporters, Lau Wong-fat, chairman of the powerful rural affairs body the Heung Yee Kuk, which on Monday gave Tang all 28 of its Election Committee nominations. A candidate has to secure at least 150 nominations to be eligible. Lau's remarks came as Tang's credibility took a battering from scandals over illegal structures and a love affair, which cost him nominations from his strongest backers on the 1,200-member committee. "Nominations and voting are two separate matters," the kuk chief said yesterday. "There is still a month to go. The situation can change a lot." Lau, who is also a lawmaker and executive councillor, said he submitted nomination forms for Tang before the illegal structure row, but did not regret the decision. Commenting on Tang's decision to run amid the backlash against him, Lau said: "He is brave." James Tien Pei-chun - honorary chairman of the Liberal Party, which along with its allies, contributed 62 nominations for Tang - said support would be withdrawn if the former chief secretary's popularity remained low next month. The latest popularity poll released yesterday by Chinese University surveyed 551 respondents. Tang's approval rating dropped 11 marks - out of 100 - to 33, and, for the first time, was lower than pan-democratic candidate Albert Ho Chun-yan's, who had 34. Arch rival Leung Chun-ying's score slid from 59 last month to 57 marks this month. Tang was sanguine about the downturn. "I knew what happened recently would deal a blow to my ratings. I accept that," he said. "As I have repeatedly said publicly, I will shoulder the responsibility on my own." Asked if his insistence on standing went against the public's will, Tang said: "I hope when selecting their chief executive, people consider whether [a candidate] is committed to serving the public, as well as if and how he or she served people in the past. Second, they should compare the candidates' visions for ruling Hong Kong." Of the 378 valid nominations, (one was ruled invalid) the former chief secretary surprisingly lost votes from some of the subsectors where he used to have the greatest support. The loss was the most severe in the accounting subsector where he only got one nomination out of 15. Subsector representative Eric Li Ka-cheung, a former legislator, said the subsector needed more time to discuss who to nominate for the chief executive election. He emphasised that the recent scandals had no bearing on their decisions. "I don't rule out the possibility that some of us may nominate Leung Chun-ying or other chief executive hopefuls," Li said. In the catering subsector, Tang got three fewer nominations than expected, securing only 14. Core supporter Thomas Woo Chu admitted some had taken a step back. "Three of them said they wanted to wait for the recent chaotic situation to settle down before making the choice," Woo said. Cafe de Coral (SEHK: 0341) chairman Michael Chan Yue-kwong was among the three pulling out. Other prominent supporters failing to back Tang included singer Alan Tam Wing-lun in the performing arts subsector, and Jonathan Choi Koon-shum, chairman of the Chinese General Chamber of Commerce, in the commercial (second) subsector. Tang had full backing from the industrial (first) and textile and garment subsectors, but no nominations from the education, labour and Catholic sectors, or the leftist Chinese Enterprises Association. Nominated by many tycoons and major property developers, he rejected suggestions that collusion between the government and businesses could arise should he be elected. He said his nominators came from "all sectors and all walks of life". Anthony Wu Ting-yuk, chairman of the Hong Kong General Chamber of Commerce and the Hospital Authority, and a Tang supporter, called on the public to consider Tang's manifesto and management skills. Leung said he expected to register as a candidate in the next few days, while Regina Ip Lau Suk-yee, who announced her bid on Monday night, declined to disclose the number of nominations she had so far secured.

Tang Ho-hing (C) sit in front of her house in Ma Shi Po village with her sons Lai Yuen-cheung (L) and his brother Lai Yuen-shan (4th from left). Sitting on Tang's lap is her grandson, the 3 year-old Lai Ka- ho. A family that has lived in Fanling’s Ma Shi Po village for over 30 years gave up legal action on Wednesday against Henderson Land (SEHK: 0012) for evicting them from their home, and are left with their last weapon – appealing to the company’s sense of decency. Tang Ho-hing, 55, and her 32-year-old son are now at the mercy of Henderson Land, who may send bailiffs to reclaim the land any time. Tang has been advised by her lawyer to give up all legal action for fear of draining her life’s savings. Fellow villager Cho Kai-kai, who has been advising Tang, said: “We want her to be able to live in her home until construction begins in 2016.” Tang’s home is on land that belonged to her relatives, who sold the land to Henderson in early 2006. The contract that Tang signed allowed her to continue living on the land until July 2006, after which she would have to hand it over to Henderson. Tang, along with relatives and fellow villagers, originally wanted the court to decide if the contract that Tang signed in 2006 with Henderson Land was valid. Tang, who is illiterate, claims that the clauses were not properly explained to her, but a Henderson spokeswoman said the clauses had in fact been carefully explained to Tang at the time of signing. Cho said: “But the land belongs to Henderson at the end of the day, so the heavy legal costs are not worth the burden. We are told that it is impossible to play the legal game with a property developer.” Henderson Land agreed to pay the family HK$30,000 to help them find a new home. Tang insists it is not about the money and has not accepted the money. “I don’t want any money. I just want to stay in the house until development begins – which at the earliest can only be 2016. Henderson is just going to destroy the house and leave the land to waste until 2016 anyway,” said Tang, who has offered to pay rent in order to stay. Henderson Land’s lawyer agreed outside of court not to ask Tang and her son for legal fees after they rescinded the injunction. Tang’s home is part of 150 homes in Ma Shi Po village being bought up by Henderson Land to co-develop a new-town project with the government.

Chief Executive Donald Tsang Yam-kuen on Wednesday dismissed new accusations of a conflict of interest, on a holiday trip to Thailand, and rejected as “utter nonsense” a media report that he had plotted to usurp Tung Chee-hwa from his current position with the central government. Tung was Tsang’s predecessor in Hong Kong’s top job. Tsang is facing accusations that he might have breached a bribery law by staying on a luxury yacht, offered by another tycoon friend, during a visit to Macau from Friday to Sunday. Oriental Daily on Wednesday reported that Tsang and his wife flew to Phuket on January 9, on a private jet worth HK$300 million, for a four-day holiday. The report said he had been invited by mainland property tycoon Zhang Songqiao, and spent time with more than 10 tycoons on board the plane. Speaking on local radio on Wednesday, Tsang acknowledged that he took a private jet to Phuket. But he dismissed suggestions of any conflict of interest, saying he had paid for the trip “at the market price”. “There were reports saying I flew to Phuket on a private jet. This is true. But on every such trip, I bear in mind a very important principle. That is, I must make sure there is no conflict of interest before taking up any offer for such a trip. And I always pay for the trip at the market price, even though this may give an impression of being petty-minded,” he said. Tsang said he had had two holiday trips on private jets and two others on yachts during his seven years in office. These included the latest Phuket and Macau trips, he said. Regarding his Macau trip, Tsang rejected the Oriental Daily claim that he discussed, with his tycoon friends on the yacht, a plan to usurp former chief executive Tung from his vice-chairmanship in the Chinese People’s Political Consultative Conference. The newspaper cited unidentified sources saying Tsang’s plan was to involve chief executive hopeful Leung Chun-ying – whom Tung is reportedly backing – in a scandal, so that he could topple Tung and take his place. But Tsang dismissed these suggestions as groundless. “We kept our talks away from major political topics. We did not touch on my post-retirement plans. I have no ambition for my post-retirement life. I do not aspire to achieve anything after I retire. “The media suggested I mentioned a plan against Mr Tung. Mr Tung is a senior figure whom I a highly respect for his contribution to Hong Kong. How would I think of usurping his position? This is utter nonsense.” Tsang also said he visited Macau regularly because his wife’s relatives were there. He and his family went on trips to gravesites in Macau to pay their respects to their ancestors. He said he had considered staying in a hotel, but eventually ruled it out because of security issues and a friend’s invitation to stay on the yacht. He dismissed the reports’ suggestions that he had enjoyed luxury food and entertainment on board. “It was not as luxurious as people have said. I only had a breakfast on board. It was only fruit, congee with pig bones and noodles in soy sauce. That is all,” he said. “Some report suggested there were entertainment shows on the yacht. But there were no such things whatsoever. The only entertainment available onboard was the TV news. “There was no karaoke, no entertainment show and no gambling. We only had talks with the few friends on Hong Kong’s future because they had good knowledge of Hong Kong retail and export trades, and I was eager to hear their views,” he said.

 China*:  Feb 24 2012 Share

Jeremy Lin playing in a friendly match at a middle school in Pinghu, his family’s ancestral home in eastern China’s Zhejiang province, in a May 2011 photo. As attention focuses on the few who first saw potential in surprise basketball standout Jeremy Lin, a Chinese sportswear company has drawn local headlines for spotting his talent – and taking out a trademark on his Chinese name. A Chinese maker of soccer balls and basketballs named Wuxi Risheng Sports Utility Co. applied for a trademark for Lin Shuhao (林书豪) in 2010, according to government records. That year, Mr. Lin graduated from Harvard University but was ignored during the NBA draft, leaving little indication that he would become a high-scoring starter for the New York Knicks as well as a global media darling. The company also registered a variant of his English name, Jeremy S.H.L. It’s unclear whether anyone in China has trademarked the English name “Jeremy Lin” – as of Wednesday evening the website of the trademark office of the State Administration for Industry and Commerce was failing to work properly. Risheng Sports’s owner, Yu Minjie, couldn’t be reached for comment. Articles in the local media have quoted Ms. Yu as saying that she was intrigued by Mr. Lin at an early stage but that his rise to prominence was “totally unexpected.” According to a filing on SAIC’s website, Risheng Sports registered the Lin trademark for a variety of uses, including balls, outfits, shoes, toys, gym facilities and ornaments. Other filings show Risheng Sports claims trademarks for other famous basketball players, including the Chinese name of Yi Jianlian, a Chinese center who now plays for the Dallas Mavericks, and also has a trademark on the Chinese name for “Jordan’s Kingdom” – an apparent reference to former star Michael Jordan – for use on balls. Word of the company’s claim, which surfaced this week in the Chinese media, comes as others plan to tap China’s immense interest in Mr. Lin, who was born in the U.S. to Taiwanese parents. Earlier this week, sports apparel maker Adidas AG said it plans to roll out Lin jerseys across its network of 6,700 stores in China. The jerseys offer his name in English, so they wouldn’t be likely to run afoul of Risheng Sports’s trademark. Should Mr. Lin or others want to mount a challenge over use of the Chinese name, they could face significant hurdles. As in many jurisdictions, China’s trademark laws tends to favor early filers, said Stan Abrams, a professor at Beijing’s Central University of Finance and Economics. Claiming ownership of a name can also be tricky because they can be shared by many people. “Theoretically anybody can register a name, and generally whoever gets there first is going to get that right,” he said. But the law provides some wiggle room for use by others, he notes, involving how the name is used or presented, or whether it includes a famous person’s likeness. Though Chinese intellectual property law has a reputation for weakness, an ongoing dispute involving Apple Inc. over the iPad name in China shows Chinese trademark law can become a major issue. Mr. Abrams said the problem tends to be with enforcement rather than the law itself.

The son of Premier Wen Jiabao has been appointed chairman of China Satellite Communications (China Satcom), a leading mainland telecommunications giant, the latest princeling to take the helm of a major state-owned enterprise. Winston Wen Yunsong (pictured) replaced Lei Fanpei, an aeronautical engineer, as China Satcom chairman during the company's board meeting last week, the semi-official China News Service reported yesterday. It is one of the six telecommunications-infrastructure operators on the mainland, with business including both terrestrial and space satellite-operation services. The company has previously said it would have 15 satellites operating by the year 2015, with annual revenue at 16 billion yuan (HK$20 billion). The young Wen has been the most high-profile princeling to make his name in the private-equity business - an industry that attracts many children of senior government and Communist Party officials, using their connections to make investments in mainland companies planning initial public offerings, and ready to reap handsome profits after their stock market listings. But his business investments were controversial, not least because his father Wen Jiabao had tried to cultivate an image as the people's premier, endeavouring to reach out to the poor and constantly expressing his indignation against rampant official corruption. After receiving an MBA from Kellogg School of Management at Northwestern University in the United States, Winston Wen started telecommunications-equipment maker Unihub, whose key clients included large banks and securities firms such as Ping An Insurance (Group) (SEHK: 2318) and Citic Securities. Wen later sold the company and turned to private equity. He helped set up New Horizon Capital in 2005, which later became the leading private-equity firm on the mainland. New Horizon is considered a foreign fund because of its legal structure and the foreign sources of its capital. It has launched three funds since 2007, raising a total of about US$1.4 billion, according to previous reports. As rumours over Wen's business activities intensified along with those about his mother Zhang Peili in recent years, New Horizon confirmed in 2010 that Wen had left the firm the year before. The 2010 announcement also revealed that Wen had taken a senior management role at state-owned China Aerospace Science and Technology, the parent company of China Satcom. Private equity-partners that have met and worked with Wen described him as smart and of an entrepreneurial nature.

China's new export orders shrank in February the most in eight months, a preliminary HSBC business survey shows, defying expectations of a pick up after Lunar New Year holidays and a worrying sign of the impact of the euro area debt crisis. Many analysts had expected some rebound in February after imports and exports fell the most in two years in January, when factories closed for several weeks for Lunar New Year holidays. But HSBC’s February flash PMI, which showed the overall manufacturing sector shrinking for the fourth-straight month, suggested overseas demand was sliding even further. “This suggests trade may continue to be disappointing and we cannot see any improvement in the near term,” said Kevin Lai, senior economist at Daiwa Capital Markets in Hong Kong. HSBC flash PMI, the earliest indicator of China’s industrial activity, rose to a four-month-high at 49.7 in February from 48.8 in January. The PMI has been below 50, which demarcates expansion from contraction, for most of the last eight months. The new export orders sub-index dropped to 47.4 – the lowest in eight months – from 50.4 in January as the European debt crisis cast a shadow over Chinese exports. Overall new orders were flat at 49.1, a level that indicates they were falling. An output sub-index rose to 50.1 in February from 47.6 in January. HSBC said the data, based on 85-90 per cent of responses to a monthly survey, suggested further policy easing was needed. The final PMI is subject to revision and will be released March 1. “Growth remains on track for a slowdown, despite the marginal improvement in the headline flash PMI led by quickened production after the Chinese New Year,” said Hongbin Qu, HSBC’s chief economist for China. “With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth. The PBoC, after delivering this year’s first RRR cut, should step up policy easing as inflation pressures continue to ease.” China cut its reserve requirement ratio (RRR) by 50 basis points to 20.5 per cent on Saturday, releasing about 400 billion yuan (US$63 billion) that could be used for bank lending. It was the second 50-bp cut in the RRR in three months. Shares in Hong Kong and Shanghai slipped marginally when the flash PMI was published. The commodity-driven Australian dollar, which is particularly sensitive to Chinese data, traded steady around a 3-week low of US$1.0634. China’s economic growth is widely seen slowing down in January to March for its fifth consecutive quarter. Economists expect full-year growth to slip below 9 per cent for the first time in a decade. Official trade data for January showed imports and exports falling at their fastest rate since 2009, which analysts said at the time showed an economy weaker-than-previously thought even accounting for distortions caused by the Lunar New Year holidays, which occurred in January. Factories in China typically shut or run at half speed during Lunar New Year holidays. The January figures showed that exports to China’s biggest market, the European Union, fell 3.2 per cent from a year earlier. The euro zone’s manufacturing PMI has been below 50, and so contracting, for six months in a row, as the debt crisis stunts the economy. Reflecting official concern over trade, China’s trade ministry is working on detailed policies, including more tax rebates, to try to boost exports. During the global financial crisis in 2009, Beijing increased the average rebate ratio for exporters to 13.5 per cent from 9 per cent before the crisis. Still, China’s export growth could slip to 13-15 per cent this year from 20.3 per cent last year, said Liu Li-Gang, chief China economist at ANZ in Hong Kong. Economists Reuters spoke to since Saturday’s reduction in bank reserves said they were sticking with forecasts for further cuts in the RRR this year. A Reuters poll conducted last month showed economists expect a total of 200 basis points of RRR cuts throughout this year to 19 per cent. “We expect another 2 RRR cuts (this year), the next one could be in late March or early April,” said ANZ’s Liu. The central bank may also use open market operations to ease liquidity strains and authorities may relax curbs on the loan-to-deposit ratio requirement so banks can step up lending, analysts say. Few expect the central bank to cut interest rates though while inflation remains stubbornly above the one-year deposit rate of 3.5 per cent for fear it could spark a rush of cash out of deposits and into more speculative investments.

The construction site of the Taishan Nuclear Power Station in Guangdong province in October. China is seeking to improve safety at its nuclear power plants in the wake of Japan's Fukushima disaster. China is seeking to improve safety at its nuclear power plants to pave the way for the industry's renewed expansion, as shown by recent statements and decisions by regulators. The National Energy Administration has embarked on a research and development plan for nuclear safety technology, following months of assessments and inspections in the wake of Japan's Fukushima disaster. The administration said in a statement on its website that 13 R&D projects should be completed by 2013, covering such issues as operational safety and the capacity to deal with extreme disasters, including earthquakes and multiple hazards. The move will greatly increase the safety of China's advanced second-generation technology, allowing it to meet the standards set for third-generation technology. The statement came just days after an announcement that the NEA would expand its nuclear power division. The agency established a separate nuclear power division on Feb 14, a sign of the importance that China attaches to the sector, experts said. China has made great efforts to improve nuclear power safety since Japan's nuclear crisis last year. China National Nuclear Corp, the nation's largest nuclear operator, said it was developing 25 plans to improve project safety. The first 11 plans were completed in 2011, the company said. Another 13 plans calling for waterproofing, emergency response procedures and other matters will be completed by 2013, it said. China also strengthened its nuclear supervision system and doubled the staff in the Department of Nuclear Management in the Ministry of Environmental Protection. Safety concerns arose again after a recent report that questioned the choice of location for the Pengze Nuclear Station in Jiangxi province, one of China's first inland nuclear projects, which is in the preliminary stages of construction. "This is an indication of public resistance to nuclear power development," said Xiao Xinjian, industry expert at the Energy Research Institute, which is affiliated with the National Development and Reform Commission. Following the nuclear leak in Japan after the March 11 earthquake and tsunami, the Chinese government suspended approvals for nuclear power stations. It also conducted rigorous safety checks at all nuclear projects, including those under construction. No new project was approved or started last year. Earlier, an unidentified official with the National Nuclear Safety Administration, which is under the Ministry of Environmental Protection, told China Daily that regulators might be able to resume approving new nuclear projects during the first half of 2012. The government might reduce the number of new reactors that can be approved each year from eight to six, industry insiders have said. Before the Japanese quake, China had planned to increase its nuclear-generation capacity by about 10 gigawatts annually, building eight reactors each year. Japan's former prime minister Naoto Kan acknowledged recently that the crippled Fukushima plant should not have been built so close to the ocean on a tsunami-prone coast. The disaster disclosed even bigger man-made vulnerabilities in Japan's nuclear industry, from inadequate safety guidelines to crisis management, all of which he said need to be overhauled. China had six new projects approved before the Japanese disaster, and construction on all of them was suspended over safety concerns. China has 11.3 gW of nuclear capacity and plans to increase that to 80 gW by 2020, exceeding an earlier target of 60 to 70 gW.

The recent agreement to allow screenings of an increased number of United States-made movies in Chinese theaters will simultaneously provide both opportunities and challenges to Chinese film makers and theaters, analysts said. A poster for a Harry Potter film outside a cinema in Shanghai. China has agreed to allow 14 films in premium formats, such as 3D or IMAX, to enter the domestic market annually. China has agreed to allow 14 films in premium formats, such as 3D or IMAX, to enter the domestic market annually. That is in addition to the existing annual quota of 20 films and would see the US movie companies sharing revenue with Chinese distributors and movie theaters. US studios will see their share of the earnings increase to 25 percent from the previous payment level that ranges between 13 and 17.5 percent. The agreement was announced on Feb 17, the last day of Vice-President Xi Jinping's five-day visit to the US, and received a warm welcome from US film makers and companies. "This agreement represents a significant opportunity to provide Chinese audiences with increased access to our films," Robert Iger, chairman of Walt Disney Co, was quoted as saying by Reuters. Some Chinese film companies say the change was expected and they believe that the move is likely to have a positive influence on the domestic industry. "It will surely exert a negative impact on small-scale movie companies, but I do think that the rise in the number of imported films might result in more private film corporations qualifying to distribute foreign films in the Chinese market," said Wang Changtian, president of Enlight Media Co Ltd, a listed private media company. At present, only China Film Co Ltd and Huaxia Film Distribution Co Ltd are allowed to distribute imported movies in the country. Wang also said that the new policy will help end excessive competition in the sector, a factor that has resulted in a significant number of companies and the production of too many films. "It offers a great opportunity for consolidation in the film sector," he said. For Chinese movie theaters, while more imported movies will attract larger audience numbers, they will also face challenges, especially in terms of business operation. "The reduction of Chinese theaters' share of revenue earned on imported films will be partly offset by the growing number of features," said Gao Jun, deputy general manager of the theater operator, New Film Association. "In general, the benefits will outweigh the disadvantages for cinemas," he added. "As the increased quota is mainly for movies in enhanced formats such as 3D and IMAX, cinema investors and operators will have to keep up with the latest industry trends in terms of technology, much more than ever before," said Huang Wei, general manager of Bona International Cineplex Investment and Management Co Ltd, a subsidiary of Bona Film Group Ltd. He added that more foreign blockbusters will mean that cinema operations and designs will have to be improved. Zhang Xiaobei, a movie critic and scriptwriter, said that access to a greater number of imported films will serve as a stimulus to the creation of Chinese films, because poorly made domestic movies will be driven out of the market. Meanwhile, film makers will have to place greater emphasis on the quality of the product instead of concentrating on factors unrelated to the market, according to the People's Daily website. Chen Shaofeng, the deputy dean of the Institute for Cultural Industries at Peking University, said: "Chinese industry giants such as Huayi Brothers Media Corp and Bona Film Group should consider the overseas market before producing their films." On Saturday, the US company DreamWorks Animation SKG Inc, the producer of the Kung Fu Panda series, signed an agreement to establish a joint venture, Oriental DreamWorks, with three Chinese partners. The joint venture will focus on creating animated feature films in China. Industry experts said that establishing a joint venture is a way of avoiding the annual quota in the fast-growing Chinese market.

A service center catering for foreign residents has officially opened in the city's Pudong New Area following a two-month trial period. The Foreign Affairs Service Station, set up by Pudong district police and Lianyang community at No 3 Building, 2797 Yaogao Middle Road, provides temporary residence permits and guidance on daily life and work. Eight staff workers offer assistance in English, Japanese and Korean. "The station is equipped with personal data systems, so expats can complete temporary residence registration here in a short time, rather than having to go to the local police department and wait a long time," said Sun Qianyi, a Pudong district police officer. The station also offers assistance to expats on more day-to-day aspects of life. 

After a year largely spent in the United States developing products that use new sources of energy, Wanxiang America, the US subsidiary of the Chinese conglomerate Wanxiang Group Corp, said it is looking toward making a large investment. During Vice-President Xi Jinping's visit to the US last week, the company signed a $100 million-investment agreement with Smith Electric Vehicles Corp, a producer of all-electric commercial vehicles. The bulk of that - $75 million - is to go into a joint venture between Smith and Wanxiang to develop, manufacture and sell all-electric school buses and commercial vehicles in China, a large step in the company's plan to move into the new-energy business. Wanxiang Group Corp, headquartered in Hangzhou, Zhejiang province, is the biggest supplier of auto-parts in China. Its US subsidiary owns 28 manufacturing plants in 14 states throughout the US and employs 5,686 people. This past year saw Wanxiang America add hundreds of jobs at its sales and manufacturing operations. The company became the subject of much attention in January last year when Lu Guanqiu, the billionaire founder of Wanxiang Group, accompanied President Hu Jintao on a state visit to the White House and displayed his company's electric-vehicle dashboards to Chicago Mayor Richard Daley. Meanwhile, Ni Pin, president of Wanxiang America, has also been making headlines. The company's yearly sales have totaled more than $2 billion, making it one of the most successful Chinese companies to go abroad. "The auto-parts business for Wangxiang's US operation has been big," Ni said. "One in every three US cars have our products in them. But since last year, we have been putting more emphasis on the new-energy industry." Since last year, the company has invested heavily in solar panels, electric trucks and school buses, as well as light -emitting diodes, or LEDs. It is one of the first Chinese companies to produce solar panels in the US. Its investments in new energy started with a JV with the battery company Ener1 Inc to make lithium-ion battery cells and packs for vehicles in China. At the time of the deal, the venture was expected to produce about 40,000 electric-vehicle battery packs by 2014. According to The Wall Street Journal, Wanxiang paid for most of the venture, including a 168,544-square-meter plant in Hangzhou. Ni said Wanxiang's success will depend on its ability to "re-allocate resources". "The differences between China and the US in their systems, in markets, in their economic development, give us a great opportunity to use their respective advantages and to bring down costs and provide products that cannot be made anywhere else," Ni said. Localization, he said, has also contributed greatly to their success. Only about 10 Chinese people work for Wanxiang America, which he said operates like a US company. "Compared with obeying rules, Chinese companies are better at creating rules," Ni said. "But when it comes to doing business in the US, I think it is important to adjust to the local rules."

Chinese authorities in Nanjing have suspended official contacts with Nagoya after the Japanese city’s mayor cast doubt over the well-documented massacre of Chinese civilians by Japanese troops in 1937. China says 300,000 people were killed that year in an orgy of murder, rape and destruction when the eastern city of Nanjing – then the capital – fell to the Japanese army, and the incident has haunted Sino-Japanese ties ever since. According to Japan’s Kyodo news agency, Takashi Kawamura, mayor of Nagoya, told Liu Zhiwei, a high-level Chinese official visiting from Nanjing, that he believes only “conventional acts of combat” took place. During talks on Monday between the two – whose cities were twinned in 1978 – Kawamura, whose father was in Nanjing in 1945 at the end of the Japanese occupation of China, reportedly denied that mass murders and rapes happened. Some Japanese academics also contest the number of casualties in Nanjing, and say estimates range from 20,000 to 200,000. Kawamura’s comments have triggered outrage in China and the Nanjing municipal party committee announced late on Tuesday it had suspended ties with Nagoya. “In view of the current denial by Nagoya mayor Takashi Kawamura of historical facts pertaining to the Nanjing Massacre, which seriously hurt Nanjing people’s feelings, Nanjing city is suspending official contact with the government of Nagoya,” it said on its official Twitter-like weibo account. China’s foreign ministry spokesman Hong Lei on Monday also waded into the controversy, hitting back at Kawamura’s comments. “The Nanjing Massacre was a brutal crime committed by Japanese military during their war and invasion, and there is irrefutable evidence,” he said. “Some Japanese people should correctly understand... that period of history, and earnestly draw lessons from history.” Many people in China still feel resentment towards Japan, which waged a war against its giant neighbour from 1937 to 1945, occupying vast swathes of the country. Relations between the two countries have steadily warmed since 2006, when they began to put behind them decades of distrust, but ties are still fragile and have been rocked by spot incidents in recent years. In September 2010, ties plunged to their lowest in years after Japan detained a Chinese fishing boat captain whose vessel had collided with Japanese coastguard ships in waters around disputed islands. He was later released.

Hong Kong*:  Feb 23 2012 Share

Alibaba Group Holdings, founded by Jack Ma Yun, offered HK$19.6 billion to take its Hong Kong-listed flagship Alibaba.com (1688) private. The e-commerce company proposed HK$13.5 per share, matching the business-to-business site's initial public offering price when it listed on November 6, 2007, eight years after its founding. The offer price also implies a premium of 45.9 percent over the closing price of HK$9.25 on November 8, the last trading day before its shares were suspended from trading. The group and its subsidiaries hold 73.45 percent of Alibaba.com, which operates three marketplaces online. Six banks will provide financing for the buyout. Alibaba.com chief financial officer Maggie Wu Wei said the privatization plan was not related to its talks with Yahoo! Inc. The group is now in talks with Yahoo to buy back its 40 percent stake in the group. Wu also said there were no plans to go public, adding that it will be "several years" away. The buyout announcement came after Alibaba.com said fourth-quarter net profit declined for the first time in two years. Net profit in the fourth quarter was 381.59 million yuan (HK$469.9), down 3.13 percent from the third quarter, and down 6.17 percent from a year back. Fourth quarter revenue was 945.64 million yuan. Wu said the company faced challenges and that negative growth of paying members is expected to continue. Last year paying members in China and globally fell 5.4 percent from 2010. This was because of "tightened requirements for membership acquisition and renewal." Net profit for the year ended December 2011 was up 16.6 percent to 1.47 billion yuan, mainly on higher sales of value-added services and contributions from new businesses. Revenue was up 15.5 percent to 5.56 billion yuan.

New People's Party chairwoman and lawmaker Regina Ip Lau Suk-yee has decided to enter the chief executive race even though she has fewer than 100 nominations so far. Ip, who said she was not interested in the top job last year, changed her mind because of the "questionable credibility" of candidates Henry Tang Ying-yen and Leung Chun-ying following a spate of incidents. "They both have problems with their credibility and that pains me. The election has been turned into a joke," she said. Ip added she does not have a "credibility problem" and is standing to give people "one more choice." The former secretary for security is confident she will be able to get the 150 nominations for an "admission ticket" because she has 30 years of experience working in government. She admitted she has been in touch with officials from the central government liaison office in Hong Kong but refuses to reveal what they talked about. "Once I get into the race, I will try to rally more support through my platform and in open debates," she said. Ip said she will welcome Legislative Council president Jasper Tsang Yok- sing should he decide to enter the race. "It will be a battle between a gentleman [Tsang] and a lady [Ip] if he decides to run," she said. But she agrees that if Tsang does so it will be more difficult for her because he has the backing of the Democratic Alliance for the Betterment and Progress of Hong Kong, which has 147 votes. When asked about supporting the enactment of Basic Law Article 23 when secretary for security several years ago, she said it was one of her duties to do so then. She added it is also the chief executive's duty to legislate the article. Dealing with poverty, however, will be her priority if elected. Ip also said the vindication of those involved in the June 4 crackdown is a sensitive issue which cannot be solved in a short time. She was emotional when it happened in 1989 but did not join the Victoria Park vigil as she was pregnant. Confederation of Trade Unions lawmaker Lee Cheuk-yan criticized Ip for standing merely because the Tang campaign is embroiled in scandal. Lee said Ip lacks the dedication to serve Hong Kong and does not have any platform to convince the public.

The government on Tuesday began its bid to overturn a landmark court ruling that gives foreign domestic helpers the controversial right to apply for permanent residence in Hong Kong. In the Court of Appeal, lawyers for the government argued that Mr Justice Johnson Lam Man-hon erred in three point of law when he found that immigration law was unconstitutional in denying domestic helpers the right to settle in the city after seven years of uninterrupted residency. Lam made the ruling last September in the High Court. Lam found that the law was inconsistent with the Basic Law because it excluded foreign domestic helpers from being “ordinarily residents”. David Pannick, QC, for the government, said the ruling had grave consequences for social, economic and immigration aspects of Hong Kong. But Gladys Li, SC, for domestic helper Evangeline Banao Vallejos, said the arguments submitted by the government undermined the rule of law and was “unconstitutional manipulation of the individual’s status”, the court heard. Pannick said the judge should have ruled in September that it was the intention of Basic Law drafters to give the legislature power to define the meaning of the ambiguous term “ordinarily resident” – to describe helpers’ residence in the city – taking into account the social, economic and immigration factors at different times. The appeal arises from a judicial review sought by Vallejos, a Philippine domestic helper, who has been working in Hong Kong since 1986. Vallejos’ application for a permanent identity card was rejected by the Commissioner of Registration in November 2008. She appealed to the Registration of Persons Tribunal, which dismissed her appeal in June 2010. The tribunal found that Vallejos had satisfied the criteria, but ruled she was not recognised as an “ordinarily resident” under immigration law. Pannick said the legislature had some discretion in defining the meaning of ordinarily resident, a privilege it has exercised since before the Basic Law was enacted. For example in 1982, he noted, the legislature exercised its power to decide that Vietnamese refugees were not “ordinarily” residents of Hong Kong, and were not entitled to permanent residence. Judge Lam, Pannick said, failed to note that the terms of residency of foreign domestic helpers in Hong Kong are “out of the ordinary”. Their entry to Hong Kong was subject to conditions – as it is for refugees, prisoners, Gurkhas and others – he said. Beijing and Britain had agreed that foreign domestic helpers should not be regarded as “ordinarily resident”, as shown in external materials from before and after the enactment of the Basic Law in 1990, Pannick argued. At the end of 2010, there were 285,000 foreign domestic helpers in Hong Kong, the court heard. About 117,000 of them, who had lived in Hong Kong for seven years or more, might be entitled to permanent residence if the unconstitutionality ruling were upheld. The appeal is expected to last for three days before Chief Judge of the High Court Andrew Cheung Kui-nung and two vice-presidents of the Court of Appeal, Mr Justice Robert Tang Ching and Mr Justice Frank Stock.

 China*:  Feb 23 2012 Share

Chinese Vice President Xi Jinping receives flowers upon his arrival in Ankara, Turkey, on Monday. Chinese Vice President Xi Jinping was in Turkey on Tuesday, where he was sure to hear from Turkish leaders about their growing concerns over the violence raging in Syria. Turkey’s government says the world cannot remain silent in the face of Syrian President Bashar Assad’s brutal crackdown on dissent. But China, along with Russia, has vetoed two Security Council resolutions backing Arab League plans aimed at ending the conflict and condemning Assad’s crackdown on protests that killed 5,400 last year alone, according to the UN. China on Saturday said it supports the League’s proposals. The seemingly contradictory stance appears to reflect Beijing’s desire for mediation while remaining averse to UN involvement that could lead to the authorisation of force, as happened with Libya. Xi, who is expected to become president of the world’s most populous nation next year, will meet Turkish President Abdullah Gul and Prime Minister Recep Tayyip Erdogan to discuss bilateral and regional affairs. Turkey has repeatedly condemned what it calls atrocities in Syria and urged Assad to step down. Turkey matters in the global debate about the bloodshed because of its 911-kilometre frontier with Syria, and because it has matured into a regional power and potential counter to Iran, a backer of Damascus. About 10,000 Syrians, fleeing the violence, have sought refuge in Turkey. Xi was also expected to oversee the signing of co-operation agreements with Turkey. Earlier in the day, some 100 Uygurs set two Chinese flags on fire and stamped on them in a protest against China’s crackdown on the minority group in China’s Xinjiang region. Uygurs are related to Turks and Turkey is home to a large Uygur community. Violence between Muslim Uygurs and Han Chinese left nearly 200 dead in western China in 2009 in the worst riots in China’s far west in more than a decade.

Adidas AG will aim at niches such as high fashion and children's wear as it seeks to overtake Nike Inc. in China and become the nation's top sports-apparel brand. The German sporting-goods company said Monday that it hopes this year to surpass its estimated €1 billion ($1.3 billion) in 2011 revenue in China, Hong Kong and Taiwan. To reach its goal, the world's second-largest maker of sports goods by revenue, after Nike, plans to home in on segments that rivals don't already dominate.

Vice-President Xi Jinping meets Irish Prime Minister Enda Kenny in Dublin on Sunday. A joint investment promotion group was set up between China and Ireland on Sunday as the Irish prime minister called for "every effort" to be made to realize the relationship's potential. The agreement to set up the investment group was signed by the Ministry of Commerce and the Irish Ministry of Jobs, Enterprise and Innovation. The deal coincides with China seeking more investment opportunities in Europe. The total value of Chinese investment in Ireland is now $148 million, Vice-President Xi Jinping said on Monday at the China-Ireland Trade and Investment Forum, attended by about 300 company executives from both countries. Xi said that China's total foreign investment is likely to reach $500 billion in 2015. "This will bring business opportunities for companies from all over the world, Ireland included," he said. China will continue to encourage Chinese firms to invest in Ireland, Xi said and he also welcomed Irish companies to invest in China, especially in the traditional industrial bases of Northeast China. He called for both countries to cooperate more in high-tech sectors such as software and bio-pharmaceuticals. China is a reliable friend for Europe and Ireland, Xi said, especially amid efforts to emerge from the eurozone crisis. Xi reiterated China's support for Europe. Irish Prime Minister Enda Kenny said that Ireland's advantages represent "an enormous opportunity for China". China is one of Ireland's "top international priorities for business development", he said before adding that he looks forward to visiting China in March. "Ireland and China have much to offer each other in food and agriculture, in high technology research and in investment. We should make every effort to realize that potential," Kenny said at a dinner he held for Xi on Sunday. Apart from the investment group, three deals were signed on promoting trade, services and boosting cooperation in higher education between Beijing Technology University and University College Dublin. Commenting on Xi's three-day visit that started on Saturday, Irish Deputy Prime Minister and Minister for Foreign Affairs Eamon Gilmore said it is an "opportunity" for Ireland to increase trade with China and to attract more inward investment. "That, in turn, would be converted into jobs and economic growth. It's part of our strategy to re-grow the Irish economy, (and) get jobs here," he told reporters. Gilmore also said Xi "certainly indicates to us a willingness to be helpful and supportive (regarding the eurozone)". The unemployment rate in Ireland stands at 14.5 percent, meaning 439,600 Irish people are out of work, according to the Irish Voice newspaper. The government last week unveiled an ambitious action plan to create 200,000 jobs in eight years. China has been Ireland's biggest trading partner in Asia for five consecutive years. Bilateral trade reached $5.87 billion in 2011, an increase of 8.6 percent from 2010. In terms of investment, Chinese investors decided in 2008 to build the Europe China Trade Hub in Athlone, a town strategically located in the center of Ireland 90 minutes away by train from either Dublin or Shannon airports. The hub will showcase the work of Chinese manufacturers to European and other international buyers. As the only English speaking country in the eurozone, and a country with a low corporate tax rate of 12.5 percent, Ireland is an ideal place for Chinese investors to access Europe, said Kevin Lynch, founder of the law firm Clerkin Lynch and chairman of the Ireland China Association. Xi also visited the dramatic Cliffs of Moher and saw a demonstration of Gaelic games on Sunday in the country's largest stadium, Dublin's 80,000-seater Croke Park - where he kicked a Gaelic football and hit a sliotar with a hurly. Gaelic football is played with both hands and feet, while hurling, and its female version camogie, use a flailed stick to propel a small, hard ball, the sliotar, toward goal. Xi also met with Irish President Michael Higgins and parliamentary leaders before departing to Ankara, Turkey.

Dressed in a red "Angry Birds" sweater, chief marketing officer and co-founder of Rovio Entertainment Oy, Peter Vesterbacka poses on February 20, 2012 in Hangzhou, East China's Zhejiang province. It's the second time Vesterbacka has visited the city to negotiate some cooperation projects with several local enterprises.

Export tax rebates will be increased this year in response to an export decline triggered by the European debt crisis. The move, which Commerce Ministry officials said will be implemented when the time is appropriate, will be the first increase since 2009. "We are studying the launch of relevant measures" to stabilize export growth, said Zhong Shan, deputy minister of commerce, at the 2012 China Imports and Exports Work Conference held in Nanchang in East China's Jiangxi province on Monday. "Uncertainty and instability in the global economic scene are growing - there are also some domestic factors," Zhong said. According to the General Administration of Customs, exports declined 0.5 percent over the year to January, the first fall in more than two years. Officials from the ministry have stated that exports face challenging times. China will, "at the appropriate time, increase tax rebates on specific categories of goods, including labor-intensive products", Zhong said. From 2008 to 2009 when the financial crisis hit, China raised export tax rebates seven times on a wide range of goods. Tax rebate rates in general were increased to 13.5 percent in 2009 from 9.8 percent before the crisis. "The situation is getting more severe with a double-digit decline in export growth expected in the first quarter," said Da Jiaxiang, deputy director of the department of commerce in East China's Jiangsu province, one of the nation's top textile exporters. "We are expecting preferential policies on tax rebates." In South China's Guangdong province, a key export region, companies said they were experiencing a difficult time.

Hong Kong*:  Feb 22 2012 Share

Hong Kong's role as a leading offshore yuan trading centre is facing a challenge, with some companies preferring to settle yuan trades in Singapore - claiming that it requires less stringent paperwork. Bank of East Asia (SEHK: 0023) deputy chief executive Brian Li Man-bun (pictured) said yesterday the bank's Singapore yuan business had doubled last year, although it still conducted more yuan business in Hong Kong. "One reason for their preference was that customers consider that Hong Kong has tougher documentation requirements than Singapore," Li said. "We have passed on our customers' concerns to the Hong Kong Monetary Authority and we hope that the paperwork regime can be eased." The yuan is not yet fully convertible but Beijing has been gradually easing its capital controls since 2009, allowing companies to settle trade in yuan and to use yuan for mainland investments. While Hong Kong has taken the lead in developing the fast-growing yuan business, London and Singapore are both eager to carve out market share. Li said his bank's London office had relatively few yuan deals but Singapore's yuan growth was substantial. Other bankers echoed Li's comments, saying many had customers who complained about a Monetary Authority circular in October requiring banks to check on third-party documentation to ensure trade transactions were genuine. They said Singapore was more relaxed about documentation. A Monetary Authority source said the customer complaints might stem from a simple misunderstanding. "Some banks think it's compulsory for them to check third-party documentation, but in fact we did not mean it as a mandatory requirement. It all boils down to a know-your-customer process." The source played down Singapore's threat to Hong Kong, saying banks also needed to check documentation in Singapore. Separately, a Monetary Authority spokeswoman said Hong Kong remained the major offshore yuan trade settlement platform, with 1.91 trillion yuan (HK$2.34 trillion) worth of yuan trades settled by banks in the city last year, out of a total mainland external yuan trade of 2.08 trillion in the same period. In March last year, Hong Kong lost out to Singapore in Hutchison Whampoa (SEHK: 0013)'s multibillion-dollar trust-listing plan, as Hong Kong lacked regulation covering non-property trusts listing. The first trust listing in Hong Kong was in November last year.

The queue for single $100 notes last week outside a Bank of China branch in North Point, where customers could buy two bills each. Uncut commemorative bills from the Bank of China are expected to soar in value when they are issued next month, with one dealer predicting that a set of 30 the bank sells at HK$6,000 may rise at least tenfold. The bank is issuing two million limited-edition HK$100 bills to celebrate its centenary, including 1.1 million single notes, 100,000 sets of three uncut notes, and 20,000 sets of 30, which are sold for HK$150, HK$600 and HK$6,000, respectively. They are legal tender but not intended for general circulation. The sale started last Monday. The singles, available at the bank's 50 branches, sold out a day later. For the sets, buyers had until yesterday to apply at a branch or online. The bank will notify successful applicants between March 10 and 19. Since the single notes went on sale, buyers, who could get two per purchase, have been earning a pretty penny by reselling them. Some reported getting up to HK$1,700 per pair at one point last week. Gold Field Coins and Stamp director Chan Wing-fai said his company was buying the single notes at HK$1,300 each yesterday. Hong Kong Numismatic Society president Ma Tak-wo said that as of last night, one note was trading at about HK$1,400. Some users on web shopping portal Taobao.com were selling at 1,700 yuan (HK$2,084) last night. Chan said that based on the HK$1,300 price per note, a set of three could get at least HK$5,000 and a set of 30 at least HK$60,000 when the bank released them, pointing out that these came in shorter supply than the singles. However, he noted that these sets were not yet on the market so it was impossible to accurately predict their eventual value. Ma said: "This is the most impressive trading of commemorative notes in recent memory - more than when the Bank of China issued the 2008 Olympics HK$20 notes and when Standard Chartered issued the HK$150 note to commemorate its 150th anniversary." Chan said the notes were attractive and well-known, and that mainlanders liked commemorative banknotes, sets of uncut banknotes and Bank of China memorabilia. Hundreds of people queued at the city's Bank of China branches last week. Many had lined up overnight to get the notes, and there were reports of queue-jumping. Customers also complained when the bank decided to issue all remaining tickets to buy the singles - which were supposed to be available until yesterday - last Tuesday.

Henry Tang faces the media as he arrives at the Registration and Electoral Office in Wan Chai to hand in his nomination forms yesterday. Casting aside any calls to stand down, scandal-plagued chief executive hopeful Henry Tang Ying-yen formally signed up for the race for the top job yesterday. He had the backing of 379 nominations from the 1,200-strong Election Committee. ominators include the city's major tycoons, such as Cheung Kong (SEHK: 0001) Holding's Li Ka-shing and Victor Li Tzar-kuoi, Sun Hung Kai Properties (SEHK: 0016)' Raymond Kwok Ping-luen and Thomas Kwok Ping-kwong, Henderson Land (SEHK: 0012)'s Lee Shau-kee, New World Development's Henry Cheng Kar-shun, and Lau Wong-fat, head of the powerful rural affairs body the Heung Yee Kuk. Presenting a five-minute manifesto yesterday, Tang vowed he would regain the confidence and trust of Hongkongers after being caught up in the latest scandal over illegal structures at a home owned by his wife and an earlier confession of "straying" in his love life. "I will devote a hundred times of efforts and I will not give up," he said. "I admitted that I did not handle [the scandals] well. I intended to protect my family, but it hurt them even more. It's my fault and I will take the full responsibility." Tang, who did not respond to media questions yesterday, was the second candidate to register his candidacy after pan-democratic contender Albert Ho Chun-yan secured 183 nominations last week. New People's Party chairwoman and former security minister Regina Ip Lau Suk-yee also announced a bid last night - although she admitted she was not positive about securing "three-digit" nominations. Some of Tang's staunchest allies have publicly questioned his ability to lead the city following the latest setback reflected in a survey - specially commissioned by the South China Morning Post (SEHK: 0583, announcements, news) - that found nearly 80 per cent of Hongkongers doubted his integrity and more than half thought he should quit the race. The pro-Beijing Federation of Trade Unions president Cheng Yiu-tong called on Tang to consider the hurdles he would face even if he did win the top job, as he had yet to offer a persuasive explanation for the illegal-structure scandal. The FTU holds 60 seats on the Election Committee and its members were given a free choice on their nomination. James Tien Pei-chun, honorary chairman of the Liberal Party, which submitted 62 nominations for Tang with its allies, said: "If Tang's popularity remains too low in March, we will not vote for him. Even if he is elected, it will not be favourable for him and Hong Kong." He said Tang would face difficulties forming an effective governing team given his low popularity. Tien said Legislative Council president Tsang Yok-sing, who on Friday signalled he might run, could be an alternative choice as he would be capable of reconciling the rifts within the pro-establishment and pan-democratic camps. Tsang said yesterday he would make a decision early next week and had begun assessing the possibility of seeking the threshold of 150 nominations required. He stressed that he had not obtained any endorsement from the central government. Tang's arch rival, Leung Chun-ying, collected more than 200 nominations, said people close to his campaign. They said Leung was considering filing his nomination by the end of this week or early next week.

 China*:  Feb 22 2012 Share

Vice President Xi Jinping wrapped up a three-day visit to Ireland yesterday with a trade and investment summit, as Dublin seeks to give Beijing an EU financial foothold. Ireland is the only European Union nation that the leader-in-waiting is visiting on an international tour, and Irish ministers say it sent a strong signal that Ireland was the place to do business in the 27-member bloc. Dublin is promoting its low 12.5 per cent corporation tax rate, as well as solid ties with the US. "We want China to look at us like a bridge or gateway, where there is potential not just for investment by Chinese companies or investors directly but also opportunities to build partnerships with investors in the US," Foreign Affairs Minister Eamon Gilmore told the Financial Times. The Irish economy is slowly recovering after the euro-zone member was forced to seek an €85 billion (HK$866.26 billion) EU-International Monetary Fund rescue package in November 2010 amid massive debt and deficit problems. Xi was to meet President Michael Higgins at his official residence before visiting parliament for talks with the speakers of both Houses. He was then to head to a trade and investment forum involving around 250 Irish and Chinese companies. Xi arrived in Ireland on Saturday after a trip to the United States, and was due in Turkey after the forum. The vice-president has been given a taste of Emerald Isle culture during his visit, sipping an Irish coffee and trying out his skills at hurling and gaelic football at Dublin's Croke Park stadium, the cathedral of Irish sports. He attended a performance of Riverdance, the international musical hit show based on Irish step-dancing. And in western County Clare, he visited the famously beautiful Cliffs of Moher and a dairy farm where a newly born calf was named after him. On the political front, Xi held talks with Irish Prime Minister Enda Kenny on Sunday. Bilateral agreements were signed on trade links, investment and education. "We welcome the opportunities which our growing relationship with China presents," Kenny told Xi at an official dinner in Dublin Castle. "We welcome the growing people-to-people links in trade, education and tourism." Kenny said both countries understood the need to reform and innovate. "Just as China has transformed itself in its recent history, so too has Ireland," he said. Kenny also said the two countries' enterprises and institutions were in the process of building long-term sustainable relationships. "Ireland and China have much to offer each other in food and agriculture, in high technology research and in investment. We should make every effort to realise that potential," the prime minister said.

Hong Kong*:  Feb 21 2012 Share

Wheelock & Co (0020) has sold all of 101 apartments of Lexington Hill launched on Friday as the rebound in primary market sales continues. The last 13 units of the Kennedy Town development went yesterday after 17 changed hands on Saturday. The most expensive apartment, unit B on the 38th floor, was sold for HK$14.2 million, representing HK$19,142 per square foot. But Wheelock has reserved three special units, including two duplexes, for sale later. Executive director Ricky Wong Kwong-yiu had said earlier that the price tag for the units would be HK$25,000 psf. Buyers' focus also shifted to Fan Ling at the weekend, where two projects - The Green developed by China Overseas Land and Investment (0688) and La Verte by Henderson Land Development (0012) - attracted heavy interest. Yau Wai-kwong, managing director of COLI's Hong Kong unit, said 5,000 people visited showflats at the weekend. That strong response prompted the company to increase the number of units in the first batch to 38 from 20. Yau said price lists of the first batch of townhouses will be released soon. Elsewhere, Cheung Kong (Holdings) (0001) raised the prices of a batch of 50 homes in Festival City's phase three. The new prices average HK$10,224 psf or HK$9,815 depending on when buyers secure a mortgage. One hundred flats have been sold in the Tai Wai project in the past two days, says a source close to the developer. In the secondary market, 70 homes changed hands at the weekend in the 10 major private housing estates tracked by Centaline. That was 10 more than the previous weekend. Louis Chan Wing-kit, managing director of residential sales, said an easing of bank liquidity on Saturday by the People's Bank f China had lifted buyer confidence. There were 15 deals at Kingswood Villas in Tin Shui Wai at the weekend. A high-floor apartment at Kenswood Court sold for HK$2.49 million, or HK$3,512 psf. The unit price rebounded to the level quoted in September, 2011.

While stock brokers are furiously opposed to moves by the stock exchange to further extend trading hours by again reducing their lunch break, food outlets in Central welcome the opportunity to sell more takeaway lunches to brokers who will now have to hurry back to their trading desks. Maxim's, the largest budget restaurant operator in Central, along with other fast food outlets and restaurants in the area, has introduced menus tailored to suit brokers who will have only a one-hour lunch break starting from March 5, down from 90 minutes presently. "Early-bird" lunch offers, they say, will give them two selling sessions during the shortened break. Brokers and stock exchange staff are bitterly opposed to the move and have taken to the streets to demonstrate their opposition. In March, Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) (HKEx) opened trading on the local exchange 30 minutes earlier, and cut the two-hour lunch break by 30 minutes to bring trading hours closer in line with those on the mainland. From March 5, it will extend trading hours further by cutting the lunch break to just one hour, from 12pm to 1pm. That will mean the exchange will be open for trading for a total of 5 1/2<121> hours a day. Before the changes, the market traded for just four hours a day, which was among the shortest trading periods in the world. Stock markets in the US, Europe and the UK are open for six to eight hours a day and have no lunch break. The shorter lunch break will mean Hong Kong brokers will have no time to order their favourites - dim sum, or shark's fin soup with rice - but will have to make do with quicker meals. "The first two weeks after the change of trading hours in March last year had only a mild impact on our sales as we had more takeaway orders,'' a Maxim's representative said. "Now customers tend to come in earlier and finish earlier and this means our Chinese restaurants can serve more people during the lunch hour." With the lunch hour due to be cut even shorter from March 5, Maxim's foresees that customers will want their meals served up even quicker. "We expect customers will have higher expectations on service efficiency and we expect a higher demand for takeaways,'' she said. The shorter lunch break will also benefit fast-food outlet Cafe de Coral (SEHK: 0341), said a spokeswoman. "The challenge to restaurant operators will be the ability to handle customer throughput within the hour - probably implying an increase in take-out sales," she said. Sato Naoyuki, executive chef and co-owner of the Naozen Japanese Restaurant in Wellington Street, said his restaurant will offer a 15 per cent lunch discount from 11.30am to 12.45am. This early-bird incentive will allow the shop to serve a second round of lunch diners after brokers finish their meals before 1pm. Some mainland-backed brokerages have responded to the changes by hiring delivery services to bring boxed lunches to their brokers. Christopher Cheung Wah-fung, chairman of Christfund Securities, said his firm, like other brokers, would offer some cash lunch benefits to traders as compensation for their shorter lunch break.

The Business Aviation Centre wants more space for private jets at Chek Lap Kok, and is parking two aircraft on one lot in the meantime. Private jets face squeeze at airport - Number of business aircraft is expected to increase at Chek Lap Kok but there is not enough space for them - Chek Lap Kok is running out of parking space for business jets, and there is no quick solution in sight. Aviation experts fear the congestion at the Business Aviation Centre will reach breaking point in two years unless its neighbour, the Government Flying Service, relinquishes some of its space for use by private jets. But talks between the two bodies have so far failed, and up to 21 business jets are now parking head-to-tail on the BAC apron. The GFS operates a search and rescue service and its apron is twice the size of BAC's and accommodates just four helicopters and two fixed-wing aircraft. "We have been lobbying hard with the GFS over the years ... it's tough, but we are still working on it," said Madonna Fung Wai-yee, the general manager of BAC. Meanwhile, the number of private jets in the city keeps rising and is expected to reach 100 by the end of this year, according to David Dixon, a vice-chairman of Asian Business Aviation Association. Some business jets are already parking at the end of the runways and in some cases, it may take as much as three hours to manoeuvre a private jet across the airport. The Airport Authority, the landlord of both BAC and GFS, was aware of the problem and had asked the GFS to surrender some of its space, a source said. Options proposed by the authority included sub-leasing a helipad at the rescue department to the BAC, or relocating the GFS to another part of Chek Lap Kok, said West Wu, the chief pilot (operations) of GFS. However, after taking into account the need for the GFS to respond to emergency operations, the rescue department turned down the proposals in 2010. "We can't risk delaying rescue operations because of any disruption caused by the parking of business jets on our apron," Wu said. "We feel for them but we can't do much at the moment." But a private jet operator thought it was unreasonable for the GFS to insist on retaining its helicopter service at the airport. "Helicopters can be placed anywhere - anywhere with a helipad. It doesn't make sense to operate at the airport as they don't need to perform cross-border operations," said Chris Buchholz, the chief executive of Hong Kong Jet. The proposed third runway, which is awaiting government approval, will provide up to 12 extra parking spaces by 2014 and this could buy some time for the BAC. However, the high-density parking on the BAC apron has led to safety concerns. Wing-tip collisions can have disastrous outcomes, say aviation experts, because this is where fuel tanks are located. "It is especially hard for us to find a parking place at the airport now as more freighters are idled and grounded due to the economic downturn," said Y.C. Yeung, the director of operations at BAC. To maximise parking space, the BAC has adopted the concept of "divided flats" where two private jets park at one lot. In the meantime, the Airport Authority and the BAC were studying the logistics of effectively moving jets across the airport, Fung said. Aircraft movements at the BAC have nearly doubled to 600 per month from about 300 in 2008. Complaints from private jet operators and owners about service disruptions arising from the shortage of space were putting staff at the BAC under great pressure, said Yeung. To mitigate the space shortage problem, the BAC is talking to Macau Airport about accommodating the overflow of private jets from Chek Lap Kok. Hopes of relocating the GFS are dim because of the shortage of land at Chek Lap Kok, said a source with the Airport Authority. "Taking into account the land shortage at the airport, the problem at the BAC is not a priority," the source said. "The authority keeps in close contact and dialogues with different business partners to see to their needs," an authority spokesman said. "We try to facilitate the requirements of different users according to our actual operational situation." In Asia, private jets are regarded as a rich man's privilege rather than a business tool. "Generally speaking, the big names in Forbes (the publisher of the world's rich list), deploy business jets as a tool to look for new opportunities, as their executives can travel more efficiently," Dixon said. Hong Kong, as one of the world's largest markets for initial public share offerings, needed to support the growth of private jets, a key element in a service-based economy, he said.

For the second time in three years, more people left Hong Kong last year than settled in the city, prompting warnings of a new brain drain. Provisional figures from the Census and Statistics Department showing net emigration of 12,400 people last year should be a "wake-up call", one population expert said. Emigration exceeded immigration just seven years in the past 50. While previous exoduses could be attributed to events in the region, last year's figures have baffled experts. Chung Kim-wah, a social scientist at Polytechnic University, said there was no obvious reason for the high level of emigration last year, although he pointed to the introduction of the Hong Kong Diploma of Secondary Education as a possible cause. Many pupils had chosen to study abroad amid uncertainty about the new exam and concern about competition for university places with others in the double-size cohort resulting from the educational reform. A census department spokeswoman said population change was difficult to explain, as it included the movements of non-permanent residents, including domestic helpers, expatriate workers and overseas students. Security Bureau statistics show that 8,300 permanent residents left the city last year, up 15 per cent from the previous year. Professor Paul Yip Siu-fai, a population expert at the University of Hong Kong, warned that many of the people departing were professionals and members of the middle class. "This is really a wake-up call," Yip said. He called on the government to take steps to ensure there would be no "structural brain drain", in which emigration exceeds immigration over a period of years. But Frederick Ho Wing-huen, former commissioner of the Census and Statistics Department, had another explanation for the phenomenon, which may cast new light on the debate over mainland women giving birth in Hong Kong. Those new mothers typically took their children back to the mainland after birth, Ho said, and about 60 per cent then sent their children back to the city for their education. Ho said the Hong Kong government should welcome the children and prepare for their return, saying: "If you can't get rid of them, why don't you make them valuable?" There were several years of net emigration in the 1960s, in the early years of the Cultural Revolution. More people left than arrived in 1964 and 1969, and in 1966, more than 46,000 more people emigrated than immigrated. Net migration appears to have been prompted in 1984 by the signing of the Sino-British Joint Declaration, in 1990 by the Tiananmen crackdown the year before, in 2003 by the severe acute respiratory syndrome outbreak, and in 2009 by the economic downturn due to the financial crisis. The government is expected to release official population figures soon. In June last year, Hong Kong's population stood at 7.1 million, up 0.6 per cent from the year before. High levels of emigration could aggravate the city's long-standing problem of a low birth rate. Hong Kong's birth rate is just 1.04 per woman, prompting concern about a possible shortage of labor. The population is boosted by the arrival of up to 150 new residents a day from the mainland under a quota scheme intended to reunite families. 

Reclaiming land to provide sites for development may be controversial - but the cost could be less than half that of freeing up rural land for housing or industrial use. That is the verdict of the Civil Engineering and Development Department, which has released more details to encourage support for further reclamation outside Victoria Harbour, the subject of an ongoing public consultation exercise. The department said it would seek to protect the natural coastline and marine life as much as possible when selecting reclamation sites. But property experts say relying on cost alone to make decisions on land use oversimplifies a complex political issue. "At this stage, it is quite obvious that the public has grave concerns about the impact of reclamation on their living areas and the environment," said Robin Lee Kui-biu, deputy head of the department's civil engineering office. "We will take them into consideration in the site selection process." Lee was responding to comments from residents who may lose their sea views, as well as environmentalists who fear rare marine life and unique shorelines will be lost. A total of 25 areas were marked for possible reclamation in a public consultation launched by the Development Bureau in November to gauge public views on building up the city's land reserve. Marine biologist Wong Chi-chun warned last month that a third of the proposed reclamation sites were home to rare species. Other critics say reclamation should be a last resort and that underused land in the New Territories should be developed first. Lee said that in most cases reclamation in shallow waters would cost about HK$4,000 per square metre, the same as the reclamation work involved in the Disneyland project. But preparing an agricultural site in the New Territories could cost between HK$6,000 and HK$10,000 per square metre, according to feasibility studies conducted in Kwu Tung, Fanling and Ta Kwu Ling. "In fact, the engineering costs of these projects can be as cheap as HK$2,000. It's the compensation paid for the land that pushes up the price," Lee said. However, he agreed with biologists that diverse marine life might be found in Wu Kai Sha and that the coastline in Tseung Kwan O may need protection. These factors would be considered in technical studies. But Professor Eddie Hui, of Polytechnic University's department of building and real estate, said: "Developing rural land might not necessarily be more expensive... It depends on the size, location, and ownership status of the land." He said past reclamation had proved cost-effective but "nowadays, when you want to fill a seabed, there can be public opposition from all sides of the community. It is more a political issue than a cost problem". Stephen Chung, managing director of Zeppelin Real Estate Analysis, said the cost to the public of preserving rural areas and the sea would be a more crowded city. "There is no simple answer," he said. "It depends on what our community wants. And how or what to give and take is the key." Chief Executive Donald Tsang Yam-kuen said in his final policy address last year that the government would explore six options to increase land supply, including developing underused land and moving facilities underground to free up space. The government says at least 1,500 hectares of new land is needed. Doubts have been cast on that estimate, but Lee said it took into account the trend towards smaller households and the need to diversify the local economy.

 China*:  Feb 21 2012 Share

Vice-President Xi Jinping, with Irish Deputy Prime Minister Eamon Gilmore (right) and Finance Minister Michael Noonan at Bunratty Castle. Vice-President Xi Jinping arrived in Ireland on Saturday for a three-day visit the Irish government hopes will help bolster the country's exports as it recovers from a recession triggered by the collapse of its property bubble in 2008. "I am delighted to pay an official visit to the beautiful country of Ireland, known as the Emerald Isle," Xi said, according to a statement handed to reporters on his arrival at Shannon Airport. "China values its relations with Ireland and hopes to consolidate our traditional friendship, expand exchanges and co-operation in all fields and take our bilateral relations to a new level," he said. Ireland planned to treat China's leader-in-waiting to a castle banquet and a private performance of Riverdance as it seeks investment from Beijing to help it return to growth. Xi, 58, who visited Ireland previously in 2005, will also visit the farm of James and Maura Lynch in County Clare in southwest Ireland. Lynch, whose family farm dates back almost 400 years, has a herd of pedigree Friesian dairy cows and beef cattle. Lynch visited China in November as part of an Irish agricultural trade mission. After a private visit to one of Ireland's best-known scenic spots, the Cliffs of Moher, Xi will travel to Dublin to meet Prime Minister Enda Kenny and take in an exhibition of Gaelic football and hurling. Xi will sign a number of agreements with Ireland on the promotion of trade and investment during his visit. Ireland's merchandise exports to China were valued at €2.25 billion (HK$22.91 billion) in the first 11 months of last year, just 2.6 per cent of Ireland's total, data from the nation's Central Statistics Office showed last week. "We will be discussing with the vice-president the opportunities for investment in Ireland," Foreign Minister Eamon Gilmore said in an interview on Wednesday. Gilmore said while he expected the visit to "set the context for increased trade and investment" between the two countries, he did not envisage talks on possible Chinese purchases of Irish sovereign debt. Xi, who goes to Turkey after Ireland, did not make explicit commitments but made it clear that China was willing to contribute more. Premier Wen Jiabao made a similar pledge last week. "China will continue to, in her own way, support efforts made by the European Union, European Central Bank and International Monetary Fund in solving the euro zone's debt problems," Xi said in an interview with The Irish Times. "China does not think one should 'talk down' or 'short' to Europe, because we believe that the difficulties facing Europe are temporary," he said. Ireland's economy has shrunk by about 15 per cent since the property bubble imploded in 2008, with export growth estimated by the central bank to have helped return the country to full-year growth last year for the first time in four.

Suntech Weathers Turmoil in Solar Industry - Shi Zhengrong, founder and chief executive of Suntech Power Co. Ltd. China-based Suntech, the world's largest producer of solar panels, hasn't been immune to turmoil in the industry world-wide, but the company's founder and chief executive, Shi Zhengrong, believes increasing consolidation in the sector will buoy large players. Dr. Shi is a foreign-educated solar scientist. He earned a Ph.D. in electrical engineering from the University of New South Wales in Australia in 1992, and gained Australian citizenship. From 1995 to 2001 he was research director and executive director of Pacific Solar Pty. Ltd., an Australia-based maker of solar components. The solar industry globally has fallen on hard times, beset by falling subsidies in Europe, a key market, and global overcapacity for solar panels and their components. In a recent high-profile case, the German government has been in talks with the solar industry to begin monthly reductions in feed-in tariffs, the fixed price at which solar energy is purchased. U.S. trade authorities are also investigating complaints of alleged dumping of solar panels on the U.S. market by Chinese producers, including Suntech. Dr. Shi has said he sees consolidation of the sector ahead, which could benefit large players like Suntech. Still, the company has been vulnerable to forces buffeting the industry. Suntech posted a $116 million loss in the third quarter, compared with a year-earlier profit of $33.3 million, hurt by a foreign-exchange loss due to volatility in the euro and dollar exchange rates. The company said it expects to post revenue of between $3 billion and $3.1 billion for 2011, up from $2.9 billion in 2010.

China's Vice President Xi Jinping attended cultural and sporting events Sunday in the Irish capital as the heir apparent of the Communist country continued a three-day visit, which the Dublin government says is an exceptional vote of confidence in Ireland's economy. Ireland is one of only three countries that Mr. Xi is visiting on his world trip, the first being his extensive visit to the U.S. last week during which he met with President Barack Obama and signed trade agreements. He is due to travel to Turkey after departing Ireland on Monday.

Hong Kong*:  Feb 20 2012 Share

Li Kui-ming (sitting) holds up the lease with singer and troupe member Koi Ming-fai (in red) standing behind him. Deal keeps Sunbeam Theatre open - Cantonese Opera venue leased for another four years at HK$1 million a month after last-minute negotiations - The show will go on at the Sunbeam Theatre, at least for the next four years. A last-minute deal between the landlord and a new tenant saved the landmark theatre from destruction. And chief executive candidate Leung Chun-ying played a key role in brokering the deal. Cantonese Opera playwright Li Kui-ming signed a contract yesterday to rent the 40-year-old venue in North Point from landlord Francis Law Sau-fai at HK$1 million per month. "Cantonese Opera is something worth fighting for," Li said. Leung said he was "pleased" the matter was settled but insisted he made just a "small contribution". As a consultant for the Chinese Artists Association, "he wanted to do something for Cantonese Opera". The theatre will close for a month after a performance tonight for renovation work. The reopening date has not been decided yet. The carpet will be changed, the sound system upgraded and new toilet facilities will be installed. "We want to make sure that when people step into the Sunbeam Theatre, they feel this is a better place," Li said. He received a phone call from Leung on Tuesday night after the politician had dinner with Law, a good friend, the night before and suggested both parties should talk directly. Li and Law spoke on the phone for the first time on Wednesday for two hours but could not reach an agreement. But on Thursday, Law's assistant called Li to say a draft document was ready. The lease was signed yesterday morning. Li and his Prime Splendor Theatrical Troupe have to pay six months rent upfront. This is not the first time Sunbeam Theatre has won a temporary reprieve. In 2009, the year Cantonese Opera was included on the Unesco list of intangible cultural heritage, previous tenant United Arts Entertainment saw rent increase by HK$490,000 to HK$698,000 when it renewed its lease for three years. The government stepped in and offered HK$3.6 million in subsidies. In 2005, the theatre came close to the same drama. Law agreed to freeze the rent, then at HK$208,000, until 2009. Li said the government stayed out this time. "From beginning to end, the government has not stepped in to offer any help," Li said, making a "zero" with his thumb and index finger. A spokesman for the Home Affairs Bureau said the government welcomed the lease renewal, but stressed it would focus more on public venues for the art form rather than on privately run ones. Prime Splendor's director Yuen Hoi said he was relieved about the outcome. "This is not just about keeping the Sunbeam Theatre; this is also about revitalising the place so Chinese culture in Hong Kong can prosper." However, many local troupes appear to have already made alternative arrangements. Marilyn To Wai Sau-ming, chairwoman of the Cantonese Opera Chamber of Commerce, said the news came too suddenly and artists were not informed. She said the industry would welcome the lease renewal but expected many of the shows at Sunbeam Theatre in the coming year to be staged by Li's troupe and mainland groups. "I would say about 90 per cent of the local professional troupes have already booked their dates with government venues in the coming year," To said. "These troupes have to make a living and they need to make plans in advance." Li said he would seek to renew the lease when it expires in four years, co-incidentally when the new West Kowloon's Xiqu centre is due to open. Li said that given the rent increase, he was prepared for losses, but he did not rule out an increase in ticket prices.

A former director of public prosecutions says the secretary for justice must exclude himself if his department needs to decide whether to prosecute Henry Tang Ying-yen or his wife Lisa Kuo Yu-chin for building an unauthorised basement. Former prosecutions chief Grenville Cross told the South China Morning Post (SEHK: 0583) that Secretary for Justice Wong Yan-lung would need to seek an outside legal opinion in such a politically sensitive case. "[Wong ] must assure the public that, in light of his association with Tang and his own government position, he will not be the decision-maker in this case, and that any decision will be taken by a senior prosecutor," Cross said. Cross stressed that Wong could not ensure his impartiality as the top decision-maker on the prosecution of a such a case because he was a political appointee and a long-time colleague of Tang. Cross said Hong Kong should do as other common law jurisdictions, such as Britain and Australia, and remove the secretary for justice from prosecutorial decisions altogether. Instead, such decisions should be made by a politically independent director of public prosecution. "This would assure the community and promote public confidence in the integrity of the legal system," Cross said. He said the decision whether or not prosecute in the basement case must be made soon because Tang would not be able to run for office if charged. The 1,200-member election committee will meet on March 25 to select a chief executive. "Everyone must know well before March 25 whether or not the DOJ will charge him or his wife," Cross said. A spokeswoman for Wong said the office had in place mechanisms to ensure that prosecutions were pursued fairly and impartially. "If there is an issue or sensitivity with regard to the matter or the person involved, seeking independent advice from outside counsel or delegating the prosecution decision to the director of public prosecutions are options available for consideration," she said. "And these options have been adopted in past cases."

Queensway Plaza in Admiralty will soon welcome Lane Crawford, which is being displaced by Burberry at Pacific Place. Lane Crawford move drives up rents in malls - Burberry triggers a chain reaction by setting up shop in Pacific Place, with small businesses in two nearby plazas fearing they will be pushed out - Burberry's move into Admiralty's Pacific Place has set off a chain reaction: bigger businesses are ousting smaller ones, possibly forcing rent rises. At the top of the chain is the British luxury brand. Its relocation affects several stores at three malls. At Pacific Place, Burberry will move into the space now occupied by Lane Crawford - taking up 21,000 sq ft over two floors - later this year. Lane Crawford this month will move into neighbouring Queensway Plaza, sending shockwaves through the government-owned shopping centre. The store is forcing out small businesses and taking up most of the one-storey shop spaces. Jewellery store Sanaco has occupied its 1,000 sq ft space in Queensway Plaza for 30 years. Store owner Takeshi Otsuka found out officially from Hang Lung Properties (SEHK: 0101) only in September that his business would have to vacate by the end of December. He moved into a 700 sq ft space in nearby Admiralty Centre, where shop space is owned by individual tenants. But he is paying one of the highest rents in the mall, only 15 per cent less than what he was paying in Queensway Plaza. Otsuka is convinced this is the start of higher rents in the less-upscale Admiralty Centre. "Once tenants see that a business like mine is willing to pay this much, then others will raise their rents too," he said. "The smaller businesses will get pushed out - it's a chain reaction." Margaret Kwok Mo-ching, who has been running an office supplies store in Admiralty Centre since 1988, said that despite the rising prices, she was not worried. "I've developed a long-standing relationship with my landlord for the past two decades, so even if another business offers to pay slightly more, they will stick with me," she said. "But if the offer is a lot higher than what I'm paying, then I'm not so sure." Otsuka said he wished the government or property company had told the Queensway Plaza tenants earlier that Lane Crawford would be taking up their shop space. "We read in the papers that Lane Crawford would be moving in, but Hang Lung still did not tell us until September - leaving only three months for tenants to find a new location. That can kill small businesses," he said. Otsuka said that since the move his business had remained steady because of long-term customers, but foot traffic had dropped significantly. Btu he does see an upside to the trickle-down effect. "In the long run, Lane Crawford might turn Queensway Plaza into a more upscale mall, which in turn will make Admiralty Centre classier too," he said. As for Burberry, Otsuka said: "Pacific Place is not the shopping destination that most tourists think of, but bringing Burberry in will make the mall more popular - especially for mainland tourists."

Artist and academic Kacey Wong is part of a group helping to rethink Hong Kong's street stalls. A new action group plans to change the face of hawking in the city and at the same time help threatened vendors. The group of designers, artists, academics and activists, called the Street Design Union, or SDU, wants to design better street markets. "We want to improve the hawkers' business, improve the street market environment and maintain the social and cultural value of markets," said Chan Ka-hing, chairman of the Hong Kong Design Community. Hawkers are under increasing pressure from the authorities in the wake of the deadly blaze in Fa Yuen Street market, Mong Kok, late last year that claimed nine lives. Soon after the fire, the Food and Environmental Hygiene Department put forward a series of proposals and ordered stallholders to remove awnings and reduce their stock. And last week the government launched a series of proposed changes to the way markets operate. Proposals include forcing hawkers to dismantle stalls at night, installing sprinkler systems, moving stalls away from building entrances, relocating street markets away from residential areas and asking hawkers to voluntarily surrender their licences to reduce the size of street markets. Public consultation on the proposals will run until May 7. One problem holding the SDU back from its goal is the lack of policy. "The government needs to have a clear hawker policy," Chan said. "If it does not, no matter what designers try, it won't be functional." Hong Kong's hawker policy dates back to the 1970s, when the city had up to 50,000 unregulated vendors. The government introduced a licensing system and took other measures to reduce this number. It worked: today there are 7,500 licensed and 3,000 unlicensed hawkers compared with at total of 47,000 in 1984. Hawkers at street markets are now given room for a 91cm-by-122cm booth and 46cm of extra space to sell their goods. But they complain this is too small to display many goods, so they often come into conflict with hawker control officers, who fine them if their products are obstructing the public. Inspectors also object to how hawkers customise stalls, such as by installing metal awnings and umbrellas to protect them from the sun and rain. But standards around the city vary, said Chan, who spoke with hawkers about their concerns. Flower merchants, newspaper vendors and vegetable sellers interviewed in Mong Kok and Central say enforcement is arbitrary and inconsistent. One hawker operating near the Mong Kok flower market said he often received fines for obstructing the pavement, but other merchants who did the same thing were overlooked by inspectors. "The worst thing is that the inspector on the morning shift says one thing and the person on the afternoon shift says another," said Dr Leung Chi-yuen, of Polytechnic University's department of applied social sciences, who studied the working conditions of hawkers. The SDU asked the department to clarify the exact rules to which hawkers are subjected, but received no response. The department did not answer the Post's questions about market stall specifications. Last year, after consulting street hawkers, the Urban Renewal Authority introduced a range of new stall designs for nine merchants displaced by redevelopment work in Graham Street in Central. The metal booths feature shelves and racks that fold outwards, giving their occupants more selling space during the day. But hawkers say inspectors have taken issue with the new stalls, preventing them from fully extending the racks, which exceed the 46cm allotment. "The new stall works for me, but the space we have around it is still too small," said the owner of Yee Kee, a vegetable stall in one of the new URA booths. "I've had to cut back on my selection to avoid trouble with the inspectors. Now I'm losing customers." If the department confirms its specifications for the size, height and function of market stalls, the SDU plans to launch a design competition and exhibition for stall designs. "They wouldn't necessarily be functional - many would be conceptual," said artist Kacey Wong, an assistant professor at PolyU's school of design. "It's a way to get people to think about what street markets could be."

Bishop John Tong Hon was anointed a cardinal by Pope Benedict in the Vatican yesterday. He became the church's seventh Chinese cardinal and Hong Kong's third after the late John Baptist Wu Cheng-chung and Joseph Zen Ze-kiun. The 72-year-old wasted no time in expressing some of the Catholic Church's views on what should be happening in Hong Kong. In a Lenten Pastoral Letter published in today's Sunday Morning Post (SEHK: 0583), he criticised the government for using the principle "market leads, government facilitates" as an excuse to shirk its duties to safeguard the well-being of its people. Tong pushed for dual universal suffrage by 2017 - meaning people get to vote for both their chief executive and the whole legislative council ahead of Beijing's 2022 timetable. The letter proposed a string of social welfare measures, stating the government needs to make "tremendous improvements" in housing, medical care, education and retirement protection. Tong even calls for universal retirement protection - something chief executive hopefuls Leung Chun-ying and Henry Tang Ying-yen shied away from in their campaigns. Building of Home Ownership Scheme flats should also be resumed, which Chief Executive Donald Tsang Yam-kuen has refused to do. He also made it clear that the implementation of inappropriate policies by the government in recent years had directly or indirectly widened the wealth gap, and led to numerous social problems with the underprivileged bearing the brunt. Tong also wrote about social tensions, especially between mainlanders and Hongkongers. He said the government only attached "great importance to the economic returns brought immigrants, while neglecting people-oriented values" and that current policies had created "greater social exclusion". Accelerated economic activity and integration between the mainland and Hong Kong had led to population problems and social contradictions - like mainland-born children being separated from Hong Kong parents and conflicts between mainland and local pregnant women over hospital beds, Tong wrote. He asked the government to formulate a reasonable population policy, and to be people-oriented instead of just economically driven. Tong said he saw his role as "a bridge" for the church on the mainland. Beijing severed ties with the Holy See in 1951 after the Communist Party took power and set up its own church outside the pope's authority.

