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How to Do Business with China, through Hong Kong & Setting up Business in China?
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China President Hu Jintao USA State Visit January 19 - 21 2011 http://www.b2bchinadirect.com/hujintaousavisit.htm

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

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Year of the Dragon - January 23 2012 Dance w/ Firework http://www.youtube.com/watch?v=-VoFfOglJuI 

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Hong Kong*:  June 1 2012 Share

Peter Woo Kwong-ching, chairman of investment firm The Wharf (Holdings) (SEHK: 0004), yesterday urged people to be more supportive of chief executive-elect Leung Chun-ying and his aides. Speaking after the company's annual general meeting, Woo said Leung's manifesto had medium- to long-term policies aimed at further developing Hong Kong. "Hong Kong has experienced a long transitional period since 1997. But we cannot always stay in a transitional period. How to maintain Hong Kong as an ideal platform for seeking foreign capital and human resources? How to resolve the obstacles such as air pollution [to maintain this platform]?" said Woo, adding that the city needed a long-term plan. "I have high expectations from Leung's government." His comments come as radical pro-democracy group People Power prepares to introduce hundreds of motions on a contentious government restructuring proposal at a Legislative Council meeting next month. The incoming chief executive has warned that if his planned reshuffle is not passed before July 1, it will affect the new administration and hinder the realisation of his election pledges. Woo (pictured) said the proposed government restructuring was only a minor part of Leung's plans and advised political parties to be more lenient towards it. "We can give opinions but we should let him decide," he said, adding that Hong Kong should act in unity. "If I want you to do something but I don't want to use your way to deal with it, and at the end of the day the task is not achieved, who should take the responsibility?" Woo said there would be no significant impact on the property market after Leung took office as he was a professional property expert. Hong Kong's home prices have hit the highest level yet, but there is a growing view among analysts that prices would ease if Leung tried to increase supply. On how the mainland's economic slowdown and the consequent visitor arrivals in Hong Kong would affect retail rents, Woo said rents in the company's core retail centres such as Times Square in Causeway Bay and Harbour City in Tsim Sha Tsui maintained a satisfactory growth level in March and April compared with last year.

Remittance firms and money changers will now have to be licensed by customs, under a change aimed at curbing terrorism financing. Hundreds of remittance firms and money changers may need to shut down after failing to apply for licences from the Customs and Excise Department before yesterday's deadline. As at 5pm yesterday, 1,027 out of 2,724 remittance firms and money changers in Hong Kong had submitted licence applications with the department as required under the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance. Applicants could apply online until midnight. Previously remittance firms and money changers only needed to register with the police. The new law requires all firms to apply for licences from customs and applicants must have premises suitable to handle money services, while their owners and management must be fit and proper persons. After the granting of the licence, these shops will be under the same requirement as banks and brokers in that they would need to carry out due diligence on customers, and report suspicious cash transactions to help crack down on money laundering. Edwin Shiu Man-chak, a director of Ngau Kee Money Changer, one of the largest money changers in the city, said some small money changers might not like to continue to operate under the new regime. "Some small players may not like to continue their business because the new ordinance has added much tougher requirements and penalties. Some people also worry that they may face criminal prosecution because of a failure to comply with the new law unintentionally," Shiu said. The new law is aimed at bringing Hong Kong in line with international standards. Banks, brokers and insurance companies must now conduct more rigorous checks on suspicious cash transactions to crack down on money laundering or face a range of penalties including a public reprimand, a fine of up to HK$10 million or a maximum seven years in jail. While Shiu said the law might present some problems for small operators, the change would benefit the industry as a whole. "The regulation for remittance firms and money changers in the past was too lax. By bringing in proper regulations, it would help make people feel more comfortable using these firms' services and to strengthen the status of Hong Kong as an international financial centre," Shiu said. A customs spokesman said the number of applications for licences it received reflected the number of active players in the city. "In line with the relevant experience of other jurisdictions and feedback gathered from the remittance firms and money changers trade, the introduction of a new statutory licensing regime will contribute to market consolidation," he said. The spokesman said customs would conduct site inspections and surveillance to interdict illicit activities. The operators of money service without a licence are liable to a fine of HK$100,000 and imprisonment for six months. Firms that have sought a licence can continue to operate until a decision is reached on their application.

Nan Fung Group has outbid eight others to win a luxury residential site at Shouson Hill for the anticipated price of HK$6 billion. However, another residential site on Peng Chau has fetched HK$15.01 million, nearly 10 per cent higher than the highest market estimates. The seaside site, which attracted 30 bids when the tender closed last week, had been won by Ocean Gain Construction, the Lands Department said. "The prices are reasonable," Centaline Professionals' chief executive Victor Lai Kin-fai said. The HK$6 billion winning bid for the 110,320 square foot site at 8-12 Deep Water Bay Road, Shouson Hill, was within market forecasts of HK$4.46 billion to HK$7.44 billion. With a maximum gross floor area of 248,135 sq ft the site can generate, the selling price amounted to around HK$24,180 per buildable sq ft. Although the price was slightly lower than Centaline's estimate, Lai said it was reasonable as the site did not have a sea view. Also, as many huge residential sites were to go on sale in the coming months, some developers may be saving their capital, he said. Donald Choi Wun-hing, managing director at Nan Fung Development, said the group would demolish the three 14-storey buildings on the land - former government quarters named Glendale - to build new houses and apartments. The group planned to invest HK$6,000 per sq ft on construction, Choi said, which would make the total construction cost around HK$1.5 billion. "We may lease the properties, as we have done with many of our properties on the Peak," he said, adding that there were not many new residential flats in Deep Water Bay. For the 12,298 sq ft site on Peng Chau, the price of HK$1,628 per buildable sq ft tripled that of another Peng Chau site that was sold to Sino Land for HK$514 per sq ft, or HK$19 million in total, last month. It also surpassed the estimates of HK$700 to HK$1,485 per sq ft for the site. Ocean Gain Construction outbid large developers, including Cheung Kong (SEHK: 0001) Holdings and Sino Land. It could not be reached for comment. "This site is located next to the eastern part of the island, with a sea view. But despite the view, the scale of this site is different from the one won by Sino Land earlier this year, which makes it difficult to compare," Centaline's Lai said. "Since the site is small and doesn't involve a high lump-sum amount, it is suitable for small developers and users. Therefore it is not surprising that they were willing to bid high."

The China Banking Regulatory Commission said this week credit risks in the steel and nonferrous metal industries had surpassed that of the property sector. HKEx query delays copper giant's HK$2.44b listing - China Nonferrous Mining was expected to set its share pricing today but the exchange has asked for changes to the financial data it submitted, sources says. Copper producer China Nonferrous Mining Corp (CNMC) is delaying its Hong Kong listing because of a "technical issue" in the financial data submitted to the Hong Kong stock exchange, according to sources close to the deal. The company was asked by the HKEx (SEHK: 0388) to make changes to the financial data it has submitted for its listing application, the sources said, although they declined to disclose the specifics of the nature of the financial data. The news came after the China Banking Regulatory Commission said on Monday that credit risks in the steel and nonferrous metal industries had already surpassed that of the property sector. At the end of last year, its total borrowings reached US$711.2 million, and the net debt-to-total-equity ratio reached 127.9 per cent, up from 70.4 per cent in 2010, according to its listing prospectus. CNMC, which runs copper mines in Zambia in southern Africa, was previously expected to set its IPO share pricing today. Agricultural Bank of China International, China International Capital Corporation, JPMorgan and UBS are the joint book runners. CNMC has already scaled back its deal size to HK$2.44 billion from HK$3.9 billion because of the market downturn. A number of industrial listings are being either scaled back or cancelled. China Yongda, the second-largest trader of luxury marques such as Audi and BMW in the mainland's eastern provinces, pulled its HK$3.37 billion IPO because of stock market downturns. Sany Heavy Industry, China's biggest machinery maker, cut the size of its listing from US$3.3 billion to US$2 billion because of weak stock markets and the slowdown in the mainland economy. It had planned to list in September, but was forced to shelve the IPO as markets crumpled under the fears over the euro-zone debt crisis and the state of the mainland economy. Traders said the uncertainty in global markets, and the slower growth on the mainland, would continue to put pressure on the performance of the industrial and resources sectors. However, the London-based high-end jeweller Graff Diamonds is expected to go ahead with its listing timeline and maintain its target deal size at US$1 billion, according to market sources. This is despite receiving a lukewarm reception from fund managers for what is set to be Asia's biggest IPO this year. Graff Diamonds opened its public subscription on Monday, and will set its price this Friday within its indicative range of HK$25 to HK$37, which is 18 to 24 times estimated 2012 earnings. It plans to commence trading next Thursday. The state-owned coal producer Inner Mongolia Yitai Coal has yet to announce the timeline for its Hong Kong listing. However, it has no plan yet to downscale the size of its US$1.5 billion deal, according to a source close to the deal. Weak investment sentiment and global uncertainty have dragged down IPO activities in Asia.

Centre for allergies is first in Asia - As treatment centre opens in Happy Valley, doctor says cases are on the rise but are often mistreated - The Hong Kong Sanatorium and Hospital is to be home to Asia's first centre for allergies, the South China Morning Post (SEHK: 0583, announcements, news) has learned. The Allergies Centre, which will be launched tomorrow at the private hospital in Happy Valley, will employ a team of experts to carry out the latest diagnostic tests and provide cutting-edge treatment for allergic reactions, which affect up to 40 per cent of the world's population, according to the World Health Organisation. The number of allergy sufferers worldwide has "surged" in the past decade and demand for treatment in the city has "never been higher", according to British doctor Lee Tak-hong, who will run the centre. In Hong Kong, 8 per cent of the population suffers from allergies, says Lee , who has been recruited from London's King's College. But awareness is well behind that found in Western countries, he adds, claiming patients tend to seek treatment for the symptoms rather than the causes of their allergies. While allergies are often associated with more minor symptoms such as itchiness, swelling and upset stomachs, more serious reactions can be life-threatening, and the number of serious cases is on the increase. "The number of patients who suffer from allergies has been surging… and the symptoms continue to become more serious," Lee said. "Over the past 10 years, I have witnessed more severe cases emerging that required hospital treatment. A lot of patients in dangerous cases could not breathe due to swelling of the mouth and windpipe." Allergic reactions occur when the immune system reacts to a substance in the environment in an unusual way. Asthma, a chronic inflammatory disease of the airways which can be triggered by allergens, affects some 300 million people worldwide, according to the WHO, a figure expected to grow to 400 million by 2025. Patients often seek treatment from an eye doctor for sore, watery eyes or a dermatologist for eczema or itchiness, but may not realise that the root of their problem is a reaction in the body's immune system. "The reason for such a reaction is still unknown. It is commonly believed it is because people's immune systems have become used to a clean environment in the urban area. There is evidence showing that those who were born on a farm and were exposed to more bacteria since their youth suffer fewer cases of asthma. "Some new research suggests a lack of natural sunlight could also be one of the reasons," Lee told the Post. Techniques such as skin prick tests, skin tests or blood tests, can be used to diagnose the substances causing the reaction - usually house dust mites, mould, plant pollen, proteins from animals, or food like milk, eggs, fish and nuts, he says. New treatments are also becoming available, such as immunotherapy, in which patients are exposed to gradually increasing amounts of an allergen to boost their immunity to it. But the medication for a three-year course costs HK$50,000, and must be imported. "The demand for treatment has never been higher in the city. Many patients feel allergies have affected their lives. But they just do not know the way to seek help and the city offers little choices", said Lee. His comments echo those of the Hong Kong Allergy Association, which has accused the government of failing to support allergy sufferers or come up with a policy to address the problem.

Joyce Wang’s modern, metallic design has transformed a former munitions depot into 56-seat restaurant Ammo. The Asia Society Hong Kong has opened its restaurant, Ammo, in what was once a munitions depot. Led by Tony Cheng, whose restaurant group also operates the Drawing Room, Ammo is not the typical museum café: His firm put $1.5 million into the modern, metallic design of the 56-seat space, which stays open long after the gallery closes. The Food & Drink: “I call it Italian-centric with a bit of East-meets-West elements,” says Mr. Cheng, who with Drawing Room chef Roland Schuller assembled a menu where pasta reigns. Some dishes feature Asian touches, like the burrata ravioli with Peking duck ragout and angel-hair pasta with uni and tomatoes. The lunch prix fixe menu changes weekly, though pasta features heavily there too, with lasagna, penne arrabiata and taglierini with baby squid among the recent options. At night, Ammo adds a tapas menu that spans salt cod croquettes to Iberian suckling pig. The drinks list includes around 30 wines by the glass, as well as cocktails like a kiwi-basil martini and pomegranate sangria. The Setting: Designer Joyce Wang was inspired by the building’s past and fitted the restaurant with plenty of metal surfaces, mimicking the bullets and artillery rounds that used to be stored there. The restaurant’s floor-to-ceiling windows overlook the foliage surrounding the building, giving the place a casual vibe. “This isn’t fine-dining,” Mr. Cheng says. Our Tip: Dinner reservations have been booked two weeks ahead of time since the restaurant opened in late April. When you do get a table, make sure to go for a stroll around the Asia Society grounds before or after your meal. The warm glow of the restaurant at night is impressive when looked at from above — take the walkway that leads you away from the main building toward the gallery and enjoy the view.

 China*:  June 1 2012 Share

General Electric is taking Beijing's "Go West" campaign seriously, and has added to its facilities in the cities of Chengdu and Xian. Chief executive Jeff Immelt says the US conglomerate is optimistic about growth prospects in the world's second-largest economy. GE yesterday opened its first "innovation centre" in Chengdu, in Sichuan province, and said it was setting up a second innovation centre in Xian, in Shaanxi province, this summer, as it positions itself closer to the high-growth western regions. "We chose Chengdu because it's a great gateway to China's west," Immelt said yesterday. "The future in China will be innovation, not just low-cost manufacturing." The 33,000 square metre innovation centre, built with an investment of US$80 million, was part of GE's US$2 billion commitment in 2010 to boost innovation and build up technology partnerships in China over three years. It will focus on research into tailor-made medical equipment for China's rural areas, equipment to tap mainland shale gas reserves and energy storage applications for the country's transport sector. Beijing has accelerated infrastructure construction and rolled out incentives to attract foreign investment in its formerly underdeveloped west. GE is revving up expansion in growth markets, including China, after its sales in the United States, its largest market, dropped 7.1 per cent last year. In China, GE recorded annualised business growth of about 20 per cent in the past year. "My preference would be steady and consistent growth over a long period of time," Immelt said. "I'd prefer to build a business that way, rather than [be] more volatile and speculative." GE is among a group of multinationals that are moving to tap the potential of China's west. In 2009, Intel, the world's largest chipmaker, spearheaded the move among Western corporate giants to relocate its assembly and testing facilities to Chengdu from Shanghai. GE has made a series of massive investments in China recently to consolidate its foothold in the fast-growing market. Last month, it announced it would buy a 15 per cent stake in China XD Electric Group for 3.38 billion yuan (HK$4.14 billion) and planned to set up a 50-50 gasification joint venture with Shenhua Group, the mainland's largest coal producer. Immelt said GE was establishing two or three more joint ventures in China, without providing details. "The goal now in China is to localise, make the products simpler, and make the products more suited for Chinese development," the chief executive said. The Xian facility due to open in summer will focus on research in lighting and coal, Immelt said.

The Carlyle Group, one of the world's largest private equity firms, is quietly lobbying big government institutions in Beijing, including the capital-rich State Administration of Foreign Exchange (SAFE), to get them to invest in its new Asia fund. Carlyle, which is based in Washington, is looking to raise between US$3 billion and US$4 billion for its fourth Asia-dedicated buyout fund, people familiar with the situation told the South China Morning Post (SEHK: 0583). If successful, the new fund would be led by Carlyle's most senior China dealmaker, X.D. Yang. The State Administration of Foreign Exchange put several hundred million dollars into Carlyle's third Asia buyout fund about three years ago as an institutional investor. SAFE, which manages China's huge foreign exchange reserves, has not yet been convinced to put more money into Carlyle's fourth Asia fund, which is currently being touted to global institutional investors through private channels, according to sources who declined to comment because of the confidentiality of the fund-raising process. One said: "As you can imagine, it's not easy to raise money in the US and Europe these days, given so many things are going on there," referring to problems including the worsening debt crisis in Europe and disappointing economic recovery in the United States. "On the other hand, this [private equity] industry is all about your track record. You need to prove your performance, and then investors will be happy to give you their money." A spokesman for Carlyle in Beijing declined to comment on Wednesday. China's foreign exchange reserves totalled about US$3.3 trillion at the end of March. Beijing has been keen to reduce the size of its foreign exchange reserves, which some economists and analysts have said will be too big to manage, in particular in terms of investment returns. Earlier this year, the government approved a pilot scheme in the capital-rich eastern city of Wenzhou to encourage local wealthy people to invest abroad. Other mainland cities are expected to follow the same route. Carlyle, which was founded in the late 1980s and is believed to have good relations with the US government, is also lobbying other Chinese institutions, including China Investment Corp, the country's US$300 billion sovereign wealth fund, to be an institutional investor in its new Asia buyout fund.

A senior executive at one of the mainland's Big Four state-controlled banks has been detained amid a widening investigation into allegations of illegal gambling and the misappropriation of clients' money. Yang Kun (pictured), an executive vice-president of Agricultural Bank of China, was detained several days ago in Beijing by the Central Commission for Discipline Inspection of the Communist Party of China, the party's internal anti-corruption arm that reports to the top leadership. The move came after the commission received complaints about illegal gambling activities in Macau, sources said. Further investigation found Yang was involved in gambling-related activities, including the alleged misuse of money in a bank client's account, said the sources, who asked not to be identified. "The case is not clear at this point," said Wang Lubing, deputy director of the investor relation division at Agricultural Bank. If Yang is proved to have been involved in illegal activities, it would mark the highest-profile case involving a Big Four banker since the state-owned banks started to go public in 2005. Also, the circumstances surrounding the inquiry raise concerns that it could be widened to implicate others, including bank clients. In a filing with the Hong Kong stock exchange yesterday, Agricultural Bank said Yang "is currently assisting relevant mainland authorities in connection with certain investigations". It said that based on information available "the bank's business, operations and financial status have not been affected", but it would follow developments and make further announcements "as and when appropriate". The size of the sums alleged to have been misused by Yang remains unclear. But one source said: "It must be a big case involving big money, given the high level of Yang's position and the quick action taken by the government. He was internally advised not to travel abroad, even just a trip to Hong Kong." Another source told the South China Morning Post (SEHK: 0583, announcements, news) that Yang was in Macau with business friends several times and the group lost money during at least one gambling trip there. Because Yang and his friends owed large sums to the casinos, complaints emerged and later came to the attention of the party's anti-graft commission, the source said. How Yang was allowed to travel to Macau remains unclear. Senior executives at Yang's level in state-owned enterprises cannot easily travel outside the mainland on personal or business trips. Typically, they do not hold a private passport but have a special passport issued by the central government for top civil servants. News of Yang's detention was reported yesterday by Caixin.com, a mainland financial news portal. It said Yang was forbidden to travel abroad about three weeks ago and was detained last week. Yang, who has worked at Agricultural Bank for more than 20 years, was widely considered to be a rising star in the financial services sector. In 2010, Agricultural Bank launched the world's largest initial public offering of shares, raising over US$22 billion. The main banker behind the IPO, Pan Gongsheng, also an executive vice-president of the bank, is being tipped to join the central bank as a deputy governor.

The main hall of the Wuxi Studio in Jiangsu province is decorated with posters of film characters. China is establishing a world-class digital movie production center in Wuxi, East China's Jiangsu province, to boost the digital film industry and to attract foreign companies involved in the film and media industries. Wuxi Studio, which covers an area of 6 square kilometers, will provide equipment and service for digital movie shooting, production and distribution, city officials said. More than 800 companies, including Raleigh Studios, the longest continuously operating studio in the United States, have established offices in the studio. The State Administration of Radio, Film and Television and the Jiangsu provincial government will invest 10 billion yuan ($1.58 billion) in the studio, which will become China's first production center specializing in digital movies. "In three to five years, the studio aims to produce 30 to 40 Chinese and foreign movies each year, and its annual revenue is expected to reach 20 billion yuan in the near future," said Zhu Weiping, Party chief of Wuxi's Binhu district, where the studio is located. According to Mao Yu, deputy director of SARFT's film bureau, China's film industry has seen an annual increase of 30 percent in the past decade. "The country now has more than 7,000 digital movie screens," Mao said. In 2008, when Journey to the Center of the Earth was shown in China, there were only about 80 digital movie screens nationwide. Statistics from SARFT show that in 2011 the overall box office receipts in China reached 13.1 billion yuan. In 2002, the box office receipts were less than 1 billion yuan. "From January to April, the number of movies shown at Chinese cinemas increased by 40 percent," said Zhu. "But more than 60 percent of them are movies imported from other countries." He added that China's film industry, though developing rapidly, "lags behind those of some countries by 20 years in terms of technology and talent pool". China now produces more than 400 movies every year. Though almost every movie has a digital version, only one-third meet the digital movie standard, according to China Film News. "Wuxi Studio will attempt to attract 30,000 to 50,000 film workers within five years, and we hope that it will become a platform for filmmakers, both from China and foreign countries, to communicate and cooperate effectively," Zhu said.

A senior commerce official expressed concern over "unpredictable" future foreign investment as a survey this week suggested that 22 percent of European companies, with a presence in the domestic market, are considering transferring their investment. The European debt crisis and weak global outlook have had consequences for foreign direct investment, Liu Yajun, director of foreign investment administration at the Ministry of Commerce, said. "The drop in FDI is mainly due to the sluggish global economy," he told China Daily. "It will be unpredictable in the months ahead." FDI fell for the sixth consecutive month in April. Foreign investment from the EU, during the first four months of this year, slumped by 27.9 percent to $1.9 billion, from a year earlier. Investment from the US rose 1.9 percent to $1.05 billion in the same period. A survey on Tuesday, by the EU Chamber of Commerce in China and Roland Berger Strategy Consultants, suggested that 22 percent of companies polled said that they are considering transferring investment to developing countries in Southeast Asia and South America. The slowing economy and rising labor costs were cited as the reasons. But a majority of the polled companies, nearly three quarters, said China remains one of their top three investment destinations. FDI in 2011 surged by 9.72 percent from a year earlier to hit a record high of $116 billion. From January to April, it dropped by 2.38 percent year-on-year to $37.88 billion. Foreign investment decreased in April by 0.74 percent. Shen Danyang, ministry spokesman, said that there are mixed reasons behind the decline. But this is a temporary situation, he said, and China is confident in the long-term FDI outlook. Wang Zhile, from the Chinese Academy of International Trade and Economic Cooperation, said that there is room for FDI to grow in the years ahead. "Double-digit growth, say 10 percent, is possible for FDI annually." BMW AG, a leading maker of luxury cars, recently announced a tripling of output in China with production expected to rise to 400,000 vehicles. The company, together with Brilliance China Automotive Holdings Ltd, will jointly invest another 500 million euros ($623 million) together to fund the expansion, on top of the 1 billion euros spent since 2009. A report by Japan Bank for International Cooperation showed China and India are the top two destinations for Japanese companies. Ministers from China, Japan and the Republic of Korea signed an agreement in May to boost trilateral investment. And a report by the United Overseas Bank of Singapore said China is the priority for Singaporean middle-sized companies aspiring to expand in the Asia-Pacific region. Liu believes that the main reason for FDI falling is the state of the global economy. Premier Wen Jiabao has said that China "should continue to implement a proactive fiscal policy and a prudent monetary policy, while giving more priority to maintaining growth". The US economy grew by 2.2 percent in the first quarter, lower than market expectations. Even though world leaders at the G8 summit agreed to take all necessary steps to combat the debt crisis and keep Greece in the eurozone, the outlook remains bleak. The euro has tumbled to its lowest level in almost two years. EU policy makers are looking at the possibility of a Greek exit from the eurozone.

Hong Kong*:  May 31 2012 Share

Senior executives are more satisfied and happier with their jobs than professionals and junior clerks, the first Hong Kong Happiness- at-Work Index shows. A total of 1,328 employers and employees were given a questionnaire from February to April and asked to score their satisfaction from work on a scale of 0-10. The higher the score, the happier the respondent. The research, by Lingnan University and Hong Kong Productivity Council, shows top and middle-ranking managers are the happiest, scoring 7.3 and 7.1 respectively. By contrast, professionals rate their happiness at 6.4, which is more or less the same as that of junior staff at 6.5. They are even below the overall average score of 6.7. Lingnan University professor of economics Ho Lok-sang, who is also director of the Centre for Public Policy Studies, said: "Top and middle-ranking managers feel happier as they have a say in running the company. They also feel less pressure as they can share their workload by assigning the ones below to finish most of the jobs. "Professionals are under greater pressure to finish jobs before deadline and need more brain-power to face various challenges. Junior workers only need to work on boring chores." The survey also shows that one in three rate their happiness level at medium or "not happy at all." Employers underestimating the importance of performance indicators, including trust, fairness, communication, efficiency and corporate governance, will contribute to staff unhappiness. And Productivity Council general manager Raymond Cheng Wai-man said: "The better the corporate's performance, the happier the employees." The council decided to commission the jobs satisfaction index to help corporations face the increasingly competitive market, said director Leo Lam Kwong-shing. Since 2005, Ho has been conducting a happiness index which determines a person's happiness with life as a whole. This year's score is 6.9, a "satisfying" level.

This retailer was paying HK$700,000 a month for this space on Canton Road, but the next tenant's rent will be HK$2 million. The slowdown in economic growth on the mainland and in Hong Kong, and in the growth of visitor arrivals, could signal an end to the sharp increase in retail rents, say analysts. After almost doubling in the last three years as retailers scrambled for prominent locations in tourist hot spots, rents in prime Hong Kong shopping districts are now likely to remain unchanged or at best show only modest growth, they say. "In the short run, retail rents are close to their peak," said Joe Lin, senior director of retail services at property consultancy CBRE. "Until recently, retailers were willing to pay higher rents for shops in prime locations because retail sales were growing at such a high rate," Lin said. "But they have turned cautious this year because of the slowdown in retail sales and tourist arrivals from the mainland." Data from the Hong Kong Census and Statistics Department shows that total retail sales grew by 18.3 per cent in 2010 and by a further 24.9 per cent last year, to HK$405.3 billion. But the data shows that year-on-year growth in sales peaked in July at 29.1 per cent, and has since declined steadily to 17.3 per cent in the first quarter of this year. Hong Kong Tourism Board data shows that growth in tourist arrivals from the mainland slowed to 21.1 per cent in the first quarter of this year, from 67.2 per cent in the first quarter of last year. Official data shows Hong Kong economic growth slowed from 3 per cent in the final quarter of last year, to just 0.4 per cent in the first quarter of this year, while the mainland economy grew by 8.1 per cent in the first quarter from a year earlier, down from 8.9 per cent in the previous three months and a three-year low. Helen Mak Hoi-lun, director of retail services at consultancy Colliers International Hong Kong, said she had revised her expectations for growth in retail rents. "Earlier this year we forecast that retail rents in the major shopping districts, Tsim Sha Tsui, Causeway Bay, Central and Mong Kok, would rise 12 per cent on average, and rents in most prime location could see growth of more than 12 per cent. Now we have concerns about rental growth." For retail landlords the slowing growth in spending and mainland tourist arrivals signals the end of a period of skyrocketing rents. "I don't think retail rents will continue to show the sharp increases we have seen in the last few years," said Edwin Leong Siu-hung, chairman of property investor Tai Hung Fai. A veteran property investor and owner of many shops in the city, Leong cited the example of a 1,200 sq ft shop on Canton Road in Tsim Sha Tsui, which he leased to cosmetic retailer Colourmix three years ago for HK$700,000 a month. With the lease due to expire in the middle of next year, he lined up a new tenant, Puyi Optical, at a rent of HK$2 million a month. "I thought rents had then peaked, as the new rent was more almost three times the old rent - but just a few weeks later a mainland luxury brand offered to pay a rent of HK$3.3 million a month." While an era seems now to be drawing to a close, Leong said that, although rents were close to their peak, as long as mainland shoppers continued to visit Hong Kong they might show modest growth from their present levels. "Rents in core shopping districts won't fall unless the central and Hong Kong governments stop mainland individual visits," he said.

Two Americans who discovered what exists beyond Neptune, the farthest planet from the sun, have taken this year's US$1 million Shaw Prize for astronomy. Professor David Jewitt of the University of California, Los Angeles, and Jane Luu, a Vietnamese American, from the Massachusetts Institute of Technology, shared the prize for their discovery and characterisation of trans-Neptunian bodies - minor "planets" that orbit the sun beyond Neptune. The citation describes their work as "an archaeological treasure dating back to the formation of the solar system and the long-sought source of short-period comets". Little was known what existed outside the Neptunian orbit before Jewitt and his graduate student Luu discovered the first object in 1993. Now it is known that the region 150 million kilometres beyond Neptune's orbit contains more than 70,000 such icy bodies with diameters larger than 100 kilometres. They were "our best record of the early stages of planet formation" because they had escaped further collisions since their early separations, the committee said. The Shaw Prize - established nine years ago by TVB (SEHK: 0511) founder Run Run Shaw to award astronomy, life science and medicine, and mathematical sciences - is known as the Asian Nobel. This year's prize for life science and medicine went to Professor Franz-Ulrich Hartl, director of Max Planck Institute of Biochemistry in Martinsried, Germany, and professor Arthur Horwich, of Yale University. Their work involved identifying the "chaperones" or proteins that perform quality control in the formation of new proteins within cells. This has helped scientists understand more about Alzheimer's and Parkinson's disease and so develop better therapies. The prize for mathematical sciences was awarded to Professor Maxim Kontsevich, of L'Institut des Hautes Études Scientifique in France, for his pioneering work in algebra, geometry and mathematical physics. Professor Yang Chen-ning, who chairs the board of adjudicators, commented that "this year's laureates seem to be younger". Board vice-chairman Kenneth Young, who is also a physics professor, said: "The selection process was totally blind to the candidates' nationalities." The official prize-giving ceremony will be held in Hong Kong on September 17.

Secretary for Development Carrie Lam Cheng Yuet-ngor said on Wednesday she would not pass the two “hot potatoes” of heritage conservation onto the next government – implying a decision would be announced soon on the fate of the west wing of the old government headquarters and Hotung Gardens. Lam dropped the hint on a radio programme on Wednesday morning in which she also urged public support for the planned government restructuring, which will put heritage issues under the new Culture Bureau. “We are proactively considering maintaining the integrity of the land [of the former government headquarters],” she said without elaboration. Under the original plan, the west wing would have been redeveloped into an office tower and the land be sold the developer. Lam’s latest comment implied the government might keep ownership of the land. Negotiations over the future of Hotung Gardens, the Peak mansion built by Sir Robert Hotung in 1927 for his second wife, have not been made public. Hotung’s granddaughter, Ho Min-kwan, wants to demolish the mansion and build 10 new houses and is resisting government efforts to preserve the building. Provisional monument status placed on the site expired early this year and it is not known whether the Executive Council will support making it a permanent monument. Lam, tipped as the next chief secretary under incoming chief executive Leung Chun-ying who takes office in a month, declined to say whether she would stay in the government. But she urged support for Leung’s planned changes, which he has claimed are being held up by Legislative Council scrutiny. “There are different stories behind the [historic buildings] and there is merit in allowing tangible and intangible heritage [issues] to be dealt with together under the new bureau,” she said.

Leung Chun-ying pours a glass of wine for Miriam Lau Kin-yee. He later picked up the tab for the dinner. Chief executive-elect Leung Chun-ying said last night he would consider requests from pro-establishment lawmakers to freeze the salaries of his team of political appointees. The calls came as he hosted what was dubbed a "reconciliation dinner" with the Beijing-loyalist camp, held at the Chinese General Chamber of Commerce in Central, in return for a dinner lawmakers gave him last month. Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, New People's Party chairwoman Regina Ip Lau Suk-yee and lawmakers from the Professional Forum urged Leung to think twice about adopting a proposal put forward by the current government to raise ministers' salaries 8.1 per cent on 2002 levels. Ip, who is a former security minister, said: "It is an honour to serve as a top official. It should not be measured only in monetary terms." "The suggestion is very good. I'll seriously consider the idea," said Leung, who picked up the bill of HK$11,332 for last night's dinner. Of the 36 Beijing-loyalist lawmakers on the guest list, 26 attended the dinner, five more than last time. The guests also included Liberal Party chairwoman Miriam Lau Kin-yee, who cast a blank vote in the chief executive election in March, and allies of defeated candidate Henry Tang Ying-yen, including Lam Tai-fai of the industrial (second) sector. Lau was absent from last month's dinner and was photographed dining at a fast food restaurant instead. Among the absentees were Chim Pui-chung of the financial services sector and Paul Tse Wai-chun of the tourism sector. The government proposed two weeks ago to raise ministerial pay to HK$322,260 a month when Leung takes over on July 1. The plan requires approval from the Legislative Council's Finance Committee. Tam said he would find it "politically improper" for Leung's administration to grant pay raises to his new cabinet once he had assumed office. On the government's plan to pay undersecretaries HK$225,582 a month, or 70 per cent of the bureau chiefs' salary, Tam called on Leung to balance different opinions. Ip proposed pegging undersecretaries' wages at 50 to 70 per cent of ministerial pay. "Despite a vibrant economy, income disparity is widening, the ranks of the poor are growing, and poverty and housing problems remain serious. It is shameful," she said. Lau also opposed giving principal officials pay rises once they took office. "It should be given only when they show good performance. It would be better to review the political appointees' salaries on the whole, to see if they deserve the current pay." Federation of Trade Unions lawmaker Wong Kwok-kin, who was absent from the meal because of another appointment, earlier said the pay of principal officials should be restored to the levels before they took a voluntary cut of 5.38 per cent in 2009. Tam said Leung would arrange another dinner with pro-government lawmakers before July 11.

A 12-carat pink diamond fetched 135.1 million Hong Kong dollars (US$17.4 million) after a 10-minute bidding war at a Christie’s auction on Tuesday. Called “the Martian Pink” because of its year of appearance (1976, when the U.S. launched a satellite mission to Mars), the diamond was sold to an unnamed buyer. It was the most expensive item at Christie’s jewelry sale and far exceeded the estimate of HK$65 million to HK$95 million. Christie’s sold nearly 80% of its offerings and generated HK$623 million, or $80.3 million. Nine of the 10 most expensive items, which ranged from the Martian Pink to a HK$37.6 million pair of unmounted diamonds, went to Asian private buyers, the auction house said. Also yesterday, Christie’s concluded its sales of Chinese ink paintings and calligraphy, with Zhang Daqian’s “Separation” going for a lower-than-expected HK$34.3 million to an Asian buyer. “Separation” portrays Mr. Zhang’s wife and was for sale for the first time, where it was estimated to fetch as much as HK$50 million. Over the two-day ink paintings sale, Christie’s sold 91% of the items on the block, generating HK$782.3 million. Other highlights from the event: “Mist Clearing Over Pine Covered Peaks” by Mr. Zhang sold for HK$29.8 million (estimate: HK$12 million to HK$18 million). “Poems in Running Script Calligraphy” by Dong Qichang sold for HK$57.8 million (estimate: HK$5 million to HK$7 million). “Admiring the Stallion” by Xu Beihong sold for HK$16.3 million (estimate: HK$4 million to HK$5 million).

Mainland shoppers lined up at a Louis Vuitton store in Hong Kong in January. Such traffic has slowed. The flood of mainland Chinese shoppers coming to Hong Kong to snap up luxury goods, expensive homes, art and wine is slowing. Earlier this month, the usual flocks of mainland tourists that fill the city during Golden Week, a Chinese holiday period, were conspicuously smaller. Likewise, interest in local art auctions and real estate among mainland consumers flagged in the latest quarter. In recent years, the number of mainland tourists crossing the border to shop and see sights in Hong Kong has ballooned to more than 28 million a year—quadruple the city's population. They have given rise to blocks of glittering storefronts filled with luxury retailers eager to cater to such visitors. Shifting economic winds are affecting the trend, though. Growth on the mainland is easing, credit is getting tighter and more people are worried about the global economy. Some Chinese tourists, meanwhile, are simply going elsewhere. On several blocks of one of the city's main streets half of the stores are now taken up by watch and jewelry vendors, says UBS economist Silvia Liu. But they have seen sales growth slow, with combined watch, jewelry and gift sales for this year's first three months increasing 19% from a year earlier, compared with 47% for all of 2011, UBS reports. For some retailers, sales are even falling. Karson Choi, chairman of luxury-watch retailer Halewinner Group, says his company's same-store sales dropped 10% to 15% compared with last year, when they grew by upward of 25%. Halewinner has 10 stores in Hong Kong and relies heavily on shoppers from the mainland: About 70% of the watches it sells locally are to mainland buyers, who spend an average of 70,000 Hong Kong dollars (US$9,000) on time pieces by brands such as Jaeger-LeCoultre and IWC. While demand in Hong Kong may have flagged, it has hardly gone away. "If last year, they bought 10 watches, now, they're buying eight," says Mr. Choi of his mainland customers. Still, it can be a painful shift. Last week Tiffany & Co., citing softening growth in China, among other factors, said its net sales would grow 7% to 8% this year, down from a previously expected 10%. The jewelry retailer, which has 19 stores in mainland China and 10 in Hong Kong, said same-store Asian-Pacific sales rose 10% in the year's first three months, compared with 26% during the same period last year. Tiffany stock took a pounding on that news and is down 16% since the end of last month. Shares of Hong Kong's major jewelers also have been hammered this month, with Luk Fook Holdings International Ltd. 0590.HK -5.80% falling 19% and Chow Tai Fook Jewellery Group Ltd. tumbling 18%. Overall growth in visits from mainland tourists to Hong Kong has been "decelerating quite sharply" in recent months, says Credit Suisse analyst Gabriel Chan. The number of Hong Kong-bound mainland Chinese visitors in the first quarter rose 17% from a year earlier, compared with the 36% year-over-year growth seen in the preceding quarter, UBS says. It isn't all a reflection of the economy. Nine years after mainland China first began granting individual visas for mainland Chinese to visit the city, Hong Kong is no longer such an exotic destination. "Instead of going to Hong Kong to shop four times a year, why not save money and go to Korea or Japan once?" Mr. Chan says. Some luxury retailers continue to enjoy buoyant—if slower—growth rates with Chinese shoppers. At Burberry Group PLC, same-store sales growth in China for 2011-12 was "well over 20%," although that is slower than the 30% growth seen in 2010-11. Burberry saw 37% growth in Asian-Pacific retail revenue for the six months ended in March, in contrast to the 51% growth seen during the six months ended in September last year. For the Louis Vuitton brand, Asian revenue increased 17% in the first quarter, slower than the 24% growth in the same period of 2011. Louis Vuitton is owned by LVMH Moët Hennessy Louis Vuitton. Mainland Chinese buyers have pulled back on art and real estate. Sotheby's said that in the spring of 2010, art buyers from mainland China accounted for nearly half of the overall sale value at its Asian auctions. This spring, they accounted for 20% to 25% of the overall sale values. In Hong Kong's turbocharged real-estate market, where Chinese have increasingly bought up the most expensive properties, their share of sales of new offerings fell to 37% of the market in the first quarter from 38% in last year's fourth quarter, according to Midland Holdings, a real-estate agency. For sales of previously owned homes, 8.4% of the total in dollar terms were purchases by Chinese mainland buyers, falling from 15.6%. As mainlanders venture farther abroad, Europe and other Asian countries are big beneficiaries of the Chinese tourist boom. Global Blue, a company that helps tourists get tax refunds from their shopping abroad, said it processed 59% more tax refunds to Chinese shoppers during the 12-month period ended in March 2012 from the same period a year earlier. Global Blue operates in 35 countries, mostly in Europe but also Japan, Singapore and Korea. Shopping in the U.K. was particularly active: Global Blue saw tax refunds from Chinese shoppers go up 64% in that period. Hong Kong sales are still getting boosted by the absence of high import duties and luxury taxes, which make luxury goods as much as 30% cheaper than if bought in mainland China, says Aaron Fischer, a retail analyst at brokerage firm CLSA. "There is a slowdown. We expected one after the incredible growth last year," he says. "Hong Kong is down, but it's not doing as badly as China," where sales growth is depressed even further because shoppers are becoming more price-sensitive. China's retail sales grew 14.8% year to year in this year's first quarter, compared with 16.3% growth in the same period last year.

 China*:  May 31 2012 Share

Mainland actress Zhang Ziyi called Apple Daily's allegations "completely untrue". Mainland actress Zhang Ziyi is demanding an apology from a Hong Kong newspaper over publication of claims that she had a paid relationship with disgraced former Chongqing party chief Bo Xilai. In a letter posted on her Weibo microblog late on Tuesday, Zhang said she and her team were deeply saddened by an “extremely ridiculous” article by Apple Daily. The article was published on Tuesday and repeated claims earlier made in a report by US-based news website Boxun.com. The claims, based on unidentified sources, said Zhang was under investigation over her alleged connection with Bo and had been banned from leaving the country. The reports also alleged Zhang had had sex with Bo 10 times between 2007 and last year and been paid 10 million yuan (HK$12 million) on one occasion as a reward. Zhang said the allegations were “completely untrue” and “constitute a grave libel” upon her. Bo was sacked as Chongqing party chief in March and is under investigation for “serious violations of discipline”. In a letter to Apple Daily that was also posted on her blog, Zhang’s lawyers said their client demanded that the newspaper publish an apology and a full retraction of the claims. Zhang said she might consider further legal action against the newspaper if it failed to do as asked. She also said she would take action against Boxun.com.

Beijing has authorised direct trading between the yuan and Japan's yen - only the second currency after the US dollar to have such an arrangement - as part of a push to internationalise the yuan to become widely used in trade, investment and reserves. The move, effective from Friday, would lower currency exchange costs, increase the use of the yuan and the yen in trade and investment, and support economic ties, the People's Bank of China (PBoC) said in a statement. Essentially, this would help to shield market makers from any unnecessary volatility brought by the US dollar, said Raymond Yeung, an economist at ANZ. He added that the arrangement would also help to develop the onshore foreign exchange market on the mainland. "It is likely that China will launch more of this direct trade with other countries in the future," which could erode the influence of the dollar, Yeung said. The price of the yuan against the yen will be determined by direct quotations offered by market makers on the China Foreign Exchange Trade System based in Shanghai - the forex arm of the central bank. China has become Japan's largest trading partner. Total trade between the two countries reached 27.5 trillion yen (HK$2.68 trillion) in 2011. In the past, the trading price between the yuan and yen was determined by the cross rates of the yuan against the US dollar and the exchange rate of the US dollar against the yen. While market makers could still use the value of the two currencies against the US dollar as a reference, the local market liquidity of the currencies will also play an important role, said Nathan Chow, an economist with DBS. In Tokyo, participating banks will present their yen-yuan exchange rates to the money market brokerage, which will then announce market rates, Bloomberg reported, citing Japan's Ministry of Finance. The timing of the policy comes as the yuan became the world's third-largest currency in the issuance of letters of credit by value in April, with a market share of 4 per cent. China now accounts for 10 per cent of the world's gross domestic product (GDP) and about 9 per cent of world trade. He Guangbei, chief executive of Bank of China (Hong Kong), said the Japanese government was interested in investing in Chinese sovereign bonds, and the new policy would help smooth the process. Japan won approval from Beijing in March to buy Chinese government bonds worth about 65 billion yuan (HK$79.56 billion), becoming the first economy to do so. Foreign investors are required to seek approval if they wish to buy Chinese government debt. Interest in using the Chinese currency as a reserve currency has also been on the rise in recent years. At present, the central banks of Malaysia, Nigeria and Chile all hold yuan, even though International Monetary Fund rules dictate that a currency without free convertibility cannot be considered a reserve currency. Eswar Prasad, former chief of the International Monetary Fund's China division, said he expected the yuan to be included in the basket of currencies that constitute the IMF's special drawing rights (SDR) within the next five years. The SDR is based on a basket of four major currencies - the US dollar, the euro, the yen and the British pound. "The IMF needs China a lot more than China needs the IMF," said Prasad. China began establishing bilateral swap arrangements with other countries in the late 1990s, allowing the countries' monetary authorities to swap their local currencies against US dollars for short-term liquidity, mostly to support trade activities. Now, more countries are setting up swap lines with China using local currencies directly. At present, there are 17 countries that have swap arrangements with China. While China's move to push the yuan as a global reserve currency has been viewed as a stunt to improve its international status, the country may also have another agenda in mind - reform at home. "I have argued in fact that what China is doing is the 'Trojan horse strategy' - trying to use the notion of the RMB becoming a global currency to get over the barriers of domestic reforms," said Prasad. Beijing is still debating how to approach the internationalisation of the currency and, more importantly, how to open up the country's capital account. More liberal forces could be using the internationalisation of the yuan to pressure more conservative factions about the importance of establishing a better financial market, corporate bond market and a flexible exchange rate, Prasad said.

Hainan Airlines interviewed its new flight attendants in Beijing, May 29, 2012. Hainan Airlines interviewed its new flight attendants in Beijing on Tuesday. The carrier plans to recruit about 1,000 flight attendants this year and recruitment has launched in more than 100 colleges all over the country. Social media has also been used for the recruitment and over 5,000 candidates have applied through micro blogs since March. The interview in Beijing was specifically for candidates who applied through micro blog. A total of 109 candidates attended the interview, out of which 20 will be recruited. The interview will be carried out in other cities soon. The candidates are aged from 18 to 27 years old. It is required that female candidates should be between 1.65 to 1.75 meters tall and males should be between 1.73 to 1.85 meters tall Image, mixed abilities, including strain capability and potential in the carrier, are also part of the criteria. Candidates who can speak rare foreign languages were encouraged to apply. The recruits will receive two-months training before working on flights.

A seven-episode documentary series on the country's favorite subject has stirred up a crest of culinary interest including millions of blog entries and an increase in sales of regional snacks and traditional foods. Our team of writers spread out to take the pulse of the producers, directors, consultants and viewers of A Bite of China. In the week that it aired on national television from May 14 to 22, A Bite of China caused the ratings to spike like never before. This seven-episode documentary was originally commissioned by China Central Television (CCTV) for its dedicated documentary channel, CCTV 9, and was mooted and produced by the Channel 9's program director, Chen Xiaoqing. When the series debuted on CCTV 1, the station's main channel, there was an increase of 30 percent in viewer ratings, knocking off the drama serials that were normally aired in that prime-time slot. According to Liu Wen, general supervisor of CCTV 9, A Bite of China was an instant hit, chalking up 2 million tweets on Sina Weibo. The ripple effect continued to spread as Web users went online to ferret out the various traditional foods and delicacies mentioned in each episode. China's biggest online shopping portal Taobao.com said the number of searches for food at the site doubled when the program was shown at 10:30 pm. Furry bean curd, black truffles, matsutake mushrooms, organic ham from Yunnan's Nuodeng village and Dali cheese "fans" all became hot items. Viewers marveled anew at traditional kitchen skills such as the slicing of soft bean curd into hair-like slivers and the making of pulled sugar candy. They were also given a glimpse into the lives of farmers harvesting winter bamboo shoots, digging up lotus roots, rearing mitten crabs and diving for sea cucumbers and abalones. Most of all, A Bite of China brought the Chinese back to their culinary roots, most of which has been forgotten in the urban rush.

Trade frictions between China and the United States will probably become more heated in the months ahead, but no trade war will break out between the two biggest economies in the world, Pascal Lamy, director-general of the World Trade Organization said on Tuesday. "As Chinese trade with the rest of the world grows, there is a normal statistical proportion of trade frictions, and we believe that the frictions can be handled peacefully," said Lamy. "But nothing like a trade war." Lamy made the remarks in an interview conducted at the Beijing 2012 Round Table on WTO Accession Best Practices for the least developed countries, which was held in the capital city. During the forum, Chen Deming, minister of commerce, said China is willing to help the least developed countries in the world join the WTO. Having them in the organization will be good for the world economy and global trade, as well as for China. China, together with other countries in the WTO, is calling for a simplification of the procedures countries must go through to join the trade organization. Agreements meant to bring about that goal are expected to be signed by July, Chen said. Last week, the Ministry of Commerce wrote on its website about policies used to support wind, solar and other sorts of renewable energy projects in five US states, including Washington, New Jersey, Massachusetts, Ohio and California, saying they violate WTO policies and trade treaties. China also complained to the WTO about the US’ imposition of anti-subsidy duties on $7.29 billion worth of Chinese goods from 22 different categories that were imported to the US last year. The announcements came on the heels of the US Commerce Department's preliminary decision to place anti-dumping tariffs of up to 250 percent on imports of Chinese solar cells. Analysts at home and abroad expressed worries that China's response to that action will provoke a trade war between the two nations. Lamy, though, said a member of the WTO has the right to challenge other members if it thinks they have violated trade rules. "Sometimes, China challenges the US, EU, with anti-dumping or countervailing duties, and sometimes it is other way round," he said. "There are trade frictions, trade disputes, but there are no trade wars." As the US presidential election draws near, the US may take further actions against China and its trade policies in the hope of quieting critics who complain about their country’s trade deficit with China and high unemployment rate, experts said. Obama has announced plans to establish a trans-agency trade enforcement unit that will be charged with investigating the policies and practices of the country’s most important trade partners. In November, China began investigating whether the US was improperly using subsidies to lower the price of US products. That scrutiny came a month after the seven US solar manufacturers filed a complaint with the US International Trade Commission and the Department of Commerce. The Ministry of Commerce said the US has used subsidies in ways that are "inconsistent with the WTO rules and rulings in many regards". "Trade frictions are a normal statistical proportion volume of trade," Lamy said. "As trade grows, the number of trade frictions grows." The Commerce Department is scheduled to make a final determination on solar tariffs in early October. The US agency also announced it would investigate Chinese exports of wind turbines, saying makers of that equipment have received unfair government subsidies. It plans to make an announcement on Wednesday about the duties it will impose on those products. Along with the EU and Japan, the US filed a complaint in March with the WTO to challenge China’s policies governing exports of rare-earth minerals. "We are concerned that during the financial crisis, protectionism is growing," Lamy said. "That's the reality." "But on the whole, there are not dramatic surges of protectionist measures, although there are signs that remain worrying. It's like going to a doctor from time to time. We do checkups, and we tell the patients, 'Be careful'."

Hong Kong*:  May 30 2012 Share

Nissan is hoping once again to become a major supplier of Hong Kong taxis: it aims to compete with mainland carmaker BYD to turn the city's 18,150 liquefied petroleum taxis into electrically-powered cars - a market worth HK$7.26 billion. BYD began talks on taxi conversions with the government last year but is reported to be struggling to get the first 45 electric taxis to Hong Kong for trial by August, as promised by chairman Wang Chuanfu. Considering only about 2,000 electric cars and plug-in hybrid cars were sold on the mainland during the first quarter, the conversion of 18,130 electric vehicles is, by any standards, a huge opportunity for any player in the sector. This is why Nissan chief executive Carlo Ghosn arranged to meet Hong Kong Chief Executive Donald Tsang Yam-kuen last week while he was in town for the relocation, from Japan, of the global headquarters of the car maker's luxury division, Infiniti. When the government decided to replace all diesel taxis with the cleaner LPG cars gas back in 2001, it took only three years for the conversion of 99 per cent of the city's 18,150 taxis. Nissan, once the dominant supplier in the city, was squeezed out of the market when Toyota offered cheaper repair costs. Now BYD is committed to paying a total of HK$13.5 million to cover the construction costs of 45 quick-charging points in 15 public car parks across the city, and another HK$9 million in provisional subsidies to help taxi operators buy 45 of its e6 electric vehicle models. "We do not wish to see any further delays in the trial and will do whatever we can to ensure the 45 EVs appear in Hong Kong in August," said Korby Chen, BYD's marketing representative for Hong Kong. Under the agreement to convert the taxi fleet, the Hong Kong Taxi and Public Light Bus Association agreed to purchase 45 e6 models from BYD, and was supposed to shoulder half of the costs, or around HK$200,000 per vehicle, while applying to the government to fund the other half. However, the association's chairman, Brandon Tong Yeuk-fung, who submitted the application last month, said officials told him it would not be processed until around September . BYD then stepped in to help out with the subsidy. BYD's Chen said the company would start building the charging points next month. Meanwhile, Crown Motors - the sole distributor for Hong Kong's dominant taxi supplier, Toyota - said while new players were welcome in the market, they did not believe electric taxis would pose a threat in the near future given the lack of charging facilities and long charging times. A total of 500 new charging points are to be built in the next two months, bringing the city's total to 1,000. All are free of charge, subject to further review. However, more than 80 per cent are the common 13A chargers used for home and office appliances and could require over 10 hours to fully charge a car.

Renaissance Securities president Frank Au (left) and CEO Bao Fan have big plans for the investment bank. Private bank keen to spread its wings - China Renaissance Partners has launched its first office outside the mainland, opening an office in Hong Kong as the country's largest privately held investment bank braces to expand overseas and meet Western rivals head on. Bao Fan, chief executive of Beijing-based China Renaissance, told the South China Morning Post (SEHK: 0583, announcements, news) it was time to transform the firm he founded in 2004 as a boutique financial advisory firm into a full-service investment bank to cater to clients' needs. This ambitious move follows a year of high-profile deals in 2011 for the company, which was involved in the billion-dollar merger of China's two largest video sites - Youku.com and tudou.com - Bao said those deals earned China Renaissance some significant advisory fees, giving it a strong capital base to support business expansion. "China's investment banking business has been dominated by big Western banks like Morgan Stanley for a long time. I think Chinese investment banks should also have opportunities to compete with them," said Bao, who was born in Shanghai and later studied in Europe. He said China Renaissance's deep knowledge of its clients' needs was a strength, and it had a clear growth strategy. "We target different types of clients - companies that may look relatively small but have big growth potential - and we want to grow with our clients," said Bao, citing Tencent (SEHK: 0700) as an example. Tencent, which provides the popular QQ messaging service in China, has become one of the world's largest internet companies in less than 10 years. To kickstart its foray offshore China Renaissance poached two executives from the Asia division of US investment bank Cowen Group to run its Hong Kong unit, which will provide a full range of services, including sales, trading and research. The hiring of Thaddeus Beczak, former chairman of Cowen Asia and a former South China Morning Post executive, and Frank Au, former chief executive of Cowen's Asian business, to lead China Renaissance Securities are the latest signs that Chinese investment banks have been more aggressive in hiring talent, particularly senior people, from Western rivals since the 2008 financial crisis, which weakened many Western institutions and presenting an opportunity for deep-pocketed Chinese companies. "We don't want to compete with investment banks like Goldman Sachs on scale. We want to focus on what we are good at. For example, when you read those research reports from foreign investment banks, you may find many of them lack insight about China," said Bao, who worked for Morgan Stanley and Credit Suisse before launching his own firm. "Frankly speaking, I don't think someone who works in Silicon Valley and follows companies like Google or Facebook in the US will be an expert and have insights into a Chinese company like Tencent." Au, the firm's president, said they wanted to boost headcount to 25 this year from about 10. It is hiring institutional sales staff and traders, research analysts and investment bankers. "We think we are more similar to business models like Lazard and Allen & Co," said Au, adding he was now working on plans to help China Renaissance open offices in New York and San Francisco.

'Zero quota' policy for mainland mothers has no legal basis: Regina Ip - Chief executive-elect Leung Chun-ying's "zero quota" policy for births to mainland mothers in Hong Kong hospitals has no legal basis, a former secretary for security says. Regina Ip Lau Suk-yee writes in her contribution to the South China Morning Post (SEHK: 0583, announcements, news) debate on the subject today that local legislation is necessary to put a definitive end to the controversial practice of birth tourism. She says reliance on administrative measures alone would fail to prevent the entry of mainland women who do not have Hong Kong husbands who rush to the city to give birth so as to secure permanent residency for their babies. Her view is confirmed by one of two pregnant mainland mothers who also took part in the debate. "No matter how high the doctors' fees or how strict Leung Chun-ying's new measures, I will try my best to give birth in Hong Kong because of the automatic right of abode given to children of mainland parents born there," said Abbie Chan, a Beijing mother-to-be. "I know that right was upheld in a Court of Final Appeal ruling in Hong Kong, which Leung cannot scrap overnight." Ip said that in early April the chief executive-elect held a meeting with prominent lawyers to discuss the right of abode issue in early April. "The legal experts confirmed that the Hospital Authority's quotas for mainland pregnant women have no legal basis," said Ip. "It remains unclear how the secretary for food and health can compel private hospitals to stop admitting mainland pregnant women in order to give priority to local women, or require them not to exceed certain quotas, in the absence of specific legal authority to do so." She was referring to the zero quota policy Leung announced last month, in which no maternity beds in private and public hospitals next year may be booked by mainland women, who are accused of crowding locals out of obstetric services. If mainland women "manage to stay in Hong Kong by whatever means in an advanced stage of pregnancy, the hospitals will still provide to them", said medical sector lawmaker Dr Leung Ka-lau. 

Taiwan's government says it will allow the export of hundreds of strategic hi-tech goods to China if exporters can prove that North Korea or Iran will not be their final destinations. Taiwan's government says it will allow the export of hundreds of strategic hi-tech goods to the mainland if exporters can prove that North Korea or Iran will not be their final destinations. The list of proscribed cross-strait shipments was introduced in 2006 amid concerns Iran and North Korea might use Taiwan as a transshipment point for goods and materials that could be used to produce weapons of mass destruction. The Economics Ministry in Taipei said on Monday that radar, optical equipment, astronomical instruments and precision machine tools are among nearly 400 items that will now be allowed for China export. It said 12 items related to semiconductor manufacturing equipment will remain on the proscribed list and that violators would be subject to five-year jail.

Thomas and Raymond Kwok, joint chairmen of Sun Hung Kai Properties (SEHK: 0016), Asia’s biggest developer, appeared briefly on Monday at the ICAC to renew their bail as part of a graft investigation that has gripped the city and sapped shareholder confidence in the conglomerate. Rafael Hui Si-yan, a former chief secretary, also reported to the Independent Commission Against Corruption and left after a short stay. More than US$7 billion has been wiped off SHK’s market value since the billionaire Kwok brothers were arrested in late March. Their estranged brother Walter Kwok Ping-sheung was arrested earlier this month, widening a probe that has also netted Thomas Chan Kui-yuen, the board member in charge of land purchases, and Hui, Hong Kong’s top civil servant from 2005 to 2007 and a friend of the Kwoks since childhood. On Monday, Raymond Kwok Ping-luen arrived at the agency in the back of a black limousine, looking stern. The cars of all three men were mobbed by TV crews and photographers trying to catch a glimpse of those involved in the ICAC’s highest-profile case since its founding in 1974. His elder brother, Thomas Kwok Ping-kwong, appeared at the agency’s headquarters in North Point shortly afterwards, accompanied by his lawyer Lawrence Lok ying-kam. All three renewed bail and were required to report back to the anti-graft agency again in July, local media reported. Chan and Walter Kwok were also expected to appear at the ICAC later on Monday. No charges have been laid by the ICAC, and shareholders say Sun Hung Kai Properties, which owns the International Commerce Centre (ICC), the city’s tallest building and home to Morgan Stanley, Deutsche Bank and the Ritz-Carlton hotel, has lacked transparency over the probe. The scandal has raised questions about the close ties between the tycoon-dominated economy and the government. The ICAC, which has said it is investigating suspected bribery and misconduct in public office, has the option of extending bail, charging those arrested or letting them go with an option to re-arrest them at a later date. Sun Hung Kai Properties, which counts Hong Kong telecom, bus and waste management units as part of its empire, was worth US$37 billion before news of the March 29 arrests. The stock lost US$5 billion the next day and has continued to lose steam, sinking to a seven-month closing low on May 18. Sun Hung Kai Properties shares were down 0.8 per cent on Monday, underperforming the benchmark Hang Seng Index, which was up 0.3 per cent. The three Kwok brothers have said they have done nothing wrong, and Thomas and Raymond insist it is business as usual at the family conglomerate. They have declined further comment, citing the investigation.

Friends of the Earth environmental affairs officer Celia Fung with some of the vegetables, fruit and other items that are still edible yet were thrown out. Water or bleach is sometimes used to deter scavengers. Despite frequent reports of rising demand for handouts at food banks, Hong Kong's four supermarket chains are throwing out 29 tons of edible food every day, according to a study by a local green group. The discarded food was enough to feed 48,000 three-person families, said one food bank manager. "These supermarket chains have the ability and the responsibility to donate and recycle food waste," said Michelle Au Wing-tsz, the deputy environmental manager of Friends of the Earth. She said the four companies the group investigated - ParknShop, Wellcome, CR Vanguard and Jusco - held a 53 per cent share of Hong Kong's retail sector. Au's team visited refuse collection points for five outlets of the four chains from March to May. Each store disposed of an average of 135kg of food a day and one-third of the waste - 45kg - had not passed its expiry dates. Given that the chains had 650 outlets in Hong Kong, the group estimated that the total amount of food being discarded daily was about 87 tons, with 29 tonnes of it still edible. Of the food that had been dumped, 47 per cent was vegetables, some still fresh and with its packaging intact, Au said. Fresh fruit was also found and loaves of bread that were still five days away from their sell-by date. According to Celia Fung Sze-lai, the group's environmental affairs officer, water or sometimes bleach was poured over some of the discarded packaged food to stop scavengers from taking it home. "This is wasteful and unscrupulous," she said. The group urged the government to bring in waste disposal fees and a landfill ban on food waste from the industrial and commercial sectors. It also urged supermarkets to donate edible items to food banks or charity groups and send anything expired or rotten to be turned into compost or animal fodder. St James' Settlement People's Food Bank service manager Connie Ng Man-ying said a system was needed to link those disposing food with those collecting it. At present, the food bank mainly receives food from individual donors. Ng said the 29 tons of food could readily feed over 48,000 three-person households for a day. "Though vegetables can only be kept for a few days, we believe that if they donated all 29 tons, we, together with some churches and other charities would be able to receive and distribute all of it," she said. There was growing demand for help from the food bank, Ng said, with 2,000 recipients last month - up from 1,600 the month before. She suggested the government legislate to protect food donors from being liable to prosecution if recipients suffer health problems caused by consuming handouts. ParknShop and Wellcome both said they offered discounts on foods nearing their expiry date and would return any expired food to suppliers to reduce waste. Wellcome said it would consider recycling food waste if feasible. CR Vanguard also said it would consider donating food if practical, and if it could maintain the quality of the food being given away. ParknShop said it did not discard enough food for it to be worth donating or recycling. Jusco said one of the company's branches was already recycling unsold food products and would look at the details of its current operation before considering any expansion of the scheme.

A $19 Million Weekend - Acker Merrall & Condit sold $9 million of wine over the weekend. Auction houses Acker Merrall & Condit, Christie’s and Zachys just held competing wine sales in Hong Kong. Luckily, buyers showed up to all of them. Although prices for top Bordeaux labels are still down around 20% from their 2011 highs, according to the Liv-Ex 100 index, which tracks the 100 most sought-after bottles among collectors, market activity in Hong Kong remained strong over the weekend. “It’s less about people investing and more about people buying to drink,” said Doug Rumsam at Bordeaux Index in Hong Kong. Acker Merrall & Condit, the world’s biggest wine auctioneers, sold 70 million Hong Kong dollars (US$9 million) of fine wines over a two-day auction with 95% of its bottles sold. The most expensive item sold was an original wooden case of 1990 Romanée-Conti, a top Burgundy estate, that went for HK$1.5 million. New York-based firm Zachys held a two-day sale at the same time in Hong Kong. The company sold HK$57.6 million, including a 6-liter bottle of Romanée-Conti for HK$1.2 million. In all, 97% of the items were sold. Meanwhile, Christie’s kicked off its five-day spring sales event in Hong Kong with a wine auction on Saturday. It cleared 100% of its wines and fetched HK$20.3 million, with the top sale going to a set of four 6-liter bottles from Château Pétrus from 2005 to 2008, for HK$786,500. “Seeing 100% of the lots sold shows a revival. It’s getting back to a healthy balance,” said Karen Leung, a broker at Platinum Wines. Last week, Bonham’s held an auction that spanned wine, single-malt whiskies and cognac, a new category for the company. The wine sales still comprised the bulk of the auction, garnering HK$9.1 million in sales, with 83% of the lots sold.

Staying Ahead of the Pack in Horse Racing - CEO Winfried Engelbrecht-Bresges. Horse racing in the West might conjure up images of lawn dresses, mint juleps and women in gravity-defying hats. In the financial hub of Hong Kong, the sport is typically less flamboyant, though no less intense. Here, horse racing is followed with almost religious fervor. Nearly every Wednesday night, enthusiasts can be seen at betting sites around town, poring over the latest statistics, scribbling and smoking furiously as they prepare their bets. Racing is also big business for the city. On a typical race day, in a city of seven million people, the Hong Kong Jockey Club—the city's sole licensed gambling outfit since 1973—processes six million bets. Last year, its horse-racing fans laid on the line a collective 82 billion Hong Kong dollars, or about US$10.6 billion. That's nearly as much as the $12.97 billion in bets placed on all North American races in 2009. At the heart of the industry in Hong Kong is the not-for-profit Jockey Club, which last year contributed about 7% of the city's tax revenue and is one of its largest employers. Still, the Jockey Club isn't immune to challenges. Young Hong Kongers are less interested in the sport. And competition looms from the gambling mecca of Macau, just an hour's boat ride away. Winfried Engelbrecht-Bresges, the CEO of the Jockey Club, which in addition to its gambling business also runs horse-racing and entertainment facilities for its 23,000 members and the public, spoke with Te-Ping Chen about the challenges of running a sprawling Hong Kong institution. Résumé: Education: Graduated from the University of Cologne with a degree in economics and finance; Career: Chief executive of the governing body of German horse racing and breeding; executive director, racing, and currently chief executive of the Hong Kong Jockey Club; Extracurriculars: Horse racing and breeding thoroughbreds; football.

 China*:  May 30 2012 Share

China aims to launch crude oil futures within the year and allow them to be traded by foreign investors as the country accelerates the opening of its commodities futures market to overseas investors, the chairwoman of the Shanghai Futures Exchange (SHFE) said on Monday. Global institutions are eager to access exchanges in the mainland, which accounted for more than half the volume of commodity derivatives traded worldwide in 2010, according to data from the World Federation of Exchanges. Once the crude oil contract is launched, the Shanghai Futures Exchange will gradually allow foreign investors to trade on other contracts, with non-ferrous metals products next in line to be freed up, followed by precious metals. “The launch of crude oil futures is not merely about the Shanghai Futures Exchange having a new contract, but it symbolises the gradual opening up of China’s commodities futures to foreign investors,” Chairman Wang Lihua said at the Shanghai Derivatives Market Forum. “We hope to attract foreign investors, producers, traders, and consumers, and launch the contract within the year. We hope the contract will in time become one of the crude oil pricing benchmarks in the Asia-Pacific time zone.” China’s commodities futures only offer a small window to foreign participation. Besides the precious metals contracts, financial institutions are barred from trading on commodities contracts and trading companies need to go through brokerages, which cannot take positions. Limitations on yuan convertibility also hamper foreign participation in China’s commodity futures market. The sour crude oil contract could be priced in either the yuan or the US dollar, the SHFE said. The bourse was also actively working with China’s currency regulator, the State Administration of Foreign Exchange, on getting quotas for its crude oil investors, which would let participants convert the currency freely within set limits. Wang did not give details on whether foreign investors would be granted membership of the bourse or if they needed to trade through domestic futures brokerages. Wang said the bourse had already developed an international platform and completed a draft contract proposal, which includes an oil benchmark, details on bonded storage delivery, rules on offshore trading and amendments to current regulations. “The move to roll-out an oil futures contract could help domestic companies cope with fluctuating oil prices and increase China’s influence over global pricing,” she said. Following the success of its rebar (reinforced steel bar) contract, the SHFE said it was also looking to roll-out more futures for the steel sector, including hot-rolled coil, steel plates and iron ore. China, which has 26 commodity futures and one stock index futures contract, is also studying the launch of government bond futures, commodity price index futures, options and other financial instruments to help companies hedge risks, Tu Guangshao, vice-mayor of Shanghai, said at the conference.

Zhang Lili is still in critical condition after the amputations and doctors have warned that her condition might deteriorate. Woman who lost both legs after rescuing youngsters from path of runaway bus is lauded as a symbol of selflessness by people in need of a champion - Mainlanders lamenting the lack of Good Samaritans have found a champion in Zhang Lili. The middle school teacher, 29, has received national praise and inspired widespread soul-searching in the three weeks since she lost her legs pushing two children from the path of a bus in Jiamusi, Heilongjiang province. Zhang has been elevated as a symbol of what has been lacking in a society that many worry has grown too self-centred and wealth-driven since the economic boom began in the early 1980s. Internet users have dubbed her the "most beautiful teacher", a term seized upon by a state propaganda machine eager to find role models to fight against what leaders describe as a moral decline. Such superlatives are often used to describe individuals who display laudable qualities. But it has resonated in Zhang's case, in part because of pictures that have been released of her as a pretty, smiling bride in her wedding dress. Photos taken since the crash have shown her lying on a hospital bed, wearing a cap and gown, with a tube down her throat. She suffered massive injuries to her back, legs, pelvis and ribs on the evening of May 8 after rushing to rescue the two children from an oncoming bus. According to state media, the bus was stopped outside the school to pick up pupils after evening classes, when the driver - reportedly chatting with passengers - accidently caused it to lurch forward. The bus crashed into another one before careening towards a small car as two children were crossing the road. Zhang, who is a Chinese teacher at the school, pushed one to safety and pulled the other out of the way before being struck herself. "She was lying on the ground under the bus when I got to her, with massive bone fractures," the China Daily quoted another teacher as saying. "Lots of students said she had saved the others, and she needed immediate care." Zhang lingered in a coma for a week. When she awoke on May 15, surgeons, who had already amputated both her legs, warned that her condition might worsen and require more operations. She remains in critical condition. Zhang's story of personal sacrifice captivated the internet, spurring tens of millions of microblog posts. Sympathetic citizens opened their wallets to help pay for her treatment, donating nearly 10 million yuan (HK$12.2 million) as of Thursday, according to the Jiamusi Charity Federation. "She has pushed other people to be alive while pulling herself [towards] death," one internet user said. "I pray for Zhang Lili and wish her to recover early." Another user wrote: "Although you have lost two legs, you leave us the most beautiful thing for humans - a strong, brave and kind heart." Some contrasted her actions to those of 18 passers-by who failed to come to the aid of two-year-old Xiao Yueyue, who was struck twice by a van in Foshan in October. The incident - caught on surveillance video - drew international attention and reignited a debate about whether China was losing its compassion and whether the lack of a so-called Good Samaritan law was encouraging people not to help fellow citizens in need. "We have read a cascade of negative news about the cold or dark side of society," said Xia Xueluan, a sociologist at Peking University. "Zhang Lili has offered a glimpse of the light of goodness for the public." Xia said the sensation surrounding Zhang showed that Chinese society still appreciated "true, kind and beautiful" figures. The symbolism of Zhang's sacrifice was not lost on central government leaders or state-run media, which ran numerous stories lionising her and detailing the detention of the bus driver deemed to be at fault. Health Minister Chen Zhu said the government would spare no effort to make sure Zhang got the best medical treatment available, China Network Television reported. Similarly, State Councillor Liu Yandong swooped in last Sunday to pay her a visit. Liu gave Zhang a get-well card and an MP3 player, praising her as a "a hero of our era". "Your heroism has moved all the Chinese people and you are worth the title of a noble teacher and a role model for all teachers," Liu said, according to the Heilongjiang Daily. "Your bravery and your sacrifice have served as a profound lesson for the Chinese people and all members of the public should learn from you." Kissing Zhang's arm, Liu said: "You can call me elder sister and I will look after your business for ever." But some internet users complained that Zhang should have been looked after better before her injury. CCTV, for instance, said Zhang was only a contract teacher, not a permanent one, like most of her counterparts. As such, she was not included in the medical insurance system and she is paid just 1,000 yuan a month. Hu Xingdou, a professor with the Beijing Institute of Technology, took issue with efforts to glorify Zhang, like People's Liberation Army solider Lei Feng in the 1960s, as some kind of saviour or saint. "You can't rely on a few moral models to keep a society's morals from declining," Hu said. Encouraging good behaviour required regulations to restrict the power of authorities and discourage people from committing bad deeds. Experts say a Good Samaritan law would go a long way to help ensure the rights of people compelled to act in a selfless way. "Without these regulations and laws, people will continue their spoken campaign to 'learn from models', but will never turn it into action," Hu said.

China has expelled former railways minister Liu Zhijun from the ruling Communist Party for suspected involvement in economic crimes, his case has been handed over for investigation to judicial authorities, the official Xinhua news agency said. Liu took huge bribes and misused his position to help the chairman of an investment company get “an enormous illegal profit”, Xinhua said. “He is a degenerate,” Xinhua said of Liu. “He has major leadership responsibility for the serious corruption problems seen on the railways system.” China’s sprawling railway system has faced numerous problems over the past few years, including heavy debts from funding new high-speed lines and waste and fraud. Last year, the ministry suffered a big blow to its image when a crash between two high-speed trains killed 40 people. This month, the government said it would open the rail industry to private investment on an unprecedented scale. Liu was sacked in February of last year for “serious disciplinary violations”. He had spearheaded an investment drive into the rail sector over the past decade. Now that the party has reached its conclusion on the case, Liu will be tried by a court, where he will face either a lengthy jail sentence or possibly death. While the case attracted a lot of attention when it first broke, it has since been overshadowed by a much more salacious scandal involving the former party chief of Chongqing, the ambitious Bo Xilai. Bo’s downfall has unleashed division and uncertainty months before the party meets to formalise a transfer of power to a new generation of leaders.

Multinationals feeling pressure of Chinese companies - Foreign multinationals are increasingly having to glance back over their shoulder to make sure they are not being outpaced by fast-paced Chinese entrepreneurs. The growing strength of Chinese companies - both State-owned and in the private sector - has been highlighted in two recent reports. Last month the China Europe International Business School 2012 Survey, Challenges and Successes for Foreign Companies in China, highlighted that competition from Chinese firms was now the second biggest challenge for foreign multinationals doing businesses in the country. Of the 254 respondents to the survey - many of them CEOs of major foreign businesses - 90 ranked competition from indigenous enterprises as the biggest challenge. In a separate survey, the 2012 White Paper of the American Chamber of Commerce China, more than two-thirds (68 percent) of respondents said they had faced increased competition from Chinese firms, with a third saying that this competition had "increased greatly". The period measured was between 2011 and 2010. AmCham, which represents 1,200 businesses in China, claims some of the competition was unfair, saying that Chinese companies often receive preferential treatment. "AmCham China member companies are not seeking to hold back competition; they just want to make sure that competition occurs on a fair playing field," says Ted Dean, chairman of AmCham China. "We have seen specific examples in terms of credit where local competitors are able to get cheap financing, and in terms of taxation where local companies may pay much lower tax than foreign companies, and in terms of regulatory policy where local competitors may have much more favorable regulations." Regulatory factors are unlikely to be the only reason for increased competition. Some argue the financial crisis, which has forced many Western companies to cut back on investment, has caused a shift in the balance of power. Meanwhile, Chinese companies, often cash-rich and less dependent on capital markets to raise funds, have taken advantage of depressed asset prices in Europe and the United States and have strategically bought companies that have boosted their competitiveness. Fosun, one of China's leading private conglomerates, alone has set aside $2 billion to acquire stakes in medium-sized technology companies in Germany. Speaking from Miami, Florida, Edward Tse, chairman, Greater China for management consultants Booz & Co and author of The China Strategy, believes the economic crisis has tilted the balance. "It has really given Chinese companies the opportunity to step up. While some of the multinationals have been reducing their investment, Chinese companies have continued to build up their strength. They have been acquiring foreign companies in order to acquire technologies and capabilities," he said.

A carpet factory in Northwest China's Qinghai province. The demand for various carpets as floor coverings in China has increased rapidly over the past few years. Western carpet sellers see huge potential in China market - Dating back 2,000 years, it's fair to say China's carpet weaving industry is at a very mature level, but now it is importing many products in the sector from the West. "The demand for high-quality carpets as floor coverings in China has increased rapidly in recent years," said Bill Chipman, vice-president of Asia-Pacific and India at Shaw Industries. "It is just the right time to come to China because the clients here are ready for the products and the prices." Having a nice carpet as a floor covering was traditionally considered a luxury by Chinese families. Before the country's opening-up in 1979, ordinary Chinese families considered it a bourgeois style of life, but now there is a fundamental change in attitudes with more people following global trends, industry experts said. James Kong, design director of Infinity Design Engineering Co, a company offering indoor design for commercial buildings, said: "The design of the carpets gives people a refreshing feeling that I love a lot." The carpets he refers to are produced by the world's largest carpet manufacturer, Shaw Industries Group Inc, whose commercial brand - namely Shaw Contract Group - continued to expand its presence in China when it opened a showroom in Beijing on May 10. "We will continue the investment in China since we see our opportunities here in a growing carpet market, especially in the commercial-use segment," said Chipman. The company has invested more than 100 million yuan in China since it started expansion in the market two years ago, it said. So far, it has many clients including China Minsheng Banking Corp, Deloitte China, Coca-Cola Co, Hang Seng Bank and Honeywell International Inc. Besides opening offices and showrooms in more cities in the coming months, the company will break ground in June on a carpet tile manufacturing facility in Nantong, Jiangsu province, a big part of its strategic expansion in China. Kong said he is quite familiar with the brand and often recommends it to his clients. "Shaw's carpets have very strong performance in design and quality. Their high prices may be the only disadvantage," said Kong. "I believe after the establishment of the factory in Nantong, the company's carpets will be very competitive in the market with prices more acceptable to customers." Maggie Liu, regional sales director of Shaw Industries in Greater China, said: "Our investment in China has surpassed all of our competitors." According to Liu, as the world's biggest carpet producer, Shaw has about a 30 percent share of the global market in the carpet industry and more than 30 percent in the US market. However, investing in the Chinese market as a long-term strategy only started two years ago. According to Chipman, three other big US carpet manufacturers entered the Chinese market many years ago and have local production facilities but Shaw's products have been sold in China for more than 10 years. He said the market among local Chinese companies soared in recent years because they care about their international image more than before and because most foreign companies traditionally prefer carpets as floor coverings. He expects double-digit annual growth rate for the company's sales in China, saying it will focus on brand-building at the beginning and doesn't have any acquisition plans at the moment. According to Shaw, China will have a market potential of 1.5 billion square meters of carpets in the commercial segment by 2014. At present, North America and Asia-Pacific have the same annual consumption of commercial-use carpets of 16 million square meters each. By the end of 2020, Asia will become the biggest carpet buyer in the world, Chipman said. "Even though China's economy is slowing down, it is still developing at a tremendous pace," he said. "There are huge business opportunities in the industry in the next 10 years." However, China has very different traditions regarding floor coverings. Public figures show that in Western countries more than 70 percent of floors are covered by carpets instead of other materials such as wood, plastic or tiles. In China the figure is around 10 percent. Furthermore, 65 percent of carpet use is for the home in foreign countries. In China, carpets are mainly for commercial use such as in hotels and businesses. Kong said State-owned and private companies are new growth points in China's carpet market because most foreign companies which have established offices in China already use carpets as floor covering. "Price competition is fierce in Beijing's market because there are not many newly-built commercial buildings now," he said. Xu Dingmu, general manager of Sepa International Business Strategy and Communication Group, a Beijing-based private company, said his company would prefer carpet as the floor covering instead of wood or marble. "My first consideration for the carpet is that it should be an environmentally friendly product," he said. "I would like to pay more for its quality and after-sale services such as cleaning." Xu said during the redecoration of his company's offices he had no chance to talk to the carpet producer directly, which he would prefer to do. "Usually, we will hire a professional design team to take care of all the redecoration of the offices but, if we have a chance to talk with the carpet producers, we will be able to get professional suggestions on our carpet usage and maintenance," he said. "The style of the office can show the taste of the boss, so it is important - and if there is lots of carpeting it is crucial," Xu added.

Beijing is considering allowing foreign tourists a 72-hour window to explore the capital without a visa. Fu Zhenghua, the city's director of public security, has confirmed that authorities are mulling over the move, saying it would represent a crucial sign that Beijing is open to the world. Lin Song at the public security bureau's exit-entry administration echoed that view on Sunday. "It's expected that the project will attract more tourists from abroad." Neither the bureau nor the Beijing Tourism Development Committee, which proposed the policy, would offer more details about the visa window when contacted by China Daily. However, experts said the policy is expected to be similar to ones already being run in Shanghai (48 hours) and South China's Hainan province (21 days for tour groups). "Shanghai and neighboring cities, such as Hangzhou and Wuxi, have benefited greatly (since Shanghai introduced a visa waiver for transit passengers), as it means foreign tourists can travel during a 48-hour stay," said Jiang Yiyi, director of the China Tourism Academy's international tourism development institute. "With so many foreign people transiting in Beijing, the visa waiver program will allow many of them to tour around the ancient city." A tourism analyst, who did not want to be identified, told China Daily that Beijing officials had considered a project last year that would allow visitors to stay in the capital for seven days without a visa. However, the idea was shelved. "The newly proposed waiver would be a giant step forward, as the visa policy plays a crucial role in the country's inbound and outbound tourism development," said Dai Bin, president of the China Tourism Academy. Although China has relatively tight visa restrictions, and has few visa exemption agreements with other countries, Dai said the country has gradually loosened its visa policy in recent years. He said many cities worldwide have come up with visa waiver projects to attract more tourists, including Tokyo and Kuala Lumpur. "A tight visa policy will only wave goodbye to those potential visitors," he said. Li Xinjian, a professor of tourism at Beijing International Studies University, agreed and added that, as the number of Chinese tourists going abroad has soared in recent years, many countries, including the United States and Japan, have relaxed limits on visas to attract more tourists. Foreigners traveling to China spent 4.7 billion yuan ($743 million) more than Chinese outbound tourists in 2008, he said. However, Chinese tourists spent 4 billion yuan more than them a year later, and the difference exceeded 24.1 billion yuan in 2011. The proposed visa waiver for Beijing comes almost two weeks after the city's public security bureau launched a 100-day crackdown on illegal immigrants. Bureau director Fu said the campaign was to make sure each foreigner is aware of China's exit-entry regulations while curbing crimes by visitors who overstay or abuse their welcome. In response to complaints from some sections of the expatriate community about the policy, the police issued a statement on Friday saying that the crackdown has not changed the city’s friendly attitude toward foreigners. On the same day, Foreign Ministry spokesman Hong Lei insisted that there is no "anti-foreigner trend" in China, adding that the country will welcome and protect the legitimate rights and interests of the foreigners coming to China. Jiang said she believes there is little possibility that the visa waiver would result in an increase of illegal residents among foreign tourists. What is more important, she said, is to stimulate China's inbound tourism. "It's vital that cities come up with reforms to boost inbound tourism," she said. "Other cities can learn from the experiences as well." Wei Xiang, a professor of tourism management at Beijing International Studies University, said besides the boost to the tourism industry, the visa project will step up China's diplomacy and foreign trade with countries in the long run as well. "The policy will bring more benefits than we can imagine," he said. "The scrutiny that the city is undergoing (the 100-day crackdown) will make sure there is better security and public order in the city," Fu said.

Hong Kong*:  May 29 2012 Share

The Hang Seng Index has lost 14 per cent from its February 29 peak as investors fret about how Europe will affect China. Europe should learn from Asia's collapse, and revival - Fifteen years on from Asian meltdown, euro zone needs to stop putting politics ahead of economics. As Greece burns, European officials fiddle and Asia braces for another global crisis, my thoughts are on Thailand. This summer marks the 15th anniversary of the baht devaluation that ignited one of history's worst meltdowns. Thailand's plunge ricocheted from Indonesia to South Korea to Malaysia before heading west. The pain went global with the Dow Jones Industrial Average plunging more than 500 points in a single trading day, hedge funds blowing up and giant bailouts becoming a norm. Fifteen years on, the world finds itself upside down. In 1997, Asia sent contagion to the West. Since 2008, Europe and the US have returned the favour by sending turmoil eastward. Now, Europe is looking to deep-pocketed Asian nations for help. It should be doing something else: learning lessons from Asia's collapse and impressive revival. Asia showed the world the danger of ill-timed austerity, denial and slavish devotion to conventional economic policies amid very unconventional circumstances. Why, then, is Europe resorting to a crisis-response toolbox that Asia clearly showed doesn't work? Europe is still putting politics ahead of economics. In doing so, it's missing two things Asians long ago accepted. One, the nature of the global financial system is shifting faster than summits and communiques can follow. Two, we live in a world without reliable economic engines. The former problem can be seen in the austerity obsession emanating mainly from Berlin. It's one that can be traced back to the flawed advice officials in Washington doled out to Asia in 1997. Back then, the US Treasury and the International Monetary Fund demanded Asia keep interest rates high to support currencies and cut government spending and debt. Of course, even the US blew off these suggestions after the 2008 failure of Lehman Brothers - just as Asians had 10 years earlier. Once officials in Bangkok, Jakarta and Seoul replaced belt tightening with more nuanced policies, growth returned and investors rushed back. Today, Asia's outperforming economies in Europe and the US by a wide margin. The latter problem - the unreliability of global economic engines - means that Europe's need for stimulus is greater than Asia's was in the late 1990s. At that time, the US was indeed an "oasis of prosperity (SEHK: 0803, announcements, news) ", as then Federal Reserve chairman Alan Greenspan called it. Today, Europe is looking at a vastly different global environment. And yet the region is experiencing what can best be described as a bubble in austerity. The US economy is limping along, Japan's deflation is deepening and China is slowing. Next week is expected to bring news that China's manufacturing shrank for a seventh month in May. So much for China riding to Europe's rescue with its vast state wealth and even bigger ambitions. Just three months ago, the chatter was about Asia's biggest economy becoming Europe's sugar daddy. Europe is imploding. China has US$3.3 trillion of currency reserves. What better way to deploy those riches, many mused, than to save the euro zone and capitalism in one fell swoop? That was until Europe's mess boomeranged on China. Nowhere are these worries more on display than in Hong Kong. The benchmark Hang Seng Index has slumped 14 per cent from this year's peak on February 29 as investors fret about how Europe will affect China. Far from reassuring markets, European leaders are clashing over how to contain their crisis. They can't, and Hong Kong's tycoons are looking at a difficult second half to 2012. Each Greek bailout only highlights the futility of political solutions to a flawed economic union. Denial has delayed the inevitable departure of Greece and now speculators have a much bigger target in their sights - Spain, the 12th-biggest economy. That was roughly Korea's global ranking in 1997, when its entrapment by Asia's crisis turned a regional problem into a global one. Europe is forgetting that the quicker you deal with the root of financial problems, however painful that may be, the quicker you can recover from them. To do that, you need growth. You also need to be bold. Korea came clean rapidly about the true magnitude of its public and private indebtedness, retooled its economy and improved competitiveness. Greece has done little heavy lifting, be it restructuring debt, defaulting or leaving the euro. Denial and delay are setting the euro zone back. Seoul's post-1997 reforms are paying big dividends 15 years later. Today, when the nation tosses around the marketing slogan "Dynamic Korea", no one is laughing. Samsung Electronics is gobbling up market share and thrusting Sony towards irrelevance. Hyundai has Toyota looking over its shoulder. And Thailand, for all its political upheaval, boasts a jobless rate of 0.7 per cent. The Bank of Thailand predicts growth of 6 per cent this year. Where will Spain be in, say, 2027? Will it be a top 14 economy, as Korea is today? Will its consumers be using euros or pesetas? It's anyone's guess. Europe's failure to heed Asia's lessons doesn't leave me optimistic.

Percival Street in Causeway Bay is the second most expensive shopping street in the world in terms of rents. Shop prices just keep on soaring - Some question the sustainability of upward trend as retail rents and prices in Causeway Bay and elsewhere keep defying gloomy economic forecasts. Rents and prices for ground-level shops in Causeway Bay are soaring as global brands scramble to open stores in the second most expensive retail precinct in the world - raising doubts about how sustainable the trend is given the gloomy economic outlook. Early this month a mainland-backed company paid HK$1.15 billion for a 23,000 sq ft shop at 108-120 Percival Street, close to Times Square - just a day after it went on the market. The previous owner had paid HK$330 million for the three-storey shop in 2005. Two international brands, including Spanish fashion label Zara, are in talks to lease the shop at an estimated monthly rent of HK$5 million - far more than the previous HK$880,000 a month, according to people familiar with the negotiations. "This huge increase in rent reflects its massive sale price," said a property agent who did not wish to be named. A Zara spokeswoman declined to comment. "An announcement will be made once we open a new store," she said. It is understood the fashion chain will also pay HK$10 million a month for 47,000 sq ft of ground-floor space at Lane Crawford House in Central, after rival H&M's lease expires later this year. But in Causeway Bay, even the tiniest of premises are getting big offers. A 200 sq ft ground-floor shop at 77-83 Percival Street received an offer of HK$200 million, or HK$1 million per square foot. Milan Station, which sells second-hand designer handbags, currently leases the shop for HK$160,000 a month. The deal would break the existing record of HK$633,333 paid per square foot for a neighbouring shop at 76 Percival Street. "It's outrageous. But small shops always generate these unbelievably high prices because it's a smaller investment," said Joe Lin, senior director of retail services at CB Richard Ellis. Lin said the new owner could try to justify the expense by bumping up the monthly rent to at least HK$300,000, or HK$1,500 per square foot. He said capital had been flooding into the retail property market, as the sector is exempt from the special stamp duty imposed on quick resales of residential property - a move that has taken transactions and prices in the retail sector to an all-time high. Rents of US$1,943 per square foot in Causeway Bay made it the second-most expensive shopping street in the world last year, behind Fifth Avenue's US$2,250 and topping Ginza in Tokyo, London's Bond Street and the Champs Elysees in Paris, according to Cushman & Wakefield, a New York-based real estate services firm. Lin doubts whether the trend is sustainable, noting that some big retailers had become wary because of spending by visiting mainlanders starting to slow since the Lunar New Year in January. Hong Kong retail rents increased 32 per cent in prime locations last year, according to Savills, even as global economies and property markets slowed. Jeannette Chan, a regional director of the retail department at property agent Jones Lang LaSalle, said prices for ground-level shops in Causeway Bay had jumped 10 per cent since January. "There is lots of talk that mainland shoppers spending less this year will put pressure on rents. But in reality, I did not see retail rents showing signs of declining," she said. With a limited supply of prime street-level shops, Chan said tenants - and newcomers - were starting to negotiate with landlords up to two years ahead of leases expiring.

