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In Depth Look of Hong Kong - Past, Current & Future
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How to Do Business with China, through Hong Kong & Setting up Business in China?
Hawaii Failed Business Image and Continue Missed Opportunities

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

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

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

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

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

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

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The Hong Kong Advantages under One Country Two Systems - when most of the world want to do business with China, there is only one place that China gives 100% backing - that is Hong Kong. Quoting the former Chief Executive of Hong Kong SAR Honorable Tung Chee-hwa "背靠祖國 - 面向世界" "backed by China and engaged globally". Whether you are an international business wanting to do business with China, or just wanting to get connected with Asia and the rest of the world - Asia's World City: Hong Kong is the right and smart choice.

Thumbnail TED: Martin Jacques Understanding The Rise of China 马丁·雅克:了解中国的崛起 http://www.youtube.com/watch?v=DJiOXUHIOeA 

Hong Kong Education Bureau (click on the links for details) 德育及國民教育指引 Moral and National Education Guidelines

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Hong Kong*:  October 1 2012 Share

Mainland visitors boost sales of mooncakes in Hong Kong - Mainlanders visiting the city snap up the real-deal treats after reports of poor-quality counterfeit products being offered across the border. Tai Tung Bakery owner Tse Ching-yuen and his son, Peter Tse Hing-chi, say production has been stepped up at their Yuen Long factory to cope with demand. Counterfeit mooncakes offered on the mainland are helping to boost sales of the festive treat in Hong Kong. In days leading up to the Mid-Autumn Festival, Tai Tung Bakery - a local brand with three outlets - was rushing to produce 10,000 mooncakes in the face of keen demand, said owner Tse Ching-yuen. Counterfeit Wing Wah and Maxim mooncakes, two of the most popular brands, were being offered on mainland websites at prices significantly lower than official ones, but their quality was not up to standard. To make sure they get the real thing, mainlanders were buying the treats directly in Hong Kong. "Negative reports about the poor quality of mooncakes across the border prompted mainland tourists to come and buy mooncakes," Tse said. "Local businessmen are also buying them in bulk as presents for mainland clients." Sales of mooncakes produced at Tai Tung's Yuen Long factory reached 120,000 boxes compared with 100,000 last year, and the bakery was making a last-ditch effort to roll out another 10,000 boxes before the holiday. Tse said demand was boosted by a growing number of mainland customers, who now amounted to about 10 per cent of total trade. Another notable change was the type of customer. "The business buyers are very different from family clients who shop in a relaxed way and take time to decide what cakes to buy," he said. "They come, buy 10 boxes of mooncakes, and leave. Some drive here and then rush home after making their purchases." Tse said he was pretty sure they were not parallel traders reselling the mooncakes on the mainland for profit, as those traders usually had trolleys and bought in bulk. Meanwhile, the counterfeit products have resulted in both Wing Wah's and Maxim's Hong Kong sales rising 20 per cent. While the better performance was not directly linked to the fakes, it was becoming increasingly common for tourists to buy mooncakes during their stay in Hong Kong, said Wing Wah spokeswoman Leung Suet-yee. "They do not have to worry about buying fake products here, as it is a rare to see them in Hong Kong," she said. "Also our mooncakes are HK$10 to HK$20 cheaper per pack than those on the mainland." A Maxim's spokesman said counterfeiting was not a big problem in Hong Kong because of better controls. "We are taking all appropriate steps and working closely with local officials on counterfeits in the mainland market and still reviewing the impact on sales." The company encouraged customers to buy their cakes at official outlets and from appropriate distributors.

Gigi Chao, who recently announced she had married her girlfriend, wants her father, Cecil Chao Sze-tsung, to retract his HK$500 million bounty for a suitable man to marry her. But he says the "manhunt" is for her own good and will offer her "one more choice in life" other than her same-sex partner. The highly public exchange via the media, and the flood of proposals from all over the world in response to Chao's offer, have come before the pair have had time to talk it over face to face. But Gigi still found time yesterday to wish her father happy birthday - he turns 77 today - and to thank him for being "sweet". The offer by Chao, owner of Cheuk Nang (Holdings), came days after Gigi announced that she had married her long-time girlfriend, Sean Eav, five months ago. Since then, around 1,500 friend requests, proposals and messages have flooded into her social network accounts. But her playboy father, although sounding stressed, insisted the plan to find her a husband must go on. "It just offers her one more choice in life. She is in charge to make the final decision," he said. "People have been mistaken in thinking that I would pick the man for her. How is it possible? It's not Romeo and Juliet and I won't stop her from seeing anyone." The overwhelming response has taken him by surprise, but he does not see the need to retract the offer, saying: "We can leave them alone for the time being." In response, Gigi thanked him and said: "Please wish him a very happy birthday. His baby girl will always find him the most handsome man in the known universe and irreplaceable as a father and love him very much." However, she gave no hint of accepting any of the suitors. "I am sure daddy is enjoying being the king, seeing all these handsome men from distant lands beg for his daughter's hand," she said. "I hate to be the one bursting his daydream bubble, but hello, it's 2012." Hong Kong musician Anthony Wong Yiu-ming, who came out as gay at a recent concert by his group, Tat Ming Pair, said Chao senior was living in an obsolete world. "Using money to change one's sexual orientation and choice of love is an unacceptable way of thinking," Wong said.

Huge refund to CLP Power, Hong Kong Electric sparks questions - HK$1.7b given to utilities brings calls to offset price increases, and demand for explanation. The government quietly refunded nearly HK$1.7 billion to the two power companies for overcharged rent and rates on properties even before disputes over the money were finally settled. The disclosure brought calls yesterday for CLP Power and Hongkong Electric to use the money to offset any price increases in a tariff review expected next month. But while CLP has returned to customers about HK$503 million of its HK$1.52 billion interim payout, Hongkong Electric has yet to say what it will do with its expected HK$1 billion refund, of which it has so far received about HK$140 million. Neither the companies nor the government have made any public announcement about the payments, except that CLP referred to its refund in a note to its 2012 interim report. CLP Power has previously warned of a 40 per cent tariff rise in three years due to more expensive and wider use of natural gas. In May, its chief executive, Andrew Brandler, said the company would have to use twice as much gas to meet the government's 2015 emission- reduction target. "The era of cheap gas is over," he said. A member of the Energy Advisory Committee, Dr William Yu Yuen-ping, said the refund would be welcomed by power users. "With hundreds of millions of dollars, the two power firms will have more room to reduce their tariff increase next year," he said. The power companies have been in long-running disputes over the way rates and government rents are calculated on their properties. The Court of Final Appeal ruled in favour of Hongkong Electric in June last year, but the Lands Tribunal, which is handling the CLP case, has yet to make a final judgment. Neither CLP nor the government would explain how such a huge payout was possible to the company before the decision, but CLP said the exact amount was subject to the outcome of an eventual appeal. Hongkong Electric said it was still discussing with the government the "final quantum" of the refund and how it should be handled. "We have received some money from the government and continue in discussions with them on the remaining portion," a spokeswoman said, without disclosing the received amount or how it would be spent. The Ratings and Valuation Department said the partial refund was about HK$140 million and discussions were continuing about overpaid rent and rates for other financial years. It expected the eventual amount to be more than HK$1 billion. CLP has paid a three-HK-cents-per-kilowatt-hour rebate to its customers since January this year after a row with the government over a proposed tariff increase of more than 9 per cent. Amid public anger, this was cut to 4.9 per cent, with about 40 per cent attributed to the refund. Hongkong Electric cut its proposed rise from 8 per cent to 6.3 per cent by delaying the recovery of fuel costs from customers, but it has never made clear whether the government refund will be passed on to consumers. Richard Tsoi Yiu-cheong, convenor of the Coalition to Monitor Public Transport and Utilities, said the government owed the public an answer on why it paid CLP before the case was closed. "It is all about public money and officials have an obligation to explain it and make it public," he said. The Environment Bureau did not comment on the refund.