Living up the I-life - A blogger named Datou ppb published a microblog on an anecdote about actor Tony Leung (above) she had read in the Hong Kong media, creating a "life font". The meme that launched more than 200,000 posts illustrates influence of the internet - In our upcoming issue, we write about some of the Internet "fonts" (体, tí), also known as verbal memes, that have gone viral in the last year or so in China. We thought we had them all - and then last month, a brand new one popped up that we could not resist. To wit, it involves: a) Hong Kong actor Tony Leung (梁朝伟), b) extravagant, Gatsby-like spending and c) netizens' envy of the above. To give you some background, Chinese Internet fonts basically function as a glorified form of Mad Libs - quotes that are either hilarious or asinine (or both) get passed around weibo (China's Twitter-like microblog service) as fill-in-the-blanks, with netizens plugging in their own increasingly absurd answers. Tony Leung's, which would come to be known as the "life font" (生活体, shēnghuótí), started on Jan 31, when a blogger named Datou ppb (大头ppb) published a microblog about an anecdote she had read in the Hong Kong media. She writes: "看报道说,梁朝伟有时闲着闷了,会临时中午去机场,随便赶上哪班就搭上哪班机,比如飞到伦敦,独自蹲在广场上喂一下午鸽子,不发一语,当晚再飞回香港,当没事发生过,突然觉得这才叫生活。" (I saw a news report that said sometimes when Tony Leung has nothing to do and is feeling bored, he will go to the airport around noon and just get on whatever plane he is able to catch. For example, he will fly to London, and spend an afternoon alone squatting in a park, silently feeding the pigeons. Then that night, he will fly back to Hong Kong, as if nothing happened. And I am suddenly thinking - that is called living!) Datou's post spread like wildfire across the Internet, with some netizens expressing envy and others questioning the feasibility of flying to and from London in a single afternoon. And then there was another, more cheeky contingent, that started Mad Libbing the post like crazy. Within a few days, the meme had exploded across the Internet, with more than 230,000 mentions and 30,000 forwards. The template goes as follows: ________有时闲着闷了,会临时中午去_____,随便赶_______,比如______,独自____________,不发一语,当晚再______,当没事发生过,突然觉得这才叫生活。 (Sometimes, when [subject] has nothing to do and is feeling bored, around noon [pronoun] will go to [place], and catch whatever [method of transportation / destination]. For example, [absurd place], and spend an afternoon alone, silently [verb]ing. Then that night, [pronoun] will go back to [original place], as if nothing happened. And I suddenly think - that is called living.) Here are some examples to get you started: The traffic jam version (堵车版) "我有时闲着闷了,会临时中午开车上北京的环路,随便赶上几环就上几环,比如上了三环,独自堵在那里一动不动看一下午前车车牌,不发一语,当晚再开回家里,当没事发生过,突然觉得这 才叫生活。" (Sometimes when I have nothing to do and am feeling bored, around noon I will go drive on Beijing's ring roads, and whatever ring roads I get on I will just drive around. For example, I will get on Third Ring Road, and spend an afternoon alone stuck in traffic there, inching along and silently staring at the license plate of the car in front of me. Then that night I will return home as if nothing happened. And I will suddenly think - that is called living.) The time traveling version (穿越版) "我有时闲着闷了,会临时中午翻开朝代列表,随便指到哪个就穿越到哪儿,比如穿到唐朝,独自在镶着玉的温泉池中泡泡,不发一语,当晚再穿越回来,当没事发生过,突然觉得这才叫生活。" (Sometimes when I have nothing to do and am feeling bored, around noon I will flip through the list of dynasties, and whichever one my finger lands on, I will time-travel to. For example, I will travel to the Tang Dynasty (AD 618-907), and spend an afternoon alone, silently sitting among the bubbles of a jade-inlaid hot spring bath. Then that night I will time travel back as if nothing happened. And I will suddenly think - that is called living.) Someone even posted a job ad that starts off using the font: "闷了,会临时去机场,随便赶趟飞机,比如飞到横店,独自到明清宫看一下午明星拍戏,不发一语,当晚再飞回北京,当没事发生过,突然觉得这才叫工作。" (When I am bored, sometimes I will just go to the airport and get on whatever airplane I find. For instance, I will fly to Hengdian, and spend an afternoon alone at the Ming and Qing palaces, silently watching a movie star filming. Then that night I will fly back to Beijing as if nothing happened. And suddenly I will think - this is a real job.) Though Leung has already kind-of denied the quote (in a December interview, he amended: "It is not to that extent, but sometimes I really do suddenly get the inspiration to fly someplace. For example, I will go to New York for a few days or a week just to rest and be someplace where people don't know me."), the story had already taken on a life of its own. And while a number of netizens have enjoyed satirizing the actor's rather inexcusable extravagance, others have greeted it with a measured wryness that arguably captures more reality than the sillier spoofs. "人生当如此惬意度过。" (We should all try to spend our lives so pleasantly.) "原来我从未'生活'过。" (It turns out I never "lived".) "唉,我们都是被日子给过了。" (Alas, the days are passing us all by.) "亲们,有木有当场泪崩的感觉?人家这才叫生活呐。" (Dears, when you read this did you suddenly feel like releasing a flood of tears? Man, that is called living.)

 China*:  Feb 20 2012 Share

習近平觀賞NBA 很親民 - 在史戴波中心附近街上,有一群在南加留學的華人學生,舉著旗幟歡迎習近平到訪。 原本是輕鬆愉快的NBA職業籃球賽,17日洛杉磯賽程卻很不平常,因中國國家副主席習近平訪美最後一站,是史鐵波中心(Staples Center),隨即搭乘專機返中國。對這位來頭不小的訪客,許多本地華人表態肯定,稱讚這位國家領導人看NBA很親民。 從習近平下榻的旅館大廳,到史鐵波中心周邊,17日布滿便衣警衛與警察,當天下午球場入口前共有六輛警車停放,圍繞周圍荷槍實彈的警力超過十人,其中有兩位華裔警察。只要在附近遊蕩者,幾乎都被盤問,舉凡售票口、媒體報到區、一般入口等,均有最少兩名以上警察站崗。 另外,傍晚時分也有一群身穿西服、低調的華人出現,他們拒絕透露身分,也未提到要看球賽,但卻分散於球場四周布哨,在看球的群眾中顯得相當特殊。有球迷猜測,這些應是中方保安人員,但無法證實。 儘管如此,各界仍對這位國家領導人看球賽的安排表示讚賞。一位從中國來美隨行的中方記者表示,習近平私底下個性很放得開,但礙於國家副主席身分,說話得格外謹慎,特別是觸及中美議題得擺出領導人姿態,但仍提出要看洛杉磯湖人隊比賽,展現其親民的一面。 17日下午,聖地牙哥加大十幾位華人留學生來洛杉磯旅遊,逛到史鐵波中心前拍照留影,得知習近平將來訪,並將觀看湖人隊比賽時萬分驚訝,立刻跑去球場售票口詢問票價。未料,當天票已銷售一空,一行人感到惋惜,表示若能和中國國家領導人一起看球,會是很酷的事情,那種感覺很光榮,可惜不從人願。 張同學表示,如果事先得知,一定會提早買票看球。他說,雖然自己不是籃球迷,但知道國家領導人是球迷,且在出訪時特別撥冗看球,這種真情流露值得稱許。傍晚時分,購票觀眾陸續進場,大部分美國球迷均不知習近平可能觀當球賽。 幾周前購好票的華裔球迷劉先生,與岳父楊先生、友人戰先生排在隊伍中等候入場。劉先生表示,身為國家領導人在拜訪美國之餘,會想去看球賽算是頭一遭,這點實現其親民一面,而他們能意外和國家副主席一起看球,也感到與有榮焉。他相信,習近平是個值得尊敬的傑出領導人。

Xi Jinping is given a souvenir LA Lakers jersey. From left to right are John Cappo, AEG China President, LA Galaxy soccer star David Beckham, LA Mayor Antonio Villaraigosa and former Laker Magic Johnson. Vice-President Xi Jinping's trip to Los Angeles was largely meant to promote Sino-US trade and help alleviate fears of a rising China, but like his "hometown" visit to Iowa early in his tour, it was highly choreographed to show his amiable side and appreciation of US pop culture. China's leader-in-waiting continued to wear a smile during his one-hour visit to the International Studies Learning Centre, designed by the New York-based Asia Society. At a later luncheon, hosted by the city government, Xi attempted to show his personal connection to Los Angeles. "Los Angeles and California are at the forefront of Sino-US exchanges," he said. "In 1980, my father [Xi Zhongxun ], while governor of Guangdong province, visited Los Angeles and was presented with a key to the city as a token of friendship. The following year, Guangzhou and Los Angeles became sister cities. This was a memorable moment in my father's tenure." He said Los Angeles had a memorable role in Sino-US ties as China's first Olympic athlete, Liu Changchun, participated in the city's Olympic Games in 1932. Then, in 1984, China sent its first delegation to the Olympics in the city after gaining membership to the International Olympic Committee. Xi was accompanied by his American counterpart, US Vice-President Joe Biden, at the luncheon and school tour. Students at the school greeted the delegation with a three-minute dragon dance and kung fu performance before a long question-and-answer session in a classroom. Xi was seen casually chatting with Biden during the student performance. Inside the classroom, a student - speaking in Putonghua - asked how Xi managed to strike a work-life balance. "My schedule, like Mr Biden's, is very full," Xi said. "I have to attend meetings and field trips, and receive guests." Xi, who is known to be a fan of Hollywood blockbusters such as The Godfather and Saving Private Ryan, said finding a work-life balance was "like Mission Impossible". However, he said he still tried to squeeze in time to read, swim and watch sport, including US basketball and baseball. Xi then encouraged students to study hard, quoting the Chinese idiom "If one does not exert oneself in youth, one will regret it in old age". Biden said the Obama administration had launched a "100,000 Strong Initiative", which seeks to push more Americans to study in China, and that Americans' perceptions of Chinese people had changed over the years. He said Xi was a "straightforward" man who could understand the needs of others. The students gave Xi and Biden T-shirts bearing the slogan "Fostering goodwill between America and China". The school, which has 840 students, was established nearly a decade ago. Many of its students earn college credits before they graduate. The school also offers French, Japanese and Korean language classes in addition to Chinese. Xi's last day in LA ended at the Staples Centre, where the Lakers were playing the Phoenix Suns. He entered the arena on a red carpet towards the end of half-time, then watched the entire third quarter and part of the fourth alongside Governor Jerry Brown and Los Angeles Mayor Antonio Villaraigosa as the Lakers won 111-99. Xi and his party then left for the airport. Xi is a fan of basketball and Lakers guard Kobe Bryant, Villaraigosa said. During the game, Villaraigosa presented Xi with a Lakers jersey with his name on the back. Former Lakers star Magic Johnson came up to the suite to meet him, as did Los Angeles Galaxy footballer David Beckham. Kobe Bryant, who scored 18 of his 36 points in the third period while Xi was in the building, had a pair of autographed shoes sent up to the Chinese dignitary. The NBA has been enormously popular in China since the arrival of 7-foot-6 centre Yao Ming, who spent eight seasons with the Houston Rockets before retiring in July. The recent success of Jeremy Lin, an American-born point guard from Harvard who has had a phenomenal two-week run with the New York Knicks has only added to the NBA's popularity in China. Lin is the first American-born NBA player who is of Taiwanese descent.

China has agreed to "significantly" improve market access for American films as Vice-President Xi Jinping wraps up his US visit. At the end of Xi's five-day trip, his US counterpart Joe Biden announced China had agreed to make it easier for Hollywood to distribute movies to China's expanding audiences, in particular 3D, Imax and other enhanced-format movies on favourable commercial terms. "This agreement with China will make it easier than ever before for US studios and independent filmmakers to reach the fast-growing Chinese audience, supporting thousands of American jobs in and around the film industry," Biden said. While Biden did not put a figure on the increase, the Motion Picture Association said the deal would allow more than 50 per cent more US movies into China. A quota system restricts the number of foreign movies coming into China annually to 20. In 2009, the World Trade Organisation ruled against Chinese limits on the import of films, DVDs, music and books. The US movie industry has long complained about the restrictions. Xi's Los Angeles tour was carefully scripted to assure his US audiences that that they would benefit from economic ties with China. Xi told a business forum that China would continue to direct investment towards the US under its 12th five-year plan. "China's economy will maintain stable growth and there will be no hard landing," he said. "There is a saying that Americans have lost, while China is taking advantage of bilateral trades and economic relationship. Such a view does not square with facts," Xi told the forum, adding each US household had US$1,000 more disposable income a year because of the lower cost of imported Chinese products. He also renewed his call for the US to relax controls on hi-tech exports to China, saying the share of US products in China's total hi-tech imports had dropped from 16.7 per cent to 6.3 per cent. "Last year, if the share of US products in China's total hi-tech imports had remained at the 2001 level, then US exports to China would have increased by as much as US$50 billion," he said. Xi took in a Los Angeles Lakers basketball game before heading to Ireland. "I can now say my visit to the United States has been a full success," Xi said, adding that his meetings with Biden and US President Barack Obama had been "very fruitful". Xi will visit Turkey before returning to Beijing on Wednesday.

China has, at least for now, dashed any hopes that it plans to obey tighter U.S. sanctions against Iran after hammering out an agreement to resume some imports of Iranian crude. State-owned Unipec, one of China’s top importers, reached an agreement with National Iranian Oil Co. earlier this week to renew an annual supply contract that had lapsed at the end of the year. During the negotiations, which dragged into February and were only resolved after a visit to Beijing by Iran’s deputy oil minister, imports fell by about 280,000 barrels a day and halved the amount of Iranian crude shipped to China in January and February. Although the timing of the cuts coincided with a renewed push by the international community to apply pressure to Iran over its nuclear activities, the agreement underscores that China’s dispute with Iran was strictly commercial rather political. Beijing is typically pragmatic about its relationships with key oil producers such as Iran, which is China’s third-largest supplier of crude after Saudi Arabia and Angola. Several state-backed oil companies all renewed contracts with NOIC last year, well before U.S. sanctions were tightened, and Unipec was expected to follow suit. But with the U.S. and E.U. moving to target Iran’s financial and oil sectors, Unipec may have found itself in a better bargaining position at a time when it already sought lower prices for crude supply. China has steadfastly defended its economic ties with Iran, and U.S. officials are typically met with a chilly reception whenever they address China’s crude purchases. Earlier this year, the U.S. slapped sanctions on Zhuhai Zhenrong, China’s largest buyer of Iranian crude, accusing the company of selling gasoline to Iran. The move was largely symbolic, considering that Zhuhai has no known assets or business ties to the U.S. Meanwhile, the timing of the agreement also coincides with a visit by Xi Jinping, China’s next leader, to the U.S., where he is hearing concerns over Iran’s nuclear program and is being encouraged to cooperate with international efforts on Iran. The move by Unipec sends a strong message that while China recognizes the need to resolve Iran’s nuclear issue, it isn’t about to cave to Western pressure.

The Chinese government said Saturday that China and the United States have agreed on a memorandum of understanding regarding the resolution of issues relating to films in the World Trade Organization's China-audiovisual case. It said both China and the United States highly praised the efforts made by the two sides to resolve disputes regarding this important matter.

A young customer is impressed with a 1.54-carat diamond worth 320,000 yuan ($50,900) at a department store in Dongyang city, Zhejiang province. China has seen noticeable growth in demand coupled with rising interest in the gemstone as an investment product. Rising demand will make China major importer of gemstones - Diamonds are expected to sparkle brighter in China amid a surge in domestic consumption and investment. Antwerp, the world's biggest hub for diamond trading, will see China overtake the United States to become the Belgian city's biggest destination for diamonds exports by 2016, according to Ari Epstein, chief executive officer of the Antwerp World Diamond Center, which officially represents the city's diamond industry. China imported a total of 9.28 million carats of both polished and uncut diamonds, with a total value of $5.09 billion, from the Belgian city in 2011. The diamond center's transaction volume, which includes exports and imports, reached $60 billion in 2011, with four out of every five uncut diamonds coming from Antwerp. The noticeable growth in demand coupled with rising interest in the gemstone as an investment product for Chinese consumers will drive the rise in diamond imports in the country, Epstein said on Friday. He added that the upward trend will continue and will lead China to become the biggest destination for diamond exports by the end of 2016, without citing figures. China briefly overtook the US to become the world's biggest diamond consumer in 2008, when the US was caught up in the global financial meltdown, but dropped back to second position when the crisis waned. In 2011, the US was the biggest consumer of polished diamonds, accounting for 36 percent of total world demand, followed by China with a market share of 12 percent and India with 11 percent. Epstein said that the rise in China's domestic demand has also triggered a rush to Antwerp by Chinese companies to trade in the gemstones. The rise of the middle class in China against the backdrop of an expanding economy has resulted in a buying spree for everything from gemstones to gold bullion to other luxury goods. A report from the World Gold Council, published on Thursday, also projected that China will overtake India to become the world's top consumer of the precious metal this year because of rising demand for gold as jewelry and as an investment. With regard to luxury goods, China is well positioned as the world's third-biggest consumer with total consumption worth more than 150 billion yuan ($24 billion) in 2010. The country is expected to overtake Japan to become the global number two within three years, according to Frost & Sullivan, the business researcher and consultancy. China is a demand-driven market, and with rising levels of prosperity and consumer spending, the country's imports of gemstones can only grow, Epstein said. The Antwerp center plans to set up a "polished desk", either in Shanghai, or one of China's other heavily industrialized cities, to sell diamonds to jewelry companies. The plan came after last October's cooperation agreement on diamond financing between the center and the Industrial and Commercial Bank of China Ltd, the country's biggest lender. The diamond boom has also prompted the Chinese bank to decide to open up a branch in Antwerp. That may happen within the next six months. Epstein said that China will become a more important manufacturing center for diamond cutting and polishing, regardless of the rising labor costs.

The first batch of Australian flight attendants hired by China Southern Airlines head to Guangzhou from Sydney for training, Feb 17, 2012.

Xi highlights youth communications in China-US ties - Chinese Vice President Xi Jinping (L, back) answers students' questions as United States Vice President Joe Biden looks on during a visit to the International Studies Learning Center in Los Angeles, the United States, Feb. 17, 2012. Chinese Vice-President Xi Jinping has called for mutual understanding and friendship between the youths of China and the United States. Xi made the remarks Friday during a visit to the International Studies Learning Center, a public school featuring foreign language and cultural studies, in South Gate, southeast of Los Angeles. Xi and his entourage were greeted by US Vice-President Joe Biden and a traditional Chinese drum performance and a dragon dance by students at the door of the school. Xi and Biden then had a warm discussion with a class of standard Chinese-speaking students. When asked about his hobbies, Xi said he likes reading, swimming and watching basketball, baseball and American football games. Swimming is his favorite sport, he said. "Of course we always want more time for ourselves," Xi said in Chinese. "But to borrow a title from an American film, it's like 'Mission Impossible,'" he joked. The room burst into laughter. Both Xi and Biden were presented T-shirts by the students. The shirt Xi received said "fostering goodwill between America and China" in English, while Biden's shirt said in Chinese that the China-US friendship lasts forever. Xi lauded the students' standard Chinese skills and encouraged them to learn the Chinese language, history and culture to enhance spiritual communication and exchanges with youngsters from China. "Young people are the future of a nation," Xi said, "Education is the foundation of a country." He said it was an essential part of his US visit to have conversations with students and promote mutual understanding and friendship among the young generation of the two countries. "This school visit can be called a finishing touch to my US visit," Xi said. Xi said the United States has a well-developed education system and that education in China has made great process. The two countries should enhance cooperation in the sector to cultivate talent for the development of both nations and for the China-US friendly cooperation. Biden said he and US President Barack Obama believe that one of the most significant factors in improving US-China relations is increasing educational opportunities for American students in China. The International Studies Learning Center was created by the Asia Society nearly a decade ago. The school's mission is to prepare students to be globally competent and ready for college and the interconnected world beyond. Los Angeles was the last leg of Xi's five-day official visit to the United States. He left Friday night for Ireland for visit after watching a basketball game between the Los Angeles Lakers and Phoenix Suns.

Hong Kong*:  Feb 19 2012 Share

Hong Kong has been ranked the most globalised of 60 economies for the second consecutive year in a survey by accounting firm Ernst & Young. Hong Kong scored the highest on average on five measures of globalisation - openness to trade, capital flow, exchange of technology and ideas, labour movement and culture integration. It was followed by Ireland and Singapore. Taiwan ranked 12th while the mainland was 39th in the survey, for which Ernst & Young interviewed 1,000 senior executives from companies in Asia, Europe and the United States at the end of last year. Hong Kong has become the largest initial public offering market in the world over the past three years. Beijing granted Hong Kong a role as an offshore yuan settlement centre last year, facilitating cross-border transactions in the currency. And as international firms eye up the mainland market, the number of regional headquarters in Hong Kong increased to 1,340 by the end of last year from 1,285 in 2010. However, recent tensions between Hongkongers and mainland tourists have raised concerns about how easy it will be for the city to promote cultural integration. "It will be interesting to see how the recent conflicts with people over the border affect the scores in the next survey," said Agnes Chan, regional partner, Hong Kong and Macau, at Ernst & Young. The accounting firm urged the government to improve the city's standard of living to lure more foreign professionals if it wants to retain its top position in the rankings. "There is much room for improvement in terms of quality of life in Hong Kong," said Chan, citing poor air quality and cramped living space as issues that can deter expatriates from moving here. "It's quite disappointing that the recent budget failed to address the problem of air pollution." An acute shortage of international- school places was also a problem, she said. "The Hong Kong government should address the problem by allocating more land for international schools as well as encouraging local students to study at local schools." It is the third year Ernst & Young has released its Globalisation Index, in collaboration with the Economist Intelligence Unit. Singapore took the top spot in the 2009 survey.

A Hong Kong-based firm has been banned from this year's International Jewellery Show for failing to pay compensation to former employees who are dying from work-related illness. Days ahead of the fair's opening yesterday, the Trade Development Council banned Worldwide Gems & Jewellery for breaching its rules on labour practices. Worldwide Gems is the only exhibitor banned from the fair this year for failing to pay court-sanctioned compensation for workers' injuries. Two former workers at the firm's pearl factory in Haifeng , Guangdong, developed terminal silicosis from inhaling tiny mineral particles. After the men, He Chunguo and Cheng Zhuhua, both in their early 40s, were made redundant in 2006, they found that they were suffering from a work-related illness. Both men were at a protest yesterday to demand they be paid in full the 600,000 yuan that a Guangdong court ordered Worldwide Gems to pay in a judgment issued in January last year. Activist group Labour Action China staged the protest at the fair's venue, the Convention and Exhibition Centre in Wan Chai. A local firm was the last exhibitor to be banned for similar reasons in 2010. The council's rules say a firm will be banned from the fair if its labour practices harm the city's reputation and its standing as a fair-trading centre. Cheng and Guo, who are close to death, said they were tired and had been paid less than 10,000 yuan by Worldwide Gems. The firm began paying them in instalments of 3,000 yuan per month, but stopped after three months. Suki Chung Ming-lai, executive director of Labour Action China, said it was illegal to pay court-sanctioned compensation, which should be a one-off payment, in instalments. "Cheng and Guo do not have long to live," she said. "They need this money for medical care. And if they had received the money earlier, their illness might not be terminal." A record 3,100 exhibitors from 48 countries are taking part in this year's fair, up from 2,870 exhibitors last year. Asi Abir, owner of an Israel-based diamond firm, said the Hong Kong show was the best location for conducting business with Asian customers. "Our buyers are not only from mainland China, but also from Singapore, India, Qatar and so on," he said. "We have been preparing for this show for the past three months." The fair ends on Monday.

Henry Tang and wife Lisa Kuo face the media last night. Kuo fought back tears as Tang pleaded for a second chance. It was my wife's idea, says Tang - Chief executive hopeful apologises for scandal over illegal structures at property and vows to stay in the race. But backers threaten to withdraw their support - Chief executive hopeful Henry Tang Ying-yen last night apologised for the controversy surrounding the illegal structures at his wife's property, which he said were her idea, but vowed to continue his campaign for the top job. However, increasingly nervous Election Committee members contacted by the Post said they are considering withdrawing their support. Meanwhile, Regina Ip Lau Suk-yee, chairwoman of the New People's Party, said she might join the race. With wife Lisa Kuo Yu-chin by his side holding back tears, Tang said: "No 7 [York Road] is my wife's property. It was my wife's idea and I knew they were illegal. Since we were experiencing a low ebb in our marriage, I did not handle the matter swiftly. I take full responsibility for the incident." Tang co-owned the house until 2010. Stony-faced, Tang apologised to the people of Hong Kong and asked for a second chance from supporters who doubt his integrity. But the disclosure may leave Kuo, who admitted masterminding what many are calling an "underground palace", facing criminal charges over the illegal works. Building officers yesterday inspected the couple's two Kowloon Tong properties and found a 2,000 sq ft basement at No 7, which was not shown in the approved building plan. But they did not say whether the basement contained a wine cellar, wine tasting room and a theatre, as has been widely reported. Tang denied he had lied in the scandal. "There were inner struggles in my heart. On the one hand I wanted to give the full picture, but on the other hand I did not want to implicate my wife," he said. China-watcher Johnny Lau Yui-siu said: "Tang's scandal has put Beijing in a very difficult situation. If Tang chooses to quit, Beijing must consider how big business, which backs Tang, could adjust its relationship with Leung Chun-ying if he is elected." Guo Li, deputy director of the central government's liaison office in Hong Kong, said voters would have to judge whether Hong Kong's governance would be affected if Tang pressed ahead in the race. She also said integrity was a vital trait for most people. Federation of Trade Unions lawmaker Wong Kwok-kin said: "He had said [earlier] a man needs to have broad shoulders, but his action to realise this - putting the blame on his wife - was unbearable," said Wong, whose FTU has 57 nominating votes. "Day after day he has offered different accounts," said Liberal Party chairwoman Miriam Lau Kin-yee. "This one response is unreliable - he still refused to disclose the size of the illegal structure." She has said the party was considering withdrawing the 62 nominations it gave to Tang earlier this month. Ho Hon-kuen, chairman of Education Convergence, which holds three tickets, said it was now impossible to nominate Tang. But a core Tang supporter, Thomas Woo Chu, who led a team that won all 17 seats in the catering sector for Tang, said it was worth offering him a second chance. "We should not impose the death penalty on him simply because of one single incident," Woo said. Former civil service minister Joseph Wong Wing-ping said: "[Tang's] political crisis is far from over. Although he's vowed to continue his campaign, I believe the likelihood of him eventually withdrawing from the race is still high." Regina Ip said: "I have had a lot of calls urging Tang to withdraw from the race - and I think he should."

Why East Asian Students Are Superior - American parents looking to send their children to the world’s best schools might want to start looking East. And we don’t mean the East Coast. East Asia is now home to the world’s best primary and secondary schools, producing students who are able to outperform their counterparts in the Western world, according to a recent report from the Grattan Institute, a think tank based in Australia. The average 15-year old in Shanghai is performing math at levels that are two or three years ahead of students in the U.S., Australia, the U.K. and Europe, according to the report, which was based on data from the Organization for Economic Cooperation and Development’s Program for International Student Assessment. Hong Kong students are at least one year ahead in reading and math when compared to U.S. and European children, the report said. Results of the study underscore a global shift that is occurring both economically and now, according to Grattan, academically. East Asian primary and secondary schools are better at addressing their own weaknesses and know how to improve the classroom through policy, the study said. In 2006, Hong Kong raised the reading levels of its students to No. 2 in international assessments, up from 17th just five years earlier. Singapore has cut courses for teachers that don’t result in higher performance for their students. Educational institutions in East Asia are also doing more with less, the study says. South Korea spends around half of what the U.S. spends on its primary school students, yet South Korean pupils outperform their U.S. counterparts in reading, math and science. President Barack Obama recently pledged to earmark $80 million for math and science education, believing it will improve the economy, according to a recent report in the Associated Press. The study also comes as the U.S. questions its educational standards and as figures such as the “Tiger Mother” — – a Yale Law School professor who has preached tough discipline for kids — have caused American parents to rethink their own roles in learning and to ask themselves whether Asian mothers are superior. The U.S. has already taken notice of the East Asian educational prowess. Earlier this month, a memorandum of understanding was signed between Singapore and the U.S., building on an earlier agreement in 2002 that focused on the teaching and learning of math and science. The new MOU continues to prioritize the two subjects as key areas of collaboration in the two countries – with Singapore having some of the best math and science high school scores in the world, and the U.S. some of the worst. Back in 2009, a delegation from Singapore’s Ministry of Education was sent to Washington DC, to share the “Singapore model method” for learning mathematics. In the same year, President Obama gave a speech to the National Academy of Sciences, devoting an entire part of it to the importance of math and science education. In his comparison of math scores between US and foreign countries, the first country he mentioned was Singapore. “Our students are outperformed in math and science by their peers in Singapore, Japan, England, the Netherlands, Hong Kong, and Korea, among others. Another assessment shows American 15-year-olds ranked 25th in math and 21st in science when compared to nations around the world,” Mr. Obama said. At least in China, such rankings are not necessarily cause for celebration. Many Chinese see the country’s education system, in particular its failure to foster innovation, as one weakness preventing it moving further along the path to superpower status. The country’s students have increasingly flocked to the West for college, and even high school, in an effort to escape the rote memorization prevalent in Chinese schools and cultivate the sort of creativity seen as producing figures like late Apple founder Steve Jobs.

US President Barack Obama greets diners during a stop at the Great Eastern Chinese restaurant in San Francisco Feb 16, 2012. US President Barack Obama made a surprise visit to a restaurant in San Francisco's Chinatown to pick up his lunch take-out on Thursday during a fundraising trip to the city, according to the White House Press Pool report. Obama stopped by the Great Eastern Restaurant for dim sum, greeting the crowd as he waited for his Chinese food, the report said. Obama shook hands with people before paying cash for his dim-sum and left the restaurant with two bags of food. The president arrived in the San Francisco Bay Area on Thursday from Los Angeles and is expected to attend a series of fundraising events in the area. According to schedules released by the White House, Obama will attend a campaign event at San Francisco Intercontinental Hotel Thursday afternoon and deliver remarks at another event held at a private residence in the city, before heading for Washington state Friday morning. 

 China*:  Feb 19 2012 Share

Officers from the China Shipping terminal applaud at the arrival of Vice-President Xi Jinping at the Port of Los Angeles yesterday. Vice-President Xi Jinping arrived in Los Angeles yesterday for a 36-hour visit including talks on boosting trade and investment, and a National Basketball Association game today featuring the LA Lakers. Flying in from Iowa, which he visited after making the rounds in Washington, one of the highlights of Xi's visit to Los Angeles is the announcement of a deal with DreamWorks Animation to set up a joint venture in Shanghai. Xi's itinerary includes addressing a China trade forum, followed by a luncheon, a school visit to meet children learning Mandarin, then a governor's forum at Disney Hall. He is also expected to watch the Lakers and the Phoenix Suns square off at Staples Centre before leaving for Ireland. Outside the airport terminal before he arrived yesterday, a few dozen people put on a welcoming display in traditional Chinese costume and with a Chinese flag. In a carefully scripted event, Xi took a short walking tour through the China Shipping terminal with California governor Jerry Brown and mayor Antonio Villaraigosa yesterday. The facility sprawls over about 40 hectares. "We're not just growing our ports, but we're greening our ports," Villaraigosa told Xi. "When I heard that this is an environmentally friendly green port, I felt that this was a major achievement," Xi later told a crowd in a brief statement. "This is a solid foundation for future US-China trade and economic co-operation." Nearly 60 per cent of the imports moving through the Port of Los Angeles come from China, including US$120 billion worth of computers, televisions, sports shoes and other goods last year. The US shipped US$13.5 billion in exports to China through the port last year. Brown and Villaraigosa are expected to use the trip to press for more Chinese investment in a planned high-speed railway between Los Angeles and San Francisco. Xi's trip to Los Angeles is the first by a top-level Chinese leader in 13 years, and California sees it as an opportunity to strengthen Chinese investment in the state's major shipping, tourism and entertainment industries. Xinhua yesterday said a joint venture with DreamWorks Animation would be formed in Shanghai between a Chinese company created specifically for the project. The Chinese side is formed by three Shanghai-based groups - China Media Capital, Shanghai Media and Shanghai Alliance Investment. With its registered capital estimated at more than US$100 million, the joint venture will primarily focus on animation production but will also engage in other fields, such as research and development for film and television technologies and theme parks. The overseas edition of the People's Daily yesterday hailed Xi's US visit as a success, saying it would lead to a "more healthy development" of sometimes fractious ties between the two nations. "Xi Jinping's visit was not long, but it had a big impact in promoting exchanges between the two peoples," it said.

As Chinese Vice President Xi Jinping makes his way across the U.S. in a five-day tour, Chinese American community leaders in Southern California are putting the finishing touches on their high-profile welcome banquet. Many Chinese American business leaders, professors and residents have been trying to score a ticket to the invitation-only event Thursday night. "My phone has not stopped ringing," said Sue Zhang, president of the Roundtable of Chinese American Organizations and the head of the 15-person welcome committee formed to prepare the banquet. "Everyone's asking me if they can be added to the guest list, and I have to tell them, 'No, there's no room.' " Zhang wants to ensure that every sector of the region's Chinese American community — commerce, education, media and science — has its best representatives at the banquet, which is to be held at the JW Marriott hotel at L.A. Live in downtown Los Angeles. "We all hope to properly welcome him and bridge our communities," Zhang said. Ling Wang, a teacher at a San Gabriel Chinese school, was among those trying to get on the list. "I called too late; I know I've missed this opportunity," Wang said in Mandarin. "I'm just one of many who want to go and welcome the official most likely to be the next leader of China." Attendance has been limited to 500 seats, with more than 100 filled by Xi's delegation. Despite all the last-minute phone calls, the final guest list is unchangeable because of the high security. The night's events will include cultural performances, as well as a speech by Xi, who is expected to replace Chinese President Hu Jintao next year. David Fang, a Taiwanese-educated attorney in Los Angeles, was lucky enough to land a VIP ticket. "The media may report it slightly differently," he said, "and I want to see his mannerisms, the way he speaks. He represents so much in terms of China's economic strength, foreign investment, future trade relations — it'll be an honor just to hear his speech firsthand."

Vice-President Xi Jinping getting into the cab of tractor on Rick Kimberly's farm in Maxwell, part of a tour wrapping up his visit to Iowa. China and the United States have signed a five-year deal to guide discussions on the security and safety of food, and sustainable agriculture at a symposium in Iowa, as Vice-President Xi Jinping wrapped up his visit to the US state. Xi spent an hour visiting a farm owned by Rick Kimberley in Maxwell, north of the state capital Des Moines, after delivering an opening address at the symposium on Thursday. His interest in farming was still alive, which he had shown 27 years ago when he visited Iowa on an agriculture mission as a Hebei provincial official. Xi even joined Kimberley, 61, in the cab of a John Deere tractor on the 1,600-hectare farm. Kimberley, a fifth-generation farmer, said Xi asked detailed questions about the farming techniques he used. "We discussed many things like the use of GPS navigators on the farm that help me to spray seeds precisely and measure the use of fertiliser to avoid wastage," he said. Kimberly took Xi and about 70 other guests on a stroll around his farm's barren fields, with some ice and frost visible, after a casual chat at his home. He showed Xi some large pieces of equipment and explained their use. During their chat, Xi asked Kimberly whether he would like his family to continue farming. "Yes, we're very interested in Grant [his son] continuing to farm," Kimberley replied, adding that perhaps the seventh generation would end up working on the family farm too. Grant Kimberley, who farms with his father, has visited China four times. Xi then asked Kimberly how he kept up with market developments; Kimberly replied that marketing the crops was the toughest part of his job. "We are someone you can rely on. We can produce good products, and a safe product," he said. Kimberley gave Xi a baseball cap, a John Deere tractor toy model and a T-shirt bearing his farm's name during the visit. "We are so glad to see such a harmonious family," Xi said. "I hope that everything you plant this spring will have a good outcome at harvest time." The co-operation agreement, signed by US Secretary of Agriculture Tom Vilsack and his Chinese counterpart Han Changfu , outlines mutual goals and responsibilities, as well as how China and America will address the issues of food safety, security and sustainability. "We have the responsibility and opportunity to work together to address the causes of global hunger that affect more than 925 million people," Vilsack said. "Current population trends mean that we must increase agricultural production by 70 per cent by the year 2050 to feed nearly 9 billion people." At the agriculture symposium, Xi recalled that he had spent seven years working on farms in a western province, which led him to develop a "special feeling" for agriculture and farmers in rural areas. He said agricultural trade formed an important element of Sino-US ties, and that bilateral co-operation should be strengthened to ensure stable food supply. A day before the symposium, China and Iowa signed an agreement for China to buy about US$4 billion worth of soya beans this year.

Jerry Brown woos Xi, Chinese companies - As he helped squire Chinese Vice President Xi Jinping around Southern California, Gov. Jerry Brown announced Friday that the state would open two trade offices in China and proposed setting up a task force with the Communist government there to improve trade and investment. In a letter to Xi released Friday, the governor made clear he is talking about Chinese investments in the Golden State rather than just helping California businesses pour more money -- and jobs -- into the fast-growing nation. "It is my hope that during your trip to Los Angeles you will not only feel warmly welcomed, but also that we together will be able to seize this special opportunity to begin a productive discussion on how to stimulate substantial new trade opportunities and flows of investment from China into California," Brown wrote. Earlier Friday, Brown announced the state would open two trade offices, one in Beijing and the other in Shanghai. The offices, he said in a statement, will be financed by the private sector with state help. The state closed a dozen foreign trade offices in 2003 after an analysis found they were not cost-effective.

Mission control will be abuzz this summer when the Shenzhou IX, carrying three astronauts, launches. Three Chinese astronauts will blast off on a Long March rocket and board the Tiangong (Heavenly Palace) space laboratory, orbiting above the earth, between June and August, mainland authorities said yesterday. The taikonauts, whose identities remain secret, would break many records in China's brief but ambitious history of human space flight, some space experts said. "They will be the first to use a real lavatory and sleep in a bed, to say the least," Professor Jiao Weixin , of Peking University's school of earth and space sciences, said yesterday. Their spaceship, Shenzhou IX, will rendezvous and dock with the Tiangong laboratory under manual control, a spokesman for China's manned space programme said. Colonel Yang Liwei was the first Chinese astronaut nine years ago. The ship's predecessor, Shenzhou VIII, performed the manoeuvre under computer control, without any human interference, last year. That success gave the latest mission clearance and confidence, the programme said. The spokesman did not reveal what the astronauts would do at the laboratory, how long they would stay or whether any would be female. Jiao said a summer launch was a bit unusual as most Chinese manned space flights took off in autumn, near the National Day holiday. But he said the mainland's space projects had developed so rapidly that officials had been left with less room to schedule space flights for the celebration of political events. "More than 20 satellites and spaceships have lined up for take-off this year," Jiao said. "Their economic and defence value goes far beyond political fireworks." He said the Shenzhou IX mission was even more likely to succeed than the previous Shenzhou VIII as the automatic docking system had proved reliable. Failure would not occur unless computers and humans all made some terrible mistakes. Tiangong is a dwarf compared with the gigantic International Space Station - about 10 metres long and three metres in diameter - but astronauts will have room to do scientific experiments and bioengineering tests, such as playing games and exercising, that were not previously possible, Jiao said. "A small step into the space lab is a big stride for the Chinese space programme," he said. But China's capabilities still trail those of the US by about 50 years, he said.

European Union Trade Commissioner Karel de Gucht says reports of Europe's economic death "are greatly exaggerated". The European Union's trade chief has welcomed Beijing's decision to take a greater role in resolving the euro-zone debt crisis, saying it "will make a difference". After attending the 14th China-EU summit in Beijing this week, EU Trade Commissioner Karel de Gucht said yesterday that the EU economy had had its difficulties, but "the reports of our death are greatly exaggerated". On Tuesday, Premier Wen Jiabao said China was "ready to get more deeply involved in participating in solving the European debt issue". Wen's words were important because the crisis affects other countries, said de Gucht. "It also makes a difference for China and other emerging markets, as the European economy is so big that the rest of the world can't prosper if the European economy is going in a wrong direction," he said. "It is not only an investment in Europe's problems, but an investment in its own future." While Beijing has yet to spell out its plans, investors are already speculating on the kind of investments it may make in the EU. Some analysts anticipate investments in Europe's physical assets and others in sovereign debts. Lou Jiwei, chairman of the China Investment Corporation, the country's US$410 billion sovereign wealth fund, said on Monday that European sovereign debts were not attractive investments. China has foreign exchange reserves of about US$3.2 trillion, the world's largest. Wen's remarks came just a day after Moody's downgraded the credit ratings of Italy, Portugal and Spain. The ratings agency also revised its outlooks for France, Britain and Austria from "stable" to "negative". On the trade front, de Gucht complained that China was stopping EU exporters accessing China's vast procurement market despite reforms in other sectors. Citing EU Chamber of Commerce research, de Gucht said China's public procurement market was valued at 7 trillion yuan (HK$8.6 trillion), but only a fraction of this was open to foreign competition.

Chinese Vice President Xi Jinping talks to crew as he tours China Shipping at the Port of Los Angeles on Thursday. Chinese Vice President Xi Jinping is wrapping up a pivotal four-day visit to the United State with a daylong series of events in Los Angeles with his American counterpart Joe Biden. China’s soon-to-be leader met with Governor Jerry Brown on Thursday and toured a shipping terminal at the giant Port of Los Angeles. The visit was a reminder of China’s huge footprint at the busiest port in the United States. Nearly 60 per cent of the imports moving through the Port of Los Angeles come from China, including US$120 billion worth of computers, TVs, sneakers and other goods last year - On Friday, Biden and Xi start with a China trade forum in downtown Los Angeles, followed by a luncheon and school visit to meet children learning Mandarin. They’ll end the day with a governor’s forum at Disney Hall. Xi’s US tour comes at a politically challenging time in US-China relations, with the White House sending stern messages on currency and trade policies and Republican presidential candidates claiming President Barack Obama isn’t doing enough to keep America competitive with the Chinese economy. The Asian power sells four times as many goods to the US as the United States sends in return to China. The US shipped US$13.5 billion in exports to China through the Los Angeles port last year. In a carefully scripted event, Xi took a short walking tour through the China Shipping terminal with Brown and Mayor Antonio Villaraigosa. The facility sprawls over nearly 100 acres. “We’re not just growing our ports, but we’re greening our ports,” Villaraigosa told Xi. “When I heard that this is an environmentally friendly green port, I felt that this was a major achievement,” Xi later told a crowd in a brief statement after his stroll with Villaraigosa. “This is a solid foundation for future US-China trade and economic cooperation,” he said. As with his previous travels, Xi was focusing on forging relationships. Xi spent the morning Thursday in Iowa, where officials from the US and China signed a five-year deal to guide discussions on food security, food safety and sustainable agriculture. China became the top market for US agricultural goods last year, purchasing US$20 billion in US agricultural exports, according to the US Department of Agriculture. Much of Xi’s visit, which began earlier this week in Washington, D.C., has been focused on agriculture. The strategic co-operation agreement signed on Thursday outlines mutual goals and responsibilities of each nation. “It charts the course and gives us a guiding document that we can reference and, over time, refine and improve,” said Scott Sindelar, the agricultural minister counselor at the US embassy in Beijing, who attended the Des Moines conference. According to the USDA, the value of US farm exports to China supported more than 160,000 American jobs last year across a variety of business sectors. US Secretary of Agriculture Tom Vilsack said the two nations will have to work together to help feed a growing global population. “We have the responsibility and opportunity to work together to address the causes of global hunger that affect more than 925 million people. Current populations trends mean that we must increase agricultural production by 70 per cent in the year 2050 to feed nearly 9 billion people,” he said. Not everyone celebrated the vice president’s arrival. The California Fair Trade Coalition, a San Francisco-based nonprofit that supports expanding trade while promoting economic justice, issued a statement calling on Brown to “address China’s predatory trade practices.” “The economic potential for trade with China is massive, but if they aren’t forced to level the playing field, this can only be a losing proposition for US workers,” said coalition director Tim Robertson.

Thorny issues between China and the US were put aside as Vice-President Xi Jinping swapped fond memories with old friends in a small farming town along the Mississippi River in Iowa. He visited the state in 1985, when few could have imagined how far he and his country would come. China's leader-in-waiting added a stop in Muscatine - population 22,000 - to his tight five-day itinerary so he could be reunited with the Iowans he met 27 years ago. Back then, Xi was a county-level official in Hebei in search of ideas to help his agriculture-rich province; they showed him around the region's hog-and-cattle operations, as well as its abundant corn and soya bean fields. The gathering, held at the house of Sarah Lande, lasted only about an hour on Wednesday and there was little banter between the Iowans and Xi because he speaks little English. But many of them were impressed by his charisma and his vivid memory for the details of his 1985 trip. Xi, who spoke in a deep and confident voice, smiled throughout the chat in a room with dark blue walls, white trim, a large burning fire and Chinese calligraphy hung in two frames. It was intended to be a casual and apolitical gathering, but Lande began by saying: "We wish you a successful presidency." She added: "I wish both the United States and China would just have a surge in the amount of visas that they issue, so we can have more international exchange and more trade, as we're having here between Iowa and China." Xi deftly shifted the conversation towards his first visit, expressing gratitude for the warm reception he received then. "Coming here is really like coming back home," he said. "You can't even imagine what a deep impression I had from my visit 27 years ago to Muscatine because you were the first group of Americans that I came in contact with. My impression of the country came from you. For me, you are America." After his opening remarks, each of the "old friends" took turns sharing memories of Xi's last visit. He recalled staying with Tom and Eleanor Dvorchak, who provided him a bedroom filled with Star Trek toys. And Xi remembered even minor details, such as the couple giving him popcorn when he left town. "I remember I stayed in your son's bedroom, and that you had a lovely daughter. She was very curious and asked us many questions, such as whether we had seen American movies. When I said I had seen movies like The Godfather, she was surprised," Xi told the couples. Xi also recalled giving a bottle of Chinese liquor to Tom Dvorchak. "Tell him that it was the strongest liquor I ever had," Tom told Xi through an interpreter, prompting laughter. Eleanor said Xi appeared to be as easy-going as he was in 1985, and he "makes everyone feel comfortable" through his sense of humour. "He was not making any jokes, but he gave clever responses, which were light-hearted and would make people laugh," she said. Cynthia Maeglin, who provided a bedroom for a member of Xi's delegation in 1985, learned that the official had later become the governor of Hebei, and had since retired. "Xi even mentioned the hugging between us and the official we hosted," she said. Mary Jo Stanley, who hosted Xi for lunch during his 1985 visit, said the vice-president's good recollections "showed that he enjoyed his previous trip, and apparently, it was a very meaningful trip to him". Tom Hoopes, who took Xi around his farm in 1985, felt that the vice-president had lightened up the gathering in the room. "He is the man in charge, and you just have a warm feeling with his presence," he said. "Everything was 100 per cent positive." Hoopes originally planned to give Xi a photo of his old farm, but dropped that idea because the gathering host and the local Stanley Foundation think tank had compiled an album of Xi's 1985 pictures. Barbara Woodstra, 86, said Xi invited her to visit China after she told him that she had a Chinese friend working in Shanghai. "But I may not be able to do that because of my age," she said. Cynthia Maeglin's husband, Dick, suggested Xi bring his daughter, who is studying at Harvard, to visit Muscatine. Xi's visit is undoubtedly one of the biggest events the town has seen in years. Although the gathering was limited to those who met Xi in 1985, many other nearby residents brought out their cameras, hoping to snap pictures of Xi's motorcade. The Muscatine Journal also reprinted its front page from May 8, 1985, to commemorate this visit.

Apple's share of China’s booming smartphone market slipped for a second straight quarter in October-December, as it lost ground to cheaper local brands and as some shoppers held off until after the iPhone 4S launch last month. China, the world’s largest mobile phone market, has not been easy for Apple, which is grappling with a lawsuit from a local firm over the iPad name and issues at its suppliers’ factories over wages and working conditions. With the number of mobile subscribers set to top 1 billion in China this year, there is cut-throat competition among South Korea’s Samsung Electronics, Nokia , Apple and local firms Huawei Technologies and ZTE (SEHK: 0763) Corporation. While Apple regained its top spot as the world’s largest smartphone vendor in the fourth quarter and for last year as a whole, it slipped to 5th place in China, overtaken by ZTE. Apple’s China smartphone market share slid to 7.5 per cent from 10.4 per cent in July-September. In the last quarter, Samsung knocked Nokia off the top slot, taking 24.3 per cent of the market, more than three times Apple’s share, data from research firm Gartner showed. Nokia’s market share more than halved last year, from above 40 per cent in the first quarter to below one fifth by the fourth quarter. “Chinese handset makers have been actively promoting their smartphones with China’s three telecoms operators, so we saw ZTE and Huawei gain significant market share,” said Taipei-based Gartner analyst CK Lu. Gartner said this week it expected Apple’s iPhone market share to slip for a couple of quarters as the novelty of its latest 4S model wears off. In the first quarter of last year, ZTE had a market share of just 3 per cent, but ended last year ranked 4th with more than 11 per cent market share. Chinese firms are gradually shifting up towards the higher end of the market, unveiling more feature-packed smartphones. “If you want to sell handsets to the mass market, a simple rule of thumb in China is that the handset price has to be close to 70 per cent of the monthly salary,” said Jayesh Easwaramony, an analyst with Frost & Sullivan in Singapore. “Today, an iPhone is more than two months salary.” This, said Easwaramony, gives the likes of Huawei and ZTE the opportunity to cater to a mass market that is captivated by the iPhone, but doesn’t have the purchasing power for it. “The quality of Huawei’s phones is quite high and it’s good value for money compared to the iPhone,” said Dale Dai, a 28-year-old sales executive from Beijing. Dai, who uses his Huawei phone to write weibo, or Chinese microblogs, surf the Internet and make calls, recently bought a new Honor smartphone for 1,800 yuan (US$290), almost a third of the price of a new iPhone 4S at 4,988 yuan. But given the sheer size of the Chinese market, just targeting the highest end users should be enough for Apple, though it’s not always been a smooth ride. Last month, shoppers in Beijing threw eggs at the Apple store and fought with police when they were told the iPhone 4S would not be on sale as scheduled. In Shenzhen, some genuine iPhones and iPads are smuggled in from Hong Kong, while sellers also take advantage of Apple’s popularity by packaging fake iPhones in iPhone 5 boxes – even before the 4S was launched. In Hong Kong, Apple resorted to an online lottery reservation system for the 4S model after crowd control issues disrupted initial sales. Analysts expect Apple to stem its slide in market share in China by signing up another carrier. China Unicom (SEHK: 0762, announcements, news) , the country’s No.2 telecoms operator, is currently the only carrier to officially carry the iPhone. It has not officially given its iPhone sales, but analysts estimate it has sold around 3 million iPhones since signing a contract with Apple in 2009. China Telecom Corp (SEHK: 0728) Ltd, the third and smallest operator, is expected to be next to clinch a similar deal with Apple later this year, and analysts predict it would sell about 1.4 million iPhones this year if it can reach a deal with Apple by May, rising to 2-4 million new iPhone users next year.

 

With 3,500 kilometers of new high-speed railways expected to be put into use this year, the length of China's high-speed railways will exceed 10,000 kilometers, a senior railway official said. Insiders said the construction of high-speed railways, which was halted due to funding shortage, will resume this year. Yang Zhongmin, director of the planning department of the Ministry of Railways, said that all four of the planned North-South rail arteries for China's high-speed rail system will be complete, according to People's Daily on Thursday. One of the four arteries, the Beijing-Shanghai line, opened in June. The others will connect Beijing and Guangzhou in South China, Beijing and Harbin in Northeast China, and cities on the southeast coast with high-speed railways. Though a section of rail between Xiamen and Shenzhen will not be finished this year, the four arteries will start operation and significantly cut travel time between major cities, Yang said. For instance, train travel from Beijing to Shenzhen will take eight hours instead of the current 24 hours, and trips from Beijing to Harbin will take only five hours instead of nine. China's high-speed rail sector was hampered by a funding shortage last year, when money from the government's 4 trillion yuan ($635 billion) stimulus plan dried up and the government's tightened monetary policy, after which the ministry was unable to get bank loans. More than 10,000 kilometers of high-speed railway projects were halted. Wang Mengshu, a leading rail tunnel expert, said on Thursday that railway construction is expected to resume this year. Wang, deputy chief engineer at China Railway Tunnel Group, told China Daily, citing a recent railway working conference, that the work on 6,000 kilometers of halted railway projects will resume this year and funds will be allocated gradually. "The ministry will also begin nine new railway projects this year, but none of them are high-speed railways," he said. An article posted on Feb 8 on the website of the Chongqing development and reform commission, a branch of China's top economic planner, supports Wang's statement. According to the article, Lu Dongfu, deputy minister of railways, said at a meeting on Dec 30 that the ministry plans to spend 406 billion yuan on 249 infrastructure projects this year. The money will be used to complete 63 rail projects, continue work on 177 others and begin nine new ones. Besides, the ministry would like to begin 53 other projects this year. But Yang Hao, a railway professor at Beijing Jiaotong University, said that the 53 projects would need the approval of the National Development and Reform Commission before ground could be broken on them. The ministry has stressed that the plan for infrastructure spending is "subject to changes", and experts believe that funding is the crucial factor that could determine whether the full plan is carried out. Zhao Jian, another railway professor at Beijing Jiaotong University, said it remains unclear how the ministry will pull together 400 billion yuan because it has clear access to only 80 billion yuan from the railway construction fund and other sources. "And even the 80 billion yuan is not enough to pay off the interest generated by the 2 trillion yuan debt the ministry owes," he said. China has planned to build a railway network of 120,000 kilometers by 2015, including at least 16,000 kilometers of high-speed railways.

Chinese Vice-President Xi Jinping talks with Rick Kimberley (right) while Xi visits Kimberley's family farm on Thursday in Maxwell, Iowa. China and the United States should strengthen cooperation in trade and food security and further exchanges in technology and information, Vice-President Xi Jinping said at the first China-US Agricultural Symposium on Thursday. "It will have great significance and far-reaching influence if the cooperation between the two large agricultural countries can rise to a strategic level in order to achieve mutual benefit and shared progress," he said at the symposium. During the symposium, US Agriculture Secretary Tom Vilsack and China's Minister of Agriculture Han Changfu signed a five-year Plan of Strategic Cooperation to guide discussions on food security, food safety and sustainable agriculture. "Agriculture is the highlight of the bilateral trade and Chinese government always pays great attention to this sector," Han said. "This plan builds on the already strong relationship our nations enjoy around agricultural science, trade and education. It looks to deepen our cooperation through technical exchange and to strengthen coordination in priority areas like animal and plant health and disease, food security, sustainable agriculture, genetic resources, agricultural markets and trade, and biotechnology and other emerging technologies," Vilsack said. Last year, China became the top market for US agricultural goods, purchasing $20 billion in US agricultural exports. The high total of exports to China helped to support more than 160,000 American jobs on and off the farm in 2011 across a variety of sectors, according to the US Department of Agriculture (USDA). China imported 1.68 million tons of corn from the US last year, the highest figure in 15 years, according to the USDA. China imported a total of 1.75 million tons of corn that year. "The agricultural trade development between the two countries has maintained a strong momentum in recent years" Xi said. Over the past decade, bilateral trade volume has grown annually by 20 percent, he said. On Wednesday, major Chinese companies, including COFCO Co Ltd, the country's largest State-owned grain trading house; and Sinograin, which manages China's grain reserves, signed deals in Des Moines with major food production companies Archer Daniels Midland, Bunge Ltd, and Cargill, among others. The Chinese delegation was expected to sign more purchasing deals in Los Angeles on Thursday, which would bring the total amount of agricultural exports to a record of more than 12 million tons, said Kirk Leeds, CEO of the Iowa Soybean Association. The soybeans will come from last fall's and this spring's harvests. The value of the purchases will be around $6 billion. "China attaches great importance to food security, and ensuring a sufficient food supply for 1.3 billion people," Xi said. He stressed that the two nations need to strengthen cooperation in technology to improve agricultural productivity and establish a fair market to enhance trade ties. If China and the US can further cooperation in agriculture, it will help stabilize domestic economic operation and give a boost to the global economic recovery, he said. According to the US Chamber of Commerce, 95 percent of the world's consumers and 73 percent of the world's purchasing power live outside of the US, with a significant portion of each tied to the Chinese economy, Iowa Governor Terry Branstad said. "These are statistics which we cannot ignore as a state or nation." In March, Iowa Lieutenant Governor Kim Reynolds and state Secretary of Agriculture Bill Northey will lead an eight-day trade mission to China to explore business opportunities.

Trade between China and the United States is expected to exceed $500 billion this year, said Vide-President Xi Jinping who is visiting the US economic hub in a bid to promote trade. Addressing a dinner of leading overseas Chinese businesspeople on Thursday in Los Angeles, Xi said bilateral trade between the two countries grew 180 times from $2.5 billion around 1980s to $446 billion last year. "The figure is further expected to exceed $500 billion this year", said Xi, stressing trade has been the most striking factor between the two countries since the duo established diplomatic ties more than 30 years ago. When Xi spoke on Wednesday in Washington, he said trade delegations sent by China had purchased more than $100 billion of goods from the United States every year from 2006-11, while US exports to China have grown by almost 5 times during the past 10 years. Xi's visit to Los Angeles, the last leg of his five-day visit to the US, focused heavily on trade and local cooperation. His official delegation toured the China Shipping terminal at the Port of Los Angeles immediately after landing in the City of Angels at noon on Thursday. Xi is scheduled speak at the China-US Economic Trade Forum on Friday and participate in other events focused on trade and investment. He will be joined again by US Vice-President Joe Biden, who has been his formal host during his time in the US. Xi will conclude his visit with a professional basketball game between the Los Angeles Lakers and Phoenix Suns at the Staples Center in downtown Los Angeles. China's Deputy Commerce Minister Gao Hucheng, who is accompanying Xi during the visit, estimated that traveling Chinese trade and investment delegations in the US alongside Xi's visit would buy $27.1 billion of US goods, including silicon chips, electronic materials, equipment and machinery as well as farm produce. Trade tensions between the two economies have sometimes caused some ruffled feathers, especially as US President Barack Obama seeks to accelerate economic growth during a re-election year. Gao said both countries should make efforts to address the trade deficit. Xi, during his Washington speech, called on the US to adjust its economic policies and end restrictions on high-tech exports to China. Xi also spoke at a dinner Thursday night that included a large contingent from the Chinese delegation and members of the local Chinese-American community. He said local cooperation has always been the foundation for strong bilateral ties. There are now 4.3 million people of Chinese heritage living in the US, the biggest number of all Asian-Americans. Xi urged Americans to seize the chance of China's development and contribute to the trade and cultural links between the two countries. Sue Zhang, president of the Roundtable of Chinese American Organizations who was attended the dinner on Thursday, said since Los Angeles is one of the cities that hub the largest number of Chinese in North America, there has always been a strong tie between the region and China. Southern California has one of the largest Chinese communities in the United States with more than 360,000 people. Stephen Sham, the newly elected president of Chinese-American Elected Officials, an organization of elected officials of Chinese descent in Southern California, said Xi's visit to the Southland is a recognition of the importance the area plays in the Sino-US relationship, and a recognition of Chinese-Americans living here. Sham, who's also mayor of Alhambra, plans to travel to Sanya, a sister-city of Alhambra, in the near future to promote collaboration between the two cities in next year's Rose Parade, a traditional way to celebrate New Year's Day in the US that started in 1890.

Hong Kong*:  Feb 18 2012 Share

Qantas chief executive Alan Joyce has clashed with Australian lawmakers and unions over his plans to switch the airline's focus to Asia. Qantas Airways must "adapt or die", chief executive Alan Joyce told Australian lawmakers last week as the nation's biggest airline confronts rising costs on unprofitable international flights. Peter Bentley, a customer for more than 10 years, agrees. "They don't have enough choices for what I need right now," said Bentley, head of sales for Pikes Wines, a vineyard in the Clare Valley of South Australia. "We are on the doorstep of Asia and that is where we have the growth, and yet we seem to have these outdated ties to `Mother England'." For Joyce, Bentley reflects a missed opportunity to parlay 44 million passengers and a domestic market share of 65 per cent into a business that can compete on faster-growing routes to Beijing and Shanghai. Sydney-based Qantas is reducing flights to Europe, shifting maintenance to Southeast Asia and planning a new airline in Malaysia or Singapore. The strategy has come too late for some investors. The shares plunged 35 per cent in the last 12 months as Qantas contended with Chinese and Middle Eastern carriers and a more than A$600 million (HK$4.9 billion) rise in fuel costs. Credit rating agency Moody's downgraded the airline to its lowest investment grade last month, saying competition and jet fuel prices will continue to weigh on earnings. "They either have to come up with a business plan with costs close to their competitors' or they just slowly contract," said Andrew Sisson, managing director of Franklin Resources' Balanced Equity Management, Qantas' biggest shareholder. Setting up an airline in an Asian hub would let Joyce hire pilots and crew at a lower cost, and offer a greater choice of connecting flights to compete with rivals such as Singapore Airlines and Cathay Pacific Airways (SEHK: 0293). While staff costs for these airlines are about 15 per cent of revenue, for Qantas they are 27 per cent. After retreating from markets in Europe, where Qantas is losing out to Emirates Airline and other state-backed Middle East carriers, Joyce is betting on Asia. "He has to get it right," said Neil Hansford, chairman of Sydney-based Strategic Aviation Solutions, which advises airlines across the Asia-Pacific. "The Asian carriers aren't going to sit still. They will fight for every passenger Joyce tries to get." Also fighting Joyce are Australian lawmakers and unions who see the new carrier as a ploy to shift jobs abroad and subvert 20-year-old legislation aimed at keeping Qantas based and run in the country. Proposed revisions to the law that seek to compel Qantas and its Jetstar budget unit to do most maintenance in Australia and to cap the growth of Asian affiliates "would strangle our capacity to run our business", Joyce told lawmakers this month. "The purpose of the legislation is for Australia to have a strong, global national carrier, but there are loopholes big enough to fly an A380 through," said Senator Nick Xenophon, who proposed the amendments. "There is nothing to prevent Qantas shutting down its international routes and replacing them with a low-cost business, and I think there are real issues there for the national interest." Union opposition to Qantas' Asia plans led to a wave of strikes last year that grounded the Qantas fleet in October for two days. About 80,000 people were stranded, and the regulator was forced to intervene. Two of three unions are now in binding arbitration that will prevent them taking action for the lifetime of new contracts. Engineers signed a deal in December allowing new jets to be maintained in Asia. The stoppages and fuel costs probably drove first-half earnings down 51 per cent to A$117 million, according to analyst estimates. Qantas is due to report today. Joyce is cutting routes to Europe and trimming cabin crew to help staunch about US$200 million in annual losses on international flights. Still, six months after he first set out plans for the new carrier, he hasn't announced a deal. Qantas has been slow to follow Asia's growth, with seven direct flights a week to mainland China, against more than 50 by Air China (SEHK: 0753) and China Southern Airlines. When the flying kangaroo was first daubed on Qantas planes in 1947, more than half of Australians were born in Britain. That proportion has halved, with Asians filling much of the gap. The failure to adapt to changing demographics and rising competition from Middle Eastern carriers has contributed to a slump in Qantas' share of arrivals to less than 20 per cent, from more than 35 per cent a decade ago. The number of passengers flying to London was little changed over the last decade, but those headed for Beijing or Shanghai almost tripled. "Asia will continue to play a larger part in the global economy," said Joyce. "There is nowhere like it. It has massive untapped potential." Pikes Wines' Bentley uses Qantas for most of his 80 or so flights a year. He plans more trips to Asia to meet rising demand in China, which accounts for 20 per cent of exports from zero five years ago. "Asia is just getting bigger and bigger for us," he said. "If Qantas can give me more options, they will get more of my business."

China's central bank has transferred US$50 billion to a Hong Kong-based arm of the nation's sovereign wealth fund, giving it more leeway to make direct investments and boost returns on the mainland's massive foreign exchange holdings. The arrangement gives the US$410 billion sovereign wealth fund more money to invest and should also boost the investment returns of the mainland's US$3.2 trillion foreign exchange reserves, which are mostly placed in low-yielding United States and European sovereign debt. Four people with direct knowledge of the matter said the foreign exchange reserve management department of the mainland's central bank had transferred the US$50 billion to the Hong Kong arm of China Investment Corporation. The transfer follows a drawn-out turf war between the Finance Ministry and the People's Bank of China (PBOC) as each attempted to gain control of the fund. The money will be used as registered capital for the unit, CIC International (Hong Kong), which was incorporated last November. The direct shift of money from the PBOC to CIC Hong Kong skirted legal restrictions on the central bank directly providing loans or capital to outside entities, the people said. When CIC was launched in 2007, the Finance Ministry issued 1.55 trillion yuan (HK$1.9 trillion) in special treasury bonds to buy US$200 billion from the country's foreign exchange regulator. That became the initial capital for CIC. CIC has invested most of that money, with only US$14.5 billion in cash positions as of the end of 2010, according to its most recent annual report in last July. CIC chairman Lou Jiwei declined to comment on the capital injection on Monday. CIC's mandate is to diversify part of the mainland's foreign currency reserves into riskier overseas assets.

Newly listed developer Swire Properties said on Thursday said it plans to build a 2.9 million square foot project in Miami’s financial district. The Hong Kong-based company had previously said in a filing that the development, Brickell CitiCentre, would cost about US$1.05 billion. It said the project would include three office towers, two residential blocks, 500,000 square feet of shopping and dining space, and a hotel, with construction expected to start in the second quarter. Swire bought four plots of land for project in 2008 and last year, and has so far spent US$145.6 million on land and advance prepartion of the site. Although Swire focuses on the core markets of China and Hong Kong, it has a 30-year track record in Miami, where it has been developing on an island called Brickell Key. It has hired Miami-based architects Arquitectonica to design the project. Chairman Christopher Pratt said when Swire Properties listed in mid-January that the company had no immediate plans to raise capital, with the sale of its Festival Walk asset in Hong Kong providing adequate capital for its immediate plans. One fund manager, who runs a US$5 billion portolio of actively managed property stocks in Asia, told reporters this week that he expected Swire Properties to go to the equity or debt markets soon to fund expansion. “Probably one year from now, they’ll raise money,” he said, declining to be identified as he was not authorised to talk to the media. Swire Properties shares were down 0.6 per cent on Thursday morning, tracking a similar decline in the benchmark Hang Seng Index.

Cheung Kong (SEHK: 0001) plans to sell a further 72 flats at its Festival City project in Tai Wai at prices slightly higher than those sold two months ago, saying stock and property market sentiment is on the rise. The developer yesterday said it would sell the flats at an average of HK$8,903 per square foot, which includes a 4 per cent discount for buyers who opt for cash or immediate mortgage payment. In December, the company sold about 80 flats at more than HK$8,700 per square foot. "Because of recent changes in the market, we have adjusted prices upwards by 1 to 2 per cent," Cheung Kong Real Estate director William Kwok Tze-wai said. "Transaction volume in the secondary home market has gone up and sales of new flats have been good, too. The stock market has also risen." The 72 flats are three and four-bedroom units between 1,000 and 1,264 square feet. Prices range from HK$8,878 to HK$9,647 per square foot and the cheapest flat costs more than HK$9 million before discount. Kwok said there were still about 780 flats available in the project and there was potential for prices to rise a further 5 to 10 per cent, meaning the overall average selling price of the flats would be close to HK$10,000 per square foot. To attract buyers, those who are willing to pay an additional 2 per cent of the property's price can get a 12 per cent cash rebate, which will be distributed in stages over two years. Midland Realty director Sammy Po Siu-ming said the price rise meant the market had buying power. "The pricing is reasonable, given that the market is a lot more active than in December, and this batch of flats offers good garden or mountain views," Po said. He also said more than 60 flats at City One Shatin were sold this month, compared with only 20 to 30 deals in December. The property market had been encouraged by the United States Federal Reserve's plan to maintain interest rates at near-zero until 2014 and banks were more actively approving mortgage loans, he said. Cheung Kong said the company would pocket about HK$700 million after selling the 72 flats. The company's optimism is in stark contrast to Wheelock (SEHK: 0020) Properties, which said this week it planned to release 30 flats at Lexington Hill in Kennedy Town at an average of HK$11,039 per square foot - 10 to 29.6 per cent lower than prices in the area.

Daiwa Securities, Japan's No 2 brokerage by revenue, gave its Hong Kong office a surprise post-Valentine’s Day gift on Thursday: more than 100 employees were let go, accounting for about one-third of Daiwa’s workforce in the city. Most of the jobs announced to be cut in Daiwa’s Hong Kong office were for its investment banking business. There were also about a dozen jobs cut in Daiwa’s Asia research team, based in Hong Kong, according to people briefed on the matter. The people declined to be named as they were not authorised to speak to the media. This round of layoffs is part of Daiwa’s earlier announcement at the end of January that the Tokyo-headquartered securities firm would cut a total of 500 jobs outside its Japan operation to save costs – after it reported losses for the fourth consecutive quarter. It marks one of the largest layoffs of bankers in Hong Kong so far this year, and follows staff cuts in recent weeks at the Hong Kong offices of other investment banks, including Swiss-based UBS, Australia’s Macquarie Group and Samsung Securities of South Korea.

Chief executive candidate Henry Tang Ying-yen on Thursday evening apologised for having an illegal basement in his Kowloon Tong luxury home — but he said he would not withdraw from the race for the top job. The former chief secretary had been facing calls to explain the basement in his property at 7 York Road after local newspaper Sharp Daily published a floor plan showing an elaborate underground complex. Accompanied by his wife Lisa Kuo Yu-chin, Tang apologised to the public, saying he had been slow in dealing with the matter. He also said he would continue with his chief executive bid and asked the public “to give him a chance”. “I will continue to pursue the opportunity to serve Hong Kong, and I wish the public would consider my suitability based on my manifesto and past service to Hong Kong,” he said. Tang’s apology came before a team of Buildings Department officials finished an inspection of the property’s basement on Thursday and briefed the media on their findings. The officials confirmed that the basement was illegal as it did not match the layout of the plans originally approved for the property. Senior building surveyor Keith Ko Kiu-kin, who headed the team, said the department would send a warrant ordering the property owner to demolish the illegal basement. But Tang’s failure to give full details on the matter has raised doubts among his supporters over his suitability as a candidate for the position of chief executive. Some political allies said his previous statements on the matter were “hardly convincing”. Tang on Thursday said the basement was the brainchild of his wife and he had wanted to “protect” her. He said the basement idea had come about at a time when his marriage was at a “low point”, and that he have very seldom visited the property after he had moved into the official residence of the financial secretary in 2003. Tang denied accusations he had lied about the illegal structure. On Wednesday he said he couldn’t recall ever seeing the basement floor plan and that it was mainly used for storing groceries. Kuo, who appeared with Tang in front of the media on Thursday, said the illegal structure had nothing to do with her husband and she took full responsibility for it. “My idea was only to build a warm and happy home for my family, like any other wife,” she said. “He [Tang] knew nothing about [the basement] and is too busy to take care of the property.” The basement plan, said to have been drawn up in 2003, shows a 430 sq ft area with a wine cellar, wine-tasting room, home theatre, Japanese bath, gym, changing room, toilet and storeroom. Earlier on Thursday, politician Dr Lew Mon-hung, a supporter of rival chief executive candidate Leung Chun-ying, called for Tang to withdraw from the chief executive race. Dr Lew said in an open letter that the controversy-plagued Tang “should avoid embarrassing the central government” and “should preserve the last portions of his dignity” by pulling out. Lew is a Hong Kong delegate to the Chinese People’s Political Consultative Conference. Leung on Thursday refused to comment on the controversy surrounding Tang. “My focus now is on my campaign,” he told reporters before an event organised by the Hong Kong Stock Exchange.

About five Buildings Department inspectors entered the home of Henry Tang Ying-yen at No 7 York Road in Kowloon Tong shortly after 5pm – an hour after the inspection had been scheduled to begin. The inspectors entered the home carrying floor plans and a camera. The inspection was expected to last three hours, local media reported. They had been delayed earlier on Thursday afternoon by a large group of reporters and protestors blocking the entrance. Police officers had tried to erect barricades to clear a path for the inspectors. Earlier, members of the media had gathered at the York Road home - waiting for the inspectors to arrive to check illegal structures in homes owned by the chief executive candidate and his wife. The inspection comes as doubts grow among Tang’s political supporters about his suitability as a candidate in next month’s election. Tang has not helped to allay those doubts, with his non-committal comments on the growing controversy. On Wednesday night, he said he was not sure if he had even seen the floor plan for what is being dubbed his “underground palace” at No 7A York Road, which is owned by his wife. The couple live next door at No 5. The controversy accelerated on Wednesday evening when the Chinese-language tabloid Sharp Daily published a floor plan that, it claimed, showed an illegal basement at No 7 York Road with a total floor size of 2,400 sq ft – larger than the 2,217 sq ft footprint of the house itself. The plan showed various facilities in the basement including a Japanese bath and a theatre. Dozens of reporters and photographers waited outside the properties in York Road, using crane trucks and heavy equipment to take pictures. Some of Tang’s key political supporters said they would need to rethink their support for him if the newspaper claim was true and depending on Tang’s explanations of any illegal structures. Liberal Party chairwoman Miriam Lau Kin-yee said on Thursday morning that the party’s 62 nominations given to Tang – a former Liberal before he joined the government in 2002 – was based on his performance in election forums last year and his track record in the administration. “The support was given ahead of all the recent happenings, which are very serious,” said Lau on RTHK radio. “Various rumours are now flying in the air, so we cannot tell whether we will still support him. His explanation so far has failed to solve people’s worries.” The chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, Tam Yiu-chung, said the party would need a thorough assessment of Tang’s attitude in handling the controversy, which he said had “escalated into an integrity crisis”. The party, which controls 147 votes in the 1,200-member election committee, has allowed members to nominate candidates of their choice.

The Asia Society established itself in 1956 with a mission to educate Americans about the Far East. More than 50 years later, it has opened a sprawling new center in Asia with a more reciprocal message. “We are really in the business of strengthening partnerships among Asians and Americans, and promoting mutual understanding,” said Vishakha Desai, president of the organization, in an interview in Hong Kong. “It’s no longer sufficient, even if necessary, to educate Americans about Asia.” “For us to have a physical presence in Hong Kong will really allow us to think about ourselves as an organization differently, more globally,” said Melissa Chiu, director of the Asia Society Museum in New York and vice president for the organization’s global arts programming. The shift, she added, reflects “the growth of Asia as a great economic and social power.” While the Asia Society has offices in Seoul, Mumbai, Melbourne, Manila and Shanghai, the space in Hong Kong, complete with a gallery, 107-seat theater and café, is its first physical center in Asia and its second in the world. Located at the site of a 19th-century British military compound that once housed and processed explosives, it connects a newly constructed building with four heritage structures, and its horizontal design stands out amid the city’s glut of skyscrapers. New York-based Tod Williams Billie Tsien Architects, which has designed for the Lincoln Center, Whitney Museum of Art and American Folk Art Museum, won a global competition for the Asia Society project in 2001. It cost 380 million Hong Kong dollars (roughly US$49 million) to build, with funds supplied by the Hong Kong Jockey Cluband other donors, Asia Society said. In April, the organization will open another center, this one in Houston, with a design by Japanese architect Yoshio Taniguchi. The Hong Kong center’s opening show, “Transforming Minds: Buddhism in Art,” mixes contemporary work by Asian and Asian American artists with ancient art from the Rockefeller collection. Over the course of the year, the center will stage other exhibitions, including one on historical Indian jewelry, and host lectures, debates, films and performances. These initiatives, too, will aim to inform Asia about the West. “We live in a global and interconnected world, so partly the programming that we do in New York will travel to Hong Kong, but it will also be reciprocal,” Ms. Chiu said. “We will be developing shows here in Hong Kong that could come to New York or could go to Houston.”

 China*:  Feb 18 2012 Share

China's promise to help Europe out of its financial woes lifted stock markets across Asia yesterday, but its own market continued to underperform the region. The MSCI Asia Pacific Index rose 1.9 per cent to 127.34 points, a half-year peak, after the People's Bank of China said Beijing was ready to be more involved in resolving the European crisis through the European Financial Stability Facility and European Stability Mechanism. Mainland stocks in Hong Kong rose 2.39 per cent, outpacing the 2.14 per cent gain in the Hang Seng Index. However, the Shanghai Composite Index edged up only 0.94 per cent, meaning that the mainland's A shares continued to trade lower than their H-share counterparts in Hong Kong. Joseph Tong Tang, an executive director of Sun Hung Kai Financial, said the A-H share premium was unlikely to see a reversal as there was little chance of the mainland government speeding up the opening of its capital markets to foreign investors. Stability remained the top priority of the government, Tong said, so it would continue to be careful not to open the floodgates to international capital - despite the weak performance of mainland stocks due to the liquidity squeeze. He also said H shares were attractive to investors not only because of their prices, but also because they offered other industry choices, compared with the Hang Seng Index. The Hang Seng's rise yesterday was led by the property sector, as the market expected home prices to rebound when the euro-zone debt crisis eased. Brokers said the market was regaining confidence despite the fact that it had swung in and out of negative territory after Moody's Investors Service downgraded the debt ratings of six European countries. The HSI Volatility Index yesterday declined 2.88 per cent, meaning traders expected less volatility in the next 30 trading days.

China's worsening air pollution, after decades of unbridled economic growth, cost the country US$112 billion in 2005 in lost economic productivity, a study by the Massachusetts Institute of Technology (MIT) has found. The figure, which also took into account people’s lost leisure time because of illness or death, was US$22 billion in 1975, according to researchers at the MIT Joint Programme on the Science and Policy of Global Change. The study, published in the journal Global Environmental Change, measured the harmful effects of two air pollutants: ozone and particulates, which can lead to respiratory and cardiovascular diseases. “The results clearly indicate that ozone and particulate matter have substantially impacted the Chinese economy over the past 30 years,” one of the researchers, Noelle Selin, an assistant professor of engineering systems and atmospheric chemistry at MIT, said. Ground-level ozone is produced by chemical plants, gasoline pumps, paint, power plants, motor vehicles and industrial boilers. Inhaling it can result in inflammation of the airways, coughing, throat irritation, discomfort, chest tightness, wheezing and shortness of breath. Past studies have shown that high daily ozone concentrations are accompanied by increased asthma attacks, hospital admissions, mortality and other markers of disease. Particulates – spewed out by power plants, industries and automobiles – are microscopic solids and droplets so tiny they penetrate deep into the lungs and can even get into the bloodstream. Lengthy exposure can result in coughing, breathing difficulties, impaired lung function, irregular heartbeat and premature death in people with heart or lung disease. The researchers made their calculations using atmospheric modelling tools and global economic modelling, which were useful in assessing the impact of ozone, which China started monitoring only recently. This methodology allowed them to simulate historical ozone levels. The findings show the problem was even worse than thought, said Kelly Sims Gallagher, an associate professor of energy and environmental policy at Massachusetts-based Tufts University’s Fletcher School, who was not involved in the study. “This important study confirms earlier estimates of major damages to the Chinese economy from air pollution, and in fact, finds that the damages are even greater than previously thought,” Gallagher said. China is a large emitter of mercury, carbon dioxide and other pollutants. In the 1980s, China’s particulate concentrations were 10 to 16 times higher than the World Health Organisation’s annual guidelines, the researchers said. Even after significant improvements by 2005, the concentrations were five times higher than what is considered safe. Chinese authorities are aware of the devastating effects of the degradation to the environment and are taking steps to tackle it. This month, authorities announced plans to reduce air pollution by 15 per cent in the capital, Beijing, by 2015, and 30 per cent by 2020 through phasing out old cars, relocating factories and planting new forests.