New technologies have helped engineers visualise noise in 3-D in Hong Kong, where some main roads are just outside bedrooms and more than a million people are exposed to excessive traffic noise. Showing noise in three dimensions has become an important method in planning for the city, as government officials try to improve on poor planning in the past. Large-scale urbanisation, carried out quickly in the early 1980s, is partly to blame for the 5,000 noise complaints that the government receives every year - more than 13 a day. Now government engineers are using advanced technology to help show the public the environmental effect in projects whose noise may annoy residents. To show people how they would be affected by particular works, government departments, through the Environmental Protection Department's website, have been putting 3-D noise maps online for assessment of big public projects. Local residents can see the difference with or without particular structures, such as noise-absorbing barriers, or semi-enclosures. The maps also help decision makers ascertain what to do to manage noise and reduce noise levels. For instance, 3-D noise maps of the Wan Chai Bypass - a proposed four-kilometre trunk road running between Central and Causeway Bay - and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link are used in their environmental impact assessments and are accessible through the department's website. Such maps were used in the consultation for retrofitting noise barriers in Tai Po in 2008, which "effectively assisted councillors in making the decision" in the end, according to a paper by the department. A department officer gave talks on what Hong Kong had been doing on this front last week at the annual Acoustics conference. The noise maps are made using a geographic information system, computer modelling techniques, and 3-D computer graphics. No actual noise measurements are usually done in making these maps. They are based on information such as traffic flow data, road/rail type, and vehicle type data. The modelling takes account of features that affect the spread of noise such as buildings and the shape of the ground and whether it is acoustically absorbent (such as fields) or reflective (concrete or water). Gone are the days when noise levels were measured on the spot and presented in reports full of maps and tables that few but engineers read. Two-dimensional noise maps, which the government adopted about 10 years ago, do not suit the hilly terrain. And it is hard to tell who in high-rises are most disturbed, and where the noises are from. Hong Kong's topography is characterised by steep slopes, with little flat land. Only about 25 per cent of the 1,104 square kilometres has been developed as urban, and 40 per cent is country parks. The city's vehicle density is one of the highest among developed economies: there are 283 vehicles per kilometre of road, according to a 2009 study. Almost 40 per cent of homes in Yau Tsim Mong district are exposed to noise levels above 70 decibels (dB), though Kwun Tong is where the highest number of homes reach that level, according to official figures done in 2003 that are still in use. Kowloon City, Sham Shui Po, Tsuen Wan and Wan Chai are other districts that top the list. At the other end, Southern, Sai Kung and the Islands districts are the quietest. More than a million people in Hong Kong are exposed to excessive traffic noise, defined as greater than 70dB, according to official statistics. That may explain why almost one in four of the 21,000 complaints the department receives every year are against noise pollution, according to the spokesman. "Given Hong Kong's population and development density, noise pollution is a frequent concern in the community," he said. Just by turning the maps from 2-D to 3-D has greatly helped the public engage in consultations, the paper said. The spokesman said the government would keep track of the latest development in the fields of noise modelling, geographic information systems and computational graphics, and would try to make use of them more so that noise effects were more transparent. Noise mapping is not new. Noise maps have been made in many European countries since the 1970s, but it was in 2007, when European Union law required cities with more than 250,000 people to be noise mapped, that noise concerns were more loudly heard. Now the London map, for instance, covers noise from traffic, aircraft, railways and industry. Planners are encouraged to use the maps to reduce noise pollution by re-routing traffic, say, or rethinking city design. In Hong Kong, the department developed a citywide 2-D traffic noise map in 2006, and in recent years 3-D maps for specific projects. The noise mapping technology has been used to help assess how much selected households are exposed to traffic noise in a large-scale study by Chinese University on the health effects of the noise in the city. Our sense of hearing is able to cope with a huge range of sounds. A car running at 60 km/h seven metres away measures 70dB; a train racing past a station measures 94 dB; at 120 dB, we start to experience pain. The findings of the university's study, which was commissioned by the department, were released this year. They were presented in the conference last week by Professor Lam Kin-che, of the university's geography and resource management department. A poll of more than 10,000 households found 36 per cent of Hong Kong adults had been disturbed by noise while trying to take a break at some time in the preceding 12 months. Interviewers asked members of 10,000 households whether loud noise emanating from outside their homes, such as that from traffic, construction and renovation, had prevented them conducting household tasks. Some 24 per cent said there were times when they could not concentrate on their work because of noise, while 15 per cent said their homes were sometimes too noisy for them to talk in a relaxed fashion. However, a majority - 64 per cent - reported that noise had no impact on their daily life.

Wine expo looks north, where palates gain polish - World's biggest gathering of buyers is about to kick off in HK, with mainlanders likely to play a big part. Hong Kong is about to pop the cork on the world's biggest wine and spirits expo amid explosive growth in the increasingly sophisticated and lucrative mainland market. As the city aims to further cement its position as Asia's wine hub with the opening of Vinexpo Asia-Pacific 2012 at the Hong Kong Convention and Exhibition Centre in Wan Chai on Tuesday, eyes are increasingly turning northwards. Mainland wine entrepreneurs, traders and those who simply enjoy a tipple are expected to swell the ranks of visitors at the showpiece annual event, which is staged in Bordeaux and Hong Kong in alternate years. Popular wisdom used to pigeon-hole mainland wine drinkers as uncultured, but that's a label one of the biggest exporters of wine to China says is rapidly becoming outdated. "In tier one cities such as Guangzhou, Shanghai and Beijing you're seeing more of a Western wine-drinking influence. It's definitely more evident when you visit those markets," said Lucy Anderson, the Asia director for Wine Australia, a statutory body that helps market the industry's output. "The rise in educated wine drinkers over recent years has been clear to us and this will be proven by the large number of mainlanders attending the Vinexpo. There has been a shift in people's knowledge, which has increased exponentially." The mainland and Hong Kong combined represent the third-largest export market for Australian wine by value, selling more than A$268 million (HK$2.03 billion) worth and almost 50 million litres. Visitors to the show - industry professionals, and wine and spirits buyers - are expected to break the attendance record of 12,617 at the last Vinexpo in Hong Kong in 2010. With a record 1,050 exhibitors from 28 countries, organisers predict the three-day trade show will attract more than 14,000 wine buyers from across Asia. The event was booked out six months in advance and exhibition space has been expanded by nearly 25 per cent to 10,500 square metres. Anderson says it is difficult to talk about the wine trade in China as a whole, because it is made up of so many different markets, with big differences between the leading and secondary cities. But the days of mainlanders mixing Coke or Sprite with wine are over. "Definitely within the largest cities you have pockets of people that know a hell of a lot about wine and are seeking out wines of interest. It's not just famous brands that they are looking for," she said. Hong Kong and the mainland are showing a growing appreciation of Australia's fine wines - those valued at more than A$10 (HK$76) per litre. The mainland is the leading market for this category, importing more than 3.65 million litres, while Hong Kong is No4 at 1.45 million litres. "There's definitely a greater awareness of imported wines in China," Anderson said. "In the past the market would have been dominated by France, particularly Bordeaux wines, but in the last five years, many mainlanders have shown a keen interest in educating themselves about wine." And it's not just mainland wine connoisseurs that are on the up, but Chinese wine producers as well. At Vinexpo, Dynasty Fine Wines (SEHK: 0828) is looking to position itself in the major international wine markets, along with Grace Vineyard and Yantai Changyu Pioneer Wine.

Chief executive-elect Leung Chun-ying has promised to visit all the city's 18 districts at least once a year when he takes office, and also vowed his ministers will be more visible and accountable too. Responding to demands for a review of the ministerial system, which were raised again in a Legislative Council public hearing yesterday on his proposals to restructure the government, Leung promised a midterm evaluation of ministers to increase public scrutiny of top officials. Critics, however, said Leung's district visits could be merely cosmetic, and could subject the administration to conflicting demands from different districts. In a document sent to the Legislative Council, Leung (pictured) promised a midterm review of the so-called accountability system established in 2002. "The political appointment system has been implemented for almost 10 years but its effectiveness in improving governance is less than desirable," Leung wrote. Social scientist Dr Chung Kim-wah said Leung's pledge to visit all 18 districts at least once a year, the first such promise by any chief executive, was unlikely to bring real policy changes. "A visit by the chief executive would raise residents' expectations more than one by a minister or councillor. But the chief executive cannot make two sets of housing policies, one for Kwai Tsing and one for Sham Shui-po," Chung said. "Most likely the main functions of these visits will be to give ministers a better idea of their popularity." Eric Lam Lap-chi, a Democratic Party councillor for Kwai Tsing district, said Leung would need to follow up with specific action to make his visits more than just publicity events. "The contact should not be shallow and ritualistic. There should be concrete follow-up policies." Lam said he doubted that Leung's visits could bring about dramatic changes. "The problem is that councillors are not empowered," he said. "Officials see the councils as having a merely consultative function." Leung Kin-man, vice-chairman of Tuen Mun district council, and a member of the pro-government Democratic Alliance for the Betterment and Progress of Hong Kong, agreed. "We urge Leung to enhance the role of the district councils, otherwise the visits will be useless." Leung also proposed creating a larger talent pool in government, along with greater accountability for ministers. However, one Civic Party legislator, Audrey Eu Yuet-mee, said his proposals were devoid of details and "simply a tactic to pass the restructuring proposal". More than 100 groups who attended yesterday's hearing remained split over the planned shake-up, which adds posts for a deputy chief secretary and deputy financial secretary, and creates new bureaus for culture and information technology.

 China*:  May 29 2012 Share

Monday's record sale of the large-sized "The Whole Country Is Red" stamp suggests collectors' fervor for Cultural Revolution relics is undiminished - The red campaigns on the mainland may have quieted since the political downfall of the movement's champion, former Chongqing party boss Bo Xilai , but collectors' enthusiasm for Cultural Revolution relics appears to be going strong. The latest evidence is a rare communist-themed stamp from 1968 that sold at auction last week in Beijing for a record-breaking 7.3 million yuan (HK$8.9 million) - more than double its HK$3.7 million auction price less than three years ago. The unissued, large-sized "The Whole Country Is Red" stamp was sold by China Guardian Auctions after more than 20 rounds of bidding at its spring auction on Monday, becoming the single biggest stamp sale ever at a Chinese auction. The final price: 7,302,500 yuan. That is a far cry from the face value of eight fen that it was given when printed at the height of Mao Zedong's infamous campaign to enforce ideological purity across the mainland. The stamp's sale accounted for more than a third of the entire auction. Mao's government issued the stamp - measuring 6cm by 4cm - to celebrate the revolution's "complete victory", even though the movement would continue until the chairman's death in 1976. It remains one of the most well-known rare stamps issued by the government and only eight are believed to have been preserved. The image features a map of China, painted red to show the "revolutionary committees" that were then set up all over the mainland. Notably, the whole map is red, except Taiwan, which, like today, was run by the Kuomintang. The design, which was printed by the Beijing Stamp Printing Factory, also depicts peasants and soldiers holding Mao's iconic "little red book" of quotations. Red flags of revolutionary committees and crowds of peasants and soldiers' marching triumphantly fill the background. The slogan "Long live the victory of the great Cultural Revolution" is written across the bottom. "It is brand new, rich in colours and in good condition," said Guo Xueguang, China Guardian's general manager for stamp and coins. "The record price reflects its scarcity and the fervent attention from the collectors." The stamp is especially rare because it was a second version of which only samples were printed for leaders' approval. The first design featured images of Mao and his right-hand man Lin Biao against the backdrop of flags, slogans and people. It was ordered to be withdrawn and destroyed after top leaders changed their guidance on publicity to require less usage of leaders' images and quotations, said Zhu Tong, vice curator of the China National Post and Postage Stamp Museum in Beijing. Zhu said the stamp's designer, Wan Weisheng, drafted a small number of samples for approval, including the one auctioned last week. The country's then premier, Zhou Enlai , said the stamp was too large and covered too many elements. A third, smaller version of "The Whole Country Is Red" - this one 4cm by 3cm in size - was printed and issued on November 25, 1968. But it was ordered suspended and destroyed, but not before some stamps were sold and passed into circulation. Wan told Xinhua the stamps were withdrawn due to an inaccuracy with the map. But it was not, as many speculated, because Taiwan was not red, he said. "It's not red because there was no revolutionary committee there," he said. "Actually, it was a concern that the unclear southwest boundaries might cause cross-country conflicts." "I was terrified to be accused as a 'counter revolutionary'," he said. "I didn't expect that I would not be punished. I continued designing stamps until retirement." Wang Banghua, vice secretary-in-general of the China Association of Collectors, said that the stamp was the product of special times. "That thing which is rare is dear," Wang said. "It's not surprising." The recent auction was not the first time the stamp appeared in the market. It was successfully auctioned for 2.8 million yuan in 2009 and 1.79 million yuan in 2010 by China Guardian, according to artron.net a mainland artifact archiving website. This time, both the sellers and buyers of the prized stamp remain unknown because the auction house has kept the information secret. Where the stamps went between their withdrawal and auction is still a mystery. Wan was surprised to see one at a Beijing auction in 1996 and later told Philatelic Panorama he had no clue where it came from. That is likely because there would have been a risk in disseminating an unapproved stamp. "It was clearly against the then regulations, especially during the Cultural Revolution," said Zhu. "It's why the stamp appeared in the market so late." The auction value of the bigger version rocketed over past two decades. It sold for 1.4 million yuan in 1999 and HK$3.68 million in 2009, which broke the world record for the highest stamp auction price, the Global Times reported. Six smaller ones, measuring 3cm by 4cm each, were sold in one lot for more than HK$2.9 million. China overtook the US as the top auction market in 2010. It solidified that position last year with US$4.79 billion worth of art sold, or more than 40 per cent of the global market, said a report by Artprice, an agency that monitors art sales and auctions around the globe.

U.S. backs down in visas row on China's Confucius Institute Teachers - President Hu Jintao tours a Confucius Institute in Chicago. State Department revises directive that led to warning some Chinese teachers working for the Confucius Institutewould have to leave America next month. The US has backed down on new visa requirements for instructors at China's premier overseas cultural institution, ending a week of deportation fears and averting another row between Beijing and Washington. Chinese teachers working for the Chinese-government-sponsored Confucius Institute (CI) in the US under J-1 visas - which are given to people participating in work- and study-based exchange programmes - had earlier been told that they were violating the rules by teaching in primary and secondary schools, rather than at university level. They were told they must leave by the end of next month. About 51 of the 600 Chinese instructors working with the CI in the US were estimated to have been affected. Some critics in China had complained that the directive was discriminatory against the CI, saying other countries' cultural institutions in the US were not affected. A revision of the policy guidance issued by the US State Department now says the accreditation given to 81 CI branches in the US is sufficient. Instructors "are not required to depart the United States at the end of this academic year". The Chinese embassy in Washington said the new US directive was the result of diplomatic negotiations, with the State Department promising to take "a flexible attitude" in dealing with the instructors' visa problem, Xinhua reported. The new directive, issued on Friday in Washington, was a revised statement of a May 17 directive that sparked the deportation concerns, a statement on the State Department's Bureau of Educational and Cultural Affairs website said. "The original directive that we issued a couple of days ago was, frankly, sloppy and not complete," State Department spokeswoman Victoria Nuland said. "That's what caused all this confusion. So we now have a new directive. "We regret the fact that the first notice was not our best work - let's put it that way." Xu Lin , director of China's Office of Chinese Language Council International, which supervises the CI, welcomed the new directive yesterday, describing it as a "quick correction", Xinhua said. "The Confucius Institute is a new organisation … which has some things that need to improve," Xu told Xinhua. "We could put up with different opinions from different people [in the US], but we can't tolerant emotional abuse. The May 17 directive damaged the feelings of people from the two countries, but it was corrected very quickly." The Chinese embassy's minister counsellor, Fang Maotian said on Friday that the embassy had raised the issue with the State Department as soon as the old directive was issued, and the embassy's education affairs official and their counterparts from the State Department held a meeting on Thursday.

U.S. bid to calm fears over Confucius visas - American official says no instructors from China's top cultural institution will be deported, after dozens are told that they had the wrong paperwork - The US State Department sought yesterday to ease concerns that instructors working for China's premier overseas cultural institution would have to leave the United States because they had the wrong visas. State Department spokeswoman Victoria Nuland said officials were confident they could prevent the deportation of dozens of instructors working at branches of the Confucius Institute on US university campuses. "Nobody's going to have to leave the country," Nuland said in Washington. "It's all going to get cleared up." The visa issue, which came to light last week after the US issued a directive to instructors, has been yet another flashpoint between Beijing and Washington. Ties have already been tested this month by rights activist Chen Guangcheng's successful effort leave China for the US. The deportation threat also comes amid tensions between foreigners and mainland authorities, inflamed this month by a viral video that seems to show a British man trying to sexually assault a Chinese woman in Beijing. Beijing city officials have since ordered a crackdown on foreigners living and working illegally. State media in China have described the US visa directive as a witch-hunt and complained that Chinese instructors were made to feel unwelcome in the United States. Professor Jin Canrong , from Renmin University's school of international relations, said the visa directive was discriminatory against the Chinese, no matter how US officials tried to reinterpret it. He said other country's cultural institutions, such as the Alliance Francaise, the Goethe-Institut and the British Council, were not affected. "It underlines deep-rooted mistrust between the two countries," Jin said. "It also highlights, in this case, Washington's political distrust towards Beijing and its ever-growing influence and to some extent, its lack of confidence, culturally speaking." But Professor Joseph Cheng Yu-shek (pictured), of City University of Hong Kong, said he did not think the row would damage Sino-US ties. "But it requires careful handling from both sides," Cheng said. "It can easily provoke a backlash among mainland netizens. And China may retaliate under domestic pressure." China has set up 81 Confucius Institutes with US universities since 2004 as part of a broader effort to spread its culture, language and history around the world. Nuland said the Obama administration supported the organisation. Nevertheless, the State Department determined that many of the institute's university-level instructors were on so-called J-1 visas. The visas only allow them to teach from kindergarten through to high school, according the Chronicle of Higher Education. Some 51 of the 600 Chinese teachers working in the US were believed to be affected. The institutes are similar to cultural centres operated by several western countries, but differ in that they say they are independent of the government in Beijing. Elsewhere there has been caution over the organisation. Last year, the faculty at Canada's University of Manitoba blocked the opening of a Confucius Institute, arguing it would legitimise Beijing's propaganda. Many US universities that host the institutes say there has been no interference from Beijing and the programs add diversity and much-needed language resources.

Hong Kong*:  May 28 2012 Share

Phoebe Chan with model Elaine Chin, who is wearing a wedding dress made of balloons - Of all the ways to take your vows with wows, few could match walking down the aisle in a wedding dress made of balloons. And in Hong Kong, where weddings are no small affairs, brides-to-be seeking that extra lift are looking to Phoebe Chan Kin-pui. It's an idea that's certainly taking off around the world - a wedding gown worn by the Duchess of Cambridge, Kate Middleton (whose parents built a fortune in the party supply trade), is said to have inspired a copy made with 5,000 balloons by a British artist. Chan, 38, is one of only four certified balloon artists in Hong Kong - and these are no inflated qualifications, as aspirants have to sit written, oral and practical examinations. And just in case you think a balloon artist is some sort of shrinking violet, Chan's "day job" involves teaching construction workers how to handle building machinery safely. Her balloon artist "studio" is in the workshop among the shovels and concrete mixers and pneumatic drills of her training institute. Chan's talent with balloons was recognised in March when she was named New Artist of the Year at the 2012 World Balloon Convention in Dallas, Texas. Her dresses and decorative arrangements have won prizes in Belgium, Japan and Malaysia. "Balloon art is actually really easy, and you can feel accomplished quickly after creating something in a short time," the self-taught artist said. "It takes me six hours to weave a dress, but can you imagine how long it would take to knit a garment that size with yarn?" She took up balloon art two years ago after watching a television show on it with her two young children. Now she offers balloon art classes - sometimes free - for special groups. Chan's stellar rise as a balloon artist has rankled some clowns and party entertainers, who claim she is taking away their clients. Chan uses about 300 balloons to make a dress, and has received many orders. "The reason my dresses are so popular is because they are formfitting. While other designers in the world just slip the dress over their models' heads, I design the dress to be so tight that it presses into the flesh, which narrows the waist." She said her balloon dresses can be kept for up to a week, but can only be worn once. "The dress is all for photos and memories." Chan is also negotiating to design costumes for a major male pop star to wear at his concerts next month.

Asia's Richest Man Details Succession Plan - Victor Li, left, spoke with his father, Li Ka-shing, at a news conference in Hong Kong on Friday. Asia's richest man laid out his succession plans Friday, putting his older son at the helm of his business empire and promising his younger son funding to embark on new investments. Li Ka-shing, the 83-year-old owner of Hong Kong's biggest supermarket chain and with assets globally in telecommunications, oil and real estate, remains actively involved in the operations of his flagship blue-chip companies. On Friday he said he had no plans to retire anytime soon, but sought to put to rest frequent media speculation in the city on the future of his multi-billion dollar companies. His net worth was estimated at US$25.5 billion, according to Forbes Magazine, making him the world's ninth-richest person. The tycoon, well-respected locally for his business acumen and whose views on the Hong Kong economy are closely followed by retail stock investors, said he is making the succession arrangements so the brothers "wouldn't have conflict" over his business interests. "Victor will manage the Cheung Kong Group assets," Mr. Li told reporters at a news briefing following a shareholders' meeting of Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd., his two key listed vehicles. Mr. Li said his younger son is "in talks with several businesses that he likes, and I will help support him fully." When asked how he plans to support Richard, the patriarch said: "That's simple. Give him cash." Friday's comments by Mr. Li come just two months after follow tycoon Cheng Yu-tung, head of jewelry chain Chow Tai Fook Group, handed the reins of his business fortunes to his eldest son, becoming the first of the city's aging real-estate tycoons to officially retire. But the actions of Messrs. Cheng and Li's are a rarity in a region where heads of family-run businesses are generally reluctant to hand down power, even in their twilight years. Gambling magnate Stanley Ho of SJM Holdings Ltd., who is in his 90s, and Chen Din Hwa of Nan Fung Development Ltd., have retained their titles even as they have grown too ill to manage their business empires. Family feuds over power and money at these two companies have filled the pages of the city's newspapers in recent years. These tycoons all began building their fortunes after World War II in Hong Kong's real-estate market, ultimately rising to create sprawling empires and families to match. The elder Mr. Li's succession plan come as little surprise to investors, who have long expected that Victor Li would eventually run his listed companies. For more than a decade, Victor, 47, has been managing director at Cheung Kong and deputy chairman at Hutchison, reporting to his father, who is chairman. Victor Li, who was sitting next to Li Ka-shing when he discussed the succession plans, said Friday he is "always happy" with his father's arrangements. Richard Li, 45, doesn't hold a title in his father's companies, and stepped down as deputy chairman of Hutchison in 2000 to develop his telecom interests after buying what was then Hong Kong Telecom, the city's top fixed-line operator, which was later renamed PCCW Ltd. The senior Mr. Li said he will help fund Richard Li's new business plans, adding that the younger son's assets will rise "several-fold" from his support. Li Ka-shing didn't elaborate on what types of assets Richard Li is seeking to buy. Richard Li couldn't immediately be reached for comment. This won't be the first time the elder Mr. Li has offered to help his younger son in his business ventures. In 2006, Richard Li attempted to sell PCCW to U.S. buyout firm TPG-Newbridge, but the deal fell apart when minority shareholder and one of China's top telecom firms at the time, state-backed China Network Communications Group Corp., blocked the sale on the grounds that the city's telecom operation should remain "owned and managed by Hong Kong people." Li Ka-shing then offered to finance the acquisition of PCCW from his son by one of his close associates, former Citigroup Inc. banker Francis Leung, but Richard Li opposed the deal, which ultimately collapsed. Still, the younger Mr. Li has been a prolific deal maker, selling Star TV—an Asian satellite television company he founded in 1990—to News Corp.,  which owns Dow Jones, publisher of The Wall Street Journal, when he was just 26. Last year he carved out some key telecom assets of PCCW Ltd. in a Hong Kong listing that raised US$1.2 billion. Richard Li has also developed real estate in Hong Kong and in 2010 bought asset manager PineBridge—then named AIG Investment—from American International Group Inc. when U.S. insurance giant AIG was hit by the global financial crisis and had to sell assets to repay the U.S. government's bailout.

School buildings are demolished to make way for a commercial plaza in Mianyang, a city in Sichuan province. The Mianyang Bauhinia Ethnic Secondary School was built using donations from Hong Kong after an earthquake hit Sichuan province in 2008. "And it (Mianyang government) will ensure good quality and timely completion of the school at its new site," said Chen Wen, an information officer with the city government's information office, on Friday. Stephen Lam Sui-lung, chief secretary for administration in the government of the HKSAR, said the Hong Kong government would return the money to the Trust Fund in Support of Reconstruction in the Sichuan Earthquake-Stricken Areas. The chief secretary, who made the remarks after meeting with Wei Hong, executive vice-governor of Sichuan, on Thursday afternoon, said: "The Sichuan side said that the local government in Mianyang had demolished the school without the consent of the government of the HKSAR, which did not conform to the arrangements for the aid project made by Sichuan and Hong Kong. The Sichuan side would investigate the case." Wei said that governments at different levels in the Sichuan quake zone had to improve management mechanisms and cherish the love of the government of the HKSAR and Hong Kong compatriots. The Mianyang Bauhinia Ethnic Secondary School was rebuilt with HK$2 million donated from the Hong Kong Federation of Education Workers and another HK$2 million from the Hong Kong government. "We thought the school would serve the local community for a long time. After the school was built, the Mianyang side said it would dismantle the school. But the Hong Kong government did not approve it," he said. The school went into operation in late March 2010. But in January 2011, the adjacent western campus of the Mianyang Normal College was moved. The school, which had rented the college's playgrounds and bathrooms, no longer had those accommodations, said Yao Ding, deputy chief of Mianyang's bureau of education and sports. After consulting representatives of the Hong Kong Federation of Education Workers, departments in charge of education, planning and construction in Mianyang chose a site for the new school in the city's science and education park, Yao said. Facing mounting media pressure after the school buildings were dismantled, Li Ze, an official with Mianyang's investment promotion bureau, said the buildings were torn down by the Wanda Group without the consent of the local government. But Wang Jianlin, boss of the Wanda Group, refuted the claim in the Beijing News, saying the government had transferred the land to his group improperly. "It is an accepted norm that any land transferred should be devoid of buildings on it," he said.

 China*:  May 28 2012 Share

China's top legislator cancelled a visit to Britain in anger over a meeting between British Prime Minister David Cameron and the Dalai Lama, Tibet's exiled spiritual leader, a source said on Saturday. Wu Bangguo, the head of China’s parliament and nominally number two in the political system, was to have travelled to Britain this month, but the Dalai Lama meeting put an end to those plans, according to the source. The British government “was told that Wu Bangguo wasn’t coming because they were unhappy with the Dalai Lama meeting,” the source told reporters, asking not to be identified. The Dalai Lama – a Nobel Peace Prize laureate – was in London earlier this month to receive the £1.1 million (US$1.8 million) Templeton Prize, which he said he would donate to charity. His meeting with Cameron and with Deputy Prime Minister Nick Clegg was described as “private” and was not held at the prime minister’s Downing Street residence. Even so, it triggered immediate criticism from China, which called it an “affront to the Chinese people”, and launched “solemn representations” with London. The Tibetan leader, who fled his homeland for India in 1959 after a failed uprising against Chinese rule, announced last year that he was giving up his political role and would focus on spiritual duties. Nonetheless, Beijing has repeatedly accused him of trying to split Tibet from the rest of China and encouraging Tibetan protesters in the vast Himalayan region to set fire to themselves – a charge he denies. A total of 34 Tibetans, many of them Buddhist monks and nuns, are reported to have set themselves on fire in China’s Tibetan-inhabited areas since the start of last year to protest against Beijing. The Chinese foreign ministry was not immediately available for comment when approached by AFP Saturday.

China filed World Trade Organization cases on Friday challenging US countervailing measures against Chinese exports worth nearly $7.3 billion, widening a conflict between the world's two largest economies. The cases, covering US anti-subsidy tariffs on 22 Chinese goods including steel, paper and solar cells, come as a weakening global economy is fueling trade frictions, experts said. China began its challenge by requesting consultations with the United States through the WTO to resolve the dispute. If that fails, China can request a ruling by a WTO panel, which can order the US to scrap measures found to violate free-trade commitments, or to pay compensation. China's mission to the WTO accused Washington of improperly using anti-dumping measures to shield US companies. "The relevant practices constitute the abuse of trade remedy measures which undermines the legitimate interests of China's enterprises," said a statement by the mission. It complained that Washington was repeating its "wrongful practice" from a dispute over Chinese solar power equipment. Ministry of Commerce spokesman Shen Danyang said the US acted inconsistently with WTO rules in the countervailing investigations, and continued wrongdoings that had been refuted by the WTO Dispute Settlement Body rulings. "We reviewed 22 countervailing cases that the US has launched against China since 2006 and found common wrongdoings in these cases and so complained to the Dispute Settlement Body for consultation," said Li Chenggang, head of the ministry's department of treaty and law. Shen added that US misuse of trade remedy measures infringed the interests of Chinese enterprises and aroused intense discontent. The US Department of Commerce announced on May 17 that it will impose preliminary anti-dumping duties on Chinese solar power equipment — ranging from 31 percent to 250 percent — after it ruled in March that Chinese manufacturers sold products below cost. The case was included in the 22 cases in which China challenged the US countervailing measures, according to Li. "China's challenge to the US countervailing measures is timely and reasonable. It is justified because the US is currently misusing the trade protection measures, which hurt Chinese enterprises," said Zhou Shijian, a senior expert in the center for US-China Relations at Tsinghua University. The US has 10 days to respond to China's consultation request and 30 days to start negotiations. If it accepts the request, it has 60 days to conclude the negotiations. Failure with these procedures will entitle China to ask for a Dispute Settlement Body panel to investigate the complaint. "The US will probably accept the request but I don't see a big chance to resolve the dispute through consultation," Zhou said. After the first countervailing investigation against Chinese exports in November 2006, the US launched about 30 countervailing cases. China complained to the WTO regarding four of the countervailing cases in 2008 and won support from the Dispute Settlement Body in 2011. "But we regret that the US did not carry out the rulings and repeated its wrongful practices in the following cases," Li said. US President Barack Obama signed a bill in March allowing countervailing investigations on products from countries that the US doesn't grant economy market status to, but the bill was recently reviewed for inconsistency with the US constitution. "This showed that the US misuse of trade protection measures is not even accepted at home," Zhou said. "But despite frequent trade frictions, we do not see a trade war between the top two economies because China's challenge to the US countervailing measures goes within the WTO framework and will not affect normal trade. It is normal to see trade frictions as bilateral trade expand, especially when the US economy is slowly recovering," Li said. "In the long run, China's move to correct the US misuse of trade remedy measures helps maintain a healthy trade relationship," he said. 

The US Treasury Department said on Friday China has not met standards of a currency manipulator, but it would closely monitor the pace of the Chinese yuan (RMB) appreciation. In its Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, the Treasury highlighted the need for greater exchange rate flexibility, including China and some other major economies. The report, which was released on Friday, concluded that China did not meet the standards of a currency manipulator. Such a conclusion is based on the fact of the RMB's appreciation against the dollar since June 2010 and the decline in China's current account surplus. China has committed itself in the G20 Summit and the China-US Strategic and Economic Dialogue to moving rapidly to a more market-determined exchange rate system, the report said. "Since China initiated currency reform in July 2005, the RMB has appreciated 40 percent bilaterally against the dollar after adjusting for inflation," according to the report. The U.S. Omnibus Trade and Competitiveness Act of 1988 requires the Treasury to provide reports on whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade. The Treasury said China's recent move to widen the daily RMB trading band "has the potential to increase exchange rate flexibility." It also mentioned the steps China has taken to liberalize its capital account, including by increasing the ability of portfolio investors to invest in Chinese assets. However, the Treasury said it would continue to closely monitor the pace of RMB appreciation. The report said the US economy would expand at a moderate pace through the end of 2012. Private forecasters currently expect real GDP to grow by 2.2 percent in the second quarter of this year, and 2.3 percent over the four quarters of 2012. The government is firmly committed to putting the federal budget on a sustainable path, said the Treasury.

The US Department of State will sort out a visa issue that affects Confucius Institute teachers in the country and will "do its best to fix it without having anybody have to leave", said department spokeswoman Victoria Nuland on Thursday, following confusion over a visa policy directive issued on May 17. The directive was sent to universities that sponsor Confucius Institutes, a program of the Chinese government to promote Chinese language and culture overseas. The document said faculty members who enter the United States through exchange program visas but also teach elementary or secondary school students are violating visa rules and must return to China by June 30 to reapply for an appropriate program. If enacted, the directive could force as many as 51 teachers to return to China. About 600 teachers currently work in Confucius Institutes in the US, according to Confucius Institute Headquarters, also known as Hanban. Nuland told reporters on Thursday at the State Department's daily briefing that the US values people-to-people exchanges with China. She said the directive isn't aimed at interfering with Confucius Institute operations but previous "muddling and messing up" in the exchange program visa. "So we're going to sort these out. Nobody's going to have to leave the country," she said. "It's all going to get cleared up. But there was some confusion on the front end, so we're going to fix it." Schools were also taken aback by the directive's demand that Confucius Institutes must obtain US accreditation in order to continue accepting foreign scholars and professors as teachers. "The department is reviewing the academic viability of the Confucius Institutes. Based on the department's preliminary review, it is not evident that those institutes are US-accredited," the directive states. But according to a Chinese education official who participated in Thursday's meeting with State Department officials, the accreditation issue appeared to be the result of miscommunication between different US administrative divisions about the status of Confucius Institutes, and the State Department may not pursue it anymore. "The accreditation issue has been mostly cleared up through our candid discussion," the official told China Daily on the condition of anonymity. "The US State Department will make proper arrangements for those affected and ensure the smooth operation of Chinese-language programs at the schools." The first Confucius Institute in the US was established at the University of Maryland in 2005. Since then, Hanban has dispatched more than 2,100 teachers to 81 Confucius Institutes across the country, which are jointly established by US and Chinese universities. Each institute is run independently. The issue has drawn grave concerns among US educators. "We were quite taken aback at the State Department's directive, which has caused us to suspend some of our programs, disrupted our planning and created a great deal of uncertainty for our staff from China," said Kristin Stapleton, director of the Confucius Institute at the University at Buffalo. "At a time when universities and K-12 schools should be encouraged to work together closely to improve education in the United States, it's hard for me to understand why the State Department has decided to throw a roadblock in the way of some very fruitful partnerships." Peng Tao, director of the Confucius Institute at Alfred University in western New York, said the directive severely hurts US universities. "I doubt whether policymakers have a sound understanding of the huge demand for qualified Chinese teachers in the US and how these teachers have contributed to bilateral cultural and economic cooperation," he said. Both sides need to find a middle way to resolving the visa issue, said Huajing Maske, director of the Confucius Institute at the University of Kentucky. "I understand the concern about the exchange program visa from the State Department. But I would also like to think that the department is thinking about and preparing for the expansion of the Chinese programs in the K-12 schools, brought on by the huge success of these programs and the warm welcome they have received," she said. As the number of Confucius Institutes in the US grows to meet the strong demand for Chinese-language study, the program is also facing criticism from some politicians. In March, the US Congress held a hearing on China's public diplomacy in the US and strongly criticized the operation of the Confucius Institutes.

Hong Kong*:  May 27 2012 Share

A view of Shouson Hill, including the site at 8-12 Deep Water Bay Drive for which several multibillion-dollar tenders are expected. Analysts expect keen competition among developers for a rare and large luxury residential site at Shouson Hill, with some forecasting the prime site could fetch up to HK$7.44 billion. "This is the last available site of such a big size located in a traditional luxury area on Hong Kong Island," said Alvin Lam Tsz-pun, a director at Midland Surveyors. "It should attract a strong response from large developers or a consortium of developers." Lam estimated that the 110,319 sq ft site at 8-12 Deep Water Bay Drive, Shouson Hill, will be sold for HK$4.46 billion when the tender closes on Friday. This equates to HK$18,000 per sq ft in terms of the maximum gross floor area of 248,132 sq ft. Three other surveying firms contacted by the South China Morning Post (SEHK: 0583, announcements, news) expected bids of up to HK$7.44 billion, or HK$30,000 per sq ft. The site, which offers a mountain view and is situated next to the South Island School, was triggered for public tender after it received a minimum guaranteed bid of nearly HK$3.59 billion, or HK$14,489 per sq ft. There are presently three 14-storey buildings on the site, which were former government quarters named Glendale completed in the late 1980s. Vincent Cheung Kiu-cho, national director for Greater China at property consultancy Cushman & Wakefield, said: "The winning bidder can choose to demolish the buildings for new ones or just refurbish the existing units and construct a clubhouse, which may just cost about HK$500 million and can be ready for rent or sale within two years." Noting that 3,000 sq ft flats at nearby Pine Lodge on 10 Shouson Hill Road West were selling for about HK$33,000 per sq ft despite the fact that they were 33 years old, Cheung said developers would find it profitable if the site itself would be sold for HK$25,000 per sq ft, or nearly HK$6.2 billion in total. A.G. Wilkinson & Associates' valuation director Ringo Lam Chun-chiu expected the site to attract between five and 10 bids, because of a lack of new homes in the area. Another site up for tender on Peng Chau could fetch bids of between HK$6.5 million and HK$13.7 million, said surveyors, which would equate to HK$700 to HK$1,485 per sq ft for the 12,297 sq ft site. The land parcel was triggered for sale after the government received a minimum guaranteed bid of HK$5.5 million, or about HK$596 per sq ft. "The site is off the eastern coast of the island next to the beach and the sea, which is suitable for building holiday houses," Lam said. With a maximum gross floor area of around 9,222 sq ft and height restriction of three storeys, he said the site could be used to build three three-storey houses. But Lam added: "It is not at a very popular location because it takes about 45 minutes to get there from Central by ferry, and another 15 minutes on foot to the site. So I think it will attract only two to three developers, including Sino Land as it purchased a site nearby recently." In March, Sino Land bought a 49,127 sq ft waterfront residential site at Peng Lei Road on Peng Chau for HK$19 million, or HK$516 per sq ft. It was the first time in more than a decade that a residential site on the island had been bought by a major developer.

AirAsia, the region's biggest discount carrier, reported its first increase in profit in five quarters as it carried more passengers and posted a larger foreign-currency gain. Net income increased to 172.4 million ringgit (HK$432.5 million) in the three months ending March 31, from 171.9 million ringgit a year earlier, the carrier said. Revenue rose 11 per cent to 1.17 billion ringgit. AirAsia boosted passenger numbers 12 per cent in the period as slowing growth in the region prompted more people to opt for budget travel. The carrier said demand in the second quarter "remains positive" based on booking trends, and it was adding more aircraft. "We have defied industry trends again," CEO Tony Fernandes said. Malaysian Airline Systems, the nation's biggest long-haul carrier, and Singapore Airlines posted losses in the same quarter as they contended with higher fuel costs and waning demand for full-service travel. The global airline industry's profit will drop 62 per cent this year, the International Air Transport Association forecast in March. AirAsia rose 2.1 per cent to 3.46 ringgit in Kuala Lumpur yesterday, heading for its biggest gain since May 15. The stock has declined 8.5 per cent this year, while the FTSE Bursa Malaysia KLCI Index advanced 1 per cent. The carrier's foreign-exchange gain on borrowings doubled in the quarter to 83.6 million ringgit. The ringgit gained 3.6 per cent against the US dollar in the period. The airline's main Malaysian unit operated 57 aircraft and filled 80 per cent of seats, the statement said. Its Thai and Indonesian units also carried more people. Thai AirAsia's parent was scheduled to list shares by the end of this month, it said. Malaysian Air's first-quarter loss, reported on Tuesday, narrowed to 171.8 million ringgit, compared with 242 million ringgit a year earlier. The carrier cut unprofitable routes and also used new fuel-efficient aircraft to curb expenses.

Malvinder Mohan Singh, executive chairman. Global medical giant joins bid for private hospitals - Fortis Healthcare to seek sites in Aberdeen and Tai Po despite what some contenders claim are harsh terms - A global health care company that runs 590 private clinics in the city is joining the fight to develop two new private hospitals. While some potential investors say unprecedented restrictions imposed by the government on bidders are "too harsh", Fortis Healthcare is interested in developing private hospitals at sites in Aberdeen and Tai Po. The government wants more private operators to join the market to correct an imbalance that sees 90 per cent of patients use public hospitals while most doctors work privately. It has earmarked four sites for hospitals and last month began the tender process for two. Fortis is drafting its submission ahead of the July 27 deadline. "There are challenges in every country, and we understand what is required in Hong Kong," Malvinder Mohan Singh, executive chairman of Fortis Healthcare, which is behind the Quality Healthcare clinics, told the Post. "Hong Kong always has a special meaning to us … We have general practice clinics and day care service, and the private hospital is just the next logical step for us. "Our interest has always been there, and our interest will not stop at only two sites." The health care group already runs 75 hospitals in Vietnam, Singapore and India, but is expected to face local competition. The private Union Hospital in Tai Wai has expressed interest in the site at Wong Chuk Hang, Aberdeen, while Chinese University hopes to develop a university hospital in Tai Po. But the Private Hospitals Association says the fact that, for the first time, the government has set restrictions on services new private hospitals can offer could put investors off. The winning bidder must set aside at least 50 per cent of available beds for Hongkongers, and also offer 30 per cent of treatments on a fixed-fee basis, so patients know exactly what they will pay in advance. Singh says the latter condition "would not be a difficulty at all", as hospitals internationally are moving towards more transparent billing, and the company is already setting fixed fees in India, the country where it was founded. "In our service in India, we have created an internal system to tell in-patients what their costs [will be]. We tell them with 90 per cent certainty, plus or minus 5 per cent, what their cost of treatment will be. We are already doing it."

Hong Kong's New Leader Seeks Growth - Incoming Leader Vows to Boost City's Competitiveness While Breaking Perceived Close Government-Business Ties - Hong Kong's next leader, Leung Chun-ying, on Thursday said he is seeking to diversify the city's economy to help underpin faster growth even as mainland China, which has powered the city's economy for years, begins to slow. In an interview with The Wall Street Journal, Mr. Leung said he expects growth in China this year to reach 7%, suggesting a slowdown ahead. China's growth rate this year in many ways will depend on how successful the country is at shifting emphasis from exports to domestic consumption, Mr. Leung said. In 2011, Chinese gross domestic product grew 9.2%. Mr. Leung starts his term on July 1, succeeding Donald Tsang, who leaves office amid public unhappiness over perceived close government-business ties and property prices that have risen 82% since late 2008. The son of a policeman, Mr. Leung is a self-made millionaire who made his mark as a surveyor and whose recent election was one of the biggest political shake-ups the former British colony has seen since it reverted to Chinese control in 1997. While Hong Kong is part of China, it operates under a separate political and economic system. Mr. Leung, who was chosen on March 25 by a group of 1,200 political and business elites to lead the city, is seen as having particularly close ties with Beijing. Unlike his predecessors, Mr. Leung will need to stand for re-election by popular vote: His term concludes in 2017, the year Beijing has promised Hong Kongers universal suffrage. Accordingly, Mr. Leung will need to adopt a more populist approach, analysts say. Mr. Leung has already taken strides in that direction, vowing to stop "birth tourists" crossing the border from mainland China from receiving permanent residency rights for their children. While Mr. Leung wants to enhance the city's competitive edge, he stressed he wouldn't change Hong Kong's existing flat-tax structure or grant tax holidays such as those offered by Singapore and other cities. "We don't need to be all things to all men," he said. On the contentious issue of property rates, Mr. Leung said he won't bring prices down by "flushing the market with new land supply." Mr. Leung cited disappointment with Hong Kong's past economic performance, noting that the economy has grown an average 3.95% annually over the past 20 years, a figure he describes as "really too low" by regional standards. Singapore had an average growth rate of 6.6% during the same period, he noted. "So one part of my mandate is to foster better growth in the economy, and also a set of more-even growth in various sectors of the economy," he said. To do so, Mr. Leung said he would seek to capitalize on Hong Kong's relationship with mainland China, which has given the city a number of preferential policies to facilitate cross-border exchange since 2003. For example, Mr. Leung said his administration would further develop Hong Kong's status as a global shipping center, citing London as one model. Though Hong Kong is one of the world's biggest container ports by throughput, Mr. Leung said the city could do more to expand maritime insurance and ship-financing services to cater to growing Chinese demand. To further improve the city's competitiveness, Mr. Leung said Hong Kong needed to address the problem of its notoriously small apartments to give people "more elbow room." For example, he raised the possibility of deliberately planting new towns in the New Territories, which borders mainland China. Mr. Tsang, the departing leader, has come under fire for accepting pleasure trips from local businessmen. Mr. Leung indicated he didn't expect his administration to be plagued by such problems, and that he feels no personal connection with the city's businessmen. "To grow the economy, we need the right government policies, pro-growth initiatives and facilitation. But you also need businesses," he said. "That's essentially the beginning and the end of my relationship with the business sector, and I don't need extensive or intimate personal relations with any sector."

 China*:  May 27 2012 Share

China filed a complaint at the World Trade Organisation (WTO) on Friday to challenge US tariffs charged on Chinese goods that the United States considers to be unfairly subsidised. The dispute, revolving around so-called countervailing duties, relates to 22 products with an annual export value to the United States of US$7.3 billion, China’s mission to the WTO said in an e-mailed statement. There was no immediate reaction from US officials. China did not name the products subject to countervailing duties. The case begins with China “requesting consultations” with the United States to try to find an amicable settlement. But it may later move to arbitration if the two cannot agree, and the United States could be forced to scrap its duties and even compensate China if it is found to have broken the rules. The dispute adds more heat to a trade relationship that has barely stopped simmering despite the United States seeing signs of China “making progress” towards easing restrictions on its currency, one of the biggest causes of friction. Although China’s pace of overall export growth has slumped to single digits this year, the trade deficit with the United States set an annual record of more than US$295 billion last year, putting extra pressure on US manufacturers whose markets are still recovering from the financial crisis. The latest complaint comes just eight days after the US Commerce Department set punitive tariffs on Chinese solar panels that it said Chinese exporters had dumped at unfairly low prices on the US market. China’s Commerce Ministry said the US action violated WTO rules and distorted trade. Two more trade disputes are due to be ruled on by WTO dispute panels within days or weeks. One concerns China’s exports of grain-oriented electrical steel. The other is a US complaint about China closing its electronic payments market to firms such as VISA, Mastercard and American Express, and giving a monopoly to China UnionPay. China’s statement said the latest case was launched because the United States had broken WTO rules in many areas, including rules regarding “public body, specificity, facts available and subsidy finding on the export restriction measures.”

Workers at the China National Heavy-Duty Truck Group prepare trucks for delivery to Brazil on Tuesday. China's annual export and import growth showed signs of acceleration in early May, but the country is still facing “a relatively stern trade environment,” the commerce ministry said on Friday. Mainland exports grew 27.3 per cent and imports rose 28 per cent in the first 10 days of May compared with the same period of last year, vice commerce minister Li Jinzao told a news conference. “There are signs of things turning better from data in the first 10 days of May,” Li said. “They are making us more confident about achieving this year’s trade target. “But we also clearly know that there will be no quick and significant improvement in global situation, and we are still confronted with a relatively stern trade environment,” Li said. China aims for annual growth of 10 per cent in exports and imports this year and is running far short of both. The first four months of this year saw exports grow 6.9 per cent on the previous year while imports grew 5.1 per cent. Li added that China’s trade surplus had also widened in early May, without giving a specific data. April’s trade surplus was US$18.4 billion, versus market expectations of US$8.5 billion. Last month’s data was a reminder of how volatile the trade account can be and that readings given before the full numbers are calculated are prone to restatement. Premier Wen Jiabao, for example, said on April 27 that China’s export and import growth had picked up to 12.7 per cent and 8.3 per cent year-on-year for the period April 11-20. The full data published on May 10 revealed import growth in April was just 0.3 per cent on the previous year and export growth was 4.9 per cent. A flurry of other economic data for April also missed expectations and prompted the central bank to lower banks’ required reserve ratio on May 12, its third such move since November last year. Since then, China has fast-tracked infrastructure investment and restated its intention to boost private sector participation in a wide range of state-controlled sectors, including electricity, oil and natural gas to help underpin growth. The policy announcements came as the European Union, China’s largest export customer, struggles to contain contagion risks from a Greek debt crisis that is unnerving global financial markets. The HSBC China Flash Purchasing Managers Index, the earliest indicator of activity in the country’s vast factory sector, showed faltering demand in May as export orders fell to two month lows. That suggests surprise weakness in China’s April economic data persists. Li said China would try to expand its share in both traditional and emerging markets, focus Chinese goods more closely on areas of strongest global demand and accelerate government efforts to make trade easier and more convenient. “Overall, we understand the severe situation we face, meanwhile we are still full of confidence,” he added.

Royal Caribbean Cruises Ltd. is bringing another ship to the Chinese market in an attempt to win the country's ballooning number of travelers and buoy sluggish growth prospects after a competitor's deadly crash in the Mediterranean cast a shadow over the industry. The cruise company plans to launch the Mariner of the Seas, which can carry 3,114 guests, in China next year to meet growing demand from Chinese tourists and will increase its voyages year-round from China and Singapore to Southeast Asia, South Korea and Japan, said Richard Fain, Royal Caribbean chairman and chief executive, in an interview. "China's cruise market is 20 years behind the U.S., but the demand is clearly there," said Mr. Fain, adding that Royal Caribbean is bullish about the Chinese market and expanding more rapidly than it has in nearly any other market. Royal Caribbean's Voyager of the Seas ship, set to sail in June from China, sold out quicker than expected, Mr. Fain said. Many international cruise companies have their eyes set on China's growing number of travelers, who are propelling the airline and hotel industry domestically and overseas. Chinese domestic and international tourism revenue is poised to jump 14% annually for the next nine years, creating a 5.5 trillion yuan, or roughly $838 billion, market, up from 1.5 trillion yuan in 2010, according to the most recent estimates from the consulting firm Boston Consulting Group. Royal Caribbean executives are going to great lengths to win over Chinese consumers. The company invested $5 million in the Voyager to retrofit the ship to Chinese tastes, rolling out more Chinese food and language services, equipping boats with more luxury retail products in its shops and playing up casinos and live entertainment. It spent $50,000 on one of the largest industrial-sized woks to satisfy consumer demands for tastier wok-fried noodles. Chinese consumers are only beginning to take an interest in voyages. The number of cruise ships received at ports on the Chinese mainland increased to 262 in 2011, up 17% from a year earlier, according to data from the China Cruise and Yacht Industry Association. The industry has been under intense scrutiny and has faced a slowdown in reservations since January, when rival Carnival Corp.'s CCL +0.96% Costa Concordia vessel was grounded off the coast of Italy, killing at least 25 people. Most cruise operators pulled their regular marketing campaigns at the start of the key reservation period. Royal Caribbean executives said in a conference call in April that new bookings fell about 20% in the first few weeks after the January accident. The decline has since slowed, Mr. Fain said, but the industry has also been affected by slumping economies in mainstay markets Europe and the U.S. "Given that we've had to face two such great shocks, we're lucky it isn't worse," Mr. Fain said. Royal Caribbean's revenue increased to $1.83 billion in the first quarter of 2012, up 9.7% from a year earlier. Profit dropped 40% to $47 million. China, where the government has been building up port infrastructure to pave the way for the industry's rise, will be a key growth market for Royal Caribbean in the year to come, said Mr. Fain. Royal Caribbean is building up a training team to teach travel agents in markets such as Beijing and Shanghai and increasing its marketing spend to educate travelers who are fearful of sea sickness. The Mariner of the Seas will double the capacity for travelers from a previous ship, Legend of the Seas, which has operated out of Singapore and Shanghai for the past three years and will return to Europe.

Bo Guagua, son of fallen Chinese politician Bo Xilai, receives his masters degree in public policy at Harvard University in Massachusetts on May 24. Bo Guagua, the Chinese "princeling" son of a deposed Communist leader, flashed a big smile and was cheered by classmates as he accepted his diploma during a commencement ceremony at Harvard University on Thursday. Mr. Bo, 24, appeared at ease as shook the hands of faculty and walked across the platform during commencement for Harvard's Kennedy School, where he earned his master's in public policy during the ceremony at John F. Kennedy Memorial Park. Mr. Bo is the son of Bo Xilai, the ousted party chief of Chongqing, China, and his wife Gu Kailai, who is under suspicion in China over the killing of a British businessman. After the ceremony, Mr. Bo, wearing a black gradation robe and crimson hood, declined to comment to The Wall Street Journal. "I'd just like to have my own day today," he said, as he walked with two friends and joined a group of others chatting outside the commencement tent. Mr. Bo's appearance at graduation came nearly a month after he asked the press, in a statement to the Harvard Crimson, to "kindly refrain from intruding into the lives" of his classmates and teachers in light of the scandal that has centered on his family.

US targets Confucius Institutes over visas- Dozens of Chinese teachers at Confucius Institutes in the United States could be forced to leave by June 30 due to a State Department directive, the head of the institute’s Beijing headquarters said on Thursday. The directive, issued on May 17, was sent to universities that sponsor the nonprofit institutes that promote Chinese language and culture overseas. It stated that academics, under a college's J-1 exchange program, that teach students of elementary or secondary school age are in violation of visa regulations, and said they must return to China by the end of June to reapply for an appropriate program. Fifty-one teachers may be forced to come back to China. About 600 currently work in the US, according to the Confucius Institute Headquarters, more commonly known as Hanban. Discussions are taking place between China and the US. China is "in consultation" with the US on the issue, Foreign Ministry spokesman Hong Lei said. "We hope the issue will be addressed appropriately and not affect the development of the programs," Hong said. A senior official at Hanban, who did not want to be identified, added that the teachers it sends go through a strict process of selection by both China and the US, and receive special training. "I thought that since the teachers were granted visas after receiving invitations from the US there would not be a problem," he said. "As someone who is responsible for Confucius Institutes in the US, I was shocked (by the directive). "All the teachers embarked on their trip in a spirit of friendship but are being forced back with the feeling that they were not welcome. Isn't this harming friendship between Chinese and American people? "What is hard to understand," he added, "is that the US, which is known for its strict visa policies, has, for years, allowed the Chinese teachers to hold their current visas. The US State Department and other agencies have never mentioned this issue to us before, but then suddenly it makes an announcement. Why?" What also caught universities by surprise is the fact that the directive says Confucius Institutes should obtain US accreditation in order to continue to accept foreign scholars and professors as teachers. "The department is reviewing the academic viability of the Confucius Institutes. Based on the department's preliminary review, it is not evident that those institutes are US-accredited," the directive states. A Chinese education official in the US, who requested anonymity, said that it is the first time a question of accreditation concerning the Confucius Institutes has been raised. The first Confucius Institute in the US was established at the University of Maryland in 2005. Since then, Hanban has dispatched more than 2,100 teachers. Hanban argues that the 81 Confucius Institutes across the US are established jointly by applicant US universities and Chinese universities. They are run independently from Hanban. "All headquarter resources that were given to the Confucius Institutes, including guest teachers, were provided based on requests from the US," said the Hanban official who did not want to be identified. Education officials from the Chinese embassy in the US had planned to meet their counterparts at the US State Department on Thursday. However, on Tuesday, the US State Department appeared to be backpedaling from its stance on accreditation. In a report by The Chronicle of Higher Education, a Washington-based news service, an unnamed US State Department official was quoted as saying that the section of the policy directive on accreditation was "confusing" and it would be redrafted to clarify that Confucius Institutes that have partnerships with accredited colleges are in compliance with visa regulations. "This is not about the Confucius Institutes or about the Chinese model," the official said. "This is just simply a regulatory matter." The College of William and Mary in Virginia only opened its own Confucius Institute in April, and believes the policy directive may "inadvertently interfere with the very positive contributions made by Confucius Institutes to higher education in the US, as well as to US-China relations more broadly". "While we do appreciate the importance of visa regulations, we hope that the State Department can work with our Chinese partners in a spirit of mutual cooperation to find ways to support the efforts of Hanban, to provide increased opportunities to learn about the language and culture of China," college president Taylor Reveley wrote in a letter to the US State Department.

Hong Kong*:  May 26 2012 Share

A school in Sichuan rebuilt with Hong Kong donations after the 2008 earthquake has been torn down to make way for luxury homes - and now the SAR may demand its money back. The Mianyang Bauhinia Ethnic Secondary School was built using HK$2 million from the SAR government and a similar amount from the Hong Kong Federation of Education Workers following an outpouring of sympathy in wake of the devastating quake in 2008 that killed around 70,000 people and injured 400,000. The federation said it is not seeking the return of its share. The school had been open only 18 months when the developer, Wanda Group, pulled it down this month. Officials from Mianyang city have come up with conflicting explanations for an action that reeks of sheer waste, according to mainland media. Its commerce chief, Li Ze, said his department was not told of the intended demolition until after the fact. "The Mianyang authorities have seriously criticized Wanda for a demolition carried out in private," Li said, warning of "further punishment." But its deputy planning chief, He Lintai, said the school was rebuilt just for "urgent use" and was not intended to be a long-term replacement. Hong Kong's Development Bureau said yesterday the head of the SAR's taskforce on Sichuan's reconstruction, Mak Chai-kwong, is in talks with the province's authorities on the issue. "The bureau carried out a site visit at the beginning of this month," a spokesman quoted Mak as saying. "It has been in discussion with Sichuan authorities and the federation over how this issue can be resolved. "This includes demanding the authorities return the HK$2 million the SAR government donated." For his part, federation chairman Wong Kwan-yu said the reason it is relenting on its share of the donation is an agreement reached with Mianyang authorities in November. Under the deal, the developer will spend seven million yuan (HK$8.58 million) building a new and bigger school on another site. Wong said he had expected the old school to be used for other purposes and not to be demolished. The new school, he said, will be erected on a site of 65.5 hectares - big enough for 900 students. The old school was on only four hectares and had fewer than 300 students. He said Mianyang Bauhinia School had to share facilities such as libraries and playgrounds with Mianyang Normal University. The university was recently relocated and so the secondary school did not have enough supporting facilities. "We welcome the relocation because the new school will be able to house more students," Wong said, expressing confidence the Hong Kong government will be able to get back its HK$2 million. Meanwhile, Chief Secretary Stephen Lam Sui-lung will visit Sichuan this weekend to check on reconstruction projects supported by the government but the site of the demolished school is not on the agenda.

Two Community Care Fund schemes - one for medical aid and the other providing free lunches for poor students - are being taken over permanently by the government. The charitable trust's steering committee yesterday "regularised" both programs, which have proven effective since they were introduced as pilot schemes last year. This means the programs will eventually be included in the government's recurrent expenditure instead of being supported by the fund, the steering committee's chairman, Chief Secretary Stephen Lam Sui-lung, said. Bringing the programs under the government's wing would allow better use of resources, Lam said after yesterday's committee meeting. "We'll have more space to support disadvantaged groups." As both programs had shown results, Lam said they would be continued and managed by the Education Bureau and the Samaritan Fund. They are among 17 programs that the Community Care Fund runs. The fund was set up in October 2010 with a goal of attracting HK$5 billion in donations from the business community to cover gaps in the welfare system. The government would supply another HK$5 billion. The change of government in July would not mean the fund would stop running, Lam said after chairing a meeting of the committee for the last time. "I believe the Community Care Fund will definitely continue to run because there is the demand in society," he said. The fund now had HK$5 billion in public funds and HK$1.8 billion from private donations, which he said was adequate for present projects. The free lunch program, for primary school pupils eligible for student financial assistance schemes, will be financed by the fund in the next school year, benefitting more than 50,000 pupils at a cost of HK$34 million. The Education Bureau will apply for a budget for the program thereafter. The second phase of the medical assistance program, which subsidises self-financed specialist medications for patients with financial difficulties, will be taken over by the Samaritan Fund in the second half of this year. The patient contribution ratio will be lowered from a maximum of 30 per cent to a uniform rate of 20 per cent to help more patients. The number of self-financed cancer drugs covered in the first phase of the scheme will increase from six to nine. The program had a HK$192 million budget in 2011-12. Meanwhile, the Community Care Fund committee yesterday approved HK$91 million to provide one-off allowances for low-income people who are inadequately housed, a scheme announced earlier this year. About 30,000 people from 13,000 households living in cubicles, cocklofts, bed spaces in private buildings and temporary housing, and the homeless, will benefit. It will pay HK$3,000 to one-person households, HK$6,000 to two-person households, and HK$8,000 to households of three or more. Applications will start in October. The committee also approved a scheme to subsidise owners' committees of residential or composite buildings that are more than 30 years old. The fund reserved HK$68 million for the program, which is expected to benefit more than 3,000 owners' committees.

Margaret Chan Fung Fu-chun after her reelection as WHO director general during the 65th World Health Assembly in Geneva on Wednesday. The World Health Organisation on Wednesday re-appointed Margaret Chan Fung Fu-chun as its chief, who declared universal health care as her top priority. Chan was re-elected to head the agency for five more years at a meeting of the World Health Assembly, the WHO’s decision-making body, in Geneva. It is the second consecutive term for the former Hong Kong health secretary who has headed the United Nations body since November 2006 and was the sole candidate nominated ahead of Wednesday’s election. Chan, who the WHO said received the backing of 88 per cent of members who voted, said she would focus on noncommunicable diseases, mental health and improving the WHO’s performance through reform. Emphasis will also be put on the prevention of domestic violence as part of a commitment to improving the health of women, she said. But universal coverage would be the “overarching priority” for the organisation over the next five years. “In my view, universal coverage is the single most powerful concept that public health has to offer,” said Chan. “It is our saviour from the crushing weight of chronic non-communicable diseases that now engulf the globe.” Back in 2009 it was Chan who declared swine flu the world’s first flu pandemic in 40 years. Chan’s next tenure will begin on July 1 and see her remain director general through to June 30, 2017. She was the only candidate put forward to the WHO’s executive board. Before her next term begins Chan said she will issue a “report card” assessing how well the WHO performed under her past leadership. The WHO has 194 member states and is responsible for assessing health trends and shaping the research agenda as well as providing technical support to countries. Chan is the eighth director-general in the body’s 64-year history.

Executive Council convener Ronald Arculli has called the antagonistic exchanges between chief executive-elect Leung Chun-ying and lawmakers “a political game”. He also rejected suggestions that Leung was intervening in the work of the Legislative Council but supported legislators’ efforts to scrutinise the incoming leader’s government restructuring plan. Arculli’s remarks came a day after publication of a newspaper article by Leung in which he said lawmakers were deliberately delaying his plan by scheduling a series of committee and panel meetings to discuss it. “Leung is worried about the restructuring. I sympathised with him,” Arculli, who succeeded Leung as Exco convener, said on a radio programme on Thursday morning. “He knew he did not want to interfere with Legco. He was just expressing his ideas.” After the article was published in six Chinese-language newspapers on Wednesday, some pan-democratic lawmakers accused Leung of trying to put pressure on the legislature. Arculli said legislators’ queries about the proposed revamp were justified, adding: “The two posts [of deputy chief secretary and deputy financial secretary] are new. Leung would agree it was right to review and question the new structure.” Leung’s reorganisation plan also includes reshuffling the policy portfolios of the 12 bureaus, and adding a new culture bureau and a new technology and communications bureau. Ahead of a vote on 111 legislative amendments related to the changes on June 20, some Legco panels including the housing panel and the information technology and broadcasting panel have scheduled meetings on the plan. In his newspaper article, Leung described the scheduled meetings as a type of filibuster. People Power lawmaker Albert Chan Wai-yip – a leader of a filibuster last week that dragged out debate on a controversial electoral bill for more than 30 hours before it was stopped by Legco president Tsang Yok-sing – has vowed to delay passage of the restructuring plan when the Finance Committee discusses funding for it. On the radio programme, Arculli also praised outgoing Chief Executive Donald Tsang Yam-kuen, whose administration is often criticised as a “lame duck”. “It is unfair to call an administration a ‘weak government’ simply because it listens to the public,” Arculli said of the seven years of Tsang’s tenure. “I give a high score to Donald Tsang and his government.” He added Leung should listen widely to citizens and lawmakers when making policies.

Legco president Tsang Yok-sing said yesterday that ''no one can put pressure on Legco'', including chief executive-elect Leung Chun-ying. Chief executive-elect Leung Chun-ying stirred fresh controversy yesterday by suggesting that lawmakers are deliberately delaying passage of his government restructuring plan. In an article published in six newspapers, he suggested that a series of Legislative Council panel meetings, called to discuss his proposals, were a form of filibustering. Legislators responded by accusing him of trying to weaken the legislature's monitoring process and jeopardising the separation of powers. "The Legco panels are all arranging meetings to discuss the proposal. Is it a kind of filibustering?" Leung asked in the article, published in newspapers including Ming Pao Daily and Ta Kung Pao. He was alluding to last week's filibuster in Legco. Leung wrote: "During the 2007 administrative overhaul, only the constitutional affairs panel held meetings [to discuss it]." As well as panel meetings, a subcommittee has been set up to vet the 111 legislative changes involved. The head of the Chief Executive-elect's Office, Fanny Law Fan Chiu-fun, yesterday pressed legislators on the subcommittee to pass the proposals. She said the incoming cabinet would use Legco's summer recess to prioritise its policies. That made passage of the restructuring by July 1 necessary to give the new team time to consolidate and roll out its policies in time for Leung's policy address in October, she said. But lawmakers asked whether the office was seeking to push through the proposals without fully explaining the rationale and job distribution of the new structure. The revamp would rearrange the portfolios of the 12 existing bureaus while adding a culture bureau and a technology and communications bureau. Civic Party lawmaker Margaret Ng Ngoi-yee said Leung was "trying to get away from monitoring by Legco. You are already jumping the queue in urging Legco to vet your restructuring proposal first - amid a pile of work - but you are not offering sufficient explanations on the proposed changes," Ng said. "It is necessary for the various panels to discuss your plans in detail, as it is not merely a change in constitutional structure, but in policy direction." The home affairs panel met on Tuesday to discuss the formation of the culture bureau. The housing panel and the information technology and broadcasting panel also have meetings scheduled. Housing panel chairman Lee Wing-tat said he "smelt autocracy" in Leung's criticism. "The panel has concrete questions about his proposal. Leung's remarks go against the separation of powers," said Lee, a member of the Democratic Party. Ip Kwok-him, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said the home affairs panel meeting he chaired was necessary since the culture bureau "was a brand new idea". However, he opposed various other panel meetings, which "were unnecessary in the previous reorganisations". People Power lawmaker Albert Chan Wai-yip, the mastermind behind last week's legislative filibuster, vowed to drag out passage of the revamp resolution. "I will table motions in the finance committee regarding the different bureaus. I have already thought of a dozen on the reorganisation of the housing bureau," Chan said. Legco president Tsang Yok-sing said that, when ruling on meeting arrangements, he would not consider Leung's accusation lawmakers were trying to block his proposal. "No one can put pressure on Legco," he said.

Tycoon Joseph Lau Luen-hung to face bribery charges - Macau court rules Joseph Lau, chairman of Chinese Estates, has a case to answer on charges relating to 2005 purchase of luxury-flats site. Hong Kong tycoon Joseph Lau Luen-hung is to face prosecution in Macau on bribery and money laundering charges in relation to land purchases approved by convicted former public works chief Ao Man-long. Lau's lawyers argued in vain at a preliminary hearing that he had no case to answer. The case against Lau comes two months after the arrest by Hong Kong graft busters of Sun Hung Kai Properties (SEHK: 0016)' co-chairmen Raymond Kwok Ping-luen and Thomas Kwok Ping-kwong and former chief secretary Rafael Hui Si-yan in connection with bribery and other offences. The eldest Kwok brother, Walter Kwok Ping-sheung, was also arrested later in connection with the case. None of the brothers, or Hui, has been charged with any crime. Lau, chairman of Chinese Estates Holdings (SEHK: 0127), and tycoon Steven Lo Kit-sing, chairman of BMA Investment, allegedly offered HK$20 million to Ao in 2005 in connection with their bid for five plots of lands opposite Macau airport, on which a luxury development, La Scala, is now being built. Ao, who is already serving a jail term of 28-1/2 years, is awaiting sentencing on six charges of bribery and three of money laundering. In Ao's trial, both Lo and Lau were listed as witnesses. Lau did not testify, while Lo denied offering a bribe. In an announcement to the Hong Kong stock exchange, Chinese Estates said: "[The] Court of Criminal Instruction of Macau [has] … formally accepted the accusation from the public prosecutor against Lau of committing offences of bribery and money laundering in relation to the acquisition of the Macau land." It said the court had also rejected the request of discharge of the accusation based on lack of evidence. The case would be remitted to the Court of First Instance of Macau "for trial in due course", it said. Ahead of the announcement, Chinese Estates' shares closed at HK$9.82, down 2.2 per cent. Neither Lau nor Lo could be reached for comment. It is not known whether Lo also faces prosecution. A HK$20 million "consultancy fee" cheque co-signed by Lau in October 2005 and made out to Eastern Base, a Macau company set up by Lo, was among evidence presented by Macau's Commission Against Corruption investigators during Ao's latest trial. The cheque was found in Ao's former home. The money was passed to Ecoline, a company controlled by Ao, after the sale of the airport land, the court heard. Moon Ocean, previously owned by Lo and now owned by Chinese Estates, was awarded the land.

The number of primary and secondary schools is expected to shrink even more in the next few years due to low admission rates. Education secretary Michael Suen Ming-yeung told the Legislative Council yesterday that six aided institutions will close their doors in as many years, raising to 101 the number of shuttered schools since 2003. Suen said two primary schools and four secondary schools will close after phasing out their classes by 2018. In addition, two secondary schools will merge with other institutions. Since the policy of closure was started nine years ago, 86 primary schools have ceased operation for not meeting the minimum threshold number of Primary One students. Nine government and aided secondary schools have also closed due to under-enrolment and other development plans. About half of these were deemed unsuitable owing to their limited size and remote locations, and a further 31 were reallocated for other educational uses. Given the overall surplus of public sector school places in recent years, Suen, who is due to retire in July, said the bureau has no plans to increase the number of places in Direct Subsidy Scheme schools at present.

 China*:  May 26 2012 Share

A staff member from Beijing Waterworks Group tests a water sample before it flows to the pipelin. New qaulity standards for drinking water will come into effect on July 1. New standards for drinking water will come into force in China on July 1, with the number of quality indicators rising to 106 from 35. While that's almost on a par with the standards used in the European Union, some experts have raised concerns about the feasibility of the new system. "There are about 3,000 water companies in China. Judging by their production technologies and their quality-testing facilities, most still have a long way to go before they can meet the new standards," said Li Fuxing, director of the Beijing Institute of Public Health and Drinking Water. Meanwhile, Fu Tao, director of Tsinghua University's Water Policy Research Center, said that the number of cities with the facilities to test all 106 indicators covers a very small portion of the area served by the industry. Traditionally, the treatment process consists of four steps: flocculation, precipitation, filtration and chlorination. The first three remove particle pollutants and reduce the water’s turbidity, making it clearer to the eye, while the addition of chlorine kills micro-organisms. Chlorination is seen as one of the major innovations of the 20th century, but in 1977 scientists in the United States discovered that organic compounds left in the water after the first three steps in the treatment process may react with chlorine to generate potentially carcinogenic byproducts. Under the regulations, first released in 2006, all treatment plants are obliged to meet the new criteria by July 1 this year. Some cities, such as Beijing, quickly achieved that goal, but despite the five-year hiatus, many companies have yet to upgrade their equipment or production techniques. "By the end of 2009, 98 percent of China’s water plants were still employing production processes that have been in use for decades," Lan Weiguang, adjunct associate professor from the chemistry department of the National University of Singapore, wrote in his micro blog. Meanwhile, the number of indicators to test for organic compounds in drinking water will rise to 53 from just five. "That means the government has realized the importance of controlling organic pollutants," said Lan. "But most water plants fail to meet the target because of outdated production processes." Some experts have asked why it's taken so long for the new regulations to come into force. "Other countries may use fewer indicators than us, but they are strictly implemented as soon they’re released. We have waited five years for these standards to be enforced," said Li. "Also, in many countries, the standards are revised annually, based on various data," he added, noting that, before 2006, the last revision in China was back in 1985. The 2006 standard unified the water quality standards in the country’s rural and urban areas for the first time. But even as plants in the city struggle to meet the new criteria, those in rural areas face an even tougher challenge because their quality standards have always lagged behind. Take quality monitoring in the rural areas of the southwestern province of Sichuan as an example. Work didn’t begin until 2004 and official statistics show that only 20 indicators were being measured by 2011, nowhere near the 1985 standard of 35, to say nothing of the 106 stipulated by the 2006 reforms. Despite this, Sichuan is seen as something of a role model in the improvement of water quality, having undertaken a large number of projects to provide safe drinking water to its rural population, which is geographically dispersed over vast distances with many people living in inaccessible mountainous regions. Meanwhile, the situation in provinces such as Yunnan and Guizhou is much worse.

The Commerce Ministry investigation said on Thursday US government support for six renewable energy projects violated free-trade rules. China's Commerce Ministry said on Thursday an investigation found US government support for six renewable energy projects violated free-trade rules. The announcement is the latest volley in a widening conflict between Beijing and Washington over renewable energy. They have promised to co-operate in developing technology but accuse each other of improperly supporting their manufacturers. China’s Commerce Ministry said an investigation launched in November concluded US support for the six solar, wind and hydro projects violated World Trade Organisation rules. It gave no indication whether Beijing might take punitive measures. The announcement follows a preliminary ruling last week by the US Commerce Department in a separate case that Chinese manufacturers were selling solar power equipment in the United States at improperly low prices.

China can now bypass Wall Street when buying US government debt and go straight to the US Treasury, in what is the latter's first-ever direct relationship with a foreign government, according to documents viewed by Reuters. The relationship means the People's Bank of China is able to buy US debt using a different method to any other central bank in the world. Other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for US debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions. China, which holds US$1.17 trillion in US Treasuries, still buys some Treasuries through primary dealers, but since June 2011 that route hasn't been necessary. The documents viewed by Reuters show the US Treasury Department has given the PBOC a direct computer link to its auction system, which the Chinese first used to buy two-year notes in late June 2011. China can now participate in auctions without placing bids through primary dealers. If it wants to sell, however, it still has to go through the market. The change was not announced publicly or in any message to primary dealers. "Direct bidding is open to a wide range of investors, but as a matter of general policy we do not comment on individual bidders," said Matt Anderson, a Treasury Department spokesman. While there has been no prohibition on foreign government entities bidding directly, the Treasury's accommodation with China is unique. The Treasury's sales of US debt to China have become part of a politically charged public debate about the latter's role as the largest exporter to the United States and the country's largest creditor. The privilege may help China obtain US debt for a better price by keeping Wall Street's knowledge of its orders to a minimum. Primary dealers are not allowed to charge customers money to bid on their behalf at Treasury auctions, so China isn't saving money by cutting out commission fees. Instead, it is preserving the value of specific information about its bidding habits. By bidding directly, it prevents Wall Street banks from trying to exploit its huge presence in a given auction by driving up the price. It is one of several courtesies provided to a buyer in a class of its own in terms of purchasing power. Although the Japanese, for example, own about US$1.1 trillion in Treasuries, their purchasing has been less centralised. Buying by Japan is scattered among institutions, including pension funds, large Japanese banks and the Bank of Japan, without a single entity dominating. Granting China a direct bidding link is not the first time Treasury has gone to great lengths to keep its largest client happy. In 2009, when Treasury officials found China was using special deals with primary dealers to conceal its US debt purchases, the Treasury changed a rule to outlaw such deals, Reuters reported last June. But at the same time it relaxed a reporting requirement to make the Chinese more comfortable with the amended rule. Another feature of the Sino-US business relationship is discretion: The Treasury tried to keep its motivation for the 2009 rule change under wraps, Reuters reported. Documents dealing with China's new status as a direct bidder again demonstrate the Treasury's desire for secrecy vis a vis Wall Street. To safeguard against hackers, Treasury officials upgraded the system that allows China to access the bidding process. Then they discussed ways to deflect questions from Wall Street traders that would arise once the auction results began revealing the undeniable presence of a foreign direct bidder. Most members of the public "hold the view that foreign accounts only submit 'indirect bids' through primary dealers. This will likely cause significant chatter on the street and many questions will likely come our way," wrote one government official in an email viewed by Reuters. In the email, the official suggests providing basic, general answers to questions about who can bid in Treasury auctions. "For questions more extensive or probing in nature, I think it prudent to direct them to the Bureau of Public Debt's government securities regulation staff or Treasury public relations area," the official wrote. The granting to China of direct bidder status may be controversial because some government officials are concerned the country has gained too much leverage over the US through its Treasury holdings. For example, economist Brad Setser, who is a member of the National Economic Council and has also served on the National Security Council, has argued China's holdings pose a national security threat. Writing for the Council on Foreign Relations in 2009, Setser posited that China's massive US debt holdings gave it power over US policy via the threat of a swift, large sale of US debt that could send the market into turmoil and drive up interest rates. But Treasury officials have long maintained that US debt sales to China are kept separate from politics in a business relationship that benefits both countries. The Chinese use Treasuries to house the dollars they receive from selling goods to the United States, while the US government is happy to see such strong demand for its debt because it keeps interest rates low. A spokesman for the Chinese embassy in Washington did not respond to calls and e-mails seeking comment. The US has, however, displayed increasing anxiety about China as a cybersecurity threat. The change Treasury officials made to their direct bidding system before allowing access to China was to limit access to the system via a specially designed private network connection controlled by the Treasury. China is among the most sensitive topics for bankers and government officials who court the country as a client because of its size and importance, and none would agree to comment on the record for this story. A former debt management official at the Treasury who did not want to be identified said that as China has garnered experience in the US Treasury market over time, its officials may have felt more comfortable taking the reins in the management of their holdings. Their request to bid directly, in his view, came from a confidence that their money managers could buy US debt more efficiently on their own than through Wall Street banks, which can often drive up the price of Treasuries at an auction if they know how much large clients are willing to pay. Such a practice is not specifically illegal, though most traders would deem it unethical. Evidence of China's growing sophistication in the US markets is clear in its expansion of operations in New York. Its money management arm, the State Administration for Foreign Exchange, has an office in midtown Manhattan and a seasoned chief investment officer in Beijing. A woman who answered the phone at its New York office said no one there was authorised to talk to the media.

Macy’s Joins China E-Commerce Craze - Another major U.S. retailer is testing China’s crowded e-commerce market as domestic players start feeling the heat. As the WSJ reports, Macy’s Inc. has invested $15 million in Chinese online retail company VIPStore Co. Intel Corp.’s Intel Capital is also an investor in the company. The deal will allow Macy’s to sell merchandise through a dedicated section on the website, Omei.com, in spring 2013, a luxury site operated by VIPStore. Macy’s move comes after Neiman Marcus Group Inc. invested $28 million for a stake in Chinese site Glamour Sales Holdings Ltd., allowing the company to tap Chinese demand for luxury goods without having to invest in bricks and mortar stores. J. Crew Group Inc. also said earlier this year it would start shipping overseas to 107 countries and is actively looking for retail space in Asia and Europe. Increased competition coming from U.S.and European companies is putting pressure on many domestic startups that had entered China’s web to sell luxury before Macy’s, Neiman and Net-a-Porter were brave enough to peddle their wares in unchartered Internet territory. Chinese Internet portal NetEase shut down its once-popular luxury commerce site NetEase Premier in January, having operated for less than a year. Analysts say more will shutter their sites as companies like Macy’s pile in, as Chinese consumers are interested in big global brand names over little-known domestic offerings. The battle online also reflects what’s happening in the bricks and mortar sphere. As larger, more global fashion companies are coming into China, the smaller Chinese boutiques that once dominated lower-tier cities are facing challenges to keep their doors open. Chinese consumers want what the rest of the world has access to, says Aaron Fischer, an analyst at brokerage CLSA Asia Pacific Markets.

Wu Qidi, vice minister, China’s Ministry of Education, spoke at the 2006 opening of a Confucius Institute at the University of Kansas Edwards Campus in Overland Park, Kan., as then Kansas Gov. Kathleen Sebelius, left, looked on. Is the U.S. government taking on one of the Chinese government’s best known efforts to promote China’s image abroad? That was the question ricocheting around the Chinese Internet this week after the Chronicle of Higher Education reported on a new U.S. State Department directive that could complicate things for the Beijing-sponsored network of language-teaching outposts known as the Confucius Institutes. From the Chronicle’s report: The memorandum, dated May 17, states that any academics at university-based institutes who are teaching at the elementary- and secondary-school levels are violating the terms of their visas and must leave at the end of this academic year, in June. And it says that, after a “preliminary review,” the State Department has determined that the institutes must obtain American accreditation in order to continue to accept foreign scholars and professors as teachers. Among those protesting the directive was Kong Qingdong, a firebrand Beijing University professor widely identified as a direct descendent of the great sage. “Citing visas, the U.S. has set a deadline for Chinese Confucius Institute teachers to leave the country,” Mr. Kong wrote Thursday on the popular Twitter-like microblogging service Sina Weibo. “Meanwhile, in China, everywhere you look you find Hollywood movies, Silicon Valley microchips and McDonald’s French fries. From entertainment to technology to food products, the American cultural invasion is multipolar, omnidirectional and deep.” At a daily press briefing on Thursday, Hong Lei, a spokesman for China’s Foreign Ministry, said officials were in talks with their U.S. counterparts over the matter and that “we hope it doesn’t affect the development of the Confucius Institute project.” The Confucius Institutes are sponsored by Hanban, an organization affiliated with China’s Ministry of Education, and are similar in aim to other government-sponsored cultural outreach programs like Germany’s Goethe Institutes and Spain’s Instituto Cervantes. By the end of 2010, China had established more than 300 Confucius Institutes (plus an additional 369 smaller Confucius Classrooms) in 96 countries and regions, according to the Hanban website. Beijing has spent more than $500 million on the program since 2004, according to a Bloomberg report in November. Criticized by some as propaganda vehicles, in part because they limit discussion of politically sensitive topics like Tibet and the 1989 crackdown on Tiananmen Square protestors, the institutes are nevertheless popular with cash-trapped U.S.universities eager to take advantage of the subsidized language instruction. More than 60U.S.universities play host to the institutes, according to a list on the Hanban website. The problem, the Chronicle reports, is that university-affiliated Confucius Institute teachers are also offering instruction to students below the college level through public outreach programs — an activity prohibited underU.S.visa regulations. Several Chinese commentators struck a defiant tone in the wake of the report, with more than a few suggesting the directive was a sign that the U.S.had grown scared of China’s growing cultural influence. “This decision runs completely counter to the popularity of Chinese language study among American college students,” Hu Xijin, editor of the nationalist tabloid Global Times, wrote on Sina Weibo. “The Confucius Institutes have absolutely nothing to worry about. Let the American universities worry.” In a second report published Tuesday, the Chronicle said U.S. officials had denied that the directive was intended to specifically target the Confucius Institutes and quoted one State Department official describing it as “simply a regulatory matter.” The controversy comes at the same time as a newly launched campaign to rid Beijing of so-called “three illegal” foreigners – foreigners who either entered the city illegally or are living or working in the city without the proper visas — a coincidence not lost on Chinese Internet users. “Looks like ‘cleaning out the three illegals’ isn’t so easy,” wrote one Sina Weibo user posting under the handle Lawyer Shen Guoyong. “China has three-illegals foreigners, but foreign countries have three-illegals Chinese people.” Even the Communist Party mouthpiece newspaper People’s Daily waded into the debate, publishing a story on Thursday in which it pointed the finger at “political forces” in the U.S. that have “always arbitrarily criticized the Confucius Institutes and incessantly tried to discredit the institutes’ teaching activities.” The move did garner some sympathy insideChina, however, including from a Sina Weibo user writing under the name The Past is Like the Winds and Clouds: “Haha, the U.S. is scared of our education,” the user wrote. “It’s because we’re good at brainwashing. The U.S. is afraid we’ll turn their next generation into our current generation.”

A shopper purchases a Lenovo Group Ltd computer at a Medion AG consumer electronics store in Germany. Lenovo's sales in developed economies increased from January to March by 85 percent year-on-year, reaching $3.4 billion. Technology giant reports record-high net profit growth rate in latest fiscal year - Lenovo Group Ltd, a Chinese maker of personal computers, became the fourth-largest maker of tablet PCs in the world measured by market share in the last quarter of its 2011 fiscal year, the company announced on Wednesday. It also reported having a record-high annual net profit growth rate of 73 percent, bringing it closer to its US rivals Hewlett-Packard Corp and Apple Inc. For its entire 2011 fiscal year, Lenovo said it had $29.6 billion in sales. During that time, it commanded 12.9 percent of the global market for the types of products it makes, making it the second-largest PC producer and fourth-largest tablet PC producer measured by market share. That brought its market share to within 2 percentage points of HP's, up from the 9 percentage-point difference seen in its 2010 fiscal year, according to the IT research company International Data Corp. Also in the fiscal year, the company saw its sales revenue increase by 37 percent year-on-year. As for the last quarter, Lenovo saw 39 percent of its sales revenue come from China. Its sales increased by 22.7 percent year-on-year in China in the same period, while they increased by 81 percent in mature markets such as the United States and Japan, which contributed about 45 percent of the company's global revenue. China is home to 512 million Internet users, a figure that has increased by 278 percent from 2005 and that now surpasses the number of users in the United States, according to the China Internet Network Information Center. After forming a joint venture with the Japan-based NEC Corp, a provider of IT products and services, and buying the German consumer electronics maker Medion AG, Lenovo's sales in developed economies increased from January to March by 85 percent year-on-year, reaching $3.4 billion. Lenovo is the largest PC brand in Japan measured by sales. The company attributed its performance to its Internet mobile devices, including tablet PCs and smartphones. Lenovo's tablet PCs, such as the ideaPad, held 17.2 percent of the Chinese market for such products in the last quarter of the company's fiscal year. "A year before, Lenovo had ranked eighth in the global market for tablet PCs, but now it is behind only Apple, Samsung and Amazon," said Wang Jiping, a senior analyst at the US-based IT research company IDC Asia-Pacific. Liu Jun, Lenovo senior vice-president and president of the company's Mobile Internet and Digital Home Business Group, said the company's revenue from sales of smartphones increased about 11-fold in the past year. Within the two years leading up to March, its market share for smartphones increased from about 2 percent to 10 percent. "We expect sales of smartphones to increase by 300 percent by the end of this year, and our tablet PC products to hold about 20 percent of the market," said Liu.

Former Utah Governor and Ambassador to China Jon Huntsman (right) discusses issues facing US-China relations with Stephen Orlins of the National Committee on US-China Relations in New York on Wednesday. The US-China relationship has evolved from being strictly bilateral to one that now affects the world, and steps must be taken to humanize it, former US ambassador and presidential candidate Jon Huntsman said Wednesday. "We see it as a relationship that impacts people of all levels of the society - because of trade, business opportunities and prospects. The stakes are way too high for us to fail in this relationship," Huntsman told the audience at an event in New York hosted by the National Committee on US-China Relations. Huntsman discussed with the organization's president, Stephen Orlins, critical issues that surround US-China relations. "Right now, a lot of Americans don't see the value in the US-China relationship. So a lot of politicians get away with bashing. They do it time after time because they know they can get away with it," said the moderate Republican, a former governor of Utah. Huntsman, during and after his ultimately unsuccessful bid for his party's nomination, publicly disagreed with Republican front-runner Mitt Romney's China policy. On Wednesday, the former envoy reminded his audience that it's crucial to "step up our efforts in humanizing the US-China relationship". "I think this is what we will become in 10 to 20 years down the road," he said. Huntsman began to see a different side to the world's most important geopolitical link while serving as governor in Salt Lake City from 2005 to 2009. "All of a sudden, China became less of a threat and more of a customer," he recalled. "We have more Mandarin-speaking students in Utah than any other state. Parents of these kids who have never been to China began lining up outside the classrooms. They knew their children would be stepping out to a different world than ours." Huntsman was nominated to serve as Washington's ambassador to China by President Barack Obama in May 2009, with the Democratic chief executive emphasizing the Republican's experience in Asia and proficiency in Mandarin. He served in Beijing from August 2009 until returning to the US in April 2011 to launch what became a long-shot campaign to defeat Obama. While their relationship continues to experience numerous ups and downs, the US and China have "completely underutilized" their opportunity to work together, Huntsman said. The two sides can and should cooperate more in tackling global issues including economic rebalancing, Iran and its nuclear program, and fighting terrorism. In years to come, a primary focus of the relationship will be Chinese investment in the US, Huntsman said. "As China moves from the export model to the consumption model, investment in the US could be a significant trend in the years to come. After all with 25 percent of the world's GDP, we are still the best market in the world to invest in," Huntsman said.

Hong Kong*:  May 25 2012 Share

British luxury clothing and accessories company Burberry said on Wednesday that annual net profits jumped by more than a quarter, boosted once again by surging demand in Asia. Earnings after taxation rose by 26 per cent to 263.3 million pounds (HK$3.2 billion) in the 12 months to March, Burberry said in a results statement. Revenues meanwhile rose 24 per cent to 1.86 billion pounds, aided by the launch of the group’s first flagship stores in Hong Kong, Paris and Taipei. “Burberry has completed another successful year,” said chief executive Angela Ahrendts. “An intense focus by our global teams on business, brand and culture in recent years has resulted in a strong foundation across channels, regions and products. “While we remain vigilant about the external environment, we will continue to invest in front-end opportunities within our brand, digital and retail strategies, to drive sustained, profitable growth and enduring customer engagement over the long term.” Burberry, famous for its trench coats and trademark red, camel and black check design, added that adjusted pretax profit also soared by 26 per cent to 376 million pounds. That beat market expectations of 375 million pounds, according to analysts polled by Dow Jones Newswires. In recent years, Burberry has been at the forefront of the global surge in demand for luxury goods, bolstered by soaring sales in China. At the same time, many mid-market retailers have struggled for survival amid poor economic conditions.

Prada has been boosted by high demand for leather goods, especially in China, but fears the effects of a possible euro-zone exit by Greece. Italian fashion house Prada said the worsening debt crisis had not hit the company's performance in Europe so far, as deep-pocketed tourists from emerging countries had kept sales buoyant. The fashion house was also undaunted about a slowdown in the mainland's economy, a smiling deputy chairman Carlo Mazzi told the media yesterday after the annual general meeting. "If you knew the results from our first quarter, perhaps you would also be optimistic." The first quarter results will be out on June 7, but the global research team at HSBC is bullish about the fashion house's prospects. According to the luxury brand's report released yesterday, high demand for leather goods, especially in China, would push Prada's earnings up by 23.3 per cent to €3.15 billion (HK$31.3 billion) this year, while net profit could rise 72.2 per cent to €431.9 million. However, what worried Mazzi was a possible exit of Greece from the euro zone. While the country contributed only "peanuts in terms of Prada's total sales volume", the impact that this would have on its European neighbours and the rest of the world was damaging, he said. An exit could expose the euro zone and European Central Bank to massive losses, and the uncertainty in Europe is one reason that the high-flying fashion house turned to emerging countries for growth. Half of the 80 shops it will open this year will be in emerging economies, including Morocco and Dubai, while 12 to 15 will be in China. Last year, Prada opened 69 shops. Mazzi said Prada had no plans to raise its prices in Europe, despite a widening gap between its European and Asian outlets due to high shipping costs and excessive import taxes charged by Asian countries and an appreciating yuan. "It is not fair for us to raise prices in Europe. We don't want to use such a strategy," he said. Mazzi added that it would also be difficult for Prada to cut prices in China and other developing countries like Brazil unless their governments decided to lower taxes on imported luxury goods. An earlier study by CLSA AsiaPacific Markets found more than half of the sales for certain brands, including Prada and Gucci, in key European cities, New York and Hong Kong were made by mainland visitors. Mainland visitors were also responsible for one third of sales of some luxury brands, including Gucci and Prada. HSBC raised the target price for the Hong Kong-listed fashion house this year to HK$53 from HK$48, and it closed 8.55 per cent higher at HK$47 yesterday.

Leung Chun-ying has suggested lawmakers are engaged in a type of filibuster on his government restructuring plans and wants them to stop it. In a newspaper article published on Wednesday, the chief executive-elect said a series of panel meetings called to discuss his proposals were delaying their passage. Legislators responded by accusing him of diminishing the legislature’s monitoring process. “The Legco panels are all arranging meetings to discuss the proposal. Is it a kind of filibustering?” Leung asked in the article in Ming Pao Daily, published as controversy continued over Legco president Tsang Yok-sing’s decision to end radical lawmakers’ filibuster on an electoral bill after more than 30 hours of debate. “During the 2007 administration overhaul only the constitutional affairs panel held meetings [to discuss it],” he wrote. As well as panel meetings, a sub-committee has been set up to vet the 111 related legislative changes. At a meeting of the subcommittee on Wednesday, the head of the chief executive-elect’s office Fanny Law Fan Chiu-fun, pressured legislators to pass the proposals. She said the incoming cabinet would use Legco’s summer recess to prioritise policies. That made passage of the restructuring by July 1 necessary to give the new team time for consolidation and rolling-out policies in time for Leung’s first Policy Address in October, she said. But lawmakers asked whether the office was seeking to push through the proposals without fully explaining the rationale and job distribution of the new structure. This re-arranges portfolios of the 12 existing bureaus while adding a culture bureau and a technology and communications bureau. Civic Party lawmaker Margaret Ng Ngoi-yee said Leung was “trying to get away from monitoring the Legco”. “You are already jumping the queue in urging the Legco to vet your restructuring proposal first – amid a pile of work – but you are not offering sufficient explanations on the proposed changes,” Ng said. “It is necessary for the various panels to discuss your plans in detail, as it is not merely a change in constitutional structure, but in policy directions.” Law said delayed passage of the plan, for which the legislative amendments are scheduled for voting on June 20, “could affect completion of public housing construction”. But Democratic Party lawmaker Lee Wing-tat said: “Construction of public housing would continue even with the existing administration structure in place.” He added that Leung’s criticisms of panel meetings on the restructuring plans were “exaggerated”. “He wants the Legco to pass whatever he tables. This looks autocratic to me,” said Lee. The home affairs panel met on Tuesday to discuss formation of the culture bureau. The housing panel and the information technology and broadcasting panel also have meetings scheduled.