 China*:  October 1 2012

Economists say August data put added pressure on government to halt slowdown Chinese industrial businesses saw their profits fall by 6.2 percent year-on-year in August, marking their fifth consecutive monthly drop. Observers said the disappointing results are likely to prompt the government to adopt stronger measures to boost economic growth. Industrial companies with at least 20 million yuan ($3.17 million) in annual revenue saw their net income decrease to 381.2 billion yuan last month, according to data released by the National Bureau of Statistics on Thursday. The August decline of 6.2 percent was the largest reported this year, compared with a 5.4 percent fall in July and a 1.7 percent decrease in June. In the first eight months of the year, the companies had 3.06 trillion yuan in total profits, 3.1 percent less than in the same period of 2011, the bureau said. The lower profits may continue to drag down entrepreneurs' confidence and suppress industrial operations in the fourth quarter, putting pressure on the government to stop the country's worst economic slowdown in 22 years, economists said. "The industrial sector remains grim and GDP growth in the third quarter might slow to 7.3 percent year-on-year from the second quarter's 7.6 percent," said Huang Yiping, chief economist for emerging Asia at the investment banking division of Barclays Bank Plc. During the first eight months of the year, State-owned industrial companies made 883.9 billion yuan, 12.7 percent less than that in 2011. Private-sector companies saw their profits increase to 945.4 billion yuan, up by 15.1 percent from a year earlier, the bureau said. Among the 41 industries the bureau's survey considered, 16 saw their profits decline and one reported a loss, the statistical agency said. The ferrous metal smelting and rolling processing industry made 67.4 percent less net income than it had a year before, and the raw materials and chemical products manufacturing industry saw its net income decrease by 20.2 percent. The bureau's statistics said the electronics industry's profits decreased by a mere 2.9 percent. Even so, Shen Xiangjun, sales manager of Ningbo Yunhuan Electronics Group Co Ltd, said his company, as well as others of its kind, saw its profits go down by at least 10 percent in the first eight months of 2012. "The electronics industry is at the forefront of the entire industrial chain, as other industries need to buy parts from us," Shen said. "If we are suffering from a profit loss, it means all of manufacturing is being hit hard. "For one thing, we dare not explore the domestic market, for domestic consumption has not been promoted yet. For another, the European and US economies remain stagnant, which is giving the Chinese export business a hard time. "We are so trapped. With labor costs and raw material prices ever increasing and little money to spare now for technological innovation, all we can do is simply wait and see." A preliminary Manufacturing Purchasing Managers' Index released by HSBC Holdings Plc showed an 11th month of contraction in September, rising slightly to 47.8 from 47.6 the month before. A score above 50 indicates expansion and one below contraction. Although industrial activity continued to weaken, especially in base metals and industrial machinery, financing conditions have improved for central government-supported infrastructure projects. That may help support the world's second-largest economy's growth in the coming quarters, Huang said. According to the People's Bank of China, the country's central bank, 703.9 billion yuan worth of new loans were made in renminbi in August, an amount 28.33 percent higher year-on-year. Sun Junwei, a Chinese economist with HSBC, predicted that manufacturers, especially those that tend to rely on exports, will be led to cut jobs in the months ahead. Beijing, being well aware of that risk to the labor market, is likely to take further easing measures, Sun said. "We have to ensure the quality of our products to retain our regular customers," said Liu Mengjue, manager of Wenzhou Jinyi Clothes, which exports most of its products to the US and some parts of Europe. "The international prospects are so gloomy that we literally don't have any business this year. So we're building a new plant on a piece of land that we had bought a long time ago, as we have nothing better to do." Economists called for more financial support to go to infrastructure construction in the coming months. Boosting investment is the most effective way to maintain growth amid the current circumstances, they said.

The United States isn't seeking to mediate an escalating dispute between China and Japan over the Diaoyu Islands but will continue to encourage the two Asian powers to resolve the matter through diplomacy, a senior US diplomat said Friday. Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, told reporters at a briefing in New York that the US has a strong interest in seeing the territorial dispute handled through dialogue. Any military action in search of a solution would be "unwise", he said. Various US diplomats have exchanged ideas with counterparts from Asia-Pacific countries this week during the start of the annual session of the United Nations General Assembly in New York, Campbell said. "We are trying to send an overarching message that it is strongly in the interest of all countries, including the United States, that territorial matters be handled carefully, and that we very much want cooler heads to prevail in the current environment, and that we are seeking to support quiet, effective diplomacy across the border," he said. US officials have said Washington would remain neutral in the dispute, but also said the US-Japan security treaty signed after World War II includes the Diaoyu Islands. The mixed message has prompted speculation that the US might seek to play the role of mediator. But Campbell, speaking on the perimeter of this week's UN meetings, insisted that Washington has no intention to act as a mediator in the dispute and said it is up to China and Japan to work out their differences and discuss potential solutions. "We have indicated quite clearly that this is a matter for diplomacy between the two countries, and the United States has no intention [of] and we are not playing a mediating role," the State Department official said. "We have high confidence in the judgment and recognition on both sides of the importance of this relationship," Campbell said. He said it is a widely shared view in the Asia-Pacific region that the US should refrain from taking an active role in the standoff. "We think it is appropriate. … We think it is a responsible view as well. So the United States is not going to play that kind of role going forward." Since April, the historically sensitive Chinese-Japanese relationship has been strained by the row over the East China Sea islands. Shintaro Ishihara, the right-wing mayor of Tokyo, recently announced plans on behalf of the city's government to "purchase" the islands from a "private owner". Earlier this month, amid strong opposition and serious warnings from Beijing, the Japanese government claimed to have "purchased" three of the Diaoyu Islands chain, which belongs to China. Following nationwide protests, Beijing sent two China Marine Surveillance patrol ships to waters around the islands and suspended ceremonies marking the 40th anniversary of the establishment of diplomatic ties with Japan. Trade between the two countries has also been affected by the dispute. On Thursday at the UN General Assembly, Foreign Minister Yang Jiechi strongly urged Japan to end its violation of China's territorial sovereignty, saying Tokyo "stole" the Diaoyu Islands from China.