VP charms Muscatine at reunion - Eleanor Dvorchak (left) makes remarks on Wednesday about the first trip China's Vice-President Xi Jinping made to Muscatine, Iowa, in 1985, at the home of Roger and Sarah Lande. Xi stayed in the Dvorchak's home at that time. Hanging by the door in the old Victorian house that Vice-President Xi Jinping visited in Muscatine, Iowa, on Wednesday is a colorful Chinese folk painting. Xi's host, Sarah Lande, has been a longtime admirer of China. Although Lande and the small city, once known as the "Pearl of the Mississippi" because of its pearl button manufacturing, are worlds apart from China, for a few hours on Wednesday, the Chinese leader was welcomed with warmth and hospitality. The vice-president returned to the city 27 years after his first visit when Xi was a young provincial official from Hebei province, Iowa's sister state. Xi's stop in Muscatine, a city of 43,000 that is located about three hours from the capital of Des Moines, was part of a weeklong trip to the US that already included an audience with US President Barack Obama, a meeting with business executives and a luncheon at the State Department. Lande and her husband Roger were one of several families who hosted or spent time with Xi during his 1985 visit. In total the Muscatine residents who attended the reunion numbered around a dozen. "The gathering went on very nicely," Lande said after the reunion. Muscatine Mayor Dewayne Hopkins, Lieutenant Governor Kim Reynolds, and Governor Terry Branstad were also in attendance. During Xi's 1985 visit to Muscatine, he toured a corn processing plant, a hog farm and a small vegetable farm. He slept in a room with cutouts of Star Trek characters on the walls and sampled local dishes of beef and corn. Lande and the Muscatine group, who call themselves the "Old Friends" group, had an opportunity to share some memories when they gathered in the Landes' living room Wednesday night. "He has an amazing memory," said Muscatine resident Mary Jo Stanley, who attended the reunion. "As we each shared our memories he was bringing up details about that first trip that some of the hosts had even forgotten. He was charming, warm and friendly, and the whole thing was a testimony to what individual-to-individual diplomacy can accomplish." Xi gave his remarks in a strong and confident voice, said several people who attended the event. He told the group that all the memories from his first trip were coming back to him, according to a Wall Street Journal reporter who was present at the reunion. "Coming here is like coming home," Xi said at the reunion. "You can't even imagine what a deep impression I had from my visit 27 years ago to Muscatine because you were the first group of Americans that I came into contact with. My impression of the country came from you. For me, you are America." His first visit occurred just several years after the normalization of relations between China and the US, and just two years after Hebei and Iowa became sister states, Xi said. "We were so excited and honored to have him here," said Sarah Margaret Minor, Lande's granddaughter. "He was very well-spoken. He said that he felt like an honorary citizen of Muscatine, and said that he was really thankful to be back. A lot of people have been asking us, 'Why here?' And I think he's just a really smart guy who knows that if you're going to meet the president of America, you should meet the people of America too," Minor said. Janet Rauch, who gave Xi a tour of her farm on his first trip to Muscatine, described him as "a calm and ambitious man who will do a great job. He is very personable." Xi received a gift from the Muscatine residents: a book of memories with photos taken during the 1985 trip. Although Xi's visit to Iowa was framed around his visit with families in Muscatine, the trip is being viewed as a chance to strengthen economic ties between China and the state, the US' largest grower of soybeans. In 2010 Iowa's exports to China totaled $627 million, an increase from $45 million in 2000. The media attention has been very exciting, Minor said. "My grandmother has always been happy to go over to China and meet Chinese people and also host them here, and she thinks that it is so important for both our country and for China for people from both places to meet like this," she said. As reporters gathered in the town over the week to cover the reunion, local residents have reacted with excitement. Beverly Thumann, owner of a Muscatine gift shop just a few blocks from the Lande family, believes the reunion holds a lesson. "Probably back in 1985, there was no thought that something that happened here in Muscatine 27 years ago would bring the vice-president of China back to us today," she said.

China’s foreign direct investment shrank for the third consecutive month in January as firms in crisis-embroiled Europe slashed spending by over 40 per cent, casting another pall over the outlook of the world’s economic growth engine. The gloomy trend was augmented by China’s trade ministry, which warned of grim times ahead and promised action to help struggling local exporters cope with lacklustre demand abroad. But Shen Danyang, the spokesperson for the trade ministry, cautioned investors against excessive pessimism, saying it was too early to predict that China’s import and export growth would shrink this year despite their shock contraction in January. “Due to growing downward pressures in the world economy, the external environment for China’s imports and exports is getting tougher and overall, the situation remains grim,” said Shen from the Commerce Ministry. He said measures to aid exporters include relieving cash strains suffered by small firms, helping companies resolve trade disputes and improving credit insurance for exporters. Shen’s comments came just after data from the Commerce Ministry showed China drew US$9.997 billion in foreign direct investment in January, down 0.3 per cent from a year ago. Underscoring the turbulence European companies faced as the 27-member European Union battles a stubborn debt crisis, inflows from the region plunged 42.5 per cent to US$452 million. Investment from the United States rose 29 per cent to US$342 million while that from 10 Asian countries including Japan edged up a mere 0.8 per cent to US$8.586 billion. In contrast, China’s non-financial outbound direct investment in January leapt 60 per cent from a year earlier to US$4.376 billion. “Previously, they had deep pockets but now, the funding is tight because of debt problems,” Ting Lu, an economist at Bank of America-Merrill Lynch in Hong Kong, said in reference to cutbacks by European firms in China. But he said the retreat should be temporary and that investors will return in droves to chase China’s heady growth rates, among the highest in the world, when the global economy steadies in the second half of this year. “For many years, China will be the world’s largest receiver of foreign direct investment,” Lu said. Investment inflows into China surged in the years after it joined the World Trade Organisation in 2001, and have rebounded strongly after being hit hard by the 2008/09 global financial crisis. Indeed, China weathered Europe’s festering debt crisis last year to draw a record US$116 billion worth of foreign direct investment, giving the Commerce Ministry confidence to target an average of US$120 billion in inflows in each of the next four years. In contrast, China’s trade performance has been far more volatile. Data last week showed imports sank 15.3 per cent in January from a year ago – the lowest since August 2009 – while exports fell 0.5 per cent over the same period, the worst showing since November 2009. The Commerce Ministry said the real trend is not as dismal as the numbers suggest as the data was distorted by the Lunar Chinese New Year, which fell in January this year but was in February last year. Lu from Bank of America-Merrill Lynch agreed that work stoppages during the festive period had exaggerated the poor performance, but nonetheless expects China’s trade growth for this year to halve to 10 per cent, from last year’s 20 per cent. To that end, he said Beijing could ease risks faced by exporters selling in fiscally troubled European nations such as Greece and Portugal by insuring their credit. “Some banks in peripheral Europe are not so dependable. The Chinese government has deep pockets and if it can give insurance, that would be helpful.”

After a number of online stores suspended sales of Apple's iPad, the US tech giant accused Proview Technology of not honoring its agreement to transfer the rights to use the trademark for the product in China. Many Chinese online stores, including Amazon China and Gome, pulled the iPad after local administrations of industry and commerce seized loads of the popular tablet computers from a second-tier city. "We bought Proview's worldwide rights to the iPad trademark in 10 different countries several years ago," according to a statement Apple sent to China Daily on Wednesday. "Proview refuses to honor their agreement with Apple, and a Hong Kong court has sided with Apple in this matter," according to the statement, which also said the case is still pending on the Chinese mainland. Proview Technology Shenzhen holds the trademark it registered in 2001, according to the official website of China's trademark authority. It claimed Apple made a deal to buy the iPad trademark from Proview Technology Taiwan, a company associated with but still a separate entity from the Shenzhen company. Gome, a major electronic appliance store in China, is the latest to suspend sales of the iPad online, though it said on Wednesday its "stock is abundant". "We will not stop selling iPad in brick-and-mortar stores until the final verdict on Apple's case is out," said a public relations worker with Gome. Amazon China also told China Daily that the iPad has been unavailable online "according to Apple's sales policy". "Apple hopes the iPad will be sold offline," said a public relations worker with Amazon. Media reported 360buy.com, another popular online store, suspended iPad sales for hours on Tuesday. Over the past few weeks, Apple has been uncommunicative, while the Shenzhen company has reached out to the media about its repeated complaints to market regulators and sent pleas to customs officials to impose an embargo on the iPad 3, which is expected later this spring. Apple's statement did not specify from which company underneath the Proview umbrella it had acquired the iPad trademark. Xie Xianghui, a lawyer representing Proview Technology Shenzhen, said Apple's "partial" reply is meant to confuse the public. He added that the verdict in Hong Kong will not have any influence on other trials on the mainland - where the two companies also sued each other for the copyright - because of the different legal frameworks. Xie countered Apple's claim that the Hong Kong court sided with it in the dispute. "Apple is worried the iPad trademark will be resold before the hearing is finished, so it asked the Hong Kong court to forbid Proview Shenzhen from doing that," he said, adding that the court's decision to prevent the trademark from being transferred cannot be seen as showing that it has ruled in favor of Apple. It is uncertain at this time when exactly the trial will begin in Hong Kong, and the lawyer said the evidence exchange has begun and will last until March. Yu Guofu, a Beijing-based lawyer specializing in intellectual property rights, said the verdict of the Hong Kong trial or that of the mainland will not have any influence on one another or vice versa. "The root cause of the dispute is Apple' underestimation of the legal complications in China," the lawyer said, adding the case also serves as a warning to companies in China to think twice about risks before "going abroad". However, Yu said the sale of the Apple's products, including the iPad, will not be affected by the lawsuit, because what customers care about is the quality. "The way out for Apple might be changing its product's name soon or buying the trademark from the Proview Technology Shenzhen," he suggested.

Xi puts military ties in the spotlight - Vice-president urges Washington to abandon trade protectionism - Vice-President Xi Jinping called for an expansion of military ties with the United States amid tension over Washington building up its military presence in the Asia-Pacific region. Chinese Vice-President Xi Jinping delivers a policy address during an event co-hosted by the US-China Business Council and the National Committee on US-China Relations in Washington February 15, 2012. During discussions on Tuesday with US officials, Xi also urged Washington to abandon trade protectionism and respect China's fundamental interests. Meeting US Defense Secretary Leon Panetta and General Martin Dempsey, chairman of the Joint Chiefs of Staff, Xi said military ties are an important part of the relationship. Xi urged defense officials from the two countries to enhance dialogue, cultivate trust and accommodate major concerns to establish a mature military relationship. Military ties between China and the US can suffer turbulence, especially when the US insists on arms sale to Taiwan. US efforts to enhance its military presence in the Asia-Pacific, as well as frequently holding military drills with its allies, has added to tension between the two countries. During Tuesday's meeting, US military officials said they want to enhance ties with China. "The US and China are Pacific powers ... we want to work with China to build an open, transparent and inclusive regional security order," Panetta said. Pentagon press secretary George Little, quoted by the Wall Street Journal, said the two countries shared a "wide-ranging discussion" on military and security matters.

Hong Kong*:  Feb 17 2012 Share

MTR Corp (0066) said it pulled in a record 350 million shoppers to its 12 malls last year - up 40 percent from 2010. Sales also grew by around 40 percent, driven by products popular among mainland travelers such as electronics, cosmetics and dried seafood. Chief retail development manager Betty Leong Sin-ling forecast double digit growth again this year. "But since we had a high base last year, growth this year may not be as high." The 12 malls include Elements at Kowloon MTR station, Paradise Mall in Sha Tin, Telford Plaza in Kowloon Bay, Maritime Square in Tsing Yi, Luk Yeung Galleria in Tsuen Wan, The Lane in Hang Hau, and The Edge in Po Lam. The rail operator said a new shopping mall called Popcorn atop the Tseung Kwan O station - its first in five years - will be opened in March. The 400,000 square foot mall, which will have more than 100 shops, is already fully let. It will cater to middle class households with monthly income exceeding HK$30,000. This segment accounts for about 41 percent of all 400,000 residences in the area. "Tseung Kwan O is the district with the fastest growth in Hong Kong. With more new flats being built in the area, it will have a lot more room to grow," Leong said.

Bank of East Asia (0023) said earnings rose by 3.2 percent to HK$4.36 billion last year or HK$1.96 per share. Net profit for the year ending December 2011 came in at the lower end of market estimates of between HK$4.05 billion and HK$4.86 billion. Core capital adequacy ratio - core CAR - fell to 9.4 percent from 9.8 percent from a year ago. Total CAR was 13.7 percent, up from 13.2 percent. Net interest margin, or profitability of loans, narrowed to 1.75 percent from 1.78 percent last year. Cost to income ratio grew to 62.9 percent from 62.1 percent, mainly on fewer trading activities and investments. Net interest income rose 22.8 percent to HK$9.26 billion. Net fee and commission income gained by 13.6 percent to HK$3.34 million. Impaired loan ratio hit 0.46 percent, down from 0.54 percent in 2010. "The bond and equity markets experienced a highly volatile year in 2011, with sovereign debt concerns and natural disasters rocking world markets," said BEA chairman and chief executive, David Li Kwok-po. "The profit and loss account recorded a negative swing of HK$588 million from 2010 to 2011 on trading activities and investments." BEA China's net profit grew 60 percent to HK$1.84 billion last year. The unit reported NIM of 2.5 percent. BEA deputy chief executive Brian Li Man-bun, said loan growth this year would be in the "low teens." He expected monetary policies this year "to be looser than last year." He does not foresee any deterioration in asset quality, but added maintaining asset growth "at 60 percent as in 2011 would be rather difficult." The China arm was now ready for a spin off, but he would wait until it "grows bigger." He would not say whether any investment banks had approached the bank on a possible spin-off. But Joseph Chee, UBS managing director of global capital markets who usually works on initial public offerings, was seen at yesterday's press conference. BEA shares fell 2.78 percent to HK$29.75 yesterday.

The administration is defending its decision to exempt the Trade Development Council from a new competition law, with Commerce Secretary Gregory So Kam-leung arguing that it plays a crucial role in helping small and medium-sized enterprises sell products overseas. While some private exhibition firms had suspended the organization of trade shows during economic downturns, he argued yesterday, "the council continued to run exhibitions to help local enterprises explore new business opportunities." The council also played a role in implementing government policies to promote Hong Kong's trading activities and to consolidate the SAR's economic competitiveness, So said. And they were good reasons to exempt the TDC from the competition bill. In discussing the bill at a Legislative Council committee meeting, lawmakers had criticized the fact that the TDC was among 575 statutory bodies exempted from the proposed competition law. Of them, 415 have little to do with economic activities, while the remaining 160 are engaged in activities related to essential public services or government policy in areas like education and trade promotion. The proposed legislation is meant to create a level playing field and deter anti-competition practices such as price-fixing and market-sharing deals. Lawmakers voiced serious concerns that exempting the TDC may undermine healthy competition between the well-connected council and private firms in hosting exhibitions. New People's Party lawmaker Regina Ip Lau Suk-yee said: "Since the council plays a dual role in promoting the territory's trading events and organizing exhibitions, it is in competition with local and international exhibition firms. "As such, it is unreasonable for the government to exempt the council from the proposed competition law." Civic Party lawmaker Ronny Tong Ka-wah weighed to say that the administration has failed to foster keen competition in the local exhibition industry and an exemption for the TDC would violate the principle behind the formulation of the bill. So responded by saying official would be closely monitoring the exempted statutory bodies to ensure none were engaged in any anti-competition practices after the bill is enacted.

Bosses are being warned about breaking the law by using hidden miniature cameras to spy on staff. For the use of "pinhole" cameras is in sharp focus after Privacy Commissioner Allan Chiang Yam-wang took a subsidiary of Sun Hung Kai Properties to task for snooping. Chiang found after an investigation that management subsidiary Hong Yip Service Co breached the privacy ordinance by its "unlawful and unfair collection of personal information." But Chiang said he will not be penalizing the company as it has dismantled the eye-spy gear. And Hong Yip bosses continue to claim they were not spying on employees by mounting a camera outside a changing room at a housing estate, and that it was to pick up trespassers in the car park. Still, two security guards had been fired as a result of their snooping. "Covert monitoring is generally regarded as highly privacy-intrusive," Chiang said. "Employers should not adopt covert monitoring unless it is justified by special circumstances." Reasons can include matters like the theft of confidential data - but only as a last resort. Warning against secret monitoring of employees, Chiang said overt devices such as CCTV cameras offer a legal alternative that in most cases is just as effective as secret cameras. According to the investigation, a pinhole camera was installed in a private housing estate - which one remains a secret - in May 2009. In September, Hong Yip managers reviewed pictures and fired two staffers for "lingering" in the changing room while on duty. The pair filed a complaint with the privacy commissioner after finding the camera concealed in a metal box on a staircase leading to the changing room. Rights groups and trade unions said Hong Yip had undermined basic rights. The director of Hong Kong Human Rights Monitor, Law Yuk-kai, said: "Spying is criminal because when people suspect they are being monitored there can be feelings of insecurity when they're alone. They are unable to enjoy a private life." Legislator Ip Wai-ming, of the Hong Kong Federation of Trade Unions, said: "Employees aren't working in jail. Hong Yip crossed the line for spying on staff by setting up pinhole cameras at a workplace." Ng Wai-yee, vice chairwoman of the Federation of Hong Kong and Kowloon Labour Unions, said there have to be efforts to make people aware of workplace rights. "Everyone should be treated fairly and with respect." Eddy Li Sau-hung, president of the Hong Kong Economic and Trade Association, said employers generally should avoid installing pinhole cameras unless there are security worries - and they should never put cameras around toilets or changing rooms. And if employers do think it vital to have cameras in offices, he said, "they should inform all employees and obtain consents. It is absolutely immoral for employers to install cameras without informing staff." The Hong Yip case is not the first controversy about pinhole cameras. In 2005, Hongkong Post was caught in a row involving six pinhole cameras at one of its branches. Interestingly, Chiang was the head of Hongkong Post then.

After a full week’s controversy about the integrity of chief executive hopeful Leung Chun-ying, the government now says Leung’s integrity was never in doubt in connection with a judging competition in 2002. “We never questioned his integrity in the press release,” Secretary for Home Affairs Tsang Tak-sing said on Wednesday morning, referring to a government press release issued on February 8 that said Leung had business connections with a contestant in a competition in which he was a juror, a decade ago. Tsang was speaking in the legislature in response to a question raised by lawmaker Lee Wing-tat. The government has been accused of releasing the information to hurt Leung’s chances in next month’s chief executive election, and to help rival candidate Henry Tang Ying-yen. Within minutes, it sent out a second press release exonerating Tang of conflict of interest in a separate matter. Leung has faced days of questions over the allegation that he failed to declare a business connection between his firm DTZ Holdings and a Malaysian company, T.R. Hamzah & Yeang, which was one of the contestants. Leung was a member of the judging panel. On Wednesday morning, Tsang told the legislature that he never said Leung had failed to declare his interests before the competition, which was related to the design of the West Kowloon Cultural District. That echoes Leung’s assertion that he did not know DTZ was listed as the contestant’s consultant. The Malaysian bid was disqualified after that disclosure. The bureau has been urged by lawmakers to release all documents relating to the vetting process of the competition. Its selective release of information has jeopardised Leung’s reputation, they said. Tsang said the bureau has written to Leung and the other involved contestant on Tuesday to seek their agreement to release relevant documents. The government must comply with international practices on disclosing sensitive commercial details, he said. Under pressure from lawmakers, the minister said he would consider disclosing records vital to the public interest if he fails to obtain the two parties’ consent to release the information. Tsang said officials looked through more than 30-old government files to research the information in the February 8 press release. He added that no government official had asked for an investigation into any conflict of interest by Leung. They accepted the contest jury’s decision as impartial and above-board.

The internet was abuzz with photos of sightings of George W. Bush in Hong Kong on Tuesday. What could the former U.S. President possibly be doing in the city? Tweets started flying around on Tuesday morning with pictures of Mr. Bush spotted in the Mandarin Oriental Hotel in Central accompanied by bodyguards. While Karl Rove was in Hong Kong last week for the Goldman Sachs Global Macro Conference and gave a keynote speech, many were confused at what had brought Mr. Bush to town as he did not have any speaking engagements in the city. One Twitter used jokingly asked whether he might be in town for Social Media Week. All was revealed on Wednesday. Mr. Bush was in fact Steve Bridges, a well-known George W. Bush impersonator from the U.S. Mr. Bridges was in town to promote something rather more prosaic – exchange-traded funds. Enhanced Investment Products Ltd., a Hong Kong-based firm, announced the launch of seven new synthetic ETFs to trade on the Hong Kong stock exchange, that will track various stock markets in Asia. To stress the simplicity of the products, the company used the fake Mr. Bush to promote its slogan: “no brainer.”

A tout outside a Bank of China in Hong Kong buys commemorative bank notes celebrating the bank's 100th anniversaryon on Feb 14, 2012. The Bank of China denominated HK$100 notes are being bought by touts and collectors and then resold in the Chinese mainland for several times their face value, presenting a "fast-buck" opportunity for many residents of the city. The Hong Kong Monetary Authority yesterday demanded the Bank of China (Hong Kong) restore public order as the frenzy over the bank's commemorative banknotes reached a new high on the second day. The demand came as thousands queued outside 50 of the bank's branches to buy special banknotes celebrating its centenary. Speculators have been selling the banknotes in the gray market at inflated prices. A bank spokeswoman said last night all slips have been handed out to customers for purchasing the banknotes on a first-come, first-served basis. She apologized to residents near branches. The authority has demanded the bank deploy more staff to handle the sale of the banknotes. It said it will review the arrangements on the sale of the banknotes with the bank, and will look at whether commemorative banknotes should in future be sold by computer balloting. The commemorative notes include 1.1 million single HK$100 notes, 100,000 sets of three uncut notes, and 20,000 sets of 30 uncut notes for HK$150, HK$600 and HK$6,000, respectively. Outside the bank's headquarters in Central, a queue of more than 1,000 stretched along a footbridge to Murray Building across the road. A man called Fung, who claimed to represent a syndicate from the mainland, paid HK$1,440 for two sets, saying they can change hands for 1,800 yuan (HK$2,216) to other mainland parties. He had been waiting outside the bank's headquarters since 9am and had more than 60 sets in hand by noon. He claimed he was prepared to spend HK$100,000 buying up banknotes.

 China*:  Feb 17 2012 Share

DBS has hired new management, introduced yuan-denominated investments and pledged to spend the equivalent of HK$1.5 billion to expand over the next five years. DBS Group, Southeast Asia's biggest bank, plans to boost its workforce in China by about 25 per cent this year after profit doubled last year and as it seeks to reduce its reliance on Singapore. The bank aims to add about 400 employees in China, mostly in corporate banking, taking the total to 2,000, Melvin Teo, chief executive of DBS China, said yesterday in Shanghai. The company increased its staff by 42 per cent last year. Revenue in China rose 65 per cent last year to about 1.9 billion yuan (HK$2.34 billion), while net income doubled to exceed 500 million yuan, the bank said yesterday. China now contributes about 29 per cent of the group's revenue and the percentage may increase to 33 per cent "in the next few years", chief executive Piyush Gupta said. Gupta has focused on building DBS's wealth-management business to reach rich Asians, particularly in China, India and Indonesia. He has hired new management, introduced products including yuan-denominated investments and pledged to spend S$250 million (HK$1.54 billion) to expand over the next five years. Gupta also set a target of 12 per cent return on equity next year, up from 10.8 per cent in the third quarter of last year. DBS targets generating about 40 per cent of revenue from its home market in five years, down from about 60 per cent now, according to a plan unveiled in February 2010. China would make up 30 per cent, DBS has said. South Asia and the rest of Southeast Asia may contribute another 30 per cent. China opened its banking industry to overseas companies in December 2006, sparking competition among foreign lenders for the nation's corporate and household savings, which reached US$12.7 trillion in January. Combined assets at foreign banks were more than one trillion yuan by the end of October, almost double from five years ago, according to the China Banking Regulatory Commission. Their profit growth averaged 26 per cent over the past decade, the regulator has said. DBS incorporated in China in May 2007, enabling it to offer yuan-denominated services to the mass market. The lender, which operates 25 outlets in 10 Chinese cities, plans to open six to seven sub-branches in the country this year, Teo said. DBS will focus on attracting large China enterprises and will cater to the affluent Chinese in developing its consumer banking business, according to Gupta. The bank plans to issue between one billion yuan to two billion yuan of bonds - with a maturity of two or three years - on the nation's interbank market in the next few weeks pending market conditions, Teo said.

China should put its own interests above international relations, the state-run Global Times said on Wednesday, during a closely watched visit to the United States by the country’s leader-in-waiting. The visit by Vice-President Xi Jinping, expected to take command of China in a leadership transition starting this year, comes as Beijing faces international criticism for vetoing a UN resolution condemning violence in Syria, and for its human rights record. But an editorial in the Global Times, which is known for its nationalistic stance, said the Asian power “does not need to satisfy the West at the expense of its own interests”. “China should adjust its thinking on what are ‘good’ relations. No matter whether Sino-US relations or Sino-European relations, the more favourable they are to China’s national interests, the better,” it said. “To China, the US and Europe are important … But China should view itself as the highest priority. This does not mean China should be arrogant, but rather ensure that it receives equal treatment from other countries through diplomacy.” Xi’s US visit, which began on Monday, has dominated the Chinese media in recent days as the country prepares for a once-in-a-decade leadership transition that begins later this year. He was given a 19-gun salute with booming cannons at the Pentagon during his visit – a rare honour for a mere vice president, reflecting the importance Washington places in its relationship with Beijing. But US politicians have not held back from raising complaints about Beijing’s currency value, saying it is kept artificially low to boost exports, or over human rights, including the communist state’s growing detention of its critics.

A New Zealand court has called a halt the sale of 16 dairy farms to investors from China. High Court Judge Forrest Miller ruled on Wednesday the New Zealand government had overstated the economic benefits that investors from China would bring when it approved the sale last month. Miller said the government needs to review the sale using stricter evaluation criteria. The Shanghai Pengxin company had planned to spend more than NZ$200 million (HK$1.3 billion) buying and improving the farms in the first such deal involving mainland investors. The plans drew heavy criticism in a country which relies on agriculture for much of its export earnings. A consortium of local farmers and businessmen, who want to buy the land, were behind the legal appeal.

The wrong steps by the UN Security Council could cause worse bloodshed in Syria, Deputy Foreign Minister Cui Tiankai told reporters on Tuesday after Vice-President Xi Jinping finished a day of talks in Washington. China wants an immediate halt to the spiraling bloodshed in Syria and an “inclusive dialogue” between the Syrian government and opposition protesters, an official said. “We are following closely the situation in Syria and we hope that the violent activities can be put to an immediate stop,” said Vice-Foreign Minister Cui Tiankai, who is accompanying Vice-President Xi Jinping on a US visit. “We hope that Syria can initiate an inclusive dialogue to solve all the problems it faces,” he said. China and Russia have faced a barrage of criticism for blocking a UN Security Council resolution condemning the bloody crackdown on protests in Syria, including from Arab nations with which Beijing normally has good ties. Tiankai said China attaches “great importance to the role played by the Arab League in seeking a political solution to the Syrian issue”. But he said the UN Security Council is “a highly authoritative international body, so whatever actions it takes, the actions should be taken in a most prudent and responsible manner.” He added that “all people are calling for an immediate end to the bloodshed in Syria. Yet if the Security Council takes one wrong step, it is likely to lead to more bloodshed instead of putting a stop to the bloodshed.” On Tuesday, Syrian troops battered Homs in some of the heaviest shelling for days in the city, a monitoring group said, as the international community warned of a humanitarian disaster. The United States has called the rare double veto a “travesty”, while one Syrian opposition group said it had handed Syrian President Bashar al-Assad’s regime a “license to kill.”. Since the crackdown was launched less than a year ago on popular protests inspired by the Arab Spring revolts, more than 6,000 people have been killed, according to monitoring groups.

New York Knicks guard Jeremy Lin drives against Toronto Raptors guard Anthony Carter during the first half of an NBA basketball game in Toronto on Tuesday. Jeremy Lin made a tiebreaking 3-pointer with less than a second to play to cap his finishing flurry of six straight points, and the New York Knicks rallied to beat the Toronto Raptors 90-87 on Tuesday night, extending their winning streak to six games. The NBA’s first American-Taiwanese player, Lin had 27 points and a career-high 11 assists in his first game since being named Eastern Conference player of the week. The season-high crowd of 20,092 roared as Lin drained a pull-up jumper from the top with half a second to play, giving the Knicks their first lead since the opening quarter. Toronto’s Rasual Butler airballed his attempt at the buzzer as the Knicks swarmed their newest hero at centre court. Amare Stoudemire returned from a four-game absence with 21 points and Tyson Chandler had 13 for New York. Jose Calderon scored 25 points, Linas Kleiza had 15 points and 11 rebounds, and DeMar DeRozan scored 14 for the Raptors. Up 75-66 to start the fourth, Toronto widened its lead with a three-point play by Barbosa before the Knicks stormed back with a 10-0 run, cutting it to 78-76 and forcing the Raptors to call timeout with 6:22 remaining. Kleiza stopped the run with a driving layup, Amir Johnson added a hook shot and, after Lin made one of two from the line, Barbosa’s layup made it 84-77 with 4:49 to go. Toronto led 87-82 with less than two minutes to go when Iman Shumpert stole the ball from Calderon and drove in for an uncontested dunk. After a missed shot, Lin completed a three-point play, tying it at 87 with 1:05 left. Barbosa missed a 3 for Toronto and, at the other end, Shumpert missed a jumper but Chandler grabbed the rebound. Lin took the ball near midcourt and let the clock run down to 5 seconds before driving and pulling up against Calderon to launch the decisive shot, touching off the latest instance of Linsanity. The Raptors had a photo of Lin on their team website in the hours before the game, and his visit generated major interest among Toronto’s Asian community, estimated at over 280,000 people, or more than 11 per cent of the local population. The Chinese Canadian Youth Athletics Association and the Taiwanese Canadian Association of Toronto both sent groups of almost 300 fans as Toronto sold out for the second time in 13 home games. One group of fans in the upper deck wore white T-shirts spelling out his name. Not all the fans were so positive: Lin was booed several times throughout the game. Local media also took note; some 75 reporters and 16 cameras packed a Tuesday morning press conference to hear Lin speak, with dozens more turned away to prevent overcrowding. More than 25 Chinese Canadian journalists were due to cover the game, including one who presented Lin with a book of “Year of the Dragon” stamps from Canada Post and asked him to record a message in Mandarin, which he did. Even Knicks coach Mike D’Antoni was shocked by the size of the throng upon walking in for his turn at the microphone. “Are we in the playoffs now?” D’Antoni joked as he made his way to the front of the room. It was Calderon, coming off a career-high 30 points in Sunday’s loss to the Lakers, who was hot early, scoring 12 points in the first as the Raptors led 28-21 after one. Lin missed his first shot and didn’t score until a driving layup with 3:46 left in the first. He had four points and four assists in the opening quarter. Lin turned the ball over on three straight possessions early in the second and Toronto took advantage with a 6-0 run, widening its lead to 13 points. He also missed a running bank shot as the half ended as the Raptors took a 47-36 lead into the break. Stoudemire scored seven points and Lin had six points and four assists as the Knicks scored 30 points in the third, but still trailed 75-66 heading into the fourth.

BP PLC has obtained approval from the Ministry of Commerce to explore in the South China Sea in what will be the company's second deepwater project in China. BP last week received a green light to have a presence in a gas field known as block 43/11, Chen Liming, president of BP China, said on Tuesday. The China National Offshore Oil Corp operates the field. Chen said BP will have a roughly 40 percent stake in the block during the exploration period and a 20 percent share when the project has moved into production. The ministry's approval was the final official step needed before the project can begin. Chen did not say when the exploration will start. BP and CNOOC signed a cooperation agreement for the project during Vice-Premier Li Keqiang's visit to London in January. BP's participation in block 43/11 will diminish the size of a share held in the project by Anadarko Petroleum Corp, a US energy company, which previously had a 50 percent stake in the block under a contract with CNOOC. The planned exploration will mark BP's second deepwater project in China. In September 2010, it bought a 41 percent stake in another block in the South China Sea. With CNOOC, China has shown its ambition to tap into deepwater resources. The country plans to use its first semi-submarine drilling rig, Hai Yang Shi You 981, for deepwater exploration in the South China Sea as early as the first half of this year. The rig is capable of working at depths of 3,000 meters and extracting oil from sources that are as deep as 12,000 meters. Chen at BP said such deepwater work is among the four areas of opportunity the company wants to exploit in conjunction with its Chinese counterparts in China and overseas markets. The other three pertain to natural gas - both conventional and unconventional types - integrated refining and chemicals and high-end lubricants. BP also said it plans to spend about $630 million on the third phase of a project to make purified terephthalic acid - which are used in many plastics - at its BP Zhuhai Chemical Company Ltd plant in Guangdong. The third phase will make the plant capable of churning out 1.25 million tons of the chemical a year. It is expected to begin operating as early as 2014 but is still subject to approval from the Ministry of Commerce, the company said. From its entrance into China in the late 1970s to the end of 2010, the oil company has invested about $5 billion into the country.

Iowa ready to give VP a warm welcome - Iowa residents show a souvenir T-shirts they made for Chinese Vice-President Xi Jinping's visit to the state. Vice-President Xi Jinping's visit to the US has been drawing a lot of attention from both the US media and people around the country. The second leg of Xi's trip will be Iowa where he visited 27 years ago when he was a Party official in Hebei province. Today, Iowans are excited about Xi's visit and think it is positive for the state. Starting at Des Moines airport, people were already talking about Xi's visit. A staff member from Enterprise car rental service at the airport, a resident from Muscatine which has a population of about 43,000, said he heard about Xi's visit and thought it would be good for Iowa. "I know he will be visiting the city Muscatine where I am from. I just think it's a great thing for our city," he said. Iowa has a strong relationship with China in agriculture. The state's exports to China have increased by 1,300 percent from 2000 to 2010, according to the US-China Business Council. But representatives from the business community have high hopes for Xi's visit because it will give the Chinese delegation an opportunity to learn more about the state and what else it can offer. Larry Zimpleman, CEO of the Principal Financial Group, said he looks forward to attending the Iowa Capitol dinner for Xi on Wednesday night. He hopes Xi's visit will bring the businesses in Iowa and China closer so that the Chinese delegation can see Iowa's potential beyond agriculture. "(Iowa) is a very strong state for financial services, with many well-known financial services companies operating in Iowa," Zimpleman said. Zimpleman said Xi's trip would be the "most significant thing" that has happened in Iowa because Xi is the most senior foreign leader to visit the state since Russian Premier Nikita Khrushchev came in 1959. John Stineman, a business and policy consultant at Des Moines-based Strategic Elements LLC, calls Xi's visit "a critical step". And he said it will create opportunities for both Chinese and Iowa companies. "Iowa is very interested and excited about the opportunities to not just compete within China to gain market share there but to participate as China begins participating more directly within the US market," Stineman said. Mike St. Clair, principal at Capital Edge, said with China's rapidly growing economy, everyone understands the importance of building a strong relationship. "Everybody understands that we're in a global economy and any economic relationship we can forge with other countries will ultimately be beneficial to Iowa," said St. Clair. Iowa also has strong educational ties with China, with both major universities in the state seeing a large increase in enrollment of Chinese students over the past five years, according to school officials at the University of Iowa and Iowa State University. Mark Olmstead, assistant principal of Muscatine High School, said he heard the news from a friend working in Des Moines. "We were excited (about the news)," he told China Daily. "We will put our best foot forward." Olmstead really wanted to invite Xi to come to his school, which offers Chinese language classes. "To have a dignitary of that magnitude come to visit our community, I think it is just a wonderful, fantastic opportunity (to invite Xi to the school)," he said. Swallow Xiaozhe Yan, executive director of Chinese Association of Iowa, expects that Xi's visit will jumpstart a series of investment projects between China and the Midwest. "A lot of Chinese people will get to know more about Iowa and the US Midwest through Xi's trip," he said. "Then a huge wave of business opportunities will come." There are about 10,000 Chinese residents in this state and most of them work in agriculture and insurance industries. Some 10 representatives from Chinese community are invited to the dinner reception at the state Capitol Wednesday evening.

Hong Kong*:  Feb 16 2012 Share

The Arch, a popular Kowloon property, may be more appealing to bankers whose six-figure housing allowances have been cut 50 per cent because of the financial sector downturn. Luxury rents decline as bankers feel the pinch - Senior staff in the financial sector, whose six-figure housing allowances have been cut in half, are downsizing or moving to less expensive districts - Rents on top luxury homes in Hong Kong have fallen sharply as banks slash generous housing allowances amid the downturn in the financial sector. Rents on homes leasing for HK$100,000 to HK$180,000 a month slid 18 per cent from January to last October as six-figure housing allowances in the financial industry came to an end, property consultancy Colliers International said. Such properties are typically at least 2,500 sq ft in size and located in Southern district or Mid-Levels. Overall, the luxury rental market, which includes flats leased for more than HK$40,000 per month, fell 7 per cent in the period. It is a far cry from 2010, when landlords in the luxury market expected a 20 per cent increase in rents year on year. Landlords would even choose not to renew contracts with existing tenants if they expected they could sign up new tenants at higher rents. Simon Lo, head of research and advisory for Colliers International, said some senior bankers and finance professionals had seen their housing allowances slashed in half in October when the finance industry felt the pinch from the US downturn. "Some of these bankers used to get six-digit housing allowances every month, but now they may only get HK$60,000 or HK$70,000," Lo said. "They have to accept a trade-off - either they move to a smaller flat in the same area, or they move away from the central business district to North Point, or even to Kowloon." He said the market for properties with rents in excess of HK$200,000 had been particularly hard hit because some banks and financial institutions decided not to fill director-level vacancies. Such people would receive more than HK$250,000 a month in housing allowances. Jackson Chiu, a luxury property agent with Land & Fortune Realty, said bankers with leaner budgets were moving to more offbeat locations such as Discovery Bay and Sai Kung, where homes were spacious but more affordable. "In such locations, you may get a 2,000 sq ft flat, or a nicely furnished house, for less than HK$80,000. Some of the expats do not want to move to smaller flats on Hong Kong Island, so they began to find these alternatives attractive," Chiu said. Those intent on staying on Hong Kong Island might also consider old Chinese buildings in Sheung Wan, Wan Chai and Causeway Bay. Younger, middle-management employees, who used to find properties in Sheung Wan and Wan Chai affordable, are now eyeing properties near the Olympic and Kowloon stations, Chiu said. He said banks and financial institutions were hiring people from overseas on something closer to local terms, meaning they received a lump sum rather than a housing allowance. Even if housing costs were included in the lump-sum package, some bankers might not choose to spend that much on housing given the tough economic environment. Banks including Goldman Sachs, Morgan Stanley and JPMorgan announced 30 to 40 per cent reductions in the bonus pool for 2011 compared with 2010. Chinese brokerage firms and investment banks are also cutting back on bonus payouts. Anne-Marie Sage, regional director for property consultancy Jones Lang LaSalle Hong Kong, expects the drop in luxury rents to continue. She said a few expat families who expected to arrive in Hong Kong this month had not turned up as firms became more cautious about bringing in staff with spouses and children.

More than a third of Hong Kong bankers may consider changing jobs if disappointed with their bonuses, despite banks' efforts to manage bonus expectations. According to a survey of 562 financial services workers by recruitment firm Astbury Marsden, 36 per cent said they would consider changing employers if they were disappointed with this year's bonus. This figure is consistent with feedback from previous years but slightly higher than the figure for bankers in London, where only 33 per cent would seek a change if disappointed. But there might not be enough jobs in the market to meet bankers' expectations, said Mark O'Reilly, managing director of Astbury Marsden Asia Pacific. "Despite people's indication that they would resign, we don't necessarily see them making a move," he said. The survey indicated that local bankers' expectations were relatively out of touch with reality, O'Reilly added. Indeed, local bonuses could fall by 30 per cent from 2010, given the sector's poorer performance in the second half of last year and the bleak economic outlook ahead, said Jerry Chang, managing director of Barons & Company, a headhunting firm. Although the local financial services industry has performed well compared with other financial centres, there is a growing understanding that bonuses outside London and New York are also declining. "Market uncertainty across the globe is impacting and may well mean no bonuses for many more banking employees this year," said O'Reilly. The survey also shows that only 5 per cent of employees would complain formally to their managers if disappointed with their bonus, compared with 36 per cent who would be prepared to resign if they were disappointed. This showed the risks that banks face when disgruntled employees resign without giving them a chance to win them back, O'Reilly said. "If the employee doesn't feel valued, or they feel that they are being taken for granted, there is the danger that they may look to change jobs even when the jobs market is weak," he said.

Chief executive hopeful Henry Tang Ying-yen says if he wins next month's election his administration would build an extra 40,000 cheap homes in the next five years and send more students to university. Tang says 30,000 of the subsidised homes would be public rental flats, while 10,000 would be built under the Home Ownership Scheme. They would come on top of the 75,000 flats promised by outgoing Chief Executive Donald Tsang Yam-kuen in his final policy address in October. "That will be the maximum amount of extra flats I can promise to provide," Tang said as he unveiled his policy platform for education and housing yesterday. "The proposal is [intended] to shorten the average waiting time for public housing applicants to be allocated a flat and to provide more affordable subsidised flats to eligible buyers." The government aims to offer a public flat to eligible applicants within three years of an application. Applicants may face a further wait if they turn down the first flat they are offered. Tang said the government should aim to actually allocate a flat within three years. He proposed offering a choice of two flats rather than one to applicants in an effort to reduce the waiting time. "My long-term goal is to shorten the average waiting time to two years by the end of my term in 2017, through finding adequate new land to build public housing," Tang said. The Home Ownership Scheme, which will provide 5,000 flats a year from 2016 for families earning between HK$20,000 and HK$30,000 a month, was resurrected last year after being suspended in 2003. The former chief secretary dismissed a plan by rival Leung Chun-ying to cool home prices through a pilot scheme to restrict the sale of new flats to Hong Kong residents. Tang said the best way to stabilise property prices was to increase land supply for development. He said Leung's proposal might damage the city's reputation as a free economy and would be difficult to enforce. On education, Tang promised to gradually increase the proportion of school leavers who would be offered subsidised places in degree courses from the current 18 per cent to 25 per cent by 2017. The government offers 14,600 degree places each year at the eight universities funded by the University Grants Committee. Tang said he did not have an exact figure for the number of extra degree places to be offered, but said the goal of increasing the number of students could be achieved by expanding universities and offering top-up degree programmes for students studying for associate degrees. He pledged to consider relaxing requirements for the repayment of tuition fee loans by graduates and said there would be no major reform of the education system during his administration. Tang plans to release his full policy platform today, the day nominations open for the March 25 vote by the 1,200-strong Election Committee that will choose the city's third chief executive.

The first mainland agent to be convicted of helping expectant mainlanders give birth in Hong Kong was jailed for 10 months yesterday. In Sha Tin Court, Xu Li, 29, was given a two-month sentence for breach of condition of stay, and eight months for making a false representation to an immigration officer. The Immigration Department expects to prosecute more suspects, having identified 40 mainland agents and 20 local intermediaries in a drive to counter cross-border deliveries without prior medical bookings. Principal Magistrate Andrew Ma Hon-cheung said such agents abetted mainland mothers-to-be in giving birth in the city. "Most of them have limited knowledge about maternity services in Hong Kong," Ma said. "Without the assistance and abetting by agents, it's believed that many mainlanders would not take the risk and give birth in Hong Kong without an appointment." Xu, a former babysitter from Hubei , helped her mainland clients book pre-natal check-ups, delivery services and hostels in Hong Kong, the court heard earlier. Ma said he took into account that Xu had operated alone, had pleaded guilty and was the first agent to be prosecuted. The maximum penalty for a breach of condition of stay is a HK$50,000 fine and two years' jail, while that for making a false representation to an immigration officer is a HK$150,000 fine and 14 years' jail. The first charge related to Xu providing services to an unidentified pregnant mainlander on December 28, while the second charge involved mainlander Li Xiuhui, who demanded ambulance services after she passed the Lok Ma Chau checkpoint on January 15. Xu was accompanying Li at the time. Agnes Chan Wing-han, assistant director of public prosecutions, told the court that officers arranged assistance on humanitarian grounds because Li's waters broke. She gave birth in Prince of Wales Hospital. However, Ma said that a deterrent sentence was called for, to stop agents risking others' lives for the agents' benefit. He said the public were "worried, concerned and even angered" by mainlanders who sought emergency deliveries through accident and emergency facilities. "Such an act poses a serious health and life risk to the mother and the baby," Ma said. "It also seriously affects the city's medical resources and manpower. The public is very dissatisfied that it deprives local pregnant mothers of obstetrics services." Wong Yin-sang, principal immigration officer of enforcement, said that mainland women who hired the services of such an agent - who is unauthorised to work in Hong Kong - might face three years' jail and a HK$350,000 fine. In separate cases, five mainland women, aged 21 to 38, were sentenced to jail terms of two to four weeks suspended for three years for overstaying from one to three months. They gave birth in hospitals between December and January. Veteran barrister Martin Lee Chu-ming QC said administrative measures were sufficient to curb the influx of mainland mothers-to-be. "There is no need to interpret or amend the Basic Law," said Lee, a member of the Basic Law Drafting Committee. "The key is that the Hong Kong government can co-operate with the mainland authorities to plug the gate at the source." While the public debate has been on the law's article 24, which states that Chinese citizens born in Hong Kong can enjoy the right of abode, Lee said the law was drafted with intent to leave the gatekeeper's duty with the central government. Legislator Raymond Ho Chung-tai, however, urged the government to consider a reinterpretation of the Basic Law to alleviate the problem.

Chief executive candidate Henry Tang Ying-yen on Tuesday announced details of his policy platform – which includes creating two top official positions to strengthen governance, scrapping appointed seats in the District Council and increasing the number of holidays for workers. In his new policy blueprint for the chief executive campaign, Tang highlighted the need enhance governance by boosting the cabinet system in Hong Kong. He explained that his plan would include creating the new positions of assistant chief secretary for administration and assistant financial secretary to help cope with Hong Kong’s difficult policy making decisions. He said the two new assistant secretaries would be positioned higher than the present 13 bureau chiefs and be responsible for liaising between different bureaus. In regard to political reform, Tang pledged to review the electoral system and to abolish appointed seats in the District Council in 2016. The former chief secretary also said he would suggest increasing the number of statutory labour holidays for Hong Kong workers from 12 to 17 a year.

Canadian oil explorer Sunshine Oilsands has set the price range for its up to US$700 million Hong Kong initial public offering, setting in motion the biggest IPO so far this year in Hong Kong. The company plans to sell 923.3 million shares in a range of HK$4.86-5.08 each, according to a term sheet for the deal seen by reporters on Tuesday. Including a greenshoe option to meet additional demand, the total IPO size could rise to HK$5.4 billion (US$696 million). Sunshine’s IPO will be the first major share sale to get off the blocks in Hong Kong in what is expected to be another slow year after demand for new listings slumped 42 per cent last year from the year before. A handful of companies have gone public in Hong Kong since the beginning of the year, with small deals that raised a total of about HK$1.58 billion. The company and its bankers started drumming up demand for the offering on Jan. 30 and will begin a roadshow to take orders for the deal on February 15. Pricing is slated for February 24, according to the term sheet.

While the rest of the world mourns the death of Whitney Houston, music fans in Taiwan are saying goodbye to a homegrown talent: Fong Fei Fei. Taiwanese news channels interrupted their programming when her death was announced Monday afternoon, although the 60-year-old singer and actress died Jan. 3 of lung cancer, her lawyer said. Ms. Fong, born Lin Chiu-luan, asked to keep her illness and death out of the limelight until all of her funeral arrangements were settled. Ms. Fong’s remains have been brought back from Hong Kong, where she resided for more than a decade, to her hometown in Dasi, Taoyuan County, in central Taiwan. Taiwan’s information minister Philip Yang called her “one of the most vital names in the Chinese entertainment industry.” The government is considering a tribute to air during the Golden Melody Awards, one of the Chinese music-industry’s biggest annual events. “Her music appealed to people of all ages,” he said. “She was a true legend.” Ms. Fong, who was named “best female vocalist” at Taiwan’s Golden Bell Awards in 1983 and 1984, also has fans in Singapore and Malaysia but never made it big among mainland-Chinese audiences. She earned the moniker of “Queens of Hats” for her signature headwear choices. “This news is absolutely shocking and devastating. Her death marks the end of an era,” said Nancy Chen, a Taiwanese banker who grew up listening to Ms. Fong’s songs, especially during times of heartbreak. “She was the kind of singer you felt you had a personal relationship with,” Ms. Chen said. “She was a friend who knew exactly what you needed to hear when you are down.” Social-networking sites such as Facebook, Weibo and Twitter were awash with messages to the late singer. Some fans paid their respects at the shrine where Ms. Fong’s urn is being kept, and even Taiwan’s president, Ma Ying-jeou, is said to have called Ms. Fong’s family to express his condolences. Lu Yu-li, an elementary-school classmate of Ms. Fong’s, recalled her as the daughter of a poor family and a shy, skinny girl who struggled with her grades. “She wasn’t the kind [of girl] you noticed, because she was very much an introvert,” said Ms. Lu. “At that time, no one really paid attention to her, and we had no idea she could sing.” Ms. Lu added that Ms. Fong dropped out after the second year of middle school to help shoulder the family’s financial burdens by performing at a local lounge. “Fong’s mother borrowed money to offer free tickets for friends and family to see her perform. This helped Fong propel herself to stardom,” Ms. Lu said. According to the official Fong Fei Fei website, Ms. Fong’s parting words were ones of gratitude: “I lived a happy and colorful life. Thank you for all those who accompanied me on this journey. In the life to come, I will sing for you the songs that I didn’t have a chance to sing in this lifetime.”

 China*:  Feb 16 2012 Share

Barack Obama greets Xi Jinping in the Oval Office of the White House yesterday after talks earlier with Joe Biden and Hillary Rodham Clinton. Vice-President Xi Jinping and US President Barack Obama held talks in the White House yesterday that are likely to boost the international stature of China's leader-in-waiting. At the same time, they were a test of Obama's ability to balance diplomacy with election-year pressures. Receiving Xi in the Oval Office, Obama said good ties between the United States and China were essential and helped the rest of the world. But he also urged China, with its growing influence, to live by global economic "rules of the road". "We want to work with China to make sure that everybody is working by the same rules of the road when it comes to the world economic system," Obama said, as Xi sat by his side for a photo call ahead of their Oval Office talks. "That includes ensuring that there is a balanced trading flow not only between the United States and China but around the world." The US leader said that on critical issues like human rights, Washington would "continue to emphasise what we believe is the importance of realising the aspirations and rights of all people". He said Washington wanted to manage tensions with China in a "constructive way" and to tackle key issues like Iran, the North Korean nuclear challenge and global economic crises together. Xi told Obama that he hoped his visit could help enhance understanding and expand consensus between the two countries, and he hoped to meet different sectors of US society during his visit. In taking his biggest step on to the world stage at a time of growing economic and military rivalry between the two nations, Xi, 58, has a chance to show he is capable of steering the crucial relationship with Washington. Beijing has carefully choreographed his visit as a rite of passage in China's once-in-a-decade leadership transition. He is expected to become head of the Communist Party later this year before taking over the presidency in March next year. Xi earlier met Vice-President Joe Biden and Secretary of State Hillary Rodham Clinton at the White House. He will meet business leaders and tour Iowa and California on his week-long trip. Biden acknowledged their two countries would disagree on some issues. "This bilateral relationship is one of the most important in the world," Biden told Xi. "We are not always going to see eye to eye." A smiling Xi said he hoped his trip would build on the progress made by Obama and President Hu Jintao during a state visit a year ago, in developing a "co-operative partnership based on mutual respect and mutual benefit". He said he looked forward to having "an in-depth and candid exchange of views." Xi arrived in Washington on Monday and headed to talks and dinner with US foreign policy veterans. They included former US secretaries of state Henry Kissinger and Madeleine Albright. Xi called for the US to objectively view China's development, to respect its core interests and the agreements signed between the two sides in the past four decades. "We hope the US side could view China in an objective and rational way, and adopt concrete measures to promote mutual trust, especially to properly and discreetly handle the issues concerning the core interests of China," Xi said. Xi appeared relaxed in the meeting, which was also attended by former Hong Kong chief executive Tung Chee-hwa, chairman of the China-United States Exchange Foundation. Xi is the highest-ranking Chinese official to visit the White House since Obama launched a new US "pivot" towards Asia in November to counterbalance China's increasing assertiveness in the region. Tibetan activists demonstrated outside the White House and the hotel where Xi stayed.

Chinese Air Force J-10 fighter jets take off during training in Lhasa, the capital of Tibet. China’s defense budget will double by 2015, making it more than the rest of the Asia Pacific region’s combined, according to a report from IHS Jane’s, a global think tank specializing in security issues. Beijing’s military spending will reach $238.2 billion in 2015, compared with $232.5 billion for rest of the region, according to the report. That would also be almost four times the expected defense budget of Japan, the next biggest in the region, in 2015, the report said. The new report was released as China’s Vice President, Xi Jinping, arrived in Washington at the start of a four-day visit to the U.S. that is seen as a prelude to his expected promotion to Communist Party chief in a once-a-decade leadership change in the fall. Mr Xi, who is also Vice Chairman of the Party’s Central Military Commission, is due to visit the Pentagon on Tuesday after meeting his counterpart, Joe Biden, and Presdent Obama at the White House earlier in the day. Ahead of the visit, he and other Chinese officials had expressed concern about the U.S. decision to refocus its military strategy on Asia last year, and complained of a “trust deficit” between Beijing and Washington. China says that its military spending does not pose a threat to any other country, and has repeatedly pointed out that it still represents a tiny fraction of U.S. defense spending. But the new research highlights what U.S. officials are worried about: That China is rapidly increasing its military spending without being sufficiently transparent about its strategic intentions in the region. Many of China’s neighbors have been alarmed in the last year or two by what they see as Beijing’s more assertive stance on territorial issues, especially over the South China Sea. China says its defense budget for 2011 increased by 12.7 percent to about $91.5 billion, but many defense experts believe its real military spending is much higher. IHS Jane’s put the figure for 2011 at $119.8 billion, and predicted it would increase by an average of 18.75 percent annually until 2015. “China’s investment will race ahead at an eye watering 18.75 percent, leaving Japan and India far behind,” said Paul Burton, senior principal analyst of IHS Jane’s Defence Budgets. He added that Taiwan’s defense spending was expected to have overtaken Singapore’s by 2015, while Vietnam and Indonesia were also forecast to increase military expenditure at a rate that exceeds GDP growth. Rajiv Biswas, chief Asia Pacific economist for IHS Global Insight, was quoted saying: “Beijing has been able to devote an increasingly large portion of its overall budget towards defence and has been steadily building up its military capabilities for more than two decades.” He continued: “This will continue unless there is an economic catastrophe. Conversely Japan and India may have to hold back due to significant economic challenges.” Responding to the report, the Global Times, a nationalist tabloid published by the Communist Party mouthpiece People’s Daily, did not dispute IHS Jane’s projections but warned against Western powers “with an axe to grind” using China’s military budget to promote the idea of a China threat. The aim of China’s defense modernization “is safeguard national unity and security,” the paper said (in Chinese). Adhering to the policy of coordinated development of national defense and the economy, investment in national defense has always occurred on a moderate and reasonable scale.”

A video clip about Chinese Vice-President Xi Jinping is being played on the giant Sony LED screen in Times Square on Feb 14, the day the visiting Xi meets US President Barack Obama and Vice-President Joe Biden. The 30-second video, titled Sino-American Friendship, a Witness to History, was produced by the Sino-American Friendship Association. It is being played every five minutes from 7 am on Feb 14 to 1 am on Feb 15.

European Commission President Jose Manuel Barroso (right), European Council President Herman Van Rompuy (left) and Premier Wen Jiabao pose for photos at the Great Hall of the People in Beijing on Tuesday. Chinese and EU leaders met for a major summit set to be dominated by Europe's debt crisis, as Beijing considers coming to the rescue of the embattled continent. Premier Wen Jiabao said on Tuesday his country was ready to increase its participation in efforts to resolve Europe’s debt crisis, after holding talks with EU leaders in Beijing. Wen also said China wanted to see Europe – its biggest trading partner – “maintain stability and prosperity (SEHK: 0803)”, a day after ratings agency Moody’s downgraded Italy, Spain and Portugal. “China is ready to increase its participation in resolving the EU debt problems,” Wen told journalists after meeting EU President Herman Van Rompuy and European Commission President Jose Manuel Barroso. Wen did not elaborate about how China would participate, but earlier this month he said Beijing was considering offering help through the International Monetary Fund or bailout funds. China has made clear its growing concerns over the crisis in Europe, repeatedly urging EU leaders to get a grip on the situation, which the foreign ministry said this week had reached a “critical juncture”. European leaders last year approached China, which holds the world’s largest foreign exchange reserves, to invest in a bailout fund to rescue debt-stricken states, but it has made no firm commitment so far. “Helping stability in the European market is actually helping ourselves … We have to keep import and export policies stable,” the premier said after talks with the visiting German Chancellor Angela Merkel earlier this month. Media had speculated Beijing would make its position clearer at the summit, which began on Tuesday and was expected to be dominated by the crisis in Europe. “The times we are living in are challenging and it is of utmost importance the European Union and China advance our common agenda and address global problems,” Van Rompuy told Wen during the summit. “We became so interdependent that change in the growth rate in one of the two strategic partners has a direct and palpable impact on the other one. Our economic destinies are interlinked.” The IMF warned last week that an escalation of the EU debt crisis could slash China’s economic growth in half this year. On Monday, Moody’s cast doubt over whether Europe’s leaders were doing enough to reverse the downslide when it chopped the debt ratings of Italy, Spain and Portugal. It also put France, Britain and Austria on warning, saying they were increasingly vulnerable to the euro zone crisis. Barroso and Van Rompuy will also hold talks with President Hu Jintao as part of the summit, which was originally due to take place in October, but had to be postponed due to the debt crisis. After the talks with Wen, Van Rompuy called for improved market access for European companies in China and better protection of intellectual property rights. “China will continue to fully meet its World Trade Organisation commitments,” Wen responded. “It will continue to expand market access.” Foreign firms frequently complain that Beijing favours domestic companies and squeezes them out of some markets, including lucrative government procurement contracts. EU trade commissioner Karel De Gucht, who said last month he is drafting a law in response to China’s protectionism in public markets, is taking part in the summit. De Gucht has been a fierce critic of China’s restrictions on rare earths exports, 17 elements crucial in the manufacturing of many high-tech products such iPods and flat-screen televisions. Wen also said it was urgent to prevent war and chaos in Syria and vowed to work through the UN to seek an end to civil strife in the country. His comments came days after China and Russia blocked a draft UN Security Council resolution that backed an Arab plan urging Syrian President Bashar al-Assad to quit amid his government’s violent crackdown on opposition groups. Wen, briefing reporters at the start of the summit, added that Beijing did not seek to protect any party, including the government of Syria. “On the issue of Syria, what is most urgent and pressing now is to prevent war and chaos so that the Syrian people will be free from even greater suffering,” Wen said in response to a question from reporters. “To achieve this objective, China supports efforts consistent with the UN charter and principles and we are ready to strengthen communication with all parties in Syria and the international community and continue to play a constructive role. China will absolutely not protect any party, including the government of Syria.” Beijing has come under fire for blocking the draft UN Security Council resolution, a stance it has defended as being consistent with its practice of not interfering in the internal affairs of other nations. Van Rompuy said all UN Security Council members should act on Syria. On Monday, UN human rights chief Navi Pillay accused Syrian President Bashar al-Assad of launching an “indiscriminate attack” on civilians to end pro-democracy protests and said he had been emboldened by the failure of the Security Council to condemn him. Pillay told the 193-nation UN General Assembly the February 4 veto by Russia and China of a draft Security Council resolution condemning the Syrian government and endorsing an Arab League plan for Assad to step aside had encouraged Damascus to intensify its attacks. Syria’s uprising, in which the United Nations says more than 5,400 people have been killed, has become one of the bloodiest of the Arab Spring revolts sweeping the region since the end of 2010.

Chinese companies more than doubled their investment in European firms last year, according to a new study, a welcome development for Continental policy makers looking for new sources of capital and growth. China's total overseas direct investment slipped in 2011 from a year earlier, and investment in the U.S. fell sharply, but investment in European firms surged to $10.4 billion, from $4.1 billion in 2010, according to estimates by A Capital, a private-equity firm based in China and Paris that takes stakes in European companies alongside Chinese investors.

Vice-President Xi Jinping seeks input from US officials with China ties - Chinese students line up to welcome Vice-President Xi Jinping in Washington on Tuesday. He is scheduled to meet with the US president and vice-president on Tuesday. After a tiresome cross-Pacific flight, Vice-President Xi Jinping began his five-day US tour with a special lesson listening to senior US officials who either helped found or preserved China-US ties. The seven special guests included former US Secretaries of State Henry Kissinger and Madeleine Albright, former US Treasury Secretary Henry Paulson, former assistants for National Security Affairs Brent Scowcroft, Zbigniew Brzezinski and Samuel Berger, and former US Labor Secretary Elaine Chao. Gathering for a dinner in the hotel where Xi is staying, the vice-president began his welcome with a tribute to the heavyweights, thanking them for continuous contribution to the China-US ties, even after they left their posts. "It's the first activity for my current US trip, and I look forward to meeting President (Barack) Obama and Vice-President (Joe) Biden tomorrow. I will raise a lot of questions to you tonight and hope to get early inspiration from you on the current visit," Xi said with a humble smile. He also urged the "US people of vision" are not to let the election factors to leave "regretable sequelas" on China-US tie in the election year. Xi also said the US side should look at China in an objective and sensible way, to take concrete measures that are conducive to enhancing mutual-trust with China, and properly handles issues related to China's core-interests with caution. Kissinger, known as the architect of the China-US relations after a secret visit to China in 1971, said he recently learned of Xi's opinions of China's ties to the US. The former secretary of state said those views including those in a written interview published in The Washington Post on Monday "are fundamentally important for the future of Chinese-US relations". Kissinger said those former officials represent the political values of both parties in the US during the past 40 years. "The colleagues here might be divided during the upcoming US election campaign later on this year, yet they are united on the importance of China-US relations," Kissinger said. "China and the US face the common challenges to seize the opportunities to promote peace and stability in the Asia-Pacific area and all over the world," he said. "We will do our best to make you feel welcome and make you feel we (China and US) have common destiny." Xi arrived in the US on Monday afternoon on a formal visit, which analysts said are all important for the stable development of China-US ties in a turbulent US election year. This year also marks the 40th anniversary of the China visit by former US president Richard Nixon's in 1972 and the declaration of the Shanghai Communique, which helped lay the foundation of China-US ties. General Brent Scowcroft, who was also present at the gathering on Monday, told China Daily in a recent interview that "China and US have very different perspectives and we have different forms of governments. But rather than shouting at each other and criticizing each other, we should seek to understand that something is not going to change in the short run, like the way we run our own country and the way China runs itself. "And we should seek to understand each other and each other's point of views. But we don't have to agree on everything in order to have a good and solid relationship. Understanding is the important thing, not agreeing," Scowcroft said. Experts said the gathering on the first day of Xi's visit to North America conveys the significance of the China-US ties. Li Cheng, senior fellow with the Brookings Institution in Washington, said "the Chinese leader wants to convey the message that China in general, and himself in particular, truly value personal friendship, which is the foundation of any bilateral relationship". "In return, those US China hands may convey to Vice-President Xi their shared view that the constructive and cooperative Sino-US relationship is not a matter of choice, but a necessity; not a historical coincidence, but should be a future trend. The economic prosperity and peace in the 21st century world requires the US and China to work together rather than compete against each other." Douglas Paal, vice-president for studies at the Carnegie Endowment for International Peace in Washington, said "Xi is smart to listen to those people who have invested in constructive relations with China, but also understand the difficult challenges we face as well as some of the ways to overcome them."

The growth of China's machinery exports will slow this year because of the weakening global economy and increasing protectionism in developed countries, Cai Weici, deputy-president of the China Machinery Industry Federation, said on Monday. A production line at Yuchai Machinery Group Co Ltd, a major machinery producer in Yulin, Guangxi Zhuang autonomous region. The China Machinery industry Federation said that a weak global economy is expected to affect China's machinery exports this year. The federation said this year's growth in machinery imports and exports would be about 15 percent each, less than in 2011. According to the General Administration of Customs, machinery exports rose 24.5 percent last year to $321.8 billion, while imports rose 21.2 percent to $309.4 billion. Cai said that the growth rate of machinery exports would continue to fall in the coming years. "Europe is an important market for China's machinery industry, so its economic gloom has led to a shrinking market and lower exports," said Cai. "Further, increasing trade frictions will worsen the difficulties for exports." He said that the increase in China's machinery exports in recent years had made some foreign companies feel "threatened" in their domestic markets. Those concerns had led to trade actions against China, such as recent US anti-subsidy and anti-dumping probes against Chinese wind power equipment producers. "Chinese companies should be prepared for more trade disputes and learn from them," said Cai. "The central government also needs to work harder on protecting domestic industries when it confronts trade barriers." "Although we had (an industry) trade surplus of $12.4 billion, it mainly came from the downstream production of the industrial chain," Cai said. He said Chinese machinery companies should invest more to develop high-end products, which are the "growth sector" but also the segment where global competition will intensify. According to the National Bureau of Statistics, the machinery industry accounts for about 19 percent of China's industrial output. Because of rising costs and an unstable export market, among other factors, the industry's annual profit growth in 2011 sank to 21.1 percent from 55.6 percent a year earlier. The federation has forecast that profits would only grow about 12 percent this year. Cai said the number of orders declined throughout 2011. As of the end of last year, the growth rate in orders had fallen to an annual 6 percent, compared with 30 percent in 2010. The federation has forecast that the industry's output and sales would each grow 18 percent this year, compared with about 25 percent last year and 34 percent in 2010. Excess domestic supplies will persist this year, according to the federation, adding to companies' difficulties in making a profit.

Hong Kong*:  Feb 15 2012 Share

Buyers are cashing in on collectable banknotes marking the centenary of the Bank of China, some selling HK$100 bills they bought for HK$150 at prices of HK$500 each and more. The bank started selling 1.1 million single HK$100 notes, 100,000 sets of three uncut notes, and 20,000 sets of 30 uncut notes for HK$150, HK$600 and HK$6,000, respectively, yesterday. The bills are on sale until next Monday, and buyers can pick up a maximum of two single notes. The notes are legal tender but are not intended for general circulation. Outside the branches, buyers were offering a crisp HK$1,000 bill for two notes. One woman reported selling a pair of notes for HK$1,300, while users of online shopping portal Taobao.com were asking up to 1,500 yuan (HK$1,847) for a single note. Many people queued overnight to pick up the notes, either as collectables or with the intention of making a quick profit by reselling them. Hundreds queued outside the Tai Koo Shing branch yesterday, as two Putonghua-speaking dealers called out to customers coming out of the bank, offering HK$1,000 for two notes. "We only buy from those who would like to sell, and we'll sell them elsewhere," said one of the dealers. One seller asked whether the HK$1,000 notes were fake but was happy to sell in the end. "I bought the notes for HK$300 and sold them for HK$1,300," she said. "I've made HK$1,000. It's great!" But Woo Chung, who queued up from 7.30am to get his hands on the notes, had no intention of selling. "Only the large sheets are worth money," he said. "I'm only buying it because it's special and quite cheap." And not everyone was satisfied. The office of Yau Tsim Mong district councillor Chan Wai-keung said there had been reports of people jumping the queue, leading to uproar at the branch at Phase Two of Olympian City in Tai Kok Tsui. The bank, founded in Shanghai in February 1912, is the only one in the mainland that has been continuously operating for 100 years. Besides the Hong Kong notes, it is selling commemorative bills with a face value of 100 patacas in Macau and special-issue stamps on the mainland. The Hong Kong bills feature images of the Great Wall and the Bank of China Building in Beijing on the front, and the Bank of China Tower and the Hong Kong skyline on the back. The bank is selling single notes at 50 of its branches, while the multi-note sets are for sale by subscription online or by application at branches.

One of the city's biggest phone companies has made a pricing U-turn as firms battle to make the best of new rules on unlimited data-use packages. SmarTone reversed its decision to scrap its unlimited data plan for smartphone users after rivals CSL and 3HK vowed to continue offering unlimited deals despite new rules set by the telecoms watchdog Ofta. Ofta ordered companies to stop marketing smartphone packages as unlimited, or to clearly set out hidden pitfalls in such deals in contracts and in promotional material. The guidelines, which came into force yesterday, are a response to consumer complaints about restrictions on unlimited service plans. While PCCW (SEHK: 0008) and China Mobile (SEHK: 0941, announcements, news) will scrap unlimited plans immediately, CSL, 3HK and SmarTone will instead impose restrictions on heavy data users. SmarTone's U-turn was pilloried on internet forums, with users saying they would have stuck with the company even if it had gone ahead with plans to impose a 2 gigabyte limit on data use. CSL, which runs One2Free and 1010 and boasts 3.2 million subscribers, will keep its unlimited plans until the end of this year. However, both existing and new clients who have used more than 5GB of data in a month could face delays accessing the web when data traffic in their area is busy. "CSL intends to move to volume-based pricing before the end of 2012. However, we realise it is a transition that needs time," chief marketing officer Mark Liversidge said. Those who have used their 5GB allowance will have a lower priority when accessing the network, and may face a wait at busy times. Normal users were unlikely to be affected, but those using high-bandwidth applications could feel the change, Liversidge said. The company was fined HK$130,000 in 2010 when it throttled transmission speeds of those using the most data as part of its "fair-use policy", a set of restrictions that consumers were not aware of. SmarTone announced it would scrap "unlimited" deals two weeks ago, but has now rolled out a plan similar to CSL's, with those who have used more than 5GB of data given a lower priority when accessing the network. Users of 3HK would see download speeds fall if they breached data-use limits, which would be 3GB or 5GB, it said. PCCW and China Mobile will introduce a 5GB limit on data. Professor Lau Wing-cheong, director of Chinese University's Mobile Technologies Centre, said it was hard to assess the impact on phone users when telecoms providers did not spell out the details of their priority schemes. Data-transfer speed could be affected by several factors, and it was usually difficult for an end user to trace if they were being given lower priority by a provider, he said. Consumer Council chief executive Connie Lau Yin-hing said the U-turn risked damaging SmarTone's reputation. "It is confusing for consumers when it changes its policy within so short a time," she said.

Isolated from the rest of Hong Kong for 60 years, part of a border zone will be opened to the public on Wednesday - but people who live there have mixed feelings. While the removal of barriers is welcome as their freedom of movement is restricted - and landlords are especially excited about an expected influx of tourists and visitors - some fret about the loss of peace and quiet and idyllic scenery. Environmental damage can be seen at both ends of a 35-kilometre strip running south of the boundary with Shenzhen. The restricted zone was established by the colonial government in 1951 amid political tension following the Communist Party seizing power on the mainland and British and Chinese soldiers fighting each other in the Korean war. The zone was intended as a bulwark against people fleeing the mainland. People have to apply for a permit to enter the zone. The first phase of the opening up includes the Mai Po wetlands in the west and six villages in Sha Tau Kok in the east. Sha Tau Kok town and the famous Chung Ying Street - one side of the street is part of Hong Kong, the other side is part of Shenzhen - will remain closed for security reasons. The middle section of the border zone will open up from 2014. Alan Cheung Yuk-lun from Tong To Ping Tsuen, one of the villages opening up in Sha Tau Kok, has ambitious plans. Backed by a rural committee, he founded Sha Tau Kok Farm (Organic) two years ago to buy or rent land from villagers to set up a recreational site, which he says is a HK$100 million investment and covers 40 hectares - as big as the West Kowloon Cultural District. "The government won't allow large-scale residential development, so we think ecotourism is a way out. I hope the farm can create jobs for locals and stimulate the area's economy, which has been so depressed," Cheung said. The project, partially completed, comprises plots of farmland, a small zoo, a war-games area, and a seafood farming area. Many residents want officials to open up Sha Tau Kok town. Wan Wah-on, a representative of Tam Shui Hang village, said: "The town is desolate. There are not enough care services for old people and recreational facilities for the young." "We living at the frontier feel we have been unable to share in the fruits of the city's economic development. Because of the access restrictions, many have moved out." Chung Ying Street was once the top spot for mainlanders to shop for foreign goods before the mainland opened up in the early 1980s. The Security Bureau says it has no plans to open up the town because of smuggling and illegal immigration. Officials are also concerned at the environmental impact of opening up. An Environmental Protection Department spokesman said it was investigating Sha Tau Kok Farm to see if there had been illegal dumping. Farm managers deny such activity. Environmentalists are also worried that the opening up will threaten the eco-sensitive Mai Po wetlands. At least two cases of environmental damage were found in the bird haven in the past few months. At San Tin, near the nature reserve managed by WWF, fish ponds were converted to become a venue for skateboarding on water. Planning and lands officials say they are taking action against unauthorised structures. In another case at Lin Barn Tsuen, just outside the Mai Po frontier, lands officials found that illegal dumping took place at least twice on a site that is earmarked for private housing development. Alan Leung Sze-lun, senior conservation manager for WWF (Hong Kong), said: "We are deeply worried that a false vision of the frontier becoming a wonderland waiting for extensive development will bring eco-vandalism." Under a government plan, the border zone will be largely preserved as a green buffer between developments on the Hong Kong side and Shenzhen. Most of it will be zoned for nature conservation, recreation and ecotourism. A few sites will have low-rise housing. Several business areas are planned near border crossings at Lok Ma Chau and Man Kam To.

The government is under growing pressure to release records relating to the 2001 arts hub design competition at the centre of the conflict-of-interest controversy involving chief executive hopeful Leung Chun-ying. International architect Dr Ken Yeang, who is caught up in the row, and more politicians across the spectrum said the government should release its records given the confusion over Leung's role in the contest. "The records should be released and made transparent," the Malaysian architect, best known for his green designs, said in an e-mailed reply to the South China Morning Post (SEHK: 0583). On Saturday, the Democratic Party said it might force full disclosure by invoking the Powers and Privileges Ordinance. Chan Yuen-han, vice-president of the Federation of Trade Unions, said the government should release the records. Asked if officials had breached their political impartiality, Chan replied: "The government shouldn't have disclosed [information] before the election nomination period. This only brings itself trouble." Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said it was "not good" for officials to leak information to selected newspapers as "government sources". "If they want to say something, it is better to say it officially," Tam said. The government was accused of timing the announcement to favour Leung's main rival for chief executive, former chief secretary Henry Tang Ying-yen. It said it released the confidential information only to "answer media inquiries" and "to protect the public interest". A government press release on February 8 said Leung, when serving as a juror in a 2001 design contest for the West Kowloon Cultural District, failed to declare a business connection between his firm, DTZ, and Yeang's team. The release said Leung's failure to declare interests in time resulted in Yeang's scheme being disqualified. Leung says he did not know a DTZ director gave the local company working with Yeang's firm unpaid advice on land values. Yeang says he does not know Leung and that his staff might not have informed Leung about naming him an adviser. Civic Party leader Alan Leong Ka-kit said the piecemeal information revealed so far had created an environment conducive to Leung. Leung yesterday renewed his call for the records to be released. Tang said it was up to Legco to decide. Tommy Cheung Yu-yan, of the Liberal Party, which supports Tang, said it would decide on the call for disclosure today. The issue has been clouded by conflicting information over the past week: the government press release, anonymous government sources talking to some newspapers, and comments from jurors in the design contest and Yeang. Yeang said yesterday he was told after the contest that the organisers had put his scheme into a pile categorised as "sustainable schemes", and a juror told him that he was not given the chance to see Yeang's design. This contradicts juror Patrick Lau Sau-shing, who said all jurors were shown all the schemes, including the ones later disqualified. Yeang again denied accusations in Apply Daily that he gave "extended benefit" to Leung. Apple Daily said NHY, a mainland company of which Yeang is a director, took part in the same residential project in Beijing with Leung's DTZ. Yeang said he did not design the project and was unaware DTZ was its property manager. The government did not respond to four questions from the Post. One was if then-chief executive Tung Chee-hwa, as has been reported, stopped then-secretary for planning and lands John Tsang Chun-wah following up Leung's conflict-of-interest problem in the design contest.

The Consumer Council has taken the unusual step of warning the public about unscrupulous sales tactics at a Hong Kong beauty salon, after angry customers racked up 61 complaints against it over transactions totalling HK$8.5 million. On Monday morning, the council reprimanded the Q&A+ Health Spa for its repeated use of “unscrupulous sales tactics, involving misrepresentation and high-pressure sales”. Q&A+ has shops in Mong Kok, Yuen Long, Hung Hom and Tsing Yi. Council chief executive Connie Lau Yin-hing said on Monday, “before naming a company we need to go through various exercises to make sure we are being fair. This company used prolonging and delaying tactics when the council asked them a number of times to improve. But they would not change, so now we are naming them.” No comment was immediately available from Q&A+. William Chan Che-kwong, chairman of the Consumer Council’s trade practices committee, said the HK$8.5 million in disputed fees was a record for one business, in the council’s experience. “We hope customers will conclude that, while beauty is important, protecting their wallets is more important.” Customers’ complaints about Q&A+ to the council, and to police, include being promised services and benefits that did not exist, high-pressure sales tactics that amounted to extortion and being pressured to sign credit card payment slips without being able to verify the transaction amounts. Certain advertisements posted by Q&A+ were found to be highly misleading or outright false. The 61 complaints were lodged with the council in 2010 and last year, and about half were about sales practices. The council cited the case of “consumer A”, who paid HK$71,280 for a “spokesperson programme”. The staff told her it would qualify her to join a slimming contest in which the winner would receive a prize of HK$500,000. If she failed to win, they said, she would still be awarded HK$100,000, which would cover all her expenses. It turned out there was no beauty contest, but by the time consumer A learned that, she had been pressured and misled by a variety of means to run up a debt of HK$540,000 on nine credit cards – including some charges that were dubious. In the worst single case, one customer spent HK$3.7 million on entry fees for such non-existing competitions, to be a “spokesperson” for the company, the council said. The council said no charges were pending against Q&A+, because Hong Kong law targets illicit products, but not unscrupulous practices. Lau said amendments to the Trade Description Ordinance will be discussed in the Legislative Council in the coming months, with a view to making it apply to services.

