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Asia Television’s chief executive lost a court appeal on Friday to block an arch-rival director from passing the broadcaster’s financial and operations documents to a shareholder. James Shing Pan-yu failed to convince the Court of Appeal to impose conditions on director Kevin Tsai Shao-chung, to limit his use of the documents to the purposes of discharging his duties as a member of ATV’s board of directors. Anson Wong, Shing’s lawyer, argued that the documents should not be passed to Tsai’s father, Taiwanese snack tycoon and ATV shareholder Tsai Eng-meng, and the father’s company. They had been using the confidential information for their own interests, in litigation against other shareholders over control of the station. Mr Justice Peter Cheung Chak-yau, Madam Justice Maria Yuen Ka-ning and Mr Justice Joseph Fok dismissed the appeal by the free-to-air station’s chief. They will hand down their explanations at a later date. The latest blow to Shing came just two days after a Communications Authority draft report called him unfit to hold a broadcast licence and proposed fining the station a record HK$1 million because he ceded much of his day-to-day responsibilities to major investor Wong Ching. ATV is seeking a judicial review to prevent the authority from releasing the final report. Shing lodged Friday’s appeal after the Court of First Instance ruled that Tsai could have unlimited access to the documents, since it was company policy that such information could be passed to shareholders. Barrister Charles Manzoni, for Tsai, told the appeal court that Tsai only learned about the damning draft report and ATV’s application for a judicial review on Thursday, despite that fact that he was a director. 

China's President Hu Jintao, at podium, arrives in Hong Kong to take part in the 15th anniversary celebrations of the city's return to China. He was greeted at Hong Kong International Airport by Chief Executive Donald Tsang Yam-kuen, chief executive-elect Leung Chun-ying and other government officials. President Hu Jintao inspects People's Liberation Army soldiers at the Shek Kong PLA barrack on Friday. China’s secretive armed forces were put on full display in Hong Kong on Friday as they staged a startling show of military might with helicopters and tanks for visiting President Hu Jintao. The military inspection at the People’s Liberation Army barrack was among the first on Hu’s agenda after he arrived in Hong Kong for a three-day visit to mark its 15th handover anniversary from Britain. Standing on top of a truck, Hu paid tribute to more than 3,200 troops at the Shek Kong PLA barrack, about 45 minutes from Central, with a huge banner that read “Love the motherland, love Hong Kong,” and red flags waving in the background. “Greetings comrades!” Hu, who was wearing a green uniform, shouted to the thousands of troops saluting him who responded by saying “Greetings President”. “Thank you for your efforts comrades!” Hu added, to which the PLA members answered “serve the people”. The show of force, however, prompted criticism from netizens in Hong Kong. “It feels like we are in North Korea,” a Hongkonger wrote on Facebook. Earlier on Friday, Hu arrived in the city exactly at noon. When Hu’s chartered plane landed at the airport, Chief Executive Donald Tsang Yam-kuen went on board to welcome him. Hu then disembarked, shaking hands with the welcoming party before giving a two-minute speech. He told listeners that the central government wanted to work with Hongkongers from all walks of life, to learn from the “precious experience” gained in implementing the “one country, two systems” policy over the past 15 years, and to use them for further development. “In the coming two days, I hope to walk more, see more and personally feel the development of Hong Kong, and understand the life and expectations of Hong Kong people,” the president said. Hu is the general secretary of the Central Committee of the Communist Party of China and chairman of the Central Military Commission. Hu, who last visited Hong Kong in 2007 for the 10th handover anniversary, also urged unity between Hongkongers and their northern neighbors. “The central government would like to use the valuable experience gained over the past 15 years with the people of all sectors in Hong Kong to unite together and look forward to further promote the practice of ’one country two systems’,” the Chinese leader said. Other officials who were present include Chief Justice Geoffrey Ma Tao-li of the Court of Final Appeal, Chief Secretary Stephen Lam Sui-lung, Financial Secretary John Tsang Chun-wah, Secretary for Justice Wong Yan-lung and Legislative Council president Tsang Yok-sing. Hu is expected to announce measures aimed at enhancing economic cooperation between Hong Kong and Beijing during his visit, as part of China’s use of the city as a testing ground to turn the yuan into a global currency. Hu, whose visit is his last as president before a key leadership reshuffle in Beijing later this year, is also expected to attend a variety show to celebrate the 15 years of Chinese rule on Saturday and the inauguration of Leung Chun-ying as Hong Kong’s next chief executive on Sunday.

China President Hu Jintao arrives in HK - Chinese President Hu Jintao (C) waves upon his arrival at Hong Kong International Airport in Hong Kong, south China, June 29, 2012. Chinese President Hu Jintao arrived here Friday to attend the celebrations marking the 15th anniversary of Hong Kong's return to the motherland and the swearing-in ceremony of the fourth-term government of the Hong Kong Special Administrative Region. Chinese President Hu Jintao arrived here by special plane at noon Friday to attend the celebrations marking the 15th anniversary of Hong Kong's return to China and the swearing-in ceremony of the fourth-term government of the Hong Kong Special Administrative Region (HKSAR). HKSAR Chief Executive Donald Tsang Yam-kuen mounted the special plane to welcome Hu, also general secretary of the Central Committee of the Communist Party of China and chairman of the Central Military Commission. HKSAR Chief Executive-elect Leung Chun-ying and a group of high- ranking officials were also present at the airport to greet Hu. A series of events will be held during the next few days to mark the anniversary, including a flag-raising ceremony, artistic performances, a fireworks display, carnivals, and parachute jumping performance staged by the People's Liberation Army 81 Parachute Brigade. 

 China*:  July 1 2012 Share

Astronauts come out of the return capsule - Chinese astronauts wave hands to greet welcoming crowd in Siziwang Banner of North China's Inner Mongolia autonomous region on June 29, 2012. Chinese female astronaut Liu Yang salutes crowds while coming out of the re-entry capsule of Shenzhou-9 spacecraft in Siziwang Banner of North China's Inner Mongolia autonomous region. 

The United States on Thursday exempted China from sanctions over purchases of oil from Iran hours before a deadline, saying that major economies were united in putting pressure on Tehran. The United States, however, did not grant exemptions to smaller-scale importers such as Pakistan and Afghanistan, meaning that banks from those countries could face punishment if they handle transactions for Iranian oil. Secretary of State Hillary Clinton ruled that China and Singapore had “significantly reduced” their crude oil purchases from Iran, granting them exemptions on the final day before sanctions take effect. Under a law aimed at pressing Iran over its nuclear programme, the United States will bar financial institutions that buy oil from Iran, essentially forcing them to choose between Tehran and the world’s largest economy. Clinton credited the threat of sanctions with severely cutting Iran’s crude oil exports and estimated that it cost the country some US$8 billion in lost revenue each quarter. The world’s “cumulative actions are a clear demonstration to Iran’s government that Iran’s continued violation of its international nuclear obligations carries an enormous economic cost,” she said in a statement. Numerous countries initially voiced concern about the US law. China and India had been among the most outspoken, initially protesting that their energy-hungry economies should not be beholden to US domestic law. But US officials boasted that countries with vastly different relationships with the United States – from close ally Japan to sometime competitor China – all decided in the end that it was best to cut imports from Iran. Clinton exempted members of the European Union and Japan in March and on June 11 did the same for India, Malaysia, South Africa, South Korea, Sri Lanka, Turkey and Taiwan. The exemptions are for a renewable 180-day period. The United States held extensive talks with China and Singapore as the deadline loomed. A US official praised a recent Chinese statement that its oil imports from Iran fell 25 per cent between January and May from a year earlier and that more reductions were due this year. “I think there’s an understanding on the Chinese side of the seriousness with which we’re going forward with this,” the official told reporters on condition of anonymity. The official highlighted effects of pressure including a cut off in fuel supplies to Iran Air and shipping companies’ reluctance to call on Iranian ports. But Representative Ileana Ros-Lehtinen, the Republican chairwoman of the House Foreign Affairs Committee, criticised the Democratic administration, saying that China remained the single biggest purchaser of Iranian oil. “The administration likes to pat itself on the back for supposedly being strong on Iran sanctions. But actions speak louder than words, and today the administration has granted a free pass to Iran’s biggest enabler,” said Ros-Lehtinen, a staunch critic of Beijing and Tehran. Israel and some Western officials fear that Iran is pursuing a nuclear weapon. Israeli Prime Minister Benjamin Netanyahu has not ruled out a military strike, leading the Obama administration to seek economic pressure on Iran to avoid war. Iran’s clerical regime has engaged in protracted talks with global powers and insists that its sensitive nuclear work is for peaceful purposes. “I urge Iran to demonstrate its willingness to take concrete steps toward resolving the nuclear issue during the expert-level talks scheduled in Istanbul” on Tuesday, Clinton said in the statement. “Failure to do so will result in continuing pressure and isolation from the international community,” she said. A US official said that the administration has exempted all “significant” buyers of Iranian oil. But Clinton has not made exceptions for smaller-scale importers such as Iran’s neighbours Pakistan and Afghanistan. The countries will not face sanctions as a whole, but their financial institutions will now be subject to bans in the United States if determined that they have dealt with Iran’s central bank to arrange the purchase of oil. Singapore has said that it imported practically no oil from Iran in May.

Hong Kong*:  June 30 2012 Share

Hong Kong property tycoon Joseph Lau Luen-hung has been ordered to trial in Macau in September over accusations he and another developer paid a HK$20 million bribe to secure prime land for luxury flats. In a statement filed last night with the Hong Kong stock exchange, Lau's publicly listed Chinese Estates (SEHK: 0127) confirmed that Macau's Court of First Instance served him papers yesterday ordering him to appear for trial on September 17. The statement said Lau had for now retained his role as executive director. It did not say whether he intended to go to Macau to face the charges for bribery and money laundering. Iau Teng-pio, a law professor from the University of Macau, said Lau could escape jail time if he stayed away from Macau because the city had no extradition treaties. "The Macau government cannot demand that the Hong Kong police and government help with arrests," Iau said. The trial comes as little surprise since allegations against Lau played a central role in the recently concluded corruption trial against former Macau public works chief Ao Man-long. Ao was sentenced last month to 29 years in prison for taking the bribe, which prosecutors said Lau and fellow tycoon Steven Lo Kit-sing paid in 2005 to advance the La Scala project near Macau's airport. Investors may nonetheless see confirmation of the trial as damaging since Lau and his family retain control over Chinese Estates. The company could not be reached for comment. Ricky Tam Siu-hing, a director at Champlus Asset Management, said the company's share price would face pressure when the market opened today. But Tam did not expect the stock to fall drastically because accusations about Lau's involvement had already come out in Ao's trial and the Lau family held 75 per cent of the shares. "Not many institutional investors have its shares," Tam said. "So I don't think there will be a strong wave of panic selling." Chinese Estates shares were priced at HK$11 last month before it was revealed that he would face the charges, and have since hovered around HK$9. The company's stock ticked up two cents to HK$8.98 at the close of trading before the announcement came out. The company had sold 300 of the 4,000 flats planned for the La Scala project before cutting off sales and construction in recent weeks. Chinese Estates has said it will take legal action to stop the Macau government from invalidating the land purchase, and that it was "determined" to pursue compensation claims if it happened.

John Tsang, Carrie Lam and Rimsky Yuen meet the press to discuss their new jobs in C.Y. Leung's government. New justice secretary quits mainland post - Rimsky Yuen leaves Guangdong CPPCC to join C.Y. Leung's team and denies he has been given a 'political mission' to revive controversial Article 23 security law. The incoming secretary for justice, Rimsky Yuen Kwok-keung, has resigned from his post on the Guangdong government's advisory body after being named in Leung Chun-ying's cabinet yesterday. Yuen's announcement came as doubts emerged about his ability to remain impartial while making controversial decisions in office, but he insisted that his role a delegate of Guangdong's provincial Chinese People's Political Consultative Conference would not "adversely effect" his role in Leung's administration. He also said legislation of the Article 23 national security law was not on his agenda and seeking an interpretation of the Basic Law from Beijing would be the "last resort" in resolving legal disputes. Yuen, elected in 2007 as chairman of the Bar Association, accepted his appointment as a delegate to Guangdong's provincial Chinese People's Political Consultative Conference in 2008. The move raised concerns among lawyers over whether the appointment conflicted with his position on the Bar and his neutrality. Yuen said last month that he would quit the CPPCC post "when there is a need to do so". Yesterday, he said he would step down from other public duties, including his post as chairman of the government's Transport Advisory Committee. He promised to do his "utmost to safeguard the rule of law, fundamental human rights and the public interest", and provide "truly independent legal advice" to the government during his tenure. Yuen praised the incumbent secretary for justice, Wong Yan-lung, as a "shining example" to follow. However, Yuen declined to make the same pledge Wong did of not inviting Beijing to reinterpret the Basic Law during his term. The former Bar chairman only said it would be the "last resort" if a dispute could not be resolved "within the city's judicial system". On the controversial national security bill, shelved after massive protests in 2003, Yuen said legislation under Article 23 of the Basic Law would not be a top priority. "I have to make it clear that I have not been told to complete any so-called 'political mission'," Yuen said. But the incoming security minister, Lai Tung-kwok, later said it would be the "constitutional responsibility" of the government to pass a national security law when consensus was reached in society. Meanwhile, incoming chief secretary Carrie Lam Cheng Yuet-ngor said she had considered leaving the government when her term as development chief expired at midnight on Saturday, but decided to become the government's No2 official after her husband Lam Siu-por persuaded her to accept the job offer. She said the position was "the biggest honour in her public service life". When asked why there was speculation she would leave the government in July, Lam said: "I had bought a house in a small town in the UK and wanted to stay there [after my public service]. "Mr Lam changed my mind. Having known me for decades he understood my passion for public service. He told me that if I had given up this chance I would probably regret it." With her husband and two sons living in Britain, Lam served as director of Hong Kong's Economic and Trade Offices in London from 2004 to 2006 - which meant stepping down from a D8 to D6 ranking in the civil service - to be with her family. Financial Secretary John Tsang Chun-wah, who has been Carrie Lam's senior over the past five years, said it would "never be a problem" for him to serve as her subordinate. He also brushed aside health concerns, as he took on a second term amid "the unprecedented challenges facing Hong Kong". "Maybe I look dull in the face today. But the best test of my health is to have a fencing match with you [reporters]," said Tsang, a fervent sportsman. "We have to maintain financial stability in light of the unprecedented challenges and prevent the economy from heading downwards," said Tsang. Asked whether he had learnt his lesson from the much-criticised move to direct HK$6,000 cash handouts to every eligible Hong Kong resident in last year's budget, he said: "I would not rule out the possibility of implementing any policy."

HKEx, China bourses form joint venture - (From left) Zhang Yujin from Shanghai's stock exchange, Charles Li Xiaojia from HKEx and Song Liping from Shenzhen's SZSE. Hong Kong Exchanges Clearing (HKEx (SEHK: 0388, announcements, news) ), which operates Asia’s largest bourse, is forming a joint venture with mainland exchanges to develop index-linked and equity derivatives products in a sign of growing cooperation in the region. After almost a year of talks, the HKEx announced the collaboration with the Shanghai Stock Exchange and the Shenzhen Stock Exchange – just days after it made its first overseas move by agreeing to buy the London Metal Exchange for US$2.2 billion. The tie-up with the mainland also comes amid a wave of initiatives launched by Beijing aimed at making the south a major financial centre, including plans to develop a US$45 billion hub in Shenzhen’s Qianhai Bay Economic Zone and push towards a freely tradable yuan. The three Chinese exchanges began discussing closer ties at a time of feverish global stock market consolidation, though few of those deals managed to get past regulatory hurdles. One challenge global investors face when tracking Chinese markets is having to keep check on multiple benchmark indexes. The new venture plans to launch indexes that better represent the cross-border nature of the market and will be responsible for licensing index-linked products such as ETFs. Despite rapid economic growth, Chinese stock exchanges have a long way to go before establishing a global presence. The total value of shares traded on the three stock exchanges last year was US$7.9 trillion, less than half the volume on the New York Stock Exchange, according to the World Federation of Exchanges. Hong Kong Financial Secretary John Tsang Chun-wah told a briefing on Thursday that the joint venture was “a new landmark in financial cooperation between mainland China and Hong Kong”. The venture partners will have equal shares in the company, each committing HK$100 million as initial paid-up capital.

Despite a fall in cargo volume, Hong Kong International Airport set new records for both revenue and profit in the fiscal year ended March 31. The Airport Authority announced yesterday that profit climbed 32.2percent to HK$5.3 billion and revenue rose 14.8percent to more than HK$12 billion. It also declared a final dividend of HK$3.9 billion, to be paid into the coffers of the Hong Kong government. During the year, passenger volume increased 6.6 percent to 54.9 million. Cargo performance softened 5.9 percent to 3.9 million tons. Authority chief executive Stanley Hui Hon-chung said it is normal for cargo volume to fluctuate, but he is confident it will grow in the medium to long term. "The strong performance is a result of healthy traffic growth," Hui said. "It is an indication of our ongoing efforts to contain costs, enhance operational efficiency and explore every possible means to increase revenue by leveraging the airport's growing passenger traffic." The authority's executive director of finance, William Lo Chi-chung, said the record revenue is partly down to strong retail and advertising revenue, which rose 25.5 percent to nearly HK$5 billion. Lo said that although revenue rose 14.8 percent, operating costs only rose 9.8 percent. This, he said, illustrates that the authority knows how to maximize revenue while maintaining low operating costs. Despite the record revenue, Lo forecasts that it will now grow more slowly owing to the gloomy European economic outlook. The announcement came as the central government pledged to encourage Hong Kong and mainland companies to invest abroad by promoting coordination among airports in the Pearl River Delta. Hui believes that this will help boost traffic flow at the airport. "This will improve the overall competitiveness in the region," he said.

Beijing has prepared several "gifts" aimed at boosting economic ties to mark the 15th anniversary of Hong Kong's return to China. They include the possibility of allowing mainlanders to open yuan bank accounts in the city and permitting them to board cruise ships in Hong Kong sailing to Japan or South Korea via Taiwan, before returning to the mainland. Beijing said "third parties" will be allowed to use Hong Kong for trade and investment settlement that will increase yuan liquidity in the SAR; the mutual listing of investment products on Hong Kong and mainland bourses will be promoted; and Hong Kong funds can invest in the mainland's capital markets. Other policy packages cover cooperation in trade, finance, education, science and technology and tourism, as well as improved cooperation between Hong Kong and Guangdong. Alan Luk Ting-lung, head of investment advisory services at Hang Seng Bank, said the measure could mean that nonlocal residents or nonlocal enterprises will be allowed to open accounts in the city, and do yuan exchange, settlement and financing. Sources also expect mainlanders will be allowed to open offshore accounts in Hong Kong with no limits. But ANZ senior economist Raymond Yeung Yu-ting said the market has included "too many personal wishes" when interpreting the words "third parties." That would mean cities such as Singapore and London will use Hong Kong as a yuan clearing center. At the moment, local residents can open onshore saving accounts but are allowed to convert only up to 20,000 yuan (HK$24,403) per day. Earlier this month, banking sources said the daily conversion limit will be raised to between 80,000 and 100,000 yuan. Beijing's gift package also includes setting up joint ventures among bourses in Hong Kong, Shanghai and Shenzhen in a move to facilitate the cross-listing of exchange-traded funds. "That means ETFs composed of A-shares will be traded in Hong Kong, and Hong Kong investors can buy the products in yuan," Yeung said. "Also, ETFs comprising Hong Kong stocks will be traded in the mainland, as Vice President Li Keqiang suggested in August." The central government will also ease rules on long-term investment from Hong Kong in the mainland. The market estimates the move will allow a more flexible product structure under the Renminbi Qualified Foreign Institutional Investor program. Currently, RQFII products consist of about 80 percent bond investment and only 20 percent equities. Beijing is also giving Hong Kong institutions the green light to set up consumer finance firms in Guangdong. Tse Yung-hoi, deputy chief executive of Bank of China International, expects the move to enhance the development of financial services in the Qianhai zone of Shenzhen. The move to allow mainland passengers to board cruises in Hong Kong will give the tourism industry a timely boost. Travel Industry Council executive director Joseph Tung Yiu-chung said this will make Hong Kong the cruise hub of Asia and draw 20 to 30 percent of the world's cruises to use Hong Kong for new routes in the region. A spokeswoman for Star Cruises, the only Hong Kong-based cruise line operator, said it does not operate the routes mentioned but is "looking forward to more details for further evaluation."

Chief Executive-elect Leung Chun-ying, centre, leaves a news conference after announcing the newly appointed principal officials for the cabinet on Thursday. The central government announced the line-up of Leung Chun-ying's cabinet on Thursday, three days before he takes office as Hong Kong’s chief executive. Secretary for Development Carrie Lam Cheng Yuet-ngor, 55, will become chief secretary, second in command in Leung’s administration, while John Tsang Chun-wah, 61, will stay on as financial secretary. Their appointments to those posts have been widely anticipated. Former Bar Association chairman Rimsky Yuen Kwok-keung, 48, will become secretary for justice. The appointments were made to the existing cabinet structure. Nobody was named for the new positions Leung is trying to create: two new deputy secretaries and two new bureaus chiefs. Some current cabinet members will retain their positions, including: Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen, 48; Secretary for Financial Services and the Treasury Professor Chan Ka-keung, 55; Secretary for Commerce and Economic Development Greg So Kam-leung, 53; Secretary for Labour and Welfare Matthew Cheung Kin-chung, 61; and Secretary for Home Affairs Tsang Tak-sing. Secretary for the Environment Edward Yau Tang-wah will become director of the Chief Executive’s Office. Undersecretary for security Lai Tung-kwok, 60, will take over as secretary for security. New faces among policy bureau chiefs include Dr Ko Wing-man, 55, as secretary for food and health, and veteran architect Wong Kam-sing, 49, as environment minister. Ko is a former Hospital Authority official. Discussing the new cabinet members, Leung said their experience and dedication would help him implement his policies efficiently. He pledged that his administration would heed public views, starting with a community visit by him and chief secretary Carrie Lam on July 2. “Each of them has an outstanding performance record in their own area and they share the same goals and ideals with me,” Leung said. “I am confident we together can achieve our goal, that is, to seek change with prudence while maintaining overall stability.” Leung said he would try to get his cabinet revamp plan passed by the Legislative Council soon, to help him better implement his policies. The plan suggests creating two policy bureaus and two new deputy secretaries. Lam said she would help Leung carry out his policy blueprint and deal with tasks such as co-ordinating work among different policy bureaus and leading the civil service. Her experience as director of social welfare, she said, helped her grasp livelihood issues facing underprivileged groups and to reach out to them. John Tsang said the focus of his coming five years as financial secretary would be on maintaining a balanced budget for Hong Kong, boosting the economy and refining the housing and lands policy to maintain a healthy property market. Rimsky Yuen pledged that, as secretary for justice, he would exhaust all the options within Hong Kong’s legal framework before asking Beijing for an interpretation of the Basic Law. On the controversial anti-subversion bill, Article 23 of the Basic Law, Yuen said it was not on his work plan because Hong Kong was facing many other issues in economic and domestic areas. Yuen acknowledged that his membership in Guangdong’s Chinese People’s Political Consultative Conference had raised public concern over his neutrality as justice secretary. He has resigned from the position, he said. Other appointments include: Secretary for education: Eddie Ng Hak-kim, 59, currently chairman of the Examinations and Assessment Authority. Secretary for development: Mak Chai-kwong, 62, the former highways chief. Secretary for transport and housing: Anthony Cheung Bing-leung, 60, Executive Council member. Secretary for civil service: Paul Tang Kwok-wai, 56, currently permanent secretary for labour and welfare. Commissioner of police: Andy Tsang Wai-hung, 54, will continue in the post. Director of immigration: Eric Chan Kwok-ki, 53, keeps the post. Commissioner of Customs and Excise: Clement Cheung Wan-ching, 50, retains the position. Commissioner of the Independent Commission Against Corruption: Simon Peh Yun-lu, 57, former immigration director. Director of audit. David Sun Tak-kei, 59, former chairman and managing partner of Ernst & Young.

From Shrouded High-Rises, Beauty Emerges - The first time photographer Peter Steinhauer spotted a building covered in bamboo scaffolding and wrapped in a colorful tarp – the subject of his new exhibition in the city – he was in a taxi. Through the backseat window, he spotted another, and another. It must, he reasoned, be the work of European environmental artists Christo and Jeanne-Claude, who often used fabric in their large-scale outdoor installations. Mr. Steinhauer later realized that in Hong Kong, these swaddled high-rises were ubiquitous, the telltale garb of a building in transition – a sign that it’s under construction, renovation or demolition. “It was so opposite of where I come from,” he says. In his Boulder, Colo. hometown, “we use steel girders to do things like this. It was something that was so significant that I knew I would come back to photograph it.” The opportunity arose 13 years later, when Mr. Steinhauer moved to Hong Kong after living in Vietnam. A black-and-white photographer by trade, he eventually switched to color to capture the under-construction buildings, which he dubbed his “Cocoon” works. A batch of prints from the last 18 months is on view at Contemporary by Angela Li, opening Thursday. Ms. Li was attracted to Mr. Steinhauer’s take on an aspect of the city that local residents typically ignore or disdain. “There’s a lot of dust and dirt around, and we just can’t wait for it to go away,” she says. “Peter sees it from a completely different angle. He sees that these buildings look completely beautiful.” To create his compositions, he shoots from rooftops, balconies, hillsides and elevated roads. Some pieces set the buildings against the backdrop of their inner-city surroundings. Others get up close to capture the folds of the tarps and the geometry of the bamboo. “Cocoon” is a departure from the photographer’s usual work, mainly shot in Asia, which tends to depict misty, natural scenes, even in Hong Kong, and straightforward portraits, always in black and white. A stickler for detail, Mr. Steinhauer prints all of his own photos rather than outsourcing the process to a lab. The images on display at Ms. Li’s gallery seem to epitomize Hong Kong’s breakneck urban development, but they also contain a touch of nostalgia. Inspired by Scottish photographer John Thomson, who recorded some of the first pictures of Hong Kong in the 1860s, Mr. Steinhauer notes that some of Mr. Thomson’s early works, too, featured buildings covered in bamboo scaffolding. “Hong Kong still uses this age-old process,” Mr. Steinhauer says. “How it works with modern culture and modern buildings in the 21st century — I think it’s amazing.”

Yuan trade settlements encouraged in SAR - Vice-President Xi Jinping, accompanied by Hong Kong Chief Executive-Elect Leung Chun-ying, talks with Hong Kong Chief Executive Donald Tsang at the National Museum of China in Beijing on Wednesday. The museum is featuring an exhibition celebrating Hong Kong's achievements in the past 15 years. The moves are part of a package of policies for Hong Kong ahead of the 15th anniversary of its return to China on July 1. The development of Hong Kong's offshore yuan businesses accelerated rapidly last year, as the total yuan trade settlement value in Hong Kong increased more than four times over 2010, the Hong Kong Monetary Authority said in a document released in late February. As a prime platform for offshore yuan trade settlement, Hong Kong's banks handled a record 1.91 trillion yuan ($300 billion) in such trade last year, up 419 percent from 369.2 billion yuan a year earlier, said the city's de facto central bank. In 2011, China's trade settled in yuan amounted to 2.08 trillion yuan, which was about 9 percent of the country's total imports and exports for the year, according to the People's Bank of China. ETFs to get welcome - Meanwhile, the long-awaited issue of ETFs that track Hong Kong shares and those that are linked to A-shares are widely expected with an initial quota of 20 billion yuan each. Analysts said that they don't believe the ETFs will be able to boost stock markets single-handedly. They said the move is more of a policy signal rather than a decisive factor for the markets. Tse Kwok-leung, head of economics and policy research at Bank of China (Hong Kong), said he doesn't see the introduction of new ETFs stimulating the stock markets. The current stock market downturn is a result of a weak global economy, said Tse, adding that the recovery of the stock market needed to be backed by the recovery of the real economy. But Tse believes investors from both the mainland and Hong Kong will be very interested in the approaching ETFs, "as they will provide a direct access to each other's bourse for stock trading". Tse said although the actual initial scale of the ETFs is yet to be unveiled, the cooperation in financial markets between mainland and Hong Kong has always been step-by-step, and the scale will be expanded gradually. The ETFs are expected to get a warm welcome by investors. Ronald Wan, honorary chair professor at the Renmin University of China, also believes that Hong Kong branches of mainland brokerages will share the quota of A-share tracking ETFs. "They will have certain advantages in developing yuan-denominated products, due to their background," he said. As for the joint ventures for stock exchanges in Hong Kong, Shenzhen and Shanghai, Chen Daofu, an economist at the State Council's Development Research Center, believes the collaboration could be in the areas of risk management, product design and trading system operation, which can change the current competition into a cooperative relationship.

 China*:  June 30 2012 Share

Military body may be set up in South China Sea city, ministry says - A military presence may be set up in Sansha, a newly established city that administers Chinese territory in the South China Sea, the Defense Ministry said on Thursday. Defense Ministry spokesman Geng Yansheng told a news conference that setting up a military body in the city is being studied by the military. The move is a strong indication of China's determination to protect its maritime sovereignty in response to provocation from neighboring countries, analysts said. The State Council on June 21 approved the establishment of the prefecture-level city of Sansha to administer the Xisha, Zhongsha and Nansha islands and their surrounding waters in the South China Sea. The government abolished a county-level administration office for the islands that was previously stationed on Yongxing Island, part of the Xisha Islands. On the same day, June 21, Vietnam passed a law claiming sovereignty and jurisdiction over Xisha and Nansha islands. The islands are within Chinese territorial waters. Asked to comment on Vietnamese overflights in the skies above Sansha recently, Geng said on Thursday that Beijing will "resolutely oppose any military provocation". "The Chinese military has already set up a normal, combat-ready patrol system in seas under our control to protect national sovereignty and our security and development interests," he said. Having established a regular patrol system in its territorial waters, China's armed forces have the resolution and will to safeguard China's territorial sovereignty, sea rights and interests, Geng said. "We will resolutely fulfill our duties in accordance with the State's arrangements." Sansha may be targeted by some countries that claim sovereignty over the South China Sea, said Zhang Haiwen, deputy director at the China Institute for Marine Affairs. The military's presence is needed to safeguard interests including fishing rights, scientific research and the development of maritime resources. After Sansha city is established, Zhang said, its government will launch a series of development plans. Implementation of the plans, he added, will need the protection of the military. Geng said China is keen to solve disputes through peaceful means and promote military exchanges with major players in the Asia-Pacific region, including the United States and Japan. A maritime defense consultation between China and Japan was held in Beijing on Thursday. A mechanism to enhance maritime trust was discussed, Geng said. Concerning recent exercises between the US and its Asian allies, Geng said that the cause of regional peace and stability was not served well when countries intentionally strengthened military alliances by holding exercises. Shortly after concluding a drill with Japan and the Republic of Korea on the Yellow Sea, the US joined the largest-ever Rim of the Pacific naval exercises in Hawaii, involving most Asia-Pacific countries. Geng said these actions were at odds with the issues of the times, namely peace, development and cooperation on the Korean Peninsula. In response to the ongoing US-led exercise in Hawaii, Geng said it is nothing to be surprised about, but expressed hopes that the parties involved will do more to maintain peace and stability in the area. Zhang Junshe, deputy director of the Naval Military Studies Research Institute, said those drills, led by Washington, reflect its "Cold War mentality". The US is beefing up its military presence in the Asia-Pacific region. US Defense Secretary Leon Panetta announced earlier this month that Washington is seeking to increase the US military presence by shifting 60 percent of its ships to the region by 2020, despite cutbacks in defense spending. The move is not good for regional security and damages trust, Geng said. Deliberately highlighting the military and security agenda and deploying more military forces in the Asia-Pacific "go against the global pursuit of peace, development and cooperation, as well as trust among nations in the region", he said. "China has always attached great importance to developing military relations with the US, and is willing to push forward the stable development of military ties on the basis of mutual respect, mutual trust, equality and reciprocity," Geng said.

The New York Times said on Wednesday it was launching a Chinese-language news website to deliver “high-quality coverage of world affairs, business and culture” to readers in China. A statement from the US daily newspaper said it was “launching a beta version of a new online Chinese-language edition designed to bring New York Times journalism to China.” The site,, was to launch in Beijing early on Thursday, or late on Wednesday New York time. “The goal of the new site is to provide China’s growing number of educated, affluent, global citizens with high-quality coverage of world affairs, business and culture,” the statement said. “The site will be edited specifically for readers in China, presenting translations of the best of The Times’s award-winning journalism alongside original work by Chinese writers contributing to The Times.” Tensions have flared recently between authorities in Beijing and foreign media outlets operating in China. Al-Jazeera said in May it had shut its English-language bureau in China after its correspondent became the first foreign journalist to be expelled from the country since 1998. China operates a huge system of internet control and censorship dubbed the Great Firewall of China, aimed at snuffing out information or comments the government considers a threat to its authority. Google has complained of interference from the Beijing government and reduced its presence in the Chinese market. Chinese authorities regularly black-out sections of broadcasts by foreign news channels such as CNN and BBC World that they deem objectionable. Asked about any agreement with Chinese authorities about content, New York Times spokeswoman Eileen Murphy said there was “none”. “The content of the site will be determined by The New York Times,” she said in response to a journalist’s query. “Having said that, we know that occasionally Chinese readers cannot access certain articles on the Chinese-language sites of other foreign media organisations. That may be something we have to live with too, though we hope not.” The US daily’s media blog said the site would feature around 30 articles a day on global news and editorials. “The Times Company, which is well aware of the censorship issues that can come up in China, emphasised that it would not become an official Chinese media company,” the Times’s Media Decoder blog said. “The Times has set up its server outside China and the site will follow the paper’s journalistic standards.” “We’re not tailoring it to the demands of the Chinese government, so we’re not operating like a Chinese media company,” foreign editor Joseph Kahn was quoted as saying. “China operates a very vigorous firewall. We have no control over that. We hope and expect that Chinese officials will welcome what we’re doing.” The blog said Chinese readers would not see a “paywall” that the newspaper uses in the United States. The site will have advertising, with sales to be run out of New York, aided by Cesanamedia for sales in China and Italy. The official account of the New York Times Chinese site on mainland's most popular microblogging platform, Sina Weibo, disappeared around noon, less than two days after it was launched. It is unclear whether it was deleted or just temporarily hidden by Sina Weibo. The team managing the Chinese site could not be reached for comment on Thursday. Even before it disappeared, no user was allowed to re-post or comment on any of the posts on Weibo.

US to calm disputes over South China Sea - With friendly tone with Beijing, nation preps for ASEAN summit - Coinciding with the decision by Secretary of State Hillary Clinton to meet Southeast Asian leaders next month, a senior US official said on Wednesday that the United States must maintain a sound relationship with China for peace and prosperity in the Asia-Pacific region. On Wednesday, Kurt Campbell, the US assistant secretary of state for East Asian and Pacific Affairs, said "one of the most important things for us at the (Association of Southeast Asian Nations) forum is to make it clear, particularly to colleagues in ASEAN, that we are committed to a strong, stable and durable relationship with China". "It is our strong determination to make it clear that we want to work with China," Campbell told the Center for Strategic and International Studies, a Washington think tank. Clinton and China's Foreign Minister Yang Jiechi are expected to meet in Cambodia for the ASEAN forum and roll out specific initiatives on humanitarian disaster relief and wildlife protection, Campbell said. Clinton's trip follows a series of recent diplomatic trips by the Obama administration in the Southeast Asia region, with Defense Secretary Leon Panetta's trip to Vietnam and a visit by Martin Dempsey, the chairman of the Joint Chiefs of Staff, to the Philippines earlier this month. China has overlapping territorial claims of the South China Sea with Vietnam, Malaysia, Brunei and the Philippines. Campbell said the high-level visits show Washington's long-term commitment to regular engagement in the dynamic economic region. The US is also trying to persuade their European allies into a discussion about Southeast Asian affairs. European Union foreign policy chief Catherine Ashton will be invited to the regional forum for the first time. "One of the areas that is dramatically lacking, in which is the remarkably little discussion or strategic engagement between Europe and US is on Asia," Campbell said. Clinton is also expected to lay out a multifaceted diplomatic approach at the ASEAN forum, including a specific economic initiative for Southeast Asia, though Campbell would not elaborate on details. After the forum, Clinton will take an economic envoy to Siem Reap, Cambodia, to meet business leaders to expand trade ties. Clinton's attendance highlights the challenges Beijing and Washington have been facing on Southeast Asian issues in recent years due to China's growing political and economic influence in Asia and the US' re-engaged diplomatic policy in the region. In 2010, Clinton waded into territorial disputes on the South China Sea by telling a security forum in Vietnam that a peaceful resolution over the Nansha and the Xisha islands were within the US' national interests. Beijing strongly objected at the time, saying Washington was interfering in Asian regional affairs and trying to hype disputes over the South China Sea. On the recent development of disputes between China, the Philippines and Vietnam, Campbell said the US has insisted on not taking a position and supporting current diplomatic efforts. Bonnie Glaser, an Asia-Pacific security expert at the Center for Strategic and International Studies, said the US does not view relations in the region in zero-sum terms and it is not seeking to force ASEAN members to choose between the world's two largest economies. "Although the US and other media often pin blame on China, I think other claimants of the South China Sea also sometimes behave in provocative or confrontational ways that has generated concern from the US government," she said.

Wen urges enhanced co-op with Latin America - Premier Wen Jiabao shares a humorous moment on Tuesday with Chilean President Sebastian Pinera in Santiago. Beijing has proposed establishing a China-Latin America cooperation forum, and both sides should strive to increase trade volume to $400 billion within five years, Premier Wen Jiabao said on Tuesday, calling for enhanced political mutual trust and strategic cooperation. Wen made the remarks in a speech delivered to the United Nations Economic Commission for Latin America and the Caribbean during his visit in Santiago, Chile's capital. The ECLAC is a regional economic committee aimed at promoting regional economic and social development and boosting economic cooperation among its 44 members. Observers said the rapid development of relations between China and Latin America is "well above all people's expectations". "From 2000, it took six years for China and Latin American countries to expand their trade volume from $10 billion to $100 billion, but only four years to jump to $200 billion. Such an astonishing rate of expansion suggests the goal that Premier Wen mentioned in his speech is not hard to achieve," said Chen Yuanting, a Latin American expert with the Chinese Academy of Social Sciences. Chen said she was optimistic about the future of economic exchanges between China and ECLAC countries. Making economic and trade cooperation a priority, Wen also called for the expansion of common interests between China and Latin America. He said China is willing to set up a regular foreign ministers' dialogue mechanism and discuss the establishment of a regular meeting among Chinese and Latin American leaders. "Latin America has become more and more important in China's diplomatic strategy. Meanwhile, there is also growing awareness among countries in the region of China's leading role in generating economic growth," Chen said. Wen announced that Chinese financial institutions will initiate a China-Latin America cooperation fund of $5 billion to support investment in manufacturing projects, technology innovation and sustainable development. He said China will also extend a $10-billion special loan to support infrastructure cooperation between the two sides. China is also ready to discuss and sign currency swap agreements with more ECLAC countries, Wen said. He asked for more promotion of food security through agricultural cooperation. China has proposed to launch a forum for Chinese and Latin American agriculture ministers, a China-Latin America mechanism for emergency food reserves of half a million metric tons and an agricultural cooperation and development special fund, Wen said. Meanwhile, China is willing to build research and development centers for agriculture technology, demonstration industrial parks for farm product processing and development zones for agriculture investment in Latin America, Wen said. He also urged further people-to-people and cultural exchanges to strengthen the China-Latin American friendship. The Chinese government has encouraged the opening of Chinese culture centers in Latin America and will offer 5,000 scholarships to Latin American students over the next five years, he said. Wen also proposed to establish a forum for technological innovation to enhance cooperation in aviation, space, new energy, the environment, as well as oceanic and polar sciences and research. Foreign Ministry spokesman Hong Lei on Wednesday said Wen's proposal shows that China intends to establish a platform at a higher level to stand with an integrated Latin America to meet global challenges and realize common development. "China has contributed to Latin America's surprising economic performance during the worldwide financial turmoil in recent years. Yet both sides are embracing greater opportunities to deepen their ties," Chen, the expert said. "Differences in economic patterns define the trade mix between China and Latin American countries," Chen said. "No one manipulates the trade. And I think existing frictions prove that the economic ties between China and Latin America have not yet fully developed. The two sides enjoy more potential despite their cooperation in agriculture and natural resources." Chen also said that Chinese investors, as newcomers into Latin America, will face strong competition from the United States and EU countries. "What China is facing now is similar to Japan's experience in Latin America in 1970s. But trade conflicts will finally phase out." "As a very influential body in policymaking among Latin American governments, the ECLAC said in a report that cooperation between China and the region has entered a new stage. And it also suggests its member countries should further improve their relations with China," Chen added.

Hong Kong*:  June 29 2012 Share

Cafe de Coral says rents and labour costs ate into profit, despite the company registering a 12 per cent increase in sales over the year. Rising rents and higher food and labour costs took a bite out of earnings at Cafe de Coral Holdings (SEHK: 0341), with net annual profit falling almost 8 per cent to HK$474 million - its first annual profit fall in eight years. The fall came despite a 12 per cent rise in sales to HK$5.96 billion. Its profit margin fell to 13.7 per cent in the year to March 31, from 15.1 per cent a year earlier, the fast food chain's chief executive, Sunny Lo Hoi-kwong, said yesterday. Lo blamed the decline on higher expenses, saying food costs rose 10 per cent year-on-year, rents 15 per cent and labour costs 17 per cent. The group will lift prices by 3 to 4 per cent this year, largely in line with the price rise for the previous corresponding period. Lo said about 100 leases were renewed this year, with some increasing by up to 20 per cent. But he expected "reasonable" leasing rates next year. Lo said the introduction of the minimum wage had affected the retail sector, and the impact would continue to grow, although the group still planned to hire 800 to 1,000 workers to expand in Hong Kong this year. The group spent HK$785 million developing two new central food processing plants in Guangzhou and Tai Po Industrial Estate, to improve logistics, save time and free up retail space in its outlets. At the end of March, the group operated 317 restaurants in Hong Kong, up by 32 from the previous period, and 120 on the mainland, including Cafe de Coral, Super Super Congee & Noodles, Oliver's Super Sandwiches, and The Spaghetti House. Lo said the group would spend HK$150 million opening 50 more outlets this year, 20 in Hong Kong and 30 on the mainland, to satisfy growing demand for fast food restaurants among China's growing middle class. "We will continue with our multi-brand strategy, and will focus on the mainland China market, especially the eastern and southern part," chairman Michael Chan Yue-kwong said. Chan hoped the group could see double-digit growth again. The group declared a final dividend of 45 HK cents per share, for a total dividend payout ratio of 74.6 per cent for the full year.

Tsang, Leung meet Xi Jinping in Beijing - Chief Executive Donald Tsang Yam-kuen (far right) and incoming leader C.Y. Leung (far left) in Beijing. Hong Kong's outgoing and incoming leaders received praise and reassurances from China's leader-in-waiting, Vice-President Xi Jinping, on Wednesday morning in Beijing. Xi praised Chief Executive Donald Tsang Yam-kuen for being “proactive and pragmatic” during his seven-year tenure in the city’s top job. He urged Tsang to give his full support to incoming leader Leung Chun-ying, to help the next administration carry on with the work of governing the city. The meeting took place in the National Museum of China, before Tsang and Leung officiated at the opening of an exhibition commemorating the 15th anniversary of Hong Kong’s change of sovereignty. Xi and Tsang sat at the centre of the room, while Leung and mainland officials sat by the side. Commenting on the 15 years since the handover, Xi noted: “The city has gone through storms and hardships but, speaking overall, the ‘one country, two systems’ policy has made enormous achievements in helping Hong Kong’s economic development, improvement in people’s livelihood, democratic progress and social harmony.” Acknowledging the outgoing chief executive’s work, Xi said: “Tsang has been the chief executive for seven years, and has led the Hong Kong SAR government actively and progressively in contributing to the prosperity (SEHK: 0803) and stable development of Hong Kong in a pragmatic way. “The central government hopes wholeheartedly that you will fully support Leung and the next government, in carrying forward with the cause into the future.” The 15-minute meeting was attended by top Beijing officials including Central Committee members Du Qinglin, Liao Hui, Liu Yandong and Ling Jihua. The two Hongkongers then officiated at the opening of the exhibition, “Towards a Better Future”, at the museum. It highlights Hong Kong achievements through the years including democratic reforms and plans for future development. In her comments at the opening, Liu Yandong referred to President Hu Jintao’s visit to Hong Kong on Friday, saying: “He will be bringing the care and blessings of the central government and mainland people towards compatriots in Hong Kong.”

The central government announced on Wednesday new measures to boost economic ties with Hong Kong as the city prepares to mark its 15th anniversary of its return to Chinese rule. The official Xinhua agency reported the initiative would push forward joint ventures between the of stock exchanges in Hong Kong, Shenzhen and Shanghai, and issue bourse-traded funds listed on both the Hong Kong and mainland stock markets. The mainland would also encourage foreign investors to make trade settlements and investments in Renminbi, or the yuan, in Hong Kong, Xinhua quoting a statement from the State Council said. Other financial policies included improving the variety of offshore yuan services in Hong Kong and facilitating long-term investment from Hong Kong in the mainland’s capital market. In terms of trade and economic co-operation, Beijing would sign a new appendix agreement to the Closer Economic Partnership Arrangement (Cepa) with Hong Kong, the statement said. The central government said it would encourage Hong Kong enterprises to invest and promote co-ordination among airports, harbours and train systems in the Pearl River Delta, it said. The statement said the policy package covers co-operation in trade, finance, education, science and technology and tourism, as well as improved cross-border co-operation between Hong Kong and neighbouring Guangdong province.

Copper is one of the various metals that Duluth plans to mine in a US joint venture. Duluth mulls raising funds in HK - Canadian firm weighs up options to diversify its shareholders in Asia amid plans to mine base and precious metals at joint venture in United States. A Canadian metals mine developer with a multi-metal project in the United States is considering a private equity share sale and a stock market listing in Hong Kong to help fund its development. Toronto-based and listed Duluth Metals hopes to attract Asian investors seeking to diversify their investment outside of the mainland and Hong Kong, to help fund its project in the US state of Minnesota. The project aims to mine base metals copper and nickel and precious metals platinum, palladium and gold. "It is a massive development in the world context," chairman and chief executive Christopher Dundas said. "There is nothing comparable in China." Dundas said Duluth wanted to launch a private equity share offer to Hong Kong-based investors, ahead of a possible secondary listing next year, and Hong Kong, London and New York were possible venues for the listing. Of the three venues, Hong Kong offered the biggest opportunity to diversify its shareholders. He said the Twin Metals joint venture project, in which Duluth had a 60 per cent stake, was estimated to have one of the world's biggest poly-metallic sulphide resources. Partner Chile-based and London-listed Antofagasta, the world's ninth largest copper miner, owns 40 per cent. The joint venture has a 70 per cent stake in three deposits, which together are estimated to contain 21.5 billion pounds of indicated and inferred resources of copper, 7.1 million pounds of nickel, 7.1 million ounces of platinum, 16.9 million ounces of palladium and 3.9 million ounces of gold. The figures were based on a technical report by engineering consultancy and project manager AMEC, which indicated that the project's production cost had the potential to rank among the lowest quarter of producers in the world, Dundas said. Inferred resource estimates are based on data from limited geological information and sampling, while indicated resource is based on more detailed and reliable exploration and testing information. But such information needs to be verified and tested before a mine's economic viability can be assessed with confidence. Before economic viability could be proven and production start, Duluth would need to complete a pre-feasibility study, which could be finished by the end of next year at the earliest and may cost over US$200 million, Dundas said. It has engaged engineering and construction firm Bechtel to do the study that includes specific mine planning. Dundas said that despite the cost Duluth was not under funding pressure in the short-term, since partner Antofagasta was responsible for up to the first US$158 million of the project's development expenses. Above that, Duluth would need to pay 35 per cent and Antofagasta was responsible for the rest. So far, Antofagasta has ploughed around US$130 million into the project, and spent US$30 million buying Duluth shares amassing an 11 per cent stake. In the joint venture, Antofagasta mainly contributes the cash and expertise, while Duluth provides the mining rights and resources. Once the project's viability is proven to the extent that banks are willing to finance it, Antofagasta has an option to raise its stake to as much as 65 per cent. Duluth was listed in Toronto in October 2006, with the Toronto stock exchange allowing it to be listed on the senior market instead of the Venture Exchange designed for junior exploration firms. He said this was because the Toronto exchange, with its in-house geologists, had conducted its own assessment and recognised the Twin Metals project's potential, based on early-stage geological data. In Hong Kong, the stock exchange allows mining firms without a profit track record to list but has restricted such listings to developers that can demonstrate, with backing from technical experts, they have a credible plan to bring their projects into revenue-earning production within a specified time frame, with a specified investment budget. Dundas said Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) 's recent purchase of the London Metal Exchange demonstrated its intention to expand its business in the metals sector, which bode well for a future broadening of listing candidates to miners that have yet to complete "bankable" detailed feasibility reports, but can otherwise demonstrate their projects' economic potential.

Former foreign minister Qian Qichen (left), Jiang Zemin and Tung Chee-hwa at the handover. Tung Chee-hwa ponders the future in the Office of Former Chief Executives. He believes the city's future will only be limited if its people don't grasp the opportunities presented. Former chief executive Tung Chee-hwa, believes the city will ride the mainland's coattails to continued prosperity - if people make the most of the many opportunities - Former chief executive Tung Chee-hwa is adamant that Hong Kong will not be marginalised by the mainland's rapid economic development. In fact, he says Hong Kong has unique advantage, such as the "one country, two systems" concept and the strength of its service industries, and that it is up to Hongkongers themselves to seize opportunities arising from development across the border. Tung, who took up the post of vice-chairman of the Chinese People's Political Consultative Conference after stepping down as chief executive in 2005, told the South China Morning Post (SEHK: 0583): " If you think about what China will be like in 20 years' time, then think about how we need to be part of it." He said that over the next 20 years the mainland's economy would move from one driven by exports to one driven by domestic consumption that emphasised value-added service industries. "What is the role for Hong Kong to play [in this process]? In 20 years' time, China will become the largest economy in the world. Hong Kong is geographically in the right place along the southern coast of China," Tung said. "Hong Kong has had tremendous success in its service industries such as legal services and logistics. Are we going to be marginalised? No, Hong Kong is not going to be marginalised. It's up to us to take up the opportunities. "There are lots of opportunities there. If you want it, you can get it. I don't think Hong Kong will be marginalised because there are people like me who want to make sure it's not going to be. "Every city, every country, everyone is facing huge challenges. Hong Kong is also facing huge challenges. But look at the advantage we have. The 'one country, two systems' concept gives us a competitive advantage which no one else has. We also have China backing us." Lu Ping, former director of the State Council's Hong Kong and Macau Affairs Office, who oversaw Hong Kong affairs in the run-up to the handover, told the South China Morning Post in 2009 that the city needed to develop a "sense of crisis" and warned that Hong Kong had already been marginalised. But Tung said the city should consider the mainland's needs in science and technology and get more involved in those areas. "We have good universities here. We have unique opportunities to attract some of the best to come and live here and engage in research in science and technology," he said. In the aftermath of the Asian financial crisis Tung set aside funds to develop Hong Kong as a research and development hub and mapped out strategies to expand Chinese medicine industries. But these efforts bore little fruit. Asked about the impact of the global economic crisis on Hong Kong, he said the US economy was slowly recovering, although the euro-zone countries were heading into recession. "But the most serious impact of the global financial crisis may probably be behind us already," Tung said. "More importantly, China's economy is growing at 8 per cent despite the difficulties around the world." Tung said the mainland authorities had plenty of resources for stimulating the economy and would be able to achieve a soft landing. "Hong Kong is the most fortunate place in the world. We have plenty of fiscal reserves. I'm sure C.Y. [incoming chief executive Leung Chun-ying] and his colleagues will do what is necessary," Tung said.

Nearly half of the city's young adults have no desire to raise a family, says the Family Planning Association. In its latest Youth Sexuality Study, which is carried out in Hong Kong every five years, the association found that 45 per cent of male respondents and 39 per cent of females were either unsure, or had made a firm decision not to have children. A total of 1,223 young Hong Kong people aged from 18 to 27 were interviewed between October and December last year. For those who planned to marry and raise families, the ideal number of children, according to the survey, were 1.5 for female respondents and 1.4 for males. "If the real birth rate turns out to be about 1.4 to 1.5, this will be barely enough to replace the city's ageing population," said Professor Paul Yip Siu-fai, chairman of the association's research subcommittee. According to the Census and Statistics Department, the number of live births per 1,000 females in the population were 1.13 in 2010 and 1.19 in 2011. The latest government population-policy report issued in May says that the city's ageing population has accelerated, and that more than four in 10 Hongkongers would be too old to participate in the labour market within three years. The professor, who has been advising the Central Policy Unit on the issue of the city's ageing population, said the real challenge in boosting local birth rates lay at the hesitation among young adults to get married, as giving birth out of wedlock was unusual among Hongkongers. The survey found that 45 per cent of females respondents, and 49 per cent of males, were undecided about marriage. These figures are the highest among males, and second highest for females, in all the surveys conducted during the past two decades. Yip said another study had found that 22 per cent of the city's women would never marry. "If we want to see an increase in the birth rate, it's highly important for the government to encourage people to get married," he said. The professor suggested that the government take the lead to implement supportive family-friendly measures, such as reducing the length of working hours, so that young adults would have more leisure time to seek a suitable partner. Yip said this suggestion was backed by the survey. Some 42 per cent of the women and 36 per cent of the men said they did not want to walk down the aisle because they could not find an ideal partner. "Many Hongkongers don't want to get married because they can hardly afford a flat in the private market," Yip said. "I think the government should help them get rid of the roadblocks that are preventing them from getting married."

"King of Shoes" Patrick Tang Kim-kwan won a partial victory yesterday in a court battle to regain ownership of four properties he bought for his ex-mistress. The High Court ruled that Tang, 69, the billionaire head of the shoe-trading empire ATG Sourcing, could take back properties in Hung Hom and Tai Kok Tsui from his ex-lover Karen Lee Chi-ting, 42, previously known as Tang's "third wife". But Tang, who has an estimated fortune of HK$2 billion, lost his claim to two other properties - an office in Jordan and half ownership of a house in Sai Kung, which together are now worth more than HK$20 million. The four properties are together thought to be worth about HK$28 million. Tang waged the court battle because he was "sad and embarrassed" by Lee's fling with former Mr Hong Kong Francois Huynh, which was exposed by a magazine in 2009, ending their seven-year relationship. "The result is like the division of wealth between a divorcing husband and wife," Lee said, adding that she hoped the matter could now end. "The husband gets some and the wife gets some. There is no winner and no loser in this case." Tang did not return calls for comment. Deputy Judge Mr Justice Anthony Houghton said Tang had used the properties to "continue, and perhaps deepen his relationship" with Lee. The judge said that Tang said at times that the properties belonged to Lee to "boast of his generosity". "Such comments after the purchase of the property do not convert something that was not a gift into a gift unless that is the clear intention of what was said or done subsequently," the judge wrote. He ruled that Tang would get the ownership of a flat at Metro Harbour View, Tai Kok Tsui, and a flat at Royal Peninsula, Hung Hom. The court heard evidence that Lee sold the Metro Harbour View property in 2005 for HK$2.1 million. The judge ordered Lee to pass the net sale proceeds to Tang. But if Tang sells the Royal Peninsula property he will be able to keep only a third of the proceeds, as the judge found that there was an agreement between Tang, Lee and her brother that they would share the amount. The judge rejected Tang's assertion that there was a condition that if Lee had an affair with another man she would have to give up her claim to a house at Marina Cove, Sai Kung, where she now lives with her eight-year-old daughter. The house is estimated to be worth HK$18 million. He ruled that it was no more than "a request for reassurance" and not a "consensus".

Hopewell managing director Thomas Wu expects construction of the Wan Chai hotel to begin this year and be completed by 2018. Hopewell Holdings (SEHK: 0054) has finally cleared all the major obstacles in the nearly three-decade struggle over its Hopewell Centre II hotel development in Wan Chai, and has accepted the government's land exchange offer by paying a premium of HK$3.73 billion. After appealing against the land premium demand, Hopewell yesterday announced it had accepted the government's latest proposal, and under a land exchange deal had given up, or "surrendered", some land to the government, which then gave Hopewell land in Wan Chai. It said the surrendered land, at or near Ship Street, Kennedy Road and Hau Fung Lane in Wan Chai, had a total site area of about 62,816 square feet. The re-granted land from the government is in the same area and has a total site area of 105,917 sq ft. "We are pleased to accept the land premium offered by the government and see this as major progress in the development of Hopewell Centre II, one of our new major projects," said managing director Thomas Wu. He said construction of the hotel would start by the end of this year and should be completed in 2018. The project, known as Mega Tower before it was scaled down from 93 storeys, has faced bitter opposition. Residents argued that the massive building, approved in 1994, would bring traffic congestion and block views. In response, the developer cut the height to 55 storeys, halving the number of hotel rooms to 1,024. The project will have a total gross floor area of around 1.09 million sq ft, with about 758,855 sq ft designated for a hotel, 298,160 sq ft for retail and 36,597 sq ft for offices. Hopewell said the total investment cost was estimated at about HK$9 billion, including the land premium and the cost of road improvement and a park. This latest settlement comes just three weeks after Wharf Holdings (SEHK: 0004) won government approval to rent Ocean Terminal for another 21 years with a land premium of HK$7.9 billion, and only days before the inauguration of a new administration that may unveil significant changes to property market policy. Vincent Cheung Kiu-cho, national director at real estate broker and consultant Cushman & Wakefield, said the land exchange offered Hopewell a more complete site because the re-granted land included some areas that had been owned by the government near the original site that Hopewell held.

Chief graft-buster Timothy Tong Hin-ming has rejected a media report that Chief Executive Donald Tsang Yam-kuen urged him over lunch to investigate allegations of false statements by his successor, Leung Chun-ying. Tong , the commissioner of the Independent Commission Against Corruption, also insisted yesterday that there was no conflict of interest in having lunch with Tsang at Government House at the same time the ICAC is investigating the departing leader's dealings with tycoons. The commissioner was responding to a Chinese newspaper report that Tsang had urged him at lunch on Monday to investigate Leung's claims during the chief executive election campaign that he had no illegal structures at his home on The Peak. It has emerged there were six. "There was no discussion on cases," said Tong, 62, who retires on Saturday. "I can tell you that the chief executive is not in a position, not in the past, not at present, and, I would like to believe, not for the future, to direct how or what to investigate." He said Tsang had treated him to lunch to express gratitude for his five years' work fighting bribery and corruption. Tsang did not comment on the issue, but his office issued a statement expressing regret over the "fabricated" media report. Tong said the lunch was a standard practice for outgoing officials and insisted that there was no conflict of interest in lunching with Tsang, while his investigators were looking into the chief executive's acceptance of rides in yachts and private jets owned by tycoons. Tong also said he had noticed growing public concerns about the integrity and conduct of senior government officials. He said that of the annual 3,400 to 3,700 corruption complaints in the past five years, those involving the government accounted for 27 per cent to 29 per cent. But not more than 10 per cent were prosecuted. He said the figure showed that the conduct of government officials was still good. "If we go by the quantitative approach, in terms of number, you cannot say that it is a significant portion as yet," he said. "If you go for the gravity, the situation can be different in that it attracts a lot of attention." The commission currently has no power to investigate allegations that centre purely on misconduct, which was a separate offence under Common Law. Tong said it involved complicated legal considerations and it would not be for the ICAC to determine whether it should be made part of the Prevention of Bribery Ordinance. Tong would not say who he thought should succeed either him or Deputy Commissioner Daniel Li Ming-chak, who retires next month, except to say that the assistant commissioners were capable enough. Former immigration director Simon Peh Yun-lu is hotly tipped to succeed Tong. Tong joined the government in November 1972, as an executive officer and served in several bureaus and departments. He was deputy secretary for security from 1999 to 2003, and was subsequently appointed as commissioner of customs and excise. He became ICAC commissioner in July 2007. Tong said that after his retirement he planned to return to writing short novels and would also be interested in doing consultative work for international graft-fighting institutions.

Antiquities Advisory Board chairman Bernard Chan did a U-turn yesterday and withdrew his resignation, saying he wanted to unite the board and stop members from leaving over the Government Hill saga. His decision came a week after he said he would quit to protect the board's credibility after being accused of colluding with the government when he cast the deciding vote to rate the west wing of the former government headquarters in Central as a grade two heritage building instead of grade one. "All of the 22 board members wrote to me urging me to stay and three of them said they would quit as well," Chan said. "If they leave, the board's operation will be affected and its reliability will be questioned." He plans to serve out the rest of his term, which ends in December. He said he would then leave even if the next administration invited him to renew his term. At next month's meeting, the board will make a final decision on the historic grading for the three wings of the building following a public consultation. "To address concerns [about impartiality], I will abstain from voting and expressing personal views in the next meeting," Chan said. He said he had arranged an informal session between the board and the Government Hill Concern Group, the major opponents to the west wing being demolished to make way for a 32-storey office tower. Since a 2009 government announcement of the plan to redevelop the west wing, historians and conservationists have called for the 52-year-old building to be preserved to keep the integrity of the hill, which was the seat of the colonial administration dating back to the 1840s. Chan came under fire earlier this month for agreeing that Secretary for Development Carrie Lam Cheng Yuet-ngor should announce a revised redevelopment plan before the board met to discuss gradings. Lam, in a press conference, categorically stated the demolition would go ahead. When the board met, eight members voted for a grade one rating and eight for grade two, leaving Chan with the deciding vote. The Development Bureau said yesterday that Lam welcomed Chan's latest decision, saying he had chaired the board in an impartial and transparent manner. But Peter Li Siu-man, campaign manager for the Conservancy Association, said it was a farce that Chan and other board members had made the U-turn. He said the grading was no longer important for Government Hill as the government had declared such a firm stance on demolition. "Is the board accountable to the government, to the public or to an individual?" he said. "What roles and duties are assigned to them? It is now time to discuss a review and reform of the whole system."

Former chief justice Andrew Li Kwok-nang has taken the unusual step of making public a personal letter paying tribute to the "outstanding contribution" of Secretary for Justice Wong Yan-lung, who steps down this week after seven years in the job. Praising Wong's "invaluable" contribution to the maintenance of the rule of law and an independent judiciary, Li also says the outgoing justice minister has served with "sensitivity, balanced judgment and courage". Addressed personally to Wong and dated yesterday, the contents of the letter are in stark contrast to recent criticisms of the outgoing minister by former director of public prosecutions Grenville Cross, who has accused Wang of presiding over a brain drain of legal talent from the prosecutions division of the Department of Justice, a lack of transparency and consistency over sensitive, high-profile cases and failing to address questions over the independence of the city's prosecuting authorities. It also comes just ahead of the expected appointment this week of barrister Rimsky Yuen Kwok-keung as Wong's successor. In the letter, Li - who was chief justice from 1997 until August 2010 when he was replaced by Geoffrey Ma Tao-li - writes: "I wish to pay the warmest tribute to your outstanding contribution as Secretary for Justice. "You have served with great distinction. You have discharged your duties with sensitivity, balanced judgment and courage. Your contribution to the … vigour of the rule of law with an independent Judiciary … under 'one country, two systems' has been invaluable." Li continues: "You have fulfilled your responsibilities with selfless dedication, utmost integrity and outstanding professionalism." Cross served as DPP for a record 12 years between 1997 and 2009 and during that time the Department of Justice made a number of controversial decisions, including opting not to prosecute Sing Tao newspaper tycoon Sally Aw Sian for fraud, or financial secretary Antony Leung Kam-chung, who bought a car for his family ahead of announcing an increase in the First Registration Tax on vehicles. It also granted diplomatic immunity to Zimbabwe's first lady, Grace Mugabe, who was accused of assaulting a journalist in Hong Kong. Cross told the South China Morning Post (SEHK: 0583): "The new secretary for justice, most regrettably, will inherit a severely weakened prosecutions division, which has suffered from an unprecedented exodus since 2009 ... [and] many (senior people) who were the experts in their field, for whom, in most cases, no successors have been trained to take over." He also hit out at Wong for not stepping aside to avoid fears of conflict of interest in the investigations into Chief Executive Donald Tsang Yam-kuen and former chief secretary Henry Tang Ying-yen by the Independent Commission Against Corruption. Wong has done so in the investigation into allegations of graft against Sun Hung Kai Properties (SEHK: 0016) tycoons, Raymond Kwok Ping-luen and Thomas Kwok Ping-kwong, and former government number two Rafael Hui Si-yan. The criticisms of a brain drain from Cross provoked a stinging rebuke from sitting DPP Kevin Zervos. "These comments … are mischievous exaggerations. A far greater number of counsel left when he was DPP, including some very experienced counsel well before retirements, for example Andrew Bruce SC and Michael Blanchflower SC. Under Wong Yan-lung, the prosecuting authority has gone from strength to strength. It is more open and accountable and more professional and successful than it ever was." Zervos also said Cross knew a decision by the secretary for justice to step aside in a case can only be made once the Department of Justice had received investigative files from the ICAC, which it had not.

The government has shelved a controversial bill to amend the copyright law, in what commentators say is a way to facilitate the passing of Leung Chun-ying's government revamp plan before the current legislature's term expires. The second reading of the Copyright (Amendment) Bill - which looks to criminalise copyright infringement in online media - had already been postponed from May 9, but now it has been put off for the next administration to deal with. As it won't be dealt with before the current Legislative Council sessions end on July 18, the whole process will have to start from scratch when lawmakers resume proceedings in September. The unexpected move came last night, as the government suggested for the first time that parodying copyrighted items could be exempted from penalties. "In view of the complexity of the bill itself, the government will address issues such as whether a copyright exception for parodies should be provided," the Commerce and Economic Development Bureau said in a statement. This represents a step back from the government's previous stance of supporting the criminalisation of parodies, despite strong opposition from the public. Sources said the copyright bill was not as pressing as others that the government wanted to pass in the next three weeks, such as the law regulating the sales of new residential properties, and changes to privacy and business laws. Removing it from the legislative agenda not only held off a thorny issue for the incumbent government, but also made more time for discussions of Leung's restructuring plan before July 18, said Lingnan University political commentator Dr Li Pang-kwong. Lawmaker Ronny Tong Ka-wah, a member of the committee deliberating the copyright bill, said commerce bureau secretary Greg So Kam-leung had indicated his intention to drop the bill "several weeks ago". "I lobbied So, saying that as long as the provisions concerning parodies are removed, it'll be fine," Tong said, adding that So rejected the idea. The creative sectors had earlier voiced concerns about the copyright bill's proposal to criminalise parodies, dubbing it the "Article 23 of cyberspace", comparing it to the national security bill shelved in 2003. Visual artist Chow Chun-fai, who had opposed the copyright amendments, said shelving the bill showed how lawmakers that were just elected in the September poll would react to public concerns. "Actually, there is room for discussion between copyright owners and web-based parodists," he said.

In rare comments on Hong Kong's public affairs, former chief executive Tung Chee-hwa has voiced support for embattled incoming chief executive Leung Chun-ying, and praised the city's core values. In an interview with the South China Morning Post (SEHK: 0583), Tung, who backed Leung during the election campaign, described him as a "good leader, competent and with clear-cut vision on what he needs to do". Even before Leung takes over from Donald Tsang Yam-kuen on Sunday, the pressures of office have been intensifying, with demonstrations expected to coincide with President Hu Jintao's visit and a growing row over the illegal structures found at Leung's home on The Peak. Pressed for his views on the illegal structures - an issue that destroyed the hopes of Leung's rival, Henry Tang Ying-yen, to become chief executive - Tung said it would be inappropriate for him to comment on how he should handle the crisis. Instead, he said Leung's tenure should not be judged on "one or two events. It's about the big picture, about the ability of the person". As for Hongkongers' concerns about their city's core values - democracy, rule of law and freedom of speech - Tung said these were shared by all Chinese people. "We all try hard to make it work, to make it successful," he said, adding that he believed these values would be left "intact" in Hong Kong. Tung canvassed for Leung during the campaign leading to the Election Committee vote on March 25 that chose the former Executive Council convenor over Tang. But he did so behind the scenes, given his special status as a vice-chairman of the Chinese People's Political Consultation Conference, a role of equal rank to state leader. Tung agreed that Leung faced a tough start to his new job but said that was to be expected. "It's about the ability to get people behind him, which he should be able to do," he said. "Every city and country, everyone, is facing huge challenges ... We all have challenges, but the question is how to better use our advantages; this is the job for the new chief executive". Tung, Hong Kong's first chief executive, resigned three years into his second five-year term after a series of controversies and massive public protests. According to Tung, the key advantage for Hong Kong is the "one country, two systems" principle whereby Hong Kong runs its own affairs while remaining part of China. "We have China backing us, we have creative people, and unlike other places, we have a financial surplus we can put to good use," he said. But Tung said he understood some people's concerns that "one country" might overshadow "two systems" and why there were calls for measures to protect Hong Kong's core values. "It's not just the core values of Hong Kong, it's the core values of every Chinese person," he said. "Every one of us wants the core values to continue to be there … Hong Kong is a pluralistic society. They can say what they want, but at the end of the day the proof is in the pudding." "One country, two systems" was an untried concept that "has become an everyday reality in Hong Kong and in every aspect of our daily life", and it was in the mainland's and Hong Kong's interest to ensure the formula worked well. "Hong Kong and the country share the same destiny, it is not a matter of which is more, which is less ... they are both there," Tung said. "It has worked for 15 years and it will work for many years to come." He added: "If 'one country, two systems' works, why not keep it," referring to its continuation after its scheduled expiry in 2047. Since his resignation in 2005, Tung has spent most of his time and efforts promoting Sino-US relations and travelling around the world. He said the US economy was picking up slowly but surely and that the latest move by France, Germany, Italy and Spain to come up with a solution for the euro zone debt crisis was a positive sign. But he conceded that there was not much that Hong Kong could do at this stage except be prepared for any fallout. "When I started [as chief executive] they talked about the death of Hong Kong," Tung said. Since then, many of his foreign friends had told me him that this prediction had been wrong. "I still believe Hong Kong is the most fortunate place … In five years' time, come and talk to me, let's see who is right. I think I'm going to be right."

 China*:  June 29 2012 Share

Defense Minister Liang Guanglie meets Commander of US Pacific Command Samuel Locklear on Tuesday in Beijing. Top Chinese military officials on Tuesday pledged to strengthen communication and cooperation with the United States, but also called for proper resolution of the issue of US surveillance flights near China. Defense Minister Liang Guanglie and Deputy Chief of the General Staff Ma Xiaotian of the Chinese People's Liberation Army made the remarks during meetings with visiting Commander of US Pacific Command Samuel Locklear. This visit comes one day before the largest-ever Rim of the Pacific naval exercises, scheduled from Wednesday to Aug 7 in Hawaii. It involves 22 nations, including the US, India and Australia, but not China, which was not invited to participate or observe. China-US military ties have great potential as overall bilateral relations have been developed in a stable manner, Liang said, adding that establishing new, equal and mutually beneficial military relations is the inevitable need of both militaries and the common expectation from the international community. China would like to boost military exchanges with the US and deepen cooperation in the fields of non-traditional security, said Ma. "This is in the best interest of both peoples, as well as the region and the whole world." The two Chinese officers expressed concerns over the US strategic shift to the Asia-Pacific region and its frequent military surveillance close to China's coast. They urged the US to resolve related issues as soon as possible. As a Pacific country, the US hopes to improve cooperation with all Asia-Pacific countries, including China, said Locklear, and he called for more dialogue and less misunderstanding. Despite differences over some issues, China and the US share common interests in many fields, and the two militaries should enhance exchanges and cooperation to safeguard such interests and build a safe international environment, he said. Closer ties between the US and its Asian allies are widely interpreted as a measure to contain China. Shortly after concluding the US joint drill with Japan and the Republic of Korea, Washington is scheduled to kick off the largest-ever Rim of the Pacific naval exercises with 21 other countries on Wednesday. Russia, India, Mexico, the Philippines, New Zealand, Norway and Tonga are participating in the exercises for the first time, according to the Stars and Stripes, a Washington-based newspaper. It is notable that China was not invited to participate or observe the exercises that involve most of the Asia-Pacific countries, analysts said. "We had 14 countries participate in 2010. We've got 22 this year, so I think that's an indication of the interest that countries have in participating in it and the value they see in this kind of unique training opportunity," Charlie Brown, a spokesman for the US Navy's 3rd Fleet, was quoted as saying. In 2006, the former head of US Pacific Command William Fallon invited the PLA to observe the exercise "Valiant Shield", said the newspaper. Professor Li Daguang with the University of National Defense said the exercise echoes the recent statement from US Defense Secretary Leon Panetta that US naval power in the Pacific will increase and the US will enhance ties with its allies in the region. The US carries on bilateral cooperation with China while at the same time continues building a strategic circle to contain China, Li told Beijing-based China News Service. "I think everyone recognizes that (the maritime security environment) is where either we learn to live and work together, because we do have considerable shared interests, or this is where we get in each other's way and potentially start to stare each other down," Brad Glosserman, executive director of the Pacific Forum Center for Strategic and International Studies in Honolulu, told the Stars and Stripes.

Jiaolong reaches 7,062m beneath sea - China's manned submersible Jiaolong set a new national dive record on Wednesday after reaching 7,062 meters below sea level in the Pacific Ocean. China's manned submersible Jiaolong set a new national dive record on Wednesday after reaching 7,062 meters below sea level during its fifth dive into the Mariana Trench in the Pacific Ocean. The Jiaolong got three water samples, two sediment samples and one organism sample, placed a marker, and made several experiments on the sea floor 7,062 meters deep from the sea surface. The oceanauts in the submersible attracted lots of living things with baits and took many photos and videos of them. China has invested 470 million yuan ($73.79 million) into the Jiaolong project over the past 10 years for submersible research and modification and on-sea experiment, said on-scene commander Liu Feng. The Jiaolong set a national dive record on Sunday after reaching 7,020 meters below sea level during its fourth dive into the Mariana Trench, the deepest part of the world's oceans. After arriving at the area earlier this month, the Jiaolong had succeeded in reaching depths of 6,671, 6,965 and 6,963 meters in its first three dives from June 15 to 22, easily surpassing the previous national record of 5,188 meters it set last July. The Jiaolong enabled China to join the ranks of deep-sea faring countries. The United States, Japan, France and Russia currently lead the world in the development of deep-sea exploration technology, each possessing their own submersibles and support bases.

The price of gold has fluctuated around US$1,600 an ounce over the last few months. Some analysts tip it to rise to US$1,800 an ounce by the fourth quarter. Predictions that gold prices will fall over the long term have underestimated the strength of demand in Asia from investors and central banks, according to World Gold Council managing director of investment Marcus Grubb. The council, which represents the world's largest gold miners, believes bullion prices can extend a decade-long bull run in the long term despite the deepening European sovereign debt crisis sending gold prices down from the record high of US$1,923.70 an ounce seen in September last year. Gold, a safe-haven asset, has fluctuated within about US$50 an ounce on either side of US$1,600 for most of the past two months, as speculation of a possible third-round of monetary policy easing, in the form of purchases of government bonds and other debt instruments by the central bank, did not materialise. However, comments by US central bank head Ben Bernanke had some analysts thinking it may be deferred instead of ruled out. Some market pundits, including analysts at British bank RBS, say gold prices will ease in the long term despite rebounding in the short term from present levels after an 18 per cent correction since September. They tipped average gold prices to rise to US$1,800 an ounce by this year's fourth-quarter, when it will see its "last hurrah" and trend downward to an average US$1,200 an ounce by 2015. "The bull argument has been quashed," RBS analysts said earlier this month. "For gold to recover, a sufficiently dramatic event would be required in the global macro or geopolitical backdrop, for the large-scale safe haven bid to re-emerge." But Grubb begged to differ. "If you look at a lot of gold price forecasts in the market … they tend to project a rise to a peak and then it comes down again," he said. "This is a kind of view that's based on an understanding of gold that says its fair value is determined largely by Western markets' monetary policy and the American inflation rate, that's only half the story. "The other half is Asia's growth, the commodities super-cycle, the fact that the demographics favour gold-buying in India and China and other parts of Asia, as well as central banks buying in Asia and Latin America." China was poised to surpass India as the world's biggest gold consumer this year, with demand projected to climb 20 per cent, the council said. Besides strong investment and physical gold demand in China and India, Grubb said debates expected in the US in the late summer over whether to extend tax breaks due to expire in December, and whether to raise the government's debt ceiling may cause the US stock market to fall, which will bode well for gold as a safe-haven asset. 

Beijing has stepped up patrols of the South China Sea, sending a fleet of four maritime surveillance ships to the disputed waters, state media said. The State Oceanic Administration sent the Haijian 83, one of its two biggest surveillance ships, equipped with helicopters, and the Haijian 84, its newest surveillance vessel launched only last month, and two other vessels to the sea, where China is embroiled in territorial disputes with many of its Southeast Asian neighbours, Xinhua said. It said the fleet was scheduled to sail 4,500 kilometres and would conduct joint drills if conditions were suitable. It is the fourth time this year that the administration has sent a fleet into the South China Sea. Professor Wang Hanling, an expert in maritime affairs and international law at the Chinese Academy of Social Sciences, said that apart from defending China's territorial sovereignty, the fleet also needed to protect the safety of China's oil exploration activities in the South China Sea. "Protecting the safety of our country's oil and natural gas exploration and drilling projects in the South and East China seas is also one of the missions of our maritime surveillance force," Wang said. Last month, state-owned China National Offshore Oil Corp sent the Ocean Oil 981, the country's first domestically made semi-submersible deep-sea drilling platform, and the Offshore Oil 201, the world's first deep-water pipe-laying barge, to undisputed waters in the South China Sea. "The territorial dispute situation in the South China Sea has been complicated since Vietnam, the Philippines and other claimants continue making provocative moves to challenge our sovereignty," Wang said. "It's very urgent for Beijing to take practical action to protect our national interest there." The administration sent six surveillance ships, including the Haijian 50, the sister ship of the Haijian 83, and the Haijian 66, its fastest surveillance vessel, to the Diaoyu Islands in the East China Sea in March, Xinhua reported. It added that the Haijian 66 had successfully kept unauthorised Japanese survey ships out of waters under Chinese jurisdiction.

Several luxury hotels in Shanghai scrambled to throw out dim sum made by a local supplier after finding out it did not have a licence. Officials refused to renew the factory's production licence in May because of hygiene concerns at one of its plants. Officials from the municipal quality supervision bureau on Monday visited six leading hotels supplied by Shanghai Jiabao Food to alert them to violations at the company's factory in the city's Minhang district. The hotels were the Sofitel Shanghai Hyland, Hilton Shanghai, the Fairmont Peace Hotel, InterContinental Shanghai Puxi, Sheraton Shanghai Pudong and Pullman Shanghai Skyway. A German-run supermarket chain, Metro China, said it had pulled Jiabao products from all its 55 outlets across the mainland. The production permit for the Minhang plant expired on May 7 and authorities refused to approve an application for renewal because of sanitation concerns, the Oriental Morning Post reported. A team that visited the factory on Sunday found expired food had been placed alongside fresher products. A label on a box of barbecued pork buns in a refrigerator showed they had been made in December 2010 and should be kept for less than six months. A nearby box of bean cakes had a manufacturing date of June 10. Quality-inspection officials along with their food and drug administration counterparts visited most of the hotels on Monday to check Jiabao products in their stock. The test results have yet to be released. Sunny Sheng, a spokeswoman from Sheraton Shanghai Pudong, confirmed yesterday that the hotel had used at least four types of dim sum from Jiabao but stopped selling all of them on Sunday. "The first time we heard the supplier had a licensing problem was when a reporter called on Sunday. We immediately decided to stop using all Jiabao products due to concerns over food safety," she said. Sheng said they had received a fax from Jiabao on Monday saying that products supplied to the hotel came from Jiabao's other plant, in Haimen , Jiangsu province, and were fine to consume. But the hotel was not convinced, as previous products from the supplier had carried the address of both plants. The statement from the Hilton Shanghai said it immediately stopped buying products from Jiabao and they were no longer serving the food as a safety precaution. A spokeswoman from Fairmont Peace Hotel, who declined to give her name, said it had removed all Jiabao products from its larder and ended the supply contract. Metro China, which has a few outlets in the city, said that all of its products came from Jiabao's Haimen branch but it would remove them anyway. Neither the Shanghai quality inspection nor FDA authorities could be reached for comment yesterday. Phone calls to Jiabao's Haimen branch went unanswered.

Foreigners working on the mainland will have the minimum duration of their residential certificates halved to 90 days under a draft law being reviewed by Beijing. It was submitted to the Standing Committee of the National People's Congress yesterday following concerns over the behaviour of some expatriates that has led to a rise in anti-foreigner sentiment. Zhang Bailin, deputy director of the NPC Law Committee, said the change was proposed as some foreigners only came for short-term jobs. The draft law also proposes fines of up to 10,000 yuan (HK$12,200) for companies that offer foreigners illegal invitation letters. The companies will also be asked to cover the cost of deporting the foreigners. The draft law was proposed to tackle concerns about foreigners who have entered the mainland illegally, or who have overstayed or worked illegally on the mainland. Official statistics show that the number of such foreigners caught on the mainland increased from about 10,000 in 1995 to 20,000 last year. "By shortening the period a foreigner can stay in China, it is easier for the authorities to control foreigners here," said Ong Yew-kim, a visiting professor at China University of Political Science and Law. "It will be easier for the authorities to send foreigners they don't like out of the country." Beijing police kicked off a 100-day campaign targeting foreigners who break immigration laws last month after a British man was detained for molesting a Chinese woman outside a Beijing subway station. Other cities, such as Yanbian in Jilin and Wuhu in Anhui also launched campaigns targeting illegal foreigners. Liu Guofu , a law expert from the Beijing Institute of Technology, said the authorities were stepping up management of foreigners with the draft law, and stringent permit approval procedures might be introduced for foreigners deemed more prone to violating laws. "But foreigners who are here for longer-term assignments can still apply for a longer permit provided that they have met the criteria." Liu said a foreigner needed to apply for a work visa first and then a residential certificate to be allowed to stay on the mainland. Jon Goldstein, director of the Guangzhou office for the recruitment agency Michael Page, said he had not heard of any expatriates having difficulties in applying for the documentation needed to work legally. A representative of a head hunting company in Ningbo , Zhejiang said it had just extended the documentation for an expatriate staff member without much hassle.

Hong Kong*:  June 28 2012 Share

The values of Hong Kong's total goods exports and imports recorded year-on-year increases of 5.2 percent and 4.6 percent in May, Hong Kong's Census and Statistics Department said Tuesday in a statement. The value of total goods exports, comprising re-exports and domestic exports, grew 5.2 percent over a year earlier to 294.5 billion HK dollars (38 billion U.S. dollars), after a year-on-year increase of 5.6 percent in April. The value of re-exports increased 5.6 percent to 289.2 billion HK dollars and the value of domestic exports dropped 13.5 percent to 5.3 billion HK dollars. The value of goods imports grew 4.6 percent over a year earlier to 330.1 billion percent in May. A visible trade deficit of 35.6 billion HK dollars, equivalent to 10.8 percent of the goods imports' value, was recorded. The value of total goods exports rose 1.3 percent in the first five months over the same period in 2011. Within this total, the value of re-exports increased 1.8 percent, whereas the value of domestic exports dropped 21.2 percent. As the value of goods imports increased 2.4 percent, a visible trade deficit of 177 billion HK dollars, equivalent to 11.7 percent of the value of goods imports, was recorded in the first five months.

Bank of Shanghai's push to sell shares in Hong Kong is spearheading the efforts of small and medium-sized Chinese banks to raise much-needed capital in the city after waiting for years to get regulatory clearance for a mainland listing. Stock offerings by the banks may help support the sluggish IPO market in Hong Kong, where initial share sales have seen their slowest start in four years because of plunging global equities. Bank of Shanghai, 8 per cent owned by HSBC Holdings (SEHK: 0005, announcements, news) , will select underwriters for its Hong Kong IPO by the end of this month, the China Business News reported on Tuesday, citing sources that it did not identify. “For city commercial banks, listing in Hong Kong would be much faster since they don’t need to stand in a long queue and there would be less regulatory uncertainty,” said Zhang Jixiu, a Tianjin-based analyst at Hongyuan Securities. Longjiang Bank, based in the northeastern province of Heilongjiang, is also planning to raise US$500 million through a Hong Kong IPO in the second half of the year, according to IFR, a Thomson Reuters publication, earlier this month. Many of the country’s 185 city and rural commercial banks are in desperate need of capital to fend off rising competition from rivals and meet tougher capital requirement rules. Chinese regulators have not approved any mainland IPO plans by smaller banks since 2007, when Bank of Ningbo, Bank of Beijing and Bank of Nanjing were listed, seen partly due to worries that additional supply of IPOs may hurt the stock markets in Shenzhen and Shanghai. Officials at Bank of Shanghai could not be reached for comment while a Longjiang Bank official declined to comment. City and rural commercial banks in China, unlike top lenders such as the Industrial and Commercial Bank of China (SEHK: 1398), do not hold licenses to operate nationwide and are restricted to their respective provinces or neighbouring regions. As of the end of the first quarter, city commercial banks had total assets of 10.33 trillion yuan (US$1.62 trillion), up 28 per cent from a year earlier. Their assets accounted for 8.7 per cent of the total held by China’s financial institutions. “Most of these are regional, or local banks, where if there is a good story backing up the regional growth, then it will be an easier sell,” said Alexander Lee, a banking analyst at DBS Vickers in Hong Kong. Bank of Shanghai, which announced in 2008 its plan to list in Shanghai, said in April it was looking to sell up to 1.2 billion shares in Hong Kong while continuing to wait for regulatory approval for its long-delayed Shanghai listing. Eighteen investment banks, including Goldman Sachs, HSBC, Citigroup Inc, China International Capital Corp and CITIC Securities Co, have taken part in the Bank of Shanghai contest, according to the China Business News report. In April, state media reported that the securities regulator had drafted rules on small and medium-sized commercial banks planning to list, seeking to allow only one in five to go public over the next few years. The China Securities Regulatory Commission said 15 city or rural commercial banks, including Bank of Shanghai, Bank of Dalian and Bank of Chongqing, have applied for a domestic listing. Harbin Bank is also planning a $1.5 billion dual-listing in Shanghai and Hong Kong, according to IFR.

Customers browse goods at a Chow Tai Fook jewellery store in Tsim Sha Tsui. Chow Tai Fook, the world's largest jewellery retailer, posted a 79 per cent jump in net profit for the year ended March, lifted by strong demand in China. Net profit rose to HK$6.34 billion (US$816.93 million) from HK$3.54 billion a year earlier, the company said in a statement on the Hong Kong stock exchange. The company controlled by the family of Hong Kong jewellery and property tycoon Cheng Yu-teng has been expanding its reach on the mainland to tap rising demand. Shares of Chow Tai Fook have dropped 34 per cent so far this year, lagging a 3 per cent gain in the benchmark Hang Seng Index.

The 118-floor International Commerce Center is one of the world's top 10 tallest buildings, in Hong Kong's Kowloon, June 22, 2012. ICC is 490 meters tall and opened in May 2011. Tourists can enjoy the view from the Sky100 lounge on the 100th floor, which is the only site with a 360-degree view of Hong Kong. The Ritz-Carlton Hotel occupies floors 102 to 118 inside the ICC, becoming the world's highest hotel. 

 China*:  June 28 2012 Share

Top Chinese military officials on Tuesday pledged to strengthen communication and cooperation with the United States, but also called for proper resolution of the issue of US surveillance flights near China. Defense Minister Liang Guanglie and Deputy Chief of the General Staff Ma Xiaotian of the Chinese People's Liberation Army made the remarks during meetings with visiting Commander of US Pacific Command Samuel Locklear. This visit comes one day before the largest-ever Rim of the Pacific naval exercises, scheduled from Wednesday to Aug 7 in Hawaii. It involves 22 nations, including the US, India and Australia, but not China, which was not invited to participate or observe. China-US military ties have great potential as overall bilateral relations have been developed in a stable manner, Liang said, adding that establishing new, equal and mutually beneficial military relations is the inevitable need of both militaries and the common expectation from the international community. China would like to boost military exchanges with the US and deepen cooperation in the fields of non-traditional security, said Ma. "This is in the best interest of both peoples, as well as the region and the whole world." The two Chinese officers expressed concerns over the US strategic shift to the Asia-Pacific region and its frequent military surveillance close to China's coast. They urged the US to resolve related issues as soon as possible. As a Pacific country, the US hopes to improve cooperation with all Asia-Pacific countries, including China, said Locklear, and he called for more dialogue and less misunderstanding. Despite differences over some issues, China and the US share common interests in many fields, and the two militaries should enhance exchanges and cooperation to safeguard such interests and build a safe international environment, he said. Closer ties between the US and its Asian allies are widely interpreted as a measure to contain China. Shortly after concluding the US joint drill with Japan and the Republic of Korea, Washington is scheduled to kick off the largest-ever Rim of the Pacific naval exercises with 21 other countries on Wednesday. Russia, India, Mexico, the Philippines, New Zealand, Norway and Tonga are participating in the exercises for the first time, according to the Stars and Stripes, a Washington-based newspaper. It is notable that China was not invited to participate or observe the exercises that involve most of the Asia-Pacific countries, analysts said. "We had 14 countries participate in 2010. We've got 22 this year, so I think that's an indication of the interest that countries have in participating in it and the value they see in this kind of unique training opportunity," Charlie Brown, a spokesman for the US Navy's 3rd Fleet, was quoted as saying. In 2006, the former head of US Pacific Command William Fallon invited the PLA to observe the exercise "Valiant Shield", said the newspaper. Professor Li Daguang with the University of National Defense said the exercise echoes the recent statement from US Defense Secretary Leon Panetta that US naval power in the Pacific will increase and the US will enhance ties with its allies in the region. The US carries on bilateral cooperation with China while at the same time continues building a strategic circle to contain China, Li told Beijing-based China News Service. "I think everyone recognizes that (the maritime security environment) is where either we learn to live and work together, because we do have considerable shared interests, or this is where we get in each other's way and potentially start to stare each other down," Brad Glosserman, executive director of the Pacific Forum Center for Strategic and International Studies in Honolulu, told the Stars and Stripes.

Chinese 3rd generation fighter: J-10 jet fighter - The domestically developed J-10 fighter jet, which represents the highest level of Chinese manufacturing, is a very good platform for combat. 

China unveils uniforms for Olympic team - Chinese athletes Huang Qiu, left, Chen Yibing, Sun Yang and Liu Zige show off the official uniforms for the Chinese national team for London Olympic Games at an unveiling ceremony in Beijing, June 25, 2012.

Kunming Changshui Int'l Airport to be open - The beautiful night view of Kunming Changshui International Airport in southwestern China's Yunnan province is seen in this picture taken on Monday. The airport is the key project of the national "Eleventh Five-Year" plan and is China's fourth largest hub airport. It will be officially opened on Thursday.

Beijing on Tuesday warned the European Union that EU firms would suffer if it decides to take action against companies in China’s solar and telecommunications sectors due to trade rows. EU firms have long accused Beijing of giving Chinese solar-cell makers and telecoms firms an unfair competitive advantage through state subsidies, and have called for Brussels to restrict imports of their products. The European Union is reportedly preparing to launch an anti-dumping investigation into leading Chinese telecoms firms Huawei and ZTE (SEHK: 0763). Commerce ministry spokesman Shen Danyang rejected allegations that the two companies received subsidies as “groundless”, adding they have been growing through “complete market competition”. He pointed out that many European telecoms companies have operated in China for many years, benefiting both Beijing and Brussels. “China does not want such a win-win situation being undermined or damaged,” he said. “Facing the grave world economic situation, we think China and the EU should enhance policy coordination... and refrain from using trade protection measures.” The US Commerce Department last month imposed levies of 31 to 250 per cent on Chinese producers and exporters, saying it had found they sold solar cells in the United States at artificially low prices, a practice known as dumping. The European Union may also follow suit and impose sanctions against China soon, according to previous media reports. However, Shen warned that any sanctions on the Chinese solar cell industry would be detrimental to EU firms because China is a big buyer of European raw materials used to make photovoltaic products. “If the EU restricts Chinese photovoltaic products, it will harm the development of the upstream and downstream companies of the EU’s own photovoltaic industry,” he said. He said China has so far imported a total of 40 billion yuan (HK$49 billion) worth of equipment to produce solar batteries – and 45 per cent of this was purchased from European nations including Germany and Switzerland. “We hope the EU will be prudent [in taking any action],” he said.