Lands officers yesterday successfully entered a rural leader's recreational park in Yuen Long and tore down most of the remaining illegal structures inside, backed by a strong police presence. Hong Kong's development minister said the move, coming five weeks after the facility became a high-profile example of inaction over illegal occupation of government land, upheld the administration's "credibility in governance". Workers entered the park and zoo of influential Heung Yee Kuk member Leung Fuk-yuen under the escort of more than 100 policemen, a day after they ran into a fierce confrontation with angry villagers. Key members of the rural body, including chairman Lau Wong-fat, visited the Tai Tong Lychee Valley during the demolition to show united support against what they called an unco-operative government. Secretary for Development Carrie Lam Cheng Yuet-ngor defended the need to remove the illicit structures. Lam said her security counterpart, Ambrose Lee Siu-kwong, had promised her enough support from the police before the Lands Department took action. "After all, it is not just about the government claiming back its own land," she said. "It is about law enforcement, and is a matter of governance credibility." Workers used a crane to pull down a two-storey-high entrance arch in the evening. According to Chinese customs, removing a signboard is seen as a taboo for businessmen. Other structures on government land, including a toilet and porches, were also destroyed. The 12,000-square-metre park, which encroaches on Tai Lam Country Park, has occupied 5,000 square metres of government land illegally for 18 years, the Audit Commission reported last month. Since the report, both Leung and the department had removed some of the structures. Kuk leaders at the scene yesterday said demolition was not the most suitable means of dealing with such land disputes in the New Territories, as the widespread problem had a unique historical background. Kuk vice-chairman and lawmaker Cheung Hok-ming rejected claims that the rural body, which oversees the land rights of indigenous New Territories residents, exhibited weakness in front of the government. "The kuk has never bowed to the government," Cheung said. He said villagers whose lands were hemmed in by government land should be allowed to pay rent so as to develop their site, or be offered unaffected land elsewhere. Demolition failed to "take landowners' feelings into account". Leung, who is chairman of Shap Pat Heung Rural Committee and a Yuen Long district councillor, said he was willing to co-operate. But he repeated his disappointment that the government refused to approve his park's applications for short-term tenancy on the government land. The Lands Department said on Saturday that the outcomes of his applications were based on the objection of the Agriculture, Fisheries and Conservation Department. A dozen villagers stood outside the park, but refrained from resistance - a day earlier they chased away a contractor's truck and flared up at lands officials. Lam said she was pleased with the local response. Political commentator Dr James Sung Lap-kung of City University said the chain of events arising from the saga showed there was good communication between the government and the kuk behind the scenes. "This could create good conditions for future discussions about village houses' illegal structures."

Advertisements for second-hand homes will have to show exactly how much space there is in each flat from next year, though estate agents will not be banned from using a controversial measure that can hugely inflate the quoted size of flats. The Estate Agents Authority yesterday ordered the city's property agents to use the "saleable area" of a property, which includes balconies but excludes common areas and bay windows, in all promotional material from January 1. The authority had been expected to set out a timetable to abolish the use of "gross floor area", which boosts the quoted size of a flat by including its share of communal areas such as lobbies and staircases and has been condemned as highly misleading. But its circular, issued yesterday, said the measure could still be used alongside the saleable area. The consumer watchdog warned in 2009 that as much as 32 per cent of the quoted size of a flat in some new estates could be made up of communal areas or space that could not be used, such as bay windows. "It is a colossal task to transform the industry's habits," William Leung Wing-cheung, chairman of the authority's practice and examination committee, said yesterday. "We will take a progressive approach to educate and publicise the use of saleable area." Agents who fail to comply with the new rule will face a penalty ranging from a reprimand to a fine or the revocation of their licence. But agencies will still be able to quote the gross floor area as long as it is written in text no bigger than that used to show the saleable area. The Legislative Council is expected to approve a ban on the use of gross floor area in the sale of new flats before the end of the legislative session in July. Developers fiercely oppose the ban, arguing that there will be confusion because of the continuing use of gross floor area in the second-hand market. Leung says he hopes saleable area will eventually become standard, but would not be drawn on how long the transition would take. "It depends on how quickly the public adopts the use of the saleable area," he said. The Consumer Council, which has long advocated a ban on the use of gross floor area, said it "hoped ultimately only the saleable area will be used" in the secondary market. Lawrence Poon Wing-cheung, of the Institute of Surveyors, said the authority should set out a timetable for a ban on the use of gross floor area. While the use of the measure for second-hand flats was less damaging than in sales of flats that have not been constructed yet, it could make it difficult for buyers to compare flats in different developments, he said. Agents already have to state the saleable area in standard forms when properties are rented or sold, but buyers would normally see such forms only when they had committed to a property. Leading property agencies, including Centaline, Midland Realty, and Ricacorp, have no objections to the new rule, but say they do not want a ban on quoting gross floor area. The Rating and Valuation Department holds a record of saleable areas, which can be ordered for a HK$9 fee. The information is also included in the sales agreement from the first time a property is sold, available from the Land Registry. The Rating and Valuation Department said it would not be appropriate to print saleable area information on the notice of payment sent to ratepayers each year because it would need to change its computer program. But since 2011 the department has sent saleable area information to buyers of new flats.

Burger King’s Truffle-Flavored Bid for Fans - Gold flake-flecked tofu, foie gras pudding, caviar-topped dim sum: It’s no secret that Hong Kong likes to glam up its food. Now, American fast food giant Burger King is also getting into the act. The latest indulgent menu addition here in Hong Kong is a black truffle burger—part of its overall premium series of food items intended to present “a taste of royal delicacy,” as the company puts it. Burger King isn’t alone in launching such menu stunts. Last year in Japan, fast food rival Wendy’s added foie gras burgers ($16) and truffle and porcini grilled chicken sandwiches ($12) to its local menu in an attempt to lure customers. By contrast, Burger King’s truffle burgers are a comparative steal: $5 if you order it a la carte, $6 if you also want fries and a drink. The burgers come with extra thick patties and are layered with curly endive and sauce made from Italian black truffles mixed with mayonnaise, reports the company. Burger King’s previous marketing efforts elsewhere haven’t all gone smoothly, with past initiatives including a cologne that smells like hamburgers and the production of a film, titled Whopper Virgins, where villagers from Thailand to Transylvania who’d never eaten at Burger King before—so-called “Whopper virgins”—were asked to take what the company called the “purest taste test.” It proved a highly unpopular move, with critics calling the campaign exploitative and insensitive. In neighboring mainland China, the company is already facing an uphill battle, having only entered the market in 2005, trailing other American fast food outlets like McDonald’s, which first set up shop in 1990, or KFC, which entered in 1987. Today, the latter is so ubiquitous and caters so much to local palates—introducing fried dough sticks and egg tarts—that some Chinese children go so far as to mistake it for a Chinese brand. Likewise in Hong Kong, Burger King was relatively late to the market, setting up its first downtown branch in late 2007. Currently, KFC has some 3,500 outlets in China, and McDonald’s has over 1,400. The latter is also boosting investment by 50% to open another 250 stores this year. Though Burger King has made efforts to target Chinese consumers on the mainland—for example, by introducing a burger spiced with Sichuan peppers—it appears to have fallen short of its own previously hoped-for expansion. In 2008, its Asia-Pacific president, Peter Tan, had said the company hoped to open “several hundred” restaurants in China by 2011, but today, Burger King has some 60 outlets in mainland China, according to its site, as well as over a dozen in Hong Kong. “We are the latecomers,” says Alex Lam, Burger King’s head of marketing in Hong Kong. “The bad side is that most of the customers are already grabbed by our competitors. But the good side is the market is still expanding.” Mr. Lam says he thinks the success of the company’s premium food line in Hong Kong, with its focus on food-savvy customers who expect quality ingredients, could also be replicable across the border in mainland China. So far, Mr. Lam says, the truffle burger promotion, which ends next month, has been very well-received. Though Burger King’s regional presence lags behind that of its rivals, he says their Hong Kong customer base is especially fervent, with their Facebook page having garnered over 20,000 fans since it was set up a year and a half ago. Frequent customer promotions and occasional street events, including free burger giveaways, have helped create a strong local social media presence for the company, says Mr. Lam.

 China*:  May 25 2012 Share

A visitor looks at model wind turbines at the China International Wind Energy Exhibition and Conference in Shanghai on April 27. China signalled on Wednesday it wanted to ramp up private investment in its energy sector, in line with recently unveiled government plans to fast-track infrastructure investment to help combat a protracted economic slowdown. That followed the announced plan to allow private investment into the vast railway sector, which is struggling with mounting debts and a corruption scandal while attempting to resolve infrastructure bottlenecks. Allowing private firms to pour money into the railways, banking, energy and healthcare sectors will give a boost to the world’s second-largest economy as the government shuns fresh fiscal stimulus. But analysts doubt there will be any quick effect. The government has pledged to publish detailed guidelines to encourage private investment in key state-controlled sectors, but how quickly they will be implemented remains in question given the stiff resistance of state-owned giants. “It’s a fantastic aspiration, but it’s very complicated as it involves a lot of things,” said Stephen Green, chief China economist at Standard Chartered Bank in Hong Kong. “It’s impossible to quantify until we see details, but it could probably take years to see any impact,” he said. Such market opening requires deeper government reforms and steps to curb “vested interests” – state-owned giants that aim to maintain their monopoly positions and tend to resist reform. The government is drafting guidelines to encourage private investment across industries, with special focus on the heavily state-controlled electricity, oil and natural gas sectors, according to an article published by the official Xinhua news agency. Government agencies are expediting the drafting of new rules for private investment and are expected to unveil them by June, said Xinhua. It did not say whether foreign investors would be allowed to participate in any of the sectors mentioned. Separately, the National Development and Reform Commission (NDRC), the state planning agency, announced about 100 new projects, mostly in the energy sector, on Monday alone, a number roughly equal to the total approvals announced in the first 20 days of May, the 21st Century Business Herald said on Wednesday. “The NDRC has started to accelerate its new project approvals in March and April, compared with the pace in the first two months,” Liu Yuhui, of the Chinese Academy of Social Sciences, a government think-tank, told the Herald. On Tuesday, the state-backed China Securities Journal said China would fast-track approvals for infrastructure investment, after data last month showed the pace of investment in areas such as roads, bridges and property was at its weakest in nearly a decade. The government has launched a fresh bid to open-up key sectors dominated by state-owned giants under the so-called ‘New 36-Clauses’, following repeated failures since 2005. China’s economy stuttered unexpectedly in April, fuelling expectations of more stimulus to boost growth, although a package as big as the 4 trillion yuan (HK$4.9 trillion) spending plan rolled out in 2008-2009 appears unlikely. On Wednesday, the World Bank cut its economic growth forecast for China this year to 8.2 per cent from 8.4 per cent and urged Beijing to rely on looser fiscal policy rather than state investment to lift activity. Premier Wen Jiabao signalled the government’s willingness to take action in remarks at the weekend, saying more priority would be given to maintaining growth. The 21st Century Business Herald said the recent flurry of investment approvals had not translated into additional demand for loans from commercial banks. It cited people close to state banks as saying the country’s top four lenders only extended new loans of 34 billion yuan in the first 20 days of this month, partly because they lost 270 billion yuan in deposits during the same period. The top four banks are Industrial and Commercial Bank of China (SEHK: 1398), Agricultural Bank of China, China Construction Bank (SEHK: 0939) and Bank of China. A loss in deposits will hurt their ability to lend, as they all have to meet regulatory requirements on loan-to-deposit ratios. Chinese banks made 681.8 billion yuan in new loans in April, missing market forecasts of 800 billion yuan. He Yifeng, an economist at Hongyuan Securities, said he expected private investment to enter the energy, railway, highway sectors more quickly once the government clears barriers, but investment in the banking sector could be slow. “The large-scale private investment will take time,” he said. Opening up the lucrative industries to private investors, including foreign investors, could help also spur market competition and improve economic efficiency. State-owned industrial giants have long enjoyed favourable positions, including easier access to bank loans and other resources – reflected by hefty profits even during the economic downturn, and they are reluctant to face increased competition. They have staged a comeback as they got the bulk of spending during the 2008-09 global crisis, sparking criticism that “the state advances and the private sector retreats”. Profits of Chinese banks reached a record high of 1.04 trillion yuan (US$165.10 billion) last year, marking an increase of 15.8 per cent from 2010, according to China’s banking regulator. Profit growth is slowing this year but could still outstrip economic growth. The numbers cover all commercial banks in China, including the world’s most profitable banks such as Industrial and Commercial Bank of China and China Construction Bank.

China has cancelled a high-level military trip to Japan. Guo Boxiong, vice-chairman of the powerful Central Military Commission and China’s highest ranking military officer, will not visit Japan due to a "work commitment". China has cancelled a high-level military trip to Japan, state press said on Wednesday, as the neighbours bicker over a disputed island chain and a recent Uygur symposium in Tokyo that angered Beijing. Guo Boxiong, vice-chairman of the powerful Central Military Commission and China’s highest ranking military officer, will not visit Japan due to a “work commitment” at home, the China Daily said, citing the defence ministry. The visit had been due to begin on Thursday, with Guo scheduled to meet Japanese Prime Minister Yoshihiko Noda. The defence ministry refused immediate comment on Guo’s trip. But the cancellation comes after China condemned Japan for allowing the World Uygur Congress, which Beijing considers an exiled “anti-China” separatist grouping, to hold a meeting in Tokyo last week. Uygurs are a predominantly Muslim ethnic minority who mainly live in western China’s Xinjiang region and have long chafed under Beijing’s rule. In April, Beijing also angrily condemned remarks by Tokyo Governor Shintaro Ishihara, who re-ignited a long-simmering maritime territorial dispute by vowing to purchase a group of uninhabited islands at the centre of the row. Ishihara, an outspoken critic of Beijing who has made a career out of provocative nationalistic remarks, said he had approached the owner of the islands in the East China Sea, called Senkaku in Japan and Diaoyu in China. In 2010, relations between China and Japan hit a low point after Japanese authorities arrested a Chinese captain for ramming his trawler against Japanese coastguard ships in the disputed area near the islands. Despite their numerous political rows, China and Japan remain vigorous trading partners. Leaders of the two nations recently agreed to begin negotiations on forming a free-trade zone that will also include South Korea.

The Lenovo Group on Thursday reported a 59 per cent rise in fourth-quarter net profit as strong demand in emerging markets such as China offset weakness in European demand. Strong sales in China helped Lenovo Group (SEHK: 0992) post a 59 per cent rise in fourth-quarter net profit on Wednesday, meeting analyst expectations, as the world’s No 2 PC maker begins to diversify more aggressively into smartphones, tablet PCs and smart TVs. Lenovo’s PC shipments in China grew 22.7 per cent year-on-year during the quarter, more than double the industry growth rate. That, combined with its diversification plans, has analysts forecasting it could overtake market leader Hewlett-Packard as soon as next year. “Even though China’s economy is slowing down, it’s still ahead of the US and Europe, so it will continue to be the driver for Lenovo to get to be the world’s No.1, a position it should be able to achieve,” said Arthur Liao, an analyst with Fubon Securities in Taipei. Lenovo posted a net profit of US$472.99 million for the fiscal year ended March, it said, versus a consensus forecast of US$472.2 million from a poll of 29 analysts. The PC maker recorded a net profit of US$273.236 million a year earlier, it said in a statement posted on the Hong Kong stock exchange. That meant Lenovo earned US$66.8 million for the fourth quarter versus a consensus forecast of US$66 million, based on a Reuters’ calculation using unaudited nine-month financial data. Lenovo’s results stand in contrast to Dell inc, the world’s No 3 PC maker, which posted disappointing quarterly results on Tuesday and forecast a 2 to 4 per cent revenue gain in the coming fiscal quarter to US$14.7 billion to US$15 billion, short of the US$15.4 billion Wall Street had been expecting. The reason Lenovo is outperforming Dell is because Dell is focused on high-margin products while Lenovo is aiming for volume sales to gain market share, said Jonathan Ng, an analyst with CIMB Research in Singapore. China is Lenovo’s stronghold, accounting for 42 per cent of total revenue, while mature markets such as Japan and Europe make up another 42 per cent. Emerging markets account for the remaining 16 per cent. Operating profit in China grew to US$552 million during the fiscal year and the operating margin was up 0.1 percentage point year-on-year to 4.5 per cent, the company said. Government measures to curb inflation had cut economic growth, but China’s PC market continued to outgrow the worldwide PC market, driven mainly by relatively stronger demand in emerging cities. “The China PC market grew by 13 per cent year-on-year during the fiscal year and became the largest PC market in the world,” the company said in its statement. Lenovo also said its market share increased by 3.2 percentage points year-on-year to an all-time high of 32 per cent. The company said its smartphone market share in China reached 9.5 per cent in the fiscal quarter four and its tablets had a dominant position of about 50 per cent of the Android market in China. The ability of Lenovo to cross-sell consumer products and business products “should sustain higher PE multiples for Lenovo, reflecting the ability to expand its portfolio beyond the PC space in China,” JPMorgan said in a note before the earnings release. Lenovo had a worldwide market share of 13.4 per cent in the first quarter, lagging HP’s 18.0 per cent, but ahead of Dell’s 11.6 per cent, according to research firm IDC. However, sales of its Lepads and Lephones still lag foreign leaders such as Apple and Samsung Electronics, as well as local rivals Huawei Technologies and ZTE (SEHK: 0763) Corporation. In China, Apple still dominates the tablet market with a more than 70 per cent market share, with Lenovo coming in a distant second with a single-digit share. In May, Lenovo launched a smart TV in China in hopes of satisfying increasingly demanding consumers who prefer to play games and watch movies online on bigger screens. Since the beginning of this year, Lenovo shares have climbed about 30 per cent compared with the Hang Seng Index’s 1.6 per cent gain.

Looking for Love in China? Get Cooking - A new survey suggests that in China and other parts of Asia, knowing how to cook may help you win the heart of a potential mate. Property ownership is often seen as a prerequisite to getting hitched in China, but if you’re single and don’t own a house, you might want to work on your cooking skills. That, at least, is what a recent survey on Asian cooking and eating habits by Swedish household appliances maker Electrolux suggests. According to the Electrolux Asia Pacific survey, released this week, 95% of respondents in China regard expertise in the kitchen as an attractive attribute in a partner. Couples in China also tend to cook together, with two-thirds of spouses saying they regularly help out in the kitchen. Some more insights into cooking habits in China: Despite scares in the country over food safety, health isn’t the main concern mainland Chinese have when it comes to preparing meals. What they really dread is doing the dishes. It might be because their sinks are especially crammed — 68% of households, the largest demographic in Asia, report that they host big family dinners once a week or more. If you’re looking for love and can’t boil a wonton to save your life, Australia might be the place for you. Only 67% of Australians surveyed think a partner’s cooking ability is important, the lowest in Asia. On the other hand, eating down under might involve some risk-taking: 21% of Australians surveyed don’t worry about health when cooking, while two-thirds eat food after “best by” dates, the highest demographic in the region. Though Western restaurants like Iggy’s in Singapore and Mr. & Mrs. Bund in Shanghai rank high on international best-restaurant lists, some Asians prefer local dishes best. 51% of respondents in China and 28% in Taiwan say their favorite foods are home-cooked dishes such as sweet-and-sour pork ribs, while 32% of Koreans surveyed prefer kimchi soup over all other meals. The Electrolux survey, conducted online, spanned 11 Asian countries. This is the third such survey from the company, which released similar reports in 2007 and 2010.

Hong Kong*:  May 24 2012 Share

Hong Kong retained its top slot in competitiveness for the seventh straight year in 2011, against cities on the mainland and in Taiwan, according to a study released yesterday. The Chinese Academy of Social Sciences' annual exercise has given Hong Kong the highest ranking since its inclusion on the list of 294 cities in 2005. While unveiling the rankings for last year in Beijing yesterday, Dr Ni Pengfei, a researcher at the academy's Institute of Finance and Trade Economics, said Hong Kong must improve people's livelihood and boost productivity to retain its competitive edge. "The government should show more concern for entrepreneurship, employment and welfare - such as subsidised housing - so the people can extend their potential without worries [about livelihood]," he said. Taipei jumped from fifth place in 2010 to second last year, while Beijing remained in third place. Shanghai slid back into fourth from second place, while Shenzhen dropped from fourth to fifth place. The city of Hangzhou , in Zhejiang , rose from 10th to eighth. The 10th edition of the academy's "Blue Book on Urban Competitiveness" said the gap in competitiveness between cities was narrowing. Hong Kong's edge in such areas as taxes and talent pool were shrinking, while high office rents hindered the development of small and medium-sized enterprises, the report said. The city needed more emphasis on technological development, it said. Hong Kong also lacks a flexible system for recruiting talented workers from the mainland, which could undermine its competitiveness in the long run. The talent pool has played an increasingly important role in the competitiveness of cities over the past decade, it said. The academy's report noted that Hong Kong still had a clear competitive advantage in international finance and trade within the greater China region. THE TOP TEN: 1 Hong Kong; 2 Taipei; 3 Beijing; 4 Shanghai; 5 Shenzhen; 6 Guangzhou; 7 Tianjin; 8 Hangzhou; 9 Qingdao; 10 Changsha.

Workers from the Lands Department, under the protection of a large number of police, successfully entered a park occupying government land in Yuen Long on Tuesday afternoon to remove illegal structures. The government workers had been turned away on Monday at the entrance of the Tai Tong Lychee Valley by defiant villagers who threatened tough resistance. On Tuesday, more than 100 officers from the Police Tactical Unit were deployed at the park when the lands officers and workers prepared to start demolition work for the second day. A number of villagers remained inside the park, but they watched quietly as the workers took down and removed signage at the entrance. Cheung Hok-ming, vice-chairman of the powerful rural affairs body Heung Yee Kuk, said the park’s operators had agreed to the demolition after officials clarified the Tai Lam Country Park’s boundaries to them. The illegal structures demolished or removed on Tuesday included the entrance signs, a toilet building and a refrigerated container. The 12,000-square-metre park encroaches into Tai Lam Country Park and has occupied 5,000 square metres of government land illegally for 18 years. The Lands Department acted to remove it after the Audit Commission criticised it last month for its inaction. Since then, Leung Fuk-yuen, chairman of the Shap Pat Heung Rural Committee and a Yuen Long district councillor – one of two owners of the park –- and the department have removed a suspension bridge, another toilet, a pavilion, some animal shelters and stone chairs.

Two correctional services officers were found guilty on Tuesday of asking a prisoner and her boyfriend for cash and expensive gifts in exchange for illicitly running messages for them. Ng Shuk-yi, 36, who had denied one count of soliciting an advantage and three counts of attempted fraud, and Lai Sau-wai, 47, on one count of soliciting an advantage and one of accepting an advantage, were remanded in custody after a District Court judge told them they would possibly face jail terms. Convicting the pair, deputy district judge Anthony Kwok Kai-on rejected Ng’s explanation that she was not really asking for an advantage, but was joking and testing the boyfriend. Ng was with the Correctional Services Department’s (CSD) Escort and Support Group, while Lai worked at the Chi Ma Wan Correctional Institution, until their arrest and suspension from duty in March 2010. The two women are accused of seeking HK$530,000 in cash, expensive handbags, jewellery and other gifts from a jailed mainland woman, Wu Qiaomei, and her boyfriend Lu Guoxiang. In return, the officers passed messages between the two and to Wu’s family. Wu was in the Chi Ma Wan jail at the time but has since finished her term and returned to the mainland, where she has been locked up again. Kwok said if Ng had been joking, she would not have sent Lu a picture of Louis Vuitton bag by e-mail. He also ruled that a telephone conversation record between Lai and Lu, which Lai’s counsel tried to suggest had been was interfered with, was valid evidence. Although Wu was in custody in mainland and only Lu could appear in court as a suspect-turned-witness, he accepted the boyfriend as a reliable witness. The judge also ruled out suggestions that two video-taped meetings with the Independent Commission Against Corruption had been carried out against Lai’s will. He adjourned sentence until June 8, pending reports on their background.

Hong Kong to be new HQ for luxury carmaker Infiniti - Nissan division attracted by city's appetite for high-end cars and proximity to the mainland - Infiniti, the luxury division of Japan's second-largest carmaker, Nissan, is moving its global head office to Hong Kong, the first time the city has been selected for the headquarters of a car manufacturer. Carmakers usually set up their head offices in their country of origin or near to their biggest markets, but Hong Kong, which sells less than 4,000 new cars a month, was chosen for its proximity to the fast-expanding Asian market and also its high percentage of luxury car sales. "China is the largest prospect for us, and Hong Kong is not only a door open to China, but the rest of Asia," said Carlos Ghosn, chief executive for both Nissan and its long-term partner Renault in an interview ahead of the new office's opening today. "There's no other market in the world [like Hong Kong] where 50 per cent of its car sales are luxurious ones." Nissan, which has nurtured the Infiniti brand since it was established in 1999, has high hopes for it. "It is difficult for any brand to prosper in front of the strength of Nissan," Ghosn said. "So it is important for us to make it distinct from Nissan, and the best way is to get it out of Tokyo." Infiniti sold only 150,000 units last year worldwide, just three per cent of the 4.85 million sales by Nissan group. But by moving its production base to China and the head office to Hong Kong, Ghosn hopes Infiniti can sell 500,000 cars globally by 2016. Infiniti, which will announce the location of its new mainland production base in the coming week, will continue to explore new plant sites outside Japan. A strong yen in the past few years has put the brand in a very disadvantageous position compared to German rivals which have production lines in various parts of the world. Despite a slowing mainland car market, the largest in the world, Infiniti expected to triple its sales in the country from a projected 27,000 units this year to about 81,000 in 2016. Its annual sales have jumped more than five times over the past three years to 19,000 in 2011. "I have worked in China since 2002 and not one year while I was there has there been no growth]," said Ghosn. "We had the banking bubble, real estate crash and the slowdown, but after this, you always discover, oh my god, China is growing more than we thought." Despite the optimism, Ghosn did not set a strict time frame for its targeted sales on the mainland, as he did not want to join the price-cutting game that has seen dealers for Audi and BMW fight to exceed or maintain their market shares by offering big discounts. "Infiniti made up not even 3 per cent of our sales and an even smaller percentage of profits, so we can afford more time to turn it into a big engine for our growth," he said. Planning to hire 100 staff for the brand's new office at Central's Citibank tower, Infiniti will work with its distributor and dealer Dah Chong Hong in the coming months on a brand-building campaign targeted at Asian markets including China, Thailand, India and Indonesia.

An ongoing battle over language and identity hit a busy Hong Kong shopping district this weekend, stirring deep emotions over the city’s at times uneasy relationship with mainland China. It started with some simple price tags at Giordano’s, a homegrown Hong Kong clothes company that was founded in 1981 and has since managed to establish a significant overseas presence. The company inflamed anger when locals in recent weeks discovered it was marking its apparel price tags with simplified Chinese characters—such as those used on the mainland—instead of traditional Chinese characters, which are used in Hong Kong. The incident marked the latest in a series of other dust-ups over retailers catering to mainland Chinese tourists in Hong Kong, which have sparked an infuriated backlash among Hong Kongers who fear their local identity risks getting submerged by waves of visitors from mainland China. In a city of 7 million, it’s no surprise that the crowds of mainland Chinese tourists who cross the border to enjoy Hong Kong’s lower tax rates and gleaming shopping malls stand out. Last year, over 28 million such visitors descended on Hong Kong, a figure quadruple the city’s population. Retailers across Hong Kong are keen to cater to such shoppers: On average during just overnight visits alone, mainlanders spend HK$7,453 (US$960) per visit on everything from Tissot watches to bottles of soy sauce. But a group of activists that gathered this weekend in the commercial Mongkok district to collect signatures in protest of Giordano’s signage said retailers sidelining traditional Chinese characters to service mainland visitors was unacceptable. Ever since the former British colony returned to Chinese rule in 1997, Hong Kongers have faced the difficult challenge of how to negotiate its relationship with its much larger neighbor to the north. Though the city is governed under a separate political and economic system, it’s become increasingly dependent on mainland China, particularly after SARS in 2003, which sent the city’s economy reeling. Gary Fan, a district councilor and one of the protesters’ leaders, says the group collected 500 signatures inside of an hour over the weekend, and intends to continue collecting more until they get a response from Giordano’s. “It’s not just about dignity or whether people respect Hong Kong customers,” Mr. Fan told China Real Time. “It’s also about preserving Hong Kong culture, traditional Chinese culture. The issue of other retailers using simplified characters, not traditional ones, has percolated for weeks here, with French brand agnes B also recently wading into hot water by jettisoning traditional characters in its café menus in favor of simplified Chinese. In response to local outrage and online criticism, the company quickly reintroduced traditional characters on its materials. “The reason we complain isn’t about [the companies] using simplified characters,” says Mr. Fan. “We have no resentment whatsoever about them using simplified characters. The problem is when they use simplified Characters to replace traditional characters as a way to curry favor with mainland tourists.” “If they use both together,” Mr. Fan adds, “that’s fine with us.” Calls to Giordano’s weren’t returned yesterday or this morning.

 China*:  May 24 2012 Share

The Varyag aircraft carrier during its second sea trial. Taiwan's intelligence chief says that the mainland government plans to build two aircraft carriers in addition to the first in its fleet, a refitted former Soviet carrier now undergoing sea trials. "Indeed the Chinese communists have decided to build two aircraft carriers on their own," Tsai Teh-sheng, head of the island's National Security Bureau, told parliament yesterday. Tsai said construction of the warships was slated to start next year and in 2015 respectively, with delivery dates of 2020 and 2022, and they would be conventionally powered. Since mid-2011, he said, Beijing conducted six sea trials on its first carrier, and Taiwan expected it to go into service before the end of this year. "Initially it may simply serve for training purposes but it can be transferred for battles when necessary in the future," Tsai said. The ship's trials have sparked international concern about Beijing's widening naval reach amid growing regional tensions over maritime disputes and a US campaign to assert itself as a Pacific power. Tsai's comments came in response to queries from Lin Yu-fang, a lawmaker from the ruling Kuomintang party who said the development could force Taiwan's entire defence strategy to be overhauled. "Once the two warships join the Chinese navy, their threat to Taiwan will be way larger than that of the Varyag," he said, referring to the reconditioned 1980s Soviet-era aircraft carrier. In response to the mainland's naval build-up, Taiwan is arming more of its warships with its new "carrier killer" anti-ship missiles and building a fleet of 12 corvettes designed with "stealth" technologies. The Hsiung Feng (Brave Wind) missiles are reportedly designed to cruise at a speed of Mach 2.0, or twice the speed of sound, with a range of up to 130 kilometres. In his inauguration speech on Sunday after winning re-election in January, Taiwan's President Ma Ying-jeou said his administration would maintain an "effective deterrent", while pursuing détente with the mainland in the years ahead. Cross-strait ties have improved significantly since the Beijing-friendly Ma became president in 2008, vowing to adopt a non-confrontational policy towards the mainland. The mainland still regards Taiwan as part of its territory awaiting reunification, by force if necessary, although the island has governed itself since the separating in 1949.

China’s Shanghai Municipality Communist Party Secretary Yu Zhengsheng attends a news conference during the 10th Shanghai Municipal Congress of the Communist Party of China in Shanghai May 22, 2012. It’s a year of political change for the Chinese Communist Party with a once-in-a-decade leadership transition planned this autumn. Leaders face political turmoil unseen in decades and an economy sending worrying signals. But that’s not exactly the way it looked Tuesday when the party’s Shanghai branch introduced its “new” lineup of cadres. The Communist Party of China Shanghai Committee on Tuesday returned Yu Zhengsheng to its helm and reaffirmed Mayor Han Zheng as his deputy. In all, half the 12-person Shanghai standing committee representing 1.82 million local party members was unchanged, including its No. 3 cadre and the only woman in the party’s top rank, Yin Yicui. In a mini-version of the ceremonial entrance expected in Beijing later this year, Mr. Yu led his deputies onto a stage in single file for a photo opportunity. After introducing them and making a few remarks, Mr. Yu led them back off the stage around eight minutes later. At the national party conclave planned this autumn, Xi Jinping is expected to succeed Hu Jintao as the 70-million-strong party’s general secretary, and if tradition is honored the leadership will be announced in this same fashion. (Political analysts say the Politburo Standing Committee, the party’s highest decision-making body, may include Mr. Yu himself, setting the Shanghai leadership for a reshuffle later.). Mr. Yu on Tuesday betrayed no hint of party disorder analysts say was unleashed by the recent ouster of Bo Xilai in Chongqing. Another transition matters more to many in Shanghai than turns on the political stage. The city, like China as a whole, finds itself at an economic crossroads after years of powerful growth. Government officials in Shanghai say they are trying to steer a crucial transformation, putting internationally focused services like finance on par with export manufacturing and investment. “The central government demands Shanghai to become the vanguard of our country’s reform and opening up, and the pioneer of scientific development,” Mr. Yu said on Tuesday. The city, he said, should become a “socialist modern international metropolis.” Investment, exports and housing have all sputtered in Shanghai. A rich-poor divide is evident, while rising elder-care needs reflect higher costs broadly for social programs. Adjustment won’t come easily: Shanghai is a massive $304 billion economy with 23.47 million people, the biggest slice of a multicity Yangtze River Delta region that in recent years has represented about 1/6th of the Chinese total GDP. “Shanghai can be seen as a bellwether of the greater Chinese economy,” says Andrew Polk, an economist at the business group Conference Board in Beijing. The city doesn’t write its own plan. China’s policymaking strategy emanates from top leadership in Beijing, Mr. Polk said, and Shanghai is “the mechanism” for spearheading implementation. For instance, Mr. Polk said, the faster the yuan is internationalized, the more Shanghai can develop as a financial center. The current economic slowdown “puts more pressure on Shanghai” to introduce fresh financial sector policies, says Piter de Jong, managing director of ING Bank NV in Shanghai and chairman of the local branch of the European Union Chamber of Commerce in China. “The potential is enormous but the potential can only be realized if they open up more,” Mr. de Jong said. He said more exciting financial reforms, such as with the currency, are these days happening in Hong Kong. In Shanghai, 67-year-old Mr. Yu has had virtually no public profile though he chuckled Tuesday to reporters that he didn’t really need an introduction. Shanghai’s decelerating growth and rising prices during his tenure since 2007 have spawned jokes in the local dialect that play on his name — one calls him a “fish-vegetable-chicken” — and are blocked by Chinese Internet censors. Mr. Han, 58, is one of Shanghai’s longest serving mayors – he took the post in 2003 – and a political survivor. He stood ramrod straight Tuesday wearing a dark suit and light blue tie. In September 2006, his then-boss Chen Liangyu was removed as Shanghai party secretary in a major corruption scandal that cascaded through the local leadership and was arguably China’s biggest political shakeup before this year’s fall of Mr. Bo in Chongqing. But Mr. Han remained standing, taking the top party post in Shanghai on an acting basis until he was replaced by China’s presumed next leader, Xi Jinping, in a brief tenure that preceded Mr. Yu’s arrival. A city of big things, Shanghai will soon be home to Asia’s biggest Disneyland. But its middling economic performance recently means Shanghai is no longer the leading edge of China’s growth story. Shanghai’s 7% first quarter growth rate was the lowest among China’s provinces and municipalities. Industrial production gained just 0.7% in the first quarter, while fixed asset investment slid slightly in the first four months of the year. Like elsewhere in China, its property prices face downward pressure. For the first quarter, the volume of activity in new home sales was off 15.5% from the year before and 17.5% in value. Shanghai is increasingly regarded as a world-class city and property agency Knight Frank LLP says at $7714 per square meter in the first quarter, luxury real estate was priced only a quarter of Hong Kong values. But in Chinese terms, real estate prices nevertheless remain high: the average cost of a new home in Shanghai in 2011 was $411,483, according to figures from China Real Estate Information Corp. Local annual incomes were only 2% of that figure, according to the Shanghai Daily newspaper. Driving too is pricey: its costs over $10,000 to register a car. Shanghai’s container handling port was the busiest in the world last year. Yet both exports and imports were lower in April, by 5.6% and 1.6%, than the same month a year earlier. One of Shanghai’s biggest challenges is demographic. Almost a quarter of its residents are 60 years or older, and local statisticians say the city has one of the lowest birthrates in the world.

Filmgoers at a Beijing theater run by Dalian Wanda Group Co on Monday. The Chinese conglomerate said it will buy US cinema chain AMC Entertainment Holdings for $2.6 billion to form the world's biggest movie theater operator. Dalian Wanda Group Corp Ltd, the owner of China's largest movie theater chain by box office receipts, acquired the world's second-largest theater chain - AMC Entertainment Holdings Inc - for $2.6 billion on Monday. Under the terms of the deal, Wanda must assume the debt of the US cinema chain. It also promised to invest up to $500 million in AMC to pay for its strategic and operating initiatives in the future. The transaction marked the largest overseas cultural investment of a domestic private enterprise and it also strengthened Wanda's global status as an owner of movie theater chains. "Wanda has been the largest theater owner in the second-largest film market in the world. Now, the deal makes it also the owner of the second-largest theater chain in the largest film market," said Chen Zheng, manager of Saga Cinema in Beijing. Wanda Cinema Line owns 86 cineplexes and 730 screens, of which 47 are IMAX screens, and it plans to increase its chain to more than 200 cineplexes with 2,000 screens by 2015. Statistics from the State Administration of Radio, Film and Television show that Wanda Cinema Line generated 1.785 billion yuan ($282.4 million) in box office revenue in 2011, ranking first domestically. Total ticket sales reached 13.12 billion yuan that year. AMC operates 346 multiplex theaters with 5,028 movie screens. As the world's largest operator of IMAX and 3D screens, it owns 120 IMAX screens and 2,170 3D screens, according to the official statement co-released by Wanda Group and AMC. "We chose to acquire AMC mainly because of its potential value and the locations of its cinemas," said Wang Jianlin, chairman of Dalian Wanda Group. Wang was ranked as China's sixth-richest person last year, having a personal fortune of $7.1 billion, according to the independent Hurun Report. Wang said the purchase would turn Wanda into a "truly global" cinema owner. Most AMC theaters are in downtown areas in the North America, and among the 50 highest-grossing cinemas in the market, 23 are from AMC, including six of the top 10. Combined box office receipts for the United States and Canada reached $10.2 billion last year, according to the Motion Picture Association of America, although the audience is shrinking as people turn to the Internet. Wanda's move followed News Corp's acquisition of a 19.9-percent stake in Bona Film Group Ltd, one of China's largest film distributors, which was listed on Nasdaq in 2010. Both of these deals are seen as evidence of the two private companies' race for a license to distribute foreign films in the second-largest film market. Wang said Wanda has applied for the license, but it's up to the authorities to decide whether this deal will increase Wanda's chance of winning it. "However, it will be a trend for more foreign movies to come into China's theaters," Wang said. The deal excludes film distribution activities, and none of the contracts the two parties signed mention the issue of promoting Chinese films in the US market, Wang said. "The cold reception Chinese films encountered abroad is not simply due to the poor distribution channels, but its poor quality fundamentally," he added. AMC will keep its original management team and employees. AMC's headquarters will remain in Kansas City, Missouri, the statement said. The firm has a handful of theaters in Asia, including in Hong Kong and Japan. As for equity structure, Gerry Lopez, chief executive officer of AMC Entertainment Holdings Inc, said "it will be unchanged". "The only thing that changed is the boss," said Wang. As for the factors leading to the acquisition, Ben Ji, an insider with 20 years of experience in the film industry, said it involved China's booming film market and the relatively slow growth in box office receipts in the North America. Ben, who has worked in Hollywood studios and currently runs his own production company in China, said "the last few years have been difficult for theater operators in the North America, while the attendance at theaters has fallen to the lowest point in 16 years". Wang said Wanda will continue to seek opportunities for overseas investments and mergers and acquisitions, especially in the cultural industry, having the goal of taking up 20 percent of the global film market by 2020. AFP contributed to this story.

Hong Kong*:  May 23 2012 Share

William Fu thinks Aquascutum has a bright future. Garment maker YGM Trading is confident it can recapture the glory days of the 161-year-old British fashion label Aquascutum, which once dressed English royalty and won the Queen's Award for Exports four times. "Now the entire business is under our ownership, which removes the uncertainty over the fate of the brand in Europe," YGM managing director William Fu Sing-yam said. "We bought a brand we have known for years," he added, saying the fortunes of the once famous brand could be turned around. Fu was commenting in the wake of mopping up Aquascutum's remaining assets, including 24 retail outlets in Britain, global trademarks and intellectual property rights for £15 million (HK$183 million) last week. It will receive royalty income from a licensee in Italy, which will continue to operate a yet-to-be-disclosed number of Aquascutum outlets in Europe, the Middle East and other regions besides Asia and Britain. In 2009, YGM bought the rights to the Aquascutum brand in 42 Asian countries, including China, Japan, South Korea and India. The stores in Britain will be consolidated into the existing 171 Aquascutum stores operated by YGM on the mainland and in Hong Kong, Macau, and Taiwan, and into the group's larger network of 300 outlets in Asia. The Aquascutum label has been a prize addition to YGM's brand portfolio, which includes labels such as Guy Laroche and Michel Rene. But the 2009 acquisition hurried the demise of Aquascutum's business in Europe, because the British firm's Asian operations had been its cash cow, Fu said. Aquascutum's European business recorded an after-tax loss of £4.47 million in the year to February 29. The latest available figure for its net liabilities stood at £13.45 million in February, 2010. Fu said the losses stemmed largely from a factory in Britain, which was shut down last month and was excluded from the deal. For the coming fashion season, Fu said the group would align its catalogue of products worldwide, as a lack of investment in the European operations in the last two years had left "limited" choices of apparel at the 24 outlets in Britain. New products like children's wear and sportswear would be put on the shelves in Britain, he said. The design and creative centre for the label will remain in London. YGM is among a growing number of garment manufacturers competing for the spending power of mainland shoppers, who favour quality international brands with an illustrious heritage. Core Pacific-Yamaichi International analyst Eugene Mak said the Aquascutum deal would give YGM the freedom to shape the brand's future direction and protect its image and value. However, its loss-making operations would drag YGM's profitability down in the short- to medium-term, he said. "Turning the European business around will be a great challenge." YGM shares fell 6 cents to close at HK$18 on Friday.

Activists outside a Giordano store in Mong Kok. A group of social activists has launched a campaign against popular clothing chain Giordano (SEHK: 0709) for using simplified rather than traditional Chinese characters on promotional materials in many of its stores. Gary Fan Kwok-wai, of political party the NeoDemocrats and the Sai Kung district councillor, said that over 90 per cent of the price tags and store notices contained only simplified Chinese and English in some stores, for the benefit of mainlanders. The practice is particularly prevalent in tourist areas, such as Mong Kok, Tsim Sha Tsui and Causeway Bay, according to Fan. "Mainland customers are treated with servility while locals [are] often neglected," he said. Fan argued that the practice was "discriminatory" to Hongkongers. Many local shops and restaurants have started offering simplified Chinese promotions to target mainland customers. Fan led a handful of party members to protest outside a Giordano store at Sai Yeung Choi Street South in Mong Kok, and collected about 500 signatures from passers-by. "Their practice is understandable as most of the customers are mainlanders," a 56-year-old local man said. "But of course it is better to have traditional Chinese as well, so I still support this campaign." Traditional characters have been used for centuries, but the mainland started to promote simplified Chinese to promote literacy after the Communist Party came to power in 1949. But a Guangzhou tourist praised the practice of using simplified characters. "I think having simplified Chinese in shopping malls and restaurants is convenient for us, and helps avert any kind of miscommunication," said the visitor who bought two polo shirts at the Giordano store. Giordano is the latest business that the NeoDemocrats have taken to task for the practice. Last month, they lodged a complaint against a branch of the agnes b. Cafe LPG chain for using simplified Chinese on its menus. Cafe staff later apologised on agnes b.'s Facebook page and reintroduced traditional characters on the menus. The signatures collected yesterday would be sent to Giordano's head office, Fan said. "If they continue to ignore our request, we'll stage the same kind of protests again in other areas like Causeway Bay and Tsim Sha Tsui to appeal for stronger public support," he said. Giordano could not be reached for comment yesterday.

High-end London-based jeweller Graff Diamonds on Monday launched the roadshow for its reported US$1 billion initial public offering in Hong Kong, one of the biggest this year. Graff Diamonds Founder and Chairman Laurence Graff and Chief Executive Officer Francois Graff met potential investors at a hotel in the city, but did not speak to reporters. In a filing to the Hong Kong stock exchange, the company said it made US$623.5 million in retail sales last year compared with US$454.3 million the year before, as revenue growth rebounded from a slump induced by the 2008 financial crisis. Britain accounted for more than half of total retail revenues, but Asia’s contribution more than doubled to US$120 million, it said, adding that net profit grew more than 15 per cent to US$120.1 million. The company planned to open five more directly operated stores selling jewellery and watches in Asia this year, in addition to the 18 it already operates around the world. Expansion of the Asian retail network, development of Graff as an “iconic brand” and developing the watch business were central to the company’s strategy. Among the risks for investors, the company cited the importance of a tiny group of 20 top customers, who had accounted for more than 40 per cent of group revenue for the past three years. The roadshow is due to continue until May 31 when the IPO will be priced, according to a term sheet seen by Dow Jones Newswires. The IPO is set to be one of this year’s biggest share sales after China’s second largest brokerage Haitong Securities last month raised US$1.68 billion from its Hong Kong IPO. The listing will enable Graff to raise its profile in Asia and tap the fast-growing luxury goods market in the mainland. China is forecast to be the world’s top buyer of products such as cosmetics, handbags, watches, shoes and clothes by 2015, PriceWaterhouseCoopers has said. Graff’s presence in Asia includes boutiques in Hong Kong, Shanghai, Beijing, Tokyo and Taipei. It is planning to open three flagship stores in Hangzhou, Macau and Dubai this year, according to its website. The jeweller will join other luxury brands in using Hong Kong as a gateway to the burgeoning market in the mainland, after the listings by Prada, Coach and Samsonite.

Allan Zeman has expanded his brand across the country. The "father of Lan Kwai Fong", who is extending the brand to the mainland, says Hong Kong risks losing its edge. Allan Zeman, whose Lan Kwai Fong Holdings developed the city's best-known entertainment district, said he had been approached by more than 10 local governments on the mainland to extend the Lan Kwai Fong brand to their cities. Most were "secondary cities", he said, but with rapid development, they would soon outgrow that status. "The more time I spend on the mainland, the more I worry about Hong Kong," he said. "China is moving quickly." At the end of 2010, his company opened its first branch outside Hong Kong in Chengdu in Sichuan . Eighteen times as big as the original, Chengdu's Lan Kwai Fong houses popular Hong Kong brands, such as the Volar club as well as local businesses. In less than two years, land values in the vicinity of the new entertainment hub have doubled. Zeman is building a similar hub in Haikou in Hainan and plans to open four more nightclub districts - each with 35,000 square metres of food and beverage outlets and a retail zone of the same size - in Chongqing , in Hangzhou and Ningbo in Zhejiang and in Qingdao in Shandong in the next five years. Each will cost US$250 million. A private nightclub group will back the projects. Since his initial plans went public, Zeman has received enthusiastic feedback from banks and funds. He did not rule out an initial public offering in Shanghai or Hong Kong after the hubs become established. Building nightclub districts would cater to the demand in secondary cities for a more colourful nightlife as their residents grow richer, he said. As there are fewer expatriates in those cities, these hubs must match the local tastes of customers, he said: "Chengdu people, they love tea, they love hotpot, and they love mahjong … Hong Kong's [Westernised] Lan Kwai Fong will fail there … there is a mix [of mainland and Hong Kong operators], so they feel comfortable." In contrast to the rapid growth in such cities, Hong Kong seems to be standing still at the moment as people argue about theoretical problems, Zeman warned. He said chief executive-elect Leung Chun-ying should be given a chance to implement his proposed policy changes, as "we need someone to light the match". Leung has warned about the perils that face the city if his plans to restructure his cabinet were to be delayed: construction of public housing would be delayed, economic growth would continue to lag behind Singapore's, financial opportunities provided by Beijing would be wasted. But Zeman urged Leung to spend six months or a year to strategise. "Most people hate change," he said. "You need time to bring the public in to let them feel they are part of the changes." Zeman called on Leung to tackle universal suffrage and housing first. "Sixty-five per cent of the social problems will be solved if the housing issue is settled," he said. On universal suffrage, Zeman said: "When the people do not have the power to vote, the government lacks legitimacy." But stability was important while moving towards democracy, he said. "Instability brings us nowhere. Some people admire the European and the US modes, but they have had difficult times too," Zeman said. A staunch supporter of defeated chief executive candidate Henry Tang Ying-yen, he said Tang could possibly run for the top job again. "But surely a campaign would be difficult if he disappears from the public scene in the coming five years," Zeman said. "We had a good conversation after he returned from holiday, and he said he wanted to go on serving Hong Kong."

Anthony Wu Ting-yuk, whose two-year term as the chairman of the General Chamber of Commerce comes to an end this week. Outgoing General Chamber of Commerce chairman Anthony Wu Ting-yuk says his appointment to a panel to help incoming leader Leung Chun-ying form his administration is a real job and not a gesture of reconciliation. “I will not just sit there doing nothing ... every time I take up [public service], I will give my utmost,” said Wu, a supporter of Leung’s election rival Henry Tang Ying-yen. “The election is over. It has become unnecessary for us to split into different camps. We all act for the sake of Hong Kong,” he told Commercial Radio on Monday morning. Wu was appointed last week to a five-member selection committee to short-list candidates for undersecretaries and political assistants – the second and third tiers of political appointees below the ministers who have been criticised for being largely remote and invisible to the public. He said he had accepted Leung’s telephone invitation to join the committee because he wanted “to help the Hong Kong government pick committed and capable undersecretaries and political assistants who can listen more to the public’s views”. Wu said he did not know if former chief executive Tung Chee-hwa had recommended him to Leung. He said the city was already behind the times when Tung introduced the ministerial system in 2002 and was disappointed that “civic engagement is insufficient” among political appointees under the existing system. He hoped that in the future such appointees would be willing to feel the pulse of the community. He also suggested improving the so-called revolving door between the private and public sectors so that political appointees who quit at the end of their terms could have more career options, such as becoming civil servants or serving in think tanks or universities. In view of the European debt crisis, Wu expressed fears that if Greece were to abandon the euro and the currency were to depreciate, Hong Kong banks holding Greek bonds may be prompted to write off large amounts of the debts and create a domino effect on the markets. A new chamber chairman will be elected at the inaugural meeting of its new general committee on Thursday as Wu’s two-year term comes to an end. Wu said deputy chairman Chow Chung-kong, who is expected to succeed him, is respectable, intelligent and opinionated.

Pak Tin Estate in Sham Shui Po. If approved, the Housing Authority's plan would bring an average increase of HK$139 per month for about 700,000 tenants. The Housing Authority is considering a 10 per cent rise in public housing rents from September to reflect rising average income for tenants after minimum wage was introduced. The plan is expected to be discussed at an authority committee meeting on Tuesday, media reported on Monday, quoting a source from the authority. If approved, it would bring an average increase of HK$139 per month for about 700,000 tenants. But a member of the authority’s subsidised housing subcommittee says 10 per cent would be too much and suggested a phased increase of 5 per cent. The proposed rise is larger than the last increase, 4.68 per cent in July 2010. The source from the authority said the increase resulted from a rent adjustment formula linked to households’ income levels. It said the average household income of tenants had grown by 16.4 per cent in the past two years, largely helped by the introduction of a minimum wage law, of HK$28 an hour, in May last year. Democratic Party legislator and subcommittee member Wong Sing-chi said a 10 per cent rise would be too much and would particularly add to the burden of low-income groups that were already being affected by inflation. He suggested the authority consider reducing the increase to 5 per cent and introducing it in two phases over the coming two years.

 China*:  May 23 2012 Share

Isofoton is discussing joint developments after signing agreements with CNOOC's battery unit, Tianjin Lishen, and GCL-Poly Energy Holdings. Spanish solar panel maker Isofoton, which expects European panel sales to fall due to cuts in government subsidies, aims to raise production capacity five-fold to 1.5 gigawatts in two years, by forming joint ventures in China, the Middle East and Latin America. "Europe is undergoing difficult times. The market is slow-growing, even though governments and banks still give the solar industry favourable treatment," chief executive Angel Serrano said on the sidelines of the SNEC Shanghai Photovoltaic Power Generation Conference. Isofoton was now looking at the United States, Latin America, Asia and the Middle East for future growth, he said, noting that Europe would account for just half of its sales this year, compared to all of its sales two years ago. Spain accounts for just 2 per cent of its sales. It plans to establish 300 megawatts of panel production capacity in each of the new regions to add to its existing 200MW of capacity in Malaga, southern Spain, and 100MW of wholly-owned capacity which is slated to come on stream in September in Ohio in the United States. European governments, including Germany, Italy and Spain, have been cutting back on subsidies over the last two years, as rapid rises in solar power consumption resulted in a growing burden on their budgets, which are being trimmed back in response to the region's debt crisis. The cutbacks were also driven by a rapid fall in the price of panels, which made solar power increasingly competitive relative to conventional forms of energy. The Spanish government last year spent around 0.2 per cent of its gross domestic product on subsidising solar power consumption in the nation, according to Bloomberg New Energy Finance. Set up in 1981 as a spin-off from a university project driven by a professor of the Polytechnic University of Madrid, Isofoton was 80 per cent taken over by privately owned consulting firm Affirma two years ago. South Korea's industrial automation products maker Toptec owns the remaining 20 per cent of the solar panel maker. Serrano said Isofoton signed a preliminary agreement with state-owned China National Offshore Oil's (CNOOC (SEHK: 0883)) battery unit Tianjin Lishen in February. It was now discussing a joint venture with its Chinese partner to build a plant on the mainland with an annual capacity of 150MW of panels and related energy systems, including power storage batteries. China National Offshore is the parent firm of Hong Kong-listed oil and gas producer CNOOC Ltd. This month, Isofoton and GCL-Poly Energy Holdings, the mainland's largest producer of the raw material used in making solar panels and wafers - polysilicon - announced they had signed a memorandum of understanding to co-develop and build 1,000MW of solar farms in the global market. They plan to form a joint venture to make solar power system trackers - devices that orient solar panels toward the sun to maximise a system's conversion of sunlight into electricity. Isofoton will supply the expertise in trackers and high concentration photovoltaic panels while GCL will be responsible for arranging project finance and engineering, procurement and construction services. Isofoton also agreed to buy all of the solar wafers needed to make the panels for the solar farms. The agreement, if realised, will allow GCL to boost sales and plant utilisation as it operates in a severely oversupplied industry that is reeling from losses. The firm saw its share price plunge 7.7 per cent last Friday after it posted disappointing first-quarter profit margins on its wafers and polysilicon production cost figures. Malaysian brokerage CIMB research analyst Keith Li estimated GCL to have made a net loss of around HK$300 million in the first quarter and a projected loss of HK$500 million for the whole of this year.

Chinese property group Wanda said on Monday it had agreed to buy US cinema chain AMC Entertainment for US$2.6 billion in a deal which will create the world’s largest movie theatre owner. Wanda, a private firm whose interests range from commercial property to the arts, will invest a further US$500 million in AMC for future strategic and operating initiatives, the companies said in a joint statement. Wanda’s portfolio includes 86 movie theatres in China with a total of 730 screens, as well as interests in film production and distribution. “This acquisition will help make Wanda a truly global cinema owner,” the chairman and president of Wanda, Wang Jianlin, said in the statement. “We share with AMC a passion for the growth of the worldwide movie industry.” Privately-held AMC operates 346 multiplex theatres mostly located in major US and Canadian cities with a total of 5,034 screens. AMC’s headquarters will remain in Kansas City in the US after the deal, the statement said. “As the film and exhibition business continues its global expansion, the time has never been more opportune to welcome the enthusiastic support of our new owners,” said Gerry Lopez, chief executive officer and president of AMC. “With Wanda as its partner, AMC will continue to seek out new ways to expand and invest in the movie-going experience,” he said in the statement.

Alibaba (SEHK: 1688), China's top e-commerce company, will repurchase a 20-per cent stake in itself from the US internet portal Yahoo for at least US$7.1 billion, the companies announced on Sunday. “At the minimum price and assuming the initial re-purchase of the full 20pc stake, Yahoo would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock,” the firms said in a statement. “Today’s agreement provides clarity for our shareholders on a substantial component of Yahoo’s value and reaffirms the significance of our relationship with Alibaba,” said Ross Levinsohn, Interim CEO of Yahoo. “We look forward to continued collaboration with the Alibaba team on business initiatives as we explore joint opportunities for growth and benefit from Alibaba’s future. Alibaba’s leadership was also upbeat about doors the relationship could open. “This transaction opens a new chapter in our relationship with Yahoo,” said Jack Ma, chairman and chief executive officer of the Alibaba Group. “I look forward to working with Ross Levinsohn and the Yahoo team as Alibaba builds China’s leading e-commerce company. Yahoo’s global audience reach will provide attractive partnership opportunities for Alibaba.” Yahoo stock price had climbed on Friday on rumours it was close to a multibillion-dollar deal to sell half of its stake in Alibaba back to the Chinese online shopping portal. Yahoo shares were up nearly four per cent to US$15.42 on the Nasdaq exchange by the close of trading due to unconfirmed reports that the only hurdle remaining was for the boards of the companies to sign off on the deal. Alibaba had long expressed a desire to buy back the 43 per cent chunk of the company owned by Yahoo, but repeated attempts at working out terms failed. Cashing out the Yahoo share of Alibaba had been part of a turnaround plan by freshly ousted Yahoo chief executive Scott Thompson. Thompson was forced out this month in the face of controversy about an inflated resume, resulting in a truce in a proxy war with mutinous shareholder Daniel Loeb. As part of the settlement with Loeb’s hedge fund Third Point, Ross Levinsohn became interim Yahoo chief and Fred Amoroso took charge of the board of directors the Sunnyvale, California-based firm. Loeb and two of his picks – Harry Wilson and Michael Wolf – were given seats on the Yahoo board.

Chow-Yun Fat at the Hugo Boss show in Beijing. Hugo Boss plans to make more suits for Chinese consumers, who are the German fashion giant’s main target these days, but that’s just about the only aspect in which the company will tailor its efforts to the world’s fastest-growing luxury market. Claus-Dietrich Lahrs, Hugo Boss’s chief executive, said that Chinese consumers want what the rest of the world has. Whereas other luxury powerhouses like Hermes have been rolling out special lines for Chinese tastes, Hugo Boss is sticking by its strategy of selling in every market the same classic suits and sportswear. At its recent fashion show in Beijing, the Hugo Boss fall/winter 2012 collection was sported by the same ethnic mix of models it features in any other market. Some other luxury brands, such as Ermenegildo Zegna, have featured more Asian models at their runway events. The event’s 1,500 attendees included Western stars like Tilda Swinton, who won an Oscar for “Michael Clayton,” and Ryan Phillippe. To be sure, Hugo Boss is making a few efforts to connect with local audiences. Chow Yun-Fat, who starred in “Let the Bullets Fly” and “Crouching Tiger, Hidden Dragon,” made an appearance on the catwalk sporting a burgundy tuxedo, and was seen chatting with “Bullets” co-star Catrina Lau.

Workers testing equipment at the first made-in-China deepwater drilling rig - the Haiyangshiyou 981 semi-submersible deepwater rig - in the South China Sea. The rig has begun to drill a well in a part of the sea known as 43/11 block that is jointly being explored by China National Offshore Oil Corp, BP Plc and Anadarko Petroleum Corp. The State-owned China National Offshore Oil Corp may understand it well. It plans a blueprint for deepwater oil and gas development and believes such a move is crucial for its future business survival and the country's oil industry as well. The company's nearly $840 million semi-submersible deepwater rig, which was put into service this month in the South China Sea, reflects CNOOC's resolve for development. In this edition, China Daily presents a selection of pictures showing the people's daily lives and work on the country's first deepwater drilling rig.

A job candidate is interviewed in a McDonald's restaurant in Shanghai on Sunday. McDonald's started its biggest ever recruitment plan in China on Sunday, hoping to meet its ambitious expansion goals in the company's third-largest market. The US-based fast-food giant plans to open 225 to 250 new stores nationwide and hire 70,000 employees this year. McDonald's has more than 1,400 restaurants in China, with more than 80,000 employees. It wants to increase the number of restaurants to 2,000 by 2013. Liu Chao, a college student in Beijing who will graduate this June, went to a one-stop recruitment event on Sunday morning at a McDonald's outlet in Oriental Plaza. Liu was led by an "employee brand ambassador" to see the work environment and learn about McDonald's culture, job descriptions and career path, before being interviewed by a manager. Liu said he is satisfied with McDonald's pay of about 10 yuan ($1.60) per hour, with 13 monthly salaries a year. The company also pays for social insurance costs and gives performance bonuses. "At a time when it's hard to find a job, working for McDonald's is not bad. I have not yet got any other job opportunity, so if McDonald's calls me within two days, I'll come to work here," said the 24-year-old. The fast-food chain also attracted many part-time job seekers. Part-time workers are included in McDonald's recruitment plan this year. "I want to get a job at McDonald's because the work environment is fairly good and I could enjoy special offers of food for employees at weekends," said Wang Mengke, a 19-year-old college student in Beijing. The store had received 10 applicants by midday and was expecting 20 more in the afternoon, according to Song Yang, a manager at the restaurant. Zhang Jianwei, a manager with a McDonald's store on Wangfujing Dajie, was optimistic about the recruitment. "We received seven applicants within an hour after the recruiting event started at 10 am. It's quite promising," he said. "We offer employee training and we have a clear promotion path, through which an employee making coffee could be promoted to store manager or an even higher management post in the company." Zhang added that they also provide jobs such as cleaning for people who have speech or hearing impairments, and they had two such applicants during the morning. A Shanghai-based manager with McDonald's China's human resources division, who declined to be identified, told China Daily on Sunday that the company expects to interview 30,000 people during the recruitment event. "We hope to demonstrate the advantages and culture of McDonald's, which offers a happy working environment and a familylike atmosphere, to interviewees as well as customers, who could be potential employees," he said. The manager said the company has made the hiring process more efficient. For instance, it now takes no longer than a week to hire someone, while in the past it would take one month. Applicants had to fill in 11 pages of forms before, but now they only need to fill in no more than two pages, he said. Applicants who pass the interview will receive notice within two days to come in for a two-hour on-site test to check if they can do the job. In Shanghai, a McDonald's restaurant in CITIC Square on West Nanjing Road received more than 10 applicants between 10 and 11 am. Another store, on Huashan Road, received four between 2 and 3 pm. "The interview was relaxing. The recruiter asked me if my parents would allow me to take a part-time job and if I could handle the job when I had academic pressure. "He also asked me if I would put my job aside and go to help a stranger in the restaurant," said Pan Lu, a junior at the Shanghai Jianqiao University. McDonald's has said that each year, May 20 will be its public recruitment day and all McDonald's restaurants across China will set up recruitment zones for a one-stop recruitment process. Lin Huirong, McDonald's China's chief human resources officer, said at a news conference on Tuesday that the big recruitment plan aims to build up a talent pool for the future. "We are mainly targeting college graduates this time and we will provide employees with competitive wages, benefits and incentives," she said. Last year, more than 10,000 employees were promoted and the company spent some 35 million yuan on training and development, according to Lin. Some insiders said they believe McDonald's ambitious goal of opening more stores and recruiting more employees is a response to fiercer competition in China's fast-food market. McDonald's biggest competitor, KFC, has more than 3,000 stores on the Chinese mainland, more than twice the number of McDonald's. The market share of McDonald's on the Chinese mainland is 16 percent, while KFC has 40 percent, the Innovative Finance Observation magazine quoted figures from market research firm Euromonitor International as saying. KFC's parent company Yum! Brands recently signed a deal with Suning Appliance, one of China's largest home appliance retailers, to allow KFC and Pizza Hut to open stores in Suning's outlets across China. The plans aim for 150 such outlets in the next five years. Other foreign and domestic fast-food chains are also eying expansion in the market. However, Yin Xingmin, deputy director of the China Center for Economic Studies at Fudan University, said the McDonald's expansion plan is not targeted at other competitors but China's market potential.

Although the United States has toned down accusations about China's military expansion in its report released on Friday, some judgments made by the Pentagon might still further disrupt rocky Sino-US military ties, some analysts have said. In its annual report on the development of China's military, the US Department of Defense said China is pursuing fast military modernization to help expand its economic and diplomatic interests around the world, including the possible construction of China's first domestically built aircraft-carrier. It also claimed China was carrying out aggressive cyber espionage. It further pointed out that many of the cases of global cyber intrusion and data theft in 2011 originated within China, and it said the Chinese government is using cyber technology to collect strategic intelligence from the US government and private companies. Beijing expressed its "firm opposition" to the findings of the annual assessment. The release of the report was also coupled with an action in the US House of Representatives, which voted to force President Barack Obama's administration to authorize the sale of 66 new fighter jets to Taiwan, which China considers to be historically part of its territory. However, the measure, part of the National Defense Authorization Act, is not likely to get further approval from the Senate, according to US media. Beijing on Saturday firmly opposed the Pentagon's report and demanded that Washington stop speculating about the intent of China's defense buildup. "This Pentagon report makes irresponsible remarks about China's justified and normal defense development and spreads the theory that China is a military threat," said Foreign Ministry spokesman Hong Lei. He said the goal of the limited development of China's military force is to safeguard China's independence, sovereignty and territorial integrity, and it is not aimed at any other country or specific target. "Countries without hostility toward China should not worry about such developments," he said. "We ask the US side to respect the fact, change the mentality and stop releasing such annual reports." The People's Liberation Army Daily called the allegations "imaginary threats" caused by the US military's Cold War mentality. The Pentagon has been issuing an annual report on China's military to Congress since 2000, continuing a Cold War-style practice that the United States once adopted toward the former Soviet Union in an attempt to put pressure on its archrival, according to Xinhua News Agency. But this year's report is much shorter than previous ones, and it was released in a low-profile manner. Some US analysts and media said that the annual assessment of China's military resembled previous reports but adopted more diplomatic language -possibly to avoid aggravating delicate relations with Beijing. "I am struck by the decidedly mellow tone," said Christopher Johnson, a researcher with the Center for Strategic and International Studies, in an interview with AFP. Despite a change in Washington's rhetorical strategy, the United States is not compromising on some issues vital to China's core interests, said Zhai Dequan, deputy secretary-general of the China Arms Control and Disarmament Association. "The sale of arms to Taiwan is one of the most prominent problems." China's military buildup is a central focus of the Obama administration, which is shifting its attention toward the Asia-Pacific region after a decade of wars in the greater Middle East, the Associated Press reported. The US is not building new permanent bases in Asia but is seeking more security partnerships in the region. The Pentagon report says that Taiwan remains the PLA's most critical potential mission. David Helvey, acting deputy assistant secretary of defense for East Asia, at the Pentagon Friday press briefing also said China places a high priority on its maritime territorial claims in both the South China Sea and East China Sea, but there is still "very positive potential" for the two countries to develop a sound military-to-military relationship. The cooperative signals in the report are to play down its strategic goal of containing China and dominating the Asia-Pacific region, Zhai said. The report emphasized the US efforts to build a "healthy, stable, reliable and continuous" military-to-military relationship with China, which the Pentagon views as an essential component of the overall bilateral relationship. China's growing military capability means opportunities for the two countries to tackle the common challenges together, such as noncombatant evacuation, counter-piracy and peacekeeping, according to the report.

Facebook co-founder and CEO Mark Zuckerberg (R) and Priscilla Chan are seen in this screengrab of a wedding photo posted on Zuckerberg's Facebook page, May 19, 2012. "Mark Zuckerberg added a life event to May 19, 2012 on his timeline: Married Priscilla Chan," read his post. As the photo he posted shows, the young CEO wore a suit jacket at the wedding rather than his trademark hoodie. The couple tied the knot at Zuckerberg's home in Palo Alto, California. "Zuckerberg's wedding was in his backyard, before fewer than 100 guests, who thought they were there to celebrate Chan's graduation," according to a tweet from a Huffington Post editor. Chan and Zuckerberg met at Harvard and have been dating for more than nine years. Chan, 27 years old, is an American-Chinese. The wedding wraps up a busy week for the couple. Zuckerberg turned 28 on Monday, the same day Chan graduated from the medical school at the University of California, San Francisco. On Friday, he rang the bell from Facebook headquarters in California, staging one of the most anticipated initial public offering in Wall Street history. Facebook's shares, priced at $38 on Thursday, opened at 42.05 dollars on Friday, and closed at 38.23 dollars.

Hong Kong*:  May 22 2012 Share

Hong Kong's jobless rate remains at a 30-month low with the seasonally adjusted unemployment rate for February to April hitting 3.3 percent, down from 3.4 percent in the previous three months before that, the Census and Statistics Department said yesterday. The average underemployment rate fell to 1.5 percent from 1.6 percent. Cleaning services and the financial sector created more jobs. Secretary for Labour and Welfare Matthew Cheung Kin-chung said, however, that the entry of fresh graduates and school leavers later this year into the job market could bring additional pressure on the employment situation. The government, therefore, has put in place a series of measures to assist graduates on both the educational and employment fronts, Cheung said. That came as economists warned the euro zone debt crisis and uncertain global outlook will weigh on the local labor market. Credit Agricole senior strategist Frances Cheung said the jobless rate could rise to 3.8 percent by the end of the year. But Recruitment consultancy Robert Half said companies are looking to hire back-office employees such as accounting officers, middle office staff in trade support or trade administration, as well as front office client-facing, relationship employees. 

By 2021 it's estimated that Kowloon East will have double the 13.5 million sq ft office space Central has today. Central Business District 2, or Kowloon East, is set to become a back office hub as well as a main workplace for firms that don't need to be in town - Most of us will be aware of a major US bank that currently occupies approximately 300,000 square foot of office space in Central; but how many of us recall its humble beginnings in Hong Kong when it opened a 5,000 sq ft office there back in the 1980s? Yes, Hong Kong has come a long way, and a recent study by CBRE of office occupier footprints around the world shows we are the number one preference for global corporates seeking offices abroad. During my 12 years in Hong Kong the transformation of the city has been dramatic, not only in terms of size, but configuration. To begin with, the reconfigured Hong Kong East district became the area of choice for major corporate occupiers who did not have a requirement to locate in Central on Hong Kong Island. Since 1998, thanks mainly to the completion of Millennium City 1 in Kwun Tong, Kowloon Bay has emerged as a vibrant new commercial district, supported by substantial retail and residential services. New business hubs are vital for the majority of business sectors to grow in Hong Kong. During my time in HK growth has come predominantly from two main business sectors, insurance and retail sourcing. Most of us would not be aware that in 2003 a major US clothing company occupied approximately 11,000 sq ft in Cheung Sha Wan. Today it occupies approximately 150,000 sq ft in two separate Kowloon districts. At the same time Kowloon East has become the new hub of choice for an insurance sector that still has expansion requirements in Hong Kong. If it was not for the continual development of the district, a major insurer might not have been able to expand from its 300,000 sq ft of space in 2006 to now occupy more than 700,000 sq ft. Clearly the evolution of new cost-effective office hubs is a vital component in job retention and creation in Hong Kong. Kowloon East, which comprises Kwun Tong, Kowloon Bay, and the former Kai Tak Airport site, is now known collectively as "CBD2" - Central Business District 2. I applaud the efforts made by the Hong Kong Government to listen to the views of all commercial and private stakeholders to ensure that the designated district - which covers 488 hectares of land - is best used to serve the needs of the entire Hong Kong community. There is currently 9 million sq ft of grade A office space in the area, considerably less than the 13.5 million sq ft in Central. However, by 2021 Kowloon East could be double the size of Central, which is one of the reasons why some market commentators have voiced concerns about competition between the two areas. I think this is a false argument. The two areas are not intended to compete and neither will they. Central will remain Hong Kong's core business district and companies that need to be there will remain there. However, CBD2 will complement Central by providing a viable location for back office space as well as main offices for those sectors that do not show a preference for Central - such as insurance, retail and product sourcing, to name but three. Major occupiers predominantly lease their office premises. But we are seeing the re-emergence of a trend of major occupiers purchasing their office premises. China Construction Bank (SEHK: 0939, announcements, news) did so when it acquired Sino Land's latest commercial development 18 Kowloon East and the recent sale of 50 Connaught Road Central to another Chinese bank is further testimony of this. So if a major international corporate were trying to enter/expand in the Hong Kong market today what options would it have? The answer is very few, because of the lack of available space. In fact, despite the obvious advantages of locating a major base in Hong Kong, it may have to look at other markets in the region. Hong Kong currently has very limited options. Even within Kowloon East, occupiers are unable to find an abundance of opportunities since the district's current vacancy rate is only at 4.5 per cent (400,000 sq ft net) - a dramatic change from the 35 per cent vacancy recorded in December 2008. That helps to explain why rentals recorded a 33 per cent increase during 2011, an upward trend we expect to continue during 2012 because of the lack of suitable supply to accommodate occupiers' growth. This helps highlight the importance of the CBD2 project, as a key new area which, alongside Central and other existing commercial areas in Hong Kong, can offer corporates a wider selection of viable choices based on their needs. Within our industry talk seems to be all about "location, location, location". We need to remind ourselves location is made by creating destinations where people want to live and work. To make this project a success, the key now is to ensure a clear line of sight on the delivery of a master plan in a systematic way so that Hong Kong creates a destination that is not only a business hub but becomes a vibrant and integrated community. CBD2 offers what may be the last major opportunity for authorities to create a world-class destination that combines location with commercial, retail and leisure needs and will reinforce Hong Kong's position as one of world's best destinations.

Jackie Chan, pictured launching the movie at the Cannes Film Festival with co-stars Laura Weissbecker (left), Yao Xingtong and Zhang Nan Xin. Hanging around in Rush Hour 2 with his co-star Chris Tucker - Jackie Chan has landed his last punch as an action star, but says he is stepping into retirement having made one of the most important films of his career. The actor said on Friday his latest film Chinese Zodiac was his last action movie. Chan said people didn't believe him when he said he was going to retire. "They say, 'No, you're still young, you can still do it', but I have to stop one day." The 58-year-old said he was bowing out with Chinese Zodiac - in which he plays a fortune hunter trying to track down missing astrological antiques - because it was one of the "most important" films in his career. Chan said he spent seven years working on the movie - writing, producing, directing and co-ordinating fight scenes. "For the last 10 years I've been choosing the director to direct me. This one I direct myself." he said. "I hope this movie, 20 years later, people still remember it. For me, for the audience, for my future, for my history - it's very important." Chan said Chinese Zodiac and the many films before it had taken their toll on his body. "It hurts, it really hurts," he said, flinching. "The shoulder, the ankle, it really hurts. You don't know because I still look healthy." Not that he plans on putting his feet up - Chan shrugs off suggestions of taking up gardening, cooking or bowling in his spare time. Now he wants to work on his acting muscles instead. "When I look at Hollywood, at Robert De Niro, he can do anything - comedy, drama," he says. "Clint Eastwood - 60 to 70 years old, he can still move. I said yes, that's my goal. Because an action star's life is so short. An actor's life is very long. I want to show audiences I can act."

Hong Kong may need to revise its economic forecast if a Greek exit from the troubled euro zone causes major turbulence in the global money markets, according to a government economist. The rapid political developments in Greece in recent weeks have seen its citizens withdraw money from banks amid fears the country will leave the euro zone. Although the Hong Kong government took the European debt crisis into account when it made its economic forecast in the budget, Government Economist Helen Chan does not rule out a revision in August if a Greek euro exit causes a ripple effect in the region. "If the situation further worsens, of course we cannot rule out a revision," Chan (pictured) said: "Risks have become much higher as compared to three months ago … the chance of a global economic decline is on the increase." The government had predicted a 1-3 per cent increase in gross domestic product for the current year, which is quite a big range compared to forecasts it made in previous years. The forecast was made based on an assumption that there would be a moderate decline in Europe and growth in the United States economy, Chan said. But it did not assume a sharp deterioration in the European economy, which could be the case if the exit of Greece prompted bigger European countries to leave the euro zone. She was most concerned about the reaction of Italy and Spain to Greece's possible exit. The situation in Spain was particularly alarming, she said, as rating agency Moody's just downgraded the credit rating of the country's 16 banks. In the space of just a year, growth in Hong Kong's GDP has dropped from 7.6 per cent year on year in the first quarter of 2011 to 0.4 per cent for the first quarter of this year, thanks to the worsening European debt crisis. Also in the first quarter, total exports decreased 5.7 per cent year on year, the biggest drop since the third quarter of 2009. However, local property prices still increased by 5 per cent in the first quarter, a trend that runs counter to other economic indicators. "We deem this [growth] is unhealthy … the chance for a bubble to develop [in the property market] has increased," she warned. Citizens should pay attention to risks when they bought flats, in the face of turbulence in the global markets. Although there was abundant cash in the banking system, given abnormally low interest rates, banks should lend with care to prevent the onset of a credit crisis, she said.

Tailors at work in the Bonham Strand workshop in Cheung Sha Wan - next month the mentoring scheme with young people in drug rehabilitation programmes will start. Kenny Shum spent years honing his skills as a tailor, specialising in the intricate detailing of women's suits. At the same time, he fed an 18-year heroin habit that robbed him of his life savings. He eventually had to stop working as a tailor and found himself doing menial labouring jobs. But now, at 46, he is back doing what he loves - making bespoke suits - with the help of a new social enterprise called Bonham Strand. Established by private investors RGL Holdings, the scheme aims to hire older local tailors who are struggling to find work and partner them with young drug addicts in rehabilitation who want to learn the trade. The company has already hired several experienced tailors and fitted out a spacious workshop in Cheung Sha Wan. Launched last month, the team has received about 70 orders and recently struck a deal with a major corporate client for in-house orders. The price of a tailored suit starts from HK$3,500 using premium Italian fabrics and takes about three weeks to finish. Next month, the tailors will start to mentor young people through partnerships with local drug rehabilitation programmes run by the St Stephen's Society and Barnabas. RGL Holdings managing director Jong Lee said their business model was to help revive the "Made in Hong Kong" brand and a major goal was to expand, with plans to have 30 staff by December. "The bespoke business is growing worldwide," he said, but many older tailors in Hong Kong were unable to tap into this growth. "We see it as a distressed asset," added Brian Ng, a former investment banker who is managing the enterprise. "Attitude is very important as we hire people who can teach, learn and work with others." For Shum, who has been drug-free for the past four years, it's a second chance. "I'm very excited," he said. "Tailoring is a lifelong job, it's a way of life so I want to learn new things now." Another tailor working at the enterprise is Mak Man-chung, 64, who was about to hang up his measuring tape when he saw a notice for Bonham Strand at the Mirador Mansion in Tsim Sha Tsui, a hub of men's and women's tailors. He followed in his father's footsteps by picking up his first needle and thread when he was aged just seven before starting an apprenticeship at 14. Mak said that about 30 years ago, he could make between HK$20,000 and HK$30,000 per month, but this had now dropped to HK$8,000. "I felt rejuvenated by this social enterprise and gave up on retirement," he said.

Wong Kwan-yu, chairman of the Federation of Education Workers - A secondary school in Sichuan that was rebuilt using about HK$4 million in Hong Kong donations after the 2008 earthquake is to be demolished, reportedly to make way for a luxury residential complex. Mianyang Zijing Minzu School, located in the hard-hit quake zone of Mianyang , received about HK$2 million each from the Hong Kong government and a non-governmental organisation to reconstruct its premises after it collapsed in the May 12, 2008, disaster. Wong Kwan-yu, chairman of the Hong Kong Federation of Education Workers, said the site was found to belong to another school only after Minzu had restarted operations. The owner sold the site to a developer, Wong said. He added that the federation had no plans to retrieve its HK$2 million contribution because the school had moved to a new building that was paid for by the local authorities and was 10 times bigger. But the Development Bureau said it would hold a meeting with the NGO and the local authorities and would consider recovering the Hong Kong government's donation. Local authorities took back the land, forcing the school to close, said Mak Chai-kwong, head of the Sichuan reconstruction team under the bureau. Officers visited the school earlier this month to find out what had gone wrong, he said. "We wanted to speed up the reconstruction, and when too many projects went ahead at the same time, some communication problems might have occurred," Mak told Commercial Radio yesterday. "This shouldn't have happened." He said the government would find out what happened, though he added: "This project is not directly under the Hong Kong government's supervision, but under … the local authorities [in Sichuan]." Now, "pupils are having classes in a nice village nearby", he said. The HK$2 million was taken from Hong Kong's Trust Fund in Support of Reconstruction in the Sichuan Earthquake Stricken Areas, he said. Chinese-language newspapers in Hong Kong reported that the school had stopped running, and signs and hoardings had been put up. Dalian Wanda Commercial Properties planned to build a project named Fucheng Wanda Plaza on the site, the papers reported. The school provided education to ethnic minority children in the quake-hit area of Abazhou. It reopened in March 2010 with full facilities, including integrated laboratory complexes, student hostels, canteens, libraries and playgrounds. Hong Kong is financially supporting 184 reconstruction projects in the province, of which 151 are sponsored by the Hong Kong government. By February, 71 government-led projects and 21 NGO projects had been completed. With legislators' approval, Hong Kong donated HK$9 billion in stages to support the reconstruction in 2009. The Hong Kong Jockey Club has given HK$1 billion. More than 87,000 people died and almost 375,000 were injured in the earthquake. Mak was invited by Secretary for Development Carrie Lam Cheng Yuet-ngor to take up the part-time job after retirement as a consultant to monitor and co-ordinate the post-earthquake reconstruction work in Sichuan.

The High Court on Saturday morning rejected an application for a judicial review over the Legco president who invoked power to kill the progress of a legislative filibuster by pan-democrats. Justice Johnson Lam Man-hon said it was not an exceptional case when giving his ruling on Saturday. He will present his reasons for his ruling next week, Lam said. Lawmaker “Long Hair” Leung Kwok-hung, who presented the application to the court, said he is consulting legal experience on whether he should seek an appeal for the decision. Leung is also facing a penalty charge of HK$200,000 in court fees, according to Pauline Ng Man-wah, the secretary general of Legislative Council. Leung said on Saturday he was worried about the fee, claiming he was “the poorest lawmaker in the Legislative Council.”

How BMW, Absolut Play to Collectors in Hong Kong - A BMW sports car painted by Andy Warhol is one of the corporate-art collaborations being showcased at Art HK 12. Hong Kong’s art fair attracts a moneyed crowd, which in turn brings out luxury brands like BMW, Absolut and Veuve Clicquot who clamor — creatively — for their attention. BMW brought out an old classic, putting Andy Warhol’s color-splattered M1 amid the main galleries area. Last year, the car maker showed off its G3 adorned with the work of Jeff Koons, part of an art series it started in 1976 that has also featured auto-based art by Alexander Calder, Frank Stella and Roy Lichtenstein. Mr. Warhol hand-painted the car in 1979, even tracing his name in the wet paint on the bumper. Veuve Cliquot hired British artist-duo Ben Langlands and Nikki Bell to create “Spiral Galaxy,” a new work that highlights dates important to the Champagne house in a spiral pattern. Meanwhile, Absolut commissioned Hong Kong artist Stanley Wong, also known as anothermountainman, to transform their lounge into a living room covered in red, white and blue vinyl — the material synonymous with the city’s cheap shopping bags.

 China*:  May 22 2012 Share

The development zone aims to be a key financial centre but needs Beijing's support for innovations, such as setting up insurance and commodities exchanges. Shenzhen's ambitious plan to turn Qianhai, a 15-square-kilometre development zone, into "the Manhattan of the Pearl River Delta" has made an inroad with the opening of its over-the-counter stock exchange last week. But with many of its proposed economic reforms either stalled or rejected by Beijing last month, the pioneering zone may still have much lobbying of the central government to do for support. The proposals stalled or rejected included plans to establish new banks focusing on online banking, a commodities futures exchange, a reinsurance transaction centre and a pilot debt-for-equity scheme, according to Shenzhen government documents obtained by Caixin magazine and The Southern Metropolis News. Shenzhen dumped nearly all of its bold political-reform plans for Qianhai in June and told the development zone to focus only on its economy. A final version of Qianhai's administrative regulation, approved by the Standing Committee of the Shenzhen People's Congress, deleted almost all the experimental measures that promised to learn from Hong Kong's experience. The China Securities Regulatory Commission told Shenzhen that many mainland provinces or cities had also applied to set up a commodities futures exchange, but it is unlikely that the State Council will approve a new exchange months after announcing a campaign to clean up rampant and unregulated trading venues, in order to prevent financial risks. The mainland has three commodities futures exchanges - in Shanghai, Dalian and Zhengzhou . At least 14 other cities are vying to set up the fourth. Qianhai also needs to compete with 11 other comprehensive experimental zones endorsed by the State Council, including Nansha in Guangzhou and Hengqin in Zhuhai, for preferential financial policies from Beijing. The China Banking Regulatory Commission and China Insurance (SEHK: 0966) Regulatory Commission also told Shenzhen that they had to stall Qianhai's plans for online banking and a reinsurance transaction centre. Qianhai management bureau spokesman Wang Jinxia did not deny it was a setback but he said "things are still under planning and carrying forward; it's not yet the final result. The future of Qianhai is broad and long ranged." But mainland economists doubt that Qianhai will be able to strive for the bold economic reforms desired by the Shenzhen authorities. Yi Xianrong , a researcher at the Chinese Academy of Social Sciences, said that because the regional and national financial systems were closely linked, the launch of certain kinds of economic reforms regionally would mean opening up the whole country's financial system. "Unified policies and laws from the central government are a prerequisite for major economic reforms," he said. "It's unlikely that regional authorities will be able to initiate bold economic reforms ahead of Beijing's blueprint." Zhang Jiansen , research director for finance and modern industries at the Shenzhen-based China Development Institute, said that because financial risks and loopholes in regional reforms could affect the whole country's financial system, it was impractical to pilot bold economic reforms in Qianhai, founded only two years ago and still at the very earliest stage of development. "Financial reform is a systematic thing," Zhang told Caixin's New Century magazine last month. But Dr Fang Zhou , assistant chief research officer at Hong Kong's One Country Two Systems Research Institute, is still upbeat about Qianhai's prospects. He said Shenzhen would benefit from at least two important financial policies from Beijing: setting up over-the-counter or off-exchange trading, and allowing its companies to take out cheap yuan loans from Hong Kong banks. "For such a long time, Hong Kong has been an offshore centre for yuan but the mainland hasn't had a fund-inflow mechanism for yuan," he said. "Investors can only deposit the currency in banks and enjoy a very low return rate. It would be a positive step if companies in Qianhai were allowed to take out yuan loans from Hong Kong banks." The Shenzhen authorities' ambitions for Qianhai do not seem to have convinced most of the province's investors. Xiao Xiaoping , a former research director from Shenzhen's Shi-Hua Real Estate Agency, said housing prices in Qianhai had not risen by more than those in the rest of the city in the past two years. "It takes time to see whether the government's bold plans can be turned into reality," Xiao said.

Three retired party officials - including the daughter of a revolutionary - have called for top communist leaders to disclose their finances in the latest sign of mounting pressure for reform ahead of a once-in-a-decade leadership change this autumn. In an open letter posted online yesterday, the three former officials, who include Ma Xiaoli, a former United Front Department official who is the daughter of a revolutionary under Mao Zedong , urged party leaders to increase transparency. The letter, which was also signed by Ren Xiaobin and Cui Wunian, former section heads of the Central Organisation Department, said candidates for the party's Central Committee and Central Commission for Discipline Inspection "should and must disclose to the 18th Party Congress their private and family wealth". "The new party leadership must show their determined stance to the broader party and their countrymen by adopting zero-tolerance for corruption by party officials," the retirees wrote. "Without such an attitude, we believe the new party leadership will not be trusted by ordinary party members and citizens." The letter cited the revelations surrounding the downfall of former Chongqing party boss Bo Xilai . Bo was removed from his top party post after events that began in February with his former police chief seeking protection from US diplomats and peaked last month with his wife's implication in the murder of a British businessman. "This incident has particularly shocked a broad number of ordinary party members," the letter said. "What state is the party in that its high echelons produced a case of evil that far surpassed any story in One Thousand and One Nights?" The three said they sent their letter to the party's Central Committee in February, but published it after three months of silence and subsequent revelations involving Bo. Analysts said the public appeal, while noteworthy because of the status of its authors, was unlikely to carry much weight. But repeated members' calls for reform shows the pace of change has lagged behind what some would expect, they said. "Instead of representing the ordinary people's interests, it is increasingly seen as representing the interests of the powerful and those who profit from the current system," said Hu Xingdou , a professor with the Beijing Institute of Technology. Han Deyun , a lawyer and National People's Congress deputy from Chongqing, proposed legislation for the past seven sessions that would require officials to disclose their personal and family wealth. Han said it was within party members' rights to petition for reform. "It's not up to this or that official to go ahead, but up to the pace of the overall political reform," Han said. Yesterday's letter follows a widely criticised article in the Central Party School-affiliated Study Times, which asserted that establishing an asset-disclosure system for public officials would take at least 10 years.

Chief executive Mark Zuckerberg celebrates after remotely ringing the Nasdaq's opening bell in Menlo Park, California, yesterday. The world's No1 online social network raised about US$16 billion. Facebook hit the street yesterday in the richest-ever share offering for a technology firm, raking in billions of US dollars and giving 28-year-old Mark Zuckerberg, who started the social network in his Harvard dorm room, a net worth of nearly US$20 billion. Priced at US$38 per share, the stock began trading under the symbol "FB" on the Nasdaq in New York, valuing the world's leading social network at a dizzying US$104 billion at its initial public offering. But the shares were flat on their first day of trade, erasing early gains of as much as 18 per cent to trade closer to their initial public offering price. The IPO has made several senior company insiders instant billionaires and is also a windfall for early investors, among them Hong Kong's richest man, Li Ka-shing. The Li Ka-shing Foundation, a charity, is reported to have a 0.75 per cent stake in Facebook after investing about US$120 million in 2007 and '08. At the IPO price, his stake is believed to be worth US$780 million. It is not known what the foundation plans to do with the stake. Its spokesmen did not return calls yesterday. Investors were keen to own a piece of Facebook, which grew from a dormitory project in 2004 to an online community with more than 900 million denizens. The stock opened 11 per cent higher and rose to US$45 before rapidly heading south in frenzied trade and touching its initial public offering price of US$38. After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company's closely watched stock began trading at US$42.05. "The reaction is a bit cooler than many would have hoped," said Gerard Hoberg, an economist at the University of Maryland. "One reason I think is because it's a very large offering." Lou Kerner of the Social Internet Fund said the market action suggested the IPO was correctly priced. "The bankers appear in the first few minutes to have done a pretty good job," he said. "The company raised a ton of money, lots of early investors, employees, and founders were able to monetise shares, and it's trading up a little, so the new investors did OK." Elsewhere in the tech world, shares of online social game maker Zynga plunged 13.3 per cent and triggered a trading halt. Shares in Zynga, which makes popular games used on Facebook and other platforms, were halted at US$7.17, near where they started at the beginning of the week before a strong climb ahead of Facebook's market debut. To rapturous applause from employees, Facebook CEO Zuckerberg - flanked by chief operating officer Sheryl Sandberg and Nasdaq CEO Robert Greifeld - rang the bell to launch trading at the company's Silicon Valley headquarters. Facebook itself sold 180 million shares and holders of previous shares are selling 241 million. Facebook was on course to raise US$16 billion, making it the richest IPO after financial giant Visa in 2008, according to Renaissance Capital. The addition of a possible stock overallotment could boost the total to some US$18.4 billion.