Hundreds of people queued for hours outside Bank of China outlets on Monday to buy a set of commemorative banknotes marking the bank’s centenary. Fifty of the bank’s branches across the city were offering a total of 1,220,000 sets of the notes starting from Monday. Almost all of them – 1,100,000 sets – are single notes to be sold for HK$150. There are 100,000 sets of uncut three-note sheets on offer for HK$600, and 20,000 sets of uncut 30-note sheets at HK$6,000. Local media reported hundreds of people queued up outside the bank’s branches overnight, including some with sleeping bags. Some buyers told local media they would immediately sell the notes to buyers or shops for about three times their original prices. The new notes’ design is dominated by a celebratory red tint. Their front side shows the Great Wall and the Bank of China building in Beijing. The back is a landscape of modern Hong Kong and the Bank of China Tower in Central.

 China*:  Feb 15 2012 Share

Chinese VP arrives in Washington for visit - Chinese Vice President Xi Jinping (L, front) is welcomed by U.S. Deputy Secretary of State William Burns upon his arrival in Washington, capital of the United States, Feb. 13, 2012. Xi Jinping arrived in Washington Monday afternoon, kicking off his official visit to the United States. Chinese Vice President Xi Jinping arrived in Washington Monday afternoon, kicking off his official visit to the United States. Xi made the visit as guest of U.S. Vice President Joe Biden. In a written statement issued upon arrival at the airport, Xi said the purpose of his visit is to implement the important consensus reached by President Hu Jintao and President Barack Obama during Hu's visit to the United States in January last year and to advance the building of the China-U.S. cooperative partnership based on mutual respect and mutual benefit. "I have brought with me the sincere greetings of President Hu Jintao and the Chinese people to the American people," he said. Forty years ago, he said, thanks to the common effort of the older generation of Chinese and American leaders, the door of exchange was reopened between China and the United States, marked by then U.S. President Richard Nixon's visit to China and the issuance of the Shanghai Communique. "Since then, our relations have moved forward in spite of ups and downs. This has brought enormous benefits to our two countries and two peoples, and has had a positive, far-reaching impact on peace, stability and prosperity of the Asia-Pacific region and the world at large," he said. As the international situation experiences complex and profound changes, China and the United States have more extensive common interests and shoulder more important common responsibilities, he said. "Whether we can seize opportunities, tackle challenges and build a cooperative partnership at the new historical starting point matters to the future of our two countries and the world as a whole," he said. "This is what I would like to explore with my American hosts in an active and practical manner during the visit, so that we can jointly promote the sustained, healthy and stable development of our relations in the new era," he said. Xi's U.S. tour has attracted worldwide attention. Sources said that besides attending a series of high-level talks and meetings in Washington, he will also travel to Iowa in U.S. Midwest and Los Angeles on the west coast. The United States is the first leg of Xi's three-nation tour. He will also visit Ireland and Turkey.

Chinese Vice President Xi Jinping is about to be the US's biggest frenemy. Which is why Vice President Joe Biden, Gov. Jerry Brown and Mayor Antonio Villaraigosa are all gathering in LA Thursday and Friday for Xi's visit to the city. Xi, who has risen the ranks of the Community Party, is widely considered to be the next president of China. The dignitary will arrive with a delegation at LAX on Thursday, attend a welcome luncheon hosted by Villaraigosa, tour the Port of LA and attend a US-China economic and trade forum, Patch reports. And it makes sense that Villaraigosa plans to wine and dine Xi. China is the port of LA's top trading partner for exports and imports totaling $120 billion, the Daily Breeze reports. And, according to the Mayor's office, Chinese-owned local businesses support about 600 jobs and pay $32 million in wages to Angelenos. The mayor plans to welcome a new, undisclosed Chinese company to the city and to sign new agreements with Chinese delegates, including an agreement to open a second LA Inc. tourism office in China, the Los Angeles Times reports. VIllaraigosa, who recently visited Chinese officials in December, is also expected to seek Chinese investment in a California high-speed rail. However, Xi's visit will not be met without protesters. The Tibetan Association of Northern California is planning to deliver busloads of protestors from the Bay Area. In fact, according to the Associated Press, "one aspect of Xi's visit will be to gauge public perceptions of China in the U.S. and seek ways of overcoming a lack of trust between the sides, a task complicated by disputes over trade, Taiwan, human rights and international concerns such as intervening in the ongoing violence in Syria."

Deng's daughter Nan points out the sights in Shenzhen in 1992. Guangdong media began a belated campaign yesterday to commemorate the famous southern tour of Deng Xiaoping in 1992. But the timing of the stories, which come weeks after the 20th anniversary of the late leader setting off on his trip, has raised eyebrows. Some observers think the campaign is an attempt to boost the reform model of Guangdong party chief Wang Yang at a time when his chief rival, Chongqing party boss Bo Xilai, is embroiled in controversy. But others say there are more benign reasons for the stories. The Southern Metropolis News reported on its front page that a forum to commemorate the 20th anniversary of Deng's historic visit to southern China would be held in Shenzhen on Saturday. The paper plans a series of news features with the theme "The Choice, 1992", starting today, reviewing the city's development over the past two decades. The paper devoted no coverage to Deng's tour on January 18, widely regarded as its anniversary, the day he set off for Shenzhen from Wuhan in Hubei province. The commemoration of Deng's tour - which helped revive the mainland's economic reforms, stalled after the June 4 incident three years earlier - comes about a week after Wang Lijun, a close ally of Bo's, fell from grace in what has become a riveting political drama. Guangdong-based party mouthpiece Nanfang Daily published commentaries yesterday urging people to praise Deng's spirit of reform and to persist with scientific development. Wang Yang has called for "free thinking and mind liberation" to remove red tape and obstacles to economic development, and for Guangdong to "be a vanguard of scientific development", since he took over as provincial party boss in 2007. Official mouthpieces in Shenzhen, such as the Shenzhen Special Zone Daily and the Daily Sunshine, also published front-page stories. Guo Zhongxiao, a well-known mainland commentator on Shenzhen affairs, was among those who thought the timing was odd. Mainland media has tended to downplay the anniversary in past years, as Deng's calls for bold reforms could embarrass regional leaders, Guo said. "The latest media campaign could stress Guangdong's vanguard position in reform and help to build up Wang's image, but it is not necessary to link the campaign with the political drama in Chongqing." Some people view a recent trip to Guangdong by Premier Wen Jiabao as a nod to Wang. Veteran China watcher Johnny Lau Yui-siu said: "Wen Jiabao also mentioned Deng's southern tour when he accompanied German Chancellor Dr Angela Merkel to Guangzhou earlier this month. "Because Deng's southern tour lasted until February 1992, it doesn't matter if it was commemorated in January or this month." A retired Guangdong propaganda official who declined to be named said the delay was because Guangdong had not received Beijing's approval for the reports until last month, and it took a few weeks to prepare them. Wang and Bo have been widely regarded as political rivals jockeying for a top party position. The media in Guangdong and Chongqing were engaged in a war of words early last year over the two places' different models of development.

Chinese City Confiscates iPads As Trademark Fight Continues - Apple’s battle over the rights to use the ‘iPad’ name in China entered a new phase after dozens of iPads were confiscated from retailers in a northern Chinese city. An inspection team under the Xinhua District Administration of Industry and Commerce in Shijiazhuang, an industrial city roughly a four-hour drive southeast of Beijing, confiscated 45 iPads last week after receiving a trademark violation complaint from Shenzhen-based Proview Technology, the state-run Hebei Youth Daily newspaper reported Monday (in Chinese). An employee at the Xinhua District AIC office who would only identify himself by his surname Wang confirmed that an inspection team had confiscated a number of iPad 2s from retailers within the district on Thursday and Wednesday. Rumors that regulators were cracking down on sales of the iPad prompted Apple resellers in other parts of the country to pull the popular tablets from shelves, the Hubei Youth Daily added (see summary in English here). Apple declined to comment. The action came just days after Proview (Shenzhen), a Chinese affiliate of Hong Kong manufacturer Proview International Holdings Ltd., announced that it had filed for a temporary restraining order in a Shanghai court to stop Apple from using the iPad name in mainland China. Proview (Shenzhen) registered the iPad trademark in China in 2001 and says it uses the name on some products. It’s not clear whether the Shijiazhuang case heralds a wider crackdown on iPads in China, where Apple devices generate enough demand to spark the occasional violence in front of the Californian company’s official retail stores. Proview has registered a complaint against Apple with the Beijing branch of the AIC, according to the state-run Xinhua news agency, though so far the Beijing AIC appears not to have taken action. In any case, the revelation that authorities in Shijiazhuang had begun confiscating iPads did not appear go over well with Apple fans on popular Twitter-like microblogging site Sina Weibo, where the news was greeted with more than a few animated thumbs-down icons. “The AICers have been waiting for this day, so they could snatch [iPads] for their wives and children,” wrote one microblogger, repeating a joke that spread widely on the site. Beijing-based intellectual property lawyer Stan Abrams wrote on his blog on Monday the Proview had to put itself in good position to cash in its ownership of the iPad name. “This is starting to look very ugly for Apple, and every day this goes on, the price for that trademark is probably going up,” he wrote. “Perhaps Apple’s legal team knows something that we don’t, but even if they think they can win these legal challenges, the commercial disruptions in the meantime are going to be significant.”

Early Hardship Shaped Xi's World View - Rural Experience During China's Cultural Revolution Upended Heir Apparent's Privileged Political Lifestyle - Xi Jinping will arrive in the US Monday evening on a diplomatic and trade visit. The WSJ's Jeremy Page tells Deborah Kan how Xi's past may give us insight into the man expected to be China's next leader. The man set to arrive in Washington on Monday as China's presumptive next leader began his ascent to power, and honed his political outlook, as a teenager living in a spartan cave dwelling in the dusty hills of Shaanxi province. It was here in the village of Liangjiahe that Xi Jinping (pronounced shee jin ping) spent seven of his most formative years after being sent into the countryside at the age of 15 along with millions of other students during Chairman Mao Zedong's Cultural Revolution. And it was here, while digging ditches and extracting methane from pig waste, that he made the decision to pursue a political career—despite the persecution of his own father, Xi Zhongxun, a revolutionary hero purged and imprisoned by Chairman Mao. Family friends say the young Mr. Xi's personality was shaped to a large extent by his father, who furnished him with an inside view of party intrigue, a sense of mission and entitlement, and a network of contacts in the political elite, many of whom hold top civilian and military posts today. But it was his sudden transition from an urban life of relative luxury to one of rural hardship that left him with an acute self-awareness, an ability to relate to people from many walks of life, and a fierce ambition to reclaim his family's status, the friends say. This rare combination of elite party pedigree, populist sensibility, and earthy pragmatism is fueling hopes in China and the U.S. that Mr. Xi will galvanize an unwieldy collective leadership, and set a fresh timbre for relations between Beijing and Washington over the next decade. Mr. Xi, now 58 and vice president, hasn't spoken in public about his family history since he emerged in 2007 as the favorite to take over from Hu Jintao as Communist Party chief in a once-a-decade leadership change this fall. Residents of Liangjiahe are also reluctant to talk about it: When a Wall Street Journal reporter visited last week, they refused to answer questions or to allow any filming. The police soon arrived and escorted the reporter out of the village. Elsewhere, however, a handful of Mr. Xi's family friends were willing to discuss his past, on condition of anonymity, and they all pointed to his time in the countryside as a turning point in his life—and the origin of his political ambitions. "There were many people, like myself, who decided to have a good time, to drink, play cards and chase girls," says one friend from another elite family who was also sent into the countryside in 1968. "Then there were a few people who became much more focused, who thought that if their parents could not help them, they should help themselves, and learn the basic skills of leadership." The friends described the life of relative luxury they enjoyed as children of the revolutionary elite in the 1950s and 60s, when the party divided its members into numbered ranks and allocated privilege accordingly. State media have described how Xi Zhongxun was so frugal that he forced his sons to wear their elder sisters' ragged castoff clothes. Still, his family was ranked in one of the party's top categories, members of which lived in large courtyard houses in Beijing, had nannies and cooks, and were driven around in Soviet-made cars. They went to elite schools and had access to foreign books and films. They also never wanted for food, even during the famine that claimed millions of lives during the 1958-61 Great Leap Forward—a disastrous attempt to raise industrial production. "They were told they were going to be the next leaders of China," said one of the friends. All that changed for Xi Jinping in 1962 when his father was placed under house arrest for supporting publication of a book deemed critical of Chairman Mao. His family was forced to move to a much smaller house, and lost almost all official perks. When the Cultural Revolution began in 1966, schools were closed, and students were ordered to join Mao's radical Red Guards. Mr. Xi and most of his friends were unable to join because they were too young, so they spent much of their time reading books borrowed or purloined from deserted schools and libraries. "We read a lot of French and Russian romantic novels," recalls one of the friends. "If one of us had a book, then we would all hear about it and try to borrow it, and read it in a few hours." That friend recalls reading Jack London, Mark Twain, the memoirs of Charles de Gaulle and even Richard Nixon's 1962 autobiography Six Crises, but he also remembers that others, including the young Mr. Xi, spent a lot of time reading Marx and Lenin. By 1968, the political atmosphere had become more dangerous, as purges spread and the Red Guards became more violent. So when Chairman Mao tried to restore order by commanding students to go into the countryside for re-education in 1968, many elite families jumped at the chance, and tried to ensure that their offspring went to areas where they had friends or relatives. Mr. Xi was sent in a group of 20 to 30 young teenagers, mostly from military families, to Liangjiahe in the Yan'an region of Shaanxi, where his father was widely renowned for helping establish a partisan base for Communist forces in the 1930s. After about a year, most of his group left to join the army, according to his own account in an essay published in 2003. He describes that period as being "very lonely"—something else that sets him apart from his peers, most of whom spent their time in the countryside surrounded by other urban youths. He admitted in another essay that he made a poor impression on villagers at first. He avoided work, and could not bear the fleas. He left the village at one point, but was persuaded to return by relatives. With no option but to embrace village life, Mr. Xi describes how he gained a sense of self-confidence, and an appreciation for the realities of China, as he began to interact with villagers. "My cave soon became the center of the place," Mr. Xi wrote in his 2003 essay. "Every evening, young and old would flock to talk about all kinds of things, whatever they felt was new. Gradually even the local party secretary came to discuss his business." Local party officials, for their part, have been quoted in state media describing Mr. Xi as a hard worker who spent much of his time buried in the books he brought with him from Beijing. His efforts to integrate were rewarded when local officials first helped him gain party membership—on his 10th attempt—and supported his application for Beijing's Tsinghua University, which accepted him on the third attempt after his father arranged for a note to be sent to Tsinghua saying his political problems shouldn't affect his son's education. After graduation, while many of his age group sought opportunities in business, in the arts, or in the West, Mr. Xi again turned to politics, taking a job working for a friend of his father's who was a vice premier, and later defense minister. One friend remembers inquiring over his motives, around that time. "Because this is what I'm good at," was his matter-of-fact response. In 1982, with the help of his father, who had been rehabilitated and readmitted to the party leadership, he shed his prestigious military job and took his first civilian party post, as deputy leader of a pig-farming county in Hebei Province. "At the time a lot of people didn't understand my choice," he wrote in his 2003 essay, attributing his decision to the connection he had made with ordinary workers and peasants while in the village. But it was a shrewd career move, too, as the military was being rapidly sidelined from a party leadership that had embraced the mantra of economic development. It also helped to counter potential allegations that his military post was due to his status as the son of a revolutionary leader—or "princeling."  Early in his career, his self-confidence almost got the better of him. When he was deputy mayor of the eastern port of Xiamen, he put his name forward as a candidate to be promoted for mayor—without the approval of the party leadership, according to people who knew him at the time. He was reprimanded, forced to withdraw his name, and transferred to party secretary of the relatively backward region of Ningde, they said. But he soon resumed his upward trajectory, and established a reputation as a pro-business figure first as governor of the eastern province of Fujian, then as party chief of the province of Zhejiang. Sidney Rittenberg, an American ex-Communist who lived in China from 1944 to 1979, recalls writing to Xi Jinping when he was Fujian governor to ask him to help renegotiate a contract for a power project on which major U.S. investors were losing money. Mr. Rittenberg, who was working as a consultant for the investors, reminded Mr. Xi that he had known his father, who he says used to invite him to dance parties in Yan'an, where they would do the fox trot, and occasionally square dance to a simple string and brass band. Xi Jinping invited Mr. Rittenberg's son to dinner at the governor's mansion and a "nice settlement" was soon reached, the elder Mr. Rittenberg said. "I can't help but think that some of his father's personality rubbed off on him," he said. "There's one trait common to both father and son: they never made life hard for their opponents." Even as he developed a head for business, Mr. Xi retained an active interest in Marxism. From 1998 to 2002, he did a postgraduate degree in Marxist theory, by correspondence, at Tsinghua. It was an unusual choice at a time when many party officials were studying business management and economics. But it was also a convenient way to re-establish his ideological credentials and to defend himself against potential critics in the party who still saw him as a "princeling." Resentment at the princelings helps to explain why Mr. Xi garnered the least number of votes when he joined the party's Central Committee as an alternate member in 1997. A decade later, however, he won the most votes in a straw poll of the party elite to decide who should be the figurehead of the next generation of leaders. What changed between 1997 and 2007 is in large part due to the machinations of Zeng Qinghong, a fellow princeling and his predecessor as vice president, who helped ensure his promotion over the head of Hu Jintao's favorite. But it also stems from Mr. Xi's unusual ability to get along, and to work with people across regional, ideological and functional divides—a personality trait that friends say dates back to his formative years in the village. "He's a very balanced character," says one family friend. "He's not the kind to take revenge on anyone—he sees the big picture, and the importance of working with all kinds of people."

The small town on the banks of the Mississippi River is "Feeling Great", abuzz with excitement and recalling happy memories as it looks forward to the return of an old friend - Vice-President Xi Jinping. It was 27 years ago that Xi visited Muscatine, an agricultural center in the US heartland, when he led a delegation to learn about farming technology. The delegates were all given badges to wear sporting the town's slogan: "Feeling Great". Sarah Lande, a resident of the town, had the same feeling early last month when she got a call from Iowa State Governor Terry Branstad. "Sarah, guess what, I think Xi is coming to our state," Branstad said. "I was really surprised and excited. I also felt humble, honored and, of course, a little proud," Lande said. Lande, 73, and her husband Roger, 74, were among several families in Muscatine to host Xi in April, 1985. Xi, then a local official in North China's Hebei province and director of Shijiazhuang Feed Association, led a five-member delegation to learn about agricultural technology in Iowa, the state that calls itself the Food Capital of the World. They were visiting as part of an Iowa Sister State program after Hebei and Iowa cemented the relationship in 1983. The delegation spent two weeks in Iowa, visiting farms, feed suppliers, and grain processing and food biotechnology companies. The three days Xi spent in the small, charming town of 23,000 left him with fond memories.

Hong Kong*:  Feb 14 2012 Share

The mainland will import about US$180 billion of services from Hong Kong under the 12th five year plan period that runs to 2015, a mainland trade official said yesterday. "Hong Kong is China's biggest partner in services," said Zhou Liujun, director general of trade in services at the Ministry of Commerce. "For the 12th five year plan, the potential for Hong Kong to sell services to the mainland is very big. In the face of the current European debt crisis, trade in services is China's way of tackling the crisis and upgrading its economy," said Zhou. Zhou was speaking at a press conference yesterday in Hong Kong on the upcoming Inaugural China Beijing International Fair for Trade in Services to be held from May 28 to June 1 in Beijing. The fair, staged at the China National Convention Centre, will cover 12 service sectors including finance, construction, tourism and outsourcing. Hong Kong and mainland officials signed an agreement yesterday for the Trade Development Council to host a pavilion at the fair to promote Hong Kong services firms, said Brian Ng, director the TDC's mainland representative office. In 2010, mainland imports of services from Hong Kong rose 28 per cent to US$33.8 billion, accounting for 18 per cent of the mainland's total import of services, while the mainland's export of services to Hong Kong jumped 60 per cent to US$60 billion, accounting for 35 per cent of all mainland service exports. Zhou said professional services were a specialty of Hong Kong: for example, as more mainland companies sought mergers and acquisitions abroad, Hong Kong could provide legal, accounting and consultancy expertise, he said. The central government aims to raise the proportion of services in the country's gross domestic product from 43 per cent in 2011 to 47 per cent in 2015, said Zhou. Last year, China's trade in services rose more than 15 per cent to exceed US$410 billion.

About 3,100 people took part in the public open day at the new Legco complex in Admiralty. It may lack the Goddess of Justice statue and neoclassical architecture that graced the Legislative Council's old home in Central, but the new Legco chamber seemed to impress its first public visitors. The complex in Admiralty hosted about 3,100 of 10,000 people who secured tickets, with more ticket-holders to get a glimpse of the corridors of power today. Legco president Tsang Yok-sing led a guided tour into the chamber, where he explained that its bigger size was intended to accommodate the expansion of Legco. One visitor was surprised to find the seat reserved for League of Social Democrats lawmaker "Long Hair" Leung Kwok-hung, known for his high-profile protests in the chamber, close to the front of the chamber - within fruit-throwing range of the spot where senior government officials speak. "I just found out he got the seat not by a lucky draw, but by agreement among colleagues. What if his bananas hit the officials for real?" the part-time teacher said. Greeted by panoramic views of Victoria Harbour at the viewing gallery, one visitors asked Tsang whether it would be possible to watch the New Year fireworks from the vantage point. But Tsang said even lawmakers had been warned not to use their place of work for social gatherings. The group visited the dining hall, conference room, education gallery and Memory Lane, an exhibit from Legco's history, which dates to 1843. Many were stunned by the scale of the new complex, which at 38,400 square metres is four times the size of the structure in Central. "The old one is too small and can't hold that many lawmakers," a 73-year-old man said. He said the government should preserve the Central building which housed the legislature from 1985 to last year and has now returned to its former use as a court. Peter Ng was not so impressed: "There are only 60 lawmakers. Why are there so many floors? There are way too many conference rooms." Chow Tsz-shing, 15, joined the tour to learn about Legco, but was left wanting more. "I wanted to get closer to lawmakers' seats," he said.

As rumours swirled yesterday of big deals involving his company, Alibaba Group founder and chairman Jack Ma Yun found time to enjoy fresh sushi for lunch and contemplate watching a George Clooney movie. Ma was spotted in Hong Kong yesterday as news spread that Alibaba's flagship e-commerce company, Hong Kong-listed Alibaba.com (SEHK: 1688), could potentially be privatised. On Thursday, Alibaba.com suspended trading of its shares in Hong Kong pending clarification about an undisclosed transaction, which it said might be price-sensitive, involving privately held parent Alibaba. Speculation was rife that such a transaction not only referred to the Hangzhou-based group's effort to wrap up about US$3 billion in bank financing to help buy back its shares that are held by US internet company Yahoo, but also to another deal in which the mainland firm could take Alibaba.com private. Alibaba spokesman John Spelich declined to comment. A request to interview Ma was also turned down. A person familiar with the matter said there was no necessary link between a potential privatisation bid and the proposed Yahoo deal. "It would be fair to say that whatever happens with the Yahoo deal is not dependent on the status of Alibaba.com," he said. A plain connection, however, can be made in terms of where the money for these two deals could come from. ANZ, Credit Suisse, DBS, Deutsche Bank, HSBC and Mizuho Corporate Bank have all been identified in reports as being part of a syndicate that has been tapped to back the US$3 billion financing needed by Alibaba. A Reuters report yesterday described a different scenario. Citing sources, the report said Alibaba would use bank loans and cash plus an asset swap to buy back about a quarter of the 40 per cent stake acquired by Yahoo in the company in 2005. That 40 per cent shareholding by Yahoo, once the world's biggest internet search service provider, is estimated to be worth up to US$14 billion. The report said Alibaba, which owns about 73 per cent of Alibaba.com, plans to pay a third of the consideration through a stake in one of its operating assets - making the transaction tax-free for Yahoo - and the rest, about US$6 billion, in cash. Seated at a quiet corner of the sushi bar at a Japanese restaurant in Causeway Bay, Ma appeared in a relaxed mood, dressed down in an orange long-sleeved polo shirt, dark slacks and canvas, slip-on shoes. While an army of lawyers, bankers and accountants were no doubt poring over his empire's potential multibillion-dollar deals, the unfazed Ma and a friend ordered sushi and then discussed which movie to see in the afternoon. Ma was apparently interested in watching the comedy drama The Descendants, which stars George Clooney and has multiple nominations in this year's Academy Awards. Alibaba.com shares last traded at HK$9.25.

 China*:  Feb 14 2012 Share

Chongqing party secretary Bo Xilai at the meeting with Canadian leader Stephen Harper yesterday. Chongqing party boss Bo Xilai - whose political future is under scrutiny - met visiting Canadian Prime Minister Stephen Harper yesterday in the southwestern municipality. It was Bo's first international exposure since a political storm erupted after Chongqing vice-mayor and police chief Wang Lijun spent a day in the US consulate in Chengdu , Sichuan , on Monday. The Chongqing government said on Wednesday that Wang was on stress leave, but sources say he was taken to Beijing. The meeting between Harper and Bo lasted for about an hour. Bo reportedly appeared relaxed and nodded when Harper thanked Chongqing for its 10-year loan of two giant pandas to Canada. The Canadian Press yesterday reported that both sides sat across a large conference table, "with Bo showing no sign of the political controversy swirling around him and Harper not acknowledging it either". "More people in Canada will notice the pandas than anything else," Harper joked with Bo. Analysts say there was no sign Bo had been affected by the drama surrounding his former top aide. "The meeting sent a message to the outside world that Bo is still talking with Beijing's top leaders about how to settle Wang's case and what his own fate will be after it is resolved," said Hong Kong-based political commentator Johnny Lau Yui-siu, referring to negotiations between Bo and the Politburo Standing Committee, the party's top echelon. Two separate Chongqing sources told the Sunday Morning Post (SEHK: 0583, announcements, news) yesterday that municipal mayor Huang Qifan was in Beijing. It is widely believed he is reporting to the central government. Bo has long been tipped as a strong contender for the Politburo Standing Committee in the upcoming leadership reshuffle at the 18th Communist Party congress later this year. But Wang's situation has fuelled speculation of a top-level power struggle. Bo is known as media-savvy and has earned notoriety for his crusade against organised crime, a controversial campaign to resurrect Maoist revolutionary culture and his over-the-top showmanship. Chongqing Daily yesterday carried a lengthy report about Bo's visit to Yunnan on Wednesday and Thursday. He was quoted comparing his "red songs" campaign with Peking Opera, saying "both spread the essence of Chinese culture". A Chongqing reporter said they covered the Yunnan trip a day later than Yunnan media because Bo personally vetted every report about him. There was also speculation online that a mass rally will be held in support of Bo today, but it could not be confirmed.

Jeremy Lin Drops 38 on Lakers, Breaks 500,000 on Sina Weibo - Can the Jeremy Lin-Yao Ming comparisons begin in earnest after Lin’s stunning 38-point scoring clinic against the Los Angeles Lakers Friday night? Probably not. Yao was an eight-time NBA All-Star who scored 9,247 points and grabbed almost 4,500 rebounds in a career that might have been Hall of Fame-worthy had it not been cut short by injuries. But consider this: Yao didn’t score 38 or more until his 127th game as an NBA starter, against the Atlanta Hawks in 2004, a game that included 15 minutes of overtime. Lin, undrafted and unwanted, did it in just his third NBA start. Chinese basketball fans who weren’t already giddy over the second-year point guard’s sudden emergence for the New York Knicks this week appear to be spinning in the grip of Linsanity now. By the end of the Lakers game Friday night, a special Jeremy Lin page set up on popular Twitter-like microblogging service Sina Weibo showed more than 1.8 million Lin-related messages before it was inexplicably taken down. By Saturday, Lin boasted more than half a million followers on Sina Weibo versus just over 120,000 on Twitter — and with the NBA claiming China has at least 300 million basketball fans, that number seems likely to grow. Elsewhere, Lin’s Chinese name, 林书豪 (Lin Shuhao in Mandarin), finished second on the seven-day list of trending topics on Chinese search engine Baidu this week. The race to claim Lin – an American born to Taiwanese immigrants with roots in mainland China – kicked into high gear after the contest against Los Angeles. As China-based journalist Adam Minter noted on Twitter, among those claiming a connection to Lin was a Chinese basketball fan from Zhejiang province, ancestral home of Lin’s maternal grandmother: Though the 23-year-old still had his doubters prior to Friday’s game, his previous performances this week — in which he stood up against All Star New Jersey Nets point guard Deron Williams and Washinton Wizards’ former No. 1 draft pick John Wall — had already earned him hero status among Chinese-speaking fans. The fact that Lin set his latest career-scoring record while playing against the Lakers’ Kobe Bryant, one of the most popular NBA stars in China, appeared to only cement his legend further. “Lin Shuhao is unbelievable. He blew Kobe up!” wrote one fan. Bryant, who claimed not to know about Lin before the game, came away impressed, according to Sina sports journalist Shen Yang. “I just asked Kobe what advice he has for Lin Shuhao in the future,” Ms. Shen wrote on her Weibo account. “Kobe said: ‘He scored damn near 40 points, what advice do I have to give?’” But if Lin has given new hope to regular-sized players on China’s college basketball courts, one YouTube video making the rounds suggests the tens of thousands of Chinese students going to the U.S. for college might want to be wary of “the Lin effect.”

A win-win exchange - San Francisco Mayor Ed Lee speaks at K&L Gates, an international law firm with 1,900 attorneys worldwide, during its annual Chinese New Year celebration in San Francisco on Feb 9, 2012. San Francisco Mayor Ed Lee said China is vital not only to California's economic recovery but also for the improvement of the state's employment status. He made the comments at K&L Gates, an international law firm with 1,900 attorneys worldwide, during its annual Chinese New Year celebration on Feb 9. Chinese Deputy Consul General of San Francisco Yi Xianrong echoed Mayor Lee on the importance of a win-win relationship between China and the US. Vice Consul Liu Xiaolong and Economic & Commercial Counselor Xia Xiang also attended the event. Howard Chen, partner of K&L Gates, speaks at K&L Gates, an international law firm with 1,900 attorneys worldwide, during its annual Chinese New Year celebration in San Francisco on Feb 9, 2012.

First there was video conferencing, then video chat. Now a restaurant chain is serving up video hotpot. Workers at a Haidilao hotpot restaurant in Beijing test the video connection with workers at a restaurant in Shanghai. Instead of making the 1,500-km trip to Shanghai for his friend's birthday, Chen Yufei popped into a Beijing restaurant where a special video room is set up. His friend in Shanghai did the same in his city. When Chen sat down at the table, his friend was in front of him on a high-definition screen. "How fancy is this!" 31-year-old Chen said to China Daily as he was taking photos of the screens with his colleagues from Shanghai. "I think it's very impressive to have a birthday party like this," he said. The video feast is on the menu of the famous Haidilao hotpot chain in China's two biggest cities. "The fresh idea flashed in our boss's mind," said Zhong Weijian, a technical officer in the Beijing branch. "Customers book the room mainly for family reunions and business negotiations," Zhong said. "We'll call the Shanghai branch when we receive a reservation and make sure customers in both cities can be seated at the same time." Currently, the chain has two video hotpot rooms, one at the Wangfujing branch in Beijing and one on Shanghai's Changshou Road. The video rooms have been open since Feb 2. If successful, the chain hopes to expand the service to other provinces, or even other countries. In addition to the food, customers pay 200 yuan ($31.75) per hour for using the room. "The video room has been fully booked in February," said Chen Yu, manager of the Wangfujing branch. The video room in Beijing is about 30 square meters and large enough for six customers. "Many customers prefer to use the room for dinners rather than lunch," Zhong said, adding the average age of customers who booked the video hotpot is about 30. "The whole process is very smooth. The image and the voice transmission are as good as those of video conferencing at work," said one of Chen's colleagues surnamed Luo. "I have a lot of friends in Beijing, whom I haven't met for a long time because of being busy at work," said a woman surnamed Yu who is having dinner with her husband at Haidilao. "The new service gives us a chance to have a dinner together without traveling. I would like to give it a try." The video hotpot also helped establish a friendship between waitresses in the two cities. Zhao Huanhuan, in her 20s, who is specially trained for serving in the video room in Shanghai, struck up a friendship with a waitress named Lu Ke in the Beijing branch. "What a fantastic experience!" Zhao said excitedly. "It was too amazing to believe. I'm so interested in using the special room and enjoy serving people there," she said. "I also talked about some interesting interactive games with Lu before guests come for dinner." Lu said they provided riddles for a family of seven who had dinner on the eve of the Lantern Festival. Five members, including a child and his parents, were in the capital, while the child's grandparents were in Shanghai. "I prepared some jokes with Zhao through the video before they came and our ideas made the family have a good time that night," Lu said. Although Lu felt a little bit nervous when she first served in front of the screens, she said the new mode of communication also encouraged her to supply better services for customers. "It's like a service competition. We saw each other through video and I could learn from Zhao's serving," Lu said, adding she will visit Zhao if she goes to Shanghai. It seems that video hotpot doesn't satisfy everyone's palate, however. Jiang Yan, a 30-year-old customer who tried the video hotpot, paid nearly 600 yuan for a dinner in the room, including the 200-yuan room expense, and said the price was a little bit high. "The lamps in the room are too bright, which may not be suitable for enjoying a dinner with friends," he said. "The video can't replace a real close family reunion sitting around the hotpot."

Hong Kong*:  Feb 13 2012 Share

The Hong Kong Monetary Authority will loosen the calculation of yuan-denominated assets in the statutory liquidity ratio. It is a move that will allow local banks to release more yuan for lending. The liquidity ratio requirement is a measure to ensure banks have enough liquefiable assets that can be turned into cash. The authority issued a guideline yesterday, letting banks increase the extent of yuan liquid assets in the ratio because "the offshore yuan market in Hong Kong has become more mature after years of development." The yuan liquidity ratio can now reach at most 150 percent of non-yuan liquidity ratio compared with 100 percent previously, according to the guideline. Anita Fung Yuen-mei, the Hong Kong chief executive of HSBC (0005), welcomed the authority's decision as it complements January's adjustment to yuan risk management and net open position calculations. It is also indicative of the maturing yuan market in Hong Kong, Fung said. The HKMA last month raised the limit on the yuan net open position to 20 percent from 10 percent - a move that helps increase yuan trading activity offshore. Standard Chartered Bank (Hong Kong) said the decision provides greater flexibility for banks to manage their balance sheets and liquidity ratios as their yuan businesses grow. Bethy Tam Ho Kam-man, StanChart's head of governance and strategic initiatives, said it also "allows banks to use yuan to a greater extent." Yuan deposits in Hong Kong have surged in the past few years, although the volume shrank month on month in December to 588 billion yuan (HK$723.8 billion). To lure more yuan deposits, some lenders have raised interest rates in recent months.

Chinese e-commerce group Alibaba plans to take private its Hong Kong-listed unit, two sources familiar with the matter said, as part of a complex deal that would strengthen founder Jack Ma’s control and give key stakeholder Yahoo cash and a direct stake in one of Alibaba’s operating businesses. Alibaba Group, the online business-to-business group set up in 1999 by former tour guide and now billionaire Ma, plans to buy back most of the 40 per cent stake in it that Yahoo bought for around US$1 billion in 2005. Under the plans being discussed, Alibaba Group would use bank loans and cash plus an asset swap to buy back about a 25 per cent stake, leaving Yahoo holding 15 per cent, the sources said. The US group’s 40 per cent holding is worth an estimated US$13-US$14 billion, based on recent deal valuations. Alibaba Group, one of the three leading players in the world’s biggest internet market, plans to pay a third of the consideration through a stake in one of its operating assets - making a deal tax-free for Yahoo – and the rest, around US$6 billion, in cash, the sources said. It is looking to raise a loan of about US$3 billion to help fund the deal. The sources said taking Alibaba.com (SEHK: 1688) private was just one of the proposals being discussed, and was not a pre-condition of any Yahoo deal. Any final agreement could be several weeks away, they added. Alibaba Group’s plans are part of an overall deal being discussed by Yahoo, the internet pioneer which is under pressure from its investors to turn around a lacklustre performance. Last month, Yahoo appointed Scott Thompson as CEO to replace Carol Bartz who was fired in September, and co-founder Jerry Yang quit the company. Yahoo shareholders are frustrated at stakeholders’ apparent indecision over how to handle investments in Alibaba and other Asian assets. “Alibaba.com’s share price has been quite bumpy since its listing. Probably taking it private will make it more flexible for the group to do the transformation that it’s going through,” said Wendy Huang, head of regional internet and media research at RBS in Hong Kong. Trading in Alibaba.com shares was halted on Thursday pending an announcement regarding its parent. Alibaba.com, which is around 73 per cent-owned by Alibaba Group, has a market value of nearly US$6 billion, making the remaining stake in it worth around US$1.6 billion. Alibaba.com is the most likely operating unit in which Yahoo may be offered a stake, one of the sources said. Both parties have an understanding on this arrangement, but have not signed any formal deal yet, the source added. Other Alibaba Group assets that could be used in a swap deal with Yahoo could include Taobao.com, often dubbed “China’s e-Bay”, Taomall, Yahoo (China) and Alipay, an e-payment business, sources said, adding Yahoo would get to choose which assets it wants. The sources declined to be identified as the discussions were private. An Alibaba Group spokesman declined to comment. Sources previously told Reuters that under a “cash rich split” plan being discussed, Yahoo would effectively transfer most of its 40 per cent Alibaba stake back to the Chinese company, and all of its more than one-third stake in Yahoo Japan to Softbank Corp in return for cash and assets. Shares in Softbank jumped more than 4 per cent to a 5-week high of 2,319 yen on Friday. Softbank has an indirect stake of 31-32 per cent in Alibaba.com as it holds close to a third of Alibaba Group and owns 58 per cent of Alibaba Japan. Yahoo had also entertained separate proposals from private equity firms TPG and Silver Lake about minority investments in the company, but those offers fell short of Yahoo’s expectations.

A five-year-long museum exhibition about Bruce Lee took a step towards completion when a lawmakers’ panel approved the HK$24.8 million proposal on Friday morning. “The exhibition … is not only eagerly anticipated by the people of Hong Kong, but is also expected to attract many tourists from the mainland and overseas,” the Leisure and Cultural Services Department’s proposal says, outlining plans for the 650-square-metre exhibit at the Hong Kong Heritage Museum in Sha Tin. Lawmakers in the home affairs panel on Friday morning urged the department to go further, and make the exhibition permanent. The exhibition proposal came after the Commerce and Economic Development Bureau was unable to agree with the owner of the late kung fu star’s former home in Kowloon Tong to turn it into a museum. Now the bureau and the department are working together on the exhibition to “showcase [Lee’s] legendary life and his contributions to the film industry and martial arts culture”. Officials involved will seek funding from the legislature’s Financial Committee in April. Once funding is secured, the LCSD hopes to spend the rest of this year preparing the exhibition and opening it to the public in the first half of 2013. The exhibit will cover Lee’s public profile, films, and martial arts and cultural influences. It will reconstruct the living room of his childhood home, as well as the fitness room and study of his former home in Kowloon Tong. A 75-minute documentary film will describe his life story and include interviews with people who were close to him. There will also be guided tours and workshops, to help visitors understand Lee’s martial arts theories and filmmaking ideas. The bureau expects no recurrent spending above the planned cost of HK$24.8 million.

Chief Executive Donald Tsang Yam-kuen says he is "praying" the looming global economic crisis will not erupt any time around July, when the new Hong Kong government takes over. In an RTHK interview, Tsang said he was “scared” that Hong Kong would be hard hit by a coming economic meltdown – triggered by the unresolved European debt crisis and stagnant economic recovery in the United States. “I am scared because I don’t know the extent of the impact that will hit us,” he said. “Nobody wants the crisis to happen. … [However, if it does] I pray it won’t happen just as the new government is taking over,” Tsang said. “But I know that’s wishful thinking. I am just speaking of my heartfelt wishes.” Tsang, who handled the 1997 Asian financial crisis as financial secretary and the 2008 financial tsunami as the chief executive, said he would rather see a crisis occur during his term of office so that he could handle it himself. “Or, I hope the timing will be at the end of this year or next year, so the new government can get settled in first,” Tsang said. On a different subject, the out-going chief executive, whose term ends on June 30, said the government must consider political factors when trying to broaden the tax base. “We must consider the political factor because any moves to widen the tax base have to go through [the] legislature. It cannot be done by the boss’s will [alone],” said Tsang. Hong Kong was sitting on healthy fiscal reserves, he said, which will make it difficult to convince the public and lawmakers that the tax system needs reform. In his budget two weeks ago, Financial Secretary John Tsang Chun-wah estimated the reserves would reach HK$658.7 billion by the end of March next year.

A property agent was jailed for five months yesterday for soliciting and pocketing an extra bonus of HK$10,000 from a client without the permission of his employer. Law Ka-yat, 28, formerly employed by Yearsfull Real Estate Agency, pleaded guilty at Tuen Mun Magistracy to one count of soliciting an advantage and two further counts of accepting an advantage. In sentencing, principal magistrate Anthony Kwok Kai-on said the court was required to impose a custodial sentence owing to the seriousness of the bribery offenses. The court heard that in early December 2009 Law told an owner of a flat at Yoho Town, Yuen Long, that a couple wanted to buy his property for HK$2.08 million. The offer was turned down by the owner, who insisted the senior property agent sell it for HK$2.1 million. Law then solicited an extra bonus of HK$10,000 from the owner as long as he could sell the flat to the couple at that price, which he eventually did. After signing a provisional sale and purchase agreement with the couple, the owner signed an agreement to pay Law the extra money for clinching the transaction. The owner transferred half the amount to Law via his bank account on December 21. On March 3, 2010, Law collected the remaining HK$5,000 in cash. Yearsfull prohibits its employees from soliciting or accepting an extra bonus from clients in relation to property transactions - without its permission. The firm assisted the Independent Commission Against Corruption during its investigation.

Two years ago, I wrote about "Hong Kong's best job," pointing to being a legislative councillor. That's because the pay for lawmakers is high, and they enjoy a high degree of freedom and media exposure. Also, there's no need to care if their boss - the Hong Kong people - feels unhappy about their performance, since they can't be sacked within the contract period. Well, this plum job may become even more attractive following the staff proposal that remuneration be pegged to as much as half the HK$280,000 monthly salary of ministers. This would essentially double legislators' current monthly stipend of HK$73,000 to HK$140,000. Outside of this job, how many workers would dare ask their boss for a 100percent pay rise? What's more, their performance for the most part is underwhelming (ie long-term low popularity). If they were like ordinary workers elsewhere, they should feel grateful for being able to hang onto their jobs. I have no idea what the rationale is behind pegging a councillor's salary to that of a bureau director. The nature of a Legislative Council member's job is simple - either blindly support something, or blindly object. They adopt a stance first, then find the rationale and make some noise inside the chamber. Also, the job of a bureau director is full time, while that of a lawmaker isn't. They can even take advantage of their Legco positions to promote their own businesses. They also get constant media coverage. If this exposure was translated into paid advertising, the cost would be astronomical. Under the current "measly" HK$73,000 per month, it's still not difficult to find "talent," as every time there's a Legco election, no shortage of candidates crawl out of the woodwork. In addition, there's no way many lawmakers can make that amount of money in the private sector. Otherwise, why are there those who who say their livelihoods have become unstable since losing their seats? The legislators insatiably want a 100percent pay hike. Are they serving the public, or are they serving the cash? The answer is crystal clear. If they're determined to serve the public interest, instead of seeking a pay rise, they should take pay cuts in these difficult times with the economy on the decline. Media guru KK Tsang, CEO of GroupM, takes a candid look at life.

Leung Chun-ying came out fighting yesterday after he was accused of failing to declare a conflict of interest in a project competition for the West Kowloon cultural hub. At the time - more than a decade ago - the chief executive hopeful was Executive Council convener. Leung insisted it was not his fault that a contestant in the West Kowloon Concept Plan Competition failed to declare a conflict of interest with him. Proclaiming his innocence, Leung said it was the entrant's responsibility to declare if it had any links to members of the jury deciding on the 2001 project. "I was a jury member, not a participant," Leung said. "I had no responsibility to find out if anyone related to me had entered the competition. It should be the participant's responsibility." He added: "The secretariat was also responsible for checking the relationship between participants and the jury. "If I was informed before March 28 [in 2002, the date of the result announcement], I would have informed the jury." Leung insisted there was no conflict of interest in the incident as his company, DTZ Debenham Tie Leung, did not receive any rewards, adding: "There does not exist a problem of trust." In March 2001, Leung was invited to be a jury member for the competition. He declared on February 25, 2002, that none of his family members or staff and no one with an contract or close professional ties or partnership with him had entered the competition. But after the voting, the competition team found that one entrant was related to Leung's company. On February 28, before the announcement of results, the competition's secretariat informed Leung of the conflict of interest. John Tsang Chun-wah, then secretary for housing, planning and lands, also phoned Leung. It was then that he reported the matter to the jury, which decided to disqualify the entry. The companies at the center of the incident issued separate statements yesterday. Davis Langdon & Seah said it contacted Leung's company for West Kowloon land price information for another Malaysian company, T R Hamzah & Yeang, for use in the competition. No rewards were involved, it stated. LWK & Partners said the company did not approach DTZ for any information related to the competition. LWK and T R Hamzah & Yeang entered the competition jointly. Leung yesterday came under fire from Liberal Party vice chairwoman Selina Chow Liang Shuk-yee who was on the judging panel. "When you talk about interests, it is not just about awards that you have pocketed," Chow said. "Leung should be responsible even if he really forgot to declare." Chow earlier declared her support for candidate Henry Tang Ying-yen. But Leung appeared confident that the incident will not affect his chance of securing 150 nominations to enter the election. Lawmaker Wong Kwok-kin of the Hong Kong Federation of Trade Unions, which holds 60 votes, said Leung was neglectful in this incident. Henry Tang said when he was put in charge of the West Kowloon Cultural District project in 2008, he reminded his staff to make declarations. Tang was given 62 nominations from the Liberal Party and other sectors yesterday.

 China*:  Feb 13 2012 Share

Lenovo's growth has been escalating in recent years, allowing it to leapfrog competitors to become the world's second-largest computer maker. Boosted by its record earnings and global market share, Lenovo (SEHK: 0992, announcements, news) plans to put the development of its fledgling mobile-internet-devices business on a fast track this year while continuing to grow faster than computer industry leader Hewlett-Packard. "We are already thinking ahead and preparing the next step beyond the traditional PC," Lenovo chairman and CEO Yang Yuanqing said yesterday. "We believe [the company's] mobile internet [business] will become our new growth engine." Lenovo, the world's second largest supplier of personal computers, reported a 54 per cent increase in net profit in its fiscal third quarter which ended on December 31. Profit rose to US$153 million, from US$99.7 million a year earlier, on the back of balanced growth across all its geographic markets, high demand for computers in the business sector, and its acquisitions in Japan and Germany. Revenue in the quarter to December jumped 44.8 per cent to a record US$8.4 billion, up from US$5.8 billion the previous year, as its global market share jumped to a new high of 14 per cent. Lenovo's market share on the mainland also grew to a record figure of more than 35 per cent. Wong Wai-ming, the company's chief financial officer, said sales in its mature markets geographic business advanced 81 per cent year on year to US$3.6 billion and accounted for 43 per cent of worldwide sales. These markets include large global corporate accounts, Australia, New Zealand, Japan and countries in North America and western Europe. Market research firm IDC estimated that Lenovo increased its shipments in the quarter to December by 36.8 per cent to a record volume of 13 million units from 9.5 million a year earlier, despite an industry-wide shortage of hard disk drives. "For the first time, Lenovo became the number one vendor globally in commercial PCs and in consumer desktops," Yang pointed out. There was also steady progress in Lenovo's mobile-internet digital home division, which the company established last year to compete in smartphones, media tablets and internet-linked "smart" televisions. Yang said Lenovo became the mainland's No2 brand of media tablets, adding the firm was also optimistic about its introduction of smart TVs on the mainland in the second quarter this year. Lenovo's laptop computers, led by its Think-brand notebooks, generated 53 per cent of total product sales last quarter. The mainland computer giant saw its share price rise 3.84 per cent to finish at HK$6.49 yesterday, its highest close since reaching HK$6.66 on January 4, 2008. While Lenovo has set its sights on unseating HP as the world's top computer supplier by the end of this year, another strategic investment may be needed for the mainland company to reach that milestone, according to Bernstein Research analyst Alberto Moel. He estimated that Lenovo's personal computer shipments must grow by closer to 30 per cent this year, up from an estimated 15 per cent, for the firm to overtake HP.

China's yuan got its long-awaited bounce on Friday, as the central bank set a record-high midpoint in advance of a US visit by Chinese president-in-waiting Xi Jinping. Spot yuan touched a record intra-day high of 6.2884 per dollar on Friday morning, after the People’s Bank of China (PBOC) set a new-high for its midpoint of 6.2937. It was the second straight midpoint below 6.30, a barrier it had never breached before Thursday. But the yuan’s rise is likely to be short-lived, dealers say. China’s exports suffered a 0.5 per cent year-on-year decline in January, while imports sank by 15.3 per cent, data released on Friday showed. “China has to strike a pose,” said a dealer at a foreign bank in Shanghai, referring to vice president Xi’s visit. “But after next week, there will definitely be some correction,” he said. Indeed, correction was already apparent on Friday morning. The yuan retreated to 6.2945 at midday, just 7 pips stronger than Thursday’s close. Traders expect the yuan to stabilise between 6.28 and 6.30 over the next month. Though traders saw political factors behind Friday’s strong midpoint, the central bank’s appetite for using short-term yuan appreciation as a goodwill gesture in advance of major events may be waning, given the leadership’s concerns about a slowing economy and weakening external demand. The clearest recent case of the central bank guiding the yuan higher in the run-up to a major event occurred in June 2010, when China announced one week before the G20 summit in Seoul, that it would end the de-facto currency peg it put in place at the height of the financial crisis in October 2008. President Hu Jintao’s closely-watched state visit to the United States in January last year also appeared to influence the central bank’s exchange rate policy. The dollar/yuan midpoint fell 318 pips in the week prior to Hu’s visit, despite rising by 565 pips in the previous four weeks. But prior to the US-China Strategic and Economic Dialogue in May last year, the pace of appreciation did not accelerate noticeably. While the central bank has now set two consecutive strong midpoints this week, the cumulative two-week decline, at 179 pips, is hardly a dramatic gesture. In the offshore non-deliverable forward (NDF) market, one-year NDFs implied 372 pips of appreciation, up 35 pips over Thursday’s close, but still below its this year peak of 500 pips on January 20.

Singapore Straddles the Fence With U.S. and China - When Singapore’s foreign minister visited Washington this past week, he welcomed and even urged deeper U.S. engagement in the region with stronger economic, diplomatic and military ties – a sign that Singapore appears to support America’s recent pivot towards Asia following years of focusing on conflicts in the Middle East. But at the tail end of his first visit to the U.S. in his new ministerial role, Foreign Minister K. Shanmugam offered some criticism and a warning: Anti-China rhetoric is a “mistake,” he said and will cause problems for the region. “Americans should not underestimate the extent to which such rhetoric can spark reactions that create a new and unintended reality in the region,” said Mr. Shanmugam, also Singapore’s Minister for Law, speaking at Center for Strategic and International Studies’ Singapore Conference in Washington. The U.S. has repeatedly applied pressure on China in recent years on issues ranging from the value of China’s currency to its assertiveness in the South China Sea, an area with overlapping claims from numerous Asian countries. In Mr. Shanmugam’s speech, which focused on key developments in Asia and Singapore including American’s recent enthusiasm for re-engagement with Asia, he said the rise of China cannot be contained. “It is quite untenable to speak in terms of the ‘containment’ of China… (China) is determined to progress in all fields and take its rightful place in the community of nations,” he said, adding that American policy makers need to “accept and understand” this. His comments are well-timed – Mr. Shanmugam left soon afterwards for Beijing, where he is now on his introductory visit to China as Singapore’s foreign minister. He had actually planned to visit China first, as his maiden introductory visit outside of Southeast Asia, but he could not because of scheduling problems.

China to Buy More Than 30 Million Cars a Year by 2018, Says J.D. Power - High gas prices? Purchase restrictions in mega cities? Neither can keep China from pursuing its ardent love affair with the automobile. Such at least is the view of senior J.D. Power analyst Geoff Broderick, who says the power of that love could push vehicle sales in China to as high as 35 million a year by 2018 — a near doubling of the market. Auto sales hit 18 million vehicles in China last year. In the U.S., meanwhile, overall auto sales last year totaled 12.7 million. “We’re bullish on China,” Mr. Broderick said in an interview in Beijing on Friday. “The whole center of gravity in the global auto market has shifted from the West to the East, and this (China) is where we’re going to see action, at least over the next several years.” The driving force behind that sunny view: Growing discretionary income in China’s smaller, “lower-tier” cities. Just half a decade ago, in 2005, only about 20% of global demand for automobiles came from so-called emerging markets, according to Mr. Broderick. By 2010, roughly half of global auto demand – 51% to be precise – came from developing economies. China is the dominant, 800-pound gorilla of the emerging world, becoming the world’s biggest vehicle market in 2009 and retaining that position ever since. Still, over the past year, demand for automobiles in China has slowed significantly. Last year auto sales grew only 5%, and many analysts and foreign auto maker executives in China say the era when yearly demand increases of more than 20% were common isn’t coming back, at least in the near term. Most forecasts for this year point to year-on-year growth of less than 10%. Those forecasts point to, among other factors, a cancellation last year of generous government sales incentives for small cars and license-plate restrictions in mega cities like Beijing and Shanghai aimed at alleviating world-famous traffic congestion. But according to Mr. Broderick, “an appreciable increase” in discretionary spending by a surging middle class of consumers in lower-tier cities, many of them located in China’s inland western region, will likely compensate for growth impediments elsewhere in the market. “Those second-tier and third-tier cities in China are going to be the real battle ground for auto makers,” he said. “Those cities have a lot of room for per capita income to rise.” Another key source of Mr. Broderick’s optimism comes from a comparatively low rate of car ownership in China, especially in those lower-tier cities. In China overall, only about 50 people per 1,000 people currently own cars, he said, repeating a widely used estimate. That car “penetration” rate is unlikely any time soon to reach levels seen in the U.S., where nearly 900 people per 1,000 own cars, he said. “But there’s a lot of room to grow.” Overall demand for automobiles in China over the next seven years should hit “30 to 35 million” vehicles, he said. There are notable challenges to growth besides the purchase restrictions, including a lack of sufficient roads, high gasoline prices, and more stringent fuel-economy and emission requirements. But unless gas prices or taxes hurt the consumer’s pocketbook “in a serious way,” Mr. Broderick said. “I don’t think it’s going to dent the market’s longer-term momentum.”

Golden roses bloom for Valentine's market - A store assistant holds a selection of gold-plated roses for sale in Suzhou, Feb 9, 2012. The products are processed from fresh roses as an attraction to customers ahead of the Feb 14, Valentine's Day. 

New wave of luxury - The Navetta 80 luxury yacht was created by Shanghai Double Happiness Yacht and Italian manufacturer Gianetti Yacht. More Chinese shipyards are turning to making yachts with foreign help - From its sleek lines and modern design to its rugged name, the 65-foot Alaska yacht is remarkably similar to luxury yachts made in Europe and the United States, except for one major difference: the price. Assembled in Shanghai, the Alaska line of yachts from Shanghai Double Happiness Yacht Co costs half of what it would typically cost for a yacht from an international manufacturer such as US-based Brunswick Boat Group. Foreign-made boats, according to the Chinese shipbuilder, carry an average price tag of 20 million yuan ($3.17 million, 2.5 million euros), but the price includes the hefty 43-percent tax that foreign shipbuilders need to pay to import their boats into China. Like the auto industry in China, where more Chinese companies have teamed up with foreign carmakers, the shipbuilding industry in the world's second biggest economy is learning that they also can't do it alone. For the Chinese shipbuilding industry, the Alaska yacht line is a pure example of that shift: it's cheaper, more high-end and similarly modernized but also full of foreign parts. "The engine and spare parts are imported from Italy, England and the US. So technically they are of the same quality as international brands in terms of performance," says Zhou Juan, general manager of Shanghai Double Happiness. "The only difference is that we are much cheaper." But another major difference is the target consumer. After years of disappointments trying to export their ships overseas and after the global economic downturn, Zhou says Shanghai Double Happiness and other shipbuilders like Hunan Sunbird Yacht Co Ltd and Kingship Marine Ltd, which is based in Hong Kong, have turned their attention to the growing number of affluent Chinese. In an attempt to show how his company's ships are more oriented to Chinese tastes, he says the Alaska line is equipped with a karaoke system, cigar bar and a cabin-converted lounge. According to the China Cruise & Yacht Industry Association (CCYIA), there are about 350 shipbuilders in China, including approximately 20 producers of super yachts, which measure more than 80 feet in length. All told, the Chinese shipbuilders generated 2.7 billion yuan (about $429 million) in revenue in 2010; shipbuilders worldwide generated about $3.4 billion in revenue. The association said it does not have the total number of boats sold in China for that year. At Shanghai Double Happiness' 21,800-square-meter shipyard, several vessels are being built simultaneously, from 40-foot boats to 86-foot yachts with price tags ranging from 5 million yuan to 30 million yuan. There are currently 200 workers making 20 boats a year. "The most competitive advantage in China's yacht industry is still the lower cost of its skilled workforce," Zhou says, "because it can take as long as 8 months or even one-and-half years to build a boat, consuming thousands of hours." While labor may be cheaper in China, the process of building yachts is relatively new to the nation, which is why many boat builders have turned to international help. All the designs for Shanghai Double Happiness, for example, are imported. The company worked with Ed Dubois, a fellow of the Royal Institute of Naval Architects and the Royal Academy of Engineering, to design its ships. It also hired foreign engineers to work on the production, repair and maintenance of its ships. "The craft of yacht-building is very complex and delicate, which needs lots of yacht-making professionals, so many Chinese companies have to make up for that by working with foreign companies or hiring foreign technicians," says Cheng Juehao, a professor from Shanghai Maritime University. In addition to cheaper labor, another advantage for Chinese yacht companies over international ship companies located in China is the after-sales services. "We have the shipyard here, we have storage for spare parts, and we have all kinds of professional technicians to take care of repair and maintenance," Zhou says. "This is something that international companies lack in providing a better service." International boat builders, however, say they don't feel threatened. Zhang Yao, general manager with the Chinese division of the Brunswick Boat Group, the world's largest yacht producer, see China's yacht market "is dominated and will be dominated by international yacht makers for at least 10 years". "We don't feel threatened by domestic boat builders. Actually there is no competition at all because international brands still hold most of the market share," Zhang says. "What is going on right now in the yacht industry is like what happened in the auto market 20 years ago. It will take about 10 years before the Chinese boat makers to catch up with their Western counterparts." China's yacht industry may still be developing, but the growing appetite for luxury boats as the next status symbol among China's new tycoons has been a blessing for both domestic and international boat makers. According to CCYIA, the market in China will reach 50 billion yuan to 100 billion yuan within the next 5 to 10 years. Traugott Kaminski, a Shanghai-based agent for British yacht maker Sunseeker International, says that "for the Chinese buyer who can afford a luxury yacht, money is not an issue any more". But Kaminski says the Chinese buyer right now still prefers international brands like they would with a Louis Vuitton bag or a Rolls Royce. "We are targeting different group of people," Kaminski says. In 2010, Kaminski sold the Sunseeker Predator 108, China's largest-ever imported yacht known for its frequent appearances in James Bond movies, to real estate giant Dalian Wanda Group for $11.3 million. "(Chinese people) view yachts as a symbol of social status just like other luxury products," he says. "They want a yacht to have fun, to entertain their friends and families and maybe to bring business opportunities." One major challenge for Chinese yacht owners is the lack of any unified regulation that governs ownership of yachts. Different regions in China have varying rules and often confine owners of yachts to the region in which they purchased the boat. "It makes long cruises difficult for sailors," says Zheng Weihang, CCYIA vice-chairman. "As a result, most of China's super rich would like to use the yacht for a few hours on weekends to entertain business partners or friends. Most European or American rich, however, can sail for a few weeks." But there is good news on that front: some local governments are stepping up efforts to build more yacht infrastructure. Tianjin has invested 9 billion yuan to build the country's largest yacht marina with 750 berths to accommodate yachts up to 295 feet. Hainan, Xiamen and Qingdao along China's 18,000-kilometer coastline are also hoping to attract more yacht owners. Zhang echoes Zhou's sentiments that the yacht industry in China is taking a similar route as the auto industry. In January, the Shandong Heavy Industry Group signed an agreement to buy a 75 percent stake in the Ferretti Group, one of the world's largest luxury yacht makers. The largest yacht being built in China is a 246-foot vessel at Kingship Marine's shipyard in Zhongshan, Guangdong province. Kingship Marine Ltd, a Hong Kong yacht builder, will deliver the luxury yacht, Arctic Whale, to the British yacht brokerage Yachting Partners International. The designer of the luxury yacht is Eva Cadio and Co, a French ship-design company. "This is one of the biggest projects Kingship has taken on ... Arctic Whale will set the standard and raise the bar for some of our other projects still to come," Roger Liang, managing director of Kingship, said. The company is also building a 144-foot vessel priced at $27 million. Liang told media that the company has yet to find a buyer for the yacht, but he is not worried: There will be a lot of interest as more of China's nouveau riche consider yachts a must-have toy.

Hong Kong*:  Feb 12 2012 Share

Hong Kong Jet, a subsidiary of HNA Group, the mainland's fourth-biggest aviation group, is enjoying unprecedented growth thanks to booming sales of private jets and privately-chartered flights in the region. Driven by the increasing demand for private air travel from mainland companies that are expanding into overseas markets, Hong Kong has become the home base for a growing number of corporate jets. At the last count, some 60 private jets were based at Hong Kong International Airport, up from just three in 1998. The airport has a dedicated facility for private jets, the Business Aviation Centre, with its own passenger terminal, customs and immigration, hangars and parking bays. Hong Kong Jet has responded to the surge in demand by adding 10 aircraft to its fleet that 10 weeks ago numbered just one jet. The fleet is valued at US$420 million. Two of the 11 aircraft, a Gulfstream G550 and a Gulfstream G-IV, are owned by the company and are used for chartered flights. The G550 is an ultra-long-haul aircraft that can fly non-stop from Hong Kong to London or San Francisco. The remaining nine planes are owned by third parties and are operated by Hong Kong Jet under management contracts. Many mainland private jet owners are first-time buyers and typically engage airline companies to operate the craft and undertake maintenance. It is expected that demand for business jets will slow from current peak levels in light of the "soft-landing" under way in the mainland economy. Industry observers report that aircraft sales have been quiet since the Lunar New Year. But Hong Kong Jet expects its fleet will grow to more than 15 by the end of the year, says chief executive Chris Buchholz. "Our cutting-edge advantage of having both a Hong Kong AOC [air operators certificate] and a mainland AOC offers customers great flexibility in operating aircraft under their preferred registration in various jurisdictions," Buchholz said. Hong Kong Jet provides services ranging from aircraft management, to business jet charters, aircraft maintenance management, and an aircraft sales consultancy.

Songs like I am Proud, I am Chinese used to be sung under chairman Mao Zedong's reign, and they still appear to have thousands of Hong Kong fans - who turned out this week to hear some favourites performed by Chongqing choirs. "Red songs" have made a comeback in the southwestern city following a passionate 2008 campaign by Chongqing's Communist Party chief Bo Xilai which caught worldwide attention. Bo has apparently been vying for a spot in the Politburo Standing Committee, but the detention of Chongqing's vice-mayor and former police chief Wang Lijun has cast a shadow over his ambitions. Still, his red song revival was going down a storm in Hong Kong this week when a show featuring 13 Chongqing choirs - and a total cast of 420 performers, of all ages - came to town to celebrate the Spring Lantern Festival as well as the 15th anniversary of the Hong Kong handover. The lantern festival marks the end of the Lunar New Year celebrations. About 1,400 people attended the City Hall performance on Monday and 1,080 turned out for a second show at Hong Kong Polytechnic University on Tuesday. On Wednesday, the troupes performed for the People's Liberation Army at their naval base on Stonecutters Island. The shows were primarily organised by the central-government-funded newspaper Ta Kung Pao, along with more than a dozen other Hong Kong organisations that were given complimentary tickets to the invitation-only events. Between songs, there were recitations of famous Chinese poems. The director, Chen Hua said: "I was nervous initially about whether Hongkongers would be receptive, but it turns out our two public shows were full houses, and many in the audience stayed behind to take photos with our performers. After all, we are all Chinese and our music brings us together." A Ta Kung Pao spokeswoman said the event came about after two visits by Hong Kong youth and media chiefs to Chongqing in April 2010 and October last year, who had apparently expressed a desire to bring the show to Hong Kong. She added that the "red songs are not sung with a right-wing or revolutionary message, but simply a reflection of Chinese people's positive spirits". The left-wing political commentator Martin Oei said: "The red song troupe from Chongqing must have been brought to Hong Kong to show that even this international city can accept this type of culture. "But with the scandal of Wang Lijun's detention, Bo's chance of a spot in the Politburo is slim." Johnny Lau Yui-siu, veteran China watcher, said: "I still know [the songs] inside out. Singing red songs cannot evoke the patriotic emotions the same way it did during the Cultural Revolution. Even though the lyrics are the same, Chinese people - especially the older generation - like it for the familiar melody." Chen said a red-song singalong was good for the heart and the health. "Singing red songs has given Chongqing an identity." He said that not all the music was from the Mao era. "Our performers sing songs and recite poetry from different periods of Chinese history, such as the Qing dynasty. If you're Chinese, you can relate."

Smartphone users who are up in arms over an end to SmarTone's unlimited data plans may take comfort in statistics that show subscribers of such plans usually use much less data than they think. In fact, so underutilised are the plans that customers use only about a quarter of the monthly cap that SmarTone will implement in place of unlimited data plans to new subscribers starting next Monday. "Many people are using less than 0.5 gigabytes a month. They don't want to be shocked by their bills so they end up subscribing to an unlimited data plan to put their minds at ease," said Eliza Lee, director-general of telecoms watchdog Ofta. Ofta figures show average data usage in October was 463 megabytes (MB) per mobile broadband user - less than 25 per cent of SmarTone's new 2 gigabyte cap. Cheaper data plans with lower limits might be more suitable for those with low data use, but most people who subscribed to unlimited plans never bothered to monitor their data use, Lee said. SmarTone says it does not want to offer unlimited data plans because Ofta's guidelines, also set to kick in on Monday, are too hard to meet. The regulator's new guidelines say service providers offering "unlimited" plans must ensure they offer the service free from any restrictions. If they consider limits to be necessary, providers may consider offering plans with a high usage cap or flat-rate plans to replace the unlimited plans. To avoid listing all restrictions, SmarTone chose the later option of replacing the unlimited plan with a 2GB one without adjusting the price. Reactions of SmarTone's one million users were mixed. Some were angry about the 2GB limit, saying it would run out quickly. Other worried users flooded to the company's outlets over the past few days and sought renewal of unlimited data contracts. They can only do so by upgrading to pricier ones. According to SmarTone's longstanding policy, a client on a SIM-only plan can extend their contract by choosing a costlier plan that comes with a new mobile phone. Those who already subscribed to an iPhone plan can also extend their unlimited data contract for 24 months by buying a new phone. Lee denied Ofta had anything to do with the cancellation of unlimited plans. She said companies determined their services on a commercial basis. She said Ofta's role was to ensure information provided by the telecom companies was transparent enough for consumers to make an informed decision. As long as companies got rid of all restrictions or spelt out the hidden caps, they could continue with unlimited plans. For those unhappy with SmarTone's new pricing, she said: "Pricing of a particular service never falls under our regulation, but many choices are available in the telecom market... there are five telecom providers. If users are not satisfied with a particular plan, they can shift to another one." Patrick Chan, executive director of SmarTone, said the company did not push clients to upgrade their services. For those whose contracts expired in three months, they could extend them early without an upgrade, he said. But for other contracts, customers could wait and see instead of opting for an upgrade. "There may be a new equilibrium in the coming one or two weeks after other providers announce their data plan caps," Chan said. 

Hong Kong's workforce will be too small to power its economic growth by 2018 because of an ageing population, a government manpower study has concluded. It is the first time that the study, started in 1988, has predicted a labour shortage. The effect will be felt gradually as baby boomers continue to retire. About 14,000 jobs will have to be filled over the next six years by either foreign and mainland graduates or new immigrants. The source of the problem is the city's low birth rate, which demography expert Paul Yip Siu-fai believes has to be doubled to keep the economy growing at the current rate by 2018. "Now on average 1.04 children are born to each Hong Kong woman. We need to raise that ratio to 2.1 to meet the demand." he said. If children born here to non-Hong Kong residents were also included in the calculation, the average birth rate jumped from 1.04 to 1.5. Further complicating the issue, the shortage will be felt unevenly across the workforce, largely due to a mismatch between education and economic restructuring. At the lowest education level, there will actually be a manpower surplus of 8,500 by 2018. But for the middle, secondary-school-educated level, we will experience a labour shortage of 22,000. For the top level, the shortage will be around 500 as Hong Kong moves further towards a knowledge-based economy. The projections are based on data from the Statistics and Census Department in 2010 and early 2011. A spokesman for the Labour and Welfare Bureau said the reason was mainly because of population ageing. By 2018, Hong Kong will have about 300,000 postwar baby boomers who have retired. Many of these vacancies will not be filled as the city's birth rate has been decreasing at an increasingly alarming speed since the 1970s. "The shortfall of 14,000 workers may not sound huge. But we do have to pay attention to it because it will be the first time that we will experience such a problem," the spokesman said.

Education will be the focus when it comes to fostering Hong Kong-Taiwan ties, said the new director of the Taipei Economic and Cultural Office in Hong Kong. Just one month after he arrived in Hong Kong, James Chu Shi said he had pinpointed several areas for greater co-operation, with increasing the flow of students between the two at the forefront. "Education is a new field that we had not paid attention to," said Chu, a seasoned diplomat and former director general of the department of Hong Kong and Macau Affairs under Taiwan's Mainland Affairs Council. Encouraging more local students to pursue degrees in Taiwan was the way forward, he said, with some Taiwanese universities planning to organise an education expo in Hong Kong in the second half of the year. "The city's implementation of the new secondary education system offers a good chance for Taiwan to recruit more Hong Kong students, as both systems require six years of secondary schooling," said Chu. Under the outgoing system, Hong Kong students took two public examinations over the course of seven years of secondary schooling. Under the new system, students just take the Diploma of Secondary Education Examination (HKDSE) in Form 6 - with the first exams being held next month. As a result, their HKDSE results will suffice when applying for a place at a university in Taiwan, whereas previously they would have had to take an admission exam. There are currently about 2,400 Hong Kong students taking undergraduate degrees in Taiwan's 149 universities. "The count for Macau is 4,300, but its population is only around 500,000," said Chu. "Taiwan offers another alternative for Hong Kong students as the schools have abundant education resources and a more liberal culture." For the first time, students are able to apply online to most Taiwan universities. By the end of January, more than 2,000 applications had been received from Hong Kong students, with the most popular choice being veterinary studies, "due to the lack of such programmes in Hong Kong", Chu said. The deadline for online applications is March 21. Chu also wants to encourage more Hong Kong students to consider applying to Taiwan's technical and vocational colleges. "Some of the best students in Taiwan pick universities specialising in highly technical commercial and engineering programmes," said Chu, who completed undergraduate studies in Taiwan and obtained a masters degree in law at the London School of Economics. "But Hong Kong students think these vocational schools are more second-tier." Chu said he would seek to initiate visits by Hong Kong teachers to Taiwan in the hope of exploring further student exchange opportunities. His arrival at the Economic and Cultural Office on January 1 followed its official recognition by Beijing last year, and the de facto consulate's name change from the more obscure Chung Hwa Travel.

 China*:  Feb 12 2012 Share

Inflation on the mainland unexpectedly accelerated last month as consumer spending jumped to a three-month high during the week-long Lunar New Year holidays, limiting scope for monetary easing. The consumer price index (CPI), a key gauge of inflation, rose 4.5 per cent year-on-year in January, the National Bureau of Statistics said yesterday. The rate outstripped economists' forecast of a 4 per cent rise, and came after a 4.1 per cent rise in December and a 4.2 per cent rise in November. Despite the upward blip, which interrupted a series of figures suggesting that inflation was in retreat after hitting a 37-month high of 6.5 per cent in July, economists said the underlying trend in 2012 was still downwards. Ting Lu, a China economist at Bank of America-Merrill Lynch, said the rise was a one-off and only temporary. He said the this year's Lunar New Year festival came nearly a week earlier than it did last year, affecting the year-on-year comparison base. The holiday ran from January 22 to January 28 this year. "Investors definitely should not read too much into the inflation [figures]," Lu said. Merrill Lynch expected China's CPI inflation rate to drop to around 3.3 per cent in February, he said. Yu Song, a China economist with Goldman Sachs, said the data would probably set off alarm bells among some policymakers but it would not necessarily cause a change in policy. Tao Wang, chief China economist with UBS Securities, said the rise in the January CPI could make policymakers somewhat more cautious about monetary easing for the moment. "It is still difficult to discern the real strength of the economy. The market should not expect any reserve requirement ratio cut as a signal for easing in the next weeks," Wang said. Peng Wensheng, chief economist with China International Capital Corporation, said the higher-than-expected CPI limited the scope for monetary easing in the near term. "Even if January's rebound was an aberration, the fact that it was well above the market expectations may caution policymakers to hold off policy loosening," Peng said. "There is less possibility that the central bank will cut the reserve requirement ratio in February." Markets shrugged off the figures. Shenzhen was up just over half a percentage point, but Shanghai's and Hong Kong's benchmark indices were largely flat. Despite the blip in prices, Qi Jingmei, a senior economist with the State Information Centre, said the authorities needed to cut the reserve requirement ratio. Economists are predicting and investors are hoping that policymakers will loosen monetary policy after the People's Bank of China's decision in December to make its first reserve requirement ratio cut in nearly three years. Food prices, which account for nearly one third of the basket of goods in the nation's CPI calculation, climbed 10.5 per cent year-on-year in January and contributed 3.29 percentage points in January's CPI rise. The increase accelerated sharply from December's 9.1 per cent rise. Month-to-month, the mainland's CPI increased 1.5 per cent in January, the NBS said. Despite the CPI rebound, the country's producer price index, a main gauge of wholesale inflation, only increased 0.7 per cent in January year-on-year, down from 1.7 per cent in December, and was the lowest rise since December 2009.

Chinese tourists photograph the Statue of Liberty in New York. The US is becoming an ever more popular destination for mainlanders. United States ambassador to China Gary Locke has unveiled a pilot programme to waive visa interviews for 100,000 mainland applicants this year. In remarks posted on the US embassy's website yesterday, Locke pledged a series of measures to shorten the visa-processing time, as the US seeks to attract more Chinese visitors. Last year, the US embassy in Beijing and its mainland consulates processed 1 million non-immigrant visa applications, up 34 per cent from 2010. They processed 48 per cent more non-immigrant visa applications in the last quarter of last year, compared to the same period in 2010. Mainlanders make up about 11 per cent of the total visa workload for US missions around the world, and about 90 per cent of applications from Chinese nationals are approved, according to US figures. US President Barack Obama signed an executive order last month to boost foreign tourism. One of the measures is increasing visa-processing capacity on the mainland by 40 per cent this year. Locke said US missions on the mainland would expand their visa-processing capacity by opening new consular facilities in Guangzhou and Shanghai, and adding about 50 consular officers this year. A former US consular facility in Beijing will be reopened this year to handle 150,000 visas. Locke said US officials had also discussed extending visa validity for mainlanders with Beijing, but that would be subject to visa reciprocity for US citizens seeking to travel to the mainland. The US missions will launch a new programme on Monday that will allow consular officers to waive interviews for some qualified non-immigrant applicants, who are renewing their visa within four years of the expiration of their previous visa of the same type. The policy could open up as many as 100,000 interview appointments for mainland travellers applying for visas for the first time. "We expect that this will benefit tens of thousands of applicants in China, saving them time and money, and making it easier for them to travel to the US more frequently," Locke said. "As China develops economically, more of its citizens will want to visit the US as tourists, on business or for education." But he said US consular officers would continue to have the authority to interview visa renewal applicants for security and quality-control reasons. Locke said in December that more Chinese visitors would help create jobs in the US and help lift its sluggish economy. "If you turn them away, they'll go to France, they'll go to Canada," he said. "It's in our economic self-interest to ensure we get as many people from China travelling to the US as possible." US figures showed that more than 800,000 Chinese nationals travelled to the US in 2010, each spending an average of US$6,000 per trip.

Surveys reveal positive public attitudes - Respondents in both China and US believe relationship is crucial, want ties to be closer, report Cheng Guangjin in Beijing and Chen Weihua in New York. Vice-President Xi Jinping (R) and his US counterpart Joe Biden in Dujiangyan, Sichuan province, during Biden's visit to China in August. Xi will begin a visit to the US soon. Two recent surveys highlight positive attitudes that seem to be at odds with the often-strained China-US relationship. A majority of those interviewed said that the relationship is crucial to both countries. They also want greater cooperation, especially in economic and energy issues. The surveys were commissioned at the end of 2011 by China Daily with Gallup in Washington and Horizon Research Group in Beijing. China Daily released the results on Thursday, days before Vice-President Xi Jinping's trip to the US. His visit, which begins on Monday, is widely expected to improve ties in what will be a turbulent US election year. The data generated by the surveys, including opinions on US-China relations and perceived barriers to building stronger ties, was drawn from a wide range of people, including members of the general public and opinion leaders in the two countries.

Hong Kong*:  Feb 11 2012 Share

China Xinhua News Network Corporation (CNC), the TV unit of state-run Xinhua news agency, has tapped the Hong Kong capital markets to support its efforts to build a global media presence and strengthen the Chinese government’s international influence. Xinhua debuted in Hong Kong on Wednesday through a back-door listing initiated via a HK$700 million (US$90.28 million) share-swap of a listed firm previously known as Tsun Yip Holdings, which was engaged in waterworks engineering services. Shares in CNC closed up 0.8 per cent at HK$1.33 on Wednesday. Apart from CNC, Chinese state broadcaster CCTV is launching its American service this week as part of a major overseas expansion, while the online news portal of Chinese government mouthpiece, the People’s Daily, is also planning to raise 527 million yuan (US$83.72 million) through a Shanghai listing. CNC said it plans to extend its coverage to about 100 countries by 2014, up from the 60 countries it now reaches.