Hong Kong*:  Sept 30 2012 Share

Mainland shoppers divided by different tastes for luxury - Chinese seasoned travellers most likely to buy premier brands in the city, while novice buyers seek mass luxury brands, according to survey. Buying patterns differ sharply among mainland shoppers in Hong Kong, according to a recent survey by market research company Nielsen. The number of mainland visitors to Hong Kong annually is more than four times the city's population, and visitor arrivals have been growing by about 23 per cent a year. Most of their expenditure is on shopping. Last month, Nielsen polled 600 mainland visitors to Hong Kong, evenly split between so-called seasoned and novice travellers. Seasoned travellers, defined as those who come from top tier cities such as Beijing, have visited Hong Kong more than once and stay longer on each trip, are more likely to buy premium brands, such as Hermes and Chanel, the survey showed. Novice travellers, those from second-tier cities such as Chengdu, are first time visitors to Hong Kong and stay for a shorter period, are more likely to shop for mass luxury brands such as Burberry and Gucci. "The seasoned [mainland] travellers treasure the trustworthiness and uniqueness of the product much more than the novice travellers," who are attracted by the cheaper prices in Hong Kong relative to the mainland, said Oliver Rust, managing director, Nielsen Hong Kong. Broken down by categories, seasoned travellers from the top-tier cities, including Beijing, Shanghai and Shenzhen, each spent more than HK$10,000 on handbags or HK$17,000 on watches or HK$4,000 on cosmetics or HK$6,000 on electronic products on average per visit, according to the survey. One factor driving these repeat visitors to Hong Kong is that they can purchase models of luxury items that aren't yet available in the mainland, Rust said. For instance, sought-after electronic goods such as the iPhone5 (released this month was available in Hong Kong before China, creating an incentive for the mainland travellers to come to the city. The Nielsen survey also showed that shopping patterns of mainland visitors are influenced heavily by word of mouth. Some 76 per cent of the respondents said that they seek advice either from friends or from the internet before they go abroad, compared with 36 per cent in past surveys. Rust attributed the strong word-of-mouth influence to the high number of internet users on the mainland.

You will be paid US$64 million to marry 33 years old Gigi Chao? 'Applications' coming in thick and fast for tycoon's daughter - Tycoon Cecil Chao Sze-tsung says "applications" have flooded in from around the world since he put up a HK$500 million (US$64 million) bounty to find a man to win the heart of his daughter, Gigi. "People send me letters, e-mails and faxes," Chao told the Post. He has received about 100 applications. "I haven't had time to read them yet. I'll have to discuss it with Gigi." The property mogul has been at the centre of worldwide attention and had to field a flurry of résumés and photographs since launching the search for a man for Gigi earlier this week, after reports that his daughter had wed her lesbian partner. "There are some who said they don't want the money, only the chance to know my daughter," the playboy said, adding that there were some handsome guys in the pile. Chao, who has never married and famously boasts of bedding 10,000 women, came up with the offer after reports emerged that his 33-year-old daughter had entered into a civil "marriage" with same-sex partner Sean Eav in France. Chao insisted his daughter was not gay and put up the reward to find the right man for her. Chao said half of the applications are from overseas - NBC News, Agence France-Presse, Britain's Telegraph, The Australian and The Times of India among others have quoted the Post's report. Gigi, who has declined to confirm that she is gay or that she entered a civil union with Eav, is at the centre of a storm. "In addition to more than 1,500 Facebook friend requests, Twitter, YouTube and Google+ followers, I am also getting so many e-mail marriage proposals it's seriously distracting," the socialite said. "Even my friend from Denmark has read the news there. I am secretly praying for a blackout … so that I can get some peace and quiet." The Post has also fielded e-mail requests. A Frenchman, 38, wrote: "I'm really serious and [despite the fact] I am a man I think I can make this woman happy, I'm as soft as a woman." Another internet user, going by the name Robin Hood 702, wrote: "I will win his daughter's heart and marry her, and my Maid Marian, a gorgeous Brazilian model, will help accomplish that with me."

The Free Trade Agreement between Hong Kong and the Member States of the European Free Trade Association, namely Iceland, Liechtenstein, Norway and Switzerland, will soon enter into force, a spokesman of Hong Kong's government announced Friday. The part of the Agreement involving Hong Kong and Iceland, Liechtenstein, and Switzerland will enter into force on Oct 1, while the part involving Hong Kong and Norway will enter into force on November 1. The Agreement, signed on June 21, 2011, is Hong Kong's first free trade agreement with European economies, which covers a wide range of areas including trade in services and goods as well as investment, and other trade-related issues such as protection of intellectual property. Under the Agreement, the EFTA States will eliminate tariffs on all industrial products as well as fish and certain marine products originating in Hong Kong. Processed agricultural products of Hong Kong origin will also enjoy tariff concessions when imported into the EFTA States. On trade in services, Hong Kong service providers and the services they provide will enjoy better business opportunities and legal certainty in market access as well as non-discriminatory treatment in the EFTA States markets in a wide range of service sectors. These encompass areas in which Hong Kong has traditional strengths, such as telecommunications services, financial services, logistics services and etc. as well as those identified with potential for further development, such as education services, environmental services, medical services, innovation and technology and etc. In terms of market access, there will not be any restrictions on foreign capital, the number of service providers or operations, the value of service transactions, the number of persons employed, types of legal entity or joint venture requirements for various service sectors in the EFTA States markets. To facilitate movement of business persons, without compromising legitimate immigration control, business visitors, intra-corporate transferees, installers or maintainers, contractual service suppliers and independent professionals of Hong Kong will be granted temporary entry into the relevant EFTA States in accordance with the commitments of individual EFTA States. To facilitate mutual investment flows and expand related economic activities, the Agreement provides investors in non-service sectors with legal certainty on national treatment, facilitates their temporary entry into and stay in the EFTA States, and provides them with safeguards on movement of capital and other aspects. These complement the Agreement's provisions on trade in services.