China’s new budget law will not include a provision to ease restrictions on bond issuance by local governments, state media reported on Tuesday. The country’s top legislative body removed a provision that would have allowed local governments to issue bonds directly under a quota system from the latest amendment to China’s budget law, the Xinhua news agency reported. The removal of the provision casts doubt on the future of a pilot program launched last year that allowed the cities of Shanghai and Shenzhen, and the provinces of Zhejiang and Guangdong, to issue bonds directly. Analysts had predicted that China would gradually expand municipal bond issuance in an effort to clean up a chaotic system of local government financing. Apart from the pilot program, local governments are forbidden from issuing bonds or taking out loans. Instead, they rely on opaque, government-owned special-purpose vehicles to take on debt. The explosion of debt accumulated by local-government financing vehicles (LGFV) during China’s economic stimulus plan in 2008/09 has raised concern that many localities will be unable to repay debts. Local government debt totalled 10.7 trillion yuan (US$1.7 trillion) by the end of 2010, the National Audit Office showed in a report last year. Some outside estimates have placed the total considerably higher. The Finance Ministry in March approved an increase in the quota for direct issuance of local government debt this year to 250 billion yuan, up from 200 billion yuan in previous years. The quota includes both the direct issuance pilot program and issuances in which the ministry serves as an intermediary, which started in 2009. The four localities included in the pilot program issued a combined 24.2 billion yuan in bonds last year. The this year issuance volumes for the pilot project have not been announced. The latest draft of the budget amendment has not been passed. The Standing Committee of the National People’s Congress cut the local government bond provision from the second draft of the amendment, which was tabled for a second reading.

Chinese students call for justice in US murder case - Chinese students rally outside the courthouse in Los Angeles with a sign reading "Protect Our Safety". A delegation of Chinese students from the University of Southern California crowded an arraignment court on Monday only to be disappointed by a delay in proceedings for two men charged with murdering a pair of USC graduate students from China. Some 30 to 40 students who stayed away from jobs or classes to be on hand expressed confusion outside court about the procedures that led to a postponement of the arraignment of 20-year-old Bryan Barnes and 19-year-old Javier Bolden to July 18. Lawyers representing the defendants asked the judge for a delay. The men are accused in the April 11 shootings of 23-year-old engineering students Ming Qu and Ying Wu, who were sitting in a car in an off-campus neighbourhood. Prosecutors say the motive for the crime is believed to have been robbery. Outside the courthouse, the student group unfurled a huge banner saying: “Protect Our Safety”. It bore thousands of signatures in Chinese and English which were collected on campus and in the Southern California Chinese communities. Members of the USC Chinese Students and Scholars Association also submitted a letter with 7,000 signatures to district attorney Steve Cooley. “We are counting on your office to help deliver justice in this case,” the letter said. “We and many others in China and elsewhere are paying close attention to this case.” It said many Chinese students and their families have become very concerned about their safety. Chen Zhunmin, head of the education office at the Chinese consulate in Los Angeles, attended the hearing. He said outside court that the victims’ families in China are grieving but do not plan to go to the United States for the legal proceedings. “Their families can’t be here, so we are here,” said Ashley Zhang, a recent graduate of the public policy masters programme at USC. Zhang, 24, who came from the southern province of Yunnan to study at USC, said she was not personally acquainted with the victims. “This isn’t just about people who knew them. It’s about all USC students,” she said. Zhang said she, like the students who were killed, were their families’ only children because of Beijing’s one-child rule. Newly appointed public defenders for Barnes and Bolden said they had not yet received discovery in the case and asked for a delay until the end of August. Superior Court Judge Shelly Torrealba said that was too long and set the next hearing for July 18, when the defendants will be expected to enter pleas. Both defendants also are accused of attempted murder for a December 3 shooting at a party, and an amended complaint filed last month accuses Bolden of attempted murder in a February 12 party shooting. Prosecutors say an error led to Barnes initially being charged in the latter case. The defendants answered “yes” when asked if they agreed to the postponement. Outside court, Lyong Liu, a graduate student in economics from the eastern province of Shandong, said students have felt in danger since the killings. “It’s very scary,” she said, noting students send one another alerts on social media if any danger is detected. “The school won’t let you know, but your friends will let you know,” she said. In another development, USC has asked a judge to dismiss a wrongful death suit filed by the parents of the victims against the university. “The murders were random, unpredictable and unconnected to USC,” said court papers filed by the university. They said the university is not liable for off-campus crimes. The lawsuit claims that USC has aggressively recruited Chinese students with promises of a safe campus.

The three Chinese astronauts aboard Shenzhou-9 speak with scientists at the Beijing Aerospace Control Centre, which President Hu Jintao visited on Tuesday. President Hu Jintao on Tuesday told the three astronauts aboard a space capsule they had pushed forward China’s space program, after they carried out the country’s first manual docking. Hu spoke to the crew – including China’s first woman in space Liu Yang – by telephone two days after they carried out the highly technical manoeuvre, a milestone in an ambitious program to build a space station by the end of the decade. “The smooth completion of the manual docking shows China fully grasps space docking technology,” Hu said in a conversation with the astronauts that was broadcast live on state television. “You have made outstanding contributions to the development of China’s manned space program.” Beijing sees its space program as a symbol of its global stature, growing technical expertise and the Communist Party’s success in turning around the fortunes of the once poverty-stricken nation. Jing Haipeng, who is leading the astronaut team, told the president that the three were in good condition after 10 days in space. State media said the spacecraft could return to earth on Friday. “Chinese astronauts have our own home in the space. We feel proud of our great country,” Jing said, as the three astronauts dressed in blue jumpsuits stood to receive the call from Hu. The third member of the team is Liu Wang, who carried out the manual docking between the Shenzhou-9 vessel and the orbiting Tiangong-1 module following the spacecraft’s launch on June 16. The complicated manoeuvre was the main goal of the 13-day Shenzhou mission, testing the docking technique needed to be able to construct a space station – which China aims to do by 2020. The two spacecraft first came together in an automatic docking on June 18, and several hours later the three astronauts on board Shenzhou-9 entered the Tiangong-1 – another first for China. Jing told Hu that the group was now carrying out experiments in space, but he gave no details.

A senior Chinese official on Monday called for the country to speed up mass production of shale gas with its own technologies to ensure adequate energy supply. Efforts must be made to achieve early breakthroughs in the appraisal, exploration and development of shale gas resources, as well as to come up with measures to ensure environmental safety, Liu Tienan, deputy head of the National Development and Reform Commission, said at a meeting. Liu, also head of the National Energy Administration, underlined the necessity to manufacture key mining equipment with indigenous Chinese technology. Factories should increase investment and production to guarantee success in meeting the national output target of 6.5 billion cubic meters for 2015. Liu stressed that the shale gas industry should be open to all types of investors. The departments involved should offer tax and fiscal incentives to encourage development. Shale gas, a clean and high-efficiency energy resource, is produced from shale through a complicated process called hydraulic fracturing, or "fracking." China's rich reserves of shale gas are estimated to amount to 31 trillion cubic meters, equivalent to the total amount of conventional natural gas. The Sichuan Basin, the Ordos Basin, the Tarim Basin, the western Hubei-Eastern Chongqing area, and the provinces of Guizhou and Hunan boast huge stores of the substance, a survey by the Ministry of Land and Resources has showed.

Hong Kong*:  June 27 2012 Share

The number of mainlanders applying to move here as investor migrants is expected to rise 20percent to 4,200 cases by year-end. Midland Immigration Consultancy chief executive Thomas Kut On said since the zero quota set to be slapped on pregnant mainlanders next year will close one of the ways in, more will opt to obtain residency through investment. But despite the proposed ban, Kut said: "We believe the number of mainlanders delivering babies in Hong Kong will remain in the tens of thousands." Four private hospitals - Baptist, St Teresa's, Union and Precious Blood - delivered 23,800 mainland babies last year. Kut said since Chief Executive-elect Leung Chun-ying has indicated that residency may no longer be granted to mainland babies born in Hong Kong, investment migration has become another option. In the first quarter, the government received 720 applications for investment migration, and Kut said this should hit 4,200 by year-end, compared to 3,300 for 2011. "Mainland applications will keep rising," said Kut, adding the demand continues to remain high. About 90 percent of investments are in the finance sector since the government has suspended offering residency rights to investors buying property here. Applicants are required to invest at least HK$10 million in non-property assets, with about 50percent of them favoring stock investments. The property restriction was adopted in 2010 when the government tried to curb soaring flat prices that unsettled many locals. Under the Capital Investment Entrant Scheme, launched in 2003, investors were able to gain residency by investing HK$6.5 million in real estate, equities or other assets. By 2008, Hong Kong home prices had jumped by about 45percent. Mainlanders are estimated to have bought more than a third of the upscale properties sold in 2010, compared with a fifth in 2009, and 15percent in 2008. (USA References for Comparison: USCIS recently announced that the latest data show that in 2011 a total of 2969 Chinese citizens applied for the EB-5 Immigrant Investor visa, including 934 approved. In the EB-5 visa total number of applicants, the Chinese people accounted for 75%. Three quarters of 2011, according to U.S. investment immigration statistics, the U.S. EB-5 category has been approved immigration application (I-526) of 2608, compared to the year 2010, 1955 investment immigration applications, up to the year 2010 the total number of 130%; unconditional green card immigration application (I-829) by 93%, a record high. Unconditional green card immigration application (I-829) is an unconditional green card applicants to secure the final hurdle. 1 to 3 quarters of 2011, USCIS received the I-526 and I-829 application form and in 2010 an increase of 78% and 204%, I-526 approval rate dropped from 89% last year to this year's 82% , I-829 approval rate of 83 percent from last year to this year's 93%. Foreign investment, according to immigration experts, Liu Heap analysis, review and approval by the rate of immigration decreased, which means early in the I-526 audit requirements of the project higher; Once pre-vetted and approved, the latter condition, or green card to lift a lot easier than in previous years. U.S. EB-5 Regional Center Project to apply for a short cycle, relatively generous eligibility criteria and other advantages of investing has become the world's most popular immigration projects. Applicants only need to invest $ 500,000 to the U.S. government approved regional centers, and indirectly create 10 jobs, you can get permanent residency. Statistics show that as of the third quarter of 2011, approved by the USCIS Immigrant Investor Regional Center has the number of new high of 173.)

Many retail investors booked a paper gain of HK$500 per board lot of HK$10,000 as the second batch of inflation-linked bonds began trading yesterday under the ticker 4214. The security advanced 5 percent above the issue price. The three-year, HK$10 billion iBond traded between HK$104.85 and HK$105.20 and closed at HK$105. The security traded slightly below its gray market close of between HK$105.20 and HK$105.60 apiece on Friday. It also traded below last year's iBond (4208), which closed at HK$106.70 on its trading debut. Dealing in the bond was heavy with 6.74 million units worth HK$708 million changing hands, making it the seventh most heavily traded security of the day. In contrast, the transaction value of the first iBond on debut amounted to HK$159 million. Institutional players also traded heavily. One transaction before opening amounted to as much as HK$50 million at HK$105 per unit. The iBond will pay dividends every half-year. The payout tracks consumer prices with a floor of an annualized 1 percent. Linus Yip Sheung-chi, chief strategist at First Shanghai Securities, said lower inflation expectations may have weighed on possible further gains. He said inflation is expected to be "much tamer than last year," factoring in the slowdown forecast for China. Yip added that the price came under pressure as many investors took a quick profit and dumped their holdings. Frances Cheung, senior fixed income strategist for Asia excluding Japan at Credit Agricole, forecast inflation at 3.8 percent for the year. She said the iBond's current price has reached fair value and that those who seek a hedge against inflation may hold on. But those who placed orders with banks can only sell their bonds to the lenders' over-the-counter trading platform at a slightly lower price. For example, a retail investor could sell to HSBC at HK$104.75 yesterday and to BOC Hong Kong (2388) at HK$105. While many banks have waived various fees, securities brokers have not done so. Aggregate service charges for buying and selling a board lot range from HK$170 to HK$210.

This year's cross-harbour swim will be open to 1,500 participants, up from 1,000 when the event was revived last year after a 33-year break. The Hong Kong Amateur Swimming Association has also shortened the course between Lei Yue Mun and Sai Wan Ho from 1.8 kilometres to 1.5 kilometres. David Chiu Chin-hung, from the association, said the shorter route would be easier for swimmers as it followed the water stream better. It would also enable older swimmers to take part in the October 21 event. Chiu said 13 three-metre-high buoys would mark the route this time, after participants complained last year of swimming extra distances because the course was unclear. Competitors who successfully completed last year's race would be given priority in entering; others would need to go through a time trial. Overseas swimmers who do not attend the trial will need confirmation from their national swimming federations to prove their ability. Ronnie Wong Man-chiu, secretary of the association, said 50 more lifeguards - after last year's more than 100 - would be deployed to ensure swimmers' safety. "I can assure participants that the ratio between swimmers and lifeguards will not be smaller than last year," he said. The public could also watch the race closer to the shore this year on Sam Ka Tsuen public pier and Quarry Bay Park promenade. The event promises to be more exciting as it will be held jointly with the Asian Open Water Swimming Championships, a five-kilometre test for professional swimmers. Previously held in Repulse Bay, Asian Open Water competitors will follow a longer route than cross-harbour participants, but will start and end at the same points. The two swimming events are a major undertaking by the Sports Commission. The cross-harbour swim was halted in 1978 because of concerns about polluted water. The swimming association has been monitoring government figures on levels of E coli bacteria in the sea, and the water is now safe enough for swimmers, according to Wong. Last year's cross-harbour swim saw 18-year-old John Ling Tin-yu beat 978 competitors overall, while 19-year-old Natasha Tang Wing-yung captured the women's title.

Homebuyers queue at a sales office of The Beaumount. Cheung Kong (Holdings) (SEHK: 0001) is offering flats in its latest project at prices below the secondary market in the area, reflecting slumping sales and growing fears of more cooling measures after chief executive-elect Leung Chun-ying takes office next week. The first batch of 138 flats at The Beaumount in Tseung Kwan O was priced at an average HK$5,313 per square foot for cash buyers. The 915 to 1,001 sq ft flats are being offered at between HK$4,993 and HK$5,905 per sq ft, or HK$4.5 million to HK$5.8 million each. Later, a second batch was offered at HK$5,324 per sq ft. The 1,777-flat development is the biggest to go on sale this year. The aggressive pricing comes after secondary transactions last week dropped to a 21-week low, and is as much as 25 per cent below the HK$6,600 per sq ft average transaction price in Tseung Kwan O. If The Beaumount fails to generate strong sales, it could trigger a wave of discounting by other developers, said Eric Yuen Chi-fung, head of research at Guoco Capital. Sammy Po, a director of Midland Realty, said residential prices were close to their peak, having risen about 10 per cent since January. "Investors may opt to cash in on their flats as Leung shows his strong determination to control home price growth," he said. The Centa-City Leading Index, which tracks secondary market home prices - with the level in July 1997 set at 100 - shows flat prices in the city rose 0.3 per cent from the week before to an index level of 104.14 in the week ending June 17, beating the October 1997 record of 102.93. With most home seekers sidelined, sales in the 50 largest private housing estates monitored by Ricacorp were down 14 per cent, to just 129, in the week of June 18 to 24. There were no sales at nine estates, including Grand Waterfront in To Kwa Wan and Tierra Verde in Tsing Yi. The sharpest fall was in Kowloon, with just 45 deals at the 20 major estates, compared with 57 the previous week. Only four flats changed hands in Taikoo Shing, Hong Kong's most actively traded housing estate. Ricacorp director David Chan said it was the sixth consecutive week of fewer than 200 deals - the lowest for the past 21 weeks. Midland Realty predicted that The Beaumount's low-price strategy would paralyse the secondary market in southeast Kowloon. Secondary transaction prices in Tseung Kwan O were currently HK$6,600 per sq ft, and secondary market prices at Lohas Park, the closest comparable development to The Beaumount, were HK$5,670 per sq ft, Midland Realty said. Midland Realty said 12,000 new flats would be available for sale in the second half and 3,000 new flats had been sold since January. Last year, 9,000 new flats went on the market. New World Development chairman Henry Cheng Kar-shun said yesterday that he did not expect Leung's administration to introduce policies that would hurt the property market. "The new government will definitely not crash the market, which is a pillar of Hong Kong's economy," Cheng said, adding that the Home Ownership Scheme and the public rental housing programme, key components of Leung's policy, would not affect the private market because they had income limits and catered to different market segments. In 1997, incoming chief executive Tung Chee-hwa pledged to tackle soaring property prices by turning out 85,000 flats a year for the next decade. But property prices plummeted more than 40 per cent just months later, and in July 1998, the government suspended land sales until the following financial year.

Members of the press use cranes to get an overhead view of chief executive-elect Leung Chun-ying's properties on The Peak. Photographers seek every vantage point. According to the Land Registry, Leung bought the two houses in 1999 for a total of HK$66 million. Chief executive-elect Leung Chun-ying might have been aware of the existence of illegal structures on his two houses on The Peak when he bought them, a clause in the sale and purchase agreement suggests. According to a clause in the agreement, signed by Leung in 1999, he agreed to "waive and relinquish all [his] rights to raise any requisition on the state, condition and structure of the property … or on the existence of the internal partitions in, and additions and alterations to, the property (if any) whether [they] are illegal, unauthorised or otherwise". Ambrose Lam San-keung, a lawyer specialising in property transactions, said it was normal to put such a clause into a purchase agreement if a house was sold by auction or tender. In this case, it did not indicate whether vendor and purchaser were aware of illegal structures. However, if it was sold through other means, such as through an agent, or a private deal, there was a possibility both sides were aware of such infringements. "It is usually the vendor, who is in a stronger bargaining position, that puts in the clause to forbid the buyer to claim any compensation or withdraw from the deal because of any illegal structures discovered in future," Lam said. It is unclear through what means Leung purchased the houses at No 4 Peel Rise. According to the Land Registry, he bought the two houses in 1999 for HK$66 million, directly from developer Housing Development. Leung has claimed the structures were already in the houses when he bought them, and that the houses were occupied by the developer after they were built in 1992. A director for the developer, Robert Lau Siu-kit, declined to respond to enquiries. It is also uncertain if the houses were rented after the developer moved out and before being sold to Leung. Grace Fung Sin-yu and Peter Lo Chi-lik, the lawyers who acted for the vendor and for Leung respectively, also declined to answer media inquiries. Meanwhile, Labour Party chairman Lee Cheuk-yan restated yesterday that he would press for a debate on the scandal at tomorrow's Legislative Council session and call for a vote of confidence soon on Leung. Lau Kong-wah, a Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker, said his party would not support the vote. "I cannot accept Leung's explanation that the unauthorised alterations stem from pure negligence. He needs to explain himself ."

Henry Cheng blames the government for steep flat prices. Property tycoon Henry Cheng Kar-shun - the only business representative on a new poverty task force - says developers could help solve housing problems by converting disused factory buildings into interim homes for people on the long waiting list for public housing. This would enable developers to earn income from buildings that now lie idle while helping the government meet housing needs, he said. Cheng, appointed by incoming chief executive Leung Chun-ying to help revive the scrapped Commission on Poverty, told the South China Morning Post (SEHK: 0583): "I have always wanted to narrow the wealth gap and to take a share of social responsibility. "To help people lead a comfortable, stable life will bring about social harmony." Cheng - a late-joining supporter of Leung who took over from his father Cheng Yu-tung as chairman of New World Development Company earlier this year - was named last week as a member of the Preparatory Task Force on the Commission on Poverty, chaired by Leung. He denied that helping the poor was an abrupt change for him, saying that he had made donations and sponsored charity projects over the years but had kept a low profile while doing so. A visit to subdivided flats and cage homes in Sham Shui Po a few months ago had deepened his determination to take action, he said. He recalled four people crammed into a 50 sq ft flat. "I saw there was such a huge gap in the living conditions of different people," he said. The revived Poverty Commission, which will advise on government policy, would be better than the current Community Care Fund, which he said provided "piecemeal" solutions. The task force should work on several areas including housing, welfare and plans to improve social facilities in neighbourhoods, he said. Under his suggested housing policy, developers could use their own resources to convert disused industrial buildings into flats, then rent the properties to the government, say on a 20-year-lease. The government would then allocate flats to those waiting for rental homes. "But you cannot make businesses subsidise the government. You need … incentives," Cheng said. "If they spend HK$10 million [on conversion of disused factories] and then earn hundreds of thousands of dollars in rental income, it is better than having no income at all." He stressed that his company held almost no industrial buildings and would not profit from the idea. His group, New World, would be ready to provide more fare concessions for its bus and ferry services "as long as it is within reason and does not affect shareholders' interests". Asked if he felt developers were to blame for creating a "property hegemony", Cheng said the government was responsible for holding back land sales in the past few years. "The government is the biggest landlord but it handed the initiative for selling land to developers," he said in a reference to the application list system, under which developers can trigger auctions by making initial bids for land on the list. Oxfam and Chinese University researchers meanwhile have proposed two new subsidy schemes to help alleviate poverty. The two proposals are a modified version of the government's work incentive transport subsidy scheme - which awards households of three people with HK$13,000 a month or individuals with HK$600 a month - and a child or working income tax credit system.

Workers remove the roof of one of the illegal structures at chief executive-elect Leung Chun-ying's house on The Peak yesterday. Incoming chief executive Leung Chun-ying faces a legal challenge to his March election victory over the controversy of illegal structures at his home on The Peak. The Democratic Party aims to file an election petition or a judicial review - or both - after accusing Leung of making false statements during the campaign when he claimed he had no illegal structures at his home. Last week it was revealed there were six illegal structures at his two houses at No 4 Peel Rise. The scandal has prompted Democrat chairman Albert Ho Chun-yan, a defeated candidate in the race for the top job, to ask the High Court to approve late requests for a legal challenge to the result. "Our case will be based on the grounds that Mr C.Y. Leung, during the election, made false representation or statements in public, thereby misleading the Hong Kong people to believe that he had no illegal structures at his properties," Ho said, after securing a unanimous endorsement in a Democrat central committee meeting. "This is particularly so when he pointed a finger at Mr Henry Tang during a public debate, accusing Mr Tang of maintaining a huge illegal structure in his residence, thereby totally shattering his own credibility." According to the law, Ho should have filed a petition within seven working days or a review within 30 days after the result was declared on March 25. But he said the court could use discretion to accept late requests, particularly where a judicial review was concerned. Whether he could file the writ before Leung takes office on July 1 depended on when his legal advisers, who include senior counsels Martin Lee Chu-ming and Hectar Pun Hei, could complete the paperwork. Meanwhile, contract workers spent nine hours yesterday dismantling the illegal cover on a parking space and a 40 sq ft storage room, two out of the four structures that the Buildings Department found in an inspection at Leung's home last Friday. The main gate was also deemed an illegal structure. But it is expected to take two weeks for the 240 sq ft unauthorised basement to be filled in. A trellis and glass enclosure were torn down last week after they were exposed by the media. At least six crane trucks were deployed by various media organisations to observe the progress of the work inside the HK$500 million property. Leung offered another public apology yesterday, but insisted that he never intended to cover up the illegal structures at his home. "I am very disappointed in myself too and I feel sorry for letting my supporters down," he said. "After I bought the house, my knowledge was that it contained no illegal structures. So I had never thought about checking my house when society discussed various illegal structure cases." The Democrats, Civic Party and Labour Party said they wanted a special question-and-answer session before July 18, but the Democratic Alliance for the Betterment and Progress of Hong Kong - whose lawmakers asked for more details from Leung on the case - questioned the need. Chief Executive Donald Tsang Yam-kuen commented on the case for the first time, saying Leung "has tried his best to be candid" in explaining the case.

President Hu Jintao arrives on Friday for a three-day visit - but, due to concerns, he won't be staying in a hotel this time. Unlike his last visit in 2007, when he stayed at the Grand Hyatt hotel in Wan Chai, Hu is expected to stay at the senior staff quarters of the Central Government Liaison Office in Tai Tam because of security concerns. The location of the building will make it easier to protect the president as the approach is only via the main road. Hu, who will be visiting the SAR for the last time as president, is scheduled to stay until July 1 when he will officiate at the swearing-in of Leung Chun-ying as chief executive. His visit also coincides with the 15th anniversary of the founding of the SAR. Hours after the announcement of Hu's itinerary, Leung held a meeting at the government headquarters in Tamar with members of his new team. They included former Hospital Authority senior executive Ko Wing-man - who is tipped to be next secretary for food and health - as well as Financial Secretary John Tsang Chun-wah, who is expected to remain in his post. Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung and Commerce and Development Secretary Greg So Kam-leung, who are tipped to serve in the new administration, also attended. Other officials include Police Commissioner Andy Tsang Wai-hung, Commissioner of Customs and Excise Clement Cheung Wan-ching, and Director of Immigration Chan Kwok-ki. It is understood the meeting was held. to discuss Hu's visit as well as the arrangements for July 1. Ko said they had discussed arrangements for the swearing-in ceremony. Hu is expected to enter Hong Kong from Shenzhen on Friday afternoon, and Chief Executive Donald Tsang Yam-kuen is likely to host a welcome dinner for him. On Saturday, Hu is expected to meet local deputies to the National People's Congress and delegates to the Chinese People's Political Consultative Conference for an hour in the afternoon. In the evening, he is expected to attend a show at the Hong Kong Convention and Exhibition Centre marking the 15th anniversary of the handover. He will also greet lawmakers, NPC and CPPCC deputies, and community and business leaders. On Sunday, Hu will attend a flag-raising ceremony at the Golden Bauhinia Square at 8am. Later he will officiate at the swearing-in of the new Leung's administration. Both Hu and Leung will deliver keynote speeches and the president will leave Hong Kong at noon. During his visit, Hu is expected to visit the People's Liberation Army garrison in Shek Kong. Guests invited to both Saturday's show and the swearing-in ceremony include Federation of Trade Unions lawmakers Pan Pey-chyou and Wong Kwok-kin, Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker and NPC deputy Ip Kwok-him and CPPCC delegate Lew Mon-hung. Democratic Party vice chairwoman Emily Lau Wai-hing said none of her party's lawmakers have so far received invitations. Tsang said Hu's presence shows the strong support the central government has for Hong Kong. Leung added: "The presence of President Hu to celebrate with the people of Hong Kong at this important moment shows his affirmation of and support for Hong Kong and the SAR government. "I would like to extend my deepest gratitude to him."

The world's top hotel operators have brushed aside global economic woes and China's stuttering growth rate as they vie with one another to build the biggest hotel networks on the mainland. Laying down a challenge to competitors last week, Arne Sorenson, president and chief executive of Marriott International, said the US-based hotel chain would open one hotel every month on the mainland over the next three years. Sorenson , who was addressing the first-ever meeting held by Marriott in Beijing for securities analysts, said the expansion program would double the chain's mainland hotels to more than 100 by 2014. At about the same time, Starwood Hotels and Resorts, operator of Sheraton and Westin hotels, was giving media representatives at a news conference in Shanghai its highly upbeat view of the outlook for the mainland's hospitality sector. The group said it planned to be running 200 hotels across China in the next three to four years. And the world's biggest hotel operator, InterContinental Hotels Group, said it expected China to replace the United States as the world's largest hospitality market in 2025 and that it would build an additional 150 hotels on the mainland and in Hong Kong and Macau within the next five years. However, the mainland boom story has another side, and occupancy rates have been the lowest among all Asian countries excluding India – at just 58 per cent in the first quarter of this year. The rate for five-star hotels was even lower, at 53 per cent, and the situation is expected get worse, as the number of five-star hotels will exceed 1,000 in 2015, compared with 645 at present, industry experts said. ''There are already signs of a declining room rate and occupancy in the industry,'' said Zhao Huanyan, chief knowledge officer of Hotelsolution Consulting, a Shenzhen-based consulting company. But helping to drive hotel construction despite these warning signals are property developers and local governments. Since central and provincial governments have taken tough measures to curb demand in the residential markets, many local property developers are turning to commercial real estate development. Developers believe that a hotel flying the flag of a world brand will boost the profile of a commercial complex, and it is also easier for high-end hotels to obtain approval and tax incentives from governments of mid-tier cities, who see the presence of the hotels as drawing cards for visitors and other investors. Around the world, Zhao said, operators typically segmented their hotels into those that were managed, franchised, leased or self-owned. On the mainland, management is the most popular business model, which means the operators manage the hotel in return for a fee. In some mainland locations, however, this limited-risk model has come under strain. In Shenzhen's Long Gang district, three five-star hotels were built before 2011 in preparation for the World University Games held in the city in August last year. Since the games, they have been operating at an occupancy rate of just 30 per cent. Ningbo, Zhejiang, is another example. The mid-tier city is expected to be home to no fewer than 50 five-star hotels next year – more than the number of top hotels in Shanghai. ''It's apparent that the hotel room supply in some parts of China is already excessive,'' Zhao said. ''But this has not stopped the big-name hotel groups from speeding up their expansion in China.''

Immigration rules should be rewritten to allow the thousands of well-educated mainland parents with locally born children live and work in Hong Kong to help reverse the shrinking of the city's workforce, a demographic expert says. The proposal from Professor Paul Yip Siu-fai, who has been tackling the issue of the city's ageing population for the Central Policy Unit, the government think tank, directly contradicts chief executive-elect Leung Chun-ying's pledge to introduce a blanket ban on mainland mothers giving birth in the city next year. While Leung's initiative has won applause from people who feel local hospitals were being overwhelmed by mainland mothers, Yip warned it was not the right direction for the city to take. Yip told the South China Morning Post (SEHK: 0583, announcements, news) that well-educated mainland parents should not only have the right to give birth in the city but that they should be granted the right of abode afterwards so families had the option of staying together in Hong Kong. With close to 33,000 babies born in Hong Kong to mainland parents last year, a third of all births in the city, the professor dispelled fears that his proposal would only further burden the city's health-care and social welfare systems. He cited research by both the University of Hong Kong and the Census and Statistics Department that showed the academic qualifications of mainland parents opting to have their babies in the city were much higher than initially thought. About 60 per cent had received post-secondary education, while 72 per cent of the mothers were economically active and more than half of those were professionals or managers. And according to a Census and Statistics Department study last year, the number mainland parents with Hong Kong children who were well-educated has increased to 60 per cent, from 30 per cent in 2007. Yip said this demographic group should be made part of the solution to the city's diminishing workforce in the next two decades. In addition, allowing the parents to stay with their children in Hong Kong would help prevent the social problems created by split families. "We are talking about a completely different social group, who are more well-off and better educated," he said, citing in comparison children born to Hong Kong fathers and their mainland wives, where only about 30 per cent of both parents had a higher education. "Instead of adding a burden to our society, they can contribute to our shrinking workforce if comprehensive policies are in place." Yip said the system should be devised with flexibility to allow for the admission of parents from different professional fields at different times in response to demand from various industries. "The bottom line is that the new immigration policy should not undermine the sustainability of the health-care service for local mothers," he said. According to government forecasts, the city's labour force will increase from 3.73 million in 2010 to 3.91 million in 2021 but will gradually shrink to 3.85 million in 2029. The dependency ratio - the ratio of the economically inactive population to the economically active one - will also increase by more than 30 per cent, from 0.87 in 2010 to 1.14 in 2029. "In this context, babies are about the public good rather than individual choices," Yip said. The 33,000 children born locally to mainland parents last year represented a sharp increase from the 16,000 in 2006. A government survey showed that of the 33,000, nearly 70 per cent went home to the mainland with their parents. If all the children born to mainlanders in the city go on to be educated locally, 120,000 children born between 2006 and 2010 may come back for primary education in the next five years. According to a rough estimation by Yip, under the small-class education policy that would require 250 extra schools. Yip, a member of the Central Policy Unit's population policy advisory group, said the public should not be overwhelmed by these statistics and advised the government to prepare itself for such a scenario. Government surveys conducted from 2007 to 2011 found that more than 50 per cent of mainland parents say their children will return to the city before they reach 21. Yip called for an annual tracking study to ensure the government would be ready with plans for the return of such children. "The figure might not be reliable, as the parents were asked this question when they applied for a birth certificate," he said, suggesting the true figure may be far lower.

Leung sets out vision for Hong Kong - Leung Chun-ying, newly-elected Chief Executive of the Hong Kong Special Administrative Region (HKSAR), gestures during an interview, April 11, 2012. London, New York offer template for greater success, CE-elect says - In mapping out his vision for Hong Kong, Leung Chun-ying draws much of his inspiration from arguably the city's greatest rivals: London and New York. Leung, the chief executive-elect of the special administrative region, said both cities are more advanced in several sectors - and that it is time to catch up. The British capital offers key lessons on how Hong Kong can once again become a leading shipping hub, he told reporters recently. "London, instead of shipping freight in and out of ports, offers services, including ship sales and rent, registrations, financing, management and insurance," said the 58-year-old, who studied valuation and estate management at Bristol Polytechnic (now the University of West England) in the 1970s. These services offer greater economic value, he said. "If Hong Kong simply tries to double cargo throughput, it will expand its scale, but it will not take it to a higher level. We can do better than just expanding scale." Hong Kong's ports used to be the busiest in the world, but that was before the rapid development of ports on the mainland. Shanghai is now the world's largest port in terms of freight throughput. Hong Kong's status as a world shipping center was being eroded, some feared. China is now a major ship-building nation and it handles huge volumes of cargo so it needs a shipping center, and Hong Kong meets all the conditions, said Leung, who will start his five-year term on July 1. Hong Kong's advantages include its multilingual workforce, international links and legal traditions, he said, adding that City University of Hong Kong has also established a research center for maritime and transportation law, and offers a master's degree in the field. Hong Kong's future would be assured and advanced if the children of port workers can become maritime lawyers or insurance specialists, he said. Hong Kong, as a financial center, also has room to improve, he said. It has often been mentioned in the same category as London and New York but Leung believed that there was no room for complacency and much work remained to be done. "Just take a walk in Hong Kong's financial district, and then in London and New York, and you can feel the difference," he said. More financial services have yet to be explored, he said. He cited, as an example, that while every bank in Hong Kong knows how to finance real estate, "not every bank knows how to do financing for ships". The mainland, with its resources and production capabilities, will create opportunities that Hong Kong can grasp to elevate itself as a financial center, he said. "I have a lot of confidence in Hong Kong's future economic well-being. We can clearly see the direction ahead of us," he said. The incoming chief executive also wants to tackle poverty levels. He conceded that Hong Kong has a wide wealth gap. But "the gap itself is not my concern. I'm concerned about those living on incomes that are too low" and are impoverished, he said, adding that the solution is not necessarily "to narrow the wealth gap". One of the measures his administration will adopt will be to improve the standard of living of those that are marginalized through "a secondary distribution of wealth", such as building more public housing while trying to stabilize real estate prices. He also advocates greater communication with those on the lower rungs of the wealth ladder. One of his ideas is to provide more quality employment opportunities. He cited Yuen Long residents, saying they had to commute two hours a day to hotels in Tsim Sha Tsui or Mong Kok to work as cleaners. What they suggested was that the government should allocate land in the district for developers to build hotels to accommodate mainland tourists who come through Shenzhen, so that they can work near home, take care of their families and save precious time. Leung called the idea "brilliant". "Chinese people have the ability to make a living with their own hands. Our government looks forward to better satisfying workers' needs over the next five years," he said.

 China*:  June 27 2012 Share


Women protesting against the Shanghai Metro's microblog post telling them to dress conservatively. The post said that wearing revealing outfits invited trouble from 'perverts'. The Shanghai Metro has come under fire for urging female passengers to "have self-respect" and not wear revealing summer clothing - fashion advice that some condemned as sexist and inappropriate. The transport agency first stirred up the controversy on Wednesday with a microblog post in which it warned that sexy clothing could provoke sexual harassment. It included a photo of a young woman wearing a sheer dress on a subway platform. "Dressing like that, it would be unusual for a lady not be harassed", the post said. "There can be perverts on the subway and it's hard to get rid of them. Please have self respect, ladies." Some online users said the post offended them. "What I wear is my basic right, it does not deny the rights of others," wrote a blogger known as SOY-BEAN-E. Li Sipan, a postgraduate student at the University of Macau, said in an article that was published by Shanghai's Dongfang Daily yesterday that the message behind the post was that women who were sexually harassed on the subway probably asked for it. Female internet users had reacted so negatively to the post because all women felt repressed by society about what was proper to wear in public spaces, she wrote. "Women demand a public space with no censorship and respect for their body's sovereignty." Shanghai University sociology professor Gu Jun said the subway dress code could be seen as the product of a war between the sexes. "Men see women's sexy way of dress as an expansion of women's rights in public space, and they feel threatened," Gu said. On Sunday, two female passengers donned black robes and masks on the metro's Line 2 to protest over the post. The passengers held up message boards saying: "I can show off, you can't harass me" and "We want to be cool but we don't want perverts." Still, some internet users supported the Shanghai Metro's advice. Some 70 per cent of the nearly 17,000 respondents to a Sina weibo online poll yesterday said that women should dress more conservatively when on the subway, and that the dress code had nothing to do with discrimination. "If you don't respect yourself, how can you ask others to respect you?" microblogger bingqing_8962 asked. Despite the controversy, the transport agency has refused to apologise. The post was still on its official microblog yesterday.

An earthquake hit a mountainous area of southwest China yesterday, killing at least two people and injuring around 100, Xinhua News Agency said. The US Geological Survey said the quake had a magnitude of 5.5 and struck the border between the provinces of Sichuan and Yunnan just before 4pm, at a shallow depth of only 9.3 kilometers. Beijing put the magnitude of the quake at 5.7. It was followed two minutes later by an aftershock of 3.3, the China Earthquake Network Center said. The quake toppled houses and cut off communications with parts of Ninglang county in Yunnan, Xinhua said, adding that casualties were also reported in Sichuan's Yanyuan county. Yunnan provincial authorities had sent relief supplies to Ninglang, where the quake was strongly felt, including 300 tents, it said. The province has also sent a team to the area. An official in Lijiang city, which administers Ninglang, said it was too early to have detailed estimates of casualties and damage. Separately, a Yanyuan county government official was quoted by Xinhua as saying that "many" houses in rural areas had collapsed, but he gave no figure. "I felt it, but I don't know about casualties," another official of the Yanyuan civil affairs bureau said, adding that the government was trying to calculate the casualties. The area is inhabited by the Yi ethnic minority. China estimates there are around 7.8 million Yi people living in four provinces, including Yunnan and Sichuan, many in mountainous areas.

Mainland carriers have nearly tripled the size of their fleets over the last decade, but there could be turbulence ahead. The sky is not the limit for air traffic growth on the mainland despite phenomenal growth in passenger and plane numbers in the last decade. Air passenger volume hit 300 million last year, more than tripling over the past decade - even with the 2003 Sars outbreak and the financial crisis five years later. Mainland carriers nearly tripled the size of their combined fleets, from 602 aircraft in 2002 to 1,764 at the end of last year. By 2015, passenger volume is projected to reach 450 million while the commercial aircraft fleet is expected to number 2,750, according to the central government's 12th five-year plan. That would make China the biggest inbound tour market and fourth-largest outbound market in the world. But turbulence may be ahead. Despite the growth spurt in the past decades and equally encouraging projections, energy issues may well be a spoiler, a researcher at the China Communications and Transportation Association warns. "If the number of aircraft reaches a certain level, let's say, 15,000, they will need some 150 million tonnes of jet fuel annually," association executive vice-president Wang Derong says. "It will definitely upset the energy policy of China, which wants to diversify its energy mix to clean energy." Fifteen thousand planes will burn up to 132 million tonnes of jet fuel a year, which, in turn, will require nearly 1 billion tonnes of crude oil to be refined. Last year, the mainland imported just a quarter of that projected jet fuel consumption. The number of aircraft operated by mainland airlines will reach somewhere near 9,000 by 2030, based on the projected air traffic growth calculated by the Civil Aviation Administration of China (CAAC). Air passengers will reach 700 million in 2020 before doubling to 1.5 billion in 2030. To put that into perspective, that means one plane for every 150,000 people, compared with one per 50,000 in the United States. But Wang said China would in no way match America's aircraft density, so Beijing should expand the nation's high-speed railway network, which could be powered by hydraulic, solar or nuclear energy. For the next 10 years or so, he said, civil aviation would continue to enjoy double-digit growth, fuelled by the ongoing industrialisation and income growth on the mainland. To cater for this growth, the CAAC has earmarked 425 billion yuan (HK$521.99 billion) for airport expansion in the five years to 2015, including building 56 new airports, relocating 16 and expanding 91. The expansion plans include building a second airport in Beijing, fourth and fifth runways at Shanghai Pudong International Airport. Many of the projects need to tap the debt markets just as the mainland's financial market faces a credit crunch. To add to the woes, around 70 per cent of the existing 175 airports run at a loss. This had made bankers wary of approving fresh loans, an airport consultant said. Many airports are also underutilised, leading to poor returns on investment, according to Eric Wong, former chief executive of Hangzhou Xiaoshan International Airport. He said there weren't enough small aircraft - those with seats under 100 - to cater for small airports on the mainland, leading to the low utilisation rate. The daily flight between Hangzhou and Wenzhou was terminated because the airline concerned was struggling to fill the 120-seater it operated on the route. Smaller aircraft could effectively tap passenger demand because they enabled airlines to fly more often and provide more choice, Wong said. "Overall planning on aircraft mix should be part of the master plan of airports and fleet expansion nationwide if the regulator wants to see airports in the black," he said. Uneven distribution of passenger volumes across airports leads to bottlenecks in major airports and severe flight delays. Only 53 of the 175 airports on the mainland get more than 1 million passengers a year. The problem of flight delays has also intensified because of air space constraints. Some 80 per cent of the country's air space is controlled by the military, to which civilian carriers must give way. Pilot shortage is yet another drag. Domestic airlines needed about 3,000 new pilots every year while the country's training schools could supply only 2,000, analysts said. But the most pressing issue is how to balance development and environmental protection. With airlines worldwide promising to have carbon-neutral growth by 2020 and halve their carbon footprint by 2050, mainland airlines are under even greater pressure as they are among the fastest growing in the world. Hopes are now pinned on the second generation of biofuels, which is derived from non-food plants. Once planes can fly free of the shackles of fossil fuel and the fear of energy safety, China's aviation sector would be able to reach its true potential.

The Jiaolong returns to the deck of the Xiangyanghong 09 research ship after its fourth dive into the Mariana Trench in the Pacific Ocean. China's deep-sea manned probe surpassed its operational depth of 7,000 metres yesterday, setting a national record for the country's sea-exploration programme. Carefully orchestrated to coincide with the nation's first manual docking in space, the Jiaolong - or the Sea Dragon - completed the world's deepest manned dive in a manoeuvrable submersible, touching the sea floor at 7,020 metres below the surface in the West Pacific's Mariana Trench, which goes to a depth of around 11,000 metres - the deepest in the oceans. The dive set a domestic record and showed the country was capable of exploring 99.8 per cent of the world's ocean floors. However, one analyst said China's next deep-sea plan was even more ambitious. Encouraged by the success of Jiaolong, it plans to soon begin construction of a deep-sea station to match its rapid march into space. Photos and samples collected by Chinese divers from regions with potential mineral or energy deposits would also give China solid claims in future diplomatic negotiations regarding treasures at the bottom of oceans, the analysts say. The dive was accomplished by three crewmen. Captain Ye Cong, a senior engineer with China Shipbuilding Industry Corporation's 702 Research Institute and a key designer of the ship, controlled the diving, manoeuvres and surfacing. Professor Liu Kaizhou, with the Shenyang Institute of Automation at the Chinese Academy of Sciences, is a scientist specialising in artificial intelligence, and was in charge of the onboard scientific equipment such as the deep-sea camera, sensors and sample collector - a robotic arm used to handle sophisticated tasks. Professor Yang Bo, another academy scientist with the Institute of Acoustics, monitored and maintained communication between the submersible and its mother ship, the Xiangyanghong 09. Most communication was carried out via military-grade underwater acoustic devices that the institute developed for the mission. The strength of Jiaolong's construction and design was proven by the dive. The 22-tonne submersible has a multilayered shell made of fibreglass and titanium alloys. The exterior design was completed at the 702 Research Institute, but manufacturing of the hull was outsourced to a military plant in Russia, said a scientist who recently retired from the project. The Jiaolong has six propellers powered by batteries. Able to carry three people and more than 200 kilograms of equipment, it stayed underwater for about 12 hours. It had suffered some equipment problems, such as leaking pipes after repeated dives in the past few weeks, but the problems were solved and the crew reported no major problems during yesterday's dive. Song Xiaojun, a former naval officer, told China Central Television yesterday China would soon begin construction of a manned deep-sea station to rival Russia and the United States in the field.

Chinese Premier Wen Jiabao and Argentine President Cristina Fernandez attend an event celebrating the 40th anniversary of diplomatic ties between China and Argentina in Buenos Aires on Sunday. Argentinian President Cristina Kirchner and Chinese Premier Wen Jiabao on Sunday hailed 40 years of strong diplomatic ties between their two countries. At a ceremony in a museum opposite the presidential Casa Rosada mansion, Wen called the four-decade mark an “important milestone” and praised the “deepening friendship and trust” between Buenos Aires and Beijing. Trade between the two states totalled US$14.8 billion last year. The Asian powerhouse is Argentina’s biggest taker of agricultural products and its second largest trade partner. Kirchner said China had played a “paramount” role in fuelling global growth over the past 10 years. She also stressed that both countries have a “common vision on defending territorial integrity” and acknowledged China’s support for Argentina’s claim to the disputed Falkland Islands, which are administered by Britain. Earlier this month, Kirchner demanded that London start talks with Buenos Aires over the archipelago on the 30th anniversary of the end of their war over the territory. Wen is on a multi-country tour of South America. He is scheduled to sign agreements and meet with Argentine officials and lawmakers on Monday before departing later in the day.

Nissan CEO Carlos Ghosn speaks at a news conference at the company's headquarters in Yokohama, Japan. Nissan Motor Corporation announced plans on Monday for an US$800 million factory in China's northeast as part of efforts to expand sales in the world's biggest automotive market. The factory in Dalian will have a production capacity of 150,000 vehicles by 2014, rising to 300,000 later, the Japanese carmaker said. It will be Nissan’s fourth manufacturing centre in China. Nissan announced an US$8 billion expansion plan for China last year as part of a global strategy to focus on faster-growing emerging markets and reduce reliance on the United States. “China is our largest market today and will continue to be one of Nissan’s most important engines of growth,” said Hiroto Saikawa, Nissan’s executive vice president, in a company statement. The company also announced it signed a contract to deliver 1,000 electric vehicles produced under its Venucia brand, created with its Chinese joint venture partner, to the Dalian city government by this year. It said the joint venture would work with the city to promote electric vehicles. Nissan’s plan in China with its partner, Dongfeng Group, calls for opening new factories and introducing 30 new models by 2015. The company has said it also plans new factories and other initiatives in Russia, Brazil, India and Southeast Asia. China’s total auto sales in May rose 16 per cent over a year earlier to 1.6 million units, according to the China Association of Automobile Manufacturers. It said total sales for the first five months of the year were up 1.7 per cent to 8 million units.

Shenzhou-IX is moved into place to link with the Tiangong-1. Scientists at the Beijing Aerospace Control Centre monitor the manual docking of the Shenzhou-IX spacecraft and the Tiangong-1 lab module. China completed its first manual space docking yesterday, a landmark step in the country's programme to build a space station by 2020. The Shenzhou-IX spacecraft and its three-person crew, including the country's first spacewoman, Liu Yang, docked with the Tiangong-1 space module at around 12.50pm, with state television covering the event live. The successful experiment has demonstrated China's capabilities to safely transport crew and cargoes to a space station if the autopilot system of the spacecraft suffers malfunctions or a breakdown, according to scientists at the China Academy of Space Technology. They also said the mastery of manual docking technology coupled with a reliable autopilot docking system showed that China was now technically ready to transport cargo or crew to the International Space Station. Beijing is willing to do so before the launch of its own space station in 2020, they added. Wu Ping, spokeswoman for China's manned space programme, said in Beijing yesterday that the docking was "a complete success" and a breakthrough in the country's space programme. Since the manned space programme started in 1992, it had cost less than 40 billion yuan, she added. The arrangements and date for the mission next year, Shenzhou-X, would be decided after a full review of the current mission and the status of the orbiting Tiangong-1 lab module, she said. The Shenzhou-X mission will also include a manned rendezvous and docking with Tiangong-1. Wu praised the "excellent performance" over the past eight days of the first Chinese female astronaut, Liu Yang. "She is in a good mental and physical state," said Wu, adding that all her physiological signs were normal. "We have made special arrangements for her life in space. She will tell you whether she was satisfied with the arrangements when she comes back," said Wu. Wu said the astronauts would stay in Tiangong-1 for another three to four days and return to earth in a journey lasting no more than a day. The manual docking was the Shenzhou-IX crew's biggest challenge. It was the first time that Chinese astronauts were given full control of their spacecraft to perform critical manoeuvres requiring such high precision. A miss by a few centimetres could damage the spacecraft and module, mess up the course of flight and threaten the lives of the crew, as both spacecraft have a combined weight of more than 16 tonnes and a collision could damage sensitive onboard equipment. Senior Colonel Liu Wang controlled Shenzhou-IX during yesterday's manual docking. Sitting in the centre seat of the spacecraft, he jostled a pair of joysticks as the distance between Shenzhou-IX and Tiangong-1 shortened to 140 metres. The left joystick controlled Shenzhou's up, down, left and right movements, while the right stick governed the ship's rotation to fine-tune its heading. As the spacecraft moved towards Tiangong -1 at less than half a metre per second, Liu kept his eyes on a TV screen as he aimed for Tiangong-1's docking portal by tilting the joysticks occasionally in his hands. The Shenzhou responded precisely to Liu Wang's correction. The 8-tonne spacecraft moved about with eight rocket propellers. Its laser and microwave radars beaming back data to the ground control in Beijing for engineers to monitor the astronaut's performance. If Liu made a big mistake, the manual control would be immediately overridden by an autopilot to ensure the safety of the crew and two spacecraft. In an interview with China Central Television before the flight, Commander Liu said that he had practiced the manual docking more than 1,500 times and was "100 per cent confident" he could bring the two spacecraft safely together. "I don't feel any pressure," he said. "I am just a man who is doing a job he loves. I always feel good."

The cost of creating a greener future - An international green building exhibition in Beijing. China set an ambitious target to make 30 percent of the country's new construction environmentally friendly by 2020. Environmentally friendly building companies to boom if targets hit - Twenty-eight-year-old banker Wang Ning bought an apartment for his parents in Shanghai a year ago. Unlike regular apartments in China, this one boasted "organic" credentials and constant temperature and humidity levels all year round thanks to a "ground source heating pump system". "This apartment was a little more expensive than others in the same neighborhood but, for elderly people, the right temperature and humidity and also fresh air mean a lot," said Wang. The couple did not need to install air conditioners in their new home, saving a lot in electricity bills. In a city where temperatures rise as high as 40 degrees Celsius in summer and fall below zero in winter, Shanghai is often short of electricity. Landsea Group Holding Ltd, the company that built the apartment, is a leading real estate developer in China, specializing in building energy-saving and environmentally friendly communities. Reliant on its ground source heating pump system, fresh air replacement and ceiling radiation, as well as the use of solar power, the apartment provides a comfortable living environment, with lower use of traditional resources such as mains electricity. "The idea of green construction is still pretty new to most Chinese people, but most of our clients are well-educated people with high incomes. Some have experienced living abroad," said Xie Man, the sales manager at Landsea Enjoy Green, a cluster of residential buildings located in northwestern Shanghai's Nanxiang county. The buildings have been on sale since the beginning of last year at a price of about 21,000 yuan ($3,300) a square meter. Seventy-five percent have been sold, leaving more than 100 apartments available. "The scientific system in our buildings will push up the price by 2,000 to 3,000 yuan a square meter," Xie said. Some people are happy with that because they want a comfortable temperature and humidity and are concerned about air pollution. Under the current Five-Year Plan (2011-15), China explicitly stated that constructing green buildings is one way of meeting the target of reducing energy consumption by 16 percent and carbon emissions by 17 percent for every unit of gross domestic production by 2015. China set an ambitious target to make 30 percent of the country's new construction green by 2020, according to a document jointly released by the Ministry of Finance and the Ministry of Housing and Urban-Rural Development in early May. It was the country's first announced goal for the development of green buildings. The document said authorities will adopt measures including increasing policy incentives and improving industry standards, as well as promoting technological progress and the development of related industries, in order to attain the goal. The document also specifies a goal of bringing China's building energy consumption ratio closer to that of developed countries by 2020.

Hong Kong*:  June 26 2012 Share

Chan Hung's centre offers poor pupils a chance to learn the arts. "They may have the opportunity in school, but it often requires a fee." In a city where celebrity "tutor kings" advertise themselves on billboards wearing flashy suits and confident smiles while promising to deliver guaranteed A-grade exam results, one teacher is offering his services for nothing. Former school principal Chan Hung has opened a free tutoring service for pupils who can't afford to pay for places at the coveted tutoring centres. The 44-year-old's charity, Principal Chan's Free Tutorial Centre, got government approval in January. He has since paired up 112 primary school pupils from low-income families with volunteer tutors, mostly non-teaching professionals. They study together in public places, such as McDonalds stores, which are close to pupils' homes. Chan is not looking to mimic the rock star-like tutor kings who focus solely on boosting exam grades. He will also offer summer classes for poor children to learn dancing, drawing and acting at his Ma Tau Wai centre. "These kids are deprived of the chance to learn the arts. They may have the opportunity in school, but it often requires a fee," said Chan, who acts in an amateur theatre troupe. "Better-off children start learning the arts when they are in kindergarten to help them get into a good secondary school later on, so our kids are losing out. A lot of parents tell us they never expected their child would get to learn how to dance. Lessons would have cost HK$1,000 a month outside." The driving force behind Chan's centre is to nurture a love for learning - something he considers secondary school pupils are deprived of. Chan was the founding principal of a direct subsidy scheme secondary school QualiEd College in Tseung Kwan O when it was established in 2003, and previously taught for 10 years in what was then a band-five school in Mei Foo - considered the worst in the 1990s. With 16 years in the education sector, Chan said today's high-pressure school culture started in about 2000 when "schools turned into businesses that had to appease parents". He said "schools were under pressure to recruit more pupils so their class sizes would not shrink" and to ensure the school was not closed for lack of pupils. "In the 1990s, schools weren't so keen on status-hunting," he said. "But now schools have become stratified with pupils glorified for their 10 As, and everyone preferring band-one schools and English medium schools. Underprivileged kids are not getting the nurturing they need. "Even as a principal, I felt helpless and I didn't want to be a part of the system any more." In 2009 he left his job and decided to strike out on his own. Chan's centre runs solely on donations, with the money mainly paying the salaries of two administrative staff as well as covering maintenance. His decision to give up his job and run the centre has not been easy for Chan's family of five, who now rely solely on his wife's civil servant income. "My family doesn't go out to eat as much, and we haven't been on a vacation for the past three years," he said. "My kids are young, but they understand their dad is doing this to help others."

More than 250 teams made a splash at the Stanley International Dragon Boat Championship yesterday, not only with their paddling prowess but also with their colourful costumes. Among the stand-outs were (bottom from left) law firm Reed Smith Richards Butler's Angry Nerds, members of the Fair Dinkum team and W hotel's Dragon Boat Warriors. Teams compete at the Stanley Dragon Boat Championships yesterday. The event, which drew 5,000 paddlers and scores of spectators, began in high spirits despite concerns over a local shark sighting last week. Not even the reported sighting of a shark earlier last week could spoil the fun for the thousands attending the Stanley Dragon Boat Championships yesterday. More than 250 local and overseas teams of more than 5,000 paddlers took part in this year's event, with the Hong Kong Friendship Dragon Boat Club winning the day's big race. Thousands of spectators watched from the shore as the competitors took to the sea in a blaze of colour and pageantry, which overshadowed any worries about last week's shark sighting in Tai Tam Bay. The shark was spotted about kilometre off Stanley Main Beach at around 11.30am on Wednesday, prompting the marine police and the Leisure and Cultural Services Department to step up patrols. This could not have been further from everyone's minds yesterday, with the mood staying upbeat. This was especially true for 27-year-old management consultant Wendy Wong, who relished her role as drummer on the PricewaterhouseCoopers team. "There were partners, senior managers and directors in our boat, so it was great to be able to give them orders for a change and tell them what to do," she said. But for Kenny Chan, his Hong Kong Institute of Surveyors team had a more pressing issue in mind during the race. "In previous years there had been complaints that the distance the boats were covering was not correct," the 31-year-old said. "But in 2004 we got involved with the organisers and used our specialist equipment to ensure that it was the right distance of 270 metres." Meanwhile, one of the event's announcers had his own take on what the event, known as the Tuen Ng Festival, stood for. "Today is about a bloke who lived a long time ago and drowned himself to protest against the government," the announcer said over the public address system. "The people then went out in their boats to stop the fish from eating his dead body." The authentic version, however, is that the race commemorates the death of Qu Yuan , a well-loved statesman and poet who lived in the Chinese kingdom of Chu more than 2,000 years ago. Jealous rivals falsely accused him of treason and Yuan was banished. In despair, and as a final gesture against the corrupt government, Yuan threw himself into the Mi Lo River. The festival's distinctive dragon boat races are a re-enactment of the frantic, vain attempts of the fishermen who rowed out to save him. Little did the statesman know that his tragic act would for decades be honoured with races where competitors are urged on to the finish line by the pounding of drums and roar of the crowd. Other races took place across the city in Tuen Mun, Sai Kung, Sha Tin, Aberdeen, Tai Po, Cheung Chau and Discovery Bay.

Augustine Lo at his papaya farm in Hok Tau, Fanling. He learned the farm had been contaminated by GM fruit six months ago, when he tried to get an organic certification. Lifting ban on GM papaya 'a mistake' - Farmers say that by allowing genetically modified papaya to be grown, the government is making it harder to build Hong Kong's organic fruit sector. Hong Kong is throwing away its chance to enter the growing mainland market for organic produce by allowing farmers to grow genetically modified papaya from today, local farmers warn. The city's Genetically Modified Organisms (Control of Release) Ordinance aims to protect local biodiversity by preventing the release of GM species into the local environment. It prohibits all GM crops. But the regulation that goes into effect today waives the prohibition on growing GM papayas and lifts the ban on imports of two commercially grown GM papaya varieties. Papaya is being exempted, the government says, because the GM form of the fruit is already present in Hong Kong and very hard to remove. Farmers, for their part, are concerned not just about the uncertain, adverse impacts that the GM crop may have on the environment and people. They also argue that the change will lead to the uncontrolled proliferation of GM papaya and the contamination of the conventional papaya crop. "Are we going to turn Hong Kong into a testing ground for GM species? Will the government introduce new exemptions any time they find other species already present here?" asked Leung Pun-kin, an organic farmer based in Yuen Long. The exemption has stirred up huge controversy among local organic farms and their supporters. They accuse lawmakers of being preoccupied with other political matters, and failing to take the time to vet the regulation before the deadline passed. Now growers fear some organic farms may be forced to stop growing papaya because any contamination found on their land could lead to loss of their certification status - hurting their business in other crops as well. Eventually, consumers will also be unable to enjoy locally grown, organic papayas, they say. In response to their concerns, environmental officials have assured farmers that GM papayas will not alter the biodiversity of Hong Kong, since GM papaya genes cannot jump to plants of other species. Developed in the 1980s, GM papaya was created to resist the ringspot virus, and first grown commercially in Hawaii in 1998. But the officials acknowledge that cross-pollination does occur between GM and non-GM papaya. That risk does exist in Hong Kong, which already has a large population of papaya trees - over 350,000, kept by casual and career farmers. About 70 per cent are believed to be genetically modified. But most farmers do not know if their papaya are contaminated with the GM variety. Removing these trees is not feasible, officials argue, because it would create a huge nuisance for the public and affect the livelihoods of those who depend on them. Further, it would be too expensive to test each tree to ascertain its genetic status. They point out that any contamination would be confined to a tree's seeds - the mother tree and the fruit would remain GM-free. But if contaminated seeds are released, the trees and fruits they generate will be genetically modified. Augustine Lo Yat-man learned that his farm had been contaminated by GM papaya half a year ago, when he tried to get an organic certification - a useful label for marketing farm produce. His application was rejected because one of the two papaya samples taken from his land was found to be GM-positive. He had to remove all his papaya trees and pay the HK$1,400 cost of the test. "The payment is clearly a penalty imposed by the certification body to deter organic farmers from growing papaya because of the high risks." Lo questions the official logic behind the regulation. Instead of offering a blanket exemption, he believes all existing GM papaya trees should be removed and replaced with GM-free ones. He said Hong Kong would miss a golden opportunity to rejuvenate its agriculture by growing organic papaya and tapping into the growing market for it. "We should do what the mainland can't do, and our strength is definitely in producing organic, GM-free, quality agricultural produce. "One day mainlanders might come not just for our baby formula, but also for our papaya," Lo said. Hong Kong imported 6,500 tonnes of papaya last year. About a third was from the mainland and 7 per cent from the United States. GM fruit made up half the mainland imports and 90 per cent of those from the US. Professor Jonathan Wong Woon-chung, who runs the Hong Kong Organic Resource Centre, the city's only certification body for organic farms, agreed that the testing fee might discourage farmers from growing papaya. But it was fair to levy the fee from farms that failed the GM test, he said, because the centre bore the cost if no genetic modification was found. "We are not trying to stop them from growing non-GM papaya, but some farmers might not want to take the risks," he said, adding that farmers must remove all GM plants to retain their certification. Wong, an expert adviser to the government on the new exemptions, said the law balances the interests of organic farms and those who are growing GM papayas. "There is no perfect solution in this case," he said. There was no scientific proof that GM papaya was unsafe either to eat or for the environment, he said. But Lo insists that a precautionary ban on the GM crop is necessary because no one can tell for sure how it may affect the species' evolution.

Revamp likely to be pushed back to October - But Beijing official says 'the sky will not collapse' because Leung could work within existing framework. Incoming chief executive Leung Chun-ying's government restructuring plan risks being abandoned before the current legislature's term ends on July 17, pushed aside by a backlog of outstanding business and delaying tactics by some lawmakers. This would mean the whole process would have to begin again in the new term starting in October. But a top Beijing official with responsibility for Hong Kong said "the sky will not collapse" if this happened because Leung could still govern with his new ministers working within the structure set up by Donald Tsang Yam-kuen. Radical democrats have vowed to continue filibustering attempts in the coming weeks in the wake of a surprise defeat on Thursday of a motion to fast-track legislators' scrutiny of Leung's plan. "I will not allow Leung's revamp proposal to be passed before July 17," People Power lawmaker Wong Yuk-man - a key figure in an earlier filibuster on electoral changes - said yesterday, adding that he had prepared loads of speaking material for the upcoming debates. In Beijing, Hong Kong and Macau Affairs Office director Wang Guangya dismissed fears that Leung's administration could be thrown into confusion if his revamp plan was not passed before he takes the helm on July 1. Making the first comment by a top Beijing official on the issue, Wang said: "The sky will not collapse. The government can still operate under the current structure devised by Tsang. On July 1, it is certain there will be a new line-up. And after July 1, when the proposal gets passed, the central government can make supplementary appointments [of new ministers] accordingly." The Legco Secretariat said the earliest the plan could be dealt with was July 11 because of 10 outstanding bills on the table. It estimated the debate and voting on the revamp resolution would require 30 hours. Bills yet to be dealt with include the law regulating the sale of new flats, the companies bill and the trade description bill - which the secretariat estimates will require more than 90 hours of debate. But lawmakers conceded the actual debate time could be much longer given People Power's pledge to filibuster Leung's plan. Fanny Law Fan Chiu-fun, director of Leung's office, declined to estimate when the proposal - which would appoint deputies for the chief secretary and financial secretary and increase the number of bureaus from 12 to 14 - would be approved. Democratic Party lawmaker Cheung Man-kwong urged Leung to propose an alternative if his revamp plan was not passed next month. But Law said: "We don't have plan C." The plan has also struck rough water in the Finance Committee, which yesterday resumed the scrutiny of the HK$62 million-a-year financial arrangements. On Tuesday, the administration tabled an amendment to revise the effective date of the revamp to five days after the proposal is approved by the committee. But pan-democrats, doubting the legality of the move, called for a written explanation before continuing the debate in the committee. The debate in the Finance Committee will continue next Friday.

The dragon boat of Hap Sim Tong carries a Chinese deity at Tai O on Lantau Island yesterday. Enter the dragon boats for a taste of color - Hundreds of boats will race to the beat of drums as festivities get under way for the Tuen Ng celebration. At today's Tuen Ng festival, hundreds of dragon boat teams will row their hearts out in long, decorated boats to the beat of thundering drums. Traditionally celebrated in Chinese communities throughout East and Southeast Asia, dragon boat races now take place around the world. Yet Hong Kong still retains first place as the most popular dragon boat destination. Races today will be held at Stanley Beach, Sha Tin, Aberdeen, Tuen Mun, Tai Po, Discovery Bay on Lantau Island, Sai Kung in the New Territories and on the outlying island of Cheung Chau. The races at Stanley Beach, where more than 200 local and international teams will compete, usually attract the largest crowds. Spectators should arrive early at the venues to find a good viewing spot, and treat themselves to some jung, rice and meat dumplings wrapped in bamboo leaves that are a traditional Tuen Ng festival snack. The festival commemorates the legend of one of China's earliest dissidents, the poet and statesman Qu Yuan (Wat Yuen in Cantonese) who drowned himself in the Miluo River near present-day Changsha , Hunan province, in protest against imperial corruption. Villagers rowed their boats into the river to try to retrieve him, all the while beating drums and dropping jung into the water to keep fish from devouring Qu Yuan's body. A more traditional ritual with a distinctly local flavour is the Deities Parade at Tai O. Yesterday, local fisherman rowed statues of Chinese deities through the canals to visit four temples in the fishing village. Today, the fishermen will take the deities past homes along the canals, while residents burn incense and paper offerings. For those who miss this weekend's action, the Hong Kong Dragon Boat Association will stage a race on July 2 in Victoria Harbour from Tsim Sha Tsui. All events are free and accessible via public transport.

Tsang downplays hopes of mainland political post - Outgoing chief executive seems to be less than optimistic of joining Tung in top advisory body. With scandals plaguing the final months of his tenure as chief executive, Donald Tsang Yam-kuen does not seem to have high hopes of joining his predecessor in the mainland's top political advisory body. Tsang had been tipped to become a vice-chairman of the Chinese People's Political Consultative Conference (CPPCC), along with former chief executive Tung Chee-hwa. But this is now seen as unlikely since controversies broke out over Tsang's dealings with tycoons and his stays in luxury hotel suites at taxpayers' expense. "To serve our country is not something for you to say, it is [an opportunity] to be given to you," Tsang yesterday said of the matter. He was speaking after making a surprise appearance at a Government Information Services lunch, turning it into his farewell meeting with the media. Tsang stressed that he planned to pursue activities that would benefit the mainland and Hong Kong. However, they must not affect his successor Leung Chun-ying and the incoming administration, he said. He also ruled out writing a memoir or working in business, despite having been invited to become non-executive director of a firm. Furthermore, he would not become a commentator. In a veiled attack on former ministers who did that, he said: "If you cannot do something [during your term], you do not come out and criticise … comment on this and that, and say gibberish about the next administration." The chief executive said he had been busy packing to move out of his Government House residence at the end of the month. Tsang refused to say where he will move to, but hinted it might be to a hotel, making a wry reference to his stay in luxury hotel suites. "I had a plan but it was wrecked … I do not want to bother my relatives or neighbours, so what other choices are there?" he said, referring to his bargain deal to rent a Shenzhen penthouse from a tycoon with business interests in Hong Kong. He decided in March against doing that so as to clear doubts about whether he may have breached the anti-bribery law. But his pet koi will stay in the fung shui pond specially built for them at Government House, and Tsang joked that he had argued with his wife about what to keep or discard. As for his moving expenses, Tsang said it would not involve public funds. On Tuesday, the 67-year-old will embark on his last official visit to Beijing to officiate at an exhibition that celebrates the 15th anniversary of Hong Kong's handover. Tsang will attend the flag-raising ceremony on July 1 and then retire after serving in the government for nearly 45 years. He will later travel abroad to meet his relatives, and then return to Hong Kong permanently, as he has no plan to relocate. A devout Catholic, Tsang plans to spend his retirement learning Hebrew and reading the Bible.

 China*:  June 26 2012 Share

China's first manual space docking successful - The manual docking between Shenzhou IX spacecraft and the orbiting Tiangong-1 lab module has been successful as The Shenzhou spacecraft and Tiangong-1 lab module has been conjoined again. It means China has completely grasped the space rendezvous and docking technologies and had the fundamental abilities to build a space station. 

Chinese premier arrives in Argentina for official visit - Premier Wen Jiabao (R) inspects a guard of honor as he arrives in Buenos Aires, Argentina, June 23, 2012. Chinese Premier Wen Jiabao arrived here Saturday for an official visit to Argentina. In a written speech released upon his arrival, Wen said the two countries have seen frequent high-level exchange visits, deepening political mutual trust, and fruitful cooperation in such sectors as economy, trade, culture, education, science and technology since the establishment of diplomatic ties 40 years ago. The two countries have also enjoyed good coordination on international and regional issues, he said, adding that China is willing to work with Argentina to promote mutually beneficial cooperation. The Chinese premier said he expects to exchange views with the Argentine leaders on bilateral ties as well as on international and regional issues of common concern. Wen arrived here after concluding his two-day official visit to Uruguay.

US woos Chinese investment amid economic slump - Investment contracts worth 3.4 billion US dollars were signed by enterprises from both China and the United States during a forum held Saturday in eastern China's Jiangsu province. The investments, mostly directed toward the United States, were made among 85 enterprises from 21 Chinese cities and 20 US cities that participated in the second US-China Cities Forum on Economic Cooperation and Investment. A total of 42 investment projects were involved, covering 21 sectors -- including manufacturing, energy conservation and environmental protection, electronic information, chemical and pharmaceutical. At the forum, four Chinese enterprises also announced their investment projects in the United States, which totaled 70 million US dollars. More than 30 Chinese mayors and representatives of over a hundred Chinese enterprises, including private and small companies, attended the forum. The 100-strong delegation of US enterprises headed by 20 mayors came to the event, as the United States stepped up export-boosting efforts to rejuvenate its sluggish economy. "We hope that the investment from China will boost the US economy," US Treasury's Assistant Secretary Marisa Lago said at the opening ceremony. Lago said Chinese investment increased the fastest among all foreign investors in the United States, citing an annualized growth rate of 53 percent from 2005 to 2010 and 6 billion in total investment during the period. The forum, jointly sponsored by Chinese and US finance ministries, this year sought to form contracts on the basis of agreements reached between China and US top officials over the past year, including Chinese President Hu Jintao's visit to the United States in January 2011. It also focused more on investment this year compared with the first one held in Seattle from April 19-20 last year, during which no contracts were inked. US delegates have been trying to make the most of the tour. They came to China days before the forum, acquainting themselves with local officials and enterprises, looking for every chance, even if a chance only to make themselves first heard. Mike Rawlings, mayor of Dallas, Texas, said to revitalize the economy and increase jobs, the United States needs the support of international cooperation and foreign capital. Rawlings hoped that his trip to China would help deepen cooperation between his city with Chinese cities, and particularly, to open a direct air route from Dallas to China. In contrast to the eagerness on both sides, Chinese investment in the United States only accounts for a small share in the country's total foreign investment. Aside from a limited understanding of US local markets, another major obstacle for Chinese enterprises to invest in the nation is barriers set by its top officials, said Mei Yuxin, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. To address the concerns, Lago explained US foreign investment review principles in her speech. China's Finance Minister Xie Xuren said at the opening ceremony that China and the United States have different resource advantages, and strongly complement each other in economic development. Both countries were working to speed up economic restructuring and promote major reforms, which have presented bigger room for cooperation, he said. The two economies should expand cooperation in more sectors, especially in energy and environmental protection, biomedicine and infrastructure, so as to turn opportunities into tangible results, Xie said. China and the United States are each's second largest trading partner. Bilateral trade currently totals 446.6 billion US dollars.

Ren Zhengfei, CEO of Huawei Technologies, speaks at the International Economic Forum in St Petersburg, Russia on Friday. The founder and CEO of Chinese telecom equipment giant Huawei, which has faced security concerns in the US and Australia, is calling for global co-operation to improve data protection. Ren Zhengfei, in a rare public appearance at an economic forum on Friday, did not mention the controversy surrounding Huawei. But he warned data would be “vulnerable to attack again and again” because technology will develop faster than security. He gave no details of possible joint measures. “Cyber security is a common issue that the whole industry has to face,” Ren said at the St Petersburg International Economic Forum. “We must join hands to proactively address this issue.” Huawei Technologies, which Ren founded in 1987, has faced suspicions it is controlled by China’s ruling Communist Party or is a front for the military. The company has denied it is a security threat and says it is owned by its employees. Huawei was barred from bidding to work on a planned Australian high-speed internet network due to concerns about cyber attacks traced to China. The company had to unwind its purchase of a US computer company, 3Leaf Systems, last year after it failed to win approval from a government security panel. The Australian ban highlighted concern about Beijing’s cyber warfare efforts, a spate of hacking attempts aimed at Western companies and the role of Chinese equipment providers, which are expanding abroad. A US congressional panel has said it will investigate whether allowing Huawei and other Chinese makers of telecoms gear to expand in the United States might aid spying by Beijing. Huawei works with 45 of the 50 biggest global phone companies and says it has won the industry’s trust. It publicly invited the US government last year to investigate it in order to allay security concerns. Ren, a former engineer in the People’s Liberation Army, said the industry must rapidly develop reliable cyberspace technology to support development of education and social skills. “It is unfeasible to establish an absolutely impenetrable security assurance system that can keep data flowing securely within the networks [pipes] at all times,” Ren said, comparing the flood of data to the global inundation in the Hollywood disaster movie “this year.” “Data floods will never go away,” he said. “No matter how well we design and reinforce security assurance systems, they will be vulnerable to attacks again and again.” Ren is one of China’s most enigmatic business figures, rarely appearing in public and never talking to reporters. Forbes magazine has estimated his net worth at more than US$1 billion. Huawei reported profit of 11.6 billion yuan (HK$14.2 billion) last year on sales of 209.9 billion yuan. Profit fell 53 per cent from 2010, which Huawei blamed on weak global demand and the strength of China’s yuan against foreign currencies. After building its business on making the switching equipment that forms the backbone of phone and computer networks, Huawei is trying to become a business and consumer brand. It launched a campaign this year to sell smartphones under its own brand in the United States. Ren said Huawei plans to expand investment in Russia to take advantage of the country’s background in technology. Huawei already has a development lab in Moscow, one of 23 around the world, including one in Silicon Valley. “Russia has a very solid foundation in the military industry, rich assets of wisdom and plenty of talent,” Ren said. “This foundation endows Russia with unique advantages in developing the information industry.”

Balcony farmers are taking root - Beijing residents grow vegetables and plants on their building's roof. With growing wealth, concerns about food safety and the fever for online shopping, more urbanites are taking to farming on their own terms. Zheng Jinran reports in Beijing. The perfect storm of two major trends in China - online shopping and growing concerns about food safety - has given birth to a generation of urban farmers. More urban residents, many of whom are young people between the ages of 25 to 35 living in metropolises such as Beijing, are growing vegetables and herbs on their balconies or rented farmland in the suburbs, and turning to Taobao, a major online shopping service provider in China, to start their apartment gardens. Online searches for vegetable seeds at Taobao has increased by 280 percent over the past year, according to the company. "That means, every day, more than 6,000 people went to online shops at Taobao expecting to buy seeds and tools that can convert their balconies into a small vegetable garden," says Lu Qi, a public relations officer from Taobao. Xue Ling, 26, has been planting vegetables on the balcony of her apartment in Jinan, capital of Shandong province, since 2010. "It's the only way to keep my food, at least the vegetables, clean and safe," she says. "Then I found out that many of my friends have realized the importance of eating vegetables. They have been busy planting this year and asked for my help to get tools for them," says Xue, who opened a shop for vegetable seeds in April because of the demand. "The sales in my shop are much higher than I expected. More than 2,000 bags of seeds have been sold since then," she says. "They plant vegetables not to save money but to guarantee food safety," Lu says. A number of food scandals have rocked the nation in recent years, including the discovery that cucumbers were found with contraceptives and another incident where leeks were found filled with toxic pesticides. The latest crop to join the list of tainted foods is the Yantai apple, which were found wrapped in paper bags containing chemicals. Xu Jian, 36, an urban farmer in Hangzhou, Zhejiang province, spent about 1,000 yuan ($158) in seeds and organic fertilizer on farmland he rented. He paid 3,560 yuan to rent the 30-square-meter farmland for two years. But the move did not come without its consequences: His mother moved out of their hometown to help him plant the vegetables. "Planting vegetables by myself may cost more money than buying them from the market and they might consume extra energy. But the risk of having polluted food is everywhere. I don't want my 3-year-old daughter to suffer from any of it. It is great fun to plant in the farmland and share the spoils with my colleagues," he says, adding that every weekend his family drives to the farmland. Taobao has taken notice of the demand for vegetables. In addition to selling seeds and tools for urban farmers, the major online shopping provider has begun selling fresh vegetables and other organic food like rice on an independent website called as of early June. "About 1,000 farms and companies want to join and provide their organic products on this new platform," Lu says. "But these green products such as fresh vegetables have special requirement in packaging and transporting, so the sales are not large." For those urbanites who crave a bigger plot to grow their crops, the website has a bigger plan: Offering farmland for its users to rent. The option should be available in June. Taobao will soon release rules to regulate land owners and tenants. The website will also soon provide a platform where plots on a farm will be offered for rent. "But in the initial state, only residents in Hangzhou and Shanghai can enjoy this new service," Lu says, adding that it could possibly expand to cover all cities in China in the near future. "More cities will see the free and convenient exchange of extra vegetables or other agricultural products," he says. "But there are many problems in achieving this goal, including the packaging and we don't know when it will come to fruition." Xu's contract for the farmland he rents will end in December. "I'll still rent some land to plant vegetables, but maybe this time I'll try to do it through the website. I hope it will work to offer me and more people with appropriate land options," he says.

Hong Kong*:  June 25 2012 Share

China’s state-owned insurer PICC (SEHK: 2328) Group has secured approval from the Hong Kong stock exchange for a planned initial public offering of up to US$3 billion, though volatile markets mean a sale is unlikely to take place anytime soon, a source with direct knowledge of the matter said. PICC is planning to raise as much as $6 billion through a dual listing in Hong Kong and Shanghai, sources previously told reporters. If successful, the combined fund raising could potentially be Asia’s biggest offering, ahead of Malaysian plantation operator Felda Global Ventures Holdings’ US$3.1 billion deal. PICC, formally known as People’s Insurance Company of China Group, will join other Chinese banks and insurers looking to raise funds to bolster their balance sheets and meet regulatory requirements on capital adequacy ratios. The Hong Kong stock exchange approval paves the way for PICC, one of China’s largest insurers, to launch its offer as early as next week. But PICC, the parent of China’s largest property insurer PICC Property & Casualty, is in no hurry to launch the offer next week given the difficult market conditions, said the source, declining to be identified because the information was confidential. Calls to PICC in Beijing were not answered because of a national holiday in China. Last month, PICC added 14 more banks including Goldman Sachs , Morgan Stanley and UBS to help underwrite the Hong Kong tranche of the IPO, taking the total number of banks that may end up working on the offer to a record 17. The IPO would help PICC raise funds and inject capital into Hong Kong-listed PICC Property & Casualty to improve the unit’s capital adequacy and solvency ratios, ratings agency Moody’s Investors Service said in a report earlier this year. The benchmark Hang Seng index is down about 12 per cent since reaching a peak for the year in late February, while the index of financial services firms has tumbled 17.5 per cent over the same period. Plunging global equity markets have slowed IPOs and stock offerings in the region, with volumes in Asia ex-Japan down 47.5 per cent this year through mid-June to US$67.8 billion, according to Thomson Reuters data. In Hong Kong alone, IPOs have had their slowest start in about four years with deal volumes 85 per cent lower in the first five months of the year.

Ngong Ping 360 resumed services in April after undergoing repairs. Cable car adds day pass to halt drop in visitors - Lantau attraction teams up with bus firm and Tai O boat operator after 40pc fewer locals make trip. The 40 per cent decline in local visitors to the Lantau cable car since it reopened two months ago has prompted it to join forces with bus and boat operators to boost business. General admissions were down 10 per cent, while the number of overseas and mainland visitors had returned to the levels seen before the closure in January, the Ngong Ping 360 company said. It blamed the rainy weather for the drop in visitors, denying that it was related to a lack of confidence in the tourist attraction. The 5.7-kilometre cable car route between Tung Chung and Ngong Ping was closed from January 25, when vibrations triggered a sensor on the bullwheel, which winds the cable, bringing the system to a halt. About 800 passengers were left stranded in the gondolas in mid-air for two hours on an extremely cold day, 3 degrees Celsius. The service resumed on April 5 after repairs. Ngong Ping 360 managing director Wilson Shao Shing-ming said the drop in local visitors had declined further since its reopening. At the beginning of April, the number of local visitors was at 70 to 80 per cent of patronage before the closure. Then it deteriorated, and was now only at 60 per cent. "That shows it's nothing about confidence," he said. "Otherwise, the situation should be the opposite, with fewer visitors in the beginning." Shao said the rainy weather in the past two months had deterred locals from going out, but the effect on tourists was minimal, as they were only in the city for a few days. Before the closure, the attraction received 4,000 people a day on weekdays, and 7,000 on weekends. Shao said the cable car had stepped up monitoring of vibrations, which was done every two weeks, and other signs of abrasion, and it had not noticed anything abnormal. The attraction has co-operated with New Lantao Bus and a Tai O boat operator to launch a day pass, which includes a return trip on the cable car, unlimited trips on more than 20 bus routes and a boat trip in Tai O. The passes range from HK$180 to HK$240 for adults, depending on the type of gondola a person chooses. Visitors can save 15 to 30 per cent off the original price. Tickets are available from next Friday. Shao said the attraction expected the day pass to bring in more local visitors who wanted to explore more of the island. He hoped the new package could attract 100 to 200 more people a day on the cable car. Matthew Wong Leung-pak, managing director of Kwoon Chung Bus, which operates New Lantao Bus, said Ngong Ping 360 had stolen some of its business in the beginning, but he hoped their co-operation could attract more visitors to Lantau. The attraction comprises the cable car and the Ngong Ping Village - a Buddhist-themed tourism facility.

HKU staff set for Shenzhen role - Seven professors will work at university's new hospital over the border - but they 'will not be there to teach mainland doctors how to do, but how to think'. Seven professors from the University of Hong Kong will head sections at the university's Shenzhen hospital, due to open next month, the hospital's honorary chief executive announced yesterday. Dr Leong Che-hung, who is also the university council chairman and an Executive Council member, said this would not lead to manpower losses at hospitals in Hong Kong as the university would be able to recruit extra medical staff in Hong Kong to compensate. The professors also work in hospitals in Hong Kong, including the university's teaching hospital Queen Mary, Pok Fu Lam, but each affected university department will be allowed to recruit at least three extra professors, funded by the Shenzhen government. The hospital in Shenzhen's Futian district will be the largest public hospital in Shenzhen with a 3.5 billion yuan (HK$4.3 billion) investment by the municipal government. After several delays, the hospital has scheduled its trial run for July 1, starting with outpatient services including health checks and family medicine. It would later provide services in five specialities on top of primary care, and will ultimately have 2,000 beds, Leong said. He was still worried about differences in culture and practices between Hong Kong and the mainland - including corruption and sourcing of transplant organs - but hoped they would be solved in the trial period. The University of Hong Kong-Shenzhen Hospital, funded by the Shenzhen government and managed by the university, has recruited 12 service chiefs, of which seven are the veteran professors. They include head of surgery Dr Lo Chung-mau and head of microbiology Professor Yuen Kwok-yung. The dean of the university's faculty of medicine, Professor Lee Sum-ping, compared them to visiting conductors helping an orchestra of skilled musicians interpret pieces. "They will not be there to teach mainland doctors how to do, but how to think," he said. "We want to bring to them the workflows and professional conduct [of Hong Kong hospitals]." Leong said that in an effort to prevent corruption it was written into staff contracts that receiving bribes from patients - a common practice in mainland hospitals - would lead to immediate expulsion. But policies on such matters as transplant organ sources had yet to be worked out. Leong added that the seven professors would see patients at the new hospital, but their main responsibility would be to transfer values. They would remain as university staff, splitting their time between Hong Kong and Shenzhen. Less than two weeks from the opening, Leong said the hospital was not yet ready for site visits. "We are afraid there may still be uneven floorboards and piles of refuse," he said. Asked if the hospital was ready to start, Leong said services would be launched stage by stage, starting with those regarded as low risk. The hospital will receive about 300 patients a day in the first three months, with 80 beds available as back-up. Outpatients will be charged 200 yuan a time. Lee said the hospital had so far recruited 28 doctors, about 100 nurses and 160 other staff on the mainland, and planned to have 500 to 600 staff by the end of the year. Once the new hospital was running smoothly, medical students at the university would have placements there.

Building Department officers inspect a second suspected illegal structure at Chief Executive-elect Leung Chun-ying's house on Peel Drive, The Peak, on Friday. Another five illegal structures – including a 200-sq-ft basement – were found at Leung Chun-ying’s home on Friday, sparking calls for inquiries into the behaviour of the incoming chief executive. Six illegal structures have been found at Leung’s home in the last two days. Pan-democrats are planning to take the case to the Independent Commission Against Corruption and will also lodge a petition against the results of the chief executive election in March. They questioned the integrity of the city’s incoming chief executive and accused him of covering up the illegal structures at his house on The Peak, in remarks to electors. Leung said last year he knew there were no illegal structures at his home because he had consulted building professionals on the matter. The incoming chief executive apologised publicly on Thursday over the first unauthorised structure reported at his home on Peel Drive, on The Peak. Leung said he did not know the structure, a 100-sq-ft glass enclosure, required approval from buildings officials. He removed the structure hastily following media inquiries. The five structures, discovered on Friday, included a wooden pergola in his garden. This was reported by Ming Pao Daily. Four were discovered during an inspection by Buildings Department officers on Friday. These include a 200-sq-ft basement under the car park, a shelter for the car park, a 40-sq-ft, one-storey structure and a metal gate. Leung said he had believed these structures were in compliance with building regulations and had no intention of hiding them. The structures were in place when he bought the house more than 10 years ago, he said. “I have never attempted to hide these structures. In the past I have invited more than 100 members of the media to visit my home many times,” he said. “It is my negligence to have failed to notice that they are illegal.” “I also acted to deal with the structures immediately after the Buildings Department notified me of the irregularities.” Workers hired by Leung were dismantling the pergola on Friday afternoon. Leung said he would remove the other four structures soon, and would ask Building Department officers to check the work when it was finished. The Democratic Party’s Lee Wing-tat said the party was considering lodging a petition against the result of the chief executive election in March. He accused Leung of telling voters his home had no illegal structures, in order to win votes. Leung won the chief executive election after the popularity of his main rival, Henry Tang Ying-yen, was battered when an illegal basement was found at Tang’s home. “[Leung’s] claim eventually led some electors not to vote for his rival, Tang. That was a serious thing,” Lee said. “Time is running short, as an election petition has to be filed within three months after the election day, meaning we have to apply before Monday [June 25],” said Lee. Meanwhile, the People Power group plans to lodge a complaint with the graftbuster on Monday over Leung’s denial of illegal structures, lawmaker Wong Yuk-man said on Friday. Leung might have breached election laws by making a false claim that he had no illegal structure at his home, Wong said. The radical pan-democratic group will also complain to the Institute of Surveyors, questioning Leung’s professional ethics. “As a veteran surveyor, it was totally unacceptable that he has a series of illegal structures in his own home,” said Wong. “It is an integrity problem, as he could have made false statements during the election at the height of the illegal structures controversy surrounding Henry Tang Ying-yen.” The incoming chief executive apologised publicly on Thursday over the first unauthorised structure reported at his house. He said he did not know the structure, a 100-sq-ft glass enclosure, required approval from buildings officials.

 China*:  June 25 2012 Share

China's deep-sea submersible completes 3rd dive in Mariana Trench - The Jiaolong completed its third dive into the Mariana Trench and returned to the mother ship with a biological sample on Friday.

A group of elderly people exercising in a public park in Beijing. Retirement housing comprises less than 0.1 per cent of housing stock on the mainland, which is inadequate. Incentives urged to boost retirement projects - Beijing should use financial carrots to encourage the development of homes for the elderly as the population gets older, says property analyst. Beijing should spur the development of retirement housing for the mainland's growing population of senior citizens by offering incentives to private developers and investors, an analyst says. Thomas Lam, head of Greater China research at Knight Frank, says developers and investors are still searching for a viable business model despite the strong demand. "The government and the Social Security Fund should take the initiative to help support retirement housing by offering incentives to developers to build this specialist form of housing," said Lam, adding that tax incentives or construction subsidies could be considered. Municipal governments could sell land earmarked for retirement homes at lower prices, and the fund could initiate a pilot partnership scheme with private developers to provide affordable housing, Lam wrote in a report this month. The mainland's housing market mainly consists of private housing and affordable social housing. Only a small portion of serviced apartments and retirement homes are provided for the elderly. In contrast, retirement housing is well established in the West. They comprise roughly 9 per cent of housing stock in America and about 2 per cent in Britain - compared with less than 0.1 per cent in China. However, some developers have begun investing in retirement housing on the mainland due to the market's strong potential. For instance, China Vanke, the nation's biggest listed property developer by assets, is building a retirement housing project in Beijing's Fangshan district. It will reportedly launch the project by year-end. Meanwhile, Poly Real Estate plans to market its retirement community project in Beijing this year and start a new project in Shanghai next year. Other developers and insurance firms have also invested in various such projects, Knight Frank says. Nevertheless, the mainland's retirement housing market remains nascent, Lam says. "The financing of homes for the elderly is difficult," Lam said. "Banks are unwilling to offer mortgage loans to the elderly, fearing foreclosures due to death." Consequently, even senior citizens with one or more properties can find it hard to finance their purchase of such flats. That's particularly given the lack of reverse mortgages, which are popular among American senior citizens since they allow owners to borrow money against the value of their homes. Developers' reluctance to invest in retirement housing projects is also due to the higher costs involved in meeting customers' need for specialist facilities, a location close to good transport links, and a noise-free environment. The ensuing property prices become unaffordable for many retirees as developers seek to recoup these higher costs. But with continued strong economic growth and greater co-operation between the private and public sectors, retirement housing can play a more important role in the property market, Lam says.

A spokesman for China's Foreign Ministry said Thursday that the country's oil imports from Iran are "fully reasonable and legitimate," and do not violate any relevant UN Security Council resolutions. "China's importing of Iranian oil is based on its own economic development needs," spokesman Hong Lei told a daily news briefing. "This is fully reasonable and legitimate." Hong made the remarks when asked whether China is moving to cut its imports of Iranian oil in a bid to seek exemptions from new US sanctions. Stressing that China has repeatedly expressed its position on this issue, Hong said China is always against one country imposing unilateral sanctions on a certain country, and "it is even less acceptable for such unilateral sanctions to be imposed on a third country." "China's imports do not undermine the interests of a third party, nor do they go against any relevant UN Security Council resolutions," Hong said. The United States said last week that it will exempt seven economies from Iran oil sanctions under its National Defense Authorization Act for 2012. The seven economies -- India, Malaysia, the Republic of Korea, South Africa, Sri Lanka, Turkey and Taiwan -- have "significantly" reduced their oil imports from Tehran, said US Secretary of State Hillary Clinton. The sanctions, which the US may impose starting June 28, aim to strangle Iran's nuclear program by cutting funding from its oil industry. China is not among the economies exempt from the US sanctions.