The multibillion-dollar bridge linking Hong Kong, Zhuhai and Macau could be utilised at just half of its full capacity 20 years after it opens, if a pilot scheme to increase cross-border driving fails to take off. And with fewer cars using the bridge, it could mean higher tolls for trucks and private cars than planned. Construction of the HK$83 billion bridge is under way. Hong Kong's section will cost at least HK$48.5 billion. Zhuhai and Macau expect to complete their sections by 2016. The Transport and Housing Bureau made the usage projection earlier, based on an existing licence system set up to allow a selected group of 24,000 Hongkongers and 2,000 mainlanders to drive between Hong Kong and Guangdong. The new pilot scheme is meant to ease these restrictions, and officials are counting on it to increase bridge traffic. One month before the trial's first phase, allowing local five-seater cars to travel north on a seven-day permit, Hongkongers are protesting to try to stop it - and the second phase, which would bring mainland drivers here. Critics fear mainland drivers, who are used to a different traffic system and are known for reckless driving, may pose a danger in Hong Kong. Even without the opposition, the take-up rate of the trial's first phase seems to be on shaky ground. While the details have yet to be unveiled, people familiar with the plan say vehicles subject to car loan repayments and seven-seaters are ineligible for the cross-border licence. The costs involved could also be formidable. Apart from an application fee of up to HK$500 for the temporary licence, drivers face miscellaneous expenses including insurance, car inspection fees and charges from institutes that guarantee the car crossing the border would be the same one returning home. Drivers will also have to pay HK$1,900 if they opt to take a course on the mainland's traffic rules and road network. If the scheme fails, it could result in an underused bridge, and a possible increase in toll charges - which officials had predicted to be as low as HK$100 for private cars and about HK$200 for trucks. Without an improved cross-border licence scheme, only 11,600 vehicles would be using the bridge at its opening in 2016, the bureau says. After 20 years, daily traffic would increase to only 42,450 vehicles - or half of the bridge's capacity. If authorities charge only HK$100 for private cars - which now make up about three-fifths of total cross-border traffic - and HK$200 for trucks, income from the bridge would reach only about HK$27.6 billion in 20 years. That was compared to a construction bill of HK$83 billion - including a 22 billion yuan (HK$27.07 billion) loan which the governments of the three cities have to repay with interest in 35 years. Zheng Tianxiang , a transport specialist at Sun Yat-sen University in Guangdong, said unless Hong Kong gave up its status as an open economy, integration with the mainland was inevitable. "Hong Kong used to oppose the individual traveller scheme as well, but that has proved crucial for the economy."

It would be “difficult” – and strictly a last resort – for Hong Kong to seek a reinterpretation of the Basic Law to stem the influx of mainland women giving birth in Hong Kong, the chief executive said on Thursday. “We will consider resorting to these extreme means only if our executive measures cannot solve the problem,” Donald Tsang Yam-kuen said in a pre-recorded interview with RTHK that was broadcast on Thursday morning. This was the first time he has publicly given his view on whether to amend or seek a reinterpretation of the Basic Law to address the issue. Hong Kong, he revealed, has passed on the names of agencies that helped arrange for mainland women to cross the border – and the number plates of vehicles they used – to Guangdong Governor Zhu Xiaodan, for follow-up action. Addressing the current exchanges of ill will between Hongkongers and mainlanders, Tsang called on locals to be accommodating, and said he believed mainlanders would try to abide by Hong Kong’s rules during their visits. Mainland netizens are angry about a Hong Kong newspaper advert published last week calling mainland visitors “locusts”. It was published in response to various incidents, including comments made by Peking University professor Kong Qingdong, who called Hongkongers “ dogs”.

Youku.com, the mainland's leading online video-services provider, and Hong Kong-listed Focus Media Network are widening their partnership to cover advertising sales opportunities in more international markets. Focus Media Network, which operates the largest network of flat-panel displays used for advertising inside commercial buildings in Hong Kong and Singapore, expects to tap greater media-sales opportunities for Youku across the Asia-Pacific region and in other key locations, where advertisers are keen to catch mainland Chinese consumers' attention. The digital outdoors-media company has about 1,100 venues located in lift lobbies of offices in the prime business districts of its two home markets. But the international network of Shanghai-based parent firm Focus Media provides resources that will help it to extend its reach to sites in Taiwan, Malaysia, Vietnam, Indonesia, the Philippines, India and Australia as well as countries in the Middle East. Those efforts could also extend to locations in South America and Russia, where its United States-listed parent firm has interests. "Youku gave us the perfect reason to further invest to promote its platform," said Eric Tam, an executive director at Focus Media Network. "We have plans to play a greater role than just a media-sales partner for Youku." Financial terms between Youku and Focus Media Network were not given. Youku, whose service has been likened to those of global providers YouTube and Hulu, counts Tudou, Sohu Video, PPTV, Ku6 Media and Sina Video as its competition on the mainland. Youku chairman and chief executive officer Victor Koo Wing-cheung said last year that "more aggressive investment in content and technology" would be made as the company "pulls further away from the competition". The partnership with Focus Media Network is expected to provide Youku with new streams of revenue that will support its expansion plans. North Point-based Focus Media Network, whose stock is listed on Hong Kong's Growth Enterprise Market, had total revenue of HK$31.2 million in the nine months to September of last year.

The Wan Chai convention centre was last expanded in 2009. The head of the Hong Kong Convention and Exhibition Centre is seeking afresh to expand the Wan Chai facility, saying big events have left the city for larger venues elsewhere. Should the exodus continue, the city's small and medium-sized businesses would face a "crisis" several years down the road in securing a place to showcase their products, said Monica Lee-Muller, deputy managing director of the venue's management company. Fair organisers and operators of other exhibition centres are expected to oppose any plans to expand the centre. The city's exposition facilities reached their full capacity on fewer than 20 days a year, a spokesperson for AsiaWorld-Expo at the airport said. Lee-Muller did not specify which big fairs or conferences had left the city but mentioned events related to retail, medical services, banking and information technology. "Eighteen years ago in 1994, when I first joined this company, the HKCEC was No2 in Asia in terms of size, just after Japan," she said. "Now, it has dropped out of the top 20 in greater China alone. "If we don't expand the centre, there will be long-term problems with the city's business community, especially the small and medium-sized enterprises, which need such channels to show their products." The 24-year-old venue doubled its exhibition space to 64,000 square metres when an extension was built over the harbour in 1997. A further area of 20,000 square metres was realised in 2009. The centre has been seeking a third expansion for years. Global Sources, which organises the China Sourcing Fairs that anchor the AsiaWorld-Expo venue, has been objecting to plans by the Trade Development Council to increase the size of the Wan Chai centre. Tommy Wong Tam-wai, president of Global Sources Exhibitions, said if any expansion was needed to exhibition centres in the city, it was needed at AsiaWorld-Expo. "The government should take the lead to expand AWE, for its convenience in travelling to mainland cities," he said. "Wan Chai is already overwhelmed with cars. Any further expansion will have a big impact on residents." Company chairman Merle Hinrichs has previously said the government spent HK$2 billion to build the Chek Lap Kok venue and "the investment will be totally lost" if it was to expand the Wan Chai venue. A spokesperson for AsiaWorld-Expo's management firm said a suggestion from the Commerce and Economic Development Bureau to split electronics and gifts events between the two venues would solve the demand issue. Raymond So Wai-man, a finance professor and part-time member of the Central Policy Unit, said he favoured expanding the convention centre because many businessmen deemed its prime location important, but it would be difficult because "there isn't enough land for it". "AsiaWorld-Expo is too close to the airport, and people don't have places to go after conferences, such as bars or a variety of entertainment. It is suitable only for events whose participants have to leave the city right after conferences." A department spokeswoman said the government was looking into the phase-three expansion plan. The public would be consulted after the convention centre made a concrete proposal.

Canto-pop legend Sam Hui leads students in a singalong during a performance yesterday to mark the centenary of the University of Hong Kong, from which he graduated in 1971. The "God of Canto-pop" showed his quick wit yesterday during a performance to help the University of Hong Kong celebrate its 100th anniversary at the Pok Fu Lam campus. In response to a reporter's question on who he would choose to be chief executive out of the two main candidates, Samuel Hui Koon-kit replied: "Who is the genius, and who is the idiot?" He was quoting a line from the song Genius & Idiot that he wrote for the 1975 film The Last Message. Clifton Ko Chi-sum, a film director and an organiser of yesterday's event, followed with the next line: "Can you or I tell who is?" The HKU gathering saw "Ah Sam", as he has been affectionately known in Hong Kong for the past 40 years, emerge from a long break to cheer up his alma mater. It came after the controversy over the visit of the Vice-Premier Li Keqiang and a mainland professor's verbal attack on Hongkongers, calling them "dogs". The 64-year-old graduated from HKU in 1971 and returned to the campus to sing some of his most iconic melodies to an enthusiastic crowd of students, staff and alumni. "I dedicate the following song specially to my HKU colleagues who have been unhappy lately," he said as he led the crowd in a singalong of The Ballad of a Rover. The song from the 1970s is about a wise man's reflection on hyprocrisy and greed. "By singing it together, I hope it will soothe your emotions," Hui told the audience. The one-hour gathering, with the theme "Brighten me with virtues: Sam Hui's world", centred on a song the pop star wrote last year to celebrate HKU's centenary. Sung in Cantonese, Hui's latest opus urges the university community to persevere in the face of "the darkest hour" and "standing fast against the wind and storm". But he denied the university was adversely affected and that freedom of speech was curtailed during Li's visit last August, which he called "an isolated incident". He said: "We should appreciate the 100 years of HKU, and not just a single event. "I do hope we are able to continue the university's tradition of virtues." The Ballad of a Rover, he added, did not reflect his views on current events. "It was written a long time ago," he said with a laugh. But he insisted that singing in Cantonese should be upheld to strengthen Hong Kong's identity. "[Hong Kong] Chinese should always listen to Cantonese songs, which appeal to our very soul, the soul of a dragon's descendant," he said. Despite the low ebb at present, he called upon all Canto-pop writers to work hard to maintain the genre's status. "Most of us in Hong Kong are Cantonese speakers. Without Cantonese, our sense of belonging will be lost." He said the attack on Hongkongers by Peking University professor Kong Qingdong "is biased against Cantonese speakers and is very inappropriate". He said he would dedicate one of his three concerts in April at the Hung Hom Coliseum to HKU. "As an alumni, I have the mission to cheer up my folks when such time calls for it, just like the song Keep On Smiling I wrote and sang at the concerts in 2004 to cheer up the community after the deadly Sars. "Now is the time for me to bring smiles to my unhappy colleagues through my music."

Fifty mainland-registered vehicles a day will be allowed into Hong Kong for up to seven days when the next phase of the cross-border driving scheme begins, say people familiar with plans being made by the Hong Kong and Guangdong governments. But mainland drivers applying for local licences would need to meet strict requirements, such as having a good driving record and attending courses on the city's traffic regulations, they said. The first phase of the plan - which will also allow 50 Hong Kong-registered private vehicles to travel daily to Guangdong - is due to begin next month. Critics worry that the second phase will lead to hundreds of mainland vehicles clogging the city's roads and adding to the pollution, and such fears have led to a war of words on the internet. However, only a maximum of 350 mainland vehicles will be in the city daily under the "50 mainland cars a day for seven days" scheme, say people with knowledge of the plan. That is in addition to the existing system of cross-border permits extended to 2,000 mainland vehicles. As such, the total population of mainland vehicles in the city is unlikely to cause an undue burden, according to the insiders. While the quota for mainland vehicles may eventually increase, they say, the number will always be fewer than that of Hong Kong vehicles heading north, which may eventually increase to 500 a day. Yang Kun, a mainland driver with a cross-border licence and the spokesman for a group of 1,500 cross-border permit holders, said none of the group's members had ever been involved in a serious or fatal motoring accident in Hong Kong. But he acknowledged there were some "killer" mainland drivers. "It was challenging for me to fit into a traffic system exactly the opposite to that of where we come from, but it didn't take me long to cope," Yang said, referring to the mainland's use of left-hand driving and Hong Kong's right-hand driving. "A good thing about Hong Kong's traffic is that there is almost always a car in front of you to remind you of the correct lane to stick to," said the deputy general manager of B&B Motor Club, a Shenzhen-based group comprising Mercedes-Benz and BMW drivers who travel across the border. Traffic regulations in the city and on the mainland also differ in other respects. For instance, vehicles on the mainland are allowed to turn right when there is no traffic, even when the traffic lights are red. That is not allowed in the city. Yang said he had occasionally driven in the wrong lane on quiet roads in Yuen Long. But he had been driving cautiously and slowly because of his lack of familiarity with Hong Kong roads, he said, adding his fellow club members did the same. "It is more comfortable to drive in Hong Kong [than on the mainland], you don't have to worry about other cars cutting you from every direction," he said. "It is easier to follow rules in an environment where everyone else is doing so too." Yang said the club agreed that strict local rules should be imposed on mainland drivers and the condition of their vehicles. It has suggested that the city's government demarcate routes for sight-seeing and shopping purposes, and have signs directing mainland drivers away from busy streets, such as those in Mong Kok and Central.

 China*:  Feb 11 2012 Share

Singapore warns US against anti-China rhetoric - Singaporean Foreign Minister K Shanmugam attends The Singapore Conference in Washington on Wednesday. Shanmugam is currently visiting Washington to meet US policy makers and took the opportunity to warn the US against making negative comments about China. Singapore on Wednesday urged the United States to be careful when making comments on China, warning that suggestions of a strategy to contain the rising power could cause strife in Asia. On a visit to Washington, Foreign Minister K Shanmugam voiced confidence that the State Department accepted the need for co-operation with China but said that US domestic politics “resulted in some anti-China rhetoric”. “We in Singapore understand that some of this is inevitable in an election year. But Americans should not underestimate the extent to which such rhetoric can spark reaction which can create a new and unintended reality for the region,” he said. Singapore is a close partner of Washington and home to a key US military logistical base. But the city-state is highly dependent on trade and has sought smooth commercial relations with Asia’s major economic powers such as China, Japan and India. “It’s quite untenable – quite absurd – to speak in terms of containment of China. That’s a country with 1.3 billion people,” Shanmugam told a conference on Singapore at the Centre for Strategic and International Studies. China “is determined to progress in all fields and take its rightful place in the community of nations. It will succeed in that venture,” he said. The United States, while looking to trim spending on its giant military to tame a soaring debt, has set a priority on Asia as rapid economic growth and the rise of China look set to reshape the region. The US military has sought closer co-operation with the Philippines and Vietnam, which have accused China of increasingly bellicose actions to assert control over disputed territories in the South China Sea. Shanmugam said that the United States should also look at other ways of engagement in Asia such as pressing ahead with the Trans-Pacific Partnership, an emerging trade pact that involves at least nine countries. It is “a mistake to focus only on the US military presence in the region, to the exclusion of other dimensions of US policy,” he said. President Barack Obama’s administration has repeatedly said that it welcomes the rise of China and will try to find areas for co-operation. Vice-President Joe Biden, ahead of a US visit by his mainland counterpart Xi Jinping, called in a statement on Wednesday for the two powers to work together on “practical issues”. Addressing the same conference as Shanmugam, senior US diplomat Kurt Campbell agreed it was “very important we’re careful about our rhetoric” and said that the United States wanted a relationship with China “based on the well-being” of both countries. “Every country in Asia right now wants a better relationship with China. That’s natural and any American strategy in the region has to be based on that fundamental recognition,” said Campbell, the assistant secretary of state for East Asia. “It is also the case that every country in Asia, I believe, also wants a better relationship with the United States,” he said. Shanmugam did not cite examples of “anti-China” comments in the United States, but a number of US lawmakers have raised fears about Beijing’s rise. At a congressional hearing on Tuesday, Congresswoman Dana Rohrabacher called for the United States to increase support for the Philippines to help the democratic US ally assert its claims in maritime disputes with China. “We need to stand as aggressively and as solidly with the Filipino government in their confronting an aggressive, arrogant China – expansionist China – as we have stood with them against radical Islam,” said Rohrabacher, a Republican from California. Economic disputes with China have also come to the forefront. In a recent television commercial that outraged Asian American groups, Representative Pete Hoekstra – a Republican seeking a Senate seat in Michigan – attacked his opponent with an advertisement criticising US debt to China. In the advertisement, a young Asian woman – in a setting that looked more like Vietnam than China – said in broken English, “Your economy get very weak; ours get very good.”

Wang Lijun, the deputy mayor and former police chief relieved of his duties in Chongqing, pictured delivering a lecture to a conference in Sichuan in October 2011. Wang met officials at a US consulate in Chengdu amid unconfirmed reports of an asylum bid, but then left the building, the US State Department said on Thursday. Wang Lijun, the deputy mayor and former police chief relieved of his duties in Chongqing, met officials at a US consulate in Chengdu amid unconfirmed reports of an asylum bid, but then left the building, the US State Department said. His whereabouts were unclear on Thursday. A Chinese official, meanwhile, said Wang’s case had been settled smoothly, but he did not elaborate. Wang, whose crackdown on crime gangs inspired a drama on state TV but who was removed from his police post last week, has dropped from public view. The disappearance fuelled unconfirmed reports in the mainland of a power struggle he may have had with the city’s powerful Communist Party secretary, Bo Xilai. Days of speculation about Wang’s situation came to a head on Wednesday with online reports that he sought asylum at the American consulate in the nearby city of Chengdu on Tuesday after quarrelling with Bo. In Washington, US State Department spokeswoman Victoria Nuland confirmed Wang sought and had a meeting at the consulate and later left “of his own volition”. She declined to comment on whether he had sought refugee status or asylum. She said to her knowledge, the consulate has not been in contact with Wang since the meeting. Employees of businesses near the Chengdu consulate reported large numbers of police vehicles in the area on Tuesday night, but said the area was quiet on Wednesday. Cui Tiankai, China’s deputy foreign minister in charge of North American affairs, said the Wang case had been settled “in a fairly smooth manner”. Asked for details, Cui said he had no further information. Cui was speaking at a briefing on Vice-President Xi Jinping’s trip to the United States next week. He said the incident would have no impact on the visit. Wang was shifted out of his role as police chief last week. The lawman may have fallen out of favour because his 2008-2010 crackdown on gangs, which Bo made into one of his signature policies, strayed from standard procedures and clashed with the central government’s current campaign to strengthen the rule of law, Beijing-based political analyst Li Fan said. Bo, who sits on the Communist Party’s powerful 25-member Politburo, appointed Wang in 2008 to clean up the force and take on organised crime in a campaign that drew national attention. Wang won a reputation for personal bravery in confronting gangs and was once the subject of a TV drama called Iron-Blooded Police Spirits. His law enforcement success led eventually to high political office and a seat in the national parliament, while his association with Bo gave him countrywide recognition. A former commerce minister, Bo is considered a leading “princeling” in the party, a reference to the offspring of communist elders whose connections and degrees from top universities have won them entry into the country’s elite. Bo garnered huge publicity for his anti-crime campaign and an accompanying drive to revive communist songs and poems from the 1950s and 1960s, spurring talk that he was seeking a promotion. Those campaigns have since fizzled, leading analysts to pull back on speculation that he might be elevated to higher office when the party begins a generational change in leadership later this year. Political analysts in the mainland say Bo has been cutting ties with the advisers behind the ‘red songs’ and anti-crime drives in hopes of reviving his political fortunes.

Chinese Internet giant Alibaba Group Holding Ltd. is in the process of raising a US$3 billion loan from around six banks to buy back the stake that Yahoo Inc. owns in the company, people familiar with the situation said Thursday. Yahoo owns 40% of Alibaba Group. The six banks –Australia and New Zealand Banking Group Ltd., Credit Suisse Group AG, DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings PLC and Mizuho Financial Group –are in the process of getting internal credit approval to underwrite the loan, which is said to have a tenor of three years with a yield of around 4%. The loan is expected to be finalized this month, the people said. The news comes as shares in Alibaba Group’s Hong Kong-listed unit, Alibaba.com Ltd., were suspended from trade Thursday. In a stock exchange filing Thursday, Alibaba.com said that it plans to clarify speculation related to a transaction involving its controlling shareholder.

Prices on par with US fail to deter Chinese customers who want a taste of 'the good life', report Gao Changxin in Shanghai and Wang Jingshu in New York. Su Nan stood inside a Starbucks on Shanghai's bustling Huaihai Road and complained about the US coffee chain's recent price hike. "It's already expensive. How am I going to live?" But the 26-year-old still joined a long line for a latte. The world's biggest coffee chain raised the price of some products on Jan 31, due to what it said were rising operating costs. That brought Su's 16-ounce (about half a liter) "grande" cup to 30 yuan ($4.75) from 28 yuan. Starbucks was already an expensive choice for regular Chinese customers such as Su, who earns about 7,000 yuan a month. One cup of cappuccino a day for a year would cost her 10,950 yuan - about one-eighth of her income. Still, Su is better off than many others. China's per capita GDP last year was $5,184. It was $48,147 in the US. Despite a huge gap in personal income, Starbucks has priced its products almost the same in China as in the US, if not higher, since it entered the Chinese market in 1999. It also raised prices recently in the US Northeast and Sunbelt, by an average of about 1 percent. In New York, a 12-ounce latte now sells for $2.85 and plain brewed coffee was $1.65. The price of a 16-ounce, "grande" cup of coffee is unchanged at $2.20 plus 20 cents in local tax. But Chinese consumers, who traditionally drink tea and have little taste for coffee, seem not to mind paying a relatively higher price. They have become one of the engines of growth for Starbucks. The company has become so popular in China that it opened its 500th store in October, in Beijing, and plans to triple the number by 2015. Globally, Starbucks had 17,003 stores in 58 countries as of Oct 2. In China, it's expanding not just in the big and rich areas but also in so-called second-tier cities, where consumers have much less disposable income. In December, Starbucks announced it had entered five more Chinese cities, including Langfang in Hebei province, which can hardly be rated as second-tier. Annual per-capita GDP is just above $3,000. Operating costs in China are much lower than in the US. So why do Starbucks and other American companies price their food and beverages higher in China? Two professors from Long Island University in New York offer explanations. "From the marketing perspective, the price-setting reflects how the brand positions itself in the market," said T. Steven Chang, chair and professor of marketing and international business. "Therefore, cost is not the only factor considered by the company. "Starbucks actually is selling their whole package, including the symbol of good taste and prestige, the Westernized atmosphere they created in each retail store, and high-quality coffee and food." Thomas C. Webster, a professor of public administration and public economics, said, "Usually prices are set based on the conditions of the specific market. In the case of China, the market is probably not saturated with competitors, so if people want designer coffee - which many regard as a status symbol - they are willing to pay the higher price. "If Starbucks starts making large profits," Webster said, "then you will see other competitors enter the market and that will drive the price down."

Pizza Hut seeks bigger piece of pie - Pedestrians pass a Pizza Hut restaurant on Nanjing Road in Shanghai. Yum! Brands Inc said it plans to open at least 150 restaurants in second- and third-tier cities in China this year. Yum! Brands Inc plans to open 150 of its restaurants in China this year - Pizza Hut, a restaurant chain owned by Yum! Brands Inc, announced it will open at least 150 restaurants in China this year as its parent company moves forward with plans to expand overseas. "Pizza Hut will accelerate its development speed in China," said Perter Kao, brand general manager of Pizza Hut and Pizza Hut Delivery of Yum! China. "We plan to invest more than 700 million yuan ($111.2 million) and open at least 150 restaurants in third- or fourth-tier cities this year." Yum! Brands Inc, based in Louisville, Kentucky, has more than 36,000 restaurants in more than 117 countries and regions, according to its official website. In 1987, Yum! entered China by opening its first KFC store. The catering giant now has more than 4,400 restaurants in the country - KFCs, Pizza Huts, Taco Bells, East Dawnings and Little Sheep. On Tuesday, Yum! Brands Inc reported that its fourth-quarter profit had increased by 30 percent from the same period a year ago, a result it attributed to its global expansion and the sales increase it has seen at its China stores. The company's net income increased to $356 million, or 75 cents a share, from $274 million, or 56 cents, a year earlier, Yum! said in the statement. Yum!, which has about 18,800 restaurants outside the United States, said its fourth-quarter sales at stores that have been open at least 12 months increased by 21 percent in China. The company said it opened 656 stores in the country last year, a record number. It gets more than 40 percent of its revenue from China. By contrast, same-store sales during the quarter increased by 1 percent in the US, driven by growth at the Pizza Hut chain, Yum! said. In addition to the store opening, Yum! announced that its plan for privatizing Little Sheep Group Ltd took effect on Feb 1, making the hotpot chain a subsidiary of Yum!. That change has given the company a much bigger presence in the Chinese market. The acquisition is expected to cost Yum! about HK$4.557 billion ($586.5 million). "China's catering industry is on a fast development track and has achieved year-on-year growth of about 20 percent during the past 30 years," said Jing Linbo, vice-president of the Chinese Academy of Social Sciences' national academy of economic strategy. "In 2011, the sales revenue from the Chinese catering industry was estimated to reach 2.05 trillion yuan, up 16.9 percent compared with the year before. "By the end of 2015, the industry's sales revenue is expected to reach 3.7 trillion yuan. That will provide a huge market for foreign restaurant companies, including Yum!."

A KFC outlet in Shenyang. The chain leads the mainland market for Western fast food, with in-store transactions up 21 per cent last year. Fast-food chain giant Yum Brands will add at least 600 more outlets across the mainland this year on the back of continued strong sales growth in the world's second-largest economy. United States-based Yum Brands, owner of the popular KFC and Pizza Hut chains, launched on the mainland a record 656 new restaurants last year and posted a 21 per cent increase in same-store transactions - a measurement of revenue from stores opened for a year or more - during the same period. That resulted in a banner year with total domestic sales of US$5.6 billion, which accounted for a quarter of consolidated global sales of US$12.6 billion last year. "We view China as the best restaurant growth opportunity of the 21st century," Yum Brands chairman and chief executive officer David Novak told analysts in a conference call yesterday. Yum Brands had a total of 4,493 traditional KFC and Pizza Hut stores on the mainland last year. It also operated more than 20 East Dawning restaurants, which offer dumplings and other Chinese cuisine served in a fast-food format. "Our strategy in China is to have leading brands in every significant category," Novak said. "KFC is the clear leader in Western quick-service restaurants (QSR); Pizza Hut is far and away the Western casual-dining leader; and we're developing Pizza Hut Home Service." "We're also building East Dawning to be the premier mainstream Chinese-food QSR concept," he said. The company's mainland expansion accelerated last month after it completed the US$4.4 billion takeover and privatisation of Chinese hot-pot chain Little Sheep, which is famous for its Mongolian-style mutton dishes. Novak described Little Sheep, which was founded in Inner Mongolia in 1999, as the "leading hot-pot brand in Chinese casual dining". He added: "We are looking forward to strengthening Little Sheep's operational model and increasing its market leadership position." The former Hong Kong-listed Little Sheep has added 450 restaurants to the mainland network of Yum Brands. Richard Carucci, the company's chief financial officer, estimates the Little Sheep business will add about 5 per cent to mainland revenues this year. "For the first quarter of 2012, given its strong sales over the Chinese New Year, we expect solid double-digit same-store sales growth [on the mainland]," Carucci said. But he pointed out that higher labour and raw-ingredient costs in the mainland market prompted Yum Brands and others in its industry to increase prices in the second half of last year. Another modest increase is expected in the first half of this year. "One of the great things we've had in China is we've had positive cash flow for at least five years there, even though we've continued to ramp up development there," Carucci said. Market research publisher IbisWorld has forecast the mainland's fast-food industry will generate sales of US$147 billion by 2016, up from an estimated US$74.8 billion last year.

Members of an honour guard prepare for an official welcoming ceremony for Canadian Prime Minister Stephen Harper in Beijing. China and Canada yesterday signed a series of agreements to boost modest levels of bilateral trade, including a deal that Ottawa said should allow the immediate resumption of Canadian beef and tallow exports after a nine-year pause. The deals were inked in Beijing's Great Hall of the People by Premier Wen Jiabao and Canadian Prime Minister Stephen Harper, who arrived on Tuesday with a large trade delegation in a bid to ramp up exports and reduce Canada's reliance on the huge US market. "The agreements being signed today, in such a wide range of areas, are further testimony that we are taking relations to the next level and further strengthening our strategic partnership," Harper said in a statement. Harper is particularly keen to increase exports of oil, citing the need to diversify away from the US, the largest importer of Canadian energy. "Diversifying our markets is a key priority for Canada," Harper told Wen ahead of a closed-door meeting between the two leaders. "We look forward to expanding our co-operation in many important areas including energy, natural resources, tourism and education." Wen said the trip was an opportunity to "further enhance our mutual understanding and trust". Canadian officials said the deal on beef should allow the immediate resumption of beef and tallow exports, which Beijing halted in 2003 after a Canadian case of mad cow disease. China committed itself in 2010 to resuming trade in Canadian beef and tallow, but Beijing's standing restrictions on beef containing the growth enhancer ractopamine have stood in the way. The two sides also wrapped up 18 years of negotiations on a foreign-investment promotion-and-protection agreement, but gave few details. Both nations will need to conduct a legal review of the deal and then sign and ratify it before it can take effect. Canada says it is determined to open up new markets and reduce reliance on the United States, which takes about 75 per cent of all Canadian exports. Ottawa intensified its calls to diversify exports last month after Washington vetoed a pipeline that would have carried crude from the western province of Alberta to Texas. China does not import any Canadian oil, but says it is interested in doing so. The two nations also signed an extension of a memorandum of understanding on energy issues covering oil, gas and nuclear energy as well as trade and investment.

One of around 200 Ochirly fashion outlets throughout the mainland - A financial consortium backed by French luxury goods giant LVMH has acquired a 10 per cent stake in mainland fashion maker Ochirly, a sign that global retailers are keen to tap the huge potential of mainland middle-class consumers, people close to the deal said yesterday. The deal is worth US$200 million, valuing the whole of family-owned Ochirly at US$2 billion, and marks the first time L Capital, the private equity arm of LVMH, has taken a direct stake in a mainland company. The people said L Capital, which is mainly financed by LVMH, has teamed up with the private equity arm of state-owned financial conglomerate China Citic Group to take the stake in Ochirly, which is a mid-priced brand that caters mostly to trendy female office workers. Beijing-based Citic Private Equity Funds agreed to hold only a small stake, leaving most of the 10 per cent stake in Ochirly to be owned by L Capital, the people said. Ochirly, established in late 1990s, currently operates about 200 retail outlets across the mainland, including in top-tier cities such as Beijing, Shanghai and Guangzhou, and is one of the nation's biggest fashion companies in terms of sales. The top management of the company has been considering making an initial public offering of shares in Hong Kong or New York in the coming years, and is looking to the tie-up with LVMH to boost the company's brand recognition worldwide. "The deal is not just about money," said one person familiar with the transaction. LVMH and L Capital consider this "a good opportunity to tap the strong fashion business growth of Chinese consumers, but it's more important for Ochirly to win recognition among global investors" for a future IPO. L Capital could not be reached for comment. L Capital is no stranger to acquisitions in Asia. In August 2010, L Capital bought about US$30 million worth of warrants and convertible bonds in Hong Kong-listed Emperor Watch and Jewellery, controlled by the city's entertainment industry tycoon Albert Yeung Sau-Shing. Emperor's foreign investors also included hedge fund D.E. Shaw. "The Emperor deal in 2010 was more like a test for the fund [L Capital] to make investments in China. I think now it's more aggressive and wants to pour more money into the local market," said another person, adding that the rise in asset prices has been a top concern of global investors trying to consummate deals on the mainland in recent years. In the West, fashion and luxury businesses were badly hit in the financial crisis in 2008. Sales of luxury products have been slowly recovering in the past two years. Currently, China is the world's second market for luxury goods, behind Japan. LVMH's best-selling products on the mainland include Louis Vuitton handbags and Marc Jacobs brand clothes. In 2001, LVMH and its major shareholder Groupe Arnault jointly set up L Capital, whose investment focus is to seek deals in consumer-driven sectors such as personal health care, luxury and retail goods. In addition to the Emperor deal in 2010, L Capital also bought minority stakes in Genesis Luxury Fashion in India, and in Singapore it has investments in luxury timepiece retailer Sincere Watch and Asian shoe label Charles & Keith. Nick Debnam, a partner at KPMG China, said: "China has become the most important market for luxury and the global luxury players are clearly very interested to invest in China. There are a variety of options for investment in China, both in terms of developing existing luxury brands and building new brands. "The multinational luxury groups may provide emerging Chinese designers with a tremendous platform to expand into the global marketplace. This would give domestic designers direct access to the experience and connections which a multinational fashion group would have built up over years of doing business on an international level."

Chinese policy banks are seeking to expand lending to commodities-rich countries in Latin America using the Chinese yuan instead of the dollar, part of a broader government effort to promote international use of the yuan, according to people familiar with the matter. Since early last year, the Export-Import Bank of China has been in discussions with the Inter-American Development Bank about setting up a fund to provide up to $1 billion worth of yuan funding for infrastructure projects in Latin America and the Caribbean, a key supplier of mineral wealth and crops to China, the people said. The fund could be launched this year, they said. The two banks signed an agreement in September under which China Exim bank committed to offer as much as $200 million to finance trade between China and the region. At least part of that funding would be provided in yuan. China Development Bank, meanwhile, has been raising yuan funds in Hong Kong's burgeoning yuan debt market partly to finance a portion of its 70 billion yuan (US$11.10 billion) loan to Venezuela, as part of a long-term loans-for-oil deal signed in 2010. Since mid-2010, the bank has sold about $2 billion worth of yuan debt in Hong Kong, according to data provider Dealogic. The cost of funds there is cheaper than on the mainland. China is pushing to give the yuan a wider role in trade and investment. As the world's second-largest economy, it aspires to be a global power with a global currency. In time, it hopes that an internationally accepted yuan could emerge as a store of value on par with the dollar, euro and yen. However, because Beijing still tightly controls the value of the yuan and capital flows, China's state-banking executives have found few takers for their yuan-denominated loans overseas, especially in developed markets such as the U.S. and Europe. "We want to make more yuan loans, but we often end up still lending in dollars," a person familiar with the policy banks said. Chinese policy banks are focusing their yuan-loan efforts on Latin America, as China sees opportunity to raise the yuan's profile in a region that is counting on Chinese demand to help bolster its economy in the face of a likely recession in Europe and a tepid economic recovery in the U.S. By targeting the Americas with its yuan push, China hopes to raise the currency's profile in energy and commodities trade, analysts say. "A weak dollar has raised the cost of the commodities imported by China, so getting the yuan to play a role in pricing commodities could help stabilize commodities prices and lessen the inflationary pressure," said Ye Xiang, a former official at the People's Bank of China who now serves as a managing director at VisionGain Capital, an investment firm in Hong Kong. China's interest in Latin America has grown exponentially in the past decade, encompassing purchases of oil, copper, soybeans and other commodities as well as helping develop infrastructure in the hemisphere to produce and deliver those products. Trade between China and Latin America and the Caribbean surged to more than $188 billion last year from just $12 billion in 2000, according to the Inter-American Development Bank, a 48-member body that provides financing for 26 countries in the region including Argentina, Brazil, Chile, and Venezuela. China in 2008 became a member of the Washington-based bank that historically has been under the sway of the U.S. As the yuan becomes more available in foreign markets through lending by Chinese banks, many analysts expect it to account for a bigger share of international trade settlement. Beijing started to allow cross-border trade to be invoiced and paid for in its currency more than two years ago, and since then, yuan-settled trade has grown to about 10% of China's total trade. Analysts at Deutsche Bank AG predict yuan-settled trade this year will come to 3.7 trillion yuan, or 15% of China's total trade. Beijing's yuan-loan push also comes at an opportune time: many European banks that traditionally have dominated the Latin American market likely will be retreating amid the debt crisis plaguing the euro zone, analysts say, providing opportunities for the Chinese lenders to swoop in. When announcing the joint agreement between China Exim bank and the Inter-American Development Bank last March to set up the yuan-denominated infrastructure fund, Luis Alberto Moreno, president of the Inter-American Development Bank, said the deal would help expand "the pool of financing available to support the regional economic development."

Prime Minister Stephen Harper of Canada pledged closer trade ties with China during a meeting with Premier Wen Jiabao on Wednesday, even as he pressed Beijing over its recent decision to block a United Nations Security Council resolution against Syria's government. The trip is part of a broader strategic push by Canada to more closely align itself with China and reduce its reliance on the U.S. Mr. Harper aims to increase Canada's capacity to export oil and other resources to China, an effort that has intensified following the Obama administration's decision to reject for the time being TransCanada Corp.'s Keystone XL pipeline, which would have shipped oil-sands crude from Alberta to the U.S. Gulf Coast. Finding alternative markets for its natural resources has become a top priority for Canada, which today sells nearly all of its oil to the U.S., but sees environmental regulations from Washington as an increasing impediment to its oil-export ambitions. In that quest, China looms large. Analysts say the trip is a somewhat tricky one for Mr. Harper, as he looks to promote deepening trade ties between the countries while not appearing too cozy with Beijing. He joins other leaders, including German Chancellor Angela Merkel, who have visited Beijing in recent weeks and pressured China over its continued defense of regimes in Syria, Iran and elsewhere. "There was a view when we took office that you either had to deal with the Chinese on economics or to deal with them on human rights and consular matters, but you couldn't do both, and we refused to accept that view," Mr. Harper said. "My view continues to be that it is possible and necessary to raise with the Chinese a full range of issue as part of a frank and productive relationship." Mr. Harper said he pressed the Chinese premier over Beijing's decision to block a U.N. Security Council resolution calling for Syrian President Bashar al-Assad to step aside amid intensifying violence there. "I raised in very clear and strong terms Canada's position on this issue," Mr. Harper told reporters following his meeting with Mr. Wen. "We would hope to see in the future action from the Security Council on this matter, and I was very clear about that." Mr. Harper, on his second trip to China since taking office in 2006, declined to say how Mr. Wen responded. Chinese leaders weren't available to comment on Wednesday, but the country's Foreign Ministry has deflected criticism previously over the veto, arguing proponents of the resolution against Syria pushed for a vote before differences had been resolved. Russia, another permanent member of the Security Council, vetoed the resolution as well. China is buying up energy and other resources around the world in a bid to fuel its booming economy. Rising uncertainty over the reliability of supply from its traditional oil providers, including Iran, has forced Beijing to aggressively seek out alternatives across the globe. Canadian officials say the country needs to harness China's rapid ascent in order to keep its own economy churning. "Diversifying our markets is a key priority for Canada and we look forward to expanding our cooperation in many important areas including energy, natural resources, tourism and education," Mr. Harper said during his meeting with Mr. Wen. Mr. Wen, for his part, said China was "ready to expand imports of energy and resource products," the state-run Xinhua news agency reported. In a sign of deepening business ties, the countries said Wednesday they had finished negotiations on a new series of regulations that aim to make investing in China easier and more stable for Canadian companies. The agreement, among other things, aims to shield Canadian companies from discriminatory regulations. Specific details of the agreement remained unclear, particularly how the agreement would be enforced at the local level in China, where foreign companies often face the most discrimination. Trade ties between the countries are on the rise. Canadian investment in China in 2010 increased by 38% to almost $5 billion, according to Canadian statistics. Chinese investment in Canada in 2010, meanwhile, jumped 9% to $14 billion.

Hong Kong*:  Feb 10 2012 Share

Need a holiday - and your friends look like they could do with one, too? How about a quick trip to Fiji in the South Pacific or maybe a jaunt to Indonesia for all of you? You'll travel by private jet and enjoy lavish service at an all-inclusive resort - all from a mere US$12,500 per person for a group of 20. Say hello to Anjet, a California-based broker of private jets that has just brought its five-star service to Hong Kong and the mainland. Its arrival is one of the more conspicuous signs of growth in Hong Kong's private-jet industry. The city has become a pivotal point for international jet-hire companies seeking to muscle in on the mainland market. And with China's economy still surging onward, Hong Kong is also the springboard for mainland business-jet operators to go international. The mainlanders who roam Canton Road in Tsim Sha Tsui in the hunt for luxury handbags and designer clothing are also now being targeted for the bigger-ticket temptations of exotic holidays by private jet. With economies on the other side of the world gloomy and stagnant, Asia is even more of a prime destination for these operators - and to keep flight times short, they're keeping most of the destinations here. "We know that our passengers would rather have their feet on the sand than on board," said Anthony Newcombe, president and chief executive of Anjet, which does not actually own any aircraft but acts as the middleman, bringing in customers for charter operators. The quick growth in the private-jet market is fuelled, in particular, by the overseas expansion strategy of mainland companies. They often need to send top management on multi-destination trips and on schedules commercial airlines cannot accommodate. "In the next 10 years, increasing numbers of mainland companies will set up headquarters in Hong Kong for overseeing their overseas operations," said Chris Buchholz, chief executive of Hong Kong Jet, which is owned by HNA Group, the fourth-largest airline corporation on the mainland. Newcombe, an avid traveller himself, started his tailor-made tour-package business in the United States in the summer of 2008. Since then, he has organised more than 100 trips for high-paying customers to top destinations. He opened an office in Central in December and another in Shanghai last month. For customers headed to private islands and other exotic destinations, the package costs about US$20,000 to US$25,000 per head. For more familiar tourist spots, such as Bali and Phuket, the fare ranges between US$12,500 and US$15,000 per person, based on a tour of four to seven days. The number of private jets in China as a whole stood at more than 160 last year, up from only about 10 a decade ago, according to the Asian Sky Group, a private-jet broker with offices in Admiralty. Approximately 100 of them operate out of the mainland and about 50 from Hong Kong. Most of the jets were manufactured by the US company Gulfstream Aerospace, followed by Canada's Bombardier and another American maker, Hawker Beechcraft. Gulfstream aircraft are more popular among mainland buyers because they are larger and have greater range. The market is tipped to see explosive growth in the coming years. The Cessna Aircraft Company - a US-based business-jet producer - told reporters last week that one of its priorities this year is to develop the Chongqing and Sichuan market. They are not alone in this. Many private-jet brokers are now eyeing the opportunity to expand their operation from China's coastal areas into inland provinces. In Chongqing, media reported that at least two local businessmen had bought private jets over the Lunar New Year period and that more than 30 others were in talks with brokers to buy their own jets. Avion Pacific - a Hong Kong-registered company based in Shenzhen - estimated the number of potential buyers in Chongqing alone at more than 100, according to the Chongqing Commercial Daily. The company is in talks with at least 10 potential buyers. It is a similar story in many other central and western provinces - where a decade ago the idea of a private jet was still a novel concept. The HNA Group sees Hong Kong Jet as having the potential to help it expand its private-jet network from the domestic market to the regional and global markets. It's part of HNA's plan to transform itself into a multinational corporation. Hong Kong Jet, which had its operating licence approved by the city's Civil Aviation Department in December, aims to expand its fledgling fleet of two planes to as many as 15 by the end of this year and to increase its staff to 100 from 48. VistaJet, a Switzerland-based private-jet company, is another foreign company hoping to tap into China, as well as Brazil, Russia, India and Nigeria, banking on the rapid growth in global commodity markets and the development of mining and other assets in remote locations. The private-jet operator said talks were at an advanced stage to establish a joint venture with a local partner on the mainland and it hoped to launch the operation by the end of the year. The firm, which calls itself the world's fastest-growing private aviation company, provides flights at a fixed hourly rate, as well as on-demand charters of a variety of private jets - from the ultra-long Global Express to the high-altitude 860 kilometre-per-hour Learjet 60 XR - from its operation centres in London, Salzburg, Dubai, Kuala Lumpur and Hong Kong. Newcombe's new Anjet office in Central is meant to handle customers throughout East and South Asia - including South Korea, Singapore and India - the South Pacific and Australia and New Zealand. It has a staff of four private-jet brokers but plans to increase this to 50 by the end of the year. And in three to five years, it reckons it will have offices in Shanghai, Beijing and Singapore and employ more than 300 people.

The long-discussed crackdown against illegal structures on village houses in the New Territories would begin in April, the development chief said on Wednesday morning. Secretary for Development Carrie Lam Cheng Yuet-ngor said letters will be sent in April to owners of houses with “severe breaches” of the law, to ask them to demolish the structures. This will include houses with extra storeys that exceed the three-level standard, and glass enclosures covering more than half the rooftop. Lesser breaches, such as glass enclosures that cover less than half the rooftop, will be tolerated for some years as long as owners register the structures with the Buildings Department. Lam told local radio the registration forms will be sent shortly to owners. “I feel that people in general are even more anxious than me to see the enforcement start. The policy should not be altered completely because of previous protests,” Lam said, referring to villagers’ protests against the crackdown in November. Meanwhile, building officials are starting a second round of publicity on the crackdown. About eight months have passed since Lam first promised a crackdown on illegal housing in the New Territories.

Three action films dominated the nominations for this year’s Hong Kong Film Awards, which were announced on Wednesday. Flying Swords of Dragon Gate and Let The Bullets Fly were nominated for 13 awards each and Wu Xia was named for 12. There are 19 award categories with five nominees each. Lau Ching-wan received two nominations for best actor, for roles as a triad member in Life Without Principle and a celebrated stockbroker in Overheard 2. The former role won him the best actor prize last year at the Hong Kong Film Critics Society Awards. “I’m quite surprised,” said Lau about his nomination on Wednesday. “I chose both of those roles and I like them both.” Also running for the best actor award are Jiang Wen and Ge You – both for Let The Bullets Fly – and Andy Lau Tak-wah in A Simple Life, for which he won a Golden Horse award in November. Lau Ching-wan said he did not know how competitive he would with the other nominees because he had not watched the other films yet. Running for the best actress award are Shu Qi, Tang Wei, Deanie Ip, Gao Yuanyuan and Zhou Xun. The 31st Hong Kong Film Awards presentation ceremony will be held at the Hong Kong Cultural Centre on April 15, broadcasted live by TVB (SEHK: 0511), now TV and RTHK.

The number of mainland mothers giving birth in emergency wards of Hong Kong’s public hospitals has dropped by at least one-third recently, the health minister said on Wednesday. The numbers have declined to fewer than 20 per week in the past three weeks, from a weekly average of 30 to 40 in recent months, said Secretary for Food and Health Dr York Chow Yat-ngok, speaking outside a Legislative Council meeting. He said the decline may be the result of measures announced last month to limit the number of non-local mothers’ births in the city. “It is too soon to say whether it shows that they [the measures announced by the chief executive last month to tackle the problem] are effective, but I believe they will be effective in the long run.” Despite the recent decrease, the 179 births last month by mainlanders was still double the 86 in January last year. Some mainland mothers have been unable to reserve obstetrics services after the government set a quota of 3,400 births for non-local women giving birth in public hospitals this year – down from 10,000 last year. Instead, many resort to using hospital emergency wards. During a discussion on the matter in the Legislative Council on Wednesday morning, lawmaker Andrew Cheng Kar-foo suggested the government consider penalising mainland mothers from using emergency wards for deliveries without prior pre-natal checks. The current practice could be dangerous for babies, and such a law would have a rationale similar to that for the child neglect law, he said. Chow said the government would study the proposal. Last month’s measures to limit births by mainlanders in Hong Kong include working with the mainland government to combat agents and vehicles bringing such women to Hong Kong, stepping up efforts to intercept non-local pregnant women at immigration control points, strengthening enforcement against unlicensed guesthouses and reviewing the fee for non-local pregnant women giving birth at emergency wards. The number of emergency births in the city involving pregnant mainlanders who slipped through border checks almost tripled last year. The growing number is adding to the burden on public hospitals, which are having to cope with fewer maternity professionals.

February is turning out to be a big month for well-heeled Burgundy lovers. La Paulée de San Francisco, Daniel Johnnes tribute to the Burgundy’s La Paulée de Meursault, runs from Feb. 22 to 25 this year (Johnnes alternates annually between New York and San Francisco). In the meantime, Christie’s is auctioning off Henri Jayer’s wine cellar in Hong Kong this Friday. Jayer was arguably the most revered winemaker of the 20th century, the man who helped to redefine Burgundy and inspire several generations of acolytes. Fifteen years after his retirement, and six years after his death, his wines are among the most sought after treasures in the wine world, rivaling those of Domaine Romanée Conti in the hearts of Burgundy fanatics. On Wine has more.

CNC Holdings Limited, a newly-named company owned by the TV arm of China's state-run Xinhua News Agency, made its debut on Wednesday on the Hong Kong stock exchange. The debut came after a shareholders' meeting of the listing Tsun Yip Holdings Limited on January 16 decided to change its name to CNC Holdings Limited "based on the company's new business direction," while its stock code remained unchanged, a news release said. Shareholders' rights will be unaffected by the name change, according to the release. The website of the company has been changed from www.tsunyip.hk to www.cnctv.hk as of Wednesday, while CNC's logo and symbol have been in use by the company since February 3. According to CNC, three shareholders of its Asia Pacific's channel carrier, including CNC limited Co, APT Satellite Company Limited (APT) and Ao Rong Investment Corporation, had signed an agreement with Tsun Yip Holdings on September 6. Under the agreement, Tsun Yip Holdings purchased all the shares of CNC Asia Pacific's channel carrier at a cost of HK$700 million ($90.27 million), with price of newly-issued shares being set at HK$0.196 per share. After completing the transaction under legal procedures on December 9, CNC's HK branch held 28.5 percent stake in Tsun Yip Holdings, becoming its largest shareholder, and a new board of directors had been established, with Wu Jincai, CNC president and Xinhua's deputy editor-in-chief, as chairman. With the move, CNC's overseas news service has gained support from the international capital market, a boost which can lay foundations for it to build a modernized media institution with global influence and competitiveness, the news release said. Wu Jincai said that CNC aims to localize its services while extending its global reach, and will also seek to improve its news reporting and the quality of its programs. Furthermore, CNC will build itself in accordance with the modern enterprise system into a world's first-class media organization, Wu added. Established in 2009 as part of Xinhua's ambition to build a multimedia press institution, CNC kicked off its Chinese channel on January 1, 2010, and its English channel on July 1, 2010. Both channels target audiences of all over the world, available via satellite, cable TV, digital media, the Internet, and other platforms. CNC's signal has reached nearly 60 countries and regions including the United States, the United Kingdom, Canada, New Zealand and Thailand.

 China*:  Feb 10 2012 Share

Canadian Prime Minister Stephen Harper, right, and his wife Laureen, with Mark Rowswell (a prominent Canadian who has lived in China for more than 20 years), tour the Temple of Heaven in Beijing on Wednesday. Canadian Prime Minister Stephen Harper will meet Premier Wen Jiabao on Wednesday, kicking off a four-day trip aimed at expanding the market in China for Canadian resources. During the visit Harper will also hold talks with President Hu Jintao and other top leaders that will likely focus on trade as oil and gas-rich Canada seeks to boost ties with the energy-hungry mainland. Canada – heavily reliant on the United States to buy its exports – is keen to sell more commodities to China after Washington last month rejected a proposed pipeline to carry oil from the Canadian Alberta tar sands to the US Gulf Coast. The Keystone XL pipeline was viewed as crucial to Canada’s economic future, by opening up new avenues to sell products from its landlocked oil sands to the United States and abroad. “If you look at the world economy and where it’s growing, the Asia-Pacific region is where the activity is,” Harper’s spokesman, Andrew MacDougall, said ahead of the visit. “Canada needs to be more engaged in the Asia-Pacific region,” he said, adding that the trip’s aim of diversifying the nation’s markets was largely “in response to decisions taken in the United States”. China is already Canada’s second-largest trading partner. Bilateral trade between the two countries soared 60 per cent in the past two years to almost US$50 billion last year, the China Daily said on Wednesday. “There is no conflict of fundamental interests between China and Canada,” the official English language newspaper said in an editorial. “The growth in Sino-Canadian ties has brought concrete benefits to both nations and at the same time promoted peace, stability and prosperity (SEHK: 0803, announcements, news) in the Asia Pacific region and the whole world.” In recent years, Canada has opened new trade offices and sent ministers on 46 trips to China, and sent back two Chinese fugitives, earning it goodwill in Beijing. For its part, China has been investing heavily in Canadian reserves of shale gas – hard-to-reach gas trapped in sedimentary rock – as it seeks to reduce its reliance on dirty coal and oil imports. During this trip, Harper is expected to sign a few small deals such as a foreign investment protection and promotion agreement with China, and secure a loan of giant pandas to Canadian zoos. After leaving Beijing, he is scheduled to visit Guangzhou and Chongqing. The Canadian leader has been joined by his wife Laureen, several ministers and members of parliament, and 40 business executives. Harper was a vocal critic of China’s human rights abuses during his first term in office and MacDougall insisted he was still concerned about the issue, but analysts expect it will be overshadowed by trade during the visit.

Foreign Ministry spokesman Liu Weimin told a regular media briefing on Wednesday that "China's action is righteous and fair and any efforts to stoke discord in China-Arab relations will be in vain," in response to comments by Britain's Foreign Secretary William Hague saying China had let the Syrian people down by vetoing a UN resolution condemning a bloody crackdown in the country. The government in Beijing on Wednesday rejected as "irresponsible" accusations by Britain's foreign secretary that China had let the Syrian people down by vetoing a UN resolution condemning a bloody crackdown in the country. China and Russia both came under a barrage of criticism for blocking the UN Security Council resolution on Saturday, with Washington calling their rejection a “travesty” and the Syrian opposition saying they had handed President Bashar al-Assad’s regime a “licence to kill”. British Foreign Secretary William Hague said their action would only encourage further bloodshed in Syria and accused Beijing and Russia of siding with the Syrian regime “in support of their own national interests”. “Their approach lets the Syrian people down, and will only encourage President Assad’s brutal regime to increase the killing, as it has done in Homs over the past 24 hours,” Hague said in a strongly worded statement on Saturday. China’s foreign ministry – which has repeatedly defended Beijing’s decision and called on both sides in the conflict to halt violence – said Hague’s comments were “extremely irresponsible” and had “ulterior motives”. “China’s action is righteous and fair and any efforts to stoke discord in China-Arab relations will be in vain,” foreign ministry spokesman Liu Weimin told a regular media briefing. “China is the friend of all Syrian people. China is always mindful of maintaining the long-term interests of the Syrian people and maintaining peace and stability of Syria and the region.” China said Tuesday it was considering sending envoys to the Middle East to help resolve the conflict in Syria, after Russia sent its top diplomat Sergei Lavrov to Damascus. Thirteen countries voted for the UN Security Council resolution, which aimed to give strong backing to the Arab League’s plan to end a deadly government crackdown on protesters. More than 6,000 people have died in nearly a year of upheaval in the Middle Eastern country, as Assad’s regime seeks to snuff out a revolt that began with peaceful protests in March last year amid the Arab Spring.

Richard Alderman, Britain’s top anti-corrpution official, has made sure to bring a gift to his Chinese hosts as he has made the rounds in Beijing explaining how his country has stiffened its anti-bribery law. His choice: the book, “Legal London: A Pictoral History” by Mark Herber, which is available in paperback on Amazon.com for $22.76, new. The gift is meant as “a sign of respect,” said Mr. Alderman, director of Britain’s Serious Fraud Office. He said that gifts are perfectly legal under the bribery statute so long as they’re “appropriate.” What would be inappropriate? Putting up an official at a lavish resort, for instance. “Everyone knows that’s wrong,” he said. Plus such largesse could “embarrass” the recipients, he said, despite the Chinese culture of gift-giving. That’s because Chinese law also bars government officials from accepting lavish gifts. In spite of those laws, more than a few foreign companies have found themselves in hot water after suspicions they provided Chinese officials with improper enticements. Among them is IBM, which paid $10 million to in March last year to settle civil bribery charges, including allegations that a subsidiary of the company provided overseas travel, entertainment and expensive gifts to government officials in China. Mr. Alderman argues that tough anti-bribery rules help British firms compete in China, despite China’s reputation for corruption. That’s because British firms will gain a reputation for not paying bribes, which will utlimately reduce costs for all concerned. And what gifts did Chinese officials shower on Mr. Alderman? “Plaques,” he said, inscribed with writing commemorating his visit.

China's State Council, or Cabinet, on Wednesday issued a plan to boost employment during the 2011-15 period, which aims to create 45 million jobs and keep the registered urban unemployment rate within 5 percent. Government authorities will work to spur employment while improving employment structure and further perfecting regulations and related mechanism to protect workers' rights and benefits, according to the plan. From 2006 to 2010, 57.71 million new jobs were created in urban areas and 45 million people in the rural surplus labor force were transferred to new job positions, official data shows. By the end of 2011, China's urban unemployment rate stood at 4.1 percent, the same as a year earlier. China's job market conditions will be "complicated" in the 2011-2015 period, and the country faces increasing pressure from creating more job opportunities, according to the plan. The country also plans to create jobs for 40 million people in the rural surplus labor force in the five-year period. Structural problems, like employees' skills not matching labor market demand, are likely to worsen in the coming years, according to the document. To solve the pressure, the government will provide more effective training and better management of the job market, it said. The government also pledged to maintain an average 13 percent growth annually in the nation's minimum wage standards in the five-year period, to keep the standard in most regions higher than 40 percent of the average wage of local urban employees. China has managed to raise its minimum wage standards by an average of 12.5 percent year-on-year during the 2006-10 period.

Florists are busy preparing for the upcoming Valentine's Day in Shenyang, capital of Liaoning province, hoping to take advantage of the great opportunity to make more money on Feb 7, 2012. Affected by the rising labor and transportation costs, prices of flowers have increased by 20 to 30 percent from a year ago.

Hong Kong*:  Feb 9 2012 Share

Mainlanders who have a second child in Hong Kong will be fined for breaching Beijing's one-child policy, media quoted a Guangdong family planning official as saying, as women flock to the territory to give birth. Mainlanders who have a second child in Hong Kong will be fined for breaching Beijing’s one-child policy, media quoted a Guangdong family planning official as saying, as mainland women flock to the territory to give birth. Hong Kong’s maternity wards are booked until September, put under pressure by the growing number of mainland Chinese seeking to circumvent the one-child policy and gain residency rights in one of the country’s wealthiest cities. China introduced its one-child policy in 1979 to limit births in the world’s most populous nation, although the rules have been relaxed in recent years. Women in several mainland cities, who gave birth to a second child in Hong Kong, have been fined on their return home, the Shenzhen Special Zone Daily quoted Zheng Feng, family planning department director of Guangdong province, as saying. It did not say how much they had been fined, although a notice on the Guangdong government website said “violators” from cities or districts would be fined up to six times the per capita disposable income of residents of their home towns. Guangdong shares a border with Hong Kong, which has put a cap on the number of mainland women permitted to give birth in the city at around 34,000 this year. Zhang said he endorsed the cap, the newspaper said. In 2010, mainland women accounted for one third of the 88,584 newborns in Hong Kong, up from 620 babies in 2001.

Hong Kong's shipments of gold to the mainland last year grew more than three times from a year earlier, confirming China’s rapidly growing appetite for bullion, despite a sharp drop in December. Total gold exports from Hong Kong to China were 427,877kg last year, up from 118,904kg in the previous year, the Hong Kong Census and Statistics Department said. The gold flow from Hong Kong to China dropped about 62 per cent in December on the month to 38,605 kilograms, its lowest level since July, the department said on Tuesday. “We didn’t see the usual rush for physical gold ahead of the Lunar New Year this time, maybe because people preferred to hold cash with the uncertainty over the euro zone overhanging,” said Dick Poon, manager of precious metals at Heraeus in Hong Kong. Poon expected the flow in January to slow down because of the week-long Lunar New Year holiday in China. Traders suspected that purchases from China’s official sector may have fuelled the swift surge in gold imports from Hong Kong in the previous few months. Spot gold suffered a drop of 10 per cent in December, as the year-end thin liquidity combined with uncertainty over the euro zone debt crisis to cause turbulence in financial markets across the board. China produced a record 360.95 tonnes of gold last year, up 6 per cent on the year. The country’s gold demand could exceed 800 tonnes, after factoring in the Hong Kong imports. China’s physical gold demand in 2010 stood at 639.2 tonnes, including jewellery, bars and coins, according to metals consultancy Thomson Reuters GFMS.

After weathering a legal challenge in China from Apple Inc. over the iPad name, a Chinese affiliate of a Hong Kong company says it is mounting its own court action. Proview Technology (Shenzhen) said this week that it filed for a temporary restraining order in a Shanghai court to stop the Cupertino, Calif., maker of hot-selling electronics from using the iPad name in mainland China. “We have to admit that Apple’s iPad is a great product, and Apple creates great value out of that,” said Yang Rongshan, chairman of the Proview arm in the southern Chinese city of Shenzhen, in an interview. “But this is not the reason to support their irregular practice here.” An Apple spokeswoman declined to comment. The challenge follows one by Apple against Proview, which claims it owns the iPad name in mainland China. In December a Shenzhen court rejected Apple’s challenge. Apple has appealed to a higher court, according to the state-run Xinhua news agency. Proview (Shenzhen) is part of Proview International Holdings Ltd., a Hong Kong-traded contract manufacturer of liquid crystal displays and other products. It registered the name in 2001 and has said it uses the iPad name on some products. “We’ve been negotiating with Apple,” Mr. Yang said. “I can’t tell you what the status right now since this is a commercial secret, but so far their attitude is still quite ambiguous.” Xinhua said this week that the Beijing Administration for Industry and Commerce is also exploring a complaint from Proview. It’s unclear how the matter will unfold, though the situation isn’t new to Apple, which has been both challenger and challenged in a broad number of markets over the years. Ma Dongxiao, an attorney who represents Proview, said the company applied on Monday for a temporary restraining order in Shanghai’s Pudong People’s Court. A decision is supposed to come within 48 hours, he said, “but in common practice it usually takes longer. So now I have no idea when we could hear from the court.” The legal action might be a rare example of a legal dispute in which the Chinese company doesn’t get popular backing in its dispute with a Western rival. China has taken to Apple’s products strongly over the past to years, to the point of scuffles in front of Apple stores. Late company co-founder Steve Jobs is lauded as an innovator and an example to young entrepreneurs in a country known more for copying than for new ideas. “I understand even lots of Chinese people think our company is playing dirty here or trying to blackmail Apple,” Mr. Yang said. “But we are doing everything completely under the laws and rules, if people understand the whole process of this matter. There has been so much misunderstanding about us, but we would continue to sue until we win what we deserve.”

A window display at Hong Kong retailer G.O.D. encourages passersby to take pictures, a dig at Dolce & Gabbana’s recent photo kerfuffle. Among the many responses to Dolce & Gabbana’s recent photo controversy in Hong Kong, local retailer Goods of Desire (also known as G.O.D.) is taking a tongue-in-cheek approach. At its flagship store in the city’s Causeway Bay district, its window display includes a camera-wielding mannequin and a sign saying “Just shoot, no worries.” The display is a dig at D&G, which sparked debate and protests last month when it attempted to block local Hong Kongers from taking pictures outside its store in Kowloon, while not restricting the same activity by tourists from mainland China and elsewhere. More than 3,000 people protested in front of the store, and the company eventually apologized. The event “marked Hong Kongers’ coming of age,” G.O.D. co-founder Douglas Young said. “Hong Kong people are saying it’s not about how much money you have,” he said. “It’s about dignity and depth and culture and manners.” G.O.D., whose merchandise and brand resemble U.S. retailers such as Urban Outfitters and American Apparel, has built a business on funny, streetwise takes on Hong Kong lore. One of its most popular and long-running products are its T-shirts that say “Delay No More,” an English transliteration of a Cantonese profanity. “We try to approach the issue from a more oblique angle, and we thought there’s nothing wrong with people taking photos of our window,” Mr. Young said. “We encourage people to do so. We always do.” Don’t expect him to wade any further into the Hong Kong vs. mainland debate. Last week, a group of people took out a newspaper ad calling mainland Chinese visitors “locusts,” though Mr. Young, who had no involvement in the campaign, declined to comment. “I think there’s enough on this particular issue,” he said.

Retail sales in both Hong Kong and the mainland grew less quickly during the Lunar New Year - a big shopping season - than last year, but analysts are not sounding the alarm. Sales on the mainland during the seven days to January 28 grew 16.2 per cent year on year to 470 billion yuan (HK$580 billion) according to the Ministry of Commerce. In the period last year, sales grew 19 per cent compared with that in 2010. Auditing firm PricewaterhouseCoopers has said it expects retail-sector growth on the mainland to slow to a single-digit pace for the whole of this year, compared with last. Many economists have forecast the mainland economy's growth will slow to 8.5 per cent this year from about 9.2 per cent in 2011, dragging down retail sales with it. A similar consolidated retail figure is not available for Hong Kong. But jewellery sales - a sector that reflects mainland tourists' spending, failed to shine during the festive season this year. Luk Fook's Lunar New Year sales grew only 4 per cent year on year. Its stock closed at a two-month low of HK$26.50 yesterday. Chow Tai Fook shares closed at a new low, of HK$13.30, after book runners and sponsors of the recently listed jewellery heavyweight cut their earnings forecasts within two months of its debut on the stock exchange. Citigroup slashed its earnings projection by 14 per cent to HK$8.8 billion for the year to March 2013 from a HK$10.25 billion estimate at the time of the listing. But according to Credit Suisse and HSBC Securities, the less-than-sterling performance of jewellers during the holidays had more to do with the changing shopping patterns of mainland tourists, cold weather and a longer-than-usual holiday this year, with the Lunar New Year following a weekend, which prompted some mainlanders to travel farther afield than Hong Kong. According to the World Luxury Association, mainland tourists spent US$7.2 billion over the Lunar New Year on luxury items outside the mainland. Europe took up 46 per cent of the total spending, North America 19 per cent and Hong Kong, Macau and Taiwan combined made up 35 per cent of the sales. "Retail growth may be slowing, but mainland travellers are expected to continue visiting Hong Kong during non-holiday periods," a report by HSBC Securities said. "Travelling to Hong Kong is also expected to become easier and may encourage non-holiday travel." While some retail experts have been warning that luxury-product chains such as Chow Tai Fook and Luk Fook need to review their aggressive expansion plans in light of an expected economic slowdown, some maintain that expansion remains the key to growth. Gabriel Chan of Credit Suisse said Chow Tai Fook, which plans to open 200 outlets annually in the next four years, should stick to its plan, because new stores in suburban areas - where most of future growth is expected to come from - will provide momentum. There are signs that retail sectors other than jewellery have also not done terribly well during this holiday season. Sa Sa, the beauty-and-health-care chain, saw sales rise just 17 per cent year on year in Hong Kong and Macau. It had been enjoying much higher growth, even in non-holiday periods.

Lawyer Mark Daly gives a talk at the Foreign Correspondents' Club yesterday on Hong Kong residency and human rights. Guangdong governor Zhu Xiaodan has assured Hongkongers a solution will be found to the problem of large numbers of mainland women giving birth in Hong Kong, but he would not provide details. Meanwhile, human rights lawyer Mark Daly urged the city's government to conduct a study of the impact the growing number of pregnant mainlanders giving birth here might have before it decides whether to seek a reinterpretation of or amendment to the Basic Law. Zhu, who was in the city to attend a reception of the Federation of Hong Kong Guangdong Community Organisations, said he had discussed the issue with Chief Executive Donald Tsang Yam-kuen. "You can rest assured. There will be ways to solve it," he said. Asked to specify possible solutions, he only repeated his statement: "You can rest assured. You can rest assured." At the same event, Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen said the city's government had proposed to Guangdong that they co-operate to stamp out the middlemen and agencies that arrange for pregnant mainlanders to come to Hong Kong. Tam said the governor was aware of Hong Kong's concern and the two sides would continue to negotiate on this issue. Tsang had announced earlier measures to try to turn the tide, including co-operation with mainland authorities to crack down on the agencies and vehicles that helped expectant mainland mothers to cross the border. Last year, the city refused entry to 3,560 pregnant mainlanders out of nearly 90,000 women who had been examined by immigration officials. About 43,000 mainland women gave birth in Hong Kong last year. However, the idea of weakening one of the biggest incentives for mainland women to give birth here - the right of abode granted to all children born in the city to a Chinese mother - remains controversial. Tam said whether to seek a reinterpretation of or to amend the Basic Law would require a consensus in society, and the government was still listening to and considering the public's views. Meanwhile, speaking after a lunch at the Foreign Correspondents' Club, Daly said: "Like the domestic helper cases, there should be a proper study of how many this will affect ... I am guessing they [the government] are exaggerating the effect of the mainland mother issue. "It is very, very serious to be suggesting - throwing out [for consideration] the idea of having - a reinterpretation [of the Basic Law]. It is against the rule of law. It is against Hong Kong's legal system. That's one of our few advantages." Some pan-democrats have proposed amending the Basic Law, the mini-constitution for Hong Kong agreed upon by London and Beijing, but Daly insisted that it was crucial to do a study first before discussing the next move. He said: "It is a very serious thing to do. You are going to change the constitution."

Men beware: your partner may be spying on you. Almost one in two women frequently check their partner's mobile phone and internet activities, a survey by commercial website ESDlife has found. Of the 1,400 people surveyed for their attitudes on romantic relationships, 47 percent of women admitted to secretly checking their partner's mobile phones and social networking accounts. This is despite the claim of 90 percent of female respondents who said they had complete trust in their partners. The women commonly tracked the call history on their partner's mobile phone and monitored his Facebook activity, ESDlife research manager Jeremy Mou Chi-wah said. On the other hand, only 27 percent of men said they checked on their partners. The survey revealed that checking SMS messages is common, with 35 percent of women confessing to reading their partner's text messages, he added. Some 58 percent of women said they checked on their partners out of curiosity while others said they simply wished to better understand their man. But Agape Matchmaking and Consulting senior consultant Terry Shum Wai-leung said women who indulge in such behavior have low self-esteem and imagine scenarios where they could lose their loved one. "Many women feel insecure and frequently doubt their partner's fidelity even when he is completely faithful," Shum said. "This can be destructive to the relationship, since trust is necessary for sharing and intimacy." Relationship experts say keeping tabs on a partner does not bode well for a couple's future. "If you suspect that your partner is up to something, talk about it," Hong Kong Institute of Family Education chairman Tik Chi- yuen said. "Spying can lead to a vicious cycle, and can be avoided by better communication." He added that young people treasure their privacy and when they find that they are being spied upon may experience feelings of hurt and betrayal.

Homebuyers have gained more confidence in the property market in the absence of any new curbs, according to Cheung Kong (Holdings) (0001) executive director Justin Chiu Kwok-hung. "With high employment and no foreseeable interest rates increase this year, homebuyer confidence has risen while some homeowners are willing to lower their asking price," he said. The government's plan to cut sites into smaller parcels should lure small and medium-sized developers, Chiu said. More land supply "is positive." Chiu expects the Bayside project near the Tsuen Wan MTR station - withdrawn from sale by the government earlier - to be relaunched this year. He said tenders "should be more aggressive." He predicted 11,000 new apartments will come on the market this year. At least a quarter would be from Cheung Kong, which plans to release eight projects providing 4,000 units. These projects are in Tseung Kwan O, Tai Po, Tsuen Wan, Lai Chi Kok, Kowloon Tong and Mid-Levels. The first to be released would be the development in Tseung Kwan O Area 85, which will provide 1,777 two-to-four-bedroom flats. Cheung Kong Real Estate director William Kwok Chi-wai said they will be priced between HK$5,000 and HK$6,000 per square foot. After presale consent, 850 units will be launched by March. Another project, the 3A phase of Lohas Park in Tseung Kwan O, will be marketed in the fourth quarter, providing 800 units. As of last month, 15 housing projects are awaiting pre-sale consent from the Lands Department. These projects can provide a total of 7,632 units. Wing Tai Properties (0369), meanwhile, plans to release The Pierre in Mid-Levels by April. The 75-unit project may be priced HK$25,000 psf on average, it said.

 China*:  Feb 9 2012 Share

Vice-President Xi Jinping's upcoming visit to the United States will help China-US ties fly clear of US election year turbulence, experts said. The visit, which starts on Monday, sends a strong signal that China places a high value on bilateral relations and wants ties to be stable, Jin Canrong, a Sino-US relations expert at Beijing-based Renmin University of China, said. "That signal is especially important" amid Republican presidential hopefuls targeting China to win votes, the White House using currency issues to criticize Beijing and Washington generally playing up China's growth to increase the US presence in the Asia-Pacific region, Jin said. The Foreign Ministry said on Tuesday that Xi's visit is at the invitation of his counterpart, Joe Biden. No further details were given. The US State Department announced earlier that the visit will include stops in California and Iowa. Xi will meet US President Barack Obama in Washington on Feb 14, the White House announced. China bashing is becoming ever-more frequent in this election year. Mitt Romney, the leading Republican candidate, pledged to "clamp down" on Beijing as a currency manipulator and openly threatened a trade war. In his recent State of the Union address, Obama singled out China for unfair trade practices. He also pointed out China's solar research facility and supercomputer as examples of global challenges facing the US. A "trust deficit" between China and the US exists, Deputy Foreign Minister Cui Tiankai said on Monday at a ceremony marking the 40th anniversary of the Shanghai Communiqu, a political document that established the foundation for relations. "Each time the Sino-US relationship encounters problems there are voices that doubt the fundamentals of the relationship. There are those who want to overturn this relationship that can truly be called too big to fail," Cui said. "We hope that Xi's visit will be used as an opportunity to enhance communication, expand cooperation and deepen friendship," he added. Experts said that the influence of the election year on Sino-US ties will be temporary. "The relationship is stable, with competition and cooperation coexisting," said Shen Dingli, director of the Center for American Studies at Fudan University in Shanghai. Xi's trip is part of the "institutional and frequent high-level visits" that reveal that the relationship is mature and not hostage to election cycles or any particular issue, Shen said. The White House said on Monday that "a number of issues are always on the agenda when we sit down with the Chinese leadership, and that will be the case with this visit as well". According to US media reports, Xi's stay in Iowa will include a reunion in Muscatine with friends he made during a trip to the state in 1985, a dinner at the Iowa Capitol and possibly a farm tour. Xi's trip is an important visit that "will really help in the relationship", Christopher Hill, former US assistant secretary of state, told China Daily in Shanghai on Tuesday. "There will be a lot of discussions and trying to know each other better," Hill, who once headed the US delegation to the Six-Party Talks, said. "I would look for the trip to build on the positive relationship and see if both sides can anticipate some of the problems and prevent them from becoming bigger," Hill said. The US strategic refocusing on East Asia has aroused speculation that the move is intended to contain China. Hill, however, said it is an attempt to secure long-term economic relationships in the region that are important to the US. "China has emerged as one of the top economies in the world. I would hope that a renewed attention to East Asia will mean a renewed dialogue with China, and perhaps even a deepening of the dialogue to avoid strategic mistrust and misunderstanding," Hill said. David Lampton, director of the China Studies Program at Johns Hopkins University, said that it is important that the emerging generation of Chinese leaders have a solid foundation in what they know of their American counterparts, to enhance future cooperation. "It is particularly important for our leaders to keep our long-term interests in mind, not use inflammatory language and to place particular emphasis on dialogue in the next 12 to 18 months," Lampton said. Experts said that Beijing and Washington have reached a degree of understanding to deal with election year friction. Kenneth Lieberthal from the Brookings Institution said that the purpose of the trip is to give both parties an opportunity to get to know each other and develop some personal chemistry.

Growing throngs overcrowd temples to seek divine blessings during the Spring Festival. Xu Lin reports. Su Shanchang was excited when she made it to Yonghegong Temple to burn incense after spending hours in line in the morning of Jan 23 (the Lunar New Year's first day). "There were huge crowds, and I felt like I was taking the subway during rush hour," the Beijing company product supervisor says. "I was exhausted after I stood outdoors for hours on such a cold morning." She joined the line at 4 am and killed time by playing her PlayStation Portable and reading e-books on her mobile phone. The gate opened three hours later, but she had to wait until those who had entered before her left. "The temple is famous for effectively transmitting prayers," she says. "I pray for health, wealth and marriage. I'm not a Buddhist, but I burn incense in every temple I visit." It's a Chinese tradition to burn joss sticks and pray for good fortune on the first and 15th day of every lunar month, especially the first of the year. Temple visits dramatically increase on these days. The Tibetan Buddhist monastery Yonghegong - aka Lama Temple - in Beijing received about 66,700 visitors on Jan 23, and from 17,000 to 27,000 visitors in the past few days. Liang Anlin, who owns a nearby incense store, says these days keep business going. "Sales aren't that good because there are so many incense stores here," Liang says. "Sometimes, I earn fewer than 100 yuan ($16) a day. But on the afternoon of Jan 23, I sold more than 1,100 yuan worth in an hour and a half." There were so many visitors that day that Yonghegong Street was put under traffic control. No cars or buses were allowed on the road, and the subway didn't stop at Yonghegong. So, people had to walk about 1,000 meters to the temple from the nearest stop. Outside, 1,200 police and Dongcheng district government workers maintained order, while 740 Yonghegong employees did the same inside. Yonghegong's security chief Zhai Xudong says the number of visitors this year was twice that of eight years ago. "It's the first year we're using X-ray machines in security checks," Zhai says. "Before, we just did random checks with portable scanners on busy days." Zhai says there are usually 14 incense burners in 13 locations, but authorities put only seven in front of three halls on these high-traffic days to decrease the fire risk. "Avoiding fire and stampedes is most important," Zhai says. "We started preparing a month ago, and our security is better every year." Zhai says his ilk must sacrifice their Spring Festival celebrations with their families to ensure the temple's security. "One security guard worked 37 hours straight, because we had to ensure fire protection at night," Zhai says. "Even one small spark from fireworks can be dangerous." Five trucks loaded with incense ash and 16 trucks of unburned and half-burned joss were transported to a landfill in Shunyi district on Jan 23. Beijing's Longquan Temple's authorities say the holy site provides incense for free so that less joss is burned, and peace and tranquility aren't disrupted by commerce. Suburban Beijing's Tanzhe Temple, which is one of the city's oldest, also sought police assistance. The temple, which usually receives a few thousand visitors a day, received 19,000 on Jan 23. About 200 policemen helped maintain order. "We opened two more ticket entrances and temporarily stopped selling tickets when the number of visitors inside reached the capacity of 7,000," Xu Jianhong from the monastery's management office says. Temples of various religions attract tens of thousands of visitors during the period. TV station employee Wu He went to Beijing's Baiyunguan Taoist Temple on Jan 23, accompanied by his Buddhist parents. "It means more to me to be with my parents than to pray on these days," the 24-year-old says. "It doesn't matter which god we worship, because our aims are the same - to pray for beautiful things. I feel the Lunar New Year atmosphere when I see so many people in the temple. I used to pray for good academic scores, but I value health more since I've started working." Many believe Buddha will take special care of the first person to burn incense in the Lunar New Year. So, many line up for the opportunity, and some temples sell the slots through auction. But Longquan Temple's abbot Xue Cheng says Buddha doesn't care who burns the first joss and treats everyone equally. Sincerity is more important to prayers, Xue says. Yonghegong's former research office director Li Lixiang agrees. "Most people come here simply to pray for good luck and may not know about Buddhism," the 63-year-old says. "Those who want to be the first to burn incense should maintain a common heart, rather than compete with others. "The number of people who burn joss sticks rises every year. As society's competition becomes fiercer, people who are under pressure seek tranquility in temples. But one can't be superstitious and assume incense-burning is a panacea."