A Seminar on Hong Kong Scientists' Participation in National Science and Technology Development was held in Hong Kong Friday. Hong Kong's Commissioner for Innovation and Technology Janet Wong, and Xu Hai, deputy director-general of the Office of Hong Kong, Macao and Taiwan Affairs under the Ministry of Science and Technology presided over the seminar. Wong said the seminar focused on the various paths for Hong Kong to participate in Mainland-Hong Kong science and technology cooperation under the National 12th Five-Year Plan (2011-2015). It would help encourage more Hong Kong research institutes and personnel to participate in national science and technology programs. He noted that the rapid developments in China's mainland and its 12th Five-Year Plan had inspired greater interest in mainland policies and measures on the innovation and technology. Wong also spoke on Hong Kong's measures to promote innovation and technology development, in particular science and technology cooperation with the mainland. Representatives from the MOST also briefed the participants on the State Science and Technology Awards, the State R&D Programs, the National Science and Technology Programs Expert Database, and the Partner State Key Laboratory Scheme. The seminar also featured a representative from the Chinese Academy of Sciences speaking on the academy's cooperation and exchanges with Hong Kong. Representatives from the Guangdong Provincial Department of Science and Technology and the Science, Technology and Innovation Commission of Shenzhen Municipality spoke on Guangdong-Hong Kong cooperation and the latest developments of the Industry, Academic and Research Bases in Nanshan, Shenzhen.

 China*:  Sept 30 2012

Foreign retailers bank hopes on China - It is common enough, even traditional, for a mother in London to dish up Weetabix cereal for her children's breakfast. If a mother from Chongqing in Southwest China does the same, it would be regarded as Western, possibly as something cool and exotic. What they are unlikely to realize is that Weetabix is now a Chinese product, the 80-year-old British brand having been recently bought by Bright Food, based in Shanghai. The change of ownership indicates both the economic muscle of some Chinese companies and the appetite of Chinese consumers for Western brands. According to the Global Retail Index, a survey carried out among 200 retailers worldwide, China and India are seen as the top growth markets. Multinational operators said they expect sales to increase in both countries, while those operating elsewhere remain cautious about future growth, according to the report released at the World Retail Congress in London in early September. Modern retail outlets, such as supermarkets and hypermarkets, are common in the West and in big cities in China, but not in underdeveloped areas. Urbanization happened in London in the 19th century. In Chong-qing, only 6.5 million of its 28 million residents live in urban areas. The Chinese government aims to transform the economy by letting more of the population move into cities, where they will spend more as their lifestyle changes. In the countryside, a household eats whatever is grown in the fields; in cities, they have to go to supermarkets. For retailers in the West, that means good opportunities. Many are facing difficulties with governments and consumers cutting spending in many European countries. Looking beyond their borders for business has become even more important. The global retail survey says that the companies polled appreciate that China's economy is slowing down, but is far from being in recession. Lim Beng Chee, chief executive of CapitaMalls Asia, a leading retail real estate developer, says he considers China's 7 to 8 percent economic growth "still very good". He says this increase is remarkable when compared with European countries, which will see hardly any growth, and is good even when compared to places such as Singapore, currently looking at a 2-3 percent annual growth rate. Many Western retailers have already opened stores in China. Tesco, the largest supermarket chain in Britain, has opened more than 100. Marc Bolland, CEO of British retail giant Marks & Spencer, says the company is looking to Asia and Europe to provide its best growth prospects, and that it aims to open 100 international stores annually. As well as general retailers, some specialized retailers are also expanding in China. Alliance Boots, Europe's largest pharmacy chain, recently signed a strategic agreement with Nanjing Pharmaceutical, China's fifth-largest pharmaceutical wholesaler with a good retail network. The retail market in China is consolidating, says Stefano Pessina, executive chairman of Alliance Boots, "and we would like to act as a market catalyst in China with regards to the consolidation process". According to Pessina, the Chinese retail market has seen double-digit growth for many years, and with around 10,000 wholesalers now, the government seems to favor a consolidation process that will involve international companies and give birth to a limited number of reliable players. "But obviously, the key reason why we decided to prioritize China is because we believe we cannot become global without having a strong presence there," he adds. Increasing urbanization in China also offers huge potential for retailers. Large-scale urbanization will happen in the next 10 years, says Lim of CapitaMalls Asia, and more people will change their lifestyle and start shopping at supermarkets. "Each year around 30 million people move to China's cities from rural areas, and that means the country's retail industry is developing rapidly," he says. Therefore, many of the international retailers have started to look beyond the mega-cities of Beijing, Shanghai and Guangzhou. For instance, Wal-Mart, Carrefour, and Metro Group have established businesses in Chongqing and announced future plans to expand around this region, according to a report on the retail industry by Deloitte. Despite the potential, however, establishing a retail business in China is harder than it used to be. About five years ago, a foreign retailer had a chance of success as long as it had a presence in China, due to strong demand and less competition, according Frank Wei, managing director of Warburg Pincus Asia LLC, the private equity firm that has invested in Gome, China's second-largest home appliances chain. Nowadays, foreign players need to be more creative and innovative to succeed in China, he says. "The market has become much more competitive, with places like Beijing and Shanghai close to saturation." He adds more companies are looking at opportunities in second and third-tier cities, as well as having to provide specialized retail offers. Warburg recently invested in a retailer in Nanjing in Jiangsu province, specializing in childcare. But Wei says that despite the overall economic slowdown, some of the companies his firm has equity in are still seeing annual sales increases of about 30 to 40 percent. In the third-tier cities now being targeted, it is all about building a strong infrastructure and having a strong local presence, he says. CapitaMalls' Lim says that international retailers also need patience to learn about the market. CapitaMalls, from Singapore, came to China in 1995 and failed to make a profit in the first six years. And as Alessandro Benetton, chairman of the Benetton Group, the Italian fashion brand, said in a recent interview: "When it comes to China, there are as many people queuing in as people queuing out." Another new trend is online stores. In China, as elsewhere in the world, more people are shopping online. E-commerce is developing at breathtaking speed in the country - valued at about $100 million (77.7 million euros) in 2011, with an annual growth of 30 percent - but, according to Wei, people are still learning how to profit from it. "There are opportunities for making money. The problem is how, " he says.