Ambassadors' wives learn to make Chinese dim sum - Dim sum chef Liu Hongqing teaches (left) Liudmyla Skyrda, wife of the Ukrainian ambassador to China, and Lithuanian Ambassador Extraordinary and Plenipotentiary to China Lina Antanaviciene how to make pan-fried dumplings in the Legendale Hotel, Beijing, on Thursday. About five female ambassadors and 15 ambassadors' wives took part in the cooking demonstration. About five female ambassadors and 15 ambassadors' wives take part in a cooking demonstration in the Legendale Hotel, Beijing, on Thursday.

China, Brazil in currency deal - China's Premier Wen Jiabao shakes hands with Brazil's President Dilma Rousseff during the Rio+20 United Nations Conference on Sustainable Development, in Rio de Janeiro, on Thursday. China and Brazil on Thursday announced that they'll swap as much as $30 billion in their respective currencies, upgrading relations between the two biggest emerging economies to a "comprehensive strategic partnership". The currency swap, worth 190 billion yuan or 60 billion Brazilian reais, is the first step toward a broader agreement with Russia, India and South Africa to allow members of the so-called BRICS group of emerging markets to pool resources as a bulwark against financial crises outside their borders, according to Brazil's finance minister, Guido Mantega. "This reinforces our financial reserves at a moment when the global economy is stressed," Mantega told a news conference at the United Nations' sustainable-development conference, Rio+20, in Rio de Janeiro. "We recognize that developed economies are still in crisis. The BRICS are the most dynamic and we'll continue to expand." The agreement was sealed while Premier Wen Jiabao was in Brazil, the first visit by a Chinese premier to South America's biggest country in 16 years. During the meeting, Wen said the two countries should seize the opportunity to enhance financial cooperation, encourage settlement of bilateral transactions in local currencies and direct trading of the real and the yuan. After nearly 90 minutes of closed-door talks between Wen and Brazil's President Dilma Rousseff, their governments issued a joint statement covering a broad set of agreements that will bind the two countries more closely. One is a 10-year cooperation pact including expanded two-way investments and increased exports of Brazilian-made goods to China. Another agreement lets Brazil's Embraer sell Legacy 650 business jets in China and manufacture Legacy 600 and 650 aircraft in China through Aviation Corporation of China, or Avic. Embraer said its China joint venture, Harbin Aircraft Ltd, will deliver its first plane in late 2013. Others deals announced Thursday involve cooperation in a range of sectors - aerospace, technology, agriculture and education. The two countries decided to establish a foreign minister-level comprehensive strategic dialogue at least once a year and will jointly launch the first of two weather satellites within 12 months. Analysts say both China and Brazil have cooperated on major international and regional issues to uphold the interests of developing countries. The elevation of their partnership to one of global strategic importance highlights their growing influence in the world economy. Swap arrangements, which allow nations' central banks to lend money to each other to keep markets liquid, and the pooling of foreign-exchange reserves are contingency measures aimed at containing crises such as the one roiling the eurozone, analysts said. Colin Bradford, a senior fellow at the Centre for International Governance Innovation, a think tank in Canada, said it makes sense for the BRICS to adopt such a mechanism and shouldn't in any way be seen as a threat to Western economic powers. The BRICS "are providing the same game to make the global economy work," said Bradford, who attended the G20 meeting in Mexico as an observer. "There is a way in which these kinds of revolutions can be healthy for the overall global community." Zhang Yuyan, director of the Institute of World Economics and Politics, affiliated with the Chinese Academy of Social Sciences, said it makes sense that emerging-market countries should set up such mechanisms themselves, as they "know their current conditions and demands much better". Amid the global economic slowdown, Zhang said, the pooling of foreign-exchange reserves will help BRICS countries fight market illiquidity, bolster their immunity to financial crises and increase global confidence. The currency-swap agreement came out of a meeting between Wen and Rousseff on the sidelines of Rio+20. It went a step beyond the recently concluded G20 summit in Los Cabos, Mexico, where on Monday leaders from all five BRICS members said that they would consider forming a foreign-exchange reserve pool and a swap arrangement as financial problems threaten to spread globally. Brazil's exports to China in 2011 were $44.3 billion, an increase of more than 43 percent from the previous year, the national Ministry of Development, Industry and Trade reported. In 2009, growth in trade with China made the country -with over 14 percent of total trade flows to the South American nation -Brazil's No 1 trading partner, surpassing the United States.

Hong Kong*:  June 24 2012 Share

Morgan Stanley had its long-term debt rating lowered by two notches - The health of 15 of the world’s largest financial institutions including HSBC has been called into serious question after Moody’s downgraded their credit ratings, citing risk exposure and the euro zone crisis. Some of the biggest names in banking – including HSBC, Goldman Sachs, Barclays, Citigroup and Deutsche Bank – saw their ratings slashed on Thursday, spelling increased investor scrutiny and potentially higher borrowing costs. Moody’s said, in essence, that the banks risked massive losses and that they were exposed to the roiling financial crisis and to each other. “All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” said Greg Bauer, Moody’s global banking managing. In total four firms were downgraded by one notch, 10 firms by two notches and one by three notches. Holding companies of a number of the same banks were also downgraded. Credit Suisse faced the largest downgrade, with its rating slashed three levels from Aa1 to A1. Under-pressure US banking giant Morgan Stanley was seen as winning a partial victory by only receiving a two-notch downgrade. Morgan Stanley welcomed the partial reprieve, but nevertheless questioned the Moody’s decision. “While Moody’s revised ratings are better than its initial guidance of up to three notches, we believe the ratings still do not fully reflect the key strategic actions we have taken in recent years,” it said in a statement. Royal Bank of Scotland, which was also downgraded, called the ratings change “backward-looking,” saying it did not recognise the “substantial improvements the group has made to its balance sheet, funding and risk profile.” Citigroup was similarly unimpressed with the Moody’s verdict. “Citi strongly disagrees with Moody’s analysis of the banking industry and firmly believes its downgrade of Citi is arbitrary and completely unwarranted.” In a jab Citi added that “sophisticated” investors no longer depend heavily on ratings agencies to assess credit risk. Ratings agencies like Moody’s were pilloried for failing to predict the cataclysm that engulfed Wall Street and the world beginning in 2008, and Thursday’s move was part of a sector-wide effort to tighten up ratings. But even so, the swathe of downgrades amounts to a fresh indictment of the health of the global financial system, which has seen wave after wave of crisis over the last four years. Since the sub-prime crisis banks have seen the value of their assets slump and their access to capital shrink, which has repeatedly forced taxpayers and central banks to step in to provide liquidity. Many governments have been forced to provide bailouts, straining already precarious public finances. On Thursday Spain became the latest to signal a bank bailout. Madrid announced that its crisis-torn banks need up to 62 billion euros (US$78 billion) to survive. It is expected to formally ask its euro zone partners for the cash on Friday. The 15 banks downgraded were: Bank of America, Barclays, Citigroup, Credit Suisse, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Royal Bank of Scotland, BNP Paribas, Credit Agricole, Deutsche Bank, Royal Bank of Canada, Societe Generale and UBS. Moody’s began its review of the banks in February, and the move was widely anticipated, helping to send the Dow Jones Industrial Average sharply lower on Thursday. In a separate announcement, Moody’s also downgraded the long-term debt rating of Lloyds TSB by one notch. The British bank said the change would have “limited impact on our funding costs and market capacity,” pointing out that its short-term funding rating remained unchanged.

The outgoing transport and housing secretary cautioned the next administration yesterday, saying that it would take public support as well as hard-driving ministers to resolve today's complex social issues. Eva Cheng, who decided to quit in what she described as an ever-more challenging political environment, said the administration of chief executive-elect Leung Chun-ying must live up to what it had promised, to gain broad support. "The people expect you to live up to your promise; the new administration should do what it pledged," she said "[To do so] you can't just rely on a tough minister or the government alone … but have to involve all the stakeholders." Cheng's remarks follow persistent speculation about tension between her and Secretary for Development Carrie Lam Cheng Yuet-ngor - the "fighter minister" widely tipped to be the future chief secretary. Leung, who has criticised the pace of public housing construction, promised during his campaign to cut to four years the existing five-year plan to build 75,000 public housing flats. Cheng said that would not be easy. "Construction works take just 36 months, it is the preliminary works [that are time-consuming]: applications for change of land use, slope works," Cheng said. "It is not just about compressing the procedures. How do you make more land and how are you going to build it?" As to whether Lam's control over the land bank had made it difficult for her bureau to find appropriate sites for public housing, Cheng said it would be a good thing if merging land and housing into the same bureau allowed projects to run more smoothly and efficiently. Leung has proposed separating housing from the Transport and Housing Bureau. Cheng cautioned her successor - tipped to be former highways chief Mak Chai-kwong - to be flexible to keep up with the ever-changing public sentiment. She noted how the MTR's process to craft a fare-adjustment policy had been hailed as open and transparent back in 2007, but nonetheless sparked discontent in recent years as it led to three fare rises during times of high inflation. She said the bureau was considering adding service quality as a factor to limit MTR fare increases if its services fell below benchmarks. Cheng said she would not work for a private firm after retiring.

Beijing and Shanghai both leaped more than 20 places to overtake Hong Kong as the most expensive place in China, a human resources agency's global survey of 400 cities found. Researchers at ECA said it was the first time both Beijing and Shanghai had been significantly more expensive than Hong Kong in the cost of living survey for expatriates. They said the weak US dollar and inflation on the mainland were the reasons. "The cost of living differential between [mainland cities and Hong Kong] has consistently narrowed since 2007," Lee Quane, Asia regional director of ECA International, said. However, all three cities had seen steep climbs in the global ranking, they said, which could mean it was increasingly costly for overseas talent to be relocated to the region. ECA carries out its survey twice a year, in March and September, comparing a basket of commonly purchased consumer goods and services in about 400 cities worldwide. In this year's March study, Beijing jumped 28 places to be ranked 20th globally, while Shanghai, previously 49th in March last year, is now 26th. Hong Kong, now 36th, climbing 11 places from 47th, is still more expensive than Manhattan at 40th but cheaper than Paris (34th). In the top 50 most expensive locations in Asia, the two mainland cities were fifth and sixth, respectively, behind the top four Japanese cities - Tokyo, Nagoya, Yokohama and Kobe. Hong Kong was ninth behind Seoul (7th) and Singapore. Shenzhen and Guangzhou were 10th and 11th. The last time Beijing and Shanghai overtook Hong Kong in the cost of living survey was in 2009. But Hong Kong climbed back up the rankings in the next two years. Quane said researchers recorded double-digit inflation in some mainland cities, and this had affected Hong Kong, which partly explained a rise in the city's ranking. "Hong Kong's inflation is relatively high compared with other developed economies," Quane said. "The problem with Hong Kong is that prices paid are significantly affected by what's going on elsewhere." Asked whether unpegging the Hong Kong dollar from the US currency would help, he refused to comment. But he said Hong Kong in recent years had become a cheaper city because of the currency peg to a weak greenback. Joseph Yam Chi-kwong, former chief executive of the Hong Kong Monetary Authority, sparked heated debate when he published a paper suggesting the dollar peg, in existence for 29 years, could be scrapped. The government said a review was not needed.

The secrets of Emperor Qianlong's Forbidden City garden will be revealed in Hong Kong today. They form an exhibition - A Lofty Retreat from the Red Dust: The Secret Garden of Emperor Qianlong - that opens at the Hong Kong Museum of Art. It features 93 artefacts from the garden. Also known as the Ningshou Gong Garden, it was created by the ruler as a retreat after he resigned the throne at the age of 85, in the 60th year of his reign in the 18th century. The Museum of Art is the first in Asia to show the exhibits, which come from the Palace Museum in Beijing. The most precious among them, according to Wang Zilin, a research fellow of the Palace Museum, are a bowl and vase with floral medallions in enamel, produced in the unique Jing Tai Lan art form, and a revolving vase, which looks plain from the outside but has another enamelled vase inside. The exhibition also presents a collection of panoramic paintings depicting the everyday life of the emperor's concubines and children, portraits of Emperor Qianlong (1711-1799) and his furniture collection. Wang says the artefacts not only showcase the exquisite craftsmanship of the Qing dynasty but also the spiritual world and religious beliefs of the emperor. The exhibition will be the first in Hong Kong to use QR (quick response) codes for visitors to get more details about the artefacts. They can scan the codes printed on the brochure and outside the exhibition hall with their smart-phones, or with the audio devices provided by the museum. A 3D representation of the complex of pavilions, rockeries and courtyards, along with four interactive programmes, enable visitors to get a more visual understanding of the garden. Chiu Kwong-chiu, director of the design and cultural studies workshop who is in charge of the multimedia programmes in the exhibition, has been studying the architectural structure of the garden with his team since 2005. The Hong Kong Jockey Club Charities Trust donated HK$6.1 million to pay for half the cost of the exhibition, jointly presented by the Leisure and Cultural Services Department and Palace Museum. It runs until October 14. Yesterday, Betty Fung Ching Suk-yee, director of Leisure and Cultural Services, and Dr Shan Jixiang, director of the Palace Museum, signed a memorandum of understanding pledging to stage a joint exhibition every year for the next five years in either Hong Kong or Beijing. Preparations are already underway for two of the exhibitions: one on palace attire in the Qing dynasty and another on portraits and paintings from the Ming and Qing dynasties. Some Hong Kong artwork will be put on display in Beijing as well. The two cities will also exchange ideas on how to preserve artefacts and educate people.

 China*:  June 24 2012 Share

New city to run disputed island chains - Beijing approves 'Sansha' city to manage the Spratly, Paracel, and Macclesfield Bank islands after Vietnam passes a new maritime law asserting its sovereignty. China has approved a plan to establish a new city to administer three disputed island chains in the South China Sea, in its latest attempt to step up its territorial claims in the region. The State Council's announcement came as Deputy Foreign Minister Zhang Zhijun summoned Nguyen Van Tho, Vietnam's ambassador to China, to protest against a new Vietnamese law governing the contested Paracel and Spratly island chains. The Ministry of Civil Affairs said a new prefecture-level city named Sansha would be established to manage the Spratly, Paracel and Macclesfield Bank island chains and their surrounding waters. Its local government will be based on Woody Island, also known as Yongxing Island, which is part of the Paracels. A ministry spokesman said the establishment of Sansha would help improve "administrative management" on the three islands and their future development. "It is also conducive to protecting the oceanic environment of the South China Sea," the spokesman said, adding that China first discovered and named the reefs, islets and the surrounding waters of the three islands. China, he said, had long exercised sovereign control over the area. Analysts said the announcement was a response to Vietnam's new law, but one described Beijing's move as being more symbolic than an effective way of deterring Hanoi. "It is just a display of sovereignty rather than a concrete move," said Du Jifeng, an expert in Southeast Asian affairs at the Chinese Academy of Social Sciences. "But it paves the way for China to send more people to administer the islands in the future." Zhuang Guotu, director of the Centre for Southeast Asian Studies at Xiamen University, said Sansha would facilitate China's territorial claims in the South China Sea. "The management of the islands is conducted by different government bodies now, such as oceanic authorities," Zhang said. "The management can be more concentrated on the setting up of a new city. The city government can send ships to protect sovereignty and can take legal action in the future." Vietnam's National Assembly yesterday approved a law stipulating that all foreign ships passing through the disputed waters must notify Vietnamese authorities. China's deputy foreign minister then summoned Vietnam's ambassador to protest that Vietnam's law was a "serious violation" and demanded an "immediate correction". "Vietnam's maritime law, declaring sovereignty and jurisdiction over the Paracel and Spratly islands, seriously violate China's territorial sovereignty. China expresses its resolute and vehement opposition," Zhang Zhijun was quoted in a Foreign Ministry statement as saying. Du compared China's row with Vietnam to tensions with the Philippines over the Scarborough Shoal. "The use of legal means to claim sovereignty may be the first aggressive move by Vietnam," he said.

Although foreign firms can now invest in Europe at lower prices, stakes in strong businesses like Louis Vuitton remain expensive as a result of a flight to quality. Chinese investors receive warm welcome in Europe - Beleaguered EU economies benefit from mergers with and acquisitions by firms from China that take advantage of depressed valuations amid ongoing debt crisis. China cannot save the troubled European economy, but Europe will be an important target of Chinese investment in the coming years, analysts say. "It is up to Europeans to resolve the euro crisis. Chinese investment in Europe may be helpful for specific companies or sectors but will not resolve the crisis. Chinese investment may be viewed as a vote of confidence in Europe or an opportunistic attempt to pick up fire-sale assets," said Woo Yuen Pau, president of the Asia Pacific Foundation of Canada, a Canadian think tank on Asia. Peter Williamson, from the Judge Business School of Cambridge University in Britain, said the euro crisis meant governments would be more welcoming of Chinese investment. "European companies that need funding and access to Chinese and other emerging markets will welcome Chinese investments," he said. Belgian Deputy Prime Minister Didier Reynders said at the recent China Global Outbound Investment Summit in Beijing that China was willing to co-operate with the EU. "We have received support from China and the [International Monetary Fund (IMF)]. Belgium is discussing with China investments in areas like water treatment." Reynders also said it would be a catastrophe for Greece to leave the euro. "I will try to persuade Greece not to leave the euro." China backed the European Union during a Group of 20 summit in Mexico on Tuesday by pledging US$43 billion for a firewall fund to stave off future crises. The contribution from China increased to US$456 billion the IMF war chest to help shield countries from fallout from the euro-zone debt crisis. In the first quarter, Chinese investment in Europe was US$1.7 billion, the same as in the first quarter of last year, A Capital, a private equity fund that invests in Europe in partnership with Chinese firms, said. However, excluding the resources sector, the EU accounted for about 80 per cent of China's mergers and acquisitions (M&A) in the first quarter, Andre Loesekrug-Pietri, chairman of A Capital, said. He said Europe accounted for 34 per cent of China's overseas M&A. "A Capital anticipates that proportion will remain stable in the next five years," Loesekrug-Pietri said. China's M&A in Europe total US$3.97 billion so far this year. At the current pace, they will fall short of the US$16.15 billion chalked up last year, according to data from Mergermarket, a media company that provides information on M&A activity. "The EU accounts for 30 per cent of Chinese exports, while the US accounts for 16 per cent. When your biggest customer's home consumption is not bullish, it is in everybody's interest that the situation in the EU gets better," Loesekrug-Pietri said. Felix Egli, a lawyer at Vischer, a Swiss law firm, said: "I see Chinese investment in the EU increasing this year. Chinese like to invest when prices are low. "Chinese companies should not take advantage of the European debt crisis to buy targets that are cheap. Chinese companies think they are getting technology in Europe at a low price, but I don't think it is a smart strategy. If you buy a bankrupt company, the risk is high." Egli cited a case where a Chinese company set up an office in Europe. "The European management cheated the Chinese company when they realised control from China was not efficient. Then the Chinese company had to get out of Europe, and there was litigation," he said. Loesekrug-Pietri said it was a "complete myth" that Chinese companies were buying cheap in the EU. "The good companies are as expensive as ever, some even more so, because of the flight to quality. If you want to invest in Louis Vuitton, it's very expensive, he said." Marshall Nicholson, managing director of China International Capital Corporation said at a recent panel on "Asia M&A in Europe" in Hong Kong: "The problem with M&A is not a lack of funds but lack of credit confidence in Europe. Once you get that resolved, M&A will take off. If you have stability in the market, more Chinese state-owned enterprises will be interested in acquisitions in Europe." Loesekrug-Pietri said: "A lot of the EU's problems stem from perception. The perception of risk has become a real risk, and this is serious. "There is a misunderstanding that because of Europe's sovereign debt crisis, everything in the EU is in trouble. Europe is still a hub for innovation in areas like energy, aerospace, automotive, healthcare." China accounted for 29 of the 948 foreign acquisitions in Europe last year, while Japan made 47 acquisitions totalling US$23.3 billion in Europe, more than China, according to Mergermarket research manager Shunsuke Okano.

China's top military body has ordered thousands of senior officers to report their assets, in a move military analysts describe as a "groundbreaking" step in the fight against corruption in the armed forces. After approval by the Central Military Commission (CMC), the People's Liberation Army's top decision-making body, the PLA's General Political Department and its disciplinary watchdog jointly issued an amendment to an asset-reporting regulation demanding that senior military officers register and report their income, property assets and investments to higher supervisory bodies, the People's Liberation Army Daily reported yesterday. The report said the move had been initiated by commission chairman Hu Jintao, also state president, saying the new measure was consistent with graft-busting efforts championed by Hu. The PLA, and especially its top and mid-level leadership, has long been plagued by corruption scandals which have tarnished the military's image at home and abroad. Lieutenant General Gu Junshan, 56, was sacked as deputy chief of the PLA's General Logistics Department in January and placed under investigation on suspicion of taking bribes. General Liu Yuan, the political commissar of the General Logistics Department, is widely believed to be one of those behind Gu's downfall. In December, one of Liu's close friends, agricultural researcher Zhang Musheng, said in a speech that a lieutenant general from Shanxi had bought a plot of land in the heart of Shanghai for 20 million yuan (HK$24.6 million) a mu (667 square metres) and resold it to a businessman for 2 billion yuan a mu. Macau-based International Military Association president Antony Wong Dong said the amendment was a "long-awaited and groundbreaking" measure to combat blatant and widespread corruption among senior PLA officers. Wong said Hu had chosen the right time to start his campaign within the army because of rising public anger at corruption, particularly since the downfall of disgraced former Chongqing party boss Bo Xilai and his former right-hand man Wang Lijun, the municipality's former police chief. "Of course, Hu may also want to make use of the chance to eradicate the influence of former CMC chairman Jiang Zemin's allies in the military and pave a smooth path for his successor Xi Jinping," Wong said. Xi is generally expected to replace Hu as the party's general secretary after the 18th national congress later this year. But Wong added that there was likely to be an extraordinary amount of resistance to the anti-corruption push among senior military officers.

Hong Kong*:  June 23 2012 Share

People visit the Hong Kong Jewellery and Gem Fair held at the convention and exhibition center of Hong Kong, China, June 21, 2012.

Chief executive elect Leung Chun-ying's house at No 4 Peel Rise on The Peak. Incoming chief executive Leung Chun-ying apologised publicly on Thursday for an illegal structure found at his home on The Peak. Ming Pao Daily reported on Thursday that Leung’s house at No 4 Peel Rise had an unauthorised, 110-sq-ft balcony with large glass windows. Leung said he removed the structure on Monday immediately after the paper’s inquiries. He did not know the structure had to be authorised because it was not fully enclosed, he said. ”I and my frequent visitors never thought the structure did not comply with the Building Ordinance,” he said. “It was an inadvertent error.” Lawmakers demanded that Leung give details as to whether he should pay a premium for building the structure. The Democratic Party’s Lee Wing-tat challenged Leung’s claim that he didn’t know Buildings Department approval was necessary. “He is a surveyor himself, and it is unlikely he did not know the structure was illegal,” Lee said, calling for an investigation by the department. The legislator for the architectural, surveying and planning sector, Professor Patrick Lau Sau-shing,also urged Leung to give more details about the balcony. Early this year, a scandal involving an illegal basement at the home of Leung’s election rival, Henry Tang Ying-yen, sparked controversy and battered his popularity. A number of senior government officials, including Education Secretary Michael Suen Ming-yeung, also had to remove illegal structures from their homes last year after local media reported their existence.

The legislature dealt a serious blow to incoming chief executive Leung Chun-ying's plans on Thursday, refusing to fast-track his proposed government revamp. The government’s motion fell one vote short of a majority. Lawmakers had been asked to approve a special request that the restructuring resolution be tabled before other outstanding bills. Now the administration may have to wait for the Legislative Council to finish scrutinising at least seven bills before the revamp plan is tabled for debate – making it almost impossible for the scheme to be approved before Leung takes office on July 1. Leung said the government asked for a fast-track because of the recent filibuster, which delayed other issues. He will discuss what to do next with his aides. Among the 54 lawmakers present in the morning, 27 voted in favour of the motion, 25 opposed it and two did not vote – Regina Ip Lau Suk-yee of the New People’s Party and Legco president Tsang Yok-sing. Six lawmakers were absent. Outgoing Chief Secretary Stephen Lam Sui-lung, who represented the government, had an air of disbelief as he marched out of the Legco chamber, while some pan-democratic lawmakers shouted in joy. Lam said he had tried his best to secure support, but understood that such matters can be unpredictable. Ip said that although she supported the revamp, it would be unreasonable for Legco to give in and reschedule its agenda. “As a pro-establishment legislator, I am protecting the institution and the constitution. I do not have to be the government’s tool or even slave,” Ip said. “Safeguarding the integrity of the legislature means safeguarding our rule of law.” Pro-government lawmakers Chim Pui-chung and Paul Tse Wai-chun joined 23 pan-democratic lawmakers in voting against the motion. Democratic Party chairman Albert Ho Chun-yan said Leung should learn a lesson, and not push his proposals too hard. If the resolution had been fast-tracked, it would still face more than 150 amendments raised by pan-democrats, requiring an estimated 30 hours of debate and voting. The revamp plan also faces a race against time in winning approval from the Finance Committee, where it could face nearly 1,000 amendments by pan-democrats trying to delay its passage.

Calls to help poor via tax subsidies - Hong Kong Council of Social Services says income of many households could be increased with ''negative income tax'', but proposal not without controversy. The tax system could be reformed to increase the incomes of poor families and spare them the stigmatising effect of applying for handouts, say two members of a committee to tackle poverty. The decades-old Comprehensive Social Security Assistance scheme has been criticised as a rigid mechanism that leaves out many needy people who earn too much to fall under the safety net. Some jobless households would also prefer not to have to apply for funds in order to avoid negative stereotyping. "If their income cannot satisfy their needs, there should be some sort of subsidy," said Christine Fang Meng-sang, chief executive officer of the Hong Kong Council of Social Service, yesterday in a radio programme, referring to what she called "negative income tax". There were 430,000 CSSA recipients, as of May, according to the Social Welfare Department. On Tuesday, chief executive-elect Leung Chun-ying said he did not intend to bring down the income of the wealthy to assist the poor. Tax credits are already used in some areas of Europe and North America, which subsidise the poor by channelling income tax to them, although it is controversial due to reports of abuse. In the United States, the concept of an "earned income tax credit" system has been incorporated into the tax regime, whereby the working poor can reduce their tax liability or get refunds from the government. According to local reports, the EITC programme led to nearly 30 million taxpayers receiving tax refunds averaging US$2,240 last year. The president of the Hong Kong Taxation Institute of Hong Kong, Philip Hung, said that reaching out to those in need, most of whom do not pay taxes, under such a mechanism would be difficult. "It is difficult to spot them. If it is done through applications, there must be a way to verify [the need]," he said, adding that administrative costs for such schemes would inevitably be high. He said that while it remained unclear whether eligible recipients would receive subsidies or get a rebate from their previous tax payments, businesses may feel the scheme is unfair since they cannot get tax rebates when business is bad. Hung hoped the poverty commission would invite not only welfare activists but also business representatives as well as professionals in order to provide a more balanced picture of how the poor can be helped. Leung vowed at the weekend to revive the anti-poverty commission as soon as he takes over. It means resurrecting an initiative his electoral rival, Henry Tang Ying-yen, presided over from 2005 to 2007. The only business representative on the committee, Henry Cheng, chairman of New World, was a late-joining supporter of Leung in the chief executive race. He initially supported Tang but switched sides for "unity" reasons, his aides said. According to the Census Department, the majority of workers do not pay tax while 80 per cent of the lowest taxpayers contribute just 10 per cent of total salary and property tax revenue. With the majority of the city's households not paying tax, another committee member, Law Chi-kwong, said the government must draw a clear line to define where to draw the line under which workers would be assisted by "negative tax schemes". This line would be the de facto poverty line, he added. On Monday, government statistics revealed that the city's wealth gap had reached a 30-year high, according to the Gini coefficient, a globally recognised measure of inequality.

The night sky above Victoria Harbour will be lit by 50,000 fireworks on July 1 to mark the 15th anniversary of the handover. Nine skyscrapers will take part in a pyrotechnics show to beef up the main 23-minute display that begins at 8pm. The fireworks, to be fired from five barges, will cost HK$8 million. To make sure everyone knows it's the 15th birthday of the SAR, the number 15 in Chinese characters will appear 24 times in the first section of the display. Wilson Mao Wai-shing, of Pyromagic Multimedia Productions, said the specially designed "HK 15" will appear alongside bauhinias and rain brocade willows. The pyrotechnics display will link nine towers, from the Sun Hung Kai Centre in Wan Chai, to Jardine House in Central. The others include Central Plaza, Hopewell Centre, Harcourt House, CITIC Tower, Queensway Government Offices, Cheung Kong Center, and the HSBC Main Building. Owing to the inauguration of the new government on the same day, Chinese General Chamber of Commerce chairman Jonathan Choi Koon-shum said the last scene of the show will be called Scale New Heights. Dandelions, red suns and red waves will crackle in profusion, and be shown with a Putonghua song, A Better Tomorrow, to signify the hope of a more prosperous SAR under the new administration. "Had it not been the start of a new government, the fireworks display would have been on a smaller scale," Choi said. "The fireworks display can be seen as a present to the new government and all Hongkongers." Meanwhile, the head of Beijing's liaison office in Hong Kong, Peng Qinghua, said "isolated conflicts" between the SAR and the mainland should not be exaggerated. Speaking to Xinhua News Agency, Peng said a fuss should not be made about economic, legal and cultural differences between the two places. He said they should seek common ground and exercise mutual respect to solve problems. Asked if measures such as the Closer Economic Partnership Arrangement may be seen as presents from Beijing, Peng said to some extent they are, although they are also necessary for mainland development. Peng said while Hong Kong is facing new challenges - and deep-rooted problems 15 years on from the end of British rule - it has numerous opportunities to turn crises into opportunities. He believes the economy will continue to progress as long as the SAR seeks changes while maintaining overall stability, as proposed by the new government under Leung Chung-ying.

The Legislative Council yesterday pressed ahead with scrutinizing a bill to revamp the government structure despite pan-democrats saying it was unethical for it to be given preference over other bills. Legislators debated a motion put forward by Chief Secretary Stephen Lam Sui-lung calling on Legco to suspend house rules to allow the debate on Chief Executive-elect Leung Chun-ying's revamp of the government's structure to move forward. Legco president Jasper Tsang Yok-sing on Tuesday gave the green light to move the reform bill ahead of other pending bills already tabled for scrutiny. People Power lawmakers Albert Chan Wai-yip and Raymond Wong Yuk-man are planning to move more than 100 amendments to the bill, which introduces two new bureaus and appoints deputies to the chief and financial secretaries. Democratic Party lawmaker Fred Li Wah-ming said at yesterday's meeting that Tsang had ignored the customary 12-day notice for prioritizing the bill and that such a decision was unethical. Civic Party lawmaker Margaret Ng Ngoi-yee said: "The government is showing disrespect for Legco's independence by pressing lawmakers to pass the bill relating to the government restructuring in a hasty manner. Such a move has deprived lawmakers of their duty to scrutinize an important bill thoroughly." Pro-democracy independent lawmaker Andrew Cheng Kar-foo depicted the government's move as "playing a dirty football game aimed at saving the face of Leung to ensure that officials of his incoming team can attend a swearing-in ceremony together on July 1." Civic Party lawmaker Ronny Tong Ka-wah said he was shocked that Tsang had exercised his power to prioritize the government's structure revamp bill without listening to lawmakers' opinions. He saw this as an attempt to give the government face. But Federation of Trade Unions lawmaker Wong Kwok-kin slammed pro-democracy lawmakers for launching a filibuster to hold up the bill. "The reputation of Legco has been severely tarnished after pro-democracy lawmakers launched the earlier filibuster," he said. FTU lawmaker Wong Kwok-hing said Leung's governance will be greatly undermined if he launches his policy initiatives with a crippled ruling team. However, Democratic Alliance for the Betterment and Progress of Hong Kong lawmaker Starry Lee Wai-king backed Tsang's decision, saying that it was a matter of urgency for Legco to scrutinize the bill first to enable the new government to carry out its work. The Legco debate continues today.

The man tipped to become the next housing chief says property prices are so high in popular urban areas that he cannot afford to live there. Anthony Cheung Bing-leung, president of the Hong Kong Institute of Education, said he is moving to somewhere else in Tai Po when he vacates the property that comes with the job which ends on June 30. "I have looked at a lot of housing information in urban areas and the prices are very high," he said. "That's why I will be staying in Tai Po. I cannot afford to move to the urban areas." Cheung, also chairman of the Housing Authority's subsidized housing committee and an Executive Council member, is moving into a 2,000-square-foot apartment. "Can many in the new generation afford the downpayment within 10 years of their graduation?" he asked. "If we use this criteria, it seems property prices at present are very high. "If many people think the government must intervene, the government should consider doing so." But he said it would be wrong to make the generalization all properties in Hong Kong are too expensive as prices reflect supply and demand. Cheung agreed with Chief Executive-elect Leung Chun-ying's earlier proposal that property sales in some projects should be made only to Hongkongers. The proposal was part of Leung's election platform, which was based on helping people who cannot afford a private flat and are also not eligible for subsidized housing. Cheung believes this proposal can be carried out by organizations such as the Hong Kong Housing Society and the Urban Renewal Authority. It should be implemented because there has been concern that overseas buyers will drive up prices, he added. However, Leung has since changed his stance. On Monday he said it was not time to implement this proposal because the entry of mainlanders into the market has not greatly affected Hongkongers. Cheung also said that if the prices of new subsidized flats are set at 70 percent of market levels, they may still be too high for the target market. But the Housing Authority has not made a decision on price levels yet, he added. The final level will be one that the public will find affordable. Meanwhile, Cheung said the Hong Kong Institute of Education is now being run as a university, though it will be about two years before it can be accredited as one.

Ten per cent of inquiries after the mainland launch of Positano were from Hongkongers, so the developer decided to launch the project in Hong Kong too. Positano is not the most luxurious mainland villa project that has been released for sale in Hong Kong, nor the most expensive. But it has captured the attention of local buyers because of its location - in the Daya Bay district on the South China Sea. Bordered by Shenzhen's Dapeng Peninsula to the west and Huizhou to the north and east, the district is home to four nuclear reactors, the nearest just a 30-minute drive away. But Luo Yongsheng, a manager for the Shenzhen-based developer, dismisses suggestions that Hong Kong buyers may be put off because of the nuclear disaster caused by the earthquake and tsunami in Japan in March last year. "I don't think they will be put off by that. It's far from the [nuclear power] stations," he said. A sales manager, Chen Ting, said: "We think many Hong Kong people will be interested in our project." Positano was first marketed to mainland buyers two years ago, and the developer decided to launch the project in Hong Kong after discovering about 10 per cent of buyers attracted by the mainland launch were from Hong Kong, Chen said. "In the beginning we had no intention to market the villas in Hong Kong, but when we discovered how big the interest was we decided to launch it here as well," she said. The project is being developed in two phases. The first comprises three separate precincts, the first of which was launched on the market at the end of 2010. The first and second precincts will eventually offer a total of 445 townhouses and houses. Chen said 297 had been sold so far at an average price of 8,500 yuan per square metre. The second phase of the project will provide flats only. Positano is not in a district well-known and popular among Hong Kong buyers. But Chen believed the spaciousness of the units and competitive prices would appeal to them. The developer has appointed Midland China as the agent in Hong Kong and will release 38 townhouses and two 885 square metre houses for sale in the city at 7,500 yuan to 8,000 yuan per square metre. Six townhouses, which are between 195 and 287 square metres, are on the market at about 1.4 million yuan each. Most of the buyers in the project had bought for investment or vacation, said Chen, who pointed out that the development was just a 30-minute drive from Shenzhen's Lo Wu station which was linked to the MTR's East Rail.

Recent media reports have accused SCMP Editor-in-Chief Wang Xiangwei of trying to downplay the story of the suspicious death of dissident Li Wangyang. The controversy erupted after a Post subeditor widely circulated an email exchange between himself and Wang over the way the story was handled. Below is Wang's note to newspaper staff about the issue. I am five months into my role as Editor-in-Chief and today I face a situation where my leadership and our newspaper's integrity have been called into question. This matter should have been resolved in a much more constructive way. However, it gives me an opportunity to state where I stand as editor in a city where we hold press freedom dear. Firstly please allow me to state the facts. I want to make it absolutely clear that I did not try to downplay the Li Wangyang story. Despite local media insinuations, the case of the hanging of dissident Li Wangyang was reported extensively in our newspaper. Although I chose not to prioritise coverage on the first day it broke until more facts and details surrounding the circumstances of this case could be established, we subsequently splashed no less than three front pages, two leaders, plus several other prominent positions including two articles by myself. We all have a huge responsibility to deliver news that continues the journalistic heritage we have inherited. I am proud of our team and believe we are able to continue to build upon this legacy of excellence together. Finally, as I have said on many occasions, I welcome all discussion and debate in a timely, professional and mutually respectful manner. Trusted, authoritative reporting remains our legacy, our strength and our purpose. Let's continue to build upon that.

The outgoing secretary for the civil service yesterday called Chief Executive Donald Tsang Yam-kuen's acceptance of gifts from tycoons "misconduct", but said her boss had not broken any rules because none applied to him. Denise Yue Chung-yee's remarks came in response to a question at a farewell media session about the recent uproar over Tsang's rides on private yachts and jets and his bargain deal to rent a luxury penthouse in Shenzhen. The scandals have exposed gaps in the anti-graft law, which currently does not apply to the chief executive. An independent commission to review the situation chaired by former chief justice Andrew Li Kwok-nang said earlier this month that the exception was "totally inappropriate". "I agree [Tsang's dealings] were misconduct," Yue said. "But he did not violate any rule since there was no mechanism whatsoever until Andrew Li Kwok-nang proposed one." Yue, who turns 60 in October, will end 38 years of government service on July 1, when she and Tsang leave to make way for the administration of chief executive-elect Leung Chun-ying. Reflecting on the Tsang case, Yue recalled the conflict of interest controversy row surrounding her decision in 2008 to let former housing chief Leung Chin-man work for a developer with whom he had official dealings. She called the case "a milestone" that taught her a lesson. In 2004, Leung Chin-man, who was then housing director, played a key role in the sale of a government housing estate to a subsidiary of New World Development at a discount. After retiring four years later, he drew fire when the company gave him a job, a move some saw as a deferred reward for helping the sale. The scandal led last year to restrictions on post-civil-service employment for government officials. Yue said it was important for government officials to avoid both real and perceived conflicts of interest. "Apparently there was a gap between my balance and public perception between an individual's right to work and public interests," said Yue, who has been leading the city's 160,000 civil servants since January 2006. "It was a milestone and I learnt my lesson." Yue said what she would miss most after retirement was the sense of satisfaction she got from her job, but joked about her retirement plans. "Maybe I will regain that sense of satisfaction by watching early-bird movies, which are offered at a discount," Yue said. Yue has no plans to take up a paid job herself. "Even if I do you do not have to worry about me. I can recite the post-service rules to its last word."

The chances of chief executive-elect Leung Chun-ying's proposed government revamp plan being fast-tracked in the Legislative Council hung in the balance last night. After six hours of debate yesterday afternoon, lawmakers had yet to approve a special request to allow the restructuring resolution - aimed at transferring statutory functions among officials - to be tabled before other outstanding bills. If the request is denied, Leung could be dealt a serious blow in getting his revamp plan approved in Legco before he takes office on July 1. In Legco, lawmakers must scrutinise government bills before settling resolutions, unless they agree to reschedule the agenda. The administration had planned to table the restructuring resolution during yesterday's council meeting, but there were still 19 government bills or motions - expected to require dozens of hours of debate - before the resolution could be tabled. Late on Tuesday night the government asked lawmakers to give priority to scrutinising the resolution, and forego a customary 12-day notice period. Legco president Tsang Yok-sing exercised his discretion to dispense with the notice period. Pan-democratic lawmakers decried Tsang's decision, which they described as another attempt to undermine Legco's traditions following his unprecedented move last month to kill the debate on a controversial by-election law. Chief Secretary Stephen Lam Sui-lung said yesterday the resolution was "time critical", to allow the new government to have its preferred bureaucratic structure in place to implement policies. Tsang also defended his decision to sidestep the notice period, as the government had given notice as early as last month that the resolution would be tabled yesterday. He also agreed on the urgency of settling the restructuring resolution. But pan-democrats were unconvinced. Democratic Party chairman Albert Ho Chun-yan said the government was making a "sneak attack" by making the special request just hours before the council meeting. "Leung was high-handed in asking for his revamp plan to be scrutinised before other livelihood-related bills," Ho said. "It was also inappropriate for Tsang to exercise his discretion so readily." Legal sector lawmaker Margaret Ng Ngoi-yee, of the Civic Party, criticised the government for sacrificing the "mutual trust" between the legislature and the executive branches by ignoring the long-standing procedures of Legco. However, Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said the backlog in the legislature was the fault of previous filibustering by pan-democrats. Even if the resolution was given priority to be scrutinised, it would face more than 150 amendments raised by pan-democrats, which are expected to require 30 hours of debate and voting. The revamp plan also faces a race against time in terms of getting approval from the Finance Committee, where it could face nearly 1,000 amendments by pan-democrats in an attempt to delay its passage. The debate continues today.

Launching the platform are (from left) Euroclear Bank's Olivier Grimonpont, HKMA's Peter Pang, and JPMorgan's Kirit Bhatia. The Monetary Authority has teamed up with Euroclear Bank and JPMorgan to launch a cross-border platform to allow international banks to more easily tap yuan funds in the city. Under a deal signed between the HKMA and the other two banks yesterday, the three parties will next Monday provide a cross-border repurchase (repo) platform that lets banks that deposit bonds into any one of them use the bonds as collateral for short-term funding in yuan, Hong Kong dollars, US dollars or euros. Euroclear has US$28 trillion worth of assets while JPMorgan has US$17.9 trillion worth of assets deposited by other banks that could be used as collateral for lending. HKMA deputy chief executive Peter Pang Sing-tong said the new platform is particularly important for Hong Kong as it sought to act as a leading offshore yuan trading centre. "Under the new platform, international banks that have US treasuries or other bonds deposited in Euroclear Bank or JPMorgan can use the bonds as collateral to borrow from a Hong Kong lender in yuan or Hong Kong dollars," Pang said. "This would strengthen Hong Kong's role as a centre for international institutions to tap the yuan for their clients in order to settle trades or to invest in any yuan investment products. This would be useful for overseas banks as now there are an increasing number of cross-border trades settled in yuan while there are also increasing numbers of issues of yuan-denominated 'dim sum' bonds." Hong Kong banks had 674 billion yuan (HK$828.3 billion) of customer and institutional investors' deposits as at the end of April, the biggest yuan pool outside the mainland. While most international banks have deposited their bonds in either Euroclear Bank or JPMorgan, few Hong Kong lenders have a relationship with these two lenders and cannot accept their bonds as collateral for yuan loans. The new platform will establish that link and add new channels for Hong Kong lenders to lend out their yuan on hand. In addition, international firms that want to tap yuan funds could also have an additional channel to tap the yuan. Pang said more than 30 Hong Kong banks and about 10 international banks had expressed interest in the platform. Euroclear Bank Asia-Pacific regional head Olivier Grimonpont said banks, pension companies and hedge funds were also expected to use the platform's cross-border repo services. JPMorgan managing director and head of technical sales of Asia ex-Japan Kirit Bhatia said developed capital markets had daily repo outstanding volumes as high as 40 per cent to 50 per cent of GDP, but in Asia, the repo volume was less than 2 per cent of GDP. He said the new platform would encourage take-off of the repo system in the region.

Home rents hit a new high last month, lifted by record flat prices. The latest research from property agency Midland Realty showed that average rents at 100 private housing estates it monitored had risen for three consecutive months to HK$21.15 per sq ft last month, up 5.3 per cent from December. The highest-ever average monthly rent was slightly higher than previous peaks of HK$20.94 per sq ft set in August of last year, and the HK$20.85 recorded in 1997. "It's because home prices have increased a lot in the last few months, which has boosted the confidence of home owners to ask for higher rents," said the agency's chief analyst, Buggle Lau Ka-fai, adding that summer was the busy season for the flat rental market. A 600 sq ft flat at Taikoo Shing was leased for HK$17,200 a month early last month, or HK$28.70 per sq ft. This was 5.5 per cent higher than the rent for another flat of the same size in the same housing estate, which was leased in December and generated HK$16,300 in monthly rental, or HK$27.20 per sq ft, Lau said. Selling prices for flats at Taikoo Shing had surged 10.7 per cent over the same period to HK$10,500 per sq ft, Lau said, adding that overall home prices in Hong Kong had risen by around 11 per cent in the first five months of this year. Monthly rents at Park Island, Ma Wan, increased 6.5 per cent from HK$16.50 per sq ft in December to HK$17.60 last month, the research found. The study also found that 72 per cent of all flats leased between January and May were priced at HK$10,000 or more, up from 69 per cent last year. Despite the rise in rentals, Lau said the market was still healthy because household income had risen 20 to 30 per cent since 1997. The share of household income represented by monthly rent has dropped to 35 per cent, from 50 per cent in 1997. David Chan, a director at Ricacorp Properties, said that in recent years many mainland students had arrived in the city looking for flats between June and September. This affected supply and rents, particularly for flats along the MTR line between Hung Hom and Tai Po. Chan said rents had been rising gradually, adding that Ricacorp expected them to go up by 5 to 10 per cent this year. Midland's research came as executive councillor Professor Anthony Cheung Bing-leung, tipped to be the next housing minister, yesterday said the government would consider helping home-seekers to buy flats if prices stayed high. Cheung, who is also the president of the Institute of Education, said he found local property prices too high while he was looking for a new home. He said prices of new subsidised Home Ownership Scheme flats should be set at affordable levels, which might require discounts of 30 per cent on market prices. Centaline Property said prices of second-hand flats hit a record last month. The Centa-City Leading Index, which tracks secondary-market prices, shows that prices during the first week of May surpassed the previous record set in October 1997.

Stewart Leung says the Singaporean model of government intervention will not work in Hong Kong. Don't flood the market, developers say - Developers respond to C.Y. Leung's hints at more subsidised housing and restrictions on sales. Developers have called on the chief executive-elect not to flood the property market with subsidised housing, saying the Singaporean model of government intervention is unsuitable for Hong Kong. The administration under Leung Chun-ying should "leave some space" for private developers to survive, said Stewart Leung Chi-kin, chairman of the Real Estate Developers Association executive committee. His comments, in an interview with the South China Morning Post (SEHK: 0583) on Monday, came after the city's future leader had repeatedly spoken of the need to increase provision of public housing and floated a proposal to restrict some sales to local buyers when the market is overheated. "We hope to have an opportunity to talk with the chief executive-elect about policy," Stewart Leung said. "I trust the government will strike a balance and … leave an area for private developers to do business." The association has not met Leung Chun-ying since he was elected in March. Stewart Leung said he did not object to the policy of speeding up the building of public rental homes. He also did not mind the construction of flats for sale under the Home Ownership Scheme, as long as there were not so many that they took away the private sector's market share. He did not comment specifically on the "Hong Kong property for Hong Kong residents" policy, under which some new middle-class developments would only be sold to local buyers. Analysts believe that in forming this plan the new chief executive had looked at Singapore, which has a similar policy as well as market domination by subsidised housing. "The government needs help from private developers to build the economy," Stewart Leung said. "It cannot act like the Singaporean government, which manipulates [the market]. There must be a balance." He expects an abundant supply of private flats in the next two to three years because of the many land sales in the past two years. "I am most afraid the market will be flooded." On a proposed law to regulate sales of new flats, Leung said it was too early to decide whether it was worthwhile going to court over it. Asked if developers were afraid the new leader would take revenge on developers, who supported his chief rival, Henry Tang Ying-yen, Leung said they were not worried. "I haven't heard developers mentioning this … we respect whoever won the election and we will co-operate with him."

 China*:  June 23 2012 Share

Weekend Plans in Hong Kong: Dragon Boat Races - Saturday is the Dragon Boat Festival holiday, dedicated to the old sport of paddling long wooden boats. The most popular races among the corporate crowd takes place at Stanley Main Beach. But for more local flavor, head out to outlying villages like Tai O and Cheung Chau to catch fisherman associations vying for titles.

Models shine at final of New Silk Road Model Contest - Contestants competed during the western final of the New Silk Road Model Contest in Chengdu, southwestern China's Sichuan Province, June 20, 2012.

Astronaut Liu Yang's first night shift in Tiangong-1

China still major investment destination for MNC - Statistics show that the amount of foreign capitals used by China is decreasing. How should we look on China's foreign capital use? Regarding this question, the reporter interviewed a relevant official from the Ministry of Commerce of China (MOC). In the first five months of 2012, the number of new enterprises invested and established by foreign merchants in China was 9,261, down 12.16 percent compared to that of the same period of 2011, and the total amount of foreign capitals actually used by China was 47.11 billion U.S. dollars, down 1.91 percent compared to that of the same period of 2011. In May, the number of new enterprises invested and established by foreign merchants in China was 2,245, down 6.11 percent compared to that of May of 2011, and the total amount of foreign capitals actually used by China was about 9.23 billion U.S. dollars, up 0.05 percent compared to that of May of 2011. In first five months of 2012, the total amount of foreign capitals actually used by China had decreased by 1.91 percent and the flow direction of global direct investments has changed. Since the beginning of 2012, China's foreign capital use has been facing severe domestic and international situations. In terms of data, the total amount of foreign capitals actually used by China in the first five months had decreased by 1.19 percent and the amount had decreased for six successive months from November of 2011 to April of 2012. The official in charge of the Department of Foreign Investment Administration under the MOC said that various factors have led to some new changes in the flow direction of global direct investments. Domestically, various factors, including the rise of the labor cost and the short supply of land recourses, make foreign investment enterprises' operations in China still have certain difficulties. “It is expected that the total amount of foreign capitals used by China in the first half of 2012 will be fundamentally equal to that of the first half of 2011,” said the official. The amount of foreign capitals used by China in May of 2012 had increased by 0.05 percent compared to that of May of 2011. It was the first monthly positive growth in 2012 and has certain positive significance. However, experts believe that the growth rate of May was too small and the growth probably was just an individual case and had something to do with the fact that investments of certain projects were put in place collectively in May. It still needs observing whether the situation of China's foreign capital use will rise again or not. Percentage of the foreign capital used by the service industry keeps increasing and China still has certain advantages in absorbing foreign investments. The official also said that China still has certain advantages in absorbing foreign investments. For example, the rapidly-increasing domestic consumption market of China has offered a good development opportunity for foreign investors. The investment environment of China has been practically improved and China actions of cracking down on the property right infringement and fake and inferior products have achieved obvious effects. Multinational companies still regard China as a major target country of their investments. In the first five months of 2012, investments of many important projects were put in place successively, indicating that multinational companies still have firm confidence on the Chinese market, the official said. Recently, the Japan Bank for International Cooperation (JBIC) released a Survey Report on Overseas Business Conditions of Japanese Manufacturing Enterprises 2011, which indicated that Japanese manufacturers are expected to keep accelerating their pace of overseas expansion. While China and India remains the preferred destination for investment. Under complicated domestic and international situation, attracting foreign investment becomes an arduous task. “We will further expand the opening up of services and encourage foreign investment in strategic emerging industries, modern agriculture, modern service industry, energy saving and environmental protection industry, as well as guide foreign investors to invest more funds into central and western regions of China,” said the MOC official.

The Thai government will receive 10,000 tablet computers from China's Shenzhen Scope Scientific Development Co Ltd. on Friday, local media reported on Thursday. According to Captain Suraphol Navamawat, an adviser to the ICT minister, Shenzhen Scope is aiming to deliver all 400,000 tablets by August 18 by shipping 12,288 tablets every day for four days a week. He said the arrival schedule of the 10,000 tablets was postponed from Thursday to Friday, because the site where they are meant to be stored was not ready. Another contract for buying 500,000 more tablet computers has already been signed, and the company will start sending them one week after the initial order of 400,000 tablets has been completed, Suraphol said. The government planned to hand out 1 million tablets to Grade 1 primary school students as part of the "One Tablet per Child Program" -- providing each school child with a tablet computer, promised by the ruling Pheu Thai during last year's election campaign. The ICT Ministry inked the contract with Scope on May 10 requiring the company to deliver 400,000 units, priced $32.8 million, within 60 days.

Chinese factory makes London Olympics mascots - Female workers sew together the London 2012 Olympics mascot, Wenlock, in a factory in Dafeng city, East China's Jiangsu province on June 19, 2012. The factory has made and sent 350,000 mascots to the UK for the London 2012 Olympics and Paralympics. 

Mining rare earths in Jiangxi - Beijing hits back over rare earths - China releases estimates of its deposits to counter claims that its limits on mining of minerals needed for hi-tech products breaks global trade rules. Beijing stepped up its rebuttal of accusations that it broke global trade rules by restricting exports of key industrial materials known as rare earths, amid an ongoing trade dispute with the United States, the European Union and Japan. It also provided its own estimate for the mainland's rare earths reserves for the first time in an industry development white paper published by the State Council, or China's cabinet, yesterday. "China's restriction on mining of rare earths is aimed at protecting its environment and resources, which is in compliance with global trade rules," Gao Yunhu, deputy director of the Ministry of Industry and Information Technology's rare earths office, said in Beijing. The paper said the mainland had an estimated 18.59 million tonnes, or 23 per cent of the world's rare earth resources, compared to the United States Geological Survey's (USGS) estimate of 36 million tonnes, or 36 per cent of the global total. Office director Jia Yinsong said the USGS did not disclose the source of its data in its estimate of the mainland's resources, which raised questions about the data's comprehensiveness. The estimate in the white paper was backed by Ministry of Land and Resources' surveys, Jia said. Fan Guohe, a Shanghai-based analyst at Phillip Securities, said the ministry's data might be more reliable since the US data might not be supported by data collection in the field. The US, EU and Japan complained to the World Trade Organisation in March, alleging Beijing restricted free trade by imposing export quotas on rare earths, a group of 17 chemical elements that are relatively abundant but not often found in high enough concentrations to justify exploitation. The dispute over rare earths has made media headlines partly because China's export restriction is seen as a bargaining chip against Japan and the US on political issues, and because rare earths are increasingly used in hi-tech electronic appliances like mobile phones and flat-screen televisions, and clean energy products like wind turbines and electric car batteries. Despite the sharp price gains in 2009 and 2010, the paper said average prices of rare earths only rose by 2.5 times between 2000 and 2010, compared to 4.4 times for gold, 4.1 times for copper and 4.8 times for iron ore. This was because rare earth prices fell precipitously between 2000 and 2005 due to overexploitation and lax environmental regulation on the mainland, it added. Analysts said the trade dispute would take years to resolve and by then large-scale overseas mines would be re-opened or built to address global tight supply, which saw prices soar 1.2 to 14-fold in 2010. China cut export quotas from 65,609 tonnes in 2005 to 30,184 tonnes last year. It also imposed a moratorium on issuing new mining licences between 2009 and 2015, as it drives consolidation of the fragmented sector, remedies wasteful mining practices and tightens implementation of environmental protection rules.

President picks up 'pride of China' - Mainlanders appear divided over the significance of President Hu Jintao's move to pick up a Chinese flag sticker from the floor on the sidelines of the G20 summit. Pictures have appeared online showing Hu, standing next to his American counterpart, Barack Obama, bending over to pick up the sticker after a photo-taking session. Obama had placed his left hand on Hu's back before walking away. A caption on Xinhua's website said the stickers of other national flags were stepped upon by other leaders who walked away after the session, but only Hu picked up the Chinese flag sticker. It said Hu handled the sticker with care. Some internet users voiced their approval of Hu's action. "Hu is actually picking up the pride of China. I feel proud to be a Chinese," said one going by the name of Tongchangshui on Sina Weibo. Another said: "I feel that the president is getting down to earth and closer to the public." Someone else said: "This small action has touched the hearts of many people." Internet users reacted swiftly after Hu Jintao, watched by Obama, picked up the Chinese flag sticker. Don't let tough talk sour ties, Hu tells Obama - President warns US counterpart not to jeopardise progress between two powers as election-year rhetoric increasingly makes villain out of China. President Hu Jintao urged Barack Obama not to allow the politics of the US presidential election to damage relations between the two economic powers. Hu shared his concerns with Obama when the two world leaders met yesterday on the sidelines of the G20 summit in Los Cabos, Mexico. The pair have met a dozen times since Obama became president in early 2009, but their ties have been tested of late amid election-year calls in the US for tougher action against China. Hu acknowledged "new progress in the co-operative partnership with the United States", but he urged Washington to take a course on bilateral disputes that would avoid causing disturbances, referencing in particular Taiwan, to which the US supplies weapons. "We hope the US will be determined to implement positive and practical policies on China, removing domestic political interference and guiding public opinion," he was quoted by Xinhua as saying. "We hope the US will support the peaceful development of cross-strait relations with concrete actions and ensure a stable Sino-US relationship during the election year." Hu said China was willing to engage in frank communication with the US and to facilitate positive interaction in the Asia-Pacific region. "China expects the United States to respect China's interests and concerns, and [China] is open to further communication and co-ordination with the US on hot-button regional issues," he said.  He added that the Sino-US relationship had seen increasing global influence and that China was committed to forging a co-operative partnership with Washington. For his part, Obama said the talks provided "a good opportunity to recap the work" between the two nations. The Democratic US president has come under fire from his Republican rival Mitt Romney for not standing up to Beijing on economic issues. Romney has said that, if elected president, he would direct the US Treasury Department to list China as a currency manipulator and slap sanctions on China for unfair trade practices. "It is expected that Obama may use rhetoric against Beijing in the coming few months as part of his re-election campaign," said Professor Shi Yinhong , an expert in US affairs at Renmin University. Obama said during the talks that there had been "significant progress" in expanding trade and commercial opportunities with China, while Hu said that maintaining a robust and mutual trade relationship was of great significance to both countries and the world economy. Obama lobbied Hu for support from China - a veto-wielding permanent member of the United Nations Security Council - in the talks to end the bloodshed in Syria. China and Russia have frustrated the US, Britain and France by blocking stronger UN sanctions against Syrian President Bashar al-Assad. The two countries said two weeks ago that they had reached a unified stance on Syria, saying they opposed regime change through UN-backed intervention. "I wouldn't suggest that, at this point, the US and the rest of the international community are aligned with Russia and China in their positions, but I do think they recognise the grave dangers of all-out civil war," Obama told reporters after the talks. Xinhua made no reference to Syria in its reports.

The Chinese arms of all of the Big Four audit firms have been asked by US regulators to turn over documents related to audits of China-based companies listed in the United States, a person familiar with the matter said on Tuesday. The US Securities and Exchange Commission (SEC) has already filed an enforcement action against Deloitte's Shanghai arm seeking documents, but has not yet taken public enforcement action against the Chinese units of the other Big Four firms - Ernst & Young, PwC and KPMG - over Chinese audit papers. One legal expert said that now that the other firms had received formal requests for documents, it could be a matter of time before they were in the same position as Deloitte. "If they don't produce the documents upon request, then it's possible that the SEC could take adverse action the way they already have done in the case of Deloitte Shanghai," William Currier, a partner with law firm White & Case, said. On May 9, the SEC charged Deloitte's Shanghai arm with violating US securities laws by refusing to produce documents from an audit of an unnamed China-based company. The SEC said sanctions could include censure or revoking the firm's ability to practise before the commission. PwC confirmed that it received requests for documents. It did not say when the SEC asked for documents but said "at various times" it received formal and informal SEC requests for audit papers from China. "Like other firms who have received similar requests, in dealing with them we are confronted by conflicting laws between the United States and China," PwC said. KPMG declined to comment and Ernst & Young did not immediately respond to a request for comment. US authorities are increasingly impatient with their Chinese counterparts about not being allowed to inspect auditors of US-listed Chinese companies and a lack of co-operation in their investigations into alleged accountancy fraud. Lewis Ferguson, a board member of the US accountancy regulator, has called for "real progress towards a co-operative oversight agreement with regulators during … this year".

Hong Kong*:  June 22 2012 Share

Asia’s Millionaires Outnumber America’s - Good news for yacht sellers in Asia: There are more millionaires there than in any other region of the world. Asia is home to more millionaires than any other region in the world, according to a new report. The study, conducted by consultancy Capgemini and RBC Wealth Management, concluded the Asia-Pacific region now has 3.37 million high-net-worth individuals—defined as those with at least $1 million in investments, excluding principal homes, consumer goods and collectibles. That exceeds the 3.35 million headcount in North America. “In 2010, Asia surpassed Europe. In 2011, it became world’s largest,” said Andrew Turczyniak, head of RBC Wealth Management Asia. Still, North America’s richest accounted for $11.4 trillion in wealth, more than the $10.7 trillion controlled by Asian high-net-worth individuals and the $10.1 trillion in Europe. Slumping stock markets and global economic uncertainty have hurt the portfolios of the world’s richest: the global net worth of all high-net-worth individuals slid 1.7% last year, according to the report. Most of that vanishing wealth came from the portfolios of the so-called ultra high-net-worth individuals – those with more than $30 million in investable assets – as they tend to have more money tied to risky investments like hedge funds and commercial real estate, Mr. Turczyniak said. And while Asia as a whole is getting richer, falling stock markets have caused Hong Kong and India to see their ranks of the rich shrink dramatically. The number of millionaires fell by 17% and 18% in Hong Kong and India, respectively. Singapore, the country with the highest percentage of millionaire households, also saw a decrease. The city-state had 7.8% fewer millionaires in 2011 than in 2010. The U.S. saw its population of its most wealthy shrink 1.2%, but it retains the title as the country with the most high-net-worth individuals, counting 3.1 million among its ranks. Meanwhile, China’s economic boom keeps churning out more wealth: Its number of high-net-worth individuals rose 5.2% to 562,400 in 2011– the fourth-highest number in the world, behind the U.S., Japan and Germany. And despite the earthquake and a long-suffering economy, Japan also produced 4.8% more millionaires last year, thanks to the country’s high savings rate and a preference for conservative investments, Mr. Turczyniak said.

In Case of Euro Emergency - The financial health of Asian economies in the event of a euro-zone meltdown can be gauged by several indicators: 1. Percentage of an economy's GDP that comes from exports to the EU (a large number signals heavy trade reliance on Europe); 2. European bank lending as a percentage of an economy's GDP (a high percentage indicates significant exposure to European banks); 3. Foreign-exchange reserves as a percentage of GDP (large reserves give a country/region more of a buffer against financial shocks); 4. Government debt as a percentage of GDP (low debt levels give governments more room for stimulus spending). Greek elections may have assuaged fears of a European financial contagion spreading to Asia, at least for the moment. But as troubles brew in Spain, where borrowing costs shot up again Tuesday, and as Greece faces more painful cuts to meet bailout targets by September, many wonder who in Asia is most exposed should Europe's economy and financial system finally crack. Lessons from the 2008 financial crisis show that while all of Asia tends to get hit when the world economy shudders, the severity differs depending on which countries have the biggest trade and financial linkages to the rest of the world, and which are best-prepared with big currency reserves, flush government coffers and central banks with room to cut interest rates. In general, Asia has more room than the West to react with interest-rate cuts and government spending. But there are new wrinkles since 2008, and some countries, notably India, Vietnam and Japan, are in worse shape to weather a storm. "As we saw with Lehman, when you get a seizure in the global financial system, nobody can hide from that in the short run," says Richard Jerram, chief economist at the Bank of Singapore. In such a scenario—which analysts say could still occur if Greece falls short of its commitments and leaves the euro, or Spain and Italy wind up requiring a bailout Europe can't afford—Asian stocks and currencies would fall, shipping lanes would empty out, and lending to consumers and businesses would dry up, slowing economies. Asian economies that rely most heavily on trade—such as Singapore, Hong Kong, South Korea, Japan, Taiwan, Thailand and Malaysia—are likely in for a bigger blast in the event of a European meltdown. South Korea's prowess in exporting things like cars and smartphones makes up 50% of its gross domestic product. For Taiwan, it is 70% of its economic activity. "The EU remains a formidable export market for the region and cannot be easily replaced by other export markets, at least in the short run," says Sanjay Mathur, an economist at RBS. Economies that rely on international bank finance and investment also will feel the pinch. The International Monetary Fund estimates that during the 2008 crisis, for every 1% pullback in loans from foreign banks to Asia, domestic banks followed suit, contracting lending by 0.6%, starving credit to small businesses and exporters. As financial centers, Singapore and Hong Kong stand out in terms of their exposure to EU banks and would see big banks cut back on jobs. Malaysia has bank loans from Europe equal to 20% of its GDP, which is high for the region. A place like China, with a closed financial system, is more immune. Some of the economies most exposed through trade and finance have lots of ammunition to fight off a slump. Hong Kong and Singapore maintain massive rainy-day funds to keep households and businesses afloat. Other countries have taken steps since 2008 that should help them if conditions worsen. After suffering a run on its financial system and a 50% drop in the value of its currency in the last global economic crisis, South Korea now has more reserves, and its banking system relies less on short-term foreign funding. Thailand, meanwhile, has boosted minimum wages and farm incomes to protect households if exports dry up. But many other Asian nations have fewer options than they did in 2008 and 2009, when countries such as India, China and Indonesia relied on stimulus or large domestic consumer markets to help them power through. Japan is constrained by government debt levels that total more than 200% of GDP, as well as limited room for monetary-policy moves, given its ultralow interest rates and the central bank's already large bond-buying program. Japan also fears its currency will get even stronger during a panic, hampering exports at the same time European demand for Japanese goods wanes. India also is more vulnerable than in 2008. It runs a higher current-account deficit, which means its financial system needs more capital from abroad to stay afloat. That is tough to get when global markets seize. Government debt also is higher, which makes it harder for New Delhi to implement a stimulus package. The central bank is caught between slowing growth and persistent inflation, limiting how much it can cut interest rates. Currency reserves are smaller than in 2008. Vietnam, meanwhile, is struggling with slow growth and high inflation (though it has eased some lately), and unlike India, it relies heavily on exports to Europe, which make up 13% of its GDP. Its banks are weighed down by a huge increase in lending in 2009 that makes new stimulus hard to pull off. China, while it has deep pockets to launch another round of big-bang stimulus, has indicated it may not want to be so bold, preferring slower, more sustainable growth. If China doesn't open the stimulus floodgates, that would mean less of a boost for its neighbors, including commodity exporters such as Australia and Malaysia. Of course, a euro disaster could be averted, as the Greek elections illustrated. The euro lives, the uncertainty remains, Europe continues its recession and the world avoids a financial apocalypse. If that scenario continues to hold, economists say, Asia likely marches on. "Asia is very well positioned for a muddle-through scenario in Europe," says Mr. Jerram. "A moderate recession in Europe doesn't pose serious hazards here."

Local office rentals could fall 5-10 percent while the growth in retail rents may ease during the second half amid bearish prospects for the global economy, real-estate consultancy DTZ Debenham Tie Leung forecast yesterday. "Office leasing has been generally quieter since mid-April as the euro zone crisis entered a new phase of uncertainty with the recent developments in Greece," said Alva To Yu-hung, DTZ head of consulting, North Asia. During the second quarter, overall office rentals in the SAR fell by 8.82 percent from a year back to HK$62 psf. Rents in the Central Business District had the steepest fall with monthly rentals plunging 18.13 percent from a year ago to HK$131 psf during the April to June period. On the upside, DTZ expects office rentals in Kowloon East to increase steadily in the second half as more high-quality office buildings are completed and more companies move away from the CBD, To said. Office rents in Kowloon East are now at HK$31 psf per month. During the three months ending June, vacancy rates were the highest in Central and Admiralty at 6.4 percent, followed by Kowloon East at 6 percent. The outlook on retail rentals is less bullish than before, but thanks to the continuing flow of mainland shoppers they are tipped to rise.

A new theme park has been included in the development plans of Tung Chung to meet the needs of residents. Details of the plan will be discussed by the Legislative Council panel on development. A paper shows 285 hectares of land will be created in the new town. This includes about 110 hectares on the waterfront where the theme park, which will comprise half of the area, will be built. The other 175 hectares will come from western Tung Chung, and part of the Tung Chung Bay will be reclaimed. The current population of Tung Chung is 70,000 and this is expected to go up to 220,000 once the development of the township has been completed. However, the development plan has yet to be confirmed and is subject to the views and feedback from the community during the first stage of public consultation, which is under way now and will last until August 12. The Tung Chung development has been identified under the land use master plan across the territory, in which 150 hectares of housing sites will be created in the short term while 2,400 hectares will be made available in the long term. Meanwhile, a Development Bureau spokesman said all 150 hectares of land for residential development will come from the Northeastern New Territories and will accommodate more than 150,000 people. The NT development area will provide 53,800 new residential units, of which 57 percent will be for private housing and the rest for public rental. The maximum building height will not exceed 35 stories to ensure optimum design and a viable air circulation in the area. Kwu Tung North, situated between Sheung Shui and Lok Ma Chau, will be the biggest area and have the largest population. Fan Ling North will be turned into a riverside township, while Ping Che/Ta Kwu Ling will be the smallest area. The spokesman said compulsory land acquisition and compensation will cost an estimated HK$40 billion. Similarly, the government plans to develop another site at Anderson Road Quarry near Kwun Tong and Tseung Kwan O. This is expected to provide 7,000 private housing units and 1,700 new Home Ownership Scheme units to accommodate a total population of 23,000 people. The bureau expects construction work to begin as soon as 2017, and residents are expected to move in 10 years later.

Vivien Chen, seen here with her father Chen Din-wah in 1993. Driven to succeed: tycoon's daughter has big ambitions - Her father built an empire from scratch - and Vivien Chen is determined to take Nan Fung to the next level. In 2009 Vivien Chen Wai-wai took over the reins at the Nan Fung Group in an impatient mood. She wanted to maintain the expansion pace set by her father, Chen Din-hwa, who founded the now-unlisted Nan Fung business empire in 1954. "Previously, our marketing was not good enough. We should put more effort into that," Chen told the South China Morning Post (SEHK: 0583) in June last year. "We want people to know that Nan Fung is not a second- or third-tier developer. We want to strive so that people know Nan Fung's products are different from the others. "For instance, the swimming pools and the kitchens in our developments are bigger than those in the other projects." Nan Fung's luxury residential project at Mount Nicholson Road provided an early test for Vivien Chen's ambitions, after the firm bought the site together with The Wharf (Holdings) (SEHK: 0004) at a government land auction for HK$10.4 billion. That made it the fourth-most expensive site in the city at the time and one of several sites for which the group had paid big money in recent years. "As the saying goes, it is difficult to start a business, but it is even more difficult to keep it a success. It is a great challenge to match up to my father, who was such a capable businessman," said Chen, the younger of Chen Din-hwa's two daughters. Vivien Chen joined the group in 1981 and told Forbes that she had worked in various areas, including property sales, property development, textiles and human resources. Forbes said she had joined the business soon after completing an education abroad, including high school in Switzerland and a design school in San Francisco. "At 52, she is assisted by Frank Seto, her long-time live-in partner and group vice-chairman who represents Nan Fung on the advisory committees and investment committees in a number of funds managed or sponsored by HSBC," Forbes wrote in May last year. In her interview with the South China Morning Post, Chen said among her most treasured possessions was a photo of herself and her father taken by a Post photographer in 1989, which shows the two smiling during the bidding for a site at a government land auction. She said it captured one of the happiest moments in the working life she shared with her father. Her father, a Buddhist, was noted for his philanthropy, but she said he was also business-savvy. "My father was good at capturing opportunities. He taught me about risk management, how to assess the risk and how to capture the right moment," she said. Vivien Chen, too, has involved her children in the family business. "Their performances are so far so good," Chen said, sharing a laugh with her daughter, Karen Cheung, her executive assistant, who was present during the interview with the Post. "They complained to me that I was strict when they were small. Now, I have three grandchildren and they have to go through what I did before. "My dad was also strict when I was small. But they are well-behaved, which is a blessing. I'm sure they will bring new ideas to the company." Her relationship with other branches of the family are less amicable, however, and the fault line that separated her and her father from her estranged sister and their mother became publicly visible when their parents were divorced by mutual consent in April last year. The break-up ended a half-century of marriage between Yang Foo-oi, 88, Vivien's mother, and the 89-year-old patriarch, who was by then suffering from dementia. It was widely reported to be Yang's attempt to help her elder daughter, Angela, regain control of the business empire. The terms have remained confidential, but embarrassing claims were made when Yang filed for divorce in 2009. As reported in Hong Kong's local media, Yang alleged that her husband had "touched" the genitals of their great-granddaughters - aged five and eight - in a car while they were heading to a Halloween party. Such "unreasonable behaviour" had resulted in her being unable to live with him anymore, she said. Yang had also sued her younger daughter, claiming Vivien had made misrepresentations to her ailing father, leading him to transfer his assets to her.

Making the rich poorer is not answer, C.Y. says - Leung's answer is to raise the earnings of low-income families, names members of poverty commission - The government would not make the rich poorer so as to narrow the wealth gap, chief executive-elect Leung Chun-ying said yesterday as he named the members of a committee to revive a commission to tackle poverty. "I have always thought that the problem in Hong Kong is poverty," Leung said. "But instead of narrowing the gap, what I'm concerned about is how to raise the income of the poor. "The issue is not to lower the income levels and assets of the wealthy, but to cater for the needs of the grassroots through welfare services." Leung was speaking a day after government statistics revealed that the city's wealth gap had reached a 30-year high, with the Gini coefficient - a globally recognised measure of inequality - reaching 0.537 based on income data collected last year. Zero on the Gini coefficient scale means perfect equality. One means total inequality. After taking into account the effects of taxation and welfare benefits provided to the poor, the coefficient, at 0.475, remains too high, welfare groups say. Leung acknowledged the statistics were alarming, but he said he was less concerned with the wealth gap than the poor's economic hardships. Yesterday he named a preparation committee to revive a high-level commission on poverty, formerly led by failed chief executive hopeful Henry Tang Ying-yen when he was the chief secretary. The committee will advise on the formation of the commission and set out the scope of its work. Committee member Law Chi-kwong, a social-work scholar at the University of Hong Kong and a Democrat, hoped the commission would take in opinions from all walks of life. Law said the widening wealth gap was partly due to the ageing population and that the commission should propose better retirement protection for the elderly. Ho Hei-wah, a fellow committee member and director of the Society for Community Organisation, said the commission should look at ways to reform the current Comprehensive Social Security Assistance Scheme. The scheme has been criticised for leaving out low-income families who are ineligible because their earnings exceed the threshold. "The scheme means that you either are covered, or you have nothing," Ho, a veteran welfare advocate, said. The government could consider extra subsidies to cater for the health care and educational needs of low-income families, he added. The other committee members include Henry Cheng Kar-shun, chairman of New World Development, and Christine Fang Meng-sang, head of the Hong Kong Council of Social Service. The chief executive-elect will head the committee. His chief secretary will be vice-chairman and the welfare secretary will be a member.

Heritage advisers issued a collective statement yesterday urging their head, Bernard Chan, to stay, insisting that none of them did wrong in the heritage grading process for the former government headquarters in Central. The statement issued by all 22 members of the Antiquities Advisory Board was issued a day after Chan tendered his resignation as board chairman in face of criticism that he colluded with officials in pushing forward a demolition plan for the former headquarters' west wing. Chan had said he had made no mistakes and resigned only to protect the board's credibility. In the statement, the advisers call on Chan to reconsider his decision. "Mr Bernard Chan has all along been fair, liberal and impartial since he became chairman in 2009 … It will be a loss to the AAB and to society if he ultimately resigns," they said. "The way the board discussed, voted and consulted the public is all in accordance with existing procedures in grading the former government headquarters. No members were under pressure from the government or anyone else." Three members have indicated they will also quit in support of Chan. Secretary for Development Carrie Lam Cheng Yuet-ngor offered to retain him. But Chan said he would stay only until a new chairman was appointed and would refrain from voting when the board met next month to finalise the grading after a one-month public consultation. Critics say the chairman diminished the board's role by agreeing with Lam, before the board graded the building last Thursday, that she should announce a revised redevelopment plan for the west wing. They have also attacked Lam for bypassing the heritage process by stating categorically that the west wing would be razed. A lesser complaint against Chan is that he cast a deciding vote to give a grade II heritage rating for the west wing, after eight members voted for grade I (highest on the three-tier scale) eight voted for grade II and four for grade III. The board agreed that the compound of the headquarters as a whole, including the east, west and main wings, should be grade I, which may be protected if it is then declared a monument. A grade II building is not safe from demolition. At Thursday's meeting, a member raised a new piece of historical information about the wing, showing a 1969 news article that recorded that the first indoor "trendy dance party" was held in there. Such parties were organised by the government after the 1967 riots in an effort to let angry young people vent their energy. Under Chan's leadership, the board has almost completed the grading of 1,440 historic buildings and sites in the past three years. But the board has yet to deal with dozens of cases in which owners of the buildings have filed objections to the proposed gradings.

Lily Chiang's sister, Chiang Lai-ping, and husband Gino Yu at the High Court yesterday. Jailed businesswoman Lily Chiang Lai-lei lost her bid for bail pending appeal after a high court judge ruled that she had no "reasonably arguable ground" for appeal. Chiang, 51, the daughter of industrialist Chiang Chen and the first woman to chair the General Chamber of Commerce, was jailed by the District Court in June last year for 3-1/2 years for a HK$3 million scam. In asking for bail yesterday, Chiang's lawyer Michael Blanchflower said that if his client was not released she would have served two-thirds of her sentence by the time of the appeal hearing in March next year. But Mr Justice Michael Lunn, in the Court of First Instance, said: "I'm not persuaded that there is any reasonably arguable ground of appeal such that refusing the application for bail pending appeal would lead to unfairness or prejudice." The setback for Chiang came on her son's birthday, her husband Gino Yu, an associate professor at Polytechnic University, said outside court. Explaining his decision, Lunn said the fact that the appeal would not be heard until 21 months after Chiang lodged the application was to some extent her own doing. He said it had been her choice to change her lawyers during the application for the appeal and it was the lawyers who told the court that they were not available this year although the court had suggested hearing the appeal in October or November. Lunn also rejected Chiang's criticism that the trial judge had erred in assessing the credibility of witnesses, and he dismissed claims that District Court Judge Albert Wong Sung-hau had not addressed the likelihood of witness coaching by Independent Commission Against Corrupt officers. Chiang's lawyers complained that Wong failed to deal with the effect on a key witness' reliability after a graft-buster repeated to the witness a statement she made earlier and provided her with a summary. Lunn also rejected a contention that the trial judge had shifted the burden of proof from the prosecution to the defendant. Five days have been reserved from March 8 next year for the appeal. Chiang's family and friends said they had not decided to appeal against Lunn's decision to refuse her bail. The former high-flying businesswoman had been found guilty of fraud, conspiracy to defraud and authorising a prospectus that included an untrue statement. The court heard that Chiang had designed a scam in which others held options or shares in two listed companies on her behalf. The options were said to have been rewards for senior officers at Chiang's companies, but the recipients were low-ranking employees including Chiang's driver and personal assistant. Her co-defendant Tahir Hussain Shah, 45, earlier failed in his application for bail pending an appeal against his two-year jail term for conspiracy to defraud. Another co-accused, Pau Kwok-ping, 54, was jailed for 19 months for fraud and issuing a prospectus that included an untrue statement.

The individual scheme allows 270 million eligible mainland residents from 49 mainland cities to visit Hong Kong multiple times. No room for more visitors, Leung says - Chief executive-elect dampens hopes scheme that lets mainland residents visit will be expanded - unless Hong Kong economy takes a turn for the worse. Chief executive-elect Leung Chun-ying has echoed concerns by Beijing's tourism chief over Hong Kong's ability to accommodate more visitors, dampening hopes of expanding the individual visit scheme. Leung said in an interview on TVB (SEHK: 0511) yesterday that the influx of tourists contributed to inflation of prices in the city. Those crossing from the mainland to the New Territories, where tourists usually shop for goods like formula milk, also "disrupt the livelihood" of residents there, he said. "The mainland government made the right decision in not expanding the individual visit scheme over the past five years," Leung said. The individual scheme allows 270 million eligible mainland residents from 49 mainland cities to visit Hong Kong multiple times. The number of mainland tourists to Hong Kong has increased from 8.5 million in 2003, when the scheme started, to 28.1 million in 2011. Leung's statement reflected the concerns of Shao Qiwei , director of the National Tourism Administration, at a meeting with tourism industry veterans last week, where Shao questioned whether Hong Kong's infrastructure could handle a further jump in numbers. According to Joseph Tung Yiu-chung, executive director of the Travel Industry Council, Shao said it often took hours for mainlanders to cross the border into Hong Kong and that there were worries that the supply of hotel rooms was inadequate. However, Leung was quick to add that if the local economy took a turn for the worse, he would bargain for the central government to extend the scheme to cover more cities. The travel scheme used to cover only the four Guangdong cities of Dongguan , Zhongshan , Jiangmen and Foshan when it was introduced in 2003 as part of a liberalisation measure under the Closer Economic Partnership Arrangement. The number of eligible cities was broadened in 2007. Despite Shao's concerns, industry experts said there was still room for more visitors, especially amid the global economic downturn. Michael Li Hon-shing, executive director of the Federation of Hong Kong Hotel Owners, said the occupancy rate of top hotels slid from 98 per cent last December to less than 80 per cent this month due to a decrease in the number of business travellers. Government figures show another 41 hotels will be finished by 2014, and another 6,000 hotel rooms will be added to the market by 2016. "If there is no increase in the number of tourists to match the bigger supply, what are we supposed to do?" Li said. Simon Wong Ka-wo, chairman of the Hong Kong Food Council, said mainlanders spent HK$5 billion on food and beverages over the past year, about 5 per cent of the city's total spending. If the number of tourists dropped, restaurants in tourist districts would be hit, he said. Over the past year, people have started to question the travel scheme's sustainability. Concern groups said tourist spending led to inflation, though others argued that mainland visitors were vital for economic growth and jobs generation. Tourism accounted for 6.2 per cent of the Hong Kong's economy in 2010, according to official figures.

Hongkongers are oddly split over the government revamp sought by chief executive-elect Leung Chun-ying. Opposition is growing sharply, yet far more people still oppose the filibuster by lawmakers to block the restructuring, according to a poll commissioned by the South China Morning Post (SEHK: 0583). The Post commissioned the University of Hong Kong's public opinion program to poll people on their views on Leung's restructuring plans, which involve giving the chief secretary and financial secretary a new deputy and increasing the number of bureaus from 12 to 14. Pollsters interviewed 512 people between Wednesday and Friday. Despite the hard work by Leung and his aides to sell the plan, opposition was 28.6 per cent - up 6.5 points from last month's findings in a poll carried out by the same pollsters. The poll found 21.2 per cent supported the plan, while 41 per cent were neutral. Late last night, the government asked lawmakers to give priority to scrutinising Leung's "time critical" revamp plan. Such a request normally requires 12 days' notice. But Legco president Tsang Yok-sing exercised his discretion and said he would ignore the notice period, much to the anger of pan-democrat lawmakers. Tsang said the government knew in advance that the controversial resolution relating to the revamp would be tabled today and he also saw the urgency of tabling it. Tsang has set aside 55 hours for the plenary meeting to run from today to Friday, plus Monday and Tuesday. The resolution faces more than 160 amendments filed by People Power lawmaker Albert Chan Wai-yip and Democratic Party chairman Albert Ho Chun-yan. In the latest survey, opposition is much higher among better educated and young people: 40.8 per cent of respondents with tertiary education oppose it, compared with 23.2 per cent with secondary school education. Among those in the 18-29 age group, opposition was 35.9 per cent, dropping to 24.2 per cent in the above-50 group. At the same time, nearly half the respondents disagreed with a filibuster to block the restructuring. People Power lawmakers' plan to move nearly 1,000 motions on the restructuring in an attempt to delay its passage, but the HKU poll found 48.9 per cent oppose that idea, 3.1 points more than last month. Only 18.1 per cent supported a filibuster. "The proposal does not have clear support from the public, but any filibustering attempt is also not welcomed," Dr Robert Chung Ting-yiu, director of the public opinion programme, said. "Perhaps Leung can consider implementing his proposal in two stages, such as restructuring the bureaus first and then adding the deputy secretaries." The survey had a 68.3 per cent response rate and a sampling error of plus or minus 4.4 percentage points. Under the contingency plan announced by outgoing Chief Secretary Stephen Lam Sui-lung yesterday, ministers would be sworn in according to the existing administration structure if the government fails to secure funding for the restructuring plan before July 1. Ministers taking up the new posts - deputy chief secretary, deputy financial secretary and chiefs of the new culture and technology and communications bureaus - would start work five days after it was approved by Legco's Finance Committee. Lam said this was a plan generated "by both the current administration and the chief executive-elect office". According to another poll carried out by the Hong Kong Public Opinion Research Centre between Thursday to Monday, 54.3 per cent of 991 respondents supported the plan to create two new policy bureaus and appoint deputies to the chief secretary and financial secretary. A further 19.9 per cent disagreed. The centre is a subsidiary of the One Country Two Systems Research Institute. Leung was former chairman of the institute's board of directors.

Hong Kong local Wong Hin-yan, 26, is pictured in Hong Kong outside HSBC’s downtown headquarters, where ‘Occupy Central’ protesters have been camping, on November 8, 2011. Hong Kong’s Wealth Gap Gets Larger - Hong Kong has become a more unequal city over the past decade, according to new government figures. The city’s wealth gap now outstrips that of Singapore, the United Kingdom and Australia as well as other major cities notorious for inequality such as Washington and New York City, says the Hong Kong’s Census and Statistics Department. In 2011, the city’s Gini coefficient—an index from 0 to 1 that measures the wealth gap—rose to 0.537, up from 0.525 in 2001. It’s a figure that exceeds various estimates even of inequality across the border in mainland China. This latest figure comes as the city’s leader, career civil servant Donald Tsang, prepares to step down after seven years in office that critics say were hamstrung by inertia and lack of action to help the poor. Mr. Tsang—who also faces a flurry of public outrage over his use of taxpayer money to fund lavish overseas trips—will leave office on June 30. His successor, Leung Chun-ying, has pledged to do more for Hong Kong’s poorest, including restarting the city’s poverty commission, which was disbanded under Mr. Tsang in 2007. “As front-line social workers, we see life has become more difficult [under Mr. Tsang],” says Christine Fang, who leads the Hong Kong Council of Social Service, citing exorbitant housing prices and rising inflation. “Their livelihood has worsened while they see that society has prospered,” she says of Hong Kong’s poor. “That’s why we can sense the antagonism between those who have and those who have not.” The thousands of people living in Hong Kong’s notorious “cage homes” are some of the more searing images associated with the city’s poverty. But the middle class has also been squeezed, analysts say, as housing prices have surpassed even the levels seen during the city’s 1997 bubble. In recent years, as travel restrictions for mainland Chinese have loosened, rows of swanky storefronts catering to such tourists have cropped up across the city, including glittering temples to luxury handbags and jewelry, spurring resentment among Hong Kongers who feel they’ve been left out of the city’s economic boom. Today, Hong Kong’s median home price is 12.6 times the annual median household income, according to research group Demographia. By contrast, that figure is 5.1 in the United Kingdom and just 3.0 in the U.S. The government was quick this week to downplay the latest evidence of the widening wealth gap, noting that after factoring in social benefits and taxes, the city’s Gini coefficient was 0.475, a figure unchanged from 2006. It also cited demographic factors as an explanation for the rise in income disparity, noting that as the population has aged, the number of households without active income has increased. In explaining Hong Kong’s entrenched wealth gap, analysts cite the economy’s overwhelming reliance on the services sector, particularly finance, which has created wealth for some but failed to provide significant numbers of well-paying jobs across the board. While income grew 60% among the city’s top 10% of earners between 2001-2010, it dropped by 20% among those in the bottom 10%.

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Hu sets out vision for US ties - Differences with China must be properly handled by the United States as both countries strive to forge a new type of advantageous relationship between big powers, President Hu Jintao said on Tuesday. Analysts said that Hu is addressing the key to a stable and beneficial relationship, especially ahead of November's US presidential election. Hu put forward a proposal outlining a new model of great-power relations, a concept he initiated in a speech during the China-US Strategic and Economic Dialogue held in May in Beijing. Hu said on Tuesday that both countries should maintain high-level strategic communication, manage differences and keep any potential interference at bay. He said he hoped that the US will adopt a positive and pragmatic approach, respect China's interests and prevent domestic politics from disturbing ties. US President Barack Obama agreed with Hu on developing the next phase of the relationship. The US is ready to work with China to cultivate a new model of great-power relations to effectively tackle global challenges, Obama said. A prosperous and stable China is in the interests of the US and the world, just as a prosperous and growing US benefits China and the world, he said. The leaders met during the G20 Summit in Los Cabos, Mexico, their second meeting this year and the 12th in three years. Both leaders commented positively on ties, analysts said, but emphasized that more needs to be done to enhance trust. The meeting set a positive tone, Jia Xiudong, a senior researcher on international affairs at the China Institute of International Studies, said. "The US is unwilling to see any major setback in ties ahead of the presidential election, but the possibility remains that Obama will take trade measures as he faces domestic pressure," Jia said. The Asia-Pacific region, more than any other area, is where China and the US have the most converging interests, and "benign interaction between the countries is the key", he said. Philip Levy, resident scholar at the American Enterprise Institute, told China Daily that the G20 provides a regular opportunity for US and Chinese leaders to work through mutual concerns. "It does so with somewhat less pressure than a state visit and it reminds the leaders that US and Chinese actions often have repercussions for the rest of the world. Such meetings always result in claims of success, but sometimes those claims can be merited, thereby justifying the work that goes into preparing summits," Levy said. Bilateral trade. Hu said on Tuesday that as China and the US are the world's two largest economies, maintaining robust trade relations is of great significance. Trade between China and the US, each the second-largest trade partner of the other, reached $446.6 billion last year. Official figures from China also show that US companies invested more than $67.6 billion in China by the end of 2011, while Chinese companies invested $6 billion in non-finance sectors in the US. China is boosting domestic demand and has full confidence in sustaining the strong momentum of its economic growth, Hu said. Both countries should boost economic cooperation and increase trade, Hu said.

China on Wednesday defended its curbs on rare earths mining and exports amid a World Trade Organisation challenge brought by the United States, Europe and Japan. The government said its controls are meant to protect the environment and preserve dwindling resources and are in line with its WTO free-trade commitments. China accounts for most of the world’s production of rare earths, which are used in mobile phones and other high-tech products. Global manufacturers were alarmed when China announced it would limit exports while trying to build-up its own industry to manufacture products that use rare earths. “All the measures taken by the government aim at protecting resources and the eco-environment,” the government said in a statement issued with a report on its rare earths policies. “They are in line with the international practice and relevant regulations of the WTO.” The United States, the European Union and Japan filed complaints in March with the World Trade Organisation charging that China is limiting its export of rare earths, minerals that are vital to the production of hi-tech goods. China accounts for more than 90 per cent of global production of 17 rare earth minerals that are used to make goods including hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapour lights, and camera lenses. China has cut export quotas while it tries to build-up its own industry to manufacture lightweight magnets and other products made with rare earths. Senior US administration officials have said Beijing’s export restrictions give Chinese companies an advantage by giving them access to more rare earths at a cheaper price, while forcing US companies to manage with a smaller, more costly supply. China has about 30 per cent of global rare earths deposits. The United States, Canada, Australia and other countries also have rare earths but most mining stopped in the 1990s as lower-cost Chinese ores came on the market.