What China Can Teach Facebook - Facebook has a proven track record of dominating new markets, and it may still prove able to conquer China’s crowded social-networking space if it ever opens up in the country. But as investors pop the champagne bottles Friday, it’s worth taking a moment before the toasts to consider what the Chinese market can teach the global social-networking leader. In no small part because Facebook has been blocked in China, the Internet in the middle kingdom hums with competing platforms. Although China rightfully still has a reputation for its wide array of copycat websites, the ferocious competition has brought no small number of innovations. With traffic quickly migrating from personal computers to mobile devices, all of the big Chinese Internet companies are pushing hard into mobile, but some with more success than others. Though Mark Zuckerberg is well aware of the mobile challenge, he might think about following in Tencent’s footsteps, and instead of working on a more streamlined Facebook app or some grander mobile operating system, make a new mobile product from scratch. China’s largest internet conglomerate, Tencent, launched a new mobile chat service last year called Weixin. On top of its mobile chat function, Weixin has integrated audio and photo sharing and other quirky features, one of which allows users to shake their phone and start up a conversation with strangers shaking their phone in the area. According to the Chinese media it’s also testing a new circles feature, that has the uncanny power to automatically categorize friends and contacts based on how a person knows them, and even throws in a few similar strangers for good measure. Though some in China aren’t sold on the product, more than 100 million users have begun using Weixin since it launched last year. As Kaifu Lee, former head of China for Google points out, what has set Weixin apart is it has left completely behind the “baggage” of being a PC product. “Facebook’s client was not inventive from the get go for the mobile experience, [it was] just aiming for functional compatibility with desktop version. That may on the positive side it will be more friendly to the desktop client, but the downside is it’s not optimized for mobile,” he said. Another innovation from Tencent that Facebook could consider is getting deeper into games. And beyond that, it might even consider a completely different monetization scheme, virtual products. While most gaming in the U.S. remains based on either a one-time purchase or ads, Tencent has done well by selling virtual products to its users. Mr. Lee points out that while they are sold mostly to gamers, others using its chat services make the purchases also. “It’s surprising because people would say they wouldn’t pay money for [a customizable avatar], but they have clever tricks. You begin with a standard t-shirt and shorts, but then they give you a free upgrade and ask if you want to renew. If yes you pay, if you say no, your shirt disappears, and you might be embarrassed about that,” he said. And even better from a shareholder perspective, Tencent has been able to ride its massive gaming revenue as it builds out other products. In the first quarter its ad revenue nearly doubled to US$85 million from a year earlier, which was good growth in a tough ad market. But it also offered more than US$1.1 billion and continued growth in gaming revenue. That’s likely to keep the share price up as China goes through that soft advertising period. Of course Facebook remains the undisputed king of the social network, with or without China for now. As Mr. Lee points out though, the complications of opening a network that allows users to share all kinds of private information in a state obsessed with monitoring that communication poses big problems for any Western company. At the same time, he argues, the window is closing on Facebook to get into the market as Chinese users grow attached to Chinese platforms. The promise of 500 million internet users notwithstanding, at least Facebook can take a few tips from the parallel internet universe that is China. It might just mean they don’t have to come to China to justify that pile of cash they’re getting.

Hong Kong*:  May 21 2012 Share

Ireland’s High Court on Thursday dismissed an attempt by Hong Kong firm Hutchison Whampoa (SEHK: 0013) to block the restructuring of Eircom on the grounds its bid for the struggling Irish telecoms firm was not properly considered. Eircom was granted court protection from creditors in March to allow it to restructure 3.75 billion euros (US$4.9 billion) debt and its court-appointed examiner agreed last week to implement a company-backed plan where lenders would take control and cut the company’s debt by 40-50 per cent. The examiner twice spurned a 2 billion euros bid by Hutchison in the process and lawyers for the company controlled by Asia’s richest man Li Ka-shing said that its offer had not been afforded due diligence.

No-reservations bar-restaurant Yardbird in Hong Kong’s Sheung Wan neighborhood - Where Hong Kong’s Hipsters Hang Out - Hong Kong doesn’t leave a visitor wanting for nights out on the town. Central has its members-only clubs, and Tsim Sha Tsui its skyscraper cigar lounges, while neighborhoods like Mongkok and Wan Chai teem with earthier entertainment. But if you’re looking for an upscale, bohemian alternative to all of the above, where’s the left-of-center neighborhood where you can mingle with the city’s creative types? The answer, of late: Sheung Wan. In the past few years, the district at the corner of Central and Mid-Levels has acquired a laidback vibe thanks to a host of independent restaurateurs, boutique owners and gallerists setting up shop. Pushed westward by Central’s skyrocketing rents, they have taken their place alongside the Chinese antique dealers and dried-fish vendors that Sheung Wan is known for, and in doing so they have begun to remake the district in their image. “The area is changing fast, but we’re trying to respect its community feel,” says David Baudrie, a Frenchman who has opened two boutiques along Tai Ping Shan Street in the past year. The area isn’t for those looking for a wild night out, but, he says, “where you come to share a nice bottle of wine and hang out with friends.” Start your ramble where Central’s SoHo district ends and Sheung Wan begins, at the stairs from Hollywood Road to Mee Lun Street. The hidden gem you’re looking for is Visage One, a one-seat hair salon by day that transforms into a tiny lounge on Saturday nights. Stylist cum barkeep Benky Chan keeps the menu as simple as his cubbyhole’s gallery-white walls — beer, wine, whiskey or water — but some of the city’s best jazz musicians are known to drop in for impromptu sessions. If it happens to be midweek, and you want to kick off your night with a bang, Volume, arguably Hong Kong’s hippest gay club, sits just across the street and offers free vodka shots every Wednesday from 7 p.m. to 9:30 p.m. as part of its “New Arrivals” night, welcoming visitors and the freshly transplanted to the scene. The crowd skews stylishly gay, naturally, but all are welcome. Farther down Hollywood Road, Sheung Wan’s main commercial stretch, you’ll find 208 Duecento Otto, unmistakable for its two-story, cast-iron façade. The stylish bar-lounge area of this New York Italian outfit offers 20 varieties of wine by the glass, and makes a mean classic cocktail. Try the 208 Bronx, a tart house signature mixed from gin, bianco, orange bitters, fresh orange and lemon. If you’re hungry, its thin-crust pizzas rank among Hong Kong’s best. A few doors down sits homey Heirloom Eatery, where you can grab a quirky vintage chair and wash down a Balinese fish taco or two with another vibrant house concoction known as the Suzy Wong (a mutation of the Mojito, made with vodka, Thai basil and ginger ale). Back uphill toward Mid-Levels, Oolaa, a sprawling, 120-seat bar-restaurant, is a favorite for Sunday brunch but draws a stylish crowd for after-work wine by the glass. The establishment down the street — the one with a huddle of good-looking 30-somethings waiting outside — is the vexingly no-reservations Yardbird, one of Hong Kong’s hottest tables since it opened last summer. The creation of Matt Abergel, formerly of Masa in New York and Hong Kong’s Zuma, Yardbird is a self-described Japanese gastropub and has won rave reviews for its nose-to-tail chicken yakitori. But it’s worth a visit for the drinks alone. Once you’ve downed a Bloody Kim Jong Il — a Bloody Mary spiked with kimchi — don’t be surprised if you find yourself calling out for a few of its celebrated skewers. Pushing on into Sheung Wan, make your way to Tai Ping Shan Street, where the gentrification of the district is happening fast. Every few weeks, a new, high-concept café or pop-up retailer seems to be opening its doors along this cozy, walkable strip. Mr. Baudrie’s latest lifestyle boutique, Kouch, doubles as a wine shop and one-room hangout, selling vintages from family-owned wineries in France and California that can’t be found anywhere else in Hong Kong. Let Mr. Baudrie, a former sommelier, assist you in your pick as you settle into Kouch’s low-slung sofas. If you find yourself in Sheung Wan on the last Friday of any given month, check out Square Street, behind Man Mo Temple, where Swedish designers David Ericsson and Alexis Holm serve free beer from the storefront of Squarestreet, their watch, shoe and leather-goods workshop-showroom. The duo’s boozy neighborhood block parties, which begin around 8 p.m., invariably attract the police with noise complaints and have become a monthly meeting ground for the city’s young international set — expect no shortage of beards, skinny jeans and flamboyant neckwear. Still going strong past midnight? XXX Gallery is your final port of call. One of the few venues in the city that can reasonably stake a claim to the label “underground,” this basement space in Sheung Wan’s commercial heart — established by Hong Kong-based DJ Enso, originally of San Francisco — doesn’t even have a liquor license, so you’ll have to pick up your own drinks at a convenience store en route. Proceed to dance on the sofas to the visiting DJ or indie band of the night, and don’t be surprised if the sun is already up when you finally stumble out into a new day.

A Christie's employee shows a pair of Qing Dynasty cloisonné enamel caparisoned elephants, valued at HK$4 million to HK$6 million, at the media preview in Hong Kong on May 17. The 2012 Spring Auction Sales will be held at Christie's Hong Kong on May 26 to 30. Featuring over 3000 auction items with a total valuation of more than HK$2 billion. The auction covers six categories, including Chinese paintings, ceramics and works of art, Asian 20th century and contemporary art, as well as luxury collectibles such as jewelry, watches and wine. 

 China*:  May 21 2012 Share

Australian Foreign Mininster Bob Carr (left) in Beijing with China's Vice-Premier Li Keqiang om Tuesday. Carr on Friday said his country’s strengthening ties with Japan and the United States were not aimed at containing China, describing Beijing's rising clout as "desirable". Australian Foreign Minister Bob Carr said on Friday his country’s strengthening ties with Japan and the United States were not aimed at containing China, describing Beijing’s rising clout as “desirable”. The endorsement came the day after Australia and Japan signed a deal on sharing security information and intelligence, a move they said cemented ties between two countries that are both strong US allies. “Established realities are being challenged as the economies of China … and other nations grow. Bigger economies naturally seek military strength commensurate with their economic power,” he said, speaking at a news conference of the last day of his three-day visit. But, he added: “Make no mistake, the re-emergence of China, and the rise of India and others is desirable.” Referring to the strategic partnership he signed with his Japanese counterpart Koichiro Gemba, Carr said: “The shift in global economic power to Asia, and the pace and scale of changes occurring in the region, make Australia and Japan even more important to one another. “That’s why on this visit I have focused on further strengthening our strategic partnership.” Carr had been in China before arriving in Japan, where talks were reportedly dominated by Beijing’s concerns over Canberra’s ties to Washington. In November, US President Barack Obama and Australian Prime Minister Julia Gillard announced plans to expand the US military presence in Australia. The first batch of 2,500 US Marines to be deployed in the country arrived in the northern city of Darwin in April. Referring to the plan, Carr said he explained to his Chinese counterparts that “this is not directed at China, that the number is very modest, that China faces a more significant US presence much closer to its boarders in Japan, in Guam, in South Korea.” Carr also said China was an important customer for Australia as a consumer of its rich natural resources such as liquefied natural gas (LNG). “Australia, like Japan, has a strong interest in continuing to develop mutually beneficial relations with China and seeing China play a constructive role in a rule-based, international order,” he said.

Trade tensions between the U.S. and China are likely to ratchet up after the Commerce Department found several Chinese solar-panel companies guilty of dumping and slapped 31% tariffs on their products. The tariffs will give U.S. panel makers battered by Chinese competition a leg up, but they probably aren't high enough to drive the Chinese makers out of the business altogether. Critics of the U.S. move said the biggest result may be harm to the overall solar business by raising costs for homeowners or business trying to generate solar power. Thursday's action came in response to a complaint by the U.S. unit of German firm SolarWorld AG and a half-dozen other solar-energy companies. The Commerce Department determined that the Chinese manufacturers were selling solar panels at below-market prices. Those receiving the 31% tariff include Suntech Power Holdings Co. and Trina Solar Ltd. That tariff comes on top of tariffs ranging from about 3% to 5% levied in March over a related complaint that the Chinese companies had received unfair export subsidies. Suntech's share price fell 5.75% in New York Stock Exchange trading, while Trina fell 7.9%. The Commerce Department said the decision was preliminary, and the companies will have the chance to challenge the tariffs before they are made final later this year. On Friday, China's Ministry of Commerce said the ruling sends "negative signals of trade protectionism," according to state-run Xinhua news agency. SolarWorld and others allege that cheap imports helped devastate the U.S. solar manufacturing sector and led to the loss of about 2,000 jobs. While it sought even higher tariffs than those unveiled by the Commerce Department, SolarWorld cheered the ruling. "It's a positive step," said Gordon Brinser, the president of SolarWorld USA. "Illegal subsidization of industries to harm and put other markets out of business is bad for everybody in the long run." He said Chinese firms are seeking "total dominance" of the sector that could lead to monopoly pricing in the long term. One of the targeted companies, Suntech Power, lashed out at the duties. "These duties do not reflect the reality of a highly competitive global solar industry," said Andrew Beebe, Suntech's chief commercial officer. Opponents of the trade suit argue that the proliferation of cheap panels has helped spur strong growth of the solar market, especially in the U.S., which gets about half its solar panels from China. Punitive tariffs could slow that growth and cost consumers money, they say. Chinese officials said in March they were investigating U.S. support for clean energy. In past trade disputes, China has retaliated by slapping tariffs on other U.S. industries. "Our intent here was to try to prevent a trade war, and we're going to keep working on that," said Jigar Shah, a spokesman for a group that represents Chinese solar-panel makers and U.S. solar-panel installers. Mr. Shah said U.S. solar-panel prices are already high because of the "cloud of chaos" created by the Commerce case. Jesse Pichel, an analyst at Jefferies Group Inc., predicted that large Chinese panel makers would sidestep the tariff by obtaining solar cells for the U.S. market from Taiwan and other countries. "The Chinese have really become the leaders of solar technology," Mr. Pichel said. He said prices were likely to rise in the U.S. and that would be "negative overall for demand and business." At the core of the trade dispute is a debate about the best way to accelerate the growth of clean energy. Many economists, inspired by the example of computers and other high-tech gear, argue it is best to let developing countries do the manufacturing at lower cost, while richer countries benefit from the proliferation of affordable goods. Others say it is important for Washington to support the creation and protection of domestic manufacturing in small-but-growing sectors. "Predatory trade practices that undermine American industry and workers cannot be tolerated in any industry, but especially in one that holds such great promise for growth and job creation," said Rep. Ed Markey (D., Mass.). The solar case is complicated by the prickly trade relationship between the U.S. and China. U.S. officials have argued for years that China's exports are artificially boosted by cheap currency. This spring, the Obama administration took a dispute with China to the World Trade Organization and announced the creation of a "trade enforcement unit" to make sure that China complies with global-trade rules.

The US move Thursday to slap harsh new tariffs on solar panels made in China is reckless as it runs against free trade which the world's most powerful nation says it promotes. The US Commerce Department said it had found that Chinese solar panel producers dumped exports at rate between 31 percent and 250 percent. Compared with the countervailing duties ranging between 2.9 percent to 4.73 percent two months ago, the anti-dumping margin is stiff and will hurt Chinese manufacturers, as well as US importers. It also will limit the amount of solar panel products on the US market. Many consumers of solar power and products in the US are opposed to the tariffs. They think the move will push up costs. When the economy falters and fossil fuel prices climb steadily, artificially raising the cost of clean energy is reckless and absurd. Pains felt by the Chinese solar panel producers could also be passed to US polysilicon exporters, as the material is a key element of producing solar panel, and China is United States' major importer of polysilicon. When the US government decided to impose stiff tariffs on Chinese tyres in 2009 citing the same reason that cheap imports hurt domestic jobs, three years later, figures prove the decision foretells a half-truth at best. According to the US International Trade Commission, the tariffs did lead to a 30 percent cut in Chinese-made tire imports from 2009-11, but it did not mean 30 percent more tires were made in the United States. Imports from economies including the Republic of Korea, Indonesia, Thailand and Mexico surged. There has been no big boost to the job creation at all. If the solar case was found to be a duplication of the tyre case, that would only prove the government's decision and pubic well-being are kidnapped by domestic interest groups again. In an age of globalization, seeking mutual benefits and comparative advantage is a reasonable and feasible way to achieve common prosperity. Trade war, at any rate, is the least desirable to happen, notably in the new energy industry which could reshape the future energy use of mankind.

More than 30 percent of Tsinghua alumni gave money to their alma mater in the 2010-2011 academic year, higher than the donation rate of any other Chinese university, according to 2012 data from cuaa.net, an independent Chinese website focusing on alumni affairs. In terms of total donations over the past 20 years, the report also showed that Peking University, which received 1.2 billion yuan, ranked first, while Tsinghua ranked second with nearly 1.1 billion yuan. Alumni donations are not only needed to fund projects, but they are also considered an important measure of a university's quality. US News & World Report, an American magazine that ranks US universities yearly, uses donations as an important criterion in college ranking. According to the magazine, the "percentage of alumni giving serves as a proxy for how satisfied students are with the school". Lei Xiangping, a Fudan University graduate, said that he donated 100 yuan to the alumni association last year. "Although I'm not giving a lot, my donation is based on my income," the recent graduate said. "For me, it is just the thought that counts." Originally from Hunan province, Lei works in Beijing and participates in alumni activities frequently. "I like to play basketball, and the alumni association provides a basketball court for us, which is great." While some can only afford to give a little, successful alumni at later stages in their careers can give a lot, such as Wang Jiwu, CEO of China Private Ventures and Tsinghua graduate, who has donated 10.5 million yuan to the university since he graduated in 1999. "It is like giving money to my family," Wang said. "I spent my younger years on this campus and still have an affection for this place where I met so many friends." Alumni donations are a way in which society provides vital support to universities, said Qiao Haishu, a professor from Hunan University, adding that the alumni associations provide benefits in return. "It will create mutual benefits for universities and alumni," Qiao said.

Hong Kong*:  May 20 2012 Share

HSBC is on track to meet the goals of its three-year turnaround plan but is worried about the unfolding crisis in the euro zone. The bank yesterday said it saved US$1.2 billion from the beginning of last year to the end of this year's first quarter. It had set a target of saving US$2.5-3.5 billion in costs by 2013. A year into implementing chief executive Stuart Gulliver's plan aimed at streamlining bureaucracy and strengthening its bottom line, the bank yesterday said it would continue to cut costs, dispose of non-core assets and improve efficiency this year, after hiving off 28 of its business operations since last year. "This is the biggest reshaping and redesign of HSBC that has happened in the 32 years that I've been here," Gulliver said. "We have to keep up the intensity … for the full three years." Gulliver said the biggest external worry for Europe's largest bank is "how the euro zone plays out and whether Greece stays in … and, frankly, whether markets take things into their own hands before June 17 [when Greek elections are held]." HSBC had also set a target of improving its cost-income ratio to 48-52 per cent by 2013 from 55 per cent in 2010, and lifting its return on equity (ROE), a measure of profitability, to 12-15 per cent from 9.5 per cent in 2010. By the end of the first quarter, underlying cost efficiency had improved 3.2 percentage points to 55.5 per cent, while underlying ROE reached around 11 per cent. The focus of the turnaround plan has been exiting fragmented businesses in Asia, Europe and Latin America, boosting its leading position in developing markets with strong growth, and integrating its four key businesses - commercial banking, global banking and markets, global private banking, and retail banking and wealth management. More integration of these is expected to help generate an extra US$2 billion in revenue - US$500 million in 2011 and a further US$1.5 billion in the short to medium term. The 28 disposals so far include HSBC's US cards business and upstate New York branches; its general insurance business in Hong Kong, Singapore, Mexico and Argentina; its pension fund business in Mexico; and private equity business in the US, Canada and the Middle East. The bank has fully exited Georgia, Slovakia, Costa Rica, El Salvador, Honduras and Paraguay. It is now considering selling parts of its US real estate portfolio and said it expects to sell a small part by June. Going forward, HSBC considers Hong Kong and the UK as its home markets. It sees the mainland, Taiwan, Australia, India, Indonesia, Malaysia, Singapore, and Vietnam as priority growth markets in Asia, and Argentina, Brazil and Mexico as priority markets in Latin America. Revenue in Hong Kong rose 16 per cent in the first quarter of this year, 18 per cent in the rest of the Asia-Pacific region and 7 per cent in Latin America. The bank plans to maintain its dividend payout policy and retain half of earnings. Last year, 50 per cent of earnings were retained to buffer capital, 35 per cent went on dividends and 15 per cent for staff pay and bonuses. HSBC shares fell 0.98 per cent to HK$65.80 yesterday. Even though the bank is trading lower than last year, Gulliver said it is still doing better than its peers and that the low share price is more a reflection of investors' concerns about the euro zone and regulatory requirements.

Lee Kit became the first local artist in five years to win the art futures prize at the Hong Kong International Art Fair yesterday. Lee's installation, presented by Shanghai gallery Aike-Dellarco, beat 34 competitors in a section of the Art HK event open to galleries up to eight years old that feature a single artist aged under 35. Lee's minimalistic and conceptual installation Something in My Hands, featuring pictures and objects laid out like a simple home setting, explores the uneasy feelings of the awareness of loneliness. The 34-year-old said he was surprised by the award, which includes a cash prize of US$25,000. He said artists from Hong Kong do have an international presence but many local people are not aware of this. "I have more than 20 shows a year, but most of them are held outside Hong Kong. People who say there's a lack of international presence of Hong Kong artists don't do any research," Lee said. Last year he exhibited at Art Basel and he has several exhibitions lined up in Shanghai, Beijing and Australia. He said he was concerned about the proposed culture bureau for Hong Kong, which he feared could be turned into a political tool to censor cultural development. Meanwhile, American conceptual artist Joseph Kosuth, who was told by the Convention and Exhibition Centre that he was not allowed to show his neon works at eye level without an acrylic screen because they were considered "dangerous", made it to the fair with a different exhibition. Originally planned as a mini-retrospective of his neon works, the exhibition at the booth of Australian curator Anna Schwartz's gallery features some neon works hung high up on walls, with the rest of the space taken up by non-neon exhibits. Kosuth said he could not understand the venue's concerns, as there were neon signs all over the city. Coinciding with the art fair, which ends on Sunday, is the United Asian Auctioneers' spring sale tomorrow at Renaissance Harbour View Hotel. Artwork up for auction includes Nose Flute (1955) by Filipino master Carlos "Botong" Francisco, with a pre-sale estimate of US$1 million. Ai Weiwei's Kui Hua Zi (2008-2009) porcelain sunflower seeds in a jar is also on offer. It is expected to fetch HK$120,000 to HK$200,000. A tonne of Ai's porcelain sunflower seeds fetched US$782,000 at a Sotheby's auction last week in New York. They were originally from a set of 100 million seeds.

Anthony Wu joins Leung Chun-ying and three others on the committee. Incoming chief executive Leung Chun-ying has named at least one known backer of his main election opponent to a screening committee for top political appointments in his new government. Leung yesterday named General Chamber of Commerce chairman Anthony Wu Ting-yuk - who nominated Henry Tang Ying-yen as a chief executive candidate - to the five-strong committee, which Leung will chair. The other members are the head of the chief executive-elect's office, Fanny Law Fan Chiu-fun, Kwun Tong District Council chairman Bunny Chan Chung-bun, and Lingnan University council deputy chairwoman Sophia Kao Ching-chi. "The five members come from different sectors of the community and have track records of public service, so they will know the qualities required for undersecretaries and political assistants," Leung said. "The selection committee is responsible for preliminary screening. There are now a considerable number of applications." Law said after the appointment of principal officials and ministers in late June, they would pick undersecretaries and political assistants shortlisted by the selection committee. Applications will be accepted until the end of the month. The 14 ministers will be assisted by undersecretaries. Additional political assistants may be hired to help principal officials and ministers. Meanwhile, the odds may have shifted against the presumed frontrunner for the new post of culture secretary. Institute of Contemporary Culture chief executive Ada Wong Ying-kay declined to comment on reports that the job would go to Undersecretary for Home Affairs Florence Hui Hiu-fai. A report said Wong's appointment had been opposed by the Democratic Alliance for the Betterment and Progress of Hong Kong.

Legislative Council president Tsang Yok-sing is seen on TV screens presiding over voting on amendments after the all-night debate. A 33-hour marathon filibuster came to an abrupt end yesterday after Legislative Council president Tsang Yok-sing invoked for the first time powers in the rules of procedure to halt debate on a controversial bill to restrict Legco by-elections. The move drew a legal challenge from League of Social Democrats legislator "Long Hair" Leung Kwok-hung. He wants the High Court to rule that Tsang went beyond his powers in ending the debate or to issue a temporary injunction freezing Tsang's decision. The filibuster was an attempt by radical democrats to block the passage of the bill, which would ban lawmakers who resign midterm from standing in a by-election within six months. People Power legislators Albert Chan Wai-yip and Wong Yuk-man tabled 1,300 amendments to the proposal. Pro-government lawmakers tried to stop the filibuster. Debate was suspended twice in the last two weeks because too few lawmakers were in the chamber. It resumed at 2.30pm on Wednesday after Tsang approved an overnight sitting. As the debate entered its 33rd hour at 4.30am yesterday, pro-government lawmaker Philip Wong Yu-hong asked for an end to scrutiny of the amendments, prompting nearly two hours of closed-door discussion among legislators. Tsang then announced he would invoke Article 92 of Legco's rules of procedure - which empower the council president to decide on matters not bound by existing rules - to stop the debate at 12pm and vote on the amendments in the afternoon. Pan-democrats criticised him fiercely, saying it could set an "extremely bad precedent" by allowing the Legco president's power to expand "boundlessly", so that in future he could halt debate at will on other controversial bills, such as legislation on the national security law. Tsang said he had exercised a power he was entitled to use. He said his decision was not due to any political pressure from the government, but was intended to maintain normal operation of the legislature. He also said he had discussed with the Legco secretariat exercising the power. "It was a very unusual situation in which the debate lasted more than 33 hours and several lawmakers made lots of repetitive speeches," he said. "It was not productive or fruitful." Tsang admitted he did not consult lawmakers on the move. "I knew the decision would be highly controversial … It would not have been fruitful [even] if I consulted the members, given their opposing political views." Chan said he was seeking advice on launching a judicial review of Tsang's decision, while Wong will seek a vote of no confidence in Tsang on June 6. Twenty pan-democrats jointly condemned Tsang's decision, but will wait for a written explanation from him before deciding whether to support the no-confidence motion. Ip Kwok-him, of the Beijing-loyalist Democratic Alliance of for the Betterment and Progress of Hong Kong, agreed with the move: "[A filibuster] is the minority's persecution of the majority. We are all like prisoners." Judge Mr Justice Johnson Lam Man-hon said he wanted to hear from the Legco secretariat and adjourned Leung's legal challenge to today. Martin Lee Chu-ming SC, for Leung, said the Legco president could exercise his Article 92 powers only when the rules of procedure did not provide for a situation. University of Hong Kong law professor Eric Cheung Tat-ming said the court was unlikely to grant a judicial review. Nearly 100 of the amendments were voted down yesterday. The voting continues today. Going through all 1,306 amendments is expected to require three more days.

 China*:  May 20 2012 Share

American diplomatic missions on the mainland have disclosed details of ambassador Gary Locke's income and personal assets in response to a call by a Communist Party mouthpiece in Beijing. The Beijing Daily's demand, in a microblog posting on Monday that has since been removed, appears to have been an attempt to silence growing calls to make public mainland officials' assets - by showing US officials were just as reluctant. "Gary Locke, please disclose [your] assets," the paper said. But the plan appears to have backfired when he immediately did so. The prompt response triggered heated online discussion about the lack of transparency in mainland governments and widespread corruption. The United States embassy in Beijing and its consulate in Shanghai released details of Locke's monthly salary and personal assets on their mainland microblogs yesterday morning - along with the salary levels of US State Department officials and their travel, meal and hotel reimbursement caps on the mainland. The microblog postings were accompanied by three detailed tables. They said Locke had declared his assets to local governments and the federal government "almost every year" and his annual income was US$179,700, plus a US$30,000 annual education allowance for each of his three children. He had 23 assets worth between US$2.35 million and US$8.12 million, and one debt of between US$500,000 and US$1 million. A declaration signed in March last year by Locke, the first Chinese-American to serve as US ambassador to China, showed he was the sixth richest US executive branch official. The Beijing Daily had earlier suggest Locke was a troublemaker, after the embassy in Beijing sheltered blind legal activist Chen Guangcheng for six days following his escape from extra-legal house arrest in Shandong province last month. In an editorial published on May 4, it questioned the motives behind Locke's actions, from travelling economy class, to carrying his own bags, to using coupons to buy coffee and taking in Chen. "Is he trying to improve the Sino-US relationship or using any means to pick faults and make trouble, which might create new and wider gaps between China and the US?" the editorial asked. Locke, who became ambassador in August, has cultivated a media image quite distinct from that of the stereotypical corrupt mainland official, notorious for splashing out on food and drink at public expense. Mainland internet users argued the paper should instead be urging mainland officials to disclose their own assets to counter widespread corruption. "As a Chinese, on our own soil, a group of foreign officials disclosed their assets and income. What can be more humiliating than this?" said one. Professor Wang Yukai , of the Chinese Academy of Governance, said: "The disclosure has shown the US is very transparent about officials' income and expenses due to its system, so they can reveal it anytime. Although we have different systems, it still serves as a warning to us: China does not yet have any policy in place to make officials' assets known to the public and should accelerate the pace of disclosure."

Manila will dispatch two special envoys to Beijing amid a tense standoff in the South China Sea following the harassment of Chinese fishermen in territorial waters. Beijing issued an immediate response on Thursday saying that it noted Manila's "attitude". Chinese experts said that dispatching the envoys, given that the Philippines has not had any ambassadorial representation in China for more than a year, reflects Manila's desire to ease the crisis. Sending the envoys, confirmed by Malacanang Palace in Manila on Thursday, is in sharp contrast with Manila suspending diplomatic dialogue with Beijing in late April. Former Philippine ambassador-designate to China, Domingo Lee and Cesar Zalamea, chairman and chief executive officer of Focus Range International, are the envoys. Philippine President Benigno Aquino, who is in the process of selecting a new ambassador to China, signed the appointment papers on May 10 for a term of six months, the palace said. The palace said Lee will "closely coordinate with, and provide regular feedback on, initiatives undertaken" to the ambassador, once an appointment is made, and to the Department of Foreign Affairs assistant secretary for Asian and Pacific Affairs. He was also directed to promote 2012-13 as years of friendly exchange between the two countries. As the special envoy for investments, Zalamea will "aggressively encourage more Chinese investors to locate and set up in the Philippines in preferred areas of investment as well as new and emerging areas for growth". "We need envoys to help us along. (China) is a vast country, you need people to specialize for instance, on attracting investors," presidential spokesman Edwin Lacierda said on Thursday. "We have cultural exchanges, we have business, we have tourism ... and we would like to explore all avenues of our relationship not just focus on the contentious one," he added, referring to the dispute over Huangyan Island. An official at the Philippine embassy in Beijing said they did not know the exact date that the two envoys would arrive in China. "We have noticed the Philippines' attitude of attaching importance to bilateral relations," Foreign Ministry spokesman Hong Lei told reporters on Thursday. "We expect the Philippines to take tangible steps to create a necessary atmosphere and good environment to protect bilateral cooperation," Hong said. Philippine Foreign Affairs Secretary Albert del Rosario also said on Wednesday he expected the territorial dispute to be settled early. The dispute was harming commercial ties. Tourism numbers, for instance, were falling, a point noted by a leading analyst. "We should notice that the appointments came as the recent dispute between the Philippines and China over Huangyan Island began to hamper trade and diplomatic ties," Chen Qinghong, a researcher on Filipino studies with the China Institutes of Contemporary International Relations, said. On April 10, a Philippine warship harassed 12 Chinese fishing vessels that had sailed near Huangyan Island, in Chinese territorial waters, in the South China Sea to seek shelter from a storm. Manila is sending officials and experts from the Bureau of Plant Industry to Beijing next week to check on exported bananas deemed unfit for sale due to infestation. Philippine fruit exporters have incurred losses of around $33.6 million since the standoff, local reports said. Both governments have said that this is not a political problem but a technical one. "The Philippines has realized the disadvantage of not having an ambassador in Beijing," Chen said. Jin Canrong, deputy dean of the School of International Studies at Renmin University of China, said "apparently the Philippines wants to ease tensions".

Hong Kong*:  May 19 2012 Share

Investment holding company Swire Pacific (SEHK: 0019) will spend US$1.2 billion over the next few years buying more than 20 new offshore support vessels to expand and upgrade its existing fleet of 77 ships. John Rae-Smith, executive director of Swire Pacific Offshore, said the investment in larger, more powerful and capable ships reflected the move by energy companies to explore for oil and gas in more hostile and challenging environments, including deep water. "We are building the fleet to go chasing the explorers," he said, pointing out that Swire Offshore, which is among the top six offshore shipping firms in the world, operates in 50 countries including Brazil, Australia and West African nations. The vessels include 21 that have already been ordered from shipyards in Japan, Singapore and South Korea. They also include a sister vessel to the Pacific Champion, a 16,300 brake horsepower anchor-handling tug-supply ship, that was delivered last year by South Korea's Sekwang Heavy Industries. The Rolls Royce-designed vessel was the first ever ship to be christened in Hong Kong by Swire Pacific Offshore. The other vessels on order included eight deepwater anchor handling tugs being built in Singapore for delivery between next year and the end of 2014, Rae-Smith said yesterday. Two offshore wind farm installation vessels, which will have jack-up legs to stand on the seabed, are also on order and will be used to install wind turbine generators off the coast of Germany in the North Sea. They can also be used to dismantle offshore installations. "A lot of infrastructure all over the world will be decommissioned. Our equipment is big enough and tough enough to get involved in that market," he said. Rae-Smith added that the investment includes the purchase of additional platform support ships. The Swire Pacific board has given the green light to acquire these vessels but orders have not been placed. Last year Swire Offshore ordered eight 5,000 deadweight tonne platform supply vessels, four of which will be constructed at Japan's Universal Shipbuilding and four at the EISA shipyard in Brazil. The expansion comes as observers expect a boom in oil exploration activity in the next few years following an anticipated rise in oil prices. "I do think the level of exploration will continue to increase but the rate of increase should be slower than we had expected," Rae-Smith said. Drilling activity could be split into three types, he said. The first two cover long-term exploration that involves relatively consistent drilling programs carried out by national oil companies and oil majors that are less affected by prevailing oil prices. The third involves projects carried out by independent oil companies that need to raise bank finance to fund their exploration operations. These programmes are more susceptible to oil price volatility, which in turn determines whether they get financial support from banks. Last year it was anticipated rising oil prices would fuel an increase in exploration from this year, but oil prices later fell rather than rose. Swire Offshore generated net profit of HK$785 million on revenue of HK$3.5 billion last year as average charter rates rose 11 per cent. Speaking at an industry event during Singapore Maritime Week last month, Lionel Lee, group managing director of ship-owner Ezra Holdings, estimated the offshore industry was worth US$600 billion and forecast that charter rates for large platform supply and anchor handling vessels would stage a strong recovery, booming between 2013 and 2015. The offshore market has also attracted other Hong Kong ship owners. Gautam Chellaram, a son of Hong Kong ship owner Sham Chellaram, who owns KC Maritime, has diversified into offshore vessels. He currently owns one ship and is about to take delivery of a second.

Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) stands a better chance of winning the bid to take over the London Metal Exchange (LME) after rival NYSE Euronext was yesterday confirmed to have been knocked out from the race for bidding too low. That leaves HKEx, CME Group, and Intercontinental Exchange to slug it out in the bidding war for LME, which handles more than 80 per cent of industrial metal futures all over the world. NYSE Euronext, the biggest US exchange owner, was notified of the decision, said exchange spokesman James Dunseath in London yesterday. "We put in a proposal that we thought offered a fair value. We wish the LME well." The removal of NYSE Euronext did not come as a surprise as brokers have maintained all along the bourse was not that interested. An HKEx source said the local bourse, which wants to buy the LME to expand into the commodities business, has a good chance of winning as it has put a fair value on the target and the takeover can help LME to expand into China, the largest commodities buyer. China accounts for about 40 per cent of global copper demand, according to Barclays. The LME opened its first Asian office in Singapore in 2010 and started trading reduced-sized metals contracts last year with Singapore Exchange. "However, there are a lot of uncertainties as there are still two strong bidders in the race. In addition, it would need 75 per cent of LME shareholders to clear the sale," the exchange source said. The LME is owned by 70 of its 94 members, including Goldman Sachs, JPMorgan Chase and Citigroup. Any bid will have to be approved by more than 50 per cent of shareholders and backed by owners of at least 75 per cent of the shares. HKEx chief executive Charles Li Xiaojia said last week he was confident of its chances of acquiring the LME. Last night the local exchange did not comment on NYSE Euronext's removal from the bid. LME received several proposals by the May 7 deadline for a takeover, which is expected to be valued at about US$1.3 billion, says Connecticut-based Equity Research Desk, an adviser to hedge funds. "The LME can fetch a higher price depending on how much Hong Kong is prepared to pay," said Diego Perfumo, an analyst at Equity Research Desk, yesterday. "The LME is an attractive asset for China, which is a big consumer of metals. They will be able to influence the price discovery of those commodities through LME's market structure rules." Alex Kramm, of UBS in New York, said NYSE Euronext wasn't necessarily a "front runner", adding: "The potential LME deal looks like a fairly complex undertaking and there are other companies that people think were more likely candidates.''

Visitors attend a preview at the exhibition centre. With 266 galleries from 38 countries showcasing contemporary art from around the world, the biggest and most vibrant edition yet of the Hong Kong International Art Fair opens to the public today at the Convention and Exhibition Centre in Wan Chai. It's also the final time the festival will be known as ART HK, before becoming one of three annual shows under the Art Basel label next year, along with the original in Switzerland and Art Basel Miami Beach. Despite the change, which comes after MCH Swiss Exhibition (Basel) bought 60 per cent of event organiser Asian Arts Fairs last year, fair director Magnus Renfrew says the event will retain its uniquely Asian flavour, with about half of the galleries continuing to come from Asia. ART HK was inaugurated five years ago and has provided galleries such as Gagosian and White Cub with an international showcase, which both have built on by establishing permanent Asian outlets in Hong Kong. The event has contributed to the development of Hong Kong's contemporary art scene, both on the trading side and by generating greater public interest. Last year's total of 63,511 visitors was the highest yet and a 38 per cent increase on 2010. "I'm very proud of how it has developed over the last five years and how Hong Kong has bought into it," Renfrew said, adding the fair had put the city in the global spotlight. With Basel's involvement, he believes the fair will grow even bigger. "Basel has unparallel access [to the art world]. There will be far more collectors and curators coming here, a more globalised interest in art in Hong Kong." Already, interest from galleries far exceeds space available - just 38 per cent of the 700 applications from exhibitors were accepted. Galleries were selected by a committee, based on artistic merit. Organisers have also increased exhibition fees by between 6.5 per cent and 8 per cent. Among the most eye-catching pieces on show are the Art HK Projects, 10 large-scale installations curated by Yuko Hasegawa of the Museum of Contemporary Art in Tokyo. The pieces spread out across two of the exhibition halls and include artist-activist Ai Weiwei's powerful Cong (2008-2011), showing 123 letters from the government to the artist and his studio refusing to disclose information about the 2008 Sichuan earthquake and, on the other side, the names of 5,196 children who died when shoddily constructed "tofu" school buildings collapsed during the earthquake. Other pieces in the project include Japanese artist Tatsuo Miyajima's HOTO (2008), a stainless steel installation containing 3,827 LED digital counters, and French conceptual artist Daniel Buren's striking Photo-souvenir: From Three Windows, 5 colours for 252 places, work in situ (2006). The fair runs until Sunday.

A job fair at Tseung Kwan O in March. More job seekers are expected to flood the markets this summer because of the reformed academic structure. Hong Kong’s unemployment rate dropped to 3.3 per cent last month on the back of firm labour demand, government figures released on Thursday showed. The rate had hit a three-year low of 3.2 per cent in January before climbing slightly to 3.4 per cent in February and March. The steepest drop was in the cleaning and financial industries, the latest figures from the Census and Statistics Department showed. The underemployment rate – which measures the percentage of people who cannot secure 35 hours of work a week – also fell to 1.5 per cent last month, from 1.6 per cent in March. Decreases in the underemployment rate were mainly seen in decoration, building repairs, laundry, as well as domestic and personal service sectors, the department figures showed. Secretary for Labour and Welfare Matthew Cheung Kin-chung said the latest figures showed labour demand remained largely firm in recent months. But Cheung said the market could face additional pressure when two cohorts of secondary school pupils finished school this summer under a reformed academic structure. Form Seven students under the old seven-year structure and Form Six students under the new six-year senior secondary academic structure may start looking for work at the same time this summer. Cheung said about 100,000 students make up the two groups. “The near-term outlook will depend on whether job creation in the corporate sector can sustain at a pace sufficiently fast enough to absorb the increase in labour supply over the summer months,” he said.

Annie Au Wing-chi plays at the Hong Kong Squash Open last year. Annie Au of Hong Kong became the first Chinese player into the quarter-finals of the British Open squash tournament when she made a tremendous comeback from two games down on Wednesday. Au overcame Alison Waters, the former world number three from England by 9-11, 7-11, 11-9, 11-9, 11-7 in an hour-long tussle during which she was behind for most of the time and twice within two points of defeat. It meant that the seventh-seeded Au had produced one of the best performances of her career in a platinum World Series event which is the richest on the WSA tour outside the World Open. It also raised hopes that the success of Au Wing Chi, to give her Chinese name, may help stimulate the spread of squash on the Chinese mainland, even though it is a very long way from the popularity of badminton or table tennis - nor yet has the growth potential of tennis since Li Na’s success. But Au was intelligent and focused, had a good game plan and stuck to it, and was good enough to overcome an opponent almost back to her best after a long spell on the sidelines with injury. “I was a little bit nervous and had to warm up longer. There is a lot of cheering and a good atmosphere and I had to adapt,” said Au, speaking of the change from conventional club courts, in a first round win over Gaby Huber of Switzerland, to the shining all-glass show court in London’s O2 arena. “I just had to be patient to keep to what I knew was working, because sometimes I’m not patient enough,” said a smiling Au, who slowed the pace down in the last three games, and kept the ball to the back relentlessly before attempting anything creative. She had to survive two crises. Waters, attacking hard whenever there was a slight chance, got back from 7-9 to 9-9 in the third game, and then repeated this recovery in the fourth. Au escaped the first time with a long sequence of straight forehand wall-clingers on a side of the court where reflections in the glass made it harder to see, and more difficult for Waters to volley. And on the second occasion Au wriggled to safety with a little luck when she was donated a penalty stroke from a Waters mishit. She then immediately leveled at two games all with a great drop-lob-drop shot sequence. In the fifth game she soon took a five-point lead and advanced steadily to victory against a Waters who may have been tiring after her five-game match against Malaysia’s Low Wee Wern the day before. “I’m really pleased,” said Au, though she already seemed to have half a mind on getting ready for the next encounter. That will be against Nour El Sherbini, the 16-year-old Egyptian prodigy, who won her second successive five-game match. Sherbini overcame Madeline Perry, the fourth seeded Irishwoman who was British Open runner-up last time, three years ago, by 11-6, 4-11, 5-11, 11-3, 11-5.

Lawmarkers vote on amendments after a marathon 30-hour debate in the Legislative Council on Thursday. The filibuster mounted by radical lawmakers in the Legislative Council was killed by the council president early on Thursday – in a move slammed by one pan-democrat as “the darkest day in the history of the legislature”. But the pro-government camp said the decision by president Tsang Yok-sing was reasonable because the meeting could not last forever. Tsang called a halt at 4.30am, 14 hours after the debate on the controversial by-election bill had resumed on Wednesday morning. He said he would allow People Power lawmakers Albert Chan Wai-yip and Wong Yuk-man, who filed 1,300 amendments to the bill, as well as the Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen, to conclude and then the amendments should be put to a vote. Tsang said the debate had gone on for more than 33 hours, but failed “to create a genuine debate of different views”. He said three lawmakers had spoken 70 times on the bill, aimed at preventing legislators who resign from standing in a by-election for six months, and had been pulled up 75 times for being off-topic or repetitive. “If I foresaw that allowing the 1,300 amendments would create a debate that is impossible to end, I would not have allowed them,” Tsang said. Pro-government lawmaker Philip Wong Yu-hong stood up after a break at 4.30am to suggest the debate should end. Agreeing, Tsang noted that in foreign legislatures there were filibusters and mechanisms to stop them. But as no such mechanism existed in Hong Kong’s legislature, article 92 of the house rules said that it “shall be … decided by the president who may, if he thinks fit, be guided by the practice and procedure of other legislatures”. Doubts were immediately raised by Civic Party barrister and lawmaker Margaret Ng Ngoi-yee, who was attending the meeting. At her request, Tsang suspended the debate and held a 90-minute meeting behind closed doors in his office to listen to the advice of different parties, including pan-democrats who had been boycotting the bill. It was decided that the meeting should resume at 9am, when the radical duo and the minister would speak for three hours at most. Tsang told reporters after the early morning meeting he had a duty to avoid the legislation process for other law bills being dragged. “On the one hand I have to allow the minority in the chamber to present their political agenda, but on the other I have the duty to guarantee the legislature operates efficiently,” Tsang said. Wong and Chan did not attend the meeting. They alleged that Tsang’s decision was a response to a “communist order” from the central government’s liaison office in Hong Kong and was unfair because they had not finished explaining their amendments. They were considering moving a vote of no-confidence in Tsang. Chan called it “the darkest day in the history of the legislature”. The Democratic Party will continue its boycott. Chairman Albert Ho Chun-yan said he was shocked by Tsang’s decision. “It was a worrying precedent … we need to know in what context will the president exercise such power.” Cyd Ho Sau-lan, from the Labour Party, said she was worried amendments to contentious proposals might be killed in the same manner in future. “When we deal with controversial proposals in future such as the Article 23 bill, the copyright bill or political reform, we may have many detailed amendments with real meaning. But with this power he can stop debate on them. That will be disastrous,” she said. Tam Yiu-chung, chairman of Beijing-loyalist Democratic Alliance for the Betterment and Progress of Hong Kong, agreed with Tsang’s decision. “The president has explained his analysis and grounds, we have been very patient [with the filibuster], but the meeting cannot go on forever,” he said.

 China*:  May 19 2012 Share

Actions speak louder than words - The tit-for-tat manoeuvres in the South China Sea are more than just propaganda - they could prove vital if sovereignty is ever settled by negotiation. If recent history follows its course, the flag planted on the Scarborough Shoal last week by a Chinese state media reporter could soon be removed by Philippine officials determined to assert their own claim to the disputed reef in the South China Sea. Such tit-for-tat actions may appear like a theatrical act of nationalistic propaganda yet there is - potentially, at least - a deeper strategic logic behind such moves. It could be called the mechanics of sovereignty. When Beijing this week announced, for example, its annual South China Sea fishing ban, it served not just to protect the region's threatened fish stocks. It was also an expression of administration that could one day prove important in the still-unlikely event that the South China Sea territorial disputes ever come to an international court. The unilateral ban also keeps the pressure on rival claimants, potentially serving Beijing's push for one-to-one negotiations and joint development deals, rather than risk defeat at the International Court of Justice. And that is why, to protect themselves on both counts in return, Vietnam and the Philippines have again formally objected to the ban, which cuts into their economic zones - a protest they issue every year. The mechanics of sovereignty have been on bold display in recent weeks over the five tiny rocks that sit just above sea level 124 nautical miles off the Philippine island of Luzon as both China and the Philippines seek to buttress their sovereign claims through word - megaphone diplomacy - and deed, such as the planting of flags and stationing of rival coastguard vessels and fishing fleets. Elsewhere in the South China Sea, there are the moves to promote tourism to disputed areas and assign them to administrative districts. For each move, there is inevitably a counter as rival states manoeuvre to ensure they are not caught napping. Vietnam recently renamed streets in some of its cities after the Paracel Islands - the Chinese-controlled archipelago it claims as its own. Beijing, meanwhile, is pushing ahead with plans to open the Paracels' shoals and reefs to mainland tourists. In legal terms, sovereignty is easy to claim but difficult to prove. Proximity, for example, is no guarantee of sovereignty, according to international legal scholars. Scarborough Shoal may sit within the Philippines' 200-nautical-mile exclusive economic zone under the UN Law of the Sea, but that does not mean it is necessarily Philippine territory. But then neither do historic facts such as discovery or traditional fishing, factors frequently raised by Chinese scholars and officials, denote ownership. Some international law experts point to the need to be able to show "effective administration" - essentially the carrying out of sovereign acts. They point to Singapore's victory in 2008 over Malaysia in the case of Pedra Branca, a small island on the edge of Singaporean waters. After a long-simmering dispute, the two sides agreed to seek a definitive ruling from the International Court of Justice in The Hague, a body run under UN auspices. The Philippines is attempting to take Scarborough to the court, but unless China agrees, this cannot happen. "Effective administration is relative to the size of the feature," said Professor Robert Beckman, an international law expert at the National University of Singapore. "The key issue is, what acts did each claimant carry out, and how did the other react? Did they protest or did they acquiesce? "In the Pedra Branca case between Malaysia and Singapore the court found that Singapore carried out several acts which only a sovereign [power] would undertake, and Malaysia was silent. Therefore, the court found that Malaysia had 'acquiesced' to Singapore's acts, and at some point title had passed from Malaysia to Singapore because of Malaysia's acquiescence." Effective administration can involve things such as reclamations, regulation of fishing, construction and maintenance of structures, and the investigation of accidents. Some scholars have already noted that while the Philippines' construction of a lighthouse on Scarborough Shoal in the 1960s might be an advantage, the fact that Manila let it fall into disrepair would help China's cause. Similar concepts proved the key to Malaysia's victory over Indonesia at the International Court of Justice in late 2002 concerning the ecologically rich islands of Sipidan and Ligitan off the coast of Borneo - larger than the rocks of Scarborough. The case hinged on Malaysia's "effective occupation" - something that dated back to colonial times. Another key factor is the so-called date of dispute. This means that actions and statements after an island or feature was clearly in dispute are ignored for the purposes of the court case - it is the actions before that which count. While some of the diplomatic rhetoric of recent weeks has been robust as Beijing and Manila trade verbal blows, there are good reasons why both sides have stopped short of beating the drums of war. The use of force to secure occupation could greatly hamper a claim, whatever advantages an aggressor may think it will bring in terms of "effective administration" or occupation. Beckman notes: "Under the UN Charter and the UN General Assembly Resolutions interpreting it, it is no longer legally possible to acquire sovereignty through the use of force." He points to the 1970 Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States. "The territory of a State shall not be object of acquisition by another State resulting from the threat or use of force. No territorial acquisition resulting from the threat or use of force shall be recognised as legal," the declaration says. The ICJ has ruled that the resolution reflects principles of customary international law binding on all states, Beckman said. While he has not taken a position on the various sovereign claims, he said there was not likely to be any use of force over territorial disputes. Singapore-based security analyst Dr Ian Storey, of the Institute of South East Asian Studies, said it had been apparent for some time that various claimants well understood the need for consistency as a constant policy to buttress sovereign claims. "With every move and counter-move, we can see some of these theories at work," he said. "It is not just about protecting ground for a possible court case. It is also about putting yourself in the strongest possible position should matters ever come down to negotiation. Whatever moves are made at [the Association of Southeast Asian Nations] in terms of a code of conduct to ease tensions, I think it is clear that tit-for-tat manoeuvring is going to be with us for some time yet."

In a move designed to boost domestic consumption and cut carbon emissions, the central government has earmarked 26.5 billion yuan (HK$32.5 billion) in subsidies for energy-saving home appliances. Under a resolution reached at a State Council executive meeting yesterday, the subsidies for energy-saving air conditioners, flat-screen televisions, refrigerators, washing machines and heaters will tentatively last for a year. It did not specify when they would be made available. Beijing launched various policies aimed at boosting sales of home appliances in order to help weather the 2008 financial crisis. These included subsidies for manufacturers to sell their products in rural areas, as well as incentives for consumers to buy home appliances via the so-called old-for-new replacement scheme. However, most of the schemes ended in 2011, resulting in a drop in home appliance sales on the mainland and creating a massive inventory backlog in air conditioners. On top of subsidies for energy-saving appliances, the meeting yesterday also decided to spend 2.2 billion yuan on promoting energy-saving lighting devices and LED light bulbs, and 1.6 billion yuan on energy-efficient electric motors. A further 6 billion yuan was earmarked for certain environmentally friendly vehicles with engine displacements of 1.6 litres or less. A recent report by CICC Research said that inventories of air conditioners stood at 20 million to 30 million units at the end of last year - equivalent to three to four months of sales. Citing the China Household Electrical Appliances Association, China Business News reported that the new round of subsidies would likely take the form of cash incentives for consumers to buy energy-saving large electrical goods. Shares in mainland makers of home electrical appliances rose as much as 2.18 per cent on Tuesday on expectations that another round of subsidies would be introduced.

The China Central Television (CCTV) tower shines amid the Beijing skyline on Wednesday. Construction of the tower officially finished on Wedneesday and CCTV employees are moving into the offices shortly. The futuristic CCTV headquarters building – with its two leaning towers linked by a 90-degree twist at the top – has attracted considerable controversy since its design was commissioned a decade ago. Now, it is ready for occupation by China’s state TV broadcaster, China Central Television. Construction of CCTV’s new headquarters officially finished on Wednesday – 10 years after Dutch architectural firm OMA envisioned the skyscraper designed to symbolise China’s rise on the world’s stage. Like the Bird’s Nest and the Water Cube – signature venues for the 2008 Beijing Olympic Games – the CCTV building is part of a new architectural wave that is redefining the landscape of Beijing.

China's gold demand hit a record high in the first quarter on investor worries over inflation and property market curbs, the World Gold Council said on Thursday, bucking a lower trend in global consumption driven by higher gold prices. Global gold demand fell 5 per cent on the year to 1,097.6 tonnes in the first three months of this year, as jewellery and technology sectors bought less gold with average prices up 22 per cent from a year earlier, but investment demand and central bank buying helped cushion the fall, the industry group said. China remained the world’s top gold consumer for the second quarter in a row, with its gold consumer demand up 10 per cent to 255.2 tonnes, beating India’s 207.6 tonnes, which was a 29 per cent decline on the year. “Further growth is expected in China: investors remain wary of high inflation rates; and property market restrictions continue to drive demand for gold among investors seeking access to real assets,” said the WGC in its quarterly Gold Demand Trends report. China’s physical gold bars and coins demand rose 13 per cent on the year to a quarterly record of 98.6 tonnes, while jewellery demand climbed 8 per cent to 156.6 tonnes and accounted for 30 per cent of the world’s gold jewellery market, the WGC data showed. The WGC said investment demand in China going forward will depend on price expectations, and the performance of other assets such as property and the domestic stock market, but inflation will continue to be a concern to investors. The country’s gold jewellery demand is likely to remain on a more moderate growth path as the market matures and economic growth cools, it said. Spot gold averaged US$1,690 an ounce in the first quarter, up from US$1,387 a year earlier. Prices have declined to below US$1,550 this week. India’s vast gold jewellery market suffered a 19 per cent drop in demand in the first quarter of the year, and investment demand tumbled 46 per cent, pressured by a weak and volatile rupee among other factors. A three-week nation-wide strike among jewellers after the government announced plans to double import tax to 4 per cent on bullion and double the duty on non-standard gold and gold jewellery to 10 per cent hit retail demand. “It is likely that this impact will reverse to some extent in the second quarter, as the supply chain readjusts following the three-week shutdown,” said the WGC. The group said the sharp drop in investment demand is partly indicative of considerable stock depletion by bullion dealers, given the uncertainty surrounding the potential impact from hikes in the import tax and excise duty. The 10 per cent excise duty on non-branded jewellery was later withdrawn by the government. “Expectations are for Indian investment to recover during the current quarter as the market adjusts to the new legislation and tax structure, particularly if prices dip,” said the WGC. The official sector remained a net gold purchaser in the first quarter, although the volume at 80.8 tonnes showed a 41 per cent decline from the first quarter of last year which witnessed an exceptional level of central bank buying, said the WGC. Russia, Mexico, Kazakhstan, the Philippines, Belarus, Ukraine and Tajikstan all added to their official gold reserves in the quarter. The WGC expected the trend of net central bank buying to continue this year as the main driving factors remain in place, as some countries seek to diversify their foreign reserves and others try to increase gold holdings to maintain the ratio of gold to their foreign reserves. Global investment demand in gold grew 13 per cent on year to 389.3 tonnes, as exchange-traded products recorded a 51.4-tonne inflow while demand in bars and coins recorded a 17-per cent decrease from a year earlier.

McDonald's Corp plans to almost double its workforce in China by hiring an additional 70,000 people this year as it accelerates new store openings, Bloomberg reported Wednesday. The world's largest restaurant chain currently has about 80,000 employees in China, Lisa Howard, a company spokeswoman, told Bloomberg. It will open as many as 250 new locations this year, compared with 200 last year, she said. The Big Mac seller has sought to compete with Yum! Brands Inc's KFC and Pizza Hut in China by opening more stores with drive-throughs and promoting value items during lunch. McDonald's, which also offers a delivery service in China, generated about 22 percent of revenue from the Asia Pacific, Middle East and Africa region last year. McDonald's has more than 33,500 restaurants worldwide.

A 450,000-tonnage terminal of Ningbo Shihua Crude Oil Terminal Co Ltd, Asia's largest crude oil terminal, was formally opened in Daxie, Ningbo, Zhejiang province, chinanews.com reported May 16. With a length of up to 490 meters, a designed annual throughput volume of 17 million tons, and the ability to anchor 20,000-450,000 tonnage crude oil tankers, the newly built berth is the largest crude oil terminal of China, as well as Asia, the report said. According to the report, the project was approved in September 2010 by the National Development and Reform Commission and put into trial production in October 2011. During the testing process, 16 oil cargo tankers (14 of which were very large crude carriers) anchored safely, with a handling capacity of over 3.36 tons. With the berth officially enabled, the number of berths in the Daxie marine area has reached 17 and the designed oil throughput capacity exceeds 70 million tons. As the report noted, it effectively enhances the strategic position of Ningbo as a crude oil transit base, greatly easing current tensions regarding China's crude oil transportation.

Fishermen sort fish in the busy fish market at Tanmen port, the largest port in Qionghai, Hainan province, on May 15, 2012. A two-and-a-half month fishing ban took effect May 16, in most of the South China Sea. A two-and-a half month fishing ban began at noon Wednesday in most parts of the South China Sea as part of ongoing efforts to rehabilitate the area's marine resources, according to fishery authorities. The Hainan provincial marine and fishing department said all 8,994 of the area's locally-registered fishing vessels have been moored. The annual fishing ban, which has been in place since 1999, will last from May 16 to August 1 this year, covering areas north of the 12th parallel, including Huangyan Island but excluding most of the Nansha Islands. The fishing ban was adopted to promote the sustainable development of the fishing industry in the South China Sea and protect the fundamental interests of fishermen, said officials from the South China Fishery Administration Bureau under the Ministry of Agriculture (MOA). Violators will face punishments such as fines, license revocations, confiscations and possible criminal charges, according to a statement issued by the fishery bureau under the MOA. The provincial fishing authority said fishing vessels with fishing permits for the Nansha Islands are required to install and activate positioning equipment so they will not accidentally enter banned areas. "Imposing the fishing ban is conducive to protecting fish during their egg-laying season, increasing fish stocks and improving the biological environment," said Tang Jianye, a professor specializing in maritime policy and law at Shanghai Ocean University. The fishing ban is also applicable to foreign ships. A spokesman from the fishery bureau under the MOA said earlier this week that fishing activity conducted by foreign ships in banned areas will be seen as a "blatant encroachment on China's fishery resources." The Yuzheng-310 and Yuzheng-303 law enforcement vessels were sent to the region by the MOA on Tuesday to conduct patrols. After the ban was issued, the Philippines said it will ignore the ban, but may issue a fishing ban of its own. "Our position is that we do not recognize China's fishing ban, as portions of the ban encompass our Exclusive Economic Zone (EEZ)," according to a statement posted on the website of the Philippines' Department of Foreign Affairs on May 14. "However, the president has decided that, in view of the accelerated depletion of our marine resources, it would be advisable for us to issue our own fishing ban for a period of time to replenish our fish stock," it said. Foreign Ministry spokesman Hong Lei said on Monday during a regular press conference that the fishing ban "is not related to the ongoing Huangyan Island incident." Tong Xiaoling, China's ambassador to the Association of Southeast Asian Nations (ASEAN), said Wednesday that China has every right to defend its sovereignty and protect its fishery resources. The ban comes amid an escalating sovereignty dispute between China and the Philippines over Huangyan Island. Tensions started on April 10, when a Philippine warship harassed 12 Chinese fishing vessels that had sailed near the island to seek shelter from inclement weather. China has repeatedly stated that Huangyan Island is an inherent part of its territory and that the surrounding waters are historic fishing areas for Chinese fishermen.

Hong Kong*:  May 18 2012 Share

Angela Wong Ching-yi, deputy managing director of Midland Holdings, at her office in Central. She spends 11 hours a day there, but finds time for yoga, swimming and shopping. The roots of Angela Wong Ching-yi's blossoming business career probably lie in the hikes she loved to take with her father when she just a little girl, she recalls. "My dad loves hiking and he would often ask his senior staff to join him so that he could use the opportunity to talk business. I first joined them when I was around four or five years old and that was probably when the seeds were sown," says the deputy chairman and deputy managing director of the listed property brokerage Midland Holdings. Following in the footsteps of her father, Freddie Wong Kin-yip, who is chairman and managing director of Midland, Wong started working for the company during her school and university holidays, and formally joined by the end of 2005 after she had obtained her qualification as a chartered accountant. She rapidly scaled the corporate ladder and in 2008 was made an executive director with responsibility for formulating, overseeing, and implementing the company's overall corporate strategies. She is also responsible for overseeing functions such as finance and accounting, marketing, company secretarial, information technology and investor relationships. It is a heavy workload but one she relishes, just as she relished those demanding hikes her father took her on when she was little. "One day my dad took me to walk up the 'Thousand Steps', one of the most popular hiking spots in Hong Kong. We went with a group of senior staff and Dad challenged them to finish the walk. "In the end I was among only a small group that finished. Many gave up and left in the middle of the walk." "The days of hiking with my Dad makes me understand and recognise his philiosophy and working style. What I am doing is in line with what my father does and our staff will find it easy to follow." Wong said her responsibilities now include formulating a strategic plan for how many new outlets should be opened and in what locations. She also aims to enhance operational and management efficiencies, which she reckons is a way to control costs and maximise profit. Her duties include stafftraining and motivation, and the considerable effort that Wong puts into these challenging tasks means she spends up to 11 hours in the office every day. Recognition from both staff and her father for her hard work is enough reward. "My dad is a very smart person and I want to get his recognition. He is also a very straightforward person and if he thinks your idea is silly he will say so in front of my staff, and then what will they think of me?" The lesson she has learned, says Wong, is to prepare very well whenever she has any ideas to present. "I rely on objective facts. Figures don't lie." She uses the same approach in her dealings with subordinates, mostly men with 10 or 20 years' experience of the industry. "I was asked how I would deal with them and frankly, I was very frightened when I had my first meetings with directors. All I could depend upon was to have the objective facts at my command." Wong, who, some analysts say, does not have the charisma of her father, says she nonetheless plays an important role in a board dominated by men. "Men usually have big egos and strong views. They do not compromise. I play a role to solve conflicts between two sides; to get people together. My dad is also a man with very strong views and I have learned how to deal with these kind of people," she said. "I may not have an exceptionally high intelligence quotient, but my emotional quotient is not bad. High EQ is very important for a leader." These frank self-criticisms were confirmed by fellow director Gordon Tse, who recalled an occasion when he went with Wong to meet a fund manager. "The fund manager was rude and yelled at her unreasonably. But she was calm, and answered every question he asked," Tse said. "This was the first time I had heard an outsider speak like that. I wanted to hit back but decided not to." In her free time - or what there is of it - Wong likes yoga, swimming, and shopping. But she cannot help popping into a Midland branch on the way, just to check if everything is running smoothly.

Beijing has doubled the amount of reserves the Hong Kong Monetary Authority can invest in the mainland interbank market, the latest move in its push for the yuan to become a global currency. HKMA chief executive Norman Chan Tak-lam told a seminar in Tokyo that the authority was recently granted a new quota of 30 billion yuan (HK$36.80 billion) - up from 15 billion yuan - to invest in the mainland interbank bond market traded by institutional investors. It would do this via the Exchange Fund, which it oversees, and has the mandate of supporting the stability of the Hong Kong dollar. The HKMA last June was granted a separate quota to invest up to US$300 million in mainland A shares and listed bonds. Beijing still has capital controls but in recent years has granted quotas for institutions such as central banks, insurers and foreign banks to trade on the mainland capital markets as it wants the yuan to become a global currency like the US dollar, used to settle trade and investment. In recent years, China has played an increasingly important role in intra-regional trade in Asia, and is now Japan's largest trading partner. In 2011, Japan's exports to China accounted for one-fifth of Japan's total exports, while over 20 per cent of Japan's imports were from China. The growing trade links between the nations presented a strong business case for use of the yuan in enhancing the efficiency of these activities, Chan told 200 bankers and fund managers at the seminar. "Hong Kong represents a comprehensive one-stop platform which can facilitate Japanese companies and banks to conduct various kinds of offshore yuan business," Chan said, adding that 13 Japanese banks had joined Hong Kong's yuan clearing platform. Andrew Fung Hau-chung, executive director of Hang Seng Bank (SEHK: 0011), said the expanded quota would allow the Exchange Fund to hold more yuan. "This would lead the HKMA to act as a model to encourage more overseas central banks to consider investing their reserves in yuan products," Fung said. Yuan deposits in Hong Kong stood at 554.3 billion yuan at the end of March, down from a peak of 627.3 billion yuan on November 30. 

Hongkongers protest against the filibuster outside the Legislative Council on Wednesday. Supporters and opponents of the filibuster by radical lawmakers against the government's controversial by-election bill clashed outside the Legislative Council on Wednesday afternoon as legislators slogged through the early stages of an all-night debate inside the chamber. About 200 opponents splashed water and threw objects at 30 supporters of People Power and the League of Social Democrats, who were continuing their delaying tactics on the bill inside Legco. The two camps of demonstrators had earlier been separated by a double layer of metal barricades in a protest zone set up by the police. But tensions grew as both sides shouted slogans. A clash broke out after several pro-filibuster protesters escaped their barricaded area and shouted at their opponents, who reacted by splashing water and throwing objects at them. Police officers intervened to calm the situation. One anti-filibuster protester was taken away by officers after allegedly pushing a reporter, local radio reported. The Legco session, which began on Wednesday morning and is set to last at least until Thursday, marked the council’s first all-night debate in two years, but the pro-government camp, which backed the marathon session, was unsure whether it could last another night. Lawmakers of the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), meanwhile, wore stickers on their chests reading, “anti-filibuster, anti-adjournment”. When asked if she was prepared to sit through a second night, DAB vice-chairwoman Starry Lee Wai-king said that she would remain “until the meeting finishes”. Federation of Trade Unions lawmaker Wong Kwok-hing said they “simply have no choice” but to continue the meeting to ensure important bills are passed before the current Legco term finishes on July 18. Wong bought paintbrush, paper and pen to “record the proceedings of the meeting”, using calligraphy, “to mock the meaninglessness of the filibuster”. Like many other pro-government lawmakers, Wong made special preparations for the overnight meeting, bringing Chinese tea to help stay awake during the debate on the Legislative Council (Amendment) Bill and 1,300 amendments. Lawmaker Paul Tse Wai-chun, dressed casually and wearing sandals, explained that these were clothes he normally wore on long overnight flights. While the People Power duo of Albert Chan Wai-yip and Wong Yuk-man moved an array of amendments to the bill, other pan-democrats boycotted the proceedings, which have already been adjourned twice due to a lack of quorum. Wong Kwok-hing was caught watching a film last week during an earlier debate on the bill – which seeks to ban a legislator who resigns from contesting a by-election for six months. Wong argued that there was nothing wrong with surfing the internet “during a meeting without substance”. Civic Party leader Alan Leong Kah-kit said he would move a motion to suspend the debate “to make way for more important bills”.

Failed chief executive candidate Henry Tang Ying-yen says illegal structures at his property in Kowloon Tong have become the subject of an investigation by graft-busters, despite his co-operation with buildings authorities to comply with the law. Tang said he feared the case, along with a recent crackdown on illegal structures at a factory owned by his in-laws, would give the public the perception that there was an attempt to "settle scores" with him after the chief executive election. The involvement of the Independent Commission Against Corruption came as a disappointment, he said yesterday on the radio program of political commentator Albert Cheng King-hon, after returning from a holiday in America. "I have been trying my best to work with the Buildings Department, hoping to obtain approval as soon as possible to undo [what was built illegally]," Tang said. "Many professionals are dealing with it now, so the issue involves the department and is none of the ICAC's business." He said the anti-graft agency had not contacted him about the matter, but he knew they were investigating other people linked to the works. Tang later clarified that he did not feel anyone was settling scores with him, nor did he think any of his supporters would be "persecuted", because "the incoming administration should be occupied with the city's economic, social and political developments". In February, government surveyors confirmed that a Tang family home at 7 York Road, under the name of his wife, Lisa Kuo Yu-chin, sat atop a 2,250 sq ft unapproved basement. Reports emerged last month that the ICAC was checking an interior design firm that had worked on the house. The investigation was believed to be related to whether anyone had forged documents to defraud the department over the structure of the house and had accepted an advantage in the process. A spokesman for the ICAC said it was the agency's job to "investigate without discrimination, in a fair, just and lawful manner if it finds a complaint pursuable". The Buildings Department has ordered Kuo's family to tear down illegal structures found at their factory building in Tsuen Wan. Tang said the actions on "the iron-plated shacks that had been [at the factory] for decades and the York Road mansion give the public a bad perception that a 'settling of accounts' is under way". Looking back at his scandal-ridden campaign, which included his admission he had strayed in his private life, Tang said he was disappointed that the public focused on his flaws at the expense of his policy platforms, including his pledges to give eligible elderly people HK$3,000 a month and to ensure hospital beds for all expectant Hongkongers. He said he met central government officials after the election and was encouraged to continue discussions on his ideas. "I hope they can be implemented," Tang said. He hinted he would serve on the Standing Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body. "If I get an offer, I will consider it positively," Tang said.

Hong Kong Chief Executive’s Proposed Salary: US$620,843 - Incoming Hong Kong chief executive Leung Chun-ying, pictured speaking to families in the city’s Sham Shui Po district, is one of a number of top officials who may get a pay raise. Hong Kong’s political leaders, already among the best-paid in the world, are in line for a pay raise. The government announced a bevy of proposed new pay raises this week, which would increase the monthly salary of the city’s government ministers by 8.1% to HK$332,260, or an annual US$513,000. Under the plan, salaries for the city’s chief executive, financial secretary and justice secretary would also experience corresponding rises. Critics were quick to heap scorn on the news. “Hong Kong already has a huge problem of income inequality,” said Labour Party chairman Lee Cheuk-Yan in an interview. “Now, we’re raising their wages to over 30 times that of the ordinary people in Hong Kong,” he said. In 2011, the median domestic monthly income was HK$20,500 (US$2,639). Secretary for constitutional and mainland affairs Raymond Tam, though, called the pay raise a “moderate increase.” Ministers haven’t gotten a pay raise in 10 years, he argued, and the annualized increase amounts to just a 0.78% increase every year. He also noted that the plan, which still needs to be considered by the legislature, also capped salaries for certain officials at lower levels than before. The latest proposal would raise the pay of the city’s chief executive (its top political post) to a comfortable US$620,843 per year, a spokesman for the city’s constitutional and mainland affairs bureau said. Such a figure is dwarfed by salaries in Singapore, where the prime minister pulls down an annual US$1.7 million salary, but still easily outstrips the US$400,000 Barack Obama makes as U.S.president, as well as the comparatively low official salaries of top Chinese leaders—a factor analysts say partially helps fuels corruption in China. (Chinese ministers reportedly earn some US$22,000 a year.) Analysts say high official salaries help Hong Kong preserve its reputation for clean government, by reducing the temptation to accept bribes or other perks. But recent scandals over reports of pleasure trips with tycoons that have dogged the city’s leader, Donald Tsang, as well as the arrest on suspicion of bribery of the city’s onetime no. two official, Rafael Hui, have shown that “giving high pay to fight corruption is not really working,” Mr. Lee argues. Michael DeGolyer, political analyst at Hong Kong Baptist University, says that the boost in salaries could prove a boon to incoming leader Leung Chun-ying, who replaces Mr. Tsang this July. In recent weeks, Mr. Leung has proposed a reorganization of the government, rattling officials who still remain divided in their support after an acrid political contest that ended only two months ago. “They know Leung is going to stir things up,” says Mr. DeGolyer. “Having a nice big fat pay raise helps take the sting out of it.” And in any case, Mr. DeGolyer adds,Hong Kong can surely afford it. The government’s reserves stand at a comfortable US$87.16 billion, making the city the envy of many debt-addled countries around the world.

Seeking changes while preserving stability" is the principle underlying my policy implementation. Accordingly, the government should continue to function normally while taking a more proactive role. Our policies should be people-oriented, forward-looking and well co-ordinated, having regard to the interests of all stakeholders. Our ultimate objective is to enhance the effectiveness of governance, further promote economic development and introduce substantial improvement to people's livelihoods. To achieve the goal of effective governance, we need to reorganise the government secretariat. Recently, there has been much discussion and misunderstanding in the community regarding the creation of the posts of deputy chief secretary and deputy financial secretary. The main objective in creating these two posts is to share the workloads of the chief secretary and the financial secretary, and assist them in co-ordinating policies that cut across different programmes and formulating long-term policies. At present, the chief secretary's portfolio is very wide-ranging. Apart from nine policy bureaus, he or she also supervises the Hong Kong-Guangdong economic co-operation, population policy, the West Kowloon Cultural District and the Community Care Fund. The financial secretary has overall responsibility for economic and infrastructure development and the management of public finance. In addition to three policy bureaus, he or she also supervises the Monetary Authority and the Economic Analysis and Business Facilitation Unit. Over the years, Hong Kong has strengthened its ties with the mainland and the provisions of our Closer Economic Partnership Arrangement are ever-increasing. Consequently, the policy responsibilities of both secretaries are becoming even more cumbersome. And with the introduction of the accountability system, they have an additional political role to play. As regards to whether the secretaries or their deputies should be held accountable for policies, this will have to be judged on a case-by-case basis, depending on the nature and importance of the subject matter. The proposed reorganization is not an expansion of the accountability system. Nor would it alter the division of responsibilities or the line of command between politically appointed officials and civil servants. The reorganization draws on the experience of the current government in its policy implementation over the past five years. It is our hope that it can enhance the political capabilities of the new leadership, so that it can improve its relationship with the Legislative Council and reach out more widely and deeply to explain its policies and collect people's views. There is only one goal in this, and that is to ensure that our policies can better address and respond to the needs of our people. Some say that we are pushing Legco to accept the reorganization in haste. As a matter of fact, we are following almost the same legislative timetable adopted in the reorganization of the third-term government five years ago. So time should not be a concern. Others say that we should conduct consultation beforehand, but no territory-wide consultation was conducted for any of the previous reorganization exercises. What differs this time around is that my campaign addresses the public. My manifesto, which covers the proposed reorganization, was written after three months of consultation and numerous visits to the local districts. It incorporates the views of people I heard. My colleagues in the Office of the Chief Executive-Elect and I have also taken the initiative to explain the concepts of the proposed reorganization to Legco members, political parties, civil servants, social organizations and listen to their views. We have also answered queries at panel and subcommittee meetings of Legco and will join public hearings to be held very soon. There are views that the political climate has changed with time and that, given people's higher expectations, it is only fair that we should do more. I share this view. We are willing to do more and have done quite a lot already. Yet those who do not support our proposed reorganisation of the leadership team to assume office on July 1 fail to justify their objections. They disregard the consultations we have conducted and seek to cast doubt on whether these changes can achieve the expected results. The proof will lie in its implementation and application. Furthermore, we are subject to monitoring by a discerning community and I shall stand accountable for the performance of my government. In the coming month or so, I will continue to make visits to the local districts and meet people from different walks of life to listen to their views. This is the most effective and direct form of public consultation, and from July, I will also invite members of my leadership team to reach out to the community. This is proactive governance.

The Hong Kong Monetary Authority (HKMA) and the Hong Kong Trade Development Council organized a seminar on promoting offshore renminbi (RMB) business in Tokyo on Tuesday. Norman Chan, chief executive of the HKMA, said that the growing trade links between China and Japan presented a strong business case for the use of renminbi, or the yuan, in enhancing the efficiency of these activities. In recent years, China is playing an increasingly important role in intra-regional trade in Asia. It is Japan's largest trading partner now. In 2011, Japan's exports to China accounted for one-fifth of Japan's total exports while over 20 percent of Japan's imports were from China, according to statistics from the HKMA. "The internationalization of renminbi involves linking of the onshore and offshore renminbi markets through three bridges, namely trade settlement, direct investment and portfolio investment," said Chan. Hong Kong is a comprehensive one-stop platform which can facilitate Japanese companies and banks to conduct various kinds of offshore renminbi business, according to Chan. Currently, 13 Japanese banks are participating in Hong Kong's renminbi clearing platform and six Japanese companies have issued over 3 billion yuan ($474.65 million) of dim-sum bonds in Hong Kong. "We are open to diversified offshore renminbi markets," Chan told Xinhua. "Hong Kong would like to build mutually beneficial relations with potential offshore markets including Tokyo."

Taiwan’s President Ma Ying-jeou has been fined Tw$500,000 (HK$131,378) by electoral authorities for urging his Facebook followers on polling day to vote for him, the Central Election Commission said on Wednesday. Taiwanese election law forbids any form of campaigning on voting day. Elected in 2008, Ma won a comfortable re-election victory on January 14. He is due to be inaugurated for his second and last four-year term on Sunday. However, his government has recently come under fire over a string of controversial policies, which saw his popularity plunge to 19.5 per cent, its lowest level in nearly three years, according to a poll released last week. Thousands of people took to the streets of Taipei on May Day to voice their anger at the government, while the opposition party has vowed to stage a mass rally on the eve of his inauguration.

 China*:  May 18 2012 Share

China Eastern Airlines and other carriers from mainland China have been given an ultimatum by the European Union over compliance with its Emissions Trading Scheme. E.U. warns airlines over emissions compliance - Mainland Chinese and Indian carriers told they have until mid-June to file data or will face fines and possibly bans from flying to European destinations - All international airlines except those from mainland China and India have complied with the EU law on offsetting their carbon emissions, the European Union's climate chief said yesterday. Eight Chinese and two Indian airlines have until mid-June to submit information to the European Union on how they plan to offset carbon emissions. If they fail to comply, then the European Commission has the option of fining airlines that break its law, or, as a last resort, banning then from flying to Europe. Connie Hedegaard, climate action commissioner for the EU said in Brussels yesterday the 10 had so far failed to comply with an order requiring all airlines flying into Europe to participate in the EU's Emissions Trading Scheme (ETS). "We will remind them to report their data before mid-June, otherwise it will be up to the member states to apply penalties," said Hedegaard. But an airline executive said the EU had jumped the gun by releasing emissions data without the information from the 10 in an attempt to sideline mainland China and India as "black sheep". Airlines and the EU clashed after the scheme was announced, and when Beijing entered the fray in February, it banned all carriers from participating in the ETS. Under the EU requirements, global airlines are obliged to hand in their emissions data for their flights to and from Europe for 2011 by May 31. The EU said it had so far received more than 1,200 emissions reports. The EU has warned the big four mainland carriers, Air China (SEHK: 0753, announcements, news) , China Eastern Airlines (SEHK: 0670), China Southern Airlines and Hainan Airlines, that they would be fined by their "administration state" in Europe if they did not file their data. Air China, for example, would be subject to a US$43,000 fine imposed by Germany if they miss the deadline. The fines will increase as time passes and, ultimately, they will be prohibited from flying to Europe. "It has put the airlines in a very difficult situation - that they either disobey their government or disobey the EU," said Mark Watson, head of environmental affairs for Cathay. The Brussels-Beijing conflict is poised to turn into a trade war as Airbus claims US$12 billion worth of jet orders have been put on hold by Beijing. Hong Kong Airlines, which is controlled by the mainland's fourth-largest aviation conglomerate, HNA Group, said it would consider cancelling its order for 10 Airbus 380s after Beijing asked mainland carriers not to participate in the ETS scheme. In a joint declaration in February, the US, mainland China, Russia, Japan and 19 other nations criticised the EU for imposing the unilateral scheme on all airlines and on all flights to and from Europe. They said they would boycott the ETS and respond with retaliatory measures on EU carriers. In the face of mounting opposition to its ETS, the EU is putting a lot of energy into achieving a global accord aimed at reducing carbon emissions through ICAO, the United Nations organisation that regulates airlines, Hedegaard said.

China Mobile (SEHK: 0941), the world’s biggest telecom carrier by subscribers, said on Wednesday it is negotiating with Apple to carry the popular iPhone in China. China Mobile is the only Chinese operator that does not officially carry the iPhone because its homegrown 3G technology is not supported by the chips used in current iPhone models. Analysts have said next-generation iPhones will likely use a Qualcomm chip that would support China Mobile’s network, removing the key technology barrier for a deal. “We’ve been actively talking to Apple on how we can cooperate,” China Mobile Chairman Xi Guohua, who assumed the post in March, told a shareholders meeting. “I can’t give you too many details, but I’d like to repeat that both sides do hope to boost our cooperation,” Xi added after the meeting. He made the comments in response to a question about when China Mobile would sign a deal for the iPhone. Rivals China Unicom (SEHK: 0762) and China Telecom (SEHK: 0728) have already signed contracts with Apple. Xi also said China Mobile is trying to expand its services outside mainland China by offering 4G services in Hong Kong this year and is hoping to provide mobile service between the United States and China. However, media reports have said US authorities might deny its application due to security concerns. “We want to become a more global company. For that to happen, we are interested in tapping other markets such as Hong Kong and the United States,” Xi said. “We have applied to the United States for a licence, but it’s not been rejected yet. Rather, it’s undergoing the relevant procedure. We hope the US government will give us their approval soon for us to expand our services there.” China Mobile also said it was expanding tests of its latest generation TD-LTE mobile network. The company has completed initial testing with 850 base stations in six cities, such as Hangzhou in China’s east, and expects to complete the next phase of tests by June next year, executives said earlier this year. TD-LTE refers to “time division long-term evolution” technology that allows for more voice connections, faster data speeds and easier network upgrades. China Mobile executives said on Wednesday the trials will be expanded to 10 cities, including Beijing, with the number of base stations increasing to more than 20,000 this year. There are now 72 LTE operators that have launched commercial services, including 25 networks launched so far this year, according to a May report by the Global mobile Suppliers Association (GSA). Commercial LTE services are already available in Asia in Australia, Hong Kong, India, Japan, the Philippines, Singapore and South Korea, the GSA said. China Mobile shares are up about 13 per cent this year, outperforming the Hang Seng Index’s rise of about 5 per cent. The carrier said subscribers in March rose to 667.20 million, more than twice the population of the United States, including 59.56 million 3G subscribers.

Gu Wangjiang, the elder sister of Bo Xilai's wife. Gu Wangjiang, the sister-in-law of Bo Xilai , has Shenzhen and Singapore business holdings with links to Shandong - adding to the web of assets owned by the scandal-ridden family. Under her Cantonese name Kuk Mong Kong, Gu is a director of two Singapore firms, Lobb Heng and Tian Yuan Holdings, according to corporate documents filed in Singapore. Gu and her younger sister, Gu Wang Ning, were also directors of the now-defunct Hitoro Singapore, which operated from 1996 to 2002. Lobb Heng, in particular, appears to be engaged in frequent and substantial business. Its last annual general meeting was on April 19. As a sign of its ties to Jinan , the capital of Shandong, Lobb Heng's previous name was Jinan-Shandong. Lobb Heng, which has a registered capital of US$1.8 million, is involved in the import and export of electronic parts, copper, paper pulp and aluminium. It also trades futures, according to corporate records. Filings show that the firm has 16 records of secured debts from 2007 to February this year with banks such as ICBC, HSBC, Standard Chartered and Societe Generale. One of Lobb Heng's directors is Zhao Mingkui, chairman of Jinan State-Owned Assets Operations. He is also a shareholder and director of Qilu Bank, Jinan's first commercial lender, the bank's website says. Among Lobb Heng's investors are Jinan Import and Export with a 28.8 per cent stake, Jinan Economic Investment Development with 11.1 per cent, Jinan Energy Investment with 20 per cent and Hitoro, which owned 6 per cent. Hitoro, which was dissolved in 2002, was 10 per cent owned by Gu Wang Ning and 75 per cent owned by a British Virgin Islands company called Hitoro Development. Meanwhile, import-export firm Tian Yuan, another Gu Wangjiang venture in Singapore, has US$1 million in registered capital. Its major shareholders include Shandong Economic Development & Investment Corp with a 30 per cent share and Hitoro Singapore with 52 per cent. She owns nearly 100 per cent of active firm Hongkong Hitoro Holdings, which in turn owns 29.92 per cent of Tung Kong Security Printing, headquartered in Jinan and listed in Shenzhen, according to Tung Kong's 2011 annual report. She is also chairman of two firms in Rizhao city, Shandong, the report says. Based on Tung Kong's market capitalisation of 2.23 billion yuan (HK$2.73 billion) on May 14, her 29.92 per cent stake in the Shenzhen-listed firm translates to a personal wealth of 667 million yuan.

Bo Xai's family businesses - Relatives of disgraced former Chongqing party boss Bo Xilai are part of an extensive web of foreign firms. The announcement in mid-March that Bo Xilai had been stripped of his political posts has exposed the former high-flying Chongqing party chief to the glare of publicity, shining attention on his family's links to a web of foreign companies. These assets have been traced to Hong Kong and elsewhere, and to large mainland state-owned firms and leading foreign businessmen, raising questions about the scale of Bo's alleged corruption and the complicity of his family, particularly his wife, Gu Kailai. Gu Kailai's eldest sister, Gu Wangjiang , for example, is a starting point for a trail that extends from Hong Kong to Malaysia and the northeastern Chinese city of Dalian, where Bo was mayor. Under her Cantonese name Kuk Mong Kong, Gu Wangjiang operates several companies in Hong Kong, including one that was previously a joint venture with a big Malaysian conglomerate and another that is an existing joint venture with a large Chinese state-owned steel producer, according to Hong Kong corporate records. Kuk and Vincent Tan Chee Yioun, one of Malaysia's richest businessmen, were previously directors of Syntax, a Hong Kong company that existed from 1992 to 2000. Syntax was half-owned by Tan's Berjaya Group, a conglomerate whose businesses include financial services, hotels, property and gambling. In early 1993, Berjaya announced it had formed six subsidiaries, including Syntax, to undertake various businesses in China. In September 1993, Berjaya said it had won the right to manage a social welfare lottery project in Dalian. Just two months later, Bo, as Dalian mayor, denied claims by Berjaya's competitor, a Malaysian-listed firm called Magnum, that Berjaya had a licence to operate slot machines in Dalian, according to media reports. Bo's father was the late People's Liberation Army stalwart Bo Yibo, making the son a "red prince". The Hong Kong corporate-governance activist David Webb also points out that Kuk's father is Gu Jingsheng , a renowned PLA general, making Kuk and Gu Kailai "red princesses" in their own right. "There does seem to be a correlation between the number of relatives one has in high office in China and the probability of success in Chinese business, but that doesn't prove each individual case is the result of corruption," Webb said. Kuk's wealth is substantial. Based on Tung Kong's market capitalisation of 2.23 billion yuan (HK$2.73 billion) on May 14, her 29.92 per cent stake in the Shenzhen-listed firm translates to a personal wealth of 667 million yuan. She was also vice-chairwoman of a troubled Hong Kong-registered ship-chartering company called Sitoro Shipping Enterprises, which was incorporated in Panama. The company was dissolved in 2002. Auditors Moores Rowland gave a qualified opinion on Sitoro's financial statements for 2000. "The company has not prepared financial statements in accordance with standard accounting practice by the Hong Kong Society of Accountants," Moores Rowland said. "There is insufficient information concerning a subsidiary in these financial statements to give a true and fair view of the company." Sitoro had net losses of US$4,958 in 2000 and US$2,779 in 1999. At the end of 2000, the company had net current liabilities of US$2.88 million and net assets of US$52,306. Kuk is a director of three live Hong Kong companies, namely Hongkong Hitoro Holdings, True Shine (a wholly owned subsidiary of Hitoro) and Hangang Worldwide. Another older sister of Gu Kailai, Gu Wangning, is also a director of Hangang, according to Hong Kong corporate records. Hangang is wholly owned by a British Virgin Islands company called Fujiang Steel Industrial, but in 2001 Hangang was half-owned by Handan Iron and Steel, a big Chinese state-owned steel producer. Handan Iron and Steel has 24,000 employees and more than 60 billion yuan of assets, and in 2008 its revenue was 35.9 billion yuan, according to its website. Hong Kong Hitoro makes steel coils in China for export to Europe, North America and Southeast Asia and for use in China, according to the website of the Hong Kong Trade Development Council. Hangang and Hitoro's address is on the 37th floor of Tower 6, The Gateway in Tsim Sha Tsui. The South China Morning Post (SEHK: 0583, announcements, news) visited their elegant offices at Gateway but a woman in the reception would not accept questions from or admit reporters. In 1992, Kuk, through Hitoro, acquired a 2,620 sq ft duplex occupying the 16th and 17th floors of Tower 9 in the luxury residential complex Hong Kong Parkview in Tai Tam for HK$13.25 million. According to Land Registry documents, the company sold the unit for HK$88 million in April 2011. Security guards at the property said the flat was occupied by a Hong Kong Chinese person. There are also strong business links on Bo's side. Bo's eldest brother, Bo Xiyong, was an executive director and vice-chairman of China Everbright (SEHK: 0165) International, a Hong Kong-listed environmental protection firm, assuming the name "Li Xueming" in company documents. On April 25, "Li Xueming" resigned as vice chairman, executive director and a member of the executive committee of the board of China Everbright International "to minimise possible adverse impact on the company of reports on his family background", Everbright said. Meanwhile, Xu Ming and Chen Chunguo, two Chinese businessmen reportedly investigated in relation to Bo Xilai, are linked to a Hong Kong company, Golden International (Hong Kong) Investment. Golden International was previously named Shide International (Hong Kong). Xu and Bo Xilai are among at least 39 people detained in the mainland seaside town of Beidaihe , a retreat favoured by Chinese leaders, according to Britain's The Daily Telegraph. Chen had been under investigation by the Chinese authorities since March, the mainland The Economic Observer newspaper reported. Xu is chairman of the Dalian Shide Group, a private mainland conglomerate, with interests in building materials, petrochemicals, electric appliances, sports and insurance, and Chen is its chief executive. Although Xu is not currently listed as a shareholder or director of Golden International, he was recorded in Hong Kong corporate documents in 2003 as owning 40 per cent of Golden International, while his brother Xu Bin owned 15 per cent and Shide CEO Chen owned 40 per cent. On April 15, Shide denied on its website that it was going bankrupt and slamming "fraudulent media reports". The company could not be contacted by phone or e-mail. In 2009, Golden International invested in a mainland firm, Tianshi Xingye Investment, which has a registered capital of US$50 million, according to a Chinese government investment website. Tianshi manages investments in the Beijing Economic and Technological Development Zone. "If an official's friends and relatives own business assets, an obvious risk is conflict of interest," Chris Leahy, a co-founder of strategic advisory group Blackpeak Group, said. "There may be a conflict of interest if he or his family holds businesses contrary to his official function. That is why in a lot of countries, officials have to declare their assets." Beijing has been drafting proposals for a system that would require officials to declare their assets, but such a system has so far not been implemented, Beijing Review magazine reported. According to a 2008 report by the central bank's Anti-Money Laundering Monitoring and Analysis Centre, some officials and top company executives tended to transfer assets through at least eight routes, including cash smuggling, underground financial institutions and offshore financial centres. "No sensible corrupt politician puts money in his or her own name nowadays," said Robert Palmer, a campaigner for Global Witness, a British non-government human rights group. "Instead, they use complex webs of shell companies to hide their identity and assets. Jurisdictions with strong secrecy laws, such as Hong Kong, are particularly attractive for these individuals. "Shell companies can be used for legitimate purposes, so the fact that a politician or his or her family member has one shouldn't be taken as proof of criminality, but it becomes suspicious if they can't explain what the company is used for."