Michigan ads seen in China - Michigan may not strike most Chinese as a top travel destination in the United States, but if Li Hairong and Tom Watkins get their way, the state will become a hotspot for tourists seeking something different. Michigan, perhaps best known for auto manufacturing, has "much, much more to offer" beyond the plants run by the Detroit Three (Chrysler, Ford Motor Co and General Motors), Watkins said. "New York and San Francisco are beautiful, as are Beijing and Shanghai. But if you want beauty and to experience what America is truly about, come to Michigan," the former school superintendent said. His friend Li, a professor of advertising at Michigan State University, agreed. "Chinese tourists who have seen the [US] East and West coasts may be looking for something different, and Michigan is the right place," he said. The duo hit on the idea of revamping five videos to pitch Michigan as a destination for tourists from China. The 30-second spots are part of the Pure Michigan campaign begun in 2006 by the state Economic Development Corporation. Subtitled in Chinese, they're now available on China's video-sharing website Youku, which has 500 million users. "There are more businesspeople from Michigan traveling to China, and they often need to introduce Michigan to the Chinese people," said Li, a Beijing native who has lived in the state since 1987. When he gives talks about advertising and branding in China, Li screens the Pure Michigan commercials for his Chinese audiences, often prompting remarks about the Great Lakes State's natural beauty. The subtitles from the spots' original voice-over - by Michigan-born actor Tim Allen - were transcribed by Cao Lu, a former student of Li's. "Those commercials are intended to help the Chinese people learn more about our beautiful state, visually and vividly," the professor said. Watkins points to Michigan's "clean air, vast forests" and its unique geography - bounded by four of the five Great Lakes, which together contain 20 percent of the world's fresh water. The state also boasts more championship public golf courses than anywhere else in the US, he added. Both of the state's main public higher-education institutions, Michigan State and the University of Michigan, rank in the top 10 in the US for the number of international students. The majority of this group on each campus are from China. "These Chinese students are adding value to our state," Watkins said. "It is our goal to make Michigan a great place not only for students to receive a great education, but to make their stay memorable so they may consider staying to create a business or encourage their family back in China to seek investment opportunities here." State leaders are pursuing such opportunities with vigor. Governor Rick Snyder recently returned from China, where he led a delegation of Michigan officials and businesspeople. It was Snyder's second trade trip to China since taking office in January 2011. "Governor Snyder understands that it takes time to develop the relationships necessary to seal deals," Watkins said. "He is seeking to develop a relationship with both private businesses and government officials in China." Watkins said a priority for the state is to increase exports of agricultural goods, technology and services to China while creating investment opportunities for Chinese companies. Besides the online videos, the state is marketing its brand in China. The Economic Development Corporation is leading representatives of 21 Michigan companies on a two-week trip to China to pursue export opportunities, agency spokesman Michael Shore said. "There are many opportunities of mutual benefit for the people of China and the people of Michigan through increased trade and foreign direct investment as well as educational and cultural exchanges," he said. Li and Watkins' next tourist-outreach effort is to share the Pure Michigan spots with Chinese travel agencies. The US welcomed more than 520,000 visitors from the Chinese mainland during the first six months of 2012, up 42.5 percent from the first half of last year, according to the Commerce Department.

China-Japan ties may sink like Titanic: official - China's assistant foreign minister on Friday urged Japan to seriously self-reflect to ensure bilateral ties get back on track, warning that continuous erroneous practices by Japan will see the relationship between it and China sink like the Titanic. Le Yucheng made the comment at a seminar organized by the Chinese People's Institute of Foreign Affairs and the China Institute of International Studies to mark the 40th anniversary of the normalization of China-Japan relations. Stressing the auspicious occasion, Le expressed regret that despite China's repeated solemn representations, the Japanese government had decided to "purchase" the Diaoyu Island and its affiliated islands, severely infringing upon China's territorial sovereignty and damaging the foundation for bilateral friendship. "It caused bilateral ties to suffer a serious setback," the assistant foreign minister said, adding that Japan should abandon the idea that it can occupy the Diaoyu Islands and that sending a few envoys to China to explain the issue will be the end of it. China hopes the Japanese government will respect history, be responsible for bilateral ties and the peace and stability of East Asia, understand the situation clearly and conduct deep self-reflection, Le urged. Japan should have the political courage to take effective measures to defuse the Diaoyu Islands issue and stop any acts that undermine China's territorial sovereignty so that the bilateral ties can return to healthy development, Le said. He called on Japan to build trust for the bilateral ties by respecting the understanding and consensus on the Diaoyu Islands reached between the older generation of leaders of the two countries. "Maintaining China-Japan friendly ties is not the business of China alone. The key is that Japan should follow the path of peaceful development and prevent right-wing forces from misleading the country, and accept rather than contain China's development," Le said. Seeking friendship and cooperation between China and Japan is in the interests of the two peoples and trends of the era. Those who block the road to cooperation will be condemned by history, he added.

Hong Kong*:  Sept 29 2012 Share

Li Ka-shing's Cheung Kong conglomerate has got European Commission clearance to buy British gas supplier Wales & West Utilities, with the deal likely to be sealed within weeks. A consortium led by Cheung Kong Infrastructure Holdings (1038), and including Cheung Kong (Holdings) (0001), Power Assets Holdings (0006) and the Li Ka Shing Foundation, announced plans in July to buy WWU for 645 million (HK$8.11 billion). WWU provides gas to about 7.4 million homes in Wales and southwest England. The deals means that together with their 88.4 percent interest in Northern Gas Networks, CKI and Power Assets will own two of the eight British gas distribution networks. It also means Li-controlled firms will supply gas to a quarter of the British population. The Li foundation has a 10 percent stake in the consortium, with the other three firms owning 30 percent each. After investing HK$2.5 billion each on the acquisition, CKI and Power Assets will see gearing ratios rise to 11 percent and 36 percent, respectively. CKI and Cheung Kong (Holdings) rose 0.3 percent and 0.7 percent, respectively, while Power Assets slipped 0.2 percent. 

About 7.6 million travelers are expected to cross at border points for the Mid-Autumn Festival- National Day Golden Week, up 20 percent on last year's holiday, the Immigration Department said. The number of outbound passengers will peak tomorrow, with about 382,000 people leaving the SAR, while arrivals will peak on Tuesday, when 438,000 residents will come back after the four-day holiday, said Gavin Ho Ka-wing, the deputy divisional commander (border). All border frontline staff have been told to cancel their leave during the week, from tomorrow until next Sunday. The Travel Industry Council said about one million mainlanders - who will start their Golden Week on Sunday - will visit Hong Kong, up from 780,000 visitors last year. It is also expected that 77 percent of them will pass through the land boundary control points. Lo Wu is expected to be the busiest with a daily average of 296,000 passengers. Ho said the department has joined forces with the police, customs and the MTR to control the crowds. "Visitors should avoid crossing the border during the morning and evening peak hours," Ho said. Meanwhile, fine and slightly cooler weather is expected to draw 250,000 people to the National Day fireworks show on Monday evening. Many roads on both sides of Victoria Harbour will be closed to traffic to allow the public to watch the 23-minute pyrotechnic display, which will begin at 9pm. Roads in Hung Hom, Tsim Sha Tsui, Wan Chai and Central will close in phases from 7pm. Kowloon West acting traffic superintendent Hung Hin-kau urged those who plan to attend the display to take public transport instead of driving. Travel Industry Council executive director Joseph Tung Yiu-chung said the expected increase in mainland tourists can be attributed to the ongoing Sino-Japanese crisis, which has prompted mainlanders to drop Japan from their holiday plans. The Hong Kong Tourism Board, meanwhile, has said mainlanders will spend around HK$4.4 billion while visiting.