A model shows Huawei's new MediaPad at the CommunicAsia exhibition in Singapore on Tuesday. China's Huawei Technologies is taking a campaign to transform itself into a global brand and leading smartphone maker to a major telecoms fair which opened in Singapore this week. The Chinese tech behemoth is the biggest exhibitor at the four-day CommunicAsia expo which it sees as a launchpad for its ambition to challenge Apple and Samsung and target itself at consumers and not just businesses. Huawei’s expansive booth is showcasing its array of mobile devices, including one of its star products the Android-powered Ascend P1, which at 7.69 millimetres is slimmer than Apple’s iPhone 4S at 9.3mm. But as it sets its sights at industry leaders Apple and Samsung, it faces a difficult task to lure shoppers who have demonstrated a preference for well-established brand names. “Basically, this CommunicAsia is a very important platform for us to really showcase how we are really committed to driving growth,” said Riadi Sugihtani, Huawei’s regional chief marketing officer. “Of course there are some connotations with a Chinese brand, and being Huawei as a brand name of course it’s unmistakably Chinese,” he said. “However, through lots of efforts we built the brand. We see that there is a clear improvement as far as acceptance by consumers across different geographies.” Huawei, founded by a former People’s Liberation Army engineer, has established itself as a major force in the global telecoms industry where its technology is widely used to build mobile phone networks. The company is a prime example of leading Chinese firms who are working aggressively to make the transition from being the world’s workshop to becoming top brands. Earlier this year, Huawei also exhibited its range of smartphones at telecoms shows in Barcelona and Las Vegas. But analysts say that pulling off a consumer-focused image reinvention will not be easy. “If Huawei has their eyes on becoming number one, they definitely have their work cut out for them,” said Melissa Chau, a Singapore-based regional research manager with IDC. “One of the challenges for Huawei is branding which is a long-term endeavour and Huawei hasn’t yet shown a lot of significant differentiation and innovation yet that would encourage people to buy their smartphones,” she said. The company sold 20 million smartphones globally last year and is aiming to be the top Android-based smartphone maker by 2015, a position currently held by South Korea’s Samsung. Handset manufacturers are waging a fierce battle to capture the rapidly growing smartphone market. Gartner, a technology research firm, said Samsung smartphones powered by Google’s Android operating software sold 38 million units in the March quarter, handing it back the number-one position from iPhone maker Apple which had sales of 33.12 million. Samsung and Apple jointly make up 49.3 per cent of the smartphone sector, with Nokia trailing badly with a 9.2 per cent share, Gartner said. It said Huawei sold almost 10.8 million mobile phones including smartphones in the March quarter, but did not give a figure for its smartphones alone. Huawei sold 20 million smartphones worldwide last year, according to Sugihtani. Huawei is also battling an image problem in the broader technology market due to its perceived close ties with the Chinese military and government. It has recently been blocked from bidding for contracts on Australia’s ambitious national broadband project, reportedly due to concerns about cyber-security. The company has in the past also run afoul of US regulators and lawmakers because of worries over its links with the Chinese military and Beijing – fears that Huawei have dismissed.

Vice-Premier Li Keqiang (left) during a visit the Chinese Academy of Sciences in Beijing on Monday. Vice-Premier Li Keqiang, widely seen as the nation’s premier-in-waiting, has urged the country to pursue economic reforms that would push factories up the value chain and reduce wasteful spending, state media reported. Xinhua quoted Li as saying late on Tuesday that China needs to quicken the development of new strategic manufacturing sectors including energy conservation, environmental protection, bio-industry and high-end equipment. Li, speaking on a visit to the Chinese Academy of Sciences, an influential research institute closely linked to the government, said China needs to let the market play a role in shaping reforms, and warned against wasteful construction projects. Li’s comments are in line with Beijing’s plan to restructure the world’s second-biggest economy to boost consumption and to reduce state investment and its reliance on a volatile export sector. Beijing lowered its official target for it 2012 gross domestic product growth to 7.5 per cent, which would be the weakest since 1990. But some analysts say China’s adjustment to better-quality growth may not be easy because reduced state investment and a shift toward consumption could threaten vested interests such as the giant state-owned firms that have thrived under the current system.

Diane von Furstenberg on ‘the China Century’ - When a newly married Diane von Furstenberg arrived in New York in 1969, she brought a suitcase full of wrap dresses. Fast-forward 43 years. Ms. von Furstenberg’s clothing, accessories, fragrances and home products are sold around the globe. She still sells the same dress, not just to Americans, but to women world-wide, and aside from the traditional Chinese qipao, there are few other styles that have transcended as many generations. From left: Diane von Furstenberg, Jessica Alba, Du Juan and Zhang Ziyi and the 2011 Red Ball in Shanghai. Much like her dresses, the 65-year-old Belgian leaves a lasting impression. Though her passion is design, she has proven to be a capable businesswoman, who with her TV mogul husband Barry Diller is worth an estimated $1 billion. Virtually every luxury marketer has China in its sights, and while Ms. von Furstenberg is no different, she says she is taking a more personalized approach to the country’s rising middle class. They appear to be responding: She now has more followers on Weibo than on its American equivalent, Twitter. She spoke with The Wall Street Journal’s Deborah Kan about the “Chinese century” and why she is not ready to retire any time soon. Below are edited excerpts from the discussion. The Wall Street Journal: Five years ago, you were just firing up your engine inside China. Since then, it seems like every major fashion label is going full speed ahead inside China. Do you think this next decade is the China decade? Ms. von Furstenberg: I think it will be more than a decade. It will probably be the China century. It’s amazing. I always was fascinated with China, because I was born in Europe, and for us, China had this fascination and mystery. The first time I came here was in 1989. They were on bicycles, and the speed of the growth has been incredible.

China 'plays constructive role' in G20 - President urges leaders at summit to continue supporting Europe - The latest capital contribution to the International Monetary Fund will enhance the organization's ability to tackle the European debt crisis and increase the say of emerging economies, analysts said. China announced on Monday that it will contribute $43 billion to the $430 billion boost to the IMF. President Hu Jintao joins world leaders at the G20 meeting in Los Cabos, Mexico, on Monday. The European debt crisis topped the summit's agenda. The contribution can be used by all IMF members, the People's Bank of China, the central bank, said in a statement on Tuesday. President Hu Jintao, addressing the G20 Summit on Monday in the Mexican resort of Los Cabos, said that China supports increasing the resources of the IMF and enhancing its ability to tackle the crisis and provide emergency assistance. Hu also called on the group to continue supporting Europe "in a constructive and cooperative way". The financial contribution is "a positive thing", and EU countries will welcome the decision, the EU ambassador to China, Markus Ederer, said on Tuesday at a speech at the University of International Business and Economics in Beijing. China has been playing "a constructive role" in supporting the EU to tackle the crisis, Ederer said. "If China expresses confidence in the eurozone, it is a very important signal to the market." But Ederer emphasized the support from the IMF is "the second line of defense", as he stressed the EU's own responsibilities. G20 finance chiefs agreed in April to increase the financial firepower of the IMF by more than $430 billion. The IMF said that it will tap the new resources to shield the global economy from the European debt crisis only if it uses up its existing resources. One of the IMF's principles is that "the more you contribute, the more rights and interests you share", and China's increased investment in the IMF will give it extra clout, said Xiong Hou, a researcher in the institute of European studies at the Chinese Academy of Social Sciences. But in comparison to developed countries, China's IMF share is still relatively small, Xiong added. The approach by the US and other developed countries in not boosting IMF resources does not match their economic strength, according to Jia Xiuguo, an expert on international affairs with the China Institute of International Studies. "It is inconsistent with Washington's responsibility to the IMF," Jia said. China's decision to boost IMF resources, rather than give direct loans to European countries, is a good way to use its large foreign exchange reserves, said Wang Yizhou, an expert on the global economy and politics at the Chinese Academy of Social Sciences. The G20 Summit in London in 2009 agreed on a $500 billion increase in IMF resources and China invested $50 billion. During the summit in 2010, the G20 leaders confirmed the 6-percent shift of quota shares to emerging and developing countries in the IMF, and were committed to achieving this by the annual meeting in 2012. If the reform is carried out, China's quota in the IMF will be increased to 6.39 percent. The EU's total quota in the fund is about 30 percent, followed by the US with about 17 percent. In the Monday address, Hu said implementing the IMF quota reform is an urgent task. During a meeting with German Chancellor Angela Merkel ahead of the G20 Summit on Monday, Hu said that China will continue to support Europe's efforts in promoting integration and maintaining the stability of the euro. A united, stable and prosperous Europe serves the interests of the world, including China, Hu said. The EU is China's largest export destination. Merkel said Europe appreciates China's confidence in the continent and its support for European integration. She also noted that a steady, robust Chinese economy is an important factor in any global economic recovery. China will continue to pursue a proactive fiscal, and prudent monetary policy, Hu said in his address at the G20 meeting. The economy as a whole has maintained growth stability as it adjusts its economic structure and improves the standard of living, he said. "We will keep the right balance between maintaining steady and fairly fast growth, adjusting the economic structure and managing inflation," Hu said.

The Shenzhou-IX spacecraft and its carrier rocket are moved to a platform earlier this month at the Jiuquan Satellite Launch Centre. Space City in the desert not so secret - The birthplace of the nation's missile and space programs - and still one of the most active launch pads - has become a lot more transparent. Dongfeng Space City sounds hi-tech but it looks plain. If not for a few long-range missiles painted with Maoist slogans standing on roadside lawns, a visitor would hardly know that this little town in the heart of the Gobi desert was the birthplace of China's missile and space programmes, and still one of its most active launch pads. Most research buildings are characterless, small and look cheaply built, easily dwarfed and outshone by the average government headquarters in a poor county nowadays. With an increasing number of spacecraft being launched recently, the "city" has become more transparent than ever. Throughout the year, mainlanders can sign up for tours inside the facilities' living quarters and also in some strictly guarded facilities such as the command centre and launch towers, for about 400 yuan (HK$490) a person, meals included. There is a museum telling the story of the base's secret past with photographs and films. There is even a tourist reception office at its entrance. Foreigners, however, rarely have a chance to get in, with tour agencies always turning down tourists with foreign passports. During some special events, such as manned space flights, some overseas guests and journalists from non-mainland media outlets, such as the South China Morning Post (SEHK: 0583), are allowed in but their activities are strictly limited. Any attempt to venture out on your own is politely discouraged. If you insist, a security officer is sent to accompany you. Even though they have heard of Dongfeng many times on television, hardly any mainlanders know where it is. Most believe the facility is located in Jiuquan , Guansu , because the city is formally known as the Jiuquan Satellite Launch Centre, but they are wrong. Named Dongfeng Space City by then president Jiang Zemin in the 1990s, it is actually located in the former headquarters of Inner Mongolia's Ejin Banner. One resident said the government named the launch centre after Jiuquan to conceal its real location. On a clear day it takes almost four hours to travel the straight road from Jiuquan to the space city. The vast Gobi desert separates the space city from the nearest village, but every few minutes on the drive there you can see mysterious looking military facilities with radars or antennas shooting up from buildings hidden behind trees. Visitors have to pass military checkpoints to enter the city, and the military vehicles speeding in and out constantly remind visitors that this is still a place under tight watch. The entire space city covers an area of 2,800 square kilometres, mostly uninhabitable desert, but also an oasis at the foot of Bayinbaogede Mountain that used to be home to more than 1,500 herdsmen before the People's Liberation Army moved in during the late 1950s. The city gave birth to China's first large missiles. When Qian Xuesen , the father of China's space program, arrived in 1958 to begin building and testing China's first missiles, he was not allowed to write a letter home for months, prompting his wife to suspect that he was dead. Qian, armed with knowledge gained in the United States about America's missile program, led tens of thousands of scientists, engineers and soldiers to give the nation its first long-range missile in 1960. The base also launched China's first satellite, Dongfanghong 1, in 1970 and Shenzhou-I, the precursor to later manned space missions, in 1999. Now the base is mainly used as the only launch pad for the manned space program. But even though much of its military testing and development functions have been moved elsewhere, it is still heavily guarded by the military. Residents said living conditions had improved a lot in recent years. When the first settlers arrived, most had to live in foxholes and tents because there were hardly any buildings. Water fetched from a nearby river was salty and vegetables were a luxury that even top commanders rarely enjoyed. Now the city has its own water purification plant and, using Israeli technology, has a vast vegetable garden that can supply more than 80 per cent of residents' needs. The base also has its own diary. "Our vegetables and milk are totally safe," one resident said. "We never worry about pesticides or melamine." The biggest buildings in the city are its hotels, open to tourists on ordinary days but reserved for senior government officials during launch missions. A graveyard for more than 500 martyrs, including Nie Rongzhen , the founder of China's missile programme, has become a tourist attraction. Most of those buried there are scientists, engineers or soldiers who were killed during rocket accidents.

India and China's largest oil companies have agreed to jointly explore for oil and natural gas world-wide, in an attempt to put aside a long-standing rivalry and better use their combined financial resources and expertise to secure energy supplies for their fast-growing economies. While the two energy-deficient countries already work together on several international oil projects, they also have a history of bad relations, and of proposing cost-reducing alliances to jointly buy foreign energy assets and crude oil that mostly have come to nothing. According to an initial pact signed on Monday between state-run Oil & Natural Gas Corp. of India and China National Petroleum Corp., the companies will jointly explore assets in other countries, cementing existing partnerships in Myanmar, Syria and Sudan. ONGC said in a written statement that the companies also agreed to expand cooperation in refining and processing of crude oil and natural gas, marketing and distribution of petroleum products, and construction and operation of oil and gas pipelines. "We think it is better to cooperate than compete," said Dinesh Sarraf, managing director of ONGC Videsh Ltd., ONGC's overseas investment arm. ONGC Chairman Sudhir Vasudeva said last month that the company wants to grow through partnerships, and intends to secure alliances for areas and resource types including deep-water exploration as well as natural gas that is trapped in shale-rock formations. China has been more successful than India in getting oil and gas equity stakes across the globe, often providing large loans and funding for infrastructure projects in developing nations to tie up deals signed by its four state-owned energy companies, the largest of which is CNPC and its listed unit, PetroChina Co. Tensions between India and China stem from a long-simmering border dispute in the Himalayas; India's hosting of the Tibetan spiritual leader, the Dalai Lama; and Chinese support for Pakistan. Relations worsened last year because of a sovereignty row in the South China Sea, much of which is claimed by Beijing. ONGC, which had been exploring Block 128 offshore Vietnam, was sharply criticized by China last year for violating Chinese sovereignty—a charge Hanoi vehemently rejected. Last month, India's junior oil minister, R.P.N. Singh, said the company will return the block to Vietnam. Whether that decision figured in the agreement on a new pact is unclear. In January 2006, India's oil ministry and China's economic-planning agency, the National Reform and Development Commission, signed an initial pact for bilateral oil cooperation, including possible joint crude purchases. But five years later, Mr. Singh conceded that progress had been slow as "there has been no sharing of information on crude purchases by the oil companies of the two sides." India hasn't been very open to Chinese companies investing in either its energy or telecommunications sectors, citing security concerns, although Chinese power-generation-equipment companies have been successful in the Indian market. Among projects that ONGC Videsh is working on with CNPC is a pipeline to transport Myanmar gas from the Bay of Bengal across India into southwestern China. The pipeline is due for completion next year. The two also work together in Syria, where they jointly hold stakes in 36 producing fields, as well as in Sudan, although oil output there has been largely halted due to military clashes between North and South Sudan. Both CNPC and ONGC are among companies that have expressed interest in building an oil pipeline from South Sudan to Kenya's East African coast, to bypass the traditional export route through the north. Mirae Asset analyst Nipun Sharma, in Hong Kong, said the latest agreement seems to be merely a renewal of an existing exploration pact. "The previous pact only resulted in a handful of projects, including one in Sudan," Mr. Sharma said. "This time around, if the two nations are able to better align their economic and political interests, we could see more joint exploration projects ahead. "This would be a definite positive for ONGC, which needs to accelerate its internationalization program in order to increase production and reduce its exposure to domestic oil-pricing risks." Indian exploration companies have been seeking partnerships with other overseas oil and gas majors to gain access to technology that will help them increase output and widen their geographical footprint. ONGC signed an initial agreement with ConocoPhillips COP +1.04% in March to look for opportunities for jointly exploring and developing shale-gas reserves in India and North America and deepwater blocks along India's eastern coast.

A worker at a dairy farm in Yinchuan, Ningxia Hui autonomous region. China imported nearly 100,000 cattle for breeding last year, mainly from Australia, New Zealand and Uruguay. Country to wean itself off dairy cattle imports - Foreign farm animals help improve breeds of cows and milk quality - The country's massive demand for milk has led to an increase in imports of dairy cattle from Australia, New Zealand and Uruguay, but that trade is expected to slow in five years, according to a leading expert. China imported nearly 100,000 cattle from the three countries last year. The number will keep increasing, said Li Shengli, chief scientist of the National Milk Industry Technology System and a professor at China Agricultural University. Modern Farming Group Co Ltd, Liaoning Huishan Holdings Group and other top milk producers plan to set up dozens of large farms, he said. Other large dairy companies have built their own farms to ensure that the quality of the milk supply remains high. China Mengniu Dairy Co Ltd will invest 3.5 billion yuan ($549.15 million) to set up between eight and 12 dairies by 2015. Bright Dairy and Food Co Ltd is expected to build a 130-million-yuan farm in Wuhan, Hubei province. And Inner Mongolia Yili Industrial Group Co Ltd last month opened a 220-million-yuan farm that is home to 5,000 dairy cattle. Nestle (China) Ltd, meanwhile, set up a dairy-farming institute at its Shuangcheng fresh milk supply base in Heilongjiang province early this month. The institute operates three training farms, which work with 10,720 cows. Not surprisingly, large farms need more cattle than small ones. Since 2009, China has been buying more of the farm animals than any other country in the world. Last year, 52 percent of the cattle imported by the country came from Australia, 34 percent from New Zealand and 14 percent from Uruguay, according to the General Administration of Customs. Foreign animals now make up a small proportion of the country's 14 million heads of cattle. In the future, though, it is expected that higher-yielding foreign species will help make the dairy industry more productive, professor Li said. Li said the great demand for foreign cattle is likely to last for about five years, after which Chinese farms will have the capacity to have the overseas breeds reproduce on a large scale. He said technology will allow farmers to ensure that the first-born calves of their overseas cows will be female, allowing them to accelerate the animals' reproduction. Gao Lina, president of Modern Farming Group, said a faster rate of reproduction will lead the company to cease importing cattle on a large scale by the end of this year. Imported cattle have so far been used primarily as a means of producing higher quality cows. "China does not have a shortage of cows," Gao said. "It is in need of cows that are good, a quality that is not reflected in their numbers but in their yields." Modern Farming Group has about 150,000 cattle, most of which are imported. About 60 of them came from Australia and the rest from New Zealand and Uruguay. Cattle inventories and milk cows' yields in China have been on the rise. Last year, the country was home to 14.4 million cattle, up 17 percent from 2008. Those animals produced 38.1 million metric tons of milk, up 0.8 percent from the same year, according to the Ministry of Agriculture. Restricted by its resources and by environmental conditions, the industry can no longer increase its productivity merely by acquiring more cattle, Gao Hongbin, vice-minister of agriculture, said at the third dairy convention held in Zhengzhou, Henan province, on Monday. Technological innovation is the best way to keep the quality of dairy products high, he said.

China's deep sea submersible Jiaolong descended to a new depth of 6,965 meters in an 11-hour dive in the Mariana Trench on Tuesday. China able to explore 99% of the ocean floor, say scientists - Chinese scientists collected the world's deepest undersea samples on Tuesday, proving the country's ability to reach nearly all the seabed on Earth. China's submersible Jiaolong descended to a new depth of 6,965 meters in an 11-hour dive in the Mariana Trench, the State Oceanic Administration said. "We collected samples of deep sea water, deposits and creatures, and recorded video and took photographs," Tang Jialing, one of the three pilots in the vehicle, told China Central Television on Tuesday, adding that the deep sea environment is unimaginably beautiful. I feel confident of reaching a depth of 7,000 meters because Jiaolong worked very well in the (Tuesday) dive," Tang said, smiling. It was the second dive for the vehicle, with another four scheduled to achieve the country's first 7,000-meter dive. Xu Qinan, the submersible's chief designer, told China Daily that it was still undecided whether the craft would try for 7,000 meters in the third dive. Though the dive was 35 meters short of the target, China National Radio quoted on-site scientists as saying Tuesday's accomplishment means China is capable of exploring 99 percent of the ocean floor. Compared with the first, 6,671-meter dive on Friday, Tuesday's dive took much longer, to test problems detected in the first dive, Peng Lisheng, an official of the China Ocean Mineral Resources Research and Development Association, told China Daily. Cui Weicheng, deputy commander-general of the diving team, said the second dive was much more important than the first because it had to solve all the problems detected in the previous dive and test the craft's safety. According to Xinhua News Agency, four machine problems were detected in the first dive and a leaky oil pipe postponed the scheduled second dive on Monday. "Besides testing the safety, our diving team finished all scheduled tasks, such as collecting samples and measuring the seabed," Peng said. Cui said Jiaolong is not only a submersible, but also a platform for scientists. "If Jiaolong succeeds in the 7,000-meter dive, the vessel will play an important role in future scientific research and mineral exploration in the deep sea," said Tao Chunhui, professor of the Second Institute of Oceanography and chief scientist on the Chinese scientific research ship Dayang Yihao, or Ocean No 1. Jiaolong, which is 8.2 meters long and 3.4 meters high, weighs nearly 22 tons. It will be used in the exploration and development of marine resources, according to the State Oceanic Administration. In 2011, China became the first country approved by the International Seabed Authority to look for polymetallic sulphide deposits, a recently discovered mineral source, in the Southwest Indian Ridge, a tectonic plate boundary on the floor of the Indian Ocean.

Hong Kong*:  June 21 2012 Share

Hong Kong to be better with unique advantages and HK spirit: Chief Executive - Past experiences have proved the principle of "one country, two systems" an unprecedented success, said Donald Tsang, chief executive of the Hong Kong Special Administrative Region (HKSAR). "I profoundly believe in a better future of Hong Kong," Tsang told Xinhua in an interview before the 15th anniversary of Hong Kong's return to the motherland. On July 1, he will leave the post which he has serviced for seven years. Wearing his trademark bowtie, this witness of history reviewed the city's progress and changes in the past 15 years in Cantonese-accent Mandarin. ACHIEVEMENT OF "HONG KONG DREAM" - When he took office in 2005, Tsang created the vision of "Hong Kong Dream", vowing to establish Hong Kong as "city of opportunity" and "locus amoenus", Latin for "pleasant place." Looking back, Tsang is glad to see that achievements made in the past 15 years are significant. The size of Hong Kong's economy expanded by 55 percent in real terms from 1997-2011, while the number of jobs increased by 500,000, and the employed population reached a record high of 3.64 million. "We nearly create a full-employment society," he said. Excited about the international recognition for Hong Kong's economic status, Tsang also listed a number of "top" and "highest" stories about this international metropolis, including the city's credit rating upgraded to "AAA", making it one of the two Asian economies with such a highest rating. In the past two or three years, funds raised through initial public offerings on the Hong Kong Stock Exchange were the highest in the world. Meanwhile, the city overtook the United States and Britain for the first time to be the top spot of Financial Development Index, which was released by the World Economic Forum by the end of 2011. It meant Hong Kong has become "the most developed" financial market in the world, Tsang said. Besides, People's livelihood is highlighted in Tsang's platform. Public expenditure registered an accumulated growth of 55 percent, demonstrating the government's commitment to sharing the fruits of economic prosperity with the people and improving their living standards. "We have also set the timetable for universal suffrage and taken the two elections in 2012 closer to this ultimate goal by adopting methods that are more open and contain greater democratic elements," Tsang said. "Even though Hong Kong is still facing challenges, we have surly made considerable progress," Tsang said. Asian financial crisis, SARS epidemics, worldwide credit crunch ... the memories of Hong Kong's difficult moments are fresh in Tsang's mind. He said gratefully that Hong Kong has struggled through these periods with strong support from the mainland. In 2003, the central government and Hong Kong signed the "Mainland and Hong Kong Closer Economic Partnership Arrangement" (CEPA), which reduces or eliminates barriers of economic and trade cooperation between the two sides. Under CEPA, Individual Visit Scheme for Mainland residents has brought tens of millions visitors to Hong Kong since 2003, which gradually became the strongest driving force to promote local tourism. The scheme has lifted the level of Hong Kong's consumer market to a "very high" elevation, Tsang told Xinhua. China's 12th Five-Year Plan started in 2011, with a chapter emphasizing the central authorities' support for Hong Kong in consolidating and enhancing Hong Kong's competitive advantages. According to the plan, the country will consolidate and enhance Hong Kong's position as an international financial, trade and shipping center, and support Hong Kong's development into an offshore renminbi business center and an international asset management center. "The dedicated chapter elaborates on the significant functions and positioning of Hong Kong in the development strategy of the country, and it is extremely encouraging for us," Tsang said. As for the offshore renminbi center, Tsang said it is a "pleasant surprise" and a "special achievement." According to him, Hong Kong has benefited from the renminbi clearing since more than 90 percent offshore renminbi transactions of the country are dealt via Hong Kong. Tsang also emphasized that Hong Kong, as an international financial and shipping center, plays an irreplaceable role in the country's economic construction and social stability. The implementing of "one country two systems" also brought mutually beneficial and win-win pattern formation, he added. While facing the world, Hong Kong is also backed up by the motherland. "These are the biggest advantages and the key to remaining its international competitiveness", Tsang said. BELIEF IN HONG KONG PEOPLE - In his last annual Policy Address published on October 12, 2011, Tsang said the Hong Kong people "worked hard through the years and, without realizing it, created a unique city with its own character." "They cherish freedom, respect the rule of law, and treasure equality, justice, integrity, pluralism and inclusiveness. These are the core values of Hong Kong." In Tsang's eyes, Hong Kong people have rational and accommodating attitude, and in their ability to set aside differences and strive for consensus in the face of challenges. "Although experiencing some setbacks after reunification, we have managed to get back on our feet every time," he said. Throughout his years in public service, Tsang had always firmly believed in people and core values of Hong Kong, and this belief is always his ruling idea and administration principle, which were "never wavered." Tsang also emphasized Hong Kong people's patriotic feelings. "You can see how the feelings increased when they give enthusiastic help to quake's victims in Sichuan or Qinghai provinces," he said. As to some friction between Hong Kong and the mainland, Tsang said Hong Kong is separated with motherland for almost one century, there must be some differences between them. "I believe Hong Kong people are rational, inclusive and respect for mainland culture." Tsang will retire from the HKSAR after a civil-service professional career spanning more than four decades on July 1, 2012. When invited to deliver a self-assessment, he said it's a "difficult and dangerous risk", which is best left for history and public. "In any case, my greatest glory lies in servicing Hong Kong." Looking forward for the future of Hong Kong, Tsang said, with a smile, that he is "with full confidence and pride." With the support of country and concerted efforts of Hong Kong people, Hong Kong will seize every opportunity to solidify its own advantages continuously, and continue making unique contributions to the country, Tsang said.

Empire builder Chen Din-hwa dies at 89 - Chen Din-hwa, dubbed the 'King of Cotton Yarns', made a fortune in textiles before expanding into property and investing in US banking stocks - One of the city's renowned corporate empire builders, Chen Din-hwa, has died. He was 89. Chen , founder of the Nan Fung Group, passed away at the weekend after a long illness, according to a statement issued by his granddaughter, Karen Cheung, on behalf of the family. Arrangements for the funeral service are being finalised, according to Cheung, who is the daughter of Nan Fung chairwoman Vivien Chen Wai-wai. No details were disclosed. The statement comes a day after the reported death. On Sunday night, a Cable TV report said the billionaire founder of Nan Fung died of prostate cancer at about 3am at the Hong Kong Sanatorium and Hospital in Happy Valley. However, neither the family nor the company issued a statement. Diagnosed with Alzheimer's disease in 2009, Chen subsequently handed over the control of his company to younger daughter Vivien Chen. While the family likes to keep a low profile, a dispute over the tycoon's assets put the family in the media spotlight in recent years. His wife, Yang Foo-oi, 87, sided with elder daughter Angela to sue Vivien in 2010 over a trust fund that had been set up, alleging her husband was misled into transferring his assets. Last year Yang sought and completed a divorce from Chen, walking away with a settlement. Chen is ranked 464th on the Forbes list of world billionaires, and 15th among the 39 billionaires from Hong Kong, with net assets estimated at US$2.6 billion. Like many Hong Kong tycoons, Chen's business empire was largely built from scratch during the boom years of the 1960s and 1970s. Unlike his peers, Chen kept an extraordinarily low profile while he kept track of everything from nitty-gritty details to grand plans, according to sources. When the market boomed in the 1990s, many of his staff left as opportunities arose elsewhere. To hold on to the rest of workforce, Nan Fung cut the working day from nine hours to eight-and-a-half. Chen was described as brilliant. ''He was very persistent. He had vision and big ambitions,'' said a source close to the family. Born in Ningbo , in Zhejiang province, in 1923 to an impoverished family, Chen left school at the age of 12 to serve as an apprentice to a silk merchant. In 1949, he moved to Hong Kong and by 1954, he had set up Nan Fung Textiles and revolutionised the industry with innovations such as the open-end spindle, earning the sobriquet ''King of Cotton Yarns''. In 1970, Nan Fung Textiles listed on what was then called the Stock Exchange of Hongkong. Riding the city's economic boom, Chen ventured into property in the 1960s. Nan Fung bought land in Quarry Bay from the British firm John Swire & Sons in 1976 and marked its first major property development, Nan Fung Sun Chuen. In the mid-1990s, as developers paid record-high prices to snap up land sites, Chen stopped buying. He shifted his money into banking stocks in the United States, landing him a windfall. In the late 1990s, he went into real estate-backed lending, offering mortgage loans and mezzanine financing.

Tsingtao Brewery (SEHK: 0168)’s third-biggest shareholder sold a HK$1.5 billion (US$193.3 million) stake in the Chinese brewer at a discount, a term sheet obtained by Reuters showed, sending the company’s Hong Kong shares down more than 9 per cent on Tuesday. Chen Fa Shu, who held about 91.64 million H-shares, has sold 32 million H-shares at HK$47 each, or a 7 per cent discount to the stock’s closing price on Monday, the term sheet showed. It could not be immediately ascertained who bought the shares. JPMorgan is the sole bookrunner of the deal. Tsingtao officials were not immediately available for comment. Chen’s stake in the brewer has come down to 4.41 per cent of the company’s total issued share capital after the share sale from 6.78 per cent, according to a Reuters calculation based on total number of A and H shares. Tsingtao’s H-shares fell as low as HK$45.9, their lowest since May 23. The stock was down 6.9 per cent at HK$47.05 as at 10.20, compared with a 0.37 per cent decline in the benchmark Hang Seng Index. Tsingtao shares in Shanghai were down 2.8 per cent. Japan’s Asahi Breweries held a nearly 20 per cent stake in Tsingtao as of end-last year.

Chief executive-elect Leung Chun-ying on Tuesday formed a seven-member preparatory group to revive the anti-poverty commission. Leung said the preparatory group would be responsible for re-launching the Commission on Poverty and set out its responsibilities and membership. The commission was first set up in 2005 to improve the living conditions of the poor but was scrapped in 2007 following the creation of the Labour and Welfare Bureau. Since then, the government has been criticised for lacking a clear strategy in tackling poverty. The preparatory group will be chaired by Leung and include four non-official members: chairman of the Community Care Fund’s executive committee Dr Law Chi-kwong, the Council of Social Service’s chief executive Christine Fang Man-sang, Society of Community Organisation director Ho Hei-wah, and New World Development chairman Henry Cheng Kar-shun. The chief secretary will be the group’s vice-chairman and the secretary for labour will be a member. Leung said the preparatory group would study how to update the commission’s anti-poverty strategies to meet today’s social needs. “There might be some areas in the works of the previous commission that could not entirely meet social needs. One function of the preparatory group is to listen to the views of stakeholders and advise on the responsibility for the new commission,” he said. The preparatory group will begin operating on July 1.

Incoming chief executive Leung Chun-ying shakes hands with Democrat lawmaker Emily Lau Wai-hing, chairwoman of the Legislative Council Finance Committee, as he made a surprise Movers and shakers lunch-time visit to the chamber during protracted discussions on funding for his government restructure plan in an apparent bid to garner support. Two days before the tabling of a resolution on the government restructuring plan, incoming leader Leung Chun-ying made a surprise visit to the Finance Committee, apparently to lobby support. His move came as scrutiny on a funding request for his proposed revamp enters its third day and is expected to drag on. A spokeswoman for the Constitutional and Mainland Affairs Bureau said last night it would still table the resolution to the plenary council tomorrow, as scheduled, even if the funding request was not passed by the Finance Committee today. But the resolution, if passed, would not take effect until funding for the proposed reshuffle was approved in the Finance Committee, she added. Under the resolution, the government will make necessary legislative amendments for the proposed restructuring - such as adding two bureaus on culture, and technology and communications - into the law. Leung, who called on the legislature just before the Finance Committee meeting was about to resume after the lunch break, stressed that his appearance was not intended as a form of pressure. "I just want to properly say thank you to them, in particular the [chairwoman] of the Finance Committee," he said. Asked whether getting the proposal passed before July 1 was aimed at saving face, he said: "To work for public office, the problem of [saving] face does not exist at all." Leung was seen shaking hands and having pictures taken with lawmakers and officials before the afternoon meeting. The committee chairwoman, Democrat Emily Lau Wai-hing, also said Leung had not pressured her or other lawmakers, saying he had just greeted legislators. After an 18-hour debate that began on Friday and carried through Saturday and yesterday, the committee will hold a four-hour meeting this morning and another six-hour deliberation on Friday. With People Power vowing to propose more than 900 motions and the Democratic Party due to table 21 more in the committee, it remained unclear if the funding request could be approved by July 1. Political scientist Cheung Chor-yung said Leung's surprise visit was clearly to lobby for support, and it showed he was anxious about the passage of his proposal. In June 2010, Chief Executive Donald Tsang Yam-kuen attended the central committee meeting of the Democratic Alliance for the Betterment and Progress of Hong Kong to ensure their support for the government's political reforms. In 2006, Tsang also attended their meeting to canvass for backing for the building of the new government base in Admiralty.

 China*:  June 21 2012 Share

Chinese President Hu Jintao poses for a group photo with other participants of the seventh Leaders' Summit of the G20 in Los Cabos, Mexico, June 18, 2012.

The House of Representatives unanimously passed a resolution on Monday decrying a law – more than a century old – that prevented Chinese from immigrating to the United States. The resolution, approved by the Democratic-led Senate in October, voices ‘regret’ for the Chinese Exclusion Act of 1882, which banned Chinese workers from further immigration and barred existing residents from naturalistion and voting. The Act was in force for six decades, and marked the first and only time the United States federal government explicitly rejected an immigrant group on the basis of their origin. “Today [is] a rare moment in history for the Chinese American community,” said Representative Judy Chu, the Democratic head of the US Congressional Asian Pacific American Caucus (CAPAC). Chu proposed the legislation and reached an agreement with the rival Republican Party to bring the resolution to a vote. “Today, the House made history when both chambers of Congress officially and formally acknowledged the ugly and un-American nature of laws that targeted Chinese immigrants.” Census figures show that over 100,000 ethnic Chinese lived in the United States around the turn of the 19th century. Many were recruited from China “to work as cheap labour to do the most dangerous work laying the tracks” on the transcontinental railroad, said Congressman Mike Honda, immigration task force chair of the CAPAC. Honda added that the early Chinese-American immigrants “strengthened our nation’s infrastructure, only to be persecuted when their labour was seen as competition and the dirtiest work was done.” The US Congress only repealed the Exclusion Act after Japanese wartime propaganda cited the law to question China’s alliance with the United States. “To have moral authority around the world, we must speak out against prejudice at home,” said House Democrat leader Nancy Pelosi, who represents San Francisco, a major centre of the Chinese-American community since some of the earliest immigrants arrived in the 1800s. “Though this legislation cannot erase the deeds of the past, it reiterates our commitment to equal rights for all Americans, regardless of race, now and in the future,” Pelosi added. When the bill voicing regret for the 1882 Act passed in the Senate, it was made clear the legislation would not open the way for compensation claims from Chinese-American families affected by the act. Some 14.7 million people, 4.8 per cent of the total US population, indentified themselves as Asian on the 2010 Census.

An advertisement for e-commerce company in Shanghai. All major online retailers are offering large discounts and rebates to users to attract customers and gain an upper hand in the market. Battle for buyers heats up among e-commerce giants - It's a summer of competition everywhere. While a soccer championships in Europe arouses spectators' enthusiasm, Chinese e-commerce websites are waging a battle of their own for consumers' eyeballs as they fight a price war. Almost all of the top 10 e-commerce players are offering large discounts and rebates to users, part of their effort to attract customers and gain an upper hand in the market. On Monday, the battle came to a climax. To celebrate its anniversary, Beijing Jingdong Century Trading Co, which runs, offered discounts worth 1 billion yuan ($157.3 million) for purchases in June. At the same time,, the largest business-to-consumer website in China, gave users "red-pocket money" worth 40 million yuan to encourage purchases from June 15 to 18. Since May, it has also provided 300 million yuan in rebates for vendors and buyers of electronic products. Home appliance retailer Suning Appliance Co, a smaller competitor, said it would offer rebates of whatever users spent from June 18 to 22, to be used for future purchases. The anniversary of comes at a key time for e-commerce, with players engaged in cut-throat competition for market share. "The price war is very likely to be a practice for e-commerce companies for a long time to come as online shoppers like low prices," said a company official of Suning, who preferred not to be named. Price wars have become the norm for e-commerce players, but the tactic has added to their financial burdens, and most of them remain in the red., for example, had a net loss of more than 1 billion yuan last year, doubling the previous year. However, "the promotions often bring in non-online shoppers to the market, which enlarges the e-commerce players' user base," said Lu Bowang, president of China IntelliConsulting Corp, a market research company. Compared with online ads, which mean a company usually has to spend 100 yuan to get a new user, promotions of this kind are more cost-efficient, he added. E-commerce companies that have failed to break even are taking other approaches to improve their performance. E-commerce China Dangdang Inc, which started out selling books, has recently introduced its own brand, which features products with fatter profit margins. It has recorded losses of more than 300 million yuan since the second quarter of 2011, according to its financial reports, partly due to aggressive price-cutting. As of Monday noon, sales of laptop computers on Tmall had increased by 600 percent, compared with a week earlier, with sales of cameras up 300 percent, during its promotion, according to figures provided by the company. Tmall will offer further rebates to users and vendors in the second half, said Yan Qiao, public relations manager of the company. Tmall dominated China's business-to-consumer market, with a 37.4 percent share in the first quarter, followed by's 17.2 percent and Suning's 2.4 percent, according to domestic research company Analysys International.

Jia Lide and his wife, Li Ting, are young engineers working on the launch of the Shenzhou IX spacecraft at the Jiuquan Satellite Launch Center in Jiuquan, Northwest China's Gansu province. The couple has little time to be with their 3-year-old daughter. Sky is not the limit for young space engineers - Generation born in the '80s plays an important role in nation's space industry - Dressed in his favorite red No 24 jersey with a basketball in hand, people cannot believe 28-year-old Li Wen is an engineer for the Shenzhou IX spacecraft at the Jiuquan Satellite Launch Center. Besides being called a space engineer, the gentle young man from the Inner Mongolia autonomous region prefers people call him "the Kobe in aerospace city". Los Angeles Lakers' All-Star guard Kobe Bryant is his favorite basketball player. Li is just one of thousands of young space engineers in China who devoted themselves to the country's aerospace industry and witnessed the successful launch of the Shenzhou IX on Saturday. Chinese space engineers are about 15 years younger on average than the average age of the space engineers in other countries, China Central Television reported. The busy young engineers staring at the big screen and cheering the country's first manned space docking at the Beijing Aerospace Control Center on Monday illustrates that the generation of Chinese born in the 1980s is playing an important role in the aerospace industry. Liu Ning, 32, director-designer of the China Academy of Space Technology, is the head of the technology department of the Tiangong-1 lab module, and through a simulation has experienced almost all of the activities that astronauts might perform in a module during a space mission. Liu has even experienced a simulated weightless environment, and was hung upside down from a crane to test whether astronauts would be able to open a door in a weightless environment. Liu served as a training partner for the three astronauts in the Shenzhou IX spacecraft in October to familiarize them with every button and function in the Tiangong-1 module. When the Tiangong-1 module was launched, Liu felt a sense of loss. Unlike Liu, 34-year-old Lu Xinguang, director-designer of the Beijing Aerospace Automatic Control Institute, felt relieved after every successful launch. He has already attended the launch of Shenzhou V, Shenzhou VI, Shenzhou VII, Shenzhou VIII, Shenzhou IX and Tiangong-1 module. Lu told China Central Television that it felt really good to see the spacecraft flying into the sky. The booming development and proud feeling of being a space engineer has attracted young people's attention. Shang Teng, 25, a new researcher at the Beijing Aerospace Automatic Control Institute, told China Central Television that he is very excited to have the opportunity to learn from these young engineers. "Everyone here loves what he or she is doing. It is the right place for me," Shang said. In China's space development, the 1980s generation of engineers and scientists are playing an important role. Mou Yu, 30, deputy director-designer of the China Academy of Launch Vehicle Technology, said it is time for the 1980s generation to contribute to social development. Mou is confident of taking on any challenge. "Young space engineers and scientists are the hope for the development of China's aerospace science and technology," said Yang Hong, director-designer of the China Aerospace Science and Technology Corporation. On Saturday, China successfully launched the Shenzhou IX, and on Monday the country's first manned space docking was completed, taking China one step closer to setting up its own space station by 2020.

Five thousand ducks head to a pond for food in Taizhou, Zhejiang province, on June 17, 2012. The owner, surnamed Hong, said he had not lost one of them for the past six months as he usually takes them for food by crossing roads. 

China leads BRICS to prop up IMF firewall - Led by China, emerging economies pledged huge sums to the International Monetary Fund’s global firewall on Monday, helping it raise US$456 billion in resources as the euro zone crisis rages. In a clear statement of their new force in the world economy, rising economic powers brought some US$95.5 billion in new money to the table for the IMF during the G20 summit in Mexico, pushing it beyond its US$430 billion target. But the money also came with a warning that things had to change at the Fund, long dominated by the now troubled economic powers of Europe and the United States, which itself has not contributed to the firewall. In an announcement late on Monday, the IMF said China was offering US$43 billion, Brazil, Russia, India and Mexico US$10 billion each, US$5 billion from Turkey, and smaller sums from a handful of other up-and-coming economies. IMF managing director Christine Lagarde said that 12 more countries offered money to the fund during the Group of 20 meeting in the Mexican resort of Los Cabos, bringing the total number of donors to 37. From left, Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Manmohan Singh, Chinese President Hu Jintao and South African President Jacob Zuma pose for a group photo in Los Cabos, Mexico, on Monday. The BRICS countries said Monday that they're considering setting up a foreign-exchange reserve pool and a currency-swap arrangement as financial problems threaten to spread across the global economy. Leaders of the five-member group -Brazil, China, India, Russia and South Africa - also said it is "willing to make a contribution" to increase the International Monetary Fund's ability to rescue troubled economies. China's President Hu Jintao on Monday morning joined counterparts from the other BRICS nations in the Mexican resort of Los Cabos ahead of the start of the Group of 20 summit. According to the Chinese foreign ministry, the leaders discussed both the currency swap and foreign-exchange reserve pool ideas and tasked their finance ministers and central bank chiefs to implement them. Swap arrangements, which allow nations' central banks to lend to each other to keep markets liquid, and the pooling of foreign-exchange reserves are contingency measures aimed at containing crises such as the one roiling the eurozone, analysts said. Contributions to this "virtual" bailout fund, as Brazil's Finance Minister Guido Mantega put it, would be tied to the size of each BRICS member's currency reserves, he said. The two measures discussed Monday may also be seen as part of a broader move by emerging markets to move away from a reliance on the dollar and the euro, as well as on the IMF, which requires strict conditions for its loans, the Wall Street Journal said. The five leaders also discussed BRICS' participation in replenishing the IMF's lending capital. The BRICS leaders stressed that ensuring the IMF is well capitalized is conducive to helping resolve global economic and financial challenges. The bloc is willing to contribute to those goals, the Chinese ministry said. The leaders also urged the IMF to carry out promised reforms of its quota and governance systems. Mexico, which is hosting the G20 summit Monday and Tuesday, has said it will use the meeting to push the world's largest economies to increase IMF resources and build the fund's capacity to intervene in the European debt crisis. BRICS countries including China made unspecified funding pledges at the IMF's April meeting in Washington. A boost in IMF funding makes sense and gives emerging economies such as China a greater role, according to Yukon Huang, senior associate at the Carnegie Endowment for International Peace and a former World Bank country director for China. "Support for a larger IMF role solves several problems. Any solution involving the IMF represents a more collective and coordinated approach and is thus less politically driven and more sustainable since it implies that the right policy actions have been agreed on," Huang told China Daily. "And if the increased liquidity is not enough, then proposals such as a currency swap and pooling of reserves provide other options. These measures were supported by China as well as affected countries during the Asian financial crisis 15 years ago to provide assurance that additional resources could be available if needed," he said. The BRICS now boast about 42 percent of the world's population and more than a quarter of its land mass. According to IMF estimates, the five had a combined nominal gross domestic product of $13.6 trillion in 2011, about 19.5 percent of the global total. Since 2010, more than 50 percent of global growth has come from the BRICS, and it has become an important force in easing the international financial and economic crisis, driving regional and global economic growth.

Hong Kong*:  June 20 2012 Share

As Hong Kong's exports to the troubled United States and European markets shrank in the first quarter, the Trade Development Council (TDC) is urging exporters to turn to Africa for growth. Europe was Hong Kong's second-worst export market in the first quarter, falling 4.2 per cent to HK$77.43 billion, while exports to the US dipped 0.1 per cent to HK$72.57 billion, the Census and Statistics Department said. These two are the city's largest export markets."Exporters were particularly pessimistic about the EU in the second quarter," TDC chief economist Edward Leung said. "This year, we are not very optimistic. Our May exports improved somewhat, but it is not representative." The growth of Hong Kong's total exports slowed to 0.3 per cent in the first four months, much slower than last year's 10.1 per cent growth and the 22.8 per cent growth in 2010. Hong Kong exporters' sentiment on the EU remained negative, with an index reading of 42.5 in the second quarter, little changed from the 42.6 in the first, according to TDC's poll of 500 local firms. A sentiment number below 50 indicates expectations of a contraction in exports, while above 50 indicates an expected increase. Their overall sentiment, however, improved from 43 in the first quarter to 47.2 in the second, while sentiment on the mainland market turned positive, with a reading of 51.6 in the second quarter, up from 49.7 in the first. Meanwhile, Taiwan's exports fell in May for a third month, after a similar export contraction in South Korea the same month, as further evidence of Asia's exports suffering from weak demand in the major markets of the US, Europe and mainland China. Taiwan's export orders - which is different from actual exports - are also expected to shrink for a third straight month in May, according to Reuters. Leung maintained his December forecast that Hong Kong's exports this year would grow 1 per cent in nominal terms, but drop 3 per cent in real terms. "You can't have much hope for the EU. We urge Hong Kong exporters to step out of their comfort zone for a real adventure out of Africa. Apart from BRICS [Brazil, Russia, India, China, South Africa], Africa will be the next growth engine of the world economy in the coming decades." Although Africa was Hong Kong's worst export market in the first quarter, falling 8.2 per cent to HK$4.42 billion, some African nations were promising markets, he said, citing Nigeria, with 23 per cent of its citizens in the middle income bracket, and Ghana - one of the fastest-growing countries, with 14.4 per cent growth in gross domestic product last year.

Wealth gap hits a 30-year high - Hong Kong's Gini coefficient, a measure of income inequality, is one of the developed world's highest - The median monthly income for the city's poorest 10 per cent dropped from HK$2,250 to HK$2,070 in the past five years. The gap between rich and poor in Hong Kong, as measured on an internationally recognised scale, now stands at its widest in at least three decades, government figures show. The city's Gini coefficient - a scale from 0 to 1 on which higher scores indicate greater income inequality - has reached 0.537 based on income data from 2011. It was 0.533 five years ago and 0.451 in 1981. It is among the highest in the developed world - compared to 0.482 in Singapore and 0.469 in the United States - with poverty advocates saying it shows that neither the economic growth of the past few years nor government relief measures have succeeded in improving the plight of the poor. Officials meanwhile say that income disparity is likely to worsen in coming years as the ageing population removes more people from the workforce. The number of "economically inactive households", defined as families where nobody is working, increased by 48 per cent from 280,000 to 420,000, the Census and Statistics Department said. Census department statistics released yesterday also showed that the median monthly income for the city's poorest 10 per cent, including those who received social security assistance, dropped from HK$2,250 to HK$2,070 in the past five years while the top 10 per cent of earners made HK$95,000, compared to HK$76,250 five years ago. Oxfam's advocacy officer Wong Shek-hung said a Gini index higher than 0.4 indicated serious inequality. Associate Professor Law Chi-kwong, of the University of Hong Kong's social work department, said the figures might well be underestimated as the measurements included welfare income received by households eligible for Comprehensive Social Security Assistance. The warnings came a day after chief executive-elect Leung Chun-ying vowed to revive an anti-poverty commission to set out policies to relieve hardship among low-income earners. Leung said on Sunday that a preparation committee for the commission would be formed soon so the body could be functioning when he took office in July 1. Commissioner for Census and Statistics Lily Ou-yang said yesterday that the enactment of minimum wage laws as well as economic growth in the past few years had boosted incomes for low earners and the better-off, meaning the wealth gap had not changed dramatically. The chief executive of the Hong Kong Council of Social Service, Christine Fang Meng-sang, said the government should no longer assume economic growth could improve the living standards of the poor. Various advocacy groups have estimated that more than 1 million Hongkongers live in poverty, although the government does not have an official definition. Chan Yik-ping, 43, said her family of four saw little hope of escaping poverty in the near future. A quarter of her waiter husband's HK$8,000 salary goes on rent for their cubicle in a subdivided flat in Sham Shui Po, while milk formula and diapers for a new baby cost HK$2,000. "I just took the baby to see a doctor today. It cost HK$100, and it's already the cheapest in town," Chan said. "It's nearly impossible for four people to live off just HK$8,000." The family applied for public housing four years ago but have heard nothing yet. "My biggest wish is to be assigned a flat in a public estate soon. The children are growing up and it's getting more crowded here," she said, looking at her 12-year-old son. "My older son has always wanted his own room, and I feel sorry that I haven't been able to give him that."

Hong Kong Mother of missing teen makes tearful plea in US - The mother of a Hong Kong student who has been missing in California since Wednesday made a desperate plea in the United States yesterday for information on her whereabouts. Jenny So struggled to hold back tears as she urged viewers of a CBS news program in San Diego to aid the family's search for 19-year-old Jessica Lo Hiu-tung. "Help me locate my daughter, please," So said. "It's almost a week." Jessica Lo, who recently graduated from San Diego Mesa College, was first feared missing on Thursday, when she failed to arrive at Chek Lap Kok airport, where her father, Samson Lo, had gone to meet her. She had planned to spend the summer at home before transferring to UCLA in the autumn to study theatre. Her parents soon learned that she had not boarded either of her scheduled flights the previous day - a Southwest Airlines flight from San Diego to San Francisco and a Hong Kong-bound connection with Cathay Pacific (SEHK: 0293). The student's aunt in San Diego reported her missing to local police after the family's attempts to contact her via Facebook and her mobile phone were unsuccessful. Her parents immediately flew to the US to retrace her footsteps. "I can't see any factor that makes her [want to] escape from us," So told CBS. "So, I worry that it must be [something has happened] to her." The last contact that anyone in the family had from the teenager was a text message she sent to her sister, Henrietta Lo Hu-yan, about eight hours before she was supposed to catch her flight to San Francisco. Jessica Lo said in the text that a female friend was going to take her to the airport after they had watched the sun rise. It is unknown whether the missing woman ever went to watch the sun rise or arrived at the airport. "This was my last contact with my sister," Henrietta Lo said yesterday. Police in San Diego are reviewing the student's phone records and trying to contact her close friends or anyone else who may have had contact with her before she disappeared. On Sunday, the parents visited popular spots for viewing the sunrise in San Diego and distributed flyers around the city. Henrietta Lo said it would be unusual for her sister to disappear for days without telling anyone in her family where she had gone. "I don't dare to speculate what may have happened to my sister," Henrietta Lo said. "She is not a child. She knows her family worries about her. She must be in a situation that she can't control and she can't come back and contact us."

Yoshiko Nakano (left), with University of Hong Kong Japanese studies graduates Emmy Wong (centre) and Keithy Suen Lo. Hongkongers are increasingly being recruited by Japanese firms who have traditionally hired their own nationals to work as executives around the world. Grooming Hong Kong talent fluent in Japanese, English, Putonghua and Cantonese for senior management positions in their overseas offices will also help cut costs and boost staff morale. This had not always been the case, said Dr Yoshiko Nakano, an associate dean at the University of Hong Kong's faculty of arts for outreach and development. "Japanese companies tended to see Hong Kong workers - regardless of how proficient in English or Japanese - as second fiddle," Nakano said. "They basically were in assistant roles for a very long time, and didn't have much of a chance of being promoted to a higher post." In the past, Hong Kong graduates would be hired to work in the local offices only, but now, they were viewed as "global talent" and sent to Tokyo for management training, she said. Nakano put the change down firstly to costs. Hiring Hongkongers to run their local offices was cheaper than deploying executives from home. "Japan has been suffering from a recession since the 1990s, so companies had to find ways to run their offices more effectively," she said. Secondly, Hong Kong graduates' language proficiency was making the city a gold mine for future executives, especially for manufacturing companies that viewed China as a valuable resource, Nakano said. "Japanese companies are beginning to see the potential of using Hong Kong graduates to act as a bridge between several countries," she said. Emmy Wong Leung-ching, 23, who has a degree in Japanese studies, will soon start working for Toshiba as a procurement trainee in Tokyo. She spent a year studying at Hitotsubashi University in Japan, where she had her first taste of the work culture. "During my internship, I made a presentation to persuade a company to take part in a competition, and the request was made at the start of my presentation," Wong said. "I later learned that it was impolite of me to be so forward." Nakano said graduates familiar with Japanese culture tended to be more loyal to their companies - a virtue the Japanese regard highly. "From what I have seen, certain companies in the financial industry may hire from the faculty of business and economics, but the recruits from Japanese studies tend to be loyal and work for years," she said. Rita Fung Sau-ping, the head of human resources at the Bank of Tokyo-Mitsubishi UFJ's Hong Kong office, said the company hired about eight management trainees a year in Hong Kong. They would undergo training at the Tokyo head office and at other overseas centres, including New York. She denied cutting costs was an objective. Fung said the aim was to diversify and localise the workforce. Of the bank's 37 department heads in Hong Kong, 31 were local, she said.

A Hong Kong investor will plough about 480 million pounds (US$751 million) into a development in east London’s Greenwich peninsula to take a majority stake in the 150-acre scheme, the second deal this month in which an Asian company has bought a significant chunk of the UK capital. In a joint venture alongside British developer Quintain Estates, Knight Dragon, a vehicle controlled by the chairman of Hong Kong company New World Development, will take a 60 per cent stake in the scheme of homes, offices and shops, with Quintain holding the rest. Quintain’s share price rose 25 per cent in early London trading to 41.25 pence on the back of the announcement that analysts at Peel Hunt said would “accelerate development through the vastly increased firepower”. Australian developer Lend Lease, which previously held a half stake alongside Quintain, will sell its interest for about 100 million pounds. As part of the deal Knight Dragon will provide up to 300 million pounds of debt funding. The deal follows an agreement earlier this month to sell London’s landmark Battersea Power Station to Malaysian investors SP Setia and Sime Darby for 400 million pounds. Central London has been the focus of a string of deals by Far Eastern investors in recent years looking to benefit from the city’s perceived safe haven appeal and the iconic nature of some of its real estate. The Greenwich scheme, which is near the O2 concert venue, will include more than 10,000 new homes and space for 25,000 workers along a 1.4 mile stretch of the River Thames. “Together we are well placed to turn our vision for this landmark project for London into reality, creating thousands of homes and jobs in the process,” Quintain chief executive Maxwell James said. James was appointed last month amid suggestions by some analysts that investors were running out of patience with previous boss and founder Adrian Wyatt over the company’s performance during the financial crisis, with its shares trading at a 70 per cent discount to net asset value at the time.

Bernard Chan, the government's chief adviser on heritage properties, announced his resignation on Monday morning after he was accused of colluding with officials' desire to demolish a former government building. Chan, the chairman of the Antiquities Advisory Board, said his personal ties with bureau chiefs and other officials had prompted questions about his neutrality in grading the west wing of the former government headquarters. Chan said on Monday he hoped his resignation would stop the criticism. “I don’t want the professional image and credibility of other board members to be affected because of me, so I think it’s time I should resign,” he said. Last week he voted for a grade two rating for the long-debated west wing, after other members’ votes were tied between grades one and two. A grade two building is not generally safe from demolition; while a grade one listing may be protected if it is then declared a monument. Although Chan said the grading was not final – pending a confirmation from the board and a public consultation – pressure groups criticised his vote. They questioned whether Chan’s close ties with the government played a part in his vote. Chan said he would stay in office for a short transitional period and would probably chair a meeting next month when the board discusses the west wing’s grading again. But he will not vote during that meeting, he said. Chan was a member of the Executive Council from 2004 to 2009.

The High Court ordered Hong Kong Central Hospital to move off the site it has occupied for more than 50 years, ruling on Monday in favour of the landlord, the Anglican Church. Deputy-Judge Mr Justice Conrad Seagroatt ruled in favour of the church’s Sheng Kung Hui Foundation, finding that the hospital had no defence for continuing to occupy the site on Lower Albert Road, Central, after its tenancy agreement expired in June last year. The judge, giving a summary judgment in the Court of First Instance, said it would be “utterly unconscionable” for the non-profit hospital to continue to inconvenience the church. He ordered the hospital to hand over the site in three months and pay outstanding rents, which are estimated at about HK$3million, in 28 days. The hospital has said it faces difficulties transferring its patients – including those suffering from chronic illnesses and expecting mothers – and dealing with the patients’ records in three months. The church has said it will make accommodations to help the hospital move out in an “orderly manner”. The ruling, unless challenged by the hospital, will clear the path for the church to carry out plans to redevelop the site. The hospital has not decided whether to appeal. In reaching his decision, the judge rejected the hospital’s claim that in 2005 the archbishop at the time, Dr Peter Kwong Kong-kit, had promised the hospital it could rent the site for another 10 to 15 years. The judge said it was inexplicable that there was no documentary evidence of that promise. “There was nothing credible to support the claim,” the judge said. The judge said he could think of no institute that would have shown as much “tolerance”, “patience” and “forbearance” as the church, in face of the hospital’s reported accusations that the church was “greedy”, “oppressive” and “self-interested”. Outside court, provincial secretary general the Reverend Peter Douglas Koon said: “Justice has been done. It clears the name of the church.” “We are very disappointed that the hospital framed our bishop. This is something that we cannot accept,” Koon said. “We understand that any organisation will do what’s in its best interest, but it has to be done with basic conscience and a moral standard.” The judge criticised the hospital for making a “direct threat” against one of its own directors, Dr Donald Lee Kwok-tung, after he gave a sworn statement saying he was “not aware” the church had made the alleged promise of a 10-15 year lease extension. The court heard that lawyers for the hospital wrote to Lee warning him that he had breached his fiduciary duty, accusing him of lying and threatening to sue him. The judge said no institute in Hong Kong should inhibit a member from exercising his conscience in saying what he felt was right and just.

 China*:  June 20 2012 Share

Chinese astronauts, from left, Liu Wang, Liu Yang and Jing Haipeng wave in the orbiting Tiangong-1 lab module Monday afternoon, June 18, 2012. They moved from Shenzhou-9 spacecraft to this module three hours after docking Monday. Three Chinese astronauts on Monday entered an orbiting module for the first time, in a move broadcast live on China’s state television network and a key step towards development of the nation’s first space station. The astronauts, two men and a woman, passed into the Tiangong-1 module a little under three hours after it docked with the Shenzhou-IX spacecraft. The Shenzhou-XI launched on Saturday carrying the first Chinese woman to go into space, before undergoing the third automatic docking China has ever performed, and the first for a manned mission. The astronauts, who were shown waving to a camera as they floated inside the narrow Tiangong-1 capsule, will attempt to complete the highly technical docking procedure manually later in their 13-day mission. The Tiangong-1 is an experimental module that is part of China’s programme to build a space station by 2020. It will stay in orbit until next year and will later be replaced, but is designed to test the docking technique essential to a space station – a delicate move the Russians and Americans successfully completed in the 1960s. The manoeuvre is hard to master because the two vessels, placed in the same orbit and revolving around the Earth at thousands of kilometres per hour, must come together very gently to avoid destroying each other. Reports have said the Shenzhou-IX will remain attached to the space capsule for six days before separating in preparation for a manual docking. President Hu Jintao has said the operation would mark a “major breakthrough in the country’s manned space program”, which is gearing up just as the United States scales back its manned space exploration activities. China sees its space program as a symbol of its global stature, growing technical expertise, and the Communist Party’s success in turning around the fortunes of the once poverty-stricken nation. The ability to dock manually is necessary in case of problems with the automatic procedure, such as the control centre being unable to carry it out remotely from Earth. The team – headed by Jing Haipeng, a veteran astronaut on his third space mission – have rehearsed the procedure more than 1,500 times in simulations. Liu Wang, who has been in the space programme for 14 years, will be in charge of manual docking manoeuvres, while Liu Yang, China’s first woman to travel to space, will conduct aerospace medical experiments and other space tests. Their mission has been heavily covered by China’s state-run media, with much of the attention focused on Liu Yang – at 33, the youngest of the three. She has been hailed as a national heroine and her mission is being excitedly followed in the Chinese media and on the country’s popular microblogs. Banners have reportedly been put up at her former high school in the central province of Henan celebrating her selection as the country’s first female “taikonaut”, as the country dubs its space travellers.

A sequel to 2008′s “Painted Skin,” the film reunites most of the original’s cast, including Zhou Xun, Zhao Wei and Chen Kun. Notably absent this time around is kung-fu star Donnie Yen. “Painted Skin: The Resurrection,” whose budget is reportedly as high as 150 million yuan ($23.5 million), also features a new director, Wuershan, who replaces the original film’s Gordon Chan. Singularly named and hailing from Inner Mongolia, Wuershan is known for his commercial work and made his feature-film debut in 2010 with “The Butcher, the Chef and the Swordsman,” a martial-arts black comedy about a large blade traversing ownership among three men. Set in ancient China, “Painted Skin: The Resurrection” is about a demon (Ms. Zhou) who consumes the hearts of men to remain young and beautiful, and the pursuit of true love that will transform her into a human. Critics praised the sequel’s cinematography and costumes but knocked what they described as the movie’s “paper-thin characters and incoherent story.” The Hollywood Reporter said “many scenes fail discouragingly to live up to” the director’s “lyrical ambitions, when not downright ridiculous.” But trade publication Film Business Asia described it as a “very entertaining, slightly over-long costume fantasy whose performances and sheer technique carry a script that often punches above its weight.” “Painted Skin: The Resurrection” opens across China on June 28 and in early July in other parts of Asia.

The 2012 Beijing International Tea Expo kicked off at Beijing Exhibition Center last Saturday. Over 300 domestic and foreign enterprises from the tea industry showed up at the four-day event, displaying several hundred kinds of tea, tea ware, drinks, tea food, and tea crafts. China now boasts the world's largest producer and consumer of tea. In 2011 alone, the annual production reached 1.6 million metric tons, and domestic consumption stood at 1.3 million tons, according to the official website of the Tea Expo 2012. Tea culture is one of the nation's cultural heritages passed down for thousands of years. 

The first manned space rendezvous and docking mission of China succeeded Monday afternoon as the Shenzhou IX spaceship and Tiangong-1 space lab module joined together, according to the Beijing Aerospace Control Center.

Hong Kong*:  June 19 2012 Share

It took a decade of debate to finally get a competition law passed, but many more hours of consultation and discussion lie ahead before it will go into effect, commerce chief Greg So Kam-leung said on Monday morning. The controversial law’s passage last Thursday was just “the start of a long process”, So said on a radio program. Still to be established are the guidelines for the law’s implementation as well as a tribunal to review complaints and a Complaints Commission. “We will set up the Competition Tribunal and the Competition Commission, which will then outline details on the law’s complaint mechanism and investigation procedures,” So said. “The commission … will take that text, with the details, for consultation with various sectors, then with Legco, before they become effective.” The commission will contain five to 16 members. While opponents of the law – passed with 31 votes and five abstentions in the 60-member Legislative Council – fear there will be devils in the guideline details, So thinks of the details as “angels”. “The guidelines are angels that give clarity on how the law will work, exactly,” said So. New People Party chairwoman Regina Ip Lau Suk-yee had moved an amendment to empower Legco to pass or reject the guidelines – to create greater checks and balances – but it was voted down. The guidelines directing the implementation of the law will go through consultation and debate in the Legislative Council, So said. The law aims to prevent bid-rigging, price-fixing and other monopolistic behaviour. But it has been heavily amended to soothe business opponents, who said the law would have trapped innocent small companies before catching the giant enterprises. The government raised exemption thresholds for small and medium-sized enterprises, to pacify businesspeople: 95 per cent of small and medium-sized enterprises have been exempted. Concessions on the size of penalties for larger businesses and the introduction of a turnover threshold to limit prosecutions for smaller businesses have also dampened enthusiasm. Upon concessions, two market thresholds were established in October – and subsequently lifted in April – to exempt 95 per cent of small and medium-sized enterprises. “The current [version of the] law has struck a balance between consumers and the business sector,” said So. The first and foremost task is to announce a date – in the form of subsidiary legislation – for the establishment of the two competition bodies, he said.

Bernard Chan quits in west wing heritage row - Bernard Chan, the government's chief adviser on heritage properties, announced his resignation on Monday morning after he was accused of colluding with officials' desire to demolish a former government building. Chan, the chairman of the Antiquities Advisory Board, said his personal ties with bureau chiefs and other officials had prompted questions about his neutrality in grading the west wing of the former government headquarters. Chan said on Monday he hoped his resignation would stop the criticism. “I don’t want the professional image and credibility of other board members to be affected because of me, so I think it’s time I should resign,” he said. Last week he voted for a grade two rating for the long-debated west wing, after other members’ votes were tied between grades one and two. A grade two building is not generally safe from demolition; while a grade one listing may be protected if it is then declared a monument. Although Chan said the grading was not final – pending a confirmation from the board and a public consultation – pressure groups criticised his vote. They questioned whether Chan’s close ties with the government played a part in his vote. Chan said he would stay in office for a short transitional period and would probably chair a meeting next month when the board discusses the west wing’s grading again. But he will not vote during that meeting, he said. Chan was a member of the Executive Council from 2004 to 2009.

Hong Kong’s Artful Thank You - One of the highlights of last week’s ceremony marking Uli Sigg’s milestone $163 million donation of Chinese contemporary art to Hong Kong was a mysterious gift to the Swiss collector, brought onstage framed and festooned with red ribbons. West Kowloon Cultural District Authority officials confirmed afterward that it was a work by Beijing artist Hong Hao, best known for his collages and pictures of grouped everyday objects. Presented on behalf of the territory, “Composing a Poem on Bamboo” was given by West Kowloon board member Ronald Arculli, who first spotted it at a charity silent auction in 2010. Printed on rice paper, the artwork forms part of Mr. Hong’s “Elegant Gatherings” series, which reimagines Song and Ming dynasty masterpieces by featuring figures from the contemporary art world. The series is inspired by “Elegant Gathering in the Western Garden,” an 11th-century painting by Li Gonglin that portrays a conclave of literati. Mr. Sigg is pictured in the middle of Mr. Hong’s work, wearing a light blue shirt and standing behind a trio of ancient scholars. Mr. Arculli, a former chairman of the Hong Kong Stock Exchange and long-time art lover, said he first came across the work at a fundraiser for Hong Kong-based nonprofit Asia Art Archive. “I felt it was special and though I had no occasion in mind, I thought I would buy it for Uli Sigg, who has always been a generous friend and patron,” he said. He added that Mr. Sigg, who did not expect the gift and was visibly emotional, “thanked us very much.” The artist, speaking through his Beijing gallery, Chambers Fine Art, explained that he created the work in 2007 by using photos he had snapped from various art gatherings. He then juxtaposed them with the classic Chinese image. He identified the man to right of Mr. Sigg as Guangdong-born artist Chen Shaoxiong, who stands next to Tang Xin, director of Beijing gallery Taikang Space. To her right is artist Han Lei, who also often works in photography. The two Westerners on the hill are strangers Mr. Hong photographed at an opening of the Asia Pacific Triennial of Contemporary Art in Queensland, Australia. The artist said he does not know their identity.

Nan Fung Group founder Chen Din-hwa finally lost a long battle against prostate cancer and died yesterday at the age of 89. Chen passed away in the Hong Kong Sanatorium and Hospital's intensive care unit yesterday. The cancer was discovered in 1999 but was sent into remission. It struck again in 2010, however, and Chen's doctors pointed to him having no more than two years to live. Earlier, in 1995, he was diagnosed as suffering with dementia, and his mental condition was the basis for a flurry of legal actions in recent years involving his family. A source close to the family confirmed Chans death to The Standard. But the family were maintaining a silence, and there was no sign of them in the wing where Chen had been confined. And a spokesman for Nan Fung did not have anything to say about the death of the founder. The private hospital in Happy Valley was in fact heavily guarded as word of Chen's death spread, and additional security guards appeared to have been stationed at the entrance. But three monks were seen walking toward what was believed to be Chen's room, and the chanting of Buddhist mantras was heard. Chen was a devout Buddhist and his two daughters had followed his wishes and brought in monks as his end neared. But because of their rivalry they each organized teams of monks from different monasteries. Even up to last week, Chen's state was not enough to see a reconciliation between feuding daughters Vivien Chen Wai-wai - the youngest, who was put in charge of Nan Fung in 2009 - and Angela Chen Wai-fong. They didn't even speak to each other when they met in the hospital. Chen and wife Yang Foo-oi, 88, divorced last year, with her reportedly being given a HK$10 billion settlement. She has also taken Angela's side in the eldest daughter's bid for executive involvement in Nan Fung. Chen was born in Zhejiang province in 1923 and came to Hong Kong in 1949. He invested HK$300,000 in the textiles industry and his business soon became the biggest in Hong Kong. That led to Chen being dubbed "King of Textiles." He became involved in the property market in the 1960s and this side of his business was also a major success. Forbes ranked him the 14th richest man in Hong Kong last year, estimating that he has a wealth of about HK$20 billion. This also made him the 464th richest man in the world. But experts have estimated that Chen could have been worth as much as HK$100 billion as his activities also involved shipping and financial investments.

Four former industrial sites have been identified for public housing use, Financial Secretary John Tsang Chun-wah said yesterday. Reviewing his work on housing land supply, Tsang, tipped to be staying in his post in the next administration, wrote on his blog that he would continue to lead a steering committee on housing land supply and explore new ways to expand the government's land bank. "Land is the basis for life and all economic activities. A shortage in land supply is also a cause for social and economic conflicts … I believe the work on land supply has to be perpetuated and improved to address people's hopes for a better home," he wrote. He said an ongoing review covering 60 hectares of former industrial land has so far identified five sites for rezoning into housing use - in Tsuen Wan, Fo Tan, Tai Kok Tsui and Yuen Long. While one of the parcels of land will be set aside for sale to private developers, four will be handed to the Housing Authority for construction of public rental homes and flats under the new Home Ownership Scheme. The scheme, relaunched last year amid mounting calls for more subsidised housing, will deliver 5,000 flats a year from 2016 for families who earn between HK$20,000 and HK$30,000 a month. Another review covering sites currently zoned for government, community facilities and institutions' use has been completed, locating 36 sites suitable for housing development, Tsang added. The reviews of urban sites are one of the six strategies to increase land supply announced by the government last year. The other five strategies are urban redevelopment, land resumption in the New Territories, reclamation outside Victoria Harbour, rock cavern development and reusing former quarry sites. Tsang said the short-term measures - the rezoning exercise and redevelopment - would release 150 hectares of land, and together with the long-term measures, they cover a total of 2,400 hectares of potential housing land.

York Chow says he has no definite plans for the future, although he has no desire to serve as a government minister again. Do not expect too much from Leung Chun-ying's administration, outgoing health minister Dr York Chow Yat-ngok warned Hongkongers yesterday. "The public should not have too much hope for the next government, because during an election, candidates' policy manifestos can be perfect, but can these perfect manifestos be delivered?" he asked during an interview on a radio show. However, he clarified after the interview that he had confidence in the chief executive-elect's cabinet and believed the public could have high expectations, too - just not too high. Chow said in his experience, it took time to implement policies. Citing Leung's electoral slogan, he added: "I hope it will really be a 'gradual change' instead of announcing a whole raft of [new policies] in a short time. [Otherwise] I am worried that they may not be achievable, or side effects will emerge afterwards." But he also urged the Legislative Council to work swiftly to pass legislation that would allow Leung to restructure the government. Leung said later he intended to be practical and realistic and do things step by step. Chow's term ends on June 30, and Leung's begins on July 1. Chow has said he has no definite plans for his future - except that he has no desire to serve as a government minister again. Although he would like to pass on his experience and knowledge to the next generation, the teaching profession does not appeal to him. "I don't like rigid teaching work. It's not just in classrooms - you speak in the Legislative Council and no one's listening. I don't want teaching work that's boring," said Chow, 64. "At my age, I want to enjoy life, spend time with family and do some meaningful work. In the past eight years [as the secretary for food and health], I have been happy, even though when I was a doctor I never thought of becoming a government official." He has previously hinted that former Hospital Authority official Dr Ko Wing-man is to be his successor. He said yesterday: "I'm confident in him because I know him. He is a good person; don't bully him." Meanwhile, Chow praised Chief Executive Donald Tsang Yam-kuen, who took office in 2005, for making healthcare a priority and for his willingness to take advice. He also said Tsang was assertive in making decisions and placed trust in his subordinates. Asked if incoming leader Leung might differ from Tsang in this respect, Chow said Leung had shown perseverance in his long journey to the top. For Chow, leaving office without resolving the manpower shortage in public hospitals is his main regret. "There is an increasing burden on frontline hospital staff," he said. "We have recruited most graduates from medical schools and nursing schools. We have been recruiting overseas doctors, and still we don't have enough [manpower]. On this, our work has not been sufficient." In response to criticism that his policies fostering the development of the private medical sector led to a flow of manpower from the public sector, he said: "I don't think too many have left, though it is seen in some specialities like obstetrics." Many senior doctors had stayed in the public sector, he said.

Chief executive-elect Leung Chun-ying at the meeting with the underprivileged in Sham Shui Po on livelihood and poverty issues. Chief executive-elect Leung Chun-ying vowed yesterday to revive the anti-poverty commission as soon as he takes over, in a move to demonstrate that easing people's hardship is his top priority. "We'll invite anti-poverty experts to join the preparatory committee, which will begin operations on July 1," Leung said after attending a lunch with 100 underprivileged people at a seafood restaurant in Sham Shui Po. The committee "will advise on the establishment and responsibility of the Commission on Poverty within the shortest possible time". It means resurrecting an initiative his electoral rival, Henry Tang Ying-yen, presided over from 2005 to 2007. The commission was first set up in 2005 to improve the living conditions of the poor and was headed by Tang, who was then the financial secretary. It proposed providing travel allowances to the poor to encourage them to seek jobs outside their neighbourhoods. It also supported the establishment of the Child Development Fund. However, the commission was scrapped in 2007 following the creation of the Labour and Welfare Bureau. Since then, the administration has been criticised for lacking a clear strategy in tackling poverty. Both Leung and Tang advocated reviving the commission during their election campaigns for the chief executive's job. Leung also said yesterday that he was looking into ways to shorten the waiting period for public housing. However, he refused to consider rent control, saying it would harm the rental market. Leung was speaking at a function organised by the Society for Community Organisation. Its director, Ho Hei-wah, had arranged for Leung to visit Sham Shui Po during the election. Leung handed out organic vegetables to families at the event and listened to representatives' stories of hardship in their lives and their hopes for the new administration. Yeung Dik-wa, a repairman working at Amoy Gardens, said he had applied for public housing for years but had not had a reply. Yeung lives in a 100 sq ft partitioned flat with his wife and two children. "Life is short and we can't live such a life year after year. I hope the new administration can be more responsible towards the underprivileged," he said. Li, a street hawker who also lives in a subdivided flat, said: "We grass-roots citizens are not enjoying the fruits of Hong Kong's economic development." He hopes the government can issue more licences to street hawkers and give needy people a chance to earn a living. This year, more than 179,000 households are competing for 15,000 public housing flats. Leung has promised that his administration will provide more public housing and he has vowed to tackle poverty. Meanwhile, the chief executive-elect's office continues to interview candidates for the 13 undersecretary posts. They include Henry Ho Kin-chung, the University of Hong Kong's senior manager of community relations, who is keen to serve in the environment bureau. Leung said all interviews would be completed today. His office will then recommend at least two candidates to each of the 13 ministers. A second round of interviews may be arranged if there are not enough candidates.

 China*:  June 19 2012 Share

Beijing offered a series of economic sweeteners to Taipei yesterday, pledging 600 billion yuan (HK$734.4 billion) in bank loans to investors, while promising to import rice from the island, in a bid to enhance cross-strait ties. The vows came at the fourth annual Straits Forum in Xiamen , Fujian province, where Wang Yi , director of the State Council's Taiwan Affairs Office, also announced more mainland regions would be open to job-seeking Taiwanese, including those who graduate from mainland universities. In response to Beijing's offers, one scholar said he expected Taiwan to return the favours by reforming discriminatory policies against mainland students. In Wang's speech, posted on the official website of the Taiwan Affairs Office, he said mainland businesses would also be able to directly employ Taiwanese residents in more regions, without setting a timetable. The revised employment policy, which is already in effect in Fujian and Jiangsu provinces, would be implemented in Tianjin , Shanghai, and the provinces of Zhejiang and Hubei. Taiwanese residents with credentials recognised by education authorities on the mainland could also work at public institutions in the six provinces and municipalities, including at colleges, universities, and cultural and medical institutions. Taiwanese could also receive free employment-consulting services by certified mainland agencies, Wang said. Taiwanese university scholars would be given equal chances to apply for work at mainland universities. Mainland banks would offer up to 600 billion yuan in credit to Taiwanese companies to help their enterprises develop over the next three to four years. Wang also announced that the mainland would invest 300 million yuan in a cross-ties foundation to foster scientific research. Additionally, Nanning in Guangxi , Wuxi in Jiangsu and Changchun in Jilin will be added to a list of 27 cities where Taiwanese can get mainland residential permits. And starting from July 25, the permits will be extended from one to two years. Sun Yun , an expert in Taiwanese affairs at Xiamen University, said: "People-to-people exchanges, especially at the grass-roots level, are the foundation for developing cross-strait relations. "These policies will enable many Taiwanese, especially those from central and southern parts of the island, to visit the mainland." The forum ends on Friday.

Arctic sea lanes will become more important as the ice melts. President Hu Jintao's three-day visit to Denmark may ostensibly have been about signing billions of US dollars worth of business deals, but a stake in Greenland's huge mineral wealth may have been the elephant in the room. Greenland, a self-governing dependency of Denmark, has some of the biggest deposits of rare earth elements, strategically important metals in which China has a near monopoly. The north Atlantic island is also situated by sea lanes that are increasingly important as the Arctic melts. That may explain why the leader of the world's most populous country decided to visit a nation of 5.6 million for three days. "He didn't come just to look at the Little Mermaid," said Damien Degeorges, associate researcher with the University of Greenland, referring to Copenhagen's small bronze statue of the mermaid from the fairy tale by Hans Christian Andersen. Hu and his wife Liu Yongqing viewed the Danish capital's most popular tourist draw in a Friday sightseeing tour that also included a visit to the 17th-century Rosenborg castle and its China Room and a harbour trip with Queen Margrethe. The first state visit to Denmark since the countries established diplomatic ties 62 years ago occurred less than two months after Premier Wen Jiabao went to Iceland, raising more questions about what China wants in the far north. Chinese and Danish companies signed roughly US$3 billion worth of export and investment deals, including plans by Carlsberg to build a big brewery in China and by Maersk to expand the port of Ningbo. Officials from the two countries also signed 11 agreements on Saturday in areas from health to climate, food and fisheries. "This shows the high level of attention we attach to our relationship with Denmark," Hu said before talks with Danish Prime Minister Helle Thorning-Schmidt on a range of topics from Europe's economic crisis to China's position on Syria. Danish officials tried to shoot down speculation that Hu's visit was ultimately about Greenland's resources. "Arctic issues are not on the agenda for this visit," Foreign Ministry spokesman Jean Ellermann-Kingombe said. There was similar speculation when Wen started his tour of northern Europe two months ago by visiting Iceland. That he stopped first on a remote island of just 320,000 sparked suspicions of Beijing's hunger for natural resources. A Chinese developer is fighting an Icelandic government decision last year to bar him from buying land that some had suggested might be a cover for a possible future naval base and part of a wider strategy to gain a foothold in the region. Hu may have chosen Denmark as the only stopover on his way to the G20 meeting in Mexico because the country holds the rotating European Union presidency, or because it supports China's bid to get observer status in the Arctic Council, the body of eight Arctic states. But analysts said that was only part of the picture. "Most analysts agree that when China looks towards Denmark, it also looks towards Greenland," according to Degeorges. Greenland, with a population of just 57,000, is dependent on exports of fish and shrimp and handouts from Denmark. It is keen to reduce that dependence by developing other industries. The Chinese already have a foothold in the Greenland minerals exploration and development business. London Mining, a firm backed by Chinese steelmakers, is seeking permission to construct an iron ore mine northeast of Nuuk at a cost of US$2.35 billion that would be the biggest industrial development in Greenland if sanctioned. Martin Breum, author of a book on Denmark's role in the Arctic and Greenland's oil possibilities, said the iron ore project - though potentially hugely important to Greenland - was not the source of concern for Western governments, industries and intelligence agencies. "Potential Chinese control of the rare earth elements in Greenland is scary to a lot of governments in the Western world," Breum said, noting that rare earth elements were used in products including telephones, televisions and hybrid vehicles, as well as cruise missiles and night-vision goggles for soldiers. "Rare earth elements are of crucial importance to the industries of the Western world," Breum said, adding that China's de facto monopoly on rare earth elements was intolerable to the West in the long term. On Wednesday, the day before Hu arrived in Denmark, European Commissioners Antonio Tajani and Andris Piebalgs signed an agreement in Nuuk to ensure that Greenland's minerals remained available to free markets in the future. Although the West's concerns are real, Breum said he was not a conspiracy theorist and Hu's visit was not a pretext. "I don't buy the conspiracy at all that the governments would secretly be negotiating some important deals about Greenland and minerals," Breum said.

President Hu Jintao and his wife are welcomed by a senior Mexican official at the Los Cabos airport in Mexico yesterday ahead of today's start of the two-day G20 meeting. China is expected to show its commitment to injecting resources into the International Monetary Fund to help Europe in the G20 summit in Mexico, but the contribution will come with a condition - that emerging markets are better represented in the IMF, analysts say. The two-day summit, which begins today in Los Cabos, will largely focus on the lingering euro-zone crisis. But China and other emerging markets do not want Europe to dominate the agenda, and are expecting its push to give less-developed nations greater presence on the IMF will run into resistance by advanced economies that do not want to cede voting power. President Hu Jintao , in a written interview with Reforma, a major Mexican newspaper, prior to the summit, urged members of the Group of 20 to continue to advance the reform of the international financial system and "speedily" meet the target of IMF quota and governance reform. "We should continue to give high priority to development and promote growth of developing countries so as to increase total global demand," he said yesterday. Much of the focus during the previous G20 Summit in Cannes, France, was on whether China would help bail out Europe, although Hu said resolving the crisis largely depended on the Europeans. Analysts said G20 leaders were more likely to be concerned about recent data from China showing a slowdown in the economy, but they would still expect Beijing to make a commitment to Europe. Hu has expressed confidence that his country will maintain steady and robust growth, thereby making a contribution to global economic growth. Speaking in an interview with the South China Morning Post (SEHK: 0583) and a Chinese newspaper, Deputy Foreign Minister Cui Tiankai said emerging markets and advanced economies were contributing to global economic development, but there was a disparity between the two groups' representation on international finance boards. He expressed hope the IMF could complete its reforms of its quota system that members had agreed upon in 2010. The reforms will give major emerging market economies greater say in how the fund is managed by handing them more voting power in the fund's decisions. China is set to become the third-largest member country of the IMF. In 2010, the IMF's executive board passed a quota reform plan, which if completed could raise China's quota to more than 6 per cent from the current 3.72 per cent, giving it a greater say at the fund. However, implementation of the reforms has been delayed as some countries, including the US, have not yet ratified the proposal. Ding Chun , an expert in European affairs at Fudan University, said China would continue to help Europe as it did not want the US dollar to be the sole dominant currency, and any collapse of European economies would significantly hurt China's trade. However, Ding said China would not make contributions if the Europeans failed to devise a robust strategy to bolster economic growth, or did not ensure China's voice was better heard. "The contributions China will make will be based on its representation in the IMF, in addition to other factors, such as whether the money will be well-spent," he said. China, which had previously said it would not take part in internationally agreed assistance, has supported Europe in several ways: buying sovereign bonds, giving money to the European Financial Stability Facility (which is to be replaced by the European Stability Mechanism), and allocating funds to the IMF. But Beijing has never made public how much it has injected to the IMF, with officials saying Beijing would specify the amount contributions when it was ready. Gregory Chin, China Research Chair at the Canadian-based Centre for International Governance Innovation, said Beijing did not want the summit to be overshadowed by the euro crisis as had happened at the Cannes summit. China would like to push forward discussion on assisting developing countries and devise a plan for strong global economic growth. "They are looking for an opportunity to better present their views by linking the issue of increased contributions to the IMF to the pre-condition of increasing the voices of the developing nations." However, Ding Yifan , a researcher at the Development Research Centre at the State Council, said China did not set pre-conditions for helping Europe. Beijing was aware the IMF's quota reform would take time. He said China was looking forward to co-ordinating with other G20 members on macroeconomic policy to tackle the crisis. China is likely to face resistance from advanced economies by championing the cause of developing nations. "The US, though it does not want Europe to collapse, will not give up its leading role in the IMF just for China to make more contributions," Ding Chun said.

Hong Kong*:  June 18 2012 Share

Members of the Chinese Orchestra at Ocean Park. The Hong Kong Chinese Orchestra, set to celebrate its 35th anniversary along with Ocean Park, showed an innovative touch by unveiling its program for the new season at the amusement park yesterday. "We were founded in October 1977, and Ocean Park in January, so we are the little brother," the orchestra's artistic director, Yan Huichang, said at the launch. He said both institutions were seen as icons and promoted cultural tourism. "Like the park's attractions from roller coaster to aquarium, we too offer a wide variety of music from large orchestral works to solo and chamber pieces," Yan said. In announcing plans for 2012-13, the orchestra also became the first local arts group to launch its new season at Ocean Park. Beginning in September, the programme will see nine world premieres by Chinese and Western composers writing for the 85-member orchestra, the largest of its kind in the world. The season-opening work, Ode to Water by Hong Kong composer Mui Kwong-chiu, will also feature calligraphy and dance. In a "Music about China" series at the Hong Kong Arts Festival next year, the orchestra will premiere works by Polish composer Zygmunt Krauze and Taipei Chinese Orchestra director Chung Yiu-kwong. It will also join with the Luxemburg Society for Contemporary Music to host its 10th International Composition Prize during which new pieces based on 14 instruments - half Chinese and half Western - will be performed in both locations. The orchestra's overseas trips will include performances in Poland, Taiwan and Singapore. The Taipei show in December will be marked by the launch of the orchestra's new gehu, or Chinese cello, as a solo instrument. There will be an emphasis on percussion in hosting a visit by Berlin Philharmonic percussionists and the orchestra plans to invite the community to celebrate its 10th annual drum festival. The event was first held in 2003 to boost spirits after the outbreak of severe acute respiratory syndrome. During the new season, the orchestra will invite children born in 2003 to participate in the drum festival.

Sales at Sa Sa increased 15 per cent year-on-year in the three months ended June, down from a 26 per cent increase in the six months ended March and 34.8 per cent growth in the previous six months ended September. Tourist numbers grew 14.4 per cent in April from a year earlier in Hong Kong, the slowest increase in 14 months. Mainland tourists account for 64 per cent of sales at Sa Sa's Hong Kong and Macau stores. Same-store sales at Sa Sa increased 12.4 per cent in the three months ended June, compared with 20.9 per cent growth in the six months ended March. The company attributed the slower growth to the higher base last year. "We will expand our network very cautiously this year due to the current economy and the soaring rental costs in the city," said Simon Kwok Siu-ming, chairman and chief executive of Sa Sa, at the results announcement yesterday. Lease agreements for 23 of its stores in Hong Kong are due for renewal this year. Of the 13 that have already been renewed, rent has gone up by 23 per cent, Kwok said. These stores are located in suburban areas, which are visited by fewer tourists. But Kwok expected the company's stores in prime locations would face rent rises of two to three times that rate. Last year, the retailer closed 11 stores in Hong Kong and Macau because of an "unreasonable increase in rent", he said. The company closed down two stores in Kai Chiu Road, Causeway Bay, in January after the landlord tried to triple the rent to more than HK$4 million a year. The site was taken over by a jewellery chain store. "The increase in rents doesn't matter. What matters more is whether the store can make money," said Kwok. As at the end of March, the company operated 227 stores in Hong Kong, Macau, mainland China, Singapore, Malaysia and Taiwan - up by 46 from the previous fiscal year. Shares in Sa Sa rose 2.19 per cent to HK$4.2 yesterday. 

Hong Kong banks began lowering yuan interest rates yesterday, after liquidity rose on the back of new measures introduced by the Hong Kong Monetary Authority (HKMA), the de facto central bank. The HKMA launched a yuan liquidity facility yesterday to offer one-week yuan loans to local banks in exchange for collateral, such as government bonds. The facility is regarded as a last resort for those seeking yuan funding in times of stress or market shocks. The regulator also introduced a new liquidity-ratio requirement, which allows banks to classify more of their yuan assets as liquid. The measures, which are aimed at boosting funding, are part of an effort to entrench Hong Kong's status as the leading international yuan trading centre. Interest in investing in the currency has weakened in recent months due to a slowdown in appreciation. The HKMA said it received queries from banks yesterday about using the liquidity facilities, but did not see a rush of banks tapping the credit line. While the new yuan term funding will make it more palatable for banks to call on the HKMA for funds, banks could still prefer to borrow yuan on the interbank market funding, where rates were lower, economists said. "I don't think local banks are particularly keen to seek help from the lender of the last resort. It's meant as a tool to mitigate a liquidity squeeze when people are starting to panic," said Raymond Yeung, economist at ANZ Bank. Some banks have started to lower yuan deposit rates for retail customers, because the relaxed liquidity requirement measures have freed up more cash to conduct business, including issuing loans. Wing Lung Bank (SEHK: 0096), for example, lowered yuan deposit interest rates by 10 to 15 basis points yesterday. The lender's one-month yuan interest rate now stands at 1.8 to 1.9 per cent, and the three-month rate stands at 2.3 to 2.4 per cent. "We want to see the market's reaction before deciding whether to further lower yuan interest rates," said Frankie Kwong, treasurer of Wing Lung Bank, who added that they would still offer attractive prices for larger corporate clients. The yuan interbank offered rate by banks such as HSBC, Bank of China Hong Kong, and Standard Chartered Bank also dropped yesterday. The one-year rate fell about 20 basis points to 2.9 per cent. But the lenders are unlikely to drastically cut yuan interest rates any time soon, as banks still need to compete for funding to support growth, said DBS China's Nathan Chow. To further boost the city's role as an offshore yuan trading centre, Beijing is expected to announce further initiatives to coincide with the visit of President Hu Jintao to mark the 15th anniversary of the handover on July 1. Potential new measures are likely to include increasing the daily cap of 20,000 yuan (HK$24,500) that individuals can convert, and lifting the ceiling of 80,000 yuan a day on remittances to the mainland, according to sources familiar with the matter.

China Vanke president Yu Liang (above) has revealed plans to establish an overseas headquarters in Hong Kong this year. China Vanke, the biggest mainland-listed property developer by sales, plans to set up an overseas headquarters in Hong Kong in the second half of this year, a move aimed at stepping up its overseas expansion. Company president Yu Liang disclosed the plan at an internal staff meeting in Xian, Shaanxi province. "The [overseas business] department will be set up in the second half and the headquarters will be set up in Hong Kong," Yu was quoted on the company's official microblogging account yesterday as saying. Yu did not give any details, but he said the company would first consider investing in developed markets such as the United States. A spokeswoman for China Vanke declined to elaborate. The new headquarters plan comes a month after China Vanke said it was buying a 74 per cent stake in Hong Kong-listed Winsor Properties for HK$1.08 billion. At the time, China Vanke said the purchase was part of its global expansion plans. The company said then that internationalisation was a long-term direction it needed to consider, and the acquisition was part of the preparatory work. At the staff meeting, Yu also cautioned that there was no single solution that could help the company sustain its top status. "In the face of the changing market, the most important point is who can correctly identify the market trend," Yu said. By that, the microblog post said, he meant trends regarding the development direction and opportunities in various cities. Property analysts said a drop in home prices and sales on the mainland because of government curbs on the real estate market were pushing China Vanke abroad. "They may buy some completed investment properties as a first step to gain some market knowledge rather than jumping into the development business," Alan Jin, who tracks property at Mizuho Securities, said. "But I guess the initial scale of the investment will not be significant." China Vanke isn't the only developer trying to expand outside the mainland. China Merchants Property Development last month bought into Hong Kong-listed consumer electronics maker and retailer Tonic Industries. And last year Gemdale, a Shanghai-based real estate developer, made an unsuccessful bid to acquire a 61.96 per cent stake in Hong Kong-listed Chi Cheung Investment, a property development and securities investment company, for HK$836 million.