A Shenzhen-based enterprise has accused technology giant Apple of infringing on its iPad trademark - a trademark over which both companies claim ownership. The Pudong district court in Shanghai will hear the case on Feb 22, a lawyer for the Chinese company told China Daily on Monday. A fine of 240 million yuan ($38 million) against Apple over the infringement is also pending from the market administrative authority in Beijing. "We are asking the court to order Apple to stop selling and marketing the iPad in China. We also demand an apology," said Xie Xianghui, a lawyer representing the Chinese company. The company, Proview Technology Shenzhen, also took two authorized Apple resellers for iPad - Gome Electrical Appliances and the Sundan Electronic Store - to courts in Guangdong province over similar infringements. No financial compensation has been demanded by Proview Shenzhen at this stage of the trials. Verdicts are pending. Proview Shenzhen registered the iPad trademark in China in 2001, nine years before Apple launched its iPad products in 2010, Xie said. Proview Taiwan, a company associated with, but not legally representing, the Shenzhen company, sold the Chinese trademark - along with others for use in other countries - to the UK-based IP Application Development Limited for 35,000 British pounds ($55,000) in 2009, according to a report by Nanfang Daily. The UK company then resold the brand to Apple for 10 pounds before Apple's launch of iPad in 2010, the report said. Apple applied to transfer the trademark from Proview Shenzhen on the Chinese mainland in 2010, but the application was turned down by China's trademark administrative authorities, the report said. Apple then sued Proview Shenzhen in 2011 to gain legal entitlement as exclusive user of the iPad name - but lost the lawsuit in a Guangdong court. The higher court in Guangdong province accepted Apple's appeal. The general office of the Xicheng district branch of Beijing Administration for Industry and Commerce told China Daily it is "investigating the cases", but refused to verify or comment on the bill on Monday. An insider who refused to be named told China Daily that law enforcement officials from other branches of the Beijing administration had listened to Xicheng's report on the case. "But many of us hold different opinions on whether it is Apple breaching Proview Shenzhen's rights or Proview Shenzhen dishonestly demanding compensation. We didn't reach consensus on the fine as well." The public relations office of Apple China did not respond to China Daily's interview request by press time on Monday. Liu Yinliang, an associate law professor at Peking University, said if the trademark management authority had not approved such an intellectual property transfer, then the trademark deal had not yet become valid in China.

A visit by Chinese Vice President Xi Jinping to Iowa is only rivaled by Soviet Premier Nikita Khrushchev and Pope John Paul II. That’s the opinion of Terry Branstad, the state’s governor. He talked about next week’s visit by Xi, the man expected to become China’s top leader, in historic terms Monday. From an economic standpoint, he said the trip likely outranks Khrushchev’s 1959 visit to Iowa and the pope’s 1979 trip. “This probably far and away is the biggest, most significant (visit) I have had since I’ve been governor,” said Mr. Branstad, who served as Iowa’s governor from 1983 to 1999 and since 2011. Khrushchev came to Iowa to inspect American agriculture on the first visit to the U.S. by a Soviet leader. Pope John Paul II’s visit drew an estimated 350,000 people, likely making it the largest, single gathering in Iowa history. The state also briefly played host to Mr. Xi’s father, Xi Zhongxun, in 1980 when the elder Xi was governor of Guangdong province. Mr. Branstad sees an opportunity to leverage the younger Mr. Xi’s visit and warm feelings about Iowa into increased business. Already, China is a leading market for U.S. crops such as soybeans, but Mr. Branstad would like to see expansions in other products such as pork. Pork production is part of what has drawn the Xi family to Iowa in the past. Xi Sr. visited a pig farm and attended a pork chop barbeque during his trip to the state and Xi Jr. made a stop there in 1985 when he was Communist Party chief of a pig-farming region in the northern province of Hebei. “There is great potential to expand on these exciting relationships,” Mr. Branstad said. Having the support of the younger Mr. Xi is critical in a nation where the government is heavily involved in the economy and corporate decision making, he said. As for next week, Mr. Xi and a large contingency of Chinese officials will come to the Midwest on Wednesday, landing in Moline, Ill. for a quick visit to nearby Muscatine, Iowa where Mr. Xi stayed back in 1985. Then, it’s back to the airport for a flight Des Moines. The state is planning meetings and a large dinner for Mr. Xi there with state and federal officials. Mr. Branstad’s office is still working on a schedule for Thursday morning before Mr. Xi departs. The itinerary could include a visit to a farm. Mr. Branstad said the state also is working on security for the delegation’s visit, including preparing for protesters. The governor, however, declined to weigh in on the issue of human rights and China. “We feel that is the responsibility of the federal government,” Mr. Branstad said.

Wal-Mart Stores Inc said on Tuesday it has named Walmart executive Greg Foran as the president and chief executive of Walmart China, capping a series of leadership changes at the China unit tainted by food scandals. Foran was chosen to replace Ed Chan, who stepped down last October after a pork mislabelling scandal that forced the company to shut a dozen stores in central China. The Chinese city of Chongqing penalised Walmart after the firm was found to have mislabelled some pork as organic at a couple of its stores. Authorities said the pork scandal was the latest in a string of 21 violations dating back to 2006. Walmart had also suffered a series of high level personnel losses last year, after its China chief financial officer and chief operating officer left in May leaving a leadership vacuum. Foran is currently serving as Walmart's senior vice president for Walmart International and will start his new role on March 1, the company said in a statement. Walmart troubles in China reflect the retail giant's struggles in a complex market where rapid expansion and a cumbersome takeover has marred profit and growth.

Yum Brands Inc.'s fourth-quarter net income rose 30% as the fast-food company's sales in China continued to grow and U.S. sales improved. Shares were up 2.4% to $64.71 in after-hours trading Monday as Yum's earnings and revenue beat estimates. As of Monday's 4 p.m. New York Stock Exchange composite trading close of $63.19, down 65 cents, the stock was up 17% over the past three months. For the past few years, the owner of KFC, Pizza Hut and Taco Bell brands has touted its strength in China and focused on growth there. Its casual-dining chains are booming in urban areas of China and other emerging markets, making up for Yum's weak U.S. performance. However, recent signs of an economic slowdown in China and rising food and labor costs there put Yum at risk of losing its biggest edge. In November, Yum said the company is separating its India business into a its own standalone segment, a strong indication of Yum's interest in expansion there, given that the only other international market it breaks out is China. For the latest quarter, China continued to post double-digit-percentage growth in same-store sales, up 21%, while operating profit rose 15% excluding currency effects. U.S. operating earnings, which haven't kept pace with Yum's other markets, rose 10% on 1% higher same-store sales. But Yum's U.S. business hasn't been its top priority. The company has said that 75% of its profits will come from its international businesses by 2015, and last year it found buyers for its Long John Silver's and A&W Restaurants chains, shedding two smaller domestic businesses in an effort to focus even more on international growth. For the quarter, Yum posted a profit of $356 million, or 75 cents a share, up from $274 million, or 56 cents a share, a year earlier. Excluding special items, earnings were 63 cents a year earlier. Revenue grew 15% to $4.11 billion. Analysts polled by Thomson Reuters expected a profit of 74 cents a share on revenue of $4.03 billion. World-wide restaurant margin declined 1.1 percentage points to 14% for the quarter; for the year, it fell 0.9 percentage point to 16%.

The Soho Sanlitun development in Beijing, where office space is now costlier than in New York. Helped by growing demand and a shortage of supply, Beijing office rents soared last year, making it the world's fifth most expensive city for office space in terms of occupancy costs, according to international property consultant Cushman & Wakefield (C&W). "As the Chinese calendar moves into the Year of the Dragon, prime office rents in Beijing's central business district have risen year on year by 75 per cent, a steeper increase than 2010 [48 per cent]," C&W said in a report on the world's most expensive office locations. Beijing achieved the largest increase last year of any city in the world, it said. With an annual occupation cost of US$130 per sq ft, it ranked the fifth most costly city globally, ahead of New York, Sydney and Paris. Beijing ranked 15th a year ago. C&W said the Chinese capital was also the third most expensive in Asia for office space, after Hong Kong and Tokyo. Hong Kong, with an annual occupancy cost of US$244 per sq ft, was the most expensive, followed by Tokyo, the West End of London and Moscow. In 2010, Tokyo held top position, with London second and Hong Kong third. The occupancy-costs survey takes into account service charges and local taxes to allow direct comparisons between countries. "From a broad global perspective, rental-rate growth has been driven primarily by modest economic improvements in an environment of limited new supply," said Glenn Rufrano, C&W's president and CEO. "We noticed an upward trend in office rents in most major Chinese cities in 2011," said Andy Zhang, managing director of C&W's Chinese operations. "The unprecedented urbanisation process in China and strong economic growth will continue to drive up the demand for office space. Beijing and Shanghai have relatively mature and international office markets and will lead the rental growth." With a single-digit, record-low vacancy rate and not much quality supply foreseeable in coming years, the group expected landlords to stay in the driving seat in Beijing and Shanghai for this year, but rental growth would slow. Tenants would have to be prepared to weather this high-rents, low-vacancy period, he said. Asia-Pacific saw an 8 per cent rise in rents last year, the highest rate of growth in the world. Globally, 2011 saw office demand improving, availability falling and rents rising 3 per cent, up from 1 per cent in 2010. The rise in rents reflected the declining supply of Grade A space in a growing number of countries, the group said. Last year was the second consecutive year of positive rental growth, following a year of declining rents in all regions in 2009. The two fastest-rising locations in terms of rental growth in Asia-Pacific after Beijing were Shanghai and Singapore, it said. However, the recovery remains restricted to prime office space, and is most visible in big gateway cities. While the year began strongly, uncertainty on a global level resulted in a drop in leasing activity during the third quarter, and a slow recovery was expected this year, C&W said. 

Lantern Festival celebrated across China - Chinese celebrate the Lantern Festival by hanging colorful lanterns, playing games and gathering with friends to eat sweetened rice dumplings.

Chinese airlines have been ordered to ignore a European Union scheme to impose charges on Beijing leaders have said repeatedly they oppose the plan that took effect on January 1, and media warned of a "trade war" in the sector. A statement from the State Council now adds that airlines must not try to use the EU emission-trading scheme to raise fares or other charges, noting that "all transport airlines in China are prohibited from participating in the EU ETS." EU ambassador in Beijing Markus Ederer said he hopes the standoff can be resolved in talks, and Chinese and EU leaders meet in the capital next week. Chinese authorities say its carriers would have to pay an additional 800 million yuan (HK$983 million) a year on flights to and from Europe. The European Commission argues that the cost for airlines is manageable, estimating that the scheme could prompt carriers to add from 4 euros (HK$40.50) to 24 euros to the price of a two-way long-haul ticket. American carrier Delta Air Lines, one of the world's biggest operators, has added US$6 (HK$46.60) for two-way flights between the United States and Europe, and Germany's Lufthansa intends to raise its fuel surcharge. The China Air Transport Association has said Beijing is considering "countermeasures" against the EU scheme as the charge will affect all big carriers, including Air China, China Eastern and China Southern. The European Union included airlines - responsible for 3 percent of carbon emissions - in its campaign against pollutants as aviation is outside any pact. Airlines that refuse to comply could be fined and denied the right to land in the 27-nation union. Ederer said the EU would exempt any airline from charges if a country slapped "equivalent" levies to offset emissions. Luo Yanyan, an analyst at China Merchants Securities in Shenzhen, said the scheme would have little immediate impact on Chinese carriers "but in the long term Chinese airlines may come under pressure as they won't give up their business in the European market."

Chinese people will buy more than half their acquisition of luxury goods on the mainland in 2014 rather than overseas, as is the case now, business research and consulting firm Frost & Sullivan said in its latest survey. The United States-based company said 53 percent of high-end brands purchased by the Chinese will be from the mainland in 2014, rising to 55 percent in 2015. In 2011, 52 percent of luxury goods bought by the Chinese were from abroad, the survey said. Zhu Yue, a consulting director with Frost & Sullivan, said the tax on designer goods is expected to be lowered in 2012, which would attract more customers. "The retail price of luxury goods keeps rising in overseas markets, even faster than in the domestic market," Zhu said, adding that buyers would begin to notice the price gap narrowing. Wealthy Chinese bought more than 100 billion yuan ($16 billion) of luxuries in the mainland market last year, with a year-on-year increase of at least 25 percent, management consultants Bain & Co said in its latest report on the 2011 Chinese high-end market. China is expected to surpass Japan as the world's largest luxury market this year, according to the consultants. Chinese shoppers are in the limelight in the global market. Every single coin they spend on high-end brands attracts the attention of global market researchers, including the World Luxury Association, Frost & Sullivan, Bain & Co, Price Waterhouse Coopers and iResearch Consulting Group. Just three days after the Spring Festival holiday, the World Luxury Association announced in a report that Chinese travelers spent $7.2 billion abroad on luxury goods during the week-long holiday, up nearly 29 percent from the $5.6 billion during the 2011 Spring Festival holiday, making the Chinese the most powerful purchasing group. About 72 percent of Chinese people interviewed believed that luxury goods overseas are cheaper than at home. A total of 69 percent travel because of the wider choice available and 45 percent enjoy the products' authenticity and the service at overseas outlets. The report also said most money was spent on luxury watches, leather bags, designer clothes, perfumes and cosmetics. Over the past few years, demand for finer products has maintained a strong growth momentum in China despite a plunging luxury market in many developed nations as a result of the effects of the global financial crisis. According to the 2012 Outlook for the Retail and Consumer Products Sector in Asia released by Price Waterhouse Coopers, China will be the top contributor to global growth in luxury sales and Chinese tourists are fueling demand in key global cities, accounting for 56 percent of China's spending on high-end brands. Chinese customers are expected to buy a total of 570 billion yuan of high-end products in domestic and overseas markets by 2015, according to another report released in December by Frost & Sullivan. The researcher recorded a growing demand by Chinese consumers for luxury goods. Among the most desired items are handbags and leather accessories, which have experienced a particularly high level of growth in sales, the report said. Chinese people spent about 14 billion yuan on designer handbags in 2010, compared with about 12 billion yuan for leather accessories, in the domestic market, with compound annual growth rates of 30 percent and 37 percent respectively over the 2006 level, according to the report. Zhu of Frost & Sullivan linked the surging demand for quality branded handbags and small leather goods with the fledgling luxury market on the Chinese mainland and "immature" domestic consumers. "The prices of these durable items are acceptable," Zhu said, adding that many Chinese buyers sport high-end products in order to show off their status and identity and to be noticed. The Chinese spent 16.9 billion yuan on cosmetics, perfume and healthcare products, followed by 15.5 billion yuan on watches, the report by Bain & Co showed. The report also said that suppliers of high-end products earned 68.4 billion yuan from wealthy Chinese in 2010. The Frost & Sullivan report attributed the growing demand for branded quality to the "increasing number of wealthy individuals" in China. In China, the number of wealthy individuals with a disposable income of more than 100,000 yuan, increased to 21.7 million in 2010 from 8.7 million in 2006, according to the report. It forecast the number would hit 54 million by 2015. "The group is a potential for future growth in demand for luxury goods," the report added. Government policies to spur domestic consumption are another factor contributing to the growing luxury retail market, the report said. During the financial crisis in 2009, the Chinese government unveiled a 4 trillion yuan investment package to reduce its over-reliance on exports and stimulate domestic demand.

Hong Kong*:  Feb 8 2012 Share

Hong Kong is ushering in more advanced data centres, backed by government incentives and strong market demand. The campaign is primed not only to entice major multinationals to set up such facilities in Hong Kong, but also large mainland enterprises. Daniel Lai, the city's new government chief information officer, said: "We expect more data centre projects to support the needs of economic development both in Hong Kong and across the Asia-Pacific region in the years ahead." The Office of the Government Chief Information Officer, the agency that sets Hong Kong's policies for information and communication technologies, has received about 60 inquiries about the setting up of new data centres and provided assistance to 10 projects in the past six months. "Our consultant, Frost & Sullivan, has estimated the demand for data centres in Hong Kong will grow by a compound annual growth rate of 9.8 per cent from 2009 to 2015," said Lai. "Last year, the growth rate in terms of net demand [for data centre capacity] exceeded 18 per cent." A data centre is a secure, temperature-controlled facility equipped to house large-capacity server computers and data-storage systems, which are maintained with multiple power sources and have high-bandwidth links to the internet. The financial services, trading and logistics, information technology, telecommunications, and content development and media industries account for more than 84 per cent of the total demand for data centre space in Hong Kong, according to a Frost & Sullivan study. The government is also supporting data centre projects to step up the city's adoption of so-called cloud computing services, which allow the delivery of software, storage and other resources over the internet just like electricity from a power grid. "Hong Kong is well recognised as an excellent location for data centres because of our conducive business environment, stable government, transparent and independent judicial system, free flow of information, reliable power supply, sound telecommunications infrastructure and low risk of natural disasters," said Lai. "So it would be natural for large mainland companies to take advantage of Hong Kong's robust infrastructure, its institutional strengths and geographical proximity to locate their data centres." Data centre space is measured in terms of raised floor space. An additional 170,000 square metres of such space would be required for such centres by 2015, including 47,000 square metres for high-tier facilities. Lai said the government was committed to facilitate new data centres at key sites, as competition from other Asian nations heated up. According to a Legislative Council brief, at least four international companies and three local firms over the past couple of years were frustrated in their plans to invest in data centres here owing to a lack of suitable sites. Most were relocated elsewhere. Rival markets have offered incentives including tax breaks and streamlined processes to speed up application and licensing approvals to entice data centre operators. A shortage of suitable sites has put Hong Kong at a disadvantage, despite its infrastructure and rule of law. In his 2012-2013 budget, which was announced last week, Financial Secretary John Tsang Chun-wah identified two measures aimed at encouraging the conversion of existing industrial buildings or industrial lots into data centres. One is to assess a lower premium for data centre developers to modify some industrial lots into so-called high-tier data centres. The high-tier data centres being developed in Hong Kong include Google's more than US$100 million facility at a 2.7-hectare site in Tseung Kwan O and NNT Com Asia's HK$3 billion complex in the same district. The other proposed measure would eliminate the fee of 50 cents per sq ft for changing parts of industrial buildings into data centres.

Property market sentiment has rebounded in the wake of equity market rallies and last week's budget that had no new policy surprises. And at least one project is attempting to fend off speculators. The Housing Society said it was considering a five-year resale restriction at Heya Green, its first private residential development. "If the homes are for own-use, the buyers wouldn't mind a resale restriction in addition to the special stamp duties," chairman Yeung Ka- sing told The Standard. The Sham Shui Po project will start pre-sales in April and is the first project in Hong Kong to offer priority to local residents, especially those living in the district. Eighty percent of the 327 flats will be two- bedroom units of 570 square feet, while the rest are three-bedroom flats of 780 sq ft. Prices may range from HK$3.42 million to HK$5.46 million, based on prevailing prices of between HK$6,000 and HK$7,000 per sq ft. "I am sure our project is attractive and I don't want to attract speculators, too," Yeung said. The five-year resale restriction was inspired by the Sandwich Class Housing Scheme, which attracted a lot of buyers in the 1990s. Meanwhile, secondary transactions hit the highest in 21 weekends. The 10 benchmark residential projects had 33 sales at the weekend, up from 22 a week ago, Midland Realty said. But there were no deals at Tai Koo Shing in Quarry Bay and South Horizons on Ap Lei Chau. Midland director Andy Ho Ming-pui said: "Sales of secondary homes in Kowloon were boosted by the government's plan to develop Kowloon East as the second core business district." As for new homes, The Coronation in West Kowloon sold nine three-to-four-bedroom flats at the weekend, a source said. Visits to show flats were up 30 percent from a week ago. So far, the developers have sold 650 flats at the project. Chatham Gate in Hung Hom sold more than 20 flats during Saturday and Sunday. So far, 160 of 334 apartments have been offloaded.

The government has pledged to consider injecting more funds into the Community Care Fund to make permanent those programs that help the grassroots not covered by the welfare system. Deputy Secretary for Financial Services and the Treasury Alice Lau Yim said the government is also increasing spending on education and health-care services under the 2012-2013 budget. Speaking at the City Forum, Lau said the fund runs more than 10 relief programs to help the neediest class - the "N-nothings" - those who live outside the government safety net with no access to public housing or the dole. "We will review the effectiveness of these relief programs soon and consider allocating more financial resources to make them permanent, thereby relieving the plight of the so-called `N-nothings' group," Lau said. While boosting spending for the less privileged, the government also has the responsibility to maintain fiscal prudence, Lau said, adding the current fiscal reserves of nearly HK$660 billion is a sound base for the next administration. Speaking at the same forum, Liberal Party lawmaker Miriam Lau Kin-yee criticized Financial Secretary John Tsang Chun-wah for lacking long-term vision in that he failed to allocate more funding to enable more secondary students to access tertiary education in universities. Tsang has been widely criticized for ignoring the hardships of the poor, but he said in his blog yesterday that the government has always given priority to improving the livelihood of the grassroots. In his budget, Tsang announced an HK$80 billion basket of relief and fiscal measures, including a salaries tax rebate of up to HK$12,000 for the 2011-12 financial year, an increase in the basic allowance from the current HK$108,000 to HK$120,000, and a waiver of property rates. To enable the grassroots to enjoy better lives, Tsang said the most pragmatic way is to guarantee they have abundant job opportunities in the labor market. In a separate development, Secretary for Labour and Welfare Matthew Cheung Kin-chung said he is confident the proposed "HK$2 a ride" public transport fare scheme for the elderly will be launched in the second half. Last year, Chief Executive Donald Tsang Yam-kuen announced that those aged 65 and over and others with disabilities will be able to travel anywhere at any time on the MTR, buses and ferries for a flat fare of HK$2.

 China*:  Feb 8 2012 Share

China says its veto of a UN resolution that backed an Arab plan calling on Syrian President Bashar al-Assad to quit is aimed at achieving a political solution to the Syrian crisis after 11 months of a deadly crackdown on protesters. But two mainland academics said China sided with Russia in Saturday's double veto because Beijing did not want to witness another Libya. Immediately after the vote, China's ambassador to the UN voiced Beijing's regret that Russia's proposal on a draft resolution for Syria was not taken into account by the other members of the UN Security Council. "Like many council members, China maintains that, under the current circumstances, to put undue emphasis on pressing the Syrian government, prejudge the result of the dialogue or impose any solution will not help resolve the Syrian issue, but instead may further complicate the situation," said Li Baodong in comments posted on the Foreign Ministry's website. "China supports the revision proposals raised by Russia, and has taken note that the Russian foreign minister [Sergey Lavrov] will visit Syria [tomorrow]", Li said. Professor Yin Gang, a Middle East expert with the Chinese Academy of Social Sciences, said Beijing's veto was an effort to stop the UN from interfering in the domestic affairs of a country. "Beijing's concern is also of Syria becoming another Libya," Yin explained. "If the UN can do this in Syria, it will do it again to another country in the future, and that is what Chinese leaders are worried about." Although China has better ties with the Middle East than Russia, it shared Moscow's displeasure about the Nato action in Libya. Niu Jun, a professor at Peking University's School of International Studies, said: "China is worried that a situation similar to that in Libya may occur again." Professor Xiao Xian, a leading Middle East expert and vice-president of the Chinese Association for Middle East Studies, said Beijing wanted to side with Russia and counterbalance US influence. "The only explanation for China's move is that Beijing is seeking closer collaboration with Moscow in order to check and balance the US-led Western alliance's domination of global affairs." Xiao said that Beijing's move had offended nearly the whole world, except Moscow. "The veto will not only anger the West, but the developing world, as Arab and developing nations at the council [as non-permanent members] have allied themselves with the West over the Syria issue," said Xiao, who is also dean of Yunnan University's School of International Relations and director of the university's Institute of Southwest Asian Studies. Xiao said that Beijing and Moscow had maintained a close consultation on the issue. But he dismissed the view that Beijing's veto has anything to do with a fear that the "Arab spring" would spread to China. In a commentary entitled, "Why another UN draft resolution on Syria is vetoed", Xinhua said the veto was designed to prevent more "turbulence and fatalities" in the violence-hit state. Quoting unnamed analysts, Xinhua said the failure of the draft resolution to clear the Security Council reveals a serious division among the 15 members of the council, which has the primary responsibility of maintaining peace and security in the world. Xinhua said Russia's positive moves deserved support from the international community. But France and other Western powers had ignored the legitimate concerns of Russia and other countries and called instead for an immediate vote on Saturday on the draft, under the pretext of what they called the urgency of the situation in Syria, Xinhua said. China and Russia both have the power of veto as two of the five permanent members of the Security Council. Saturday's veto sparked an international outcry, as it came just hours after reports that troops in the city of Homs killed hundreds of civilians.

China's airlines are not allowed to pay a charge on carbon emissions imposed by the Europe Union (EU), and neither to hike freights nor to add other fees accordingly without government permission, the Civil Aviation Administration of China (CAAC) said Monday. The CAAC said in a statement that it had been authorized by the State Council, China's Cabinet, to notify the ban to all domestic airlines. The statement said the EU's decision to charge flights into and out of EU airports for carbon emission "runs contrary to relevant principles of the United Nations Framework Convention on Climate Change and the international civil aviation regulations." The EU's Emissions Trading Scheme, which has taken effect on January 1, is one of the widest-reaching measures adopted by any country or regional bloc to regulate emissions of greenhouse gases blamed for climate change. It is estimated that around 4,000 airlines will pay the EU for their carbon emissions. "China objects to the EU's decision to impose the scheme on non-EU airlines, and has expressed its concerns over the scheme through various channels," the statement said. "China will consider adopting necessary measures to protect interests of Chinese individuals and companies, pending the development of the issue," the statement said. It added that China hopes the EU can find proper solutions to the issue with considerations of the overall bilateral relations, the two sides' combined efforts to combat climate change as well as the sustainable development of the international airline industry. The Chinese government said on Monday it has barred the country's airlines from joining a European Union scheme to charge for carbon emissions from flights into and out of Europe and prohibit airlines from charging customers extra because of the EU plan. The hardening of the dispute, which comes a week before Chinese and EU leaders hold a summit next week, could potentially subject Chinese airlines to fines or prohibitions on use of EU airports. The aviation row also comes as euro zone countries have looked to China, with its big holdings of foreign exchange reserves, for a show of economic support while they grapple with the latest phase of their debt crisis. The announcement from the central government’s State Council, or cabinet, bolstered China’s opposition to the plan – intended to help curb greenhouse gases from aviation that are adding to global warming. It said Chinese airlines would need approval if they want to join in the EU airlines emissions plan, which Beijing has already denounced as an unfair trade barrier. “China hopes Europe will act in the light of the broader issues of responding to global climate change, the sustainable development of international aviation and Sino-European ties, strengthening communication and co-ordination to find an appropriate solution acceptable to both sides,” an unnamed official from China’s civil aviation authority said, according to the announcement, issued by the Xinhua news agency. The official also issued an opaque warning about additional consequences. “As well, the Chinese side will also consider taking necessary measures to protect the interest of the Chinese public and businesses based on developments,” said the official. From January 1, all airlines using EU airports have been brought into the EU’s Emissions Trading Scheme (ETS), alongside EU utilities and heavy industry. Any airlines that do not comply face fines of 100 euros for each tonne of carbon dioxide emitted for which they have not surrendered allowances. In the case of persistent offenders, the EU has the right to ban airlines from its airports. Late last year, the European Court of Justice ruled against a group of US airlines that challenged the European law requiring a carbon cap on all airlines flying to and from European Union airports. In December, too, the China Air Transport Association (CATA) urged China’s airlines to refuse to take part in the emissions scheme. CATA says the scheme would cost Chinese airlines 800 million yuan (US$123 million) in the first year and more than triple that by 2020. EU Climate Commissioner Connie Hedegaard has repeatedly said she is open to talks with other nations and that the EU law provides for “equivalent measures”. Those could be other forms of carbon reduction, rather than the purchase of permits under the EU scheme.

German firms seeking growth in China - Back in his home town of Essen in North Rhine Westphalia, Erik Breslein was made to feel like a folk hero, telling stories of optimism, growth and expansion in a distant land that were in sharp contrast to the tales of gloom and doom which have prevailed in a continent troubled by sovereign debt problems, credit crisis and soaring unemployment. Of course, Breslein was well aware of the problems that beset Europe. But stationed in Taicang, a small town in Jiangsu province that is near metropolitan Shanghai, he and many other German executives in this enclave of German industrial enterprises have been too busy ramping up production at their respective facilities to pay too much attention. "We are thinking of nothing but expanding and expanding," recalled Breslein, general manager of Zollner Electronic (Taicang) Co Ltd. His problem was to find the most cost-effective source of funding to build new factories and buy the latest machinery. Funding is becoming even more acute in 2012 when European banks, their traditional source, are tightening credit to boost their capital bases in preparation for the worsening of the sovereign debt crisis, which is threatening to spread to the larger European economies. Meanwhile, Breslein, and his German colleagues in Taicang are under tremendous pressure from their respective head offices to further expand their production facilities to pick up the slack of those in the developed economies. In Taicang, staff at the 160-plus German companies in the city's Economic Development Area are working three shifts a day to meet orders. "We have seen a 75 percent growth this year at the Taicang plant, though not as much as the 225 percent growth rate from 2009 to 2010," said Breslein. He predicts that the growth rate in 2012 will slow down further but will still reach 45 percent because of an expected increase in demand in the Chinese market. "The Zollner group made 800 million euros ($1 billion)in sales turnover last year," said Breslein. "The Taicang plant will make around 16 to 16.5 million euros by the end of this year. At the moment, it's not much of the group's turnover, but we have to prepare our sales for the future because business ties between the United States and China are becoming tighter," said Breslein. To better meet the growing market need, the company has already leased a new tract of land in Taicang for the construction of a new plant in 2012. The project, Breslein said, has obtained the green light from the company's managing board. "It will be about 8,000 to 9,000 square meters (sq m) in the first phase and will be completed in the next two to three years. In the second phase, we plan another extension of 8,000 sq m to be completed in the next four to five years," he said. Although it remains confidential as to the exact amount to be invested in the new plant, it has been decided that the company will move in by the end of this year, according to the schedule. The plant will also increase its headcount from the current 208 workers to 249 this year to meet the production capacity. Having been in China for about eight years, it is Breslein's habit to read through the Chinese central government's five-year plans to seek any latent business opportunities. Although it is widely speculated that China's economic growth will slow this year, Breslein is still optimistic about future growth, as his home country braces for zero growth this year. "Maybe it'll cool down by 1 to 2 percentage points. But if you look at China's 12th Five-Year Plan (2011-2015) and the inputs they are making in railway and automotive hybrid technology - they are now playing a much bigger role. The healthcare market is also flourishing. These are all branches that need electronics," he said. "We've already delivered directly to China Railway for the high-speed train line. Look in Shanghai: It has all the new subway lines. Suzhou also gets a new line. You have many projects here the government is forcing to work into this five-year plan," he added. The rampant debt crisis in Europe has not exerted any impact on this Zandt-headquartered company because they have been balancing their output, attaching equal importance to the three divisions of the automotive industry, the semi-conductor industry and office data communications, said Breslein. "Automotive takes up about 20 percent of the whole sales turnover and the other two major ones take up not more than 30 percent respectively. So when one branch gets weak, you still have the others," he said. Keeping the overall output balanced within the company is also the aim of Foehl China Co Ltd, a manufacturer of zinc diecasting based in South Germany's Rudersberg, according to Simon Xue, business development manager of the company.

People perform dragon dance to celebrate the upcoming Lantern Festival in Taiyuan, capital of North China's Shanxi province, Feb 5, 2012. The Lantern Festival, which falls on Feb 6 this year, marks the end of the Chinese Lunar New Year celebrations.

The rise of Asia represents greater balance in the international power structure, China's Vice Foreign Minister Zhang Zhijun said here on Saturday. Zhang made the remarks during a panel discussion on "America, Europe and the Rise of Asia" at the Munich Security Conference. Development of the East and the West is not a zero-sum game, Zhang said in his speech titled "Working Together for Peace, Stability and Development of Asia." The rise of Asia has picked up speed since the beginning of the 21st century and Asia remains a bright spot and a big plus for the world against a backdrop of sluggish recovery of the world economy and frequent regional turbulence, he said. The modernization of billions of people in Asia will create a bigger market and more job opportunities for the world, Zhang said, adding that it renewed vitality to the efforts to fight global challenges and improve global governance. Asia has always been an open and inclusive region and China welcomes the participation of the United States, Europe and others from outside the region in Asia's development and their constructive contribution to Asia-Pacific affairs. But in the meantime, he noted, countries outside Asia should fully respect the will of the Asian people and follow the development trend in Asia. It is the shared aspiration of the people of Asia to seek economic development, better living standards and stability, according to the vice foreign minister. He pointed out that any move to deliberately highlight the military and security agenda, create tension and strengthen military presence or military alliance runs counter to the trend of our times and people's will in Asia. He called on countries outside Asia to respect the characteristics of Asia and the Asian people's way of action, stressing that Asia does not export development models or ideologies, nor does it want to see others impose their will on Asia. With regard to the Euro-Asian ties, Zhang pointed out there were immense scope and potentials for Asia-Europe cooperation lying ahead. China has been supporting the European Union's efforts to address its debt problems and hopes the two sides can further enhance mutual understanding and trust and deepen mutually-beneficial cooperation, he said. With its constant policy of building friendship and partnership with its Asian neighbors, China has enjoyed over 30 years of peace with its neighbors and their economies have become much more integrated, Zhang said. Although there may still exist some differences and frictions between China and some of its neighbors, efforts are being made to solve them and they do not affect the overall relations between China and its neighbors. China sees the future of its development in the common development of Asia, Zhang said. China does not seek a sphere of influence, he said. The country does not intend to build an exclusive regional order and is not capable of doing so, he added. China is firmly committed to peaceful development and will take its due responsibilities in safeguarding world peace and development while handling affairs concerning its 1.3 billion people well, he said. That is China's long-term strategy and solemn promise to the world, he added. Former US Secretary of State Henry Kissinger, Australian Foreign Minister Kevin Rudd, Singaporean Defense Minister Ng Eng Hen, US Senator John McCain and former French Foreign Minister Michel Barnier also participated in the panel discussion.

Chinese and foreign children watch a lion dance performance in Shanghai's Biyun international community yesterday ahead of today's Lantern Festival which marks the last day of Chinese Lunar New Year celebrations. Visitors to the city's Yuyuan Garden this evening are promised a dazzling display. An entrance fee is being charged for the popular lantern show and numbers will be controlled to ensure safety. When visitors reach capacity, ticket points will be closed temporarily until numbers subside.

China's new generations of the Long March rocket family, Long March-5, -6 and -7 are expected to make their maiden flights in the next five years, a rocket scientist has said. Yu Menglun, also academician of the Chinese Academy of Sciences, said in a recent interview that China has sought to develop non-toxic, low-cost, highly reliable, adaptable and safe carrier rockets in its research of the new generation products. Long March-5 rocket will be using non-toxic and pollution-free propellant. It has a maximum low Earth-orbit payload capacity of 25 tonnes and geosynchronous orbit payload capacity of 14 tonnes. The Long March-6, which is designed to be a high-speed response launch vehicle, has a minimum of 1 tonne of sun-synchronous orbit payload, according to the scientist. The Long March-7 has a maximum low Earth-orbit payload capacity of 13.5 tonnes and 5.5 tonnes of sun-synchronous orbit payload, he said. The Long March rockets currently fall into four categories, namely the Long March-1, Long March-2, Long March-3 and Long March-4. China started development of modern carrier rockets in 1956, and Long March rockets have become the main carriers for China's satellite launching. The Long March rocket family has already made more than 150 flights. The Shenzhou manned spaceships and China's lunar orbiters were all launched on the Long March rockets. So far, China has three launch centers, located in Jiuquan, Taiyuan and Xichang. Currently, a fourth launch center is being built in Wenchang in the island province of Hainan. The Wenchang launch center is expected to be put into use within two or three years, according to Yu.

A massive project to divert water from the south to the drought-prone north - which has seen hundreds of thousands of people relocated - will become partly operational next year. Called the South-North Water Diversion Project, it is one of the mainland's largest infrastructure programs since the building of the Three Gorges Dam, which involved the relocation of more than one million people. Sun Yifu, deputy water resources chief in eastern Shandong, said his province's part of the project will be completed at the end of the year. He added that "the entire project" will become operational in the first half of next year, and start supplying water to arid parts of the north. The project consists of three routes - eastern, middle and western - and Sun was referring to the eastern portion of the project, which is a 1,890-kilometer canal. Construction on the 1,430km central route began in 2003 and will only be operational in 2014. The western section, meanwhile, has yet to see the light of day. The late chairman Mao Zedong is credited with coming up with the idea for the massive diversion program, which will feature a tunnel dug beneath the Yellow River - the second-largest in China. But the project - which will cost an estimated 500 billion yuan (HK$614.78 billion) - was only approved in 2002. Critics said it could be a huge waste of resources that risks creating new water shortages and sparking environmental disasters. They also point to the human cost of mass relocations to make way for the canals. 

Hong Kong*:  Feb 7 2012 Share

HK business activity up; first rise since July - Robust jobs market helps drive strong local demand, offsetting mainland slowdown and European turmoil - Resilient domestic demand in Hong Kong has been 'a critical counterbalance' to China's continued slowdown and turmoil in Europe. Hong Kong business activity grew last month, reversing a five-month contraction, as the strong employment market helped to underpin local consumption. The Hong Kong purchasing managers' index (PMI) compiled by HSBC and Markit stood at 51.9 points in January. A reading above 50 denotes growth and anything below denotes contraction. It was the first positive figure since July. The survey, which is compiled from interviews of about 300 companies from a variety of sectors including manufacturing, services, retail and construction, produced a reading of 49.7 points in December. "Overall demand strengthened again in January to tip the headline PMI back above 50," said Donna Kwok Ho-jong, HSBC Greater China economist. "The sustained strength of Hong Kong's job market is clearly helping to underpin local consumption and offset the impact of still tepid mainland demand." "Slowing global trade flows will weigh upon growth this year, but this promising start to 2012 underscores our expectations for gross domestic product to stay in expansion mode this year," Kwok said. Among the sub-indices, business output expanded for the first time in six months to 51.7 points last month from 49.7 in December, the research said. The new orders sub-index soared to an eight-month high of 53.7 points in January, up from 50.4 over the previous month. There was also a growth in new jobs for the first time in six months, with the relevant sub-index surged to 51.5 points in January. Figures from the Census and Statistics Department showed that the city's jobless rate fell by 0.1 percentage points to 3.3 per cent for the period between October and December due to strong consumption demand from both tourists and locals. However, HSBC's report also stated that new business inflows from the mainland contracted again for the third month, with a reading of 49.1 points. "This supports our view that resilient domestic demand in Hong Kong is acting as a critical counterbalance against the impact of China's continued slowdown and ongoing turmoil in European and global financial markets," the study said. But Daniel Poon Wing-choi, assistant chief economist at the Hong Kong Trade Development Council, said an improved figure for a single month did not necessarily signify the start of a trend. "There were many holidays in January and some companies might have boosted their output in advance before the holidays," Poon said, adding that exports to tradition markets such as the US and Europe might weaken due to uncertainties in the global economies. The mainland's official services PMI sank to 52.9 last month from 56 in December, according to the China Federation of Logistics and Purchasing which issues the data with the National Bureau of Statistics.

More than 20 banks have expressed interest in joining the HK$100 billion loan guarantee scheme for small and medium-sized enterprises (SMEs) that Financial Secretary John Tsang Chun-wah announced in his last budget speech on Wednesday. Under the scheme, the government will offer HK$100 billion of loan guarantees to small companies in the first half of this year to help them access cheaper credit amid an uncertain business environment. In April, the government will seek lawmakers' approval for the requisite funding. The government hopes to help the roughly 280,000 SMEs in Hong Kong secure bank loans and preserve jobs. SMEs hire more than 1.2 million people. A similar loan guarantee scheme to help SMEs was instituted during the 2008 global financial crisis as liquidity froze up. Gregory So Kam-leung, secretary for commerce and economic development, said the new scheme would allow SMEs to secure loans with better terms when applying to the Hong Kong Mortgage Corporation under the SME Financing Guarantee Scheme. It will guarantee up to 80 per cent of bank loans for SMEs, up from the current 70 per cent. The government expects defaults of HK$11 billion. The scheme will allow SMEs to pay less interest as the new guarantee fee will be about a third of the current level. Each firm will be able to borrow up to HK$12 million for five years. So said the new scheme would encourage banks to lend to SMEs. "SMEs are our economic pillar," So said. "We consider it necessary to introduce timely and effective measures to support enterprises amid the global economic slowdown." Ricky Tsang, managing director of CaSO (HK) Engineering, a local company with a staff of 30, said the scheme would help his firm secure more bank loans. "It is useful for SMEs that are qualified to get bank loans," Tsang said. "However, those that do not have the necessary assets and business will not get bank loans just because of the government guarantee." Local banks have pledged their support for the scheme. A HSBC spokesman said the bank "is fully committed to supporting and participating in the enhanced scheme". "Hang Seng Bank (SEHK: 0011, announcements, news) attaches great importance to our SME business," said Donald Lam Yin-shing, head of corporate and commercial banking at Hang Seng Bank. "We will participate in the SME Financing Guarantee Scheme subject to the scheme details." A Standard Chartered Bank spokeswoman said: "We believe more SMEs will be encouraged to make use of the scheme to help them obtain financing."

Sales slide after vintage year for bogus Bordeaux - Fears over bootleg booze end three-year boom and send mainland market for fine wines into freefall. As New Year's revellers around the world were popping Champagne corks to welcome 2012, the producers of another famous French tipple had considerably less to celebrate. Trade in the very best Bordeaux wines ended the year sharply down, falling 4.6 per cent in December alone. That came on the back of a six-month slide that erased more than a quarter of the wines' value from a high point in June. With the market seemingly locked in a downward spiral, investors and merchants were asking one question - has the Bordeaux bubble burst? And many eyes were looking in the direction of China. Mainland wine buyers - one of the main drivers of a three-year boom - had suddenly lost interest. Prices for Chateau Lafite Rothschild fell 45 per cent, dropping from a record £14,043 (HK$172,189) for a 12-bottle case of the 2008 vintage to a year-end low of £8,108. Lafite saw its price shoot up virtually overnight in October 2010 after announcing the 2008 vintage would carry the "lucky" Chinese character for eight on its bottle. By the end of last year, it was trading at less than the pre-launch price. Wine industry insiders say that aside from economic factors such as the European debt crisis, what really scared mainland buyers were worries about bootleg booze. "Everybody knows that there are huge amounts of fake Lafite in China," said Guo Qingfeng, general manager of Xiamen Gulong Foods, which specialises in exclusive wines. "The amount of Lafite drunk on the mainland is enormous, way in excess of the amount of real Lafite in the whole world. Most of it has to be fake, and nobody knows how to tell the real from the fake." According to the Bordeaux vineyard's website, annual production ranges from 15,000 to 20,000 cases. Annual consumption of the wine on the mainland is estimated to be around 3 million bottles - 250,000 cases. Zhejiang province alone is estimated to have guzzled 300,000 bottles last year. "Rich mainlanders started to get very worried about this last year," Guo said. "People began to hear about the numbers involved and realised. They started to question whether the Lafite they had drunk was genuine or not." One mainland-based wine trader, who asked not to be named, said the problem of counterfeiting had become a major headache. "It is a real dilemma," he said. "Proving the providence of a bottle of Lafite is very difficult on the mainland. Many of the fakes are so good it is impossible to tell until you open the bottle - and even then, relatively few wine drinkers would be able to say with any certainty." The trader said unscrupulous mainland merchants regularly refilled genuine Lafite bottles with generic red wine - often cheap plonk from mainland vineyards - or produced copied bottles from scratch, artificially ageing the labels for effect. "There has been such intense demand for Lafite, above all other chateaux, from mainland drinkers keen to show off their wealth and often with very little knowledge about wine other than the brand name, that it is hardly surprising people cash in on it," he said. "The situation is so severe that it is really undermining the investment market for fine wine in China. "First-growth Bordeaux wines are the gold standard for wine investments internationally, but I think any that had been stored in mainland China at any point would be viewed as inherently suspect." Guo said he also saw last year's sudden price decline as evidence the mainland market was maturing. "The problem is that fine wine is about more than just money. You have to have certain knowledge before you can tell a good wine from a bad one," Guo said. "Until recently, wealthy mainlanders believed all they had to do was buy the most expensive wine available in order to impress people. Increasingly, they want to show that they know how to appreciate wine for its intrinsic qualities. "People are starting to realise that although wonderful, certain wines have become over-priced simply due to their popularity. That is dramatically so in the case of Lafite." Gulong, a state-owned food group based in Xiamen , Fujian , expanded into fine wines a decade ago after seeing a massive potential market in the mainland's emerging wealth. "Education is the key factor that is missing," Guo said. "We have our own showcase cellar in our headquarters and we run tasting classes for members of our wine club." He said it was a challenge to persuade affluent mainlanders who were relatively new to drinking good wine to look beyond price or brand image. "The reality is that many wines available for 300 yuan (HK$369) to 400 yuan a bottle are very enjoyable and we try to teach consumers that," he said. "Once you get to 1,000 yuan, you should be talking about an exceptional wine. "I do not think the market for a real consumer of wine - as opposed to investors - will be affected by this price dip, but I do think the price of those top wines will continue to fall. "It will probably be the second half of the year before the price correction is complete and values get back down to reflecting the actual quality of the wine."

Officers didn't overstep mark, police chief says - Commissioner Andy Tsang insists no excessive force was used on protesters at HKU during Li Keqiang's visit, and denies it breached agreement on security - Police Commissioner Andy Tsang Wai-hung denied yesterday that his officers had overstepped security arrangements agreed with the University of Hong Kong ahead of Vice-Premier Li Keqiang's visit to the Pok Fu Lam campus last summer. Tsang (pictured) also insisted that only a "minimal level of force" had been used on protesters. The remarks came a day after a HKU review committee accused police of using "unjustifiable and unreasonable force" on protesters; of breaching an agreement with the university that absolutely no force would be used; and of extending previously agreed restricted areas. Tsang reiterated that the arrangements were a result of agreements with HKU management, adding: "What officers did was also in accordance with existing guidelines. No excessive force was used." He said that he would study the committee's report in detail and consider its recommendations to improve communications in future events. "We will do better next time and we will learn from this experience." HKU's report said that during Li's visit in August, police pushed student protesters into a stairwell even though they posed no threat. Tsang said he was prepared to face a legal challenge from one of the protesters, student Samuel Li Shing-hong, who has said he is considering taking the police to court. He claims he was falsely imprisoned when he was confined in the stairwell. But the HKU report concluded the police action did not amount to false imprisonment as the students could have left the stairwell if they had wanted to, evidence showed. The debacle at the university's centennial celebration ceremony pushed the institution into crisis mode, with vice-chancellor Tsui Lap-chee announcing he would depart at the end of his current contract. Rumours that political pressure from Beijing was behind his decision and the security arrangements have been dismissed by university officials. The review panel did, however, hold Tsui responsible for administrative blunders behind the debacle and bad judgment. Legislator James To Kun-sun yesterday urged police to respect HKU's autonomy for events held at the school campus. "They are just an agent. They should respect the views of the university and should not do anything against their will, even when it is minimal [force]," he said. Critics have said the treatment of protesters as well as seating arrangements for the ceremony, which put Li centre stage, have tainted HKU's reputation for upholding academic freedom and freedom of expression. Other than Tsui - who has agreed to remain in his post until a successor is found - the school's registrar Henry Wai Wing-kun was also singled out for criticism in the university's report. But the committee did not name any names when it came to who in the police force should shoulder responsibility for the blunder.

Jackie Chan takes new role as jet star - As it eyes the big Chinese market for executive jets, Brazilian planemaker Embraer has presented one to its newest customer, martial arts star Jackie Chan, to help build its brand there. Embraer said Chan would help the company promote "its entire line of executive aircraft, not only in the rapidly growing greater China market, but globally". "This delivery is a moment of historical importance to Embraer because it solidifies an already long and successful relationship between China and Embraer," said Ernest Edwards, president of Embraer's executive jets unit. Embraer hopes to translate Chan's charisma and celebrity into increased recognition and sales for the Brazilian jets. "I believe that Embraer is poised to become a major player in the Chinese executive jet market," said Chan, who described himself as a "brand ambassador" for the manufacturer. The ebullient actor, singer and cultural icon toasted the company's executives as they stood together in front of the Legacy 650 plane customised with Chinese colours of red and yellow and with the name "Jackie" painted on the tail. The Legacy 650 has a range of 7,200 kilometres and can fly four passengers nonstop from Beijing to Dubai or from Hong Kong to Adelaide, Australia. It sells for about US$30 million. Hong Kong-born Chan is also respected for his commitment to world philanthropic causes and devotion to the promotion of Chinese culture. Embraer - the third-largest commercial aircraft maker behind American Boeing and Europe's Airbus - is the only manufacturer offering a full line of executive jets, from entry-level to ultra-large aircraft.

 China*:  Feb 7 2012 Share

A new strategy for New Zealand's future dealings with China was launched by Prime Minister John Key at Auckland's waterfront on Friday, which gives its relations with China a clear direction over the next five years. Calling for more investment between the two nations, Key said New Zealand was on track to doubling its two-way trade with China to 20 billion NZ dollars (about 17 billion U.S. dollars) by 2015 at the launch ceremony. "We have a strong relationship with China and have seen good growth in trade over the past few years. The launch of the strategy today will help further strengthen that relationship," Key said. "The goal of doubling two-way trade from 10 billion NZ dollars to 20 billion NZ dollars by 2015 was agreed when I visited Chinese Premier Wen Jiabao in 2010." "We are on track to meet that goal. Bilateral trade in the year to last September was up 22 percent on the year before, largely helped by the Free Trade Agreement that came into force in late 2008," Key added. New Zealand was the first, and is still the only Western economy, that has a free trade agreement in place with China. It is also the first time for New Zealand to launch a China Strategy.

Russia, China veto Syria draft resolution - China's Ambassador Li Baodong (front) votes during a UN Security Council meeting on an Arab-European draft resolution on Syria backing an Arab League plan which demands a regime change in the Middle East country, New York February 4, 2012. Russia and China on Saturday vetoed an Arab-European draft resolution on Syria backing an Arab League plan which demands a regime change in the Middle East country, the second time since October 2011. The draft resolution, tabled by Morocco and backed by the United States and European powers, received 13 votes in favor. In order to be adopted, a draft resolution needs nine votes in favor and no veto by any of the five permanent members of the 15- nation council -- Britain, China, France, Russia and the United States. Russia and China staged double veto on October 4, 2011 against a European draft resolution, which meant to strongly condemn "the continued grave and systematic human rights violations by the Syrian authorities" and threatened punitive measures against the Middle East country. The unadopted draft "fully supports" the January 22 Arab League decision "to facilitate a Syrian-led political transition to a democratic, plural political system ... including through commencing a serious political dialogue between the Syrian government and the whole spectrum of the Syrian opposition." The Arab League plan contains demands that Syrian President Bashar al-Assad to step down to pave the way for a new national unity government and national elections in the Middle East country. Russia and China have voiced their strong opposition to forced regime change in Syria. Russia warned some countries against meddling in the internal affairs of Syria, saying that the international community should prevent a replay of the Libya model, in which NATO military action help topple the regime of Libyan strongman Muammar Qaddafi. Hours before the Security Council entered into a scheduled meeting on Saturday, with Western powers pushing for a council vote on the draft, Russia insisted that the document be amended. "We circulated an amended resolution which aims to fix two basic problems ...(first), the imposition of conditions on dialogue, and second, measures must be taken to influence not only the government but also armed groups," Russian Foreign Minister Sergei Lavrov said at a panel discussion at the Munich Security Conference, adding that these two issues are "of crucial importance" from the view of Russia. French and US ambassadors said after the council vote that they were angry with what they called the inaction of the Security Council to address the current situation of Syria, which has been plunged into a political crisis since March 2011.

Oil to top Canadian PM's agenda - Stephen Harper visits China this week, where he will promote oil sands after US rejects pipeline plan - Canada's prime minister heads to China this week, where he will discuss his country's vast oil reserves in a visit that is being viewed as an "open warning" to the United States, which rejected a pipeline from Canada to Texas. Prime Minister Stephen Harper will be in Beijing and two other cities for bilateral meetings with top officials, including President Hu Jintao and Premier Wen Jiabao , from Wednesday to Saturday. Andrew MacDougall, Harper's spokesman, said it was "absolutely in Canada's interests" to move its resources to China. Five Canadian cabinet ministers, including the ministers of natural resources, trade and foreign affairs, will make the trip with Harper. Harper is determined to build a pipeline to Canada's Pacific coast after US President Barack Obama rejected the Keystone XL pipeline that would have taken oil from Alberta to the Texas Gulf Coast. Ninety-seven per cent of Canadian oil exports now go to the US and Harper is eager to diversify. Canada has the world's third-largest oil reserves after Saudi Arabia and Venezuela: more than 170 billion barrels. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million by 2025, which the oil industry sees as a pressing reason to build the pipelines. Canada is increasingly looking to China, thinking the US does not want a big-stake share in what environmentalists call "dirty oil", which they say increases greenhouse gas emissions. Harper told Obama he was "profoundly disappointed" that he rejected the Keystone XL pipeline. The pipeline has become a hot topic in the US presidential election. Republican presidential hopefuls Newt Gingrich and Mitt Romney have both promised to approve the pipeline. After Obama first delayed a decision on the Keystone pipeline in November, Harper told Hu at the Pacific Rim summit in Hawaii that Canada would like to sell more oil to China, and the Canadian prime minister filled in Obama on what he said. Wenran Jiang, an energy expert and professor at the University of Alberta, said Canada was using China as leverage. He said Harper's visit was an explicit warning to the US. "It's a not a subtle warning. It's an open warning. Harper has said Keystone was a wake-up call." Jiang said Washington would be paying attention to the trip but a number of factors made US officials less worried than a few years ago when China's investment intentions in Canada's oil sector were not as clear as they are now. Jiang said US officials no longer feared that Beijing is investing in Canada to lock up the supply and ship it back to China. But Jiang said that did not prevent Republicans like Gingrich and Romney from raising fears that the US is losing energy security. David Goldwyn, a former energy official in the Obama administration, has said he sees no threat from Chinese inroads into Canada because there is more than enough oil for all concerned. China's growing economy is hungry for Canadian oil. Chinese state-owned companies have invested more than US$16 billion in Canadian energy in the past two years. State-controlled Sinopec (SEHK: 0386) has a stake in Enbridge's proposed Pacific pipeline, and if it is built, Chinese investment in Alberta oil sands is sure to boom. "The two countries do have clear interests that we can meet each others needs," MacDougall said. Zhang Junsai, China's ambassador to Canada, has said Harper's visit will help forge a "win-win" natural-resource partnership with Canada to help his country's expanding economy meet its voracious energy needs. Forty Canadian business leaders will accompany Harper on the trip. Relations between the countries have improved significantly since Harper's first visit in 2009 when Wen publicly chided Harper for taking so long to visit China. Harper has since changed Canada's hardline stance on human rights.

In a demonstration of its growing military power, China is increasingly willing to deploy its armed forces to protect its nationals abroad, but analysts say it still lacks the capacity to mount a complex hostage rescue. A crisis in Sudan where 29 Chinese workers are being held captive has renewed pressure on Beijing to provide security for more than 800,000 citizens employed overseas, particularly in resource rich but unstable nations where China has become a major investor. Expectations that China could intervene in a distant crisis were raised last year when the People's Liberation Army won domestic acclaim for its role in the rescue of almost 36,000 workers from Libya in the midst of that country's civil war. After more than two decades of double-digit increases in defence spending, this was widely seen as evidence of the PLA's growing capacity to conduct complex, maritime operations far from home. Beijing's move in December to deploy armed border police on joint patrols of the Mekong River following the killing of 13 Chinese nationals in an attack on cargo shipping was also seen as part of this trend. However, the Chinese military would be unwilling to attempt the kind of daring rescue that US Navy SEALs mounted last month in freeing an American aid worker and a Danish colleague from Somali gunmen, according to experts on the Chinese military. "China does not have the intelligence network, it does not have the political will and it does not have the military capability to conduct operations of that kind of audacity," says Gary Li, a London-based analyst with Exclusive Analysis, a business intelligence agency. Beijing's growing military reach has also been on display since PLA warships in 2008 began escorting Chinese and foreign cargo ships in and around the Gulf of Aden as part of an anti-piracy campaign. This mission has also seen Chinese naval vessels come to the assistance of about 50 cargo ships that have been captured or freed from pirates. And, on occasions, senior Chinese military officers have called for stronger measures in dealing with Somali pirates despite the fact that Beijing has been careful to ensure its warships avoid armed clashes. The chief of the PLA's general staff, General Chen Bingde , said on a visit to Washington last year that international forces should also target Somali pirates on land to hit at the organisers behind attacks on civilian shipping. "It is all part of a creeping shift in China's willingness to deploy security forces overseas," says Christian Le Miere, a maritime security researcher at the International Institute for Strategic Studies in London. "We will see more of this in the future." China last week sent a team of civilian officials to Sudan to negotiate the release of the hostages. Rebels in the Sudanese border state of South Kordofan captured the construction workers on January 28. They are apparently being held as bargaining chips in a dispute between Sudan and rebels allied with the newly independent and oil-rich South Sudan. With so many workers and professionals employed offshore, many of them in resource-rich but politically troubled nations in Africa and the Middle East, analysts say Beijing will almost certainly need to plan for future emergencies. "We will see more incidences of kidnapping or other dangerous situations for Chinese in the nearer future," says Sven Grimm, the director of the Centre for Chinese Studies at South Africa's Stellenbosch University and an expert on China's investment in Africa. "In very crude terms, more people simply increase the likeliness of something to happen to them. And, secondly, a number of countries in which Chinese businesses operate are unstable." The Sudan kidnapping has led to calls in China for better protection of vulnerable citizens offshore. Threats to workers overseas trigger thousands of posts on blogs and social media sites urging the authorities to launch a rapid response. State-controlled media, too, have called on the government to do more to protect nationals overseas. "No other powers have the same number of nationals living in underdeveloped and turbulent regions as China," the strongly nationalistic, state-controlled Global Times newspaper said in a commentary. "Ensuring their safety is a major challenge." Even if China develops the military means to use force against pirates or kidnappers, most analysts believe it would require a fundamental shift in a long-standing, cautious approach to the security elements of its foreign policy to clear the way for the use of force. China has so far avoided establishing foreign military bases and alliances that would allow it to mount distant operations, and shows no inclination to do so. "It is highly unlikely that China would take the approach of using its special forces to conduct rescue missions on foreign territory," says Shen Dingli, a professor at Shanghai's Fudan University and an expert on Chinese security policy. Shen adds that in all its deployments offshore, China has been careful to follow international law and consult with other nations. And, for a military that has been untested in major combat since the PLA fought a short but intense war with Vietnam in 1979, failure in a high-profile rescue could deliver a damaging blow to official prestige. Analysts point to the humiliation for the US military and the Carter administration from the failed 1980 attempt to rescue American hostages in Iran as an example of the risk in these types of operations. "No part of the Chinese military has seen any combat since 1979 and most of those guys have retired by now," Li says. Still, the presence of Chinese military was symbolically important, analysts say. "It sent a strong signal that China is prepared to keep its citizens safe," says Gabe Collins, a US-based specialist on maritime affairs.

Hong Kong*:  Feb 6 2012 Share

Hong Kong is bracing for more finance-sector job cuts as Western banks, many of which base their regional operations in this business hub, scale back their Asian expansion amid the fallout from Europe's debt crisis and a generally weaker global economy. Yet while economists and analysts expect the layoffs—predominantly at European financial institutions—to continue well into the first half of this year, they see limited impact on other sectors of the city's economy over the coming months, in part because of the strength of the flow of money from mainland China to both the retail and financial markets. Hong Kong's finance sector, which employs roughly 180,000 people, or 4.9% of the city's working population. A bigger concern, they say, is the threat that cuts in banking jobs could put a heavier strain on Hong Kong's already sluggish property market. In the past few months, prices have declined for the first time since 2008. Jobless bankers may be more inclined to sell property, possibly triggering bigger price declines. Already, banks with a major presence in the city, such as Royal Bank of Scotland Group PLC and Morgan Stanley, have announced thousands of job cuts globally, although the final number of those affected in Hong Kong isn't yet clear. Those layoffs would add to U.K. banking giant HSBC Holdings PLC's ongoing move to eliminate 3,000 jobs in the city, representing roughly 10% of its local work force. European banks have expanded significantly in the region over the last few years to capitalize on the China growth story. Now, with the ongoing debt crisis at home, many are forced to shift their focus and halt investments in Asia. For example, Spanish lender Banco Bilbao Vizcaya Argentaria SA—which has been ramping up its presence in Asia by boosting its investment in China's seventh-biggest bank and opening branches in several countries— in December laid off nearly 30 Asia-based employees, representing a third of its global-markets staff in the region, with the bulk of the cuts in Hong Kong, a person familiar with the situation said last month. BBVA said the layoffs were part of global cutbacks. Daiwa Capital Markets senior economist Kevin Lai said he expects more European banks operating in the city to reduce their staff numbers and freeze hiring as the euro zone's problems squeeze liquidity from them. Further cutbacks in European bank lending in the city could affect small and medium-size enterprises, he said, though the impact, if any, remains to be seen. European bank loans account for less than 10% of the city's total loans outstanding. To be sure, Hong Kong's latest unemployment statistics have yet to show any signs of an economic slowdown, with the jobless rate falling to 3.3% in the October-December period, from 3.4% in the September- November period. Meanwhile, the unemployment rate in the financial-services professions remained constant at 2.4% during the fourth quarter. For the city's finance sector, which employs roughly 180,000 people, or 4.9% of Hong Kong's working population, any rise in unemployment from layoffs will likely be temporary, economists say, underpinned by growing demand for financial services from China-related businesses. "Unemployment in Hong Kong is more likely to be frictional for now, as some job seekers don't mind waiting a while to find positions that are a better match for their skills given a high savings rate," said Crédit Agricole CIB senior strategist Frances Cheung. Frictional unemployment, which refers to the temporary transitions of employees from one job to another, is present in any economy during good times and in bad. Illustrating Ms. Cheung's argument, the local website of eFinancialCareers showed more than 4,000 finance-sector job postings, with positions ranging from asset management and capital markets to private banking. Ms. Cheung said she expects banks operating in the city to allocate more resources to the booming yuan business or traditional retail operations, thereby absorbing finance-sector talent. If bank layoffs do accelerate, the city's property market could feel the impact. In the last round of major bank cuts during the 2008 global financial crisis, some bankers unable to keep paying on large mortgages sold property at steep discounts, contributing to a retreat in prices at the time. Denys Kwan, president of the Society of Hong Kong Real Estate Agents Ltd., said transaction volume has been low in recent months partly because property owners are holding onto their flats in the hope that the market may go up again. "But if there are massive job cuts in the financial sectors and no positive external economic indicators in the coming months, some of these owners may be forced to sell their flats low. If that's the case, we won't be surprised to see a 20%-30% price correction in the residential market this year," Mr. Kwan said. Home rental prices could also be affected as expatriate bankers move out of the city, said Wong Leung-sing, associate director of the research department of Centaline Property Agency, the city's largest real-estate agent. "Most of the overseas bankers choose to rent apartments because they have no intention to stay here for good. We only see a single-digit percentage drop in residential rentals in recent months. But the fall could well be much more substantial if there are massive job cuts in the financial sector over the next few months," Mr. Wong said. Meanwhile, office rents in Central, the city's central business district, eased 5.8% in the fourth quarter of 2011 from the previous three months, according to real-estate brokers CBRE. Rhodri James, CBRE's executive director for office services, expects office rents in Central to fall as much as 20% in 2012, partly due to increases in vacancy rates amid downsizing of banks.

Bringing the big beef East - The entrance to Morton's Steakhouse on State Street in Chicago. Restaurant group looks to Asia for expansion drive as US division saw losses - Starting from chopping onions and making salads in the kitchen 16 years ago, Christopher Artinian knows Morton's like the back of his own hand. Now, Artinian, 41, who is the president and chief executive officer of Morton's Restaurant Group Inc, is leading the company in an attempt to escape the economic downturn and go for further expansion in Asia. Morton's, the world's largest owner and operator of a company-owned fine dining restaurant, opened its first steakhouse in 1978 in downtown Chicago, where Morton's corporate office is still located. Since then, the company has grown to 77 steakhouses and one Trevi restaurant. Morton's has 71 domestic steakhouses and six in international locations: Toronto, Hong Kong, Shanghai, Macao, Mexico City and Singapore. The restaurant industry, especially fine dining, largely relies on general economic conditions. Morton's, where the average per-person check is more than $99, is one of the high-end restaurants that have been affected by the global economic recession. "There is no secret that the US economy has been difficult. It was incredibly difficult in our business in 2008 and 2009. But things started to really pick up again in 2010. Morton's has reported seven quarters of positive comparable sales, which is very exciting," said Artinian. The company suffered a loss of $77.5 million net of tax from continuing operations in 2009 and $61.8 million in 2008. The restaurant revenues decreased when compared with the previous year by 19.5 percent for 2009 and 4.9 percent for 2008. In fiscal year 2010, the company reported net income from continuing operations, net of tax of $4.6 million. "What was really great for Morton's is that luxury hotel, luxury retail and business entertaining have been on the rise for the last seven or eight quarters and continue to forecast positive," he said. Artinian has recently completed his tour of Asian cities including Seoul, Tokyo, Taipei, Beijing and Shanghai to look for possible locations for new restaurants. Sitting in Morton's The Steakhouse in Shanghai, which has just celebrated its first anniversary, Artinian said that he is leading the group in an aggressive expansion in Asia. "Our plan is to open two locations in Asia a year for the foreseeable future. We have nothing to announce definitively, but we are incredibly close on several locations," he said. "We are already actively looking in two other locations for Shanghai and at least two locations in Beijing. I would not be surprised if we have at least one, if not two, open in 2012," he said, adding that the company is also looking for a second location in Hong Kong. While the United States is Morton's No 1 for business, because that is where the company originated, Artinian said he believes the company's operations in China can easily come a very close second. "China is our No 1 area for growth," he said. The company has moved its regional director of operations from Honolulu to Hong Kong and the vice-president of construction and development is now based in Shanghai. "We are excited about the growth. We want to make decisions faster," Artinian said. In November 2010 when the Morton's restaurant opened in Shanghai IFC Mall in the Lujiazui area, a commercial center of the city, Artinian said that it might be the most important one among all Morton's restaurants. "Hong Kong and Singapore were well-traveled international cities. They have more Western influence than Shanghai does today. We were a little unsure if we would really grow on the Chinese mainland. And we knew that if we could be successful here, it would open up the doors for other cities such as Beijing, Guangzhou, so on and so forth," he said. He added that so far they are off to a terrific start because the restaurant's performance in the first year was beyond their expectations. "Our four restaurants in Asia are all in the top core tile of all of Morton's. They are some of our fiscal year's most profitable restaurants," he said. The company's financial report for the third quarter in 2011 showed that the company's six restaurants overseas realized more than $3.91 million in income before tax in the first nine months, while its domestic restaurants suffered a $2.86 million loss.

 China*:  Feb 6 2012 Share

A landmark ruling by the European Court of Justice is expected to result in lower anti-dumping duties on Chinese goods exported to the EU. The judgment by the EU's top court meant that in future, Chinese goods heading to the EU would in general face lower anti-dumping duties, said Edmund Sim, a partner at international law firm Appleton Luff. On Thursday, the court annulled anti-dumping duties the EU slapped on Hong Kong shoemakers Brosmann Footwear and Risen Footwear and Guangdong shoemakers Seasonable Footwear (Zhongshan) and Lung Pao Footwear (Guangzhou). They are among 400 to 500 Chinese and Vietnamese shoemakers which have been paying anti-dumping duties since 2006. Most Chinese shoemakers have been paying duty of 16.5 per cent. Since 2006, the Chinese and Vietnamese shoemakers had paid more than US$1 billion in such duties, said Arnoud Willems, a partner at US law firm Sidley Austin. Willems, who represented the shoemakers, said the companies could expect to gain millions of dollars in tax refunds. The court also ruled that any Chinese exporter requesting an individual assessment of an anti-dumping duty imposed on it is entitled to receive one. Individual assessments increase the likelihood of anti-dumping duties being lowered. "This is an important development," Willems said. He said China, as the world's biggest exporter, was also the biggest victim of EU anti-dumping duties, with at least eight in 10 of such actions directed against its companies. If the EU argued that it was unable to look into the appeals of all exporters because there were too many of them, it must take a representative sample of exporters and calculate the anti-dumping rates accordingly, said Sim, who has also helped some Chinese and Vietnamese shoemakers in anti-dumping cases. The EU uses only one Chinese company to calculate the anti-dumping rate for all Chinese companies. This lead to higher duties than would be the case if the rate been based on several companies, Sim said. The EU adopted this practice because it treated China as a non-market economy and assumed all companies were controlled by the state, Sim said. "The Court of Justice says the EU cannot do it anymore. It increases the legal obligations of the EU." The judgment overturned an earlier ruling by the General Court of the EU. It was the fourth time the European Court of Justice had overturned a lower-court ruling, Willems said. According to Sim, EU courts are independent of the politics of China-EU relations. The judgment came on a day when Premier Wen Jiabao told German Chancellor Angela Merkel in Beijing that China was considering getting more deeply involved in tackling the EU's debt crisis. The EU anti-dumping action against Chinese and Vietnamese shoemakers in 2006 was the result of political pressure by rivals from southern European nations including Italy and Spain, according to Sim. Many of these nations are now looking to China to help resolve their debt problems.

Moutai's status provides a headache - Liquor products made by Kweichow Moutai Distillery Co are becoming increasingly expensive. Kweichow Moutai Distillery Co, which makes baijiu, China's most famous white spirit, is a little miffed about its status as a luxury brand. Or perhaps the company is upset that its Moutai brand isn't as beloved by Chinese millionaires as the fashion brands Louis Vuitton, Cartier and Hermes. The company's source of animosity is the Hurun Best of the Best Awards 2012, issued by the Hurun Research Institute in January. In the press release, the institute ranks Moutai as the fourth most expensive luxury brand in the world. The Hurun Report, a publication that studies China's upper class and its lifestyle, surveyed 503 Chinese whose individual wealth is more than 10 million yuan ($1.58 million). The report also lists Moutai as the fourth-most valuable brand behind the LVHM SA unit Louis Vuitton, Hermes Group and BMW AG, but higher than Daimler AG's Mercedes-Benz and Chanel SA. Moutai officials were quick to criticize the survey, partly because it doesn't want to be seen as a brand that is getting more and more expensive for the average consumer. Nonetheless, the fact is that Moutai is experiencing a strange paradox at the moment. In December 2010, the company raised prices of most of its bottles to be released in 2011 by 20 percent. After the price hike, the average price for a bottle of Moutai jumped by 300 yuan for a 0.5-liter bottle to about 1,900 yuan. Liquor evaluators are also attempting to put the prices of vintage bottles of Moutai (the spelling for the generic name of the white spirit) from various Chinese producers of baijiu on an even footing with some of the most sought-after bottles of French wine. In a recent auction at Beijing Googut Auction Co, devoted only to aged Moutai, Liu Xiaowei, the chairman of the auction house, put the price of a 1982 vintage bottle of Moutai at between 10,000 yuan and 20,000 yuan. Moutai is therefore in a quandary: How does it market itself as being affordable to consumers as China's rising affluence and growing demand for the product as an ideal gift inflates the price? During this year's Spring Festival, salespeople for Beijing stores that carry Moutai were trying to sell the company's flagship beverage 53-degree Flying Moutai at more than 2,000 yuan per bottle. What's more, a salesperson for the company, who would only give his surname Yang, said the company expects to raise its current ex-factory price of 53-degree to wholesalers from 620 yuan per bottle to more than 900 yuan. The increasing enthusiasm has been a boon to Moutai. According to the stock information site Hexun.com, in January the company's share price stood at 190 yuan per share, resulting in a market capitalization of approximately 194 billion yuan. On Jan 18, the company estimated that profit would grow by 65 percent. Its net profit in the first three quarters of 2011 was 6.93 billion yuan, 57 percent higher compared with the same period in 2010. Moutai is also quickly expanding its production capacity. In 2003, the company's annual output was about 10,000 tons. In the past eight years, output has been growing steadily. "Output in 2011 was 26,000 tons," said Wu Hua, a press officer with Moutai. Last year, Yuan Renguo, Moutai's general manager and board chairman, told China Business News that the company's revenue should grow by 8 percent year-on-year in the next five to 10 years. But drinkers are complaining that the liquor is becoming too expensive. "Rising costs are a reason (to explain the price hike)," said Liu Wenke, an official with the economic development office of Maotai Town in Guizhou province. Liu said the price of the locally produced, high-quality sorghum used in the production of Moutai has tripled since 2008, from 2.4 yuan per kilogram to 7.2 yuan. There is also limited land in the town, which liquor experts say is the ideal area to produce baijiu because of the local mountain waters. That means every time Moutai expands its workshop areas and factories, a large amount of compensation has to be paid to families whose homes are demolished to make way for the expansion. The company said that, in return for the demolition, it hires one member of each uprooted household. "A new employee earns 60,000 to 70,000 yuan per annum," Liu said. He said that in 2011 some 900 households were relocated; in 2012, the figure will be close to 400.

Hong Kong*:  Feb 5 2012 Share

The MTR Corporation (SEHK: 0066), which operates the Lantau cable car, may lose as much as HK$35 million in revenue, because services will be suspended for at least two more months to allow worn ball bearings to be replaced. Operations at the Ngong Ping 360 cable car have been suspended since an incident left patrons dangling in mid-air for two chilly hours during the Lunar New Year holidays. Temperatures of about 3 degrees Celsius made the delay highly unpleasant for the more than 800 trapped passengers. The January 25 incident was the latest in a series of mechanical failures that have hit the troubled tourist attraction in recent months. A preliminary investigation blamed the disruption on a faulty ball bearing inside a "bullwheel" - which drives and redirects the cable - at the Airport Island Angle station. The bearing had been used for 25,000 hours; its lifespan is 90,000 hours. Signs of irregular wear were found between some of the faulty bearing's rollers and the contact surface, said Wilson Shao Shing-ming, managing director of Ngong Ping 360. "Such irregular wear would cause cable cars not to operate smoothly," Shao said yesterday. "A lack of smooth operation may cause the cable cars to stop periodically." The bearing would be sent for tests to determine the cause, Shao said. He said Ngong Ping 360 had offered to refund 4,000 tickets. He said the average daily patronage was 4,000 during weekdays and 7,000 on Saturdays and on Sundays. Assuming passengers all buy adult round-trip tickets at HK$125, the operator could suffer revenue losses of about HK35 million. Shao said the problem had not affected the safety of the cable car, but all seven bearings should be replaced to ensure reliability. Five of them have been in use since the cable cars went into service in 2006, while two were replaced last year. He said engineers regularly conducted visual checks on the bearings and used computers to monitor vibration and noise. Two months were needed for the overhaul since frames must be erected to raise the bullwheels, which weigh four to eight tonnes, Shao said. Helicopters will take the lifting frames to the cable car's station on Nei Lak Shan, which may take weeks and could be delayed by weather. The government said it "will only approve the resumption of the cable car service when the inspection result is satisfactory". Adi Lau Tin-shing, board chairman of Ngong Ping 360, pledged to improve checks and to better inform the public about incidents. Alan Ling, a teahouse tenant in Ngong Ping market, said shopkeepers might consider collective action if a special allowance offered by the MTR Corp during the shutdown was not satisfactory. "Business has almost dried up in the past week when the cable car was closed," he said. Legislator Paul Tse Wai-chun of the tourism sector said MTR Corp could arrange free shuttle bus services to ferry visitors.

Tramy Ng (left) from Dragonair and Wing Luk from Cathay Pacific show details of boarding passes on their smartphones. Helter-skelter dashes to the airport check-in desk will now be a thing of the past for many passengers, with nine airlines offering smartphone boarding passes in Hong Kong from this month. The system "uses less paper and will be more convenient for business travellers", said Rocky Kwok, the assistant general manager of terminal operations at Chek Lap Kok airport. Apart from that, it will be no different from issuing of paper boarding passes. About half of all passengers departing from the airport can now choose to have their boarding passes sent to their smartphones by SMS or e-mail when they check in online. If they have no checked baggage and are travelling on a direct flight to their ultimate destination, they will not have to visit a check-in counter. Passengers will receive a form of barcode, known as a QR code, on their smartphone screens, which they will hold up to a scanner at the airport. The machine will flash a green light on approving the code. US-based Continental Airlines piloted the programme in 2007 and the system became mainstream at US airports in 2010. There have been a few glitches. Passengers have in the past had to return to a ticketing desk for a paper ticket after faulty scanners were unable to recognise the QR code. But Kwok said this was unlikely to cause much of a holdup at Chek Lap Kok airport. "The person at immigration or the security post would just call the airline to check the details of the boarding pass and name." The procedure would be exactly the same as what would happen if the barcode on a paper boarding pass was to malfunction, he said. The system promotes less dependency on paper and is especially suitable in a place like Hong Kong, which, according to research by Google and Ipsos, has a 35 per cent smartphone penetration. Sixty per cent of 18- to 29-year-olds and 47 per cent of 30- to 49-year-olds have smartphones in the city. The participating airlines are Cathay Pacific (SEHK: 0293), Dragonair, United Airlines, British Airways, KLM, Lufthansa, Delta, Air France and Emirates. Cathay recommends that passengers with luggage who opt for the mobile boarding pass should check in at least 45 minutes before departure. But passengers should beware if their phone is finicky or running low on battery power, an article in The New York Times warned in a review of the system in the United States. In such cases, it might pay to stick to paper passes.