Eslite bookstore's 24-hour model fails in Hong Kong's tough market - Taiwanese book chain's first store in HK changes hours to meet business reality - lack of sales. The new Taiwanese mega bookstore in Causeway Bay has revised its round-the-clock operations after a month-long trial. The rationale behind that decision could be summed up in a talk by Eslite founder and chairman Robert Wu Ching-yu at the University of Hong Kong: "Running a bookstore in Hong Kong, I believe, requires a little more shrewdness and a little less romance." The three-storey store at Hysan Place now closes at 11pm daily. As of next month, it will stay open until 2am from Thursdays to Saturdays and on the eves of public holidays. The revised hours mark a departure from the 24-hour model on which Eslite's domestic outlets are based three days a week. "We need to strike a balance between readers' expectations and business reality," Catherine Wang Po-chi, chief operating director of the Causeway Bay store, said yesterday. The store is Eslite's first outside Taiwan since Wu founded the chain in 1989. Launched on August 11, it has already received some 1.2 million visitors. During the first month, it was open 24 hours from Thursdays to midnight on Sundays. "The moving scene of Hong Kong readers enjoying a moment of quiet reading after the closing of mass transport is what we saw at our Dunnan branch in Taipei in the past," said Wang, Wu's chief lieutenant in Hong Kong. However, a major consideration for the firm is "the sales volume during those early hours". "We have to be practical," she said. "It took us a long time to establish the 24-hour practice in our Taiwanese stores, and that provides us with experience in mapping out our strategic plans." The chairman's target, she said, was to generate a surplus in the first year, despite the Eslite group being in the red for its first 15 years in Taiwan. "My staff are working extra hard, living up to Eslite's motto of four likes: art, reading, work, and overtime. The only dislike is money," Wu told a crowd of HKU students on Wednesday. He struck an upbeat tone about the concept which he has brought to Hong Kong, dismissing doubts over Eslite's competitiveness in the face of different lifestyles and reading habits in the city. "I believe we have the best collections in town. We might not offer the same discounts, but we have the space for readers to enjoy the books," the entrepreneur said with a smile. The 61-year-old told the audience that he owed the city a deep gratitude for a high-risk heart operation he underwent in 2006 and thanked the two HKU doctors at Queen Mary Hospital.

MTR passengers will be able to enjoy fourth- generation telecom network service at busy stations by the end of the year, and full coverage will be available by June. "Our colleagues have been working hard to install the network when the MTR stations stop service every night," commercial director JenyYeung Mei-chun told The Standard. "Priority will be given to stations with heavy people flow." Yeung declined to say how many stations will have 4G by year-end. But the network will likely be available at Causeway Bay, Central, Tsim Sha Tsui, Mong Kok and Admiralty stations first. Mobile carriers have to pay MTR Corp (0066) for the installation. Yeung said discussions between carriers and the railway have been going well and all mobile subscribers will be able to enjoy the service once the 4G network is ready. The 3G technology now used on the MTR system requires upgrading, as customers are dissatisfied with its speed and quality. Even SmarTone (0315) customers find the data speed falls when they use iPhones at MTR platforms and on trains at present. SmarTone is currently the only local carrier that uses 1.8 gigahertz bandwidth, which supports iPhone 5 - best compatible with 4G. Regarding the government's idea of introducing penalties on the fare-adjustment mechanism that is under review, Yeung said the MTRC will try its best to cooperate with the administration. The mechanism is supposed to permit fares to be lowered or raised according to operating costs. But it has been under heavy criticism because fares have never been lowered since the program was implemented in 2007. MTRC hiked fares by 2.1percent, 2.2 percent, and 5.4percent in 2010, 2011, and 2012, respectively - despite annual net profit of about HK$10 billion. The rail operator, however, has offered various promotions. While most of the company's income is generated from property projects, Yeung said such income does not have a steady flow, when asked whether it should be included in the mechanism. After several fare hikes in the past few years and other technical reasons, it is now more expensive on some routes to use the Octopus card rather than buying individual tickets.

HK to step up surveillance of parallel traders ahead of Golden Week - Surveillance of mainland parallel-goods traders will be stepped up during the long weekend holidays, when 7.6 million travellers are expected to cross the border, immigration officials said on Thursday. Immigration deputy division commander Gavin Ho Ka-wing said extra manpower would be deployed at border checkpoints to handle the surge in visitors, which is expected to be 20 per cent more than during last year’s “Golden Week”. The Mid-Autumn Festival and National Day holidays fall on Monday and Tuesday next week, respectively. The additional border officers will also be watching for parallel-goods traders, and deny entry to suspicious travellers, Ho said. Hong Kong law enforcement authorities have cracked down on parallel traders from the mainland this month. Saturday would be the peak day for outbound travellers’ during the holidays, Ho said. Parallel traders buy goods in Hong Kong to sell over the border, to dodge high taxes on the mainland. Hongkongers living near the border have protested against the traders for obstructing an MTR station and nearby streets and buildings while doing business. Since last week, more than 130 mainland parallel-goods traders have been arrested by law enforcement officers during four crackdowns in Sheung Shui. A small number of them have been convicted in Hong Kong courts of breaching their conditions of stay by working as traders. Most of the others have been repatriated. Twenty of them have tried to re-enter Hong Kong since their repatriation, Ho said, but they were all denied entry at the border.

Hong Kong's finest late-night nosh - Is it getting easier to find a real meal in the city after midnight?Nan-Hie In joins the night owls. Software developer John Chapman regularly eats dinner after midnight, courtesy of a job with unusual hours, one that requires testing software on real-time financial market data overseas. Sometimes he's in his Central office from 4pm to 3am. A career-long night owl who has worked in major cities around the world, the Chicagoan has become something of a nocturnal dining connoisseur by default. "You can always get high-quality ramen [in Tokyo] no matter what the hour, especially in Roppongi," says Chapman. In New York, the possibilities are endless. "There are areas dedicated to 24-hour dining, like Koreatown, where I go for pho at Pho 32, a franchise found all over New York," he says. Pizza is another favourite pre-dawn meal as a fine slice can be had at any time in Manhattan. But when asked about top twilight eats in Hong Kong, Chapman's mind draws a blank. With so few kitchens open all night in Central, his choices have narrowed to eating for sustenance alone: kebabs at small outlets such as Beirut or Ebeneezers, or omelettes at round-the-clock breakfast diner The Flying Pan. "Hong Kong is a bit limited when it comes to late-night foods because it's such a small place," says Chapman. While Hong Kong's dining landscape boasts a dizzying diversity in cuisine, most gourmet opportunities vanish by midnight, leaving late-night diners with a dispiriting choice. It is one area in which the city fails to measure up against other international culinary capitals. But the selection is improving with a few game-changers opening recently, such as Loyal Dining - a restaurant by entertainment mogul Steven Lo Kit-sing's food and beverage arm, BMA Catering Management. The company's marketing and public relations director Joan Law is familiar with the menu limitations in the area. "Most options at night are cha chaan teng, so the selection is narrow and in environments that are not always clean or comfortable," says Law. Although Loyal Dining doesn't see itself as a cha chaan teng, the year-old restaurant was designed to give an upmarket version of Hong Kong's street food. It aims to dish up an extensive menu filled with local favourites, available until late, in a soothing and clean environment. In the same neighbourhood, AKA Japanese Cuisine and Lounge gives sleepless gourmets options they are unlikely to have encountered before - soft shell crab tempura, soba noodles and more. Satisfying a late-night gourmet food craving has become a question of exploring tasty possibilities rather than overcoming a challenge.