Secretary for Financial Services Chan Ka-keung (left) and Secretary for Constitutional and Mainland Affairs Raymond Tam. The Legislative Council's finance committee yesterday began a marathon series of meetings in an effort to push through Leung Chun-ying's government restructuring plan before he takes over as chief executive in two weeks. Meetings scheduled to last 22 hours will be held by Tuesday, but it remains unclear whether Leung will get his wish - that the proposals, which include the creation of new bureaus, be approved before he takes office on July 1. People Power lawmakers, who led last month's filibuster stand-off over the by-election reform bill, plan to move nearly 1,000 motions on the restructuring in an attempt to delay its passage. The motions are subject to the approval of committee chairwoman Emily Lau Wai-hing and the consent of other lawmakers. Lawmakers will be allowed to asked unlimited questions provided they do not repeat themselves. Fierce debate on rules and procedure is expected during the meetings, which got off to a slow start as lawmakers spent the first hour discussing whether members tipped to join Leung's cabinet should be absent due to potential conflicts of interest. Accountancy-sector legislator Paul Chan Mo-po, for one, is widely tipped to be deputy financial secretary, a post the restructuring will create. Lawmakers disagreed about whether there was conflict of interest. Pan-democratic lawmakers then spent hours during the evening questioning Leung's rationale for adding new deputies to the chief secretary and financial secretary and creating two new policy bureaus. The plan will increase costs by an estimated HK$74 million per year. The pan-democrats worried that the plan could make the government structure too complicated. But Fanny Law Fan Chiu-fun, the director of Leung's transition office, said the new structure would improve government efficiency because of a better division of labor. Outgoing chief executive Donald Tsang Yam-kuen said during his last Legco question-and-answer session on Thursday that his expansion of the ministerial, or accountability, system in 2008 was a watershed moment in his administration and helped begin his slide in popularity. Civic Party leader Alan Leong Kah-kit criticised Leung for trying to expand the ranks of political appointees without instigating a review of the existing system. "It's now the second round of expansion of the system and [Leung] demands we approve the funding to open new positions," Leong said. "However, did you [Tsang] conclude the original process?" Law said Leung would conduct a review of the accountability system two years into his term. But pan-democrats said that idea was illogical. Lawmakers from Economic Synergy and the Professional Forum said they supported Leung's proposal, but urged him during a meeting yesterday to conduct a review of the system after a year in office. Economic Synergy convener Jeffrey Lam Kin-fung said Leung told them he appreciated their suggestion, but would not commit to a review after one year. The meeting continues today.

Carrie Lam has joined chief executive-elect Leung Chun-ying in pushing to revoke the policy, considered ''unfair'' to urban dwellers. Carrie Lam Cheng Yuet-ngor may have stirred controversy by calling for an end to the New Territories small-house policy but the likely next chief secretary has won strong support from the public. Her stance has received popular support in phone-in radio shows and among people approached by the South China Morning Post (SEHK: 0583, announcements, news) in street interviews yesterday. Giving her personal view, Lam said in an interview with the Post early this week that a line should be drawn to halt the endless demand for land under the policy, which since 1972 has granted every male indigenous villager the right to build a three-storey house of 2,100 sq ft close to their ancestral homes. Lam's view is in line with that of chief executive-elect Leung Chun-ying, who said in an interview during his election campaign that the problem should be settled and solutions would be raised during his tenure. Former chief secretary David Akers-Jones, an important adviser to Leung and an early executor of the policy, also advocated a radical rethink, saying the policy had been seriously abused by villagers selling houses for quick profit. This had violated the original purpose of the policy, which was formed to cater for the housing need of rural people. In an interview two months ago, he said agricultural land should be rezoned for suburban development instead of awaiting applications under the small-house policy. Of 10 people interviewed yesterday, eight sided with Lam and said it would be unfair if rural indigenous people continued to enjoy this right. Xavier Lam Sze-wai, a 35-year-old recruitment manager, said indigenous people have enjoyed the right for a long time already and should now keep pace with Hong Kong's overall social development. He said the policy was not only unfair to non-indigenous people, but also to women. Moreover, families with more boys would be wealthier because they would be granted more land, he added. "I think [Secretary] Lam's decision will intensify social tension. However, no policy will have 100 per cent support and every policy has pros and cons," Xavier Lam said. Mrs Chan, a finance manager in her 50s who lives in an urban part of Hong Kong, also thinks the policy should be withdrawn. "[Villagers] can enjoy our city's development and public facilities which are supported by taxpayers," she said. "Why do they have more rights than us and can make profits by selling their small houses?" Other respondents said land supply was limited and there should be no distinction between city dwellers and rural villagers nowadays. Two respondents said they believed the policy should be preserved. "We have no right to deprive them of this right," said Ice Young Kit-fong, a 42-year-old housewife. In a phone-in radio programme on RTHK, a majority of callers supported a review of the policy. "The issue can't be left unattended indefinitely. Land was not scarce in the colonial era. The policy was adopted to reassure the villagers," one male caller said.

Rural leader Lau Wong-fat and likely next chief secretary Carrie Lam Cheng Yuet-ngor tried to cool an intensifying public debate on the New Territories small-house policy, triggered after Lam said it was time to draw a line for an end to the policy. Lau, chairman of the Heung Yee Kuk and leader of tens of thousands of villagers who have benefited from the policy, said he was willing to sit down and talk with the government on the issue. "We are not barbarians. We hope the government will table some proposals and discuss with us," Lau said. "Having said that, I think Lam's statement is inappropriate because it will lead to public speculation about the Basic Law." Lam meanwhile stressed she was only expressing a personal opinion when she called for ending the policy of the right of male indigenous villagers to build a three-storey, 2,100 sq ft house when they turn 18, and that one possibly was in 2029. "As a responsible official, I have to address the question," she said in response to questions whether she had been indiscreet. "Do you want to hear the government repeatedly saying the problem couldn't be dealt with because it's complicated?" She raised the possibility after being asked in an interview with the South China Morning Post (SEHK: 0583) on Tuesday why she had not tackled the 40-year-old policy in her term as development minister. Cancelling the policy in 2029 would imply that the last generation enjoying the right would be those turning 18 in 2047 - the end of the 50-year transitional period in which Hongkongers were guaranteed an unchanged way of life under the Basic Law. Political analyst James Sung Lap-kung saw Lam's words as a "tactful" way to defuse a political time-bomb. He added that Lau's willingness to talk showed rural figures that they could no longer delay a review of the policy, given the clear stance expressed by an official who could influence future government policies. "I do think she has communications with the next chief executive. Both of them touched on the city's major conflicts that might touch on the Basic Law and require discussion with the central government," said Sung, referring to Leung Chun-ying's decision to ban the delivery of babies by mainland parents in Hong Kong. But an associate professor with the Chinese University's department of sociology, Chan Kin-man, said Lam's suggestions might complicate relations with villagers as she was still tackling the issue of illegal structures.

 China*:  June 18 2012 Share

Hu Jintao and Queen Margrethe in a toast to ties during a state banquet held at the Christiansborg Palace in the Danish capital, Copenhagen. President Hu Jintao received got words of encouragement for China's bid to expand its influence in the oil-rich Arctic on the final day of his state visit to Denmark. Hu wrapped up the three-day visit to the Nordic country - the first by a Chinese head of state - by meeting Danish Prime Minister Helle Thorning-Schmidt and signing a raft of partnerships that included agreements on tariffs, environmental protection, cultural exchanges and agriculture. "These are partnerships that have formed the basis for Danish companies to reach agreements with Chinese companies into the two-figure billions," Thorning-Schmidt said. Hu's visit generated some 18 billion kroner (HK$23.7 billion) in agreements, though specific details of the deals were not immediately available. Their discussions also touched on Europe's economic crisis; Hu set off later yesterday for the G-20 meeting in Los Cabos, Mexico. A senior US Treasury Department official said earlier that the G-20 meeting would focus on strengthening global growth, and encouraging China and other emerging countries to bolster growth and support currency flexibility. "The G-20 will look to maintain momentum on rebalancing demand, which is critical to stronger overall growth," Lael Brainard, the treasury's undersecretary for international affairs, said ahead of the summit tomorrow and Tuesday. "Key of course to achieving this among other things is for China and other surplus emerging-market economies to take fiscal and other measures to support domestic consumption, as well as allowing exchange rates to reflect market forces," she said. US President Barack Obama will meet Hu on the sidelines of the meeting, the White House said on Friday. Meanwhile, China yesterday urged euro zone countries to work together to resolve the debt crisis or all faced being pulled down amid "severe economic storms". Xinhua likened the currency bloc to a "gigantic ship", and said that its 17 members needed to act as if they were in the "same boat". It added that Germany and France were "the two motors of the euro zone economy" and called on them to "strengthen bilateral co-operation and play a bigger part in handling the debt crisis. Thorning-Schmidt said Hu had also raised the issue of China's bid for permanent observer status on the Arctic Council, an intergovernmental forum promoting co-operation among eight states, including Denmark, that border the mineral-rich region. "I see no problem in that, provided that China fulfils the conditions," Thorning-Schmidt said, without elaborating. "I will be going to China this autumn. We have had very good talks and have been very happy with the entire visit," she added.

President Hu Jintao said on Friday 2012 is a vital year for China as it moves into a new five-year plan, in the first and only public speech of his three-day state visit to Denmark. “This year is an important one. We go into a new five-year plan. Chinese economic development paints a positive picture now,” Hu told guests at a state dinner hosted by Denmark’s Queen Margrethe II. “We have strengthened the macroeconomic regulation, growth quicker, prices are being stabilised and efficiency is good. We have improved the population’s living standards,” Hu said. He added that China’s 12th five-year plan and Europe’s 2020 strategy had a lot to offer each other and that China’s decision to increase domestic demand, increase imports and open-up the service sector would expand the horizon for Danish and European exports to China. “We will speed up changes to the economic growth model and develop new strategic sectors in China. This will attract more European investment in new technology and strengthen European co-operation with China,” Hu said. “China will strengthen copyright protection and improve the investment environment for foreign investment. This will help European capital and industry to achieve growth in China,” he added. Praising Denmark as a “unique” player in Europe, Hu said China was particularly interested in Denmark’s high expertise in biomedicine, foodstuffs, green economy, energy saving, environmental protection and technological innovation. The president said new cultural centres were to increase understanding “by following the principle of bilateral respect and benefit”. Hu spoke only hours after a long list of major Danish and Chinese companies had signed co-operation agreements, which the Danish government has suggested were worth at least DKK 18 billion (HK$23.7 billion) over the next few years. The president was on Saturday due to hold political talks with Denmark’s Prime Minister Helle Thorning-Schmidt before leaving Denmark for Mexico where he is to take part in next week’s G-20 meeting.

China launches spaceship with first female astronaut - The Long March 2F rocket carrying the manned spacecraft Shenzhou IX blasts off from the launch pad at the Jiuquan Satellite Launch Center in Northwest China's Gansu Province on June 16, 2012. Shenzhou IX , atop an upgraded Long March 2F carrier rocket, blast off from the Jiuquan Satellite Launch Center in northwestern China at 6:37 pm Saturday. A see-off ceremony was held at the center hours before the launch. Wu Bangguo, the country's top legislator, attended the ceremony and extended wishes to the three astronauts. "The country and the people are looking forward to your successful return," he said. The first Chinese woman in space Liu Yang, 33, is joined by commanding officer Jing Haipeng and Liu Wang, who has been selected as an astronaut trainee since January 1998. Main tasks of the Shenzhou IX mission include the manual docking procedure conducted between the Shenzhou IX and the orbiting space lab module Tiangong-1. China succeeded in the automated rendezvous and docking between unmanned Shenzhou-8 spacecraft and Tiangong-1 last year. A successful manual docking will demonstrate a grasp of essential space rendezvous and docking know-how, a big step in the country's manned space program to build a space station around 2020. Liu, a People's Liberation Army (PLA) major, was a PLA Air Force pilot with 1,680 hours of flying experience and deputy head of a military flight unit before being recruited as an astronaut candidate in May 2010. After two years of training, which shored up her astronautic skills and adaptability to space environment, Liu excelled in testing and was selected in March this year as a candidate for the Shenzhou IX manned space mission. "Female astronauts generally have better durability, psychological stability and ability to deal with loneliness," Wu Ping, spokeswoman for China's manned space program, said. More than 50 female astronauts from seven countries have gone into space to date. The longest space flight by female astronauts lasted 188 days.

The Chinese currency Renminbi, or the yuan, gained 102 basis points to 6.3089 against the U.S. dollar on Friday, according to the China Foreign Exchange Trading System. In China's foreign exchange spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day. The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices before the opening of the market each business day.

18th Shanghai Television Festival concludes - The closing ceremony of the 18th Shanghai Television Festival held in east China's Shanghai Municipality, June 15, 2012.

China has rejected US criticisms during a review of its trade policies at the World Trade Organisation and instead suggested that many American accusations were not only groundless but in some areas hypocritical. US Ambassador to the WTO Michael Punke levelled a wide-ranging salvo of criticisms during the two-day Trade Policy Review (TPR), which every WTO member has to undergo on a periodic basis. Punke said China was falling back into a "tighter embrace of state capitalism". He complained about Beijing's failure to disclose subsidies and a lack of transparency and intellectual property enforcement. Beijing swatted aside many of the criticisms. Assistant Minister of Commerce Yu Jianhua said he regretted that during the review process, some WTO members had deemed China was practising state capitalism. "The term cannot be found in … WTO documents. It has nothing to do with the TPR or WTO rules," Yu said. "We strongly believe the TPR should not be abused for the purpose of domestic politics." Alongside the oral debate, China answered more than 1,720 written questions in a 442-page document, on topics ranging from its plans to develop shale gas to a promise to set up a deposit insurance scheme as soon as possible. Some questions submitted by the United States elicited barbed comments. Others, such as a US allegation that the state bodies overseeing China's economy provided economic support to national champions in key industries, prompted flat denials. An American demand for more transparency fell on stony ground. China said the commitments to transparency cited by the US were outside the WTO's remit. "The US never fulfils any of the transparency commitments made to China," it said. Quizzed about its apparent failure to provide ample time for other countries to comment on changes to food safety laws, China said: "The problems raised … do not exist. In addition, China has noticed that the US has failed to provide ample time … We hope that the US could give more attention to honouring its own transparency obligations." The US challenged China in September to come clean on 200 subsidies that appeared to be barred by the WTO. On Tuesday, Punke said WTO rules meant Beijing should have responded by notifying the trade body of the subsidies promptly, but it had notified only 10 so far. China's response to the US written question was dismissive, pointing to differing opinions about what constituted an illegal subsidy. "On a lot of items in the US submission, China actually has already notified in its submitted notifications, but it seems to China that the US has not been able to recognise those notified ones, in particular when they are implemented at the sub-central government level," it said. "Rather, the US has mistaken such implementations by our sub-central governments of the notified central programmes as locally initiated subsidies." Nevertheless, Beijing pledged to accelerate its efforts to notify the WTO of local subsidies in future, having concentrated its efforts so far on notifying central subsidy programmes, an area where it had made "substantial progress".

Hong Kong*:  June 17 2012 Share

Shanghai restaurant chain Xiao Nan Guo is hoping its second attempt at an initial public offering will tickle investors' palates as it seeks to raise as much as US$75 million, according to market sources. Known for selling the Shanghai delicacy, xiao long bao, it had to shelve the listing last September when the blue-chip Hang Seng Index was hit by a wave of selling because of the euro-zone sovereign debt crisis and credit tightening on the mainland. The HSI bottomed last October at around 16,000, having lost 3,000 points over a few weeks. Its original IPO plan aimed to sell 335 million new shares at an indicative price range of HK$1.65 to HK$2.20, representing a price-earnings ratio of 18.6 to 24.7 times its 2010 earnings per share. The pricing details of its revived IPO plan have yet to be released. Traders said other smaller deals were about to push ahead with roadshows, having also delayed their IPOs since late last year because they saw little prospect of a strong rebound in stock markets soon. Mainland furniture maker Merry Garden plans to raise US$20 million in the middle of July, according to a source close to the deal. Chinalco Mining, a unit of the world's third-biggest aluminium producer, Aluminium Corporation of China, is set to start a roadshow for its US$200 million listing. The listing of Chinalco and of Huadian Fuxin Energy, which has already secured enough cornerstone investors to support its US$391 million share sale, would be among the biggest deals in the Hong Kong IPO market so far this year. Issuers worldwide have hugged the sidelines since London-based luxury jeweller Graff Diamonds shelved its US$1 billion Hong Kong listing plan last month after getting the cold shoulder from investors. Graff was not the only international name to turn its back on a volatile market. Formula One also pulled a US$2 billion listing planned for Singapore the same week. And, premier English football team Manchester United said it was ditching plans for a US$1 billion Asian listing and would instead list in the United States. Analysts said it was not known whether any or all of the shelved IPOs would be revived later this year because much hinged on the outcome of Greek elections this weekend, and on whether last weekend's Spanish bank bailout could restore investor confidence. According to Dealogic, Hong Kong ranks eighth globally in terms of IPOs. It has topped the league table for the past three years. The market turmoil has sidelined investors in Hong Kong, and main board turnover was just HK$38.25 billion yesterday. Total average daily turnover in the first five months this year has also fallen to HK$59.1 billion, down 21 per cent year-on-year. So far this year, the top IPO markets are the Nasdaq, New York Stock Exchange and Shenzhen-Chinext.

Shinichi Inoue (left) and Victor Chu at the launch. HK$888 'as low as we go' for HK-Osaka - Peach Aviation says the airfare on its new route cannot go any cheaper, despite the carrier's budget tag, because both cities are expensive. Budget carrier Peach Aviation has said its cheapest one-way fare of HK$888 between Hong Kong and Osaka is the best it can offer for now as both cities are expensive to operate in for low-cost players. "You will find that all the chairs in our offices are of different colours and shapes," said Shinichi Inoue, chief executive of the Kansai-based budget carrier, on the sidelines of a press conference announcing the new Hong Kong-Osaka flight in the city yesterday. "We bought all the furniture through auctions on the internet," as one of the company's many cost-control measures, Inoue said. The low-cost carrier, formed by All Nippon Airways and Hong Kong-based direct investment fund First Eastern Investment, will launch the route on July 2, its first medium-distance flight. The four-hour journey will cost HK$888 to HK$3,388 one-way, fuel surcharge and taxes included. Hong Kong passengers can use Kansai as a transit stop to Sapporo, Fukuoka, Nagasaki or Kagosima, which are on Peach's existing network. Despite its budget tag, Peach is not offering rock-bottom prices on the Hong Kong-Kansai route. Its round-trip fare starts from HK$1,776, whereas ANA offers a HK$2,810 package that includes airfare and two-night hotel accommodation. However, Peach's price includes a HK$600 fuel surcharge, but the ANA package does not. "Package fares are subject to a certain period, while our airfares are available every day," Inoue said. The daily flight, to operate with a 180-seater, is expected to divert passengers from ANA and other carriers to Peach. Inoue insisted the new flight would create new demand, especially from Japanese travellers, but admitted there was little room for further fare cuts. On whether Hong Kong was a destination friendly to low-cost carriers, he said: "We fly from Japan. It doesn't cause many problems for us, compared with airlines that are based here." Another budget flyer, Jetstar Hong Kong, a joint venture between China Eastern Airlines (SEHK: 0670) and the Qantas Group, has applied for a licence and expects to launch short-haul services in the first half of next year. Kansai airport has lowered its landing and parking fees, which account for 16 per cent of total operating costs for airlines. By autumn, it will have a dedicated budget terminal ready for carriers such as Peach Air. Peach will launch flights to Okinawa next month, followed by services to Taipei by the end of September. "We will definitely fly to mainland China and broaden our network in the Greater China market," said Victor Chu, chairman and chief executive of First Eastern. Peach now operates three Airbus 320s on four domestic routes and one international route to Seoul. Its fleet will expand to 10 aircraft by the second quarter of next year.

A plan to buy 45 BYD e6 electric cars for use as taxis in Hong Kong by August may be delayed amid safety fears after three people were killed when one of the cars caught fire following a crash in Shenzhen last month. The Hong Kong government is seeking to tighten the standard of electric vehicles imported into the city after an accident sparked a fire in a BYD electric car last month, killing three people in Shenzhen. The accident caused public concern over the safety of electric cars and may put on hold or at least delay a BYD plan to ship 45 of its e6 models - the one that caught fire - into Hong Kong for use as taxis by August. It was understood a report into the accident, expected to be released by the end of this month, would rule out the car's battery standard as a cause of the fire. However, a person informed of the findings said BYD would be urged to improve the protective material around the battery, known as the battery wrap or casing. Electronics experts said the safety standard of car batteries was now fairly high, but it was the protection around them that determined how severe the damage would be in the case of impact. At present, Hong Kong refers to standards set by the European Union, United States and mainland China in assessing the safety standards of imported electric cars. However Ringo Lee Yiu-pui, chairman of the Vehicle Repair Merchants Association, said none of these standards provided a very clear benchmark on battery protection. "Some automakers like Ford have their own set of definitions and guidelines on the battery wrap, and there is also a non-binding guideline on battery wraps issued by a US-based standard-setting organisation, SAE International," Lee said. "But they are not embedded in the national standards which we follow." The government has set up an expert team comprising officials from the Transport Department, Electrical and Mechanical Services Department, Environmental Protection Department and independent experts, to review whether the city should tighten or devise its own standards for electric vehicles. They will hold their first meeting today. "We should study overseas examples - including Japanese carmakers, for example - and pick out the best standards for us," said Chan Ching-chuen - a University of Hong Kong professor dubbed the "father of electric vehicles" because of his long-term research. He said the government should put on hold the trial of 45 e6 taxis in Hong Kong until Beijing released its findings on the accident. On May 26, a sports car crashed into a BYD e6 electric taxi at high speed, ramming it into a tree. The electric car caught fire and three people inside it were killed. Brandon Tong Yeuk-fung, chairman of the taxi owner group who will pay about HK$18 million to help buy the 45 cars, said officials would not be justified in delaying the trial just because of the accident. Half of the cars' cost would be covered by the government's green transport fund. "The sports car was being driven at 180 kilometres per hour at the time. Even a Ferrari would have caught fire or even exploded," Tong said. "I just can't see how a car running on petrol or liquefied petroleum gas would be safer than an electric one." The taxi industry is eager to find a replacement for the LPG taxi, given the escalating fuel prices. BYD's e6 - which has the longest range among the world's electric cars - met standard tests in mainland China, and received four out of five stars in the United States test. It is understood the carmaker will soon provide Hong Kong authorities with an e6 for crash testing and will also put it to the test under the EU standards.

The Hong Kong stock exchange on Friday agreed to pay 1.4 billion pounds (HK$16.86 billion) to buy the London Metal Exchange (LME), in a deal that gives Asia’s largest bourse a much needed entry into a commodity trading platform, and brings LME members closer to China, the world’s biggest metals buyer. Hong Kong Exchanges and Clearing (SEHK: 0388) (HKEx) will finance its acquisition of the 135-year old commodities exchange operator through its existing funds and with a 1.1 billion pound bank loan, it said in a statement. HKEx competed with several other exchanges to win the auction, including the InterContinental Exchange, a US commodities exchange. HKEx CEO Charles Li had previously sat out a wave of consolidation among exchanges early last year. “HKEx believes the combination will allow the LME and its members to significantly increase trading volumes through improved access to China and form the foundation for the growth of its commodities platform,” it said. Li, a former journalist and JPMorgan China banker, expressed confidence in the bid last month and was able to celebrate winning the LME at a party to mark the 12th anniversary of HKEx’s listing. The offer must now be approved by the LME board. “The price is higher than some were expecting, but because the deal is not completely debt-financed there may be room for some accretion,” said Sam Hilton, analyst at investment bank Keefe, Bruyette & Woods. “Investors are more likely to be negative on this news, but that’s partly because the bears have been very negative whereas the investors who are positive on this deal are at best lukewarm,” he said. The deal will help HKEx maximise commodity trading opportunities across Asia. The bourse has previously been more geared towards equity markets. HKEx, the world’s second-most valuable stock exchange, said the acquisition will add to its earnings from the third year after completion – expected in the fourth quarter of this year. HKEx sat on the sidelines through a wave of exchange consolidation in major financial centres more than a year ago. At the time, HKEx was focused on forming joint ventures and alliances with its neighbouring Shanghai and Shenzhen bourses. It has since made clear its ambition to do more business in commodities – a push led by Li and head of market development Romnesh Lamba, another ex-investment banker. Some analysts have expressed concern the HKEx may be over-paying for the LME. Those concerns have partly weighed on the company’s shares, with the stock down 9.4 per cent this year, compared to a 4.3 per cent rise in the benchmark Hang Seng index.

A Wan Chai police commander was arrested by the anti-corruption agency on Friday on suspicion of accepting discounts from a Causeway Bay restaurant and ignoring its illegal liquor sales. The Independent Commission Against Corruption charged police superintendent Titus Wong Koon-ho, 50, with one count of misconduct in public office. The offence occurred between June and August last year, an ICAC spokesman said. Wong had the authority to make recommendations on liquor licence applications processed by the Wan Chai Division. He allegedly accepted discounts, from two directors of a restaurant in Causeway Bay, for food and drink that he consumed and was expected to pay for. He failed to tell his supervisors about the conflict of interest that arose when he accepted the discounts, the ICAC said. Wong failed to take action to stop the unlawful selling of liquor at the restaurant when he knew it was being sold without a licence, it said. He is also accused of failing to raise objections to the liquor licence application submitted by one of the restaurant’s directors, although he knew the restaurant sold alcohol without a valid licence from the Liquor Licensing Board. Wong’s arrest arose from a complaint, the ICAC said. Wong has been involved in several high-profile cases in recent years, including investigations into an acid attack in Causeway Bay in 2009, in which six people were injured. Police later arrested Lo Ching-ho, 24, who was jailed for 13 years. Wong, who was once personal assistant to former police commissioner Dick Lee Ming-kwai, will appear in Eastern Court on Monday to face his charge.

Lawmakers stand as Donald Tsang makes his exit after his last question-and-answer session. Facing his final grilling in the legislature, chief executive Donald Tsang Yam-kuen assured lawmakers yesterday he had been behaving himself lately. He said there had been no trips on private yachts or jets with tycoon friends since such behaviour caused a furore - and then there was that matter of whistling. In March 2005, Tsang drew criticism for whistling on his way to meet then-chief executive Tung Chee-hwa, rumoured at the time to be stepping down amid public discontent. Tung quit soon afterwards. Textile and garment-sector lawmaker Sophie Leung Lau Yau-fun yesterday recalled it and asked Tsang to advise his successor, Leung Chun-ying, against bad habits. "I have never whistled again since then," he assured lawmakers. "Since my previous trip to Macau, I have not visited Macau again with so-called tycoons. I have also avoided riding on private yachts or flying in the [private] jets of others. So I think we learn from what has happened. "Sometimes we are so conceited that we overlook Hong Kong people's feelings," he added. "Mr Leung is a sensitive person. He clearly knows the sensitiveness of these issues. I believe he will not commit the mistakes of my blind spots." With his seven-year term ticking down to June 30, Tsang insisted he would not step down early but spend his final days completing his work and ensuring a seamless transition. He appealed to lawmakers to approve Leung's proposed government restructuring. "There are many remaining tasks to be finished. As the chief executive, my responsibility to Hong Kong people is that I finish those tasks," said Tsang, 67, who spent more than four decades in public office. "These are crucial to the public's livelihood. I must grab every moment to complete those tasks in the remaining 16 days. I can neither leave my position nor fail to live up to their expectations." On the challenges facing Leung, Tsang expected he would need to address several lingering problems such as income disparity and housing concerns. Tsang is still under investigation by the Independent Commission Against Corruption for allegedly receiving favours from tycoons.

Travel bugs, here's your chance to win a flight ticket for as little as HK$1. Auctions for two sets of return tickets on Mongolian or Brunei airlines as well as four-day packages to Japan, Taiwan and Thailand will be held over the weekend at the International Travel Expo. Star Cruises is also offering trips from Penang to Phuket. The four-day event at the Hong Kong Convention and Exhibition Centre in Wan Chai opened yesterday for only those in the travel industry. In addition to the auctions, a Japanese railway company is offering passes for four days of unlimited travel for just 7,000 yen (HK$685) - the first of its kind in Japan. West Japan Railway marketing manager Kenji Uno said Hong Kong travelers are now mature enough to travel individually. "To promote individual travel, we have launched the railway pass for travelers to Kansai. This will encourage them to discover the beauty of the periphery around Nara and the big cities such as Osaka and Kyoto," he said. Organizer TKS Exhibitions said the expo has attracted more than 600 exhibitors from 54 countries with Japan accounting for 30 booths. The event is expected to draw 80,000 trade visitors and members of the public, with the latter only being admitted on the last two days. New Taipei City tourism marketing officer Wang Xiu-yi said the island will use the event to launch agricultural tourism. Wang expects Hong Kong visitors to the island to reach one million. "Most people go for the food, shopping and scenery. But there is much more we can offer," she said. In opening the expo, Financial Secretary John Tsang Chun-wah said the mainland provided 28 million of the 42 million visitors to Hong Kong last year. He expects this to increase when the Hong Kong-Zhuhai-Macau Bridge is completed and the third airport runway has opened. Meanwhile, a Japan budget airline is offering one-way tickets to Japan for as little as HK$888, inclusive of fuel surcharges. Tour packages will range from HK$1,138 to HK$4,248. Peach Aviation will open its new route between Hong Kong and Osaka (Kansai) on July 2. Peach Aviation chief executive Shinich Inoue said he expects a great demand for the service.

Lawmakers have finally passed the controversial Competition Bill after a marathon debate. Thirty-one lawmakers from the Civic Party, Democratic Party, Economic Synergy and other pro-establishment parties voted for the bill which bans anti-competitive practices such as price-fixing and bid-rigging. Five legislators abstained from the voting. League of Social Democrats lawmaker Alert Chan Wai-yip said he is upset at the controversial exemptions allowed by the bill. They include those for the Trade Development Council and Urban Renewal Authority which will be governed by the Competition Policy Advisory Group, not regulated by the bill. However, Civic Party lawmaker Ronny Tong Ka-wah said he supported the bill, which has been mooted for more than a decade. Hong Kong General Chamber of Commerce chairman Chow Chung- Kong said the bill is not complete and the government should continue its work in perfecting it.

 China*:  June 17 2012 Share

The United States will officially voice regret for shutting its doors to Chinese immigrants more than a century ago, an Asian American lawmaker said on Thursday after negotiations in Congress. Representative Judy Chu, a Democrat who heads the Asian American caucus in Congress, said she had reached an agreement with the rival Republican Party to bring the bill to a vote on Monday in the House of Representatives. The law – already approved by the Democratic-led Senate in October – would voice regret for the Chinese Exclusion Act of 1882, which banned further immigration by Chinese workers and their naturalization as US citizens. “With this resolution, the House will finally acknowledge the Chinese Exclusion laws’ injustice and express regret for the lives it destroyed. And together we will make sure that the prejudice that stained our nation is never repeated,” Chu said in a statement. Some activists had initially called for the word “apology”. The Senate bill also said that it “deeply regrets” the Chinese Exclusion Act and made clear that the legislation will not open the way for claims for compensation. Census figures show that more than 100,000 ethnic Chinese were living in the United States at the end of the 19th century. Many had been recruited to build the transcontinental railroad, but faced racism from white workers. Congress repealed the Chinese Exclusion Act in 1943 during World War II after Japan highlighted the law in propaganda questioning China’s alliance with the United States. But activists say that Congress never voiced regret for the restrictions, which marked the first time that the United States explicitly rejected an immigrant group on the basis of their origin. Asian Americans form a fast-growing group in the United States. Some 14.7 million people, or 4.8 per cent of the total US population, identified themselves as Asian alone in the 2010 Census. Another 2.6 million said they were Asian in combination with another race group, most commonly white.

Technicians work on Jiaolong, China's manned deep-sea submersible, on Friday before it dived over 6,000 metres into the Mariana Trench in the western Pacific Ocean. A manned Chinese submersible set a new record for the country's deepest sea dive on Friday, over 6,000 metres, showing Beijing’s technological ambitions as it also prepares for its first manned space docking. The Jiaolong craft dived over 19,685 feet into the Mariana Trench in the western Pacific Ocean, the first in a series of six dives which aim to reach 7,000 metres, the official Xinhua news agency said. The deep-sea dive push comes as China prepares to launch a spacecraft on Saturday to conduct its first manned space docking, as part of efforts to establish a permanent space station by 2020. The submersible, which carried three men, reached around 6,500 metres with only a technical glitch in communications, state media said. “In our first battle, we have already reached 6,500 metres. All of our tasks have been completed,” chief commander Liu Feng told state television aboard the ship carrying the submersible. He said a piece of communications equipment on the surface of the water failed, but the team switched to a back-up system and restored communications. He did not say whether contact was completely lost with the Jiaolong. The same vessel – named after a dragon from Chinese mythology – reached 5,188 metres in a Pacific dive last July, the nation’s previous record. Friday’s dive sparked outpourings of nationalism on the internet and comparisons to the forthcoming space launch. “Three pilots will take the Jiaolong to attempt the 7,000-metre dive, while three astronauts will take the Shenzhou-9 to connect with the Heavenly Palace,” a Shanghai based blogger wrote on his microblog. “Up in the sky we can pluck the moon, down in the oceans we can catch the turtles,” said the posting on Sina’s microblog service, quoting a saying attributed to late Chinese leader Mao Zedong. Experts say China intends to use the submersible for scientific research, such as collecting samples of undersea life and studying geological structures, as well as future development of mineral resources. But one Chinese expert on Friday described the latest dives as an “experiment” for China and said future use of submersibles for scientific research faced obstacles, such as with stability and durability of the craft. “Even after it reaches the 7,000-metre depth, it still remains a question whether it can achieve scientific purposes,” Zhou Huaiyang, professor of the School of Ocean and Earth Sciences at Shanghai’s Tongji University, said. Scientists say the oceans’ floors contain rich deposits of potentially valuable minerals, but the extreme depths and high pressures pose technical difficulties in harvesting them on a large scale. Earlier this year, American film director James Cameron descended almost 11,000 metres to the bottom of the Mariana Trench – the deepest place in the world. His effort is believed to have at least equalled the offial record for the deepest manned dive, set by a US Navy officer and a Swiss oceanographer in 1960 at 10,911 metres, according to Guinness World Records. His effort is believed to have at least equalled the offial record for the deepest manned dive, set by a US Navy officer and a Swiss oceanographer in 1960 at 10,911 metres, according to Guinness World Records.

President Hu Jintao escorted by Danish Queen Margrethe II, inspects a guard of honour on his arrival in Copenhagen on Thursday. China’s President Hu Jintao arrived in Copenhagen on Thursday accompanied by a large trade and business delegation, the first-ever visit by a Chinese head of state to Denmark. Hu was met at Copenhagen airport by Denmark’s Queen Margrethe II and her husband Prince Henrik, as well as other members of the royal family, television footage showed. Hu made no remarks on his arrival. China froze relations with Denmark in 2009, after two successive prime ministers welcomed Tibet’s exiled spiritual leader the Dalai Lama at the official government residence. Those relations were mended in late 2010 when the Danish parliament made it clear that Copenhagen had a one-China policy and did not back independence for the Himalayan territory. Hu’s official programme was to begin on Friday with a courtesy call on Queen Margrethe at the royal palace, after which he and his wife Liu Yongqing were to board the royal yacht Dannebrog for a sightseeing tour of Copenhagen harbor. At the same time, Chinese and Danish businesses and officials are scheduled to open a trade conference, at which seven Chinese companies are expected to sign agreements with Danish partners on future cooperation. Danish Trade Minister Pia Olsen Dyhr said earlier this week that her ministry was in the process of finalising agreements in the region of 18 billion kroner (HK$23.6 billion). Olsen Dyhr and Chinese Trade Minister Chen Deming were to meet on Friday with representatives of Danish companies Kopenhagen Fur, NKT, KMC, Carlsberg and Rockwool, all of which aim to develop commerce and co-operation with China. Hu’s visit also underlines Beijing’s interest in Arctic issues. As part of its international ambitions, China is seeking permanent observer status on the Arctic Council, an intergovernmental forum promoting co-operation among eight states, including Denmark, which border the region. On Monday, the Chinese-controlled company London Mining Greenland announced it had sought permission to build a 14-billion-kroner mining project in southeast Greenland. It would involve some 2,000 Chinese workers. Hu is to hold talks on Saturday with Danish Prime Minister Helle Thorning-Schmidt before leaving for the G20 summit in Los Cabos, Mexico on June 18-19.

Liu Yang will be China's first woman in space - Liu Yang, China's first female astronaut in space, prepares for her mission on the Shenzhou IX manned spacecraft in Jiuquan, Gansu province, June 12, 2012. Astronaut Liu Yang, one of China's two female reserve astronauts and a former air force pilot, will become the country's first woman in space as she and two other astronauts will board the Shenzhou IX spacecraft and lift off at 6:37 pm on Saturday from the Jiuquan Satellite Launch Center, announced the country's manned space program. She will be joined by Jing Haipeng, a veteran astronaut who was in the three-day Shenzhou VII mission in 2008, and Liu Wang, a new face to the public. The three astronauts will carry out the country's first manned space docking mission that is an important step in the lead-up to building a space station by 2020.

Hong Kong*:  June 16 2012 Share

The value of this building at 60-62 Yee Wo Street has risen by leaps and bounds since the owner bought it in 1987 for HK$28 million. A local investor is set to release his HK$1 billion retail-residential building in Causeway Bay for tender as commercial property prices in the city go through the roof. The seller bought the 13-storey building, at 60-62 Yee Wo Street - opposite Paliburg Plaza - for HK$28 million in 1987. Property agents estimate the building has since risen in value to HK$800 million to HK$1 billion. Land Registry records show the property is owned by Bloomland Company, controlled by Lawrence Lim, an active investor who focuses on commercial properties, and owns several shop and office units in Central and Causeway Bay. "The value of the building has gone up a lot," said Stanley Wong, senior director at CBRE, the agency handling the tender. "There have been several record-breaking transactions in the commercial property market of late, which prompted the owner to release it for sale." With low interest rates and rising retail rents, property investors are scouting for commercial buildings and other retail properties, particularly in areas that are top destinations for mainland shoppers, such as Causeway Bay. This has led to a steep jump in commercial property prices. Last month, a shop with a usable area of 192 square feet at 83 Percival Street was sold for HK$178 million, or HK$927,083 per sq ft, becoming the most expensive retail property in the city in terms of price per sq ft. The price was 257 per cent higher than what the seller had paid in 2009. A three-storey retail shop at 108 Percival Street was sold by the Yu Ming Group for HK$1.15 billion to a mainlander last month - 229 per cent higher than the price it paid in 2005. Residential prices have seen strong growth as well. The Monetary Authority has warned of the risks of an overheated market despite a "potential downside in the economy" led by the euro crisis. Housing prices increased 9 per cent in the first four months of the year, it said. Rents rose too, but at a slower pace, resulting in low rental yields. Wong said the 13-storey block up for tender had a gross floor area of 28,000 sq ft. Shops occupy its ground floor and mezzanine floor, while residential flats take up the rest of the building. A giant advertising signage on the wall faces Yee Wo Street. Its occupancy rate is above 90 per cent, generating about HK$800,000 a month for the owner. As it is old, the monthly rents of its flats, ranging between 500 and 600 sq ft in size, are only about HK$10,000 to HK$20,000. Its income potential is expected to go up substantially if it is refurbished.

The Hong Kong Monetary Authority on Thursday moved to increase yuan supply in the city - In a move to increase the supply of yuan funds in Hong Kong, the Hong Kong Monetary Authority said on Thursday it would allow banks to borrow yuan term funds from a swap line with China’s central bank. With effect from June 15, the HKMA will provide yuan funds against necessary collateral to banks involved in offshore yuan business, the territory’s de-facto central bank said in a notification posted on its website. Being China’s premier offshore yuan centre, the swap line between Hong Kong and the People’s Bank of China is the biggest at 400 billion yuan (HK$490 billion) among the many swap lines Beijing has signed with various central banks across the world. “The facility would serve to address short-term yuan liquidity tightness which may arise from time to time, for example, due to capital market activities or sudden need for yuan liquidity by Participating AIs’ overseas bank customers,” Peter Pang, deputy chief executive at the HKMA, said in a statement. The move underscores Hong Kong’s commitment to Beijing’s plan to use it as a test bed for growing efforts to internationalise the yuan. “It would help reduce potential market disruptions and hence enhance market confidence at all times and support the long-term development of the offshore RMB market,” he said. Retail investors and companies have been drawn to the yuan and a spate of new yuan-related investment products in recent years on expectations that Beijing would continue to let its currency appreciate against the US dollar. But retail interest has waned in recent months as the yuan weakened to near six-month lows. At the end of April, yuan deposits in Hong Kong banks were around 552 billion yuan, compared to a peak of 627 billion yuan in November, government data showed. In separate news on Thursday, sources said Hong Kong was set to announce measures to boost liquidity in the offshore yuan market, after renminbi deposits at the city’s banks fell for five months in a row. The measures would include increasing the daily yuan conversion quota for Hong Kong residents from 20,000 yuan and raising their daily transfer quota to mainland Chinese banks from the current level of 80,000 yuan, the two sources with direct knowledge of the situation said. Traders said the moves are likely to be incremental at best as corporate deposits are the key driver for offshore yuan business and not retail funds. While retail investors have grown discouraged, institutional players have not shown similar signs of losing patience with the offshore yuan market. Yuan-denominated bond sales have kept growing at a robust pace. After suffering a decline in the closing months of last year, average monthly issuance of so-called ‘dim sum’ bonds so far this year is a healthy 11.3 billion yuan compared to 8.5 billion yuan in the last quarter of last year, analysts’ data showed. The Chinese currency’s weakness in the offshore yuan market has lagged a fall in the non-deliverable forwards space because of a spreading cash squeeze in Hong Kong. Among the reasons cited for the decline in yuan deposits in recent months are an increased pace of fund flows back into the mainland because of easier cross-border flows and the launch of various investment schemes such as RQFII. The explosive growth in CNH funds was led by a landmark agreement between the HKMA and the People’s Bank of China in July 2010. Prior to that scheme, Hong Kong residents could convert their savings into 20,000 yuan daily. Between 2004 and early 2009, the share of yuan deposits in the Hong Kong banking system stagnated well below the 1 percentage point mark.

The Hong Kong Monetary Authority is set to announce measures to boost liquidity in the offshore yuan market, two sources with direct knowledge of the situation told reporters on Thursday, after renminbi deposits at the city’s banks fell for five months in a row. The measures will include increasing the daily yuan conversion quota for Hong Kong residents from 20,000 yuan (US$3,100) and raising their daily transfer quota to mainland banks from the current level of 80,000 yuan, the sources said. The HKMA said on Thursday it would also allow banks to borrow yuan term funds from a swap line against collateral, in a move that would markedly increase the source of yuan funds for cash-strapped local banks. Two sources with direct knowledge of the situation had told reporters earlier that Hong Kong was set to announce measures to boost liquidity in the offshore yuan market, after renminbi deposits at the city’s banks fell for five months in a row. Traders said the moves are likely to be incremental at best as corporate deposits are the key driver for offshore yuan business and not retail funds. But they would underscore Hong Kong’s commitment to Beijing’s plan to use the financial centre as a test bed for its growing efforts to internationalise the yuan. The Hong Kong Monetary Authority said it would hold a media briefing on new measures to enhance yuan liquidity, but a spokesperson said it was not related to residents’ daily transfer quota to mainland banks. Retail investors and companies have been drawn to the yuan and yuan-related investment products in recent years on expectations the Beijing would continue to let its currency appreciate against the US dollar. But retail interest has waned in recent months as the yuan weakened to near six-month lows. At end-April, yuan deposits in Hong Kong banks were around 552 billion yuan (US$87 billion), compared to a peak of 627 billion yuan in November, government data showed. Institutional investors’ interest has not shown similar signs of flagging. Yuan-denominated bond sales have kept growing at a robust pace. After suffering a decline in the closing months of last year, average monthly issuance of so-called “dim sum” bonds so far this month is a healthy 11.3 billion yuan compared to 8.5 billion yuan in the last quarter of last year, Thomson Reuters data showed. The Chinese currency’s weakness in the offshore yuan market has lagged a fall in the non-deliverable forwards space because of a spreading cash squeeze in Hong Kong. Among the reasons cited for the decline in yuan deposits in recent months are an increased pace of fund flows back into the mainland because of easier cross-border flows and the launch of various investment schemes such as RQFII. The explosive growth in CNH funds was led by a landmark agreement between the HKMA and the People’s Bank of China in July 2010. Prior to that scheme, Hong Kong residents could convert their savings into 20,000 yuan daily. Between 2004 and early 2009, the share of yuan deposits in the Hong Kong banking system stagnated well below the 1 percentage point mark.

Donald Tsang Yam-kuen pictured on Thursday during his final question and answer session in the legislature as chief executive. In his final question and answer session in the legislature as chief executive, Donald Tsang Yam-kuen admitted some failures and described the "misery" of his recent conflict-of-interest scandals, on Thursday. Tsang, who will leave office in two weeks’ time after 40 years in government, reflected on his seven years in office. He acknowledged failings in his economic policy, which failed to narrow the city’s wealth gap. As for the long decline in his popularity, he said it began with a controversial cabinet reshuffle plan in 2008. “My concept was to make the cake bigger for all, so that once the economy grew every sector could share in the benefits. But it turned out that theory and practice were different,” he said. But Tsang defended himself from criticism that his government had been slow to relaunch a subsidised housing scheme amid rising property prices in recent years. He had been cautious about the Home Ownership Scheme, he said, because it had caused a market slump and driven up homeowners’ negative equity during the 1998 Asian financial crisis. Asked by lawmaker Lau Kong-wah which part of his tenure had been the most notable, Tsang said the past three months had been the most miserable, as a series of scandals erupted. “Each day of the past three months has been miserable,” Tsang said. Tsang has been facing calls to resign for accepting trips on yachts and private jets owed by tycoon friends, and for using luxury hotel suites during official trips abroad. He has apologised twice in three months and admitted he “mishandled” these dealings. But he vowed to stay out his term in office and deal with pressing issues. Tsang got another taste of his “miserable” moments in the legislature on Thursday, when some pan-democratic members grilled him again over the scandals. He was told to resign immediately, and to refund the extra money spent on luxurious hotel suites, by the Labour Party’s Cyd Ho Sau-lan, People Power’s Albert Chan Wai-yip and Wong Yuk-man. Tsang brushed the calls aside and said he needed to ensure a smooth transfer of government and the passage of important bills. “I have promised to implement the recommendations of the two reports and to refine the system [for defining proper conduct in a chief executive]. I think this is my best response,” he said. Two recent, high-profile reports criticised Tsang’s acceptance of favours from rich friends and excessive spending on hotel suites on some trips abroad.

Eight treasure duck (top) is a signature at Fook Lam Moon. The complex dish requires good knife skills and meticulous preparation. Radish cake (bottom left) and wok-seared rice flour cannelloni and dried shrimp (right) from Yan Toh Heen InterContinental Hong Kong; pork lung soup (centre) from Fook Lam Moon. Hong Kong food today is built on the foundations of dishes brought by waves of immigrants from southern China. The dishes mostly originate from neighbouring Guangzhou and Chiu Chow. Traditional Chinese cooking techniques can still be found here although they're fast disappearing from the repertoires of both home cooks and restaurant kitchens. Versions of dishes such as eight treasure duck or salt-baked chicken may be widely available but they are arguably made with poor technique and are poor substitutes for authentically-made versions. "We're always willing to tell people about how our dishes are made," says Dr Daniel Chui, executive director of Fook Lam Moon, or "tycoons' canteen" as it's sometimes known. "It's just that people take shortcuts nowadays." Dishes such as eight treasure duck (which, more often than not must be ordered in advance at other establishments) are favourites at Chui's restaurant. These dishes are often laborious to make. They require good knife skills, and meticulous preparation including extensive cleaning, delicate handling and long marination and cooking times. Classic techniques are difficult to honour under the pressures of time and cost. Restaurants are taking shortcuts or deleting elaborate dishes from menus. If they are offered, mass-market food outlets bank on customers not knowing the difference between a properly made version and one that is hastily prepared. Chui cites economic reasons for the decline of traditional dishes. "Customers expect the prices to stay low despite rising food costs and rents. So naturally the restaurants have to cut costs somehow," he says. So how does he do it? "We're lucky that we own all the properties where our restaurants are located, which gives us a bit more breathing space." According to Lau Shing, chef supervisor at Fook Lam Moon, eight treasure duck is made by stuffing a duck with a combination of lotus seeds, lotus petals, barley, dried shitake mushrooms, salted egg yolk and gingko. These ingredients are relatively easy to find in most Chinese larders. But the restaurant must ensure that it is able to procure the best. That means lotus seeds that soften after slow cooking, rather than harden, for example. The duck needs to be carefully cut open, deep-fried, stuffed, sewn back together, then finally braised for around two hours. The ingredients that go into the dish were never particularly expensive. Outlets popular with the working class, such as Lin Heung Lau, have always served it. Its decline has more to do with the labour involved. Lau mentions a similar, but lesser-known dish, ba wong ngaap, or the overlord's duck. "Not many people make it nowadays," he says. This is because it's even more complicated, with the additional step of having to debone the bird prior to stuffing. (In this case, it is stuffed with glutinous rice rather than barley). When done by the masters, the deboning and stuffing are completed through a small incision at the base of the duck's neck, so the bird doesn't need to be opened and sewn back up. The neck is simply tied in a knot to seal the stuffing. "It takes some practice, but it's not particularly hard. It's just that not everybody can be bothered to go through all the steps," says Lau. "It takes a lot of time and manpower just to do one dish, as it's fiddly." The shortcuts include products that can now be made in factories, such as cheung fun (rice paper rolls). "Shortcuts are a very common problem nowadays," says Lau Chun, a food columnist. He's also the son of Lau Kin-wai, who owns Kin's Kitchen, and private kitchens Kin's Terrace and Yellow Door Kitchen. In many restaurants, the popular Cantonese dish salt-baked chicken "is not really baked in salt that's been heated up in a hot wok, like it's supposed to be", says Lau Chun. "They just use a brine instead to make the chicken salty." Each chicken needs a least 30 minutes on the stove, which is "not something larger Chinese restaurants that need to serve more than 100 people with two or three stovetops can afford to do", says Lau. Out of the chain, it is only served at Kin's Terrace, where menus are pre-arranged. "It might not be a matter of whether there are people who know how to do it," says Leung Man-to, director of Tai Wing Wah restaurant in Yuen Long, which is known for Hakka food from the walled villages in Hong Kong. Leung cites fish dumplings, a popular Shun Tak (SEHK: 0242, announcements, news) offering: "If you make it by hand, you need to fillet the fish, take the flesh and incorporate it into the dumpling wrapper, then use more of the fish, and beat it to a paste for the filling." These steps are often mechanised nowadays. The result is, Leung says, that "the flavours and textures are not the same". Leung often travels to cities in Guangdong to find old dishes. These include dishes like mud carp belly steamed with shrimp paste. This requires all the bones to be removed, with only a minimal amount of flesh lost in the process. Seemingly simple dishes such as stir-fried bean shoots with minced pork, served in lettuce cups, are also dropping off menus. "You have to choose the right bean shoots, and pre-cook them to get rid of the raw, grassy scent," says Leung. "I wouldn't say that no one in Hong Kong knows how to make these dishes, but they take a lot of effort and the margins are low. So who still has the patience?" Leung adds that people are counting cents and find it hard to be passionate about these techniques. At the much-lauded Shung Hing Chiu Chow Seafood Restaurant chive pastries filled with crab are another hard to find favourite. Making these diminutive bites is no easy feat. Everything from the pastry to the filling is made in the kitchens. The pastry can't be used for any other dish, because it incorporates fresh chive juice, which is pressed on site. The filling consists mostly of crab meat, which needs to be carefully removed from the shell. Another of the restaurant's dishes, marinated mantis shrimp, served raw, doesn't look as though a lot of work has gone into it. But the saltiness of the brine has a distinctive sweet fragrance. The subtle scent comes from Chinese rose wine, distilled from rose petals. The mantis shrimp are left to soak in distilled water for 20 minutes, before marinating in a mixture of rose wine and rock salt for half an hour. Then they have their heads removed and are butterflied, ready for a final eight-hour marination. "I don't think many people make this any more, it's too troublesome," says Shung Hing owner Suen Suk-keung.

Hong Kong may benefit from a series of mainland initiatives designed to lift the city's economy as it prepares to celebrate the 15th anniversary of its return to Chinese rule. Zhang Xiaoqiang, deputy director of the National Development and Reform Commission (NDRC), said Beijing was likely to announce measures to help the city, which is feeling the impact of global stock market volatility and a worldwide economic slowdown. "I believe the central government will definitely do it," Zhang told Hong Kong media at a briefing in Beijing yesterday. The measures are expected to be announced when top state leaders visit Hong Kong on July 1 to mark the handover and swear in new chief executive Leung Chun-ying and his administration. They are tipped include boosts to commerce, trade and the financial and service industries. The fillips will come on top of 36 measures announced by Vice-Premier Li Keqiang on a visit to the city last August. These included an exchange-traded fund to allow mainlanders to invest in the Hong Kong stock market and the expansion of a scheme for companies to settle cross-border trades in yuan. Zhu Yingjuan, a department chief with the commission, said Beijing was mulling further measures to facilitate the Closer Economic Partnership Arrangement (Cepa) - the agreement, signed in 2003 and since regularly expanded in scope, that gives preferential access to the mainland market for Hong Kong products and professionals. The latter complain of red tape and other hurdles, though. Zhu said the NDRC had heeded complaints from Hong Kong that the agreement had opened "one big door" for market access but that many "small doors" remained closed. "I believe this problem will be addressed shortly," she said. Zhang said that while the city's role as a hub to funnel foreign capital into the mainland had diminished as China opened to the outside world, it could draw on its deep pool of professionals and international connections to help mainland enterprises expand overseas. "China is speeding up its pace of 'going out'. Hong Kong will have plenty of opportunities in this area," he said, noting that investment from the mainland to overseas markets totalled US$65 billion last year. Hong Kong deputy to the National People's Congress Priscilla Lau Pui-king said more yuan financial products might be allowed in Hong Kong, and the scope of programmes such as the renminbi qualified foreign institutional investors scheme - which allows approved foreign investors to use offshore yuan to buy the A shares of mainland-listed companies - might be expanded.

Yam's paper on the peg goes beyond the money - In addition to raising speculation about the future of the Hong Kong dollar, Joseph Yam Chi-kwong's controversial paper on the city's monetary system has led to speculation about his own motives and political aspirations. The former central banker raised eyebrows on Tuesday when he released an academic paper calling for "informed debate" on the 29-year-old peg between the Hong Kong and US dollars, the most detailed article yet written on the mechanism by a former senior government official. The comments by Yam, one of the staunchest defenders of the peg in the past, immediately achieved its ostensible aim of creating a public discussion, but his paper also contained intriguing comments about politics and the quality of Hong Kong's leadership that have set tongues wagging in the city's political corridors. Some critics saw it as an indirect attack on chief executive-elect Leung Chun-ying, who rebuffed Yam's paper within hours of its release. After going through the technical issues, Yam swayed his discussion to politics and set an apocalyptic tone. "Democracy, public opinion and public standing are all very important to effective governance and are political attributes that politicians crave … But these attributes, when expressed in Chinese, are all just one word away from populism," he wrote. "I hope Hong Kong does not go down that slippery slope towards large government, persistent budget deficits, heavy public debts, financial meltdown and monetary crisis." He did not elaborate on the connection between these concerns and the need to review the peg. Yam was the city's central banker for 16 years and served under several governments, including that of outgoing chief executive Donald Tsang Yam-kuen's administration, making it unlikely that he is worried about the current government's policy. Curiously, the release of his article coincided with an interview Leung gave to a Chinese newspaper, in which the incoming chief executive said he would make use of the HK$600 billion reserves to invest and build up a social safety network. Leung won the chief executive position over his rival Henry Tang Ying-yen - whose campaign was endorsed by Yam - largely because of his populist approach and higher popularity ratings. But Leung was criticised on several occasions by Tang for his alleged lack of financial expertise and perceived inclination towards more government intervention. Yam is also believed to have been the brains behind Tang's financial platform. Yam wrote that he was concerned whether there was sufficient "political willingness to pursue prudent macroeconomic policies, in particular to observe fiscal discipline" and fears there won't be enough "informed discussion" about the future of Hong Kong's monetary policy. The former head of the Hong Kong Monetary Authority also questioned whether future political leaders would have the courage to reform the city's monetary system. "Reform of the monetary system in peaceful times takes leadership, foresight, courage and effective persuasion," he wrote. "It is entirely understandable that in the current political environment, the best option to some (personally) may be to avoid (personally) risky decisions by conveniently arguing for the maintenance of the status quo." Yam also put forward an interesting argument about the psychological effect on the public as the Hong Kong dollar continues depreciating against the yuan. He said there was growing concern, as the value of yuan rises against the Hong Kong dollar, that mainlanders would start to belittle Hong Kong's currency and lose their respect for Hongkongers. "This psychology, reinforced by the rise of the mainland consumerism that is being manifested in Hong Kong in ways that some have found irksome, may have contributed to eroding somewhat the harmonious relationship between the people of Hong Kong and of the mainland." Yam also points out that "there is no law in Hong Kong to prohibit the use or circulation of other, foreign currencies," following the repeal of an ordinance which did forbid this until the 1980s. This meant that "it is therefore possible that, as the renminbi attains international currency status, it becomes more and more popular in Hong Kong, for example, in the payment of salaries or in day-to-day consumption, in addition to it being, as currently, an attractive alternative avenue for the store of wealth." Whether this will happen "in the fullness of time", Yam writes, will depend on the sentiment of the Hong Kong people, and progress in the internationalisation of the yuan and the Hong Kong dollar, among other factors.

Carrie Lam, whose term as secretary for development ends this month, talked to the Post about her ideas for welfare reform. The candidate favoured to become the next chief secretary is calling for an end to what some see as the infinite demand from rural indigenous villagers for homes under the small-house policy. In an interview with the South China Morning Post (SEHK: 0583, announcements, news) in which she outlined the challenges the next government must tackle, Carrie Lam Cheng Yuet-ngor also hinted at "a big social experiment" to overhaul the welfare system. "Not long after my appointment, I talked to the Heung Yee Kuk and asked if they could draw a line," she said, as she reviewed her term as the development minister since 2007. "If life is unchanged for 50 years until 2047, as set out under the Basic Law, and only 18-year-old [or older] indigenous male villagers are eligible for a small house, how about ending it in 2029? I have asked them and offered different options. But they just didn't come back," she said. Under her plan, the last generation to enjoy what the villagers regard as their right would be those born in 2029 and who would become 18 in 2047. The small-house policy gives male indigenous villagers in the New Territories the right to build a house close to their ancestral homes. It has drawn criticism because in some cases it is being abused for profit. Lam said she now sees an opportunity to propose an end to the policy in the next five years. However, she admitted her relationship with some rural representatives had turned sour as a result of stepped-up actions on clearing illegal structures in village houses since April. "They were agitated about my enforcement [on illegal structures]," she said. "Now that they realise the law has to be enforced, they would probably think about what to do with the remaining village zones that cannot accommodate all their [housing] demands. I do think the next administration should make a start." One of the challenges, Lam said, is to convince the public that the government may need to give something to villagers in return when the policy is ended. This could include providing more infrastructure to the villages and speeding up the application process with more efficient use of land. On welfare, Lam, who was director of social welfare between 2000 and 2003, said she had in mind a "very big social experiment" to tackle poverty and narrow the wealth gap. One idea was to reform the Comprehensive Social Security Assistance scheme, calling it "a whole new paradigm shift to deal with poverty". "I have always felt that the CSSA is not the best scheme. If it is a good scheme, why are there so many 'three-nothings' and 'four-nothings' in Hong Kong," she said, referring to the working poor who do not benefit from government relief measures because they are not welfare recipients, taxpayers or eligible for public housing. Improvements to the safety net in the past five years included means-tested transport subsidies for workers, and vouchers for kindergarten education and for health checks for the elderly with private doctors.

 China*:  June 16 2012 Share

Chinese president starts state visit to Denmark - Chinese President Hu Jintao (L, front) and his wife Liu Yongqing (C) are welcomed by Denmark's Queen Margrethe II (R, front) upon their arrival in Copenhagen, Denmark, June 14, 2012. Hu Jintao arrived here on Thursday for a state visit to Denmark. Chinese President Hu Jintao arrived in the Danish capital of Copenhagen Thursday for a state visit aimed at furthering the comprehensive strategic partnership between China and the Nordic nation. This is the first state visit to Denmark by a Chinese head of state since the two countries established diplomatic ties 62 years ago. Chinese officials have described the trip as a "milestone" in the development of China-Denmark relations. During his stay in Copenhagen, Hu will meet Queen Margrethe II and Prime Minister Helle Thorning-Schmidt on enlargement of all-round cooperation between the two countries. As Denmark is holding the presidency of the European Union (EU) in the first half of this year, Hu will also exchange his views "in an in-depth way" with Danish leaders on the current international economic situation and the ongoing euro-zone crisis, said the Chinese officials. The two sides are expected to sign a host of cooperation documents on investment, tariffs, energy, environment protection, agriculture, education and culture, the officials said. "I very much look forward to the historic visit of President Hu Jintao," Danish Prime Minister Helle Thorning-Schmidt said in a June 6 statement. "China's role and relevance in the development of large parts of the world has grown rapidly in recent years. Both Denmark and China have much to gain by a closer relationship and I look forward to discussing how we can further strengthen the depth and breadth of our strategic partnership," she said. In recent years, the China-Denmark relations have been steadily enhanced with greater political mutual trust and respect and expanded economic cooperation and trade. In 2008, the two nations established a comprehensive strategic partnership. Denmark now is China's third largest trading partner in the Nordic region. In 2011, two-way trade between the two countries stood at 9.2 billion U.S. dollars, increasing by 18 percent over the previous year. In recent years, the two countries have strengthened cooperation in the fields of climate change, energy and the environment, research and innovation, and education. Given Denmark's status as an important member of the European Union, the Chinese president's visit to the Nordic country would also promote the China-EU relations, analysts said. Chinese Deputy Foreign Minister Song Tao said Monday that Hu's visit to Denmark is expected to improve the bilateral political ties featuring mutual respect, equality and mutual trust, and to blueprint further development of the relationship. "President Hu Jintao's visit, the first by a Chinese president since China and Denmark set up diplomatic ties, will open a new chapter in the development of bilateral relations," he said. From Denmark, Hu will travel to Los Cabos, Mexico, for next week's summit of the Group of Twenty (G20), which will address pressing issues affecting the global economic growth and stability. The Los Cabos summit convenes at a time when the global economy is facing great risks to growth and stability. The euro-zone debt crisis, slowdown in major developed nations and even in emerging economies, and high unemployment rates in parts of the world are posing threats to a fragile recovery. Speaking at a press briefing Monday, Chinese Deputy Foreign Minister Cui Tiankai expressed the hope that the G20 summit would continue to promote economic growth and stability against the backdrop of the volatile world economic situation.

The PLA Navy will conduct an annual training drill in the western Pacific amid concerns among Beijing’s neighbours about its military ambitions. China will conduct an annual naval training drill in the western Pacific, state media reported on Wednesday, amid concerns among Beijing's neighbours about its military ambitions. The exercise is “not aimed at any specific country or target”, the defence ministry said in a statement carried by the official Xinhua news agency. “China hopes all relevant sides will respect China’s maritime rights, such as freedom of navigation.” The ministry did not give further information about the location of the drill by the PLA Navy, when it would be held or which ships would participate. China is involved in a number of simmering marine territorial disputes with its neighbours and is locked in a prolonged stand-off with the Philippines over a shoal in the South China Sea. Beijing claims nearly all of the South China Sea, even waters close to the coasts of neighbouring countries. The Philippines and Vietnam have in recent years accused China of becoming increasingly aggressive in staking its claim.

Jack Ma has been a busy man. On May 20, the Alibaba Group founder saw his company end years of bitter back-and-forth with Yahoo by coming to terms on a deal that would allow the Chinese e-commerce giant to buy back as much as half of the 40% stake Yahoo took in it back in 2005. Then, only a few days later, he watched as shareholders voted to take Hong Kong-listed private, clearing the way for a major Alibaba Group IPO down the line. Mr. Ma, who once famously dressed up as “The Terminator” for a public appearance with Arnold Schwarzenegger, is never far from the spotlight, but the conclusion of those two projects helped make the executive China’s top corporate newsmaker, according to data compiled by Dow Jones Insight and edited by The Wall Street Journal. Rising one spot to No. 2 in May was another Internet executive with the surname Ma, Tencent founder “Pony” Ma Huateng, who made headlines with plans to restructure his company to expand beyond its core gaming business—news that sparked a round of rumors in the Chinese press about company executives whose jobs might be in danger. Rounding out the top three was property mogul Pan Shiyi, a social media celebrity whose real-estate company, SOHO China, this month found itself on the receiving end of a civil lawsuit filed by developer Fosun International over rights to a prime piece of land on Shanghai’s prestigious Bund.

China announced Thursday that it has developed a new engine for its new generation of carrier rockets, making it the second in the world to harness such engine technologies. The 120-ton liquid oxygen/kerosene high-pressure staged combustion cycle engine will provide an effective guarantee for the country's manned space and lunar probe missions, said the State Administration of Science, Technology and Industry for National Defence. The engine is non-toxic and pollution-free, and features high performance and reliability. It is the first kind of high-pressure staged combustion cycle engine for which China has proprietary intellectual property rights, said the administration. It also makes China the second country in the world, after Russia, to grasp the core technologies for a liquid oxygen/kerosene high-pressure staged combustion cycle rocket engine. The research project for the engine was initiated in September 2000. It was coordinated and organized by the State Administration of Science, Technology and Industry for National Defence, and conducted by the Academy of Aerospace Propulsion Technology of China Aerospace Science & Technology Corporation. Researchers made more than 70 technical breakthroughs in designing, manufacturing and testing, and obtained nearly 20 national defense scientific and technical achievements along with patent licenses. They also worked on nearly 50 kinds of new material.

Summit of all fears - Storm clouds loom over global economy ahead of G20 meeting, but Vice-Foreign Minister Cui Tiankai says Hong Kong and Beijing can weather difficulties together. Next week's summit of the leaders of the G20 group of countries in Los Cabos, a scenic city in southern Mexico, will give President Hu Jintao an opportunity to show that China has a role to play in handling the global economic crisis. Yet Hu, who has served as China's president for the past 10 years, knows all too well that this time he has many challenges to face, both at home and abroad, some of which may prove to be the toughest of his career. At home, mainland China's latest economic data shows inflation at three per cent, its lowest level in 23 years, signalling a slowing down in growth rate of the world's second largest economy. Abroad, Hu will have no time nor will he be in the mood to appreciate the beautiful scenery of the Mexican city where he and his G20 counterparts will meet. No one could have predicted, when the summit's dates were set last year, that the meeting of the world's 20 most powerful leaders would coincide with an election in Greece, on June 17, the outcome of which will have a huge bearing on the economic crisis that has threatened both Europe's and the world's economic recovery due to Greek difficulties in repaying formidable debts. "Last year, it was said that the Cannes G20 Summit was 'hijacked' by Europe. This year, it happens that Greece will have its new election just one day ahead of the summit. We'll see what is the outcome", said Vice-Foreign Minister Cui Tiankai , during a briefing on China's preparations for the summit. Cui was at ease during an interview with the South China Morning Post (SEHK: 0583, announcements, news) and another newspaper, but it was clear that he could not afford the luxury of relaxation, as he is responsible for keeping Hu briefed on developments in Europe, with the latest news indicating Athens has predicted Greece could run out of money next month as government income, especially tax revenue, dries up during a worsening recession. When asked how serious Beijing expects the euro-zone crisis to become, and how it would affect Hong Kong - a city whose open market makes it particularly vulnerable - Cui struck a confident note, pointing out that Hong Kong's financial officials will take part in the G20 summit as deputies in the Chinese delegation. According to Cui, this will demonstrate that Hong Kong and Beijing will work together in facing the crisis. Cui said he believes Hong Kong can overcome the financial crisis, thanks to the support of the central government. "Even though the euro zone's debt crisis keeps deepening… I think Hong Kong and the mainland can jointly fight the crisis," he said. "If the mainland economy can pass through the difficulties, Hong Kong's economy can too." The looming difficulties are also expected to be a test of Financial Secretary John Tsang Chun-wah's abilities, ahead of his inclusion in the cabinet of chief executive-elect Leung Chun-ying, who takes office on July 1. This situation parallels the one faced 15 years ago by Tung Chee-hwa, the city's first chief executive, who had to deal with the Asian financial crisis soon after being sworn into office. The euro-zone crisis and the blow it may inflict on Hong Kong's economy may be Tsang's first big test in the new government. A Hong Kong government source confirmed both Tsang and Norman Chan Tak-lam, the chief executive of the Hong Kong Monetary Authority, will attend the G20 summit, at which they and their European counterparts will take a close look at the developments unfolding in Greece. The two Hong Kong officials will also be able to monitor whether there are likely to be any regulatory amendments made in Europe, and the possible impact on the Hong Kong property market of fluctuations in interest rates in European markets. "The financial secretary's office has been keeping a close eye on what's going on in Europe, including the upcoming election in Greece, and it is no exaggeration to say that we're monitoring the situation day and night," said a person close to Tsang. In the space of a few weeks Tsang has issued three warnings that the bubble in Hong Kong's property market is in danger of bursting, while chief executive-elect Leung has said he would like his financial secretary to focus on the global financial situation and be well prepared for any possible crisis. In his interview, Cui also said that Hong Kong had played a positive role in shaping China's international profile, with the city providing an economic and financial hub that attracts many mainland companies. Some of these mainland companies have also made investments overseas via Hong Kong, he pointed out. It is understood that mainland firms are frequently questioned by the West over their allegedly hidden political agendas when seeking to make overseas investment. In order to avoid such difficulties some prefer to seal deals as Hong Kong-registered or -listed companies, which have less "political color". The central government has also supported Hong Kong's participation in international agencies, such as the Asia-Pacific Economic Co-operation (Apec) forum, and Cui cited the example of Dr Margaret Chan Fung Fu-chun , who was the city's director of health before she became the head of the World Health Organisation in January 2007. "Chan is the first Chinese person to be the number one at an international agency," Cui said. "China did not nominate someone else from [the mainland] for such a top position, but instead chose Chan from Hong Kong … The central government attaches great importance to Hong Kong talents." Another example cited by Cui was of the G20 meeting in 2009, when Hu opposed Hong Kong and Macau's inclusion on a list of tax havens, which would have made the two special administrative regions less popular among investors. Cui, who will visit Hong Kong to celebrate the 15th anniversary of the establishment of the Foreign Ministry Commissioner's Ofice in Hong Kong, said the city could aid Chinese diplomacy by successfully implementing the concept of "one country, two systems". "The successful implementation of the concept is proof that China is true to its words," Cui said.

A visit to Denmark later this week by President Hu Jintao is expected to provide a backdrop for companies to sign export deals worth more than 10 billion Danish kroner (HK$13 billion), the Danish trade minister said. Denmark also hopes the June 14-16 visit will lead to a doubling of exports to China over the next five years and improve the balance of trade, which is now in China's favour, Minister for Trade and Investment Pia Olsen Dyhr said on Tuesday. Hu's Copenhagen tour, the first state visit since China and Denmark established ties 62 years ago, will be his only European stopover on his way to the G20 meeting in Mexico. Last year, Danish exports to China were worth 15.1 billion kroner, accounting for 2.5 per cent of total Danish goods exports, while Chinese imports to Denmark were worth 36.2 billion kroner, Danish government figures showed. "We see the possibility of increasing trade to China and actually doubling it in the next five years," Olsen Dyhr said, adding that Denmark would like more balance in the relationship. Last year the most valuable category of Danish exports to China was medical and pharmaceutical products, a field where Denmark has several strong companies, including Novo Nordisk, the world's biggest producer of insulin. Denmark is also a big provider of shipping between China and the rest of the world, as Danish container shipping company Maersk Line is the largest in its sector. Meanwhile, China's main export to Denmark last year was clothing. Olsen Dyhr said export and investment agreements would be made during Hu's visit by companies in the fields of green technology, pharmaceuticals and agricultural products. "It amounts to more than 10 billion [kroner] in export agreements, and we are talking about more than a handful of investment agreements," the trade minister said, but he declined to name companies. Daily newspaper Jyllands-Posten said that about 20 major orders and other agreements would be signed at a ceremony tomorrow. Ditlev Engel, head of Danish wind turbine maker Vestas, said last Sunday that he hoped Hu's visit would be "another very important step towards closer co-operation within our sector in China and also outside China". In a briefing for reporters on Monday in Beijing, Deputy Foreign Minister Song Tao said: "Denmark is very strong in green technology and sustainable investment. President Hu Jintao will promote co-operation in these areas." Olsen Dyhr said that Denmark would not miss the opportunity to discuss human rights in China with the visiting officials. "We always talk human rights when we meet with the Chinese."

Mainland officials have backed a Taiwanese minister's idea to establish cultural offices in each other's territory, giving warming cross-strait relations added impetus. Fan Liqing, a spokeswoman from the Taiwan Affairs Office under the mainland's State Council, yesterday called for dialogue between Beijing and Taipei to pave the way for the establishment of such centres. "To fit in with the new situation following rapid cultural exchanges across the strait, we have actively promoted the idea of setting up in each other's area private-level cultural offices or organisations," said Fan in Beijing, responding to a question on what she thought of Taiwanese culture minister Lung Ying-tai's idea. Lung said she was studying the setting up of a cultural centre on the mainland. Taiwan has overseas cultural centres in New York, Paris and Tokyo, and Lung hopes to expand their number to 11. The mainland could be the location for one of the new centres her ministry will open. But for this to be realised, Lung said, she needed to open discusssions with other departments, including the island's Mainland Affairs Council, which draws up cross-strait policies. Fan said her office was positive. "We hope to negotiate with the Taiwanese side in order to reach consensus" for cultural exchange between such centres, Fan said. Asked if the opening of the centres would be a first step by the two sides towards the signing of a cultural co-operation agreement, Fan reiterated that a cultural pact could be inked under a step-by-step basis or initiated in one step. As for what title Lung should use if she visits the mainland and takes part in a cross-strait cultural forum, as she has proposed, Fan said it should be one that both sides were able to accept. Lung has proposed holding regular cross-strait cultural forums as part of her cultural policy towards the mainland. She believes the two sides can slowly build up enough mutual trust through the forums to take the next step to establishing cultural relations. Beijing has been enthusiastic about signing a cultural pact with Taipei, since it hopes to engage with more Taiwanese people, especially those from the pro-independence camp, through cultural exchanges to pave the way for political dialogue. The two sides resumed talks in 2008 after mainland-friendly Ma Ying-jeou of the Kuomintang was elected president and adopted a policy of engaging Beijing. Fan yesterday also welcomed a plan to try to revise high school history books that had been changed by Ma's pro-independence predecessor Chen Shui-bian, who advocated a Taiwan independent of China. The disgraced Chen, president between 2000 and 2008, has been imprisoned for corruption.

Chinese entrepreneurs labeled Germany as the most attractive investment destination in Europe, considering more acquisition and joint ventures with German companies, a latest study showed Wednesday. The report of consulting firm Ernst & Young, based a survey of 400 executives of medium-sized and large Chinese firms from different industries, indicated that one in four Chinese managers viewed Germany as one of the three most appealing locations for investment worldwide. The other two were China itself, with 61 percent of votes and the United States, with 29 percent. Within Europe, Germany wins 63 percent of responses, ahead of France with 13 percent, the report said. Among Chinese companies that are planning to invest in Germany, Europe's strongest economy, 9 percent of them are expecting business acquisitions, while 56 percent preferred joint ventures. Ernst & Young said Chinese companies, with substantial funds in hands, are "full to bursting" for the expansion in Germany. As for the particular sectors, 57 percent said they are interested in mechanical engineering, with automobile industry in the second place. "German companies and brands are regarded highly in China, which shapes the image of Germany as an investment location from the perspective of Chinese companies," said Yi Sun, a partner at Ernst & Young and head of the China business services in Germany, Austria and Switzerland. "The German mentality with diligence and punctuality earns high reputation among Chinese companies," Sun said, adding that Germany's well-developed infrastructure, excellent research and development system of universities and various institutes and large potential markets also attract Chinese companies. In March, the Berlin-based foreign trade and investment promotion agency Germany Trade & Invest reported that China became the biggest foreign investor in Germany in 2011, with 158 greenfield investment projects, ahead of the United States and Switzerland, which had 110 and 91 projects respectively.

Airbus fully supports China's stance in opposing the European Union's plan to tax international airlines under its Emissions Trading Scheme, one of the company's executives said Tuesday. Airbus shares China's stance on the matter and believes that the EU practice is improper even though the ETS was designed to reduce carbon emissions, John Leahy, a chief operating officer at Airbus, said. The EU began charging airlines that use EU airports for carbon emissions on Jan 1. The first payment is due on April 30, 2013. The EU's move is unacceptable to other countries and must be corrected, Leahy said at the 68th annual conference of the International Air Transport Association. Leahy said a global solution under the framework of the International Civil Aviation Organization should be worked out. Chinese and US aviation authorities and industry associations have repeatedly voiced opposition to the ETS, urging the EU to take a global and comprehensive approach to the issue. Tony Tyler, chief executive and director-general of IATA, said the administration is calling on the International Civil Aviation Organization, a UN agency, to finalize a global solution to reduce carbon emissions in the aviation industry. The EU's carbon charges are not a step forward, but a move that could trigger disputes or even a trade war in the industry, Tyler said. Airbus, which delivered about 20 percent of its products to China last year, will continue to take the country as an important civil aviation market, according to Leahy. The company plans to deliver more than 100 aircraft to the Chinese market this year. Leahy said Airbus's goal is to provide the market with more efficient aircraft that consume less fuel and create less noise and pollution. With its new engine, the company's A320neo aircraft consumes 15 percent less fuel than the previous A320, Leahy said. Global aircraft giants, including Boeing, Embraer and the China Aviation Industry Corporation, are all working on more fuel-efficient and lighter aircraft to reduce weight, noise and carbon emissions. Li Jian, deputy director of the Civil Aviation Administration of China, said new technology will play an important role in the future development of the civil aviation industry.

Hong Kong*:  June 15 2012 Share

Ankara eyes investment from HK, mainland China - Infrastructure projects in the next decade aim to draw in billions of dollars from Chinese investors who can also share their experience. Workers lay railway track along a 21.7-kilometre metro line extension between Kadikoy and Kartal in Istanbul in October. Turkey is wooing mainland China and Hong Kong, seeking billions of dollars in investment for its railway, energy, infrastructure, property and other sectors, as it aims to put previous disputes with Beijing behind it. The Turkish government has set ambitious investment targets for 2023, the 100th anniversary of the founding of the republic by Mustafa Kemal Ataturk. Between now and 2023, the Ankara leadership hopes to attract US$130 billion in energy investments and US$23.5 billion in railway investments from all over the world, said Didem Engin, chief executive of Turkish advisory firm Renova Economics and Investment Consulting. "By 2023, Turkey wants to build 10,000 kilometres of high-speed rail," Engin said. "From now till 2023, the Turkish government wants 500 kilometres of normal railway to be renewed every year. China is a very important country to share its experience in high-speed railways." Other targets in the next decade include the construction of three new airports, a third bridge for Istanbul and 16 logistics centres. By 2019, the country aims to have at least one of its ports among the 10 busiest in the world and to command a total container capacity of 32 million 20-foot equivalent units (TEUs) for all Turkish ports, Engin said. "Hong Kong companies can share their experience in port management with Turkey," she said. In energy, Turkey aims to increase its installed power capacity from 54,000 megawatts to 125,000MW by 2023, its natural gas storage capacity from 2.6 billion cubic metres to five billion cubic metres, and the proportion of its renewable energy usage from less than 10 per cent now to 30 per cent, she said. "We want to build nuclear plants. China, Russia and South Korea are interested in this," she said. In November, China Tianchen Engineering signed an agreement to construct one billion cubic metres of underground natural gas storage facilities in Turkey. The project, estimated to cost US$640 million, was China's biggest investment in Turkey at that time, Bloomberg reported. Housing is another area of development, because of two earthquakes late last year that shook the east of the country. Engin said 7.56 million residential flats would be built between now and 2023. "Hong Kong companies are strong in real estate. [They] can take part in real estate projects," she said. Sino-Turkish relations deteriorated in 2009, when Turkish Prime Minister Recep Tayyip Erdogan described the plight of Uygurs in China as "a kind of genocide". The Uygurs share linguistic, ethnic and religious ties with Turkey. "Relations between Turkey and China will be stronger than ever, though in the past there were some tensions," Engin said. Vice-President Xi Jinping visited the country in February, and Erdogan reciprocated in April, the first trip to China by a Turkish leader in 27 years, she said. Despite Erdogan's controversial remarks in 2009, Chinese imports soared from US$12.68 billion in 2009 to US$21.69 billion last year, while Turkish exports to China jumped from US$1.6 billion to US$2.47 billion. Turkey's exports to Hong Kong nearly doubled from US$229.17 million in 2009 to US$$425.56 million last year. However, imports from Hong Kong fell from US$100.11 million to US$99.8 million. In the first quarter, China overtook Germany to become the second-largest source of Turkey's imports, behind Russia, Engin said. "The issue with the Turkish economy is that we import more than we export. That is the reason the Turkish government is trying to lower the import portion," she said. The prospects for Chinese investment in Turkey are very good, said Ben Simpfendorfer, founder of Silk Road Associates, a Hong Kong consultancy focusing on countries lying along the route from China to Turkey. "We're talking about an economy that can be compared to Brazil, a large industrialised economy with access to the European Union," he said. Turkey has substantial resources, reasonable labour costs and free-trade agreements with the European bloc, Simpfendorfer said. In 2010, Turkey attracted US$9.1 billion in foreign direct investment, far below the US$20 billion it gained in 2008, before the onset of the global financial crisis, according to the UN Conference on Trade and Development. Foreign direct investment in Turkey reached US$16 billion last year, figures from the central bank of Turkey showed.

Cathay is looking into making changes to its inflight entertainment system, but not in the next few years, carrier chief John Slosar says. Screens on the back of airline seats are likely to be phased out over the next few years as an increasing number of carriers find that broadcasting movies or music through Wi-fi is more cost-effective. Cathay Pacific Airways (SEHK: 0293) is considering changing its on-board entertainment system to reduce the weight of the plane by at least one tonne. That will translate into less fuel burned and save costs at a time when airlines' profits are being dented by relatively high fuel prices. "It is the next generation of inflight entertainment," said John Slosar, chief executive of Cathay Pacific. He thinks the popularity of tablets among flyers will assist changes in inflight entertainment. Slosar said Cathay would definitely "be looking at it", but was not likely to implement the new system for the next five to six years, when he estimated that 85 per cent of people would own tablets. An aircraft could be one to two tonnes lighter without the screen and its cables, he said. Today, about 10 per cent of passengers carried tablets, an official from the Guangzhou-based China Southern Airlines said. "It is definitely a trend, a revolution in all kinds of on-board entertainment," the official said. "Even the paper and magazines passengers carry can be downloaded onto these gadgets. That's the reason our product development department is looking into it closely." Some airlines have already implemented the service. Australian budget carrier Jetstar, a unit of Qantas, has bought 3,000 iPads and plans to buy more to be used on its routes from Australia. When Jetstar introduced the iPads late last year, the carrier said the latest releases in movies, television shows and music direct from Hollywood, as well as the latest generation of games, e-magazines and e-books, would be available on the devices. Virgin Australia also said it would launch a similar service soon. Across the Pacific, American Airlines rolled out a Wi-fi-based inflight entertainment option last year. Passengers pay for each television show or movie streamed to the tablet on demand. Earlier this month, budget long-haul airline Scoot, owned by Singapore Airlines, said it would take two tonnes of entertainment equipment out of its fleet and instead offer iPads, which it said would cut an aircraft's weight by 7 per cent. The iPads will be loaded with movies, music, games and television shows. Scoot plans to charge economy class passengers to use the iPads, but business class travellers can use them for free. Passengers will eventually be able to access content via a wireless system. Qantas is also conducting trials of a similar product. But there is still a debate over whether the Wi-fi signal could interfere with cockpit communications. And questions remain about how the service and quality of movies might be affected when many passengers are trying to watch the same movie at the same time.

From left: central government's liaison office official Sun Xiangyi, BOC (HK) chief He Guangbei, the World Bank's Klaus Rohland and acting financial services secretary Julia Leung. China theme underpins World Bank bond fund - Offering from global organisation and Bank of China (HK) allows retail investors to bet on longer-term gains in currencies of the mainland's big trading partners. The World Bank has tied up with Bank of China (Hong Kong) to launch an emerging market bond fund that allows retail investors to bet on gains in the currencies of China's major trading partners. It is the second retail fund to be launched by the World Bank, which set up a Japanese retail fund in 2005. This time, the World Bank chose BOC (SEHK: 3988) (HK) as its exclusive partner because it believed Hong Kong was the ideal base for marketing the fund in China. "China has changed substantially over the last 30 years," Klaus Rohland, the World Bank's country director for China, Mongolia and Korea, said as he co-hosted a launch ceremony at BOC (HK) headquarters in Central. "China used to be a poor country 30 years ago, but now it is the world's second-largest economy. China now has a big influence in trade, export and commodities worldwide." The Washington-based World Bank is a global institution that lends money to developing countries to alleviate poverty and lift living standards. It is a major bond issuer around the world, with the highest possible credit ratings from Standard & Poor's and Moody's Investors Service. The BOC (HK) World Bank Emerging Markets Bond Fund has a China theme, investing 85 per cent of its assets in World Bank-issued debt securities denominated in 40 currencies of countries trading with China, including Australia, Brazil, Chile, Colombia, India and South Africa. Investing in the fund would be equivalent to investing in a basket of debt securities denominated in various currencies. "The fund allows investors to capitalise on China's rising economic influence by focusing on its trading partners. They are either exporting commodities to mainland China or they are importing manufactured goods from mainland China. These countries have high growth potential due to China's rapid economic development," said Au King-lun, chief executive of BOC (HK) Asset Management, which will be responsible for the fund's investments. The fund will invest no more than 15 per cent of its assets in US Treasury securities or Chinese government bonds and bank deposits. The bond fund is an open-ended fund authorised by the Securities and Futures Commission, so it can be sold to retail investors in Hong Kong from tomorrow to July 20 at any branch of BOC (HK), Nanyang Commercial Bank and Chiyu Banking Corporation. The minimum initial investment is US$1,000. "Even though the euro-zone crisis is not yet resolved, we still believe investors want a good investment that is low-risk but can offer a better return than the interest rate paid on bank deposits," Au said. "That's why it's important to invest in debt securities issued by the World Bank, which has the highest possible credit rating. "Many Asian currencies have the prospect of appreciating against the US dollar, so investors can enjoy a good return from the currency appreciation over the long term." But Au reminded investors currencies might also depreciate, and the bonds were issued in emerging markets, which might also involve more risk than developed countries.

SCMP front page in 1983, when the peg was announced. Over the years it has offered much-needed certainty. Following John Bremridge's announcement of the peg, newspaper readers at a bank in Mong Kok try to figure out what it means. Since 1983, when pegging the Hong Kong dollar to the US dollar helped soothe frightened members of the public, some of whom had started to demand payment in US dollars, the linked exchange rate mechanism has been sacrosanct. For many in Hong Kong, changing the peg would be like repainting the ceiling of the Sistine Chapel or turning the Taj Mahal into a shopping mall. From the time that financial secretary John Bremridge announced that the Hong Kong dollar would be pegged at HK$7.8 to US$1 on October 17, 1983, his successors over the past 29 years have stood by it. This includes current Financial Secretary John Tsang Chun-wah, who yesterday insisted that the government was "fully committed to maintaining the linked exchange rate system". As a result, a call yesterday by former Hong Kong Monetary Authority (HKMA) chief executive Joseph Yam Chi-kwong for a review of the peg stirred up a hornets' nest - particularly since Yam never suggested the need for such a review during his 16-year reign at the helm of the HKMA, which ended in 2009. "A fixed exchange rate cannot be an end in itself, although it can be an effective tool for achieving a monetary environment that serves well the public interest," Yam said in an academic paper. The city's emphasis on maintaining the peg since 1983 boils down to one word: certainty. Although it meant Hong Kong lost control of interest rates and had to follow the US Federal Reserve's every move, businesses and investors have liked the security that the peg offers - particularly during the Asian crisis. The Hong Kong dollar has had a colourful past. Early last century, it was linked to the value of silver and then to the British pound before being allowed to float freely until the introduction of the peg in 1983. The peg was born at a time when public confidence was at a low ebb, with many concerned about the possible outcome of Sino-British talks over the future of the-then British administered city after July 1, 1997. Jitters over a mainland takeover sparked a wave of selling, weakening the local currency to a low of HK$9.50 to US$1 at one point in 1983. Some businesses even refused to accept Hong Kong dollars, insisting on US dollars instead. Fears of a currency collapse caused shoppers to flood supermarkets to stock up on everything from rice to toilet paper on fears that the weakening exchange rate would bring inflation, pushing up prices. Back then, Yam was one of the Hong Kong government officials that helped design the peg and has always backed it - until yesterday. During his time at the head of the de facto central bank, any suggestion that the peg was flawed brought a swift and incisive response from Yam, who vowed there was no need to change the mechanism. The peg came under renewed fire in 1998, when it helped make Hong Kong an attractive target for speculators at the height of the Asian crisis. Speculators, who had already driven down currencies in Thailand and Indonesia, turned their sights on the Hong Kong dollar by shorting the blue chip Hang Seng Index to spook investors and shake confidence in the currency. But Yam and Donald Tsang Yam-kuen, who was then financial secretary, spent HK$212.6 billion buying in the underlying Hang Seng Index, effectively squeezing out the speculators, who were sent packing. After the crisis, the most common criticism has centred on the inflation that the peg inevitably brings because of a weakening US dollar. Several investment banks speculated in 2008 that inflation might force the HKMA to abandon the peg so that it could set interest rates to choke off inflation. But at that time, Yam hit back in a weekly column on the HKMA website. In April 2008, he vowed not to change the linked rate system. "The peg was not the only reason for rising inflation," Yam wrote, pointing to soaring labour costs as a bigger factor. He said a study by the HKMA had shown that a 10 per cent fall in the US dollar against all currencies would only cause Hong Kong domestic prices to rise 0.82 per cent in the short run and 1.61 per cent in the medium term. Those words seemed forgotten yesterday, when Yam questioned the peg, and whether the city might be paying too high a cost. "This is particularly so, when, as widely recognised, inflation in Hong Kong has, at times, been uncomfortably high, and asset bubbles have been a feature of Hong Kong's economic development," he wrote in his paper. With inflation hovering around 5 per cent as a result of quantitative easing by the US Federal Reserve, the peg "must now be questionable". David Webb, editor of said it might be time to change, and either just use the US dollar or eventually the yuan as legal tender when it is fully convertible - although Beijing would probably not allow "dollarisation". Andrew Fung Hau-chung, executive director at Hang Seng Bank (SEHK: 0011), said the peg had helped keep Hong Kong's financial markets stable, rejecting calls for linking the HK dollar to a basket of currencies.