The top Communist Party official in Shandong is the front runner to become Chongqing party secretary, succeeding Vice-Premier Zhang Dejiang , who assumed the position after the downfall of Bo Xilai in mid-March, according to well-placed sources. "Jiang Yikang from Shandong will soon go to Chongqing and replace Zhang. He's been named personally by [Vice-President] Xi [Jinping] ," a source close to the party's Shandong provincial committee said, without specifying the timing of the transition. Another source, familiar with the Chongqing municipal government, quoted two senior officials in the municipality as telling her that: "Jiang, who was once deputy party head of Chongqing, will come and be the municipal party boss as early as June." The 59-year-old Shandong party secretary is generally believed to be a protégé of former vice-president Zeng Qinghong , the head of the so-called princeling faction formed by descendants of the party's revolutionary veterans. Xi and Bo are both prominent princelings. If Jiang does become party secretary of Chongqing, one of the mainland's four municipalities, he is also likely to secure a seat on the party's powerful Politburo. Various cliques have been casting covetous eyes on the vacancy since Bo was sacked. Hunan party secretary Zhou Qiang , 52 and an ally of party general secretary Hu Jintao because of his Communist Youth League background, has long been tipped as a contender. A Chongqing-based scholar confirmed on Saturday that he had heard that Jiang was now favoured, saying: "Compared with Zhou, Jiang's opportunity at this moment is greater." However, a media source in Changsha , the capital of Hunan , said Zhou still stood a chance of getting the Chongqing job. Appointments to key posts usually involve intense horse trading and bargaining among different factions. The People's Daily ran a headline on its front page on April 26 lavishly praising Shandong for its outstanding environmental protection efforts, just a few days after blind legal activist Chen Guangcheng escaped from extra-legal house arrest in Linyi , Shandong. It remains unclear whether the party mouthpiece's unusual promotion of Shandong has anything to do with Jiang's promotion prospects. Jiang became deputy director of the powerful general office of the party's Central Committee in 1995 before being transferred to Chongqing as deputy party chief in 2002. He was promoted to the ministerial-level post of vice-president of the National School of Administration in 2006, before being appointed Shandong party secretary in early 2008.

The Bureau of Fishery Administration in the South China Sea Region under the Ministry of Agriculture announced that, as of midday May 16, most areas in the South China Sea will be affected by a summer fishing ban of two and a half months. The region includes the South China Sea area between 12°N and the waters bordering Fujian and Guangdong province (including the Beibu Gulf). Apart from single-layer gill nets and fishing tackle, other types of fishing operations are prohibited. According to statistics, Hainan province's 8,994 fishing vessels are including in this year's moratorium, affecting 35,611 fishermen and accounting for 38 percent of the total number of the fishing vessels in the province. The fishing moratorium will last until August 1.

The traditional folk art of brick carving from China's Jin Dynasty (1115-1234) is being shown for the first time in New York through June 17. Hosted by the China institute and co-curated with the Shanxi Province Museum in China, the exhibit presents over 80 sculpted objects depicting theatrical performances from southern Shanxi province. 

China on Wednesday welcomed a decision by a United Nations (UN) commission not to adopt Japanese claims over the geopolitical classification of Okinotori Atoll. "Japan's claim of its outer continental shelf based on Okinotori Atoll was not acknowledged by the Commission on the Limits of the Continental Shelf," said Chinese Foreign Ministry spokesman Hong Lei in response to a question at a regular press conference, quoting information released by the UN agency. "Japan's allegation that Okinotori Atoll has been adopted by the commission as an 'island' is absolutely baseless," said the spokesman. Japanese media, quoting government officials in the country, reported on April 28 that the UN Commission on the Limits of the Continental Shelf agreed with Japan that the sea basin north of Okinotori Atoll is part of its continental shelf, and thus said Okinotori was recognized as an "island" and could be used as a territorial "base point." However, Hong denied Japan's rights to the outcropping, citing the commission to explain, "As mentioned by the Japanese side, the commission recognized the Shikoku Basin Region north of Okinotori Atoll as part of Japan's outer continental shelf. But in fact the recognition was based on other parts of Japan's land territory, not related to Okinotori Atoll." Hong said Japan's request submitted to the commission involved some 740,000 square km but only 310,000 square km was recognized by the body. "The areas claimed by Japan as part of its outer continental shelf but not accepted by the commission include the 250,000-square-km southern Kyushu-Palau ridge based on Okinotori Atoll," added the spokesman. Okinotori Atoll, some 1,700 km south of Tokyo, is only about 10 square meters above sea level at high tide. According to Article 121 of the United Nations Convention on the Law of the Sea, rocks that cannot sustain human habitation or an economic life of their own shall have no exclusive economic zone (EEZ) or continental shelf status. An EEZ is an area of sea over which a state has exclusive rights of exploration. China and South Korea have opposed Japan's illegal attempt to claim areas based on Okinotori Atoll as part of its continental shelf, as Okinotori is a group of rocks and not classifiable as an "island." "Many countries have also expressed their objection against Japan's illegal claims relating to Okinotori Atoll," noted the spokesman. According to Hong, the commission's decision concerning Okinotori Atoll is "fair and reasonable" and in line with international law. "[The commission] has safeguarded the common interests of the whole international community and China welcomes the decision," he added.

Hong Kong*:  May 17 2012 Share

Incoming chief executive Leung Chun-ying has indirectly called on voters to kick out filibustering legislators should they seek re- election to the Legislative Council in September. Leung also warned that if such tactics continue "Hong Kong will come to a standstill." People Power and League of Social Democrats lawmakers are trying to force the government to withdraw the contentious by- election bill by introducing more than 1,300 amendments. This has caused debate on the bill, which seeks to prevent resigning legislators from seeking re-election within six months, to be postponed twice for lack of a quorum. "Such tactics have led us to believe that the filibustering will be used by a small number of lawmakers to stall various matters in Legco in the future. As such, Hong Kong will come to a standstill," Leung said yesterday. Legco, he added, should focus on the urgent needs of citizens and not play politics. In addition, the people of Hong Kong should not be onlookers. "He or she is the master of Hong Kong. Irrespective of whether they support or oppose the filibustering tactics, they should express their views," Leung said. He called on voters to assess the performance of legislators over the past four years when considering whether to vote for them in upcoming elections. "Some [filibustering] lawmakers will ask voters to re-elect them. I believe that citizens should consider what they have said and done over the past four years and the impact of their acts on society." Responding to comments by former Xinhua Hong Kong deputy director Zhu Yucheng that he should act aggressively to strengthen the executive-led system of government, Leung said it should handle matters in a more decisive manner. Meanwhile, Ip Kwok-him of the Democratic Alliance for the Betterment and Progress of Hong Kong said he is still trying to organize round-the-clock attendance at Legco in order to get the by-election bill passed. The Civic Party's Alan Leong Kah-kit said Legco president Jasper Tsang Yok-sing has approved his request to raise a motion tomorrow seeking an adjournment of the debate. Meanwhile, groups such as the Civil Human Rights Front and the League of Social Democrats are planning a protest outside Legco tomorrow to support the filibuster. But the Labour and Democratic parties announced last night that they will not join the filibuster. But they will support Leong's motion.

The High Court has dismissed a judicial challenge against a residency requirement for those applying for Old Age Allowance. Justice Johnson Lam Man-hon said requiring applicants not to be out of Hong Kong for more than 56 days in the one-year period before the date of application is reasonable and justified. Lam Wo-lun, now 74, asked for a judicial review after his March 2008 application was turned down on the grounds that he had spent two-thirds of his time in the mainland. But after several reapplications, he was eventually granted the allowance, starting October 2010. It is currently set at HK$1,090 a month. Lam, who is a former driver and messenger, argued that the residency requirement infringes his rights to social welfare, travel and equal treatment. In his judgment yesterday, Justice Lam said that unlike with Comprehensive Social Security Assistance, an applicant for OAA is not subject to any means test. He said the latter is not designed to meet the basic need for subsistence. "The aim of OAA is to help elderly people meet special needs arising from their age," Justice Lam said. "In this respect, there is a much greater need to have a requirement of continuous residence to safeguard the sustainability of OAA as compared with CSSA." OAA is generally perceived as a "fundamental right" of the elderly and its purpose is to show respect for the aged. That perception stems from an absence of a means test and partly from the description of OAA as "fruit money," Justice Lam said. The allowance is not supposed to be a form of publicly funded pension scheme, he stressed. If the rule is abrogated, it would mean an additional expenditure of HK$593 million a year. About 520,000 people receive the allowance, costing HK$6.8 billion a year, the Social Welfare Department said. Secretary for Labour and Welfare Matthew Cheung Kin-chung said the court ruling reaffirmed the legal basis of the residency requirement. "In fact, the requirement is based on sound policy considerations. Primarily, we are talking about a non-contributory social security system," Cheung said. "It is important that we manage the resources carefully and prudently," Richard Choi Yiu-cheong of the Society for Community Organization, which assisted Lam in getting a judicial review, said the group will ask him whether he wants to seek an appeal. "We hope the government will change the policy in the near future," Choi said. A senior citizen, surnamed Wong, who is living in Guangdong, said he is disappointed at the court decision. "I paid HK$30,000 to HK$40,000 salaries tax before retirement. [The ruling] has hurt my feelings," he said. Zhao Ming, a spokesman for the Hong Kong Federation of Trade Unions in Guangzhou, urged the government to speed up the implementation of a scheme under the Social Security Allowance that will allow eligible retirees who take up long-term residence in Guangdong to receive OAA without the need to return to Hong Kong.

Ronnie Chan previously said the era of exorbitant profits was over. Five years after it sold flats at Long Beach in West Kowloon for the last time, Hang Lung Properties (SEHK: 0101) yesterday said it would sell another 108 flats there - this time at its Tower 8. The average price of the flats would be HK$10,580 per sq ft, the company said. Prices of second-hand flats at the same project are going for between HK$8,700 and HK$11,000 per sq ft. The sale comes a month after Hang Lung chairman Ronnie Chan Chi-chung said the era of property tycoons making excessive profits would end under the administration of chief executive-elect Leung Chun-ying. Speaking at a seminar last month, Chan, a key supporter of Leung in March's chief executive poll, said property developers would be able to "make money but not exorbitant profits". Developers had been making too much profit for decades, he said. Chan also said that he believed Leung would adopt an appropriate pace in easing land prices. Asked why the company decided to sell flats before Leung takes over, a spokesman for Hang Lung said it was purely a commercial decision. "We have an inventory of over 1,200 units at Long Beach. We think now is a good time to sell some of them," he said. The price this time had been set some 50 per cent higher than in October 2007, when the company last sold flats there, he said. The spokesman also said Hang Lung had been selling flats of The Harbourside at Kowloon station. According to the Rating and Valuation Department, the vacancy rate for private housing is 4.3 per cent, or 47,920 flats were empty in the city at the end of last year. It was 4.7 per cent a year ago. According to Centaline Property Agency, home prices across the city in the secondary market had recently risen, on average, 1.75 per cent week on week. The average price is now 2.8 per cent over the last peak in 1997. Prices in some housing estates are beyond 1997 levels. The average second-hand home price at Taikoo Shing now stands at HK$10,552 per sq ft, according to Midland Realty - about 25 per cent higher than during the 1997 peak level.

Wong Wai-yin (left) and Kwan Sheung-chi with their work To Defend The Core Value Is The Core Of Core Values at the "Mobile M+: Yau Ma Tei". Yau Ma Tei assumed a new identity yesterday, hosting the works of seven artists under the West Kowloon Cultural District as the city waits to see who will be its first culture minister. Six artworks were displayed in Portland and Shanghai streets in the old district in an exhibition titled Mobile M+, which kicks off a mad week of art fairs, exhibition launches and auctions riding on the opening of the Hong Kong International Art Fair (Art HK) to the public on Thursday. Yau Ma Tei was an area that Lars Nittve, executive director of the M+ museum of 20th and 21st century visual culture in the West Kowloon project, described as a neighbour of the arts hub. Participating artists said they were glad to see the hub authorities making an effort to bring art closer to the public. Pak Sheung-chuen, who leads one of the projects, L, said the Mobile M+ series was a good idea before the M+ museum itself was ready. "We are all exploring the possibilities between a museum and the community, and for this art project we have to work with ordinary residents," said Pak, whose project examines issues of trust and faith. Hong Kong-based Finnish artist Erkka Nissinen said: "To foreigners, Yau Ma Tei is a very exotic and beautiful district, and having the first Mobile M+ there is a nice idea." His installation, Silopolis, takes place in a shop in Shanghai Street. Nittve said the establishment of a culture bureau was a "splendid idea" and should facilitate arts and culture development in the city. However, he expressed concern that the city was an "unusually regulated" place. It was understood that the curatorial team had spent a great deal of time when applying for licences for exhibition venues from various departments instead of one centralised agency. The costs of setting up the Yau Ma Tei exhibition were not disclosed. The pop-up exhibition is at six locations - an empty office, street-level shops, a park and a marquee set up under a bridge. Kwan Sheung-chi and Wong Wai-yin teamed up for their conceptual work To Defend The Core Values Is The Core of The Core Values. They created a 24-carat 6.4 ounce gold coin engraved with "Hong Kong Core Values" and "Millions For Freedom, Not One Cent for Slavery" on both sides. They want the public to vote on the fate of the coin, as a critique of worries about increasing corruption of Hong Kong's core values. Visitors can vote from May 15 to May 30 at a Portland Street shop. The organisers will select a voter who will go on a boat trip in Victoria Harbour on June 4. Mobile M+: Yau Ma Tei is free and runs until June 10.

Former chief secretary Henry Tang Ying-yen speaking on radio on Tuesday. Defeated chief executive candidate Henry Tang Ying-yen on Tuesday ruled out running in the upcoming Legislative Council election, saying he wanted a break to think about his future. Speaking on a radio programme, Tang was asked by the host if he had any plans to run in the September election. He indicated his intention to serve the public, but ruled out a bid for a Legco seat. “I hope I can be given more space for now. I have to deal with the illegal structures in my home,” he said, referring to the unauthorised basement that caused him embarrassment during the chief executive campaign in March. “I want to start work as soon as possible to return my home to its original state. I also want more time to take a break and to think about how I can serve Hong Kong most effectively,” he said. There has been speculation whether Tang, a former chief secretary, would stay in politics after his defeat in the chief executive election. Tang lost to Leung Chun-ying after a bitter campaign. In a debate before the poll, Tang alleged that Leung had suggested during a high-level closed-door official meeting in 2003 that riot police and teargas should be used to deal with protestors in 2003. Tang said on Tuesday he did not regret making the remarks even though this might have breached the code of conduct of the official meeting, widely assumed to be the Executive Council. He said he spoken “out of conscience” to let people know Leung better.

Barry Cheung, acting chairman of the Pay Trend Survey Committee - Civil servants may get a pay rise of more than 5 per cent after a government survey released on Tuesday found wages in the private sector rose by this margin in the past financial year. The pay trend survey – an annual exercise by the government to find out general pay movements in the private sector – found that junior rank employees got a 5.71 per cent pay rise in the year ending March 31. Middle-rank and senior employees got a 6.64 per cent and 6.01 per cent increase, respectively. The survey questioned 112 private companies covering a total of 18,000 employees. Barry Cheung Chun-yuen, acting chairman of the Pay Trend Survey Committee, said the poll results were only one of several factors used in determining pay adjustments. The government would also consider its financial position, Hong Kong’s economy and civil servants’ morale, Cheung said. On Monday, the government announced a revised remuneration package for politically appointed officials starting from July. Among them, the salary of bureau chiefs will increase 8.1 per cent to HK$322,260. But the monthly salary of political assistants will be capped at HK$100,000, down from the current level of between HK$134,000 and HK$164,000. The government gives with one hand and takes away with the other in its new order of pay. Principal officials will see their monthly salaries rise to HK$322,260 from the current HK$282,080. But political assistants will be hit hard under the mechanism revealed yesterday as they will get a pay cut or, at best, no increase. Currently, each bureau can hire one political assistant for between HK$100,000 and HK$160,000 a month. Under the new system, their salaries are capped at HK$100,000 a month. And while a bureau can hire more than one assistant ,the combined salaries cannot exceed HK$100,000. Secretary for Constitutional and Mainland Affairs Raymond Tam Chi- yuen said the new pay scale for principal officials represents a rise of 8.1 percent based on the original salaries of the three key secretaries and 12 bureau chiefs. They took a voluntary cut of 5.38 percent in 2009 during the economic crisis, and that pay level will be restored, making for an overall rise of 14.2 percent. Tam argued that this rise is certainly overdue as officials at this level have not had an increase for 10 years despite inflation eroding their purchasing power. The raise is also similar to that of senior executives in many local companies, Tam added. "The Independent Commission on Remuneration suggests that we adjust the salary according to inflation over the years, that the increase should be 15.3 percent," he said. "But the government has not adopted this figure. "On one hand, we need some balance on this matter because the pay has not been increased for the last decade. But on the other hand, we need to practice self-control, and so the raise will be 8.1 percent." If adjustments are passed in the Legislative Council next month, the chief secretary will get a monthly salary of HK$357,300, the financial secretary HK$345,215 and the justice secretary HK$333,540. All bureau chiefs will get HK$322,260 a month. At present, undersecretaries get either 65percent (HK$197,455) or 75 percent (HK$211,560) of the salary of bureau chiefs. Under the new proposals they will get 70 percent (HK$225,582) of the bureau chiefs' salary. The monthly pay for the newly created deputy chief secretary and deputy financial secretary will be 1.75 percent higher than the bureau chiefs. Tam also said that pay-cut proposals for political assistants is in response to public criticism. "We understand that the public thinks the political assistants are getting high salaries," he said. And he hoped that assistants will change their working mode from working "behind the scenes" to meeting the public more. The government will save HK$5 million a year under this adjustment, he added. Lawmaker Leung Yiu-chung of the Neighbourhood and Workers' Service Centre said the percentage of increase is too much. "The public thinks it is unacceptable. They feel that the principal officials have the special power to give themselves a greater pay rise than the public." Labour Party chairman Lee Cheuk- yan thinks the pay rise is too high. Additionally, he fears there will be too many political assistants, which will make it hard for lawmakers to monitor the administration's performance.

Relatively "new asset classes" in which the Exchange Fund has been investing in recent years have yielded better returns than traditional options, Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said yesterday amid criticism of poor performance by the fund. Since deciding to diversify the city's foreign reserves from traditional safe and liquid investments in mid-2008, Chan said HK$83.6 billion has been plowed into assets other than stocks and bonds in developed markets. Of this, HK$29.8 billion has been invested in private equity, HK$28.1 billion in equity and bonds in emerging markets, and HK$21.3 billion in yuan assets and HK$4.4 billion in real estate. On an annualized basis, private equity and real estate investments enjoyed a 9 percent internal rate of return, while emerging markets and yuan assets generated an average yield of 7 percent, Chan wrote yesterday in his weekly column inSight. However, investments in such asset classes have failed to help the Exchange Fund shine. It made a profit of only HK$27.1 billion last year, the second-worst result in a decade, yielding an overall investment return of 1.1 percent, lagging far behind the prevailing inflation rate of more than 6 percent. In the past five years it returned only 3.2 percent, trailing many sovereign wealth funds such as Singapore's Temasek Holdings. Lawmaker Regina Ip Lau Suk-yee has blasted the poor returns of the Exchange Fund and also criticized its diversification, saying such investments lacked transparency. Chan said HKMA has limited its investments in new asset classes to a third of accumulated surplus.Financial Secretary John Tsang Chun-wah wrote on his blog on Sunday that since he took office in 2007, he has been aware returns from traditional investments have been declining every year.

 China*:  May 17 2012 Share

A McDonald's Corp employee in Beijing adjusts the sign of a promotional item. Earlier this year, McDonald's increased the prices of its Big Mac burger, soft drinks and pies due to the pressure of rising costs. McDonald's Corp has raised the prices of some set menu items for the second time this year in China to offset higher operating costs. The world's largest fast-food chain by sales revenue added 1 yuan (16 US cents) to the prices of four of its breakfast and lunch set menus. It said the move was a "structural price adjustment" but emphasized that it had left the prices of some set meals unchanged and introduced value set meals at the same time. "I can still afford the present prices as my daughter loves (the food), but if it goes too far, I will visit less often," said a customer at a McDonald's outlet in downtown Beijing. Earlier this year, McDonald's added 0.5 yuan to 2 yuan to the prices of its Big Mac burger, soft drinks and pies due to the pressure of rising costs. Since entering the Chinese mainland in 1990, the US fast food giant has opened about 1,400 stores across the country. It aims to open 225 to 250 new stores this year and to expand its network in the mainland to more than 2,000 outlets by 2013. KFC Corp - McDonald's biggest rival in China - which is owned by Yum! Brands Inc, raised prices in September and again in October. Pizza Hut, another restaurant chain owned by Yum, also raised some menu items early this year. Chief Financial Officer Rick Carucci of the parent company of the Pizza Hut, KFC and Taco Bell brands said during a conference call in February that rising food and labor costs at its restaurants in China would likely result in menu prices being increased in 2012. Another fast food chain, Yoshinoya, said on its website that earlier this year it had increased the prices of some items by 0.5 yuan to 3 yuan. In February, coffee giant Starbucks Corp added 1 to 3 yuan to the prices of some espresso-based beverages and fresh-brewed coffee to offset higher costs. "Costs of raw materials, property, labor and transportation have been increasing and that's expected to continue, so it's inevitable that restaurant chains hike product prices to protect margins," said Gong Bo, industry analyst with Beijing United Innovation Capital Ltd. The consumer price index rose to a three-year high of 6.5 percent last July, but by the first quarter of this year, it had fallen to 3.8 percent, according to the National Bureau of Statistics.

China Southern Airlines, one of the three major Chinese airlines, on Tuesday announced it is cutting flights to the Philippines as tourist numbers shrink amid tensions in the South China Sea. China Southern will reduce its number of flights between China's Guangzhou city and Manila, capital of the Philippines, to just one a day on certain dates from May 26 to June 30. The airline normally operates two flights daily on the route. A spokesman for the airline said the adjustment was made in accordance with the cancellation of "a large number of tourist groups" lately. Major Chinese travel agencies have announced cancellation of package tours to the Philippines upon travel safety advice issued by the National Tourism Administration earlier this month. It came after the Chinese Embassy in the Philippines warned Chinese citizens of "massive anti-China demonstrations" related to the Huangyan Island incident. The tourism administration on Sunday said almost all Chinese mainlanders on group tours will leave the Philippines by Wednesday. Major airlines serving the Chinese mainland and cities in the Philippines include Air China, China Southern, Philippine Airlines and Cebu Pacific Air. Tensions in the South China Sea started on April 10, when a Philippine warship harassed 12 Chinese fishing vessels that had sailed near the island to seek shelter from inclement weather. Chinese officials have repeatedly stated that Huangyan Island is an inherent part of China's territory and that the surrounding waters are historic fishing areas for Chinese fishermen. Foreign Ministry spokesman Hong Lei on Monday urged the Philippines to respect China's territorial sovereignty and "refrain from taking action that could expand and complicate the situation."

News Corp. will acquire nearly a 20% stake in Bona Film Group Ltd., one of China's largest film distributors, in a bid to help the U.S. company gain a stronger foothold in China's booming film market. News Corp., the owner of 20th Century Fox film studio, will take a 19.9% stake in the Chinese film company, buying directly from the firm's founder and Chief Executive Yu Dong, Bona Film said Monday. The deal marks the latest in a recent spate of tie-ups between Hollywood and China, where box-office revenue climbed 29% to 13.1 billion yuan ($2.08 billion) last year, according to China's State Administration of Radio, Film and Television. Hollywood has been eager to gain a stronger foothold in the market, as box-office revenue in the U.S. and Canada dropped 4% to $10.2 billion, according to the Motion Picture Association of America. DreamWorks Animation SKG Inc. in February announced plans to form a joint venture with state-owned investment-management company China Media Capital and Shanghai Media Group Inc., one of China's largest television broadcasters. The Chinese government also agreed in February to expand its quota of movie imports to 34 from 20 and agreed to allow additional 3-D and IMAX movies. Neither News Corp., which owns The Wall Street Journal, nor Bona Film disclosed financial terms of their deal. Bona Film's revenue more than doubled to $43.7 million in the first quarter as its profit jumped 35% to $3.3 million. American depositary shares of the company, which has a market capitalization of $363 million, were up 5.2% midday Monday on the Nasdaq Stock Market. The Chinese company distributes films across China, South Korea, Southeast Asia, the U.S. and Europe. It also produces films across genres and owns and operates 13 movie theaters in China. Its films have included the 3-D "The Flying Swords of Dragon Gate" and the popular drama "A Simple Life." A forerunner of Bona Film was once part-owned by the business arm of the People's Liberation Army, China's military, though it no longer has an equity holding in the company. News Corp. plans to tap Bona Film's reach and vertical business model in China, said Jack Gao, senior vice president of News Corp., in a prepared statement. News Corp. has set its sights on China for years but has faced challenges. Chief Executive Rupert Murdoch in 2011 called for China to open its film market, allowing more foreign films to be distributed in the tightly regulated market. News Corp.'s 20th Century Fox recently has succeeded with Chinese audiences with the global release of "Titanic" in 3-D. In its opening weekend in China, the film's box-office sales hit $67 million, according to 20th Century Fox.

China's Ministry of Commerce (MOC) urged Tuesday the US government to live up to its promises on loosening restrictions over hi-tech exports to China. At the fourth round of the China-US Strategic and Economic Dialogue, which concluded early this month, the US government pledged to relax controls on exports of hi-tech products for civilian use, encourage Chinese enterprises to apply for Validated End-User status, and reform its exports regulatory system to promote exports to China. MOC spokesman Shen Danyang said at a Tuesday press conference that those commitments had been taken as positive signals sent by the US government, but warned, "We have not seen any concrete actions." He said China hoped the United States could make its deeds consistent with its words. The US government started to address the issue of restrictions on hi-tech exports to China, US President Barack Obama told Chinese President Hu Jintao during a sideline meeting in March at the Seoul Nuclear Security Summit. In 2009, the US Department of Commerce published a draft amendment on the policies of US exports to 64 countries and regions. But it excluded China, one of the largest trading partners of the US.

Shadow puppetry performer Zhou Wei prepares the shadow puppet for the upcoming performance, Shanghai, May 14, 2012. Shadow puppetry is a kind of traditional Chinese performing art which uses flat articulated figures (shadow puppets) to create the impression of moving humans and other three-dimensional objects. Although popular in ancient times, this kind of traditional art has witnessed decline in recent years. Zhou Wei has been working as a shadow puppet performer for decades and hopes to transmit the culture heritage to the next generation.

Hong Kong*:  May 16 2012 Share

A giant soccer player near Brasilia airport welcomes visitors. Brazil will host the 2014 Fifa World Cup. HK firm may win as soccer body seeks new partners - Fifa to market merchandise via multiple outlets, PPW hopes to represent global body on mainland. Putting all your eggs in one basket is not always wise, as Fifa found after its sole master product licensee for 2010's World Cup went belly up. The world soccer federation has learnt its lesson and is now adopting a more defensive strategy in its search for partners to market its merchandise for the 2014 World Cup. A Hong Kong firm may be one of the early beneficiaries of the new tack, after Singapore-based Global Brands Group went bankrupt in late 2010, leaving behind a sea of broken contracts. Fifa decided to resume more control of its merchandising business and will work directly with manufacturers and retailers to tap the multibillion-dollar market in World Cup-related memorabilia. "Fifa suffered substantial financial damage due to the bankruptcy," Ralph Straus, Fifa's head of strategy and brand management, told the South China Morning Post (SEHK: 0583). "But we have learnt from that and revised our strategic direction for 2014 and beyond." The body's annual reports show Fifa's revenue from selling licensing rights fell by more than half to US$26.1 million in 2010 from US$57.21 million in 2006. Last year it further dwindled to US$12.48 million. "For key product categories and key markets, we will manage the projects ourselves and directly engage with retailers and manufacturers," Straus said. "For the more complex markets, where we have no scope and skills, we would prefer to work with agents." The Trade Development Council organised a business-matching session last week in the hope that some Hong Kong companies could grab a bite of the multibillion-dollar market. Promotional Partners Worldwide (PPW), a Hong Kong-based licensing agent that distributes products such as those based on characters from the Angry Birds game and the Thomas & Friends television series, hopes to represent Fifa on the mainland. "It is difficult to open retail stores on the mainland these days, and we have our own chain of retail shops, restaurants, factory and supply chain there," PPW president Ivan Chan said. But Straus said they are unlikely to work with a single master licensee for China or Asia. "There will not be exclusivity with agents. For particular territories like Indonesia and Thailand, we potentially will work with different agents," he said. "For manufacturers with distribution channels and outlets, we will engage with them directly, but for those without, we will work with agencies." Fifa also plans to explore online retailing in the mainland market. "It is a great platform for testing products and engaging with customers, and it's easier to build a loyalty program there," Straus said. He said Fifa was in touch with mainland internet giant Tencent (SEHK: 0700) over possible co-operation. The value of Fifa's global licensing programs was estimated at about US$1.52 billion in 2006. Straus said there was certainly a growing interest in soccer on the mainland and that Fifa was planning to hold more events there, which would help boost sales of related merchandise. "We are looking into organising [an official Fifa Fans Fest] in China," Straus said. "Whether it should be held in Beijing or Shanghai or both we are still evaluating." The festival is a huge event where soccer fans gather to view important matches: 18 million people took part in Germany's Fifa Fan Fest in 2006.

The government on Monday proposed an 8.1 per cent pay raise for policy bureau chiefs in the next government. This would raise the monthly salary of a politically appointed minister to about HK$322,000. The raise, suggested in an independent pay review, would apply to all politically appointed officials from July 1. The review has been approved by the Executive Council. It also suggests the salaries of undersecretaries should be 70 per cent of that of bureau chiefs. But a new salary cap of HK$100,000 a month would be introduced for political assistants, according to the review. Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen said on Monday that ministers’ salaries had not been raised for 10 years. He said the pay raise aimed to reflect inflation over that time. Politically appointed ministers were introduced by former chief executive Tung Chee-hwa in 2002. His successor Donald Tsang Yam-kuen added two layers – undersecretaries and political assistants – in 2007. 

The old-age allowance, also known as “fruit money”, is not a fundamental right of elderly residents, a court said on Monday. It made the comments after dismissing a challenge to a requirement that recipients of the allowance must be in Hong Kong for at least 309 days of the year before applying for it. In the ruling against Lam Wo-lun, 74, in a judicial review, Mr Justice Johnson Lam Man-hon said the allowance was not designed to be a publicly funded pension scheme, and the requirement was necessary for it to be sustainable. The judgment in the Court of First Instance followed a ruling in 2010 which struck down the full-year-stay rule for applications for comprehensive social security assistance (CSSA). The judge said fruit money was different from the CSSA in nature, as an applicant over 70 was not subject to any means test, and the allowance was not designed to meet subsistence needs. Elderly people in desperate need should apply for the CSSA instead, he said. Permanent residents over 65 can apply for a monthly allowance of HK$1,090. Those under 70 need go through a means test, while others do not. Current rules require an applicant to have lived in the city continuously for a year, although they are allowed to leave for up to 56 days. After being granted the allowance, they need to stay in Hong Kong for only 60 days of the year. The judge also noted that once “fruit money” was provided, it was unlikely payments would be discontinued. “In this respect, there is a much greater need to have a requirement of continuous residence ... to safeguard the sustainability of [the old age allowance] as compared with CSSA,” he said. He noted that there was a perception that the allowance was a fundamental right of elderly people, but this was never its original intention. It had orginally been intended to to help “the elderly persons to have some financial independence from their family members”. In a court submission, the government estimated extra spending of HK$279 million a year would be incurred if the full-year-stay rule was scrapped for the old-age allowance, enabling citizens living outside Hong Kong to apply. The Society for Community Organisation, which helped Lam and is listed as an interested party in the case, said it would consider an appeal.

Chief executive-elect Leung Chun-ying on Monday renewed claims that many Hongkongers were unhappy about filibustering tactics by lawmakers – saying voters should consider punishing their representatives at the ballot box. His remarks marked the fourth straight day he has lashed out at radical pan-democrats’ delaying tactics used during the Legislative Council’s scrutiny of a contentious by-election bill. “Hongkongers are not onlookers, but the masters of Hong Kong,” Leung said on Commercial Radio. “Irrespective of whether they support or disagree with the recent filibustering, they should air their views. The residents I have reached out to in the past two weeks all believe the Legislative Council should put priority on what people urgently want and work for the people, but not play politics.” He called on people to assess the legislators’ overall performance in the past four years when considering whether to re-elect them in September. Leung said the filibustering made people worry that other matters could be stalled in Legco by a handful of lawmakers. He said this was a trend that should be discouraged, but he did not say whether the current administration should withdraw the Legislative Council (Amendment) Bill this year. This seeks to bar lawmakers who resign from contesting elections for six months. Albert Chan Wai-yip, a lawmaker of People Power which on Friday succeeded in having a debate on the bill adjourned for the second time in two weeks. He said he would continue the filibuster on Wednesday. He raised doubts over Leung’s call for people to speak out, accusing the incoming chief of stirring conflict in society. Independent pan-democrat Andrew Cheng Kar-foo said on Sunday he would back the filibuster. Some social activists have called on the public to support the filibuster.The Civil Human Rights Front, together with organisations such as the Federation of Students, the Christian Institute and the League of Social Democrats, will meet outside the Legislative Council during its next full session on Wednesday.The rally will start at 5pm and continue all night if necessary, according to Civil Human RightsFront convenor Eric Lai Yan-ho.He said that if the electoral bill was passed it would take away people’s rights to vote and stand in by-elections. Lai said if the government had more important issues to deal with then it should withdraw the bill.He hopes more political parties will support the filibuster. Lai said he expects hundreds will join the rally. Anyone who wishes to hold a public rally of more than 50 participants must notify the police a week in advance. Front member Andrew Shum Wai-nam said they would make an application on Monday.

Benson Tsang, Nise Sou, Ban Chung and Cyrus Hu. A man who spent his HK$6,000 government handout on buying food for Hong Kong's hungry has accidentally created a new movement to help the city's poor. Benson Tsang Chi-ho was making a simple personal protest against the government's decision to give all permanent residents cash instead of using the money to help the people he believed really needed it. He used his money to buy tins of food and hot meals from small, independent stores and restaurants in Sham Shui Po to feed the local poor. A few of his friends decided to join in, using their HK$6,000 "as it should be used - back into the community". Tsang, an interior designer, posted some pictures of their efforts on Facebook and then arranged some other "people's handouts" using the social network site. The turning point came in February, after a government clean-up operation swooped without warning on street sleepers in Sham Shui Po. Their belongings, including bedding, identity cards, phones and clothes were confiscated and thrown away. Tsang said: "I got so mad about it I started ranting on Facebook. That night, I brought clothes down to Sham Shui Po for [the street sleepers] but they were nowhere to be seen. It was really cold that night." His outrage saw his actions gather momentum and now, a year and two months since the first "action" last March, 150 to 180 people gather once a month to try to make a difference. Most of them have never met each other before. And as of yesterday, 678 people had indicated on Facebook that they were taking part in the next of their planned events. Tsang said: "It's completely decentralised and anonymous. No one needs to commit and everyone's encouraged to bring the idea back to their own neighbourhoods, or start their own actions." Tsang said the aim wasn't just to "feed the poor" but to change the way people see others and to realise how powerful one's decisions can be. "This is not about being sympathetic - we don't need that. It's about sharing. We are trying to rebuild community and relationships within a neighbourhood," he said. Nise Sou Lai-sim, who does community development work in a church and has become a regular participant, said: "We don't raise funds, we don't need commitment, we have minimal organisation. "Rather, we hope this experience will create bridges between people of different backgrounds. "Our aim is to bring back the sense of neighbourly friendliness which Hong Kong has lost." Sou became involved last October - at which time about 40 people were taking part - after coming across Tsang's Facebook posting about a "mooncake event", where the group was giving out 800 mooncakes which had been donated. On Christmas Eve, she added, about 100 people turned up. She said talking to store owners, street sleepers, the elderly or cubicle dwellers was just as important as giving out food. "When you talk to people, your heart will change," she added. She said it was also important to spend donations within the community itself. "If we buy cans of food from ParknShop and Wellcome, then the meaning is lost. "This exercise is actually about bringing awareness. I changed the way I see, and so changed the way I consume. "We want participants to realise this," added Sou, who said the movement had also spread to To Kwa Wan and Kowloon City. Cyrus Hu Kwok-chum, who joined for the first time in December, said the initiative had made him aware of where food was made, and who would benefit from the money he spent. "My eyes were opened," he added, saying he now counted street sleepers, local store and restaurant owners as well as the people collecting cardboard among his friends. Hu works for a food import and export company and his bosses now donate food and drink which is close to their sell-by date and therefore cannot be sold to supermarkets. Another participant Ban Chung Wing-sze, who works in publishing, was moved to act a year ago after seeing Tsang's pictures of elderly people collecting cardboard to sell in order to be able to eat that night. "I was looking for a way to serving people, and saw that this was a good one," she said. Tsang said 80 per cent of the people who indicated they would come to an event turned up. Without a structure, Tsang said, he had named what was happening an "equal sharing initiative". There are now around 20 people who help put together events. The next one climaxes on May 26 and is all about "rediscovering your little neighbourhood stalls". People are being asked to purchase five to 10 cans of food from different small, local shops, label them with the stores' addresses and paste pictures on Facebook. On May 26 in Sham Shui Po, which has the lowest average household income in the city, participants will swap the cans of food then return to their own districts to hand out the tins to the local needy, said Tsang. "We will create a network and map of all the local surviving stores all around the city, supporting them, while using our money to ultimately support the needy," added the man who started it all.

A master plan by chief executive-elect Leung Chun-ying to restructure the government risks creating an unclear chain of command and ending in administrative chaos, two prominent critics have warned. In the latest South China Morning Post (SEHK: 0583) debate, former chief secretary Anson Chan Fang On-sang and political scientist Cheung Chor-yung cast doubts on how the creation of a deputy for both the chief secretary and financial secretary could improve governance. Defending the multimillion-dollar revamp, Fanny Law Fan Chiu-fun, head of the chief executive-elect's office, countered that it would help with co-ordinating policy formulation, developing long-term plans and expanding the city's economic base. Cheung, a senior teaching fellow at City University, said: "If the line of command and the division of responsibility between the new deputies and their subordinate bureau chiefs are not clear, this may create administrative confusion and accountability problems." Under Leung's proposal, the new deputies will report to their direct bosses but not to the chief executive. "It could cause further confusion since one policy portfolio apparently may involve three subject officers (the chief secretary or financial secretary, their deputies as well as bureau ministers) who all have responsibility over that policy," Cheung warned. The proposed changes, which also include new ministers for culture and for technology and communications, will incur an extra HK$72 million a year in staff costs. Former chief secretary Chan, who quit Tung Chee-hwa's administration in 2001, said she had never believed that good coordination in policymaking could be best achieved "by creating multiple layers of administration". She called on Leung to refrain from launching a major overhaul until he had hands-on work experience in the post to better assess the merits and downfalls of his own proposal. Chan also renewed her call for a review of the political appointments system, introduced by then-chief executive Tung in 2002. "Taxpayers should not be asked to foot another HK$72-73 million per annum to pay for additional posts, without being assured that their creation will genuinely improve governance and amount to good value for money," she said. Bauhinia Foundation Research Centre chairman Anthony Wu Ting-yuk, a former supporter of defeated candidate Henry Tang Ying-yen, backed Leung's plan to hire more political appointees. On the two deputy posts, Wu urged Leung to "draw the reporting lines clearly" and attract the right calibre of person for the job. So Ping-chi, chairman emeritus of the Senior Government Officers Association, also threw support behind Leung's proposals. He said there were now insufficient political appointees to promote policies, leaving the job to civil servants in some cases. Leung's plans need to secure the backing of the Legislative Council next month if they are to be in place when he takes office on July 1.

 China*:  May 16 2012 Share

China is set to enforce an annual fishing ban it imposes in the South China Sea, but the Philippines says it will not recognise the ban in waters both countries claim. The ban that begins on Wednesday is designed to conserve marine resources and curb overfishing. The official Xinhua News Agency cited a South China Fisheries Administration Bureau official on Sunday as saying the ban includes waters around Huangyan island, which Manila calls Panatag Shoal. Its popular name is Scarborough Shoal. Philippine Foreign Secretary Albert del Rosario says his nation does not recognise the Chinese ban and suggested Filipinos would continue to fish in its territorial waters. Ships from both nations have been standing-off at the shoal since April 10. China’s enforcement of the ban has previously sparked tensions with Vietnam.

For almost a century, Canada's economy has been firmly tethered to its much larger southern neighbor. Now, Canadian officials and executives also are betting their future on China. Canada's economic reliance on the U.S. has ebbed for decades amid sporadic efforts to diversify. But weak demand from a prolonged economic downturn south of the border has accelerated the move, sending Canadian companies looking for new markets. Climbing oil production in the U.S. is upending American demand for Canadian hydrocarbons. That has spooked Ottawa, suddenly worried about finding buyers for its own growing crude exports, almost all of which now flows to the U.S. The shift is sharpest here in Western Canada, rich in resources and closer to China. Last year for the first time ever, British Columbia sent more exports to the Pacific Rim than to the U.S. Chinese investors have beat out U.S. investors in Canada's oil patch every year since 2009, pumping $12.8 billion into companies and projects since then, according to Dealogic. British Columbia and the federal government have embarked on a massive push, spending billions of dollars, to retool the country's infrastructure to facilitate more trade with Asia. On a national level, Canadian officials say they expect America will always be Canada's biggest trading partner. Last year, the U.S. accounted for 67.7% of Canadian trade, measured by the value of exports and imports. That is down from 80.8% 10 years ago. Asia's share of Canadian trade stood at 15%, up from about 9.5% a decade ago. China's share alone came in at 7.2% last year. The U.S. replaced Britain, Canada's onetime colonial master, as its most important export market and source of investment in the early 1920s. Canada has pushed before to diversify away from the U.S., with mixed success. In the early 1970s, amid trade and economic-policy spats with Washington, Prime Minister Pierre Trudeau pursued a "Third Option," courting Europe, in particular. But Canadian business never strayed too far, for too long, from the world's biggest economy. A free-trade agreement in the late 1980s and the North American Free Trade Agreement the next decade made that market even easier to access. The shift carries risks, underscored by a recent slowing of China's massive economy, which has weighed on international commodities and crude prices, and by extension Canada's stock-market indexes. By linking its economic prospects more closely to China, Canada may have to suffer through the future ups and downs of Beijing's still-incomplete transition to global economic power. Australia, another resource-rich economy that has taken an even bigger bet on China's economy, has suffered recently amid China's slower growth. If the U.S. economy bounces back strongly, some of the urgency of Canada's Asian push will inevitably abate. "The balance of trade will bounce around a bit, but as long as we have several markets, we won't be captive to one," said British Columbia Premier Christy Clark. Political unease over Chinese involvement in strategic industries like energy, mining and telecoms is on the wane. In Beijing in February, Canadian Prime Minister Stephen Harper lifted a 36-year ban on Chinese purchases of Canadian-mined uranium. China Investment Corp. owns 17% of one of Canada's largest mining conglomerates, Teck Resources Ltd. In March, Igor Medge, the vice president of AgriKalum, a Saskatoon-based potash-mining start-up, was trolling for around $2 billion in financing at a Toronto mining conference swarming with Chinese executives and government officials. "China is the biggest potash consumer in the world, and they have a lot of American dollars that they need to spend," he said, spooning prawn dumplings from a buffet table onto his plate at a presentation sponsored by the Chinese government. The tilt is playing out in Canadian demographics. Last year for the first time, Canada's western provinces—those west of Ontario—had more people than Canada's eastern ones, according to government-census data. That was driven in part by heavy immigration, particularly from Asia, the census determined. Chinese is the third most-spoken language in Canada, after English and French. In Vancouver, a recent influx of wealthy, mainland Chinese seeking real-estate investments has transformed the property market. Real estate here has always been expensive. But the new Chinese buyers have sent valuations soaring. Developers are marketing directly to buyers in China and often giving buildings and developments names that translate well in Mandarin. Cam Good, president of The Key, a real-estate brokerage and marketing firm, said so far this year he has booked 40 groups of Chinese visitors on buying trips to Canada, in some cases ferrying them on helicopters to view exclusive homes, including along Vancouver Island. He has opened offices in Beijing and Hong Kong. With so many agents catering to Chinese clients in Vancouver, "we felt we were fishing in a big lake with lots of other fisherman," Mr. Good said. "So, we went upstream." British Columbia's provincial government, backed by the federal government in Ottawa, has rushed to support the shift. The province estimates that some $22 billion of provincial, federal and industry funding is now going into infrastructure upgrades across the province. The province is targeting another $25 billion in provincial and private upgrades through the end of the decade. Most of that is to ease the flow of goods bound for Asia, says Ms. Clark, the province's premier, equivalent to a U.S. governor. In 2011, the province's exports to the Pacific Rim accounted for 43% of its total exports by value, inching out U.S.-bound goods for the first time ever. Softwood lumber exports to China topped $1 billion. That is well shy of the $1.6 billion forestry companies here sent to the U.S. But it now represents about a third of the province's softwood lumber exports. China's first big foray into Canada didn't go well. In 2004, China's Minmetals Corp. entered exclusive talks to buy Canadian mining giant Noranda Inc., a deal valued at the time at more than $5 billion. The deal foundered amid political opposition in Ottawa. Over the next few years, Chinese firms kept coming to North America, but they tended to tiptoe in, buying up small firms, minority stakes in bigger companies or working interest in specific projects. Amid the global financial and economic crisis, however, Canadian firms started opening the door wider to Chinese investors. In September 2008, Toronto-based Liberty Mines Inc. was set to ink a deal with a U.S. venture capitalist, who had agreed to inject 30 million Canadian dollars (about US$30 million) into the company, to help it develop its nickel prospects in Ontario.

The pathway that leads to Aman Spa, a major relaxing retreat at Amanfayun resort in Hangzhou. The concept of boutique hotels, mainly popular in the West, has now moved beyond the usual design capitals of the world and is entering new markets including the Chinese mainland. A guest suite at Amanfayun resort in Hangzhou. Amanresorts International Pte launched Amanfayun in the city In January 2010, its 24th property worldwide and second in China. The resort offers guests a unique rural retreat on the outskirts of the city. "It is one of those destinations that instantly enthralls the visitor, especially in the early morning when sitting in the courtyard of a tea plantation house, hearing the monks greeting the day in nearby temples on top of the hills. Their mantras cover the valley like a warm duvet. On such a morning one can hear the country breathe in and out - very gently, very calmly." That purple prose came from a review left at a boutique hotel in Hangzhou. Unlike the traditional standardized hotel, a boutique hotel - also known as a lifestyle hotel or designer hotel - contains luxury facilities of varying degrees in unique or intimate settings with the opportunity to explore the local atmosphere. They have boomed in China's first-tier cities such as Beijing and Shanghai and blossomed in scenic destinations, attracting customers, including 22-year-old Ye Ying, who look for something special and different. "The hotel pays attention to detail," the young woman said effervescently when talking about her experience with her boyfriend at a boutique resort close to the West Lake in Hangzhou last summer. "Its dcor is very detailed - such as the balcony and curtains. The entire sense of taste is exquisite," she said. More importantly, the hotel creates a feeling of home and is close to nature, which differentiates it from branded hotels, she added. Ye and others like her represent a new trend - a young group seeking properties that are noticeably different in look and feel from branded hotels - when planning trips. As such, the concept of boutique hotels, mainly popular in North America and the UK, has now moved beyond the usual design capitals of the world and is entering new markets including China. Hangzhou is one of China's most renowned and prosperous cities, famed for its natural beauty. Luxury brands including Amanresorts and local hoteliers have all staked their claims, establishing well-hidden facilities at remote lakeside spots or in the mountains. In January 2010, Amanresorts launched Amanfayun, its 24th property worldwide and second in China, offering guests a unique rural retreat on the outskirts of the city. Local providers of boutique hotels are also in on the trend. In one year, a local boutique resort brand called West Lake Reclusive Life expanded to nine outlets at scenic spots in Guangzhou. Another local group, Fulinlehui Resort, which opened last year at the city's Xixi National Wetland Park, is planning to create more rooms. The hotel is designed to provide travelers with a home from home to relax in, said He Jin, Fulinlehui's owner. "I am an outdoor hiking fan and was inspired by boutique hotels in Southeast Asia," he added. Boutique hotels took off in China at a time when high-ranking branded hotels began to expand frenziedly despite a stagnant occupancy rate. Official figures show that the number of five-star hotels stood at 651 in China at the beginning of this year, with 500 more scheduled to open. According to Shenzhen-based consulting firm Hotelsolution, the occupancy rate at high-ranking star hotels was a little more than 60 percent for the last quarter of 2011. A hotel barely breaks even if the rate is lower than 60 percent.

International piano superstar Lang Lang holds his honorary doctorate from the Manhattan School of Music on May 11 in the United States. International piano superstar Lang Lang received an honorary doctorate from the Manhattan School of Music on May 11. It is the 29-year-old's first doctor's degree in the United States and makes Lang Lang the first Asian to receive an honorary doctorate from the Manhattan School of Music. "Above all, relax and enjoy yourself. Let your audience feel it," Lang Lang told students at the 2012 commencement ceremony. "In the end, your goal is to communicate with your audience. Touch their hearts with your fingers - it's your voice - and make that music an inspirational and magical experience they will never forget," he said. Lang Lang previously received an honorary doctorate from the British Royal Academy of Music from Prince Charles. Lang Lang indicated that the honor would encourage him to go further in his musical career.

Beijing is to begin a clamp down on foreigners illegally entering, residing or working in the national capital to improve social security, according to a local authority announcement on Monday. The campaign is scheduled to run from May 15 to the end of August, said a spokesman with the Beijing Municipal Public Security Bureau. Police will comb communities believed to have large numbers of such aliens and mobilize the public to report them, as well as tighten reviews of visa applications, he promised. Official data shows that Beijing sees nearly 200,000 foreigners every day, including 120,000 inhabitants. Police records reveal that foreigners without income, a permanent abode and a job are more likely to commit illegal acts in the city. Beijing police reported earlier that a British man was detained on suspicion of assaulting a Chinese woman on the side of a road in Xuanwumen in downtown Beijing's Xicheng district on Tuesday night. The man, intoxicated on the night of the incident, is a British national in China with a tourist visa. A recording of the incident uploaded to video-sharing site youku.com by an Internet user incurred public wrath.

Hong Kong*:  May 15 2012 Share

A Hong Kong-based medical device manufacturer has developed a breakthrough stent for heart patients that speeds up healing and lowers the chance of a relapse. The new generation "combo stent" - coated with both drugs and antibodies - has been designed for coronary angioplasty to treat heart blood-vessel obstruction, said Professor Michael Haude, chairman of the Working Group on Interventional Cardiology of the German Society of Cardiology. "It puts together the best of both worlds - the drug technology and antibody technology," said Haude, the principal investigator in research to prove its safety and quality. The manufacturer, OrbusNeich, expects that the cost of combo stents to be similar to drug-eluting stents, at around HK$20,000 each and to become available before the end of this year. OrbusNeich, based in Hong Kong, specialises in interventional medical devices that are sold around the world. The earlier generations were either drug-coated or antibody-coated. Patients either suffered from their blood vessels re-narrowing or obstructions by clot formation. Both may result in relapse and the surgery would have to be repeated, said Dr Chris Wong Kwok-yiu, president of Hong Kong College of Cardiology. The first generation, a bare metal stent, typically made of stainless steel or cobalt-chromium alloy, was introduced in angioplasty surgeries because around half of the patients suffered relapses six months to a year after surgery, he said. The stent is inserted and remained in the vessel to keep it open, but it could cause injury to the inner vessel wall, causing cell proliferation and re-narrowing of the vessel in the repairing process. Its relapse rate is around 25 per cent. The second generation drug-eluting stent was introduced in Hong Kong in 2002 and is coated with drugs to inhibit cell proliferation. The relapse rate with this stent was reduced to around 9.5 per cent. Following the development of the combo stent, Haude led a study in 2010 with 183 patients (including 31 from Hong Kong's Queen Mary Hospital) from eight countries, comparing the results of the combo stent and drug-eluting stent. Study results showed that patients using the combo stent had more new tissue layers covering it after nine months, and a similar cell proliferation inhibiting effect as the drug-eluting stent. The relapse rate among patients with combo stents was 5.2 per cent. None of the patients suffered blood clots and the new stent was proven safe, said Haude.

Many Cathay Pacific cabin crew are finding it difficult to cope with the increasing number of turnaround, overnight "red-eye flights" that involve working up to 12 hours straight, according to the Cathay Pacific Airways (SEHK: 0293) Flight Attendants Union. A union survey last month revealed that about 70 per cent of the 1,900 cabin crew surveyed said they found red-eye flights exhausting, and that it was difficult to keep alert, especially on the return trip. Julian Yau Chi-hung, vice-chairman of the FAU, said such flights, where cabin crew had just about an hour between flights, were on the rise at Cathay Pacific. There were only two such flights a day last year. But the number rose to six a day by the beginning of this year and was up to nine a day now. "We are worried for safety reasons. If flight attendants are not on full alert during the flight, it may jeopardise the safety of both the crew and the customers," Yau said. The increase may also affect the quality of service, he said. In the past, red-eye flights were usually on routes to Jakarta and Singapore, but Yau said flights to Japan and Korea now also had such schedules, where cabin crew had to fly there and back in the same shift. The union urged the Civil Aviation Department to look into the situation, with 20 union members staging a protest march yesterday. Yau said he wondered if Cathay Pacific's recent cost-cutting had made it decide to save money by cutting back on overnight rest for crews overseas. "While this is legal, we've had many cabin crew tell us how tough it is. I think [the company and the government] should listen to our voices and concerns," he said. A flight attendant who gave her name as Kwan said red-eye flights "go against a person's normal daily cycle, it disrupts any schedule". It could be difficult to cope, especially if the flights were full. The hardest part of red-eye flights was to stay alert. Cathay Pacific said no cabin crew had to fly more than one such turnaround flight a month. After returning to Hong Kong, the operating crew would have the rest of the day off as well as the next day.

Hongkongers visit the Flower Market in Mong Kok yesterday to pick out special gifts for Mother's Day. The most popular choice this year is the classic magenta carnation, says one flower seller in Wan Chai. But while shops have plenty of floral presents for today's occasion, some sons and daughters are keeping their gestures simple, such as by helping out with chores and making handmade cards. As 23-year-old Jennifer Ching Tse-yan says: "There's no need to hype it up and buy expensive gifts, because every day is Mother's Day." 

 China*:  May 15 2012 Share

Li Keqiang with Alex Salmond in Edinburgh. China, it seems, is in love with all things Scottish - the whisky, the salmon and perhaps most of all, the game of golf Scotland gave to the world. But this is no unrequited love. The feeling is entirely mutual. Though still two years away from voting on the issue of independence from the UK, Scotland is looking for a long-term partner. And it is becoming clear Beijing is at the top of its list of suitors as the country's leader, First Minister Alex Salmond, and his Scottish National Party busy themselves with forging links with foreign powers ahead of that independence poll. From burgeoning business and educational links to countless cultural exchanges, it looks like the courtship is going well. There have been gifts, like the giant pandas Tian Tian and Yang Guang given to Edinburgh Zoo last year. But will it all lead to anything more than a marriage of convenience? And how will Scotland cope with the critics who are calling on it not to "get into bed" with China without demanding assurances on human rights? Only last week, Scotland's environment minister Stewart Stevenson told a visiting delegation from Shandong : "China is a key market for Scotland and our commitment to the relationship is justified by results." Government insiders admit that "spadework" is being done now with a view to what might happen after 2014. One said: "I think we'd be accused of insulting people's intelligence if we said China wouldn't be important should we gain independence. "The groundwork has been going on and has been for several years, but now it has added significance given the vote in two years' time." Now, with China contributing more growth to the global economy than the whole of the G8 put together, Scotland's politicians know the importance of romancing the dragon. Salmond visited China in December and met Vice-Premier Li Keqiang to sign an agreement for increased cultural ties and discuss how relations between the two nations could be taken "to the next level". After talks identifying further business and cultural links to build on those already made, Salmond said he was struck by the warmth shown to him. He was also impressed by Li's knowledge of Scotland and his "genuine interest in enriching our relationship". Salmond said: "It is clear that since our first meeting in January, we have made significant progress on links between our two nations." The pair also discussed opportunities for the two countries to collaborate on knowledge-sharing and how to support developing relationships "in the fields of health care, water management and infrastructure and aviation connectivity". Salmond added: "This relationship is justified by results and is growing ever stronger." He highlighted the major success of both salmon and whisky sales to China. Last year salmon exports were worth £21.4 million (HK$268.4 million) thanks to an agreement which allows direct exports. Whisky sales have soared after the granting of legal status for the drink in 2010, which meant that only genuine Scottish whisky could be sold in China. Exports of the spirit, up 15 per cent on the previous year, reached £60.1 million in the same period. It is not a one-way street. Scottish investors are putting more money into China as confidence in the wider UK market continues to slide, according to a report last month. Scotland was quick to build on historical contacts and links when China began to open up in the 1980s. And the Chinese have been visiting Scotland in growing numbers in recent years. In 2005 there were 7,000 visitors from China - now that number has increased to 11,000. Shandong's vice-governor Jia Wanzhi and his delegation were the latest tourists to take in the Scottish air earlier this month. Stevenson welcomed the visitors by emphasising the importance of building strong links with China's second-largest province, which is home to 95 million people and a rapidly growing economy. He said: "The links between our two nations are going from strength to strength. We are committed to working more closely with Shandong in a number of sectors, including offshore energy, life sciences, education, agricultural research, culture, sports and tourism." In recent years educational links between the two countries have grown strong. Schools have started exchange programmes, while Scottish universities are exporting courses and the franchising of degrees to China. There are also growing cultural ties. Audiences across China will celebrate Hogmanay - the Scottish new year's event - with a series of concerts from the Royal Scottish National Orchestra. With support from the Scottish government's international touring fund, the RSNO will perform six concerts at five venues across the mainland in December and January. Despite the purse-strings being tight back home, Scotland's culture secretary, Fiona Hyslop, announced £110,000 was being given to support the performances in Guangzhou, Shenzhen, Tianjin and Macau, as well as the National Centre for the Performing Arts in Beijing. She said: "Scotland is known worldwide as a place of creative and cultural excellence. Overseas tours showcase Scotland's creative talent on a world stage, enhancing our global reputation. "They also strengthen cultural and diplomatic links with countries identified as a priority in our framework for international engagement, such as China."

Huawei's head of North America, John Roese, said his company was more than ready to take on larger rival Cisco Systems but noted it would take some patience - and time. "The US is by far our most complex market … for us our entrance into the US is similar to a western company entering China," Roese said on the sidelines of Interop, an internet technology infrastructure conference in Las Vegas. For a decade, China-based Huawei has been selling infrastructure to US telecoms operators. It sells routers and switches that move data through networks and devices such as modems and smartphones, but now it aims to provide equipment to large businesses, a market dominated by Cisco Systems. Huawei in September last year launched its enterprise unit and aims to generate US$15 billion worldwide in revenue by 2015. This year it expects its deals to total more than $7 billion worldwide. The enterprise unit provides equipment such as hubs, routers and switches that run networks transferring data across corporations. "We basically said it will take a few years to get to critical mass but the US is not critical to our revenue objective," Roese said. Huawei's enterprise unit revenue rose 57.1 per cent in 2011 to 9.16 billion yuan (HK$11.26 billion), making it the fastest growing division though it contributes only 4.5 per cent of total revenue. Cisco is the world's leading maker of networking gear. "There really has not been a legitimate major competitor for Cisco for a long time … and in comes Huawei and we are not a small player," Roese said. Cisco's chief executive John Chambers (pictured) has repeatedly called Huawei its toughest rival in the enterprise market and promised to be compete aggressively. In 2003, Cisco sued Huawei for allegedly infringing on patents. Huawei removed the contested parts and the case was dropped. Cisco's executive vice-president Rob Lloyd implied that Huawei was still imitating and questioned its security credentials. "The privacy of information, how data is protected, is forefront in our customers' mind in a cloud-centric world," he said. Roese shrugged off the comments. "If they want to declare us public enemy No1 and their biggest threat, I am glad to take that compliment," Roese said, adding that Huawei was still too small a player in the US to compete with Cisco. But it is gearing up to take on Cisco. Huawei last week announced its first US distribution agreement with IT-distributor Synnex that will allow it to expand its presence in the US enterprise market. It is also launching new products that compete with Cisco's telepresence offerings and network switches. Still, the United States has been a difficult market for Huawei to crack as some US politicians are wary of the company's secretive founder and chief executive Ren Zhengfei, a former Chinese military officer. There are also concerns regarding the security of its hardware.

For years Filipino and Chinese fishermen peacefully shared the rich harvests around the Scarborough Shoal in the South China Sea, but today threats, harassment and fear have replaced friendship. While Filipino fishermen still ply their trade at the outcrop 230 kilometres from the Philippine coastal town of Masinloc, they say rifle-brandishing Chinese personnel on rubber boats are intimidating them. Soon after returning from two weeks at the shoal, crewmen from a 15-metre-long outrigger said the Chinese shadowed them whenever they sought to fish inside the shoal. "They sent their rubber boats to follow us and circle our vessel. They didn't make threats but it was dangerous because sometimes we almost collided," boat mechanic Glenn Valle, 40, said. "We were afraid because all the boats were moving and they were sticking close to us, close enough to touch our outriggers." Fishing boat captain Zaldy Gordones, 34, said each Chinese rubber vessel carried about eight men in grey camouflage uniforms with rifles and long-lensed cameras, which they used to photograph the Filipinos. The rubber boats were sent by Chinese surveillance ships that have been posted near the mouth of Scarborough for more than a month to assert China's claim over the rocky outcroppings, according to the Filipinos. The Philippines says the shoal falls within its exclusive economic zone, but China claims almost all of the South China Sea as its historical territory. The rival claims flared into a major diplomatic dispute on April 8 when Philippine authorities accused Chinese fishermen of taking endangered species. Philippine efforts to arrest the fishermen were thwarted when two Chinese surveillance vessels arrived at the scene. Fishermen from Masinloc have been making the journey to the shoal for two decades, a trip that can take eight to 14 hours, depending on the weather. The waters are renowned for the rich bounties of fish and the Filipinos know they can return with boats packed with anchovies, tuna and scad. Despite the rival claims, boats from the Philippines, Vietnam, Taiwan and the mainland all regularly visited the shoal, which was also a refuge during bad weather, Masinloc residents say. Boat mechanic Valle said the fishermen used hand signals to communicate, recalling how they would ask Chinese crew for help. "If we wanted to ask for water, we just held up a container and made a drinking motion and they would give us water," Valle said, adding the Vietnamese were even more generous. "They gave us rice and noodles even if we didn't give them anything." Masinloc's local fisheries officer, Jerry Escape, said stories were common of fishermen from different countries bartering food, water and cigarettes with each other. "There has been no ill-treatment of any fishermen reported," he said. But Chinese fishermen also had a reputation for taking marine species that were protected under Philippine law, such as sea turtles, corals and giant clams. "For our fishermen, there are things that are prohibited but for the Chinese, nothing is prohibited. They take what they want," said Nestor Daet, 55, local head of a volunteer environment protection group, Sea Guardians. Masinloc fishermen were warned to avoid the shoal to keep from getting caught in any possible crossfire after the stand-off began. But there was no ban and Masinloc coastguard deputy officer Norman Banug said he now even encouraged them to go back out there. "If the Chinese see no Filipinos fishing there, they will think they can take over that area. "

Chinese Premier Wen Jiabao (C), President of the Republic of Korea (ROK) Lee Myung-bak (L) and Japanese Prime Minister Yoshihiko Noda (R) shake hands during the fifth summit meeting of China, Japan and the ROK at the Great Hall of the People in Beijing, May 13, 2012. China, Japan and the Republic of Korea (ROK) on Sunday agreed to launch talks on a free trade area (FTA) later this year as the their leaders gathered in Beijing. Chinese Premier Wen Jiabao announced the plan at a joint press conference held after a trilateral meeting with Japanese Prime Minister Yoshihiko Noda and ROK President Lee Myung-bak. Calling the agreement "an important strategic decision," Wen said the three nations should make concerted efforts for the early establishment of the FTA. "I think it's very meaningful for the future of the three nations to start the ROK-China-Japan FTA negotiations," Lee told reporters at the press conference. China and the ROK announced the start of bilateral negotiations for setting up the FTA earlier this month. China's Minister of Commerce Chen Deming said he hoped the negotiations would conclude within two years. Analysts say the Japanese government felt pressure after China and the ROK's announcement of the bilateral talks, as many Japanese enterprises fear they will be edged out of the vast Chinese market by their ROK competitors with tariff advantages. At the press conference, Japanese Prime Minister Noda said Japan agreed to conduct consultations with China and the ROK. "It's a substantial result that we reach a consensus on launching the FTA consultations within the year," Noda said. "The guideline of the Japanese side is to set up an Asia-Pacific free trade circle, including the TPP (Trans-Pacific Partnership advocated by the United States)," he said. The establishment of the FTA among China, Japan and the ROK will not only contribute to the development of the three countries, but also help promote East Asian integration and drive global economic growth, said Chen Fengying, director of the Institute of World Economic Studies under the China Institutes of Contemporary International Relations. China, Japan and the ROK together represent 74 percent and 22 percent of the East Asian and world populations, 90 percent and 20 percent of the East Asian and world economies, and 70 percent and 20 percent of East Asian and world trade, respectively, according to a White Paper handbook titled "China-Japan-ROK Cooperation 1999-2012" released by the Chinese Foreign Ministry. Chinese Premier Wen said the other important result of the 5th Trilateral Summit Meeting was that the three nations clinched a deal to promote, facilitate and protect mutual investment among the three nations. "It will serve as the first important legal document on trilateral cooperation in the economic field," said the Chinese leader. Wen said the three nations have promised to seriously implement the deal, so as to "create a stable, fair and transparent environment for expanding mutual investment among the three countries and further deepen economic integration." Chen, the Chinese scholar, said the deal will help quicken the pace of setting up the trilateral FTA as well as encourage more investment among the three nations. Both Noda and Lee highlighted the significance of the deal. The three sides signing the trilateral investment agreement is worthy of a great celebration, said the Japanese leader, adding that he hopes the deal will spur a move to advance trilateral cooperation to a higher level. Lee said the deal "should have been reached earlier" given the close economic ties among the three nations. Statistics show that trilateral trade expanded from 130 billion U.S. dollars in 1999 to 690 billion U.S. dollars in 2011. China has topped the lists of trading partners of Japan and the ROK for many years, while Japan and the ROK rank fourth and sixth among China's trading partners, respectively. During the meeting, the leaders also agreed to expand their trade settlements in local currencies to boost financial cooperation in East Asia and enhance cooperation on environmental protection and the recycling economy, among other areas, to realize sustainable development in the region. "We stressed that the three sides should work to deepen mutual understanding among the people of the nations and improve people-to-people sentiments, which is of significance for China-Japan-ROK cooperation," said the Chinese leader.

Hong Kong*:  May 14 2012 Share

Hang Seng Bank says it has to increase capital and reduce leverage under new regulations implemented after the global financial crisis. Some small shareholders are demanding that Hang Seng Bank (SEHK: 0011) raise its dividend back to the 2008 level after it saw solid profit growth last year. The bank's net profit rose 12 per cent to HK$16.68 billion. "Since 2009, Hang Seng has been paying a dividend of HK$5.20 per share, unlike HK$6.30 previously," a shareholder said at the bank's annual general meeting yesterday. "It has been three years and I hope we can go back to the old dividend soon. Never before has Hang Seng cut its dividend for such a long time." His comments drew applause from other shareholders at the meeting, where several investors also expressed concern over the bank's payout. "In 2003, the earnings per share were HK$4.90 and the dividend was also HK$4.90 per share, a 100 per cent payout. Between 2004 and 2009, the level was about 85.8 per cent," one investor said. "But last year, even as earnings per share rose to HK$8.72, the bank paid just HK$5.20 per share in dividend, a mere 59.6 per cent payout. Why can't you pay more?" The bank's chief executive, Margaret Leung Ko May-yee, said that under the Basel III accord implemented after the financial crisis in 2008, banks were required to increase capital and reduce leverage. Basel III is a global standard on bank capital adequacy, stress-testing and market liquidity risk developed after the financial crisis exposed loopholes in the prevailing regulatory regime for financial institutions, and governments were forced to bail out overleveraged banks and insurers. Banks have complained that Basel III would increase their lending costs. "In the past three years, many banks have lowered their dividend payout ratio and many, including some large banks, needed to raise funds. At Hang Seng, we only slightly reduced our dividend payment and still managed to achieve growth even without raising funds," Leung said. "If you compare our payout ratio with other banks, locally or internationally, Hang Seng's is still higher than many other banks'." Leung retired at the end of the meeting yesterday after working 34 years for the HSBC group. She was appointed to head Hang Seng Bank in 2009. Leung said that although she was a perfectionist, she was pleased with the bank's performance in the past three years and that she had no regrets. "When I first joined the sector, the banks' business was simpler, ranging from money lending and saving to services such as money transfer and credit card services. But nowadays, the areas are broader, including investment banking, private banking, insurance and advisory works," she said. "There are more regulations, too, both at the local and international levels. So it's really a lifelong learning process. I have worked in the banking sector for 37 years and I am learning new things every year." Leung, who turns 60 next month, is replaced by Rose Lee Wai-mun, a China adviser at HSBC. Hang Seng Bank shares fell 0.95 per cent to HK$104.70 yesterday.

The development site at Tai Wai MTR Station, which is estimated to be worth HK$10.9 billion to HK$15 billion. Fifteen developers submitted expressions of interest yesterday in tendering for the MTR's proposed HK$15 billion Tai Wai Station commercial and residential project. But although the project appeared to have won an overwhelming endorsement, property analysts expressed concern that the eventual tenders from developers would see a repeat of what happened in January when a Tsuen Wan project was withdrawn by the MTR after it judged that the offers submitted by the developers were too low. Developers lining up to submit tenders for developing the Tai Wai Station site include Cheung Kong (SEHK: 0001), Henderson Land (SEHK: 0012), Sun Hung Kai Properties (SEHK: 0016), New World Development, The Wharf, K Wah International, Kerry Properties (SEHK: 0683), China Overseas Holdings, Wing Tai Properties, Kowloon Development (SEHK: 0034, announcements, news) , Nan Fung Development, and Sino Land. Surveyors expect the site to sell for between HK$10.9 billion and HK$15 billion - or between HK$4,000 and HK$5,000 per square foot of permitted gross floor area. Once construction costs and interest on bank loans are factored in, total investment in the site could reach HK$29 billion. Vincent Cheung Kiu-cho, national director for greater China at Cushman and Wakefield, said: "It is a big project and it will involve a large investment cost. I think it might attract three or four bids when it finally goes up for tender. Earlier this year, the MTR Corp's HK$10 billion Tsuen Wan Bayside site attracted 17 developers to submit expressions of interest. However, only four bids were eventually submitted. "The land price of the Tai Wai Station project is even higher, and I wonder how many developers will be willing to invest so much money on one project. Also, it is not easy to raise more than HK$10 billion in the capital market given the current poor market sentiment and uncertainty about the global economy." The site, which is next to Cheung Kong's Festival City development, could accommodate eight blocks of flats 40 to 52 storeys high, with a total gross floor area of about 2.88 million square feet, and a commercial area of about 66,700 square feet. Cheung said the site could be worth around HK$13 billion, or HK$4,780 per square foot, "but the size of the project is too big and developers may submit lower offers". Since the MTR was unlikely to settle for bids of around HK$3,000 per square foot, there was a likelihood that the project would be withdrawn, he said. It would have been better to have split the site into four lots, Cheung said. The cost of each would then have been cut to between HK$2 billion and HK$3 billion, which would be more affordable for small developers, he said.

Pan-democrats last night succeeded in forcing an adjournment of Legislative Council debate on a controversial by-elections law for the second week running. The government-friendly camp pressed for round-the-clock meetings to push the measure through. The three radical lawmakers pursuing a filibuster of the law, which would ban legislators who resign from fighting any by-election for six months, stood by the door of the chamber at 8.20pm as the government-friendly camp failed to muster the 30 lawmakers needed to meet Legco's quorum - the minimum attendance required for debate. The debate will resume on Wednesday. That could mean other legislation, including that for chief executive-elect Leung Chun-ying's government reorganisation, is not approved by the end of the legislative term in July. Bills not approved will die. Leung waded into the debate over the filibuster last night, warning that the lawmakers behind the delaying tactic were putting their Legco seats in jeopardy ahead of September's election. "Anyone will think carefully if he knows his behaviour in Legco may cost him his seat in the election three months later," he said, before last night's adjournment. Raymond Tam Chi-yuen, the constitutional and mainland affairs chief, said the government would continue to pursue passage of the bill. "The government cannot, and should not, give in or compromise," Tam said after the meeting was suspended because only 28 lawmakers were in the chamber. Pan-democrats are not attending the chamber for quorum counts. "I may sometimes feel that I cannot see the light at the end of the tunnel, but I also have a feeling that the filibustering will be over soon and hope the bill can be put to a vote next week," Tam said. He said the administration would be ready for round-the-clock meetings - the first since 2010. The bill was prompted by pan-democrats' resignations last year to trigger by-elections they hoped would be a de facto referendum on democratisation. Tam said the government had kept Leung's office "closely informed" of the progress of his restructuring plan. Fanny Law Fan Chiu-fun, head of the office, attended Legco to show support to government-friendly lawmakers. The session began with a call from Wong Kwok-hing, Federation of Trade Unions lawmaker, for Legco to meet "day and night" to speed up debate of People Power lawmaker Albert Chan Wai-yip's amendments, which he called senseless. Outside the chamber, Wong hung works of calligraphy condemning the filibuster, while "Long Hair" Leung Kwok-hung put up posters mocking the government-friendly camp. Chan and colleague Wong Yuk-man, who have tabled 1,306 amendments, vowed to continue the fight against what they called an "evil law". Yesterday's meeting was earlier forced to adjourn for 10 minutes when an angry protester threw a book and a pair of shoes into the chamber from the public gallery. The 60-year-old man was arrested for contempt of Legco.

Legislative Council president Jasper Tsang Yok-sing came under fire from pro-establishment lawmakers for refusing to bar the People Power legislators' filibuster of the by- election amendment bill. At yesterday's Legco meeting, Albert Chan Wai-yip and Raymond Wong Yuk-man raised more than 1,300 amendments to the bill, triggering outrage and anger. The bill's third reading will resume today. Wong, who raised minor amendments on the wording of the bill, imitated the tone of Premier Wen Jiabao in delivering his speech slowly and deliberately, citing the writings of ancient Chinese scholars in his address in an effort to have the meeting aborted and force the government to withdraw the bill. Chan and League of Social Democrats lawmaker Leung Kwok-hung used similar tactics and the meeting was disrupted at least 10 times because of the lack of a quorum. Leung also asked Tsang to check whether legislator Wong Ting-kwong, who had fallen asleep, was alive or dead. Wong "woke up" moments later. Raymond Wong also asked Tsang to require other lawmakers not to read books when he saw Lau Kong-wah of the Democratic Alliance for the Betterment and Progress of Hong Kong reading. Wong criticized Wong Kwok-hing of the Federation of Trade Unions for doing calligraphy but the unionist responded that the rules of procedure do not bar it. Lawmaker Paul Tse Wai-chun criticized Tsang for allowing the People Power lawmakers to raise "meaningless and trivial" amendments. But Tsang only said lawmakers should not doubt his rulings in the chamber. The pro-government camp mobilized members with poor attendance records - including David Li Kwok-po and Timothy Fok Tsun-ting - to ensure a quorum.

 China*:  May 14 2012 Share

China's first deep-water drilling rig started operations 320 kilometres south of Hong Kong this week. Mainland military experts say Beijing should make use of its deep-sea technology to explore and even start drilling for oil in disputed parts of the South China Sea to reinforce its sovereignty. Xu Guangyu , a senior researcher at the China Arms Control and Disarmament Association in Beijing, said military action would be China's last resort in resolving its territorial disputes with the Philippines in the South China Sea because there were many other, peaceful approaches that Beijing could adopt, including diplomatic, economic and even technological means. He said China could send its first home-made, semi-submersible, deep-sea drilling platform to explore for oil in the waters off Scarborough Shoal, the scene of a month-long stand-off with the Philippines. Both countries claim the area, known in China as Huangyan Island and in the Philippines as the Panatag Shoal. "We should be more active to show our determination to defend our sovereignty … we didn't explore Huangyan in the past because we lacked the technology, but now we are capable of doing it," Xu said. "In the meantime, non-military vessels like fishery patrol boats should also be stationed at Huangyan to protect Chinese fishing boats and expel boats from other countries." The National Energy Administration announced this week that a deep-sea drilling platform, the Ocean 981, began producing oil from the Liuhua 29-22-1 well in the eastern part of the South China Sea, where Beijing's territorial claim was not disputed, on Wednesday. More than 1,000 oil wells have been drilled in disputed parts of the South China Sea by the Philippines, Vietnam and other countries, but none are owned by China. Senior Colonel Li Jie , from China's Naval Academy, said the announcement sent a signal to those countries that China was going to have a finger in the pie. "China has done all kinds of preparation, including the development of deep-sea oil technology," Li said. "We know the public is very angry over the Philippines' provocative anti-China demonstration, but it's not worth using military means because the Philippines is no match for our military." Some popular mainland internet portals mentioned rumours yesterday the Guangzhou Military Command and the People's Liberation Army Navy's South China Sea Fleet had been put on the second level of the four-level combat readiness scale - with the first being the highest. The Ministry of National Defence denied the rumours in the afternoon. Luo Yuan , a hawkish retired major general, has urged Beijing to take military action to punish the Philippines. "We shouldn't let the Philippines get off free because it has severely encroached on our bottom line," Luo told China Central Television's Today Focus programme on Thursday. "If the PLA cannot declare war on the Philippines, why do we still keep such an army?" But Ni Lexiong , a Shanghai-based military expert, said China would not go to war with the Philippines, even though Beijing knew Washington could not help Manila.

Some external investors are frustrated by overly restrictive regulations for investment in mainland hospitals, according to the head of a leading Taiwanese medical group, even as Beijing continues to encourage private investment in health care. In particular, investors from Hong Kong, Macau and Taiwan say they are struggling to open hospitals for more affluent patients, as the mainland's regulations on medical institutions are directed more at facilitating the establishment of general hospitals rather than upper-tier ones. That's a problem facing the Taipei-based Landseed International Medical Group, which will formally open its Shanghai Landseed International Hospital on June 26. It will be the mainland's first wholly externally funded hospital, according to its president, Dr Victor Chang. "There are many requirements we think are unreasonable," he said. "For instance, if we want to purchase equipment such as a CT scanner, we must have at least three doctors to run it; but in Taiwan, we are required to have only one doctor. Another example is that, for some departments, we are required to have a minimum amount of space, but we don't need that much space." As a result, they aren't allowed to open some departments, such as oncology, at the Shanghai facility. Still, the hospital plans to provide comprehensive services, including family medicine, paediatrics, plastic surgery, rehabilitation, gynaecology, obstetrics and traditional Chinese medicine, unlike most overseas-funded medical institutions that focus on providing only selected services. "We feel the demand from high-end customers for one-stop health service in first-tier cities, such as Beijing, Shanghai and Guangzhou, is prominent," Chang said. In late 2010, mainland authorities announced that they were encouraging "social investment" - referring to private and overseas funding - in the medical sector. They issued a directive allowing investors from Hong Kong and Macau to set up wholly owned hospitals in Shanghai, Fujian , Guangdong, Hainan and Chongqing , while allowing Taiwanese investors in Shanghai, Jiangsu , Fujian, Guangdong and Hainan. "For other overseas investors, I would like to say there is huge potential in the mainland market, but you should be patient, because the process of amending these restrictive regulations will be very slow," he said. "I also suggest that they establish joint ventures first, in order to gain more experience and familiarise themselves with the special regulations here, as well as with officials' mainland mindset." External investors are currently barred from building wholly owned hospitals on the mainland. The Landseed group has operated on the mainland since 2000, running a joint-venture hospital in Shanghai for 10 years and co-operating with about 200 hospitals across the country by providing hospital-management advice and medical staff training.

China has impounded Philippine fruit exports alleged to carry pests, squeezing a key industry amid a tense stand-off between the two countries over disputed territory, a Philippine official said on Saturday. Manila newspapers reported tonnes of Philippine bananas were rotting at Chinese ports, while the Philippines’ Bureau of Plant Industry director Clarito Barron confirmed fruit shipments faced stricter inspection there. “This has a huge effect on the industry,” Barron said, describing China as an important market having imported 300,000 tonnes of Philippine bananas worth US$60 million last year. The Philippine Daily Inquirer newspaper quoted Stephen Antig, president of an association of 18 banana growers, saying they had sustained losses of one billion pesos (about US$236,000) because bananas spoiled after three days. Chinese quarantine officials informed the Philippines that all its banana exports would have to face inspection before they clear Chinese ports after scale insects were allegedly found in one March shipment, Barron said. The stricter quarantine measures were later extended to Philippine pineapples and papayas after Chinese authorities claimed they also found pests in a May 2 shipment, he said in an interview aired on DZBB radio in Manila. Barron said the Philippines disputes the Chinese findings, stressing that the bugs allegedly found on the March shipment attacked coconuts, not bananas. With total shipments worth US$470.96 million last year, bananas are the Philippines’s second-largest agricultural commodity export after coconuts, according to government data. China is the Philippines’ second-largest banana market after Japan. The banana issue came up a month before Chinese maritime surveillance vessels prevented the Philippine navy from arresting Chinese fishermen on a disputed South China Sea shoal in April, sparking a tense maritime stand-off. “In my opinion this [banana quarantine] has nothing to do with that issue,” Barron said. The Philippine government has proposed measures to resolve the trade impasse, including sending inspectors to accompany the fruit shipments, but China has yet to reply, he added.

IMAX is thinking big in China. "China has become the second-largest market outside of North America for IMAX," said CEO Richard Gelfond. As part of its increased cooperation with Chinese filmmakers, the company will release Flying Swords of Dragon Gate, starring Jet Li, in about 30 screens in North America, the first Chinese film to be released there in IMAX 3-D format. When Avatar hit China in 2010, it was released on only 13 IMAX screens, but now The Avengers is available on 68. There will be about 100 IMAX screens in China by the end of this year, and another 100 are coming in the next two years, he said. Box office revenues in China have been increasing at an average 30 percent a year since 2003, reaching 13 billion yuan ($2 billion) in 2011. The country imports only 20 foreign films for theatrical release a year. But Gelfond is excited about a deal hammered out in February during Vice-President Xi Jinping's visit to the United States. Under the deal, 14 extra films will be imported every year. "We think this is a positive step forward for Chinese moviegoers," he said. But the company is still eager to find more content, not only from Hollywood blockbusters, but also local productions. Company executives have been meeting Chinese directors to learn about their ongoing or finished projects. The company previously would only convert one or two Chinese films a year, such as Feng Xiaogang's Aftershock about the disastrous Tangshan earthquake, and Hong Kong director Tsui Hark's Flying Swords. "But in the near future we will work on three to five Chinese films every year," Gelfond said. The company will provide seminars, workshops and facilities to help Chinese filmmakers better understand what kind of movies are suitable for the format. It will not only convert completed Chinese films, but also join projects before production starts. The company is currently in talks with Legendary East, a subsidiary of Legendary Pictures, about using IMAX cameras to shoot Great Wall, a Chinese epic story. If the deal proceeds, it would be the first Chinese film shot with IMAX cameras, instead of converted to the format after shooting is complete.

Hong Kong*:  May 13 2012 Share

Clockwise from top left: Sloane in zebra print; Letitia in coral; Sloane in navy glitter; Belgravia in white with stars; the Mira; Dunraven in royal blue - Sandra Choi, Jimmy Choo's niece, with Simon Holloway. We're in Elements Mall, sitting in the middle of Jimmy Choo's first men's boutique in Asia, and creative directors Sandra Choi and Simon Holloway look uncomfortable. The photographer asks them to look natural as he takes their portrait, but this is also their first public appearance and interview together and they are clearly not accustomed to the attention. It's only when they're asked to pose with a men's slip-on shoe covered in blue glitter that their faces brighten and they start to relax. Although Choi, Choo's niece, has been with the company since 1996 and Holloway since 2010, they are relatively unknown. Until last year, the public face of the brand was former chief creative officer and Jimmy Choo co-founder Tamara Mellon. Things changed overnight when the Swiss firm Labelux bought the company and Mellon stepped down, leaving behind big shoes to fill (pardon the pun). "It takes some getting used to, but, fortunately, for me it's natural to talk about making shoes. It's what I do and know about after all these years. It's important to have leadership and to tell people why we do certain things from a design angle," says Choi. If looks are anything to go by, Jimmy Choo's new reigning couple are polar opposites. Holloway looks dapper in a smart white shirt, grey waistcoat and matching trousers, while Choi embraces her inner fashionista in a navy silk parachute dress accessorised with stacks of bracelets and a pair of white sporty Jimmy Choo cork wedges. Even so, one thing they do share is their design vision. "Every season we work out the concept, research and theme of each collection, and usually we have similar ideas," says Holloway. "We are on the same wavelength when it comes to designing. Occasionally, we may get into a debate, but we pull each other along," adds Choi. Holloway interjects, "We are continuously in meetings. She refers to me as her work husband, much to the chagrin of her real husband." Although the designers have 30 years of experience between them, their backgrounds are different and they bring their respective talents to the Choo design table. For Choi, shoemaking and the Choo legacy are in her blood. Born on the Isle of Wight in Britain, her parents sent her to Hong Kong as a young girl to learn more about Chinese culture. At age 13, she returned to London to complete her secondary education and began working with her uncle, Jimmy Choo, at his couture shoemaking business in the East End. "I've loved fashion since I was a young girl and was influenced by Japanese magazines. I wanted to go to fashion school, but in our culture it's important to help the family, so I did. With my uncle I learned the trade. I always say I learned shoemaking in the school of Jimmy Choo," she says. Working as Choo's protégée, Choi perfected the art of creating couture shoes, learning everything from cutting patterns and stitching to constructing lasts. Although she attended Central Saint Martins briefly, she eventually abandoned her studies to manage the atelier and design with her uncle. When Choo later partnered with Mellon, former editor of British Vogue, in 1996, the brand transformed from a couture business into a fully fledged fashion label with Choi serving as creative director alongside Mellon. When Choo was bought out in 2001, Choi stayed on and garnered accolades for the brand, including the 2008 Designer Brand of the Year from the British Fashion Council. "I was ready to take on the world after my uncle left. I was hungry to do it on a bigger scale and build on the DNA of beautiful and elegant shoes," she says. "The difference was that we wanted to cater for the woman that I knew - the modern girl who enjoys fashion and wants cool design twists on beautifully made shoes. The more we approached different parts of a woman's life, the more we pushed ourselves to experiment." Like Choi, Holloway developed a love of fashion through magazines such as i-D and The Face. His formative years were divided between an English boarding school and his family in the US and France, giving him a global perspective. At the age of 16, he decided to study fashion at Newcastle College, followed by a degree at Kingston University. "Even at university, it was like being a freelance designer. Every two or three weeks, I was doing something different, whether it was shoe design, lingerie or menswear. But after university, it was all about shoes. Shoes are the extension of an outfit. You don't need a handbag or sunglasses, but you need something on your feet," he says. After working at brands such as Narciso Rodriguez, Calvin Klein, Michael Kors and Ralph Lauren, Holloway joined Jimmy Choo. Last year he became co-creative director. "I love classical design, and that was the basis for Jimmy Choo: it's about the right kind of sexy that's not too vulgar, but still fabulous and glamorous," he says. "There is an edge to the brand that sets it apart from others. It's always had a fashion image rather than a shoe image, and that's part of the appeal. "When I joined, I didn't want to change things; it was more about making it a better version of what it already is. A strong foundation had already been built through expertise and craftsmanship in the shoe category, so when you have control and mastery of that, it's a lot easier to play in other categories." Holloway's appointment couldn't have come at a better time for Choi. "His experience really helps. I call him the walking encyclopedia of fashion. I have been working in this brand so many years that it's good to have a fresh opinion to stir things up," she says. Their first project together was the 24:7 collection which they dubbed as the perfect shoe wardrobe, featuring tailored and classic styles in a wide variety of colours, materials and heel heights. "Our woman is now much busier. She has a lot to do, and a lot of places to be, but also cares about her looks. We had to respond to that," says Choi. Holloway adds: "It's about pure, tailored silhouettes that are versatile and appeal to lots of women. This allowed us to play with the mainline collection more and create fantasy seasonal messages that keep pulses racing. It was about diversity." For autumn-winter last year, the brand debuted its first menswear line spearheaded by Holloway. Both designers wanted to reflect the diversity of the women's collection in the men's, so offerings ranged from cool new shapes such as slippers and motorcycle boots, to classic styles, like the loafer. "It's designed for the 'him' that accompanies 'her'. He is definitely cool and edgy. He has a great sense of style and is not afraid to have fun - just like her," says Choi. Holloway adds: "The line has a constant sense of style and taste. There's always a frame of reference for everything we include. It's never completely outlandish, but there's room to be eccentric and playful." For now, the two keep busy designing six women's and two men's collections annually, while working on new projects such as their upcoming collaboration with artist Rob Pruitt, which launches in July along with the cruise collection. Also on the cards is expanding the menswear. The Elements Mall boutique sits next to the original women's-only store, which opened in 2008, and will offer men's shoes, bags, belts and other leather accessories. "We'd like to consolidate our position as leaders of shoes and head into places where we aren't available. We are lightly stepping into China and want to see how it will develop. Men's is tiny compared to women, but we hope it grows, too. We feel the brand could go into any category comfortably," says Holloway. Choi adds: "There's so much I want to do. I think my uncle would be proud of what we've achieved."

Hong Kong’s next leader should be covered by the law against bribery, now that Chief Executive Donald Tsang Yam-kuen has become embroiled in alleged conflicts of interest, the city’s top prosecutor said on Friday. Kevin Zervos, the director of public prosecutions with the Department of Justice, said “My view is that no one should be above the law, and the law should be applied to everyone equally.” He was speaking after addressing an ICAC symposium on corporate corruption, attended by anti-corruption delegates from more than 50 countries, at the Convention and Exhibition Centre in Wan Chai. Sections 3 and 8 of the Prevention of Bribery Ordinance govern soliciting or accepting an advantage and the bribery of public servants, but do not cover the chief executive – even after an amendment in 2008. “It is important that we should all [be guided by] the same set of rules,” Zervos said. An independent review committee, led by former chief justice Andrew Li Kwok-nang, is currently studying whether the law should be extended to cover the chief executive. In his symposium speech Zervos said the recent conviction and imprisonment of three ICAC officers was a timely reminder of how important it is for officers to maintain high professional standards and stick by the rules. He was referring to chief investigator Kevin Cho Wing-nin and fellow investigators Ben Chan Kai-hung and John Au Kim-fung, who were sentenced to jail terms ranging from 18 to 30 months in the District Court last week for coaching a key witness in a HK$100 million fraud case. Zervos declined to comment on his progress in the high-profile Sun Hung Kai Properties (SEHK: 0016) case, in which three brothers associated with the firm have been arrested along with the city’s former chief secretary, Rafael Hui Si-yan. Zervos has been appointed to decide whether Hui and the brothers – Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen – should face prosecution. ICAC Commissioner Timothy Tong Hin-ming said he did not think Hong Kong’s image had been tarnished by several recent high-profile cases, and allegations, of corruption involving government officials.