Mitt Romney’s HK backers rally to raise campaign funds - US Republican candidate Mitt Romney's Hong Kong supporters have raised more than US$385,000 for his White House run. Supporters of Republican presidential candidate Mitt Romney plan a campaign fundraiser for him on Thursday in Hong Kong, where US business interests intersect with China’s growing influence as a world financial superpower. The third-highest ranking Republican in the House, Majority Whip Kevin McCarthy, was due in Hong Kong on Thursday to make an appearance at the event, Erica Elliott, a spokeswoman for the California congressman said on Wednesday. Romney campaign spokesman Danny Diaz confirmed the report but added “no other specifics at this time”. Business community figures in Hong Kong also confirmed the event. Hong Kong has been a dependable source of campaign cash for Romney, where expatriate supporters have already raised more than US$385,000 for his White House run, according to federal campaign finance records. US President Barack Obama’s campaign has also mined cash from partisans there, raising US$84,000. Many of both candidates’ backers in Hong Kong are business figures who deal regularly with Chinese officials and corporations, a focal point of growing presidential campaign concern over US-China trade friction. Romney and Obama have sparred repeatedly over how to deal with China’s growing economic rivalry to the US, and the issue looms as a critical talking point in the upcoming presidential debates. Romney accuses China’s government of trade, currency and intellectual property abuses, and says Obama has failed to confront Chinese officials. The Obama campaign said the administration has stood up to China and accused Romney’s former firm, Bain Capital, of aiding the shift of American jobs to China. Both China and the US filed World Trade Organisation complaints against each other last week for alleged trade violations. “China has been an 800-pound stage prop and both sides play it,” said Bob Kapp, a Washington state-based China consultant and former president of the US-China Business Council. The Hong Kong event is not Romney’s first effort to glean campaign cash there. Two of his sons headlined a fundraiser in Hong Kong last May. And Obama supporters have also been busy in China, gathering in Shanghai in July for a US$10,000 Obama Victory Fund event benefiting both the campaign and Democratic Party coffers. Only American citizens and green card holders can donate to US candidates. One Hong Kong businessman invited to the Romney event identified one of the fundraiser’s organisers as Michael G Desombre, a Hong Kong attorney specialising in mergers and acquisitions and private equity for Sullivan & Cromwell. The businessman, Leland Sun, of Pan Asian Mortgage, said he was told the fundraiser was billed as a small event. Desombre did not return calls for comment. The event was to be held at the Mandarin Oriental Hotel in Central, Bloomberg reported on Wednesday. Other hosts include John Ying, founding partner of Peak Capital Partners I, attorney Thomas Britt and Charles Regan, head of Asia banking at Enclave Capital, Bloomberg reported. Like many of the Hong Kong-based business figures who have donated to both candidates, Desombre has represented and advised numerous US firms that have invested in Chinese companies. Desombre’s website details his work for Warburg Pincus Asia’s multiple investments in Chinese firms, several Goldman Sachs investments in China and the merger of two Chinese power companies. Desombre’s firm, Sullivan & Cromwell, also has regularly lobbied in Washington, representing GE, Mitsubishi and the Private Equity Growth Council in recent years. Romney has benefited from other supporters with extensive business interests in China. Casino owner Sheldon Adelson, who owns gambling resorts in Macau, has given more than US$43 million to political action committees supporting Romney and allied Republican causes. Adelson is the largest individual donor in the this year campaign, according to a review of campaign records. In recent weeks, the Romney campaign has made China a central foreign policy issue, pushing new ad campaigns in Ohio and other battleground states that accuse China’s government of trade “cheating” and attacking Obama for not pushing back. The Obama campaign has also used China as a campaign scapegoat at times in its ads, criticising Romney’s former private equity firm, Bain Capital, for several investment deals that reportedly shipped US jobs to China. Romney has also been sensitive to the China issue in his personal finances. Over the past two years, as the presidential race approached, a lawyer overseeing his family’s trusts sold off numerous shares of stock in Chinese state-owned firms, including the last year sale of shares in a Chinese oil company. Romney had pledged in 2007 to eliminate any investments that conflicted with his political beliefs, but his trusts kept many of the Chinese investments and other politically-sensitive holdings until 2010 and last year. The fundraising event comes after Romney’s bid was badly hit by the release of a secretly filmed video in the US in which he is heard telling fundraisers he has no way of attracting support from 47 per cent of US voters because they are dependent on government and pay no taxes.

Court upholds DBC confidentiality application - Albert Cheng King-hon must not disclose confidential information heard at meetings of troubled Digital Broadcasting Corporation, which he co-founded, the Court of First Instance ordered on Thursday. Mr Justice Jonathan Harris allowed the injunction sought by station chairman and major shareholder Bill Wong Cho-bau. Wong was unhappy that Cheng, DBC’s president, had been revealing on air information discussed in meetings of the station’s board of directors. Wong’s lawyers told the court that Cheng had been taping the meetings without board’s consent or authority. They also suspected that Cheng had supplied transcripts of the meeting to the press, including Chinese-language newspapers Oriental Daily and Ming Pao. Wong, his lawyer said, made an urgent application to stop Cheng from divulging further confidential information ahead of a general meeting. Cheng was bound by the shareholder agreement not to disclose confidential information heard in the meetings, the lawyer said. Cheng has been notified of the application on Wednesday evening, the court heard. Cheng is also barred from repeating the confidential information he has already disclosed. Cheng may discuss the confidential information with employees and agents of the radio station. “The way we drafted the order is to be as helpful for Cheng as possible rather than to trip him up in day-to-day operations,” said Wong’s lawyer, Daniel Fung SC. “We are not seeking to do a post-mortem. We are seeking to hold the reins,” Fung said. Neither Cheng nor his representatives were present in court, and the case was adjourned to October 8 for further court directions. DBC co-founder Cheng and Wong have been at odds since Cheng openly lambasted Wong, a Beijing loyalist, for refusing to top up his investment in the company because of what Cheng called political reasons. On Tuesday, Cheng said the radio station would start a 100-hour countdown to closure unless he and Wong could close a deal to change its ownership. Cheng proposed buying out Wong’s stake at a 50 per cent discount, or selling his own stake to Wong. The city’s first digital broadcaster is running out of cash after Wong allegedly went back on an agreement to pump in an additional HK$50 million. Investors have spent HK$150 million on the station since it was awarded a 12-year broadcasting licence in 2008. Its seven channels have been broadcasting since last year. Earlier this month, Wong sought a court declaration that he was not in breach of a shareholder agreement when he refused to inject an additional HK$50 million.