This artwork by Cao Fei is called RMB City 2007. It is among the artworks that Dr Uli Sigg has donated to the West Kowloon Cultural District Authority. Dr Uli Sigg (right) poses with Michael Lynch, CEO of the West Kowloon Cultural District Authority. Hong Kong's freedom of expression influenced a Swiss collector's decision to hand Chinese artworks valued at HK$1.3 billion - including some by mainland dissident Ai Weiwei - to Hong Kong's future museum of contemporary art. In a deal signed between Dr Uli Sigg and the West Kowloon Cultural District Authority yesterday, the veteran collector donated 1,463 Chinese contemporary works to the permanent collection of M+, which is due to open by 2017. Dr Lars Nittve, executive director of M+, said Sigg's contribution would comprise a third of the museum's collection of about 4,000 pieces and would set the ball rolling for future acquisitions. Sigg's collection includes work by 310 artists from the 1990s to the 2000s. Auctioneer Sotheby's has estimated their value at HK$1.3 billion. In a part-gift, part-purchase agreement, Sigg also sold 47 Chinese contemporary artworks from the 1970s to the 1980s to M+ for HK$177 million. The purchase is the museum's first. Sigg, who has been collecting Chinese contemporary artworks for three decades, said he chose to donate the collection to M+ because the museum would be in Hong Kong. The city, he said, was part of China but not subject to the same restrictions as the mainland. "There is concern from [mainland] authorities of how China is represented in contemporary art. It may not be how they want to be perceived," Sigg said yesterday. He also said he had been in discussions with institutions across the border, and realised it would be impossible to show all the works without limitations. Conversely, Hong Kong was a world-class city in China and would be the best platform to make Chinese contemporary art - yet to be represented properly in Asian museums - visible to the world, Sigg said. "Chinese people need to see their own contemporary art which they don't know of yet," Sigg said. The collection has 26 pieces by Ai, who is required to report his daily movements to state security officials. They include an eight-hour video surrounding Chang'an Avenue in Beijing. Other collection pieces include Zeng Fanzhi's colourful paintings featuring rich facial expressions and Zhang Xiaogang's renowned Bloodline Series, which drew inspiration from Mao-era family portraits. Another highlight is a wooden sculpture made by Wang Keping in 1979, on which a hand covers the figure's mouth, implying it has been silenced. It caused a stir on the mainland at the time it was created, Sigg recalled. Hong Kong artworks form only a small part of the collection, with half a dozen pieces by installation artist Lee Kit and visual artist Pak Sheung-chuen. Oscar Ho Hing-kay, programme director of Chinese University's master of arts in cultural management, applauded the donation. "Dr Sigg is a major collector of Chinese contemporary art," he said. "This is good news for M+, which will rely much on donations." But "it's important to have a balance of local artists and mainland artworks", Ho said in urging the inclusion of local artworks.

Chief Executive-elect Leung Chun-ying is giving the thumbs-down to a suggestion to delink the Hong Kong dollar from the greenback. Leung said the peg has worked well for the past three decades and he sees no need to change the system. He called on people to ignore the proposal by former Hong Kong Monetary Authority chief Joseph Yam Chi-kwong. "I hope that Hong Kong and the international community will not be affected by the opinions raised by Yam in his published academic article, which we have actually heard before," Leung said. "I have read the article and I see that there is nothing new. The linked exchange rate system has worked well over the past 30 years, and it has helped stabilize the Hong Kong financial market and economy. As such, I think there is no need to change the system." Leung's comments were echoed by Financial Secretary John Tsang Chun- wah and current HKMA chief executive Norman Chan Tak-lam. Tsang said Yam's suggestion shocked him. "The views expressed by Yam have in fact been raised by different commentators over the years," he said. "They have also been thoroughly discussed and analyzed by HKMA colleagues when Yam was still the chief executive of the monetary authority. "We all agree the linked exchange rate is most suitable for Hong Kong. As financial secretary, let me reiterate in no uncertain terms that I see no need, nor do I have any intention, to change the peg." Chan said: "I hope that the community will not have any misunderstanding about the problems that the inflation level, which has been at high level for a certain period of time, and local property prices, which rise sharply at certain periods of time, are caused by the linked exchange rate system." He said property prices have been influenced by land and housing supply, and mainlanders' zest in buying flats. Economists say the mechanism that links the Hong Kong and US currencies has served the city well since its introduction 29 years ago, surviving repeated attacks from speculators. They are concerned that de-pegging could undermine the currency stability. Chinese University economist Terence Chong Tai-leung said the Hong Kong dollar may become volatile if it is de-pegged from the greenback. Economist Andy Kwan Cheuk-chiu said: "It is the worst time to talk about delinking the Hong Kong dollar from the US currency, since the global economic prospects have been hard hit by the euro zone crisis and the US economic slowdown. If the Hong Kong dollar is linked to a basket of foreign currencies - including the euro - it might not be favorable to maintain the Hong Kong dollar's stability."

The second batch of inflation-linked iBonds is likely to be oversubscribed by at least three times as brokerage houses began cutting margin orders yesterday. Subscriptions for the new HK$10 billion worth of iBonds, with orders set in multiples of HK$10,000, end today. Its half-yearly payout will track the local inflation rate, subject to a floor of an annualized 1 percent. The subscriptions at 11 brokerage houses totaled HK$2.91 billion as of yesterday, up 9.76 percent from Monday. Of that, at least HK$723 million was in margin subscriptions. Phillip Securities received a total of HK$880 million in margin and cash orders, while Bright Smart Securities (1428) received HK$350 million in margin orders. "The number of applications we received this year has already exceeded that for last year's iBonds by four times," said Christine Lam Yuk-wah, head of retail banking at Citibank Global Consumer Group. Appetite is expected to rise further as the deadline approaches, she added. Listed last July, the first batch of iBonds (4208) jumped 6.7 percent on debut. Payouts were linked to the average gain in the consumer price index. The bonds traded unchanged at HK$105.70 yesterday. Meanwhile, Bank of China (Hong Kong) (2388) said it plans to cooperate with the World Bank to launch an "Emerging Markets Bond Fund." BOC said at least 85 percent of the net asset value of the fund will be invested in World Bank debt securities denominated in the currencies of China's trading partners in emerging markets and commodities countries. "The fund's unique feature enables us to minimize the credit risk by investing in local currency bonds of emerging markets," said Au King-lun, head of BOCHK asset management. The fund will be traded daily and is expected to pay quarterly dividends after the first six months. In Hong Kong, the minimum subscription amount for the fund is HK$10,000. The fund will be open for subscription from tomorrow until July 20. The subscription fee is as low as 1.5 percent for total consideration of HK$500,000 or above.

In a measure aimed at preventing inexperienced, wealthy individuals from signing on to high-risk investment vehicles, the Hong Kong Monetary Authority yesterday revised its definition of a high net worth individual. Under the new definition, a lender may classify an individual as a private bank customer if the person has at least US$3 million (HK$23.4 million) worth of investable assets such as securities and deposits, or US$1 million of such assets under the bank's arrangement. This would mean that a private bank should not sell accumulators to those falling below the revised threshold and if they lack product knowledge. The customer must also maintain a personal relationship with the bank and receive its personal banking services or portfolio management services. The bank will need to make only a "portfolio-based" assessment in terms of suitability, rather than evaluating the the customer for each investment product.


Former monetary authority chief Joseph Yam Chi-kwong dropped a bombshell yesterday by saying it's time to review the long-standing peg between the Hong Kong and US dollars. But Yam - who for three decades staunchly defended the peg as the best safeguard for Hong Kong's long-term prosperity and stability - was roundly criticized for calling for a review of the peg just weeks before the SAR's new administration takes over. Senior finance and monetary officials strongly insisted they see no need to change a system that has served Hong Kong well for 29 years. Lawmakers questioned his motives, while bankers and market watchers wondered whether any changes are indeed necessary. The incoming administration of Chief Executive-elect Leung Chun-ying also waded into the controversy. As Yam released his hugely controversial thoughts, outlined in an academic paper, the Hong Kong dollar swung higher by 69 basis points to 7.7535 per US dollar. But as government officials rushed to reaffirm their support for the peg, the currency gave up nearly all its gains. Yam, who retired as head of the Hong Kong Monetary Authority in October 2009, helped construct the linked change rate mechanism in 1983. He is currently an executive vice president of the China Society for Finance and Banking, a think-tank of the People's Bank of China. Yam held a press briefing to explain the unexpected departure from his long- standing defense of the peg. He said "the circumstances have changed" in that the US dollar has continued to weaken, and that monetary loosening in developed markets has sparked inflation in Hong Kong. In a paper titled "The future of the monetary system of Hong Kong" published online less than three weeks before the new administration takes office, Yam argues that "asset bubbles have been a feature of Hong Kong's economic development [and have] unsettling and possibly debilitating consequences for society." He wrote the paper in his capacity as a distinguished research fellow of the Institute of Global Economics and Finance of the Chinese University of Hong Kong. Yam denied any political motives, saying the timing of the publication of the paper - shortly before Leung's administration takes office - was a mere coincidence. He said he began writing it after campaigning for losing candidate Henry Tang Ying-yen in the chief executive election. Yam suggested that the government may widen or remove the trading band [currently between HK$7.75 and HK$7.85 per dollar], re-pegging with a basket of currencies or even allowing the currency to float freely. "There is a need to address the question as to whether the monetary system, as currently structured, can continue to serve the public interest," he wrote. Other than exchange rate stability - which the peg guarantees - price stability, high employment and sustained growth are all in the public interest, and monetary policy can help achieve them. It is also unrealistic to expect the monetary system to serve the domestic needs of its seven million people, while continuing to serve the needs of international financial intermediation between China and the rest of the world while at the same time maintaining monetary and financial stability, Yam wrote. The peg, he said, has also caused growing concerns about the "yuan premium" getting bigger all the time, leading to mainlanders "eroding the respect" of Hong Kong people. Moreover, he implicitly slammed the government's lack of motivation to even consider reviewing the peg and for not maintaining appropriate fiscal prudence. "Frankly, I have worries [whether there is] political willingness to pursue prudent macroeconomic policies." He added: "I don't see financial discipline ... for example, the HK$6,000 [per head given away by Financial Secretary John Tsang Chun-wah last year]." Yam said, when expressed in Chinese, democracy, public opinion and public standing are "are all just one word away from populism." Anita Fung Yuen-mei, chairwoman of the Hong Kong Association of Banks, said the peg has been effective over the past three decades. The system is the best for Hong Kong as a small and export-oriented economy, she said. Fitch Ratings said it is a fundamental basis of the city's AA+ sovereign rating. It said Hong Kong's economy is growing well, with sustained budget surplus, and that it would be difficult to grasp what other monetary system could replace the existing mechanism.

 China*:  June 15 2012 Share

China-bashing on the table at Hu-Obama talks - Foreign deputy says warming ties could be threatened by politicking ahead of US presidential election - The leaders of China and the United State will discuss ways of avoiding upsetting ties during the US presidential election campaign, Vice-Foreign Minister Cui Tiankai , says. He told the South China Morning Post and other Chinese media in an interview that the two countries had become more mature in handling crises but that ties could still be undermined by the politicking ahead of the November election. For this reason, Cui said, President Hu Jintao , who will discuss the global financial crisis and other economic issues when he meets Barack Obama on the sidelines of next week's G20 summit in Mexico, would also discuss the US election campaign. The deputy minister gave an upbeat assessment of the relationship between Hu and Obama, who will be meeting for the 12th time, saying their past encounters had always run longer than scheduled. "The leaders will discuss how to avoid any negative factors regarding bilateral ties caused by special conditions associated with the election," Cui said. "China is concerned that some US politicians will hurt Chinese interests during the campaign." The rhetoric against China has been quite fierce during campaigning, with candidates pandering to the anger of voters hurt by the downward trend in US manufacturing, raising concerns that positive sentiment over ties will be compromised. For example, Republican nominee Mitt Romney has labelled China's leaders "cheaters" and "currency manipulators", and said that, should he defeat Obama, his Democrat rival, he would "stand up to China on trade and demand they play by the rules". Cui said some politicians may "politicise" trade friction between the United States and China even though the problem was caused by various factors, including the industrial restructuring of America. Various politicians also criticised China on other international issues, such as nuclear proliferation in North Korea. Cui said Beijing considered the US election campaign a domestic affair but nevertheless did not want co-operation between the two countries to be affected by "unreasonable demands" raised by US politicians. "Leaders of the two countries will give ideas on maintaining positive ties," he said. He added that China should not be blamed for US economic and unemployment problems and that the US had also benefited from co-operation with China. Cui also said China will push for discussions about increasing the representation of emerging markets in international financial institutions and helping developing countries at the G20 Summit. He said emerging markets and advanced economies both made important contributions to the world economy. But when it comes to voting, the advanced economies such as the US are still the major players. "The representation of emerging markets in the International Monetary Fund cannot fully reflect their economic status," Cui said. "It is necessary for the IMF to carry out reforms." He said that advanced economies and emerging markets each represented half the composition of the G20, but emerging markets do not share same voting rights. "It is necessary to seek ways to ensure that the opinion of both the advanced economies and developing countries are properly represented," Cui said. He said Sino-US ties remained positive this year following the visit to the United States of Vice President Xi Jinping , who is expected to replace Hu. Also, the conclusion of the Strategic and Economic Dialogue (SED) early last month saw both countries reach a series of investment and trade agreements, despite the talks being overshadowed by the flight of dissident Chen Guangcheng to the United States. But he said China was well aware that the saga was an isolated incident that should not derail ties and that he had established a good working relationship with US Ambassador Gary Locke. "The SED was not affected and could still run smoothly even after the sudden emergence of the Chen incident. This just shows that both sides are more capable of keeping their problems under control than previously," he said. He said that both countries were still exploring ways to build a constructive relationship as world powers, and had already reached a consensus that both regarded the other as an equal partner. "It is easier for us to handle problems once we have reached such a consensus," Cui said. Cui called on the US Embassy in Beijing to focus on improving ties and expanding mutual common interests. He also conceded that there was distrust between the two countries, and urged the US to respect China's core interests in issues such as selling arms to Taiwan and not miscalculating China's strategic intentions. One such miscalculation concerned China's role in the Asia-Pacific, triggering fears that US leadership in the region will be challenged. "China does not want to compete with anyone for leadership in the region. The worries of the US are unnecessary," he said.

Many small- and medium-sized Italian companies see Chinese capital as a chance to grow. While most investors in Italy have made a hurried exit or are on the sidelines waiting for an end to the euro-zone crisis, Chinese and Hong Kong investment in Italy has taken a great leap forward this year - and Italian firms are pinning their hopes for growth on the mainland market. Mergermarket, a consultancy that focuses on mergers and acquisitions (M&As), said Hong Kong and Chinese investment in Italy had ballooned in recent years. "In the fashion design market, there are lots of potential and real deals in Italy involving Asian companies, Chinese companies in particular," Bianca Bonaldo, managing partner of Chance Equity Partners, told an "Asia M&A in Europe" forum hosted by mergermarket yesterday. "I have a lot of clients in Italian fashion luxury companies. They need money to grow in the fast growing market of China. A lot of these companies have between €50 million (HK$488 million) to €100 million of annual revenue. Chinese companies propose joint ventures to sell the brand in China. Some Italian companies prefer the Chinese companies to take a minority stake, but want to grow in the China market." The value of announced Hong Kong and Chinese investments in Italy jumped from zero in 2009 to €42 million in 2011 and €528 million between January 1 and June 11 this year, according to mergermarket. Forum participants said the Italian region of Piedmont was a good example of the strengthening links. "There is a good interest by Chinese investors in Piemonte [Piedmont]. There is also great interest from Piemonte companies to find Chinese partners in the China market," Federico Zardi, from the Piemonte Agency for Investments, Export and Tourism, said. "The problem of Italian companies is undercapitalisation because of the Italian economy - Piemonte companies in particular. Piemonte companies want capital from China to grow more international. Chinese companies seek Piemonte companies for technology." Zardi said times had changed from a decade ago when Chinese businesses were seen as "raiders" searching for "technology in Europe to bring back to China". Now Italian small- and medium-sized enterprises (SMEs) saw Chinese capital as a chance to grow, including helping them to grow their sales on the mainland, Zardi said. "Italy and Germany offer very good opportunities, especially in [the] technology, consumer and manufacturing areas. However, there is a clear lack of growth in Europe," China International Capital Corporation managing director Marshall Nicholson said. "The euro is down versus the renminbi by 16 per cent year-on-year. Assets are getting cheaper but growth has slowed, making forward earnings lower, too." Patrick Lau, managing director of China Construction Bank (SEHK: 0939, announcements, news) International, said recent loosening measures by the People's Bank of China "provides ammunition for Chinese companies to go overseas to do mergers and acquisitions". But Fabio De Rosa, president of the Italian Chamber of Commerce in Hong Kong, warned investors against a bargain basement mentality. "It will be difficult for Chinese SOEs [state-owned enterprises] to go to Italy with the mindset to buy cheap," De Rosa said.

A special police officer stands guard as a pile of illegal firearms are destroyed during a ceremony in Yuxi city, Yunnan province. More details have emerged about a Sino-US firearms smuggling ring busted last month as mainland police destroyed more than 100,000 illegal guns and 250 tonnes of explosives in 150 cities yesterday as part of an ongoing crackdown. Chinese and US police broke up a criminal ring and arrested 26 suspects including a US National Guard staff sergeant who allegedly smuggled firearms into the mainland even though it has some of the world's toughest gun laws, Xinhua reported late on Monday. The Ministry of Public Security said 23 Chinese suspects had been arrested in 16 cities and provinces since August, with 16 guns, a large quantity of gun parts and more than 50,000 bullets seized. Meanwhile, Joseph Debose, a 29-year-old staff sergeant with US National Guard Special Forces, and two Chinese suspects aged between 23 and 25 were arrested by US federal law enforcement officers. Debose was found carrying a .45 calibre pistol and 12 other firearms that he intended to export illegally when he was arrested in North Carolina last month. The illegal trade went unnoticed by the authorities until a random inspection at Shanghai airport in August uncovered nine pistols and 16 gun parts and accessories in a UPS courier parcel sent from New York to Taizhou , Zhejiang province, Xinhua and the Oriental Morning Post reported. The addressee, a 32-year-old Chinese man who was arrested the next day, confessed he was a middleman who smuggled weapons with the Chinese ringleader in New York and then sold them to mainland buyers. The alleged ringleader, 25-year-old Lin Zhifu, who has lived in the US since 2009, was arrested by federal police and charged with illegally exporting firearms. Lin, Debose and another Chinese suspect could face up to 20 years in prison if convicted, the US Attorney's Office said. Chinese and US police said Lin and another Chinese suspect bought guns from US soldiers before sending to middlemen on the mainland. "Between December 2010 and April 2012, Debose provided multiple shipments of firearms to associates who then secreted the weapons in packages and transported them to shipping companies to be sent to customers in China," the US Attorney's Office said. It said the defendants allegedly altered the serial numbers on various weapons to disguise their origin in order to export them to China, and the firearms were all listed on the US Munitions List and barred from export without a licence issued by the US State Department. The case has thrown a spotlight on an underground gun market that authorities fear may be growing even though mainland firearms and explosives laws carry sentences of up to 10 years in jail, or in the most serious cases, the death penalty. Last month, the Ministry of Public Security announced the arrest of 14 suspects who allegedly smuggled dozens of guns into the country from Southeast Asia. During yesterday's nationwide destruction of illegal guns and explosives, the ministry said that a 10-month crackdown launched in February has already led to the arrest of more than 7,800 suspects and the confiscation of some illegal 50,000 guns and 2.4 million bullets.

Beijing said its purchases of Iranian oil are legal and transparent, after the United States refused to exempt its financial institutions from tough new sanctions that will be imposed from June 28. Washington announced Monday that seven emerging economies, including India, will not be penalized after they cut back on oil bought from Iran. "China is opposed to one country imposing unilateral sanctions on another country in accordance with domestic law, let alone imposing sanctions on a third country," foreign ministry spokesman Liu Weimin said in response to the US move.

Hong Kong*:  June 14 2012 Share

Swiss Collector Gives $163 Million in Art to Hong Kong - Yu Youhan, 'Chairman Mao in Discussion with The Peasants of Shaoshan,' 1999 (oil on canvas, 200 x 150 cm), Liu Wei, 'Landscape,' 1998 (oil on canvas, 200 x 120 cm) and Gu Wenda. Art collector Uli Sigg, a former Swiss ambassador, agreed Tuesday to donate the bulk of his Chinese contemporary art collection to a planned museum in Hong Kong—a gift valued at $163 million. Curators around the world have long salivated over Mr. Sigg's collection because he began amassing an encyclopedic group of works by China's burgeoning avant-garde three decades ago when few other collectors or museums were paying much attention. As a result, his collection of 2,200 works includes seminal early examples by artists whose works now sell at auction for millions, including Zeng Fanzhi, who is known for painting men in suits and grinning masks, and Zhang Xiaogang, who is known for painting haunting family portraits. Of this group, Mr. Sigg has agreed to give 1,463 works to the M+ Museum, a museum for visual culture that's being developed in Hong Kong's West Kowloon Cultural District. He is keeping the rest and still plans to collect. The museum, which aims to open in 2017, has also agreed to pay $22.7 million for an additional 47 works from Mr. Sigg's collection, a gift-sale combination meant to underscore the museum's commitment to the collection. Museum organizers said their building will be around 180,000 square feet—roughly the size of New York's Museum of Modern Art—and feature the whole sweep of art, architecture, and design from Hong Kong, China, and Asia more broadly dating from the 1960s onward. Mr. Sigg's collection, which will be displayed in about 15,000 square feet of museum galleries, will focus specifically on art made in mainland China since 1979, the year when some of the earliest living artists were allowed to attend art schools following the Cultural Revolution. Among the highlights will be Wang Keping's 1979 wooden sculpture of a man being strangled, "Chain," and Yue Minjun's "Liberty Leading the People," his 1995 nod to Eugene Delacroix's revolutionary tableaux from 1830. Some of the installations are big enough to fill a room of their own, such as Sun Yuan & Peng Yu's "Old People's Home," a 2007 work involving statues of 13 toothless men dressed in world-leader garb—from Catholic robes to checkered keffiyehs. The men sit slumped into motorized wheelchairs that collide like slow-motion bumper cars. Other donated works include Ai Weiwei's 1995-2000 "Whitewash," a group of 132 Neolithic vases, some of which the artist has slathered in white house paint— the visual embodiment of an ancient culture fumbling with its changing values amid a development boom. Mr. Ai's art was one of the reasons Mr. Sigg said he chose to give his collection to a Hong Kong museum rather than an institution in mainland China as he once pledged. Mr. Ai was arrested by Chinese authorities in April 2011 and released nearly three months later on the condition he pay roughly $2 million in allegedly owed back taxes. He was also ordered not to travel or post to Twitter for a year. (He's since contested the tax-fraud claim and regularly posts to Twitter.) Mr. Sigg said such freedom-of-expression "constraints" made him wary of turning over his collection to a museum in China for fear some pieces might be censured or destroyed. He said he also dismissed a plan to give his works to one of several museums being built in Shanghai because he was nervous about their long-term capability to care and store his works, some of which are made from fragile materials like human hair. He said he and M+ museum officials began discussing a possible gift two years ago, and director Lars Nittve has assured him that his works will be thoroughly catalogued and treated gingerly. Mr. Sigg said he also hoped his move would serve as a "vote of confidence" for Hong Kong's bid to become a global art center on par with London or New York. Hong Kong already has a major art fair, called Art HK, and a slew of new galleries, but M+ represents its first attempt to build a destination museum stocked with masterpieces. Michael Lynch, chief executive of the West Kowloon Cultural District Authority, said Mr. Sigg's gift will help Hong Kong's art ambitions take a "significant step forward." Mr. Sigg, who is in his mid-60s, grew up in Switzerland; he and his wife, Rita, still own a home near Lucerne. In 1977, he began making investment forays into China and established investment firm Asia Pacific's first joint venture with China in 1980. In 1995, he was named Switzerland's ambassador to China, North Korea and Mongolia, a post he held for four years. Today, he sits on the board of Swiss media company Ringier and belongs to advisory councils for several major museums like MoMA and London's Tate Gallery.

Memo to CY Leung, Singapore isn't better off - A closer look at the lot of HK residents shows we are in a far better place than down south - "With an economy just half the size of Hong Kong's 10 years ago, Singapore has now surpassed us." Leung Chun-ying, chief-executive-elect. Technically he's right. The Singapore economy is running at about US$260 billion a year at the moment and the Hong Kong economy at about US$245 billion. Ten years ago Singapore's economy was only half the size of Hong Kong's in US-dollar terms. I could go for the easy explanation of this and say it is the result of the Sing dollar strengthening against the US dollar while the Hong Kong dollar is pegged to the greenback, but I won't. I have a better explanation. Gross domestic product is not a foolproof way of measuring the wealth of an economy. If you value the appearance of wealth more than the actual fact of it, you can work the system to get the numbers you want. It is what Singapore has done. Start with the fact that a third of Singapore's GDP is composed of an export surplus. This is all very well if your own people generated the export success and can then reap the rewards. If this were so, we would expect Singapore's huge trade surplus with the rest of the world to be matched by equally huge investments abroad (the balance of payments always balances), which would in turn generate a rising tide of investment income from abroad, all of it flowing back home and making life more comfortable. But it is not so in Singapore. We are talking here of a city-state that specialises in bureaucrats, not entrepreneurs. In Singapore, industrial investment comes predominantly from foreigners and they take their winnings back out again. This outflow has long exceeded the inflow of investment income from abroad. Singapore's net income balance has been negative to the tune of an average of 5 per cent of GDP for the past 10 years. That big trade surplus, a third of GDP, is not doing much at all to help make Singaporeans wealthier. It shows up when you look at the real measure of how well the man on the street lives - private consumption expenditure. The first chart shows you that the Hong Kong system gives its people 65 per cent of their economic effort to spend on themselves. The Singapore system gives its people barely half of that and the figure has been getting steadily worse. Now let's factor in one other consideration. If you ever thought Hong Kong people foist their dirty work on foreign labour you can ease your conscience by looking at Singapore, where about 36 per cent is non-resident. Let's be fair to these migrant workers and include them in our calculations. I now take you to the second chart - personal consumption expenditure per employed person. We now have things in their proper perspective. Hong Kong maintains a steady lead over Singapore. Have faith in our free market economy, Mr Leung. It continues to be superior to Singapore's communist model. In fact, I think the gap is wider than the chart indicates. The last time I went to Singapore I had the clear impression of people there facing harder times than people in Hong Kong. Although they have bigger homes, they have less money. But you may need a better judge of the matter eventually. Singapore-bashing will get me turned back at Changi Airport one of these days. It will be worth it, if it helps straighten out people like C.Y. Leung, who pay too much attention to Singapore government talk.

The joint venture between China Eastern and Jetstar is planning to offer short-haul routes from Hong Kong with three aircraft. Jetstar Hong Kong, the budget airline set up by China Eastern Airlines (SEHK: 0670) and Australia's Jetstar, has sought regulatory approval for a licence to operate air services from Hong Kong, a senior China Eastern executive confirmed. Liu Shaoyong, chairman of China Eastern Airlines, said yesterday the joint venture had lodged an application for an operating licence, the air operator's certificate, with the Transport and Housing Bureau. He expected the application to be approved by the end of this year, ready for services to start next year. "I am confident that the Hong Kong government will be supportive of the joint venture," Liu said while attending the annual general meeting of the International Air Transport Association (IATA) in Beijing. The certificate is a document certifying an operator is technically competent to operate an airline. Jetstar Hong Kong would also need to obtain a licence from the Air Transport Licensing Authority before it could operate scheduled services to and from the city. In addition, it would need to be a designated Hong Kong carrier. The US$198 million joint venture plans to operate short-haul routes from Hong Kong with three aircraft in the first half of next year. Liu said Jetstar Hong Kong and China Eastern would collaborate, but he declined to give further details. It is expected that China Eastern will channel passengers from second- and third-tier mainland cities transiting Hong Kong to Jetstar Hong Kong's regional routes. But observers doubted whether the budget carrier could fulfil the requirements set out in the Basic Law for a Hong Kong airline. A Hong Kong government spokeswoman said any designated Hong Kong carrier had "to be incorporated and have its principal place of business in Hong Kong. Any new players are required to meet our regulatory requirements." Andrew Pyne, a senior partner at airline and aviation consultant Concuros, said it was difficult to see how Jetstar Hong Kong could qualify as having its principal place of business in the city if decision-making was not done in Hong Kong. "There are strict regulations on airline ownership," Cathay Pacific (SEHK: 0293) chief executive John Slosar said on the sidelines of the IATA meeting. Slosar said Cathay Pacific welcomed competition, adding that the airline was already competing with dozens of low-cost carriers, including on Southeast Asia routes. Air China (SEHK: 0753, announcements, news) chief Wang Changshang warned that the low-cost carrier model might not be suitable for mainland China owing to political and economic constraints. "The infrastructure of China cannot support the growth of low-cost carriers, as there are only 150 airports in the nation," Wang said at the IATA meeting yesterday.

Film star Zhang Ziyi formally filed defamation lawsuits in Hong Kong and the United States yesterday against media which reported last month that she had sex with disgraced former Chongqing party secretary Bo Xilai for money. In Hong Kong, Zhang has hired law firm Haldanes and senior counsel Jason Pow, renowned for handling defamation cases, for her suits against Apple Daily and Next Magazine, according to China News Service and her spokesman's Sina microblog. She is also suing a US-based Chinese language news portal, which the China News Service report said was the source of the allegations. An earlier letter sent by Haldanes to Apple Daily, and posted on Zhang's Sina microblog, said the allegations that Zhang was under investigation, banned from leaving the mainland and had sex for money, had seriously damaged the actress' reputation and caused her considerable distress. ''Sometimes, justice might arrive late, but it will definitely arrive,'' a message posted on her spokesman's microblog account said yesterday. Zhang briefly visited Hong Kong on May 30. The reports, slammed as ''absolute libel'' by Zhang, claimed she began sleeping with Bo in 2007, under an arrangement made by Xu Ming, a Dalian-based tycoon and one of Bo's close allies. They said the relationship lasted until last year. Zhang was further accused of making money from sleeping with other senior mainland officials and businessmen. Repeated calls yesterday to Apple Daily and Next Magazine for comment were unsuccessful. Bo was removed from his position in Chongqing in March, a month after his right-hand man Wang Lijun sought refuge at the US consulate in Chengdu. Since then Bo's wife has been formally arrested on suspicion of involvement in the murder of British businessman Neil Heywood. Bo has disappeared from public view.

Li Ka-shing (right) with elder son Victor, who will take the reins of his companies while younger son Richard (left) will continue running his own businesses. The business of succession - Li Ka-shing's foresight on succession planning stands in contrast to high-profile disputes over the transfer of family wealth. How can tycoons preserve their legacy? The fortunes they built up in the boom years of the 1960s and 1970s are immense, even legendary, but the city's ageing tycoons are now facing entirely new challenges that could wipe out billions from the businesses they built up from scratch. Perhaps mindful of the squabbling that has befallen the families of gambling mogul Stanley Ho Hung-sun and the Kwok brothers who run Sun Hung Kai Properties (SEHK: 0016), one of the city's biggest landlords, business titans are now mindful of the need to think about their legacies. Li Ka-shing, Asia's richest man and the chairman of Cheung Kong (Holdings) (SEHK: 0001), last month set something of a precedent for his peers by publicly announcing his succession plans and his arrangements for dividing up his wealth between his two sons, in a move that has won praise from analysts. "This is very good because [Li]) has separated succession planning from estate planning," said Elsa Pau, chief executive officer of Estate Solutions Group, who believes that Li has set an example for other billionaire tycoons to follow by not forcing his children to work in his empire. Li , who turns 84 tomorrow, was rated last year by Forbes magazine as the ninth-richest person in the world, with an estimated wealth of US$25.5 billion. Li and his family trust together own about 43.3 per cent of property developer Cheung Kong, which has a 49.97 stake in Hutchison Whampoa (SEHK: 0013), one of the largest companies listed on the Hong Kong stock exchange, with a diverse portfolio covering telecommunications, retail chains and property development. At the end of April, companies in the Cheung Kong Group had a total market capitalisation of HK$823 billion. On May 25 Li spelled out the division of his wealth. Speaking immediately after Cheung Kong's annual general meeting, he said that his elder son, 47-year-old Victor Li Tzar-kuoi, would take the helm both of Cheung Kong and Hutchison Whampoa. Currently, Li is chairman of both, and Victor his deputy. "As for my other son [Richard Li Tzar-kai], there are some things that he is very interested in. He will have my full support ... now that he has already owned several sizeable companies. The asset values of the businesses that he owns will go up several times over, so he will also have a very successful career. And there will be no conflict among their businesses," Li Ka-shing said, without explaining whether Richard Li would remain a beneficiary of the family trust. The younger Li controls PCCW (SEHK: 0008), the media and information-technology services giant, which has announced plans to boost investment in its pay-television business and expand support for corporate data centres on the mainland. Unlike his older brother, Victor, who has shunned the limelight since his kidnapping in May 1996, Richard Li is fairly visible; his relationship to actress Isabella Leong Lok-sze, the mother of his three children, is a rich source of fodder for the popular press. The two brothers' relationship is also reported to be beset by sibling rivalry. Joseph Fan, a professor at Chinese University who for more than 20 years has studied family succession in Hong Kong, Singapore and Taiwan, said Li's announcement marked "the first time [a Hong Kong tycoon] has publicly announced a clear succession and wealth-splitting plan". Fan jointly studied 250 family companies in Hong Kong, Singapore and Taiwan between 1987 and 2005. He found that the five-year period in which there is a generational change in ownership and control tended to coincide with an average 60 per cent market-adjusted drop in companies' share prices. That makes succession a crucial issue. "If the younger Li is crossed out from the list of beneficiaries of the family trust that controls Cheung Kong, it will be a clean wealth split," said Fan of Chinese University. According to the Hong Kong stock exchange, the family trust - Li Ka-Shing Unity Trustee - owns 40.43 per cent of Cheung Kong. This would minimise potential disputes with the listed companies, said Fan. "Even though we do not have details of the plan, I assume that the younger son will get a similar amount of wealth to that of the elder son. Otherwise, conflicts may arise," said Timothy Lo, managing director of CIC Investor Services. Li's foresight about succession planning within his business empire has seldom been matched by his fellow tycoons. In the past two years, Hong Kong has seen a number of dramatic disputes over the generational transfer of family wealth, most noticeably between the three Kwok brothers and within the family of Stanley Ho, whose four wives have borne him 17 children. "The SHKP disputes came about as all three Kwok brothers are the beneficiaries of the family trust that controls Sun Hung Kai Properties, and all are decision makers. That easily creates conflicts," said Fan. The fallout among the Kwok brothers - Thomas, Raymond and Walter - has been further complicated by the fact that all three have been arrested by the ICAC. Raymond Kwok Ping-luen and Thomas Kwok Ping-kwong were arrested on March 29 as part of an unprecedented investigation into allegations of bribery and misconduct in public office. Walter Kwok Ping-sheung was arrested early last month over the same case. None has been charged, but the arrests have raised concerns about succession planning at SHKP, where members of a new generation - the three brothers have 10 children - may be waiting to take over. After a highly public dispute, replete with charges of mismanagement, questions about the undue influence of a woman friend, charges that eldest brother Walter suffered from a psychological disorder (after his kidnapping by the same gang that abducted Victor Li), media leaks and court injunctions, Walter Kwok was ousted as chairman in May 2008. The SHKP boardroom battle was reported to have been without precedent in Hong Kong's recent corporate history in terms of drama, intrigue and acrimony, and ended with their mother, the octogenarian Kwong Siu-hing being put in charge of the company created by her husband. In 2010, a source close to the Kwok family said that Kwong expressed her wish that the family trusts be divided into three equal parts, including one for the benefit of Walter's family. Over at Stanley Ho's house, an acrimonious court battle for control of the mogul's multibillion-dollar gambling empire was waged between some of the children of his four wives. Ho, by then 89 years old, was last seen in public in May last year, when, looking frail and in a wheelchair, he appeared on TVB (SEHK: 0511). The Cantonese-language video footage showed Ho reading in laboured breaths from a script on a large cue card at the home of third wife Ina Chan Un Chan who - with daughters Pansy, Daisy and Maisy - stood by and watched as he announced that he had withdrawn a lawsuit against family members whom he had accused of "improperly and/or illegally" seizing control of his empire. The lawyer who had initiated the lawsuit on behalf of Ho on January 26 last year, Gordon Oldham of Oldham, Li and Nie, said that the tycoon had been pressured into doing the broadcast. Fan believes that the spectacular disputes and fallouts among the Ho and Kwok families were not the only, nor the major incentive for Li to announce a succession plan. "The Cheung Kong group of companies is so big its succession will have an impact on the mainland economy and the central and Hong Kong governments. Li also needs to tell stakeholders about his plan. He needs to do it," said Fan. Following Li's announcement of his succession plan, real-estate and casino magnate Lui Che-woo as well as Wharf (Holdings) (SEHK: 0004) chairman Peter Woo Kwong-ching disclosed how they would distribute their wealth among family members. Lui, the 82-year-old founder of developer K. Wah International Holdings (SEHK: 0173) and Galaxy Entertainment Group (SEHK: 0027), which runs casinos in Macau, said last month that he intends to split his business empire among his five children, with his casino and property businesses to go to his eldest son, Francis Lui Yiu-tung, and third son, Alexander Lui Yiu-wah, respectively. At Wharf, chairman Woo's daughter, Jennifer, is handling luxury retailer Lane Crawford, while son Douglas is managing director of its development arm, Wheelock (SEHK: 0020) Properties. Henderson Land Development (SEHK: 0012) chairman Lee Shau-kee has not yet unveiled his succession planning. But a company spokeswoman said that for years his empire's businesses have been split geographically, with elder son, Peter Lee Ka-kit, responsible for the group's business in the mainland, while younger son, Martin Lee Ka-shing looks after the businesses in Hong Kong. In March, tycoon Cheng Yu-tung resigned as chairman of New World Development, the company he found in 1970, to prepare for a takeover by a younger generation. So what is the best succession planning? Richard Norridge, a lawyer at Herbert Smith who specialises in trusts, succession and other matters of estates, said: "There is no 'one size fits all' approach to succession planning which can definitively avoid disputes, as there are all kinds of variables, including the personalities and approaches of the parties involved. However, trusts often provide for flexibility and can be a financially efficient way of devolving wealth to future generations." Fan believes it can be easily dealt with: "To make it simple, there are two ways of transiting fortune - combine or divide. If you believe your children will not have family disputes over asset transfers in the next 50 years, you combine them to run the business. If not, you divide them." In the West, some family businesses can last for more than 100 years without any disputes. Family governance was crucial to their sustainability, he said. "But Chinese do not vote. The family listens to the father, and if the father dies the family will listen to the eldest son," Fan said. Fan said the current corporate dynasties were mostly founded in the aftermath of the second world war. Their elderly founders were still grappling with how to hand over the reins to the next generation. And even though some Chinese tycoons had good succession plans, some assets could not be transferred, Fan pointed out. After all, he says: "Who can replace Li Ka-shing?"

Complicated ownership issues will have to be resolved if the Macau government seeks to seize five plots of land at the centre of a corruption case involving jailed former public works chief Ao Man-long and two Hong Kong tycoons, legal experts said. They were speaking as a document seen by the South China Morning Post (SEHK: 0583) - apparently prepared as legal advice to one of the parties involved - suggested that the government could not invalidate the land deals because they were made between private companies. The office of Macau's Secretary for Transport and Public Works said last week it did not rule out declaring the transfer of the five pieces of land invalid after confirmation of last month's verdict on Ao. Yesterday was the deadline for anyone to raise objections to the verdict on Ao, but no one had done so by 4pm, a government source said. A HK$20 billion luxury development, La Scala, is being built on the land by Hong Kong developer Chinese Estates (SEHK: 0127), whose chairman is tycoon Joseph Lau Luen-hung. The Court of Final Appeal ruled last month that the land was awarded to Moon Ocean, a company then owned by tycoon Steven Lo Kit-sing and later sold to Lau, after Ao received HK$20 million in bribes from Lau and Lo. It sentenced Ao to 29 years in jail for corruption and money laundering. Lau and Lo were also charged with bribery and will face trial. Macau lawyer Miguel de Senna Fernandes said yesterday that whether the government could invalidate the land deals depended on whether it had owned the land. "The ownership issue is very important ... it is complicated and I do not want to speculate," he said. He said the government could not invalidate the land deals based solely on the verdict on Ao. It would need to initiate another court hearing, which would take time. The court earlier heard that in 1995, the vacant land adjacent to Macau airport was divided up at the government's suggestion into five areas, each managed by a different firm. The five companies - Tai Lei Loi, Sun Hung Fat, Sun Hou Kung, Sun Vai Ip and Lei Tin - were managed by a sixth, Lei Pou Fat, which was jointly owned by the Macau government, which had an 88 per cent stake, and three private businesses. The legal advice seen by the Post suggested that contracts for the sale of the land were signed in 2005 between the five companies and Moon Ocean for 1.368 billion patacas, and were approved by the government. The document said four of the five companies shared the profit and were dissolved. "Even if the former secretary [Ao] was condemned, this would not alter the effectiveness of the contracts signed on October 12, 2005," it said. It also said the verdict on Ao would not affect the 300 buyers who had bought flats in La Scala from Lau's Chinese Estates, as they were legal deals protected by law. Iau Teng-pio, assistant professor of law at University of Macau, said after studying the contracts that the land had been transferred from the five companies to Moon Ocean with the government's approval. But he did not agree that the government could not seize the land as the approval was made under the influence of Ao. "There would be two situations, either the land would be returned to the [five companies] or the government," he said.

Henderson tycoon plans to retire on a high note - Lee Shau-kee is giving himself up to five years to restore his wealth to level before the 2008 crisis - Tycoon Lee Shau-kee's retirement goal is to restore his wealth to pre-2008 financial crisis levels, and he's giving himself three to five years before considering giving up his day job as chairman of Henderson Land Development (SEHK: 0012). While some property tycoons, including Asia's richest man, Li Ka-shing, have spelled out their succession plans recently, Lee wants to recover lost financial ground. He was among those whose wealth was hard-hit by the global financial crisis. "For example, as when playing mahjong, I want to have munwu, or winning the game by the highest scores. "Then my wealth may be double and it would be better for my successors as well as for the charity [works I fund]," he said yesterday after the annual general meetings of Henderson Land Development and Henderson Investment (SEHK: 0097). Lee declined to disclose exactly how much he is worth now, but said there was still a "shortfall" - which, according to estimates by Forbes magazine, could be as much as US$1 billion. "I hope I can make it up in the next three to five years," he said. Asked if he would retire at that time, he said: "I'm 83 now and am gradually reducing my workload running the group." Lee, who has two sons and three daughters, said he had no immediate plan to step down, though his two sons had gradually been taking over the business empire in Hong Kong and on the mainland. "Elder son [Peter Lee Ka-kit] will focus on the group's mainland business, while younger son [Martin Lee Ka-shing] will head the Hong Kong operation. My daughters are not so keen on doing business," he said. He was rated by Forbes as the second-richest man in Hong Kong, with an estimated wealth of US$18 billion in March this year, compared with US$19 billion in May 2008, just before the collapse of Lehman Brothers in September that year, which triggered the global financial crisis. According to Forbes calculations, Lee's wealth plunged to US$9 billion in 2009 before rebounding to US$18.5 billion in 2010. Last week, at another company gathering, Lee, famous for giving out investment tips, advised that stocks in Hong Kong would be more profitable than property. The remark upset some of his friends in real estate. "If your boyfriend gives you HK$10 million and you use it to purchase stocks, the value of the stocks will probably jump to HK$20 million in three years provided that the stock market goes back to its usual situation," he said. "But if the HK$10 million is used to invest in properties, you may get an amount slightly above HK$10 million." Yesterday, Lee said this personal view was not meant to encourage people to buy Henderson shares. "I just wanted to share my views with the public," he said. "Other developers, and even my company staff, complained to me that my words might discourage home-buying interest," he said. They were worried that "it would affect their sales when they released new projects onto the market. Some of my friends are also unhappy as their girlfriends asked them for cash to buy stocks instead of receiving property as gifts." Meanwhile, Lee said Henderson Land, the city's seventh-largest developer in terms of market value, had 68 redevelopment projects in urban areas, which could provide six million square feet of gross floor area over the next five years, and yield 10,000 new flats upon completion. Lee forecast Hong Kong home prices were unlikely to increase significantly because the government had boosted land supply and was keen to build more public housing.

Protesters caused the conflict at a demonstration on Sunday after breaking their agreement with police, the outgoing security minister said on Tuesday morning. Ambrose Lee Siu-kwong said: “During the event, some protesters failed to observe the [agreements reached with police], leading to conflict.” He did not specify which agreements were broken. Sunday’s demonstration, outside the central government liaison office, was to demand a government investigation into the suspicious death of Tiananmen dissident Li Wangyang in a Hunan hospital last week. The official claim that Li committed suicide is being widely rejected. Li told local radio: “I believe the incident cannot be separated from facts. Like many Hong Kong people, I also hope that the truth will come out.” Recollecting his nine years in the ministerial job, Lee said it was regrettable that the controversial Article 23 national security legislation was not passed into law during his nine-year tenure. Its original failure was partly to blame for the resignation of his predecessor, Regina Ip Lau Suk-yee, a hardcore supporter of the bill, whom Lee replaced. He agreed with Chief Executive Donald Tsang Yam-kuen and incoming chief executive Leung Chun-ying that the legislation should be re-introduced after a social consensus on the issue was achieved, he said. It would be better if the next bureau secretary and under-secretary had experience with the disciplined services, he said: “I’m saying that would help, but it’s not a priority.” After he steps down at the end of the month, Lee plans to travel to Canada to spend time with family members, he said.

First it was a secluded village office and now a fruit stall has been identified as an illegal betting centre for Euro this year soccer matches, police said yesterday. The centres were raided as part of a citywide operation codenamed “Crowbeak” to crack down on illegal betting during the championships. Police have arrested nine people and confiscated bets with a face value of HK$13.2 million since the operation officially kicked off last Friday, although officers first began investigating the fruit stall in Ma On Shan a few weeks ago. On Monday night, three hours before the match between France and England, officers from the Sha Tin anti-triad squad raided the stall at the Chevalier Garden market off Hang Shun Street and arrested its 54-year-old owner and his female assistant, 51. Officers seized betting slips on soccer matches and Mark Six draws totalling HK$180,000 in the booth during the raid on Monday night. In a follow-up search yesterday, the man was brought back to his home in Wong Tai Sin, where police seized a computer. An anti-triad officer said initial investigations showed that two suspected bookmakers took bets over the counter and by phone from residents in the district and workers at the market. Within 24 hours after the opening of the tournament, officers from the organised crime and triad bureau arrested three villagers in a raid on the village office at Yuen Kong San Tsuen in Pat Heung on Saturday. The office is open to all villagers to gather and chat. Police confiscated betting records on soccer and horse racing totalling HK$22 million. Officers also seized a computer and six mobile phones. “Initial investigations showed that this syndicate took bets on soccer and horse racing by phone and through a website in the village office,” a senior officer said. Officers from the technology crime division are checking the seized computer to find out whether it stored other betting records. Police believe the gang had been in operation for several months. The three villagers have been granted police bail. Police say illegal gambling websites and telephone orders are the main channels local bookmakers use to take bets. “Nowadays, bookies hide indoors to collect bets by phone or through the internet. They seldom take bets in pubs or massage parlours,” the senior officer said. To fight cross-border bookmaking syndicates, police would exchange intelligence and co-operate with mainland authorities, he said. But because of the operational reasons, he refused to give more details. He said police would continue to adopt several approaches – education, publicity and enforcement – to tackle the problem.

 China*:  June 14 2012 Share

Brussels must coordinate with Washington, Beijing and other global players on capital control measures if Greece exits the eurozone after the general election on Sunday, financial experts warned. Eurozone finance ministers are reportedly considering a range of options, such as limiting cash withdrawals from ATMs, if Greece leaves the euro. Brussels has denied that it is preparing such contingency measures for the worst-case scenario — the Grexit, or Greece exiting the euro. When questioned by China Daily on whether the European Commission can confirm media reports that it is preparing contingency measures, Amadeu Altafaj Tardio, spokesman for Vice-President Olli Rehn, said: "We are not aware of any plan of that kind as reported by a wire service based on anonymous sources." Rehn is responsible for economic and monetary affairs. Several sources were quoted by Reuters as saying on Monday that the EU is considering measures, such as capital controls, due to political uncertainties in Greece. The election may bring the left-wing party, Syriza, into power. The party has constantly spoken out against the austerity measures demanded by Brussels in return for bailout money. The BBC ran a feature story on Tuesday analyzing how Greece could switch from the euro to its old currency, the drachma. Opinion polls suggest that about 80 percent of Greeks want to stay in the eurozone. Francois Heisbourg, a senior adviser with French think tank, the Foundation for Strategic Research, said it is "premature" to ask what measures the EU should take if Greece exits the eurozone and Europe should wait for the results of the election. But Wang Jianye, chief economist at the Export-Import Bank of China, a major lender that helps domestic enterprises go overseas, said it is necessary for EU officials to get ready for a worst-case scenario. But such "extreme" measures, if implemented, will backfire, because capital movement is the foundation for economic recovery, he said. "The consequences would be huge. The US didn't turn to capital controls when it was trapped by the Lehman turbulence."

Chinese sportswear brand Li Ning on Tuesday warned of a "substantial decline" in profit for 2012 due to weaker sales and higher marketing costs, knocking its shares close to a seven year low. Private equity-backed Chinese sportswear brand Li Ning (SEHK: 2331) on Tuesday warned of a "substantial decline" in profit for 2012 due to weaker sales and higher marketing costs, knocking its shares close to a seven year low. The warning is the latest blow for China’s domestic retail brands, which are facing challenges including high inventory, rising costs and competition from foreign brands such as Nike and Adidas. “Investors are likely to lose confidence in the company due to its unclear market position and intensifying competition from local and foreign brands,” said Conita Hung, head of equity research at Delta Asia Financial. Shares in Li Ning, backed by TPG Capital and Singapore sovereign wealth fund GIC, fell as much as 7 per cent to their lowest level since January 2006. The drop took its loss for the year to 13 per cent, against a 1.8 per cent gain for the benchmark Hang Seng Index. “A further slide in the stock is unlikely as investors who wanted to unload their shares have already done so,” said Alfred Chan, a chief dealer at Cheer Pearl Investment. In a filing to the Hong Kong bourse late on Monday, Li Ning said trade fairs for this year had been completed and new product trade fair orders for the full year would show a high single digit percentage fall on last year. For the fourth-quarter, trade fair results showed total orders by value would fall by the high teens in percentage terms year-on-year. This included a fall of over 20 per cent for apparel products, it said, noting that trade fair results do not reflect all of the group’s revenue. “Competition within the sporting goods industry has intensified, discount promoting efforts have further increased and the pressure of inventory clearance at the retail level remains strong,” the company said. Li Ning said it also faced a “substantial” increase in brand marketing and promotion expenses after it signed a five-year agreement to be the equipment sponsor for the Chinese Basketball Association until 2017. Earnings would also be hurt by a previously announced impairment loss of intangible assets on the Lotto brand licensing business, and other factors, such as interest payable in relation to convertible bonds. “During this year and next year, the group will strive to clear out inventory at the retail level, streamline the retail store network, control the pace of new store openings, close down inefficient stores and improve retail efficiency,” Li Ning said in the statement. Basketball had become one of the most popular sports leagues in China and it planned to launch more high-quality products for the sport and leverage sales off its relationship with the sports governing body. Li Ning in March posted a 65 per cent fall last year profit to 386 million yuan (HK$473million).

Guangdong TV's swimsuit-clad weather girls, selected via a Miss Bikini competition, have been a ratings success so far. State-controlled Guangdong TV surprised the province's soccer fans when it introduced a bikini-clad weather girl for its broadcast of a Euro 2012 soccer match at the weekend. Local media said ratings for the station's broadcast trumped those for many of its competitors, which featured well-known commentators or celebrity guests. The official state broadcaster brought in acclaimed pianist Li Yundi to play Chopin pieces before the start of the match. The tournament co-hosts are Poland, the composer's birthplace, and Ukraine. "Do you want Li Yundi playing Chopin or bikini weather girls forecasting Polish weather?" Guangdong-based Information Times newspaper asked readers. Although footage with girls in bikinis is commonly broadcast on the mainland during family viewing hours or in movies classified as suitable for children, it is very rare for state-controlled television to introduce anchorwomen wearing only a swimsuit. The weather forecast for Euro 2012 venues, which was broadcast just before midnight and lasted several minutes, sparked huge debate among internet users. Mainland newspapers cited the television station as saying that dozens of beautiful bikini-clad women, many of them undergraduate students and in their early 20s, would appear in the weather forecasts during the tournament to boost ratings and advertising sales. The women were selected in a Miss Bikini competition organised earlier by the station. An unnamed director from the station's sports channel was quoted by news portal yesterday as saying the programme hadn't been expected to spark such a huge public response, but suggested it was because mainland audiences rarely see scantily clad anchorwomen. As for Saturday night's weather girl, many soccer fans said she looked a bit shy and embarrassed on television. Some internet users poked fun at the station, saying its sports channel should be renamed the "human flesh watching channel", as the pronunciation of "sports" and "human flesh watching" in Cantonese are the same. Other fans praised the appearance of the anchorwomen, adding that they were a welcome move away from the mainland's old-fashioned, Communist Party-controlled broadcasting and urging propaganda authorities to learn more from TV stations in the West.

Wei Zhenzhong, Secretary General of the Chinese Air Transport Association, pictured in Hong Kong in September 2011. China will take swift counter-measures that could include impounding European aircraft if the European Union punishes Chinese airlines for non-compliance with a scheme to curb carbon emissions, the China Air Transport Association (CATA) said on Tuesday. Chinese airlines, which have been told by Beijing not to comply with the EU’s Emissions Trading Scheme, refused to meet a March 31 deadline for submitting carbon emissions data. EU Climate Commissioner Connie Hedegaard has said carriers have until mid-June to submit their data before enforcement action is taken. “Chinese airlines are unanimous on this. We won’t provide the data,” Wei Zhenzhong, secretary general of the China Air Transport Association, said on the sidelines of an International Air Transport Association (IATA) meeting in Beijing. The Chinese group represents major airlines there, including the big three state-controlled carriers Air China (SEHK: 0753), China Southern Airlines, and China Eastern Airlines (SEHK: 0670). “The government at least will take the same kind of measures and these anti-sanction moves will be lasting,” Wei said. However he said: “We would try to avoid any trade war.” A number of countries including China, India, Russia and the United States have protested against the inclusion of all flights using EU airports into the emissions scheme. “It’s not about the money. It’s an issue of sovereignty,” said Paul Steele, IATA’s director of aviation environment. The EU plans to charge airlines a fee for their carbon emissions based on the quantity of carbon calculated for complete flights with an EU origin or destination, rather than just the portion flown over Europe. Critics say that amounts to interference with national airspace. The EU has delegated implementation of the scheme to member states, which would fine airlines for non-compliance. If the airlines do not pay the fine, other theoretical EU counter-measures include impounding aircraft, IATA’s Steele said. Under the EU plan, Germany will determine whether Air China is in breach of ETS regulations or not; France will monitor China Southern Airlines; and the Netherlands will monitor China Eastern Airlines. “We would not like to see a situation of ‘you hold up my planes and I hold yours’,” Wei said. China, which according to Airbus and other sources in the European aerospace industry is delaying plane orders worth up to US$14 billion from European plane maker Airbus over the row, has asked the EU to push the scheme back by a year. “ICAO [the International Civil Aviation Organisation] will hold its 38th meeting in October next year, and the EU should at least push the deadline to that time and agree to resolve this issue based on the coordination of ICAO,” Wei said.

Apple CEO Tim Cook pictured during the keynote address at the Apple 2012 World Wide Developers Conference in San Francisco, California on Monday. Apple on Monday reaffirmed its commitment to China, the company's second-biggest market, with the launch of more Chinese-user specific features on its updated desktop and mobile operating systems. The announcement was made more than three months after Tim Cook, the chief executive at Apple, quietly conducted several meetings in Beijing with government officials and commercial partners. Apple reported in April that robust sales of the iPhone in China helped the company nearly double its profit in its fiscal second quarter ended March to US$11.62 billion. Of the total revenue that quarter of US$39.19 billion, about US$7.9 billion was contributed by China. Last October, Cook declared China – comprised of the mainland, Hong Kong, Macau and Taiwan – as Apple’s second-largest market after the United States, with a record US$13 billion in sales in the company’s financial year ended September 24. Apple had earlier announced plans to have as many as 25 branded stores in the country by this year, but this has been a slow-paced retail expansion. It currently has two stores in Beijing, three in Shanghai and one in Hong Kong. On Tuesday morning, Cook opened the company’s annual World Wide Developers Conference in San Francisco with a review of the gains made by online software applications for the iPhone, iPod touch and iPad through the online App Store. “The App Store is the most vibrant app eco-system on the planet,” Cook said. “We now have over 400 million accounts on the App Store. This is the store with the largest number of accounts with credit cards anywhere in the internet that we’re aware of.” The online store also now contains more than 650,000 applications. “This compares to just a few hundred for our competition,” said Cook, referring to the applications offered for smartphones and media tablets that run on Google’s Android operating system. Cook added that 225,000 of the applications on the App Store have been specifically designed for the iPad. He also announced a new App Store milestone: customers have now downloaded about 30 billion apps since Apple’s digital distribution platform started operations in July 2008. The Apple chief executive’s top lieutenants highlighted the greater Chinese user support on the latest upgrade of the OS X desktop operating system, called “Mountain Lion”, and on iOS 6, the new update for the operating platform of the iPhone, iPad and iPod touch. Philip Schiller, Apple’s senior vice-president of worldwide marketing, said Mountain Lion, which will be available next month for download from the online Mac Store, new China-specific included “significantly improved text input, a new Chinese Dictionary, easy set-up with popular e-mail providers, Baidu search in Safari, and built-in sharing to Sina Weibo [the mainland’s Twitter-like microblog] and popular video websites Youku and Tudou”. The improved text input will have typing Simplified Chinese and Traditional Chinese characters easier, faster, and more accurate than ever. While a user types, the system offers up-to-date and relevant candidates for words and phrases. Mountain Lion has added support for so-called Fuzzy Pinyin, which makes text input easier for users who type Pinyin with regional pronunciations. When a user mistypes a word, Mountain Lion offers a likely candidate for the word the user meant to type. The operating system supports more than 30,000 Chinese characters. Handwriting recognition complies with the so-called GB-18030 standard for character support. Users will now be able to type English words in a Pinyin sentence without switching keyboards. The Standard Dictionary of Contemporary Chinese is made available in the Dictionary app for those using Simplified Chinese. Sian Web, the popular Chinese micro blogging service, is built into the operating system’s Share menu. Sign-in once and it is set up. A user can share links and photos to Sian directly from Safari, Preview, Photo Booth, and Quick Look. It also works with the Notification Centre function, so a user gets a notification whenever someone mentions the user in a post or sends the user a direct message. Mountain Lion users will be able to easily share videos on popular Yoko and Tudor, which recently announced a merger. When a user previews a video file in QuickTime Player or Quick Look, the user can post it directly to Yoko or Tudor with the Share button – without switching to another app. With single sign-on, log-in once and start posting videos. Badu, the leading Chinese online search provider, is a built-in option for searching in Safari. Mountain Lion also makes it easy to set up the e-mail function with the Ten cent’s QQ Mail,, and’s 163. The new iOS 6 will have more than 200 new features, according to Scott Forstall, the senior vice-president of Apple’s iOS software division. It will be available this autumn as a free download. “iOS 6 continues the rapid pace of innovation that is helping Apple reinvent the phone and create the iPad category, delivering the best mobile experience available on any device,” Forstall said. “We can’t wait for hundreds of millions of iOS users to experience the incredible new features in iOS 6.” Improved text input and built-in support for popular Chinese internet services, iOS 6 are expected to make the iPad, iPhone, and iPod touch even better for Chinese-speaking users. Like the enhancements in OS X, a new Chinese dictionary and improved text input will make typing in Chinese easier, faster, and more accurate. Users can mix full and abbreviated Pinyin and even type English words in a Pinyin sentence without switching keyboards. With support for over 30,000 characters, iOS 6 more than doubles the number of Chinese characters supported in handwriting recognition. Baidu is a built-in option in Safari, and users can share videos directly to Youku and Tudou. Users can also post to Sina Weibo from the Camera, Photos, Maps, Safari, and Game Center functions. Forstall said Siri, the voice-command system on the iPhone, is being made available to the iPad with iOS 6. That included up to 15 languages supported, including Putonghua and Cantonese.

US Secretary of State Hillary Rodham Clinton speaking at Wellesley College in Massachusets on Monday. The US said on Monday it would give seven emerging economies exemptions from sanctions on Iran, but not China. The United States said on Tuesday it would give seven emerging economies including India exemptions from tough new sanctions after they cut back on oil supplies from Iran, but the punishment still loomed for China. Secretary of State Hillary Clinton added India, Malaysia, South Africa, South Korea, Sri Lanka, Turkey and Taiwan to the list of those exempt from the sanctions. In March, she made exemptions for European Union nations and Japan. The decision was announced two days before Clinton meets Indian officials for annual talks. The move resolves one of the biggest points of tension in years in the growing relationship between the world’s two largest democracies. Under a law approved last year that irritated some US allies, the United States starting on June 28 will penalise foreign financial institutions over transactions with Iran’s central bank, which handles sales of the country’s key export. Clinton said the seven economies exempted on Monday have all “significantly” reduced crude oil purchases from Iran. She cast the exemptions as proof of success in the US campaign to put pressure on Iran’s clerical regime, which Israel and some Western officials fear is seeking a nuclear bomb. “By reducing Iran’s oil sales, we are sending a decisive message to Iran’s leaders: until they take concrete actions to satisfy the concerns of the international community, they will continue to face increasing isolation and pressure,” Clinton said in a statement. However, the United States did not announce an exemption for China – which is heavily dependent on oil from Iran and elsewhere to power its economy. Officials said that the United States remained in talks with Beijing. “We have informed our Chinese colleagues fully about the scope and urgency” of the sanctions, a senior US official told reporters on condition of anonymity. But the official said that China – one of six nations in talks with Iran that resume next week in Moscow – was a “very important partner” on the nuclear row. “We may have different perceptions of sanctions at different times, but one of the things that has been very important is that China has agreed to this dual-track process of pressure as well as persuasion,” the official said. Chinese President Hu Jintao on Friday called on Iran to be “flexible and pragmatic” over its nuclear programme. Some industry experts say China, despite its public stance, has been quietly diversifying from Iranian oil. A number of countries were angered by the US law, arguing that only the UN Security Council has the right to apply sanctions and that the reductions in oil would jeopardise an already shaky economic recovery. But Iran’s arch-rival Saudi Arabia has increased output to make up for any shortfall from Tehran. To the surprise of some forecasters, oil prices have been declining despite the tensions surrounding Iran. The International Energy Agency estimated that Iran was not selling up to one-quarter of the 3.3 million barrels it produced each day in April. India has said that it will cut its purchases of Iranian oil by 11 per cent. India has historically enjoyed warm relations with Iran but it tried to play down differences when Clinton visited last month. President Barack Obama’s administration hopes to exert economic pressure on Iran in part to avert an attack by Israel, whose prime minister, Benjamin Netanyahu, has not ruled out the use of force. Representative Ileana Ros-Lehtinen, the Republican head of the House Foreign Affairs Committee, criticised the Democratic administration for the exemptions, saying it was not tough enough on Iran. “If the administration is willing to exempt all of these countries, who will they make an example out of?” she said. The Obama administration has repeatedly voiced concern that an Israeli strike would be devastating and potentially fuel an arms race in the region. Clinton, in her statement, renewed her call on Iran to “engage seriously” to resolve international concerns. “Iran has the ability to address these concerns by taking concrete steps during the next round of talks in Moscow. I urge its leaders to do so,” Clinton said. Iran contends that its nuclear programme is for peaceful purposes. US intelligence, while concerned about Iran, has not concluded that Iran is building a nuclear weapon.

Hollywood Summer Slump? It’s China to the Rescue - ‘Men in Black 3,’ minus the Chinatown scene, raked in nearly $50 million in less than two weeks in China. Facing a spate of big-budget film flops and cash-strapped audiences who are increasingly picky when splurging on summer blockbusters, Hollywood is looking for a superhero. Who will step in to save the day? Look to Chinese consumers, industry experts say. The world’s fastest-growing movie market is expected to head to the theaters this summer in droves, helping to lift Hollywood movies’ ticket sales by as much as $50 million per film, up from $15 million per film a year earlier, says Robert Cain, a Los Angeles-based independent film consultant. China’s box-office revenue climbed to 13.1 billion yuan ($2.08 billion) last year, up 29% from a year earlier, according to the State Administration of Radio, Film and Television. Meanwhile, box-office revenue in the U.S. and Canada dropped 4% to $10.2 billion, according to the Motion Picture Association of America. Films set to suck in audiences this summer in China include DreamWorks’ animated “Madagascar 3,” which opened in China over the weekend and Relativity Media’s “Mirror Mirror,” a remake of fairy tale “Snow White,” featuring actress Julia Roberts. Hollywood is looking for brighter days after several big-budget films, such as Warner Brothers’ “Dark Shadows” and Disney’s “John Carter,” have fallen out with U.S. audiences, and China offers it a glimmer of hope. Chinese movie-goers have already jolted sales for Marvel’s “The Avengers,” which came out in May and had hauled in more than $84 million out of roughly $800 million internationally, according to Box Office Mojo, an online box office reporting service. Despite having roughly three minutes of footage sliced out by the country’s film censors, “Men in Black 3” from Sony/Columbia was also a hit, garnering nearly $22 million in its opening weekend in China versus $54.5 million in the U.S., says Box Office Mojo. 

Hong Kong*:  June 13 2012 Share

Last month, David Li Kwok-po, a long-time representative of the banking industry on the Legislative Council, announced that he would not seek re-election. “The past 27 years was a waste of time,” Li complained. “I wish I had never entered politics, and I would ask my sons not to do so.” What caused Li to take such a dim view of politics after so many years of being a prominent part of the system? One explanation for the unhappy end to another incestuous affair between business and politics is the upending of the old bureaucratic system. Once upon a time, government officials were promoted purely based on experience and competence in true Weberian fashion. They could reach ministerial positions purely by dint of technocratic merit. The government was a stubbornly hierarchal organisation that valued technical superiority above all else. Civil servants could expect to move up every few years, and deviations occurred only due to extreme performance or luck. Thus, it was easy for the city’s business elites to cosy up to the government’s ruling class, which featured a cast of regulars that exited the stage only at retirement. Contest for the government’s top job, as we have seen in the last chief executive election, however, introduced uncertainty to every level of government. Despite complaints that the race was essentially a choice between two bad options (“the less unpopular candidate won”, an article concluded), the election did produce an unexpected outcome and an element of unpredictability. In this new reality, businesspeople hoping to gain favour with the next chief must participate in some form of political horse-betting. Speculators who back the wrong candidate may find themselves grumpily disillusioned and cut off from political influence. The same can be said of government hopefuls vying for a piece of the pie, as loyal supporters of the new chief – mostly outsiders and political underdogs– are tipped to play prominent roles in the next administration. The fact that these political appointee jobs are open to everyone, including young people without a university degree or civil service experience, signifies the declining importance of traditional bureaucratic competence. More than 1,000 people have put their names in the hat for the highly sought-after positions, competing to woo chief executive-elect Leung Chun-ying with their vision of Hong Kong’s future development. In forming his own team with people he likes and replacing principal officials, undersecretaries and political assistants all in one strike, Leung brings us one step closer – as his predecessors did –to politicising the government’s top-level leadership. There are many implications for people seeking opportunities within this new structure. While the political tier is here to stay, individuals appointed to these positions are not. The public is determined that the chief advantage and impetus of the public accountability scheme are increased accountability. Since the appointments are political in nature, public scrutiny will bring instability to these jobs. In the current Legco debate on the incoming chief’s restructuring plans for the government, a burning issue is how a minister who underperforms should be made accountable. Should he or she be demoted, have his or her salary cut, or be made to bow out? Clearly, public expectation is such that an appointee who loses favour in the eyes of the people and becomes a political liability to the chief executive will be quickly relieved of his duties. The contract system and the availability of a large pool of outside talent supposedly make it much easier to do so than in the past. This general sentiment is evident in the recent controversies surrounding corruption among high-ranking government officials. It is surprising to no one that many members of the business elite have both lawfully and unlawfully bought political influence from willing participants. Nonetheless, as government becomes less bureaucratic and more influenced by politics, officials are expected to provide leadership in policy as well as morality. Thus, intense public outrage erupted over Chief Executive Donald Tsang Yam-kuen’s greedy habits, with many calling for punishments much harsher than the actual crime. As this article goes to print, more businessmen and former officials in the camp of disgraced chief executive hopeful Henry Tang Ying-yen are coming to grief over alleged corruption in Hong Kong or Macau or other manifestations of poor performance, fuelling a conspiracy theory that the retribution game is on. Whatever happened, call it retribution or simply the withdrawal of protection by the powers-that-be, a reshuffle of the deck upon the election of a new leader is likely to be the shape of things to come. After all, a transfer of power, with all that it implies in terms of who goes up and down, is what periodic democratic elections are supposed to bring. Democracy is supposed to usher in greater equality, transparency, accountability and social justice. But also unpredictability, instability, and trade-offs with efficiency and bureaucratic reliability. The new system, which promises salvation to many, comes as a shock to those still living in the old system, like David Li. As Hong Kong people soldier on in the long march to democracy, let us be crystal clear about all the changes – some more desirable than others – that democracy might entail.

A HK$27 million summer extravaganza, co- sponsored by the Hong Kong Tourism Board and Visa, will be rolled out later this month in an attempt to attract up to 12 million visitors. The "Hong Kong Summer Spectacular," with the theme "Hot Events Cool Place," begins on June 22. It is aimed at youngsters, mainland families and other short-haul markets such as Malaysia, Taiwan, the Philippines and Singapore. Among the main attractions is a new Michael Jackson wax figure from his last This is It concert, which can be found at Madame Tussauds on The Peak. Other events include the Dragon Boat Festival, the opening of Bouncy Wetland at Hong Kong Wetland Park this month, the Grizzly Gulch zone at Disneyland, Polar Adventure at Ocean Park next month and Summer Pop Live 2012 in August. The attractions may draw up to 12 million visitors during the summer break. There were 18 million tourists from January to May, a 15 percent increase compared to the same period last year. The number of mainland visitors increased 20 percent. Tourism board chairman James Tien Pei- chun said he is confident the number will continue to rise as summer is a peak season. Last year, the total number of arrivals reached a record high of 41.92 million, with 11 million foreigners arriving here for the summer holidays. "We hope this campaign will help increase arrivals and stimulate spending, while increasing Hong Kong's appeal as a summer destination," Tien said. Although the retail business has not been doing so well in the first five months of the year, he believes a series of summer discounts in shopping malls will boost sales. The extravaganza promoting top attractions, new facilities and special offers ends August 31. The prime event is the "Visa go Hong Kong Super Shopper" contest in which contestants from nine short-haul markets will be required to design and complete a Hong Kong itinerary for a prize of HK$200,000 in Visa spending credit. Other summer events include the Tai O Dragon Boat Water Parade, Chinese Opera Festival, Lan Kwai Fong Beer and Music Festival, Hong Kong Book Fair and Food Expo.

New World Development says a mere 40 flats, or 29 per cent of the 137 on offer at its high-end Riverpark in Sha Tin (above) were sold. Luxury home sales over the weekend saw their worst performance this year, with developers managing to sell just 20 per cent of 285 flats on offer at two high-end projects - The Riverpark and Providence Peak - as fewer mainland buyers and a rising credit crunch across the border begin to bite. The poor response was also linked to last week's Hong Kong government warning that it would intervene in the market if prices continue to rise. A bearish stock market and tighter lending for luxury flats also kept local buyers away. A total of 58 were sold over the weekend, of the 285 offered by New World Development's The Riverpark above Che Kung Temple MTR station in Sha Tin, and Sino Land's joint-venture development, Providence Peak, in Tai Po. New World Development said 40 flats, or 29 per cent, of the 137 on offer at The Riverpark were sold, while Sino Land said 18 flats, or 12 per cent, of the 148 at Providence Peak were bought. Following the poor response, New World last night released another 315 flats, with sizes between 660 sq ft and 964 sq ft, at prices as low as HK$5.2 million, an average of HK$8,430 per sq ft. That makes the latest batch of units cheaper by about 9 per cent than last week's first launch price. It also put on the market four flats at The Riverpark, with areas from 953 sq ft to 1,812 sq ft with price tags of HK$8.3 million to HK$20 million. "This was the poorest sales performance so far this year. It will send a negative signal to the market," said Sammy Po, a director of Midland Realty, adding that more homebuyers would stay on the sidelines as these two projects would have been a benchmark for the luxury segment. Po noted mainlanders' buying interest for flats worth over HK$10 million seemed to be on the wane. Most units at The Riverpark and Providence Peak are being offered at between HK$10 million and HK$37 million each. But Raymond Chan, sales director for Sha Tin and Tai Po district at Midland Realty, said he believed mainland buyers accounted for less than 10 per cent of the weekend sales. "In that absence of an influx of mainland buyers, big-ticket transactions will be affected." Despite the sluggish sales, Chan said that flats with better views got the higher asking prices, which indicated demand still exists. "But buyers have become more selective. They don't mind paying more for the best flats in a development." Ricacorp Properties director David Chan said home seekers have become conservative amid rising worries that the government would introduce more cooling measures when chief executive-elect Leung Chun-ying takes office next month. "Most people are adopting a wait-and-see attitude." Victor Tin Sio-un, Sino Land sales and leasing general manager, said the most expensive flat, with a private pool, at Providence Peak had sold for more than HK$37million. "Buyers need more time to weigh their options as more than 75 per cent of our flats are over HK$10 million," he said. Chan of Midland said that flats below HK$10 million appeared to be doing better. The Housing Society's Heya Green development in Sham Shui Po had sold all its 327 flats on the first day of the launch on Saturday, he pointed out. Only locals can buy the flats at Heya Green, and each buyer is limited to one flat. The flats were offered at between HK$3.99 million and HK$7 million.

Joseph Yam Chi-kwong may once have been the world's highest paid central banker, but that wasn't why the former Hong Kong Monetary Authority chief executive was nicknamed "tsar" of the local financial sector. It was his ability to steer the city through many an economic storm over the past two decades that made him invincible. It was Yam who helped create the Hong Kong-US dollar peg in the early 1980s to stabilise the local currency and, just short of a decade later, limited bank loans to homebuyers to protect lenders against property slumps. Despite having retired in 2009, purple HK$10 notes still bear his signature, while the Bauhinia motif he designed is on our every coin. Such was the legacy of the 64-year-old until a damning report released by the Legislative Council last Wednesday that accused him of failing to prevent banks from misleading investors into buying the risky Lehman minibonds. The report, result of a probe that lasted more than three years, said Yam should bear "ultimate responsibility" for investors' losses as bank staff sold clients the structured products issued or guaranteed by Lehman Brothers without explaining the risks. When the US lender collapsed in September 2008, these products became worthless and investors suffered huge losses. About 43,000 investors in Hong Kong spent HK$20.2 billion. The finding has split opinion, not only over Yam's role but also whether it has tainted his reputation. "To be fair, Mr Yam got the job done as a good central banker by establishing the peg-linked system to ensure the stability of the local currency. But this does not offset his failure to regulate the banks' securities businesses that led to the minibond fiasco," said Chim Pui-chung, the legislator who represents the financial services sector. "Mr Yam had only one good trick, to manage the peg … which he did well. But he did not pay attention to banking regulations that saw them sell products like Lehman's minibonds without fully explaining the risks. That's why the criticism is fair." Not everyone shares this one-trick pony portrayal of the former central banker. Banking legislator and Bank of East Asia (SEHK: 0023) chairman David Li Kwok-po said he and many bankers considered it "extremely unfair" and "ill-considered" to single out Yam's responsibility. "As the chief executive of the HKMA, Joseph Yam oversaw the remarkable growth of Hong Kong as a financial centre and led the effort to establish the city as the financial centre for our country. He has given fully of himself for Hong Kong,'' Li said. He said it was Yam's sound supervision that meant the banks could cope with the 1998 and 2008 financial crises. Born on the mainland in 1947, Yam moved to Hong Kong with his parents and an elder brother when he was one. After graduating with first-class honours in economics and statistics from the University of Hong Kong he joined the government in 1971 as a statistician in the Census and Statistics Department and rose to become senior economist in 1977. In 1983, he helped created the Hong Kong-US dollar peg at the exchange rate of US$1 to HK$7.80 to shore up fragile public confidence when China and Britain began talks on the change of sovereignty. Yam became the city's first central banker when named chief executive of the newly established Hong Kong Monetary Authority in 1993 and stayed in the position until 2009. While critics agreed with the Legco report that he failed to regulate the securities business, bankers praised Yam as a competent regulator who, in 1991, said banks could not lend more than 70 per cent of the value of a property to homebuyers - a golden rule that is still in place and has protected banks from the risks of a property slump. Yam was awarded the Grand Bauhinia Medal in 2009 for his contribution to the financial sector, a move supported by former HSBC executive director Vincent Cheng Hoi-chuen, who said: "Mr Yam is a good financial architect and has laid down the financial system in the city." Before the minibonds saga Yam often faced flak about his salary. He was the world's highest paid central banker, receiving HK$11.9 million (US$1.53 million) in 2008, compared with US Federal Reserve chairman Ben Bernanke's US$191,000. Yam was back in the spotlight last year as he jumped in to help former chief secretary Henry Tang Ying-yen run for chief executive. There were speculation that if Tang had won, Yam might have taken up the top financial job or joined the Executive Council. Yam turned down a request for an interview with the South China Morning Post (SEHK: 0583) about the Legco report but replied in writing, disagreeing with its findings. "I have adequate grounds to seek a judicial review. But it is difficult to confront the entire political engine with my own force." Bankers believe the report will have little impact on Yam's reputation and say many banks, officials and academics would be pleased to hear his advice. Even legislator Chim said: "Mr Yam is not a saint. Like others, he makes mistakes, such as in the minibonds crisis. But still he is one of the few people in Hong Kong who has the experience and ability to know how to run a central bank and handle a financial crisis. He is likely to continue to play a key advisory role to the mainland government and banks." CAREER PATH: Joseph Yam Chi-kwong; Age: 64; Currently: Executive vice-president of the China Society for Finance and Banking, non-executive director of China Construction Bank (SEHK: 0939), distinguished research fellow of the Institute of Global Economics and Finance at the Chinese University of Hong Kong; Previously: Chief executive of the Hong Kong Monetary Authority (1993-2009); Education: Bachelor in economics and statistics, University of Hong Kong; honorary doctorate degrees from the University of Hong Kong, Hong Kong University of Science & Technology and Hong Kong Shue Yan University; Personal: First marriage in 1972, second in 2000. Has two children.

A day after 100 pairs of limited-edition Nike Air Yeezy II were snapped up in Hong Kong, some are already being sold online for a handsome profit - with one pair on offer for an outrageous US$90,000 (HK$702,000). The shoes - designed after bad boy rapper Kanye West - were sold for HK$1,999 on Saturday night in a two- hour frenzy at an IT Hysan One store in Causeway Bay. The regular bids ranged from HK$12,000 to HK$37,000 on eBay and YahooBid, though there were no deals as of 8pm last night. One eBay user broke from the pack and posted a selling price of US$90,000, but many doubted if there would be any takers. This is the second Nike collaboration with West, the multiple Grammy winner whom US President Barack Obama described as "talented but a jackass" after he torpedoed Taylor Swift's awards speech in 2009. West is now dating reality star Kim Kardashian. Some 3,000 Air Yeezy II pairs in white and gray, and black and solar red, are estimated to have been sold worldwide. The first edition Air Yeezy in 2009 cost US$215 but the price went up to more than US$1,000 to online bidders. On Saturday, more than 600 locals, many of them South Asians, queued up from 11am for the 9pm sale. Police watched over the queue. "We sold the shoes after drawing 100 lots out of 400 chips. The 100 pairs sold out in two hours," an IT worker said. One man was spotted holding more than 100 chips after hiring people for HK$28 an hour to queue up for him. In comparison, the Nike Air Jordan XI retro - a collaboration with famed basketball player Michael Jordan - sold at US$180 last year, with the price marked up to US$1,000 online.

HSBC Hong Kong has asked protesters of the Occupy Central movement to leave the ground floor plaza of the headquarters building which they have been occupying for the past eight months. The move follows similar evictions in London and New York. "In preparation for a number of community events in the plaza at the HSBC main building later in the year, we have formally asked the occupiers to vacate the area voluntarily," bank spokesman Gareth Hewett said yesterday. "We will continue to work with the authorities regarding the matter." The protest movement occupying financial centers began in the United States with Occupy Wall Street and soon spread to other cities globally. The New York protesters were forcibly evicted in November and those in London were told to leave their Finsbury Square camp this month. In Hong Kong, protesters numbering about 50 at their peak have pitched tents and laid out couches as they playguitars, run photography classes and read Chinese novels beneath the headquarters of HSBC. "We won't leave," said protester Leung Wing-lai. "HSBC has not given us a deadline to move out." Hong Kong is one of several Asian cities, including Seoul, Taipei and Tokyo, which have seen protests inspired by the Occupy Wall Street movement. The Hong Kong movement has had to share the space with long-standing demonstrators seeking compensation over the Lehman Brothers saga. On weekends, when maids have their day off, they also lay out mats in the same space to share meals, play cards and chat. Bookstore saleswoman Jojo Wong, 22, said she drops by the site before and after work. She helps to organize language and photography lessons for passersby. In an e-mailed response to questions yesterday, the police department did not comment directly on its role in any eviction of protesters from HSBC's premises. "The police respect the rights of individuals to peaceful assemblies and they can express their views in a peaceful and safe manner," the e-mail said. "In managing public order events, major considerations are public safety and public order."

 China*:  June 13 2012 Share

China Mengniu Dairy (2319) said it will invest 3.5 billion yuan (HK$4.26 billion) over the next three years to set up 12 self- operated dairies as it races to shed the legacy of tainted milk and rebuild consumer confidence. Executive director Bai Ying said in a media tour yesterday that setting up its own dairy farms will ensure the quality of its milk supply is never again compromised. Sun Yiping, the chief executive who came onboard in April, has decided to fast-track the dairy farm plan, originally slated for completion in 2017. Sun was previously deputy general manager of COFCO Property (Group). Mengniu, China's leading fresh milk producer, collects about 80 percent of raw milk from self-run dairies and cooperatives, including about 10 percent from China Modern Dairy Holdings (1117). It also sources supplies from farmers operating small dairies. Since 2008, when formula tainted by the industrial chemical melamine led to the deaths of some six infants and caused kidney disease in 300,000 other babies in the mainland, Mengniu has been dogged by several other quality scares, including excessive levels of cancer- causing aflatoxin in ultra heat-treated milk, and most recently, suspicions of cow urine in milk, which it has denied. Wang Fu, assistant president of Inner Mongolia Mengniu Dairy (Group), a unit of Mengniu, said 30 million yuan has been spent so far this year on introducing quality assurance systems. More staff have also been assigned to check quality at small dairies. Mengniu chief financial officer Wu Jingshui said sales growth in the first five months has weakened from a year back. Last year, revenue grew 23.5 percent to 37.4 billion yuan. The Hohhot-based company is also planning to launch the high-end milk brand Deluxe in Hong Kong in August. It plans capital expenditure of between 2.4 billion and 2.6 billion yuan this year, excluding costs of potential acquisitions of medium-sized dairy producers. Shares of Mengniu rose about 1 percent to HK$20.85 yesterday.

Two air force rivals are keeping their fingers crossed as the countdown ticks for China's first female astronaut to blast off into space. Either Wang Yaping or Liu Yang - selected among the first batch of women astronauts - will be in the three-person crew to launch aboard the Shenzhou-9 as early as Saturday, Xinhua News Agency said. Each waits anxiously to see who will be the chosen one. Wang, married to an air force pilot, was born in 1980 in the coastal city of Yantai, Shandong. Liu, who is single, was born in 1978 in Zhengzhou, Henan province. Both have served in the PLAAF 13th Air Division - Liu as a transport pilot and Wang as a cargo pilot. If all goes well with the launch, the Shenzhou-9 will dock with China's orbiting space laboratory, making the nation the third after the United States and Russia to complete a manned space docking. The Shenzhou-9 and its carrier rocket, the Long March-2F, have been moved to a launch platform in northwest Gansu province to allow scientists to conduct tests before the launch. The Tiangong-1 space lab module was launched in September, and two months later it successfully completed China's first space docking with an unmanned spacecraft, Shenzhou-8. After graduating from high school in 1997, Wang trained as a pilot at the Changchun academy. She qualified for solo flying in 1998, and had accumulated 800 flight hours by 2007. In 2001, Wang graduated with a bachelor degree and was assigned to the 13th Air Division. Liu was recruited into the PLA Air Force in 1997 and trained at the Changchun Flight Academy as a pilot. She graduated in 2001 with a bachelor degree. During her service, she has flown four different aircraft types and successfully handled a bird strike incident, landing the aircraft safely.

Chinese archaeologists have unearthed 110 new terracotta warriors that laid buried for centuries, an official said on Monday. Chinese archaeologists have unearthed 110 new terracotta warriors that laid buried for centuries, an official said on Monday, part of the famed army built to guard the tomb of China’s first emperor. The life-size figures were excavated near the Qin Emperor’s mausoleum at Xian, in the central province of Shaanxi over the course of three years, and archaeologists also uncovered 12 pottery horses, as well as parts of chariots, weapons and tools. “The … excavation on the 200-square-metre site has found a total of 110 terracotta figurines,” said Shen Maosheng from the Qin Shihuang Terracotta Warriors and Horses Museum, which oversees the tomb. “The most significant discovery this time around is that the relics that were found were well-preserved and colourfully painted,” Shen, deputy head of the museum’s archaeology department, said. He added that archaeologists had pinpointed the location of another 11 warriors but had yet to unearth them. The discovery is the latest in China’s cultural sector, after experts found that the Great Wall of China – which like the Terracotta Army is a UNESCO World Heritage site – was much longer than previously thought. Shen said experts had expected the colours on some of the warriors and wares uncovered at the site to have faded over the centuries, and were surprised to see how well preserved they still were. The finds also included a shield that was reportedly used by soldiers in the Qin Dynasty (221-206 BC), decorated with red, green and white geometric patterns. Qin Shihuang – the Qin emperor who had the army built – presided over the unification of China in 221 BC and is seen as the first emperor of the nation. The ancient terracotta army was discovered in 1974 by a peasant digging a well. It represents one of the greatest archaeological finds of modern times, and was listed as a World Heritage Site in 1987. The news comes after a five-year archaeological survey found the Great Wall of China was more than double the previously estimated length. The survey – released to the public last week – found the wall was 21,196 kilometres long, compared to an official 2009 figure of 8,851 kilometres. Beijing authorities on Saturday also reiterated plans to open two new sections of the Great Wall to tourists and expand two other existing areas to help meet booming demand.

The newly-built Changshui International Airport in Kunming, capital of southwest China's Yunnan province. China to build 70 new airports by 2015 - China will build 70 new airports within the next three years, the head of the country's aviation watchdog said on Monday, as part of ambitious expansion plans in the industry despite an economic slowdown. Civil Aviation Administration of China (CAAC) chief Li Jiaxiang also reiterated pledges that carriers would buy on average more than 300 planes a year from last year to 2015 – the country’s current five-year economic plan. “China plans to build 70 new airports in the next few years and to expand 100 existing airports,” he told delegates in Beijing at the annual general meeting of global airline industry group IATA. He added that the number of airports would reach more than 230 by the end of 2015, and that Chinese carriers would operate around 4,700 planes by then. The aggressive expansion comes after IATA head Tony Tyler warned that global airline profits would more than halve this year on the back of surging oil prices and the euro zone crisis. The airline industry in the Asia-Pacific region is expected to turn in a US$2 billion profit this year, according to IATA figures released on the sidelines of the AGM, but this still represents less than half of the region’s last year profit. The group did not provide specific projections for the China market – which has so far experienced booming growth due to rising demand for air travel as increasingly affluent Chinese people travel more frequently. But it said part of the reason behind the projected drop in profits in Asia-Pacific was a slowdown in the Indian and Chinese economies. Growth in China, the world’s second largest economy, slowed to 8.1 per cent in the first quarter of this year – its slowest pace in nearly three years. But Ma Kai, a state councillor in charge of economic development, said at the AGM that China’s aviation market had the “biggest growth potential” in the world. “Ever since 2005, the industry has realised an annual growth rate of 17.5 per cent,” he said. “We have contributed to the current development of growth in the global civil aviation industry and will continue to do so for the time to come.” Li added that by the end of last year, China had 2,888 commercial planes in operation and its aviation industry employed 1.2 million people.

Engineers work on the Jiaolong submersible aboard China's oceanographic ship Xiangyanghong 09, June 11, 2012. The first dive will challenge the depth of over 5,000 meters, but less than 6,200 meters. The fifth and sixth dives are scheduled to challenge the depth of 7,000 meters. The six dives will test various functions and performances of the manned submersible at great depths. Each dive may last for eight to 12 hours. The Jiaolong succeeded in diving 5,188 meters in the Pacific Ocean last July, enabling China to conduct scientific surveys in 70 percent of the world's seabed areas. "Before the formal sea dives, a comprehensive review of the submersible as well as its support system will be taken," on-scene commander Liu Feng told Xinhua on the Xiangyanghong 09, the mother oceanographic ship of the submersible. Experts say, for safety, sea dives can only be conducted in daylight under no-more-than-four-class wind and no-more-than-three wave.

NetSuite, an online seller of business-automation software controlled by technology mogul Larry Ellison, plans to step up its expansion into China through the mainland's fast-growing e-commerce industry. Zach Nelson, the president and chief executive of NetSuite, said the company was keen to establish partnerships with mainland online retailers to drive the adoption of its unique "e-commerce-as-a-service" platform that merchants can subscribe to, customise and quickly deploy in the domestic and international markets. "We think our SuiteCommerce platform will be an accelerator of our growth in China and other markets worldwide," Nelson said. California-based NetSuite, which was founded as NetLedger in 1998, is the world's top cloud computing-based supplier of enterprise resource planning (ERP) software to companies. The firm is listed in New York and posted record revenue of US$263.2 million last year. Cloud computing enables companies to buy, lease, sell, or distribute over the internet a vast range of software, business systems, data and other digital resources as an on-demand service, like electricity from a power grid. "Cloud" refers to the internet, which is depicted in that form in computer network diagrams. NetSuite made its initial foray into China via Hong Kong in 2008 and has since slowly built up its presence on the mainland through systems integrators and other channel partners. It has about 40 customers in China and eight channel partners. The company, which has 12,000 corporate customers worldwide, launched its SuiteCommerce platform last month to provide businesses with a central system to manage all their e-commerce transactions with consumers and other businesses through a website, smartphone, social media site, or in a physical store. NetSuite's prospects for SuiteCommerce on the mainland look promising based on the rapid growth of the online retail market. Total online shopping revenue on the mainland is forecast to reach 1.2 trillion yuan (HK$1.48 trillion) this year from 773 billion yuan last year, according to iResearch. The mainland's largest e-commerce players, however, have implemented their own proprietary online-selling platforms to support multiple merchants and brands. These include the Alibaba Group's market-leading online-shopping services TMall and Taobao Marketplace, and (SEHK: 1688) the world's biggest business-to-business e-commerce provider. Beijing Ule E-Commerce, a joint venture between China Post and Li Ka-shing's Tom Group (SEHK: 2383), has also built a proprietary online-selling platform for various merchants and brands. "The Chinese e-commerce market has been interesting to us because the winners have been aggregator sites like Alibaba, which list individual sellers without their own physical brand or presence," Nelson said. "The opportunity for us in China is that we can immediately deliver an experience for every online merchant with customers and suppliers across different touch points, whether smartphones, media tablets or social media sites." A spokesman for Alibaba Group said the company was always open to talks with other companies.