Up in arms over a regulator’s proposal to make them criminally liable if companies lie in stock-market filings, Hong Kong’s initial-public-offering bankers have hired lawyers to fight back. On Wednesday, Hong Kong’s Securities and Futures Commission launched a two-month consultation process that proposed civil and criminal liabilities for sponsors of companies whose listing prospectuses contain false statements, as well as a cap on the number of listings sponsors per IPO to as few as one. The regulator also called for making drafts of filings available on the exchange website as soon as a company files for listing. Sponsors are the key underwriting banks or brokerage firms that bring the deal to market and sign off on the prospectuses. In response, a group of the major investment banks in the city have hired Martin Rogers, head of litigation for Asia at the law firm Clifford Chance, and Bonnie Chan, a partner in Davis Polk & Wardwell’s corporate department, to speak for them. It’s no wonder the city’s IPO bankers, who bring in as much as 60% of a Wall Street bank’s Asia revenue, are upset. While the rules are aimed at the banks rather than the individual banker, a banker could face criminal charges—with the potential of up to three years in jail and a hefty fine—if the bank is caught. And even if the charges are laid against the bank rather than the banker, the effects could by felt by all aspects of its operations, including its credit ratings or licenses in other countries. And according to the SFC, it has found problems with the due diligence performed by firms that are “household names.” Given how many of Hong Kong’s listings nowadays are from outside the city, and increasingly in more and more remote parts of China, the regulator is putting a heavy burden on underwriters. “If a company decides to lie to us, and with so many out-of-the-way Chinese banks out there, how can I find that out, and why should I go to jail for it?” said a Wall Street banker in Hong Kong. A company could collude with officials, for instance, to put misinformation in to the prospectus.

Hong Kong’s economic growth slowed to 0.4 per cent in the first quarter of the year – mainly due to a lull in exports amid a difficult external environment, a government economist said on Friday. This was the slowest rate of growth in the city’s real gross domestic product (GDP) since the fourth quarter of 2009, when the figure was 1.8 per cent. Hong Kong was recovering from the 2008 global financial crisis at the time. The city posted a 3 per cent GDP expansion in the fourth quarter of last year, and 5 per cent growth for last year as a whole. Government economist Helen Chan said a 5.7 per cent drop in total exports was the main factor affecting Hong Kong’s current economic performance. “The weakness of exports in the first quarter was widespread across the major markets,” Chan said in a report on the city’s economic situation in the first quarter. “Apart from the further dip in exports to the United States and the European Union, those to the Asian markets also slackened distinctly alongside the slowing intra-regional trade flows, particularly those related to the intake of raw materials,” she said. Chan said the first quarter was shored-up by thriving inbound tourism, private consumption and growth in investment. Private consumption expenditure grew 5.6 per cent on the back of improved income, while tourism helped “exports of service” to expand by 3.6 per cent. Active machinery acquisitions and public infrastructure projects boosted investment, which grew 12.2 per cent. Looking ahead, Chan said the government would maintain its full-year growth forecast of between 1 and 3 per cent. Growth within this range should be attainable because of a strong mainland economy and a better-than-expected performance in the US, she said.

For years, Chinese investors have descended on Hong Kong to scope out the latest high-end developments—gleaming projects with grand titles like The Dynasty and Bel-Air. Such waves of buyers have stoked anger among locals and fueled one of the world’s biggest property booms: Hong Kong apartment prices have jumped by 82% since late 2008. But new figures suggest that at least when it comes to buying second-hand apartments, mainland appetite may be cooling. According to Midland Holdings, mainland purchases accounted for just 8.4% of the value of transactions in the past quarter, compared to 15.6% in the last three months of 2011. That’s the lowest percentage since the third quarter of 2010, says Midland. The company is the largest listed real estate agency in Hong Kong. Greater difficulty getting credit in China is one factor driving the trend, says Angela Wong, Midland’s deputy chairwoman. A rise in demand among Hong Kongers getting married and having children this year—the auspicious Year of the Dragon—and seeking housing upgrades is another. Meanwhile a growing number of owners were looking to sell, she says, given fears about cooling in the market and uncertainty over Hong Kong’s changing leadership in July. Landlords would “rather just take the profit and sell it out,” says Ms. Wong. Though mainland China has capital controls that limit the amount of money its citizens can take out of the country, many find ways to get around those restrictions–pooling money from family members, using underground remittance agencies–and buying Hong Kong property is a popular way to park cash outside mainland authorities’ reach. Most mainland customers tend to prefer brand-new apartments, accounting for some 40% of such sales in Hong Kong last year. “Their footprint is mainly in the luxury market,” says Nicole Wong, regional head of property research at brokerage CLSA. “The demand is being generated by an increase in high net worth [individuals],” says CLSA’s Ms. Wong. “They want to diversify their wealth, and some people of course buy a flat in Hong Kong for status, as well.” But in the secondary market, Midland says mainland demand has shifted to focus more on buying cheaper apartments, often out in New Territories—an area located away from the main business districts and closer to mainland China’s border. “Before, a lot of us believed that mainlanders would buy in the luxurious segment—the Peak, Repulse Bay, all the expensive districts,” says Midland’s Ms. Wong. Though late last year, 66% of mainland buyers in the secondary market purchased lower-end apartments priced under HK$5 million ($644,114), in the first quarter of this year, that figure grew to 74%. And though the transaction value accounted for by mainland buyers scooping up apartments in Hong Kong, Kowloon and the New Territories all dropped in this year’s first quarter, such a decline was far less pronounced in the New Territories.

 China*:  May 13 2012 Share

Fruit from the Philippines will receive stricter inspections for harmful organisms at Chinese borders, a potential setback for exporters from the country. Ito Yokado, a Japanese supermarket chain in Beijing, has suspended sales of fruit imported from the Philippines at one of its stores for a few days, said Yang Kai, a staff member in the branch's public relations department. "Also, we've stopped purchasing Philippine fruit from importers now. So far there is no schedule to restart it," he told China Daily on Thursday. Pan Anyi, an administrator at Longwu fruit and vegetable market in the Minhang district of Shanghai, which is the city's largest wholesale and trading market of imported fruit, said all fruit sold there must have official border quarantine reports. "As far as I know, bananas (from the Philippines) have been piled up at Chinese border docks," he said on Thursday. China's top quality watchdog on Tuesday ordered stricter inspections on fruit imports from the Philippines after harmful organisms were found in several shipments, according to a notice posted on the website of the General Administration of Quality Supervision, Inspection and Quarantine. Insects and bacteria have been found in pineapples, bananas and other fruits imported from the Philippines to ports in Shanghai, Shenzhen and Shandong since last year, the notice said. 

Shanghai General Motors Co., Ltd. (Shanghai GM) will recall 47,415 Chevrolet Aveo-model cars over faulty brake fluid reservoirs, China's consumer quality watchdog said Friday.

Colombia says it has signed agreements with China to study the joint financing and construction of a pipeline that would deliver at least 300,000 barrels of oil per day to Colombia’s Pacific coast for export. Colombian Mining and Energy Minister Mauricio Cardenas said two memorandums of understanding were signed on Wednesday during President Juan Manuel Santos’ visit in Beijing. Cardenas said by phone from China that one agreement is with China’s development bank while the other involves the bank, Colombia’s state-run oil company Ecopetrol and the Chinese conglomerate Sinochem. Cardenas says there is no exclusivity to the deals. He says that once a route is established for the pipeline, Sinochem would be invited to take part and the Bank of China to finance it.

Some immigration lawyers have seen a new increase in the number of Chinese seeking foreign citizenship, a trend they suggest is tied to worries about political turmoil and economic slowdown in China, especially among businesspeople and politicians seeking to protect their families and wealth. "There's definitely a surge in China for what I call 'let-me-out-now' product," said Jean-Francois Harvey, an immigration lawyer based in Hong Kong who deals with clients throughout Asia. The recent interest builds on a trend of growth in applications from Chinese seeking to emigrate to places like the U.S., Canada and the U.K. in recent years, including to programs that promise citizenship in exchange for investments: In the U.S., 75% of investor-immigrant applicants were from China in fiscal 2011. The rush to apply to the U.S. investor immigration program, known as the EB5 visa, is also partly prompted by Washington politics: The plan has to be reauthorized by Congress in September for it to continue, but applications filed before that date will still be considered. Last time the program was up for review, in 2009, there was a big spike in applications. Under the program, applicants and their immediate families receive permanent U.S. residency if an investment of at least $1 million in the U.S. leads to 10 full-time jobs within two years. The requirement is only $500,000 if the U.S. jobs created are in a rural or high-unemployment area. There is little information on the identities and actual numbers of Chinese seeking to leave, but participants in the industry that has grown up around such requests say they have seen increased activity in the weeks since the Communist Party's ouster of senior party official Bo Xilai, which adds to a general feeling of uncertainty ahead of a once-a-decade leadership transition in the fall. Mr. Harvey and other lawyers say clients rarely give a reason for wanting to leave, which makes it difficult to say whether the latest headlines are helping to drive the push, though they say anecdotal evidence suggests they are a factor. "The political situation heightens anxiety, and the wealthy people head for the visas," said Richard Kurland, an immigration lawyer based in Vancouver, who said he has seen a rise in inquiries in recent weeks. Mr. Harvey said that as recently as this week he received queries from Chinese consultants about programs under which Chinese clients could secure passports in a short time. Canada was a favorite destination, but its investor immigration program, which required applicants to essentially post an 800,000 Canadian dollar (US$811,280) five-year, interest-free loan for governments in the country's provinces, is no longer accepting new applicants, until at least July, to deal with a backlog that has caused process times of more than threeyears for Chinese. That has led wealthy Chinese to look to the U.S. and elsewhere. A State Department official said recently that the U.S. immigration agency has been receiving a wave of applications, leading to a backlog of cases in the Chinese city of Guangzhou. 

A model shows a gold necklace at Jewelry Shanghai 2012 in Shanghai World Expo Exhibition & Convention Center, Shanghai, May 10, 2012.

An Industrial and Commercial Bank of China Ltd office in Shanghai. The US Federal Reserve Board approved an application by the bank to purchase up to 80 percent of the Bank of East Asia Ltd's US unit. The US Federal Reserve Board on Wednesday announced that it had approved a move that would allow three major Chinese State-owned banks to extend their footprint in the country, viewed as a major breakthrough after last week's bilateral strategic and economic dialogue. The Fed approved an application filed a year earlier by Industrial and Commercial Bank of China Ltd, the world's largest lender by market value and the most profitable, to purchase up to 80 percent of the Bank of East Asia Ltd's US unit. It is the first time that a Chinese bank has been allowed to buy a majority stake in a local depository institution, which signals a substantial opening of the US banking market to Chinese lenders, said analysts. The Fed also approved an application by Bank of China Ltd, the third-largest Chinese bank by assets, to establish a branch in Chicago and an application by Agricultural Bank of China Ltd, the fourth-largest, to establish a branch in New York. In addition, the Fed allowed ICBC, Central Huijin Investment Ltd and sovereign wealth fund China Investment Corp to become bank holding companies. Under US regulations, a bank holding company may, directly or through subsidiaries, engage in non-banking activity determined by the Fed to be closely related to banking. These activities could include mortgage banking, consumer and commercial finance and loan servicing, leasing, collection agency, asset management, trust company, real estate appraisal, financial and investment advisory activities and certain insurance-related activities. A bank-holding company can also make limited investments in companies not engaged in activities closely related to banking. "The board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market," the Fed said in a statement on its website. Guo Tianyong, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics, said the move was a response to China's opening for foreign banks and showed that Chinese lenders' performance and the competence of China's banking regulators had been fully recognized by major economies. "US financial institutions routinely request that China remove its restrictions on foreign investment in the financial industry. But Chinese financial institutions also highlight the difficulties they face in trying to enter the US market," said Huang Yiping, chief economist for emerging Asia at the investment banking division of Barclays Bank Plc. The Fed's action came after Chinese officials said earlier last week they would raise the ceiling on foreign banks' investment in stakes in ventures with domestic securities companies to as high as 49 percent from the current 33 percent. Wang Li, a US researcher at the Chinese Academy of International Trade and Economic Cooperation, which is affiliated with the Ministry of Commerce, said he believes the US will further open up to Chinese State-owned enterprises in some sensitive areas, including finance. "That's not only because the US would like to trade that for China's increased opening up to foreign companies. "More importantly, it realized that under current conditions, foreign investment is crucial for its efforts to shore up the economy, and investment from China into certain fields actually would not mean as much trouble as it thought previously," Wang said. "This could accelerate mergers and acquisitions, as Chinese banks may look to acquire regional banks in order to establish a US footprint," Bloomberg quoted Jaret Seiberg, senior policy analyst at Guggenheim Securities' Washington Research Group, as saying. In the United States, ICBC operates an uninsured state-licensed branch in New York City and owns Industrial and Commercial Bank of China Financial Services LLC, a registered broker-dealer that engages in securities brokerage and riskless principal activities. ICBC has stated that it will devote adequate financial and other resources to address all aspects of the post-acquisition integration process for this proposal, the Fed said. The lender has spent more than $6 billion on overseas acquisitions in the past three years. "In the long run, the internationalization of Chinese lenders will become inevitable and we would see more M&As outside China conducted by those banks," Guo said.

University students majoring in Korean traditional dance wear traditional costumes as they dance during the grand Confucian ceremony of Seokjeon at a shrine at Sungkyunkwan University in Seoul May 11, 2012. Seokjeon is a biannual ritual to consecrate Chinese philosopher Confucius and his disciples as supreme teachers at civil temples, to honour their virtues and to follow their teachings. Dancing to the playing of music and making offerings of traditional liquor for blessings are part of the ceremony. 

China on Friday expressed concern over the security of its citizens in the Philippines and hope that the Philippine side will refrain from actions that will escalate tensions. Foreign Ministry spokesman Hong Lei made the remarks at a routine press briefing. According to media reports, about 200 Philippine activists held an anti-China demonstration on Friday outside a Chinese consular office in Manila over the Huangyan Island incident. Meanwhile, many Chinese travel agencies have suspended travel services to the Philippines due to safety concerns. Reaffirming that Huangyan Island is an inherent part of Chinese territory, Hong said it is a false move for the Philippine side to incite the anti-China protest, which will escalate and complicate the current situation. China has requested the Philippine side take effective measures to protect the security, lawful rights and interests of Chinese citizens and agencies in the country, according to Hong. He urged the Philippine side to respect China's territory sovereignty and take tangible actions to prevent escalation of the tensions.

Hong Kong*:  May 12 2012 Share

The next four to five years will provide Hong Kong with a critical window for it to grow its offshore yuan market, said leading economist Ba Shusong. That is because the present global economic instability gives China a rare opportunity to promote the internationalisation of its currency. But one of the major challenges Hong Kong faced in developing its offshore yuan market was a lack of financial innovation and yuan-related products, said Ba, deputy director general of the Financial Research Institute at the State Council's Development Research Centre, a think tank that reports to the cabinet. "The remaining time for Hong Kong is quite limited - perhaps just four to five years - and then you will see the economy in Europe and the United States stabilise," Ba said yesterday during a visit to the Chinese Financial Association of Hong Kong. The group includes many major mainland financial firms in the city. "When the global economy is unstable, the demand for yuan expands greatly. That's why you see many foreign central banks have signed bilateral currency pacts with the People's Bank of China," he said. Ba, who often writes economic research papers for top mainland leaders, said Hong Kong should be more confident instead of opposing attempts by other cities - including Shanghai, London and Singapore - to take advantage of yuan-related business opportunities. Some analysts believe these moves may threaten Hong Kong's leading position as a global centre for the yuan trade. China and Britain agreed last year to co-operate on developing London into an offshore yuan centre. Since then, London has been speeding up its efforts in this direction, primarily to serve the European market. Singapore is doing the same, but mainly with an eye on the yuan trade in Southeast Asia. Beijing has said it wanted to significantly boost trading volume in Shanghai's onshore capital and currency markets and turn the municipality into a global financial centre by 2020. Ba said for Hong Kong to strengthen its position as a financial centre, it must offer more financial products in which yuan holders could invest. "Bankers in Central should think harder about new and innovative yuan products. Hong Kong is a free market, so if your product is good, the market will prove it," Ba yesterday told a small audience of financial professionals at a seminar held by the association. Financial institutions have built up a pool of yuan deposits in Hong Kong that totalled about 560 billion yuan (HK$688 billion) in February, and have created investment products that include yuan-denominated bonds, known as "dim sum bonds", which big multinational firms such as McDonald's and Ford Motor have used to raise capital. But Ba said that was insufficient for Hong Kong to expand its offshore yuan market. Some traders expect yuan deposits in Hong Kong to reach 2 trillion yuan by the end of this year. However, this may now be difficult, partly due to reduced expectations for the further rise of the yuan. Ba said that as part of the city's efforts to boost the supply of yuan-related services, bankers could pitch more yuan-denominated share listings in Hong Kong, and local firms could settle more of their business in yuan. In April last year, the Hong Kong stock exchange welcomed its first yuan-denominated listing: Hui Xian Real Estate Investment Trust, backed by tycoon Li Ka-shing. Since then, banks have pitched some potential yuan listings in Hong Kong, but none occurred, mainly because of weak market sentiment amid the worsening debt crisis in Europe and the slow economic recovery in the United States.

A former senior civil servant who is now the top aide of chief executive-elect Leung Chun-ying says she will consider serving on the Executive Council if invited. Fanny Law Fan Chiu-fun, head of the Chief Executive-Elect's Office, said she would not rule out becoming an adviser of Leung's government. "No one has invited me yet. I would consider it," she told Democratic Party legislator Emily Lau Wai-hing in an interview for an online television program. More than a month ago, Law said she would not serve in any position if she was seen to be a burden. "I do not rule out [an Exco appointment], but I hope I would not bring any negative impact to Leung's governance," she said on April 1. "If anyone says I will be a burden to C. Y. I will not take up the job." She also dismissed the chances of accepting political appointment under Leung. Law entered government service in 1975 and rose to become permanent secretary for education and manpower before being named commissioner of the Independent Commission Against Corruption in 2006. Late last month, she was appointed to head Leung's interim office, sparking talk of whether she was reconsidering her rejection of a return to public service. Leung said during a televised election debate in March that "Law had already retired". Law said Exco members would have a bigger role in policymaking in future. "Previously, Exco members were consulted only at a late stage of the policymaking process, but in the new system they would take part earlier," she said. Leung met several civil servants' bodies yesterday to explain his proposal to expand the ministerial team by adding a deputy chief secretary and deputy financial secretary and form two new policy bureaus. The Legislative Council will hold a public hearing on the shake-up plan on May 19. Leung said he wanted a second hearing on May 26.

Many people may be feeling the pinch. But one new University of Hong Kong graduate is having the time of their life, earning HK$70,000 a month at an investment bank. And other graduates are not doing too badly either. With work on infrastructure projects such as railway lines starting, the construction industry is hungry for entry-level engineers and is willing to pay. HKU graduates joining the construction sector are enjoying the biggest rise in pay, up an average 26 per cent from HK$13,800 a month in 2010 to HK$17,400. "In Hong Kong construction jobs, local graduates have an advantage over mainland or overseas competitors because they are familiar with the territory and already have local work experience," said Herman Chan Ping-kong, HKU director of careers and placement. "We have seen a surge of popularity in subjects like surveying in response to this industry's bright job prospects, and we see this trend continuing in the next few years." Last year's graduates are earning an average of HK$18,350 a month, up 5.8 per cent on 2010 graduates. "The employment situation has recovered to levels before the 2009 financial crisis," Chan said. In the past year, the top earner - a financial analyst - from the class of 2011 earned HK$850,000, including a bonus. But this is still a far cry from previous top earners, some of whom have raked in up to HK$1 million a year. Graduates entering financial institutions are still the highest paid, at an average of HK$20,161 a month, with doctors and dentists close behind. Of graduates who chose not to continue studying, 99.7 per cent are now employed. "Many graduates return to school if they cannot find a job. But with better job prospects, fewer graduates opted to pursue further studies," said Chan. Only 18 per cent of graduates returned to university, down from 23 per cent in 2009. Of 3,975 full-time graduates at all levels of the university, 88.9 per cent responded to the survey.

Secretary for Education Michael Suen Ming-yeung has won the first round in a blistering dispute over textbooks. Publishers backed down last night from their stand-off with the government, saying they "understood and welcomed" his new policy. However, Suen's victory leaves unresolved in the long run the problem of schools having to pay for teaching tools. The next government may have to deal with it, since publishers will not give out freebies any more in order to keep costs down. Earlier yesterday Suen explained why he had announced a U-turn this week on easing what was previously a total ban on free teaching materials, after publishers had submitted their price lists for the coming school year. On Monday, he allowed schools to accept basic teaching manuals free of charge. Suen said his manoeuvre was meant to prevent publishers from transferring the cost of the teaching materials to parents. "If we had asked publishers two months ago to give out free teaching manuals, before they set the prices, they would very likely have channelled all the costs to parents." Critics said Suen had emerged in a bad light from the saga because of his policy inconsistency. Ho Hon-kuen, vice-chairman of the Education Convergence watchdog, said the dispute had pitted schools against parents. A spokeswoman for the Anglo-Chinese Textbook Publishers Organisation said last night that the Education Bureau had assured them it "will not force publishers to give out teaching handbooks" free of charge. Publishers will release their price lists today, after they retracted the information on Monday in response to Suen's about-turn. The bureau will also issue its recommended book list today to help schools select textbooks for their pupils in time for the September school year. Ben Mak Ka-lung, a representative of the publishers' lobby group, said last night that they would keep their word about separating teaching kits from the sales of pupils' textbooks in the next two years. Mak said publishers were taking more risk, as schools might not want to buy teaching guides. Most textbooks will continue to see price increases of 4 per cent on average. Prices of books that have been separated from the teaching guides - mostly for major language and mathematics subjects - will rise by less. Subsidised Primary Schools Council chairman Sin Kim-wai said when new book versions were published, schools would still have to buy them with their own funds. Chan Chung-hong, principal of S.K.H. Ching Shan Primary School in Wong Tai Sin, said: "For example, materials for Chinese classes alone cost HK$750 per grade, or HK$4,500 in total. But we have to buy them because the textbooks have recently been revised." He said his school, which had only seven classes, had only slightly more than HK$11,000 left over from the curriculum grant this year. Legislator Cheung Man-kwong said the government should increase subsidies for schools in the long run to buy necessary teaching guides, a practice used overseas. Suen said yesterday that mechanisms were in place to help schools that ran out of cash.

 China*:  May 12 2012 Share

Handset and accessories manufacturer Atelier Haute Communication plans to expand sales of its expensive luxury smartphones to China's lower-tier cities, as demand for high-end goods grows rapidly in the world's second-largest economy. The Paris-based company aims to add up to 20 new outlets this year across the mainland, where its French-made handsets are sold in nearly 100 locations, including company-owned boutiques, licensee shops, brand stores and other outlets, it said yesterday. It expects to drive more sales with the release this summer of a lower-priced smartphone, bearing Swiss watchmaker TAG Heuer's brand and costing about €2,400 (HK$24,157). Its two other licensed brands are Christian Dior and Versace. "We believe there is an untapped market for high-end luxury mobile phones and accessories that cater to the discerning taste of the most successful in society," said Atelier chief executive Stéphane Bohbot. About 56 per cent of its global sales last year were generated from affluent buyers on the mainland and in Hong Kong, Macau and Taiwan, he said. In Hong Kong, prices for Dior handsets range from HK$40,000 to a one-of-a-kind HK$800,000 model. The average cost of its TAG Heuer and Versace models is around HK$200,000. The most expensive model from Apple is its 64-gigabyte iPhone 4S, priced at HK$6,688. Atelier considers British firm Vertu as its chief rival. A division of Nokia, it pioneered the luxury market segment in 1998 and its handset prices start from £3,500 (HK$43,800). Market research firm Euromonitor International has forecast the global market for luxury phones will grow on average by 37 per cent annually between 2010 and 2015, when total sales will reach US$719 million. It said the biggest demand would be from China, Japan, parts of the Middle East, and Russia. 

Industrial and Commercial Bank of China (SEHK: 1398), the world's most profitable lender, has received approval to operate as a US bank holding company when it buys a controlling stake in Bank of East Asia (SEHK: 0023)'s American unit. The Federal Reserve also granted bank holding company status for ICBC's government shareholder, Central Huijin Investment, and that company's parent, sovereign fund China Investment Corporation. The regulator also approved applications by Bank of China and Agricultural Bank of China to open US branches, its website said. The ICBC decision, which was reviewed by the US Department of Justice, is the first time regulators have allowed a Chinese bank to buy a majority stake in a US depository institution and signals the most significant opening yet of the US banking market to Chinese rivals. "The board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market," the Fed said in its order. ICBC chairman Jiang Jianqing has spent more than US$6 billion on acquisitions in Asia, South Africa and North America in the past three years as he sought to triple the share of profit from abroad to 10 per cent. The US$140 million acquisition of the 80 per cent stake in Bank of East Asia's US arm gives ICBC 10 branches in California and three in New York, a toehold for US growth. The initial agreement in January of last year was among as many as 60 signed by Chinese and US firms during President Hu Jintao's visit for talks with his US counterpart Barack Obama. "This will be conducive to Chinese banks' strategy to go abroad and reduce reliance on the domestic market, where competition is intensifying and growth is slowing," said Tang Yayun, a Shanghai-based analyst at Northeast Securities. ICBC bought a 70 per cent stake in Bank of East Asia's Canadian unit for C$80.3 million (HK$620 million) in 2010.

A protester burns Philippine and United States flags during a demonstration near the Philippine consulate in Hong Kong yesterday. Philippine officials and the Chinese embassy in Manila are once again talking to each other over the stand-off at Scarborough Shoal in the South China Sea, following a suspension lasting about two weeks, with Beijing demanding that Manila guarantee the safety of Chinese citizens ahead of anti-China protests today. Tensions between the two countries over the territorial dispute are still running high, however, even as diplomats make goodwill gestures, with a newspaper run by the People's Liberation Army warning China will not let its sovereignty be usurped. The row may intensify today, with a protest involving about 1,000 people planned by Philippine civil and political groups in Manila. Organisers plan similar protests at China's embassies and consulates in the United States, Canada, Australia and Italy and in other Asian capitals. Professor Fu Kuncheng , of Xiamen University, warned that "if Manila fails to properly handle the protest, and allows it to trigger anti-China sentiment … tensions will inevitably intensify. This could prompt Beijing to take tougher action." Both countries have recently ratcheted up their rhetoric over the shoal, known as Huangyan Island in China and Panatag Shoal in the Philippines. With the stand-off having lasted more than a month, Chinese analysts say Beijing is considering a military response and economic retaliation. The Philippines' Department of Foreign Affairs announced on April 27 there would be no diplomatic meetings with Chinese embassy staff, accusing the mission of relaying inaccurate information to Beijing. Foreign Ministry spokesman Hong Lei said in Beijing yesterday that communication had been resumed, but that Beijing was still concerned about the actions taken by Manila, and about today's planned protest. "China is paying close attention to the safety of the Chinese people and institutions in the Philippines, and demands that the Philippines provide effective assurances for their safety," he said. Ties between the two countries have plunged since the stand-off began on April 8, when the Philippine navy sought to arrest the crews of Chinese fishing boats near the shoal. The PLA Daily warned yesterday that China would not "blindly tolerate unreasonable tricks" on matters of territorial integrity, national dignity and social stability. "We want to say that anyone's attempt to take away China's sovereignty over Huangyan Island will not be allowed by the Chinese government, people and armed forces," it said. "If one mistakes China's kindness for weakness and regards China as a 'paper dragon' … he is terribly wrong." On Tuesday, Deputy Foreign Minister Fu Ying warned that Beijing was ready to respond to any escalation. Professor Su Hao , from the China Foreign Affairs University, was quoted yesterday as saying Beijing was considering military action. "The government says it is making every preparation, and it means that they are considering using military means to meet the challenge," he said. Antony Wong Dong, president of the Macau-based International Military Association, said Beijing may stage military drills. Beijing said on Wednesday quarantine checks would be stepped up on fruit imported from the Philippines. Chinese travel agencies have suspended tours to the Philippines.

In this image made on Friday, April 27, 2012, pages of rival Taiwan newspapers Apple Daily (owned by Jimmy Lai), top half, and The China Times (owned by Tsai Eng-meng), bottom, are seen depicting each other’s owners in a fight for ownership of a major chunk of Taiwan’s media outlets. One sure way to grab headlines in the Chinese-language newspapers: Attempt a takeover of Taiwan’s famously frothy cable-TV market while angering Hong Kong media mogul Jimmy Lai in the process. Tsai Eng-meng, chairman of Taiwanese snack food giant-cum-media conglomerate Want Want China Holdings Ltd., is pushing for his company to take a 60% stake in Taiwan’s largest cable operator, China Network Systems, in a move that could complicate prospects for rival Mr. Lai’s new venture, Next TV. The impending deal has prompted Mr. Lai’s newspaper, Apple Daily, to attack Mr. Tsai for being too friendly with Beijing, helping make Mr. Tsai the most-written-about executive in China last month, according to data compiled by Dow Jones Insight and edited by The Wall Street Journal. Rising to the second spot from fourth last month was Alibaba Group Chairman Jack Ma, who has been working on a highly scrutinized deal that would see Yahoo Inc. sell back part of its 40% stake in Alibaba. Mr. Ma also grabbed attention after Alibaba’s listed unit, Alibaba.com Ltd., saw first-quarter net profit drop 25% amid plans to take the company private. Holding steady at No. 3 was Ma Huateng, executive chairman of Internet company Tencent Holdings Ltd., who saw his company’s share price hit a record high early this month. Tencent has also been in the news as uncertainty surrounds Beijing’s efforts to roll out a real-name registration system with implications for the company’s microblogging service, Tencent Weibo.

The China economy story at the end of the first quarter was slower growth but signs of an uptick in the March data. Trade numbers for April throw cold water on that theory. Growth in exports fell to 4.9% year-to-year, down from 8.9% in March. Exports to the troubled European Union were especially weak, shrinking 2.4% year-to-year. It’s no surprise that the world is not buying as much of China’s exports. But import data also disappointed. Growth of 0.3% year-to-year was the lowest outside a holiday month since the dark days of the financial crisis in October 2009. A 4.1% year-to-year fall in imports of components to the export processing trade suggests China’s manufacturers are destocking in anticipation of weaker demand. 
Visit CRT’s China Econtracker for historical export, import and trade balance data dating back 20 years. More worryingly, commodity imports were also lackluster, with iron ore and copper both down month-to-month. That likely suggests the slowdown in China’s real estate sector is eating into its demand for raw materials. April’s industrial output data, expected Friday, will provide a clearer read on the direction of China’s growth. But based on the trade numbers, the expected second quarter recovery has yet to arrive.

Hon Hai Precision Industry Co Ltd, also known as Foxconn, plans to drive a renewed push into distribution via a new headquarters in Shanghai where construction started on Thursday. Terry Guo, chief of Foxconn, Apple Inc's main manufacturer, said that the business model of the company's new e-commerce services will be unprecedented, providing clients with "one-stop" services. He didn't give specifics on the plan but accused existing e-commerce business models in China of "burning money". Speaking at a news conference in Shanghai, where he also answered questions on the controversial issue of labor treatment and Apple Inc's upcoming iTV, Guo said the move underscores Foxconn's determination to extend its business from manufacturing into distribution. Foxconn has long wanted to enter the distribution sector, where margins are typically higher than in manufacturing, but has so far achieved little success. In 2009, Foxconn invested 90 million yuan and set up e-commerce website e-feihu.com. Three years later the site still lags a long way behind industry leaders such as 360buy.com and taobao.com. In September 2009, Guo formulated a blueprint aimed at establishing its own distribution network in mainland China by setting up 10,000 chain stores. The plan is little mentioned now. Guo admitted that the former push "failed" and added that "failure is the mother of success".

A Wanda cinema in Shanghai promotes the 3D version of Titanic. Wanda Group is reported to be in talks with AMC Entertainment to buy all or part of the US theater chain. Dalian Wanda Group Corp Ltd, which operates China's highest-grossing movie theater chain - Wanda Cinema Line - is reported to be in talks with the US' second-largest cinema chain, AMC Entertainment Inc, for a possible acquisition, according to The New York Times. The US company is likely to sell a significant stake or even the whole company to Wanda Group, according to a source familiar with the deal, who declined to be identified. Calls from China Daily to Wanda to confirm the report went unanswered. Other domestic media organizations reported that their efforts to contact Wanda produced refusals to comment or a statement that the company was unaware of the report. AMC also didn't respond to queries by The New York Times. Wanda Group mainly focuses on commercial properties and luxury hotels. It entered the film industry in 2005 with the establishment of Wanda Cinema Line Corp, which generated 1.77 billion yuan ($281.4 million) in box office revenue in 2011, ranking first among domestic cinema chains, according to Zero2IPO Research Center, a Beijing-based consultancy. According to its official website, Wanda Cinema Line currently owns 86 five-star cineplexes and 730 screens, of which 47 are IMAX screens, and it said that it plans to increase the number of cineplexes to more than 200 and to own 2,000 movie screens by 2015, accounting for more than 20 percent of China's box office market. Wanda Cinema Line is in the process of applying for an initial public offering on the Shenzhen Stock Exchange. Wang Jianlin, chairman of Dalian Wanda Group, earlier said at a conference that in 2012, total revenue will exceed 140 billion yuan, of which 20 billion yuan will come from its cultural business, a sector that is expected to generate more than 40 billion yuan within five years. As one of China's best-known executives, Wang features frequently on "rich lists". He became the wealthiest person on this year's New Fortune magazine 500 Rich List with 46 billion yuan in personal assets, according to a list co-released by China Minsheng Banking Corp Ltd and the magazine on Tuesday. Last year, he ranked the third on the same list and his wealth at that time was 3 billion yuan less than the publicized figure this year. In addition, Wang ranked sixth on the Hurun Rich List 2011 and first on the Hurun Research Institute's China Property Rich List of 2010. China's box office receipts grew 29 percent year-on-year to 13.15 billion yuan in 2011, and the number of screens rose from 6,266 in 2010 to 9,296 last year, up 48.4 percent, according to the National Bureau of Statistics. The expanding film market might lead to a new phase in which the domestic film industry will have closer ties with Hollywood if the deal is completed. "Since both parties declined to deny the report, the chances that it is true are high," said Zhang Yanan, a senior analyst specializing in media and entertainment at Zero2IPO Research Center. She said if the news is true, Wanda's move could be interpreted as going beyond investing in theater chains or commercial properties, because it might hope to acquire the film content production resources in relation to AMC Entertainment to develop its own film-making business. Zhang based her conjecture on the fact that in the United States, many cinema chains go beyond just showing movies, and sometimes they have connections with directors, actors and financial institutions. Since 2004, AMC has been owned by an investment group, including the Apollo Investment Fund, Bain Capital Investors and J.P. Morgan Partners. "There is a possibility that Wanda plans to make use of the potential resources within AMC to complete its film industry chain," Zhang said. Previously, Wanda Group invested $80 million in setting up a film and TV production company. She added that probably Wanda simply views the deal as an investment in real estate, for in the US, the property industry is beginning to show signs of recovery while in China it remains relatively sluggish. In terms of the possible influence of the acquisition on China's film distribution in the global market, Chen Shaofeng, deputy dean of the Institute for Cultural Industries at Peking University, said that "if the deal is completed, it won't increase the presence of Chinese films in the US market significantly, as the release of films in a certain market is decided by market feedback".

Student models in a fashion show with a low-carbon theme at Nanjing Arts School in Jiangsu province on May 9, 2012.

Hong Kong*:  May 11 2012 Share

Police probe sophisticated wine-scam syndicate - Hundreds of mainlanders and Hongkongers may have invested in vintage futures that never existed - Police believe hundreds of investors have fallen victim to a cross-border scam after being promised huge returns for investing in red wine that never existed. The investors, most from the mainland, were tricked into paying tens of thousands of dollars each to buy en primeur wines - wines that are still maturing in the barrel. They were told they would receive huge returns when the wine was bottled and offered commission to lure investors. Police began investigating the syndicate after receiving complaints from four women, from Hong Kong and the mainland, last month. The four invested in red wine through the company, but when their investment was due to mature they did not receive any wine and found they could not contact the agents who had sold it to them. Officers from the Commercial Crime Bureau arrested two senior executives of a Hong Kong company in connection with the case and seized documents from its office. Police will exchange intelligence with colleagues on the mainland, where the transactions took place, as part of their investigations. En primeur wines, or wine futures, give investors the chance to buy into a particular vintage before it is bottled. When the wine is delivered, they can either consume it themselves or sell it on the open market. Normally, the period from purchase to delivery is two years. A police officer said investing in en primeur wine was a "new gimmick" fraudsters use to deceive investors. "Previously, victims were lured to buy fragrance products and health food in such investment scams," he said. "Popular and trendy products are what fraudsters use to cheat." Initial investigations show the firm was based in Kwun Tong but had recruited clients in several provinces on the mainland. "They recruited a group of would-be clients in one location and then they moved and continued in other locations," another officer said. He said the victims were brought to Hong Kong to attend seminars or talks, at which they were briefed about their investment plans and promised huge returns. They were also offered commission in return for finding new clients for the company. "Initial investigation showed that the events were held in rented exhibition halls instead of the offices of the company," the officer said. "We believe most of the victims are mainlanders, but some Hong Kong residents, who live or work on the mainland, also fell into the trap." After a month-long investigation, police arrested a 52-year-old man at the Shenzhen Bay border checkpoint on Saturday and another man, 45, in Hung Hom the following day. The men, both Hong Kong residents, were released on bail pending further investigations. Officers are checking the seized documents to establish how many victims were cheated and how much money was involved.

Eva Cheng has no wish to stay in government. The housing minister, Eva Cheng, does not want to stay in government after the end of her term in June. Cheng said yesterday she had discussed it with her family and respected their wishes. She is the second top official to express an intention to leave, after the chief secretary, Stephen Lam Sui-lung. Her decision comes after persistent talk of tension between her and Secretary for Development Carrie Lam Cheng Yuet-ngor, who is tipped to be the next chief secretary. Cheng did not say if the chief executive-elect, Leung Chun-ying, had offered to retain her. "Everyone has different duties and positions in different times," Cheng said, quoting a line from a classic Chinese poem: "Cloud is in the blue sky, water is in the bottle. It's just like water, sometimes it's in the sky, sometimes it's in a bottle. We can think about what is the right thing to do at different times." Cheng had indicated as early as October last year that she might quit. Reports have circulated widely among officials that Cheng clashed with Lam over their bureaus' different priorities, with Cheng focusing on meeting the construction target for public housing and Lam allocating land for different uses. It has also been said that Lam disagreed with Cheng's housing policy, especially the rent-to-buy programme My Home Purchase Plan. But Lee Wing-tat, chairman of the Legislative Council's housing panel, said the blame for the failure of housing policy should be on Chief Executive Donald Tsang Yam-kuen. "It was Tsang who decided to do the minimum in subsidised housing and not to interfere in the private market. Cheng could only follow the leader's direction," Lee said. Cheng joined the civil service in 1983 after graduating from the University of Hong Kong. Before taking up her current political post, she had served as commissioner for tourism and permanent secretary for economic development. Yesterday, Cheng also dismissed a call by property developers for the removal of two important but disputed components from a bill to regulate the sale of new homes. Cheng said: "The public have expectations that the legislative work will be completed this year. We have dealt with [the developers'] views before." Developers should also "carefully think about society's reaction" if they were to launch a judicial challenge, she said.

5th ICAC Symposium, 9-11 May 2012, Hong Kong Day 1: Opening Ceremony Dr Timothy H M Tong Commissioner, ICAC, Hong Kong, China http://www.youtube.com/watch?v=Euq1uYyCwtA 

5th ICAC Symposium, 9-11 May 2012, Hong Kong Day 1: Keynote Address (1) The Honourable Chief Justice Geoffrey Ma Tao Li Chief Justice, Court of Final Appeal, Hong Kong, China http://www.youtube.com/watch?v=VLTWAhplL3E 

5th ICAC Symposium, 9-11 May 2012, Hong Kong Day 1: Keynote Address (2) Mdm Hu Zejun Deputy Procurator-General, Supreme People's Procuratorate, People's Republic of China http://www.youtube.com/watch?v=HsNUWgqWfH0 

ICAC commissioner Timothy Tong vowed to improve staff training and monitoring on Wednesday. Three anti-corruption investigators who were convicted of coaching a witness in a fraud case have filed an appeal, the head of the Independent Commission Against Corruption said on Wednesday. ICAC commissioner Timothy Tong Hin-ming also said the agency had improved staff training and monitoring after the case involving the three investigators. The three – chief investigator Kevin Cho Wing-nin, senior investigator Ben Chan Kai-hung and assistant investigator John Au Kim-fung – were convicted and sentenced to jail in the District Court last month. They were accused of coaching a key witness to provide false evidence in a HK$100 million fraud case. Cho and Chan each received a 30-month jail term after being found guilty of perverting the course of justice and misconduct in public office. Au was found guilty of misconduct in public office and was jailed for 18 months. This was the first time ICAC officers had been convicted of perverting the course of justice. Tong was speaking after an ICAC symposium on fighting corruption, on Wednesday. In summing up the year to date, he said the agency received 1,267 reports about corruption in the first four months, up 4 per cent from the same period last year. Of those reports, 825 concerned private organisations and 366 involved government bodies. Complaints about corruption in Hong Kong are on the rise – including 15 related to the chief executive election – the city’s top graft-buster told an international symposium on Wednesday. Dr Timothy Tong Hin-ming, commissioner of the Independent Commission Against Corruption, said complaints to the ICAC increased 4 per cent in the first four months of this year, compared to last year. But the number of cases with enough evidence for an investigation remained unchanged. He was addressing the fifth ICAC Symposium attended by anti-corruption delegates from more than 50 countries, at the Wan Chai Convention and Exhibition Centre. Of the 1,267 complaints received by the ICAC in the first four months of this year, 825 were related in the commercial sector, 366 involved government officials and 76 involved public organisations, he said. The chief executive election in March generated 15 complaints about issues including vote rigging, providing free food and beverages during the campaign and spreading false information, Tong said. The 2007 election produced six complaints, according to the ICAC. The commission received more than 2,000 corruption complaints related to the district council elections in November, a record for district polls, he said. The nature of bribery involving public figures has worsened nowadays to become a “sinister form of self-generated advantage, created by a public officer using and abusing his public office to obtain a private benefit”, Tong said. Chief Executive Donald Tsang Yam-kuen is currently being investigated for potential conflicts of interest by accepting favours from tycoon friends. The public, Tong said, have raised their expectations about government officials’ probity. The ICAC began working with the government two years ago to study how to counter corrupt activities in the government, he said. Tong declined to comment, when asked, about the high-profile probe into corruption allegations against former chief secretary Rafael Hui Si-yan and the three Kwok brothers of Sun Hung Kai Properties (SEHK: 0016). But in his speech he noted there have been 20 successful prosecutions of public officers since the ICAC’s founding 38 years ago. This has prompted the public “to expect increasingly high standards of accountability and integrity of its public officials”, he said. The commissioner did not comment on former chief secretary Henry Tang Ying-yen’s accusations of lying, made against election opponent Leung Chun-ying. Tang said in March that he had made a report to the ICAC, after accusing Leung of lying to the public about comments he had made during an Executive Council meeting. Tong’s term in office ends on June 30, and he did not say if he wanted to stay on. He said it was most important for him to finish the tasks at hand, particularly working through the complaints from the district council elections. The symposium will continue until Friday.

The government surprised lawmakers on Wednesday by saying an independent committee had already reviewed Hong Kong’s controversial political appointment system – something which has also been proposed by the incoming administration. In fact, two key features sought by incoming chief executive Leung Chun-ying are echoed in the independent review, Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen told a constitutional affairs panel meeting on Wednesday morning. He said the report, produced by a government commission headed by banker Vincent Cheng Hoi-chuen, had already been submitted to the government. “Some of the suggestions [in the report] were expressed in [Leung’s] restructuring document,” said Tam after the special panel meeting. He was referring to two pay levels put forward in Leung’s proposals for the government shake-up. One is a salary of around HK$300,000 per month for each of the two new deputy posts, under the chief secretary and financial secretary. The second is a cap on salaries of HK$100,000 a month for new political assistants, who will be hired by the 14 policy bureaus. Tam said the report – which he hopes will be released this week – was intended to review the political appointment system in terms of its pay structure and employment terms. The system was introduced in 2002 to improve the accountability of principal officials, and expanded in 2008. “The pay level and employment conditions of the bureau chiefs have not been changed since the system was introduced 10 years ago,” said Tam. “The committee asked if the pay should be revised or an adjustment mechanism should be introduced.” Labour Party chairman Lee Cheuk-yan said he had not been aware an independent commission was reviewing ministers’ salaries. “If they were discussing the issue, why weren’t the people and lawmakers given a chance to express their views?” he said. Also unaware of the review was Civic Party lawmaker Audrey Eu Yuet-mee, who said the government should consult the public about the restructuring proposals and how much the new ministers should be paid. Beijing loyalist lawmaker Ip Kwok-him, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said he had not been informed either. But it was not a problem if lawmakers were not told about it, he added. At the panel meeting, lawmakers asked for a pledge from Leung that the civil service revamp would lead to better service for the public, in return for their support in passing the proposal by July 1. Democratic Party lawmaker Cheung Man-kwong said Leung’s proposal was only supportable if it came with promises of a shorter waiting queue for public housing and stronger economic growth. Cheung said: “Leung said public housing development and economic development would be jeopardised if his restructuring proposal is delayed, so he should make promises to citizens about what actual benefits he can deliver,” said Cheung. “You cannot just tell the citizens: ‘If you allow my shake-up plan I will give you a boundless sky’.” DAB Lawmaker Lau Kong-wah also called for a pledge for better service. But the head of the chief executive-elect office, Fanny Law Fan Chiu-fun, said she could make no such pledge on Leung’s behalf. The first three months of Leung’s administration should be used to consolidate policy priorities, she said. “The ministers also need time to familiarise themselves with each other.” Ip supported the review commission’s suggestion that there should be an adjustment mechanism for the pay level of bureau chiefs. He said the adjustment should be based on performance, while lawmaker Wong Kwok-kin, from the Federation of Trade Unions, said the adjustment should be based on inflation.

Bus enthusiasts bid farewell to a non-air-conditioned KMB "hot dog" bus in Tsim Sha Tsui on its last day of service. The city's last "hot dog" buses made their final journey yesterday, but not everyone was happy about it despite the 40-degree temperatures sometimes endured in the non-air-conditioned double-deckers. "[I'll miss] the breeze from an open bus window - it's very refreshing," said a Mr Li, one of droves of enthusiasts who gathered to say goodbye to the veteran vehicles that had served Hong Kong since 1949. Operator Kowloon Motor Bus did not think it worth a ceremony so the enthusiasts staged their own at the Tsim Sha Tsui pier bus terminal. "It is a historic moment for the last hot dog to leave the oldest bus terminal in Hong Kong, but it seems that KMB doesn't care," said Jacky Lim Hung-tat, a spokesman for activist group Our Bus Terminal. The crowds were so keen that police were called in to keep people from running onto the roads as what were billed as the last buses left on Route 5A to Kowloon City - one of four routes still using hot dogs. KMB laid on two extra hot dogs because of the crowds. But in fact the very final one departed much later - at two minutes past midnight. The fans were given a bonus: because of a breakdown of one of the buses, the company brought an already-retired one back to temporary service, and it was a classic. "This bus - GD605 - is the last of its kind," said 18-year-old student Chan Zheng-nian. He said the Dennis Dragon was first built as air-conditioned 18 years ago, but had its cooler taken out to serve people who could not afford the higher fares for air conditioning. Li Ka-ho, 18, said the city could have considered following Britain and keeping one hot-dog route. Mr Li, in his fifties, has been riding the buses for 40 years and 5A is his regular route. He said he hoped the buses could be preserved - "even Britain did it". The Chinese word for dog sounds like the "Kow" in Kowloon.

Ada Wong says the new culture minister's first priority would be to meet creative community representatives to discuss policies. Arts critic Ada Wong Ying-kay is expected to take up the post of culture minister to lead a newly created bureau, the South China Morning Post (SEHK: 0583) has learned. The new culture bureau is to take over the duty of heritage conservation from the Development Bureau. Urban designers worry the change may defeat the current efficient mechanism of protecting heritage and result in a repeat of the King Yin Lei incident, in which a historic mansion was nearly demolished. The proposed bureau, part of chief executive-elect Leung Chun-ying's government restructuring plans, is up for discussion in the Legislative Council today. Both Wong, chief executive of the Institute of Contemporary Culture, and Ma Fung-kwok, former chairman of the Arts Development Council, had been tipped to head the body. But joining the government would require Ma to give up his position as Hong Kong deputy to the National People's Congress and he did not want to do that, a source said yesterday. Another person familiar with Leung's search for ministerial candidates also said Ma was unwilling to be culture minister. Ma had earlier stated his intention to run for the Legislative Council seat representing sports, performing arts, culture and publications in September's election. Ma said he would not comment on the post. It is understood that Leung has approached Wong recently about the post. Wong said on radio yesterday that the new culture chief needed to be passionate about arts and culture. The minister's first priority would be to meet representatives from the creative community to discuss policies, including a review of arts education and the establishment of more venues, she said. The duty of heritage conservation was passed from the Home Affairs Bureau to the Development Bureau when the latter was formed in 2007. The change was meant to tackle public anger at the demolition of historic structures, including the Star Ferry clock tower and the King Yin Lei residence at Mid-Levels, a 1930s Chinese Renaissance building that has since been restored. Under the restructuring, heritage conservation will be removed from the Development Bureau's work of urban planning. The culture minister will report to the Chief Secretary but the housing chief will report to the Financial Secretary. Bernard Lim Wan-fung, president of the Institute of Urban Design, called the separation a step backward. It would not be conducive to the formation of a coherent policy on heritage protection, Lim said. The institute's vice-president, Ng Wing-shun, said: "Co-ordination will be difficult. "Taking [heritage conservation] away from urban planning would mean repeating history." Ng said the city should have a comprehensive policy instead of saving heritage on a project basis. Other likely ministers include the executive vice-president of Polytechnic University, Nicholas Yang Wai-hung, for technology and communications, and executive councillor Anthony Cheung Bing-leung, for housing, planning and lands.

Michael Kadoorie (centre) with CLP's chief executive, Andrew Brandler (left), and vice-chairman William Mocatta. The government's "clean energy" policy will mean higher power bills for consumers, the chief of Hong Kong's biggest power company, Michael Kadoorie, said yesterday. In a rare tycoon broadside against the government, Kadoorie, chairman of CLP, cautioned the new administration not to meddle in the sector and said the "inevitable" outcome of an energy policy based on importing cleaner but more expensive gas from the mainland would be higher power bills. The Hong Kong government agreed with Beijing in 2008 to source "clean energy" gas for the city's power supply from the mainland. That means CLP now has to buy gas at a price three times more expensive than the supply it secured 20 years ago through a long-term contract. However, attempts by CLP to raise tariffs to offset its higher costs have been stymied by the government, which is sensitive to public pressure over power bills. Ronnie Hui Ka-wah, a member of the government's energy advisory committee, rejected Kadoorie's criticism, saying the government had done well as a regulator and in safeguarding public interests. Lawmaker Wong Kwok-kin said CLP's "threat" to raise tariffs meant the government must consider importing electricity from the mainland. Kadoorie, in a swipe at perceived government meddling, said the chief executive-elect, Leung Chun-ying, would face "a challenge" in defining what the government should do and what was best left to the private sector. "On those few clear days when I can look across the harbour from my office in Central, I see the West Kowloon reclamation and the site of the old Kai Tak airport. Both have been lying vacant and unused for many years," Kadoorie said, in a statement read by CLP's vice-chairman, William Mocatta. "If the speed and efficiency of decision-making and implementation by CLP in managing and operating the electricity supply system for Kowloon and the New Territories had matched those standards, I would be speaking to you today in darkness." Kadoorie - who said he was like "the overwhelming majority of Hong Kong people who did not vote" for the city's new chief executive - said his only interest in the political process was that it "would lead to confident, capable and committed leadership to carry our society forward in the years to come." Leung's office declined to comment. CLP, the larger of Hong Kong's two power suppliers, warned after its annual shareholders' meeting yesterday that tariffs would be "materially" higher by 2015 on the back of a roughly 40 per cent rise in fuel costs. CLP's chief executive, Andrew Brandler, said the company would have to use twice as much gas to meet the government's 2015 emission reduction target. "The era of cheap gas is over," Brandler said. The 2015 target requires power suppliers to cut emissions by up to 64 per cent below 2010 levels. The government has proposed changing its reliance on different sources of electricity to a mix of 50 per cent nuclear, 40 per cent gas and 10 per cent coal by 2020. Coal, nuclear and gas currently each account for a third of CLP's electricity generation. CLP was forced to lower its proposed tariff increases to 4.9 per cent from the previously proposed 9.2 per cent, on January 1 after lengthy discussions with the government in the last two weeks of December. Architect Wong Kam-sing, who is the front runner to be the new environment minister, said he and his officials would negotiate with CLP and Hongkong Electric (SEHK: 0006), over carbon reductions. Lam Pun-lee, a former Polytechnic University professor who has closely followed the Hong Kong power sector for more than a decade, said the government was being unreasonable in suppressing power firms from lifting tariffs. He said CLP tariffs were raised in accordance with the scheme of control, a 10-year agreement between the government and the power companies that is due to mature in 2018. This allows CLP and Hongkong Electric to earn a 9.99 per cent return annually on their average net fixed assets and pass fuel costs on to end users. CLP Power (SEHK: 0002) has teamed up with the state-owned China Southern Power Grid in negotiating to buy a 60 per cent stake in the power generation company Capco, from ExxonMobil Energy of the US. CLP Power already owns 40 per cent of Capco, which in turn owns three power plants in Tuen Mun and Lantau.

Shenzhen’s Cross-Border Soy Sauce Runs - Mainland Chinese shoppers holding multiple shopping bags walk under a shopping mall decoration made of hats in Hong Kong on March 7, 2012. Soy sauce, Louis Vuitton bags, milk powder and jewelry: For mainland customers, Hong Kong is one-stop shopping. Spurred by lower prices and fears about product safety on the mainland, residents from the nearby city of Shenzhen make frequent border runs to buy goods in Hong Kong, generating $3 billion in annual sales, the Shenzhen Franchise Association reports in a new survey. That’s an average of over $300 per city resident that Shenzhen is losing to retailers in Hong Kong. “When these figures came out, they sort of shocked me,” the association’s chairman, Hua Tao, told Southern Metropolis News. He cites concern that increasingly, it’s not just the well-heeled who are choosing to shop in Hong Kong—it’s ordinary Shenzhen shoppers as well, a trend that points to consumer misgivings that could threatenChina’s efforts to boost its own domestic consumption. For Hong Kong’s retailers, the influx has been a boon: On average, mainland tourists spend $1,500 per trip. However, as the number of mainland tourists visiting Hong Kong has vaulted in recent years, growing in 2010 to nearly 23 million—equal to three times Hong Kong’s population—relations between mainland Chinese and Hong Kongers have grown strained. To be sure, most people from Shenzhen still buy locally, the survey reports: Only 28% of the city’s residents have made special trips toHong Kong to go shopping. That’s quite a jump, though, from the 11% who reported making such trips in 2010, and Mr. Hua said he expects it to continue rising. The number of mainland visitors to Hong Kong this year is up 21% from the same period last year. Plenty of people from Shenzhen make the trip to Hong Kong to stock up on designer clothes and high-end handbags—thereby avoiding mainland China’s luxury tax. But many also make the trip to buy mundane products from toothpaste to cooking supplies. More than a quarter of respondents who report visiting Hong Kong to shop say they go at least once a month. In addition to the belief that Hong Kong goods tend to be more reliable, they’ve also been driven by the stronger yuan, which makes goods in Hong Kong comparatively more affordable for mainland customers. Though Hong Kong is technically a part of China, the former British colony functions with its own political and economic system, as well as with its own currency, which is pegged to the U.S. dollar. The survey also shows that the most popular items for visiting mainlanders are clothes and shoes, bought by 56% of cross-border shoppers. Second is makeup, followed by household appliances and electronics and daily products. Medicine and health products are also popular, cited by 30% of respondents. And, of course, the appeal of shopping in Hong Kong isn’t restricted to its posh malls: as China Real Time wrote last week, the city is also a great place to pick up books banned across the border for discussing such taboo political topics such as Bo Xilai.

 China*:  May 11 2012 Share

China’s central bank plans to alot US$10 billion from its huge pile of foreign exchange reserves to a new entity designed to assist Chinese state firms invest abroad, four sources with direct knowledge of the matter said on Wednesday. The People’s Bank of China (PBOC) is in talks with China Reform Holdings Corporation, a state firm controlled by the State-owned Asset Supervision and Administration Commission (SASAC), to set up a joint venture, probably abroad, the sources said. “The central bank plans to offer US$10 billion for the co-operation. The negotiations have been going on for a while,” one source said. “The two sides prefer to set up a joint venture overseas, which will try to help state-owned firms to invest abroad with foreign exchange reserves,” the source added. China has the world’s largest stock of foreign exchange reserves at US$3.3 trillion and Beijing has been seeking ways to diversify holdings to preserve value and improve returns. The State Administration of Foreign Exchange manages the bulk of China’s official foreign exchange reserves. The China Investment Corp (CIC), the country’s sovereign wealth fund, was set up in 2007 with an initial mandate of US$200 billion. The fund had US$410 billion under management at the end of 2010. Sources in February said CIC was set to receive a further US$50 billion injection. CIC Executive Vice-President Jesse Wang said in March the fund had been given an additional US$30 billion last year. Beijing is also increasing efforts to support domestic firms investing abroad, in search of resources to feed its fast economic growth and 1.3 billion population. Central bank governor, Zhou Xiaochuan, said in April China was encouraging capital outflows to help reduce imbalances caused by net capital inflows. China has accumulated a vast store of reserves as its massive export industry has sucked in foreign currency, which companies must exchange at the central bank to comply with the country’s closed capital account rules. It was not immediately clear how the new operation would further China’s stated ambition of making more overseas investments with its foreign currency holdings. The Ministry of Commerce said in January it was targeting a total of US$560 billion in outbound foreign direct investment in the five years to 2015. China has faced repeated obstacles to making major overseas acquisitions in recent years, whether they are political objections from governments of potential targets or internal wrangles over the permissions needed to make deals. The China Reform Holdings Corporation was established in late 2010, with initial registered capital of 4.5 billion yuan, to help SASAC consolidate state assets under its oversight and increase the efficiency of China’s state sector. Neither the PBOC nor China Reform Holdings Corporation responded to questions when contacted.

The Global Times – a state-owned official newspaper in the mainland – on Wednesday accused “overseas forces” of using blind lawyer Chen Guangcheng, who fled house arrest to seek safety at the US embassy, as a political tool to demonise China. “External forces would like to use this to politicise and universalise some of China’s social conflicts,” Liu Yang said in the commentary, published by the English edition of the Global Times, which is known for its nationalist stance. “They want Chen’s case to become deadlocked, drawing in international attention, and becoming an issue as big as what has happened in Libya and Syria, so that they can capitalise on this opportunity to demonise China as a whole.” China’s state media has carried little coverage of Chen’s dramatic escape from house arrest to the US mission, which sparked a diplomatic crisis between Washington and Beijing and made headlines around the world. Wednesday’s commentary did not appear in the Chinese-language edition of the newspaper, suggesting it was aimed at a foreign readership. Liu said the self-taught lawyer was unaware he was being “used” as a political tool. “Chen didn’t realise he was being used and his case being hyped into a national political issue,” wrote Liu. “How can they be so cruel as to use a disabled person in their political games?” Chen was jailed for four years after exposing forced sterilisations and abortions in China’s one-child population control policy, and was released in 2010 but then held under house arrest. The 40-year-old campaigner has been a symbol of China’s dismal human rights record since his 2006 conviction, with the United States and the European Union loudly condemning his treatment. Supporters and journalists who travelled to Chen’s Shandong home were routinely beaten by security guards. Chen left the US embassy and was taken to a Beijing hospital last week after China agreed to guarantee his safety and allow him to apply to study in the United States, where he has been offered a law fellowship. The Global Times said the legal methods used by Chen to seek redress for rights violations were “inappropriate” in China. By staying in China, Chen “could have truly benefited China,” but if he goes to the United States he will only end up spending American taxpayers’ money, the paper said.

Skeptics be damned: Barring a terrorist attack, pandemic or corruption crackdown, China will lead the boom in luxury goods for years to come, a new report says. While many industry observers expect the country’s growth to slow this year, brokerage CLSA Asia-Pacific Markets says Chinese consumers will still be buying watches, handbags, jewelry and expensive clothes. “Wealthy individuals won’t slow down their spending,” said Aaron Fischer, a CLSA analyst. Mainland-Chinese customers generate roughly one-third of Gucci and Prada’s world-wide sales, he added, and it’s not uncommon for rich Chinese to spend one-quarter of their disposable income on luxury goods. They are also, Mr. Fischer pointed out, becoming more discriminating. Gucci and other retailers are stocking fewer logo-emblazoned items in their Chinese stores as shoppers begin to gravitate to more subtle displays of wealth.

China to start issuing e-passports - A police officer from the exit-entry administration of Beijing Public Security Bureau presents the new e-passport, which is to be issued on May 15. China's e-passports will better protect citizens' personal data and national security, said customs officials on Tuesday, as authorities nationwide geared up for the introduction of the new high-tech system. The 48-page travel document, which will be issued starting May 15, is fitted with a chip on the last page. Each page has an anti-forgery label. Only police and customs authorities will be able to access the information on the chip, which includes the holder's name, photograph and fingerprints. "In this way, no one can copy or use an e-passport that is lost or stolen," said Tang Lei, head of e-passport management for Beijing Public Security Bureau's exit-entry administration. "The e-passport will be effective in protecting national security and convenient for residents when passing through customs checkpoints." So far, more than 100 fingerprint recorders have been installed at the exit-entry administrations that process applications across the capital. Authorities say that staff members responsible for coping with the application work have received extensive training. Although the e-passport will increase the workload for staff, it will take just one or two more minutes to finish an application. Starting May 15, new applicants will get e-passports after storing thumb fingerprints and signatures, while old passports can still be used, if valid, said Lin Song, an officer in the administration. The cost for the passport application will remain 200 yuan ($30). The application process in Beijing will be suspended on Monday to transfer the system. In Shanghai, the acceptance of passport applications will be suspended for the three work days prior to May 15 to prepare devices and make system upgrades, said Li Feng, a publicity official for the Shanghai Public Security Bureau's exit-entry administration. More than 90 countries in the world, including the United States and Japan, already use e-passports, according to the administration. "It's inevitable for such advanced technology to step into residents' lives," said Tang, who hailed the arrival of e-passports as an important step for China to take toward automatic processing at customs points. "If the e-passport is developed well in China, the automatic pass, or pass without labor management, in customs will be implemented as soon as possible," Tang said, adding that it would be like the self-service ticketing on buses in the capital. However, exactly when that could be realized is uncertain, he said. The e-passport service has received plaudits from applicants. "A passport can sometimes work as a substitute ID card when checking in at hotels or boarding a flight. It would be horrifying if my passport was fraudulently used by others," said Zhou Shuwen, 25, who works in a public relations agency in Shanghai. However, others fear the need for fingerprints will be inconvenient, especially when it comes to visas. "I have to personally go to the site to give my fingerprint with this new passport," said Tang Wenzhe, a Shanghai native and a travel enthusiast. "Then what is the need to pay for travel agencies? I want them to help me with the string of application procedures," she added. According to the Ministry of Public Security, China issues more than 10 million regular passports every year, and that number is increasing by 20 percent annually.

Visa text message - Beginning Wednesday May 9 2012, foreigners in Beijing will receive a text message reminding them to have their visas extended, according to the exit-entry administration of Beijing Public Security Bureau. More than 900 foreigners in the capital, whose visas, residence permits or accommodation registrations will expire soon, will be the first to receive the texts, according to the administration. The message will be sent one month before visas expire, said Lin Song, an officer at the administration. "It's a new service for foreigners in Beijing, aiming to help them avoid forgetting to extend their visas and relevant certificates," he told China Daily. According to recent statistics from the Ministry of Public Security, about 80 percent of foreigners identified as illegally residing in China do not do so intentionally. Instead, most are unaware of China's residence regulations and forget to extend their visas. 

The nation's top economic planning agency has said that yuan-denominated funds managed by overseas private-equity firms are "foreign" and may not invest in strategic sectors, which could limit exit channels such as initial public offerings. The Wall Street Journal reported on Monday that the National Development and Reform Commission decided last month that all of the capital in a yuan-denominated fund must come from local Chinese investors, or the fund will be classified as foreign and cannot invest in sensitive industries, such as national defense-related companies, and they also face restrictions on investing in industries including resources, telecommunications, education and the Internet. The NDRC specifically cited a fund run by Blackstone Group LP, which could have benefited from getting local status for a 5 billion yuan ($795.4 million) fund that is about halfway through its fundraising, the Wall Street Journal said. "I am not surprised by this, and I think most foreign PE firms were already expecting to be deemed (foreign direct investment investors). So, there's no big immediate impact," said Chris Rynning, CEO of Origo Partners Plc, a PE company listed on the London Stock Exchange that focuses on the Chinese market. "The Chinese PE market has been a fabulous success story and has created many leading companies, to the benefit of entrepreneurs, investors, employees and society as a whole," said Andre Loesekrug-Pietri, chairman and managing partner of the European PE company A Capital. "Foreign funds have been instrumental in bringing this industry to China, where it found very fruitful ground with world-class Chinese entrepreneurs. It is now important to preserve the added value that foreign (PE firms) can bring to this rapidly maturing market. "We are now entering a new phase and see the trend of mergers and acquisitions, of market consolidation and of outbound investment growing very fast. These require a whole new set of competencies, where foreign PE firms with experience can play an important role in the Chinese market," said Loesekrug-Pietri. "It is rational that yuan-denominated funds managed by a foreign PE company should not be allowed to invest in sensitive industries in China, but such funds should be regarded as domestic, or there is no reason for a foreign company to raise yuan funds," said a senior executive at a foreign PE firm who declined to be named. China relaxed rules last year to allow foreign PE firms to launch yuan-denominated funds as the government sought to channel more savings into the private sector to sustain growth. The Shanghai government conducted a trial program under which foreign PE firms could have their yuan funds classified as local even if up to 5 percent of a fund's capital came from outside of China. "China would hugely benefit from continued reforms, leveling the playing field among foreign and local PE firms. After all, China will benefit from FDI, so it is not ideal to have different rules for foreign and local firms, with the exception of only a few protected sectors (involving) national security," Rynning said. "We hope foreign investors can be equally treated and more positively take part in this market of great potential," Loesekrug-Pietri said. In 2011, yuan funds raised totaled $23.4 billion, topping the $15.4 billion raised by dollar funds, the Wall Street Journal said. China carried out a trial program for qualified foreign limited partnerships in several cities including Shanghai and Beijing last year, allowing a certain number of foreign PE funds to make equity investments in China after exchange settlement. The Blackstone Group LP, The Carlyle Group and DT Capital Partners Co were the first companies to win licenses to operate under the program. In 2009, the State Administration of Foreign Exchange ruled that unless otherwise specified, foreign enterprises' yuan funds after settlement may not be used to buy equity investments in China. That was meant to prevent hot money inflows. SAFE granted Shanghai a $3 billion initial quota last year for the program, sources with knowledge of the situation told Reuters in November. Carlyle and Blackstone received quotas of $100 million each. A spokesman for Carlyle China said the firm is studying the NDRC statement, and declined to comment.

PetroChina (SEHK: 0857) is in talks to buy Valero Energy's shuttered refinery in the southern Caribbean island of Aruba, sources said – the latest in moves by China’s state-owned oil giants to take advantage of a global refining downturn to bolster supply to the mainland. PetroChina, Asia’s largest oil and gas producer, has made a string of overseas refinery acquisitions in the past few years to strengthen its global refinery foothold and boost its trading and marketing capabilities. In a filing with the US Securities and Exchange Commission, Valero said it had received a non-binding indication of interest for the 235,000 barrel-per-day Aruba plant for US$350 million plus working capital, but did not identify the interested party. Sources familiar with the negotiations said the approach had been made by PetroChina. It was the second time in two years the Chinese company had discussed the purchase of the plant, which is located near the coast of Venezuela, China’s fourth largest crude supplier, sources said. A local media website, Amigoe, reported that PetroChina signed a memorandum of understanding with the government of Aruba on April 30, but details of the deal had not been made public due to the sensitive nature of the negotiations. Petrochina was not immediately available for comment. China’s oil giants, which have been suffering heavy refining losses at home due to state-controlled oil prices, are pushing into the overseas refining sector to optimise their refinery operations and maximise the value of crude they produce overseas, energy bankers and analysts say. Sinopec Group, parent of Asia’s largest refiner Sinopec Corp (SEHK: 0386), signed a deal with Saudi Aramco earlier this year to build a new 400,000 barrels a day (bpd) oil refinery in Yanbu in Saudi Arabia, its first overseas refining project. “They hold the concept of building a global trading business. The concept is it allows them to get cheaper crude to China,” James Hubbard, head of Asia oil and gas research at Macquarie, said of Chinese oil firms’ overseas refining strategy. PetroChina has said it wants to double its global trading and marketing of oil – including crude oil and refined fuel – to 8 million barrels a day by 2015 from 2010 levels. PetroChina bought a 50 per cent stake in chemical group Ineos’ European refining business last year for US$1 billion, its third overseas refinery deal after acquisitions in Singapore and Japan for more than US$2 billion combined. Sources said PetroChina has reached a deal with Petroleos de Venezuela (PDVSA) to supply the Aruba plant with heavy crude. “PetroChina has a presence in the Venezuelan upstream. This is related to them looking for an upgrader for that heavy crude,” said John Auers, a refinery specialist with Houston-based industry consultants Turner Mason. The Aruba plant has two fairly new coker units to handle the heavy Venezuelan crude as well as recently upgraded hydrotreating capability, sources familiar with the refinery said. This would allow PetroChina to semi-process heavy crude and then ship the product to China for finishing in the mainland refineries there, which can only run lighter grades. Venezuela is currently supplying 460,000 barrels of oil per day to China, and is set to increase its shipments to 1 million barrels per day by 2015, according to government officials. China National Petroleum Corp (CNPC (SEHK: 0135)), parent of PetroChina, and PDVSA are also building a US$9 billion joint refinery on China’s southern coast in April, paving the way for more Venezuelan oil to flow to China. China has become a major partner of President Hugo Chavez’s government in Caracas, supplying billions of dollars in credits, some of which are being cancelled with crude shipments from the South American OPEC member. The Aruba refinery has been idled at least twice in the past few years, most recently earlier this year, due to poor profit margins that have plagued refiners in Europe, the Caribbean and on the US East Coast. Earlier this year, over 2 million barrels of refining capacity were threatened with closure across the Atlantic Basin, driving up petrol prices on the US East Coast as supplies to the region looked short ahead of the US summer driving season. But in recent weeks buyers have begun to emerge to snap up plants at low prices, with Delta Air Lines buying Conoco’s Pennsylvania refinery and oil trading companies Vitol Group and Gunvor Group purchasing two European refineries. Refineries have seen a combination of weak demand as well as rising fuel costs – especially for plants that receive crude from Europe and West Africa – hit profits in recent years. Aruba also faces higher costs relative to US plants on the Gulf Coast because it uses fuel oil to power its units. US refiners have benefited from a growing supply of cheap natural gas that reduces operating costs.

Hong Kong*:  May 10 2012 Share

Hong Kong's gold shipments to the mainland in March jumped nearly 59 per cent from the previous month to the third highest level on record, while the gold flow from China surged to the most in at least two years. Hong Kong shipped 62,907 kilograms of gold to mainland China in March – a surprisingly high number, and received 24,835kg of gold from the mainland, leaving the net exports at 38,072 kg, up 16 per cent from February, data from the Hong Kong Census and Statistics Department showed. The gold imports from China in March is about half of the total volume shipped from the mainland to Hong Kong last year. “The net exports figure is more in line with the market activity in March,” said a Singapore-based dealer. Some market participants said the higher exports from Hong Kong to the mainlandwere partly due to arbitrage trade. “We are aware of unofficial round tripping that we think is inflating the number somewhat,” said an industrial source familiar with the trade, who declined to be named. “Traders in China export gold jewellery, usually in rough form, to Hong Kong, where the material is made into bars and exported officially to China. It’s a continuous loop.” Traders also tried to take advantage of a small premium in prices in Hong Kong over prices for such form of gold in China, the source said. The phenomenon has been going on since last year, which partly explains the explosive growth in China’s gold imports from Hong Kong, a main conduit for bullion flow into China, he added. In last year, Hong Kong’s gold exports to China more than tripled from a year ago to 427,877kg, while gold imports from China surged to 48,311kg from just 4,444kg in 2010, data showed. In November, China imported a record 102,525kg of gold from Hong Kong.

At least three more railway projects - including a Siu Sai Wan extension and a spur line parallel to the Island Line - could be proposed after the government decides this year on the rail projects for the next stage of post-2020 development. The Transport and Housing Bureau said it did not mention these extensions when it singled out three links last month for the next round, as the need for them was largely reliant on which of the proposals the public endorsed. However, transport analysts say the public was deprived of the full picture when the proposed rail links were not mentioned previously. They rejected claims that the rail lines are inter-dependent. The bureau last month released a study commissioned by engineering firm Aecom a year ago on railway development after 2020. It singled out for public discussion two domestic lines - the Northern Link from Kam Tin to Lok Ma Chau, and the Tsuen Wan-Tuen Mun Link - and a multibillion-dollar cross-border railway connecting Hong Kong and Shenzhen airports. Responding to queries from the South China Morning Post (SEHK: 0583), the bureau said that was only the first stage which "focuses on major regional railway corridors". In the second stage, it would study localised improvements and congestion relief. In the second stage, for instance, commuters could travel directly from Siu Sai Wan to either Chai Wan or Heng Fa Chuan, while in East Kowloon, commuters could travel directly to Central and Admiralty without having to change at North Point. "As the major regional corridors will affect the traffic distribution of the whole network and may potentially shift bottlenecks, it is logical to divide the study into two stages," a bureau spokeswoman said. But an MTR Corp executive, who declined to be identified, says it is hard to see how, for instance, the airport link - which has a spur line connecting Tuen Mun to the Tung Chung Line - could have an impact on whether the North Island Line should be built. "That spur line mainly serves movements between New Territories west and north Lantau, while the North Island Line serves to ease the mounting burden of North Point as an interchange station and handles movements between East Kowloon and Island west," the executive said. The two proposed domestic lines would also have little effect on the extensions, the executive says. It is also disappointing that no railway projects were proposed to facilitate the east-west movements, the executive says, noting the MTR's suggestion from a long time ago to connect Sha Tin or Tai Wai with Lai King and Tsuen Wan - a route now dominated by minibuses. Hung Wing-tat, a veteran transport analyst, says it is a waste of public funds to split the study of the railway blueprint into two phases. "The government paid for the study and we expect the consultant to give us a thorough report on all possible lines, and not just part of it," Hung said. "I don't think these lines are so inter-dependent on one another. I wonder if they wanted to rush to announce the results before the new administration takes over." Of the three proposed railway lines, officials believe the airport link might be the most profitable following the addition of two spur lines, which would attract travellers between Hung Shui Kiu and Qianhai two newly developed areas in Hong Kong and the mainland, respectively.

Despite having no power supply, a development in Ping Yeung, Ta Kwu Ling, received approval. A Post investigation into village houses offered for sale as part of a managed estate hints at more abuse of the long-criticised Small House Policy. The policy is intended to give male indigenous villagers in the New Territories the right to build a house close to their ancestral homes. It was created in the 1970s to improve rural housing and the cohesion of rural communities, but conversations with estate agents selling homes on one new estate offer further evidence that it is being abused for profit. The investigation also hints at pitfalls for buyers, who could end up paying millions for homes that lack essential infrastructure. The Post, posing as a potential buyer, spoke to agents offering homes at The Parkland development in Ping Yeung, Ta Kwu Ling, which they say is made up of 33 village homes, some of which are divided into one- or two-storey flats. Records of land transactions for the site indicate that the homes were never intended to be occupied by villagers. Instead, "dings" [indigenous male villagers entitled to a small house grant] exploited their right to build a small house for a quick profit. Land records show that two companies bought six lots from the villagers managing the sites, all surnamed Chan, at a cost of more than HK$5.4 million from 1997 to 1999. The lots were then divided into small sites and sold to villagers, most of whom were also surnamed Chan, some just a few weeks later, others over several years. In 2007, most of the villagers applied for and were granted building licences under the SHP by the Lands Department, which issued a certificate of compliance, essential for the sale of a village house, for most of the homes in 2010. The owners of at least six of the homes had sought permission to sell their village homes within a year of their completion. While one owner paid the government HK$660,000 to secure the right to sell, the price the homes went for gives a clue as to the profits made. With flats selling for almost HK$3 million, indications are that a whole house would go for around HK$7 million. The fact that only 22 of the 33 houses have been built, with just 16 given a certificate of compliance, also indicates that the villagers had no intention of living there. "You can reserve [the house] first and move in a few months later when all application processes are completed," an agent from Chosen Property Agency told the Post. And while there are healthy profits for developers, buyers who take the plunge at The Parkland face doubts over access to the site and the power supply. Critics say the problems show the dangers of using homes built under the SHP, which are treated by the government as individual homes - to make up an estate. "It is a serious abuse of the policy. In fact, it is illegal to sell small houses before they are built," town planner Dr Ng Cho-nam said. "The victims are buyers, who are exposed to the risk of buying unapproved houses with poor planning. They may end up buying a house without a right of way or a proper sewage system." He called for a review of the SHP and for planning controls on village house developments, to ensure estates are planned with basic infrastructure and amenities. "It is not unreasonable to impose controls, as the approval process for one house is now being abused for the building of a whole estate," Ng said. But Yu Wah-sang, a director of Richery Honour Development, one of the developers, said the estate complied with all legal requirements. Chan Shung-fai, a Northern district councillor and chairman of the Ta Kwu Ling rural committee, said the trend of outsiders buying land in the district was worrying. "Developers saw the opportunity to reap profit here after the government announced new development plans [for an area near the site of The Parklands]," he said. "But these small house developments can be as bad as squatters, as they often lack planning, and land conflicts can hold back the development for years, leading to security problems." Lawmaker Lee Wing-tat of the Democratic Party urged the incoming government to review the policy and study options for ending it entirely. The Post reported last year that villagers in Wong Chuk Yeung, Sai Kung, had sold their building rights to a developer and helped it lodge applications to build small house in return for cash or a free flat.

This year’s Hong Kong International Art Fair is a week away, but its organizers are already focused on 2013. That’s when the event — Asia’s biggest and most lucrative art fair — will be reborn as the Hong Kong edition of Art Basel. It will be held May 23 to 26 and remain at the city’s convention center. Marc Spiegler, co-director of Art Basel and sister event Art Basel Miami Beach, the biggest art fair in the U.S., said there will be “significant differences from this year” but declined to share details. MCH Group, which owns both Art Basel fairs, bought a 60% stake in Hong Kong’s fair last May. Exhibitors, however, will get some idea of what’s changing on June 11, when Basel releases information on the selection committee and makes its 2013 applications available. Among galleries’ concerns: that Art Basel Hong Kong will feature the same names that pop up in the U.S. and Europe. That won’t happen, Mr. Spiegler said. “Every gallery has to apply every time to every show,” he said. “We want [to avoid] shows that all look the same. There will never be a get-in-once, get-in-three times concept, though that would make our lives simpler.” Magnus Renfrew, the Hong Kong art fair director who is now Art Basel’s director in Asia, said the fair is committed to keeping a 50-50 split between Western and Asian (which they define as including the entire Asia-Pacific region as well as the Middle East and Turkey) galleries. What patrons can expect is to see top-selling Asian artists and galleries appear in Miami and Basel, similar to Art Basel Miami, which raised the profiles of Latin American artists, who were then invited to Switzerland. “There is cross-pollination,” Mr. Spiegler said. In an effort to cultivate Asian collectors, Art Basel has hired VIP relations officers in Shanghai, Singapore and Sydney, and is seeking representatives in Beijing and Taipei. “This kind of high-touch approach is important,” said Mr. Renfrew. While the May date is conveniently near Hong Kong’s spring auctions, it’s not ideal for overseas collectors and galleries, who are already hopping from Frieze in New York to Art Basel in Switzerland this time of year. Mr. Spiegler cited the logistics of booking Hong Kong’s convention center, which is packed with trade shows and other events in the spring. “This is an issue we’ve been working on,” he said.

 China*:  May 10 2012 Share

China’s vice-foreign minister Fu Ying on Monday said Beijing was fully prepared for an escalation of a drawn-out maritime stand-off with the Philippines, adding China was not optimistic about the situation. “The Chinese side has … made all preparations to respond to any escalation of the situation by the Philippine side,” Fu told a Philippine diplomat in Beijing, according to a statement posted on the foreign ministry website on Tuesday.

US Defence Secretary Leon Panetta and and China's Minister of National Defence General Liang Guanglie speak at the Pentagon in Washington on Monday. Asserting that cyberattacks against the US do not come only from China, the US and Chinese defence ministers said they agreed on Monday to work together on cyber security issues to avoid miscalculations that could lead to future crises. Defence Secretary Leon Panetta said that since China and the United States have advanced cyber capabilities, it was important to develop better co-operation. “It’s true, as the general pointed out, that obviously there are other countries, actors, others involved in some of the attacks that both of our countries receive,” Panetta told reporters after an afternoon meeting in the Pentagon marking the first visit by a Chinese defence minister to the US since 2003. “But because the United States and China have developed technological capabilities in this arena, it’s extremely important that we work together to develop ways to avoid any miscalculation or misperception that could lead to crisis in this area.” General Liang Guanglie, China’s minister of national defence, offered a vigorous defence of his country, saying through an interpreter that, “I can hardly agree with the proposition that the cyberattacks directed at the United States are directly coming from China... We cannot attribute all of the cyberattacks [against the] United States to China.” Just six months ago, however, senior US intelligence officials for the first time publicly accused China of systematically stealing American high-tech data for its own national economic gain. It was the most forceful and detailed airing of US allegations against Beijing after years of private complaints, and it signaled the opening salvo of a broad diplomatic push to combat cyberattacks that originate in China. Guanglie said he and Panetta talked about ways to strengthen cybersecurity, but they are leaving the details to the experts. Cybersecurity was just one of the many issues discussed by the two leaders during their meeting, but it also is one of a number of contentious topics that rattle the often rocky relationship between the two nations. “The US needs to start laying the groundwork for better understanding by the Chinese of what we expect from them in cyberspace,” said James Lewis, a cyber security expert with the Centre for Strategic and International Studies who has met with Chinese officials and scholars for informal discussions. “We want to figure out some way to get some understanding in place before something bad happens.” As an example he said American officials want to know whom to talk to when Chinese hackers breach US computer networks. And if there is a cyber incident in China, Lewis said, “we need the Chinese to feel confident that they can call us up and ask, ‘Was it you?’, and get a straight answer.” Chinese officials routinely have denied the cyber spying, insisting that their own country also is a victim of such attacks. And they note that the hacking is anonymous and often difficult to track. US cyber security experts acknowledge that attribution can be difficult, and that while they can trace an attack to China, it is often difficult to track directly to the Chinese government. Last December’s report by US intelligence agencies said America must openly confront China and Russia in a broad diplomatic push to combat cyberattacks that are on the rise and represent a “persistent threat to US economic security.” And, separately, several cyber security analysts have concluded that as few as 12 different Chinese groups, largely backed or directed by the government there, commit the bulk of the cyberattacks that aim to steal critical data from US companies and government agencies. Officials estimate that the stealthy attacks have stolen billions of dollars in intellectual property and data. Because people and businesses in both China and America have been victims of cyberattacks, officials have been talking more about building a better relationship so that they can work together. Law enforcement is one area of cybersecurity where the two nations have begun to build partnerships, but so far it has been extremely limited. Lewis said that last year, US authorities requested help from the Chinese 11 times, and in seven of the cases received no information. But, he said, the Chinese co-operated with US law enforcement in a high profile financial fraud case late last year.

Due to low occupancy rates, the Shanghai Railway Bureau will offer discounts for business class and priority seats on high-speed Shanghai-Nanjing and Shanghai-Hangzhou routes from May 18. A total of 116 trains are included in the discount campaign. The biggest discount for business class seats comes to 30 percent, while discounts for priority seats reach 10 percent. 

The sixth-generation semi-submersible CNOOC 981 will begin operations in a sea area 320 kilometers southeast of Hong Kong at a water depth of 1,500 meters. The first deep-water drilling rig developed in China will be put into service in the South China Sea on Wednesday, the country's largest offshore oil producer said Monday. The sixth-generation semi-submersible CNOOC 981 will begin operations in a sea area 320 kilometers southeast of Hong Kong at a water depth of 1,500 meters, China National Offshore Oil Corp (CNOOC) said in a press release. It will be the first independent deep-water oil drilling by a Chinese company, marking "a substantial step" made by the country's deep-sea oil industry, CNOOC said. About 70 percent of oil and gas reserves in the resource-rich South China Sea is contained in 1.54 million square km of deep-water regions, or sea areas with depths of over 300 meters. However, most of China's current offshore oil exploration is conducted less than 300 meters below the surface. The South China Sea is estimated to have 23 billion to 30 billion tons of oil and 16 trillion cubic meters of natural gas, accounting for one-third of China's total oil and gas resources. 

Hong Kong*:  May 9 2012 Share

The Independent Commission Against Corruption has refused to say if it offered former Sun Hung Kai Properties chairman Walter Kwok Ping- sheung immunity from prosecution if he testified against his two brothers in its biggest bribery case. Kwok's siblings, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, were earlier arrested in a bribery investigation that also implicated former chief secretary Rafael Hui Si-yan. It was reported that Walter Kwok last week gave a statement which might help the ICAC's investigation of Thomas Kwok and Raymond Kwok, the joint chairmen of SHKP, provided it is not used against him. The reports also suggested the possibility that Walter Kwok would testify against his billionaire brothers if the graftbusters subsequently decided to prosecute them. The ICAC is reportedly investigating allegations that Hui obtained an unsecured loan of up to HK$70 million from two local banks. Walter Kwok, who was earlier forced out as the company's chairman during a family feud, remains a non-executive director of SHKP. He was earlier quoted as saying he had no knowledge of what Hui was doing while he was a consultant for the company. The three siblings are required to report to the ICAC later this month. Walter Kwok's arrest on Thursday night by the ICAC is part of an unprecedented investigation into allegations of bribery and misconduct in public office. His younger brothers, along with Hui, were arrested in late March. Those arrests, in turn, followed the March 19 arrest of Thomas Chan Kui-yuen, an SHKP executive director. All are currently out on bail and none has been charged with any offense. 

Pro-government lawmakers have agreed to coordinate attendance and ensure there will be no more debate suspensions in the Legislative Council because of a lack of quorums. The agreement follows Wednesday's suspension of a debate on electoral arrangements when only 27 of the 60 councillors turned up - three short of forming a quorum. Pan-democrats boycotted the debate in support of a filibuster by People Power lawmakers Albert Chan Wai-yip and Raymond Wong Yuk-man, who tabled more than 1,300 amendments in a bid to delay passage of the by-election bill. Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker Chan Kam-lam said representatives of pro-establishment parties, including the DAB, Federation of Trade Unions, Liberal Party, Economic Synergy, and several other independent lawmakers held a meeting last week and agreed to a rotation plan to ensure that quorums are met. He said all 10 DAB lawmakers will remain in the chambers throughout Wednesday. DAB lawmaker Ip Kwok-him said he will collect the itineraries of pro-establishment lawmakers to make sure there are replacements for those who have to leave because of urgent business. "If some lawmakers choose to be absent during a particular time slot during Wednesday's meeting, we will arrange a replacement to guarantee there are more than 30 lawmakers still present at the meeting," Ip said. Federation of Trade Unions lawmaker Wong Kwok-kin said the pro- establishment camp will do its best to make sure the rotation plan works. But Legco president Jasper Tsang Yok-sing said the plan will only work if all pro-establishment lawmakers are strongly determined. Chief secretary Stephen Lam Sui- lung said: "I hope lawmakers will respect Legco's Rules of Procedure and not launch another filibuster." In another development, a group of local singers, songwriters and music composers urged the government to relaunch a public consultation of the controversial Copyright (Amendment) Bill and to exempt derivative works in the music and showbiz industries from criminal liabilities. Singer and songwriter Chet Lam Yat-fung said: "There are many gray areas in the Copyright (Amendment) Bill. I believe the bill will definitely affect the music industry if it is passed." Canto-pop singer Kay Tse On-kei agreed, saying the bill might deter young musicians from performing derivative works.

Lawmakers asked the government to set aside spaces for mainland mothers in public hospitals. The government should make it easier for pregnant mainland women with Hong Kong husbands to give birth in the city, lawmakers said at a health panel meeting on Monday. Recent efforts to reserve obstetric services for Hong Kong women – such as quotas and raised fees – have made it too difficult for pregnant mainland women married to Hongkongers to reserve obstetric services. The lawmakers were told about progress in the city’s new policy to differentiate mainland women married to Hongkongers from those who are not. Around 10 women in the former category have been accepted by private hospitals to give birth, Monday’s meeting was told. Announced by the Food and Health Bureau last month, the policy requires such women to provide documents proving they are married to Hongkongers. But others are still struggling to find beds in public hospitals. Lawmakers on Monday asked the government set aside spaces for them in public hospitals and charge no more than HK$39,000 for a delivery booked in advance. Another option, they said, was to give them a discount for service at private hospitals, where many cannot afford the fees of up to HK$100,000. Public hospitals will raise the fee for giving birth in emergency departments from HK$48,000 to $90,000 this Saturday, in hopes of deterring the influx of non-local mothers. “That means this group has no place to turn to, if they have no money. The government should think of some ways to offer them help”, said Cheung. The health panel was told on Monday that all obstetric services at public hospitals are fully booked by local mothers for the rest of this year, and they are unable to provide any space for mainland wives of Hong Kong husbands. “The public hospitals simply cannot accept any more mainland wives for delivery,” said Dr Lee Kun-hung, a chief manager of the Hospital Authority. About 40,000 spaces at public hospital this year are fully booked, and he foresees local births increasing up to 41,000 next year. “We also expected some 2,000 non-booked emergency deliveries to come forward next year, meaning our service capacity of 43,000 has already reached the upper limit”, Lee said. “But we should have sufficient service available for all local women who need them.” Richard Yuen Ming-fai, permanent secretary for the Food and Health Bureau, told the panel meeting about the policy to differentiate mainland mothers married to Hongkongers from those who are not. He pointed out that the government is unable to regulate the fees that private hospitals charge to Hong Kong-mainland couples, as it cannot interfere with the operation of the market. Several lawmakers told Yuen the new policy won’t provide much help to Hong Kong-mainland couples if the price is too high. He replied that some private hospitals birthing services for as little as HK$40,000, which the couples should be able to afford. “The cost of delivery should be brought down by the abundant supply and a shrink in demand”, Yuen said. The panel meeting also addressed the issue of tendering bids to build two new private hospitals, and lawmakers were told the winning bids would probably be those that dedicate 70 per cent of their services to Hongkongers. The bidding terms call for at least 50 per cent of beds to be set aside for Hongkongers. But some lawmakers said an even larger proportion should be reserved for city residents. “If the government wants to ensure that local people can benefit from the extra land, even tighter restrictions should be set”, Civic Party lawmaker Audrey Eu Yuet-mee said. Cheung said the current government should suspend the tendering process until the next government takes office this summer. “It is clear that chief executive-elect Leung Chun-ying has a different opinion about developing medical tourism as one of the six industries in Hong Kong. The government should consider suspending the tender process for two months until he gets into office and reviews medical policy.” But Yuen said the new private hospitals were not being built for medical tourism. “It is clear that the local demand for private hospital service is great, and only more supply and competition can bring down the prices of the service”, Yuen said. The invitation to tender ends on July 27, to build hospitals in Wong Chuk Hang and Tai Po.