Middle-market retailers including the Yata department store have been rushed off their feet. Total sales hit HK$43.05 million in December. After years of steady growth thanks to strong demand from deep-pocketed mainland tourists, jewellery shops should brace for tougher times, with sales growth in luxury goods including jewellery and watches slowing for a seventh straight month. Local retail sales jumped 23.4 per cent year on year to HK$43.05 billion in December, bringing the total for last year to a record HK$405.7 billion, up 24.8 per cent on 2010. Sales of jewellery and watches, which made up nearly a quarter of sales in terms of value, jumped 46.6 per cent in value and 32.1 per cent in volume last year. But on a monthly basis, growth in the sector has fallen from 61.3 per cent year-on-year growth in May in terms of value to just 29.2 per cent in December. Since August the luxury goods sector has reported a fall in sales of big ticket items - such as multi-carat diamond rings and watches that cost millions of dollars - although this has been partly offset by ballooning sales in medium- and lower-priced items, backed by a growing number of mainland tourists. According to the Census and Statistics Department, year-on-year growth in sales volume of jewellery and watches fell from 46.2 per cent in May to 15.9 per cent in December. Caroline Mak Shui-king, chairwoman of the Hong Kong Retail Management Association, said low- and medium-priced jewellery might not be selling as strongly as before. "Recently we saw slackening growth in the number of mainland tourists - and we haven't seen that in a very long time," she said. Mak warned that some luxury goods shops, which have overexpanded in districts with sky-high rents over the past year, may face falling profits and even shop closures. "In some areas, jewellery shops are as common as convenient stores, It's not healthy for any business to operate like this with such high costs," she said. A total of 706,748 mainland visitors, including those in tour groups and individual travellers, arrived during the Lunar New Year holiday between January 22 and January 28, up 6.6 per cent from last year. But out of this total, the number of individual visitors, who tend to be the big spenders, grew only 4.4 per cent. Retail sales during the festival were weaker than expected, and the association said it had adjusted its expected sales growth in the two months to February to 18 per cent year on year. It said some jewellery chains reported minor growth during Lunar New Year, although vendors of durable goods and smartphones reported continued strong growth. "Given a slowing economy and sharp growth in retail sales over the past three years, it would be unrealistic to expect another year of 25 per cent retail sales growth," Mak said. "We should be very happy if we could achieve 15 per cent in 2012."

The Lantau cable car will be shut down for two months – for a major overhaul of its bearings, managers said on Friday. This follows an incident that left patrons dangling in mid-air for two hours during the Lunar New Year holidays, Operations at the Ngong Ping 360 cable car have been suspended since the incident on January 25, when an air temperature of three degrees Celsius made the delay highly uncomfortable for the more than 800 passengers suspended in the air. That was the latest in a series of mechanical failures that have plagued the troubled MTR Corporation (SEHK: 0066)-managed attraction in recent months. A preliminary probe into the incident blamed the disruption on a faulty bearing of a bullwheel – a key piece of machinery that drives and redirects the cable – at the Airport Island Angle Station. Managing director Wilson Shao Shing-ming said some of the bearing’s rollers showed signs of wear, and would be sent for tests to determine the cause. Shao said the problem had not affected the safety of the cable car system, but all seven bearings should be replaced to ensure reliability. They have been in use since the cable car went into service in 2006. The operation will take so long since lifting frames must first be erected to raise the bullwheels, which weigh four to eight tonnes, Shao said. Only then can the bearings be replaced. Helicopters will have to transport the lifting frame to the cable car’s station on remote Nei Lak Shan, which may take weeks to complete and could be delayed by bad weather. Board chairman Adi Lau pledged to improve check-ups and communication with passengers in future, but refused to say if anyone in management would be held accountable for the recent incident. The stranded riders complained about not being told the reason for their long stranding in mid-air.

Cheer on the 70,000 runners (in particular Fauja Singh, the 100-year-old British Indian man who is the world’s oldest marathoner) who will be taking to the streets for the 16th annual race. The finish line is at Victoria Park, and don’t forget to set your alarm clock — the first runners start pounding the pavement at 5:30am Sunday February 5 2012

Travelers get urge to splurge - Chinese consumers were big buyers of luxury goods worldwide during the recent Spring Festival holiday, an industry report showed. Mainland tourists queuing at a luxury store in Hong Kong. According to the World Luxury Association, Europe, North America and Hong Kong, Macao and Taiwan were the main destinations for Chinese mainland shoppers during the Lunar New Year holiday. Chinese tourists' spending on luxury goods overseas reached $7.2 billion in January, driven by holiday trips during the Spring Festival holiday that began on Jan 23, the World Luxury Association said in a report on Wednesday. The figure was a record for Chinese residents buying luxury goods overseas, and was 15 percent higher than the association's pre-holiday forecast, the report said. Lower prices overseas were the key attraction, with about 72 percent of those surveyed citing that factor, said Ouyang Kun, chief executive officer of the association's China office. The report said that Europe, North America, Hong Kong, Macao and Taiwan were the main destinations of these shoppers. Chinese consumers contributed as much as 62 percent of the total sales in Europe's luxury market during the festival, the association found. Total sales of luxury goods in the Chinese mainland in January totaled only $1.75 billion, less than one-fourth of the amount spent overseas, according to the association's report. The growth rate for luxury goods sales overseas will exceed that of domestic sales in 2012, lifted by a stronger yuan and increased overseas travel, according to consultancy, Bain & Co China Inc. It's common for overseas luxury sales to get a boost with big Chinese holidays such as the Lunar New Year or National Day, when long vacations make foreign travel easier. But the boom in overseas sales was at the expense of the domestic market, some business insiders said. "Our revenue is much less than that of the shopping malls in Hong Kong during the holidays, although similar brands are available," said Kuang Zhenxing, vice-president of Beijing Modern Plaza, which features high-end brands including luxury brands. Kuang said the rush of consumers to overseas stores during the holidays made it tough to further develop the domestic luxury market. However, other experts noted that, regardless of what happened overseas, China's luxury market is still growing fast. "The surge is just during the holidays and it doesn't represent the whole market," said Zhou Ting, executive director of the Research Center for Luxury Goods and Services at the University of International Business and Economics. The overseas sales boom during holidays reflected the rise in foreign tourism, and the group of consumers buying luxury goods abroad weren't the core consumers for the segment, she said. These travelers only bought luxury goods "incidentally" during their holidays and don't have a fixed consumption of such items. From a long-term perspective, Chinese residents consume almost the same share of luxury goods in the mainland, the West and Hong Kong and Macao, Zhou added. "The only thing we can say is that the Chinese have already become the main driver of the worldwide luxury market's development, especially with the West mired in a financial crisis," she said.

Little Sheep officially off HK Stock Exchange - Logos of Yum! Brands Inc and Chinese hotpot chain Little Sheep Group Ltd on display in Shanghai, May 26, 2011. Little Sheep Group Ltd was officially delisted from the Hong Kong Stock Exchange as of Feb 2. US-based Yum! Brands Inc announced plans last April to make Little Sheep private in a deal that valued it at more than $860 million.

Li Ka-shing's Hutchison 3G will buy Orange Austria from France Telecom and a private equity fund in a deal valued at 1.3 billion euros (US$1.7 billion) including debt, expanding the corporate footprint in Europe of one of Asia’s richest men. The deal by the unit of Hutchison Whampoa (SEHK: 0013) follows a cluster of outbound M&A transactions from Asia in early this year as firms with large cash piles and low debt buy assets in Europe, where economies are struggling with the debt crisis. Hutchison said on Friday it would buy 100 per cent of Orange Austria. Hutchison shares rose as much as 3.8 per cent to HK$76.20 on the news, bucking a flat overall market. Hutchison, controlled by Hong Kong billionaire Li Ka-shing, has been shopping for regulated infrastructure and utility assets in developed countries, especially Britain, which is open to foreign ownership of its infrastructure assets. “It is definitely a positive for the future development as the acquisition cost can be lower in the current economic climate,” said Conita Hung, head of equity research at Delta Asia Financial Group. “It is a good opportunity for those financially strong companies to buy assets in Europe, especially if they believe in the strong growth prospect,” she said. Li’s business empire bought British utility Northumbrian Water Group for 2.41 billion pounds (US$3.81 billion) last year, having paid 5.8 billion pounds to buy the British electricity distribution network of France EDF in 2010. Li, a high-school drop-out nicknamed “Superman” by Hong Kong media for his deal-making savvy, started out with a plastic flower business and now has a global empire with 26,000 employees in 55 countries. So far this year, Asian corporates have launched about US$9.3 billion worth of outbound deals, compared with US$181 billion worth transactions attempted the whole of last year, according to Thomson Reuters data. High-profile deals this year include Shandong Heavy Industry Group’s purchase of a 75 per cent stake in debt-laden Italian yacht-maker Ferretti Group and China Investment’s purchase of an 8.7 per cent stake in the holding company of Thames Water, the privately held UK utility. Hutchison 3G Austria already operates under the ‘3’ brand, competing against Deutsche Telekom’s T-Mobile and A1. Hutchison said the deal would make it Austria’s third-biggest mobile phone operator, with 2.8 million customers and a 22 per cent market share. The two units had combined revenues of more than 700 million euros last year. “Overall, we do think the deal offers one of the few relatively visible paths to long-term sustained profitability for 3 Austria,” Bank of America/Merrill Lynch said in a report. As a second leg of the deal, Hutchison will sell some of Orange Austria’s assets to Telekom Austria for 390 million euros, Telekom said separately. The assets comprise frequencies, base station sites, mobile phone operator YESSS! Telekommunikation GmbH and certain intellectual property rights, the statement added. Hutch’s net consideration is 900 million euros, giving the business an enterprise value to EBITDA multiple of 6.9 times. Bank of America/Merrill Lynch said that the multiple paid by Hutch “is at the high end of comparable private transaction multiples, but below the 7.6 previously speculated.” For France Telecom, the sale is the second deal in an ongoing portfolio review aimed at exiting low-growth mature markets and returning cash to shareholders. It recently agreed to sell Orange Switzerland to private equity group Apax Partners for about 1.6 billion euros. Orange Austria is jointly owned by France Telecom and Mid-Europa Partners. France Telecom said it expected cash proceeds of 70 million euros from the sale of its 35 per cent equity stake in the Austrian business, which had around 1 billion euros of debt. It described the move as “another milestone in the optimisation” of its asset portfolio following the Swiss transaction. The French company will likely now announce a share buyback programme for up to around 800 million euros, or half of the proceeds of the two sales, according to Raymond James analysts. “This would also leave more than enough to pay for half of the acquisition of minority interests in Mobistar while the other half would be paid by potential tax synergies,” the analysts said, referring to the Belgian mobile phone operator in which France Telecom is majority shareholder. Shares in France Telecom were down slightly, in line with the French bluechip CAC 40 index, and have fallen about 5.5 per cent so far this year. Hutchison also owns 3G wireless network operations in Britain, Italy and Australia, among other countries. It competes with Britain’s biggest mobile operator, Everything Everywhere – a joint venture of Orange and T-Mobile – Telefonica’s O2 and Vodafone Group. The wireless business had been losing money over the past decade, but broke even in the second half of 2010 and recovered further last year. Hutchison said it was expected to contribute to the conglomerate’s profits in the second half of last year. J.P. Morgan advised Hutchison group on the purchase, while Morgan Stanley advised the sellers, a source familiar with the process said. The source was not authorised to speak to the media.

The solution to the right of abode controversy lies with the Hong Kong government - or even the British government - rather than amending the law, a Basic Law expert says. Alan Hoo QC, chairman of the Basic Law Institute, said the Hong Kong government should correct a 2002 change to immigration rules that is at the root of the row over mainlanders giving birth in the city. The rules were changed to bring them into line with a 2001 ruling on the Basic Law by the Court of Final Appeal that gave permanent residency to a boy, Chong Fong-yuen, born in the city while his parents were visiting from the mainland. Hoo said Beijing could not amend or reinterpret the Basic Law concerning right of abode because it had al-ready done so in 1999, effectively saying mainlanders did not have right of abode in Hong Kong unless at least one parent was a permanent resident of the city at the time of birth. Hoo said a 1993 Sino-British Joint Liaison agreement clearly stated that a child born in Hong Kong would only be entitled to right of abode if at least one parent was a resident at the time of birth. He believes if a way could be found to bring the issue before the city's top court again, the government could convince it to side with the 1993 agreement. The way to achieve that, he says, is for the government to ask the Legisla-tive Council to approve changing the immigration rules to comply with the 1999 interpretation. Then it could properly claim that children born of mainland parents did not enjoy automatic right of abode, rather than resorting to administrative measures to stop mainland births in the city. If that triggered legal challenges, Hoo believes the top court would reach a judgment in line with the 1999 interpretation. The government would need to provide "enhanced evidence", Hoo said, and that would mean providing a more authoritative version of the 1993 agreement - a pamphlet version of that agreement was given in evidence to the top court in 1999 but was rejected. Hoo said that the court might take it more seriously if Britain mentioned the contents of the 1993 agreement in one of its regular parliamentary reports on Hong Kong - perhaps as a result of some lobbying from Hong Kong.

 China*:  Feb 5 2012 Share

China not out to purchase Europe - Premier Wen Jiabao said on Friday that China has neither the intention nor the ability to buy up Europe, answering concerns over the country's increasing investment in debt-stricken eurozone economies. German Chancellor Angela Merkel and Chinese Premier Wen Jiabao (R) pose in front of a model of a tunnelling system during their visit to a plant of the Herrenknecht Tunnelling Equipment company in Guangzhou Feb 3, 2012. China is "willing to cooperate with Europe to fight the current crisis. Some people say this means China wants to buy Europe", the premier told a business forum in the southern city of Guangzhou. Such a worry is unnecessary, although the nation encourages its companies to invest in the region, he said. "This isn't a concern and doesn't fit reality. China doesn't have this intention and doesn't have this ability." Wen stressed that China's investments in European nations are only at the fledgling stage, and China's investment creates benefits for both sides. "If we join hands to combat the financial crisis and the debt woes, all the problems will be addressed," he said. German Chancellor Angela Merkel, in China for a three-day visit to boost her host's confidence in Europe, also attended the forum along with executives from the energy, chemicals, engineering, banking and electronics sectors. There are growing concerns in Europe that a recent wave of investment by Chinese companies and government-backed funds will give Beijing too much influence over struggling European economies.
In 2011, China's outbound direct investment gained a slight 1.8 percent to $60 billion, while China's investment in Europe gained by 94.1 percent to $4.28 billion, figures from the Ministry of Commerce showed. Chinese construction equipment maker Sany Heavy Industry announced recently it would pay 324 million euros ($426 million) to buy 90 percent of Putzmeister, Germany's largest concrete pump maker. In another recent deal, China State Grid has agreed to pay 387 million euros for a 25 percent stake in the national electricity grid of debt-stricken Portugal, Treasury Secretary Maria Albuquerque said on Thursday. European leaders have called on China, which has the world's largest foreign exchange reserves, to invest in a bailout fund to rescue debt-stricken countries. On Thursday, Merkel started her fifth official visit to China in six years as chancellor. On the first day of her three-day visit, China promised to consider how to get "more deeply involved" in resolving Europe's debt crisis. On Friday she met President Hu Jintao before she flew to Guangzhou, home to more than 400 German companies. Hu said China was ready to push forward the long-term, healthy and in-depth development of its strategic partnership with Germany over the decades to come. During a forum in Guangzhou, Wen said nobody needs to worry about China's increasing investment in Europe and China also welcomes investment from Germany. "We expect Chinese companies can make more investments and enhance cooperation with Germany. China encourages domestic companies of all types, including State-owned and private enterprises, to invest in Germany," he said. "Germany is a country that is open to all. We warmly welcome the investment from China," said Merkel. "There are already many good examples." Last year, Chinese computer giant Lenovo made the biggest purchase since it bought the IBM PC business years ago when it announced it would buy up the German computer firm Medion AG, a deal that will help Lenovo grab 14 percent of the German PC market. "The brand of Lenovo is still new to German consumers and industries, and we expect the German government will care more about Chinese companies and their growth," said Yang Yuanqing, chairman of Lenovo. "China welcomes investment from Germany and regards all the registered Germany companies as Chinese companies," said Premier Wen during the forum with enterprises from both sides in Guangzhou. In China, Germany is the largest investing nation from the European Union, and also a major nation that has transferred a lot of technologies to China. "We expect China to provide the same treatment to German companies as their domestic counterparts," said Merkel. "It's (investment in China) a win-win situation. We have absolutely no complaints here," said Martin Herrenknecht, chairman and managing director of tunnelling systems of Germany-based Herrenknecht AG, the world's largest tunnel boring machine provider. "Without China, the financial situation could be worse." China-Germany trade could reach $200 billion in two to three years, compared with the target of five years previously set by the two sides, said Wen. Germany is China's largest trade partner in the EU, and its fourth largest worldwide, next to the United States, Japan and South Korea. Last year, China-Germany trade increased by 18.9 percent to $169.15 billion.

United Energy, a firm controlled by mainland tycoon Zhang Hongwei and supported by a US$5 billion credit facility from China Development Bank, is seeking to buy oil-and-gas assets in Asia, the Middle East, Africa and the United States. The company, 68-per-cent-owned by Zhang, is eyeing opportunities to buy mature producing projects in both developed and emerging markets, chief financial officer Thomas Pang Pui-yin said. "Valuation of assets in developed markets have become more attractive amid the sovereign debt crisis, while emerging nations are still hotbeds for energy assets acquisitions although political risks are higher and valuations have not changed much." Last September, United completed a US$750 million acquisition of oil-and-gas assets in Pakistan from BP, as part of the latter's assets sale to finance a US$20 billion fund to compensate victims of a major oil spill in the Gulf of Mexico. State-owned China Development Bank (CDB) had granted United a five-year, US$5 billion credit facility to fund its overseas oil-and-gas business, Pang said. In the Pakistan acquisition, the CDB has lent United HK$5 billion for 10 years at an interest rate of about 5 per cent. United said in September it was in early talks on two possible acquisition deals, whose size was unlikely to be less than the Pakistan purchase. Zhang chairs the Orient Group, one of the mainland's largest private firms, whose businesses span transportation, construction, manufacturing and property. He took over garment maker and property developer Orient Resources Group in 1997, and renamed it United Energy in 2008, when it diversified into the oil sector. Pang said United planned to spend up to US$190 million this year to develop the Pakistan projects and add reserves, up from US$40 million last year. The projects have proved and probable oil-and-gas reserves of 73.9 million barrels-of-oil equivalent (boe), of which 75 per cent is gas. Average daily output is expected to be 24,000 to 26,000 barrels by December, up from 21,400 barrels last year, while operating profit margin is expected to fall to US$20 per boe from US$26 as it ramps up drilling and seismic data collection. United budgeted US$23 million this year for its oil-output enhancement project in Liaohe, northeastern China, a joint venture with PetroChina (SEHK: 0857). It expects to book output of 1,100 to 1,200 barrels a day, up from 1,024 in last year's second half. Its operating margin is expected to be at least US$24 a barrel, compared to US$27.50 in last year's second half.

German Chancellor Angela Merkel, left, shakes hands with President Hu Jintao at the Great Hall of the People in Beijing on Friday. The leaders held discussions on the euro zone crisis. German Chancellor Angela Merkel met China's president Hu Jintao on Friday as she seeks to lift Beijing’s confidence in Europe where the sovereign debt crisis threatens to tip the region into recession. China, the world’s second-largest economy, has watched with increasing concern as euro zone economies have deteriorated, and has repeatedly urged European leaders to get a grip on the situation. Merkel’s meeting with Hu came a day after talks with Premier Wen Jiabao, who said Beijing was looking at ways it could contribute to Europe’s bailout funds and warned of an “urgent” need to solve the debt crisis. “China is investigating and evaluating ways, through the International Monetary Fund, to be more deeply involved in solving the European debt problem via ESM/EFSF channels,” Wen said at a news conference with Merkel. Wen was referring to the European Financial Stability Facility, a temporary rescue fund that was established to help struggling economies in Europe, and the European Stability Mechanism -- a newer, permanent fund. Hu told Merkel before their closed-door meeting on Friday that her visit would “increase mutual understanding” between the two countries, whose bilateral trade reached US$169 billion last year, an 18.9 per cent increase on the previous year. Merkel, who will return to Germany on Saturday, said in a speech on Thursday she would raise the issue of human rights during her visit. After meeting Hu she flew south to Guangdong – where German companies have a significant presence – with Wen and executives from the energy, chemicals, engineering, banking and electronics sectors. Her visit to the manufacturing hub will include a meeting with Gan Junqiu, the state-backed Catholic bishop of the provincial capital Guangzhou, according to a German diplomatic source.

Premier Wen Jiabao said yesterday that China was considering "involving itself more deeply" in efforts to address Europe's debt crisis - the first time a Chinese leader has said Beijing could aid the cash-strapped continent. "It is urgent to solve the European debt crisis," Wen said at a joint news conference with visiting German Chancellor Dr Angela Merkel after talks in Beijing yesterday, where he called on the international community to co-operate. "China is considering greater involvement in resolving Europe's debt crisis by participating in the European Financial Stability Facility [EFSF] and the European Stability Mechanism [ESM]." The ESM fund was to be set up next year, but European leaders agreed at a summit in Brussels on Monday that the fund would come into force this year. Unlike the EFSF, which comprises only guarantees by participating countries on bonds issued by the fund, the countries will have to inject funds into the ESM, which is worth €500 billion (HK$5.09 trillion). Wen said China's confidence in the European economy was firm and it would not change its view that Europe is a major pillar of the world economy. He said Beijing was studying how it might help in Europe's efforts to stabilise the euro, but he also reiterated that Europe should help itself through its crisis by cutting its debt load and introducing structural reforms. Merkel said China had given her a message that Europe must "do its homework" on the crisis before getting help from elsewhere. She also called on China, the biggest buyer of Iranian oil, to use its influence to persuade Tehran to renounce possible nuclear weapons ambitions. Merkel said Germany wanted the resumption of talks among six world powers and Iran. Wen said he supported the idea for a dialogue and said Beijing did not support any Middle East nation developing nuclear weapons. The United States and European Union have imposed sanctions against Iran's oil sector over its continued defiance of UN resolutions demanding that it give up its nuclear programme. "The question is more how China can use its influence to make Iran understand that the world should not have another nuclear power," Merkel told an audience at the Chinese Academy of Social Sciences. China - which gets 10 per cent of its oil from Iran - has so far refused to impose sanctions against the nation. Merkel said she also discussed with Chinese leaders "more sensitive topics" including human rights and the rule of law. Merkel will meet President Hu Jintao today before heading to Guangzhou. In an interview with the Guangzhou-based Southern Weekly, Merkel stressed the importance of communication in economics and technology, but also in "politics, values and civil society". Analysts say China has cemented harmonious relations with Germany. In her previous visit, in July 2010, the two nations issued a communique to declare a strategic partnership. In the interview, Merkel said such a partnership meant "we can discuss issues with divergent views", such as "what is viewed as unquestionable values - the respect of human rights and the individual's role and respect in a society". Foreign media said yesterday that Merkel, a Protestant, will meet the Catholic Bishop of Guangzhou, Joseph Gan Junqiu, in Guangzhou tomorrow. Merkel and Wen are also scheduled to meet business executives at a forum in Guangzhou.

A unit of China National Petroleum Corp. agreed to buy a big slice of a shale-gas play in Canada from Royal Dutch Shell PLC, bolstering Beijing's footprint in North America's energy patch, as two other Chinese companies sealed energy deals in the U.S. and Europe. After tiptoeing into North America in recent years, Chinese companies have ratcheted up their energy deal-making as unconventional extraction methods—from oil sands to shale gas—have transformed the continent's energy market. PetroChina Co., a Hong Kong-listed unit of CNPC, said Thursday that it bought a 20% stake in Shell's Groundbirch natural-gas development in northeastern British Columbia. 

Facebook mentioned China several times in its initial public offering filing document, as the company races to expand its footprint in Asia. What are the chances the soon-to-be public social networking giant can tap the world’s largest Internet population?

A leading rural policymaker yesterday defended China's rapid expansion in agricultural investment overseas, arguing it is about more than just acquiring land. To meet future domestic demand, China is trying to boost agricultural investments abroad, such as by establishing food-processing factories and helping build infrastructure in grain-exporting countries. But there have been accusations that China's leasing of land overseas is a form of neo-colonialism, especially in Africa. At a press conference yesterday, Chen Xiwen, deputy head of the Central Rural Work Leading Group under the State Council, said that China helping agriculturally underdeveloped countries to reach their farming potential was good not only for China's food-supply needs, but also the world's. He said that as more Chinese agricultural firms have started farming overseas, they are also being encouraged to provide technical and financial support to local farmers, while helping improve infrastructure. But Chen said that, judging from its total grain output and current population, China is secure in its food needs. "The more than 570 million tonnes of grain [produced by China last year] accounted for about 22 per cent of the world's total output, and China's population last year accounted for 19 per cent of the world's," he said. However, despite the government's ongoing commitment to research into genetically modified crops, Chen said China will not produce genetically modified crops this year, as the government has not yet approved large-scale commercialisation. He also ruled out any major changes in agricultural trading policies this year, saying China will continue with moderate imports and exports based on gaps in the domestic market. Although the government imported grain last year, Chen said there was no shortage of corn. Some southern parts of the country imported corn from abroad because it cost less than hauling it from major production areas in the far northeast. He also said China has been exporting a large amount of corn by-products. In response to concerns about a gradual reduction in China's arable land, he said the country is still expected to retain more than 120 million hectares of farmland - a level that central authorities have vowed since 2006 not to dip below, to ensure sufficient food production.

Hong Kong*:  Feb 4 2012 Share

An Esprit store in New York gives an indication of the company's situation. Its business in North America are running significant losses. Esprit Holdings (SEHK: 0330), the Hong Kong-listed fashion retailer struggling to recover from an earnings slump, may close all its stores in North America, if it fails to find a buyer or licence partner for the unprofitable business. The company, which was founded by Susie and Doug Tompkins in San Francisco in 1968, said it "intends to focus on finding one or more licence partners to maintain and reinvigorate the presence of the Esprit brand." However it will have to close all stores in North America if no one is interested in taking them over, a spokesman of the company said in an emailed statement yesterday. Esprit's US and Canadian subsidiaries haven't decided on whether to file for Chapter 11 (or equivalent Canadian) proceedings, he added. Esprit currently operates around 90 stores in Canada and the United States, among its 1,100-plus stores worldwide. "We are not surprised they have found it difficult to find a buyer for the stores as the US retail market remains in a difficult position," said Aaron Fischer, head of consumer and gaming research at CLSA. The company made provision for the possible store closures in its annual report for the year to last June, estimating the divestment cost in North America would total around HK$1.268 billion. Esprit's business in North America has been in the red since it acquired trademark rights in the US and the Caribbean Islands in 2002. Its retail operation in the region recorded an earning before interest and tax loss of HK$308 million for the year to last June. Its poor performance in this market was also one of the reasons that the company's net profit plunged by 98 per cent to HK$79 million last financial year. It has also been troubled by sluggish demand from European markets, which account for nearly 80 per cent of its revenue. Esprit said earlier that it had three options when divesting from North America. It would prefer to sell out or find license partners. Otherwise it will close the stores there. The retailer has been investing significantly in the hope of turning the business around, improving its designs to revive earnings in Europe while doubling sales in China. Chief executive Van der Vis is setting up design teams in Paris and China and has hired managers and designers from Adidas, Puma and Hennes & Mauritz. Esprit shares, which lost 73 per cent last year, have risen 17 per cent this year, better than the benchmark Hang Seng Index's 11 per cent gain. Its share price rose 1.05 per cent to close at HK$11.56 yesterday. Gabriel Chan, an analyst at Credit Suisse, said the European business would still represent the major challenge for the company as it seeks to recover its image and profit. "Esprit has many franchise stores in Europe," said Chan. "Many of the franchisees would be reluctant to follow the company's transformation, which require extra cost."

CSL chief marketing officer Mark Liversidge (left) and Tony Li, vice-president for North Asia marketing at HTC, stand with a model as they unveil the HTC Velocity 4G. CSL, the largest wireless network operator in Hong Kong, has teamed up with Taiwanese handset maker HTC to offer local mobile subscribers the first of a wave of new 4G smartphones set to reach the city this year. The carrier, a unit of Australian telecommunications giant Telstra, is currently the sole network operator in Hong Kong that runs a high-speed 4G mobile infrastructure based on the industry standard called Long Term Evolution (LTE). "We will have a full suite of 4G devices this year, including new smartphones, media tablets and routers," said Mark Liversidge, the chief marketing officer at CSL. "We expect to provide the new HTC device within this month." CSL was the first in Asia to launch a commercial 4G mobile network in November 2010, when it signed up key corporate customers as early adopters. Its LTE infrastructure was designed and built by ZTE (SEHK: 0763), the mainland's second-biggest telecommunications equipment manufacturer, which also supplied the initial batch of 4G dongles used on laptop computers to access the network. HTC, the world's largest maker of smartphones that run the Google-developed Android operating system, agreed to have its Velocity 4G handset exclusively available for pre-order from yesterday to subscribers on CSL's premium 1010 service. The Velocity 4G features an 11.4cm touch screen, 1.5-gigahertz dual-core processor, an 8-megapixel camera on the back and 1.3-megapixel camera in front, Bluetooth and Wi-fi support, 16 gigabytes of storage and an expansion slot for a memory card. On an LTE network connection, the HTC smartphone can deliver an internet download speed of up 100 megabits per second. It also works on CSL's existing 3G network, which provides a download speed of up to 42Mbps. Liversidge said the Velocity 4G, which is expected to cost around HK$5,000, will eventually be made available to subscribers on CSL's mass-market one2free service. Macquarie Securities analyst Lisa Soh said CSL's aggressive rollout of new 4G devices this year may prompt Hong Kong's other 3G mobile network operators to step up their own LTE infrastructure development plans. "CSL has apparently resolved the issue about the lack of 4G devices to support its LTE network," Soh said. Hutchison (SEHK: 0013) Telecom and fixed-line network HKT, through their joint venture called Genius Brand, last year signed a contract with Huawei Technologies to build and deploy their 4G LTE infrastructure in Hong Kong.

The government has added 24 residential sites to its land sale list, bringing the total number of sites available in the coming fiscal year to 47. Secretary for Development Carrie Lam Cheng Yuet-ngor said the sites could provide a total of 13,500 flats. The new sites will include projects by the MTR Corporation (SEHK: 0066), the Urban Renewal Authority and private developers. Four of the sites, which will be sold between April and June, are in Tseung Kwon O, Sha Tin and North Point and will generate up to 1,400 flats. Two more of the sites are part of the Kai Tak development project. This is the first time private residential sites in the area are being released for sale. These sites will provide a total of 1,000 flats. Lam said the government was also set to release four sites for commercial use and two hotel sites in the new financial year.

Alvin Lee Chi-wing's family of three, who make about HK$60,000 a month, have welcomed the tax relief measures. The secondary school teacher, who conducts liberal studies classes, said he pays almost HK$100,000 in salaries tax - close to two months of his family income. Lee also has to pay HK$40,000 a year for his daughter's university education. The relief measures means his tax bill will be around HK$14,750 less. Of this, the bulk of his savings will come from the HK$12,000 tax rebate, while another HK$2,000 flows from the increased tax allowance for married people and basic tax. Rounding up his savings will be the around HK$750 he does not have to cough up as a result of increased allowances for supporting his parents and daughter. Coupled with the HK$2,500 rates waiver for each quarter - or HK$10,000 a year - and the HK$1,800 electricity subsidy, savings for the family add up to around HK$26,550. Lee, chairman of the Voice of Middle Class, said although the measures and sweeteners are able to soothe the middle-class hardship to a certain extent, more can be done. He called for the introduction of a tax allowance for those who need to pay mortgages. "I am lucky that I have already paid off my mortgages," Lee said. "But life is difficult for those who still have to pay for their mortgages." He said some of his friends who are on a monthly household income of about HK$40,000, especially those with children and who need to pay off mortgages, are having a hard time making ends meet. Another in the middle-class bracket, Lai Chung- ming, expressed satisfaction with the budget, saying it supports people like him and those earning less. "However, I find that John Tsang is not keen on carrying out long-term measures," said Lai, who works in the financial sector and paid HK$40,000 in taxes last year. Lawyer Stanley Chan Wing-leung was another who was appeased, saying the budget is better than last year's and helps the middle class.

Middle-class citizens are rubbing their hands in anticipation after the financial secretary delivered an HK$80 billion package of one-off sweeteners and relief measures in his parting budget yesterday. But John Tsang Chun-wah also played it safe - the HK$662.1 billion in reserves he is leaving to the next administration offers a reasonably secure safety net if the economy tanks this year. Chief Executive Donald Tsang Yam- kuen said the budget was well thought out and urged lawmakers to support it. The relief measures are, in dollar terms, about 30 percent more than those John Tsang undertook in last year's budget when Hong Kong was caught in an inflationary spiral. Tax relief includes a 75 percent reduction in salaries tax and tax under personal assessment, capped at HK$12,000. Tsang said the move will benefit 1.5 million taxpayers and cost HK$8.9 billion. The basic allowance and single-parent allowance will be raised from HK$108,000 to HK$120,000. The married person's allowance will be raised to HK$240,000 from HK$216,000. It is understood the steps will see about 130,000 people leaving the tax net. "Many in the middle class expressed to me their wish for the government to understand their hardship and to ease their burden," Tsang said in his budget speech in the Legislative Council. "Their voices have come across loud and clear." He will also add a surplus of HK$66.7 billion to the reserves - much higher than the projected HK$3.9 billion. This is from record-high land sales and profits and salaries tax revenues, he said. Tsang forecast there will be a deficit of HK$3.4 billion in the next financial year, partly because of the European debt crisis. Government expenditure for the next financial year will reach HK$393.7 billion, about 7 percent more than the current year. On concerns that increasing allowances will narrow the tax base, which may not be healthy for Hong Kong in the long run, Tsang said it is not the right time to broaden the base because the economic forecast for this year is not optimistic. "The economy this year will be very difficult. I hope the different measures will help the public shoulder some of its burden. This will narrow the tax base in the short term, but we have to do it and it will be worth it," he said. Donald Tsang said the budget has catered for the needs of Hongkongers from all walks of life. The budget shows that the government is determined to maintain economic growth. Bernard Wu Tak-lung, chairman of the Association of Chartered Certified Accountants and former chairman of the Taxation Institute of Hong Kong, said the measures to help the middle class show progress from last year's budget. However, the government needs to consider restructuring the system so that more people pay tax, but the progressive tax rate should be lowered. A snap poll by The Standard shows that most middle-class people are satisfied with the budget as the measures will ease the impact of inflation. The increase in tax allowances is the most popular. "The government set the amount of basic tax allowance according to local financial conditions so it is reasonable," said Ho Ting, who works in the financial sector. However, Labour Party chairman Lee Cheuk-yan said the budget fails to help middle-class people who have to pay high rent, and lacks long-term measures to help the underprivileged. He criticized the government for knowing only how to give away sweeteners every year.

HK$100b committed to help SMEs thrive - Small businesses, which employ half the private sector workforce, will get a helping hand including loan guarantees of up to 80 percent to weather the economic downturn and be eligible for tax rebates. The measures were generally welcomed. John Tsang said he is concerned about difficulties owners of small and medium-sized businesses will face. To help with funding, the Hong Kong Mortgage Corp will lift the ratio of its SME Financing Guarantee Scheme to 80 percent from 70 percent with the government committing HK$100 billion. This, he said, will lift banks' confidence "in offering loans to SMEs." Tsang proposes to slash the loan guarantee fee by more than two-thirds to 10-12 percent of the loan's interest. For example, it now costs HK$16,000 to insure 70 percent of a HK$1 million loan, compared with HK$5,000 under the new scheme to cover 80 percent of the loan. He tipped a default ratio of 12 percent, or spending of HK$11 billion. But in 2008-10, only 0.69 percent of loans turned bad, costing HK$510 million. Hang Seng Bank (0011) chief executive Margaret Leung Ko May-yee believes the proposals will ease financing needs and cut costs of SMEs. Tsang also proposed a profits tax rebate for fiscal 2011-12 of 75 percent, up to HK$12,000, and to waive business registration fees for 2012-13. Charges for import and export declarations will be halved. "We welcome the tax rebate. But it's better to lower the profits tax rate to 15 percent for corporations [from the current 16.5 percent]," Hong Kong SME Association chairman Stephen Kwok Chun-pong said.

Hong Kong's total retail sales value in December 2011, provisionally estimated at 43 billion HK dollars (about 5.5 billion U.S. dollars), increased 23.4 percent over a year earlier, the city's Census and Statistics Department announced here Thursday.

 China*:  Feb 4 2012 Share

The China Securities Regulatory Commission (CSRC) on Wednesday released the examination and approval processes for the initial public offering of stocks, empathizing regulations on distributors and intermediary agencies would be more timely and strict.

The export and import value of China-made electronics rose 11.5 percent year-on-year to 1.13 trillion U.S. dollars in 2011, the Ministry of Industry and Information Technology (MIIT) said on Thursday.

Chinese Premier Wen Jiabao (R) shakes hands with visiting German Chancellor Angela Merkel at the welcoming ceremony before their talks in Beijing, capital of China, Feb. 2, 2012. Chinese Premier Wen Jiabao on Thursday exchanged views with German Chancellor Angela Merkel on major bilateral issues. After the closed-door meeting, Wen said this year, the 40th anniversary of diplomatic ties between the two countries, was very important for bilateral relations. The two countries have arranged a variety of high-level visits as well as a series of large scale economic and cultural exchange activities for 2012. These exchanges programs have great significance for deepening bilateral mutual trust and improving bilateral coordination on coping with the complicated international political and economic situation, so as to safeguard common interests of the two countries, said Wen. Calling Merkel's visit is focusing on future, Wen said he was willing to work with Merkel to advance bilateral friendly cooperation. Merkel said Germany will host the Chinese Culture Year, which is an opportunity to promote mutual understanding and exchanges between the two countries. She praised the sound economic cooperation between Germany and China and called on the two sides to create good conditions for business operations in each other's country. Merkel arrived in Beijing on Thursday, starting a three-day official visit to China. China is the first country that Merkel has visited this year outside Europe, while she is the first foreign leader China has received after the traditional Chinese New Year which began on Jan. 23.

Wealthy Chinese have been paying record prices for contemporary art and top wines while shelling out for some the world’s most expensive cars. Turns out they’re also the driving force behind the princely sums being paid for top-quality pigeons. A Chinese shipping magnate last weekend spent 250,400 euros ($328,000) for a Dutch pigeon, a new world record according to Pipa, the firm that ran the online auction. These aren’t your ordinary birds that eat scraps in the park but ones bred for the arcane sport of pigeon racing, which has a cult following in England, Belgium, Netherlands, Germany and, increasingly, China. The buyer, Hu Zhen Yu, runs Zhenyu Holding Group in Wenzhou. He told Pipa that he wants to “focus more and more on the pigeon sport.” Zhenyu last year sponsored a pigeon race in Wenzhou that awarded 7 million yuan ($1.1 million) in prize money. Pigeon racing has traditionally been a rural pastime, and the entrance of wealthy Chinese hobbyists is ruffling some feathers. The Telegraph quoted veterans of the sport complaining about the high bids and loss of the birds to another continent. A Chinese buyer was responsible for the previous pigeon auction record, set last year: $200,000 for a Belgian pigeon named Blue Prince. “We must not forget pigeon racing is a simple sport to be enjoyed by all who wish to become involved for the right reasons,” Ken Ambler, a pigeon fancier who took up the sport 70 years ago, wrote in a comment on Pipa’s auction announcement.

What Acer Inc. really needs is a star product, not a star to promote its products. That was the reaction from tech watchers after the Taiwanese PC maker named the world’s top professional female golfer Yani Tseng, a Taiwan national, as its “global brand ambassador.” The contract will ask Tseng to wear a cap sporting Acer’s logo in future tournaments and to be featured in commercials as well. Following quarters of net losses due to the cannibalization of tablets and its internal accounting and inventory issues, Acer is hoping to turn itself around by selling more high-end (and thus higher-margin) products–such as the up-and-coming ultrathin laptops–and spending more money on brand-building. “By associating Tseng’s characteristics such as efficacy, speed, precision and stability, we hope to enhance consumers’ recognition of Acer’s products,” Acer said in statement. Acer declined to say how much it will pay Tseng. Whatever the sum, critics seem unconvinced it will be money well spent. “Brand image is more based on the word of month from user experience. So any company which would like to raise its brand image has to improve its product competitiveness first,” said Raymond Wen, columnist of marketing magazine Brain. “We can’t name any flagship product for Acer so far.” Yuanta analyst Vincent Chen added: “Investment in building brand awareness doesn’t necessarily translate to sales. What Acer really needs is a star or game-changing product.” Although Acer has said it will strengthen its in-house hardware and software design, it still relies heavily on external contract designers. Analysts say that explains why it has been slower than its peers, such as Asustek Computer Inc., in responding to fast-changing market needs. Asustek is widely credited with creating the market for lightweight mini-notebook PCs with the launch of Eee netbook PCs in 2007. The company has continued to try out new things with its latest tablet, the Transformer, which comes with a detachable keyboard. Acer spent less than 0.4% of its revenue on research and development in 2010, according to the latest data available from the company — significantly less than the 3% Asustek spent for the same period.

Thousands of residents of a restive Guangdong village cast their ballots yesterday, marking the start of a gradual restoration of grassroots rights following violent confrontations with authorities over land grabs. The rebellion last year against abuse of power and the illegal sale of hundreds of hectares of farmland in coastal Wukan became a benchmark of rural defiance against land grabs and corruption that blight villages nationwide. Villagers gathered in the morning sunshine outside a school where the election is being held. Seven steel ballot boxes were laid out in the concrete school courtyard before a red election banner as patriotic songs poured from speakers. Xue Jianwan, daughter of protest organizer Xue Jinbo, 42, who died in police custody in December - sparking further protests - visited his memorial in the village square before voting. "This is something my father would have hoped for," she said, bursting into tears. "We just want to do our best to fulfil his final wishes." The poll will select an independent election committee to oversee upcoming ballots, including one for the village committee on March 1. With China's top leadership jockeying for power ahead of a succession in the fall that will usher in a new generation of leaders, the smooth handling of the Wukan unrest has been paramount for Guangdong's Communist Party boss Wang Yang. Several dozen uniformed police officers guarded the entrance of the school, with several police vans nearby. Wukan villagers had looked forward to yesterday's ballot after suffering years under the previous Communist Party village secretary, who was toppled in last year's turmoil after decades in the post. "For 40 years we've never had a proper election," said villager Chen Junchao, clutching a white ballot registration slip stamped with an official red ink government seal. "I've never seen these papers before. I was crying when I saw this." Polling appeared smooth, amid some underlying bitterness and suspicion.

Hong Kong*:  Feb 3 2012 Share

Financial Secretary John Tsang Chun-wah attends a radio phone-in on Thursday program to answer budget question at the Central Government Offices a day after he announced the budget. Middle-class callers praised the new budget – and the poorest condemned it – when the financial secretary spoke with Hongkongers on a Thursday morning radio show. John Tsang Chun-wah, who delivered his budget in the legislature on Wednesday, heard from one caller who was crying, saying she and other poor people had one more been ignored. She was a single mother surnamed Cheung, in her 30s, who is raising a young daughter and living in a partitioned flat. “I can’t benefit from the budget,” she said. “I sought help from the Social Welfare Department but they said they could help [by giving her welfare payments] only if I quit my job.” Cheung, who said she earns about HK$9,000 a month, continued: “The financial secretary said the budget helped all people. Does that mean we – at least 300,000 to 400,000 of us – are not Hong Kong residents? So you don’t need to help us?” Many measures Tsang announced on Wednesday for lower-income people – such as subsidies for public housing rent and electricity bills – do not apply to those who live in subdivided flats and do not receive welfare. Some low-income callers like Cheung called for cash handouts, as in last year’s budget. Many middle-class callers, meanwhile, thanked Tsang for the wide range of tax relief measures, which they said would ease their burden. Some of them urged the government to roll out more measures to help the poor. Tsang said they would be helped through recurrent government spending on such areas as education. Officials decided against cash handouts because of the criticism it generated last year, he said, adding that the new measures would benefit various classes of people.

Brands spend HK$36b (US$4.6 billion) to lift sales - Banking, cosmetics and pharmaceuticals drive 16 per cent increase in marketing campaign budgets as influx of mainland tourist arrivals boosts retailers' takings - Advertising spending in Hong Kong reached a record HK$36.03 billion last year, driven by the continued growth of marketing campaigns in the banking, cosmetics and pharmaceutical industries. Market-monitoring firm admanGo said that was a 16 per cent increase from HK$30.98 billion in 2010 and 38 per cent higher than the HK$26.1 billion the market posted in 2009. It said a steady influx of mainland tourists in the city had boosted sales for many retailers, underpinning increased advertising spending. There were also new advertising vehicles launched last year, including two free newspapers, which encouraged more companies to advertise and prompted more rate discounts. Television, newspapers and magazines seized the biggest share {minus} about 79.77 per cent {minus} of all advertising dollars spent in Hong Kong last year. Jennifer Ma, the director of sales and marketing at admanGo, said the expected launch of more advertising vehicles, such as a new free-to-air terrestrial television network, and the development of campaigns targeting internet-linked smartphones and media tablets augured well for increased advertising spending this year. "But top-spending advertisers, especially in the banking industry, were more cautious towards the end of last year due to the economic uncertainty brought on by the European financial crisis," Ma said. "We expect that exercise of caution to continue this year." Advertisers in the market-leading banking and investment services sector saw their spending rise 14 per cent year on year to HK$3.63 billion, on the back of increased campaigns for personal loans and credit cards. They were led by HSBC, the perennial No1 advertiser in Hong Kong, with total marketing campaigns worth HK$278.81 million last year. The cosmetics and skin care sector had the second-highest spending group of advertisers last year, with total campaigns up 22 per cent to HK$2.78 billion. SK-II, a Procter & Gamble brand, invested HK$252.78 million in campaigns last year to lead its sector and jump to No3 from tenth place in 2010 in the overall ranking of Hong Kong's top advertisers. The pharmaceuticals and health care sector saw advertising spending advance 9 per cent to HK$2.63 billion. Abbott Laboratories led this group with campaigns worth HK$215.94 million last year after it increased its budget to promote baby milk products. That pushed it to No7 among the city's top advertisers this year from No41 in 2010. Fast-food giant McDonald's remained the No2 spender with campaigns worth HK$252.78 million. Samsung Electronics emerged as No5 behind ParknShop, with campaigns that reached HK$229.38 million. The Korean firm, which was No28 in 2010, bolstered promotions for its Galaxy Tab media tablet to compete against Apple's iPad.

Chief executive candidate Leung Chun-ying yesterday refused to give an assurance the controversial functional constituencies would be abolished by 2020 if he won the top job. He also declined to discuss the matter despite unveiling his manifestos for executive and political structures and social welfare. "We still have eight years to reach a consensus on this rather controversial subject and it is difficult to predict the social situation at that time," said Leung. "This is not the right time to explain my stance on that." Functional constituencies are chosen by a narrow electorate but Leung proposes increasing the number of voters for the 30 trade-based seats for the legislature in 2016. The next chief executive, who will take over from Donald Tsang Yam-kuen in July, will be expected to spell out his views on the formation of the 2016 Legislative Council election, paving the way for the public election of all lawmakers by universal suffrage in 2020. But both Leung and his main rival, former chief secretary Henry Tang Ying-yen, have been coy on the issue of functional constituencies. Repeatedly asked by the media whether the "reformed" functional seats under his regime would stay in 2020 - in whatever format - Leung said only: "I can assure you this is not a trap." In a 22-item constitutional chapter, Leung made no mention of the proposed national security legislation - as stated in Article 23 of the Basic Law. "Discussion of Article 23 will not appear in my remaining policy manifestos," said Leung, referring to the sports, culture and environment chapters. Tang's campaign office also refused to comment on the issue yesterday. The universal pension fund and standard working-hours legislation, two controversial topics, were also both unmentioned in Leung's social welfare manifesto. Instead, he proposed creating a special old-age allowance with a simple means test to improve livelihoods for poor elderly people. Elderly people who passed the test could get around double the current HK$1,035 monthly allowance. Meanwhile, the top Beijing official in the city said the central government has no preferred candidate in Hong Kong's chief executive election, after weeks of rumours suggesting Henry Tang Ying-yen was favoured in the mainland's corridors of power. Dr Peng Qinghua , head of the central government's liaison office in Hong Kong, fended off the notion that Beijing had a desired candidate in the leadership race. "[The] elections have to be held in a fair and just manner in accordance with the law," he said. "It is impossible that the central government has a favourite."

A surplus bonanza is prompting a host of sweeteners as the cash-rich government gives us a budget boost today. Financial Secretary John Tsang Chun-wah is set to raise tax rebates to HK$12,000 and the personal allowance to HK$120,000 in the last budget of the administration. The sweeteners, in what is expected to be a bullish projection of Hong Kong's economic affairs, follow yesterday's announcement that the surplus for December was HK$38.3 billion - bringing the total for the first nine months to HK$59.5 billion. The figure for the full year to the end of March may reach HK$100 billion. A spokesman for the Financial Services and the Treasury Bureau said the December surplus is mainly due to HK$37 billion in investment income on fiscal reserves. The reserves stood at HK$654.9 billion at the end of last year. Tsang is also expected to raise the tax allowances for parents and children, even though such a move will narrow the city's tax base. Other sweeteners include a HK$1,800 electricity subsidy and an extra month's "fruit money" for the elderly. There will also be an extra month of social security allowance. Rent for people in public housing is expected to be waived for two months, and there will also be a waiver on rates. To help small and medium-size enterprises, the government is expected to waive business registration fees. Tsang may also beef up guarantees on bank loans to 80 percent for SMEs. He is expected to include matching funds to encourage tertiary educational institutions to raise money from the private sector. The fund-matching program, announced in 2003, sees the government matching donations, dollar for dollar, up to HK$45 million, and half that amount on figures above that. A scholarship scheme that saw HK$250 million injected last year is expected to continue. The tax rebate last year was HK$6,000, while the personal allowance - the general baseline at which everybody is exempt from salaries tax - is HK$108,000. The HK$100 billion estimate for the whole financial year was made by Chinese University of Hong Kong economics professor Terence Chong Tai-leung. It was HK$71.3 billion in the last financial year. He based the figure on the fact that the current quarter is the peak period for tax payments. He suggested the government should give away half the surplus as sweeteners. The rest should be reserved for later. But he warned that increasing the tax allowances will narrow the tax base and this may hurt funding for future development. "Only about a third of the population pays tax at present," he said. "The tax base should be broadened instead." This is necessary as the government's main source of income is from land sales. "It means that the government will have less income if land sales drop," he said. Many small to medium enterprises do not need to pay tax at present, he said, and regular contributions from them will create a broader tax base. Bernard Wu Tak-lung, chairman of the Association of Chartered Certified Accountants and former chairman of the Taxation Institute of Hong Kong, agreed on the need for a broader base. He also forecast the surplus this year to be bigger than last year but did not give a figure.

Chief executive candidate Leung Chun-ying has been accused of a conflict of interest involving the West Kowloon Cultural District project. In an exclusive report, East Week magazine said Leung was one of 10 judges in the 2001 concept planning competition - despite his company acting as a consultant for one of the competitors. Financial Secretary John Tsang Chun-wah, the former secretary for planning and lands bureau, was quoted as saying he was shocked when he stumbled across the alleged conflict of interest while checking nearly 160 competition entries. He then met with Leung, asking him to step down as judge. Liberal Party vice chairwoman Selina Chow Liang Shuk-yee, who was on the judges' panel, recalled Leung was excluded in the final stage. Lawmaker Ronny Tong Ka-wah said if the conflict accusation is true, Leung's role was unreasonable even if unintentional. Tong called on the government to release the relevant information in accordance with the Power and Privileges Act. Another legislator, Cheung Man-kwong, urged the government to clearly explain what happened, as Leung's credibility is at stake. Reacting yesterday, Leung was at first unwilling to comment, saying: "Let me check first." Later, when asked why he had provided consultation services to candidates, he said: "It happened 10 years ago. Several professional teams participated in the competition, but neither my company nor I joined any of the teams. "One quantity surveyor under a particular professional team asked our company about related comments and information on land prices in West Kowloon. But we did not take any money in return. "There was no business relationship, or conflict of interest. I have already reported the case to the jury committee chairman and government bodies." Meanwhile, the Federation of Trade Unions has threatened to boycott Leung and rival Henry Tang Ying-yen if they do not reveal their positions on statutory working hours. Federation chairman Cheng Yiu-tong accused them of behaving worse than Chief Executive Donald Tsang Yam-kuen on the issue. "Tsang, at least, is studying the issue, but Leung and Tang only say they will let the public discuss it first," Cheng said. The federation holds 60 votes in the 1,200-member election committee. 

Hong Kong's burgeoning population of millionaires has at least one addition. Last night's Jockey Club Mark Six draw saw one ticket taking the first prize of HK$86 million. It was the second-largest draw after the HK$133.5 million jackpot last year, shared by three individuals. Tens of thousands were drawn to the lottery as punters laid down a total of HK$201,428,850 yesterday. Some of the hopefuls shared their dreams of winning big. "I seldom bet on the Mark Six but I bought a few tickets with my husband because I noticed that the draw was worth much more than normal. I will donate a part of the huge sum of money and go traveling if I win the first prize," said Chui Hang-ping. Another punter, To King-lok, said: "I am used to betting on the same numbers for every 10 draws but I spent an extra HK$60 on this draw. I will probably buy a Mercedes-Benz if I am lucky enough to win." Housewife Maria Chan Siu-ling said she would buy another home and make donations. "Actually, I don't think I could really win. However, I will not be disappointed and will pretend it's donating money to a charity - the Jockey Club," she said. The rich lottery draw also attracted teenagers, some buying tickets for the first time. "I spent HK$20 on the draw as I saw the first prize was worth [at least] HK$70 million," said first-time Mark Six punter Chow Cheuk-ting. "I will purchase a sports car and musical instruments, like a guitar, if I win." The richest draw, held in May, saw three individuals winning HK$44.5 million each. Punters put in a total of HK$342 million into that draw. One of the winners, Indian delivery driver Jagpal Singh, 32, was also a first-time bettor.

The Hong Kong Monetary Authority Tuesday announced that the city's total assets of the Exchange Fund increased by 2.3 billion HK dollars to 2.4927 trillion HK dollars at the end of December, on November 2011. The Monetary Authority said that foreign-currency assets increased by 10.4 billion HK dollars and Hong Kong dollar assets decreased by 8.1 billion HK dollars. The Currency Board Account showed the Monetary Base at the end of December was 1.076 trillion HK dollars, up 15.8 billion HK dollars, or 1.49 percent, on November. The rise was mainly due to an increase in Certificates of Indebtedness. Backing Assets increased by 16.8 billion HK dollars, or 1.46 percent, to 1.172 trillion HK dollars. At the end of December, the backing ratio stood at 108.92 percent, compared with 108.95 percent in November. (One U.S. dollar is equivalent to 7.758 HK dollars)

The Hong Kong Government announced Tuesday that there was a surplus of 38.3 billion HK dollars (about 4.94 billion U.S. dollars) in the month of December, thereby bringing a surplus of 59.5 billion HK dollars up to the end of December, 2011. Expenditure for the nine-month period amounted to 264.8 billion HK dollars and revenue 324.3 billion HK dollars, according to the government. A government spokesman said that the surplus in December was mainly due to the receipt of 37 billion HK dollars in investment income on fiscal reserves. On the other hand, the 7 billion HK dollars injection into the Elite Athletes Development Fund had not been reflected in the December figures. The revised estimates for the current financial year will be published along with the 2012-13 Budget Feb. 1. The fiscal reserves stood at 654.9 billion HK dollars as at Dec. 31, 2011. (One U.S. dollar is equivalent to 7.758 HK dollars.)

APPLE Inc has introduced a lottery system for iPhone reservations in Hong Kong to combat scalpers who were blamed for disrupting the iPhone 4S launch on the Chinese mainland. But, so far, the system is not being introduced in Shanghai or other mainland cities, an official at Apple Shanghai confirmed with Shanghai Daily yesterday. Apple's online store in Hong Kong requires customers to submit their personal details for a chance to reserve an iPhone between 9am and 12pm each day, Apple said. Those lucky enough to be awarded a reservation will be notified via e-mail before 9pm and told when and where they can pick up the phone. Those who don't receive an e-mail can try their luck again the next day, the company said. "Due to high demand, we are accepting a limited number of iPhone reservations per day," an announcement on the website said. "If you don't receive an e-mail, we were unable to reserve an iPhone for you, and you can try again another time. Only those who receive an e-mail confirming their reservation will be able to purchase an iPhone. We will not be selling the iPhone 4 or iPhone 4S to walk-in customers." Previously, iPhones were sold on Apple's online stores on a "first come, first served" basis. But as the phones are getting more and more popular in China, many scalpers use the system by hiring batches of people to reserve iPhones as soon as they become available. An official at Apple Shanghai, who asked not to be named, said: "We haven't received any information that Apple's online store on the mainland would use the lottery system. Customers who want to purchase one still have to wait till the next batch of items arrive." Apple canceled sales of its iPhone 4S at Apple Stores in Shanghai and Beijing on January 13 "to ensure customer safety" after it said all the phones sold out the day its latest smartphone model was launched on the mainland. At least several hundred people, including Apple fans and scalpers, gathered at each of the five Apple Store outlets on the mainland - three in Shanghai and two in Beijing - waiting all night for the iPhone 4S debut. In Beijing, some migrant scalpers who had waited all night long only to see the stores remained closed threw eggs and shouted at employees through the windows. The new lottery reservation system has sparked heated discussion online. "How does the craze start? I'm quite stunned by the popularity of the expensive smartphone which can only be purchased in the lucky draw," was a comment left by "Seasons" on Weibo.com. Others doubted if the lottery system would combat scalpers as "they can still hire hundreds of students clicking their mouse to try their luck every day," was one comment.

New premier Sean Chen (left) and his deputy, Jiang Yi-huah. Taiwanese President Ma Ying-jeou has named a financial expert as the head of his cabinet, in the hope of steering the island through economic uncertainty brought on by the European debt crisis. Sean Chen, 62, the outgoing vice-premier known for his strong financial expertise, would replace Wu Den-yih as premier, effective from Monday, government spokesman Philip Yang said yesterday. "With his expertise, capability and experience, I believe [Chen] is able to properly tackle a possible crisis brought by the European debt turmoil," Ma said in a statement yesterday, as the island cut back its economic growth rate for this year to an estimated 3.91 per cent, down from 4.19 per cent projected in November amid the global recession. Wu, the president's running mate in the January 14 election, will become vice-president. Ma, the mainland-friendly incumbent, has won a second four-year term, and both he and Wu will be sworn in on May 20. As a sign of respect to members of the newly elected legislature, who will assume their posts today, Wu and the rest of the cabinet under Ma's first term resigned yesterday. After the mass resignation, Chen announced the first round of cabinet selection, featuring a line-up heavy in economic and financial experts. "I insist on putting the right people in the right positions, regardless of whether they are old or new faces," Chen said. The new cabinet officially assumes power on Monday. Among the newly appointed ministers are Christina Liu, the outgoing head of the Council for Economic Planning and Development, who will replace Lee Shuh-der as finance chief. Former economic minister Yin Chii-ming will take Liu's old post. Also helping Chen will be economics Professor Kuan Chung-ming and Simon Chang, Google's former head of Asia-Pacific hardware operations. Both were named ministers without portfolio. Appointed with them was Yang Chiu-hsing, an ex-judge who helped Ma's campaign. Interior Minister Jiang Yi-huah will move up as vice-premier and will be succeeded by civil engineering expert Lee Hong-yuan. Former Taipei city cultural director Dr Lung Ying-tai, who teaches at the University of Hong Kong, will be the culture minister. Those staying in their posts include Defence Minister Kao Hua-chu, Foreign Minister Timothy Yang Chin-tien and Mainland Affairs Council chairwoman Lai Shin-yuan. The ministers of justice, economics, transport, environment, labour affairs and health were also not included in the reshuffle. But the opposition has criticised Chen's cabinet for having too many holdovers. Of the 47 cabinet and ministerial-level positions in the reshuffle, only 16 officials were newly appointed - three of whom were part of the previous cabinet. Ke Chien-min, head of the opposition DPP caucus in the legislature, called the line-up "full of political rewards and old faces rather than professionals". But most Taiwanese media and analysts applauded the revamp, saying they were more or less the proper choices.

Casino-resort developer Las Vegas Sands Corporation said its fourth-quarter net income rose 17 per cent to US$320.1 million as the company set an internal record for revenue, thanks mainly to more people gambling at its resorts in Macau and Singapore, company officials said on Wednesday. The company’s billionaire CEO, Sheldon Adelson, who has made headlines recently for his and his wife’s combined donation of US$10 million to a political action committee supporting Republican Presidential candidate Newt Gingrich, said the company is seriously considering building resorts in Japan, South Korea, Taiwan and Vietnam. “Our most recent conversations have advanced to the point where details such as site selection ... have been discussed,” Adelson told investors during a conference call on Wednesday. Adelson said the company hopes to build one resort each in the two most populous cities in each country. Sands’ net income amounted to 39 cents per share. Its revenue for the quarter rose 26.3 per cent to US$2.54 billion. The company reported adjusted earnings of 57 cents per share, in line with an average forecast from analysts, while its revenue beat the average forecast for revenue of US$2.46 billion. After hours, its shares fell 90 cents to US$49.28, after finishing the day up US$1.07, or 2.2 per cent, at US$50.18. Analyst Robin Farley of UBS Investment Research said Sands’ earnings before taxes, interest, depreciation and amortisation (EBITDA) in Las Vegas missed Wall Street’s targets. She said the company also got a lucky bump in Singapore, where it won more money from high rollers than it should have given the amount the gamblers wagered. “Luck may have added about US$22 million or more to the reported US$427 million (in EBITDA),” Farley told investors in a note. Adelson said he thinks analysts underappreciate Sands’ growth potential and standing in the industry. Sands declared an annual dividend of US$1 per share to be paid in four parts, starting March 30. The company said that in Macau, more middle-income gamblers played slots and table games. They wagered at lower limits than high rollers, but with lower costs – so their bets were more profitable. Fourth-quarter revenue for the subsidiary Sands China increased 22 per cent to US$1.33 billion. In Singapore, revenue rose 44 per cent to US$806.9 million. And in Las Vegas, Sands’ revenue climbed 9.3 per cent to US$339.5 million, while it rose 25.9 per cent in Bethlehem, Pennsylvania, to US$105 million. Adelson said the company now has just under one-fifth of the Macau market, and he expects that share to rise as Sands revamps its relationships with junket representatives who bring in high rollers and after Sands Cotai, a new casino development, opens in eight weeks. Adelson said Macau’s eye-popping gambling tourism will keep growing as transportation infrastructure improves and more urban Chinese people have the disposable income and hotel rooms are built. Sands also has asked the Chinese government for permission to build a new 4,000-room themed casino on land Sands owns in Macau’s Cotai peninsula; it would have separate towers for mass-market gamblers and high rollers. Adelson said he thinks Sands is ahead of other companies wanting to expand in Cotai because it already owns the land it wants to build on. He said he has also talked with the Singapore government about buying land adjacent to its Marina Bay Sands resort and building an additional 1,000 to 1,500 rooms there. More rooms could significantly increase revenue at the resort, where occupancy is above 90 per cent. “We’re turning people away,” he said.

 China*:  Feb 3 2012 Share

Beijing and Berlin taking friendship to next level - German chancellor Merkel arriving in China today for her fifth visit in as many years. China has long seen itself as being confronted by a dominant global power, either as enemy No1 or chief competitor. Today, that role is played by the United States. And under its united front strategy, Beijing is seeking friendly relationships with other powers to check and balance that dominant power and seek to build a multi-polar world. That is why China has cemented harmonious relations with Germany, Europe's largest economy, in recent years. When German Chancellor Dr Angela Merkel arrives in Beijing today for a two-day visit it will be her fifth trip to China in five years. "Among China's relations with major powers, the Sino-German one is the best," said Professor Zhang Xiaojin , a European affairs expert at Tsinghua University. Feng Zhongping , director of European studies at the China Institute of Contemporary International Relations, said: "Germany under Merkel has adopted a very pragmatic approach towards China, particularly since her second term as head of government beginning in 2009." Merkel, who came to office in 2005, angered China's leadership when she welcomed Tibet's spiritual leader, the Dalai Lama, in 2007. But relations have improved in recent years, as economic co-operation between the world's second- and fourth-largest economies outweighed tensions over long-standing political issues, such as human rights and Tibet, that were once prominent obstacles to improved ties. In her previous visit, in July 2010, the two nations issued a communique to declare a strategic partnership, the first between China and a Western power. Besides her talks with President Hu Jintao and Premier Wen Jiabao , Merkel will deliver a speech on "financial and currency policy issues" at the Chinese Academy of Social Sciences before heading to Guangzhou tomorrow, where she is scheduled to visit companies and attend an economic forum in an effort to help establish a stronger foothold for German business. This year also marks the 40th year of diplomatic relations between the two countries. Germany and China, the world's top two exporters, enjoy vibrant trade relations. China is Germany's largest Asian trading partner, and Germany is China's top trade partner within the European Union, with business equivalent to its trade with Britain, France and Italy combined. Germany's imports from China reached €77.27 billion (HK$788 billion) in 2010, while it exported €53.79 billion worth of goods to China in the same year. Neither Beijing nor Berlin has detailed the issues that will be discussed between Merkel and Chinese leaders, but analysts expect the euro-zone crisis, climate change, Iran's nuclear ambitions and the ongoing unrest in Syria to top the list, along with trade and investment. Germany's top concerns include China's moves to make the yuan more flexible, intellectual property rights - with many of its firms involved in hi-tech areas ranging from cars to chemicals - market access and rule of law. China wants the European Union to accord it market economy status and end an embargo on arms sales imposed after the military crackdown on the pro-democracy movement on June 4, 1989. With EU leaders having reached a deal to tackle the debt crisis, many are looking at China as a potential saviour, thanks to its US$3.2 trillion in exchange reserves. "With all developed economies in debt crises, the EU is looking at the cash-rich emerging economies and China is the first among them," said Hu Yifan, chief economist with Haitong International Research. Zhang said Merkel's chief mission was to explain the EU rescue plan to Chinese leaders and lobby for Beijing's participation because Beijing was still suspicious about the effectiveness of the plan and worried about the safety of any investment. He said China would rather seek investment opportunities as an indirect way to help the struggling continent. Europe's financial crisis has created buying opportunities for cash-rich investors, and China is leading the charge. Beijing has provided billions of dollars in state financing for key public works projects in Europe. Exchange rates have been a big issue between the US and the euro zone on the one side and China on the other, with critics saying an undervalued yuan gives Chinese exporters an unfair competitive edge. Analysts said China's increased trade and investment with Germany would ease economic disputes and encourage Berlin to support China's position on issues where it was at odds with the US, such as the value of the yuan and trade disputes at the World Trade Organisation. Beijing is also looking to Germany to take the first step to recognising China as a market economy. With the EU adopting its harshest sanctions yet against Iran, Merkel is eager to secure Beijing's co-operation. China is the largest importer of Iranian oil and has openly dismissed US sanctions. China also has almost US$120 billion in investments in Iran.

The production line at the Mainland Headwear Holdings factory in Shenzhen will soon be 50 per cent smaller. Sky-rocketing wages in Shenzhen will force Mainland Headwear Holdings, one of the world's largest cap makers, to relocate as much as 50 per cent of its output to Bangladesh over the next two years. The relocation was being fast-tracked after the special economic zone lifted the monthly minimum wage by 13.6 per cent to 1,500 yuan (HK$1,845) today, the nation's highest and the third increase in two years, managing director Pauline Ngan Po-ling said yesterday. On top of that fewer migrant workers had returned to work at the group's factory in Shenzhen on Monday, the first working day after the Lunar New Year break, indicating dwindling labour supply, she said. "A production line can't operate properly if it is missing one worker," she said. "My core mission in the next two years is migrating half of the production to Bangladesh." Labour issues are aggravating manufacturers' growing woes, which range from deteriorating demand in the United States and European Union to yuan appreciation and industrial reform in Guangdong. Some factory owners have opted to move production to remoter parts of China, but Mainland Headwear chose Bangladesh, because average salaries are far lower there than in its Shenzhen plant. Ngan said workers at the Shenzhen factory took home about 3,000 yuan a month on average, but those in Bangladesh only earned US$60. On top of the pay, the Shenzhen factory offers three meals a day and accommodation, but no such provision is made in Bangladesh factories. Mainland Headwear planned to form a joint-venture with a local Bangladesh factory, with the business ultimately to be 51 per cent-owned by the Hong Kong company, Ngan said after she visited the country last week. Meanwhile, factory buildings were under construction in Bangladesh near the capital of Dhaka and completion would be scheduled in May. "Bangladesh is like China 50 years ago," she said. "I want to move as soon as possible. It is an effort to keep workers at the Shenzhen plant." On Monday, 1,600 migrant workers, or 65 per cent of the total workforce of 2,500, returned to work at the Shenzhen plant after the Lunar New Year holidays, compared with 80 per cent the same time last year. This was despite offers of perks such as cash bonuses and a dinner banquet with wine and lucky draw prizes of iPhones, television sets, washing machines and smart-phones made two weeks before the Lunar New Year. "The lower show-up rate means the offerings are not attractive enough," Ngan said. "Those who have returned to work after the holidays are older, it is so hard to keep the younger ones." Danny Lau Tat-pong, the head of Kam Pin Industrial and chairman of the Hong Kong Small and Medium Enterprises Association, said the industrial and architectural coating firm only had 10 per cent of its migrant workers fail to show up at its Dongguan plant yesterday, about the same as last year. But he said this year's economic outlook was just as bad as it was last year. Lau estimated that less than one-third of Hong Kong manufacturers across the border made profits last year, with the remainder suffering losses or just breaking even. One garment-manufacturing member of the association produced a smaller number of samples for customers during November and December last year. "This is a clear signal of poor demand for the first half of this year," Lau said.

Yuan deposits shrank in December at the same pace at which the mainland currency exited the banking system during the 2008 financial tsunami. But the Hong Kong Monetary Authority said the level of deposits is not a reflection of Hong Kong's status as an offshore yuan hub. Yuan deposits declined 6.18 percent to 588.53 billion yuan (HK$723.48 billion) after reaching a high of 627.30 billion yuan in November, according to the de-facto central bank. Following the Lehman Brothers collapse in September 2008, monthly yuan deposits fell at a rate of 5.54 percent, 6.27 percent and 9.48 percent in three consecutive months. The HKMA said total remittances of yuan for cross-border trade settlement jumped to 239.04 billion from 184.99 billion yuan, up 29.22 percent. "This shows that there are more two- way flows of trade settlement between Hong Kong and China,"said Frances Cheung, senior strategist for Asia ex- Japan at Credit Agricole CIB in Hong Kong. "Yuan may also be repatriated to the mainland via the foreign direct investment mechanism." The currency's pace of appreciation has slowed since the fourth quarter last year. Also, some firms have moved yuan from Hong Kong to China for some bill settlements at year-end. Meanwhile, local lenders are continuing to entice depositors. From today, HSBC (0005) is offering up to 1.5 percent interest rate for a minimum 20,000 yuan, three-month deposit. And DBS offers one-month and six- month time deposits for 1.55 percent and 2.05 percent interest rates, respectively. The Hong Kong dollar loan-to- deposit ratio slipped to 84.5 percent in December, versus 85.5 percent in November as total loans fell while deposits, especially time deposits, increased.

Airline stewardesses in cheongsam - Many airline companies in China also provide the cheongsam as uniforms for their stewardess and ladies ground workers.

A US solar industry group opposed to a rival coalition's request for steep import duties on Chinese-made solar cells and modules warned in a report on Monday that more than 60,000 US jobs could be lost if such duties were imposed. "We cannot allow one company's anti-China crusade to threaten the US solar industry and tens of thousands of American jobs," said Jigar Shah, president of the Coalition for Affordable Solar Energy (CASE). The CASE report, commissioned from The Brattle Group, an economics consulting firm, says the job losses would come in the solar industry and in the broader US economy, even though there would be a gain in domestic solar manufacturing jobs. CASE says it represents companies responsible for 97 percent to 98 percent of US solar industry jobs, which it defines to include residential and commercial installation of solar panels as well as domestic manufacturing. The group strongly opposes a request for anti-dumping and countervailing duties on Chinese-made solar cells and panel filed by SolarWorld Industries America, the US arm of one of Germany's largest solar manufacturers. SolarWorld, along with six other US solar energy companies who have remained anonymous, has asked the US Commerce Department to impose duties of more than 100 percent on their Chinese competitors to offset alleged government subsidies and unfair pricing practices. The department had been expected to announce preliminary countervailing duties in the case on Feb 14, when China's Vice President Xi Jinping, meets with President Barack Obama at the White House. A Commerce Department official said on Monday the initial ruling has been delayed until March 5. But the department has made a preliminary finding of "critical circumstances" in the countervailing duty investigation, meaning any duties announced on March 5 would be applied retroactively from early December, the aide said. A second critical circumstances finding would have to be made for any anti-dumping duties to be applied retroactively, the aide added. Commerce is expected to announce preliminary anti-dumping duties in late March. US imports of the solar energy products from China have soared in recent years and were expected to exceed $2.4 billion in 2011, up from about $1.5 billion in 2010. The Solar Foundation, a nonprofit education and research organization, estimated in August there were slightly more than 100,000 Americans working in the solar industry and forecast 24,000 new jobs would be added in the coming year The Brattle Group study estimated a 50-percent tariff would shut out most imports from China, driving up prices for solar panels, pushing down demand and resulting in 14,877 to 43,178 fewer US jobs by 2014 than would be expected without duties. A 100-percent tariff would completely block imports from China, threatening 16,917 to 49,589 jobs by 2014, it said. Polysilicon is a key material used to make photovoltaic solar cells.

China's government debt is at an "overall safe and controllable" level, said Premier Wen Jiabao, who pledged that funding for key projects would be ensured and steps would be taken to gradually digest the risks. "Through clean-ups and regulation, the trend of expanding investment vehicles has been effectively contained," Wen said. Wen's comments, reported in the People's Daily on Monday, were made in a speech at the Central Financial Work Conference in early January. The National Audit Office said earlier this month it had uncovered 531 billion yuan ($83.8 billion) in irregularities involving local government debt, which amounted to 10.7 trillion yuan as of the end of 2010. The scale of China's local debt has aroused concerns among investors, and some fear that defaults would cause a chain reaction and threaten the stability of the country's banking system. But Wen said the majority of local debt was in the form of "high-quality assets", such as infrastructure, that had healthy cash flow and promising returns. Wen warned against a simple approach of hitting the brakes on local debt and called for gradual solutions to the problem. "We must avoid turning local risks into comprehensive, systemic risks," he said. Meanwhile, the funding needs of key construction projects approved by the government, such as affordable housing projects, must be ensured, he said. He urged greater attention to, and control of, systemically important financial institutions, and stressed the role of private credit in the world's second-largest economy, given that it was properly regulated. Wen reiterated that the nation would "further improve the renminbi exchange rate formation mechanism and strengthen the flexibility of the renminbi exchange rate in both directions". "Declining revenue for local governments and a large volume of maturing debt have made local debt a focus of emphasis in China's financial stability this year," said Guo Tianyong, director of the Banking Research Center at the Central University of Finance and Economics. "While properly handling the debt stock, authorities should regulate the mechanism for further financing of local governments" and consolidate their debt payments into the budget, Guo said. Wang Tao, an economist at UBS AG, said that declines in the property market and the risks of local debt would not generate systemic risk in the near future, because the nation's policy stance had shifted to stopping the growth rate from falling too fast. "The government is seeking a balance between maintaining growth and dealing with the negative effects left over from the last round of fiscal stimulus," Wang said. China has set a target of 8 trillion yuan in new local-currency loans and 14 percent growth in broad M2 money supply for 2012, Reuters reported, citing sources familiar with government plans. This suggests a rise from 7.47 trillion yuan in new bank loans and annual M2 growth of 13.6 percent achieved in 2011, implying a further loosening of policy by the People's Bank of China to support the economy as growth weakens and inflation eases.

Hong Kong*:  Feb 2 2012 Share

A Louis Vuitton store in Causeway Bay, among the luxury brands that are popular with mainland shoppers in the city. Luxury goods such as Louis Vuitton handbags, Gucci couture or Harry Winston jewellery watches could be taxed as a viable option to widen Hong Kong's narrow tax base. Indeed, a 3 per cent tax on luxury goods should be introduced, according to a survey earlier this month of 200 Hong Kong-based members of CPA Australia, a global accounting organisation. The proposal, which comes ahead of the government's budget announcement tomorrow, is not expected to affect low-income earners. Loretta Shuen Leung Lai-sheung, chairwoman of the Greater China tax division of CPA Australia, said the proposed tax on luxury goods - roughly defined as branded consumer goods - would not deter mainland shoppers in the city. That's in view of the 30 to 50 per cent tax on imported luxury goods and the 17 per cent value-added tax on the mainland, she said. "This is a far cry from the levy across the border," Shuen said yesterday. "Another reason they [mainlanders] shop here is because of the authenticity and high quality of goods." Sales of luxury goods in the city amounted to HK$50 billion in 2010. A 3 per cent tax on that amount would yield HK$1.5 billion in revenue to the government, Shuen added. She said it was time for the government to look for long-term measures to improve the tax system. A review of the tax base was necessary, she said, because only one in five people in Hong Kong paid taxes in 2010, with most from the middle class. Financial Secretary John Tsang Chun-wah, who is due to deliver his last budget speech tomorrow, wrote in his official blog on Sunday that a series of measures would be introduced to strengthen companies' ability to withstand economic downturns, as well as lifting spending on education, social welfare and health care. Calls are also growing to broaden the city's tax base. For instance, accounting firms such as KPMG, Ernst & Young, and Deloitte have recommended a goods and services tax (GST). Yvonne Law Shing Mo-han, Deloitte's national chief knowledge officer, yesterday said while there was a need to broaden the city's tax base, taxing luxury goods was potentially as controversial as introducing a GST. She said luxury goods must be clearly defined and that any tax rate must be carefully considered, because a definition that is too broad and a rate that is too high would affect the general public. Conversely, a definition that is too narrow and a rate that is too low would not generate significant tax revenue. "There are many issues needing to be addressed. For example, should we tax tourists or local shoppers or both? Should we tax local brands or foreign brands?" Law asked. "A plasma TV is a necessity to many families, but it may cost tens of thousands of dollars. A branded handbag is a necessity to many ladies, but it may be a luxury to others. How should we define luxury goods?" Chief executive candidate Henry Tang Ying-yen supported introducing a GST in 2006 when he was the financial secretary. However, the plan did not proceed due to public opposition. CPA Australia expects the government to post a HK$58 billion surplus for the fiscal year ending on March 31. Shuen said the government should also support small- and medium-sized firms by cutting their corporate tax rate to 13.5 per cent from the current 16.5 per cent.