Wang Yaping (left) and Liu Yang - Shenzhou-IX launch could be on Saturday - Of the two women candidates, one is known for being tough, and the other top-scored in aviation theory - The earliest China would be able to launch its Shenzhou-IX manned spacecraft would be Saturday, mainland media reported yesterday while giving information about the two female candidates vying for the mission. The City Express, based in Hangzhou , Zhejiang province, quoted an unidentified person involved in the mission as saying that the launch window could open on Saturday. The Shenzhen-IX spacecraft and its carrier rocket have already been moved to the launch platform at the Jiuquan Satellite Launch Centre in Inner Mongolia in the northwest. China has made steady progress with its space programme since 2003, when it became the third nation in the world to send humans into space, after Russia and the United States. Two more manned missions followed, one including a space walk. Officials previously said the Shenzhou-IX mission would involve three astronauts manually docking with the Tiangong-1 space module, which was launched on September 29 and is orbiting earth. The report yesterday quoted Qi Faran , chief designer for Chinese spacecraft, as saying that one of the three astronauts on the Shenzhou-IX would be a woman. Qi said two female candidates were undergoing training. Mainland media reported that either Liu Yang or Wang Yaping , both 34, would be selected for the job. The reports said that both Liu and Wang were mentally capable and had passed many tests, and that they had received advanced piloting training. Liu, who graduated from an aviation college in Changchun , Jilin province, is known for being tough. She did not let her parents visit her during her four years at the college. And when she made her first skydive, she did not immediately call her family to tell them she was safe. Her parents broke down in tears when Liu finally called them, with her father telling her: "It's good that you are safe." Wang, whose husband is also a pilot, had no intention of becoming a pilot when she was young, but she changed her mind after being persuaded by a friend to try aviation college. She registered the top scores in the aviation theory examination for two consecutive years.

The family of Gu Kailai, the wife of the ousted Chongqing leader Bo Xilai who is suspected of murdering a British man and igniting a political firestorm, has hired a Beijing lawyer experienced in defending officials accused of corruption to work for her, two sources have said. The sources, who have ties to Bo, said her family hired Shen Zhigeng, a partner in the Beijing Zong Heng Law Firm, whose clients have included former vice minister of public security Li Jizhou, who was jailed in 2001 for taking bribes. Both sources requested anonymity, citing the risk of repercussions for talking about the case at the heart of the worst scandal to hit the Communist Party in decades. Shen would neither confirm nor deny he was working for Gu or her family. "It's still not for certain. I still haven't met with her yet," Shen said. "The judicial authorities don't allow comment on these things. At this stage the judicial bureau doesn't allow us to have contact with the media." The law gives the police wide power to deny suspects access to lawyers, especially before they have been formally charged or indicted. That can make it difficult for lawyers to secure approval from suspects to serve as their attorneys. If Gu goes on trial and Shen acts as her attorney, they will be thrust into the heart of one of the most closely watched criminal cases in years. In March, Bo was dismissed as party chief of Chongqing, which he used to promote policies that mixed left-leaning populism with courting multinational investment. Bo could also face criminal charges related to the scandal, but Communist Party officials must first complete their inquiry and decide whether to hand his case to police and prosecutors. Gu is suspected of murdering a British businessman, Neil Heywood, in November, and his family and British diplomats could seek access to any proceedings. The government said evidence indicated Heywood was murdered and Gu and Zhang Xiaojun, an aide in Bo's household, were "highly suspected." Gu and Heywood were in dispute over unspecified "economic interests," said the government. Bo, 62, and Gu, in her early fifties, have disappeared from public view since his removal as chief of Chongqing, and have had no chance to respond publicly to the allegations about them.

Hong Kong*:  June 12 2012 Share

Security Secretary Ambrose Lee Siu-kwong confirmed yesterday that he would be leaving the government after 38 years of service. He also said Hongkongers had been enjoying more freedom since the handover. For instance, "there are 18 protests every day now, a number not seen in the past", he said. In a radio interview, Lee said it was time for a break and for him to devote himself more to his family. "As Andrew Li Kwok-nang [former chief justice of the Court of Final Appeal] said, a person should do something else when he reaches a certain stage," Lee said. In 1974, Lee joined the civil service as an immigration officer. From 1998 to 2002, he led the immigration department as its director. In July 2002, he was appointed as the head of the Independent Commission Against Corruption. In August a year later, he took over as the city's security chief after his predecessor Regina Ip Lau Suk-yee quit following the withdrawal of Article 23 of the Basic Law. It is widely expected that undersecretary for security Lai Tung-kwok will succeed Lee. During his career in government, Lee witnessed a deadly arson attack on the immigration tower by right-of-abode claimants in 2000, the World Trade Organisation protests in 2005, and Vice-Premier Li Keqiang's controversial visit last year. Regarding Li's visit, protesters and the media criticised the police for placing the protest zones too far away from the main event at the University of Hong Kong and for disrupting the work of reporters. Lee said the authorities had learned a lesson and that there was room for improvement when communicating with the press. However, he said the police were "wronged" in the "818 incident" on August 18 last year, when students said they were prevented from protesting during Li's visit to HKU. "It was a lie that one of the students, Samuel Li Shing-hon, was locked up by the police," Lee said. Although police usually negotiated with organisers ahead of protests, controversies arose when groups came up with new demands on the spot, he said. But activists say they are enjoying less freedom these days. For instance, prior to the 1997 handover, protesters only had to inform police about their events. Now they are required to get a "notice of no objection" from police, according to Civil Human Rights Front convenor Eric Lai Yan-ho. Lai said Lee did not go far enough to defend the rights of Hongkongers. Despite the failings of the police shown during the vice-premier's visit, Lee had never apologised, Lai said. Richard Tsoi Yiu-cheong, vice-chairman of The Alliance in Support of Patriotic Democratic Movements of China, said Lee failed to review security laws, including controls on protests and assembly that were contrary to human rights. Lawmaker James To Kun-sun, chairman of the Legislative Council's security panel, said stricter controls were imposed on protests, especially those outside the central government's liaison office and those held during visits by the nation's top leaders. "Lee is not a bad guy who goes out and harms others. But he doesn't have the courage to fight for our rights," To said.

Chief executive-elect Leung Chun-ying speaks at a session with Chai Wan residents yesterday. Buying back shares in shopping-centre owner The Link Reit (SEHK: 0823) may be an option to lower the rents of local businesses, incoming chief executive Leung Chun-ying says. Residents at a Siu Sai Wan forum called on Leung yesterday to put in place a government buy-back of shares in The Link, a real estate investment trust that has been running shopping centres on public housing estates for about seven years. They also proposed his administration provide more commercial facilities for small businesses. The residents complained that commodity prices had soared in recent years after The Link bought 180 government-run shopping centres and car parks in 2005. The retail landlord faces frequent criticism for forcing out small tenants by increasing their rents. Leung said his administration could consider the option but it would be a big exercise to spend public money to buy back the shares. He said his government - which is planning to re-establish a housing, planning and lands bureau - would consider building more commercial facilities near public housing estates. The Link has been managing the city's largest retail portfolio since the Housing Authority privatised the shopping centres and car parks. In the latest controversy, its advertising campaign in April to promote "nostalgic restaurants" at its shopping centres drew accusations of hypocrisy from hundreds of internet users. The incumbent government has said more than once that it has no plans to buy up shares in The Link, on the grounds that doing so might not help reduce rents and could push up the company's share price - and, as such, would not be a proper use of taxpayers' money. Meanwhile, Leung reiterated his call for the Legislative Council to approve his government restructuring proposal before he takes office on July 1, while stressing he would follow all the necessary procedures and answer lawmakers' questions patiently. He appeared unhappy about plans by radical People Power lawmakers to raise more than 900 motions on the restructuring proposal at a Legco finance committee meeting. "There are lawmakers planning to raise 900 motions. The public would know what that is for," Leung said. Executive councillor Dr Leong Che-hung also urged legislators to approve the restructuring before July so as to grant the incoming chief executive more flexibility in implementing policies. Leong, a former legislator, said lawmakers today paid more attention to political fights than to monitoring the government. He urged lawmakers of different political stripes to settle their differences. He also called for a review on the composition and operation of the Executive Council. He did not say if he had been invited to remain on the council in the new government.

 China*:  June 12 2012 Share

A new Honda Acura concept car, the NSX, at the 2012 Beijing International Automobile Exhibition in April. Car sales in China rose 22.6 per cent in May year-on-year. Car sales in China rose 22.6 per cent in May from a year earlier, extending the double-digit gain made the previous month, as new models were introduced at April’s Beijing auto show started to arrive in the showrooms. The strong rebound by Toyota and Honda, which both suffered severe shortages of parts a year ago after northern Japan’s devastating earthquake and tsunami in March last year, also pushed up the monthly tally. Demand is likely to remain solid if Beijing renews some of the policy incentives that helped propel China beyond the US as the world’s largest car market by volume in 2009, industry observers say. In May, a total of 1.28 million sedans, sports utility vehicles (SUVs), multi purpose vehicles (MPVs) and minivans were sold in the country, the China Association of Automobile Manufacturers said on Saturday. In the same month of last year, that number was 1.04 million. From January to May, deliveries climbed 5.5 per cent to 6.33 million, continuing an upward trend that started in April.

Sri Lanka's first Chinese-built port has opened for international shipping in a strong symbol of Beijing's investment in South Asia. The US$1.5 billion deep-sea port in Hambantota, southern Sri Lank, the constituency of President Mahinda Rajapaksa, straddles a major east-west shipping lane used by 200 to 300 international vessels a day. The project, delayed by just over a year, was conceived to create a new logistics hub to handle transshipments from Asia and provide a boost to Sri Lanka's economy as it recovers from decades of civil war. Regional power India turned down an offer to construct the port soon after Rajapaksa came to power in 2005, saying it was not commercially viable. But China's presence has created unease in New Delhi. India views Sri Lanka as being firmly within its sphere of influence and has been concerned about China getting a foothold there and in other surrounding countries. China loaned money for the port, and construction was led by Chinese engineers and workers, but it is managed exclusively by Sri Lankans. "We have a vast area of land for storage at the port. This we can offer to car manufacturers in Asia to hold their stocks," said Priyath Wickrama, chairman of Sri Lanka Ports Authority, adding that there was also space for car assembly around the port. He hopes to raise the number of vehicles handled at the port - 240 kilometres south of the capital, Colombo - to a million within five years. China is building a second port in Colombo and Chinese firms have pledged investments of US$50 billion over the next 10 to 15 years, according to Sri Lanka's trade ministry. Elsewhere in South Asia, China has funded port facilities in Pakistan, a long-standing ally, and has plans for rail projects in Nepal, a traditionally India-aligned country where Beijing is increasingly influential. Bangladesh has asked for Chinese help to build a port and Beijing in November opened an embassy for the first time in the Maldives. According to Charu Lata Hogg, an analyst at London-based think-tank Chatham House, India has come to terms with China's rise. "There seems to be a tacit understanding that their commercial interests can be complementary," Hogg said.

Hong Kong*:  June 11 2012 Share

Mainlanders' love affair with Hong Kong property is cooling, with some either defaulting on home purchases or being forced to sell at a loss as mainland credit tightening and growing bearishness about the sector start to bite. Property agents believe those who have not yet completed their purchase agreements on flats may be tempted to forfeit their down payments and cancel the deals out of fears the market may be due for a correction after repeated government warnings of a possible bubble. Chinachem sales manager Ng Shung-mo said three mainlanders who had bought apartments at its 88-flat Residence 228 in Sham Shui Po had walked away from the deal, forfeiting their 10 per cent initial down payment. A local buyer had also forfeited the deposit. "We weren't able to contact these mainland buyers, even though the completion date was extended from early this year to this month. So we treated them as defaults," he said. The three mainland buyers had bought the flats last year for a total of HK$12.2 million, he said. This meant they had forfeited HK$1.36 million. In the secondary market, a mainland businessman was forced to sell his luxury flats at The Arch, at Kowloon station, where many of the flats have been bought by mainlanders, at a loss of close to HK$2 million this week to raise cash for his business, said a property agent who asked not to be named. Another mainland buyer reportedly lost HK$4 million from the sale of his luxury flat at The Cullinan, also at Kowloon station. "We've been seeing fewer mainland buyers over the past six months because of the intensifying credit crunch in China," said Dickson Lui, assistant sales director from Ricacorp Properties. But Sammy Po, a director of Midland Realty, played down the defaults. "We're used to seeing some buyers choosing to default on their deposits when market sentiment changes dramatically," he said. In the first quarter, mainlanders' spending on new homes fell 15.5 per cent to HK$12.5 billion, from HK$14.8 billion in the final quarter of last year, a Midland Realty survey showed. Their spending in the secondary market was HK$4.6 billion, down 16.4 per cent. Mainlanders accounted for 36.8 per cent of new-home sales in the quarter, down from 37.9 per cent per cent, and 8.4 per cent in the secondary market, down from 15.6 per cent. "If the trend continues it could drag prices lower in the short term," Po said. In the first quarter, property prices were 10 per cent above their peak in 1997, the government said last month, sparking fears of an asset bubble. Mortgage payments take about 46 per cent of the average flat owner's household income. An increase of three percentage points would take that figure to 60 per cent. Meanwhile, executive councillor Professor Anthony Cheung Bing-leung, widely tipped to be the next housing minister, ruled out making "big moves" in the private property market. He also appeared to backtrack on banning non-locals from buying flats in designated developments as a means to help locals buy affordable homes, saying more studies were needed. "The incoming government should review the long-term housing policy and seriously think about the issues of land planning," said Cheung. "Based on the current situation of the property market, we should not intervene too much."

Debt-laden Greentown China Holdings (SEHK: 3900) has become the first mainland developer to bring in new shareholders from Hong Kong to raise cash. It is a sign the city's investors are looking to pick up discount assets in the troubled real estate sector. Tightened lending and a slowing economy are expected to force more mainland developers to sell their assets cheaply to overseas and local investors. Though Beijing cut the interest rate on Thursday, property analysts say the disposal plans will continue. Greentown, based in Hangzhou , announced yesterday it would sell a total of HK$5.1 billion of shares and convertible securities to Hong Kong's Wharf (Holdings) (SEHK: 0004). The Hong Kong developer will hold 24.6 per cent of Greentown and become the second-largest shareholder. If the company converts the notes, its shareholding will increase to 35.1 per cent. It is Wharf's largest investment on the mainland since it spent 6.3 billion yuan (HK$7.7 billion) to buy two sites in Hangzhou and Hunan in February last year. Greentown will offer 327 million new shares at HK$5.20 - a 2.8 per cent discount to the closing price at HK$5.35 on Thursday - and also issue HK$2.55 billion of convertible notes with a distribution rate of 9 per cent. Alan Chiang Sheung-lai, head of mainland residential property at property agency DTZ, said: "Poor property sales and tightened lending have forced many mainland developers to sell their assets to repay debts, but this is the first time a large developer has sold a major portion of their shares." DTZ's research shows 22 out of the top 30 developers listed in Shenzhen and Shanghai recorded negative cash flow in the last quarter of 2011. The gearing ratio of 13 developers was over 70 per cent. Many small and medium-sized developers are now facing financial problems as lenders like China Construction Bank (SEHK: 0939) have cut off funding. The drop in interest rates has done little to help the property market, although developers may be able to raise their asking prices slightly. "Developers were reluctant to sell their sites to other companies when the property market was booming previously, as they could fetch higher prices by selling the projects to individual buyers," Chiang said. "However, with property sales in recent years weak, they have become willing to sell." This was providing many opportunities for overseas and local developers to expand into the mainland at a discount and at a faster pace. With this acquisition, Wharf surpassed New World China (SEHK: 0917) to become the Hong Kong developer with the largest land bank on the mainland. Wharf owned 12.2 million square metres by the end of last year, while Greentown held 40.98 million. New World China owned a land bank of 18 million square metres. However, such company transactions are not expected to become a trend, analysts said. Chiang said: "There are some small developers who are selling their shares. But not many companies are interested in buying, as the developers are small. And the investment risk on buying companies is higher than a single project." The gearing ratio of Greentown was 216 per cent at the end of last year, indicating an excessive degree of borrowing. Greentown chairman Song Weiping said: "We have experienced cooling measures [in the property market] for half year or a year. "But the duration of the current cooling measures is much longer than we expected. We are in a very difficult situation." The amount raised will be used to repay loans and for working capital.

A police officer carrying a 5kg haul of cocaine worth about HK$500 million following a raid. An 18-year-old suspect was nabbed. Cocaine smuggling from South America is on the rise. Drug cartels are using couriers, or "mules", trained to carry up to 1.7kg of the drug in their stomachs for flights lasting 20 hours or longer. In April and May alone, airport customs officers seized 20kg of cocaine with a street value of HK$22 million and arrested 14 suspected mules. Between January and March, they made just two arrests and seized just 3kg of cocaine. Most of the suspects were Colombian and came from the company's capital, Bogota, officers said yesterday at a briefing to explain details of the trade and their stepped-up detection efforts. All but two of the 16 cases this year have involved drug mules, compared with only six of 16 cases last year. A senior customs official says the couriers are trained to swallow and discharge drug pellets to learn the amount they can tolerate in their bodies. Each pellet is 4cm to 5cm long and weighs 10 to 15 grams. Couriers are paid US$3,000 each to swallow pellets containing at least 1kg of cocaine. A kilogram of cocaine has a street value of HK$1.1 million. "[Couriers] were given anti-diarrhoea tablets and ordered to take the pills before flying from their hometown," the official said. "They were also asked to wear cycling tights in case the pellets were accidentally discharged during their long journey." One suspect wore four pairs of cycling tights to prevent spillage. Most of them carried a bottle of lubricant since "it helps them swallow any pellets they discharge by accident". Another was found to have swallowed more than 150 pellets containing more than 1.7kg of cocaine. The record was set several years ago by an African courier who was caught with 2.4kg of heroin. The seizure of 23kg of cocaine equals last year's entire haul. Frontline officers have been alerted about the drug-swallowing couriers, according to another customs officer. A risk-profiling system, which officers use to pick out high-risk cargoes and passengers for inspection, is helping identify the drug mules. "Our analysis indicates that they usually come alone, without carrying check-in luggage," the officer said. "They are nervous and act suspiciously. Their actions are apparently sluggish because of the large amount of pellets in their stomachs." John Lee Cheung-wing, head of customs' drug investigation bureau, said: "The successful interdiction of those drug trafficking attempts fully reflects our determination and effort on the anti-narcotics front." The sharp rise in arrests has prompted airport customs officers to be more alert, while narcotics officials will seek to improve co-operation with various South American countries, including Colombia. Most cocaine is smuggled from the "Silver Triangle" of Peru, Bolivia and Colombia - the world's leading cocaine-producing region. Yesterday police arrested an 18-year-old man and seized 5kg of cocaine in a raid on an industrial unit in Wang Kwun Road, Kowloon Bay.

The Legislative Council yesterday approved a HK$273 (US$35.28 million) million interest-free loan to the exclusive Harrow International School for construction of its premises. The loan is to meet "part of the construction costs of its new school premises" in Tuen Mun, and is part of the government's commitment to support the international school sector to meet the demand for places for foreign families, according to a government document to the Finance Committee. But Fung Wai-wah, president of the Hong Kong Professional Teachers' Union, doubted the legitimacy of using taxpayers' money to fund the school. Some critics also see the loan as another sign of collusion between the government and the private sector. Harrow will be the first international school with boarding facilities in Hong Kong. It is expected to accommodate 400 primary and 750 secondary pupils when the first phase of construction is completed. There will be 99 classrooms, a boarding house, swimming pool, fitness room, an outdoor sports field and other facilities, the paper said. Construction for Harrow's premises is supposed to be completed by the end of the year. The first phase of the construction is expected to cost HK$878 million (US$113.38 million). "As a non-profit-making organization, [Harrow] can only obtain a bridging loan for the construction of school premises from private or commercial sources with the backing of the government's interest-free loan," the government paper said. "The provision of an interest-free loan to [Harrow], which provides non-local curriculum for the international community in Hong Kong, will help in facilitating the provision of additional international school places to meet the demand." But Fung said taxpayers' money should be used in a better way. "Although generally speaking, the school is nonprofit, it's not right to use public money to fund a school with abundant resources." He said the lack of international school places in Hong Kong should be alleviated from the root of the problem. "There are many international schools in Hong Kong. It's just that some are taken up by local students. We may have to rethink how to allocate those places to those who are really in need." The 3.7-hectare site at So Kwun Wat was allocated to the school in 2009, along with three other sites for international schools. Harrow is required to reserve at least half of its places for non-local students. The school's first batch of HK$600,000 debentures sold out last year. A report from moving consultant firm Crown Relocations in February found that only two international schools on Hong Kong Island, and four in the New Territories and Kowloon, had vacancies for Primary One pupils. The report surveyed 37 international and English Schools Foundation schools popular with expats. Government figures show there is growing demand for British curriculum school places, driven by a 35 per cent growth in the British population in Hong Kong in the past five years. The school is one of four international schools to have benefitted from being allocated land by the Hong Kong government, the others being Kellett School, Hong Kong Academy, and Christian Alliance International School.[1] It has been built on land formerly used as an army barracks in Tuen Mun in the New Territories. The land had been granted by the Hong Kong government in late 2008 for the nominal consideration of HK$1,000 (US$129), despite having a value of HK$600 million US$77.41 million), in its location adjacent to the Gold Coast. Harrow International Management Services is operating the school from Harrow School in the UK. The school campus is expected to have cost approximately HK$1 billion (US$129 million) to have been built. Hong Kong Education Minister Michael Suen Ming-yeung said in 2009 that the Hong Kong government wanted to facilitate and promote the international school sector to underpin Hong Kong's position as a "world Asian city". There are already a number of international schools in Hong Kong. There is demand from Hong-Kong's millionaires who have nostalgia for the old British systems, for a British-style education for their children, without having to send them too far.

 China*:  June 11 2012 Share

Chinese luxury brands lag behind foreign ones - Despite its status as the world's second-largest consumer of luxury products, China's own luxury brands are almost nonexistent, experts said Friday. Chinese products were few in contrast with the abundance of foreign items at a luxury commodities show that opened in Beijing on Friday. "China has basically no top-class luxury brands, which is a regrettable situation," said Xiong Xunlin, deputy secretary-general of the China Chamber of International Commerce. The mismatch has become even more noticeable as the nation's appetite for luxury goods has grown increasingly bigger. Xiong predicted that sales of luxury products in 2015 will reach $27 billion, which will account for more than one-fifth of the global luxury market and make China the world's biggest luxury consumer. Xiong said that even when the global financial crisis hit in 2009, sales of luxury products in China still surged 16 percent for the year. A recent survey carried out by the Beijing-based University of International Business and Economics showed that 68 percent of the 2,000-plus consumers surveyed believe that China does not have the capability to create its own luxury brands. Jessica Tu, chairwoman of the Luxury Market Council (China), said Chinese brands remain weak in terms of global influence. "They need to attach more importance to the exploration of overseas markets," Tu said. Xiong said that while China was once the king of "luxury products" as they were known in ancient times, the country has been slow to create luxury goods that appeal to modern consumers. "Where the country lags far behind is the creation of brands," Xiong said. Experts interviewed at the event said Chinese rice wine, tea, porcelain and jewelry brands have the potential to become luxury-class goods.

China will launch its Shenzhou-9 manned spacecraft sometime in mid-June to perform the country's first manned space docking mission with the orbiting Tiangong-1 space lab module, a spokesperson said here Saturday. By 10:30 a.m. Saturday, the spacecraft and its carrier rocket, the Long March-2F, had been moved to the launch platform at the Jiuquan Satellite Launch Center in northwest China, a spokesperson with the country's manned space program said. In the next few days, scientists will conduct functional tests on the spacecraft and the rocket, as well as joint tests on selected astronauts, spacecraft, rocket and ground systems, according to the spokesperson. The Shenzhou-9 will be launched into space to perform China's first manned space docking mission with the orbiting Tiangong-1 space lab module. The manned spacecraft Shenzhou-9 and its carrier rocket were delivered to the Jiuquan Satellite Launch Center in early April this year. The Tiangong-1, or Heavenly Palace-1, was lowered to docking orbit in early June and is orbiting normally, the spokesperson said. The final preparations are running smoothly, and the selected astronauts have completed their training and are in sound physical and mental conditions, according to the spokesperson. Niu Hongguang, deputy commander-in-chief of the country's manned space program, said earlier that the three-person crew on Shenzhou-9 might include female astronauts, but the final selection would be decided "on the very last condition." The space docking mission will be manually conducted by astronauts, giving China another chance to test its docking technology, the program's spokesperson said previously. One of the three Shenzhou-9 crew members will not board the Tiangong-1 space module lab, but will remain inside the spacecraft as a precautionary measure in case of emergency, the spokesperson said. The target module Tiangong-1, which blasted off on September 29, 2011, went into long-term operation in space awaiting docking attempts of Shenzhou-9 and Shenzhou-10 after completing China's first space docking mission with the unmanned Shenzhou-8 spacecraft in early November.

Hong Kong*:  June 10 2012 Share

Responding to an outcry over the renewal of the lease providing additional gross floor area for the Ocean Terminal operated by Wharf Holdings (0004), Secretary for Development Carrie Lam Cheng Yuet-ngor said yesterday there were no special considerations. On Monday, it was announced that Wharf would pay a land premium of HK$7.9 billion for a new 21-year lease. The government has since come under attack for not calling for a public tender. Legislators and analysts have been critical of the low premium. "The land premium was carefully estimated by the Lands Department's professional valuers and it fully reflected market price," said Lam, calling it a "win-win" deal. Lam said Wharf had sought a 50-year renewal, but the government consented to a 21-year term instead. She emphasized that neither she, nor the current and future chief executive, was involved in the deal. "It's strange that some say the plot should be put to a public tender, which is not common practise," Lam said. Usually, a tenant would be entitled to propose changes, or to exchange land with the government when the lease has not expired, she added. In this case, an exchange of land had occurred and so a land premium was imposed. Maximum gross floor area was increased 40 percent to 922,168 square feet, from the current 658,000 sq ft. But Lam said only 59 percent of the 922,168 sq ft of GFA would be for commercial use and the rest was for public utilities. The lease at HK$690 psf each year is comparable to market price, she said.

The hotel business of tycoon Lee Shau-kee is unlikely to be affected by China's economic slowdown. "There may be less tourists from the mainland, but we haven't seen any negative impact. Our hotel guests are a very diverse group," said Miramar Group (0071) managing director Martin Lee Ka-shing. "In the first quarter, the number of visitor arrivals to Hong Kong rose by around 15 percent from a year back. We expect that to climb further." The younger son of Lee Shau- kee said occupancy is about 80 percent, while the average room rate is around HK$2,000 a night, 20 percent up from a year back. The group operates three hotels - one in Hong Kong and two in Shenzhen. A new hotel - Mira Moon on Jaffe Road, Wan Chai - will open in December. But Lee downplayed hopes for Mira Moon, saying it will have just 100 rooms. Lee expects 100 percent occupancy rate for the first phase of Miramar Shopping Center, and 80 percent for the second. The shops are leased at HK$100 per square foot per month. Lee noted that rental growth has eased from two years ago, but said it is down from an "already high" pace. Miramar shares rose 0.36 percent to HK$8.31.

The Xintiandi bar and restaurant area in Shanghai - Shui On Land (SEHK: 0272) yesterday said it was not facing a cash crunch and hinted it might have to defer plans to spin off China Xintiandi if the market sentiment continued to weaken. But chairman Vincent Lo Hong-sui, said the company was still preparing for a separate listing of China Xintaindi. "If there is an overall improvement in market conditions, the spin-off will go ahead," he said after the company's annual general meeting. His comments come as several companies start rolling back listing plans, with no sign of the market mood picking up as the euro-zone crisis drags on and an economic slowdown deepens at home and abroad. London-based jeweller Graff Diamonds shelved its US$1 billion listing plan, while car dealer China Yongda pulled the plug on its HK$3.37 billion planned initial public offering. Shui On Land chief financial officer Daniel Wan said the company had 6.3 billion yuan (HK$7.7 billion) of cash in hand and had raised 4 billion yuan from a bond issue earlier this year. "The funding we have should be sufficient to meet this year's expenditure," Wan said. "We will not press on with the spin-off in a bad market when we can do it later when things improve." Lo said the company had appointed four investment banks to work out the details for the spin-off, without elaborating. China Xintiandi focuses on managing, designing, leasing, marketing and redeveloping premium retail, office, entertainment and hotel properties in urban areas. Its first redevelopment project, Shanghai's Xintiandi entertainment district, opened in 2001. Shui On subsequently launched similar projects in other cities, including Chongqing and Wuhan. The proposed spin-off this year was expected to raise up to US$1.5 billion, according to bankers familiar with the plan. Deutsche Bank, JPMorgan, Standard Chartered and UBS have reportedly been arranging the deal. Chief executive Freddy Lee Chun-kong said Shui On Land had secured 16 per cent of this year's sales target of 12 billion yuan. Most projects were slated to be launched in the second half of the year. "We are confident of achieving the full-year sales target," he said. On the outlook for the mainland property market, Lo said the central government had made it amply clear that the curbs on home purchases would remain in place and he saw no let-up in the near future. Shares of Shui On Land remained unchanged at HK$3 yesterday.

CCB president Zhang Jianguo said the bank had drafted and discussed the plans and was applying for regulatory approval. China Construction Bank (SEHK: 0939) is planning to integrate its operations in Hong Kong by merging China Construction Bank Asia and CCB's Hong Kong branch, as part of a plan to boost overseas business and avoid internal competition. "We hope to maintain the brand of CCB Asia," CCB president Zhang Jianguo confirmed with the Post yesterday, adding that the parent bank hoped CCB Asia would develop into a bank with fully fledged commercial banking business. CCB, the mainland's second largest bank by assets, has been expanding in recent years, setting up two to three offshore outlets every year. It was believed to be hoping that its Hong Kong operation could blaze a trial and nurture talent for future International expansion. Zhang said the main purpose of the merger was to restructure and consolidate mid-back office operations, save resources and avoid internal competition. He said major layoffs were unlikely. Its Hong Kong branch was the bank's first offshore foray, with a focus on wholesale banking. CCB Asia, which has about 2,000 staff, is a wholly owned subsidiary but has concentrated more on retail banking since acquiring Bank of America's Hong Kong retail operations in 2006. Zhang said the bank had drafted and discussed the plans and was applying for regulatory approval. CCB's top management set out an overseas expansion blueprint in 2006. "Our future overseas strategy is to mainly grow organically, but also capture good acquisition opportunities," Zhang said recently, adding that the bank was pushing for expansion in Moscow, Canada and Dubai this year. CCB Asia has 41 branches and one private banking centre in Hong Kong. Its wholly owned subsidiary China Construction Bank (Macau) has eight branches. Wang Hongzhang, who recently took over the chairmanship of CCB, also said yesterday at the bank's AGM that the bank would slightly adjust loan extension criteria, extending more credit to those with less risk, and that there was strong loan demand in China's western regions. Wang said CCB was in full compliance with so-called Basel III, international standards set up to regulate banks' capital and liquidity. He said he expected loan growth to remain stable as China's economy was expected to pick up in the second half. Pang Xiusheng, CCB executive vice-president, said it would be hard to maintain the past few years' fee income growth of 30 to 50 per cent, but the bank would still push ahead to develop this business. On wealth management products, the bank said even though issuing such products would increase costs, it helped to retain customers. For every 100 billion yuan of new products issued, costs would rise about 2 billion yuan, Zhang said. Outstanding wealth management products rose about 14 per cent to nearly 800 billion yuan by the end of April from the end of last year.

The euro weakened in Asian trade on Friday after hopes were dashed for US policy easing to pump-up the world’s biggest economy, while a Spanish credit rating downgrade had limited impact on the unit. The euro fetched US$1.2525 and 99.47 yen in Tokyo morning trade, down from $1.2561 and 100.01 yen late on Thursday in New York. The dollar bought 79.41 yen against 79.58 yen in New York, as Japan revised upward its January to March economic growth figures, but warned that soaring energy costs were taking a toll. Federal Reserve chairman Ben Bernanke, in testimony to Congress on Thursday, was fairly upbeat about “moderate” growth in the US economy and gave no hint of fresh stimulus measures. Also on Thursday, China’s first interest rate cut in more than three years underscored worries about slowing in the world’s number-two economy. “Rather than be enthusiastic about China’s easing, markets are aware of the fine line China treads, and worry about just how soft the economy is,” National Australia Bank said in a note. “This doesn’t allow a risk rally on China’s easing, but more caution instead.” Europe’s progress on resolving its fiscal crisis was not happening as quickly as markets would like amid growing international calls for action, the bank said, adding that a summit later this month could prove “disappointing”. Adding to euro zone concerns, Fitch Ratings on Thursday slashed Spain’s sovereign credit rating by three notches, citing ballooning estimates of the cost of a banking crisis, mushrooming debt and deepening recession. An uptick in the yen on Friday came as Tokyo said Japan’s economy grew by 1.2 per cent in the January to March quarter, up from a preliminary 1.0 per cent. In separate data, Japan’s current account, the broadest measure of Japan’s trade with the rest of the world, shrank 21.2 per cent on-year to a 333.8 billion yen (US$4.2 billion) surplus in April, as soaring energy costs in the wake of last year’s atomic crisis weighed.

Leung Chun-ying plans to tell state leaders that Beijing's measures to boost the Hong Kong economy are having a wider impact - helping the entire country to modernise. The incoming chief executive hopes his remarks will change the growing perception among some mainlanders that Hong Kong relies on favours from Beijing, he said during a wide-ranging interview with the South China Morning Post (SEHK: 0583) this week. Leung expects to deliver the message to state leaders officiating at the ceremony to mark the 15th anniversary of the handover on July 1. President Hu Jintao is expected to visit Hong Kong for that anniversary and the swearing-in of Leung and his administration on the same day. Hu will probably announce fresh measures to bolster the city's economy. Asked what he would tell the visiting state leaders, Leung said it would be a message of appreciation to them - and to all mainlanders - for the measures announced by the central government to boost Hong Kong's economy. "But I will also tell state leaders that by making the most of these measures, such as the Closer Economic Partnership Arrangement and the 36 measures announced by Vice-Premier Li Keqiang last year, Hong Kong will contribute to the country's economic and social development," Leung told the Post. During his visit to Hong Kong last August, Li announced a series of initiatives to help the city. They included the creation of an exchange-traded fund - which will allow mainlanders to invest in the city's stock market for the first time - and the expansion of a scheme that allows local and foreign companies to settle cross-border trades in yuan. Leung emphasised the need to step up "internal diplomacy" between Hong Kong and the mainland. To that end, Hong Kong government offices on the mainland should send out the message that both Hong Kong and the mainland will benefit mutually through increased cross-border economic co-operation. "But our economic and trade office in Guangzhou has less than 30 employees. Its size is even smaller than the British consulate in Guangzhou," Leung said. He noted that Hong Kong's economy grew by an annual average of only 3.96 per cent over the past decade, compared with Singapore's 6.6 per cent. Hong Kong's economic growth fell to just 0.4 per cent in the first quarter - its lowest level in more than two years. Leung is preparing to set up a financial development council to facilitate the development of the financial services industry. "If Hong Kong's economy grows faster, we will have more resources to resolve some deep-rooted problems in the city, such as poverty, housing and environment," he said. "Cleaning up the air and preparing for an ageing population will require extra financial resources, which will be produced by a higher rate of economic growth." He said the government should not be bound by any ideological baggage. "That's why I propose prudent adjustments when we help Hong Kong's enterprises embrace opportunities arising from the development of the mainland." Leung floated his ideas on "prudent" government intervention in the economy in April.

Hong Kong's total port cargo throughput in the first quarter increased 3 percent from a year ago, to 64.5 million tons, the city's statistic department said here Thursday. Inward port cargo recorded virtually no change at 35.9 million tons, while outward port cargo went up 7 percent to 28.6 million tons. On a seasonally adjusted quarter-to-quarter comparison, total port cargo throughput decreased 1 percent. Inward port cargo decreased 2 percent, while outward port cargo recorded virtually no change. Within port cargo, seaborne cargo increased 4 percent over a year earlier to 44.9 million tons, while river cargo also rose 1 percent to 19.7 million tons. Within inward port cargo, imports fell 9 percent to 16.6 million tons, while inward transhipment went up 10 percent to 19. 3 million tons.

 China*:  June 10 2012 Share

President Hu Jintao (front, centre) and other participants arrive for the large-group meeting of the Shanghai Co-operation Organisation Beijing summit in the Great Hall of the People yesterday. The Shanghai Co-operation Organisation (SCO) - a bloc comprising China, Russia and four Central Asia countries - accepted Afghanistan as an observer yesterday as it ended two days of talks in Beijing. Member states also jointly criticised Nato for establishing a missile defence system, and opposed any use of force against Iran. However, China, host of the bloc's summit this year, said it had no intention of replacing Nato's role in Afghanistan when foreign combat troops left the war-torn country in 2014. President Hu Jintao announced that Afghanistan had been granted observer status and that Turkey had become a "dialogue partner", while vowing that the bloc would jointly combat terrorism, separatism and extremism. The bloc also includes Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan. Iran, India, Pakistan and Mongolia are also observers. "Member states should establish a comprehensive security co-operation mechanism and take co-ordinated action to narrow down the space of activities of the three forces [terrorism, extremism and separatism], eradicate drug-trafficking and cross-border crimes," Hu said. He will meet Afghan President Hamid Karzai today, with the two countries expected to sign documents promising further co-operation. In a speech at the China Foreign Affairs University on Wednesday, Karzai said China could play a significant role in helping Afghanistan and Pakistan combat terrorism. He said expanding ties with China was high on Kabul's agenda, and the forming of a strategic partnership with the US last month did not mean Kabul would pay less regard to Beijing. Vice-Foreign Minster Cheng Guoping said after the summit that a stable Afghanistan was crucial for regional stability, and China and the bloc would continue to give economic support to Kabul. "The SCO will not replace the troops," he said. "The SCO will promote co-operation with Afghanistan under the framework of the United Nations, and help Afghanistan to maintain peace and harmony." The bloc said in a joint statement the use of force against Iran because of concerns about its nuclear programme would be unacceptable and would lead to unpredictable circumstances in the region and the world. The six countries said the strengthening of missile defences by a country or a group of countries in a unilateral and unrestrained manner, in disregard of the legitimate interests of other countries, would damage international security. The bloc also vowed to deepen economic ties, with China offering a US$10 billion loan for economic development in member states. The member states should establish railway, telecommunications and energy pipeline links, Hu said. 

An official with a state-run oil firm confirmed on Friday an earlier industry report that China will cut retail gasoline prices by 530 yuan (HK$649.50) per tonne and diesel by 510 yuan per tonne effective on Saturday.

Chinese President Hu Jintao (right) shakes hands with his Afghan counterpart Hamid Karzai during at the Great Hall of the People in Beijing on Friday. Chinese President Hu Jintao told his Afghan counterpart Hamid Karzai on Friday that the mainland will provide “sincere and selfless help” to Afghanistan, as he welcomed the country to become an observer at a security bloc anchored by Beijing and Moscow. “At present Afghanistan has entered into a critical transition period. China is a trustworthy neighbour and friend of Afghanistan,” Hu told Karzai in central Beijing’s cavernous Great Hall of the People. “Both now and in the future China will continue to stay firmly committed to our policy of developing friendly relations with Afghanistan and will continue to provide sincere and selfless help to the Afghanistan side.” Hu congratulated Karzai on Afghanistan becoming an observer member of the Shanghai Co-operation Organisation (SCO), which held its summit this week. He called Karzai an old friend of China, according to a pool report. “In the past 10 years, very fortunately, our relations have grown in a very positive way. Relations have broadened and deepened,” Karzai said in return. The future of Afghanistan, struggling to end an insurgency by Taliban militants despite the presence of US-led international forces for more than a decade, was one of the main issues at the two-day summit. Hu told Chinese state media this week that the bloc bringing together China, Russia and central Asian states wanted to play a bigger role in Afghanistan. A senior Russian official, however, ruled out any military involvement by member countries, despite fears instability will spread across the region as most foreign combat troops leave Afghanistan by the end of 2014. The SCO, founded in 2001, includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Iran, India, Pakistan and others attend the summits, but not as full members. All have an interest in Afghanistan’s future. As an observer, Afghanistan can attend SCO meetings but not vote. Chin has said it would increase cooperation with Afghanistan over resource development, infrastructure, energy and training. But Beijing will remain cautious, edging rather than rushing towards any bigger presence on concern about security troubles without the lure of major energy resources, Chinese experts say. US officials and legislators have said China could play a bigger reconstruction role through aid and investment. Afghanistan’s neighbours, including Iran and Pakistan, as well as nearby India and Russia, have jostled for influence in the country. The competition could well heat up after 2014. India has poured aid into Afghanistan and, like China, has invested in its mineral sector. But China’s trade with Afghanistan is small. In last year, two-way trade totalled US$234.4 million, a rise of 31 per cent on the previous year. Chinese imports from Afghanistan were worth just US$4.4 million, according to Chinese customs data.

Visitors look into a Ford Focus while a model stands next to the car at an auto show in Chongqing on June 6, 2012. Sales of passenger vehicles in China increased by 16.6 percent year-on-year in May, reaching their second-highest point in 17 months and reaffirming analysts' confidence that the industry is recovering. Analysts said the momentum suggests the growth will continue into the coming months and will accelerate in the third quarter, as the economy recovers. May saw the sale of 1,176,328 cars, sport utility vehicles, multi-purpose vehicles and minivans, up 2.2 percent from April, the China Passenger Car Association reported on Thursday. That helped produce a year-on-year growth rate of 4.4 percent for the first five months of this year. "The high growth is not out of our expectations, as vehicle sales in last May were seriously hit by Japan's earthquake, which reflected on Japanese automakers' sharp production decline amid a parts supply shortage," said Rao Da, secretary-general of the association. "As for June, although monthly sales will be less than that in May as hot weather keeps some consumers away from showrooms, the market performance will help keep positive growth over last year as a result of the industry rebound." He said fuel prices might be reduced this month because global oil prices have declined sharply. "The fuel price cut for two consecutive months will stimulate vehicle sales in June." Even so, he warned that dealers might have to deal with inventories that had already reached worrisome sizes by the end of May. China Automobile Dealers Association said the number of vehicles that local dealerships had in stock by the end of the month exceeded what they could sell in two months' time. According to a survey the association conducted among 500 Dongfeng Nissan Passenger Vehicle Co dealerships throughout the country, the large inventories have squeezed dealers' average gross profit margins to 1 percent, far less than the margins of between 4 percent and 6 percent that are common in the industry. "Automakers were continuously adding vehicle glut pressure to dealers, as they expanded production capacity aggressively during the market slowdown," Rao said. "The dealers had to undersell the cars through a price war to maintain their cash flow, which led to a decline in profits for some dealerships." According to a recent study conducted by the consulting firm J.D. Power and Associates, 63 percent of the vehicle dealerships in the world's largest automobile market made profits last year, down from 81 percent a year earlier. On Tuesday, the Ministry of Finance released a second list of pure electric and hybrid automobiles whose sales will be promoted through taxation policies, a measure that analysts said will encourage purchases of "green" vehicles. This year, the taxes charged on energy-efficient vehicles that run on older fuel sources will be cut in half and those on new-energy vehicles will be eliminated. "This combination of stimulus measures for energy-efficient vehicles will not only help the market rebound, but also promote a restructuring of the industry," said Cui Dongshu, deputy secretary-general of China Passenger Car Association. General Motors, the largest foreign automaker in China, reported it sold 231,183 vehicles in the country in May. That number was up 21.3 percent from the same month last year and 1.7 percent from April of this year. For the first five months of this year, the US automaker sold a record 1,203,552 vehicles in China, an increase of 11.5 percent year-on-year. Another US automaker, Ford Motor Co - benefiting from a strong demand for its New Focus model - also reported selling a record number of vehicles in May, 48,608 in total. That number was up 8 percent year-on-year. Shanghai Volkswagen, a joint venture between Volkswagen AG and China's top automaker SAIC Group Corp, said it sold more than 100,000 vehicles in May, a number up 13.6 percent from the same month last year.

The leaders of the six Shanghai Cooperation Organization countries sign agreements in Beijing on Thursday. SCO will be 'fortress of security and stability' - President sets out vision for bloc as Afghanistan gets observers status. The Shanghai Cooperation Organization granted Afghanistan observer status on Thursday as President Hu Jintao said the bloc aimed to become a "fortress of regional security and stability and a driving force of regional economic development". The current summit of the organization in Beijing, which witnessed the signing of agreements covering security, politics and the economies of the members, will be a landmark in the bloc's history as it set out a clear vision of its direction, analysts said. By granting observer status to Afghanistan, the SCO, which groups China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, consolidated ties with the war-torn country ahead of the pullout of most foreign troops by the end of 2014. The organization also announced that Turkey, a NATO member, will join Sri Lanka and Belarus as a dialogue partner. Observer status will strengthen "political, economic and civilian cooperation between the SCO states and Afghanistan," Vice-Minister of Foreign Affairs Cheng Guoping said after the summit. Central Asia's stability is a pressing issue for the regional bloc, analysts said, especially considering the turmoil in the Middle East and the withdrawal of troops from Afghanistan. Chen Yurong, a researcher of regional affairs with the Institute of International Studies, said as the security situation in Central Asia has changed, the SCO must revise security policies. The participation of Afghanistan and Turkey enlarges the region that the SCO covers geographically and increases the bloc's global influence, Chen said. But some analysts suggested that the SCO should be cautious about more participants, as it could undermine the bloc's capability given the sharp economic and historical differences between some countries. The SCO on Thursday also recommitted itself to closer security ties by adopting a 2013-15 anti-terrorism plan and establishing a swift response mechanism. The mechanism allows SCO members to request the help of other members to handle domestic emergencies. It "will considerably boost the SCO's ability to prevent and tackle emergencies", a diplomatic source said. Hu told the summit that "we should establish and improve a system of security cooperation". He also said that the members must tackle terrorism, separatism and extremism, as well as drug traffickers and other organized cross-border criminal activity. Development blueprint. Analysts said that the Beijing summit will be a milestone as it gives impetus to the development of the bloc, founded in 2001. The member countries issued a joint declaration to adopt the Strategic Plan for the Medium-Term Development of the SCO and vowed to build the region into an area of secure and lasting peace and shared prosperity. "It is no exaggeration to say the adoption of the strategic plan will have a far-reaching influence on the SCO's development," Vice-Foreign Minister Cheng said. Xing Guangcheng, executive director of the SCO Research Center, said the declaration and strategic plan not only show the openness of the SCO, but also highlight the sustainability and stamina of the organization's future development. Hu said the summit is pivotal for the future development of the SCO, especially as the international and regional situation has been more complex and volatile. Only after SCO members enhance cooperation and act in unison can they effectively cope with emerging challenges, safeguard regional peace and achieve development, he said. Hu also said China will offer a loan of $10 billion to support economic cooperation within the bloc, and the loan will also be used to aid the development of SCO member states. He also said China will help train 1,500 experts from other member countries over the next three years. It is also going to provide 30,000 government scholarships and invite 10,000 Confucius Institute teachers and students to come to China for research and study over the next decade. The president also called for the establishment of a development bank, a food security mechanism, and for the promotion of trade and investment. The 2013 SCO summit will be held in Kyrgyzstan. Russian President Vladimir Putin, Kazakh President Nursultan Nazarbayev, Kyrgyz President Almazbek Atambayev, Tajik President Emomali Rahmon and Uzbek President Islam Karimov also addressed the summit on Thursday. Leaders and officials from the four SCO observer countries, Mongolia, Iran, Pakistan and India, as well as Turkmenistan President Gurbanguly Berdymukhamedov and Afghan President Hamid Karzai, also delivered speeches at the meeting.

Egrets build nests in Mantou Mountain, Changxing county of East China's Zhejiang province, June 7, 2012. It is the breeding season for more than 10,000 egrets living in the mountain. The county is building a natural reserve of more than 27 hectares for the bird. An adult egret feeds young birds at Mantou Mountain, June 7, 2012.

Hong Kong*:  June 9 2012 Share

Former financial czar Joseph Yam Chi-kwong says his conscience is clear after a Legislative Council report singled him out for "ultimate responsibility" in the Lehman Brothers minibond debacle. But while he feels he has grounds to seek a judicial review of the report blaming him for the fiasco, it will be hard to fight a political machine alone. The former Hong Kong Monetary Authority chief said he disagreed with the findings. "I have served the people of Hong Kong in the financial field for many years and I have tried my very best," Yam said in a statement. "The Lehman Brothers incident happened during the global financial crisis and affected the entire world. No one wants to see it happen, but Hong Kong could not have escaped the consequences." He said the HKMA, the Securities and Futures Commission, the government and the Hong Kong Association of Banks have been helping minibond investors get back some of their money since 2008. "My conscience is clear and I believe that people will judge me correctly in their own hearts," Yam said. The Legco subcommittee, set up three years ago to probe the Lehman Brothers saga, blamed lax regulations, banking malpractices and government inaction for the loss of more than HK$20 billion by 43,000 investors. The report said Yam should accept ultimate responsibility for the HKMA's failure to detect and rectify problems before they became widespread. Yam is "reproved" in the report. Subcommittee member Regina Ip Lau Suk-yee said Yam made a public warning about the minibonds a year before Lehman Brothers collapsed. Yet he did not do anything to rectify the situation. The report also said the subcommittee is "greatly disappointed" in former SFC chief executive Martin Wheatley. The SFC, in 2005, found that the system for regulating public offers of structured financial products was inadequate. But it did not push through amendments in time. The subcommittee expressed "disappointment" at Financial Secretary John Tsang Chun-wah and Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung for not doing enough to oversee the regulations. The report made 50 recommendations, including one that complex and risky products should be sold only to suitable investors. It said the division of regulatory powers between the HKMA and SFC has given rise to complexities. Disciplinary powers should rest with a single regulator, which should have the power to order banks to compensate investors. Three members of the subcommittee - Philip Wong Yu-hong, Abraham Shek Lai-him and Jeffrey Lam Kin- fung - refused to sign on to the report. They believed it was unfair to name the banks in the report, and Yam should not be named and shamed. "If you have to reprove a person, that means the person has to take full responsibility," Wong said. "But even a celestial being could not have anticipated the collapse of [Lehman Brothers]." Shek said the greater blame fell to Lehman Brothers. Next should come the SFC because it approved the sale of minibonds in Hong Kong. The HKMA said in a statement the subcommittee did not fully take into account the information it submitted and that measures to enhance regulation of products have been implemented since 2008. A Financial Services and Treasury Bureau spokesman said the government has made recommendations since 2008 to regulate the sale of products. It took the committee 44 months to finish the report, which cost taxpayers HK$28 million.

The French construction group Bouygues said on Wednesday it has won part of a major contract to build a bridge between Hong Kong and Macau along with local partner China Harbour. A Bouygues statement put the value of the overall contract at 1.25 billion euros ($12.12 billion), of which its share would amount to 607 million euros. The joint venture with China Harbour is to build part of a section of bridge measuring 9.4 kilometres from the Hong Kong’s International Airport Island to the boundary of the city’s territorial waters, Bouygues said. Work was to start in the middle of this year, and the bridge is to be ready for use in 2016. Bouygues said that the deal’s value made it the largest design-build contract ever awarded in Hong Kong.

The two remaining suitors for the London Metal Exchange (LME) will resubmit proposals on Thursday and are likely to raise their bids in the final stages of a contest to buy the world’s biggest metals marketplace, sources close to the situation said. The content of bids by the US-based InterContinental Exchange and Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) are similar, the sources said. Both have pledged to keep the LME’s unique composition unchanged for now, including its warehousing network, complex prompt-date structure and open outcry trading. Trading on the LME sets global benchmark prices for six base metals. That has increased the prospects the two bidders will be asked to refine the proposals, which sources have said are already around 1.2 billion pounds (HK$14.4 billion). “One would anticipate there will now be a bit of finessing of the bids,” one source close to the process said on Wednesday. “It will be best and final offers at this stage, and then it will move forward to a recommended bid, once the LME has decided what they want to do.” A second source with knowledge of the matter said both exchanges were still in the running. ICE and HKEx were shortlisted after the exit of CME Group and NYSE Euronext in recent weeks. “As far as I know both parties are keen to continue, and I can’t see any change to that ahead of the bidding deadline,” the source said. The new submissions will be scrutinised by the board on Thursday, the day before the 135-year old exchange holds its annual general meeting, but a final recommendation is not expected to be made to shareholders at that meeting. The board is expected to have a period of consideration before any final bid is put to shareholders, the sources said. Voting on the sale will take place at an extraordinary general meeting. The LME declined to comment. Members, including JPMorgan Chase and Goldman Sachs, need to weigh the advantages of receiving a lump sum payment of millions of dollars for their shares versus maintaining the LME as a member-owned exchange. Any potential buyer would need to secure 75 per cent of ordinary shares as well as win approval from 50 per cent of shareholders. With its main European energy market and an established clearing house in Britain, the LME would be a logical fit for Atlanta-based ICE, Thomas Farley, president of ICE Futures US, said earlier this year. HKEx’s access to China, the world’s largest copper consumer accounting for 40 per cent of global demand, makes it an attractive suitor, industry observers have said. The LME has long sought to win approval from Chinese regulators to list its warehouses nearer customers in the country. Its last effort was rebuffed three years ago. LME Chief Executive Martin Abbott wants to build an in-house clearing operation and raise fees if the exchange is not sold.

Joseph Yam not accountable, says inquiry chief - The head of a Legislative Council subcommittee that looked into the Lehman Brothers minibonds fiasco says there is no need for senior SAR officials criticised in the committee’s report to be held politically accountable for the blunders. Raymond Ho Chung-tai rejected calls for the resignation of Financial Secretary John Tsang Chun-wah and Secretary for Financial Services and Treasury Chan Ka-keung by investors who lost money on complex financial products linked to the failed US investment bank. Speaking a day after the release of the committee’s report, Ho said the criticism of the pair had been moderate and referred to only one part of their overall responsibilities. “We should treat the two things separately,” he said on Commercial Radio. “This is among many things that they have done. The criticisms were not heavy.” The report, released after a three-year investigation, expressed disappointment that the two officials had failed to initiate reforms to improve regulation of structured financial products such as minibonds as the products became more popular in the market. Heavier criticism was reserved for former Monetary Authority head Joseph Yam Chi-kwong – who, the committee said, should bear most of the blame – and former Chief Executive of Securities and Futures Commission Martin Wheatley, in whom the committee expressed “great disappointment”. Legislator Ho, an engineer, said there was also no need for a political attack on Yam. He made this remark when asked about Yam’s response to the report on Wednesday when the former central banker said the subcommittee had been unfair to him. Yam meanwhile was tight-lipped on his own statement and the report, refusing to comment to reporters this morning. Another subcommittee member, Kam Nai-wai said the next government must step up measures to curb irregular sales tactics which he said were still being practised by banks. He also rejected a separate report by three other legislator members of the subcommittee who said the Lehman Brothers blunder was not of Yam’s making and criticism of government officials was wrongful. Kam compared the event to earthquakes – precautions planned by humans could prevent casualties, while quakes themselves could not be prevented. On the same programme, two investors in Lehman-linked products said the report had brought them “basic justice” that the government and banks had owed them. Eva Hui, who invested through Hang Seng Bank (SEHK: 0011, announcements, news) , said the report had at least stated that the investors had no responsibility for their losses. “I guess there’s a bigger chance that I could get back my initial investment after the release of the report,” she said, adding that she would continue to protest outside the bank. Chan Leung-yuen, who bought the products through DBS, said the report held the government and the banks responsible. There’s no way the investors should bear the losses.” But Philip Khan, a deputy chairman of the Alliance of Lehman Brothers’ Victims, said he was very disappointed by the report and would like to see government officials and banks apologising to them. Chan Kwong-yue, another leader of the investors’ efforts, said it was wrong for banks to rule out experienced investors in compensation plans and added that the report failed to answer some key questions. “Why was it that these retail products couldn’t be sold in the US nor could they be sold in the UK but they were everywhere in Hong Kong,” he said on RTHK.

Incoming chief executive Leung Chun-ying will float policies to spur the economy and ease people's hardships in his first 100 days in office, rather than waiting until his October policy address, he vowed yesterday. In an interview with the South China Morning Post (SEHK: 0583), he said some of his initiatives would take immediate effect, and cited as priorities better housing for young people and care for the elderly. He implied he would waste no time tackling burning issues and the plight of those in need. Leung said his administration would find social and economic investments to make better use of the government's HK$669 billion fiscal reserve, such as addressing the problem of the ageing population and promoting growth sectors of the economy. Expressing concern about the depth of the crisis unfolding in Europe, Leung said global economic problems were among the priorities in discussions between his team and the outgoing administration. Yet his immediate challenge was to secure the passage of his government restructuring plan through the Legislative Council, he said. He is facing attempts by pan-democrats to block the revamp. People Power lawmakers plan to delay it by tabling 1,000 motions for discussion in Legco's finance committee. Leung said he was "cautiously optimistic" that his proposal would pass before he formally takes office on July 1. "I don't have a Plan B. We are still trying our best," Leung said. But failure to get it passed in time would not paralyse the government. "The sky won't fall, but we will lose our competitive edge." Although Leung has not announced the names of his cabinet ministers, he said the new team was already working with counterparts in the incumbent government to prepare for the transition. "When deliberating policies, my cabinet will unveil initiatives as they mature. That doesn't have to wait until [October's] policy address." His administration would be well prepared for an economic crisis in Europe, he said. He has maintained close contacts with Financial Secretary John Tsang Chun-wah, who is tipped to continue in the role in Leung's team, and with financial regulatory institutions to monitor the situation. If his government restructuring proposal was approved, Leung said, he wanted the deputy financial secretary to share the workload of developing the city's economy, while the financial secretary could "glue his eyes on the European situation". The incoming leader said he would be "extra cautious" in designing housing and land policies against "the backdrop of the situation in Europe". Leung did not comment on whether property prices in the city had climbed too high. Asked whether he was touched by the estimated turnout of 180,000 at the candle-light vigil on Monday to mark the anniversary of the Tiananmen crackdown in 1989, he said: "I am not saying I am not touched. I have no comment [on the turnout]."

 China*:  June 9 2012 Share

Protesters hold a picture of Philippine warships during a protest outside the Philippines Consulate in Kong Hong on May 11, 2012. Shanghai Sharks Call Off “Goodwill Games” - First bananas, now Sharks. The list of casualties from China’s territorial spat with the Philippines keeps getting longer. Just a month ago, news surfaced that China had been blocking the import of thousands of boxes of Philippine-produced bananas, leaving many to spoil. Unfortunate fruit exporters ended up taking a hit of some $33.6 million in related losses in mid-May. Now, a Chinese basketball team has called off games with the Philippines, the Agence France-Presse reports. The Shanghai Sharks—the team partially owned by native son and basketball star Yao Ming—had been slated this month to play two games in Manila, but the team’s vice general manager has asked for an indefinite postponement of the games, an official with the Philippine Sports Commission told the AFP. The games were organized last year by both governments as a way to promote friendly sport exchanges between the two nations. However since April, China and the Philippines have been embroiled in an ugly maritime standoff in the South China Sea over a collection of rocks, reefs and islands called the Scarborough Shoal. Both countries claim the shoal, known as Huangyan Island in Chinese, as their territory. Warning signs have been percolating for some time that the fate of the so-called “goodwill” games might be on the rocks. Earlier last month, a Sharks spokesman said it was unclear whether the team would be able to play. “It’s not about our decision right now,” he told Chinese state media. The Sharks told Philippines sports officials the players’ passports weren’t ready and therefore they couldn’t participate. A Philippines official said the commission was “surprised” by this, given that the players had plenty of time to prepare their papers, says AFP. Zhang Chi, spokesman for the Shanghai Sharks, said, “We did get the invitation from Philippines side. But it is a short notice and there is not enough time for the club to arrange the trip so we decide not to go.” Adding to tensions, Chinese authorities have also lately advised mainland tourists against visiting the Philippines—though that evidently didn’t deter one enterprising Chinese company from hosting a lottery purporting to give entrants the chance to win a trip to Huangyan Island, in one provocative advertising gambit. Company representatives didn’t respond to inquiries about whether or how such a trip would be carried out. The South China Sea is thought to hold substantial reserves of oil and natural gas and is variously claimed in whole or in part by Malaysia, Vietnam, Brunei and Taiwan, as well as China and the Philippines.

China will adjust trade tariffs and provide fiscal support to boost imports while the world economy is undergoing a "complicated" restructuring, Vice-Premier Hui Liangyu said on Thursday. He said the adjustments aim to further promote balanced trade, but he did not provide details about how and when the tariffs would be changed. Hui made the remarks at the opening speech to the Asia-Pacific Economic Cooperation China CEO Forum in Beijing. Further enhancing opening-up to achieve mutual benefit is a firm basic principle of China, and the country objects to any form of trade protectionism, he said. Hui also said that the government will encourage foreign investors to put money into green technology, environmental protection, financial services and technological research and development. It will also try to create a better business and investment environment for foreign investors, he said. "Meanwhile, we will continue to encourage and help domestic enterprises to invest overseas." All these efforts are intended to better respond to the challenges of development, which are becoming thornier as the global economy is still struggling, he said. "The world economy is undergoing complicated changes, and achieving a full recovery still has a long and tortuous way to go." China's exports increased by 4.9 percent year-on-year in April, and imports edged up 0.3 percent. Weak domestic demand pushed up the trade surplus to $18.42 billion, according to data released by the General Administration of Customs. The purchasing managers' index, a reading of manufacturing activity, came in at 50.4 in May, 2.9 points below the previous reading of 53.3, surprising the market on the downside by a large margin. The sub-index of export orders fell 1.8 points to 50.4. A recent survey by Reuters of 22 economic analysts showed that export and import growth rates are estimated to have risen only slightly in May, amid the spreading European debt crisis. "China's trade sector could be affected further by rising global uncertainties. "While the Ministry of Commerce said that both exports and imports performed extremely well (up by 25 percent year-on-year) in the first 10 days of May, we remain cautious on the trade outlook in the next few months as the eurozone, China's biggest trade partner, could fall into a steeper recession in the second quarter," said Liu Ligang, head of China economics at the Australia and New Zealand Banking Group Ltd. China is faced with rising pressure from overseas, and "proactive" policies such as cutting tariffs to facilitate trade and spur imports are needed, said Wang Haifeng, director of international economics at the Institute for International Economic Research, which is affiliated to the National Development and Reform Commission. "China's current tariff levels are still higher than those in developed economies, which means there is much room for cuts," Wang said. To spur imports and promote economic restructuring, China announced last year that it will cut tariffs for more than 730 kinds of goods this year, including energy, skin care products, milk and other goods. Closer cooperation between China and other APEC economies will help counter the many challenges to trade, as the bloc accounts for 40 percent of the world's population, 54 percent of its GDP, 53 percent of its trade, and has the most dynamic economies among its members, Hui said. Trade officials from the 21 members of APEC said on Tuesday that they expected to reach a consensus by September on a list of environmentally friendly products that would receive tariff cuts over the next three years, according to a statement issued at their annual meeting in Kazan, Russia.

The joint venture could get a 30 per cent market share in eastern China, said Katherine Song, a beverage analyst at Sinopac Securities. Tsingtao Brewery (SEHK: 0168) and Japanese beverage company Suntory have agreed to jointly produce and sell beer in eastern China. With their home market shrinking, Japanese brewers have been looking to expand in China, the world's biggest beer market with an annual consumption of 45 million kilolitres in 2010, twice that of the United States. Suntory's rival Asahi already holds about 19 per cent stake in Tsingtao. Tsingtao and Suntory will have an equal stake in the joint venture, which will pool their production and distribution networks in Shanghai and Jiangsu province. Suntory will inject 1.35 billion yuan (HK$1.65 million) of cash in for a 50 per cent stake, according to a filing with the Hong Kong stock exchange yesterday. "By combining their assets, the joint venture will get a 30 per cent market share in eastern China," said Katherine Song, a beverage analyst at Sinopac Securities. "It will increase their bargaining power over the fees and charges levied by retail chains on the mainland." But the joint venture is unlikely to help Tsingtao's earnings in the near term. "The combined joint venture will bring limited earnings accretion to Tsingtao this year, yet there would be potential synergy from pricing power given the dominant market share," a Merrill Lynch report said yesterday. To consolidate their sales and distribution networks, the two companies will form a joint sales company. All Tsingtao and Suntory beer produced in the region will be distributed through this company, in which the two companies will invest 35 million yuan. The consolidation of sales and marketing resources could deliver considerable savings. Suntory's sales and marketing company last year saw losses of over 173 million yuan, while Tsingtao's losses jumped 300 per cent year on year to 125.9 million yuan. With Shanghai's beer market shrinking in recent years, the net profit of Tsingtao's beer operation last year was down to just 22.6 million yuan from 58.48 million yuan the year before. Suntory's beer operation in Shanghai and Kunshan saw 320,000 yuan of losses last year, an improvement over the 5.4 million yuan losses it recorded in 2010. Total beer sales in Shanghai dropped from 726,000 tonnes in 2008 to 509,000 tonnes last year. Tsingtao shares rose 2.6 per cent to HK$49.3 yesterday on news of its alliance with Suntory.

President Hu Jintao prepares to deliver a speech at the Shanghai Co-operation Organisation (SCO) summit in Beijing on Thursday. Chinese President Hu Jintao said on Thursday that Beijing will offer US$10 billion in loans to the member states of the Shanghai Co-operation Organisation. The SCO, founded in 2001, includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Iran, India, Pakistan and others attend the summits, but not as full members. “China has decided to give to the other member states US$10 billion in loans,” Hu said in a speech broadcast on state television. He did not elabourate on how the funds would be used. At an SCO summit in June 2009, Hu offered Central Asian states US$10 billion of credit to help counter the global economic slump. Hu said on Wednesday that China would “continue providing member states with concessional loans”. It is unclear how much money from that past commitment was dispersed.

Metal Piles at China Ports Signal Growth Sputter - A steel worker operates a furnace at a steel manufacturing plant in Hefei, Anhui province on July 12, 2011. A reddish-gray mountain range is springing up along China’s eastern seaboard, casting a shadow over the country’s economy. The mountains are iron ore, a crucial import that’s a lifeline to the world’s largest steel producer, and their size has become a telling, even if imperfect, indicator of the Chinese economy’s sharp, sudden sputter. Iron ore stockpiles at Chinese ports this week reached an all-time high of around 120 million tons, a senior analyst for Beijing’s told China Real Time on Thursday. The high supply level is not a good sign: It suggests steelmakers aren’t in a hurry to produce, pointing to a weak appetite across the industry, which is heavily dependent on China’s all-important real-estate sector. It’s not just iron ore. China is the world’s largest buyer of just about every industrial commodity, so an economic slowdown since April in the world’s second largest economy is cause for concern in global trade. Coal stockpiles this week also reached a 2012 peak, rising 40% compared to a year earlier at 8.7 million tons, according to analysts at a research agency affiliated with the National Development and Reform Commission. High stock levels also extend to agricultural commodities, with the state-backed China National Grain and Oils Information Center warning last week that “recent soybean arrivals at ports have been on the higher side.” As far as iron ore is concerned, however, the rising port stock levels aren’t necessarily a harbinger of doom, said Zhang Jiabin, research director for Beijing-based steel consultancy While higher inventories generally point to slower downstream demand, Zhang said it would be too simplistic to say consumption is collapsing. “The ore stock level has been fairly steady this year, and although there has been some output reduction among smaller steel mills, there have not been large-scale production cuts,” he said. Iron ore spot prices began to rise in the last week of May after sliding 9% from mid-April, suggesting that steel makers have resumed bargain hunting. Still, if ore inventory consumption is measured and compared in terms of how many days port stocks can last, it’s clear the industry is languishing. Stock levels surveyed in a sample of 50 smaller mills over the last two weeks have remained around 29.9 days-of-use, Macquarie Commodities said in a report published Wednesday. In comparison, mills were holding about 20-28 days’ worth of stocks last year, Macquarie said. Steelmakers are also facing more difficulties (link in Chinese) obtaining bank loans. “It’s an open secret that banks are now more restrictive toward loans for steel mills and fluctuating prices have reduced the ability of trading houses to use imported steel as collateral,” Zhang said. In some cases, analysts are already projecting that rising quayside supply will dent China’s import appetite. Macquarie estimated that refined copper imports in May could fall 25% from April as Chinese consumers opt to run down high levels of domestic stocks. Copper stocks are estimated to have risen sharply this year to around 1 million tons. Iron ore imports have shrunken for two successive months. Bouts of high port inventories don’t always tell the story of a slowdown that’s here to stay. China’s steel mills have been known to pause buying as a collective tactic to secure cheaper ore prices. But if the freighters calling at Chinese ports need any early signal of what’s going on, they need look no further than the record high right at their offloading berths.

Some of China’s biggest technology firms are turning to fellow emerging-market giant Brazil to seize on growing demand for personbal computers and smartphones in South America’s biggest economy. From Lenovo Group to telecommunications giant ZTE, cash-rich Chinese hardware makers are seeking to boost their market share globally as demand cools at home. They are looking at both buying firms abroad in countries such as Brazil, or setting up their own manufacturing plants there. Analysts and industry experts say more tech deals are on the horizon. Brazil has a fast-growing middle class whose use of smart TVs and smartphones is quickly rising. Chinese companies have the know-how to produce electronic devices at lower costs. “There is every opportunity now for Chinese companies to work towards a global empire by adopting investment patterns that position well in the economies which are the most promising in terms of future growth,” such as Brazil, said Connie Carnabuci, Asia co-head of telecoms, media and technology practice at international law firm Freshfields Bruckhaus Deringer in Hong Kong. “Technology and telecommunications happens to be an area where China has well-established export players such as ZTE and Lenovo, so the synergies are obvious.” Lenovo, the world’s second-largest PC maker by shipments after Hewlett-Packard, is interested in working with “all the players” in Brazil when it comes to acquisitions, the Chinese PC maker’s president for Asia-Pacific and Latin America, Milko Van Duijl, said in an interview. Not every deal has gone smoothly, however. Lenovo’s pursuit of Brazilian computer-hardware maker Positivo Informática ended in December 2008 without a merger deal. The companies didn’t provide a reason for why talks fell apart. Mr. Van Duijl declined to comment when asked whether Lenovo might reconsider a bid for Positivo, but said that acquisitions would help it get to be the top seller of PCs in Brazil, from its current No. 9 spot. Officials at Positivo couldn’t be reached for comment. Meanwhile, ZTE is investing $200 million over the next four years in a high-tech industrial park in São Paulo that will house the firm’s first research-and-development facility in Latin America. It will also include a production plant, a training center and a logistics center. For ZTE, building a presence in Latin America is critical to its global ambitions, as it has faced political opposition to its plans to expand in the U.S. and Europe over concerns about ties to the Chinese government, and in India over official security inspections for network equipment from China.

The head of China's giant sovereign-wealth fund sees mounting risks of a breakup of the euro zone, and says China Investment Corp. has scaled back its holdings of stocks and bonds across Europe. The comments by CIC Chairman Lou Jiwei are among the most bearish pronouncements yet on Europe by a senior Chinese official. They reflect growing dismay in Beijing at how European leaders are handling the escalating crisis in China's largest export market, and anxiety over the potential for global contagion.

China Cargo Airlines, China's first and largest all-cargo airline, is expected to join SkyTeam Cargo, the world's largest cargo alliance by the end of June 2013 to expand its international network, a top executive said Wednesday. Joining SkyTeam Cargo conforms to the long-term interests of China Cargo Airlines. It can learn from member airlines and better cope with fierce international competition as part of the alliance, said China Cargo Airlines general manager Zhu Yimin at an aviation logistics exhibition in Shanghai. China Cargo Airlines was established in 1998 and is a joint venture between China Eastern Airlines and China Ocean Shipping Company. It has 19 airplanes and operates 16 cargo routes to 20 major cities over the world, including Chicago, Atlanta, Dallas, Los Angeles, Paris and Milan. SkyTeam Cargo was founded in 2000 and has 9 member airlines throughout the world. China Southern Airlines joined the cargo alliance in 2010.

Hong Kong*:  June 8 2012 Share

The Li Ka Shing Foundation will join Hutchison Whampoa (0013) in buying a controlling stake in Israel's second- largest telecommunications carrier, Partner Communications. Hutchison will buy 50 percent and the foundation will gain 25 percent of Scailex Corp from Suny Electronics for US$125 million (HK$975 million), the Hong Kong- based conglomerate said. Scailex owns 44.5 percent of Partner, which was originally set up by Hutchison in 1999. Back in 2009, the Hong Kong firm sold a 51.3 percent stake in Partner to Scailex for US$1.38 billion. Scailex has debts of US$760 million, of which US$300 million is owed to Hutchison. Scailex will sell its handset distribution business to Suny for US$100 million to reduce debt. Hutchison fell 0.9 percent to HK$61.90 while Scailex surged as much as 80 percent on the Tel Aviv exchange yesterday. 

The Hong Kong Museum of Art will be the first museum in Asia to feature artifacts from the famous Qianlong Garden in the northeastern corner of the Forbidden City. The exhibition is called A Lofty Retreat from the Red Dust: The Secret Garden of Emperor Qianlong. The ancient complex of pavilions and courtyards, also known as the Ningshou Gong Garden, was built by Emperor Qianlong (1711-1799) as a private retreat in his old age. The garden is being restored by Beijing's Palace Museum and the World Monuments Fund. Although similar gardens had survived from that period, they were all changed or damaged over the years. Qianlong Garden was abandoned after the last emperor left the Forbidden City in 1924. The Museum of Art will feature 77 exhibits, including paintings and calligraphy, furniture, murals, architectural elements of the period and religious art from the Palace Museum. The aim is not simply to show us the historical items but to examine the significance of a traditional Chinese royal garden and Qianlong's cultural contributions, philosophical musings and religious beliefs. Qianlong kept an extensive personal collection of rare art pieces and asked Europeans to help design portions of his palace. The exhibition also represents an excellent example of the heritage preservation work being done in China today. It opens from June 22 to October 16. Bernard Charnwut Chan, chairman of the Antiquities Advisory Board, sees culture from all perspectives. 

Asia's richest man, Li Ka-shing, is seen by many youngsters as the No1 dad - better than their own - a survey shows. Predictable was the line that an ideal father must "love me," but many also said he should "be an ATM machine." The poll organized on behalf of Sun Hung Kai Real Estate Agency tapped into the thoughts of 500 youngsters aged eight to 17 through online social media sites and questionnaires. It was held last month with Father's Day on June 17 in mind. One-third of the students picked Li, nicknamed "Superman," as the best, while only 13 percent chose "My Papa." Ten percent voted for pop singer Jacky Cheung Hok-yau. Others in the top 10 included Iron Man - a movie character played by Robert Downey Jr - in fourth place, footballer David Beckham fifth and Jackie Chan Kong-sang and Bruce Lee at joint eighth. And Chief Executive-elect Leung Chun-ying placed 10th, on the same level as US President Barack Obama. Mark Li Kin-yin, a senior lecturer in social work at the Hong Kong Baptist University who ran the survey, said Li Ka-shing was top "probably because parents often use him as a role model to encourage kids to work hard. "Picking Jacky Cheung and David Beckham are probably due to children's expectations toward their fathers. They would like to have a father that possesses special skills." Yet real fathers need not worry, Li added, as it was not serious research. "Parents are always rated in higher positions in serious studies," he said. The choices for best father were based on the identity and characters that a father figure should possess. "For example, Li Ka-shing is a father," said Bonald Chan Suk-hang, an executive in Sun Hung Kai Real Estate Agency. "As for Iron Man, he's not a father but has characteristics that match a fatherly role - strength and charisma." On 10 criteria for a good father, 20 percent chose he should "love me," 19 percent "being an ATM machine" and 12 percent "being funny." That a father should be "always available" and "handsome" were least important. A point to take from the poll, Mark Li said, is that parents and kids must spend time together to realize their expectations.

Wharf Holdings' (0004) ship is going to continue to come home at Ocean Terminal. For the firm has finally struck a deal with the government to pay a lower-than-estimated land premium of HK$7.9 billion to renew the lease on the property for another 21 years. The developer said it accepted the terms of the renewal on Monday - the previous lease was due to expire on June 16. The lease covers No83 Kowloon Permanent Pier and the Ocean Terminal Lot, which houses Harbour City. Opened in 1966, the warehouse-turned-shopping mall is the biggest of its kind in Asia. Many who work at one of Hong Kong's iconic retail spots said they are happy to see Wharf gain a fresh lease on the property. "I've been working in a beauty parlor in Ocean Terminal for 20 years. I'm afraid I will lose the job should it close down," said Joyce Wong, 63. Under the new lease agreement, the maximum gross floor of the area is 85,572 square meters or 922,165 square feet, compared with 658,000 sq ft under the old one. Wharf is also allowed to develop a four-story building adjacent to the terminal for cruises and commercial facilities under the new contract. The HK$7.9 billion premium means Wharf pays HK$376.19 million each year or HK$408 psf, which is about 40 percent lower than its neighbors. After-tax net rental income from the terminal was HK$587 million last year. Therefore, the land premium is lower than expected as earlier Credit Suisse expected Wharf to pay the government about HK$9 billion for renewing the lease while CLSA estimated the figure would even be higher, HK$12.5 billion. Citi, Nomura and Credit Suisse were among the brokerages that raised net asset value per share of Wharf by HK$3-HK$5 on news of the renewal. But lawmaker James To Kun-sun criticized the renewal as yet another example of collusion between the government and the business sector. "How was that HK$7.9 billion figure reached without a tender process? It's not a market price and is much cheaper than neighboring premises." To said he will force the next administration to provide more details on operational costs. Wharf's shares rose as much as 4.8 percent during morning trading yesterday before closing 1.5 percent higher at HK$39.80.

Trading in the shares of Chinese Estates Holdings Ltd. 0127.HK 0.00% was halted Wednesday, after the Macau government said late Tuesday that it wouldn't rule out seizing a residential project under construction by the Hong Kong-listed company. Chinese Estates, which halted share trading from 0100 GMT, before the stock market opened, didn't elaborate on the suspension. The Macau government's statement came after the Court of Final Appeal in the former Portuguese enclave ruled last week that the company's chairman had bribed a former official to win development rights to the land. The court found former official Ao Man-long guilty of nine additional counts of bribery and money laundering, including the charge that in 2005 he helped companies run by Hong Kong tycoon Joseph Lau and businessman Steven Lo win a government tender for five plots of land near the Macau International Airport, in return for a $20 million Hong Kong dollars (US$2.6 million) bribe. Developer Chinese Estates, a company controlled and chaired by Mr. Lau, is building an upscale apartment complex called La Scala on the site. The company said earlier it has invested more than US$2.58 billion in construction and design. The court ruling has put into question the status of the La Scala development, with Macau lawyers earlier saying that the government could confiscate the site because the tender process was conducted illegally. These concerns were confirmed Tuesday by the Macau authorities. "Regarding the sale and transfer of the five plots of land conducted illegally, the government will await the court's confirmation early next week of its earlier ruling...[before] initiating relevant measures as soon as possible," the Macau government said in a statement. The government said it "won't rule out the possibility of deeming the sale and transfer of the five plots of the land to be invalid." While both Mr. Lau and Mr. Lo have denied any wrongdoing, the two will face prosecution in Macau over bribery and money laundering linked to the land deal, Macau authorities said earlier this month. The criminal prosecution will be separate from the latest court ruling for Mr. Ao. Chinese Estates and both men couldn't immediately be reached for comment on Wednesday.

Luxury Spending Tops $1.4 Trillion - The world indulged in more than $1.4 trillion worth of luxury goods and services last year, according to a Boston Consulting Group report. Forget handbags and fancy cars. The world’s rich want more spa treatments and fine dining. Despite uncertain economic times, 12 of the world’s wealthiest countries spent over $1.4 trillion on luxury goods and services in 2011, according to a new report by Boston Consulting Group. Just over half that figure (55%) went toward high-end experiences, such as resort travel and wine tastings, rather than expensive objects. “Experiential” spending is quickly eclipsing traditional consumption of luxury goods: In Europe, the former grew 6% a year from 2009 to 2011, compared with 4% growth in personal luxury goods. In the U.S., the stats are 9% and 6%, respectively. Even in China’s booming luxury market, experiential spending grew 28% over the same period, outpacing the 22% increase in purchases of goods like jewelry and designer clothes. Still, Chinese consumers are more likely than their Western counterparts to shell out for products. Experiential spending made up only 40% of their overall luxe budget, lower than the 61% share in Europe and 51% in the U.S. Some luxury brands are already adjusting to this shift. LVMH, which owns labels such as Louis Vuitton and Marc Jacobs, is developing its Cheval Blanc hotels, named after one of the conglomerate’s top vineyards in Bordeaux. It currently has one hotel at the French ski resort town Courchevel and is slated to open others in the Maldives, Paris, Oman and an island in Egypt. The BCG report’s authors said demographics are one big reason behind the shift to experiential spending in mature Western markets. As rich baby boomers approach their retirements, they become less interested in acquiring more things, the firm said. Chinese consumers, though, are at a relatively early phase of interacting with luxury and therefore still interested in its shoes and cars. Spas, travel and other services are growing fast in China, though the motivation behind them differs, said BCG partner Vincent Lui. “In the West, it’s about enjoying yourself,” he said. “But here in China, fine dining is about inviting people or being seen. It’s about the public display of wealth, the status.” “Luxury travel is growing, but when you look into the content of the trip, it’s different,” he added. “Westerners don’t join tours, but the Chinese still do it. They’ll join invite-only private tours for the super-rich that include a private tour to Barney’s in New York and private fashion shows. And in between the shows, they’ll go to look at real estate to buy or private schools for their children.” According to a survey of Chinese millionaires released earlier this week by Hurun Report, Chinese luxury travelers travel in groups – nine people on average. The report also found that 85% of the millionaires wanted to send their children abroad for education and one-third already owned assets overseas, mainly in real estate.

 China*:  June 8 2012 Share

Construction of Daocheng Yading Airport, the world's highest tourism airport at an elevation of 4,410 meters, began Wednesday in Sichuan province. The regional airport, located in Daocheng county of Sichuan's Garze Tibetan autonomous prefecture, is expected to open routes to the western cities of Chengdu, Chongqing, Kunming, Guiyang and Xi'an after its completion in 2013. The cost of the airport with a 4,200-meter runway and four tarmacs, comes to 1.5 billion yuan (237 million U.S. dollars). The annual passenger throughput is estimated to be around 500,000 for 2013. Together with the airport, the local government has also started builing roads, terminal building, power transmission project and hotel with a total investment of 3.218 billion yuan. The Garze government hopes to attract 1 million tourists and raise 1.5 to 2 billion yuan in tourism revenue in 2015 after the completion of the projects. The airport is 130 km from Yading scenic spot, a national-level reserve in the eastern part of the Qinghai-Tibetan Plateau which contains beautiful alpine valleys. Yading's amazing scenery has won itself the titles of "the last Shangri-La" and "the last pure land on the blue planet."

Uzbek President Islam Karimov, Kyrgyz President Almazbek Atambayev, Russian President Vladimir Putin, Chinese President Hu Jintao, Kazakh President Nursultan Nazarbayev and Tajik President Emomali Rahmon (from left to right) pose for a group photo prior to a small-group meeting of the 12th Meeting of the Council of Heads of Member States of the Shanghai Cooperation Organization (SCO) in Beijing, capital of China, June 6, 2012. A small-group meeting of the 12th Meeting of the Council of Heads of Member States of the Shanghai Cooperation Organization (SCO) was held on Wednesday afternoon at the Great Hall of the People in downtown Beijing.

China National Nuclear Power, the country's biggest nuclear power developer, plans to raise money to help fund projects worth US$27.3 billion via what could be one of China's biggest initial public offerings. It did not specify its fundraising target or IPO timing in a statement on the Ministry of Environment Protection’s website, but said the IPO proceeds would go towards five projects with a total investment of 173.5 billion yuan (HK$212.2 billion). The ministry said in a statement it had approved the IPO plan, which would also need the go-ahead from the securities regulator. China suspended approvals of new nuclear power plants in the wake of Japan’s nuclear crisis in March last year following a devastating tsunami, and ordered nationwide safety checks on existing plants and construction sites. The government has not made any decision on when to start approving new nuclear plant projects but the State Council, China’s Cabinet, last week approved a nuclear safety plan and said its nuclear power plants met the latest international safety standards. State media have said China will probably scale down its 2020 nuclear power generation capacity target to 60-70 gigawatts compared with earlier expectations of around 80 GW. China National Nuclear was formed last year as part of a restructuring of its state-owned parent China National Nuclear Corporation (CNNC). Chinese companies in industries such as nuclear, mining and chemicals must get approval from the environmental ministry before they can submit IPO applications to the China Securities Regulatory Commission (CSRC), the securities watchdog. If all or most of the planned projects are financed by share sale proceeds, China National Nuclear’s IPO could be mammoth, potentially surpassing Agricultural Bank of China’s The Hong Kong-Shanghai dual listing could become China’s biggest. China National Nuclear owns the bulk of the nuclear business of CNNC, one of the largest companies owned by the Chinese central government.

Beijing has major Macau casinos in its sights as it seeks hard evidence of bribery and money laundering amid a snowballing investigation into a senior banker and a secretive businessman on the mainland. A special team from the Communist Party's high-level anti-corruption watchdog, the Central Commission for Discipline Inspection, is trying to uncover a complex network run by low-profile but well-connected businessman Wang Yaohui, according to sources familiar with the matter. They also said Wang's business empire was having problems, without giving details. Wang, chairman of the closely held property-to-resources conglomerate Zhonghui Guohua Industry Group, was detained in Beijing in late May. At about the same time, Yang Kun, an executive vice-president of Agricultural Bank of China (ABC) mainly in charge of loans, was also detained. ABC, one of the big four state-run banks, last week confirmed Yang's detention in a statement but gave no further details. People familiar with the matter said yesterday that one of Beijing's aims was to examine Yang and Wang's gambling activities in Macau. "There are already some clues as to how much money they lost in Macau, but, of course, the government needs evidence so that it can put a specific number on this," one of the sources said. The source added that clues pointed to bank loans offered by ABC with Yang's help to Wang's company and suggested that part of the loans, which were intended for mainland property construction, may have been misused to cover gambling losses in Macau. The sources said the two men lost several hundred million yuan during their gambling trips to Macau. They did not name any of the casinos that may have entertained Yang and Wang. One of the sources said Beijing received a tip-off from an informant to the Ministry of State Security, Beijing's main foreign intelligence agency, about the men's gambling activities in Macau and a dispute between Wang and a casino over the losses. In 2009, Li Peiying, the former chairman of Beijing's Capital Airports Holding Company, was executed for losing tens of millions of yuan during more than a dozen gambling trips to Macau.

President Hu Jintao and his Russian counterpart, Vladimir Putin, review an honour guard in Beijing yesterday at the start of Putin's three-day state visit to China. His trip comes as the two countries seek to counterbalance the geopolitical clout of the United States in Asia and to bolster their joint stance on Syria. China and Russia signed a deal to set up a US$4 billion joint investment fund yesterday as Russian President Vladimir Putin began a three-day visit to Beijing. Putin's visit comes as the two countries seek to counterbalance the geopolitical clout of the United States in Asia and to bolster their joint stance on Syria. President Hu Jintao and Putin, on his first Asian trip since his re-election, signed a declaration pledging to further develop both nations' strategic partnership. They also pledged to deepen military exchanges and strengthen co-ordination in Asia-Pacific, and co-operate on investments. However, no deal was reached on plans to sell large quantities of Russian natural gas to China. Negotiations are stuck over pricing. Hu said both sides were committed to bilateral ties as their top diplomatic priority. "We will strengthen mutual support, co-operation and our long-term friendship. We will strengthen strategic co-ordination in international issues, better promoting the development of both countries and stability in the region and the world," Hu said following talks with Putin. For his part, Putin said the bilateral strategic partnership had reached a "historic height". "We have shared common interests in a lot of areas, including co-ordination in international issues, economic co-operation and technological exchanges," Putin said. Putin, who came to China just weeks after cancelling a visit to the US, is due to attend the Shanghai Co-operation Organisation summit today. Russia and China, seen as close allies of Syrian President Bashar al-Assad, have defied calls by world leaders to confront Syria's regime over its crackdown on anti-regime protesters who are demanding freedom. Despite Syrian rebels saying on Monday they would walk away from the UN-backed truce, both Hu and Putin said the international community should continue to support the UN and Arab League joint envoy Kofi Annan's mediation efforts. Speaking during a visit to Georgia, the US Secretary of State Hillary Clinton called on Russia and China yesterday to be "part of the solution" to the crisis in Syria. In an article in People's Daily, the Communist Party mouthpiece, Putin said Russia and China shared the same stance on various world issues. "All politicians with a clear mind, and all economic and world affairs experts should be aware that no international issue can be discussed and enacted without the involvement of Russia and China, and taking consideration of the interest of both countries," Putin wrote. Among the deals signed were one between the China Investment Corporation (CIC) and the Russian Direct Investment Fund. Each will contribute US$1 billion to set up a fund to support firms in various industries, such as logistics and technological exchange. "This is a very important step for … co-operation between both countries," said Kirill Dmitriev, chief executive of the Russian Direct Investment Fund. On the issue of energy, Hu and Putin said both countries were committed to co-operation, including in areas such as nuclear energy. Putin will meet Premier Wen Jiabao today.

The Chinese energy group Hanergy Holding Group Ltd agreed on Tuesday in Beijing to acquire all of the shares that Q-Cells SE, a German maker of solar panels, holds in its subsidiary Solibro, a maker of thin-film solar panels. The purchase comes as the latest evidence of Chinese energy companies' interest in the European market during the current debt crisis. After the completion of the acquisition, Solibro will increase its yearly production capacity to 100 megawatts in order to supply power to Hanergy customers in Europe. The companies declined to release information about the value of the deal. "Hanergy has taken many big steps in recent years and the latest acquisition will help the company improve its technology used in manufacturing thin-film solar panels, which still lags behind what is used internationally," said Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance. China is the world's largest maker of solar panels, mainly producing what are known as polysilicon panels. Manufacturers that want to make thin-film panels are faced with technical obstacles. Gao said the thin-film solar industry has developed slowly in the past few years. He said producers of polysilicon solar panels have worked to make their products more efficient and to reduce the cost of making them on a large scale, causing the demand for thin-film solar panels to decline and affecting investors' enthusiasm for thin-film cells. "In recent years, some solar companies have already cut or planned to cut their thin-film solar panel businesses," she said. "Even so, Hanergy has been a leading company in thin-film solar projects in the country and is a company that has long-term strategies and investment plans." Following the acquisition, Hanergy's chief competitor will be the US-based First Solar Inc, the world's largest manufacturer of thin-film panels. The company said it has explored various opportunities for investing in thin-film production and has decided to put money into a specific technology, called copper indium gallium diselenide co-evaporation, which Solibro has developed over the past 25 years. "Solibro has a proven track record in thin-film technologies," said Jason Chow, senior vice-president of Hanergy Industrial Photovoltaics Group. "Hanergy will provide the extensive network, the strong production capacity and the long-term research and development investment. We are confident that the acquisition will enhance Solibro's performance and capacity despite the industry's current downturn." Hanergy Chairman Li Hejun said the acquisition will consolidate the company's position in the global market. The company said it will not reduce the size of Solibro's workforce nor change the leadership at the company and that Solibro's operations will remain unaffected. Nedim Cen, CEO of Q-Cells, said Solibro's thin-film technology and existing production capacity can be fully taken advantage of following the acquisition. To expand more at home and abroad, Hanergy received a credit line worth 30 billion yuan ($4.7 billion) from China Development Bank in November.

Robo-chef stirs hopes for eatery chain - Move over chefs, it's time to let robots do the slicing, dicing, stirring and serving. At least that's the message from a Shanghai company planning to release high-tech cooking machines on the Chinese market this month. Qiu Jian, founder of Net Taste Investments, said the robots are designed to provide convenience for communities and families, as well as guarantee the standard of Chinese dishes. The system, with automatic and semi-automatic models, is made up of a pot, stirring equipment and a control board. Ingredients and seasonings are placed in different compartments and are mixed together in less than 10 minutes. At the company's restaurant on Changyang Road, diners are able to sample dishes made by the machines. Jin Wei, director of research and development for Net Taste, said the eatery, with just nine employees, can cater to more than 90 customers at once. "We can offer food to 300 people during lunch time," Jin said. The semi-automatic machine has a built-in menu of 300 dishes, while the automatic cooking machine has 200 dishes. Jin said the company plans to open about 30 restaurants in the city this year, and the number will be expanded to 300 in three years. So what do the customers think? "The taste is a bit salty and oily, but it's OK in general," said 32-year-old Wang Weiqi, an IT technician whose office is near Changyang Road. "For an average of 20 yuan ($3.14), it's a reasonable price for lunch." Wu Hong, a 43-year-old surgeon, added: "For Chinese dishes, it is better to have a chef in the kitchen. Even if it offers Chinese-style fast food, the feeling is a bit weird."