The government is planning to develop electronic school textbooks to fight the monopoly controlled by traditional textbook publishers, Secretary for Education Michael Suen Ming-yeung said on Monday. The government would seek HK$50 million of public money to support the development of digital textbooks, he told reporters. The long-awaited plan comes after publishers refused the government’s call to unbundle their books in the coming academic year, citing problems with production costs. Publishers now sell textbooks bundled with other learning materials – such as CD-ROMs, study notes and guides – a system that pushes up prices, angering parents. Suen said the plan was aimed at giving more choices to schools and parents, and at breaking what he called bad practices by publishers. “The textbook market now is heavily distorted, with [publishers] using many unacceptable sales practices,” he said. “We must deal with the root of the problem now. One way is to introduce a new market and set new rules,” he said. Suen said the HK$50 million would be used to set up a fund to support non-for-profit organisations and universities in developing e-textbooks. Each organisation could start applying for HK$4 million under the fund, which could be in place as early as this summer if the Legislative Council approves the scheme. The first batch of digital textbooks is expected to be available for 50 primary and secondary schools during a trial in 2014, Suen said. The government announced in 2008 that it intended to develop e-textbooks. Since then, there have been talks between the government and publishers on pricing tactics and unbundling the books, but no concrete agreement has been reached.

The chief secretary’s decision to leave government work has drawn praise as well as speculation that it marks a “U-turn” by the central government’s liaison office. Stephen Lam Sui-lung was praised on Monday morning by Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen, for his strong skills in the areas of co-ordinating and executing cabinet work, as well as teamwork. “When tricky problems came up, [Lam] would ask us to pray together,” said Tam, who like Lam is a Christian. Lam announced on Sunday he would quit government work to study theology. Tam said he considers Lam a mentor and friend, and that it is a pity he is leaving politics. At the same time, Tam was not surprised about Lam’s plan to pursue theological and pastoral studies. Lam’s popularity had been undermined by controversial constitutional issues over the past decade, which Tam also found challenging to handle. Legislative Council president Tsang Yok-sing said he respected Lam’s “good personal choice” of overseas study. “For a long time he has taken on a challenging job in Hong Kong,” said Tsang. “The city’s political development in the past few years has been full of conflict and controversies.” Democratic Party founding chairman Martin Lee Chu-ming called Lam’s departure a “U-turn by the [central government’s] liaison office”. “The chief secretary post could have been left vacant when Henry Tang resigned [to launch his failed chief executive candidacy bid]. But Lam was appointed,” said Lee, referring to the possibility that Beijing planned to groom Lam for a position in the next administration. “But Leung Chun-ying was elected with a low popularity rating, so the liaison office changed its mind and turned to [development chief] Carrie Lam, who enjoys high popularity, to maintain confidence in the government.” Lee, a veteran barrister, praised Secretary for Justice Wong Yan-lung, who is expected to leave government work, for his endeavours in a “difficult job”. “I sincerely thank Wong. It was a separate matter to be the secretary for justice under the colonial government, which held immense respect for the rule of law. But we all know the central government has kept putting pressure [on the rule of law in Hong Kong] since the handover. Wong has kept endeavouring to uphold the rule of law.”

 China*:  May 9 2012 Share

A Toyota Dear Qin is displayed at the Beijing International Automotive Exhibition in Beijing in April. Mainalnd sales by Toyota and its two local joint-venture partners rose 68 per cent in April from a year earlier to about 81,700 vehicles, according to a company spokesman on Monday. Sales in China by Toyota and its two local joint-venture partners rose 68 per cent in April from a year earlier to about 81,700 vehicles, according to a company spokesman. For the first four months of the year, the Japanese auto maker sold a total of about 293,200 vehicles, a 14.3 per cent increase from the same period last year, said the spokesman, Takanori Yokoi. Yokoi said the large year-on-year jump in April sales was due chiefly to the fact that sales during April last year were comparatively low because of the massive earthquake on March 11. The earthquake and tsunami paralysed production of key components and affected Toyota’s vehicle production around the world, including China. Still, Toyota’s sales momentum was “fairly strong” so far this year, said Yokoi. Because the company’s sales performance was so bad last year due to the impact from the earthquake Toyota “should be able to post double-digit sales growth at least for the next several months,” the Beijing-based spokesman said. “If things go as normally as we expect, we should be able to meet our sales goal” – of selling one million cars this year, said Yokoi. Toyota’s China sales last year totalled about 883,400 vehicles, a 4.4 per cent increase from 2010, reflecting in part the general slowdown of automobile sales in the mainland last year. After rapid growth in 2009 and 2010, China’s auto market as a whole slowed considerably last year as sales of smaller-engine cars and commercial vehicles stalled after the government ended some incentives for car buyers. Various industry forecasts point to overall vehicle sales this year growing about 5-10 per cent from last year. Toyota would have to grow sales by about 13 per cent this year to meet its goal of selling one million vehicles.

A close ally of former police chief Wang Lijun who was adept at wiretapping was detained in a facility that was designed to house officers busted during the municipality's massive triad crackdown launched by former Chongqing party boss Bo Xilai and Wang. A source in Chongqing told the South China Morning Post (SEHK: 0583) last week that in the heyday of the sweeping anti-crime campaign steered by Bo and Wang, they set up a detention centre near Shizishan village in Jiangbei district, specifically for the imprisonment of police officers. The officers had been found to be either friends of so-called triad bosses or had had a falling out with Bo, Wang or their allies. "I know a mid-level policeman who was sent to the centre by Li Yang (pictured), the former head of the municipal criminal police team, for 'failing to do his best work'," the source said, adding that the officer, who used to be a strong and well-built man, became weak and fragile after months of torture at the centre. The officer was recently released after the downfall of both Wang and Bo. Ironically, Li was sent to that detention facility after the downfall of the pair. The source said Li was a specialist in phone tapping who had worked as the head of a telecommunications centre with Dalian Maritime University in northeastern Liaoning province before he was invited by Wang, his close friend for years, to be the political commissar of the criminal investigation squad in the second half of 2010. He was named the head of the team in September last year. Wang and Li formed an association to improve co-operation between Dalian Maritime University and Chongqing police. Li also oversaw the telecommunications squad with Chongqing's public security bureau before his downfall last month. Overseas media have reported rumours that the municipality's former party boss, Bo Xilai, wiretapped senior party leaders, such as a conversation between President Hu Jintao and Minister of Supervision Ma Wen when she visited Chongqing in August. Speculation is rife that Li may have played a role in the eavesdropping on senior officials. Li was also purportedly among the top three police officers responsible for the murder investigation into the death of British businessman Neil Heywood in Chongqing in November last year. Wang and Guo Weiguo, then deputy police chief in Chongqing, were the other two senior police figures on the investigation team. "Ironically, the detention centre is now where Li has been locked up, along with Guo," the source said. Both Li and Guo were removed from their positions and placed under investigation last month on suspicion of covering up details of Heywood's death. During the height of the triad crackdown, hundreds of police officers were detained at the Jiangbei centre, the source said. "Some of them have been released, but numerous others who were close to Wang and Bo have [been sent to the facility]. As a result, dozens of them remain there," the source said. An anonymous police source said that, as there were many claims of injustice in the municipality, authorities there now fear an influx in cases of former officers seeking to have their cases reviewed. The police source said that most police officers in the city have been forced to show their loyalty to the central government in the wake of the downfall of Bo and Wang. "Quite a number of police officers in Chongqing have been required to write a letter vowing that they will unconditionally listen to the party's commands," said the source, adding that "most of them largely copied from others' letters, although some have taken it seriously".

Gen. Liang's visit, the first by a Chinese minister of defense in nine years, suggests Beijing and Washington are both anxious to limit the political fallout of last week's standoff, particularly in a year that includes both a U.S. presidential election and a once-a-decade Communist Party leadership change. "In the last 40 years, China-U.S. relations have been through ups and downs, but always moved forward," Gen. Liang said in a speech in San Francisco, according to the state-run Xinhua news agency. "China and the U.S. are not competing rivals in a zero-sum game, but partners with mutual benefits, whose common interests far outweigh their differences." While previous confrontations over sensitive issues have often disrupted bilateral dialogue—especially in the military sphere—and prompted sustained public criticism of the U.S. in China, the Chinese Foreign Ministry and state media remained pointedly silent on the Chen saga Sunday. Orville Schell, director of the Arthur Ross Center on U.S.-China Relations at the Asia Society in New York, said the Chen case speaks to a "new kind of maturity" in the ability of the U.S. and China to resolve problems. "The two sides did actually work this out in a mature, hard-nosed way with a minimum of rhetoric and blame," he said, adding that both realized "they were stuck with a common problem and both had an interest in dealing with it." The Pentagon said Gen. Liang traveled to San Diego where he toured the naval station and a U.S. destroyer, discussing counterpiracy operations with U.S. officials. Gen. Liang reached Washington Sunday and is scheduled to meet with Secretary of Defense Leon Panetta on Monday, officials said. Later this week, Gen. Liang is scheduled to visit the U.S. Southern Command in Florida, and tour Camp Lejeune and Seymour Johnson Air Force Base in North Carolina as well as the U.S. Military Academy in West Point, N.Y. Activists and diplomats said the Chen case could flare up again if Mr. Chen has problems getting a passport or completing any other of the formalities needed for him and his family to travel to the U.S. He has been offered a position as a visiting scholar at New York University. It remains unclear if Mr. Chen has access to a Chinese passport, or will have to return to his home in Shandong province—where he says he and his wife were illegally detained and frequently beaten by their guards—in order to apply for a new one. Less than two weeks ago, Mr. Chen fled effective house arrest in his home in eastern China and made his way to Beijing, where he sought refuge in the U.S. Embassy shortly before Secretary of State Hillary Clinton was due to arrive in China. He left the embassy Wednesday after what Xinhua said was a six-day stay, under an agreement between the U.S. and Chinese governments that he would be allowed to study law at a university in China. But after talking with his wife and fellow activists, he quickly changed his mind and said he wanted to go to the U.S. That path to a compromise appeared Friday when the Chinese Foreign Ministry announced unexpectedly that Mr. Chen, like any other Chinese citizen, was free to apply through the normal legal channels to study overseas. The U.S. government said the Chinese government had indicated it would accept Mr. Chen's applications for appropriate travel documents, and Washington expected Chinese authorities to "expeditiously process" them. Mr. Chen has yet to say publicly whether he plans to accept the NYU invitation. Repeated efforts to contact him Sunday weren't successful. Vice President Joe Biden, speaking Sunday on NBC's "Meet the Press," defended the Obama administration's handling of the case. "We have not, in any way, backed off of our commitment to human rights," he said.

Hong Kong*:  May 8 2012 Share

A Lantau authority should be set up to turn the island into a new "metropolis" to help Hong Kong keep pace with fast-growing cities on the mainland, a business alliance says. The Lantau Economic Development Alliance said it would remind chief executive-elect Leung Chun-ying to live up to his promise of setting up a Lantau authority to make the best use of resources on Hong Kong's biggest island. The alliance was formed last year by nine businesses on Lantau, ranging from Hong Kong Disneyland, the Ngong Ping 360 cable car and AsiaWorld-Expo to the Heritage Conservation Foundation, which turned the 110-year-old Tai O police station into a boutique hotel. A 17-strong delegation paid a field visit last week to key development zones in the Pearl River Delta: Qianhai , Nansha and Hengqin . The Hong Kong government is consulting the public on the possibility of a railway linking Qianhai with Hong Kong airport, while Hengqin is within an hour's travelling time of the Hong Kong-Zhuhai-Macau bridge, which will link Zhuhai with Lantau when completed in 2016. Li Yan-tai, the alliance's honorary secretary and leader of the delegation, said its members were impressed by the ambitious plans of the governments in the places they visited. "Integration [in the Pearl River Delta] is inevitable," Li said. "The question is how will Hong Kong play a part? Hong Kong has to integrate [with neighbouring cities]. Otherwise, we will only see economic activity shifting northward." Li said the alliance believed that Lantau - as home to the world's third-busiest international passenger airport and the landing point of the Hong Kong-Zhuhai-Macau bridge - had the potential to become a new "metropolis", a commercial-tourism hub in the Pearl River Delta and the powerhouse of Hong Kong's future development. He said the alliance would conduct further research and gather public opinion before submitting a proposal to Leung later this year. Li said the alliance's top priorities included setting up a cross-departmental Lantau Authority, on which tourism, transport and lands officials would sit together to make decisions about the vision and master plan for Lantau in Hong Kong's future. He said Leung had promised such an authority when they met earlier this year and pledged to "rearrange" the functions of New Territories West and Lantau "to improve our competitive edge" in his election manifesto. The alliance will also propose upgrading facilities around the airport to create more business, such as turning the golf course next to AsiaWorld-Expo into a commercial complex with malls, offices and flats. Li said that while it was aware of possible risks ahead, the alliance was not pessimistic about Hong Kong's future, because it believed its free economy and independent judiciary would continue to attract business. However, other members, including Anna Hong, deputy general manager of Shun Tak (SEHK: 0242, announcements, news) 's jetfoil business, said time and land resources were running out for the city. "Given the excellent geographical location of Lantau [on the Pearl River estuary], it may be one of the few pieces of land we have left for development."

There will be no public consultation on the controversial restructuring of the cabinet proposed by chief executive-elect Leung Chun-ying, the head of his transition office says. Any delay to the reorganisation before Leung takes office on July 1 could affect the choice of ministers, said Fanny Law Fan Chiu-fun (pictured). Leung would, however, seek opinions on the changes in meetings with the 18 district council chairmen and civil servants, as well as in the Legislative Council, Law said. "Do we have to change our choice of ministers if they have to wait for half a year [for the restructuring to be implemented]?" she said at RTHK's City Forum yesterday. "[It would] affect the continuity of policies." Amid mounting calls from pan-democratic lawmakers and academics for a thorough scrutiny of the proposed shake-up, Law continued to explain the planned new set-up, in which deputy posts will be created for both the chief secretary and the financial secretary. Law said that on "general matters", the bureau chiefs would report only to those deputies. "There will not be another layer of bureaucracy in the restructuring plan, as the bureau heads only need to report up to the deputies. For general matters, it is not a must to go to the chief secretary and financial secretary," she said. "The chief secretary will still host the weekly policy meetings, which all bureau chiefs will attend to report the important issues," said Law. The suspension of a Legco session last Wednesday for lack of a quorum as pan-democrats boycotted a debate on changes to the by-election rules raised the possibility that Leung's plans could be subject to delaying tactics. Pro-government lawmakers said they now plan to rotate in shifts to ensure a quorum. However, Legco president Tsang Yok-sing said he thought that might prove difficult. On Wednesday, the legislature will continue to vet the government's bill to scrap Legco by-elections, to which the radical People Power party has filed about 1,400 amendments in an attempt at a filibuster. Meanwhile, speaking to Tung Chung residents yesterday, Leung said he saw the new town in Lantau as "a testing ground" for district administration. "There should be government departments stationed in the district to solve local issues and understand the local economy," he added. Leung also said he wanted to see more economic activity in Tung Chung and better transport links.

The graves of the 16 workers (top left). Police arrest some union members during a raid (top right and bottom right). A bomb disposal technician at work, and a protest by communists (bottom left). Reporters covering a demonstration outside a government building as the police try to manage the crowd. Police prepare to fire tear gas to disperse left-wing demonstrators in San Po Kong. Yesterday's 45th anniversary of Hong Kong's worst-ever riots saw roughly 70 former leftists pay their respects to 16 workers killed in the violence. Chan Sze-yuen, chairman of the 67 Synergy Group, which comprises leftists jailed during the 1967 riots, said it was their first collective visit to the workers' graves. The workers are buried alongside each other in Wo Hop Shek Public Cemetery in Fanling. "During the 1967 riots, the Hong Kong government buried some workers who were killed during the disturbances in the cemetery without naming them on their graves," Chan said, "The government did that because it was at war with the leftist camp." In 1973, the Hong Kong and Kowloon Spinning Weaving and Dyeing Trade Workers General Union - a member union of the Federation of Trade Unions, a Beijing-loyalist - confirmed the location of the graves of more than 20 of the workers. The union subsequently reburied the 16 workers at a particular location in the Fanling cemetery after seeking their families' consent. Chan said his group last year learned that the workers were buried together, and organised yesterday's visit to mark the anniversary. "We plan to organise similar visits on May 6 every year in the future," he said. The group also aims to seek redress for those jailed and killed during the riots. The infamous riots broke out on May 6, 1967 when 21 people were arrested during a clash with police outside the Hong Kong Artificial Flowers Factory in San Po Kong. They escalated in the second half of that year, with the leftist camp staging general strikes and some extremists planting bombs on the streets. According to government statistics, the riots claimed 51 lives; 15 people were killed by bombs and 832 people were injured. By December 31, 1967, 1,936 people were convicted during the turbulent period. Luk Tak-shing, who delivered a eulogy at a ceremony held near the workers' graves, said he believed the reputation of those workers would be cleared by history. Ho Hiu-ming, whose father, Ho Fung, was killed in a police raid in July 1967, said the visit was very meaningful, as it would remind Hongkongers about that dark chapter in the city's history. "Some people have negative views about the leftists who fought against the British in 1967 because they don't know what exactly happened at the time," Ho said. "Many workers and students were arrested even though they did not take any violent actions."

Hong Kong's total retail sales value in March was provisionally estimated at 36.6 billion HK dollars (about 4.72 billion U.S. dollars), increasing 17.3 percent over a year earlier, the city's Census and Statistics Department announced here Thursday. After netting out the effect of price changes over the period, the volume of total retail sales increased 13.4 percent in March compared with a year earlier, the department said. The relevant components of the Consumer Price Index are used as deflators. The revised estimate of the value of total retail sales in February increased 15.6 percent year on year to 33.8 billion HK dollars, while the volume of total retail sales increased 10.1 percent. For the first three months of 2012, total retail sales rose 15.9 percent in value and 10.7 percent in volume over the same period last year. Based on seasonally adjusted series, the volume of total retail sales decreased 0.9 percent in the first quarter of 2012 compared with the preceding quarter. Analysed by broad type of retail outlet, the volume of sales of miscellaneous consumer durable goods in March increased the most by 84.7 percent on year-on-year comparison. On the other hand, the volume of sales of furniture and fixtures decreased the most, with a 10.4-percent slump. A government spokesman noted that retail sales expanded strongly in March, reflecting the fairly buoyant tourist spending and local consumer sentiments. The spokesman added that looking ahead, the favorable labor market conditions and prevailing strength of inbound tourism should continue to render support to the retail business in the near term. (1 U.S. dollar equals to 7.758 HK dollars)

Visitor arrivals to Hong Kong in the first quarter this year reached 11.22 million, a 15.6 percent year-on year increase, the city's Tourism Board announced here Friday. Mainland arrivals rose 21.1 percent to 7,895,453 while there was a 10.6 percent rise in arrivals from North Asia to nearly 650, 000. Arrivals from South Korea rose 17.2 percent to exceed 300,000. Tourism Board regarded it as a result of the country's stable economy and the strong won against the Hong Kong dollar. Overall arrivals from Japan went up 5.3 percent to 340,000, bringing the market's performance back to levels before the March, 2011 earthquake and tsunami disasters. In the long-haul markets, overall arrivals from Europe gained 9.4 percent to 483,363, despite the impact of the sovereign debt crisis. Russian arrivals rose 72.3 percent to reach 50,961.

Chief executive-elect Leung Chun-ying yesterday expressed frustration at the inefficiency of policy implementation in recent years and said people had become used to things getting done at a snail's pace. If the city delayed his proposed reorganisation of the government, it would lose its competitive edge, Leung warned. "It seems that Hongkongers are used to the fact that we get things done at a slower pace," he said on a radio program. "We used to work very fast and efficiently. However, if we allow [social] problems to drag on and rely only on the success we have achieved in the past, I don't know how long we can still rely on such achievements." Later, Leung said at a separate event that he was not criticising the current administration but urging stakeholders - including lawmakers - to show a sense of urgency in tackling pressing issues. On the radio show, Leung cited the example of public housing, saying his proposal for a housing, planning and lands bureau would alleviate the problem. He said Hong Kong's economy had fallen behind Singapore's in the past 10 years and his reshuffle was intended to speed up growth and solve housing woes. Leung pointed to a reorganisation of the government under Chief Executive Donald Tsang Yam-kuen in 2007, in which a transport and housing bureau had been formed. That had overloaded its minister, Eva Cheng, and as a result the administration's long-term housing planning had been inadequate. Leung obtained endorsement for his restructuring plan from the Executive Council on Friday and will now take it to the Legislative Council. He wants lawmakers to approve it before he takes office on July 1. But filibustering in the legislature on controversial amendments to the electoral law may delay its scrutiny of his revamp, while pan-democrats are demanding a full public consultation on the overhaul. Leung proposes creating two posts - deputy chief secretary and deputy financial secretary. Paul Chan Mo-po, the lawmaker for the accounting sector widely tipped to be deputy financial secretary, yesterday urged his colleagues not to delay passage of the election law amendments so as to allow time to scrutinise Leung's plans. Chan would not comment on whether Leung had invited him to join the cabinet. Emily Lau Wai-hing, vice-chairwoman of the Democratic Party, said she wanted thoughtful public discussion of the proposals before they were put to a Legco vote. Leung also said some of his preferred ministerial candidates had declined invitations to join his team because of personal reasons, such as concerns about their family, health and age. Some talented people outside government had also declined to serve, he said, because of the increasing politicisation of society. "Some talented people may not get used to the political environment in Hong Kong," he said. "As public officers we live in a goldfish bowl, which is always under close watch by the public."

A controversial dinner at which women paid nearly HK$5,000 to "speed date'' foreign men went ahead at an alternative location last night just hours after the five-star Mandarin Oriental Hotel cancelled it - apparently on the grounds of taste. The "Dinner with Foreigners" was only open to women who paid HK$4,800 for the arguable pleasure of "speed dating'' middle-aged foreign men who attended - and ate - for free. It was promoted widely as taking place at the plush hotel in Central. But after a storm of social media criticism over the women-only charges and, it is understood, a flood of calls to the hotel, just hours before the 8pm dinner started organiser Rachael Chan Ying-lam of HK Speed Dating was told she wasn't welcome. "The hotel said they didn't do dating events, but I said, 'How about weddings?' They didn't reply," she said. "[The dinner] was fully booked and I have the receipts to prove it." It is not clear if the hotel knew the exact nature of the event when it was booked. Bachelors who attended the two-hour dinner had to be aged 35 to 48 and be a foreign, working professional. Chan did not spell out who qualified as a foreigner. Calls to the hotel management were not returned. Chan said the women-only fee was about ensuring the participants were committed to finding a partner: "Looking for love is, most times, a bit sensitive and the more we charge, the more serious the person is." She did not explain why the condition did not apply to the men. The dating agency has held events for single millionaires and men looking exclusively for a flight attendant as a partner. Former banker turned dating coach Willie Booker said he was surprised the event had been fully booked as women could easily meet foreign men in Lan Kwai Fong without paying a big fee.

The closure of a private hospital that carries out almost half of Hong Kong's abortions could lead to women seeking illegal or unsafe terminations, it is feared. Last year around 5,000 abortions were performed at the Hong Kong Central Hospital in Mid-Levels. The rest were carried out at either public or private hospitals or by the Family Planning Association (see the accompanying table for the cost of abortions at these institutions). According to the latest official figures, 11,230 abortions were performed in the city in 2010. The 50-year-old Lower Albert Road hospital is widely used because of its competitive rates. But its landlord, the Hong Kong Anglican Church, wants to redevelop the site. It means the hospital is likely to close, sparking fears that the city's already stretched medical sector will be unable to meet the demand. The Development Bureau has already approved the church's redevelopment plans, but final approval is still pending. "We'll have to close if we can't find another site,'' said hospital executive manager Wendy Tam. A former chairwoman of the Women's Commission, Sophia Kao Ching-chi, said a contingency plan was needed to ensure affordable abortion facilities. "There is a demand and that demand needs to be met," she said. The hospital charges HK$8,000 for an abortion, making it the only affordable option for women past 10 weeks pregnant. The Union Hospital in Sha Tin charges twice to four times as much for an abortion depending on the difficulty of the surgery and the quality of aftercare and room and board. Public hospitals perform only about 500 operations a year because of strict criteria for who is eligible. Abortions are legal up to 24 weeks in Hong Kong, but two doctors must certify it is necessary. "If these places [at Hong Kong Central Hospital] were to disappear overnight, where are these women to go?" asked women's rights advocate Liu Ngar-fun. "This is going to affect their choices. You don't want to drive abortion underground." Luna Chan Lui, chief operating officer for PathFinders, an NGO that works with migrant mothers, expressed concern over illegal abortions, which can cause infections, injury, infertility and even death. She said underground abortion clinics moved around the city to avoid detection and were used by local women and domestic helpers. "My girls say there are usually eight or so other girls sitting there waiting. It costs about the same as the Family Planning Association, HK$3,000-4,000, but you don't have to make appointments and you don't have to get the two doctors' approval or go to meetings." Price and convenience also encourage women to travel to the mainland for the procedure. Others say they have been sold abortion drugs, which are illegal. The Family Planning Association is the only place where termination without surgery is available. Of 311 women interviewed in a 2007 survey by the association, 43.4 per cent said they had a termination on the mainland. Only 3.9 per cent said they had an illegal abortion in Hong Kong. The city used to have one of the highest abortion rates in the world, with 29 per cent of babies conceived aborted in 2001, but the number has now fallen by half. The hospital has been locked in a dispute since the church announced its redevelopment plans in 2009. A church spokesman said he was aware the hospital carried out a high proportion of the abortions in Hong Kong, but insisted it had nothing to do with moves to evict the hospital.

 China*:  May 8 2012 Share

Defence Minister Liang Guanglie has started a week-long official visit to the United States, where he will meet state and military leaders, an opportunity for both sides to strengthen communication and military co-operation. Liang is the first Chinese defence minister to visit the US in nine years. His American counterpart, Leon Panetta, said they would hold talks at the Pentagon tomorrow. "There are a lot of issues we have to discuss … North Korea … the ability to have free trade in that region," Penetta said. He also expected to discuss management of open sea lanes, humanitarian assistance and the proliferation of nuclear weapons. "What I am hoping is that we can establish at least a process whereby we can communicate with one another on a peaceful basis," he said. Shanghai-based military expert Ni Lexiong said the competing claims over sovereignty in the South China Sea issue would be another key issue. "Since the Philippines and Vietnam are keen on winning the US's support when dealing with China about their territorial disputes in the South China Sea, Liang and Panetta might exchange their views on this sensitive issue," he said. Liang later in the week will visit leading US military installations, including the home port of the US Pacific Fleet in San Diego, California, the US Southern Command in Florida, Fort Benning in Georgia, Camp Lejeune in North Carolina, and the military academy at West Point.

Despite a slight increase in the number of overseas buyers, the sales volume declined at China's largest trade fair, sending a gloomy signal for the export outlook. Transactions clinched at the 111th China Import and Export Fair, which concluded on Saturday in Guangzhou, capital city of Guangdong province, totaled about $36 billion, down 4.8 percent and 2.3 percent compared with the fair's 110th and 109th sessions, sources with the fair's organizing committee said. The fair, also internationally known as the Canton Fair, meanwhile, has registered more than 210,000 overseas buyers from 213 countries and regions, a slight increase of 0.23 percent over the previous session. "The decline in sales was mainly due to sluggish demand from Europe and the United States," said Liu Jianjun, the fair's spokesman. Affected by the European debt crisis, the number of buyers and transaction from Europe decreased by 15.5 percent and 5.6 percent, respectively, Liu said. Sales volume to US buyers also decreased by 8.1 percent compared with the last session, according to Liu. "Buyers are still holding a cautious approach in signing long-term orders with Chinese exporters due to the global financial crisis," said Liu, who noted that about 86 percent of orders signed at the fair are short-term deals. "Disappointed by slowing demand from Europe, we have turned to emerging markets like South America," said Cao Yunhui, exports manager of Fuxin Electronic Technology Co, a wine cooler exhibitor at the Canton Fair. Transaction from emerging markets including the BRICS members and African countries increased by 4.1 percent and 13.5 percent, respectively, sources with the fair's organizing committee said. Chen Feng, executive chairman of Guangdong Xinghui Auto Model Co, said the company's business in emerging markets - including Brazil, Russia, India and South Africa - has seen a dramatic increase in the past two years. The company, based in Shantou of Guangdong province, ships its toy model cars to 47 countries and regions, with its profit in Russia, for example, increasing by 40 percent last year, according to Chen. "Along with upgrading our products, we have been focusing on the emerging markets since the global financial crisis in 2008, when the world economy in major markets of Europe and the US has been sluggish," Chen said. With a dramatic increase of exports to emerging markets, the company has witnessed steady business growth in recent years, with sales reaching some 440 million yuan ($70 billion) last year. To attract more buyers from the developed markets like Europe and the US, the fair's spokeman Liu Jianjun urged Chinese companies, especially those mainly engaging in simply processing, to focus on developing their own brands and invest more in self-innovation. "Providing high-end products catering to the EU market is the key to stabilizing export growth," Liu said. Chinese manufacturers who have already brought new and innovative products with high added value have seen rising popularity among European buyers, Liu said. "Besides the emerging markets, Chinese manufacturers should also turn to the domestic market to develop their sales channels," Liu said.

Hong Kong*:  May 7 2012 Share

Li Ka-shing's Hutchison Whampoa (SEHK: 0013) has made a bid of about €2 billion (HK$20.4 billion) for Eircom Group, the Irish phone company currently in supervised credit protection, sources said. The cash offer by Hutchison's Three Ireland subsidiary was rejected by Ireland's court-appointed examiner because there were too many conditions attached, two of the sources said. Three Ireland will probably make another bid, they said. Eircom filed for the Irish equivalent of bankruptcy protection on March 30 with €3.8 billion of net debt, the biggest corporate insolvency in the nation's history. Hutchison is stepping up its investments in Europe, where the Hong Kong company agreed to buy the phone carrier Orange Austria this year, and acquired the UK's Northumbrian Water Group in 2011. Lam Ka Kei at Redford Asset Management in Hong Kong, who rates Hutchison a buy, said: "Eircom is undergoing restructuring, so the company may be purchased at a discounted price. For Hutchison, price is the all-important thing in any deal. There are many companies in Europe that face financial issues, so there are opportunities for Hutchison." Officials for Eircom and Three Ireland declined to comment, as did a spokesman for Eircom's senior lenders. Eircom's examiner set a deadline last month of April 23 for indicative investment proposals, with May 7 the deadline for final proposals. Hutchison closed down 0.3 per cent at HK$75.80. The stock has risen 16.5 per cent this year. Eircom, which is based in Dublin, said on April 30 that the examiner, Michael McAteer of Grant Thornton, rejected a conditional non-binding offer for the company. It did not name the bidder. McAteer said on Thursday that he had not received another offer. Eircom customers have cut spending or ditched their contracts as unemployment tripled with the economic collapse that led Ireland to seek a bailout in 2010. Hutchison has said it was looking to expand its wireless business in Europe. There are opportunities for consolidation in the phone industry in the region, Hutchison's managing director, Canning Fok, told reporters in Hong Kong on March 29. "We will be the consolidator; we won't be consolidated," he said. In February, Hutchison agreed to buy Orange Austria in a deal valued at €1.3 billion to expand its operations in Austria. Hutchison's 3 Group, which owns phone businesses in Italy, the UK, Denmark, Sweden, Austria, Australia and Ireland, has made cumulative investments of HK$240 billion, according to Morgan Stanley in 2010.

Hong Kong's biggest taxpayer handed over HK$79 million in salaries tax last year, while one highly profitable company accounted for 3 per cent of all profits tax generated in the city, official figures show. The identity of the top taxpayer was not disclosed, but it is likely to have been Canning Fok Kin-ning, group managing director of tycoon Li Ka-shing's Hutchison Whampoa (SEHK: 0013) empire. He earned HK$170 million last year, of which HK$157 million was a bonus. Fok is often assumed to have paid the most tax. Only once in the past five years has the biggest salaries-tax payer's bill been higher - w in 2009-10, when it was HK$91 million. Revenue from the 10 biggest taxpayers in the 2011-12 financial year amounted to HK$498 million, an 82 per cent increase on the HK$274 million from the top 10 in 2010-11, Inland Revenue Department figures show. One expert said the leap in payments - and the fact that the government's tax revenue for last year grew to a record HK$238.3 billion - suggested the rich may have cashed in stock options in the expectation of gloomy economic times ahead. Another expert, Taxation Institute president Philip Hung, said the figures for corporate tax and the dominance of a small number of companies pointed to the potential dangers of a narrow tax base. "Our financial secretary has already given a negative note in his budget speech this year. In fact, his thinking has been shared by the companies at an earlier stage. Some predicted the property market would go downwards," Hung said. "It is not surprising for the staff of these companies [that predicted a negative economic outlook] to exercise their stock options at that point in time." He said the taking up of options was one-off behaviour, which was unlikely to be repeated in later years. Neither Hung nor Jeremy Choi, a tax partner at PricewaterhouseCoopers, would offer an estimate of the salaries of the top taxpayers, since the calculation would involve numerous variables and their high bills were racked up from a combination of bonus and stock options, not pay rises. Choi said the higher tax revenue did not reflect a general increase in salaries, but "it may be a reflection of some companies making big profits, like those in the real estate business". The most profitable firm on the list paid HK$3.52 billion. Hung said the fact that one firm was such a big contributor was unhealthy and showed the need for the tax base to be widened. "Apart from a few large developers, these are likely to be the multinational investment companies based in Hong Kong, which are attracted to the city's low- tax environment," he said. "Can you imagine what will happen to the government's revenue if they relocate to other Asian cities with better air quality and infrastructure? It's also time for the government to rethink how to retain these talents [of individual taxpayers] and companies." Owing to the city's narrow tax base, the highest-earning 200,000 individuals paid 80 per cent of the salaries tax. And just 10 per cent of roughly 91,000 firms paid profits tax. The government said this week it had conducted two studies on options for widening the tax base, but found no consensus in society.

The rural leader who ran a private park on government land for 18 years may be taken to court, although a Lands Department officer's fault may have prolonged the occupation. The Director of Lands Annie Tam Kam-lan said in a Legislative Council meeting the case had been referred to the Department of Justice, which would decide whether to take legal proceedings. But Leung Fuk-yuen, one of the two directors of the recreational park in Yuen Long, said the land belonged to his ancestors in the first place, and that he had also sought legal advice. The case of Tai Tong Lychee Valley in Yuen Long was one of the six cases exposed in the report. Legco’s public accounts committee held a public hearing yesterday to consider the Audit Commission’s report last month on illegal occupation of government land. Lawmakers criticised the government for failing to tackle the problem for so many years. Leung, chairman of the Shap Pat Heung Rural Committee and one of two directors of the recreational park, said in a phone interview the allegations levelled against him were unreasonable because “this used to be my ancestors’ land, if you really want to define its ownership.” “My ancestors began living here at least 300 years ago, and only in the 1970s the government forcefully took it as a country park,” he said. “Having said that, I only ran the park to educate children about the nature, not to make money,” he said. Leung is a key member of the powerful Heung Yee Kuk and a vocal opponent of the government’s crackdown on illegal structures in the New Territories. If he is brought to court, a revelation by Lands Department’s Tam that her colleague had failed to follow guidelines may one of his defences. Tam said an officer in 2006 had not passed on the case to a task force after rejecting Leung’s application for a short-term tenancy. As a result, the case had stood idle until last year, when Leung tried to apply for a short-term tenancy again and the Lands Department noticed something was wrong. Tam said: “the colleague who handled the tenancy thought it was done...Usually, there isn’t any problem with the system. But that time, why didn’t the colleague put it back to the system? I’m sorry, I can’t tell.” Leung said: “How could we have known? They didn’t even tell me. Does the government expect farmers to follow the gazette frequently?” The Development Secretary Carrie Lam Cheng Yuet-ngor said lands in the New Territories were entrenched in practical and historical issues. She said: “We’re not talking about big lots of lands which can be used to build public housing being occupied. Usually these involve marginal lands, or those behind houses, which the government can’t possibly use.” She said the government would come up with revised penalties during the next Legco term. The Kuk’s chairman Lau Wong-fat has previously said some land in country parks used to be private, and that the government was the one grabbing the owners’ land. On that, Lam said government policies would not be affected by what any individual people said. The Lands Department knew the 12,400-square-metre park has been using government land for 18 years, but acted only after it came under fire from the commission last month. The incident dates back to 1995 when villagers resisted government attempts to remove the lychee garden, which encroached on seven hectares of Tai Lam Country Park in Yuen Long. During the occupation, Leung submitted eight short-term tenancy applications, all of which were rejected by the Lands Department.

Hong Kong's creative minds have joined forces to demand that the government rethink the controversial copyright amendment bill and listen to the needs of artists in drafting the law. Representatives of the arts and cultural community said yesterday that the government had only sought opinions from a commercial perspective, while artists who created works the law is supposed to protect have not been consulted. At present, copyright theft is only a criminal offence if it is done for profit or has a significant impact on the copyright holder. The bill would extend that definition, and some campaigners fear it could criminalise works of satire, parody or tribute. Its passage through the Legislative Council has been delayed for two to three weeks after a lawmaker tabled more then 1,300 amendments. "The cultural perspective must be taken into account, but Hong Kong's discussion of the copyright law has never considered cultural factors," said veteran lyricist Calvin Poon Yuen-leung. "Why is this law only looked after by the Commerce and Economic Development Bureau? asked Poon. "Shouldn't it be discussed later when the culture bureau [proposed by chief executive-elect Leung Chun-ying] is set up?" Poon last month won the best original song prize at the Hong Kong Film Awards. More than 30 artists attended a press conference yesterday to express concerns about the law's impact on creative freedom. Many said they were unable to fully comprehend the implications of the law. Composer Adrian Chow said he struggled to understand the law, despite having studied law at university. "That's why it needs to be discussed carefully," he said. He said industry associations such as the International Federation of the Phonographic Industry), which represents the recording industry, and the Composers and Authors Society of Hong Kong had claimed to represent the interests of artists as the legislation was debated. "But they have never consulted me. How can this government say that they have done enough consultation? Does the government really have a firm grasp of public opinion?" Chow said. Poon, also a filmmaker, said he hoped the law would be studied carefully as it was complicated and problems with it would not be solved simply by exempting parodies, or any creation based on an original, copyrighted work. Controversy surrounding the bill is largely based on penalties for anyone who distributes copyrighted material extensively enough to, in the words of the Commerce Bureau's briefing to Legco, "affect prejudicially the copyright owners". Internet users fear this clause will lead to them being punished for sharing satirical, creative works based on posters, literature, music or films on a digital platform. Internet users have dubbed it the "Article 23 of the internet", after proposed national security legislation which prompted massive protests in 2003. More than 1,700 people have signed an online petition initiated by the culture sector against the bill. Poon, a copyright owner, said that a blanket exemption for works of parody or pastiche would also be unfair. "Rights holders and managers are under a lot of pressure too," he said. If the bill is not approved by the end of the legislative session in July, it will have to be tabled again by the new administration.

More than a million people will be able to ride the MTR anywhere for HK$2 from late next month if the government's HK$400 million flat-fare transport scheme for the elderly and handicapped wins funding approval from the Legislative Council. The new flat fare is set to be introduced in phases, starting with the MTR. Four of the five franchised bus companies will join in mid-September, followed by the New Lantao Bus Company and ferry operators early next year. The government will pay the difference between HK$2 and the existing concessionary fare, but a charity that works with the elderly said yesterday that the transport operators should foot the bill eventually as part of their "social responsibility". Doubts were also expressed about the future of the scheme if companies stopped their voluntary concessions, such as half fares for the elderly. All people over 65 and those aged 11 to 64 with 100 per cent disability and receiving a disability allowance will be eligible for the low fare any day of the week using Octopus cards. Funding for the scheme -which will benefit about 1.1 million people including 980,000 elderly - will go to the Legislative Council for approval on June 8. "Due to the complexity of setting up a centralised settlement platform for the different transport operators with different calculation systems, the scheme will be pushed out in phases, as we hope to roll it out as soon as possible," Labour and Welfare secretary Matthew Cheung Kin-chung said yesterday. The news was welcomed by Brotherhood Charity, a non-government organisation serving the elderly. "The implementation - albeit slow - is better than nothing," executive director Elton Lam said. But he added that as Hong Kong society was ageing quickly and the cost of the scheme would rise, the next step would be to look at legislation such as requiring transport operators to adhere to the scheme as a condition of their licence renewal. "Actually, it shouldn't be the government paying the outstanding amount. This is part of these companies' social responsibility. It shouldn't always be about profit-making," he said. Ng Wai-tung, of the Society for Community Organisation, added: "These big companies earn a lot already. They should be the ones paying. The government subsidising just means we [the public] are actually the ones paying for it. Even Shenzhen has free transport for their elderly. We are already a step behind." The scheme relies on transport operators continuing their voluntary concessionary fares, and Lam said if the companies withdrew these concessions it would have to be halted. A government spokeswoman said that if, for example, the original fare was HK$10 and the operator had a voluntary half-price concession, the government would pay HK$3 while the passenger paid HK$2. She said transport operators had promised they would continue their voluntary concessions, but did not state for how long.

 China*:  May 7 2012 Share

Grimsstadir in northeast Iceland, where a Chinese businessman plans to lease up to 300 square kilometres for a luxury retreat. A Chinese tycoon appears closer to realising his dream of building a luxury resort near the Arctic after coming to terms with Iceland's government over the leasing arrangement for a frozen chunk of land. Huang Nubo had tried to buy 300 square kilometres in the remote northeastern area of Grimsstadir in November, but legal restrictions on foreign ownership of land and local protests scuppered the project. A spokeswoman for Huang's company, Zhongkun Investment Group, said it expected to reach a leasing deal with the Icelandic government next month. The size of the plot, the length of the lease and its cost, measures to protect the environment and local hiring had been finalised, said Yao Chen , Huang's assistant and spokeswoman. "We look forward to a signing ceremony in June," she said. Iceland's national radio RUV reported on Wednesday that Huang had agreed a lease for 70 per cent of the 300 square kilometres for 40 years. The luxury resort project - which will include the hotel, a golf course and outdoor facilities - calls for an investment of US$160 million and will create between 400 and 600 jobs. The resort would target wealthy Chinese tourists, the report said. But Yao declined to confirm the numbers, saying details were subject to changes amid negotiations. "After rejecting our offer to buy the land last year the Icelandic government has been approaching us non-stop with alternative options such as leasing. In fact, e-mails have been exchanged every week," she said. The company was surprised by the RUV report as the parties involved had agreed to keep the terms secret until the official signing. After his initial offer was rejected last year, Huang blamed an anti-Chinese prejudice among Western governments. Xinhua even ran a commentary on its website, calling the incident an injustice and a collective effort by the West to demonise China. The company said at the time that it would consider other options and that Finland, Sweden and Denmark had expressed interest. Huang could not be reached for comment yesterday. But he told China National Radio on Thursday that the company would lease the entire site for 99 years and the total investment would be greater than reported. "Icelandic law only allowed land [to be leased to foreign entities] for three years. For our project, its parliament passed a new law raising the limit to 99 years," Huang said. Over five years, the company plans to spend US$200 million to build a 100-room hotel offering golf, horse-riding and hot-air ballooning.

International luxury brands in China are meeting the challenge of a market slowdown with greater efforts to improve the quality of customer service and the overall customer experience. Gucci plans to open 10 new stores in China this year, after opening 12 last year. The number of Gucci stores in the mainland increased from four to 46 between 2004 and the end of 2011. "Yes, the rate of expansion will be slower than in the previous years," Patrizio di Marco, president and CEO of Gucci, told China Daily. Some other luxury brands, including LV and Chanel, will also slow their expansion in China starting this year, business analysts said. Rather than just expanding their stores in China, the leading luxury brands are starting to pay more attention to upgrading their current stores. Despite the slowdown, Gucci will relocate and enlarge some of its stores in China. "It's not (store) numbers, it's how you engage with your customers that counts," Di Marco said. Luxury brands' slowing expansion is one of the reasons behind China's luxury market growth slowdown this year. "International luxury brands are cautiously optimistic about the future of China's market, because of uncertainty in the whole economy," said Bruno Lannes, a partner at the US-based consulting firm Bain & Company. The growth of China's luxury market will be about 20 percent this year, down 10 percentage points from last year, according to a Bain report. The first-quarter report issued on April 18 by LVMH, the world's leading luxury products group, showed that Asia excluding Japan did not rank among the top three growth regions for the group's fashion and leather goods department, which includes Louis Vuitton, Fendi and Marc Jacobs. During the first quarter, revenue in Asia grew by around 10 percent, while the region accounted for 32 percent of the department's revenue last year. Stacey Cartwright, chief finance operator of Burberry Group Plc, said on April 17 that the brand's revenue in China grew 20 percent from last September to March, but the rate was 30 percent between last September and December. Rising inflation and depressed securities and real estate markets have affected Chinese middle-class income and consumption, said Zhou Ting, executive director of the research center for luxury goods and service at the University of International Business and Economics in Beijing. "It is difficult to forecast how long the decline will last and maybe it is time for many luxury brands to change their strategy in China," Zhou added. "The Chinese market is evolving very fast and we need to be able to react to that changing market," said Patrizio di Marco, who said that is one of the challenges for Gucci in China. "Fortunately, we already established a large market share here," he said. "Our objective is now to consolidate our market share." More products and shopping channels will be a way that Gucci takes to keep its consumers. Gucci plans to launch e-commerce at the end of the year, allowing Chinese consumers to buy from Gucci's official website Gucci will open more stores targeted at male customers and children, Di Marco said. Luxury brands are now faced with the challenge of meeting more demands from customers. High-end consumers, especially in big cities, do not just follow the well-known brands and require more personal products, said Zhou Ting. "Scenes of Chinese consumers rushing into luxury stores for big names will diminish in big cities," she said. In addition to luxury goods, high-end consumers want a better shopping experience, she added. International luxury brands' after-sales service in China has long been criticized for its absence or the difficulty in obtaining services such as cleaning and maintenance. "The weakest link may be the easiest one to change," Zhou said. After-sales services have an important role to play in changing Chinese consumers' attitudes toward luxury brands, she added. Gucci has already taken steps in this direction with the launch of its customer service hotline in the mainland in February. Compared with the big names in the luxury industry, some niche brands are continuing to enjoy rapid growth in China this year. Bottega Veneta, a luxury fashion brand which is famous for its understated elegance, saw its revenue rise by 45 percent in Asia excluding Japan in the first quarter of 2012, according to its parent company's revenue report released last week.

Fifteen-year-old Wei Jiakun slides into the pilot's seat, fastens his seat belt and presses the start button. All the panel lights flash on, the engine starts roaring and he feels his seat shaking. As the Beijing high school student tightly and carefully pulls up the controls, he sees the airplane's nose lift on the screen. Time for takeoff. Wei, from Beijing No 57 Middle School, is trying his hand in the school's flight simulator, which the school has opened to its students since 2004. He has been learning to fly in this simulator for more than one semester. "If everything goes well, I will be able to join the special training class in my senior high school," said the student, who is now in his final year of junior high school. The Beijing municipal commission of education recently launched the special program in a few high schools, giving comprehensive training for interested and qualified senior high school students to become pilots. Wei's school and the High School Affiliated to Beihang University are the first two schools to run the class starting this year. It includes not only basic training in a simulator, but also comprehensive training on aeronautical theory, physical health and flight training on a real plane at the city's two air bases. Another high school, Beijing No 12 High School, will start the class in 2013. "China has an increasing demand for young pilots every year," said Ke Yubao, deputy secretary-general of the Aircraft Owners and Pilots Association of China. "Many students, especially boys, are very passionate about becoming a pilot. Yet it is usually when they go through examinations after high school that they discover they are not qualified." Since 2004, the association has run a flight training class with Beijing No 57 Middle School. "Through the class, we noticed many very brilliant students with amazing potential to become pilots," Ke said. "But many of them did not get on the path because of myopia." They also have to score high in English in the National College Entrance Examination, as English is the international language of aviation. "We feel it's a big pity for talented kids, especially when our country has a huge demand for young pilots," Ke said. Ke said that in 2011, Hainan Airline, a major airline company, planned to recruit 20 pilots in Beijing, but was only able find nine qualified applicants from a pool of around 400. According to statistics from the aircraft association, China will need another 18,000 pilots by 2015. Beijing No 57 Middle School will start recruitment for its training class on the coming weekend, accepting 30 students for the year. "Over the week, we've received many telephone inquiries," said principal Liu Xiaochang, adding that the class will not charge additional fees. Members of the flying association will offer training for the class.

Hong Kong*:  May 6 2012 Share

A blind woman has partially regained her sight after University of Hong Kong doctors implanted a HK$1 million microchip in an eye in a first for Asia. The German-made subretinal microchip implant, capable of reconstructing lights into images, is expected to be widely available in the market in one to two years. Tsang Wu Suet-yuen, 51, became blind 15 years ago from retinitis pigmentosa, a degenerative eye disease in which light receptors cease to function. Tsang, who had the three-by-three- millimeter chip implanted directly under the retina of her right eye on February 13 at Queen Mary Hospital, regained around 5percent of her normal vision. Electric power is connected to the chip through a wireless device placed behind an ear. Tsang is now able to find and identify objects placed on a table in front of her and may independently walk toward her husband. "It is still hard to identify details of his face but it makes me happy enough that, from total blindness, I can now see my husband in shades of gray," Tsang said. Those with the implant, however, may only see in black and white. And the technology is not risk-free. If the chip malfunctions, the patient will have to undergo further surgery to take it out, rendering them blind again. But those with the chip may take showers or even swim without affecting its function. The chip was developed by Retinal Implant. It chose the HKU Eye Institute as part of the third phase of clinical trials for the device, which may vastly improve the lives of up to 2,000 blind people in Hong Kong. Institute director David Wong Sai- hung said two patients have been implanted with the chip, which takes a nine- hour operation. The two were chosen from 12 patients through the help of Retina Hong Kong, a local support group dedicated to help those with retinal problems. "The visual results of these patients exceeded our expectations," Wong said. "The vision is not normal vision by any means, but we are very encouraged because never in my 35 years' experience as an eye doctor have I seen patients who are blind and can see again."

The chief executive-elect said on Friday he was concerned that delaying tactics in the legislature might block approval of government restructuring before his administration takes office. “If the government restructuring cannot be completed before the new government assumes office, many policies on economic, livelihood and housing will have to be delayed for more than half a year,” Leung Chun-ying said at a media briefing. His term begins on July 1. Leung was concerned that debate had been halted in the Legislative Council on Thursday because lawmakers’ attendance fell below the required minimum of 30. “I sincerely urge the legislators to make good use of the remaining two months [of the current term] to do what they should do.” Thursday’s Legco debate on an electoral bill was boycotted by pan-democratic lawmakers – amid other delaying tactics by opposition lawmakers – and several pro-government legislators failed to appear. It raised concerns across the political spectrum that the legislature would not be able to deal with several outstanding pieces of legislation – including bills on competition, copyright and regulating the sale of new flats – and Leung’s government restructuring proposal before the current administration’s term finishes at the end of June. A key opponent of the electoral bill vowed on Friday morning to continue the delaying tactics when the Legco debate resumes on Wednesday. People Power lawmaker Wong Yuk-man said on Commercial Radio that he would not allow Leung’s restructuring plan to “get passage in the Legco easily”, but did not say what tactics he would use to block it. Speaking on the same radio programme, pro-government lawmakers urged Wong to stop the delaying tactics. They included Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong; Miriam Lau Kin-yee, chairwoman of the Liberal Party; and Wong Kwok-kin, of the Federation of Trade Unions. Wong Yuk-man and party colleague Albert Chan Wai-yip had tabled more than a thousand amendments on the electoral bill. Wong Kwok-kin and Lau said they would not be strongly opposed to dropping the electoral bill given the time constraints.

A fare concession scheme for elderly and disabled people will begin in June, Secretary for Labour and Welfare Matthew Cheung Kin-chung said on Friday. The scheme will allow people aged 65 and older, and recipients of disability allowance, to pay a flat fee of HK$2 for a single ride on public transports, including the MTR lines, buses and ferries. The scheme will be implemented in phases because it involves complex details such as co-ordinating with transport operators and adjusting the Octopus payment system, Cheung said. The first phase will begin on the MTR by the end of June, he said. Franchised buses and ferries are expected to join in September and early next year, respectively. The concession will apply to trips paid with an Octopus card as well, Cheung said. About 1.1 million people are expected to benefit under the scheme. The scheme will cost about HK$400 million a year when fully implemented. The labour bureau will table a funding proposal to the Legislative Council in early June. The concession scheme was announced by Chief Executive Donald Tsang Yam-kuen last October.

Hong Kong-listed Sun Hung Kai Properties Ltd. said Friday that Walter Kwok, former chairman and the eldest son of the company's founding family, was arrested by the city's antigraft agency in connection with a bribery probe. Walter Kwok's arrest came after his two younger brothers, Thomas Kwok and Raymond Kwok, were arrested by the Independent Commission Against Corruption in March on suspicion of bribery. The two younger brothers are joint chairmen and executive directors of the group. Through a spokeswoman, Walter Kwok declined to comment Friday on his arrest. Sun Hung Kai, one of the world's largest real-estate developers, said in a statement that it was informed by Walter Kwok, a non-executive director of the company, that he was arrested by the ICAC on Thursday night and has been released on bail. "The Company wishes to clarify that the arrest has not affected and will not affect normal business and operations of the group," Sun Hung Kai said in the statement, after trading in the developer was suspended Friday morning. It added that trading will resume at 0500 GMT Friday. The company declined to comment further. Raymond Kwok has previously said he was innocent of any wrongdoing and believes his brother Thomas has also done nothing wrong. Along with the three real-estate-tycoon brothers, the ICAC also arrested Rafael Hui, the city's former No. 2 official, on suspicion of bribery and misconduct in public office in March. Thomas Chan, a long-serving Sun Hung Kai executive director, was also arrested at the same time as part of the same investigation. Neither could be reached for comment. On Wednesday, Walter Kwok said through his spokeswoman that he wasn't involved in Sun Hung Kai's recruitment of Hui and didn't know what Hui did at the group. "Hui worked for my two brothers and he was not a consultant to me or my mother," Walter Kwok told Dow Jones Newswires Wednesday through his spokeswoman. None of the five arrested has been charged so far and all have been released on bail. The brothers preside over a real-estate empire with a stock-market value of HK$246.7 billion with properties stretching across southern China, Shanghai and Beijing. Between the arrests of Thomas Kwok and Raymond Kwok on March 30 and Thursday, the company's shares have fallen 15% to HK$94.30. The ICAC declined to comment on Walter Kwok's arrest. The arrest of Thomas and Raymond back in March was a blow to the exclusive club of businessmen and politicians that has ruled Hong Kong since before Britain handed over the city to China in 1997. A small group of powerful organizations control real estate, transportation and communications in Hong Kong, and the spectacle of the two tycoons walking into law-enforcement offices to answer questions in a bribery case riveted the city's inhabitants. Sun Hung Kai, co-founded in 1963 by the late Kwok Tak-seng, has made its mark over the years as a staunch optimist in the Hong Kong property market, consistently betting on the city's rise and buying up lots of land for development. When the elder Kwok died in 1990, he left the reins of Sun Hung Kai to his eldest son, Walter Kwok, who took over as chairman and chief executive. He was removed from the company's board after a family squabble.

A model's work is never done - Some of Hong Kong's most glamorous faces are trading on their celebrity to set themselves up in business. Husband-and-wife team Anthony Sandstrom and Jocelyn Luko. Right: Cara Grogan at Genie Concepts, her juice bar in Sheung Wan. Adrienne Lau, CEO of fashion boutique Tinseltown. Former actress Lelia Chow, now managing director of Frement PR.

Diamonds cut from the 603-carat Lesotho Promise are shown at Graff Diamonds. The jewellery firm wants to further tap into China's growing high-net-worth population. Ultra-high-end jewellery maker and retailer Graff Diamonds got Hong Kong stock exchange approval yesterday for a listing worth up to US$1 billion, market sources said. The initial public offering could be the biggest in Hong Kong by an international issuer so far this year, but details of the issue, including its timing, have yet to be confirmed. It would also be the biggest IPO in Asia excluding Japan after the US$600 million listing in Thailand of the property fund of Tesco's Thai unit, according to data provided by research firm Dealogic. Haitong Securities, listed on the Shanghai Stock Exchange, raised US$1.7 billion in a share offering in Hong Kong last month, the biggest new listing so far in the region. While Hong Kong has had more IPOs this year, they have been smaller. Including Haitong, there have been 24 new listings, which raised a total of US$3.1 billion, so far this year, compared with 18 deals, which raised US$4.5 billion, over the same period last year, according to Dealogic. In Asia excluding Japan, both the number and volume of new listings have dropped. The region has raised US$13.4 billion through 126 deals so far this year, down from US$32.3 billion through 196 deals during the same period last year. Brokers said the market would be eyeing the Graff IPO with keen interest because of its unique market position. They said the listing would also be a breath of fresh air in a market that does not want to rely too heavily on listings of mainland companies. Kenny Tang Sing-hing, general manager of AMTD Financial Planning, said investors would be bullish on the stock following the strong performance of Italian luxury brand Prada, which raised HK$16.7 billion in June last year. Prada shares closed yesterday at HK$52.80, comfortably higher than the HK$39.50 offer price. "Graff Diamonds has a unique business model in terms of the rarity of its stones and its scope of business, which covers both production and retail of jewellery pieces," Tang said. Graff, founded by dealer Laurence Graff, specialises in rare gems and diamonds. In 2010, the firm paid a record 45.4 million Swiss francs (HK$386.5 million) for a 24.78 carat pink diamond at auction. Graff's clients include billionaires, celebrities and royalty, including Indian steel magnate Lakshmi Mittal, media mogul Oprah Winfrey and the Sultan of Brunei. The firm has some 30 outlets, including a store in Hong Kong's Peninsula Hotel. It plans to open a second shop in the city and new shops in Hangzhou and Macau this year to further tap into China's growing high-net-worth population. The Graff IPO will be managed by Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley. Listings in the pipeline this year include Sany Heavy Industry, which could raise up to US$3.3 billion, Chinalco's Peruvian copper mining assets (US$1 billion), and China Everbright (SEHK: 0165) Bank (US$1.9 billion).

William Fu, the managing director of YGM Trading, which has a portfolio of luxury brands. YGM in talks to take over British label Aquascutum - Bid for 160-year-old trench-coat brand points to mainland consumer demand for luxury items. YGM Trading's desire to tighten its grip on Aquascutum, a 160-year-old trench-coat brand that once dressed Winston Churchill and the Queen Mother, shows the growing appetite of mainland shoppers for high-end fashion with heritage. The garment maker said on Wednesday it was in exclusive talks with the administrators of Aquascutum in Britain until next Wednesday over the purchase of the British icon's business and assets, excluding its factory in Northamptonshire. Aquascutum's European business went into administration last month after co-owners Harold Tillman and Belinda Earl could no longer afford the group's heavy losses. The century-old factory has since been shut down, costing 115 jobs. The assets at stake include the intellectual property rights of Aquascutum and about 37 stores outside Asia. YGM bought the Asian operations in 2009 and there are about 300 stores across the region. Some analysts said the deal added to a bevy of European brands coming under the control of Hong Kong investors, who are vying for a bigger slice of the mainland's robust consumer market. Last month, fashion retailer Trinity, which is part of the Li & Fung group, paid up to £92.5 million (HK$1.16 billion) for the brand and business of Gieves & Hawkes, a British premium label for menswear since 1771. "These deals signal the rising appetite of mainland shoppers for established British brands," Kingsway analyst Steve Chow said yesterday. "They favour luxury brands with heritage." A KPMG survey of mainland consumers found "quality, exclusivity and heritage" were top of their list when they went shopping for luxuries. KPMG said the mainland was fast becoming the world's largest luxury market, with such products representing a higher social status and wealth level. Some analysts said it was necessary for garment manufacturers in the Pearl River Delta including YGM to transform themselves to take advantage of the mainland's policy of upgrading the domestic market. Aquascutum's businesses in Europe, North America and Latin America will be added to YGM's portfolio of such labels as Michel Rene, Ashworth, J. Lindeberg and Guy Laroche. Chow said he expected the Aquascutum deal would be sealed before the May 9 deadline, which he said would be "good news" to YGM as uncertainty about global ownership of the brand would be removed. He said YGM, which has HK$600 million in cash, was financially sufficient to cover the deal. He said Aquascutum would drive YGM's profit growth in the next few years. YGM's managing director, William Fu Sing-yam, was not available for comment yesterday. Fu said in October last year the design team at YGM's Hong Kong headquarters modified the designs from London. For example, consumers in northeastern China, which has cool weather and indoor heating, prefer their trench coats shorter, with thicker, knitted fabric, fur seams and single-breasted. A London-designed trench coat commonly has a longer body and is double-breasted but without fur. YGM shares rose 40 HK cents, or 1.94 per cent, to close at HK$21 yesterday.

The system allows electricity to pass through walls to power everyday household items. Power transfer system means no more cables - Who needs wall sockets? HKU researchers transmit electricity between devices over several metres. Refrigerators with no power cords and mobile phones that can be charged though a wall are on the way thanks to a wireless power transfer system developed by University of Hong Kong researchers. Wireless transfer based on electrodynamic induction - where electricity passes from one device to another without any direct connection as in a rechargeable electric toothbrush - has been around for years. But until now it was possible only over short distances. The system devised by Ron Hui Shu-yuen, chair professor of power electronics at the university, and Lee Chi-kwan, assistant professor of electrical and electronic engineering, can transmit power over what they term a medium range of a few metres. The electricity travels through an electromagnetic coupling between a series of resonating coils arranged in domino-like patterns that allow flow to be reversed or even split into branches with little power loss. "With the multiple coils system, electricity passes through distance as in a relay [race]," Hui said. "We can easily charge a mobile phone or supply power to the television next door through the wall." When the system was patented by Serbian-American inventor Nikola Tesla more than a century ago, it was assumed it would work only between two coils, limiting the distance over which it could be used. But the team found a way of making the power travel from coil to coil. Hui - who also invented the first universal wireless battery charging plate for hand-held electronic products in 2005 - said the new system would be useful in sites such as heritage buildings where drilling was not allowed. Even over longer distances, efficiency could be kept at 80 per cent. As the electromagnetic coupling was not radioactive, there were no health risks even when used throughout an entire house. The theory has been peer-reviewed and was published in the latest volume of the Institute of Electrical and Electronics Engineers' journal Transactions on Power Electronics last month. Hui said his team had patented part of the research and the project had been granted about HK$1 million from the government's Innovation and Technology Fund to extend the transmission distance and improve efficiency of the system. "If it works like it does in theory, we may transmit electricity wirelessly even between continents," he said.

Betty Kong, owner of Kay Lee Roast Meat Joint, wants to sell her culinary expertise and business, which has a 60 per cent profit margin. How much is a good siu mei or Chinese roast meat recipe worth? About S$2.25 million (HK$14 million), according to the owner of Singapore's Kay Lee Roast Meat Joint, who boosted the sale price of her restaurant by that amount for throwing in her recipes when she put it on the market this year. Betty Kong and her husband want S$3.5 million for their 60-plastic-stool establishment, a hefty premium over the S$1.25 million assessed value of the site. The price includes the 1,300 sq ft property, their recipes for roasting duck, pork ribs and crispy pig skin as well as other Cantonese-style classics, plus three months of cooking lessons - and, presumably, the loyal clientele that lines up outside, sometimes for more than an hour. "I have the heart to run it, but the body isn't willing any longer," said Kong, 66, the proprietress with frosted hair, cleaver in hand, and a gait burdened by decades of work. "I'm on my feet for eight hours a day and it's becoming tedious now." The premium being sought is more than 20 times the amount for comparable restaurants, raising the issue of whether trade secrets can increase the value of real estate, says Lee Ai Ming, a partner at law firm Rodyk & Davidson in Singapore. "It's a very compelling example of the value of intellectual property," she said. "It's an example of the price of real estate reflecting the brand and goodwill associated with a location of a successful business, and I'm sure we'll see more." At Kay Lee Roast Meat Joint, Kong's husband, Har Wai Kay, 62, reigns in the kitchen, rising at 4am daily to start the dishes his father, whose roots are in Guangzhou, used to cook for his family in the 1950s. Kong says her property and recipes warrant the premium in part because her roast pork, unlike her ubiquitous competition found on Singapore's streets for about S$3.50 or less a plate, uses special herbs and ingredients. She charges S$5. The Roast Meat Joint generates sales of around S$2,000 a day, she says, or S$620,000 annually, assuming it's shut one day a week and three days for the Lunar New Year holidays. Profit margin is 60 per cent, says her broker Raymond Lo at Knight Frank. The asking price is 5.6 times annual sales, compared with the 1.1 multiple for the Straits Times Index. It would take six years to recoup the recipe premium. The shop started in the 1970s in Chinatown, on the edge of Singapore's financial district. It moved about 12 kilometres to the city's eastern Paya Lebar suburb in the early 1980s, down the street from its current location where it moved in 2003. Customers give the fare rave reviews on the local food site hungrygowhere.com and say that its roast pork is uniquely honey-browned in a city where most char siew is red-barbecue-coloured. "The main draw to this rustic restaurant is its char siew and its boisterous lady boss," wrote a reviewer under the name Waragaw. While the food may be good, a buyer could find better things to do with the more than S$2 million premium, writes famed food blogger, K.F. Seetoh. "I can buy about four Unesco World Heritage houses, and perhaps an existence to go with it," he wrote. "With that amount I will also be treated like royalty in the casinos around the world. Or, I can buy that char siew and roast-meat business and work tirelessly in the fiery kitchen, forever."

 China*:  May 6 2012 Share

A distant view of the State-owned CSC Jinling Shipyard in Nanjing, Jiangsu province, May 2, 2012. The Chinese State-owned CSC Jinling Shipyard Co Ltd announced Tuesday at a news conference that it had signed a memorandum of understanding on April 20 with an Australian mogul to construct a replica of the Titanic in China. The deal between the shipyard based in Nanjing, Jiangsu province, and Australian mining magnate Clive Palmer to build Titanic II is music to the ears of China's shipbuilding industry, which is currently bogged in its lowest earnings slump in three years. Design plans have started for the new Titanic, which will have the same dimensions as its old version with 840 rooms and nine decks. The new vessel is expected to make its maiden voyage from London to New York in late 2016.

'Legend of Zhen Huan' sweeps Chinese mainland - The 76-episode drama series "Legend of Zhen Huan" (甄嬛传) has had sweeping popularity in the Chinese mainland over the past months, that "a whole town tunes in to watch when it airs on TV," Sina.com reported. The series is adapted from a novel of the same name by Liu Lianzi, and the story centers on the schemes between Emperor Yongzheng's concubines in the imperial palace during the Qing Dynasty (1644-1911). The pure and innocent 17-year-old Zhen Huan is chosen for the emperor's harem, and after entering the palace, she finds herself caught in the fierce infighting between the empress and the concubines. Realizing that the palace is actually a cruel and harsh place, Zhen has to learn to survive on her own, sometimes by unscrupulous methods. With her wits and talents, Zhen fights her way through and wins the emperor's affection, ultimately becoming the most powerful concubine in the imperial palace and ascending to unparalleled glory and wealth. However, she also becomes a woman with few true friends at her side, even after she is rid of all her enemies. Directed by Zheng Xiaolong and starring Sun Li and Chen Jianbin, "Legend of Zhen Huan" has been praised as one of the best historical dramas in the Chinese mainland in recent years. Through the thrilling story, audiences can also learn about ancient Chinese poetry, wardrobes, court etiquettes, and herbal medicine. The show also features many refined dialogues that become trending quotes among its followers on the internet. Some viewers have also begun using the story to allude to the present and describe the schemes and trickery between rivals in the palace as "a treasured book for survival in today's professional world." Psychological experts disagreed, saying that violent infighting is not a characteristic in modern workplaces. 

Yuan, yen, won and dollar banknotes. China, Japan, and South Korea have agreed to use their foreign exchange reserves to invest more in each other's treasury bonds, a step meant to maintain stability in their financial markets. China, Japan and South Korea agreed to promote the use of their foreign exchange reserves to invest in each other's government bonds to strengthen regional cooperation and stave off the impact of the European debt crisis. In a joint statement released by the Bank of Korea, the countries said they aim to further enhance their economic relationship to counter risks and uncertainties in the global economy. The statement was made after a meeting of the three countries' central bank governors and finance ministers in Manila on Thursday. The three countries also agreed to improve information sharing to further deepen regional ties. "Our view is that overseas demand, especially from central banks for foreign exchange reserve diversification, is one factor behind a medium-term convergence of long-term rates in South Korea and the global US benchmark," said Young Sun Kwon, a Hong Kong-based economist at Nomura Holdings Inc. By the end of March, China's $3.3 trillion of foreign reserve holdings ranked the world's largest, followed by Japan's nearly $1.3 trillion. South Korea's foreign reserve holdings of $316 billion were the world's seventh-largest. "Today's statement from the three countries shows the governments will enhance the status of Asian currencies by encouraging investment within the region," Bloomberg quoted Choi Seok-won, head of research at Hanwha Securities Co in Seoul, as saying. It would have the effect of reducing volatility from money coming in and out from other regions, said Choi. Japan announced on Thursday that it will start purchasing South Korean bonds to diversify its foreign reserves, beginning with a "small amount". It signed a similar agreement with China last December and applied to buy about $10 billion of Chinese bonds in February. The three countries, which account for 70 percent of Asian GDP, are also considering strengthening their cooperation by setting up a trilateral free trade zone. A summit meeting of the leaders of China, Japan and South Korea, to be held in Beijing later this month, will be "a positive signal for the arrangement of the China-Japan-South Korea FTA", said Commerce Minister Chen Deming. China and South Korea on Wednesday jointly announced the launch of FTA talks in Beijing, which are expected to be completed within two years. Along with the 10 members of the Association of Southeast Asian Nations, the three economies are expanding a regional liquidity safety net by doubling the Chiang Mai Initiative multilateralization agreement to $240 billion. The pact permits countries to swap their local currencies for US dollars in times of crisis. A draft of the communique, scheduled to be published after the one-day meeting of the 13 countries in Manila, highlighted the significance of expanding the currency swap arrangements given the current financial problems in Europe, AFP reported. "We are fully aware of the potential downside risks to the region's economic performance in 2012 ... The prolonged sovereign debt crisis in the eurozone could continue to weigh on ASEAN+3 economies through trade and financial channels," it said. The effects of the eurozone debt crisis have been spreading at an obvious pace to Asian countries, and the region's economic growth is not expected to regain momentum in the short term, said Liu Mingkang, former chairman of the China Banking Regulatory Commission. The 13 countries will also increase the amount of money available for lending to troubled members without conditions set by the International Monetary Fund, the draft said. The IMF-delinked portion, currently at 20 percent of the total, will rise to 30 percent next year and 40 percent in 2014 if conditions warrant, AFP reported.

Dalian Shipbuilding Industry has teamed up with Angang Steel (SEHK: 0347) and one of Asia's largest shipping companies to launch a 3 billion yuan (HK$3.69 billion) ship repair and recycling complex that will be the biggest such facility north of Shanghai. Steel from ships scrapped at the facility will be sent to Angang Steel's blast furnaces in Liaoning province to make new material that could be sold to Dalian Shipbuilding to build ships. The shipping partner in the venture is Singapore's Pacific International Lines, in which Chang Yun Chung and family have an 89.61 per cent stake. PIL is the major shareholder, with a 39.45 per cent interest, in Hong Kong's Singamas Container, the world's second-largest marine container maker. Teo Choo Wee, who is overseeing the project for PIL, said: "It will be the largest and most modern facility of its kind in northern China. It will be one of the most environmentally friendly recycling yards in the world." Teo said the facility would fully comply with the International Maritime Organisation's convention for the safe and environmentally sound recycling of ships, which was adopted by the organisation's diplomatic conference in Hong Kong in May 2009. Torben Skaanild, the secretary general of the Baltic and International Maritime Council, said that while the Hong Kong convention had yet to enter into force, it "was interesting the two main regulatory centres - Washington and Brussels - were moving forward on the IMO standard". The European Commission proposed new rules in March that ships registered in European countries could only be recycled in facilities that are safe for workers and environmentally friendly. The proposals, which will be discussed by the European Council and the European Parliament, aim to implement the Hong Kong convention quickly, without waiting for its ratification and entry into force, a process which will take several years. Teo said the complex on Dalian's Changxing Island would be capable of repairing up to 90 ships a year ranging in size between 70,000 and 300,000 deadweight tonnes when it became operational by the end of next month. This will include massive supertankers and the world's largest container ships, including Maersk's Triple-E series of 18,000 teu (20-foot equivalent units) boxships that will be delivered from 2014. Teo said the ship recycling complex, which will begin operating in the fourth quarter of this year, was targeted to scrap 75 vessels a year and produce 75,000 tonnes of steel for recycling. Scrap steel prices have surged in the past year, hitting more than US$500 per tonne in August, although they have cooled to more than US$400 per tonne as Chinese recyclers competed for ships against operators in India, Bangladesh and Pakistan. Ships totalling US$38.3 million were sold for scrapping last year, a 53 per cent increase over 2010. Asked why the three partners came together, Teo said PIL has been a major customer and strategic partner of Dalian Shipbuilding, ordering a total of 45 ships at the shipyard, of which 37 had been delivered. Angang Steel is the major supplier of steel plates to Dalian Shipbuilding for both new ships and ship repair. The combined facility will cover 1 million square metres and have a total quay length of 3.8 kilometres. Teo said Dalian's close proximity to Japan and South Korea meant it was cost-effective for shipowners in both countries to send their ships to Changxing for recycling.

President Hu Jintao and US Secretary of State Hillary Rodham Clinton at the opening ceremony of the US-China Strategic and Economic Dialogue in Beijing yesterday. Clinton told China that it cannot deny the "aspirations" of its citizens as she opened talks marred by the row over blind activist Chen Guangcheng, although she did not directly mention him. Chinese leaders called on their US counterparts to deepen mutual trust and to respect the nation's right to follow its own development agenda, as annual bilateral talks started in Beijing yesterday. US Secretary of State Hillary Rodham Clinton said bilateral co-operation was crucial to solving global problems. Both countries appeared to make an effort not to let the latest developments in the saga of blind activist Chen Guangcheng overshadow the Strategic and Economic Dialogue and to keep its focus on trade and economic issues, such as Chinese currency reform. Chen, who recently escaped government-imposed house arrest, said yesterday that he had changed his mind and wanted to go to the United States instead of staying in China. Speaking at the opening ceremony of the talks, President Hu Jintao called for co-operation and warned that any worsening of relations posed "grave" risks to the world. "Given the different national conditions, it is impossible for China and the United States to see eye to eye on every issue," Hu said. "We should approach our differences in the correct way and respect and accommodate each other's interests and concerns. We should properly manage differences through dialogue and by improving mutual understanding." Vice-Premier Wang Qishan said both countries faced their own difficulties in dealing with the effects of the global financial crisis, and it was important for both to fix their own problems. "Every family has a story that is difficult to read," he said. "Under the existing circumstances, China and [the] US should get their own things done properly." Chinese leaders gave Sino-US ties a positive assessment but also called for America to respect China's sovereignty and abide by international-relations norms. "The fundamental way to managing state-to-state relations is to abide by the basic norms governing international relations, namely, to respect each other's sovereignty, core interests and choice of social system and development path," said State Councillor Dai Bingguo. He said nothing could push the two countries towards confrontation, but added that they would face difficulties in boosting ties. Clinton said the US would raise human rights concerns during the talks, but placed more stress on the importance of bilateral co-operation. She said the US was committed to building a co-operative partnership with China, and called for Beijing's help in easing global tensions over Iran and North Korea. "I think it is fair to say that China and the US cannot solve all the problems of the world. But without our co-operation, it is doubtful any problems can be solved," she said. Shi Yinhong , a US affairs expert at Renmin University, said the Chinese leaders' remarks were a subtle expression of Beijing's frustration over Chen's case. "The US has previously said it respects China's right to choose its development path. But the incidents … have raised serious concerns about whether the US is becoming more disrespectful of China and increasingly meddling in China's domestic problems," he said. Commerce Minister Chen Deming urged the US to remove restrictions on hi-tech exports. "Mr [Timothy] Geithner [America's treasury secretary] has said the US has started relaxing the restriction, but it seems that some restrictions have been strengthened recently," Chen said.

Hong Kong*:  May 5 2012 Share

A shop in Causeway Bay. Strong consumer sentiments helped push sales in March to about HK$36.6 billion. Hong Kong’s retail sales rose 17.3 per cent in March year-on-year, continuing the rebound seen in January and February, according to government figures released on Thursday. The Census and Statistics Department said buoyant tourist spending and locals’ strong consumer sentiments helped push sales in March to an estimated HK$36.6 billion. March’s figures surpassed the increases in January and February, when the Lunar New Year holiday generates high consumer spending. January’s increase in value terms was 14.9 per cent and February’s was 15.6 per cent, over the same months last year. After discounting the effect of inflation, the volume of retail sales in March – as opposed to their value – increased by 13.4 per cent, the department said. Sales of miscellaneous consumer durable goods – such as computers, musical instruments and medical goods – increased the most in March, by 84.7 per cent. This was followed by electrical goods and photographic equipment, which soared 59.9 per cent. By contrast, sales of furniture and fixtures decreased 10.4 per cent, while motor vehicles and parts dropped 8.8 per cent. Over the first three months of the year, retail sales increased by 15.9 per cent in value and 10.7 per cent in volume, over the same period last year, the department reported. A government spokesman said March’s buoyant tourist spending and local consumer sentiment was expected to continue. “The favourable labour market conditions and the prevailing strength of inbound tourism should continue to render support to the retail business in the near term,” the spokesman said.

A Standard Chartered Plc bank branch in Beijing. Foreign investors mostly want to have access to the domestic inter-bank and bond markets, and increasing the limits that apply to qualified foreign institutional investors will not do much to draw in long-term capital, according to an economist at Standard Chartered, which is a qualified foreign institutional investor. China should further raise the investment limit on qualified foreign institutional investors and qualified domestic institutional investors to make the yuan easier to convert, said a senior official at the State Administration of Foreign Exchange. Sun Lujun, director of the capital management department of the administration, said the priority in making the yuan more convertible should be placed on opening up the domestic capital market and individual capital accounts to the outside world. He made the remarks in an article published in the magazine China Finance on Wednesday. Sun said Beijing should lower the hurdles foreign investors must cross if they want to gain access to the domestic capital market, allow overseas institutions to raise funds in the Chinese capital market through the launch of an international board, allow Chinese individuals to invest in overseas industries and securities and continue to increase quotas for renminbi qualified foreign institutional investors, or RQFII, which allows them to invest in the mainland using yuan they collected outside China. In early April, China announced it would raise the QFII quota by $50 billion, taking it to $80 billion. That was the largest such increase seen since the program was introduced in 2002. The limit for RQFII was meanwhile increased by 50 billion yuan ($7.9 billion) from the previous limit of 20 billion yuan. The China Securities Regulatory Commission said in a statement that it might continue to improve the qualified foreign institutional investor program in order to channel more foreign long-term money into the domestic capital market. Li Wei, a senior economist at Standard Chartered Bank (China) Ltd, said foreign investors mostly want to have access to the domestic inter-bank and bond markets, and increasing the QFII quotas will not do much to draw in long-term capital. Li said the case is different, though, for qualified domestic institutional investors. "An increase in their quotas would be more practical, although the act that the yuan cannot be freely converted is expected to restrict outbound investment," Li said. Authorities are worried about the risks that are likely to be brought by large influxes of capital, said Liu Yuhui, director of the financial laboratory at the Institute of Finance & Banking at the Chinese Academy of Social Sciences, a prominent central government think tank. Zhou Xiaochuan, the central bank governor, said in April that China looks closely at global liquidity when it makes policy decisions and tries to prevent large amounts of capital from flowing into the mainland when there is already a high amount of liquidity worldwide. China's recent policies are mostly "opening windows for domestic investors to go from China to the outside world", said Kenneth DeWoskin, director of the China Research and Insight Center at Deloitte & Touche Financial Advisory Services Ltd. "And the biggest change that they will bring is more ways that the yuan, China's national currency, can be collected to invest outside of China." What China would like to see happen to outbound investments should likewise be permitted to happen to inbound investments, DeWoskin said. The China Securities Regulatory Commission has deemed 158 institutions as qualified foreign institutional investors and only about 1.1 percent of the A-share market's value comes from such investors. By April 16, the State Administration of Foreign Exchange had decided to allow 136 foreign institutions to invest nearly $25.2 billion in total, and 98 domestic institutions to invest $76.4 billion in total overseas. In the first quarter of 2012, qualified foreign institutional investors have shown greater enthusiasm for investing in the domestic capital market. Overseas investors opened 12 new accounts in Shanghai and Shenzhen in the first three months of the year, half the number of new accounts opened in 2011, according to data from the China Securities Depository and Clearing Corp Ltd.

Hong Kong property sales volume is expected to rebound as much as 15 per cent this week as demand rose over the three-day Labour Day holiday, a peak season for mainland tourists visiting the city, according to property agents. David Chan, a director at Ricacorp Properties, believes an influx of potential buyers during the three-day holiday, which ended yesterday, would lift the number of transactions in the secondary residential market after declining for two weeks. Chan believes sales volume this week would increase by 10 per cent to 15 per cent. But the bump would not be enough for a major turnaround. "No significant breakthrough will be seen in sales volume as there are limited units for sale," Chan said. Sales in the 50 largest private housing estates monitored by Ricacorp dropped to 283 in the week to April 29 from 289 a week earlier, or 2 per cent. Despite the decline in home sales, Chan said prices rose 0.6 per cent from a week earlier as most apartments sold at high prices. Sammy Po, a director of Midland Realty, said the firm had arranged for several groups of potential buyers from Shenzhen and Guangzhou to visit new projects in the New Territories yesterday. "These groups of buyers are looking for apartments worth HK$10 million to HK$20 million each," he said. "Most of them are fast decision-makers as long as they like the units." Argus Mak, senior sales director at Centaline Property Agency's Sha Tin branch, said bookings for flat viewings rose 20 per cent this weekend from a week earlier. "We have registered 30 bookings this week," Mak said. "The market will become buoyant after being slow for a couple of weeks." Po said transactions could increase further as most buyers are waiting for two major projects to hit the market this month. They are 1,091-unit Century Gateway at Tuen Mun Station, a joint venture between Sun Hung Kai Properties (SEHK: 0016) and the MTR Corporation (SEHK: 0066), and New World Development's 981-unit The Riverpark at the Ma On Shan Line's Che Kung Temple Station. A strong response would be a positive sign for the market, Po said.

It has been over a month since the formation of Jetstar Hong Kong was announced, but those looking to fly cheap may have to wait a while as the budget carrier has yet to apply for the licence enabling it to operate here. To get the licence, Jetstar HK, a joint venture between Australia-based Jetstar Group and Shanghai-based China Eastern Airlines (SEHK: 0670), needs to prove that it is a truly Hong Kong-based carrier even though none of its shareholders is a Hong Kong-based company. Under the Basic Law, the government cannot grant an operating licence or traffic rights to an airline whose "principal place of business" is not in Hong Kong. "If the Hong Kong government allows Jetstar, why won't Virgin, Air Asia and Tiger set up Hong Kong-based subsidiaries, too?" said Andrew Pyne, senior partner at Concuros Partners, a consultancy firm for low-cost carriers. Jetstar's Hong Kong team will be put to the test in proving its local credentials. In order to fulfil the requirement of having the principal place of business here, it has to set up a management team separate from its parents' and a Hong Kong-based board. Market sources said the company was looking for a Hong Kong chief executive from outside the aviation industry. Another question hanging over the new venture is why it chose Hong Kong instead of Shanghai or another mainland city as its base when its main target group is the growing middle class on the mainland. Pyne said it would have been easier as a mainland-based company to apply for traffic rights to the mainland, rather than applying for them from Hong Kong. But Jetstar has served Hong Kong for seven years, and has never had a Shanghai flight. Hong Kong would fit the network in the Jetstar family and connect to its bases in Australia, New Zealand, Vietnam and Singapore. Jetstar's joint venture in Japan takes off in July and is expected to operate flights to the mainland and Hong Kong. Hong Kong, one of the busiest international air hubs, is one of the few Asian cities that does not have its own low-cost carrier, which has weighed down its air traffic growth to only 3-4 per cent a year, far lower than Singapore and Indonesia. Jetstar HK was launched at a time when an unprecedented tide of low-cost carriers swept across Asia. Starting from zero a decade ago, the number of such airlines has surged to 47 and is expected to reach 50 by the end of this year. Some 1,000 new planes have been ordered by budget airlines, which are projected to account for 65 per cent of the total regional market growth in the next 10 years. Even Japan, one of the most restricted markets, saw its first low-cost carrier, Peach, start operating in March. Two more will come on stream by the end of the year.

A Tai Hing restaurant branch in Causeway Bay, one of the company's 53 shops. The Cantonese-style roasted meat chain has yet to set a definite time scale for its IPO. Hong Kong diners don't mind paying a little extra for the best Cantonese snacks, but upcoming listings by two local chains - Tsui Wah Restaurant and Tai Hing Roast - may not tickle everyone's palate. Traders said the two tea restaurants had unique qualities that separated them from other listed fast-food chains, but that investors would still focus on their chances of survival in a tough retail environment. Tsui Wah would be the first local tea restaurant to go public, and Tai Hing would be the first Cantonese-style roasted meat specialist to list, should the deals proceed. Louis Tsui Ming-kwong, a director of VC CEF Brokerage, questioned whether Tsui Wah and Tai Hing could maintain or increase profit margins, in the face of high rents, rising inflation and wages, as well as increases in raw material costs, even if they expanded their networks. Existing listed restaurant operators and fast-food chains including Café De Coral have complained of cost pressures. In its last interim report, Café De Coral said total turnover rose 10 per cent to HK$2.9 billion, but net profit fell 15 per cent year-on-year to HK$191 million. It now has 90 shops, 15 institutional catering units and eight outlets of its premium line The Spaghetti House. It also has more than 100 stores on the mainland. Tsui Wah now has 23 outlets, including one in Macau, and two in Shanghai. Tai Hing has 53 shops, including 11 in Beijing, Shenzhen, Shanghai and Hangzhou. Arthur Kwong, head of Asia-Pacific equities at BNP Paribas, said Tsui Wah's business model had generated strong cash flows, and it might carve out a niche market in the mainland where consumers might find Hong Kong-style tea restaurants a novelty. But he said investors would scrutinise how Tsui Wah is going to spend its proceeds on business expansion, especially as none of its peers has ever had to raise funds for this purpose. "Investors are still watchful of small and medium size private companies after the spate of resignations of auditors from the listed SMEs," Kwong said. Investors would simply refuse to invest in listings where the proceeds would mainly go to the owners' pocket instead of the business, he added. Tsui Wah Restaurant Group has yet to say what it will do with any IPO proceeds, which could be as much as US$200 million. Chairman Lee Yuen-hong said yesterday that no timeline or listing details were available. Tai Hing has yet to announce its deal size and IPO timing.

A luxury residential site in Repulse Bay fetched nearly HK$40,000 per buildable square foot yesterday, the second-highest price ever paid for government land in Hong Kong. Tai Cheung Holdings outbid 10 other developers to win the 46,715 square foot site near 110 Repulse Bay Road for HK$1.668 billion, or about HK$39,673 per sq ft of maximum gross floor area. The selling price is within five surveying firms' estimates of between HK$1.362 billion and HK$1.89 billion, or HK$32,395 to HK$45,000 per sq ft. A site on Mount Kellett Road on The Peak - sold to Sun Hung Kai Properties (SEHK: 0016) in 2006 at a then world record price of HK$42,192 per sq ft - retains the crown for the highest price paid for government land in Hong Kong. One analyst attributed the failure to break the record to today's economic climate. "The reason it failed to become the most pricey site is there is more economic uncertainty now than in 2006," said Vincent Cheung Kiu-cho, national director of valuation and advisory services at property broker Cushman & Wakefield. "Also, developers do not want another record-breaking land sale, which may prompt the government to launch more cooling measures." Surveyors said the Repulse Bay site fetched a high price because it is a luxury residential area with a sea view and is known to many overseas and mainland investors. "Small and medium-sized developers like Tai Cheung may think Repulse Bay is a well-known area, which makes it easy to market the flats to mainland buyers," Cheung said. The site has a maximum gross floor area of about 42,044 sq ft, and buildings are limited to four storeys. Cheung expects the developer to build 10 houses of about 4,000 sq ft each priced at HK$60,000 to HK$80,000 per sq ft. Knight Frank executive director Alnwick Chan Chi-hing believes the houses could be marketed at between HK$60,000 and HK$70,000 per sq ft. Cheung said a luxury residential site at Mount Austin Road on The Peak that is now on the land application list may challenge the highest price when it is sold. Tai Cheung has been focusing on luxury residential developments and has actively bid for government sites in recent years but failed to win any. The last time it won a government site was in 2002, when it paid HK$100 million for a luxury site at Cape Road in Stanley. Meanwhile, Emperor Group won a residential site in Siu Lam, Tuen Mun, for HK$180 million, or HK$4,635 per sq ft. It outbid 11 other developers for the site, which has a maximum gross floor area of 38,837 sq ft. The price fell at the upper end of surveyors' forecasts. Donald Cheung Ping-keung, executive director of the Emperor Group, said the company would spend HK$400 million to build about 13 luxury houses on the site. He said earlier that villas to be built there could be sold for about HK$15,000 per sq ft at current market prices. Midland Surveyors' Alvin Lam Tsz-pun said the selling prices of the two sites were reasonable, and many bidders had been attracted by the possibility of building luxury villas.

Chongqing aims to have a total of nine metro lines by 2020 and 17 by 2050, according to the developer's construction plan. An ambitious billion-dollar plan to build metro lines in Chongqing - whose party boss Bo Xilai was sacked in March - is likely to slow down or even hit the brakes, owing to a lack of sustainable financing. The municipality's first metro line was officially launched in July last year. It was considered a key achievement for Bo and boosted his popularity among residents. In many modern cities, rail networks above and below ground are regarded as the most convenient means of public transport, but they are also expensive to build. On the mainland, a metro can cost several hundred million yuan per kilometre to construct, so having one reflects a city's financial strength. Chongqing's financial power is apparently falling in the wake of Bo's downfall. According to people familiar with the matter, Chongqing Rail Transit Group (CRT) recently began talks with banks in Hong Kong, seeking their help in raising money. The developer and operator of the metro in the western city had apparently experienced difficulty securing loans from banks on the mainland. Chongqing aims to have a total of nine lines by 2020 and 17 by 2050, according to the construction plan - a matter of public knowledge. It is unclear exactly how much money CRT is seeking to fund the next phase of its project, but bankers say such construction loans could easily hit one or two billion yuan. "They sound anxious to get loans, as the chance of them getting more big loans from banks on the mainland is small," said a Hong Kong-based banker who was involved in talks with CRT. The banks CRT approached had been generally hesitant and cautious in trying to reach a deal with the firm, which was also seeking other financing options, including issuing yuan-denominated bonds in Hong Kong, he said. Hang Seng Bank (SEHK: 0011, announcements, news) and Standard Chartered Bank are among the banks that CRT has been negotiating with, said one of the sources, who declined to be identified as the discussions are confidential. More than 15 billion yuan (HK$18.43 billion) has been invested in Chongqing's Line 1 and the first phase of Line 2, according to local media reports. Most of Line 2 has been completed and is already undergoing trials. Chongqing is building new lines, including some in its short-term rail development plan, that should be completed this year and next. Line 1, which has been running for less than a year, has been operating at a loss. Most of the funds for Chongqing's metro project now come from the local government's budget and debt, commercial loans from the mainland's "big four" state-owned banks and low-interest foreign loans, including €200 million (HK$2.03 billion) from Germany's promotional loan programme, part of financial co-operation. The city needs more money to keep its 2020 and 2050 metro development plans going smoothly, the sources said. Chongqing has long been considered a business hub for the western part of the mainland, attracting foreign capital in support of the nation's "go west" economic policy. Bo's fall from grace attracted huge attention from the business community at home and abroad. Residents liked Bo for improving the infrastructure and living conditions in the city - at the cost of enormous local government debt.