The top Beijing official in charge of Hong Kong affairs has fended off suggestions that the central government has a favoured candidate in the chief executive election campaign. Peng Qinghua, director of the central government’s liaison office, said on Tuesday morning: “Hong Kong’s elections have to be held in a fair and just manner in accordance with the law. It is impossible that the central government has a favourite now for the [next] chief executive.” He was speaking before a Federation of Trade Unions’ reception in To Kwa Wan. Further pressed by the media as to whether both Henry Tang Ying-yen and Leung Chun-ying were suitable candidates, Peng said: “Everything has to be done in accordance with the law.” His comments echo those made by a top mainland leader in mid-January at a meeting of nearly 100 city deputies to the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) in Zhuhai. Li Jianguo, vice-chairman of the NPC Standing Committee, praised Tang and Leung for having done “plenty of work” for Hong Kong. His remarks, widely interpreted as a dismissal of claims that Beijing had a favoured candidate, marked the first time that an official confirmed the central government’s neutral stance on the chief executive contest. Several deputies at the meeting said Li, who is also the Standing Committee’s secretary general, described Tang and Leung as men who “love the motherland and love Hong Kong”. Li listed these qualities as the top of three criteria for judging chief executive hopefuls. 

Sunshine Oilsands Limited, a Canadian oil explorer backed by Chinese state-owned enterprises, could raise up to US$700 million through a Hong Kong initial public offering (IPO), in what is set to be the biggest new listing in Asia in the new year. The IPO will consist of all new shares, representing 25 per cent of the company’s expanded capital, one source with direct knowledge of the plans told Reuters on Tuesday. Sunshine Oilsands and its bankers started drumming up demand for the offering on Monday and will launch the IPO on February 6, added a second source. Pricing is slated for February 14, with its debut on the Hong Kong stock exchange set for February 21. Thomson Reuters publication IFR reported on Friday the IPO could raise between US$500-700 million, valuing the company at up to US$2.8 billion. Sunshine Oilsands, which owns 1.14 million acres of oil sands leases in the Athabasca region in Canada, raised about US$230 million in March last year from a group of investors including a unit of Bank of China, China Life Insurance (SEHK: 2628, announcements, news) (Overseas) and Hong Kong private equity fund Cross-Strait Common Development Fund, a company statement showed. Orient International Resources Group, controlled by Hong Kong businessman Hok Ming Tseung, is also a major shareholder of Sunshine Oilsands. The Canadian company has been eyeing a Hong Kong IPO since the middle of last year, according to local press reports. Sunshine Oilsands said in September it filed its A1 listing application with the Hong Kong exchange for the proposed IPO. Sunshine Oilsands will kick start what is expected to be another slow year for initial offerings after demand for new listings slumped 42 per cent last year from 2010 to the lowest in three years. Six companies have gone public in Hong Kong since the beginning of the year, with small-sized deals that raised a combined HK$1.4 billion (US$180.5 million). The Sunshine Oilsands IPO would follow a series of energy takeovers by Chinese companies in recent months as the world’s second-largest economy seeks to secure steady oil supply to support growth in the coming years. Most of the recent deals have been in shale and other unconventional oil sources and technology, including a US$2.2 billion deal between China’s Sinopec (SEHK: 0386) and Devon Energy Corp. this month to develop five shale oil fields. CNOOC (SEHK: 0883) closed a US$2 billion deal in November for a stake in a Canadian oil sands project and also started talks to buy a stake in Frac Tech International, which operates technology used in hydraulic fracturing. The company hired BOC (SEHK: 3988) International, Deutsche Bank and Morgan Stanley as joint global co-ordinators and joint sponsors of the IPO, added the sources, who were not authorised to speak publicly on the matter.

Kam Kwan-lai (left), younger son of Yung Kee Restaurant founder Kam Shui-fai, leaves the High Court in Admiralty with his son Carrel Kam Lin-wang on Tuesday. The older brother in a family feud involving the famous Yung Kee restaurant was portrayed by his siblings as "dominating and always wanting to be in charge", in court on Tuesday. That description of Kinsen Kam Kwan-sing was heard at the Court of First Instance as his younger brother, Kam Kwan-lai, rejected the accusation that he was trying to grab control of Yung Kee Holdings. Kinsen Kam is asking the court to issue a winding-up order of the holding company, which could result in liquidators selling the shares on the open market or one brother buying out the other’s stock. The two brothers, who own the Yung Kee restaurant in Central, fell out in a row over shares after the death of their father, the court has heard. Kinsen Kam, 64, through his lawyer, said winding up the company was not his primary goal: rather, he could buy out his brother’s 55 per cent share or his brother could buy out his 45 per cent share for HK$669 million. The valuation of Yung Kee Holdings, at up to HK$1.5 billion, does not include the value of antiques, fine paintings, furniture and cutlery, the court heard. Jat Sew-tong SC, for Kinsen Kam, said his client would pursue a winding-up order only if the court ruled the shares should be sold at a discount in the event of a buyout. Kinsen Kam is arguing that he has been running the company in a quasi-partnership with his younger brother, and therefore his shares should be sold at full value – in contrast to a case where a shareholder sells his stake to another shareholder at a discount. If the company is wound up, its shares would be sold at full value by the liquidator and anyone – including Kinsen Kam – could bid for it, Jat said. John Bleach SC, for Kam Kwan-lai, cited a description given by his client’s sister, Kelly Kam, of their older brother. “Even as a child, Kinsen Kam was dominating, always wanting to be in charge,” Bleach said, reading from a court document. “I have also seen how he can be bullying and trying to intimidate in business and at the restaurant. In particular, he does not like his decisions or authority to be questioned, and if they are he can be very stubborn,” according to evidence by Kelly Kam. “He seems to me to have no thoughts or ideas on how to develop the business,” the evidence went on. Kelly Kam also said Kinsen Kam’s children were lazy, lacking in motivation and expertise in running the business. Describing Kam Kwan-lai, Kelly Kam stated in her evidence: “My brother … is not dominant and forceful. He has a down-to-earth personality.” “He has greater skill and expertise than Kinsen Kwan,” she stated. Lawyers for Kam Kwan-lai stressed that the proceedings only concern Yung Kee Holdings, which has no involvement with the business of the restaurant other than being its holding company. “Whatever happens in this proceeding, it will have absolutely no impact on the business of the restaurant, which continues to be very successful,” solicitor Nigel Francis said. The hearing continues before Mr Justice Jonathan Harris.

Samsung Securities, the largest brokerage firm in South Korea in terms of market value, said on Tuesday it would downsize its Hong Kong office as part of its restructuring plans. The Hong Kong office, with more than 80 staff members, is the biggest overseas office of Samsung Securities and will be the only overseas office affected by the restructuring, a spokesman from the company’s Seoul headquarters said. “The downsizing will be limited to Hong Kong,” he said. “A challenging market environment is the main reason. Some global investment banks have already announced the downsizing of their Asia businesses these days.” The spokesman said there were no plans to completely shut down its business in Hong Kong, or to downsize the company’s other offices in Tokyo, Shanghai, New York and London. “Our HK business has three major divisions,” he said. “They are a Hong Kong equities brokerage, Korean equities brokerage and Hong Kong investment banking...some divisions may close temporarily.” About 20 of the Hong Kong staff are in brokerage services. Samsung Securities employ 3,200 people in Korea and 160 its overseas offices as of the end of last year. The Hong Kong office was opened in 2001, according to the company’s website. It was renamed Samsung Securities Asia in 2009 when the company injected an additional US$100 million into the office, aggressively hiring more than 50 extra staff to expand into investment banking, proprietary trading, hedge funds and Asian equities brokerage. A source said the money invested in the Hong Kong office had almost dried up because of “challenging market environments”. He said the company had decided to slow down its overseas expansion and turn its attention to business at home, especially high net-worth individuals in Korea. Another independent source said the brokerage would probably close down because of ebbing interest in Asia stocks, which fell farther than developed market stocks when the eurozone debt crisis hit global stock markets last year. An insider at the company said the staff was told about the downsizing at a townhall meeting late on Tuesday. The entire equity sales and research teams would be laid off, the source said. Samsung Securities declined to confirm or comment on the actual number of job cuts, but said it would release further details on Wednesday.

China's top economic planning agency and the Shanghai government yesterday jointly announced plans to establish a huge, onshore market for the yuan within three years, directly competing with Hong Kong's own ambitions for offshore trading in the mainland currency - The National Development and Reform Commission (NDRC) and the Shanghai government said the plan to make Shanghai the global centre for yuan trading, clearing and pricing was part of broader efforts to make the city a financial centre like London or New York by 2020. Shanghai's yuan-trading hub will aim to lift its annual non-forex financial market volume to 1,000 trillion yuan (HK$1,228 trillion) by 2015 from less than 400 trillion yuan in 2010, but Hong Kong-based analysts said the city's markets should comfortably meet the challenge from Shanghai. Hong Kong economists were also sceptical, saying the plan paid lip service to bolster the investment community's confidence in Shanghai's long-term effort to transform itself into a global financial centre. "The term `yuan trading centre' easily stokes fears in Hong Kong, but obviously Shanghai will focus on the onshore market while it doesn't necessarily mean Hong Kong's importance should be played down," said Gu Weiyong, chief investment officer at Ucon Investment Management. "The plan looks extremely ambitious. It is a statement to established Western financial hubs like London and New York that China, including Hong Kong, will begin to compete with them in attracting capital thanks to the yuan's rising profile," Gu said. The NDRC said it wanted the Shanghai market to set benchmark levels for the yuan prices and yuan lending rate worldwide, which bankers said showed that China wanted to tell the world that the mainland government would decide on the yuan's level - not offshore markets. The NDRC also wants overseas companies to sell yuan-denominated shares on mainland stock markets. Although it has not yet submitted a timetable or other details, such a change would directly compete with the Hong Kong stock market which has been encouraging companies to issue yuan shares since September. The NDRC-Shanghai statement, however, played down the challenge to Hong Kong, saying Shanghai's plan would "strengthen co-operation with Hong Kong" as the two cities were important to China and "complementary to each other." "Hong Kong could beat Shanghai in terms of attracting international traders as Hong Kong has free flow of capital, a good legal system as well as many international banks and brokers," said Joseph Tong Tang, of Sun Hung Kai Financial. "International investors cannot freely trade in the Shanghai market, while the mainland legal system is different from international practice. It's more likely that Shanghai will act as an onshore yuan trading centre for mainland firms and Hong Kong will be the offshore trading centre for yuan for international investors." Earlier this month, Britain said it was teaming up with Hong Kong to secure London a top spot as an offshore trading centre for the yuan.

Hong Kong’s coffers are full again as the city’s government prepares to announce another hefty budget surplus Wednesday, with calls for sweeteners to support the slowing economy and the city’s low-income groups. But any budget plans are likely to be constrained by political reality: a change of government in a few months. Financial Secretary John Tsang will deliver the speech at 11am, with economists forecasting goodies similar to previous budgets like one-off tax rebates and temporary waivers of public housing rental, but no big surprises. The government is likely to report about HK$65 billion (US$8.4 billion) budget surplus for the current fiscal year ending March 31, 2012, a person familiar with the situation said Monday, adding that Tsang will also say Hong Kong’s GDP rose about 5% in 2011, but forecasts slower growth, of below 3%, this year due to the weakening global economy. “Given the imminent change in top government posts, we expect the upcoming budget to be long on one-off concessions and short on new vision,” Standard Chartered economist Kelvin Lau said. “One-off relief measures should prove timely given that growth is set to slow further in 2012.” For the property market, Citigroup also believes the Hong Kong government is unlikely to announce any new measures in the upcoming budget that may hurt the property market, given prices stopped rising in June. “Hong Kong government officials have no intention of causing a home price collapse, especially when senior government officials are worried about the European debt crisis,” Citigroup said in a report. While Mr. Tsang is expected to push forward infrastructure projects that have been widely flagged to create jobs as an economic slowdown starts to bite, Hong Kongers probably can’t count too much on other measures.

 China*:  Feb 2 2012 Share

China lost an appeal at the World Trade Organisation on Monday after complaints about its restrictions on raw material exports, but will be able to maintain its supply stranglehold on rare earths, crucial ingredients in many high-tech products. A WTO panel on Monday said Beijing violated global trading rules by restricting exports of raw materials like bauxite, coke, magnesium, manganese and zinc, which inflated prices and gave domestic Chinese firms an unfair competitive advantage. Many countries later accused China of choking off global supplies of rare earth metals, causing prices to rocket. Although rare earth metals were not part of Monday’s ruling, a number of US lawmakers urged the United States to use the decision to launch a new case to force Beijing to lift its rare earth export restrictions. “The decision of the appellate body is a huge victory for the United States,” said Michael Silver, chief executive of American Elements, a US-based rare earth processor. “It confirms the existence of the two-tiered price structure that has caused so much concern.” EU Trade Commissioner Karel De Gucht said the decision would force China to drop export restrictions for the materials mentioned in the case and for rare earths. But while China might be forced to tweak some of its export policies, analysts said Beijing’s strategy to restrict rare earth supplies and control prices would likely remain unchanged. “It is still too early to say what the impact will be but I can’t see it having a big impact on prices – the main issue will still be supply and demand,” said Vivian Pang, an analyst with the Asian Metal consultancy in Beijing. China controls 95 per cent of global rare earth supplies – a group of 17 elements used in new industries like renewables and hybrid cars – and its dominance means that it is in a strong position to disregard WTO rulings if it so wishes. The United States, European Union and Mexico had all launched WTO legal cases in 2009, challenging China’s right to restrict raw material exports. “The question is whether China will actually stop or at least reduce export taxes,” said Silver. “I expect they will, so they remain WTO members in good standing.” China’s Ministry of Commerce said on Monday that it “deeply regrets” the ruling but would comply. Tu Xinquan, associate director of the China Institute of WTO Studies, said Beijing was likely to have to adjust its policies in order to comply – but its overall strategy need not change. “There are other ways it can meet its objectives,” he said. WTO provisions allow a country to limit trade on health and environmental grounds, but it said on Monday that China had so far been “unable to demonstrate” that its restrictions helped conserve resources, cut pollution or improve public health. Beijing has said that unregulated rare earth exploitation had caused untold damage in big producing regions like Inner Mongolia. It has also said it should not have to bear so much of the global output burden, especially as domestic demand grows. The idea is to continue to play up the environmental impact – the issue is whether it can convince the WTO that its policies are applied equally to foreign and domestic firms, hence the emphasis on the domestic output cap. China deployed similar arguments in 2004 when imposing quotas on coking coal exports. Despite the threat of WTO action, exports have dwindled from 10 million tonnes a decade ago to 3.6 million tonnes last year, and it is now a huge net importer. In the last few years, Beijing has banned dozens of unlicensed rare earth miners and raised entry thresholds. It has also imposed strict export limits and cracked down on smuggling. It issued export quotas amounting to 30,184 tonnes last year, and said the figure for this year would remain unchanged in order to “guarantee international demand”. Exporters used just 56 per cent of their allocations last year. China has rejected claims that local firms have gained an unfair advantage, saying nationwide output caps – which are compliant with WTO rules – have also raised domestic prices and forced local users to scale back operations. The question for the WTO is whether or not Chinese firms gain an unfair advantage, but there is nothing it can do to stop domestic rare earth producers from selling to domestic consumers at a cheaper price, said Tu of the Institute of WTO Studies. “I don’t know if domestic firms get cheaper supplies but if it is just enterprises setting prices, rather than the government, there is nothing anyone can say about it.”

Being able to afford pork was once a symbol of wealth for Chinese. Today, the mainland produces half of the world's pork and because pork prices weigh so heavily on the nation's inflation data, some internet commenters even refer to the CPI as the "China Pig Index". Steadily growing demand for the meat and widespread concerns for food safety across the mainland has attracted more investors to dabble in the pig-raising industry in recent years, among other agriculture-related sectors. The best-known example may be the plan by Chinese internet company NetEase to run its own pig farm in order to produce "safe, delicious" pork. More than two years after company founder Ding Lei announced the plan in 2009, NetEase recently released the design of its pig farm, which it started building in the mountains of Anji , Zhejiang , in March. Bai Lei , director of marketing for NetEase's agriculture department, said the decision to locate the farm in the mountains was made because the area has an advantage in terms of epidemic prevention - the company had promised to not medicate pigs. The farm, covering about 80 hectares of mountain land, features more than 30 buildings, including offices, feed-storage facilities and pigsties, which will house around 100,000 pigs when the farm is operational, Bai said, without giving a starting date. "To protect the local ecology, we haven't ruined the vegetation or altered the original terrain," he said, "so not all of the 80 hectares of land is used. We used just a small portion of it to construct buildings". The pigs will live in overhead structures built on stilts in order to keep vegetation where it is. Unlike traditional pigsties, which are dirty and crowded, the NetEase pig farm will provide an average of two square metres of space for each pig, it said, adding that these measures provide a safer environment for the pigs so they are kept healthy enough to not need medication. Ding's motivation to raise pigs reportedly came as a way to provide safe meat after a hotpot restaurant served him pig-blood pudding that he believed to be unsafe. He told the Nanfang Daily in a report early last year that the mainland's breeding industry used 97,000 tonnes of antibiotics in 2010. "Can you imagine how many antibiotics each chicken and pig has eaten?" he said. According to the National Bureau of Statistics, the mainland produced more than 50 million tonnes of pork in 2010, accounting for 64 per cent of all the meat it produced. Li Shuilong , head of the China Meat Association, said in November that the massive figure accounted for 49 per cent of the world's pork production that year. NetEase has not said how it will price its pigs, but Bai said the prices would definitely be high enough to ensure profits. "Because our initial plan was to extend [the pig farm gradually], we would definitely need profits to make this happen," Bai said, adding that a detailed pricing scheme would be released when the time is right. He Zhonghua , an analyst from Chinameat.cn, a website under the China Meat Association, said NetEase's way of raising pigs was not worth expanding. "The market for high-end pork is limited, and this makes it hard to enlarge its production," he warned, adding that many businesses in the meat industry had tried to be different in management, but none of them had achieved large outputs. "Besides, it's basically impossible to always keep domestic animals away from illnesses," he said. "One has to consider everything in the raising process, from the selection of species to the feed, which might contain residual pesticide." He believed that the solution to providing safe pork was the replacement of individual pig farmers by large corporate pig farms. "When the number of pigs raised on a farm is big, the potential profits are higher, and the owner won't bother taking the risk of using `lean meat powder' to lower the pigs' fat content," he said.

Two customers enter a Starbucks cafe in Shanghai yesterday. Starbucks Corp yesterday said it will raise prices on certain coffee products in China from today to offset higher cost. The price increase, ranging from 1 yuan (16 US cents) to 2 yuan, will mainly cover "several" coffee drinks, including espresso-based beverages and fresh-brewed coffees. Price of food items, tea drinks and blended beverages such as hot chocolate and juice will remain unchanged.

81,000 foreign experts were working in Shanghai at the end of last year - a third more than in 2005, the local labor authority said yesterday. Shanghai has more foreign experts - overseas professionals recognized by a government certificate - than any other city in China, said the local human resources and social security bureau. Indeed, one in six of foreign experts in China are based in Shanghai. Certified foreign experts mostly work in cultural, educational and research sectors. This category does not include other foreigners legally hired to work locally on work permits. At the end of 2010, some 210,000 foreign nationals were living in Shanghai, according to the latest population census. Over the past five years, 370,000 foreign expert employment contacts were established or renewed, officials said. Meanwhile, the city is attracting growing numbers of Chinese graduating from overseas institutes and returning to China to begin their careers. The bureau said there are currently about 95,000 returned Chinese being employed or running their own businesses in Shanghai - up by more than 30,000 from 2005. Officials said in recent years, Chinese graduates from overseas schools have set up 4,400 companies in Shanghai with investment of US$620 million. The city is also aiming to attract 1,000 more senior professionals from foreign countries over the next five years. Incentives will include supporting the opening of more international schools in Shanghai, lowering tuitions for children of foreign professionals and cutting visa red tape, officials said. The government also plans to develop more hospitals accredited by foreign insurers so foreigners working in Shanghai can have local medical bills covered by insurance policies bought overseas. 

German Chancellor Angela Merkel will use her trip to China to lobby for trust in a euro zone that is struggling hard to solve its debt crisis by imposing tougher budget rules and implementing bigger rescue funds, a senior government official said Tuesday. The chancellor will seek to restore confidence in European leaders' efforts to stabilize the situation in the single currency bloc, said the official, who declined to be identified, during a briefing on Ms. Merkel's trip.

Apple Inc recently released its fiscal 2012 first quarter results. The company posted record quarterly revenue of $46.33 billion, with iPhone sales totaling 37 million units. At the earnings call, Apple CEO Tim Cook said China is an "extremely important market" for the company, and it will continue to look at how to grow its presence in the country. But China is not simply seen as a potential growth market for Apple products. The country often is regarded as the company's main production base. US consumers could be misled when they turn over an iPhone and see the "Made in China" label. They often think that means China is taking US jobs and making money from US products. The reality is that this impression is not an accurate reflection of the situation. A report written by three US professors - who attempted to capture value in global networks by using Apple's iPad and iPhone as research examples - shows that only about "$10 or less in direct labor wages that go into an iPhone or iPad is paid to Chinese workers". The report points out that while the Apple products - including components - are manufactured in China, the primary benefits go to the US economy. That's because Apple continues to keep most of its product design, software development, product management, marketing and other high-wage functions in the US. China's role, the report concludes, is much smaller than the casual observer would think. The supply chain for the iPhone 4 actually presents a good example of how it works: The device was designed by Apple engineers in the US, sourced with components from different parts of the world and is only assembled in China factories owned by the Taiwan-based company Hon Hai Precision Industry Co Ltd, also known as Foxconn Technology Group. One of the report's authors, Jason Dedrick, a professor at Syracuse University, said that China makes very little money from these products. Rather, much of the value in high-end products such as Apple's, is captured by the brand, distributors and retailers - the beginning and the end of the process. The report said that each unit sold in the US - at a price of around $600 - adds between $229 and $275 to the US-China trade deficit (the estimated factory costs of an iPhone or iPad). However, the portion retained by the Chinese economy is "a tiny fraction of that amount". Another of the report's authors, Kenneth L. Kraemer, a professor from the University of California, said that most consumers simply don't quite understand how global supply chains work in this case. "They (people who think China's role is bigger in the production of Apple products) focus only on the trade deficit with China, and therefore they think China has a bigger role. What they don't understand is that China gets all sorts of input from other countries from Japan, the US, Malaysia and so on. So China's contribution is really a small amount of labor," Kraemer said. "They think China's role is bigger simply because they don't understand how global supply chains work. They think everything from an iPad and iPhone is made in China rather than just shipped (components) and assembled there," Kraemer said.

Hong Kong*:  Feb 1 2012 Share

Business on a handshake fits Ferragamo just fine - Italian luxury giant's old-fashioned way of operating won't change despite cost pressures to shift factories to China. Italian luxury fashion house Ferragamo has done business the old-fashioned way for decades with the factories that make its goods - "a firm handshake and a look in the eye". And this very Italian way of doing business will continue even amid technological change and cost pressures, according to company chairman Ferruccio Ferragamo, who visited Hong Kong late last year. With some blaming expensive production costs for Italy's economic troubles, the pressure for the country's highly regarded manufacturers to outsource to cheaper countries such as China is enormous. But Ferragamo, chairman of Florence-based Salvatore Ferragamo Italia, a luxury goods company founded by his father, Salvatore Ferragamo in 1928, is standing firm. "Because we are 100 per cent made in Italy the market is worried about the high costs and all that," Ferragamo said, noting that his competitors had relocated part of their production outside Italy, either officially or unofficially. "But we have a very flexible structure that means we can compete very well. We have many factories that produce exclusively for Ferragamo. The agreement is a handshake, a look at them in the eyes, but no contract." Such an arrangement, he argued, was time-tested and a win-win formula because Ferragamo could walk out when the factories failed to perform, and the factories did not have to worry about losing contracts to others because the partnership would continue indefinitely. One factory has worked for Ferragamo for 58 straight years. In addition, when the market fluctuated, quantities could be varied more flexibly in the absence of a contract, Ferragamo said, which helped both factories and the company. "Their problem is our problem because they are our factories," he said. "If their mentality is very good and they are very much committed to us, we respect that and we try to improve them. "We try to make them evolve. We are not looking to move production outside Italy where it might be a lot cheaper because they belong to a family." Ferragamo is not blind to the problems of his country: the government was too slow and not practical enough, and the business community faced high costs and little flexibility. He also said finance had increasingly become an issue for many companies because bankers were very strict about making loans to avoid risks. In the manufacturing sector, liquidity has become difficult because not many firms paid on time. More Italian businesses might have moved to Asia to control output costs and raise funds through a stock market listing, Ferragamo said. China, meanwhile, has expressed increasing interest in acquiring Italian brands and industrial know-how since the unfolding of the euro-zone debt crisis. In January, machinery maker Shandong Heavy Industry Group-Weichai Group of Jinan reached a deal with the debtors of Italian luxury yacht group Ferretti to acquire 75 per cent of its share at €374 million (HK$4.1 million), more than half of which would finance debt. Small and medium enterprises are also seeking deals in Italy. Sitoy, a Hong Kong-listed luxury leather goods manufacturer for Prada and Coach, acquired Italian brand Tuscany in February last year. It said the economic conditions opened more potential acquisition targets in Italy. Ferragamo said his company's listing on the Milan stock exchange last year was more for management reasons - the family has 25 grandchildren of the founder competing for three places in the firm. Ferragamo's shares have advanced 30 per cent since it went public in Milan in June. The stock closed at €12.53 on Friday. Ferragamo said it chose not to list in Hong Kong even though mainland China remained an important market for the brand. It planned to enter as many as eight new mainland cities over the next three to five years. "We are 100 per cent made in Italy. It will be funny not to have the listing certificate in Milan but somewhere else," he said. "If I could go back I would have done exactly the same thing."

Private jet operators are warning that Hong Kong will lose out to Shenzhen if it ignores the acute shortage of aircraft parking space at Chek Lap Kok. The number of business jets registered in the city has surged to 50 from two since 1998 when the airport's Business Aviation Centre (BAC), catering to mainland firms and wealthy clients, opened. But the BAC has not expanded as rapidly, forcing customers to park their planes at a remote area. "Sometimes we have to park our clients' jets on the tarmac between the two runways at the far end of the airport island," said Wyn Li, director of marketing and client relations for Metrojet, one of Asia's largest private jet operators. It takes several hours to tow aircraft back to BAC for take-off, according to Li. Business Aviation Asia (BAA), a Shenzhen-based business jet operator, recently struggled to find a bay at the city's airport to change an aircraft engine's waste oil. The overhaul, which usually takes eight hours, took three days to complete and made the owner very frustrated, said Jeffrey Lowe, a former director of sales and marketing at BAA. "If Hong Kong continues not to address the [lack of] space issue, it is quite logical for the owners to look for alternative airports in the Pearl River Delta," Lowe said. Metrojet is seeking to persuade its clients to park their jets at Clark International Airport in the Philippines, where it has invested in a maintenance facility. The additional costs arising from parking overseas could easily be offset by the lower labour costs, parking fees and jet fuel prices at Clark, Li said. Private jet operators want the Airport Authority to consider their needs and incorporate the development of business aviation into their expansion plans. The authority recently completed its public consultation on the development of a third runway, which included plans for a new business jet facility. "Airport planning is a constraint to business aviation in Hong Kong, said Chris Buchholz, chief executive of newly formed Hong Kong Jet, a unit of HNA Group. "I think common sense will prevail and we will have a second FBO [fixed-base operator] in Chek Lap Kok," Buchhloz said. Hong Kong Jet is among the interested participants in the upcoming bidding to be the second fixed-base operator - like BAC for business aviation. In theory, the existing two hangars and apron area at BAC can accommodate up to 40 private jets. But private jets will occasionally be instructed to park at a remote area when the number exceeds 30, according to Ng Chi-kee, BAC's deputy director of airport operations. "Parking a private jet, which will not be in use for a few days, at the remote parking base could enhance the efficiency and movement of aircraft in the ramp area," Ng said. Unlike commercial jets, which have a tight turnaround time, business jet operators usually have lead time of several days. Ng said BAC was unaware of private jet operators' complaints, but they had been in constant contact with BAC to enhance their operation. Private jet operators say that a second fixed-based operator would ease the lack of parking space at the current facility. About two-thirds of the 50 private jets in Hong Kong have to park outside of the two hangars. BAC's third hangar is due to open in the first quarter of next year, but it can only provide limited relief from the overcrowding. A new operator for a business jet facility could bring about competition that could lower the handling fee that BAC, which has a market monopoly, levies. BAC charges hangar rates of HK$100,000 to HK$1 million a month, depending on the size of the aircraft.

The city’s cold snap discouraged many mainlanders from visiting Hong Kong over the Lunar New Year holidays, the Tourism Board chief said on Monday morning. James Tien Pei-chun said the total of 700,000 mainland visitors to the city was well below expectations – it was only a 6 per cent increase from last year, while a 10 per cent rise – over 1.1 million visitors – had been expected. “Preliminary analysis shows that it was due to the weather. The second to the fourth day of the Lunar New Year was especially cold,” Tien said during a radio interview on Monday morning. The number of visitors arriving as individuals increased 4.7 per cent while those travelling with tours grew by 17 per cent, he said. Another reason for the shortfall is an increase in the price of hotel rooms, he said. That rise was caused by a shortage of rooms, he said, disagreeing with recent remarks by a spokesman for the hotel industry. Michael Li Hon-sing, executive director of the Federation of Hong Kong Hotel Owners, said recently that hotel room occupancy was not at saturation level. Tien said Li’s figures were wrong, and that hotel room occupancy during this year’s Lunar New Year was over 90 per cent. Hong Kong currently has about 62,000 hotel rooms, and in a year’s time there will be an estimated 10,000 more, Tien said. But that will still leave a shortage, since the number of visitors next year is expected to grow by 2 million, he said. Most visitors during Lunar New Year are from the mainland.

The financial secretary yesterday pledged to expand spending on education, welfare and health care and hinted at more tax breaks and concessions ahead of his last budget speech on Wednesday. John Tsang Chun-wah wrote in his official blog that a host of policies were needed to boost the financial well-being of Hong Kong people before an impending economic storm caused by the European debt crisis. "I would ... adopt a series of measures to stabilise the economy and strengthen businesses' ability to resist adversities," Tsang wrote. His comments came as Chief Executive Donald Tsang Yam-kuen yesterday repeated his warning of the severity of the European economic crisis at the World Economic Forum being held in Davos, Switzerland. "Now, what is happening in Europe is not only the lack of discipline of the market ... [it has been] expanding too quickly," he said in a TVB (SEHK: 0511) interview from Davos. "What is more, there are also problems in monetary management [and] problems with the fiscal systems, fiscal management in [the European countries]." The situation today was more worrying than that during the Asian financial crisis in 1998, as "it's rare to see all these three problems emerge at the same time", Donald Tsang said. The chief executive earlier told an audience in Davos that he had "never been as scared as now" about the gravity of the crisis. Echoing those remarks, the finance chief said the government would be "preventive" in its approach and "ready" for the economic crisis, and would implement measures "as soon as possible" to minimise its impact on the city. John Tsang also said this year's budget would refer to the policies he introduced in 2009, including specific measures to help the middle class and the underprivileged. He wrote that there would be more investment in areas including education, health care and social welfare, in order to "relieve the burden on the next administration". He would also "increase pragmatically all expenses related to livelihoods" by implementing one-off relief measures included in Donald Tsang's policy address in October. Donald Tsang said he would rather the economic meltdown plagued the city sooner rather than later. "If it really bursts, I would like to see it take place during my term so that I have the chance to deal with it," he said. "If it takes place during the government transition, it could be more troublesome to us." He quickly added: "I didn't mean that I want it to burst ... But we have to be prepared [for the worst]." The budget is likely to include measures such as waiving property rates, lifting the ceiling for mortgage relief, and extending the entitlement period for tax deduction from 10 to 15 years, the Post has learned. But cash handouts would not be given to adult permanent residents as they were last year, a government source said.

After what felt like an endless holiday season, the initial-public-offerings market in Hong Kong is finally stirring to life once again. But companies had better act before it cruelly shuts again. Hong Kong shares have been on a tear in 2012, ratcheting up 11% of gains, with one of last year’s big losers, Li & Fung, up 24%. The Hang Seng Index is taking a slight breather on Monday, the eighth day of the Lunar New Year, as investors take profits after six consecutive sessions of gains. For now, the horror of 2011 seems to have been forgotten. “If I could annualize the [year-to-date] return I’d lock up shop now!” writes Citigroup Asia Pacific strategist Markus Rosgen, quoting an investor. Call it the effect of the dragon if you will, but as Citi notes, markets in Hong Kong and Taiwan have tended to move higher after the Lunar New Year holiday. The gains are being magnified this time as Hong Kong stocks claw their way back up from very cheap levels, with the prospect of a prolonged low-rate environment giving them a shot in the arm. Plus, there is just a lot of cash to be put to work. Trading volumes in 2011 were depressed, flirting with 2009 lows, according to Citi, while bank deposits piled up. In Hong Kong, bank deposits at the end of November were up 10% from a year earlier; for Asia excluding Japan, they were up 14%. That Asian total is the equivalent of $2.2 trillion, no chump change. Bankers last year said their pipelines were just bursting with stalled equity, debt and M&A deals, with 146 IPOs worth $25.4 billion postponed in Asia in 2011, according to Dealogic. Some of the more eagerly anticipated IPOs include offerings by China Everbright Bank Co., Manchester United Ltd. and Mongolia’s Erdenes-Tavan Tolgoi Co. One of the first major IPOs could be that of Canada’s Sunshine Oilsands Ltd., which Dow Jones Newswires reports is kicking off its pre-IPO marketing this week as it seeks to raise up to $700 million. There are just some slight obstacles ahead that could derail things again—like, Greece’s defaulting on its debt payments in March.

Hong Kong's gross domestic product likely grew 5% in 2011, in line with government forecasts, a person familiar with the situation said Monday. Financial Secretary John Tsang is due to report the GDP data and forecast economic growth for this year on Wednesday, when he presents the government's budget for the fiscal year starting April 1. The person familiar with the situation said the growth forecast for 2012 is likely to be below 3%, given the weakening global economy. Economists say the global slowdown will be more visible during the first half of 2012, dragging on the city's economy—though strong domestic consumption and tourism spending could lessen the effect. The Hong Kong government will likely report a budget surplus of around 65 billion Hong Kong dollars (US$8.38 billion) for the current financial year ending March 31, due to surprisingly strong land sales and stamp-duty receipts, the person said. That compares with a surplus of HK$75.1 billion in the previous fiscal year. The city's economy expanded 7.5% in 2010, after contracting 3.3% in 2009.

 China*:  Feb 1 2012 Share

Beijing has moved to outlaw foreign investment in the construction and management of villas on the mainland - though the definition of a villa remains to be clarified. In an amendment to foreign investment rules just published by the National Development and Reform Commission (NDRC) and the Ministry of Commerce, villa construction and management was re-categorised from "restricted" to "prohibited". The change, contained in the revised Catalogue of Industries for Guiding Foreign Investment (2011 Amendments), means that foreign investment in this type of real estate business is banned in the future. The amended catalogue will become effective today. The new catalogue lists industries in which foreign investment is either "encouraged", "restricted", or "prohibited". It replaces the catalogue that took effect in December 2007. But in the absence of a clear definition, there is no certainty in the property industry about what qualifies as a villa. In the past, the central government appeared to have accepted the concept that a villa meant a single detached court villa, global law firm Mayer Brown noted in a commentary on the revised catalogue. This indicated that any semi-detached villa, townhouse, overlapped villa or penthouse might not be categorised as a villa real estate project. However, there is now talk in the market of the likelihood that the Ministry of Land and Resources is considering an official definition of the term "villa" that might embrace semi-detached villas or townhouses, thus banning foreign investment in such "quasi-villa" projects. "It is yet to be seen how and when such a legal definition would be formulated and officially released," Mayer Brown said. Against the background of uncertainty, analysts said the amended catalogue could have a negative effect on new foreign investments in the real estate sector over the next few years, although they believed the impact would not be severe. "Since the prohibition of any land supply for villas has been provided for in various rules since 2003, the impact of the [revised] Catalogue on the real estate industry may not be huge in this regard," Mayer Brown said. The prohibition of land supply for villa projects was issued in February 2003 by the Ministry of Land and Resources. Later, in December 2006, the ministry and the NDRC issued the catalogue on prohibited land use projects, which categorised a "villa real estate project" as a "prohibited land use project". Amendments to the foreign investment rules contained in the revised catalogue affect a number of industries including mines, food processing, and textile manufacturing. Law firm Morgan Lewis said the revisions showed the central government's increasing desire to encourage foreign investment in high technology, high-end manufacturing, clean energy, energy saving, environmental protection and modern services.

Kate Moss modelling for Mango, which is moving into China. With an eye on the rising spending power of China's middle class, international fast-fashion retailers are rushing to open stores there, particularly in second-tier cities. Among the latest to declare their expansion plans is Spanish clothing retailer Mango, which plans to open a further 800 stores in China as part of a global expansion programme, according to media reports. The fashion label already has 200 stores in China and is reported to be targeting a 10 per cent contribution to its total global revenue from China by next year. European fashion company C&A is also expanding aggressively in China. It has already opened 11 stores there and plans to have 150 stores distributed all over the country by 2015. US-based fashion retailer the Gap has expanded to Tianjin after opening in Beijing, Shanghai, and Hangzhou; while another fashion retailer, Forever 21, has also leased a 2,500 square metre store in Sun Hung Kai Properties (SEHK: 0016)' Beijing apm shopping mall. The lure of strong and growing retail sales in the country is proving irresistible to international retailers, and the latest sales data released by the Ministry of Commerce showed that sales at China's main retailers and restaurants during the week-long Lunar New Year holiday rose 16.2 per cent from a year earlier to 470 billion yuan (HK$576 billion). The data showed that sales of clothes, jewellery and food by value jumped 18.7 per cent, 16.4 per cent and 16.2 per cent on year, respectively. Ada Nip, head of retail at property consultancy DTZ's North China division, said fast-fashion retailers were expanding the most aggressively, targeting such second-tier cites as Qingdao. "The retail markets of the second-tier cities are becoming mature and the spending power of shoppers is rising. Also, more new shopping malls have been completed." Though rents were similar to those charged in first-tier cities, operating costs were lower, as was competition, Nip said. Simon Lam, executive director of retail services for the mainland at consultancy Colliers International, said more new retailers from Europe and Russia had begun to study the development potential of China's retail market since the European debt crisis. "Most are fashion retailers. But it will take at least one or two years to finalise their expansion plans." Tom Gaffney, national director and head of the retail department at Jones Lang LaSalle, said many international brands had by now established or identified target locations in first-tier cities and were looking at prime locations in second- and even third-tier cities. "Working with numerous luxury groups they are also looking for the same opportunities. These cities provide the next wave of opportunities and growth for these retailers." Gaffney said that given relatively depressed markets in Europe and in the USA, many international retailers and luxury brands were allocating large amounts of capital and budgets to Hong Kong and the mainland. Lam said the development of a high-speed rail network had also encouraged international brands to expand into second-tier cites. So far, however, the expansion had not driven retail rents in second-tier cities higher, according to Nip. "The malls are newly-developed. And asking rents will be low if they all launch at the same time. I do not think we will see significant growth in rents until leases come up for renewal in two or three years' time."

European Union Trade Commissioner Karel De Gucht addressing trade talks at the EU-Belgium pavilion in Shanghai in July 2010. The EU is drafting a law in response to protectionism in China's public markets, De Gucht told the German magazine in an interview published on Monday. The European Union is drafting a law in response to Chinese protectionism in public markets, EU trade commissioner Karel De Gucht told the German Focus magazine in an interview published on Monday. “My colleague, internal market commissioner Michel Barnier, and I are preparing a draft law on public markets so that we can respond if the Chinese continue to deny European companies access to certain segments of the market,” he said. The law would also make it possible for the European Commission to close access to public markets to Chinese companies in return. The draft should be ready by March, the magazine said. De Gucht criticised China for what he called “nationalist commercial practices”, “massive subsidies” and “monopolistic access to raw materials”. “All of this makes it very difficult to do business there,” the commissioner said. Negotiations for China’s adhesion to a World Trade Organisation government procurement agreement have stalled on Beijing’s refusal to allow EU firms the same access to public markets as that enjoyed by Chinese companies in Europe. The WTO’s appeal organ is due to make a ruling later on Monday on a challenge by China, which was found guilty by the body last year for restricting exports of raw materials crucial for European industry.

China's Yu Jing (centre) broke the women's 500m speed skating world record in Calgary on Sunday, becoming the first woman to break the 37-second barrier. China's Yu Jing broke the 500 metre world record at the World Sprint Speed Skating Championships on Sunday. The 26-year-old, who competed for China at the 2010 Vancouver Olympics, clocked 36.94 seconds at the Olympic Oval facility to become the first woman to break the 37-second barrier. The previous world recod of 37.0sec was set in December of 2009 at Salt Lake City by Germany’s Jenny Wolf. It was the second world record in as many days here, after Canadian Christine Nesbitt broke the 1,000m world record on Saturday. Yu earned the sprint world title at the end of the weekend’s four races with a total of 148.610 points, just edging defending champion Nesbitt who finished with 148.630 points. China’s Zhang Hong was third with 149.700 points. On the men’s side, South Korea’s two-time sprint world champion Lee Kyou-hyuk was dethroned by Stefan Groothuis of the Netherlands. The Dutch skater emerged from the four races with a total of 136.820 points with Lee second on 137.000. South Korea’s Mo Tae-bum was third. Two other speed skating world championships are on the slate for this year – the all-around worlds at Moscow February 18-19 and the distance worlds at Heerenveen in the Netherlands March 22-25.

For generations, Chinese men looking for a dose of vigor have sworn by a traditional remedy: fungus harvested from dead caterpillars, known in some quarters these days as Himalayan Viagra. Now Chinese investors are using the rare fungus to try to boost something else—their investment returns. The fungus has doubled in price over the past two years and the top grade now fetches more than $11,500 a pound, according to Fuzhou-based brokerage firm Industrial Securities. With Chinese stocks falling, real-estate markets flat and bank deposits offering measly returns, Chinese investors have been looking for help in strange places. Besides traditional medicinal products, they are plowing money into art-based stock markets, homegrown liquors, mahogany furniture and jade, among other decidedly non-Western asset classes. "On a micro level, speculation has appeared," says Long Xingchao, president of the information center of the China Association of Traditional Chinese Medicine. The association says prices of traditional medicines, including red ginseng and false starwort, have surged since 2010, partly because of speculators. Mr. Long insists, however, that a price bubble isn't forming. "There's nothing to pop," he says. Newfangled exchanges are sprouting across China to take advantage of the excitement. Nanjing Pharmaceutical Co. set up an exchange last year for trading traditional medicines such as deer antler. In November it extended hours so investors could trade when they get home from work. "Expanding the hours gives investors more time to make a profit," the exchange said on its website. Exchanges have popped up that allow investors to buy and sell shares of individual works of art. In the city of Tianjin last summer, an unnamed seller floated about 30 million shares of a painting called "Eternal Lotus Wind," at an initial price of 1.61 yuan apiece—about 25 cents. Within two days, investors had bid the shares up 52%, valuing the painting at about $11.5 million. Then the shares began sliding; they now trade at 36% below the initial offering price. Cui Ruzhuo, who painted "Eternal Lotus Wind" but didn't profit from the offering, says the art market still has legs. "We still haven't arrived at the high point," he says. Investors are taking to drink, as well. Maotai—the most popular variant of a homegrown liquor called baijiu, and once a favorite of Chairman Mao—now sells for more than $300 a bottle, double the price a year ago. "In the past, baijiu was only for consumption," says Liu Xiaowei, chairman of auction house Beijing Googut Auction Co., which held a baijiu action last month. "But now it's also a collectors' item and for investment." At the December auction, a businessman from Jiangsu province dropped $8,300 on two dozen bottles of liquor of uncertain vintage—their water-stained cardboard packaging suggested they were old—almost four times the starting price on the auction docket. "If I held these for a while, I could definitely make some money," said the buyer, who didn't provide his full name. China's banks are getting in on the action. Industrial & Commercial Bank of China Ltd., China's biggest state-owned lender by assets, set up a fund for customers to invest in high-end pu'er tea, marketing it as a low-risk investment. China Merchants Bank Co. is planning to allow some customers to trade diamonds through its website. Auction house Googut helped three banks set up bank-run investment funds for customers to invest in baijiu and other liquors. Mr. Liu, Googut's chairman, said the funds are eyeing an annual return of about 20%. The problem for Chinese investors is that returns have evaporated from more traditional markets. Real estate was once China's favorite investment, but government efforts to contain price increases and keep housing affordable have led to price stagnation and even declines in some cities. China's major stock exchange in Shanghai is down almost 20% since the beginning of 2011. Bank deposit rates are lower than the pace of inflation, meaning savers effectively pay banks for the privilege of handling their money. "There really are very few investment channels," says Ren Jun, a 30-year-old media entrepreneur with investments in contemporary art, antiques, gold and silver. "That's why I'm kind of forcing myself to be brave in trying new options." China's central government is less than intoxicated by the investment party. It said in November it would tighten oversight of Chinese asset exchanges, warning of "serious speculation and price manipulation" among some and adding that some "managers have run off with clients' funds." Some of the biggest boom-and-busts have taken place at art exchanges. "Roaring Yellow River," a traditional landscape painting by the late artist Bai Gengyan, was the first work listed last year by the Tianjin Cultural Artwork Exchange. Within two months of the offering, shares were trading at nearly $3 each, up from about 15 cents, valuing the painting at about $18 million. The previous auction high for the artist's work was a bit more than $600,000. About two months after the offering, the Tianjin city government suspended trading in "Roaring Yellow River" and another painting, and the exchange imposed limits on daily and monthly price changes. Shares of "Roaring Yellow River" now trade at about 20 cents, down more than 90% from their peak. Shanghai financial-software designer Jimmy Wang sunk about $790,000 into shares of a pink diamond and a jade pendant traded on the same exchange, putting up his house as collateral to finance the investment. He says he has lost as much as 2.7 million yuan. "So basically I've lost my house to the bank and I am struggling to pay the interest," he says. Such hard-luck stories haven't slowed the hunt for the next great investment. Wang Jingbo, chief executive of wealth-management company Noah Holdings Ltd. in Shanghai, said late last year she was considering recommending to clients a fund that invests in high-end watches. Googut's Mr. Liu believes the next market to watch is white jade. Mr. Ren, the media entrepreneur, says he is looking at diamonds. "While silver and gold may see fluctuations depending on international markets," he contends, "the price of diamonds never drops."

A record number of tourists swarmed into the city of Yichang, home of the Three Gorges Dam in central China's Hubei province, during the seven-day Spring Festival holiday. From January 22 to 28, over 565,000 tourists visited the city, bringing in 192 million yuan ($30.45 million) in tourism-related revenues, according to statistics frmo the city's tourism bureau. The city touts the scenic Three Gorges Dam, as well as the Gezhouba Dam and Xiling Gorge, as major tourist attractions. The Three Gorges Dam is a multi-functional water control system, consisting of a 2,309-meter-long, 185-meter-high dam, a five-tier ship lock and 26 hydropower generators. The construction of the $22.5-billion Three Gorges project began in 1993 and was finished in 2009. It started generating electricity in 2003.

Fishermen, scientists and green campaigners have joined forces to prevent the rare Yangtze finless porpoise from disappearing from Dongting Lake in Central China - YUEYANG, Hunan - He Daming may only have received eight months of education as a child, but he is smart enough to realize that the fate of the fishermen in his village is closely tied to that of the rare finless porpoise. The 43-year-old, who has been fishing Dongting Lake in Hunan province since he was 11, recently handed out 2,000 copies of a letter he wrote urging fellow villagers to protect the endangered mammals. Researchers from the Institute of Hydrobiology in Wuhan, capital of Hubei province, check the health of a rare finless porpoise that was shipped from Poyang Lake on May 25. A severe drought last year posed a serious threat to the mammals' survival. "We used to regard them as river gods; we'd never hunt or hurt them," he said, explaining that they are seen as "guides" because they are usually spotted in areas where fish are in abundance. "We all depend on fish to survive," he said. "If the lake environment worsens and there are fewer fish, the porpoises die and we won't be able to make a living." Since April, He and another 10 friends have been patrolling the lake, hoping to protect the animal from illegal fishing techniques, such as electrofishing. "These destructive methods kill all the life, including small fish, which are the main food source for finless porpoises. Sometimes the porpoises are injured or killed, too," said He, who has already persuaded several fishermen to be more eco-friendly. Yet, fishermen alone cannot solve the problem. Studies show that the porpoises, which are found only in the Yangtze River and Poyang and Dongting lakes, have also been affected by pollution, busy water traffic, extreme weather conditions (mainly droughts) and the construction of hydropower projects. A three-year field survey recently completed by the Institute of Hydrobiology of the Chinese Academy of Sciences and the World Wide Fund for Nature (WWF), the international wildlife NGO, found about 1,000 finless porpoises, down from an estimated 1,800 in 2006. The findings suggest the population is reducing by 6.4 percent every year, although the rate is much higher in Dongting Lake, where only about 120 now remain. Although the animals have a history dating back more than 25 million years, Wang Ding, former deputy director of the institute, predicted that the species could be extinct in a decade if measures are not taken to protect them.

Trade tensions between China and the United States may be exacerbated by the global financial outlook and US election politics, economists said. "What I worry about are trade tensions between China and the US," Stephen Roach, senior research fellow at Yale University's Jackson Institute for Global Affairs, told China Daily in Davos during the World Economic Forum. Roach did not elaborate on who was to blame for growing trade tension. But he described China as his "favorite economy" because it has weathered economic challenges without sacrificing the interest of other economies. "I don't think trade friction between China and other economies will grow, but my worry is about (the frictions between) China and the US," Roach, an expert of the Chinese economy, said. "Trade tensions are going to be a major feature amid the shift in the global environment in the next few years." Roach said that he was hopeful over another challenge facing China: transforming China's economy from one that focuses on trade and investment to one based on domestic consumption, as indicated in the 12th Five-Year Plan (2011-15). "I am optimistic that China will do it," he said. At a panel discussion on whether emerging markets can deliver global growth, Li Daokui, policy adviser of China's central bank and director of the Center for China in the World Economy at Tsinghua University, also listed trade tensions between China and the US as a concern. "We must pay close attention to growing trade tensions between China and the US," said Li, adding that protectionism does not help protect US jobs. Tension between the US and Iran is also something that should be taken into account, Li said. "If this situation erupts, global oil prices will surge and the supply could be disrupted. This will have a huge impact on emerging economies, such as China," Li said. Since the financial crisis in 2007-08, emerging economies such as China, India and Turkey, have become the driving force of global economic growth. China is expecting to achieve about 8 percent growth this year, while advanced economies are close to recession, economists predicted. "If trade tensions (between China and the US) grow I am afraid this will further dim the already gloomy economic outlook," Li said. Chinese enterprises have faced growing US trade protectionism. "We welcome the US government to create a fair environment in which its enterprises can compete instead of using punitive measures," said Gao Jifan, president of China's leading solar power equipment producer Trina Solar. Gao was referring to the US launching anti-dumping investigations against Chinese solar panel manufacturers. US President Barack Obama's State of the Union address, during which he targeted China, was a particular issue of concern for Gao. "I understand this is election politics," Gao said. "But it is also very clear if the US takes tough measures, jobs in his country will decrease instead of increase." Gao's company has set up one of its four overseas headquarters in the US. "So I think it is wrong for the US president to play the China card, especially a card against Chinese enterprises," Gao said. "If it continues, China suffers, our US clients and employees suffer, and the world economy suffers." But in a panel discussion in Davos, US Trade Representative Ron Kirk dismissed any possible trade war. When asked by China Daily what were his grounds, he replied: "The best insurance I will give to China is the $300 billion in trade surplus between China and the US."

Hong Kong*:  Jan 31 2012 Share

Four MTR stations are being given a new look to make them more accessible to the public at a cost of HK$160 million. While work at Mong Kok East is now complete, renovations at Sha Tin, Fan Ling and Sheung Shui stations are ongoing, and should be completed by the middle of next year. Chief architect Wilfred Yeung Sze-wai said the aim of the work is to improve the appearance of stations and make them more accessible. Increasing shop space is not a consideration, Yeung said. "`In Touch with Nature' was the main theme adopted when renovating the four stations," he said. "In Mong Kok East station, natural materials and colors have been used to give it a brighter, more spacious and comfortable look, and to provide a natural atmosphere for passengers to get closer to nature." For Sheung Shui and Fan Ling stations, Yeung was inspired by the River Beas, which flows across the northern New Territories. In all of the stations ticket machines are being removed from the center of concourses and mounted on walls to create more space for larger flows of passengers. Customer service centers are also being revamped to make them more accessible to all passengers, including the disabled, and will be placed in the center of concourses, closer to the entry and exit gates. Passengers have welcomed the work being carried out but are concerned at the cost of up to HK$40 million for each station. Clara Cheuk said the renovations are far too expensive. "It would be fine just to improve the facilities, but I do not think it is worth spending on artifacts just to brighten up a station." However, Cheuk is worried the cost will result in higher ticket prices. Yeung said MTR Corp will set aside HK$4 billion each year to upgrade, revitalize and maintain facilities at stations.

Before Lunar New Year, the consumer market was booming. Small businesses interviewed by the media all said business had grown a lot compared to the previous year. Citizens said because the government handed out HK$6,000, they were more ready to spend. Being hard hit by the European debt crisis and correction in property prices, the consumer market should in theory not have done so well. The power of HK$6,000 is indeed great. Last year, I was against the handing out HK$6,000 under pressure, thinking that once the government set a precedent, it would come under great political pressure when the scheme was scrapped or the handout made smaller. The economic benefit of the cash handout is beyond my expectations. The effect has been better than that of a tax rebate. This is because the HK$6,000 is not a small sum to the grassroots. It increases their daily spending. But a tax rebate only benefits those in the middle class who pay tax and the amount rebated is only a very small portion of their income. Also, the upper limit of a tax rebate covers only those with higher income levels. It would be even more difficult for a tax rebate to make them spend more. The HK$6,000 serves to send out a clear message, too. If tax is returned in certain proportions, different people will get different amounts and a very small section of the people will get the maximum rebate, which means it will be difficult to have a unified and clear message. In addition to the handout, there was also a maximum of HK$6,000 in tax rebates last year. But how many people talked about the rebates? It could be seen that the cash handout worked much better. As the message was clear, businesses were more willing to create spending opportunities tailored to the handout, which further stimulated spending. The economy in the Year of the Dragon will not produce a stellar performance as the European debt issue has not yet been solved. Hong Kong and the mainland are also still trying to curb their property markets. If the government wants to continue giving out sweeteners in the coming budget, it must not only continue with the cash handout but also consider making a bigger handout while cutting the tax rebate. Media guru KK Tsang, CEO of GroupM, takes a candid look at life.

 China*:  Jan 31 2012 Share

People visit Yuyuan Garden yesterday in Shanghai despite the rain to take a look at dragon lanterns and soak up the holiday atmosphere. Yuyuan Garden once again was the city's most popular tourist attraction during the Spring Festival. More than 2.7 million visited the site in the past seven days.

The Chinese zodiac's 12 animal signs are always popular symbols in both East and West. And when the Lunar New Year arrives, enthusiasts all over the world are eager to get their hands on the best collections. This year, the focus is on stamps. Han Bingbin reports. As a zodiac mascot, the dragon soars above its peers as the symbol of the year. Compared to the rabbit (which just gave up its one-year reign), the ox, rat, snake, monkey, pig, goat, rooster, tiger, horse and dog, the dragon is a notch above. Why? Because it is the only mystical beast in the zodiac barnyard and it also bears the aura of aristocracy. Its fire-breathing looks sometimes give rise to a misunderstanding. For example, the official dragon stamp released to commemorate the Spring Festival this year was criticized for its ferocious demeanor. Chinese netizens were quick to criticize the image on the stamp as "overbearing" and asked if it should not have been more benign. Designer Chen Shaohua say his dragon stamp this year was inspired by the motifs on the imperial Qing robes and Nine Dragon Wall in the Forbidden City. The stamp's creator, designer Chen Shaohua defended his design online in his blog, carefully avoiding confrontation by refusing media interviews. The dragon's role in mythology was to ward off evil, he says. As a deified image passed down through generations, it deserves the respect and dignity of preserving its legendary reputation, and should not be subjected to arbitrary changes. 

Hong Kong*:  Jan 30 2012 Share

Chief Executive Donald Tsang spells out his warning to Europe's leaders in Davos yesterday. Chief Executive Donald Tsang Yam-kuen underlined yesterday the gravity of the crisis gripping the world economy, admitting he has "never been as scared as now". Tsang and other policymakers from around the globe used the last full day of the World Economic Forum in Davos, Switzerland, to press Europe's leaders to halt its financial meltdown. At the forefront of concerns were debt write-down talks in Greece, which dragged into the weekend and threaten to overshadow a European Union summit tomorrow designed to showcase the continent's plans to escape its mountain of debt. "You need decisive action, you need overkill. You need to inspire confidence," Tsang told Europe. "That confidence must come from the decisive action of governments working together and doing it quickly," he added, saying that delays had already cost billions in debt that was mounting unnecessarily. "Two months ago in Greece you can do with 20 per cent haircut. Now even 50 per cent is not easy, maybe 70 per cent is needed. So do it quickly. "You need resolution and you need decisiveness," he said, talking of the reduction in payments on Greek sovereign debt that private creditors will need to accept. Tsang has four decades in public service that spanned other serious economic downturns such as the 1997-98 East Asian financial crisis. As financial secretary in August 1998, at the height of that crisis and with Hong Kong's currency under speculative attack, he poured billions of dollars of government money into the city's stock and futures markets, sparking a rebound in investor confidence. The hugely controversial move was later widely praised. Other global financial officials were also critical of Europe's leaders, saying failure to deliver home-grown solutions would rule out any chance of further outside support. It would also undermine the International Monetary Fund's push for more crisis-fighting resources of its own. The concern tempered earlier optimism that Europe had succeeded in calming financial markets. On Friday, Fitch Ratings downgraded the sovereign debt of Spain, Italy and three other euro countries. IMF managing director Christine Lagarde said: "It's a crisis that could have spillover effects around the world. It is critical the euro zone members develop a clear, simple firewall that can limit the contagion." As the officials debated in Davos, the Greek government was in talks with private lenders on a €100 billion (HK$1 trillion) debt write-down designed to return the country to solvency and contain the problem. A failure could force Greece, which is now in its fifth year of recession, to default on its debt and quit the euro, potentially triggering another wave of mayhem. "The fact that we're still, at the start of 2012, talking about Greece again is a sign that this problem has not been dealt with," British finance minister George Osborne told his fellow senior finance officials. "The danger here is that the tail wags the dog throughout this crisis." Tomorrow, the leaders of the 27 EU member states will meet in Brussels, Belgium, at a summit called to agree details of their "fiscal compact" deficit-reduction plan.

Eric Wong, boss of Galaxy Stars, gets comfy in one his capsules, while a possible future customer gets some sleep one "floor" below. Wong expects the city's first capsule hotel to open within six months. Visitors to Hong Kong will soon be able to bag a single "room" for as little as HK$240 per night - but it will be no place for the claustrophobic. The city's first capsule hotel will be aimed at budget travellers and cash-strapped students, offering accommodation at a fraction of Hong Kong's average nightly rate. Eric Wong Wai-lun, boss of Galaxy Stars, spent a year modifying the standard capsule bed design so it would suit the market in the city. His company will supply the beds to hoteliers and he expects the first hotel to be ready within six months, subject to government approval. Capsule hotels first appeared in Japan more than 30 years ago and the country now has more than 300, with up to 700 capsules in each. While some liken the capsules to the cage homes inhabited by Hong Kong's poorest people, Wong says his stays at the hotels are always fun. "It's like you're an astronaut going up in a spaceship. When you're travelling, you are out all day and only need a place to sleep at night." Each capsule is made of plastic with steel reinforcements and is about the size of a single bed, measuring 1.9 metres long, 1.15 metres high and one metre wide. They come with a two-inch foam mattress and for fire safety reasons the capsules have no doors. They just have a simple screen that can be pulled down for privacy. Each capsule, weighing about 100kg, is fitted with air-conditioning, a smoke alarm, power outlets, light switches, a TV and small shelves. For every six beds, there will be a shared toilet and shower and the hotel will provide a communal area and lockers for luggage. Compared to capsule hotels across the Asia-Pacific region and Europe, Wong says prices in Hong Kong will be among the cheapest. He set up his business a month ago and says he has been approached by the owner of a three-star hotel who is negotiating to find a site in Yau Ma Tei, Mong Kok or Tsim Sha Tsui. "Over the past few years, the supply of hotel rooms has been very tight so I think there's a big market for cheaper hotels," Wong said. "There will be lots of tourists from the mainland when the [Guangzhou-Shenzhen-Hong Kong] high-speed rail is completed [in 2015]." The average price of a hotel room in the city last year was HK$1,343, according to the Federation of Hong Kong Hotel Owners, and room rates are expected to rise between six and 10 per cent this year. Wong has also spoken to several university student associations and if at least 15 students sign up to the idea, he will fit out a flat and rent them the capsules for HK$1,000 per month. Cheryl Yan, a student at the University of Hong Kong, pays about the same price to share a small room with another student. She said she would consider a capsule bed only if facilities such as the kitchen and storage area were better.

Wheelock (SEHK: 0020) said on Friday that it has appointed Stewart Leung Chi-kin as chairman of subsidiary Wheelock Properties, and as a vice-chairman and board member of the parent company. Leung, 73, takes over the role at Wheelock Properties from Peter Woo, who remains as chairman of the parent, according to a filing with the Hong Kong stock exchange. The appointments are effective as of February 1. Leung previously held a senior management position at New World Development, but resigned as a board member and adviser to the company as of January 1. He is also chairman of the executive committee of the Real Estate Developers Association of Hong Kong. The filing said Leung would receive a salary of HK$5.4 million per year, plus a discretionary bonus and a director’s fee of HK$60,000. Wheelock shares closed up 1.23 per cent on Friday ahead of the announcement, which came after the close of trade, outstripping a 0.31 per cent gain on the benchmark Hang Seng Index.

Shares of Li & Fung (SEHK: 0494) Ltd rose 4.4 per cent on Friday to the highest in eight months after the Hong Kong consumer goods exporter announced the first acquisition by its regional distribution arm LF Asia, fuelling hopes for accelerating expansion. Li & Fung shares rose to HK$18.58 on Friday morning, the highest since May 20 last year. At the noon trading break, the stock was up 2.6 per cent at HK$18.26 compared with a flat benchmark Hang Seng Index. “Li & Fung is building a new long-term earnings stream based on Asian brand consumption,” Daiwa Capital Markets said in a research note. “Kids is obviously going to be a big category for L&F in China … we expect more acquisitions to accelerate LF Asia’s development over the next six months.” Li & Fung announced before the Lunar New Year holiday last week that it had acquired the children’s apparel and toys operations in greater China of Roly Group in September last year for US$41 million, LF Asia’s first acquisition since the expansion of Li & Fung’s distribution business to Asia last year. The acquired businesses cover wholesale, retail and sourcing operations in greater China for licensed brands including Walt Disney Mickey Mouse and Winnie the Pooh, Elle and Sesame Street products. “This is the first acquisition by Li & Fung for its LF Asia operation. We are positive on the progress,” Deutsche Bank said in a research note. Li & Fung said LF Asia would divest the apparel retailing business acquired from the Roly Group to a subsidiary of privately held Li & Fung (1937) Ltd for US$17.8 million. “We believe Li & Fung will concentrate on organic growth in its traditional sourcing business,” Daiwa said, adding that the group had kept the non-retailing part of its business model intact as it divested the retail business. Li & Fung, manager of supply chains for retailers including Wal-Mart Stores and Target, said it expected the uncertain environment in Western economies to continue for the better part of its three-year plan ending next year, while Asia would expand.

According to Chinese tradition, the Year of the Dragon starts strong before tailing off into something more mediocre. Shares listed in Hong Kong are fulfilling the first part. The Hang Seng Index is up 1.9% since it reopened Thursday after the three-day Lunar New Year break. A shift in the Chinese zodiac provides a nifty explanation—but there are earthly causes, especially the prospects of policy easing in China and more positive signs from the U.S. and Europe. Among the big gainers is sourcing giant Li & Fung, which is quickly putting a bad Year of the Rabbit behind it. Shares in the company, which sources products for retailers such as Wal-Mart, lost about a third of their value in 2011 on concerns about rising labor and commodity costs and weak consumer sentiment in the U.S., where most of its sales come from. But Li & Fung's shares are staging a rally lately, up 28% so far this year, including a 3.4% jump on Friday. Healthier indications from the U.S. are the main factor. But the company also announced, just before the New Year break, that one of its divisions—LF Asia—bought a sourcing and merchandising business for children's clothes and toys in China, including the brand licenses for Disney and Sesame Street. The $41 million acquisition is not a big deal at first glance. But it represents the first step in a smart strategy by Li & Fung aimed at customers closer to home. "We don't think that the market is as yet fully appreciating the opportunity that LF Asia represents," says Daiwa Capital Markets analyst Matthew Marsden. "Li & Fung is building a new long-term earnings stream based on Asian brand consumption." A downturn in the U.S. economy or a hard landing in China could still see Li & Fung's Year of the Dragon take a turn for the worse. So far, though, the company is off to a flyer.

 China*:  Jan 30 2012 Share

Jia Qinglin held meetings in Ethiopia with African leaders. China's top political adviser, Jia Qinglin, was at the opening ceremony of the 18th African Union (AU) summit in Addis Ababa yesterday to inaugurate its new, Beijing-funded headquarters there. The US$200 million, 113-metre-high complex was built on 110,000 square metres of land provided by the Ethiopian government, according to the AU website. "The AU Conference and Office Complex, built with China's assistance, is a symbol of our profound friendship that will go down in the history of China-Africa friendly relations," Jia, chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), said on Friday. "Since the establishment of diplomatic ties 42 years ago ... China and Ethiopia have had fruitful exchanges and co-operation in political, economic, trade, cultural and other fields and enjoyed ever closer co-operation in international and regional affairs," he said. Construction of the building - which now dominates the skyline of the Ethiopian capital and is the city's tallest - began in January 2009, with some 1,200 Chinese and Ethiopian workers involved. Most of the building materials used were imported from China and even the furnishings were paid for by Beijing, earlier reports said. The centre will offer all the facilities of an international-standard conference centre and the AU will host key meetings there. Jia is the most senior official from Beijing to attend the summit. The Foreign Ministry said he would also hold talks with Teodoro Obiang Nguema Mbasogo, the president of oil-rich Equatorial Guinea and current holder of the AU's rotating presidency. Jia held talks with Ethiopian president Girma Woldegiorgis and Prime Minister Meles Zenawi and pledged more investment in the country. Jiang Yuechun , a professor at the China Institute of International Studies, a foreign ministry think tank, said Jia's high-profile presence at the summit indicated that both sides were willing to develop long-term diplomatic and economic ties. "Beijing has good experience dealing with our African friends, not only getting their votes in the United Nations, but also in terms of economic co-operation," Jiang said. "China holds the biggest foreign-exchange reserves and we need to find an overseas market for our investment. Africa is the biggest potential market because of its rich resources and land." He said many Chinese enterprises, such as Haier - the world's largest refrigerator and washing machine maker - were also looking to Africa as a potential new market. "This is a win-win because China has the money, the labour and the experience of building infrastructure, which our African friends need, and we need their rich resources to help us to boost our economy," he said. Sino-African trade rose more than 23.5 per cent to over US$160 billion in 2011, up from US$129.6 billion in 2010, deputy commerce minister Gao Hucheng said on Friday. China overtook the United States as Africa's biggest trading partner in 2009. China's cumulative investment in Africa totals US$40 billion, including US$14.7 billion of direct investment, with more than 2,000 Chinese-invested firms there, Gao said.

A Chanel store in Beijing. Before the Christmas period, many luxury companies began to increase the prices of their goods. However, this won't do much to affect the demand from wealthy consumers. Many luxury brands have made their annual price adjustments for certain products, with increases of more than 10 percent since November, but that hasn't dented Chinese customers' taste for upmarket items. The price hikes for bags and cosmetics began before the annual sale period for Christmas in December, led by well-known brands such as Chanel, Gucci, Celine and Bottega Veneta. The price on a bag made by Celine known as the "IT bag" went up in the middle of November in Europe, America and the Asia-Pacific region. In China, the price went to 17,500 yuan ($2,770) from 16,000 yuan.
Gucci also raised the prices of its bags by about 10 percent. In November, the prices of leather products from Bottega Veneta were lifted for the second time in 2011. Prices were increased more than 30 percent in April. At the end of last year, Chanel wrapped up its annual price adjustments on classic bags and cosmetics, with increases of up to 10 percent globally. "Like other luxury brands, we evaluate and alter the prices of our products regularly based on exchange rates and the costs of production and raw materials," said an announcement from Chanel. The announcement also noted that limited supplies of top-grade leather, used in all Chanel bags, directly affected the prices of the products. Tiffany, the well-known jewelry brand, declined to comment on price changes. The company said that it had changed the prices of certain products to reflect a maturing market. "Luxury brands have been increasing prices simultaneously worldwide around Christmas in the past few years, driven by an obvious increase in some raw materials," said Yuval Atsmon, a partner in McKinsey & Co's Shanghai office. However, said Atsmon, "in China, this hasn't so far slowed down consumers. In some cases when applied to classic or iconic goods, it has even given consumers the sense that those (products) appreciate in value and therefore buying them is a good investment." For wealthy consumers in China, annual price adjustments for luxury goods won't do much to affect demand. "I've noticed the prices of luxury products have risen gradually, but I still need to buy these famous brands to fill my wardrobe from time to time," said Yu Shenghui, a businessman from Wenzhou, Zhejiang province, who spends at least 500,000 yuan on luxury goods purchases every year. Yu added that annual increases in the prices of luxury goods are acceptable, because most daily necessities are also becoming more expensive due to inflation in China. Sales of luxury goods in the country reached 212 billion yuan in 2010 and probably grew 25 to 30 percent in 2011, with new customers accounting for more than 60 percent of the purchases, according to a survey released last month by Bain & Co, an advisor to the global luxury goods industry. "Our view remains that the luxury market will continue to see strong growth, although considering the explosive growth of past years, it would be a little slower in comparison," said Atsmon. He added that the increase in the number of wealthy people, as well as an expansion of the upper middle class, will fuel the growth of the luxury market. Much of the growth would come from new consumers, he said, with some help from the increased wealth of current buyers. Li Qingxing, secretary-general of the China Luxury Industry Association, suggested that luxury consumers in China are still not sophisticated enough to make their own brand choices and thus turn to luxury brands. "A variety of luxury brands have expanded their network in China to attract more potential customers as more Chinese people get wealthier and recognize luxury goods as a status symbol," said Li. He added that as long as Chinese consumers chase the dream of a life filled with luxury, higher prices wouldn't stop them from shopping.

The New York-based NGO Human Rights Watch issued its World Report 2012 on Jan 22, observing China's human rights conditions from angles of defendant rights, judicial reform, freedom of speech and religious freedom. The report seriously lacks in objectivity and impartiality. Its conclusion intentionally distorts China's human rights conditions. Its observation of China's judicial reform is extremely inconsistent with facts and one-sided. The report says the public security departments dominate the criminal justice system and rely excessively on the defendant's confession. The weak courts and seriously limited rights of defense mean forced confession is still universal and judicial partiality is common. This is serious distortion. It is known that China's criminal justice system is not controlled by public security departments, but consists of investigation and procuratorial organs as well as people's courts. China's Criminal Procedural Law clearly stipulates the labor distribution among the three parties. They work with and check against one another. The proposal for prosecution by public security departments must be examined by procuratorial organs before it is recommended to the court to initiate a public prosecution. The public prosecution of the investigating organs must go through the court's open and fair trial, during which the defendant's opinions and all kinds of testimony must be verified, before becoming part of the court's decision. In this process, it is common for the procuratorial organs to require public security departments to file a case (or not), the procuratorial organs decide to prosecute (or not), and the people's courts declare the accused guilty (or not). These possibilities all restrict the power of public security departments. In judicial practices, public security departments must follow or respond to the procuratorial organs' procuratorial proposals and supervision of filing a criminal case. According to the Supreme People's Procuratorate's work report to the National People's Congress in 2011, all procuratorial organs proposed 33,863 times and cases to correct the public security departments' illegal practices of investigation. The number of cases in which the procuratorial organs do not ratify an arrest, do not prosecute, withdraw a lawsuit, and the people's courts decide the accused innocent, is increasing proportionally year by year. All of these actions are restricting the public security departments' power effectively. Besides, according to the seventh article of the Regulation on Exclusion of Illegal Evidence issued in June 2011, if the courts are doubtful of the legitimacy of the defendants' confessions obtained before trial, the courts can insist that the questioners take the stand in courts. All these examples prove that China's criminal justice system is not controlled by the public security departments. It is an integral system made up of the three parties, each with clear duties, with the people's courts' rights of sentencing and measurement of penalty as the core. Excessive dependence on defendants' confessions is decreasing remarkably. The role and rights of defense counsels are increasing steadily. Forced confession is strictly forbidden. The regulations on the exclusion of illegal evidence and on evidence in death penalty cases issued in June 2010, as well as the draft amendment to the Criminal Procedural Law released in Aug 2011, all reflect important progress in the protection of human rights. But the Human Rights Watch report fabricates and speculates on "an article of secret detention" of the draft amendment, which no longer exists. In fact the draft amendment issued in August 2011 includes an article about notice of detention. That is big progress compared with related articles of the law in 1996. According to the 84th article of the draft amendment, the public security departments must present detention warrants when detaining anyone, who should be sent to the detention center within 24 hours after being detained. The detained person's family should be notified about the detention reason and the detention center location within 24 hours after detention, except for serious crimes such as those endangering national security, terrorist crimes. There are exceptions, if it is impossible to notify, or if the notice may obstruct investigation. The 64th article of the Criminal Procedural Law of 1996 only stipulated that the public security departments must present detention warrants while detaining anyone. The detained person's family or work units should be noticed about the detention reason and detention center within 24 hours after detention, except if it is impossible to notify, or the notice may obstruct investigation. This amendment of the 84th article is just to strengthen the public security departments' obligation to notify and protect the suspects' families' rights to know. The report of Human Rights Watch does not mention progress in the draft amendment at all and only fabricates non-existent misleading articles. In the draft amendment, forced confession is prevented; exclusion of illegal evidence and its procedure are added, standard of proof of criminal procedure is clarified; the definition of "social danger" is clarified; the obligation of persons obtaining guarantor pending trial is regulated to lower detention rate; designated monitored residence can be converted to prison term; technical investigation is authorized and regulated; the recording system in inquest is strengthened, investigation defense system is formed and clarified, the number of remand for retrial is limited, the criminal reconciliation procedure is clarified; the system of sealing up criminal record of juvenile crimes and deferred prosecution is regulated; mental illness treatment procedure is regulated, and inspection and supervision of implementation are strengthened. These active changes reflect the main progress in China's judicial reform in 2011. Compared with the former one in 1996, more than 60 articles are added and more than 90 articles are amended in the draft amendment. Remarkable breakthroughs in judicial reform have been made in 2011 in measurement of penalty, State compensation, mediation, trial management and implementation procedure. It is a pity the report of Human Rights Watch turned a blind eye to all these positive steps and Chinese authorities' effort to promote judicial reforms, and only focuses on some non-existent articles.

Attention to detail defines the experience at Mokihi, one of a bevy of Japanese whiskey bars that have taken root in Beijing. Single-malt, 18-year-old Scotch mixed with bottled green tea, anyone? The concoction — the subject of many a nightlife horror story by visitors to China — isn’t as popular as it used to be, but it remains an apt metaphor for Beijing’s nightlife, which prefers its high with a splash of low. That distinguishes the city from the more Westernized Shanghai. “In Shanghai, it’s about how much money you can spend,” says Leon Lee, a San Franciscan who owns bars in both Shanghai and Beijing. “Beijing is edgier, a little rough around the edges,” he adds. “It’s more fun to go out in Beijing.” As money and mixologists have streamed into the city, its upscale options have grown. Start by checking out Sanlitun, Beijing’s preeminent drinking district. Once a sweaty Babylon where shadowy figures tried to beckon male visitors to “lady bars,” Sanlitun is now home to Nali Patio, a six-story, Mediterranean-themed courtyard complex that houses several bars and restaurants. Here, the main attraction is Apothecary, a sleek, third-floor speakeasy. Run by Mr. Lee, its extensive drinks menu doubles as a cocktail-history textbook and includes an expertly executed Old Fashioned (with optional bacon-infused bourbon) and an Earl Grey martini made with handcrafted bitters and topped with whipped egg whites. Prices are reminiscent of Manhattan, but so is the quality. Other Nali Patio options include Enoterra, a welcoming wine bar on the fourth floor, and Migas, a Spanish restaurant and bar with an industrial-chic dining room and an expansive rooftop patio. For a quieter night out, go east of the Third Ring Road to an entertainment district known as Lucky Street. There you’ll find Mokihi, an unassuming Japanese whiskey bar located on an upper floor along the southern end of the street. Bypass the main room for the back area, where bartenders ply their trade in a room lined with bottles of single-malt whiskey and infused liquors. If you’re hungry, order a plate of Wagyu sashimi from K’s Kitchen next door, and pair it with a wasabi martini. To go deeper into Beijing’s soul, head inside the Second Ring Road to Dongcheng. An older part of the city, Dongcheng is one of the last repositories of the city’s beloved hutong — maze-like alleyways where history, politics and culture brush up against each other to fascinating effect. Few nightlife spots epitomize that better than Yugong Yishan, a music venue inside a complex that once housed the government of warlord Duan Qirui. It hosts everything from punk rock shows to film screenings to underground rebel bingo and keeps its patrons well lubricated with cheap Tsingtao. A few kilometers away is Gulou Dongdajie, a street teeming with pubs, guitar shops and vintage clothing stores that serves as Beijing’s answer to San Francisco’s Haight Ashbury neighborhood. In a courtyard house tucked away in an alley, you’ll find Amilal, one of the favorite haunts of the city’s expatriate literati. Run by a Mongolian photographer who uses the space to host exhibitions of his friends’ work, it’s an excellent place to decompress after taking in a live show. Another hutong option is Mao Mao Chong, a five-table bar that does a steady trade in China-themed mixed drinks such as the Maojito, a gingery take on the Mojito, and the Jing Fling, a cocktail based on China’s not-for-the-faint-of-heart baijiu liquor. If you’re still going strong at midnight, two after-hours destinations, Lantern and Haze, beckon. Lantern, run by Beijing electronic-music label Acupuncture Records, ministers to heaving weekend crowds. Haze caters to hipsters and offers the added late-night challenge of being located at the bottom of one of the city’s most perilous staircases.<