Hong Kong*:  June 7 2012 Share

Ocean Park has become the 12th most popular theme park in the world after recording a 30 percent surge in visitor numbers last year. The park ranks four places ahead of rival Disneyland Hong Kong, which was placed 16th, according to a report by Themed Entertainment Association and consultancy firm AECOM Economics. Ocean Park drew 6.95 million visitors last year to become the most visited theme park in the Greater China region and fifth in Asia. Mickey Mouse and friends, on the other hand, welcomed 5.9 million visitors, enjoying a 13.5 percent rise in annual attendance figures. "The rise in ranking is a wonderful testimony to our transformation into a world-class marine- based theme park focusing on education, conservation and entertainment," Ocean Park chief executive Tom Mehrmann said. "Our exceptional attendance last year was spearheaded by the opening of new themed attractions such as Aqua City and the Thrill Mountain, leading to multiple months with record-breaking numbers." The report said capital expansion boosted the quality of the park in terms of theme, technology and attraction, enabling it to rise two places from the previous year. Mehrmann said he is confident the attendance figures will continue to impress this year, with the Polar Adventure attraction due to open next month. Disneyland Hong Kong declined to comment on the report. The survey assessed various theme parks internationally by attendance, and the world's top five are: Magic Kingdom in Florida (17.1 million visitors); Disneyland California (16.1 million); Tokyo Disneyland (13.9 million); Tokyo DisneySea (11.9 million); Disneyland Paris (10.9 million). "Asia is still adding parks, while North America is not, and the gap will close substantially when Shanghai Disney opens," John Robinett senior vice president of AECOM Economics said. "By adding 5-10 more theme parks, Asia will probably catch up with North America and then surpass it."

Private equity firms have mushroomed on the mainland - according to state media, there were more than 10,000 at the end of 2011. Enthusiasm for yuan-denominated private equity funds is tapering off in China because of regulatory uncertainty but the sector in Asia overall is recovering almost to pre-crisis levels, according to a McKinsey survey. Last month, there were media reports that Beijing was formulating rules to classify all foreign-run yuan funds as non-Chinese. The National Development and Regulatory Commission (NDRC), the top economic planning agency, also said in late April that unless all the capital in a yuan fund originated from domestic investors, a fund would be classified as "foreign" and subject to special rules. "One of the main purposes of launching yuan funds is to receive local-investor treatment. Foreign firms are obviously keeping a close eye on this issue," said Bruno Roy, partner and head of principal investors practice at McKinsey in China. Roy added that while in the near term it would be harder to raise yuan funds, the regulatory stance should become clearer next year once the political transition is completed. Yuan funds have risen in popularity the past few years, accounting for 81 per cent of the private equity (PE) funds raised last year, up from 21 per cent in 2005. There were some 80 yuan funds worth US$13.7 billion last year, according to McKinsey. Despite the regulatory impasse, the Asia-Pacific region's total PE investment has returned to 2006 levels, reaching some US$65 billion, with China accounting for nearly 45 per cent of the new activity. The region now accounted for 21 per cent of the global PE industry and has been the first to come out of the trough brought on by the global financial crisis, faster than the US and Europe, Roy said. In China, local investors are playing an increasingly active role in PE investments. The share of funds based on purely foreign investors has plummeted 60 percentage points to 27 per cent. Funds with contribitions from local and mixed investors now take up 73 per cent of the market. PE firms have mushroomed in China in recent years. The China Daily recently cited an NDRC official as saying there were more than 10,000 venture capital and private equity firms at the end of 2011. "While there is indeed a plethora of PE firms active in China, when you look at the deal value, there is concentration at the top," said Roy. "As the market matures, most of these smaller firms will either become bigger or exit the market if their performance is below expectations." More and more large state-owned companies are also partnering with large PE firms to conduct acquisitions overseas as these funds provide financial expertise in the process, said Roy. According to the survey, investors have been raising concerns about the sustainability of the country's economic growth and credibility of corporate governance, prompting fund managers to perform tougher due diligence.

The two leading wireless network operators in Hong Kong and South Korea are set to introduce next month the world's first 4G international mobile roaming service between the two markets. CSL, the first mobile carrier in the city to launch a 4G network based on the technology called long-term evolution (LTE) in November 2010, and Korean wireless market leader SK Telecom yesterday said their landmark service would be available from July 1 and pave the way for more roaming agreements among existing 4G LTE operators. "This is a significant milestone for the telecommunications industry, which continues to debate the feasibility of 4G LTE international roaming," said CSL chief technology officer Christian Daigneault. "Our pioneering partnership with SK Telecom is proof that 4G LTE international roaming will be a reality worldwide - sooner rather than later." CSL and SK Telecom will support their high-speed 4G mobile roaming service on the 1.8-gigahertz band, the radio spectrum on which the two carriers' compatible LTE networks run. Advanced 4G networks have theoretical internet download speeds of up to 100 megabits per second. The fastest existing 3G networks run at 42Mbps. The LTE networks of CSL and SK Telecom are based on the widely adopted frequency division duplex (FDD) standard. The other recognised LTE standard is called time-division duplex, which is being championed by China Mobile (SEHK: 0941). Daigneault said 4G international mobile roaming had become a complex undertaking not only because there were two LTE standards, but also because of the existence of about 40 frequency bands on which operators could run these networks. SK Telecom, for example, also runs its LTE network on the 800-megahertz band. CSL's apparent advantage is that its 4G network runs on both the 2.6GHz and 1.8GHz bands. "There are about 70 operators that have launched commercial 4G LTE networks [worldwide] and a large portion are on those two bands," he said. He added that those would not be issues anymore when smartphones and media tablets that supported multiple bands and LTE standards became available in future. CSL's next 4G international roaming partner is expected to be its parent firm, the Australian telecommunications giant Telstra. Daigneault said CSL, which operates the 1010, one2free and New World Mobility brands, was in discussion with many other FDD LTE network operators. Macquarie Securities analyst Lisa Soh said CSL's pact with SK Telecom would put pressure on other local LTE network operators - 3 Hong Kong, HKT and China Mobile's Hong Kong subsidiary - to start generating revenue from 4G international mobile roaming. "Roaming typically accounts for 20 to 25 per cent of total revenue for each Hong Kong mobile network operator," she said. The number of visitors from Korea exceeded one million for the first time last year, while Korea receives more than 30,000 Hong Kong visitors every month, according to the tourism boards of both markets.

Lower ranked civil servants will have a larger pay rise than that suggested by a pay trend survey, the government announced on Tuesday. Instead of 4.56 per cent, junior government workers will now get an increase of 5.8 per cent, the same as middle ranking civil servants. A Civil Service Bureau spokesman said the decision was based on a “bring-up” arrangement – under which staff on lower pay grades see their wage rises match those of better-paid staff. The spokesman said the Chief Executive and the Executive Council had endorsed the arrangement. The pay trend survey is an annual exercise aimed at keeping salaries for the city’s 160,000 civil servants in line with those in the private sector. Employees in the upper salary band and directors will have an increase of 5.26 per cent, same as the level suggested in the pay trend survey. Results of the latest survey were released two weeks ago. 

A sea of candles lit up Victoria Park last night as a record number of mourners gave public voice to their grief at China's only large-scale event commemorating those killed in the 1989 Tiananmen Square crackdown. Organisers say 180,000 people took part in the vigil, but police put the number at just 85,000. It took place against a backdrop of growing public fears that freedom in Hong Kong will be eroded when Leung Chun-ying takes over as chief executive next month. Leung repeatedly refused to answer questions yesterday about the vigil and the bloody crackdown on student protesters on June 4, 1989. Lee Cheuk-yan, chairman of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China, which organised the vigil, said numbers were up 30,000 on last year and that it was "encouraging to see more mainlanders and young people" joining the 90-minute memorial. Waving candles and singing, the crowd spread across six soccer pitches and the nearby grass field. They chanted: "Release pro-democracy activists, build a democratic China, vindicate the June 4 movement, and end one-party dictatorship." Activist Fang Zheng, whose legs were crushed under a tank in Tiananmen Square, told the crowd he wanted to see the democracy movement vindicated in his lifetime. "Hong Kong is really an ocean of love and conscience. It was stunning to see the sea of candle light," Fang, 46, said from his wheelchair. "Your participation shows that you have not forgotten the movement 23 years ago. I have to thank you all on behalf of the victims." Asked about Leung's refusal to comment, Fang said: "So many Hong Kong people have voiced their wishes. If he, as a leader, does not listen to their calls, he's not doing the right thing." Guan, a tourist from Guangzhou, said that while he felt pity for Fang it was justifiable for Beijing to suppress protests, as they could threaten the government's authority. There was also a message to Hongkongers from dissident lawyer Chen Guangcheng , who fled the mainland for New York last month. In a letter to the alliance, posted on its website, Chen urged Beijing to face up to the June 4 issue and implored Hong Kong not to forget the tragedy. "I hope our central government will further free up its mind, deal with the issue in a timely and fair manner, and give the public a satisfying reply that will stand the test of history," wrote the lawyer, who was allowed to leave China after a dramatic escape from house arrest in Shandong. Wang Dan , a leader of the 1989 student movement, told campaigners in a video message "it is worth persisting", citing the long struggle of Myanmar's democracy leader Aung San Suu Kyi, now a lawmaker after years of struggle. Guo Liying, a member of the Tiananmen Mothers activist group, sent a message saying she was touched by the efforts of Hongkongers to keep memories of the killings alive. Later more than 100 protesters from the radical League of Social Democrats ignored police warnings and marched to the central government's liaison office in Western. Ivan Choy Chi-keung, a political scientist at Chinese University, attributed the high turnout to public fears over Leung's leadership style. "They fear Leung will be high-handed and that Hong Kong's freedom of assembly and of speech will be tightened. They are also worried that Western district [the liaison office] will interfere in local affairs." Lee slammed mainland authorities as "more corrupt than they were in 1989" and accused them of backsliding on human rights while making no progress towards democracy. He praised protesters in Wukan , the Guangdong village where protests against land seizures by the local government eventually led to democratic village elections. But he also expressed his concern for the prospects for freedom in Hong Kong. "Over the past year, the government has been tightening control on local protests and public rallies," Lee said. "Leung Chun-ying is a chameleon who changed from placing an advertisement [in 1989] reprimanding the massacre to advocating [in recent years] giving the Nobel Peace Prize to Deng Xiaoping ," the man thought to have ordered the killings. Fanny Law Fan Chiu-fun, Leung's top aide, said it might not be appropriate for Leung, as the chief executive-elect, to comment on the incident under the principle of "one country, two systems". The Chief Executive's Office had no comment on the vigil. In Beijing, Tiananmen Square and other sensitive spots saw tightened security while bereaved families paid tribute to loved ones in Wanan Cemetery. The Foreign Ministry, meanwhile, expressed "strong dissatisfaction" at a US call to free all those still jailed for the 1989 protests. Washington's call came after a diplomatic row between China and the US over Chen.

Gold imports from Hong Kong by the Chinese mainland increased by 65 percent to hit a record high in April, advancing for a third straight month as investors looked to have a hedge against turmoil in the financial markets and a slowdown in the economy. The month saw 103,644.5 kilograms (103.6 metric tons) of materials shipped, up from 62,913 kilograms in March, according to export data from the Census and Statistics Department of Hong Kong, according to Bloomberg calculations.

 China*:  June 7 2012 Share

The Foreign Ministry said yesterday it hoped the United States would respect Chinese concerns in the region, after the US defence secretary announced plans to shift most of his country's warships to the Asia-Pacific region by 2020. "At present, the grand trend and broad aspiration of the Asia-Pacific region is towards seeking peace, fostering co-operation and encouraging development," Foreign Ministry spokesman Liu Weimin said in answer to a question about the US announcement. "All sides should strive to preserve and promote regional peace, stability and development. The approach of artificially stressing military security, enhancing military deployments and strengthening military alliances is out of keeping with the times," he said at a daily news briefing. US Defence Secretary Leon Panetta said on Saturday the Pentagon would reposition its naval fleet so that 60 per cent of its battleships would be in Asia-Pacific by the end of the decade, up from about 50 per cent now. "The Asia-Pacific is the region where Chinese and US interests most overlap, and we welcome the United States to play a constructive role in the region," Liu said. "We also hope that the United States will respect the interests and concerns of all sides in the Asia-Pacific, including China." Liu's remarks were China's first public reaction to Panetta's announcement, though media said on Sunday China would intensify its vigilance, but not lash back, in response. China has long been wary of US intentions, with more hawkish voices in the People's Liberation Army saying that the US is bent on encircling China and frustrating its rise. China's fast-modernising navy has stirred worries among neighbours, including in Southeast Asia, where several countries are in dispute with Beijing over rival territorial claims in the South China Sea. Under the plans, Panetta announced the US Navy would maintain six aircraft carriers assigned to the Pacific. Six of its 11 carriers are now assigned to the Pacific, but that will fall to five when the USS Enterprise is decommissioned soon. The number will return to six when a new carrier, the USS Gerald R. Ford, is completed in 2015. The US Navy had a fleet of 282 ships as of March. That is expected to slip to about 276 over the next two years, according to a US Navy projection released in March.

China said on Tuesday both Beijing and Moscow oppose foreign intervention or forced regime change in Syria as Russian President Vladimir Putin arrived in the capital for a security summit. China and Russia, both permanent members of the UN Security Council, have blocked efforts by Western powers to condemn or call for the removal of Syrian President Bashar al-Assad whose forces the United Nations says have killed more than 10,000 people since March last year. Both countries have stayed in close touch on Syria and believe there should be an immediate end to violence, adding that political dialogue should begin as soon as possible, Chinese Foreign Ministry spokesman Liu Weimin told a daily news briefing. “Both sides oppose external intervention in Syria and oppose regime change by force,” Liu said. “We believe ultimately the Syrian issue should be properly addressed through consultation among different parties in Syria. This is in the fundamental interests of the Syrian people. China and Russia have been playing, in their own way, a positive role on the Syrian issue.” Russia and China, wary of any Western-led military intervention in Syria, say UN mediator Kofi Annan’s plan is the only way forward, but have twice blocked UN Security Council resolutions that would have condemned Damascus and perhaps led to sanctions. Syrian rebels said on Monday they were no longer bound by a UN-backed truce because Assad had failed to observe their Friday deadline to implement the ceasefire and had only attacked government forces to defend “our people”. Putin is attending a summit of the Shanghai Co-operation Organisation, which also includes former Soviet states in central Asia. Among the talks between Russia, the world’s biggest energy producer, and China, the largest consumer of energy, will be a natural gas deal that Moscow hopes to finalise after years of negotiation. Also on the table is a multi-billion dollar joint venture to build a long-haul aircraft, Russian media have said, and a state-run fund to invest in Russian and Chinese projects.

The leaders of Russia and China met Tuesday to foster an evolving partnership that has counterbalanced U.S. influence and shielded Syria from international moves to halt its crackdown on a 15-month uprising. Russian President Vladimir Putin arrived in Beijing on his first visit to China since returning to the presidency earlier this month. He later sat down for talks with Chinese President Hu Jintao that are expected to touch on the crisis in Syria as well as on Iran, bilateral trade and energy cooperation. He will also join a regional summit later in the week. Russia and China have repeatedly defied international calls to confront Syria's regime over spiraling violence, saying they will not back steps that could lead to foreign intervention. Russia has long been a close ally of President Bashar Assad's regime, while Beijing opposes setting precedents that could potentially be applied to its troubled western regions of Tibet and Xinjiang. China and Russia vetoed two U.N. Security Council resolutions that raised the threat of sanctions against Syria and have ruled out any Libya-style military action to protect civilians there. The two also voted against a resolution Friday that condemned last month's massacre of more than 100 civilians in the cluster of villages known as Houla and called for an independent investigation. The U.S. has pushed Russia to join international efforts for a political transition in Syria that would remove President Assad from power. Mr. Putin, meanwhile, has sought to use Russia's burgeoning ties with Beijing as a counterweight to U.S. global predominance, and the sides have found common cause in rejecting Western calls for more-open politics and respect for civil liberties. Foreign Ministry spokesman Liu Weimin told reporters Tuesday that China and Russia both "oppose external intervention in the Syrian situation and oppose regime change by force." Both countries also oppose further sanctions against Iran over its suspected drive to develop nuclear weapons. On Wednesday and Thursday, Messrs. Putin and Hu will be among leaders attending the annual summit of the Shanghai Cooperation Organization, whose six members—Russia, China and four Central Asian states—work to boost regional integration and curb Western influence. The countries are also preparing for the U.S. departure from Afghanistan. Mr. Liu said the summit leaders will issue a declaration on guidelines for cracking down on terrorism and building a region of "lasting peace and common prosperity." He did not give details. Ties between the former Cold War rivals have grown steadily warmer over the course of Putin's dozen-year dominance of Russian political life. Along with close coordination in international affairs, they've sought to boost economic ties, particularly in the energy sector, setting a target of $100 billion in trade by 2015, from $83.5 billion last year. Still, disputes and mistrust linger. Moscow is unhappy with China's copying of Russian fighter jets and other military hardware, and the two have wrangled for years about the price of gas to be delivered by two Siberian pipelines. Russia prefers to link gas prices to oil prices, as it does in Europe, while China wants a lower price. If Russia's OAO Gazprom and China National Petroleum Corp. can reach a deal, deliveries are to start by 2015. Mr. Putin Monday attended an EU summit in St. Petersburg at which he defended his country's human-rights record, saying Russia has no political prisoners and dismissing criticism of a draconian bill that increases fines for unsanctioned street rallies. He returned to the presidency in May after stepping down in 2008 due to term limits.

World Bank Senior Vice-President and Chief Economist Justin Yifu Lin left his post after his four-year tenure at the Washington-based lender ended on June 1. Lin's role as the chief economist of the World Bank's official website has been replaced by Martin Ravallion, who is now an acting chief economist for the bank. Lin began his service at the World Bank in June 2008, where he guided the bank's intellectual leadership and played a key role in shaping the economic research agenda of the institution, according to an introduction on the bank’s website. The 60-year old economist is now likely to return to his former role as a professor at the China Center for Economic Research at Peking University, where he served for 15 years as founding director before joining the World Bank. It is also reported that Lin may be appointed as chairman of the All China Federation of Industry and Commerce. The report has not been confirmed. Lin has been vice-chairman of the federation since 2005.

Yuan settlements gain favor with exporters - Two foreigners choose ceramic products at the spring session of the China Import and Export Fair in Guangzhou on April 23, 2012. Guangdong has recorded about 1.1 trillion yuan in cross-border settlement in the Chinese currency over the past three years. A growing number of Chinese exporters expect wider use of the yuan in trade settlements to avoid rising exchange-rate risks, after watching export profits dwindle in recent years. "We aim to use the yuan in trade settlements with clients. But most buyers from Europe and the United States are unwilling to accept price quotations we offer in yuan," said Tang Lu, a sales manager with Hunan Xianfeng Ceramic Industry Co. Tang said, transactions settled in yuan currently account for only a small portion of exports for the company, which is based in Liling city, in Hunan province. During the spring session of the China Import and Export Fair, China's largest trade event held twice a year in Guangzhou, capital of Guangdong province, only a few clients from emerging markets such as Brazil and the Middle East agreed to transactions settled in yuan, Tang said. Yuan-denominated international trade has grown since China introduced a program using the currency in July 2009 in a number of provinces. The program expanded nationwide last year, when yuan-denominated trade exceeded 2 trillion yuan ($317 billion), sources with the Ministry of Commerce said. Currently, cross-border yuan clearance is conducted through the Hong Kong and Macao branches of Bank of China, or agency banks of overseas participants. Transactions using the yuan in cross-border trade reached some 581 billion yuan in the first quarter of this year, up 61 percent year-on-year, according to the ministry. However, Chinese exporters are still finding it hard to clinch deals in yuan with overseas buyers, especially those from developed markets such as Europe and the US. "We have to keep our clients by respecting their preference to use the dollar in trade settlement. But you know, the rising exchange rate has made it hard for us to maintain a sustainable profit," said Wang Liyu, a sales manager at Shanghai Toys Import and Export Co. "Most clients from developed markets show little interest in cross-border yuan settlement in trade," Wang said. The rising exchange rate, combined with sluggish demand in Europe and the US, has resulted in a downturn in business growth for the Shanghai-based company for the past two years, Wang said. Liu Jianjun, a spokesman for the China Import and Export Fair, said most sales deals clinched at the fair were settled in dollars. "We believe that some deals were settled in yuan, which is good for Chinese exporters to avoid exchange-rate risk," Liu said. The stable value of the yuan is making it a new choice for Chinese exporters and investors as they strengthen their foreign trade and business ties, Li Rongcan, assistant minister of commerce, said at a recent forum on cross-border yuan business held in Guangzhou. Guangdong, one of the first provinces to implement cross-border settlement in the Chinese currency, has recorded around 1.1 trillion yuan in such international trade and investment deals over the past three years, accounting for 30 percent of the country's total, according to Li Simin, vice-president of the Guangzhou branch of the People's Bank of China. "Cross-border yuan settlement plays an increasing role in helping Chinese exporters ward off exchange-rate risks and reduce transaction costs," Li said. The Ministry of Commerce will work closely with bank authorities to optimize the yuan settlement business and simplify supervisory measures to benefit more Chinese exporters, Li said. "We are also promoting the use of the yuan in international investment settlement, as more and more companies in China and around the world choose to pay and be paid in the currency," Li said. The China International Payment System, which will handle cross-border yuan payments and boost convertibility of the currency, will be established in one or two years, sources with the central bank said. The system will make yuan clearance safer and more efficient for cross-border trade and investment settled in the currency, helping to promote wider use of the yuan in international settlements.

Hong Kong*:  June 6 2012 Share

The financial secretary warned on Monday of a "rocky" time ahead – saying the earlier estimates of annual economic growth by one to three per cent this year may have to be revised. John Tsang Chun-wah told legislators that the euro-zone crisis had deteriorated quickly in recent days and latest developments were worrying. If Greece left the euro zone, or if Europe experienced a deep recession, Hong Kong would not remain unscathed, he said. “Due to the turbulent circumstances, I can’t rule out the need to again revise the economic growth forecast in the next few months,” he said referring to an earlier estimate of one to three per cent by the end of the year. Officials earlier said the Hong Kong economy had slowed further in the first quarter of this year, with real GDP posting a slight year-on-year growth of 0.4 per cent, after a 3 per cent expansion in the fourth quarter of last year. Officials have said that growth is mainly supported by consumption and investments while the export trade, particularly with developed economies, had suffered. Speaking at a meeting of the Legislative Council finance panel, Tsang said the property market was unhealthy, with prices having surpassed their peak in 1997. While the number of transactions had recently plummeted, there might be a need to tighten mortgage lending to allow the market to develop “steadily and healthily”. “The developments have reminded us that we can’t blindly believe the property market is a miracle that only rises and never falls,” he said. “If there is a need, the mortgage regulations will be further tightened given that it will not affect citizens making their first home purchases,” he said. The mainland has seen the world’s fastest-growing prices over the last five years, up 111 per cent through the end of last year, with Hong Kong in second place at 94 per cent, according to brokerage Knight Frank. There was a lull in the Hong Kong market in the second half of last year, but confidence returned early this year only to fall again the last few weeks. Prices have risen around ten per cent so far this year. “The local property market will face great corrective pressure,” Tsang told legislators."

One of the closing numbers from “Love in Hong Kong,” performed by the People’s Liberation Army in Hong Kong from June 2 to 3, 2012. In a whirl of ballet slippers, glittery spandex outfits and feathered bodices, China’s army was determined to show a softer face in Hong Kong this weekend. The show, titled “Love in Hong Kong,” was performed by the People’s Liberation Army art troupe, and enjoyed a two-night run attended by 6,000 spectators. The spectacle mixed goose-stepping interludes with acrobatics, women flitting about the stage wearing columns of pink tulle, and men belting out operatic odes such as “Hello, Hong Kong,” “I’m By Your Side,” and “Hong Kong’s Better Tomorrow.” A giant screen backdropped the performance, broadcasting shots of army personnel riding tanks, kissing young children and doing training exercises in the mud. Though the PLA generally tries to keep a low profile in Hong Kong to avoid ruffling local sensibilities, the gala event—timed to coincide with the 15th anniversary of the former British colony’s return to Chinese rule—was just the latest in a series of similar events that have been held over the years. In one early opening number, dozens of men in military fatigues and combat helmets twirled and did somersaults about the stage as computer-generated bolts of neon yellow and green lightening forked overhead on the screen. In another, ranks of women clad in pastel flounces danced as electronic butterflies and bright flowers circled above them onscreen. An electric fan kept a pair of Hong Kong and Chinese flags fluttering at all times at the front of the stage, which was frescoed by giant magenta replicas of the bauhinia, the flower that the city has adopted as its emblem. Between performances, a duo of Mandarin and Cantonese-speaking emcees introduced the acts and told the crowd that the exuberant spirit of the performers also represented “the way we feel about Hong Kong.”

Regine Auyeung at her shop in Happy Valley. It sells products aimed at an older clientele, such as the coloured walking sticks beside her. Silver is gold for a new breed of entrepreneurs as 300,000 baby boomers are set to reach retirement age in the next five years. The government-appointed Steering Committee on Population Policy last week said a likely shrinkage of the labour force as a result of ageing could hinder the city's development, but some entrepreneurs see new opportunities opening up as the population greys. Regine Auyeung, who used to work for an international insurance company, spotted just such an opportunity and co-founded Sencare with two partners last year. The company specialises in retailing products for senior citizens. Government statistics show 18 per cent of Hongkongers are over 60, which will increase to 33.6 per cent by 2030. About 60,000 people retire every year at present. "The new retirees are in better health than previous generations. The grey-hair business has proved to be a hit in Japan, and I believe the same will happen in Hong Kong," Auyeung said. More shops like Sencare's have opened for business in the city in the past few years, selling medical aids such as wheelchairs and sticks, and other products tailored for seniors. Sencare targets a more premium niche, however, importing from Japan items like Sakura Colour walking sticks and ultralight shoes. "Many seniors demand a good lifestyle. At present, most fashion shops and retailers target young people. In comparison, there aren't that many shops tailored for the old. I believe there's a lot of room for expansion in this sector," Auyeung said, adding that half of her sales come from youngsters and tourists buying for their parents or grandparents. Japan, where 30 per cent of the population is over 60, has already seen a mushrooming of department stores with huge sections dedicated to products for seniors. Auyeung believes Hong Kong will go that way. "When more people reach retirement age here, the retail business will be forced to reorient itself. What is happening in Japan today will happen in Hong Kong, and seniors will emerge as the big spenders." Financial analysts also believe ageing will bring new business opportunities to certain sectors. A Schroders report, for example, says the global population aged over 65 will treble by 2050, by which time 30 per cent of the world's people will be over 65. This will boost the demand for products for retired people, and increase the share price of companies that offer a product with appeal to older people, like travel companies. Legislator Paul Chan Mo-po said old-age-related businesses had a good future. "I am in my 50s and I am among those from the lucky generation that lived and earned in the golden 80s. When I retire, I believe I will have more money to spend than my father had after his retirement. "I would like to see more retailers providing products suitable for people like me."

Bruno Charrade, the outgoing managing director. Hong Kong's century-old tramway system will return to local management as the firm's French chief will be stepping down. Bruno Charrade, managing director of Hong Kong Tramways, will be succeeded by Tsang Wing-hang, Tramway's deputy managing director and a former transport official. Charrade was appointed to the top job after French multinational Veolia Transport bought the firm from Wharf Holdings (SEHK: 0004) in 2009. He later enacted a HK$200 million scheme to revamp the city's most iconic transportation platform. Many locals were stunned when Wharf sold Tramways to Veolia, and there were fears the foreign firm might impose undesirable changes to the famous "Ding Ding" - one of the city's oldest cultural icons. But the public took to the HK$200 million refurbishment plan that Veolia launched a year after the takeover. The changes - which included improvements in the signalling, braking and track system, as well as real-time passenger information systems - were well-received. The remodelling of the trams' interior also proved to be a hit, although that led to a fare rise of 30 HK cents last year. Over the past two years, the transport firm has however suffered a slow decline in patronage amid rising competition. But it managed to maintain an average annual net profit of HK$20 million - 10 times that of the Wharf era, which saw Wharf roll out a new advertising campaign prior to selling the transport firm. Charrade has told the South China Morning Post (SEHK: 0583) that the new management would continue to extend the refurbishment scheme to the rest of the tram fleet while continuing to pursue unfinished projects. They include a re-looping of the 30-kilometre track that would allow better tram deployment to cope with uneven demand between the east and the west of Hong Kong Island; a request for more tram-priority lanes; and most importantly, to convince the government that trams are a better option than a monorail for the new Kai Tak redevelopment. "There are a lot of nice things you can do with tramways," said Charrade. "In Europe, we green our tracks by growing grasses on it. Our system's not only clean but passengers get on and off easily. It's also much cheaper than monorail." The nine-kilometre monorail system - a project the government proposed to link Kai Tak with its neighbourhood - has raised eyebrows over its whopping estimated construction cost of HK$12 billion. Charrade, 40, was once tipped to be a likely successor to Daniel Cukierman, Veolia Transport's Asia chief executive, as he was heavily involved in the mainland business and won several bus projects for the firm in Nanjing and Macau. However, Charrade said he would be moving to Chile to develop Veolia's public transport business in South America. Tsang, who worked for more than 16 years at the Transport Department, became Hong Kong Tramway's deputy chief last year. He will assume his new post on July 1.

The second batch of the government iBonds issue is set to receive a strong response when subscription starts tomorrow, but potential buyers are warned not to harbor any hopes of making a quick profit on the notes. High fees and more modest allocations than were given during the first issue of the inflation- linked notes last year are likely to temper the gains. Subscription for the new batch of HK$10 billion of iBonds will end on June 13. Some 155,000 locals subscribed to last year's issue locking up HK$13 billion. Orders under 44 lots worth HK$440,000 were fully satisfied. But the market expects ibonds to get a hotter reception this time. "It will not be surprising if investors are given only one to two lots (HK$10,000 or HK$20,000) of iBonds, given the bad sentiment in equity markets that are encouraging people to invest in bonds, which are less risky," said Raymond So Wai-man, dean of the business school at the Hang Seng Management College. Most banks and brokerages are waiving some of their fees, including monthly custodian fee, twice- a-year dividend collection fee and fee to redeem the debt at three- year maturity, enabling customers to take almost all of the payout. Some brokerages even provide interest-free loans for the entire subscription principal, apparently so investors can take short-term profit as the bonds are expected to rise 5 to 6percent on their first day of trading. The coupon rate on ibonds is equal to the average Hong Kong inflation rate in the past six months, which has been forecast at 3.5 percent. Prudential Brokerage, meanwhile, has received more than 1,700 orders seeking 100 percent margin subscription of iBonds. Some are from university students who signed up after the firm gave a talk about investment opportunities on campus. Prudential Brokerage associate director Alvin Cheung Chi- wai has said profit will be limited from the iBond deal, butit will utilize the opportunity to take in more customers. Bright Smart Securities also announced it will offer 100 percent margin financing, plus a HK$5 rebate for every HK$10,000 worth of iBonds allotted.

A Las Vegas Sands Corp. unit said it had dropped an attempt to win rights to Macau land in which it had invested more than US$100 million, scaling back expansion plans in the world's largest casino market. Sands China Ltd. on Friday told the Hong Kong Stock Exchange that the company had withdrawn its appeal of the Macau government's December 2010 decision to reject a request for land rights. The land, known as Parcels 7 and 8, is in the Chinese territory's lucrative Cotai area, home to the company's flagship Venetian Macao casino-resort and other properties. The rejection was a setback for the company that pioneered the transformation of Cotai's swampland into what is becoming Asia's version of the Las Vegas Strip. Las Vegas Sands said it has invested US$9 billion in Macau, which last year raked in more than five times the gambling revenue of the Strip. It was also a reminder of the regulatory risks that companies face in Macau. The Chinese territory, where gambling revenue soared 42% last year, is a crucial market for U.S.-based casino operators battling an anemic Las Vegas market. But local and Beijing officials have been advocating more moderate growth, and casino operators have had to grapple with policy moves such as a cap on the number of new gambling tables, a limit on the number of foreign workers and Beijing's imposition of visa restrictions on its citizens, who make up the majority of Macau's patrons. Sands China's remaining expansion plans face further risks. Under the company's contracts with the government, Sands China must complete two more development projects in the next two years or risk losing the rights to the land and facilities built there. Las Vegas Sands said it had spent US$3.16 billion on the projects as of Dec. 31. A US$4.4 billion expansion project called Sands Cotai Central, the first phase of which began in April, must be completed by May 2014. The second project, for which the company's development plans hadn't been approved as of Dec. 31, must be finished by April 2013. The company said in its 2011 annual report that it wouldn't be able to meet the deadline for that project, known as Parcel 3, and that is has applied for an extension. The company is focused on opening the next phase of Sands Cotai Central this fall and "accelerating" the development of Parcel 3, "bringing it to the market as quickly as possible," Sands China Chief Executive Ed Tracy said in a prepared statement on Friday. "We believe this is the most prudent path forward for our company and the success of Macao as a leisure, business and entertainment destination." The company in January 2011 appealed the government's decision to reject the lands-rights request for Parcels 7 and 8. Las Vegas Sands has said that if it didn't get the rights or receive reimbursement, it would record a charge for all or some of its US$101.1 million in costs as of Dec. 31. It was unclear Friday whether the company would be reimbursed or what would happen to the land. Analysts have said that the parcels could be auctioned off or left to hang in limbo. The company declined to comment on any potential reimbursement. Macau's Transportation and Public Works Department said it had "no further information." It hasn't been unusual for casino operators to start work in Macau after receiving verbal approval from the government but before receiving exclusive rights. But casino companies have become more cautious recently. Wynn Macau Ltd. is moving ahead with a Cotai casino-resort after a land-grant process that took years. SJM Holdings Ltd., which had expressed interest in Parcels 7 and 8, and MGM China Holdings Ltd. await land rights for projects.

Former Lehman Brothers trader Allan Bedwick is shutting his US$120 million Asia-based global macro hedge fund after a two-and-a-half-year struggle to boost assets, fund documents showed. Hong Kong-based Bedwick’s fund is Asia’s latest hedge fund victim of the global economic woes as fears of a worsening euro zone debt crisis, and slowing growth drive investors toward the safety of large and well-established funds. His Sequence Fundamental Macro Fund is currently returning capital to investors and will shut by the end of June, according to a letter to investors. Bedwick declined to comment. Macro hedge funds focus on major economic trends and events and bet anywhere they see value, including stocks, bonds, currencies, commodities and derivatives markets. Bedwick’s fund gained 0.1 per cent in the first three months of this year versus a 1.9 per cent gain in the Eurekahedge global macro hedge fund index. The fund reported a 3.1 per cent gain last year, outperforming a 1.2 per cent drop in the index. Bedwick headed global macro trading at Lehman Brothers and later at Nomura Holdings after the Japanese company bought Lehman’s Asia and European businesses. The fund, earlier known as OGI Global Macro Fund, started in October 2009 in Japan. Bedwick moved to Hong Kong following the earthquake in Japan last year and changed his firm’s name to Sequence Asset Management earlier this year. The closure extends a growing list of hedge funds shutting down in Asia, putting pressure on an industry which is now about US$50 billion below its peak assets of US$176 billion hit in December 2007. More than 140 Asia-focused hedge funds shut down last year, while 38 have closed so far this year, industry tracker Eurekahedge estimates. This year’s closures include Novatera Capital, which managed about US$90 million in a long-short hedge fund, and Orvent Asset which shut its US$130 million event-driven hedge fund after its Swedish seed capital investor pulled out at the end of April. TIG Advisors also liquidated its 15-year-old, US$210 million global emerging markets hedge fund earlier this year. Doric Capital, one of Hong Kong’s oldest hedge fund firms founded by former Man Group executive Michael Nock, and Thaddeus Capital Management also shut hedge funds recently. Other closures include Boyer Allan Investment Management, Singapore-based RSR Capital, Britain-based Wessex and Singapore-based Komodo Capital.

 China*:  June 6 2012 Share

The Chinese government has called on key agencies including the central bank to come up with plans to deal with the potential economic risks of a Greek withdrawal from the euro zone, three sources with knowledge of the matter told Reuters on Monday. The sources said the plans may include measures to keep the yuan currency stable, increase checks on cross-border capital flows and stepping up policies to stabilise the domestic economy. As investor concerns over Greece’s possible exit from the euro zone grow, the central government has called on related state agencies, including the National Development and Reform Commission, the central bank and the banking regulator, to discuss contingency plans, the sources said. “It’s very urgent,” a source with direct knowledge said. “The government has asked every department to analyse measures to cope with a Greek exit from the euro zone and make their own suggestions as soon as possible.” Late last month, Premier Wen Jiabao warned at a state council meeting that “downward economic pressure is increasing”. The government has already announced a raft of measures to support economic growth, which is expected to slide this year to its weakest pace since 1999. These include fast tracking infrastructure and industrial investment projects while doling out subsidies for energy-saving home appliances and cars. A research chief with a Chinese bank in Hong Kong said that banks are being required by the mainland authorities to hand over a brief on global financial markets every day. Yu Yongding, an influential economist and a former central bank adviser, said in comments published last week that China should prepare for a Greek withdrawal from the single currency and proposed steps including capital controls to cash injections to domestic markets to reduce volatility. China’s central bank chief said in comments published on Monday that the country will continue to invest in euro zone government debt and other assets and urged the single-currency bloc to step up reforms to stem its debt crisis.

Vice-President Xi greets old Iowan friends - People-to-people exchanges pave way for business, trade, leader says - With the same excitement she experienced three months ago, 74-year-old Sarah Lande from Iowa, chose to wear a bright pink coat when meeting her old friend, Vice-President Xi Jinping. Vice-President Xi Jinping received an American delegation led by Iowa Governor Terry Branstad at Diaoyutai State Guesthouse on Sunday. In a group reunion on Sunday in Beijing, Sarah Lande, on her fifth visit to China, told Xi that "we can set an example for our countries of how friendship opens a door for business and trade. Then our friendship can shape our countries in the future". The friendship Lande spoke of was sealed when Xi first visited Iowa as an official from Iowa's Chinese sister state Hebei almost three decades ago. Leading a delegation of four other local officials on a trip primarily focused on learning agricultural techniques, Xi and his colleagues spent two weeks there, visiting farms, feed suppliers and grain processing and food biotechnology companies as part of an exchange that began with Iowans going to Hebei in 1984. During the trip, Xi met then and current Iowa Governor Terry Branstad in Muscatine, as well as more than a dozen other Iowans he now calls "old friends". Among them, Lande and her husband, Roger, who were one of the several families that hosted or spent time with Xi's delegation during that visit. During their reunion in February, when Xi visited the US, Lande told him that "friendship is a big business, and a world of friendship is a world of peace." At Sunday's meeting, Xi said Lande's remarks were impressive. Speaking with a group of those old Muscatine friends who are visiting China, Xi said people-to-people exchanges are the foundation of China-US ties, and the undying force behind growth in China-US ties. The relationship between the two countries has come to an important time, and the two have been committed to exploring a new type of bilateral ties marked by mutual respect, cooperation and benefit to both, according to Xi. This is an unprecedented endeavor that can inspire people in the future, and it is not an easy task, said Xi. Xi pledged that the two countries will have more such grassroots exchanges and carry on their friendship. Branstad, who is leading the Iowa delegation, said Xi's visit to Iowa in 1985 "was like planting a seed of corn. Now it has grown to be a tall stock that will provide a wonderful yield of friendship and economic benefit to both of our countries for years to come." Branstad said Xi has made such a great impression on the people of Iowa and built a lasting friendship, which is beneficial to both countries. Luca Berrone, a 56-year-old businessman who helped arrange the schedule of Xi's delegation 27 years ago in Iowa, said the friendship between Xi and Iowa was like a thread binding the two countries together. The veteran businessman also said "the reality we have seen (during our trip to China) far exceeds how we have imagined it". Xi's 1985 visit to Iowa, the agricultural state known for meat and cotton products, came just a few years after China and the United States established their diplomatic relations. Since then, the two countries have seen increasing personnel exchanges. While only a few thousand visitors traveled between China and the US 30 years ago, now more than 9,000 people are flying between the two countries every day, 160,000 Chinese study in the US, and 23,000 US citizens study in China, according to the Chinese foreign ministry. During his meeting with the Iowa delegation, Xi said the two countries should push for more exchanges and cooperation so that more people could contribute and benefit from China-US cooperation.

A consortium led by global asset manager Fidelity has invested US$50 million in Pod Inns, a mainland budget hotel chain. The move reflects global funds' renewed interest in China's slowing hospitality sector. Hangzhou-based Pod Inns will use the funds and millions of yuan in banking loans to expand nationwide. The firm aims to expand to 300 outlets at the end of the year from 200 currently. China's hotel market has been showing signs of slowing following the Beijing Olympics in 2008 and the Shanghai World Expo in 2010. According to hotel research firm Meadin, 39 star-rated hotels began operations in the first quarter of this year, down from 56 in the previous quarter. A drop in occupancy rate bodes ill for the sector's outlook, but analysts say investors remain bullish on the long-term outlook for budget hotels. That's because they expect middle-income earners to select inexpensive accommodation as they step up their domestic travel. Zhu Hui, chief executive of Pod Inns, said travellers could enjoy better cost savings, as its hotels have bunk beds for more people to share a room. China's budget hotel sector has been growing fast, with several brands - including Nasdaq-listed Home Inns & Hotels Management, the nation's largest budget hotel operator - vying for a bigger share of the market. However, Home Inns posted a net loss of 103.2 million yuan (HK$125.6 million) in the first quarter of this year, compared with net earnings of 32.5 million yuan a year earlier. The firm attributed the result to acquisition-related charges, and weaker margins due to the opening of new hotels in the last quarter of last year. To be sure, China's tourism sector has grown rapidly in the past decade, driven by the rising affluence of mainlanders. Last year, the sector raked in revenues of 1.93 trillion yuan from domestic travellers, up 23.6 per cent from 2010. "Quality budget hotels remain in short supply amid the rising demand for middle- and low-income travellers," said Tripod Capital investment manager Cao Hua. "The huge potential of the mainland tourism market could continue to attract more investors." Earlier this year, Fidelity said it planned to launch its biggest China venture capital fund of at least US$250 million. It has fully deployed funds of US$450 million in its current three China funds. The consortium includes Morgan Creek, KTB Ventures and Jianxin (Beijing) Investment Management.

President Vladimir Putin visits China tomorrow on the first trip to Asia of his new Kremlin mandate to tighten an increasingly close alliance that is key for Russia's diplomatic and economic strategy. Putin, who began a historic third term as president less than a month ago, has already made a lightning trip to Germany and France but will symbolically be visiting Beijing before the United States. The sometimes troubled Moscow-Beijing relationship has warmed during Putin's 12 years of domination over Russia, and the two governments are notably opposing outside intervention to solve the Syrian crisis. "One can understand where the vector of Russian policy is turned" with the Beijing visit, said Georgy Kunadze, a China expert at the Russian Academy of Sciences. Putin is likely to co-ordinate positions with President Hu Jintao on the violence in Syria and the Iranian nuclear crisis, with the West keenly aware both UN Security Council permanent members are prepared to wield their vetoes. But economic issues are also set to figure prominently on the three-day trip, particularly the energy sector as Russia searches for new markets, while China seeks cheap natural resources. Russian energy giant Gazprom over the past week held talks in China in an apparent bid to overcome continued disagreements over gas prices in a landmark contract that has been in its final stages since last summer. The long-term deal envisages that Russia will annually supply nearly 70 billion cubic metres of natural gas to China over the next 30 years, under a framework accord signed in 2009. Russian Deputy Prime Minister Arkady Dvorkovich said last week that the sides had still not reached an agreement on price, and it was unlikely that the deal would be signed during Putin's visit. Meanwhile, Russian media reported that the two countries were also preparing to launch a joint aerospace project to develop a long-range passenger plane based on Russian know-how and Chinese investment which would challenge giants Airbus and Boeing. The presidency of Dmitry Medvedev - from 2008 to May this year while Putin served as prime minister - was marked by optimism about Russia's strengthening relations with the US. But Putin led observers to believe his foreign policy would be rooted elsewhere when he surprisingly cancelled a trip to America last month that was to have been the first foreign visit of his new term. On Wednesday, Putin will take part in a Beijing summit of the Shanghai Co-operation Organisation, a security body that includes Russia's former Soviet partners in Central Asia and a handful of observer states, including Iran. Putin's attendance at the summit - seen as a fledgling eastern counterpart to Nato - is also symbolic given he was absent from the Nato summit in Chicago amid a row with the US over missile defence. Putin would also meet his Iranian counterpart Mahmoud Ahmadinejad on the summit sidelines as tensions rose over Tehran's nuclear drive, a Kremlin official said. Putin is a frequent guest of Chinese leaders, last visiting Beijing as recently as October in his capacity as prime minister. It was his only foreign trip after he announced in September his plan to run for president. While Russia's economy pales in comparison with China's growing economic might, Putin indicated in his pre-election foreign policy manifesto that Moscow did not view its neighbour as a threat. "Growth of China's economy is not a threat," he wrote, instead seeking "Chinese potential in developing Siberia and the Far East". Putin will be arriving in China from Uzbekistan, where he is due today to meet President Islam Karimov.

China and Afghanistan will sign a deal in the coming days that strategically deepens their ties, Afghan officials say, the strongest signal yet that Beijing wants a role beyond economic partnership as Western forces prepare to leave the country. China has kept a low political profile through much of the decade-long international occupation of Afghanistan, choosing instead to pursue an economic agenda, including locking in future supply from Afghanistan's untapped mineral resources. As the US-led coalition winds up military engagement and hands security over to local forces, Beijing, along with regional powers, is gradually stepping up involvement. President Hu Jintao and his Afghan counterpart Hamid Karzai will hold talks on the sidelines of the Shanghai Co-operation Organisation summit in Beijing this week, where they will seal a wide-ranging pact governing their ties, including security co-operation. Afghanistan has recently signed a series of strategic partnership agreements, including with the US, India and Britain, described by one Afghan official as taking out "insurance cover" for the period after 2014, when foreign troops leave. "The president of Afghanistan will be meeting the president of China in Beijing and what will happen is the elevation of our existing, solid relationship to a new level, to a strategic level," said Janan Musazai, a spokesman for the Afghan Foreign Ministry. "It would certainly cover a broad spectrum, which includes co-operation in the security sector, a very significant involvement in the economic sector, and the cultural field." He declined to give details about security co-operation, but Andrew Small, a China analyst at the European Marshall Fund, said the training of security forces was one possibility. China had signalled it would not contribute to a multilateral fund to sustain the Afghan national security forces - estimated to cost US$4.1 billion a year after 2014 - but it could directly train Afghan soldiers, Small said. "They're concerned that there is going to be a security vacuum and they're concerned about how the neighbours will behave," he said. Beijing has been running a small programme with Afghan police, focused on counternarcotics and involving visits to China's restive Xinjiang, the western tip of which touches the Afghan border. Training of Afghan forces is expected to be modest, and nowhere near the scale of the Western effort to bring them up to speed, or even India's role, in which small groups of officers are trained at military institutions in India. China wanted to play a more active role, but it would weigh the sensitivities of neighbouring nations in a troubled corner of the world, said Zhang Li, a professor of South Asian studies at Sichuan University. "I don't think that the US withdrawal also means a Chinese withdrawal, but especially in security affairs in Afghanistan, China will remain low-key and cautious," he said. "China wants to play more of a role there, but each option in doing that will be assessed carefully before any steps are taken." Afghanistan's immediate neighbours Iran and Pakistan, but also nearby India and Russia, have all jostled for influence in the country at the crossroads of Central and South Asia, and many expect the competition to heat up after 2014. India has poured aid into Afghanistan and like China has invested in its mineral sector, committing billions of dollars to develop iron-ore deposits, as well as build a steel plant and other infrastructure. It worries about a Taliban resurgence and the threat to its own security from Pakistan-based militants operating from the region. Pakistan, which is accused of having close ties with the Taliban, has repeatedly complained about India's growing role in Afghanistan. "India-Pakistan proxy fighting is one of the main worries," Small said. Musazai said Kabul supported any effort to bring peace in the country. "China has close ties with Afghanistan. It also has very close ties with Pakistan and if it can help advance the vision of peace and stability in Afghanistan we welcome it."

People wave the Xiaoyanghong 09 off on its mission to reach the bottom of the Mariana Trench. A manned deep-sea submersible will soon attempt to set a Chinese record for the deepest dive, in a sign of the country's growing prowess in deep-sea exploration as a global race for natural resources intensifies. The Jiaolong vessel will attempt a depth of 7,000 metres later this month or in early July. It departed yesterday from the eastern port city of Jiangyin in Jiangsu province, heading to the West Pacific's Mariana Trench - the deepest area in the world's oceans. Xinhua reported that a three-man dive team was expected to spend more than 10 hours at that depth and would take samples. If successful, the Jiaolong "could set the world's deepest record for an operation-aimed manned submersible", China National Radio reported. About 100 scientists will monitor and provide support for the mission from aboard the Xiaoyanghong 09, which is transporting the Jiaolong to the trench. China is one of just five countries to have sent a manned submersible to a depth of more than 3,500 metres, after the United States, France, Russia and Japan. "The scientific expedition of the Jiaolong is aimed at benefiting mankind. The deep sea has amazing resources waiting to be discovered, such as hydrothermal sulfide and manganese nodules," said the lead pilot of the Jiaolong, Ye Cong, 32. Xu Qinan, chief designer of the submersible, said the mission was different than that of the Deepsea Challenger, which was piloted in March by filmmaker James Cameron to a depth of 10,898 metres - just above the lowest point of the trench. "Cameron was the third person to reach the bottom of the Mariana Trench. It was definitely an impressive act," Xu said. In 1960, an American mission sent two men to the same depth as Cameron reached and stayed there for about 20 minutes. "Their spirit of adventure is very impressive. And what they did put the world's attention on deep diving, as well as benefiting the development of deep-diving technology." But the purpose of Cameron's Deepsea Challenger was for adventure and photography, and it could only carry one person, Xu said. The vessel also suffered two mechanical failures during the dive. The Jiaolong is designed to operate at a depth of 7,000 metres, and its goal is to take three people to look for resources and conduct scientific research. A test dive to 5,000 metres last summer also showed that controls and systems on the Jiaolong could operate at that depth, and that the vessel could do multiple descents, Xu said. But there are still substantial challenges for diving a further 2,000 metres, and the chief designer said a series of upgrades were carried out on the Jiaolong to strengthen its ability to operate at pressure of about 7,000 tonnes per square metre, and a temperature of about 1 degree Celsius. The team has also installed a better visual-transmission system and a GPS to help locate Jiaolong should it be caught in bad weather when returning to the surface. If the dive is successful, China will be able to reach most of the world's seabed areas.

Hong Kong*:  June 5 2012 Share

A dramatic slowdown in the growth of wine exports to the mainland is forcing traders to come up with new business strategies to maintain Hong Kong's position at the centre of the trade in Asia. Export growth to the mainland, which had been running at more than 100 per cent in early 2012, dropped to just 6 per cent in April, according to the latest figures from the Hong Kong Trade Development Council. The drop-off has left Hong Kong traders, who rely heavily on mainland customers to sustain the city's reputation as Asia's wine hub, with a challenge. In particular, sellers of premium wines, whose clients are mostly mainlanders, are being hit hard and urgently need to explore the market for more affordable wines. In the first four months of this year, the mainland imported 128 million litres of wine from around the world, 8.8 per cent more year on year but well below last year's 44 per cent growth rate. During the same period, wine exports from Hong Kong to the mainland - which accounted for 59 per cent of the city's total wine exports - doubled year on year to HK$421 million. However, the surge came mainly in the first three months, and things changed for the worse in April, with the growth in export value slowing to 5.6 per cent. Marcus Chan Chun-wang, business development manager of Grand Cru Cellar International, said half his clients used to buy wines costing more than HK$10,000 a bottle. Now many were shifting to those costing less than HK$1,000. It was going to be a hard year for the industry, and merchants were focusing more on cheaper selections, he said. However, such a change is not without its drawbacks for a cramped city like Hong Kong, given that merchants need more space to stock wines of lesser value in large quantities. The profit margin was also lower, he said. Paulo Pong, managing director of wholesaler-retailer Altaya Group International, said the company's wholesale division was seeing less growth than in previous years, mainly due to the reduced demand from the mainland. Local consumption did not drop, he said, but shoppers were being more cautious with their spending. Developing the local retail market seemed to be the way to go. Sales have grown since he opened shops that specialised in specific growing regions including Bordeaux and Champagne, and he planned to launch more such shops in the coming months.

Two scientists who have spotted "chaperones", the proteins that perform quality control in the formation of new proteins within cells, are winners of this year's Shaw Prize for life science and medicine. Professor Franz-Ulrich Hartl, director of the Max Planck Institute of Biochemistry in Martinsried, Germany, and professor Arthur Horwich, of Yale University, will collect their US$1 million prize in Hong Kong in September. Their work was "very, very important" because it helps scientists explain what goes wrong in the formation of new proteins in diseases such as Alzheimer's and Huntington's, said Kenneth Young, vice-chairman of the Shaw Prize board of adjudicators. "Scientists haven't yet found a way to cure, for example, Alzheimer's disease, and their work has brought us closer to finding it," said Young, who is also a physics professor at Chinese University. A protein begins its life as a long chain of amino acids that is eventually folded, and how it is folded can have very different effects on our health. Protein misfolding can cause diseases such as Alzheimer's and Huntington's and some forms of cancer. When proteins misfold, they clump together. These clumps can often gather in the brain, where they are believed to cause the symptoms of such diseases. Some proteins fold spontaneously in the test tube, yet others require protein "chaperones" to guide folding in intact cells and in the test tube. Hartl and Horwich began working together in 1989 and identified the "chaperones" responsible for mediating such folding, though they later worked separately. They also showed, atom by atom, the exact geometry of the action of a chaperone, called GroE, in the test tube and later through detailed inspection. In separate contributions, they showed that GroE captures an unfolded polypeptide - a group of amino acids - in a closed chamber that changes its shape in stages until the folded protein is released as a finished product. In order to carry out their function, for instance as enzymes or antibodies, they must take on a particular shape. Now researchers in the field are talking about dealing with viruses, bacteria and infectious diseases by inhibiting chaperones. They are also thinking of boosting chaperone function to help treat diseases because drugs that inhibit the function of these proteins can help other proteins in the body to fold. The duo received the Albert Lasker Basic Medical Research Award last year for discovering a cellular machine that controls how newly manufactured proteins fold into their biologically active structures. Other winners include Professor David Jewitt of the University of California, Los Angeles, and Jane Luu, from the Massachusetts Institute of Technology, who share the Shaw Prize for astronomy. The prize for mathematical sciences is awarded to Professor Maxim Kontsevich, of L'Institut des Hautes Études Scientifique in France, for his work in algebra, geometry and mathematical physics.

The Suntec board (back row): Chow Chung-kai, Robert Wang, Tony Yeh and Li Dak Seng; (front row): W. H. Chow, Lee Shau-kee, Run Run Shaw, Frank Tsao, Li Ka-shing and Cheng Yu-tung. Robert Wang at his home in Clear Water Bay. Wang with Singapore's Ong Teng Cheong. Robert Wang helped HK's richest men navigate the turbulent handover era and made a fortune in the process. But he has no illusions about the friendship - The dictionary definition of the word "tycoon", which reads "a person who is successful in business and so has become rich and powerful", does not even begin to describe the control and influence Hong Kong's greatest taipans have wielded over the years. No one knows this better than Robert Wang Wei-han, whose years working with the city's most successful people put him on the road to riches, albeit with some bumps along the way. Wang was born in Ningbo and soon afterwards his parents moved to Shanghai. When he was five, his family fled Shanghai amid the Chinese civil war and started a new life in Hong Kong. They had nothing. As far back as he can remember, though, Wang was determined to be a success. In the early 1970s, as a qualified solicitor, he founded Robert W. H. Wang & Co, which grew into the city's fifth-largest law firm. As the handover of Hong Kong approached, and with no one quite sure what the end of British rule would bring, Wang came up with a plan to safeguard the fortunes of Hong Kong's richest tycoons by convincing Singapore to take them in so they could run their businesses from there. He spent his time dealing one on one with the most powerful businessmen and politicians in the region, including Li Ka-shing, Lee Shau-kee, Cheng Yu-tung and Run Run Shaw. However, after Wang unwittingly offended certain power brokers, the tycoons cut him adrift. He has now written a book detailing his life, called Walking the Tycoons' Rope. It offers a rare look into the world of Hong Kong's property tycoons and how ruthless they can be. "Let's just say you have to be extremely careful," Wang said. "You have to be mutually useful to each other or it won't work. They don't knock on your door for no reason, although I did become close with Cheng and Shaw. They taught me a lot." He believes the power that Hong Kong tycoons have is now on the wane, and that the watershed was the last chief executive election. "Henry Tang [Ying-yen] was their hope for continuity," he said. "That was the reason why the tycoons were so vehement in their support for him. However, the unexpected happened. Their hopes were dashed when C. Y. Leung was elected instead." Wang is convinced the chief executive-elect has made it known, in no uncertain terms, that he is chief executive for all the seven million people of Hong Kong - not just the most powerful. "From now on, the developers will still make money, just not on the same scale as before. Some semblance of normality will return to Hong Kong's property market," he said. High-profile investigations by the Independent Commission Against Corruption seem to back this thinking, most notably the Sun Hung Kai Properties (SEHK: 0016) case, in which brothers Walter Kwok Ping-sheung, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen were arrested along with former chief secretary Rafael Hui Si-yan. No one has been charged. Wang's association with Hong Kong's tycoons continues today, and he would not comment on the Kwok brothers' case. "We are well known to each other. Our joint-venture hotel - The Minden, in Tsim Sha Tsui - was sold just a month or so ago. I wish them well," he said. To fully understand his relationship with these taipans one must go back to the early 1980s, when, though life was still good in Hong Kong and the economy booming, Wang's worries about the 1997 handover steadily grew. "The world around us was changing. Factories here were moving north and China's economy was getting stronger by the day. Like everyone else in Hong Kong in those days, I was very fearful of the sovereignty change," Wang said. "All my friends and compatriots were leaving Hong Kong in droves and emigrating, mainly to Vancouver in Canada, which we called back then 'Hongcouver' as so many people were going to live there. "I wasn't prepared to emigrate. I had a good thing going in Hong Kong as a solicitor and didn't want to start all over again. My firm was the fifth-largest in Hong Kong and it employed 220 people, including nearly 50 solicitors." At that time, the British government introduced a scheme to confer British nationality on locals and offered British passports to 50,000 heads of households and their dependants. This was designed to reassure key businessmen and their families, while stabilising the economy in the run-up to the handover. But what Wang was looking for was a bolt-hole for himself, and for his partners, colleagues and clients, in case their worst fears were realised. It was then he turned his gaze towards Singapore. It was safe and an integral part of the West. From there he could set up another base before the handover and observe how it was affecting Hong Kong. What followed was a period of prolonged negotiations between Wang and the Singaporean government as he tried to set up a new firm there that would run in parallel with his firm in Hong Kong. Only after a gruelling cross-examination by Singapore's then prime minister Lee Kuan Yew, lasting more than an hour, was a deal finally struck. The prime minister told him to go ahead and form a committee to "propose, vet and recommend" Hong Kong solicitors to practise in his country. "I was the first to set this up in Singapore and the firm is still going," he said. "Over 60 per cent of the solicitors working in Hong Kong benefitted from this move. Some were very powerful men in the judiciary." After this Wang decided to make another proposal to Lee, telling him that Hong Kong entrepreneurs had the same worries and were also looking for a bolt-hole. Lee agreed to this and told him to recommend some entrepreneurs who would be interested in doing business in Singapore. This gave birth in 1984 to a scheme to allow entrepreneurs to move to the city state. However, the launch of the scheme led to such a huge influx of entrepreneurs to Singapore there were simply not enough investment opportunities. To get around this problem Wang helped create a company called Suntec, involving 21 powerful investors. Some of the most influential taipans in Hong Kong, such as Li, Lee, Cheng and Shaw got involved. Among them they accounted for more than 40 per cent of the market capitalisation of all Hong Kong companies. This later evolved into a scheme that in essence allowed an approved entrepreneur to nominate one person for permanent residence in Singapore for each S$1 million (HK$6.01 million) he invested. The nominees could come from approved categories that included immediate family members, relatives, senior members of staff and co-investors - essentially also looking after those who mattered most to the entrepreneur as well. The demand was so great that Singapore granted approval to 50,000 families from Hong Kong. Unfortunately, once the tycoons were firmly established in Singapore, they had no further need for Wang. Caught in the crossfire amid infighting among the tycoons, he became increasingly marginalised. The death knell for Wang came after a squabble with a Singaporean tycoon over who should hold the main positions of authority in a private club the group had just established. "To me it was a trivial matter, but they said my choice of patron ran against Singaporean customs and conventions. I had no idea at all about this. It was just a way of getting rid of me once and for all," he said. A chastened and wiser man, he focused instead on his law firm and his own entrepreneurial investments. As it turned out, none of the Hong Kong tycoons needed a plan B to fall back on, as the transition from British to Chinese rule proved to be a painless one for the business world. But Wang said having a fallback was the collective thinking among the tycoons at the time, and there was a mad scramble to jump on board. Wang said he and the tycoons he had been involved with over the years were the product of their environment - the tough upbringing they endured drove them on to greater things. Many were not educated, but they were determined to work hard and be a success. "I've often been asked why we came to have this crop of outstanding entrepreneurs in Hong Kong, and it's because they're all products of the environment … of Hong Kong and Shanghai in the 1940s and 1950s," Wang said. "It was a very tough time. But they were able to transcend the class they belonged to. Not once or twice but many times. That's the thing about Hong Kong. Normally in Western society, if you are born into a certain class it's just not the done thing to transcend it. In Hong Kong you can," he said. The 68-year-old is now enjoying his retirement and living happily off the money he made with his law firm and the city's most influential tycoons. "I'm very content with the way things have turned out for me and that I branched out from my legal practice during the days I was in Singapore," he said. "Suntec was a major success and my involvement in a number of their properties proved very profitable. I guess that is what happens if you become intertwined successfully with tycoons for long enough."

 China*:  June 5 2012 Share

A property agent sits besides a board displaying prices for residential apartments in Beijing, where home prices fell 3.2 per cent last month. Mainland home prices fell for the ninth straight month as property curbs continued to bite, with major cities posting the biggest falls, a property survey shows. Average home prices in 100 cities fell 1.53 per cent last month from a year ago to 8,684 yuan (HK$10,610) per square metre, said the China Index Academy, a domestic real estate research institute. In Beijing and Shanghai, prices declined 3.2 per cent to an average 15,314 yuan per square metre during the same period. "The continued falls in residential prices are mainly because developers are offering new projects at a discount," said Alan Chiang Sheung-lai, head of China residential property for consultancy DTZ. Developers' inventories were rising, forcing them to cut prices by 15 to 25 per cent to boost sales. In Shanghai alone, more than 10 million square metres of residential space were available for sale, according to Soufun, the mainland's biggest property website. "It is the highest since 2007, and it will take 18 months for the market to digest the housing stocks," an agent said. However, sales in 30 cities monitored by Centaline Group rose, as the lower prices drew buyers. Centaline said sales in those cities grew 20 per cent month on month to 16.31 million square metres last month. "Sales volume last month climbed to a 16-month high as price cuts spread from rural to urban areas, and we have seen some obvious reduction in luxury homes in Shanghai and Guangzhou," said Centaline Group. DTZ's Chiang expects prices to keep falling in the second half. Earlier last week, Kong Qingping, chairman of China Overseas Land (SEHK: 0688) & Investment, said the worst was yet to be over for the mainland property market and that developers faced great challenges in the second half. According to Chiang, developers prefer to launch new projects as early as possible to compete for buyers before credit dries up. "Banks tend to tighten their lending quotas near the year end, which will probably dampen buying demand from genuine homebuyers," said Chiang. In the wake of a two-year curb on home prices, nearly 40 cities have moved discreetly to ease restrictions on home purchases to revive the market, mainland media report. However, Hunan's local government has denied that the city has eased curbs on home purchases. The denial came a day after reports of the approval of lower initial down payments and the discounting of mortgage rates for first-time homebuyers. About 20 cities are reportedly allowing pension funds to be used to buy homes, with Chongqing's local government saying that families could apply to borrow as much as 800,000 yuan, up from 400,000 yuan, from their pension fund.

Things got a bit muddled when Leon Panetta (centre) tried to shake hands with Japanese deputy defence minister Shu Watanabe (left) and their South Korean counterpart Kim Kwan-jin at the Shangri-La Dialogue. A senior Vietnamese military official yesterday sought to head off Chinese anger over US Defence Secretary Leon Panetta's visit today to the strategic southern port of Cam Ranh Bay, where US navy resupply ships are repaired. Deputy Defence Minister Nguyen Chi Vinh (pictured) said stronger Sino-Vietnamese military relations had reduced the risk of confrontation. Vinh told the Sunday Morning Post (SEHK: 0583, announcements, news) Hanoi and Beijing recognised that increased military-to-military links had "contributed to the overall relationship". "Both countries are aware that the increase in defence-to-defence relations … can prevent … confrontation and conflict," he said. "We attach great importance to the exchange of delegations, especially of border guards and the navy. It is a specific step to realise what has been agreed by the countries and militaries." While Vinh stressed the "untouchable" importance of Vietnam's territorial integrity, he repeatedly appeared to strike a conciliatory tone towards China, in contrast to the tensions of recent years. "To have peace, stability and security in the region, it is very important for us to have good relations with China so that we can enjoy mutual benefit," he said, while stressing the need for transparency. Two years ago as he led a successful drive to push South China Sea disputes onto the international agenda, Vinh told the Post that Vietnam had "all capabilities" to defend its sovereignty. Yesterday he said Sino-Vietnamese tensions over the disputed area had dropped, though there was still friction each year over the capture of fishermen and Vietnam remained concerned about China's unilateral fishing ban. Vietnam and China claim the Paracels and Spratlys archipelagoes in their entirety, while China's controversial nine-dash line - by which it justifies its claim to virtually the entire South China Sea - bisects Vietnam's claimed economic zone, including oilfields. Panetta, the Pentagon chief, begins a visit to Vietnam today to explore ways of expanding the fledgling relationship between two former enemies - including the prospect of increased US naval ship visits and the lifting of a US ban on arms sales. Vinh, who was speaking before the US confirmed Panetta would travel to Cam Ranh Bay, said Chinese officials had told him they accepted that the relationship was "the business of Vietnam and the US". Many regional analysts believe, however, that China is watching the relationship closely, fearing it may represent an attempt at containment. "Vietnam knows it must not act to contain China - that has been made very clear," one Chinese envoy said recently. Vinh said that he "did not share" the idea that Vietnam - which has embarked on its own naval build-up - was attempting to create a deterrent to China's military rise. "We have two key principles," Vinh said. "Our sovereignty and our territorial integrity are something untouchable … something ultimate to us." He said small countries like Vietnam had to be "very determined" to protect their sovereignty. "Only in that way can we achieve an equal relationship." Looking ahead to Panetta's visit, he confirmed that the US and other navies would continue to have access for non-combat ships to commercial repair and resupply facilities around Cam Ranh Bay. This was a commercial operation separate from the closed military facilities within the bay, he said. The Post reported yesterday that Panetta was expected to push for greater flexibility in repair missions after an initial agreement to host four civilian-manned resupply ships. Senior US officials played down the prospect of an actual US warship visit to Cam Ranh any time soon, even though they occasionally visit other Vietnamese ports. On possible future arms sales, Vinh said the long-standing congressional ban on the sale of lethal US weapons "made a nonsense of the mutual trust" inherent in the evolving relationship. Some reports suggest that US senators have already been given a "wish list" of arms by Vietnam. However, Vinh said Vietnam did not need US weaponry at this point. Hanoi has in recent years broadened its sources of arms from traditional patrons such as Russia. He said Hanoi "had nothing to hide" from China about its relations with Washington. China provided weapons and sanctuary to Vietnamese communist revolutionaries from the earliest days of their long but successful wars against French colonialists and then American forces. But souring relations between Beijing and Hanoi degenerated into violence in early 1979, when then-paramount leader Deng Xiaoping ordered People's Liberation Army troops to cross Vietnam's border to "teach Hanoi a lesson" for its invasion of Cambodia, which drove the China-backed Khmer Rouge from power. Ties were restored in 1991.

Tensions in the South China Sea could provide a chance to forge co-operation across the Taiwan Strait, but political trust between Taipei and Beijing should be a pre-condition, say defence experts from the mainland and Taiwan. Admiral Fei Hung-po, Taiwan's former deputy chief of general staff, said Taiwan's navy and the People's Liberation Army Navy had unintentionally formed a "tacit understanding" in maritime issues at least two decades ago. But it was still too early for both sides to co-operate due to the lack of cross-strait political trust, he said. "On the South China Sea issue, the problem is that Taiwan's navy is incapable of defending the islets we control - such as Taiping - in a large military crisis, but the PLA is capable of doing so," Fei said at the sidelines of a forum in Hong Kong on Tuesday. "So far what Taiwan can do is stick to our original [neutral] policy, and will not co-operate with the PLA." Since 1956, Taiwan has controlled Pratas and Taiping islands, the largest of the potentially oil-rich Spratly Islands group, which is also claimed wholly or in part by the mainland, the Philippines, Vietnam, Malaysia and Brunei. Taiping, the only islet with fresh water in the archipelago, is seen as a key military strategic and support depot during a military crisis. In 2006, Taiwan built a 1,200-metre airstrip on the islet. Professor Ni Lexiong , director of a new research centre on sea power and defence policy at Shanghai University of Political Science and Law, said if Taiping and other islets controlled by Taiwan were invaded by other countries, the PLA Navy "would absolutely send fleets to protect Taiwan's interests". "In maritime issues, Beijing and Taipei share common interests, so the PLA Navy would eagerly co-operate with the Taiwan navy to safeguard our territory," Ni said. However, when tension in the South China Sea escalated last month after a stand-off between Beijing and Manila over the Scarborough Shoal - known as Huangyan Island in China and Panatag Shoal in the Philippines - the government of mainland-friendly Taiwanese President Ma Ying-jeou remained silent. Tsai Der-sheng, the island's security chief, said Taipei was in a unique position to mediate the dispute, as the Philippines and Vietnam had tried to persuade Taipei not to side with Beijing. Senior Colonel Li Jie of the PLA Navy's Military Academy agreed that cross-strait military co-operation should build on the foundation of political trust. Otherwise, cross-strait military exchanges and other activities were merely symbolic, he said. "I hope Ma Ying-jeou will come up with more innovative mainland policies, which should expand from economic and cultural areas to political co-operation after his inauguration for his second-term administration," Li said. "On the South and East China Sea issues, people on the mainland and in Taiwan have reached a consensus that the Diaoyu, Spratly and Paracel islands are China's territories." Admiral Fei said he witnessed such a change in the political atmosphere. "When I was the director of Taiwan Naval Combat Department in 1995, our navy got along with the PLA navy in the Taiwan Strait. The 1996 strait missile crisis arose for political reasons," Fei said. "On the other hand, what Taiwan has done on Taiping and other islets aims to defend the common interests of Greater China, which is the ideal China that both governments across the Taiwan Strait aspire to achieve in the future." Fei said Beijing was capable of resolving its disputes with the Philippines over the South China Sea due to its growing clout in global economic and military affairs. "I believe the South China Sea issue will have a happy ending because Beijing will not let it escalate into a military conflict, which would only provide the United States with an opportunity to get involved in the South China Sea issue," he said.

Defence chief Panetta says majority of America's warships will be in Asia-Pacific by 2020 but China has nothing to fear; it's no big deal, PLA general says - Most of America's warships will be stationed in the Asia-Pacific region by 2020, US Defence Secretary Leon Panetta said yesterday. He revealed about 60 per cent of the US naval fleet would be assigned to the region, as he spelled out the meaning of the Pentagon's "pivot" towards Asia. Senior US defence officials also told the Sunday Morning Post that Panetta would today visit Cam Ranh Bay in Vietnam, a move that will be closely watched by Beijing. Speaking to the informal Shangri-La Dialogue on security in Singapore, Panetta also vowed to push for deeper military relations with China and insisted that Beijing should not fear Washington's growing role as a Pacific power. The top Chinese official at the Singapore event, Lieutenant General Ren Haiquan, told Phoenix TV that while China should not take the move lightly, he wouldn't call it a "big deal". Panetta said the quota of US warships in the Asia-Pacific would rise from the current 50 per cent to 60 per cent by the end of the decade. "That will include six aircraft carriers in this region, a majority of our cruisers, destroyers, littoral combat ships and submarines," he said. The navy has about 285 ships, but the total may fall as ships are retired without being replaced. Ren, vice-president of the Academy of Military Science of the People's Liberation Army, said: "It seems to me the overall naval strength [in the region] would be more or less the same - it is a 10 per cent increase… but you have to take into account that they are downsizing their total number [of battleships and planes after withdrawing from Afghanistan and Iraq]." Still, he said, China should not drop its guard. Xinhua warned it was no time to "make waves" in the disputed South China Sea. Panetta defended efforts to deepen and broaden US alliances. Confirming his visit to Cam Ranh Bay - the first by a US official to the port since the end of the Vietnam war in 1975 - officials also said the Pentagon chief would board the USNS Richard E Byrd, a civilian supply ship being repaired at a shipyard there. The South China Morning Post (SEHK: 0583) reported yesterday that Panetta was expected to push for greater access for US ships during his trip. Panetta spoke repeatedly yesterday of the shared Sino-US interest in a stable and peaceful region, but at the same time said neither side was naïve about their differences. In contrast to previous years, when Chinese officials and scholars questioned Panetta's predecessors about their "cold war mentality" or attempts to contain China, he faced no such attacks from the unusually low-level Chinese delegation this time. Ren's academy colleague Senior Colonel Bao Bin said China welcomed the US playing a role in regional peace and stability.

Hong Kong*:  June 4 2012 Share

An independent review committee, set up to look into preventing and handling potential conflicts of interests, has said that it is "completely inappropriate" for the chief executive to be above anti-graft laws, and it should be made a criminal offense for the city's leader to accept gifts without approval. This is one of the 36 recommendations made by a five-member committee chaired by former chief justice Andrew Li Kwok-nang. The independent committee, set up by Donald Tsang after he was accused of receiving gifts from tycoons, also called for the setting up of an independent panel to vet favors that the chief executive receives, such as hotel accommodation, trips on private jets and yachts. Li, whose team spent three months on the report, said it was a "fundamental defect" that two important sections in the Prevention of Bribery Ordinance, which applied to civil servants, were not applicable to the chief executive. This was because of a government amendment in 2008. "The present situation is that the chief executive decides for himself what advantages to accept and he is not subject to any checks and balances," Li said. "The chief executive should not be above the law, which applies to politically appointed officials and civil servants." Li recommended that legislation be enacted so that accepting advantages required the permission of a statutory independent panel, which consists of three members, including a chairman, to be appointed jointly by the chief justice and the president of the Legislative Council. The committee also suggested that the chief executive and his spouse can receive gifts valued below HK$400; gifts valued between HK$400 and HK$1,000 - if the gifts are inscribed with the chief executive's or his spouse's names; and invitations to functions or performances worth up to HK$2,000. With all other benefits the chief executive will need to get special approval from the panel. Li also said it would be impractical for the chief executive to seek permission for gifts that are of little value - such as a breakfast or an egg tart. In this case "he should also consider his relationship with those that bestow on him such gifts," Li said. Though Tsang is not named in the report, it appears to be directed at him as it cites examples such as traveling on private jets and yachts, and renting premises below market value - all of which Tsang has reportedly benefited from. "As our highest political leader, the chief executive should set a good example for all politically appointed officials and civil servants. He should be vigilant when offers of entertainment come his way," Li said. The committee also proposed that the Register of Gifts be renamed as the Register of Advantages, and should be expanded to include all favors the chief executive receives in his private capacity. Commenting on the findings, Tsang said he agreed with the committee's report. "The public has high expectations about the integrity of public officers and a sound system is needed to prevent and handle potential conflicts of interest." Chief Executive-elect Leung Chun-ying said he welcomes the report and will seriously consider the recommendations. "I will use myself as an example when leading the civil servants," he said.

Chinese Estates CEO Joseph Lau Luen-hung (left) and fellow property tycoon Steven Lo Kit-sing (right) have been linked to a crooked deal with ex-minister Ao Man-long for land near Macau's airport. When Macau International Airport opened for business in November 1995, Ao Man-long, the city's secretary for transport and public works at the time, saw a golden opportunity. After the completion of the airport's six-year construction programme, 78,789 square metres of adjoining land on Taipa were still vacant, and Ao's public works bureau said that this area should be used for Macau's development. According to the evidence at his latest trial on corruption charges in Macau's Court of Final Appeal, the land was divided up at Ao's suggestion into five areas, each managed by a different company. The five companies - Tai Lei Loi, Sun Hung Fat, Sun Hou Kung, Sun Vai Ip and Lei Tin - were managed by a sixth, Lei Pou Fat, which was jointly owned by the Macau government and private businesses, including gambling mogul Stanley Ho Hung-sun's Sociedade de Turismo e Diversoes de Macau (STDM). Ao appointed several of his officials from the Infrastructure and Development Office to work at Lei Pou Fat, but the court found that the prosecution had not established that Ao was in charge of all six companies. In 1999, the five companies paid the Macau government a total of 2 billion patacas for the five pieces of land, compared with an estimate of 1.17 billion patacas by First Pacific (SEHK: 0142, announcements, news) Davies (Savills), a company commissioned by Ao to carry out an evaluation after he had decided in December 2004 to sell the land. Ao, who will now serve 29 years in jail on corruption charges after his sentencing today, told the court in his latest trial that Macau's government had decided to develop the land because the city's economy had been hit hard by the outbreak of Sars in 2003. But, according to evidence before the court, among the principal beneficiaries of this development was Ao himself. According to Io Fu-chun, senior investigator in Macau's Commission Against Corruption, no bidding exercise for the Taipa project had been carried out by the time Ao met Hong Kong tycoon Steven Lo Kit-sing for the first time on January 14, 2005. Io told the court Ao and Lo met at Restaurant 456 after they were introduced by Ho Meng-fai, the owner of construction company San Meng Fai. He is a key figure in the corruption scandals surrounding Ao, and a fugitive from Macau authorities. Ho Meng-fai fled Macau in 2007, before he could stand trial on corruption charges, and was sentenced in absentia to 25 years in jail in June of that year. He remains the subject of an Interpol "red notice", a request to police to identify and locate a suspect with a view to extradition. Much of the evidence against Ao in his latest case was taken from notebooks seized at his home. Ao has denied the authenticity of some, but has confirmed to the court that Ho Meng-fai had introduced him to Lo and, later, to Joseph Lau Luen-hung, another Hong Kong property tycoon. Since then "we have only seen each other once or twice. We have had no further communication, not to mention any advantage being involved", Ao told the court. Ao also confirmed that San Meng Fai had been involved in many government projects, including several for the Macau East Asian Games in 2005. Ecoline, a company controlled by Ao, had offered to consult on some of those projects, including one for the design of the canopy for the Macau Dome Stadium. The court heard that, according to immigration records, Ao had met Lo, Lau or both at least 11 times between January 2005 and March 2006. Telephone records showed that Ao had never called Lo directly, but called Ho Meng-fai instead. Ho would then call Lo. Lo would also go through Ho to get in touch with Ao. Further evidence of their relationship came from a name card that was confiscated from Ao's home, bearing the name of Lo. George Lew Wing-tim, a director and architect at Hong Kong-based architectural firm Hsin Yieh, told the court that he had been instructed by Chinese Estates (SEHK: 0127), a company headed by Lau and listed on the Hong Kong stock exchange, to work on a design for the Taipa site as early as December 2004, six months before bids were invited to develop the land. Chinese Estates even required the company to submit the study before the new year, without giving reasons. Lew's testimony contradicted what Lo had told the court when he said that, initially, he was "very keen" to develop the land but Lau was "not as active". According to a notebook that Li Sau-lung, senior engineer of Chinese Estates, gave to the Macau graft busters, Lau had discussed the Taipa development with Ao, Lo and a representative of architects firm Hsin Yieh as early as February 2005. "This showed that Lau was very concerned about this project," Io said. Lew and Kenneth Ng from Chinese Estates went to survey the site in March 2005, and Lew worked on the design again, adding in details. That same month, Stanley Ho, whose STMD owns one-third of the Macau airport's operating company, had expressed an interest in developing the adjoining land. The gambling mogul had approached Antonio Lourenco, former director of Macau's Infrastructure and Development Office and then a manager of one of the five companies owning the land on Taipa, but Lourenco did not respond, according to Io. At a meeting of Lei Pou Fat shareholders in May 2005, the firm agreed to put the land up for sale. Patrick Huen Wing-ming, STDM's representative, expressed dissatisfaction, saying that Stanley Ho's interest had been ignored. In June of that year, Chinese Estates paid a HK$200,000 "research fee" to Hsin Yieh for its work on the project. On 16 June, Ao verbally told Lourenco to invite three companies to take part in a closed bid. Lourenco invited Jones Lang LaSalle, CB Richard Ellis and an STDM-Vigers joint venture to submit bids, and gave them 10 days to prepare a proposal. The first two companies had no experience in property development in Macau. That same day, Ao called Ho Meng-fai, who then called Lo. Lo then travelled to Macau. On 22 June, Joseph Lau and Steven Lo met Ao in a Macau restaurant, at a table booked by Ho Meng-fai. The next day, Stanley Ho wrote to the Macau Infrastructure Development Office, saying this was an "unprofessional way of conducting the tender process" and demanding an extension to the deadline for submitting a proposal, as 10 days was hardly enough to prepare a "presentable and detailed plan". By that time, Hsin Yieh was making amendments to its own plan for the site, drawn up on behalf of Lo and Lau. On June 24, Lo purchased a company called Moon Ocean, and approached Jones Lang LaSalle, the court heard. "Lo appeared to be the shareholder of Moon Ocean, but in reality Lau was the shareholder. Lau was the only person to put in capital," Io said. Chinese Estates later asked Hsin Yieh to submit a copy of its proposal for the airport site to Jones Lang LaSalle. On 27 June, all three companies submitted their plans, with bids ranging from 1.1 billion patacas to 1.368 billion patacas, all of them below the price of 2 billion patacas paid to the Macau government in 1999. In the bid-reviewing process, it was found that Jones Lang LaSalle submitted the plan on behalf of Moon Ocean, while CB Richard Ellis helped a company called APEX to submit an offer. The joint bid by STDM-Vigers turned out to be only from STDM. The proposal submitted by Jones Lang came to 70 pages, while that of CB Richard Ellis was only one page. STDM submitted a rough design plan of 15 pages. Andre Ritchie, a former senior technician who reviewed the bid applications, said all the bids should have been disqualified because of irregularities, but Lourenco decided to award the land to Jones Lang LaSalle for 1.368 billion patacas. Ritchie said he found no evidence that Ao had interfered in the bidding, but thought he could have as Lourenco had to report to Ao every week. Io told the court that Ao and Lourenco had spoken over the phone on 19 occasions that year, of which 14 were between June and October. On July 28, 2005 the bid review committee decided to award the land to Jones Lang LaSalle, a decision approved by Ao. Io told the court that on September 25, Lo and Lau "made up" a HK$20 million contract to make it seem as if it covered a consultancy fee paid between two of Lo's companies and Eastern Base. In fact, only Hsin Yieh had been consulted by Chinese Estates and its fee had been settled. A month later, Ao's Ecoline issued a debit note to Ho Meng-fai and asked him to pass it on to Lo. In the name of Eastern Base, Lo asked Moon Ocean for the money. Moon Ocean then lent Lo HK$20 million from Lau's company Group Luck. On October 24, a cheque co-signed by Joseph Lau and his younger brother Thomas Lau was passed to Eastern Base. On the same day, a sum of HK$20 million was deposited to Ecoline's Bank of China Hong Kong account. Three days later, Lo treated Lau and Ao a meal at the Waldo Hotel in Macau, for which Lo paid HK$18,000. Subsequently, Ao put a tick beside the word "2000" in his notebook, indicating that he had received HK$20 million, Io told the court. The notebook also carried words like "Big Lau" (Joseph Lau's nickname), "airport" and "land". Lo confirmed in court that Lau's Chinese Estates had deposited HK$20 million into Eastern Base's account. But he then argued that the HK$20 million was a "preliminary payment" for San Meng Fai, and that this was the "usual practice" in the industry. But his point was soon rebutted by Leung Wah-tat, an architect who worked on the project for Hsin Yieh. Leung, who testified two days after Lo, said there was no such thing as a "preliminary payment", and it was unheard of to pay a construction firm any money before any progress had been seen on a project. Lo said he and Lau had met Ao "once or twice" but denied their meetings were related to the project. He said the meetings were arranged by Ho Meng-fai. Ao gave the court a similar account. Lo also told the court that he knew of the government's plan to sell the plots of land as early as late 2004 through Jones Lang LaSalle's agent, Tony Lo Hing-hung. The court also heard that Moon Ocean was fully owned by Lo when the 1.368 billion patacas bid was submitted in June 2005. It was later sold to Lau for HK$1.6 billion. The five plots of land, worth 2 billion patacas in 1999, were sold by Lei Pou Fat to Moon Ocean for 1.167 billion in 2005. Comparing this price with those of two pieces of government land sold in 2004 and 2008, Io said, the Macau government should have earned between 3.9 billion and 21.3 billion patacas more from the sale of the land near the airport. Fong Kin-fao, a lawyer for Ao, said the prosecution failed to establish beyond a doubt that Ao had actually interfered in the bids for the land opposite the airport and other government projects. But prosecutor Kuok Un-man said that Ao had abused his power as an official and had disgraced the Macau government, likening Ao's alleged bribe-taking for the sale of government land to "running his own business".

The not-so-mean cost of cruising Honolulu's streets - The SAR's offices in Honolulu and San Francisco hired a car and driver for HK$36,700 during two preparatory visits to hunt for hotels for Donald Tsang. During the "site visits" in Honolulu in December 2010 and February 2011 - five days in total - representatives from the Trade and Industry Department in Honolulu and the San Francisco Economic and Trade Office inspected 11 hotels. Ten of the 11 hotels are within a parameter of just three kilometers - the equivalent of walking from Central to Causeway Bay. The audit report quoted the San Francisco office as saying hiring a driver and car was "operationally necessary" because hotel management was only available during office hours. Hiring a car was important to keep to the schedule as a delay of one hotel visit would have a "knock-on effect" on the appointments that followed. The office added that taxi services were not reliable and could be hard to come by in the tourist areas where the hotels are located. The Honolulu office has used taxi services to find hotels before, but found that this mode of transport is not reliable. But the audit report cited Hawaii's official travel website as saying that taxis are a great way to travel. Calling a taxi by phone or through the hotel concierge is the norm in Hawaii, the report said. Taking the first preparatory visit as an example, it would have cost less than HK$2,000 if taxis were used - but it cost taxpayers HK$14,500 because a car and driver were hired.

 China*:  June 4 2012 Share

China’s news agency warned on Saturday it was no time to “make waves” in the disputed South China Sea after the US said it would shift the bulk of its naval fleet to the Pacific Ocean by 2020. “It is advisable for some to refrain from muddying the waters and fishing therein,” said Xinhua, referring to the sea, which is part of the Pacific and the subject of overlapping territorial claims. China claims the sea in full, and it is also claimed in whole or part by Taiwan, Brunei, Vietnam, Malaysia and the Philippines. “As regards the South China Sea tensions, it is some other claimants, whether emboldened by the United States’ new posture or not, that sparked the fire and have been stoking the flames,” said the agency. It was Beijing’s “genuine wish” to turn the South China Sea “into a sea of peace, friendship and cooperation”, added Xinhua, in the commentary entitled “Not to make waves in South China Sea.” US Secretary of Defence Leon Panetta announced the decision to deploy more ships to the Pacific as part of a new strategic focus on Asia earlier on Saturday at the annual Shangri-La Dialogue in Singapore. He said it was part of a “steady, deliberate” effort to bolster the US role in an area deemed vital to the United States’ future, and insisted the switch in strategy was not a challenge to China.

US Secretary of Defence Leon Panetta tells a Singapore summit on Saturday that the plans are meant to "renew and intensify our involvement in Asia". The United States will shift the majority of its naval fleet to the Pacific by 2020 as part of a new strategic focus on Asia, Pentagon chief Leon Panetta told a summit in Singapore on Saturday. The decision to deploy more ships to the Pacific Ocean, along with expanding a network of military partnerships, was part of a “steady, deliberate” effort to bolster the US role in an area deemed vital to America’s future, he said. And he insisted the switch in strategy was not a challenge to China, saying it was compatible with the development and growth of the fast-growing Asian power. Panetta said “by 2020, the navy will re-posture its forces from today’s roughly 50/50 per cent split between the Pacific and the Atlantic to about a 60/40 split between those oceans. “That will include six aircraft carriers in this region, a majority of our cruisers, destroyers, littoral combat ships, and submarines.” The US Navy currently has a fleet of 285 ships, with about half of those vessels deployed or assigned to the Pacific. Although the total size of the overall fleet may decline in coming years depending on budget pressures, Pentagon officials said the number of naval ships in the Pacific would rise in absolute terms. The United States also planned to increase the number of military exercises in the Pacific and to conduct more port visits over a wider area extending to the Indian Ocean. Panetta was speaking to mainly Asian defence officials and officers from 27 countries at the Shangri-La Dialogue, a summit organised by the London-based International Institute for Strategic Studies. The speech appeared designed to reassure allies worried about Beijing’s more assertive stance in the South China Sea that Washington will back its much-publicised “pivot” to Asia with concrete action. Panetta said budget woes in Washington would not affect the plan to tilt towards Asia, which would take years to fully realise. The United States planned new investments in capabilities needed “to project power and operate in the Asia-Pacific”, including radar-evading fighter jets, a new long-distance bomber, electronic warfare and missile defences, he said. “But make no mistake – in a steady, deliberate, and sustainable way – the United States military is rebalancing and is bringing an enhanced capability and development to this vital region,” he added. Military commanders are revising doctrine to take into account new weapons that “could deny our forces access to key sea routes and lines of communication”. Amid a growing US-China rivalry, American officials privately acknowledge the push for a larger military footprint is meant to reinforce US diplomacy when confronting Beijing’s assertive stance in the South China Sea. But Panetta insisted that Washington wanted dialogue with Beijing and not conflict. “Some view the increased emphasis by the United States on the Asia-Pacific region as some kind of challenge to China. I reject that view entirely,” he said. “Our effort to renew and intensify our involvement in Asia is fully compatible... with the development and growth of China. Indeed, increased US involvement in this region will benefit China as it advances our shared security and prosperity (SEHK: 0803, announcements, news) for the future.” But in laying out core US principles in the region, Panetta made clear Washington opposed any attempt by Beijing to make unilateral moves in its push for territorial rights in the South China Sea. Disputes had to be resolved through agreed-upon rules among all countries and based on international law, he said. Panetta also said the United States is “paying close attention to the situation in Scarborough Shoal in the South China Sea,” where the Philippines and China have been locked in an argument over territorial rights. The Philippines is among a number of countries with overlapping territorial claims in the potentially resource-rich South China Sea. Panetta alluded to US concerns over cyber intrusions that Washington has blamed on China, saying that in talks with Beijing the two sides had “agreed on the need to address responsible behaviour in cyberspace and in outer-space.”

Who wants to be a millionaire's spouse? Young women fill applications forms to attend a matchmaking event for millionaires in Guangzhou, Guangdong province, on May 20. About 320 out of 2,800 applicants participated in the event, but it was unknown how many, if any, found their Mr Right. Many say matchmaking activity for the rich is an insult to women - Some 300 women