Former Bar Association chairman Rimsky Yuen Kwok-keung says he is prepared to quit his post on the Guangdong government's advisory body, as speculation mounts that he will be the new justice secretary. Yuen, a member of Guangdong's provincial Chinese People's Political Consultative Conference, said yesterday he could not comment on speculation that he was chief executive-elect Leung Chun-ying's choice. The lawyer courted controversy by joining the CPPCC during his spell as Bar chief, and lawmakers said yesterday it would be wrong for him to continue in the job if he were appointed to Leung's government. "What I can say now is that the situation is yet to be ascertained … there are a lot of considerations at the moment," Yuen said yesterday. Elected Bar Association chairman in 2007, he accepted the CPPCC appointment a year later. Some lawyers said the role conflicted with his post with the Bar. He stepped down as Bar chairman in early 2009. Yesterday he said: "I will [resign from the CPPCC] when there is a need to do so." Yuen, who turns 48 this year, is one of a batch of high-profile names hotly tipped to join Leung's cabinet when he takes office on July 1. Accounting sector lawmaker Paul Chan Mo-po has emerged as favourite to be named to the deputy financial secretary post Leung wants to create. Some lawmakers fear Yuen's role with the CPPCC could conflict with his duties as justice chief, especially with a series of hot-button legal issues with cross-border implications likely to land on his desk in the next five years. They include right of abode for babies born in Hong Kong to mainland parents, whom Leung has said would not be guaranteed residency from this year. "I am disappointed [by the prospect of Yuen's appointment]. Hongkongers want to see a person without much political background take the job," said Ronny Tong Ka-wah, a Civic Party lawmaker and barrister who, like Yuen, is a member of Temple Chambers. Labour Party lawmaker Cyd Ho Sau-lan said Yuen should not serve in public office in Hong Kong and on the mainland under the principle of "one country, two systems". New People's Party chairwoman Regina Ip Lau Suk-yee said: "The secretary for justice should stay impartial. He would not have the time to handle the CPPCC work anyway … he should quit that." Chan, a core supporter of Leung's election campaign, refused to comment yesterday on speculation linking him to the new financial post. The deputy financial secretary will, if Legco approves funding for Leung's shake-up, be tasked with boosting knowledge-based industries and capitalising on opportunities arising from the nation's 12th five-year plan. He will also be responsible for implementing the 36 measures to boost Hong Kong's economy that were announced by Vice-Premier Li Keqiang during his visit in August. Chan said he had been following the progress of the 12th five-year plan in his work with the Institute of Certified Public Accountants. Financial Secretary John Tsang Chun-wah is believed to have been offered another five-year term, having previously been widely tipped to leave the government.

Hong Kong's tax revenue rose to a record HK$238.3 billion in the 2011-2012 financial year, spurred by profits and wage tax gains. That was an increase of 14 per cent from the previous record in the preceding year. The taxman collected HK$118.6 billion in profits tax, up 27 per cent from the year earlier, while wage tax rose 17 per cent to HK$51.8 billion. "These increases were because of a good economic performance in the first half of last year, and they were mainly generated by a small number of firms earning high profits and a small group of high-income individuals," said Chu Yam-yuen, commissioner of the Inland Revenue Department (IRD). Owing to the city's narrow tax base, the highest-earning 200,000 individuals paid 80 per cent of the income tax. And just 10 per cent of roughly 91,000 firms had to pay profits tax. However, stamp duty revenue fell 13 per cent to HK$44.4 billion due to fewer transactions in the stock and property markets after August because of the global economic jitters. On the issue of whether the incoming government should review the tax system, Chu said his department had conducted two studies on broadening the tax base but there was no consensus in society. As part of the government's move to curb property speculation, a special stamp duty - levied on 225 transactions - collected HK$51.5 million since its introduction in November 2010. The stamp duty levies 15 per cent on the sale value of properties resold within six months of their purchase, 10 per cent for those sold within a year and 5 per cent for those within two years. Since it was introduced, up to about 20 transactions a month were slugged with it. The number of such transactions surged to 108 in March. Was the tariff's impact declining? "We don't know why there was a surge," Chu said. "But it is said that there is a short-lived boom in the property market. We need to look further." Chu also said there was evidence to suggest that the special stamp duty had achieved its aim. Before its introduction there were 320 confirm or sales a month on average. They are deals in which properties are resold by buyers before completing their purchase. After the stamp duty's enactment, monthly confirmor sales fell to an average of 74 transactions last year, and 29 in the past three months. But while the stamp duty had curbed property speculation, real estate prices kept rising due to low interest rates and inflation, said Eddie Hui Chi-man, a building and real estate professor at Polytechnic University. Patrick Chow Moon-kit, Ricacorp Properties' head of research, said the surge of sales in March subject to the stamp duty was due to profit-taking by investors who had held the properties long enough to qualify for the 5 per cent tariff. In the area of tax evasion, the taxman collected HK$6 billion in back taxes and penalties from various cases, some of which went back as far as a decade.

 China*:  May 5 2012 Share

Chen 'never pressured' to leave, Locke says - Blind lawyer Chen Guangcheng, left, is helped by US ambassador to China Gary Locke as they leave the US Embassy for a hospital in Beijing on Wednesday in this photo released by the US Embassy Beijing Press Office. Zeng Jinyan, the wife of human rights activist Hu Jia, with blind legal activist Chen Guangcheng at an undisclosed location in Beijing. Zeng said in a Twitter post on Thursday she was placed under house arrest, a day after Chen left the US embassy after a high-stakes diplomatic stand-off. The US ambassador to China on Thursday strongly denied accounts that activist Chen Guangcheng was put under pressure to leave the US embassy in Beijing. “I can tell you unequivocally that he was never pressured to leave. He was excited and eager about leaving,” Ambassador Gary Locke told reporters a day after Chen left the US embassy under a controversial deal. Chen has said he fears for his safety after leaving the embassy on Wednesday. Some activists say the 40-year-old left the embassy under pressure, including threats by China to retaliate against his wife. Locke said that US officials listened to part of a telephone conversation between Chen and his wife, shortly before his decision to leave the embassy. “She was imploring him to come to the hospital to be reunited with the family and saying that there will always be uncertainties and we need to take first steps,” Locke said. Locke said Chen told him during their hours of conversation he was prepared to spend “years” in the US embassy unless he had a deal that met his satisfaction. “He knew the stark choices in front of him. He knew that and was very aware that he might have to spend many, many years in the embassy, but he was prepared to do that unless the terms of an agreement with the Chinese government satisfied him,” Locke said. But Locke said Chen had voiced concern about the fate of his family in eastern Shandong province if he stayed in the embassy. Locke said that Chen was satisfied with Wednesday’s agreement after rejecting an earlier proposal. He did not describe the earlier plan in detail, but said that Chen had demanded a personal meeting with Premier Wen Jiabao, to whom he earlier sent a defiant open video-message. The ambassador said that Chen accepted the proposal that the Chinese government “take a first step as a sign of good faith”, and received that first step when authorities allowed his family to come to Beijing.

A worker clears up parcels at Shentong Express Company’s distribution center in Guangzhou, in South China’s Guangdong province. New national standards on express delivery, effective on Tuesday, may not substantially improve service as expected, but may increase the cost, experts said. The eye-catching details of the new standards include deadlines set for deliveries according to distance, the amount of fines if delays happen and how to sort parcels. Under the amended standards, addressees are encouraged to open the package for inspection before they sign their names to check if the item in the package has been damaged. "This is the first time the requirement of inspecting the package first has been written into the national standard," said Shao Zhonglin, deputy secretary-general of China Express Association, a non-profitable organization for major express companies. "It specifies the rights and duties of all participants in the delivery industry, which is a good move for the healthy development of the business, especially at a time when many people are using the service and an increasing number of disputes are happening," Shao said. But many experts and couriers doubt its effects in improving the efficiency of deliveries. "Under the new standards, couriers are forbidden from leaving packages at gatehouses or giving them to others to pass on to addressees. As a result, it sometimes will take more time for couriers to wait for the receiver to sign for the packages. As a courier can deliver fewer packages a day, the express companies have to hire more people, thus leading to a larger cost for the company," said Xu Yong, an expert in logistics at China Express and Logistics Consulting website (cecss.com). "The new standards are not laws but a guideline for the delivery industry. Without enforcing its implementation, I'm afraid that the standards would become useless," he added. Meanwhile, express delivery companies and couriers said they felt nothing different after the new national standards took effect. Zhou Ye, manager of the information office of Yuantong Express, which delivers more than 2.6 million packages every day, said they had asked employees to let clients open packages for inspection long before the national standards. "We'll offer clients compensation if the items in the packages were damaged. We'll also punish those who were responsible for the damage," he said. Zhang Wencong, a courier at Shentong Express in Beijing, another express company in the country, said he still left packages at the gatehouse as usual. "I don't have time to wait for every client to come in person, and I can guarantee there will be no problems. You know, if a client issues a complaint about my service and the complaint is proved to be true, I have to pay a 10,000-yuan ($1,600) fine. I can't bear that amount." "I usually ask the delivery man to put my packages in the reception room. You don't have to run out to sign for them when you are at work," said Kong Cong, a 24-year-old worker in Beijing, adding that her colleagues always did that, too. She said she did not know about the release of the new national standards, but she supported them. "It's time to make rules for the delivery industry. Some delivery men are irresponsible," she said.

US Secretary of State Hillary Clinton speaks with State Councilor Dai Bingguo at Wanshou Temple before their dinner in Beijing on Wednesday. The fourth round of the China-US Strategic and Economic Dialogue is due to be held from Thursday to Friday in Beijing. Amid a flurry of regional hotspot issues in the Asia-Pacific region, the China-US Strategic and Economic Dialogue is an opportunity for the world's sole superpower and a major rising power to learn how to cooperate with each other on overlapping security interests, experts said. The fourth round of the S&ED is scheduled for Thursday and Friday in Beijing. Vice-Premier Wang Qishan and State Councilor Dai Bingguo will join US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner to co-chair the annual double-channel dialogue on macroeconomic policies and major international issues. High-ranking officials from more than 20 government agencies on both sides will attend the gathering. Bilateral foreign policies, climate change, energy security, the Sudan issue and the security situations in Southeast Asia, among others, are expected to be discussed at the high-level talks. "Against the background of regional hot issues, how Beijing and Washington will coordinate mutual stances has attracted particular attention," said Qu Xing, director of the China Institute of International Studies. Jin Canrong, deputy dean of the School of International Studies at Renmin University of China, said with China's rapid growth and the eastward shift of the strategic focus of the US, deeper strategic trust has been a key precondition for a healthy partnership between the two world powers. "We noticed that this round of dialogue has put more attention on the small-scale talks (which are more secretive and usually touch upon sensitive issues). Besides, there will be a second round of strategic security talks. Such an arrangement reflects the common will of both sides to make the dialogue a more in-depth and productive one," Jin said. Under the framework of the S&ED, the first Asia-Pacific strategic security talks, which brought together diplomatic and military personnel from both sides, were launched last year as part of the broader dialogue mechanism. "This kind of security dialogue remains particularly important, especially at a time when regional security tensions have deteriorated following Pyongyang's failed rocket launch and the escalated confrontation between China and the Philippines on China's Huangyan Island," Qu said. "It is expected that China and the US ... can find the way for a major rising country to get along with a holding power," Xinhua said on Wednesday. The talks, which will take place ahead of both the US presidential elections and China's upcoming leadership transition, have further attracted attention from the international community, said Li Xiangyang, director of the Institute of Asia-Pacific Studies under the Chinese Academy of Social Sciences. The US is expected to continue to urge China to accelerate reforms of its State-owned financial sector and the exchange rate of its currency, said Song Hongru, a researcher with the Institute of World Economics and Politics under the CASS. "(But) considering the basic balanced exchange rate level the yuan has approached and China's decision to allow bigger daily fluctuations, the yuan's exchange rate issue is not expected to dominate this year's talks," Song said. IPR protection is also expected one of the main topics of the Beijing dialogue, according to Zhang Yansheng, director of Institute for International Economics Studies under National Development and Reform Commission. The US Trade Representative's annual Special 301 report — which designates the world's worst offenders of US intellectual property rights in Washington's eyes — on Monday once again listed China and Russia among the most serious offenders. However, Beijing has long said it expects the US to take more practical measures and suspend its long-established restrictions on high-tech exports to China, reduce prejudices on China's investment and handle bilateral trade frictions in a more cautious manner.

Loong Gate Resort in Hainan, by Cuningham Group of Minneapolis. The American wave: Two classic villas on Phoenix Island in Qingdao (top left and top right), by Los Angeles-based Landry Design Group, which attracted Chinese clients because of its expertise in traditional European architecture. M+M Creative Studio, based in Beverly Hills, has lent a contemporary touch to its Luxelake Wood Villa project in Chengdu. Omaha-based Leo A Daly's China Mobile headquarters in Beijing. Call it reverse outsourcing. In a trend that has been accelerating for the past few years, US architects and interior designers are finding that most of their work is now in China as they cater to the nationwide building boom; although analysts have been predicting the softening of the market for several months now, American architects say that, if anything, business is picking up. Top-notch US architects, who had typically worked on theme parks, outsized celebrity mansions and sleek skyscrapers in the US, largely shifted their focus East as the US market softened. As a result, US names are now attached in China to everything from golf courses and water parks to resorts and even super- deluxe private homes of 200,000 sq ft or more. "Right now, we have well in excess of eight million sq ft of homes just in China," said Richard Landry, a regular fixture on the Architectural Digest AD100 top architects and designers in the world. His Los Angeles-based Landry Design Group has completed homes for the likes of Rod Stewart, Tom Brady and Gisele Bundchen, and Sylvester Stallone. But it wasn't just the celebrity associations that first brought Landry to the attention of developers in China. Some cachet was acquired through a 2006 book, Modern to Classic: Residential Estates by Landry Design Group, which had been translated into Chinese. The company is known for its expertise in traditional European architecture, and found that this is what Chinese clients came to them for. "We got a lot of calls because of the book and it brought us a certain level of name recognition," Landry said. "Even now, we get contacted at least every week by potential clients." Among his current projects are a 200,000 sq ft house in Shanghai that has been under construction for almost two years. Although Landry won't go into details, he did say that the home was for "one large, extended family". "It's an amazing property," he said, "with beautiful estate grounds, gardens and water features. We have understood the culture of it, where the family can live together but where everyone has their privacy. These are people who do a lot of philanthropy and entertain a lot and need a place not just to live in but to hold events and fund-raisers." Architects say the mainland construction boom could not have come at a luckier time, some even admitting that it kept their businesses from folding long ago. "Projects in China now make up about 65 or 70 per cent of our portfolio," said Ahsin Rasheed, who heads DDG, a Baltimore-based company whose international projects range from retail and town centres to hospitality and residential. Although the company started working on the mainland a decade ago, it wasn't until more recently that the number of commissions began to soar. "When the meltdown happened in 2008, we started getting calls from our US clients telling us to stop work. So we hunkered down and started making calls to contacts in China and we got work and continued to stay in business," he said. "If we hadn't gone out and canvassed that business, we would have shut down." Rasheed's company's current mainland portfolio includes hotels, resorts, duplexes and town houses around the country. Current projects include Grand China, a vast retail centre in Tianjin that, at 4 million sq ft, will become the country's largest shopping centre when it opens. DDG also worked on the Xi Cheng Clubhouse in Shenzhen, part of the Xi Cheng Buena Vista mixed-use community. Rasheed has hired several Chinese-speaking architects to work in the Baltimore office. Detractors may argue that while all this is good news for US-based architects, it is less than optimal for their Chinese counterparts. "The Chinese are trying to build so much, so quickly, that they would use local talent - it's just that there aren't enough of them," said Chris Mitchell, CEO of M+M Creative Studio, based in Beverly Hills, California. "We're doing two projects through a developer in Chengdu - that same developer has 60 or 70 projects." Still, more than any perceived scarcity in homegrown talent is another, more critical, factor. "Developers in China really appreciate diversity more than anybody," said Mitchell. "They try to create marketable environments that will sell to middle- and upper-middle-level clientele with money. They are not trying to create something for nothing. "They are trying to move property and they go to multiple firms for multiple projects so they don't create a cookie-cutter look." That's certainly the case for the Luxelake Villas project that Mitchell is working on in Chengdu, which is as urbane and sophisticated as anything that might be found in, say, the Hamptons or St Barts. These 20,000 sq ft homes benefit from the wealth of craftsmanship in the area, including stone and wood carving that, says Mitchell, "rivals the Egyptians'". Chinese architects are almost always called in to collaborate with their American peers, and joint- venture deals and offices are beginning to mushroom. The Minneapolis-based Cuningham Group, commissioned to design the Loong Gate Resort in Hainan - a theme park with resort hotels, championship golf course and homes - recently began collaborating with century-old Tsinghua University in Beijing, one of China's leading universities, to create the Architectural Design and Research Institute. Working from a shared office in Beijing, architects from Cuningham and licensed professionals and graduates from Tsinghua's architectural programme will pursue projects related to entertainment, leisure and health care - fields that are less on the radar of US firms. "It's critical for any US firm that wants to work in China to have a presence here," said James Scheidel, chairman of Cuningham Group Architecture. Scheidel said that being able to work side-by-side with local architects helped address the "cultural component" of doing business in China, and was an advantage when pursuing new opportunities. "We are looking at a large health care project - which is a growing market in China - as well as creating the next generation of schools and learning centres," he said. "Having an established presence there will open up a variety of markets to us." Interestingly, Chinese developers are savvy about portioning out work, so although it seems that US architects have the lion's share of projects, that may not strictly be true. "None of these buildings are being done solely by an international architect," said Charles Peace, regional director for Asia for Leo A Daly, a 100-year-old family-run architect firm based in Omaha, Nebraska. "There are different stages of design, and a lot of collaboration, not just because it's cheaper or quicker but also because foreign firms are not always registered or licensed to do half of this work." Leo A Daly is now working on about 10 large-scale projects across China, including the national headquarters for China Mobile (SEHK: 0941, announcements, news) , the world's largest mobile phone operator, in Beijing. "Like anywhere else, there are literally thousands of developers in China, from the small provincial ones to the large national ones," said Peace. "Very simply, we focus on the big national developers. We are not hunting around in the backwaters of China for clients." US architects are aware that the China boom won't last forever, so they are diversifying into other markets - Cuningham has been involved in projects for the 2018 Winter Olympics in South Korea, while Rasheed is looking at Russia. "The pie is getting bigger," said Peace, "but most of it goes to local designers anyway. We are getting more projects, but we are getting less work out of each project."

Shares of Gome Electrical Appliances (SEHK: 0493) yesterday fell to their lowest in almost three years after the company issued a profit warning for the first quarter. The stock dropped 11.43 per cent to HK$1.24, the lowest since June 2009, after the company forecast on Monday "a significant decline in its net profit" for the first quarter. It attributed the poor performance to lower sales and a loss in its e-commerce business. Analysts said demand for home appliances on the mainland had cooled since the central government ended a nationwide subsidy policy in December last year. Under the policy, consumers were given subsidies when they replaced their old home appliances. Linda Huang of Macquarie said in a research note the operating deleverage would continue in the first half as the impact from the subsidy's expiration could last for the whole year. To boost sales, home appliance retailers including Gome have cut their prices sharply over the past months, which may have hurt their profit margins. In addition, the tightly controlled housing market is also a reason for the weaker demand for television sets, refrigerator and washers. Gome's major rival Suning Appliance, the largest retailer in the country, reported a 7.2 per cent drop in same-store sales and a 15 per cent fall in profit for the first quarter, reflecting the tough situation facing the entire industry. Gome operates 1,079 shops across the country as well as two online shopping platforms. Net profit fell 6 per cent to 1.84 billion yuan (HK$2.27 billion) last year despite a 16 per cent growth in revenue. Gome's stock has lost 28 per cent this year, against a 15 per cent gain in the benchmark Hang Seng Index.

China City Railway Transportation Technology hopes to cash in on an investment boom in mainland urban metro systems after raising about HK$246 million from listing on the Growth Enterprise Market (GEM) board in Hong Kong. China City Railway supplies city rail networks with information technology systems, ranging from automatic fare collection to passenger information equipment. It will issue 200 million shares at HK$0.95 to HK$1.23 per share, of which 180 million will be placed with international institutional investors and 20 million with the public. The international placement ends tomorrow. Shares start trading on May 16. "The response from international institutional investors has been very good. We are fully covered," said Danny Wong, head of corporate finance of Guotai Junan Capital and managing director of Guotai Junan Securities (Hong Kong). Guotai Junan Securities (Hong Kong) is the sole global co-ordinator, lead manager and bookrunner of the IPO, while Guotai Junan Capital and Quam Capital are joint sponsors. "The steady growth of China's metro railway offers us a huge business opportunity," said China City Railway chief executive Cao Wei. Under the government's Five-Year Plan for 2011 to 2015, urban railway investment is expected to reach 1.4 trillion yuan (HK$1.7 trillion). Beijing, which has the biggest metro rail network, plans to invest 162 billion yuan to expand from 342 kilometres to 660 kilometres in 2015, said Cao. China City Railway derives most of its revenue from Beijing, with some revenue from Hong Kong customers including MTR and Kowloon Motor Bus. In its niche, China City Railway commands 92 per cent market share in Beijing and 8 per cent of the total mainland market. "The Beijing metro system had rapid growth, so our company had explosive growth," said China City Railway chairman Tian Zhen Qing. Revenue jumped 195 per cent to HK$72.05 million in the fiscal year ended 30 June 2011, while net profit leapt 718 per cent to HK$40.47 million, with a net profit margin of 56 per cent. In the five months to 30 November 2011, its turnover rose 284 per cent to HK$65.25 million while net profit soared 404 per cent to HK$26.03 million. "We hope to expand to other cities like Chengdu and Changchun. We had lots of discussions," said Cao. Major shareholders in China City Railway include Vix Group, an Australian provider of automatic fare collection solutions, and Beijing Infrastructure Investment (BII), a Chinese state-owned company.

Defence Minister General Liang Guanglie will embark on an official week-long visit to the United States tomorrow, state media reported yesterday. As China's fifth-highest-ranking military official, Liang will meet US state and military leaders before talks with US Defence Secretary Leon Panetta and a joint press conference, Xinhua said, citing an announcement by China's Defence Ministry. Liang is also expected to visit the US Southern Command, the US Army's Fort Benning, the Naval Base San Diego, the 4th Fighter Wing of the US Air Force, the II Marine Expeditionary Force and the US Military Academy at West Point, the state news agency said. The visit is also expected to enhance mutual understanding and trust, promote co-operation, and push forward the healthy and stable development of bilateral ties, as well as military ties, Liang said. He met US acting Undersecretary of Defence James Miller in Beijing yesterday, noting that frequent high-level visits have promoted the building of a co-operative partnership of mutual respect and benefits between the two countries. Liang also urged the two sides to expand common interests and resolve differences, so as to ensure the sound and stable development of bilateral military relations. His tour comes amid tensions between China and the Philippines in the South China Sea, including a recent stand-off around Huangyan Island, referred to by the Philippines as the Scarborough Shoal. Professor Shi Yinhong , who specialises in international relations at Renmin University, said yesterday that, much like that of Vice-President Xi Jinping's trip in mid-February, Liang's trip will be part of normal top-level exchanges between the two countries - exchanges that have improved since President Hu Jintao's US visit in January last year. "As Washington has a huge influence over the actions of the Philippines, I think General Liang will urge his US counterparts to make use of that influence to keep Manila from overreacting while working to solve problems through diplomatic dialogues," the Beijing-based analyst said. Shi also said he thought Liang would almost certainly bring up the issue of US arms sales to Taiwan. The White House on Friday promised it would give "serious consideration" to selling F-16 fighter jets to Taiwan.

Hong Kong*:  May 4 2012 Share

Hong Kong’s tax revenues hit a record high of HK$238.3 billion in the 2011-12 financial year – up 14 per cent from the record set the previous year – the government announced on Wednesday. Chu Yam-yuen, commissioner for the Inland Revenue Department, said the increase was due to surges in both profits tax – which increased 27 per cent to HK$118.6 billion – and salaries tax, which climbed 17 per cent to HK$51.8 billion. “These increases were because of a good economic performance in the first half of last year, and they were mainly generated by a small number of companies earning high profits and a small group of high-salaried individuals,” Chu said. The city’s narrow tax base means 80 per cent of salaries tax was paid by the highest-paid 200,000 people in the city last year. About 91,000 firms, or 10 per cent of the city’s companies, were required to pay profits tax. Revenue from stamp duty dropped by 13 per cent, to HK$44.4 billion. That was due, Chu said, to the fall in the number of transactions – in both the stock and the property markets – after August due to the worsening global economic environment. Asked if he saw a need for the new government to review the tax system, Chu said: “In the past we have conducted two studies to broaden the tax base, but there was no consensus in the society.”

Walter Kwok Ping-sheung, the ousted chairman of Sun Hung Kai Properties (SEHK: 0016), yesterday attempted to distance himself from the corruption scandal engulfing the company as he stepped up his fight to regain some control over the family empire. Kwok denied knowledge of the involvement of former chief secretary Rafael Hui Si-yan in company business, which has become part of the corruption probe. Hui is the highest-ranking ex-government official to be arrested in the Independent Commission Against Corruption's 38-year history. "[Hui] was employed by my two brothers and he worked for my two brothers," Kwok said. "He did not have an office in Sun Hung Kai Centre...He was not an executive staff [of Sun Hung Kai Properties]. I really have no idea what he was doing." Kwok, who was ousted from the family trust that controls Sun Hung Kai Properties two years ago, has intensified his battle with his two younger brothers, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, for the HK$245 billion empire. Walter Kwok claims he has legal documents proving he still has a one-third stake in the company. A court in Liechtenstein is expected to be the next forum for the legal battle. A document being kept in there shows the latest holding structure in the trust, which controls 42.42 per cent of the property empire, according to Kwok. "I will seek legal advice about what is next if the document in Liechtenstein also confirms my shareholdings," he said. Liechtenstein-based lawyer Thomas Wilhelm and his firm Codex have filed an appeal against allowing him to view the document, he added. "I am authorised to view the document after winning an arbitration in the International Chamber of Commerce in Switzerland, but they rejected it," he said. The appeal hearing date is fixed for May 21 in Liechtenstein. Kwok claims Wilhelm represents his mother Kwong Siu-hing and his two brothers. The family could not be reached for comment, but a source close to the family denied Wilhelm and his law firm represented the family trust or any member of the family. According to sources close to Walter Kwok, the three brothers signed a "legal document" well before October 4, 2010, when he was removed as a beneficiary of the family trust. As part of that document, the three brothers agreed that each had a 15 per cent stake in the family trust with another 18 per cent to be granted in the trust at some time in the future. No time frame was mentioned. The Kwok family source said the document Walter Kwok held was outdated. Walter Kwok yesterday confirmed the three brothers had signed an extra legal document regarding the shareholding distribution in the family trust. But he declined to reveal any details. The feud among the three brothers surfaced in February 2008, when Sun Hung Kai Properties announced that Walter Kwok would take a temporary leave of absence for personal reasons. In May of that year, Kwok - after 18 years in the top job - was demoted to non-executive director. Family matriarch Kwong replaced him as the chairman, and removed him as a beneficiary of the family trust two years ago. The source close to the family said Kwong remained the decision maker for the trust. The family feud emerged again when Thomas and Raymond Kwok and Rafael Hui were arrested on March 29 by the ICAC in a connection with a bribery investigation. None of those arrested have been charged. Walter Kwok declined to comment on whether he, or his girlfriend Ida Tong, had spoken to the ICAC regarding the investigation. Asked why he was not investigated by the ICAC, Walter said: "Maybe they [the ICAC] know that I am not involved. As a matter of fact, I am not involved." Walter admitted he was chairman of the company when Hui was recruited as the consultant. But he said he had no knowledge of what Hui did for the company. He also denied reports that Hui was a consultant for his mother. The Hui inquiry is believed to include allegations of debts linked to him of more than HK$100 million, including an unsecured loan of HK$50 million, and alleged ties between him and Thomas and Raymond Kwok stretching back years. Land deals also form part of the investigation and could be related to the arrest and release on bail in March of Sun Hung Kai Properties executive director Thomas Chan Kui-yuen, the company's land acquisition chief. Analysts have speculated that Walter Kwok could regain control of the property empire if his two brothers are charged. Asked whether he would return to the company if invited by the board of directors, he said: "I will consider."

Wynn Resorts Ltd. WYNN +0.63% said Wednesday its unit, Wynn Macau Ltd., received approval from the Macau government for its Cotai land concession, paving the way for Wynn Macau to break ground on the 51-acre site. The casino operator didn't elaborate on the details of the project but said last year it planned to develop a resort containing a five-star hotel, gaming areas, retail, entertainment, food and beverage, spa and convention facilities in Macau's Cotai area. Shares of Wynn Macau were suspended from trading in Hong Kong Wednesday morning pending the release of price sensitive information. Macau, the world’s biggest gambling destination, posted a 21.9 per cent rise in April gambling revenue to 25 billion patacas (HK$23.8 billion), government data showed on Wednesday, after the opening of a new US$4 billion casino drew strong demand from wealthy mainland visitors. Macau’s booming casino business has been a goldmine for US casino giants such as Las Vegas Sands who have reaped stellar profits from their Macau subsidiaries. Mainland visitors contribute the bulk of revenues in Macau as it is the only place where they can legally casino gamble. Sands China, gambling billionaire Sheldon Adelson’s US$4 billion company, opened its new casino opposite its trademark Venetian property on April 11. With economic growth in China cooling and small- to mid-sized factories struggling, some Macau analysts remain cautious that a slowdown in the mainland coupled with a rise in bad loans could impact gambling revenues.

Taiwan legislator Lin Yu-fang (centre) visits Taiping Island, the biggest island in the disputed South China Sea, on Monday in an effort to emphasize Taiwan's claim over the Spratlys. Taiwan’s defence ministry said on Wednesday that it had formed a special airborne unit capable of scrambling to the contested Spratly Islands in just hours, as tensions in the South China Sea mounted. The unit has been set up under a plan named “airborne fast response and maritime support”, which was unveiled in a report by the ministry to parliament, officials said. No details of the unit, such as its size, were released to the public, but local media said that if needed, it could arrive on Taiping Island, the biggest in the disputed waters, onboard C-130 transport planes within four hours. Despite protests from other countries with claims in the area, Taiwan in 2006 built a 1,150-metre runway on the fortified island, which is about 1,376 kilometres away from Taiwan. Also on Wednesday, Taiwan’s coastguards said its troops stationed on Taiping will be armed with mortars with a range of 6,100 metres, nearly doubling the range of mortars currently in use. The moves come as an increasing number of Vietnamese fishing boats have been reported by Taiwan authorities as intruding into the restricted waters of Taiping. The number of intruding Vietnamese boats surged to 106 last year, up from 42 the previous year, according to the coastguards, which added that 41 Vietnamese fishing vessels had intruded into the waters in the four months to April. Tensions in the South China Sea have risen recently, with Beijing and Manila locked in a maritime dispute over Scarborough Shoal, a reef off the Philippine coast. The tensions began when mainland maritime vessels blocked the Philippine navy from arresting the crews of eight fishing vessels which had entered the area. Taiwan, Vietnam, Brunei, Beijing, Malaysia and the Philippines claim all or part of the potentially oil-rich Spratlys. All claimants except Brunei have troops based on the archipelago of more than 100 islets, reefs and atolls, which have a total land mass of less than five square kilometres.

 China*:  May 4 2012 Share

China will work harder to bring in more imports as it strives to bring balance to its trade, according to guidelines issued by the State Council on Monday. "The government will further improve the structure of imports and stabilize imports of bulk commodities while importing more advanced technological equipment, important parts and raw materials and appropriately broadening its imports of consumer goods," according to the guidelines. "More money for import promotion will be added to the present money set aside for developing foreign trade. And interest subsidies will be provided for government-encouraged imports while the coverage of the interest subsidies will be appropriately adjusted." The guidelines also called for more support for imports from developing economies. Dong Dengxin, head of the securities research institute at Wuhan University of Science and Technology, said the guidelines come as an important sign amid China's economic transition. "The policy will help balance China's international trade in view of its great foreign exchange reserves and ease the rising price at home against the background of a high (consumer price index)," he said. "The measures will also drive down the prices of imports and give the Chinese a greater chance of enjoying imported commodities as the yuan appreciates." The duties charged on some imports will also be adjusted. Tentative tax rates will be introduced to lower the import duties charged on some raw materials and commodities used in people's everyday lives, as well as to adjust the duties charged on imports of some advanced equipment and components. The goal will be to reduce the duties charged on primary raw materials and important components that are used in strategic emerging industries but that cannot be produced by China, the document said. "The important result of expanding imports of consumer commodities and other things is to bring more competition to domestic markets and provide more high-quality products for consumers," said Wang Haifeng, director of international economics at the Institute for International Economic Research, a think tank under the National Development and Reform Commission. Easier means of obtaining financing are being called for to encourage imports of advanced products and resources, as well as to broaden importers' means of obtaining finance. China reported the value of its imports increased by 6.8 percent in the first quarter of the year, down 26 percent year-on-year. It also said the value of its exports increased by 7.6 percent in the same period. That was the slowest rise seen since 1999 except for in 2009, when the figures were distorted by the world financial crisis, according to the Spring 2012 Report on the Foreign Trade Situation of China, which was issued by the Ministry of Commerce on Friday. Sluggish overseas demand and increasing domestic costs have taken a deceleration seen in China's foreign trade in the fourth quarter of 2011 and extended it to the first quarter of 2012. The second quarter, meanwhile, will continue to see slow trade growth while the whole year is expected to see slower but more balanced trade growth than 2011, according to the report. "The slowdown in GDP growth is under control and expanding imports will not hurt GDP growth, which the government wants to see happen at a rate of 7.5 percent this year," Wang said. "That will drive the economic transition at home and lead to balanced trade." For the country's 12th Five-Year Plan (2011-15), the ministry has set a goal of having trade grow at an average rate of 10 percent a year. That's lower than the 15.9 percent in average annual trade growth seen during the 11th Five-Year Plan (2006-10). The lower target came in response, in part, to the global economic slowdown, trade protectionism, fluctuations in exchange rates and increasing costs, according to the 12th Five-Year Foreign Trade Guide issued on Thursday. "China's move to expand imports will bring more market room for economies troubled by economic crises and reduce trade frictions," Wang said. "What's more important, it signals China's economic growth will continue and promote confidence in a global economic recovery."

A key manufacturing gauge rose to a 13-month high in April but clouds still hover over the economy as smaller businesses struggle due to weak demand. The Purchasing Managers' Index (PMI), an indicator of manufacturing activity, climbed to 53.3 last month from 53.1 in March, the highest since March 2011, according to a statement by the China Federation of Logistics and Purchasing on Tuesday. A reading above 50 indicates expansion, below indicates contraction. The index, based on responses from managers at more than 820 companies in 28 industries, shows economic expansion for a fifth month in the world's second-largest economy and suggests that the economy is growing at a robust rate. "The PMI shows that China's economic growth is upbeat," said Cai Jin, vice-chairman of the federation. Cai expected economic growth in the second quarter to hit 8.2 or 8.3 percent from 8.1 percent in the first three months, and the third quarter will see similar growth. "But there may be more uncertainty in the fourth quarter depending on the global economic situation," he said. "The PMI, as a preliminary indicator, showed that economic growth is warming up," said Li Daxiao, an analyst with research company Yingda Securities, in an online comment. "And recovery in the real economy will provide support and confidence to the stock market." Markets in the Chinese mainland and Hong Kong were closed on Monday for a public holiday but shares in the Australian market extended 0.5 percent on the release of the PMI figure. However, investors in other markets were less moved by the news because of concerns over the sluggish US economy and the eurozone debt crisis. Tight credit, especially for developers, had helped push the economy to its weakest footing since the fall of 2008. But there are signs that loan availability is improving. New loans in April may have reached 900 billion yuan ($140 billion), according to a recent report by China International Capital Corp. More attractive interest rates led to an acceleration in new mortgages, the report said. "Policymakers continue to grapple with the challenge of loosening enough to prevent a sharp slowdown, but not loosening too much and sparking an inflationary spiral," Alastair Thornton, analyst at IHS Global Insight, said. China's annual GDP growth slowed to 8.1 percent in the first quarter of 2012 from 8.9 percent in the previous three months - the fifth consecutive quarter slowdown. Zhang Liqun, a senior economist at the Development Research Center of the State Council, said uncertainty remains even though the economy has displayed signs of moderation, citing decreasing new orders in sub-indexes. The output sub-index rose to 57.2 in April from 55.2 the previous month, the highest since Jan 2011, while export orders also picked up slightly, according to the data. But the sub-index for new orders, 54.5, was increasing at a slower pace, the data showed, which Zhang viewed as a reflection of weak export demand. "Economic growth may slow further as affected by the changes in demand, and the key to steady economic growth lies in the stabilization of investment and demand growth," he said. Meanwhile, the overall increase in April's PMI was mainly driven by "large and medium-sized companies", while the gauge for "small companies" plunged to below 50, for the first time in four months, to 49.1. A separate PMI last week compiled by HSBC and Markit Economics, which is weighted more toward smaller businesses, showed that manufacturing may have contracted for a sixth month in April. The preliminary results of the HSBC survey in April stood at 49.1, compared to 48.3 in March. The final reading of the survey, which covers more than 420 companies, is scheduled to be released on Wednesday. Zhang Qizi, a researcher with the Institute of Industrial Economics at the Chinese Academy of Social Sciences, said the official PMI showed optimism on the macroeconomic level, but this was not reflected at the grassroots. "Manufacturing activity is mainly measured by investment and the return rate of a company, both of which allow no optimism," Zhang said. Zhang's comments were echoed by Wang Ming, a sales manager with Zhongshan Beiaos Metal Products, a producer of car alarm systems in Guangdong province, who said economic woes in Europe hurt sales last month. "Orders from Europe, our biggest export market, didn't pick up last month and we don't see it picking up soon," Wang said. "Inventory is high and we are not in a very good position right now." For Zhu Jianfeng, general manager of Wenzhou Gold Emperor Shoes, export orders and inventories stayed relatively stable last month, but rising material and labor costs are cutting profit. "Pressure is on the cost side and has been there for a long time. We have to digest cost hikes by ourselves in most cases," Zhu said. "The economic outlook is not promising when small businesses are facing heavy pressure," Zhang said.

Hong Kong*:  May 3 2012 Share

Hong Kong Monetary Authority chief executive Norman Chan Tak-lam received a pay rise of 8 per cent last year, giving him a total take-home sum of HK$9.04 million. Lawmakers and analysts considered that to be too high. The authority's annual report said Chan (pictured) received HK$9.04 million last year, up from HK$8.37 million in 2010. His base salary remained at HK$6 million, unchanged from the previous year. The rise came mainly from higher performance-related variable pay of HK$2 million last year, up from HK$1.5 million in 2010, plus a benefit of HK$1 million last year, up from HK$868,000 in 2010. Chan's pay is higher than Securities and Futures Commission chief executive Ashley Alder at HK$8 million and is higher than US central bankers. Federal Reserve chairman Ben Bernanke earns US$199,700 (HK$1.55 million). But it is lower than his predecessor Joseph Yam Chi-kwong's HK$10.9 million in 2009 and former SFC chief executive Martin Wheatley's HK$9.33 million last year. Chim Pui-chung, legislator for financial services, said the 8 per cent pay rise for Chan was too high. "Many employees only receive a pay rise of 4 to 5 per cent while some bankers are losing their jobs. Why does the de facto central banker enjoy a high pay rise while others in the banking sector are suffering?'' Chim asked. "The seniors officials at the HKMA receive a pay rise even though the Exchange Fund performed poorly. This is not fair when other white collar workers are now worrying if they can keep their jobs. "The HKMA pay rise in such a difficult time for the banking sector is one of the reasons for the widening gap between the rich and the poor. This is not good for Hong Kong.'' Other lawmakers such as Regina Ip Lau Suk-yee also complained about the poor performance of the Exchange Fund, which is managed by the HKMA. The global stock market downturn last year hit the city's Exchange Fund, resulting in its third-worst year on record, with a return of just 1.1 per cent - far below the average 5.6 per cent earned over the 18 years since the HKMA's inception. A source close to the HKMA said Chan should not be judged solely on the Exchange Fund performance. As a central banker, Chan also had to deal with other matters, such as the stability of the local financial sector amid the euro-zone crisis and developing Hong Kong's offshore yuan market, the source said.

It’s official: HKEx in running to buy metals exchange - Brokers urge caution as bourse confirms expansion plans include potential £1b purchase of London hub. Hong Kong Exchanges and Clearing (SEHK: 0388) , which operates the city's stock and futures markets, has confirmed it is bidding for the London Metal Exchange as part of a broader strategy to diversify. The exchange yesterday confirmed a South China Morning Post (SEHK: 0583) report in February that it was one of several bidders lining up to buy the London Metal Exchange, which said in December it was considering its future strategy as an independent entity or as part of a larger group. "HKEx continues to participate in that process and understands it is one of a number of interested parties studying this opportunity," the exchange said in a statement. While it did not say how much the deal might cost, brokers believe it might have to spend up to £1 billion (HK$12.2 billion) to compete with other bidders who include the New York Stock Exchange, Euronext, the and Intercontinental Exchange. The London Metal Exchange has required the bidders to submit a second round of proposals before May 7. HKEx emphasised that "there can be no certainty as to the outcome of that process. The board will update the market if and when required in accordance with the listing rules." HKEx chief executive Charles Li Xiaojia said in January that the bourse wanted to expand beyond equities and develop commodities trading. But Louis Tse Ming-kwong, director of VC Brokerage, said the exchange would need to be careful in any merger. "Many companies including HSBC have lost money through misjudging acquisition targets," Tse said. "HKEx needs to be careful that, if it buys the LME, it's at the right price, offering value for money. And it should tell the market how it will finance such a big deal." "Besides, HKEx has few staff with experience of commodities," Tse said. "HKEx needs to tell shareholders how it will manage the LME after an acquisition. It would be wasting money if it bought another exchange, but couldn't run it effectively." Separately, NYSE Euronext, one of HKEx's rivals for the LME, yesterday said first-quarter profits fell by almost a third to US$121 million due to a slowdown in trading and costs from its failed merger with Deutsche Boerse. The New York exchange also said it incurred US$31 million of merger and exit costs, including US$16 million from its failed merger with Deutsche Boerse. NYSE canned the US$7.4 billion merger in early February after the deal was rejected by European antitrust authorities.

Failed chief executive candidate Henry Tang Ying-yen hinted yesterday that he would stay on the political scene but step into a new role. Back in Hong Kong after a month-long overseas break, Tang (pictured) spoke about his next move following an hour-long one-on-one meeting yesterday with chief executive-elect Leung Chun-ying. It was the first time the men had met since their bitter March 25 showdown for the top post, which caused a rift in the pro-Beijing camp. After the meeting at Leung's office, Tang said he remained committed to serving the community. But he declined to say in what capacity, only hinting that he wanted to try "new channels". "I would like to try something I have not tried before. I still have a heart to serve the community. But I think I will choose some channels which I have not tried before," he said, adding that it would not be meaningful to repeat previous roles. Long seen as Beijing's favourite for the job, Tang plummeted in popularity after scandals came to light leading up to the vote. He refused to withdraw from the race and ended up losing by a wide margin. There has been speculation that Beijing might offer him a seat on the standing committee of the Chinese People's Political Consultative Conference - the country's top political advisory body - a position seen as a "condolence prize" for him. Tang was the secretary of commerce, industry and technology in 2002. And a year later, he was promoted to financial secretary. He was appointed chief secretary in 2007 - a job he had held until he resigned last September to run for chief executive. He was also a legislator in the 1990s. Commenting on yesterday's meeting, Leung said Tang had offered him good advice on Hong Kong's development, as well as on the formation of the new government. He added that he hoped to have regular meetings with Tang. "Henry worked in the government for a very long time. He has a lot of experience … I listened to his views and learned a lot from him," Leung said. Leung also hinted he might appoint Tang's aides to positions in his administration. "There were many people who offered good advice to Henry for his election platforms. They are talents. I think we should hold together. I hope we can work together to serve society," he said, continuing to toe Beijing's line on post-election reconciliation and unity. Political observer Chung Kim-wah, of Polytechnic University, said yesterday's meeting was window-dressing. "It is unlikely reconciliation can be achieved by just one or two meetings. The rift in the camp is so big that it will take long time to heal," Chung said.

All public primary schools will start teaching a controversial course in moral and national education in 2015 that officials say has been modified greatly in response to concerns about its potential for indoctrination. Public secondary schools will follow in 2016. The subject, which might include topics such as understanding the mainland's constitution, would take up no more than 5 per cent of class time, the Education Bureau said. The bureau sought to reassure critics that the revised curriculum - which does not feature landmark political events such as the June 4 Tiananmen incident - would not dictate what to learn. The curriculum would focus instead on developing critical thinking, it said. However, teachers responsible for the subject would be sent to the mainland for seminars, it said. The head of a government-appointed taskforce that drafted the syllabus, Professor Lee Chack-fan, said they had modified it in response to public demand. "There won't be one-sided praise [about the mainland]," Lee said. The bureau announced its revised curriculum guide yesterday after a four-month consultation last year, amid concerns over whether the subject would add to the burden of teachers and brainwash pupils with knowledge and attitudes that favoured the central government. Originally, the subject would have been introduced in primary schools this September and in secondary schools in 2013. Each school will receive a one-off subsidy to the tune of HK$500,000. Among suggested topics are learning about central government bodies and the etiquette for a national flag-raising ceremony. Public exams would not be held for the subject. Bureau principal assistant secretary Dr Cheung Kwok-wah said political events such as the Cultural Revolution or the Tiananmen incident were not listed, so as to give teachers flexibility to choose what to teach. But Dr Leung Yan-wing, an associate professor at the Institute of Education, said officials should not steer clear of political discussions. "If you need to instil a sense of belonging among Hongkongers, you cannot avoid talking about politics," he said. Federation of Education Workers vice-chairman Wu Siu-wai said the lack of specific instructions for the syllabus might pose a problem for less experienced teachers trying to compile learning materials. Cheung said the bureau would upload suggested classroom materials online for teachers' reference. The bureau had briefed chief executive-elect Leung Chun-ying before the announcement, he said. "It was an appropriate thing to do since this is a topic of public concern." He said Leung did not show any opposition to the revised curriculum. The bureau declined to reveal how many objections to the subject it received during the consultation.

Mainland visitors shop at the World Trade Centre in Causeway Bay. A strong renminbi is enough incentive for some to cross the border for their cosmetics and luxury items. Predictions were gloomy for Labour Day holiday shopping: visiting mainlanders were expected to be stingy with their hard-earned yuan because of the weaker economy across the border. But for at least one group of shoppers from Guangdong, Hong Kong’s relatively cheap prices – because of the strong renminbi – created an irresistible impulse to splurge a bit. The South China Morning Post (SEHK: 0583, announcements, news) accompanied a group of 40 Guangzhou office ladies shopping in Causeway Bay on Tuesday morning. The women, 25 to 35 years old, showed no hesitation in sweeping their favourite products off the shelves – chiefly cosmetics, jewellery and clothes – at a shopping centre. Guangzhou resident Nana Yu Li-na, who works in the fashion industry and earns 5,000 yuan a month, quickly bought HK$5,000 worth of cosmetics. Yu, who visits Hong Kong once or twice every year, said: “Cosmetic products in Hong Kong are around 20 per cent cheaper than in Guangzhou, given the currency discrepancy.” She spent a total of HK$21,500 – almost four times her monthly salary. She snared a diamond ring and a watch, after buying cosmetics. The renminbi has appreciated against the Hong Kong dollar in recent years. Its current level – HK$100 will buy you 81 yuan – gives extra purchasing power to mainlanders shopping in Hong Kong. This city’s stores offer a wider variety of commercial brands than those in Guangzhou, according to Ng Jia-min, who earns 5,000 yuan a month as a wedding planner. She spent HK$3,000 on cosmetics alone on Tuesday morning. “Everything in Hong Kong is cheaper than in Guangzhou,” Ng added, before spending HK$7,000 on a luxury wallet and bag, bringing her total outlay to HK$10,000. A Ms Wong, who declined to give her full name, visits the city nearly once a month and buys skin care products, gold bracelets and other accessories. Wong said she tried to cap her spending budget at about HK$5,000 before her trip, but she usually ends up spending double that amount because she finds the shopping so inexpensive. Another mainland shopper, He Jie, who works in the design industry, outspent the other ladies at HK$32,500, most of it going into a diamond. All this will be music to the ears of Hong Kong merchants. Yu Yan-ki, the area supervisor at one of the shopping centre’s boutiques, said: “Mainlanders make up about 20 per cent of our customer base, and we expect a 10 to 20 per cent boost in business” from the normal level, over the holidays, which end on Tuesday. The retail market in Hong Kong has softened this year following fast growth last year. Total retail sales growth slowed to 15.2 per cent in January and February from an average of 25 per cent last year, according to government statistics.

Chan Yuen-han of Federation of Trade Unions calls for workers' rights at a march in Kowloon. Thousands of Hongkongers marked the Labour Day holiday on Tuesday by marching for better work conditions, such as standard working hours and increased minimum wage. The Federation of Trade Unions said 5,000 people marched from Sham Shui Po to Yau Ma Tei this morning. About 1,000 firefighters staged a protest in Wan Chai, according to reports. They were demanding a 48-hour work week, instead of the current 54 hours. Lee Tak-kei, chairman of the Fire Services Department Staffs General Association, said a shorter work week would bring firefighters’ working conditions close to those of the city’s other disciplined services. Labour groups also campaigned to increase the minimum wage to HK$33 per hour. The Minimum Wage Commission is currently reviewing the statutory wage, which is now at HK$28. It is inviting public views and is scheduled to report its findings at the end of October. Speaking on a radio show on Tuesday morning, Labour Party chairman Lee Cheuk-yan said he was disappointed that the chief executive-elect did not plan to speed up a review of the minimum wage. Lee described a meeting he attended the previous evening, in which Leung Chun-ying told pan-democrats he did not intend to speed up the work of a taskforce that is reviewing the minimum wage level. “I asked C.Y. whether you would do it immediately after you take office, since we need to raise pay [levels] now. What I find a bit disappointing is that he said he hadn’t thought about it,” Lee said, noting that Leung had the discretion to speed up the review. Leung also said he had not thought about demands that the number of statutory holidays be increased to 17 days per year, Lee said. “I am a bit disappointed, because he had said [earlier] that he cared about the livelihood of grass-roots people,” Lee said. He noted that workers overseas gained standard working hours 100 years ago, and he was saddened to think Hong Kong workers still do not have them. All Hong Kong workers are entitled to 12 days of statutory holidays, but employers have the discretion to grant five more days per year. Lee later told the South China Morning Post (SEHK: 0583) that Leung seemed uncertain at yesterday’s meeting when asked about legislating standard working hours. “When I raised the issue [of standard working hours], he asked us to look at his campaign manifesto,” he said. Leung’s manifesto says he will set up a taskforce to study the issue of standard working hours. Lee said: “But a policy like this would need a clear mandate from the government to move ahead.” Ng Chau-pei, chairman of the Federation of Trade Unions, said the introduction of a minimum wage had not caused massive layoffs or hindered economic development in the past year, as many critics had predicted. He said Leung should improve labour rights when he takes office.

 China*:  May 3 2012 Share

The Boeing 777-300ER jet has a listed price of US$298.3 million and is said to be more than 10 per cent fuel-efficient than an Airbus A340-600. Boeing has made a sales pitch more common to the car showroom than multibillion-dollar aircraft deals as it attempts to woo mainland customers from European rival Airbus. The US company convinced China Eastern Airlines (SEHK: 0670) to trade in five of its Airbus aircraft at a premium in return for it buying Boeing 777-300ER (extended range) planes. Boeing's breakthrough in selling wide-bodied aircraft to China Eastern comes as a time when Beijing is at odds with the European Union over its emissions trading scheme. China Eastern ordered 20 Boeing 777-300ERs in a deal worth US$5.94 billion, marking a milestone for the carrier which now operates an almost pure Airbus fleet for long-haul routes, except for three Boeing 767s ordered by its subsidiary Shanghai Airlines in 1998 and 2005. China Eastern and Shanghai Airlines merged three years ago. Airbus, which has lost yet another deal from a mainland airline, said US$12 billion worth of aircraft orders had been put on hold by Beijing as a retaliatory measure against the EU's plan to charge all flights to and from Europe for carbon emissions from January. Boeing had poached a previously loyal Airbus customer by a really sweet deal, analysts said. It offered to trade in five A340-600s from China Eastern at US$142.2 million each - at least 2.4 times the market price. "It's a very unusual practice," said Paul Sheridan, the head of consultancy in Asia at Ascend, a London-based aviation consultancy. "Boeing has done it because until now China Eastern has used quite a lot of double-aisle aircraft from Airbus." Another analyst also found the tactic abnormal. "It is as if there has been no amortisation of the aircraft's book value since they were delivered," said Simon Finn, a senior vice-president of aviation research for DVB Bank. China Eastern could not be reached for comment because of the Labour Day holiday. The B777 is said to be more than 10 per cent fuel-efficient than the A340-600 on a typical flight. This operating cost excludes the maintenance costs associated with four large turbofan engines, against two on the B777. "It is very common in the United States to trade in your old car when you buy a new car from an agent," said Christopher Morgan, a senior sales director at Boeing (Asia). "It happens a little bit in the aviation industry." Sources said Boeing would lease the traded aircraft. It leased an A340 to Cathay Pacific Airways (SEHK: 0293) few years ago, the source said. Airbus did not comment on the deal.

China is considering sovereign guarantees for its ships to enable the world's second-biggest oil consumer to continue importing Iranian crude after EU sanctions came into effect in July, the head of China's shipowners' association says. Tough sanctions aimed at stopping Iran's oil exports to Europe also ban European Union insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world. About 90 per cent of the world's tanker insurance is based in the West, so the move threatens shipments to Iran's top Asian buyers - China, India, Japan and South Korea. Global crude oil prices have risen nearly 20 per cent since October, partly on fears of supply disruptions from Iran. "[Ship] operators are worried that if the insurance issue cannot be resolved, they will not be able to take orders for shipping Iranian oil any longer," China Shipowners' Association secretary general Zhang Shouguo said. "We have put forward our concern and related government departments are studying the issue." Iran, Opec's second-largest producer, exports most of its oil to Asia, and major buyers have yet to find a way around the pending sanctions. "We are paying great attention to this. The country has the need for oil and it's our responsibility to move the crude," Zhang said. "But we need a solution from the government so we can avoid such risk." Like China, India and South Korea are also mulling sovereign guarantees for their tankers. Indian shipping firms indicated last week they would continue to transport Iranian oil even if limited insurance cover exposed them financially to a spill or accident. Chinese insurers and shipowners would not take the risk on themselves and government intervention was necessary, Zhang said. A major ship insurer, China P&I Club, said last month that it would not provide replacement cover for domestic tankers carrying Iranian oil. Analysts say that most of China's tanker fleet is covered by European insurers. Most maritime insurers pool their coverage and tap into the reinsurance market when coverage exceeds US$8 million. A typical supertanker - the biggest can ferry about 2 million barrels of oil - is covered for US$1 billion against personal injury and pollution claims. Zhang said several government departments were considering the industry's request, including the Finance Ministry, China Insurance (SEHK: 0966) Regulatory Commission, Transport Ministry and National Development and Reform Commission. He did not say when a decision might be made. Until recently, China was Iran's top customer, but imports in March were only half what they were in the same month last year.

Manufacturing activity on the mainland rose in April to a 13-month high, official data showed on Tuesday, indicating the world’s No 2 economy may have bottomed out in the second quarter. The official purchasing managers index (PMI) rose to 53.3, from 53.1 in March, its fifth consecutive month of expansion, the China Federation of Logistics and Purchasing said in a statement. A reading above 50 indicates expansion, while a reading below 50 suggests contraction. The latest figure was the highest since March last year, when the PMI reached 53.4, although it fell slightly short of the forecast of 53.5 from seven economists polled by Dow Jones Newswires. Alistair Thornton, economist for IHS Global Insight in Beijing, said the figures showed activity picking up but cautioned it was “too early to break out the champagne”. “China remains in a tough spot. Timid monetary easing over the past few months has ensured the gentlest of bounce-backs following the recent crunch,” he said in a research note. “There are signs of life in the economy and things should improve, all underpinned by an easing credit climate. But the recovery will be slower, more volatile and less assured than perhaps markets were hoping for.” The mainland’s economy is widely expected to slow this year as troubles in key export markets such as Europe and the United States hit its overseas sales. The government in March set a target of 7.5 per cent economic growth this year. The economy grew 9.2 per cent last year and 10.4 per cent in 2010. Some analysts expect the economy to have bottomed out in the first quarter, but others say recovery might be delayed until the second quarter. HSBC issued preliminary data last week that showed manufacturing activity on the mainland shrank in April for the sixth straight month, although the reading was higher than for March, indicating a slower contraction. The bank’s figures are typically more pessimistic than the official numbers.

High-end Chinese brands coming soon - The starting price for a bottle of Moutai liquor at a recent auction was 380,000 yuan ($60,000). As foreign luxury brands compete to carve out portions of China's fast-growing market, experts are predicting that Chinese companies will soon develop luxury brands of their own. It is time for domestic enterprises to establish luxury brands, since China has already become the dominant driver of growth in the luxury sector, said Zhou Ting, executive director of the research center for luxury goods and services at the University of International Business and Economics. The sales volume of China's luxury market was 11.5 billion euros ($15 billion) in 2011, a year-on-year growth of 25 percent, according to PricewaterhouseCoopers International Ltd. Potential domestic luxury brands could come from some traditional Chinese industries, including liquor, tea, porcelain and silk, said Yang Qingshan, a guest researcher of luxury goods and services at UIBE. The research center listed 10 domestic brands with the potential to become luxury brands in its luxury report in November. Three liquor brands - Moutai, Wuliangye and Langjiu - are among the 10 brands. Zhuyeqing tea and some clothing brands, such as NE-Tiger and Shanghai Tang, are also on the list. "Many traditional Chinese products already have a feature of luxury because of their heritage," Yang said. However, many Chinese enterprises do not want to become luxury brands, since luxury is not a positive word in Chinese culture, as frugality is advocated, Yang said. "Chinese enterprises are usually conservative." For example, the starting price for a bottle of Moutai liquor at a recent auction was 380,000 yuan ($60,000). But Ji Keliang, honorary chairman of China Kweichow Moutai Distiller Co Ltd, said that the company opposes labeling its liquor as a luxury product, Jiefang Daily Newspaper reported in November. However, some Chinese enterprises have begun to change their attitudes toward luxury and intend to develop high-end brands. Luzhou Laojiao Co Ltd, which operates the longest-running liquor cellar in China, released high-end bottles priced at 336,666 yuan each on March 16."Our liquor has two necessary features of luxury items, which are scarcity and heritage," said Zhang Liang, president of the company, according to the Beijing Times on March 17. Zhang Zhifeng, chairman of NE-Tiger Fur Fashion Co Ltd, is also working on establishing a luxury-clothing brand."I aim to develop my company into one of the top international luxury brands," Zhang said. Zhang intended to establish a luxury brand when he registered NE-Tiger in 1992, but some consumers said the company's reputation is still far from that of international luxury brands. Creating a luxury brand is no small task, according to the UIBE researchers."It takes at least 30 years to develop a luxury brand," said Yang. Merger and acquisition are faster methods of producing luxury brands, Yang said. Shanghai Tang became the first successful Chinese luxury-clothing brand after it was purchased in 2000 by Richemont Group, the world's second-largest luxury conglomerate by turnover. The transaction instantly promoted Shanghai Tang into an international luxury brand. Meanwhile, Chinese investors are also trying to enter the international luxury market thorough investment and acquisition. "Purchasing a luxury brand is a shortcut for Chinese enterprises by instantly acquiring a brand's heritage, which can span hundreds of years," Yang said. As some companies in the West struggle amid the recent economic recession, it provides Chinese enterprises with ripe acquisition opportunities. But acquisition is not the best way for Chinese enterprises to enter the luxury market, experts say, since the acquired brands are still foreign and lack Chinese elements. Although Chinese manufacturers still have a long way to go in the luxury industry, supported by a huge consumer base and rising incomes, Chinese luxury brands will soon emerge, said UIBE expert Zhou Ting. Marketing is an important tool, which Chinese companies must learn from international luxury brands, Zhou added. International luxury brands excel at telling their stories and connecting their brands with history, Zhou said. "Chinese companies only make products, and none of them link their products to culture," said Xia Yang, president of Beijing Sunny Times Polo Sports Co Ltd. Xia said Hermes can charge thousands of yuan for a scarf because the brand has historical value. Consumers buy not only its product but also its history and culture, he added.

Hong Kong*:  May 2 2012 Share

Hongkongers visit PLA navy ships - Chinese missile destroyer Haikou while docking in Hong Kong. Two mainland warships that escorted Hong Kong vessels through dangerous waters off Somalia were thronged with hundreds of visitors at Stonecutters Island on Monday morning. The missile destroyer Haikou and missile frigate Yuncheng, which escorted 34 ships from Hong Kong in the past four months, will be in the city for five days. This is the fourth port call in Hong Kong by the PLA Navy in the 15 years since the handover. The warships, which belong to naval task force 171, carry some of the most advanced missiles and cannons in the Chinese navy. They have conducted 40 escort missions since November in the Gulf of Aden, guarding 240 Chinese and foreign ships, including 34 from Hong Kong. “These are the best ships we have. They have comparatively stronger capability to fight attacks from the air, sea and surface,” Rear Admiral Li Shihong said after taking Chief Executive Donald Tsang Yam-kuen on board for a visit. Li, a commander of the taskforce and deputy chief of staff of the South China Sea Fleet, said the navy had no plans to set up bases in other countries. The operation off Somalia was a collaborative effort in which various countries shared intelligence with each other, he said. Hong Kong invited the ships to make a port call on their way home to Zhanjiang, Gua ngdong. On Thursday, 6,000 tickets for the public were snapped up within 45 minutes.

Key Leung supporter fails to attend meeting - The incoming chief executive rewarded a key election supporter from a pro-Beijing party by inviting its chairman to a meeting on Monday morning – although he failed to appear – according to the Labour Party. Labor Party chairman Lee Cheuk-yan told a Monday morning radio show that chief executive-elect Leung Chun-ying had invited Tam Yiu-chung, chairman of the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), to a meeting with the Mainland-Hong Kong Family Rights Association. The association is a pressure group on the issue of pregnant mainland women’s demand for obstetric services swamping Hong Kong hospitals. Tam did not attend the meeting, according to an organiser with the association. The organiser said Leung’s office phoned them on Sunday morning to say Tam would be attending Monday’s meeting, without explaining why he would attend. Nor was Tam’s absence explained. Questioning Leung’s reason for inviting Tam to the meeting, Lee said it may be an effort to help the DAB gain votes in September’s Legislative Council election, by raising their public profile. More such invitations could be expected in the run-up to the election, he said. “This is apparently a reward for the DAB to pave the way for the Legco election,” said Lee on a radio programme before the meeting began. “More such events will come for parties that supported him, as a reward for their help in the election.” The DAB gave 147 ballots to Leung in the chief executive election, which he won with 659 votes. The pan-democrats are due to meet Leung on Monday evening, and Lee said he would ask Leung about the issue of attaining universal suffrage in 2017. “We will corner him over the nomination threshold issue for the next chief executive election. If there must be a nomination committee, there should be better representation for the general public,” said Lee. “Can the nomination requirement be raised to 50,000 signatures?” Democratic Party lawmaker Lee Wing-tat said he planned to raise the issues of government restructuring and housing with Leung, at this evening’s meeting. “We are concerned about the arrangement of political assistants in Leung’s administration. In fact any kind of expansion of the political appointment system should be made only after a thorough consultation,” said Lee. Head of chief executive-elect office Fanny Law Fan Chiu-fun said on Saturday the 14 policy bureaus – including new bureaus for information technology and culture – would get a lump sum to hire their political assistants. Leung also wants the chief secretary and financial secretary to have new deputies. Civic Party leader Alan Leong Kah-kit said he would question Leung over legislation on the Basic Law’s Article 23, the abolition of functional constituencies and the perceived intervention of the central government’s liaison office in local affairs.

No Easy Scapegoat for Hong Kong Pollution - Hong Kong has long preferred to blame its smoggy skies on polluting factories just over the border in mainland China. But new analysis suggests that the blame for much of the city’s pollution rests squarely on Hong Kong’s shoulders. According to just-released data from a regional government report, air quality in the Pearl River Delta area has continuously improved over the past year, thanks to initiatives to encourage better energy efficiency and cleaner industrial production. By contrast, Hong Kong’s own air quality, notably roadside pollution, has actually grown worse, says Clean Air Network, a local environmental group. In the delta region last year, the average level of nitrogen dioxide, a key measure of roadside pollution (it’s the stuff that makes you cough when you pass by a bus trailing a cloud of smelly exhaust), was down by 13% from 2006 levels. But in Hong Kong, the levels measured at roadside monitoring stations during that same time period were actually up 28%, says the environmental group, citing data from Hong Kong’s Environmental Protection Department. Indeed, for concentrations of nitrogen dioxide, Hong Kong ranks second among 32 major Chinese cities, surpassing even notoriously smoggy Beijing, according to official Chinese data. “Hong Kong’s government is lagging behind the mainland here,” says Jia Yuling, the Clean Air Network’s education and research manager. For example, she notes, though Hong Kong has taken steps to adopt more stringent air-quality measures, “it was only after the same announcement in mainland China that Hong Kong’s government decided, ‘Oh, we need to catch up,’ and did the same.” For a city that’s wealthier than its mainland counterparts, says Ms. Jia, Hong Kong’s lack of leadership is disappointing. To be sure, Hong Kong has taken steps to combat air pollution, including new measures to tamp down on sulfur dioxide emissions from local factories. But there’s plenty of room for improvement, says Ms. Jia, especially on issues of pollution from boats and ships, now one of the biggest contributors to Hong Kong’s air-quality problem. At this point, Hong Kong’s air has deteriorated to the point that it’s literally driving expatriates away from the region. Surveys have repeatedly found that the city’s noxious skies are hurting its competitiveness, with many expatriates preferring such greener, cleaner choices as Singapore. Tourists who make their way up to the city’s Peak to enjoy its famous views often find that the sought-after vistas are obscured by a dense blanket of smog. The Clean Air Network says Hong Kong’s rising levels of car ownership and the aging of its vehicle fleet are partly to blame for its bad air. Across the border, a number of cities are taking on the problem of dirty old cars, and environmental activists say Hong Kong should do more to join them. For example, last week, Beijing’s Municipal Environmental Protection Bureau announced it would begin paying city residents and businesses between 2,500 yuan and 14,500 yuan ($397 to $2,301) to retire an aging or heavy-diesel vehicle. Other cities, such as Shenzhen, have offered similar deals. Asked to comment on the issue, Hong Kong’s environmental-protection department hadn’t responded as of Monday afternoon. “We can’t keep blaming regional air quality any more for our problems,” says Ms. Jia. “Hong Kong needs to do more to address local pollution on its own.”

Hong Kong certified accountants could be tempted to use fake qualifications on offer that allow them to practice in the mainland. For even mainland candidates have a tough time qualifying as accountants with, apparently, only 50 percent passing the seven exams needed. Under the Closer Economic Partnership Agreement with the mainland, Hong Kong candidates need to take only three of the exams - namely taxation, tax law and integrated final exam. But these are tough, not least because all the papers are in simplified Chinese. Mainland tax rules are also extremely complicated and all answers have to be precise, with no interpretation allowed. The use of traditional Chinese is prevalent in Hong Kong. Also, local accounting exams are all in English. But demand for mainland qualified accountants is steep, especially as the local exchange, from December 2010, allows such professionals to audit locally listed mainland firms. Among the 160 H-shares companies, 27 of them use mainland auditors. "There is a rising trend among local accountants hoping to get a mainland professional qualification because more Hong Kong companies have cross- border business," said Jonathan Ng Tai-sing, deputy executive director of Hong Kong Institute of Certified Public Accountants or HKICPA. The fake certificates can be bought for just 20,000 yuan, according to an e-mail received by The Standard. "Our organization is responsible for completion of qualification for certified Chinese accountants, 20,000 yuan all inclusive," the e-mail claimed. It even claimed all the certificates on offer would be recognized by The Chinese Institute of Certified Public Accountants. Those who want to obtain the fake qualification need to submit a copy of their local accountancy bachelor degree, a copy of one's Hong Kong identity card, a photo and proof of professional experience. Mainland and Hong Kong auditors have come under the spotlight this year due to a spate of balance-sheet scandals involving several locally-listed mainland firms. In at least two cases, the auditors resigned and seven firms have stopped trading, prompting the Securities and Futures Commission to tighten the rules on sponsoring initial public offerings. Most of the scandals have occurred at recently listed mainland firms and, so far, three companies are being investigated for "false accounting." Among the 33,577 certified HKICPA members, only 141 have so far completed the three mainland examinations. Among them, 131 have met all conditions to become fully qualified accountants in the mainland. Several local accountants contacted by The Standard admitted that the mainland exams are very difficult and that they failed in their first attempt. But most said they are determined to pass as having both Hong Kong and mainland qualifications greatly enhances their job prospects. Under CEPA, mainland accountants, if they qualify, can also work in the SAR. So far, 64 mainland professionals have completed the HKICPA examinations and 45 are fully qualified. A government spokesman said it will continue to pursue mutual recognition of professional qualifications.

The Panchen Lama, known for his Tibetan calligraphy, wrote words meaning "auspiciousness and good luck", as a message to HK. He is the most protected and the most mysterious person in China. Perhaps we should not even address him as a "person", because to many he is more than that. The Panchen Lama is a reincarnation, a revered spiritual figure, and one of the two highest spiritual leaders of Tibet, together with the Dalai Lama. Little is known about the 11th Panchen Lama chosen by mainland authorities, and his visit to Hong Kong, where he gave the keynote speech to the Third World Buddhist Forum last Thursday, was the first time he has left the mainland. For that reason and because of the controversy surrounding him as well as the recent events in Tibetan areas, the South China Morning Post (SEHK: 0583) asked for an exclusive interview with the person his followers call the Master. On short notice, I was told he would meet me and my photographer at 9pm on Thursday. I rushed out of the office, jumped into a taxi and headed to his hotel in Wan Chai. I knew Hong Kong had been carefully chosen as the ideal stop for his first trip outside the mainland, all the more carefully because of the controversy surrounding him and the self-immolation of protesters in Tibetan areas. The 22-year-old man I was to meet, Gyaincain Norbu, was an ordinary Tibetan boy before being anointed by Beijing in 1995 as the reincarnation of, or the successor to, the 10th Panchen Lama, who died in 1989 after a tumultuous relationship with China's leaders. Beijing says a lot had been drawn from a sacred golden urn in accordance with Tibetan Buddhist rituals. But the Dalai Lama, in exile, had picked a different boy, Gedhun Choekyi Nyima, and remains in dispute with Beijing about who is the real successor. The Tibetan boy he chose disappeared on the mainland shortly after, aged six. Norbu - the name means "holy streamer of triumph" - was more fortunate. Away from the world for 16 years, during which he was carefully educated, the boy has emerged to make his first public appearance outside the mainland and his first one-on-one interview with outside media. I was told I had only 15 minutes, due to his tight schedule. But it would still be a good chance to learn more about him. When we arrived at the Grand Hyatt, we were escorted to the executive floor. The Beijing official accompanying us, who was introduced as Bureau Chief Zhou from the central ministry of the United Front Work Department, asked us to wait outside while he told the Master of our arrival. I took the chance to double check my questions, making sure we would touch on sensitive questions, such as the recent self-immolation of Tibetan monks. Zhou said: "As long as the Master is willing to answer, you can ask whatever question you like." I was surprised to see it was an ordinary suite, not a grand, presidential one. There was the young face I recognised from his occasional appearances on television. He wore his saffron kasaya, the Buddhist robe, and in his hands, which he held in front of his chest, was a string of prayer beads. I wondered whether I should shake hands. Is it true that lamas are not allowed to touch women? But before I could consider, the Panchen Lama extended his right hand, and the three young monks surrounding him smiled and gestured for me to step forward to shake it. Realising we only had minutes for an interview that I wished would last an hour, I immediately asked: shall we start? "Yes, please," the young Panchen Lama said, putting on his glasses and sitting. I noticed he had all the curtains closed - for this interview, or because he has been trained not to get too excited by this colourful, secular world? My first question was why Hong Kong had been picked as his first stop outside the mainland. "It is a great honour for me to have this opportunity to attend the worship ceremony of the skull-bone relic of the Buddha in Hong Kong," the lama said in a peaceful tone. "I got the chance to worship the teeth relic and the finger relic before, but not yet this one. That is why I'm here." But is it that simple? "I have been wishing to visit this city ever since it returned to the motherland in 1997," he said. "I'm very glad to see that Hong Kong is prosperous and that the people here look very happy. The forum I attended will bring good luck to the people of Hong Kong, and I wish them more happiness." Hong Kong is likely to be only the beginning of many future visits outside the mainland. After 16 years being groomed by Beijing, it appears that now is the time for this young Tibetan spiritual leader to go international and tell the world his version of the story concerning religious freedom in Tibet and the rest of China. It is not surprising that Beijing wants the world to recognise the 22-year-old as a Tibetan spiritual leader, if not to replace, at least to minimise, the impact of the Dalai Lama. "I'll definitely come back to Hong Kong again, and would like to visit Taiwan and Macau," he said. "I'd also like to visit Singapore and many other countries in future." Taiwan? Any concrete plans in mind? "Not yet, I just hope I can go there someday". "But if you are to venture overseas, you will definitely encounter or be confronted by supporters of the Dalai Lama, who will protest at the lack of religious freedom in China. Will you be able to handle those situations, and how?" The young Master did not seem flustered on hearing the title of the exiled Tibetan spiritual leader. He kept his smile and said: "Wherever I go, I only have one mission. That is to advocate Dharma, that is to promote the altruistic care for all beings, to advocate purification of body, speech and mind, and to achieve universal salvation. Thus, I will teach people to have a kind heart, to be good to others." As I listened to this abstruse Buddhist theory I did not know whether he had answered the question or evaded it. Just then one young lama reminded me: "Time is up." Was the little lama - he could not have been more than 17 - trying to steer away from a politically sensitive question? As I did not want to finish the interview so abruptly, I immediately raised another question: "What do you think of the recent self-immolation of some Tibetan monks and nuns in protest at Beijing's control? Was it because of Beijing's crackdown on religious freedom?" He was quick to defend Beijing. "I don't think the self-immolations had anything to do with religious freedom," he said. "As a matter of fact, the doctrine of Buddhism is against any self-destruction of life. We all have short and precious lives. "We should make our lives more meaningful by doing good for people and the world. So, I here take this opportunity to call for everyone to treasure life, to make full use of our limited lives to make unlimited contributions to all. That is, to do good things for the happiness of the whole world." Doing good for others and for the world also means not being greedy, he said. So, I asked what he thought of those who say Hong Kong is an avaricious city, full of, as we say in Chinese, "money animals". "I believe people in Hong Kong enjoy a rich spiritual life. You have different religions in Hong Kong and each respects the others. I don't agree with those who say Hongkongers value money over everything. As long as one has a [religious] belief, one has a way to choose between wholesome and unwholesome acts. Our hearts can then be purified." But while praising the people of Hong Kong, the young buddha did express concern about the contamination of greed on the mainland. "Money blinds one's heart easily sometimes. This can be very dangerous to Buddhism, especially now, when the mainland is experiencing rapid economic growth. That's why I stressed the importance of avoiding the temptation of materialism, while maintaining the 'science of mind', which stresses the harmony of nature and peace of the world." Despite his spirituality, the Panchen Lama is very much a creature of the 21st century. The Master obviously did not want to talk about politics, but he was at home with technology like computers and digital cameras. "Many of our Buddhist doctrines are now put online. I spend most of my time studying Buddhism using my computer, but I also like photographing beautiful scenes. "I'm also learning English, and the study of logic is one of my favourites [hobbies] too". As he talked about his activities outside Buddhism, I felt that in front of me, if he were not in his kasaya, was just an ordinary young man full of curiosity about the world. So will he have time to go outside and see a bit more of Hong Kong? "Oh yes, I'll visit the Tian Tan Buddha on Lantau Island tomorrow." He also said he had done some sightseeing that day and enjoyed the beautiful views of the harbour. Fifteen minutes had passed quickly and turned into half an hour, but now the interview was over. The Panchen Lama is well known for his Tibetan calligraphy, so I asked for a sample. He took out a piece of yellow paper and wrote down words meaning "auspiciousness and good luck", then carefully signed. "This is for all people in Hong Kong," he said. Then he stood. "Let me present you both a khada," a Tibetan ceremonial white scarf for good luck. The little monk who had previously tried to end my interview now turned solicitous. He smiled and told me and my photographer: "You are all blessed by the Master." It was clear the Panchen Lama was well educated and well prepared. One can only hope the wisdom of Buddhism will be enough to guide him in the role he is supposed to play.

Public hospitals will try to hire a record 2,000 nurses this year to ease a chronic staff shortage, a top nursing official says. Sylvia Fung Yuk-kuen, the Hospital Authority's chief nurse executive, said staffing problems in obstetric services, which have been overwhelmed by expectant mothers from the mainland, would not be resolved, however, until next year. The authority expects more nurses to return in 2013 from private hospitals. The new hiring target of 2,000, up from 1,700 last year, aimed to stem manpower losses to the more lucrative private sector and would account for about 10 per cent of the total number of nurses, Fung said. About 1,700 of the vacancies would be filled by fresh university graduates, she said, and the remainder by experienced nurses returning from the private sector. But employing more new blood should not be the only way to deal with the shortage of nursing staff, said Dr Joseph Lee Kok-long, lawmaker for the health services sector. "Retaining current talent should be one of the major issues for the authority to address," he said. "If the human resources policy does not change at all, and the undesirable working environment for nurses goes unresolved, public hospitals will go on losing staff no matter how many new people they hire," said Lee, who is also the chairman of the Association of Hong Kong Nursing Staff. Lee said the nurse-patient ratio in the public sector could be as bad as one to 14, or even one to 16. The workload is almost double that in private hospitals. "The government should develop a standard nurse-patient ratio for each ward to adhere to and hire people according to the standard," Lee said. "Just throwing out the number to be hired without any standard as a reference is meaningless." Public hospitals had a 5.3 per cent turnover rate for all nurses last year, meaning 1,044 nurses left. Of those, a third were nurses with three years of experience who had finished their first government contract, Fung said. Paediatrics and obstetrics departments had the most severe staff shortage; 7 per cent and 6 per cent of their nurses, respectively, left last year, Fung said. Obstetrics wards were short about 80 nurses. A major reason is private hospitals have been investing heavily in the two specialties, attracting experienced staff with higher pay. Fung appealed to obstetric nurses working in private hospitals - who may see a dimmer future as demand shrinks now that the government has announced a "zero quota" for births to mainlanders in private hospitals next year - to consider returning to the public service. She said the authority would welcome them. "But this will not happen until 2013," Fund said. "As 2012 is the Year of the Dragon, we expect the [demand for obstetric nurses in private hospitals to] continue to be great." She said public hospitals could provide more training and experience to nurses. That would give those hospitals an advantage over private hospitals, against which it would be hard to compete in terms of salary.

Major business groups have warned that raising the hourly minimum wage from HK$28 to HK$33 will prompt higher-salaried workers to demand fatter paycheques, as the city government prepares to review the pay law. The trade organisations, voicing their concerns on the eve of the law's first anniversary, also urged a delay in the review of the minimum wage level, saying data collected now would be "premature and misleading". The review, to be carried out by the Minimum Wage Commission, is likely to stir intense debate. Workers' unions, which are fighting for wage rises, are expecting thousands of people to take to the streets on Labour Day tomorrow. But Stanley Lau, the vice-chairman of the Federation of Hong Kong Industries, told the South China Morning Post (SEHK: 0583) that the increases proposed by these unions were simply "too much". "When we hear unions promoting a fight for HK$33 or HK$35 [hourly wage], I would like to ask if nowadays there is any sort of job that would see an 18 per cent increase in pay every two years," he said. Since the wage law was passed a year ago, companies gripped by a "ripple effect" raised pay by 5 to 10 per cent after higher-ranked workers demanded thicker pay packets when low-income workers' pay rose, according to Lau. "The ripple effect will indeed increase. If they are blindingly calling for a new [wage] level, businesses will only channel the costs to end-users," he said. Hong Kong General Chamber of Commerce CEO Shirley Yuen also said any data collected on the minimum wage law's effect at this time would be "premature, incomplete, and perhaps misleading". "The statutory minimum wage was introduced at a time of economic stability and near-full employment, which has masked the true effects of a wage floor," she said in a written statement. "Overseas experience suggests it normally takes two years for the effect to be filtered through the entire economy." The law requires a review of the wage level every two years, despite earlier calls for an annual review. The commission, which is inviting citizens to express their views on the policy, is set to submit a recommendation report by the end of October. A survey by the Hong Kong Institute of Human Resources Management after the law came into effect, which studied 95 firms that employed some 150,000 staff each, found that 15 per cent of the firms, due to the ripple effect, raised pay for employees who earned more than the hourly minimum wage. Julita Leung, who heads an institute team studying the impact of changes in labour laws, said the government should take into account some concerns that the wage floor had increased labour costs. Lau, from the Federation of Hong Kong industries, said there was ample time for the government review to be completed by the middle of next year, two years after the law came into effect in May 2011. Lau also said HK$31 was an acceptable level of the new wage floor, assuming the inflation rate stands at about 5 per cent per annum during the review period. He warned that a "blind call" for an increase would lead to repercussions from the business sector although further rises may or may not happen. "We can see that some cha chaan teng [Hong Kong-style restaurants] are already raising their prices citing reasons such as [further] increase in wages," he said. Recent surveys have shown that low-income workers benefit from the mandatory wage floor, with incomes rising by 17.7 per cent for the bottom 10 per cent of earners, according to the Census and Statistics Department. In one of the government's consultation papers, it was said that if the wage floor were increased to HK$31 an hour, wage costs could rise by 2.3 per cent.

Alice Lau, of the chief executive-elect's office, defended the hiring of a mainlander. A top official in the chief executive-elect's office has given an assurance that contract workers will not automatically be carried over to the next administration. This follows a controversy over the hiring on contract of a mainlander by Leung Chun-ying's office. Meanwhile, executive councillor Cheng Yiu-tong proposed in a media interview that the next government expand the political appointment system. He said Exco members should have political assistants of their choice. Speaking at RTHK's City Forum, Alice Lau Yim, secretary general of the chief executive-elect's office, stressed that it hired former Leung campaign aide Chen Ran - a non-permanent resident and a former member of the Communist Youth League of China - as a project officer based on her talent and not her political background. Chen was appointed without a recruitment call on a non-civil service contract until June 30. "We did not require her to declare her background," she said. "We have no plans now to carry over any contract officer in the office of the chief executive-elect to the future Chief Executive's Office." Lau dismissed suggestions that Chen's hiring had set a precedent, saying the government had hired dozens of non-permanent residents as civil servants and contract staff members before. Asked if Chen might have an edge over other candidates when competing for jobs in Leung's office from July 1 onwards, Lau said that under an open recruitment of contract staff, candidates' abilities would be considered comprehensively. After the forum, So Ping-chi, honorary chairman of the Senior Government Officers Association, pointed out that existing rules allowed the chief executive to hire his special assistants, private secretary and drivers without an open recruitment. Lau said Chen had to be "politically neutral, incorruptible and upright and enforce policies in accordance with the law" as long as she worked for the government. Meanwhile, in an interview with Cable TV, Cheng, honorary president of the Federation of Trade Unions, floated the idea that political assistant positions should be created under executive councillors, who should be given the freedom to choose their aides. He said as Exco members had to help the chief executive with policymaking, they would find it easier to do the job well with the aid of political assistants. At present, there are nine political assistants, who work in bureaus and the financial secretary's office. Cheng also called on Hongkongers to support Beijing when it stepped into Hong Kong's affairs "with good intentions", for instance by doing the city favours. Separately, Legco president Tsang Yok-sing said the Legislative Council Commission would convene today to continue discussing its choice for the next secretary general to succeed the incumbent, Pauline Ng Man-wah. Earlier, a source said undersecretary for education Kenneth Chen Wei-on was a shoo-in.

Workers at 7-Eleven were guaranteed minimum wage last year, but owners say their franchise deal makes it difficult to pay the rise. Workers at 7-Eleven stores may be guaranteed a minimum hourly wage of HK$28, but some of their bosses say they are earning less than that. More than 10 7-Eleven franchise holders - squeezed by the minimum wage law that took effect a year ago tomorrow and an unfavourable agreement with local brand-owner, Dairy Farm - have in the last year given up the right to run the convenience stores, said Thomas Hung Wing-yu of the Hong Kong Franchisee Association. "Life is very tough," Hung said. "In a bad month we earn HK$7,000 or less. A boss running a store in Chai Wan works around the clock and sleeps fewer than three hours." Some 563 of Hong Kong's 964 7-Eleven stores are operated by franchisees. Each is required to pay a one-time fee of HK$300,000 to HK$800,000, depending on the shop's size, before they start running the business. Once they take it up, franchisees bear labour costs while Dairy Farm, a subsidiary of Jardine Matheson, pays the rent. Each month's profits are shared, with Dairy Farm getting 60 per cent to 70 per cent. Profit is calculated by deducting the cost of products from business turnover, but the formula does not account for wages. Franchisees say they have been forced to make up the difference between previous rates and the minimum wage from their own pockets. Worst hit have been those in Tuen Mun, Kwai Chung, Tsing Yi and Sham Shui Po, where the hourly rates have shot up to HK$28 from HK$21. Cutting staff is difficult because many shops already employ the minimum four to five employees needed to run a 24-hour store. It is also hard to offset costs by raising prices on items sold in the stores because franchisees get an even smaller portion of the profits from food and other goods. "Even if we raise the prices of goods, it would be Dairy Farm which benefits from it," Hung said, adding that it was unfair for Dairy Farm to refuse an adjustment in the profit-sharing ratio. "When rent increases, it lowers our profit-sharing ratio. Now wages have increased, it refuses to let us share more of the profits." A spokeswoman for the 7-Eleven brand that the chain has been monitoring the impact of higher wages on business and the franchisees' operations since the implementation of the minimum wage law last year. The spokeswoman said an increase in cash profit per store showed that the average business performance of 7-Eleven franchises had improved in the past year. Apart from 7-Eleven, Dairy Farm runs a list of well-known retail chains in Hong Kong, including Ikea, Mannings, ThreeSixty and Wellcome. It also owns 50 per cent of Maxim's, a catering company with more than 560 restaurants, fast food stores and cake shops. It also has sole rights to the Starbucks brand in Hong Kong and Macau and holds the local Genki Sushi franchise.

Legislative Council president Tsang Yok-sing called for both Beijing and the pan-democrats to exhibit more pragmatism and common sense in their relationship. Tsang Yok-sing has called on Beijing to engage in dialogue with prospective pan-democratic contenders for the 2017 chief executive race and allow them to visit the mainland. The outgoing Legislative Council president, who enjoys close mainland ties, says it is imperative for Beijing and the pan-democrats to communicate and reconcile. "It will be tough, but it doesn't mean it cannot be achieved," he said. "I think all sides should have a higher level of pragmatism and common sense. "It doesn't mean [a pan-democratic candidate] can't criticise the policies of the Chinese government, but [he or she] should win the trust of the central government. [He or she] is obliged to do that. I believe it would be impossible for anyone who bids for the chief executive post to put forth platforms that are confrontational to the central government. All contenders would express their wish to co-operate with the central government [instead]." Reviewing his four-year Legco presidency, Tsang lamented a missed opportunity in 2009 when his proposal for the central government to invite all 60 lawmakers to attend the 60th National Day celebrations in Beijing was rejected due to fears of unruly behaviour by certain legislators. Asked if Beijing could accept a pan-democrat to take the helm of Hong Kong when universal suffrage was in place, Tsang said: "I won't guess. I am a pragmatist … various political factions should enhance their communication with the central government so that Beijing can get to know more about them." He also suggested Beijing allow potential pan-democratic hopefuls to visit the mainland in future. The former chairman of what was the Democratic Alliance for the Betterment of Hong Kong admitted that reconciliation between Beijing and pan-democrats would be a tough task. Tsang dismissed pan-democrats' fears over their chances of being filtered out by the nominating committee that was eventually set up for the top leadership election in 2017. He said pan-democrats should be more worried about whether they could field a candidate who was good enough to run the city and that their prospective contenders should strive for Beijing's support. He said all Hongkongers, including Democratic Party chairman Albert Ho Chun-yan, should be allowed entry to the mainland as long as their visits were for legal activities. The pan-democrats should not just be issued one-off permits, he said. Tsang conceded that it would be impossible to arrange a visit by all 60 lawmakers en masse to the mainland before this Legco term ends in July. He said he had proposed such a visit to the central government's liaison office when Beijing was mulling over the guest list for Hong Kong's delegation to the capital for the 60th anniversary of the founding of the People's Republic of China in 2009. "At first, officials at the liaison office told me it would seriously consider it," Tsang said. "But later, they replied to me that they were worried that if [some Hong Kong lawmakers] held protests during the celebrations, it might affect state leaders' image before foreign guests." He added: "They pledged to arrange another visit, but I have since not heard from them." Labour Party chairman and lawmaker Lee Cheuk-yan, who has long been denied entry to the mainland, said: "Beijing should allow pan-democrats to visit the mainland unconditionally, which can prompt a real reconciliation." Lee, who chairs the Hong Kong Alliance in Support of Patriotic Democratic Movements of China, said of Tsang's idea that prospective pan-democratic hopefuls had to win support from Beijing: "How could we know what kind of people are acceptable to the central government?"

 China*:  May 2 2012 Share

China successfully launched two satellites into space at 4:50 am Beijing Time Monday, the 12th and 13th satellites for its Beidou global navigation and positioning network, the launch center said. The Beidou-2 satellites, launched from the Xichang Satellite Launch Center in the southwestern province of Sichuan, was boosted by a Long March-3B carrier rocket and has entered the scheduled orbit. It is the first time China has launched two navigation satellites with one rocket, and the two satellites will help to improve the accuracy of the Beidou, or Compass system, the center said in a statement. China will launch three more satellites for the Beidou network this year and a global satellite positioning and navigation system will be completed in 2020 with more than 30 orbiters, the statement said. Monday's mission marked the 160th flight of China's Long March series of carrier rockets. China successfully launched two satellites into space at 4:50 am Beijing Time Monday, the 12th and 13th satellites for its Beidou global navigation and positioning network.

The 492-meter-high, 101-story Shanghai World Financial Center in Pudong district, Shanghai, is the tallest building on the Chinese mainland. The more than 30 exterior crews that clean the landmark have earned the title of "high-rise supermen" as they risk their lives to work hard every day on more than 10,000 glass curtain walls. To join the ranks, applicants to become high-rise cleaners are required to have vocational certificates and be free from high blood pressure. Of course, those with a fear of heights need not apply. Crewmembers are prohibited from wearing watches or carrying mobile phones while working high above the ground and they must stop working if winds reach Force 4 on the Beaufort scale, defined as a "moderate breeze" of 20 to 28 kilometers an hour. 

The central government's internet censors have a dim view of Facebook, but that has not stopped it from being a model of sorts for the mainland's securities regulator, IFR has reported. At a recent regular training seminar, the China Securities and Regulatory Commission urged IPO bankers to learn from the risk disclosures in Facebook's listing prospectus, the financial publication reported on Saturday. The remarks underline Beijing's determination to transform its existing IPO system, where regulators decide whether a company is fit to come to market, into a more disclosure-based model that trus