 China*:  Sept 29 2012

Taiwan's intelligence chief yesterday warned that one in every three Taiwan companies based in the mainland is facing closure this year due to rapidly decreasing profits, a report said. Another 30 percent of firms from the island are "struggling" across the strait, Tsai Der-sheng, head of the National Security Bureau, told a parliamentary session, the United Evening News reported. "There is both risk and opportunity in investing in China. However, we cannot deny the benefits of economic exchanges between Taiwan and China despite the growing risks," he was also quoted on radio as saying. Taiwan firms have been facing rising labor costs in the mainland since 2008 under new rules requiring fewer working hours and higher pay. "Also the general investment climate is worsening under global economic problems," said William Chao, secretary-general of Dongguan Taiwanese Businessmen Investment Association in Guangdong.

Taiwan's Lin Join-sane named as top negotiator with China - Taiwan named Lin Join-sane as its top negotiator with China, replacing Chiang Pin-kung, who oversaw the signing of 18 agreements as cross-strait relations reached their warmest in more than six decades. Lin was elected chairman of the Straits Exchange Foundation yesterday, Timothy Hwang, a spokesman at the foundation, said by phone. Chiang resigned last week, citing his age and health. The 79-year-old Chiang had led the foundation, a semi-official body responsible for handling relations with China, since May 2008 when President Ma Ying-jeou took office. Tensions between China and Taiwan eased after Ma dropped the pro-independence stance of his predecessor and focused on strengthening economic relations. Cross-strait discussions resumed in 2008 after a nine-year halt sparked by former Taiwan President Lee Teng-hui's description of the talks as "state-to- state", a term rejected by the mainland government. Beijing claims Taiwan as a province and has vowed to reunite the island with the mainland by force if necessary. The two sides have been ruled separately since 1949, when the Kuomintang government fled to the island following its defeat by the Communists in the Chinese civil war. Chiang has actively boosted cross-strait relations, Fan Liqing, a spokeswoman for China's Taiwan Affairs Office, said at a weekly briefing in Beijing yesterday. Chiang helmed eight cross-straits talks that led to the signing of 18 agreements, including the resumption of direct flights, shipping and postal services. Taiwan signed its first trade pact with the mainland in June 2010. Before serving as the ruling Kuomintang party's secretary general in February, Lin held government posts including secretary general to President Ma and cabinet secretary general.

Film "Dangerous Liaisons" makes debut in Beijing - Zhang Ziyi, Jang Dong-gun and Cecilia Cheung attend the premiere of the movie "Dangerous Liaisons" in Beijing, capital of China, Sept. 26, 2012.

Mainland tourists made 1.32 million trips to Taiwan from January to August this year, surpassing the number for the whole of last year, according to the Taiwan Affairs Office of the State Council. Spokeswoman Fan Liqing said at a regular press conference that the number of mainland tourists traveling to the island is expected to surge during the upcoming National Day holiday, which begins on Oct. 1. As more tourists are heading to the island, Fan expressed concern over the safety of mainland tourists. A total of 30 tourists from the Chinese mainland were injured in a road accident in Taiwan's eastern Hualien county on Monday. Earlier this year,another two road accidents occurred in the same area, killing two mainland tourists. Fan asked relevant authorities in Taiwan to take practical measures to improve safety for mainland tourists. The Chinese mainland is currently the largest source of tourists for Taiwan. Mainland tourists account for about 30 percent of the island's visitors. Taiwan is the third-largest source of tourists for the mainland, accounting for 6 percent of tourists received by the mainland. The total number of tourists traveling between both sides surged from 4.7 million in 2008 to 7.05 million last year, representing an annual growth rate of 14 percent, official statistics show. Mainlanders started traveling to Taiwan in groups in July 2008, while individual travelers received permission to visit the island in June 2011.

A Toyota Motor Corp employee inspects a vehicle at the company's assembly line in Tianjin. Toyota has idled its plants in Tianjin and Guangzhou, but said production will resume in October after the week-long National Day holiday. Japanese automakers including Toyota Motor Corp and Nissan Motor Co are slowing their production in the world's biggest auto market as tension between Japan and China depresses demand for their vehicles. The Japanese automakers' decision to reduce their output in China comes after protests broke out over the Japanese government's illegal "purchase" of the Diaoyu Islands. "For the time being, I think you're going to see Japanese automakers' sales in China decrease by 20 to 30 percent," said Koji Endo, auto analyst at Advanced Research Japan Co Ltd. "The last time we had protests like this was in 2010 and they only affected things for about a month. But I think it's going to be different this time. This is going to have serious consequences." Nissan, the top Japanese automaker in China measured by sales, said on Wednesday that it will bring production to a stop at a joint venture it has in China starting on Thursday, three days earlier than planned. The halt is to extend through the National Day holiday next week. Toyota said it planned to suspend production at its plants in Tianjin and Guangzhou starting on Wednesday, also earlier than initially scheduled. The company denied media reports saying it would halt its production in China for the entire month of October. Xu Yimin, group manager for Toyota China's corporate communication department, said the Toyota factory will be back in operation after the National Day and Mid-Autumn Festival holidays, which will last from Sunday to Oct 7 this year. He said the company's plans do not call for bringing production to a "complete halt". He said the decrease in demand has led to an early holiday for workers at some of the factories. Toyota's exports to China "will be adjusted according to market demand", Xu said. But "we are still hoping to meet a 1-million-sales target for this year, and that target hasn't been changed." Reuters, though, quoted a senior Toyota executive in Beijing as saying that "the company probably won't be able to meet its goal of selling one million cars in China this year". In 2011, Toyota, working with Chinese partners, managed to sell about 900,000 vehicles in the country. Shen Li, spokeswoman for Nissan China, said Nissan aims to deliver 1.35 million vehicles in China this year. John Zeng, director of Asia Pacific Forecasting, LMC Automotive, said Japanese auto brands are likely to miss their sales targets in China this year. "It is the worst scenario for Japanese automakers in China in the last 40 years," he said. In August, Nissan produced 86,488 vehicles in China, down 8.9 percent year-on-year, according to a statement from the automaker. The same month saw Toyota produce 67,625 vehicles in China, down 18 percent year-on-year. Nissan generates about 30 percent of its profits in China, Toyota about 17 percent and Honda Motor Co Ltd about 15 percent, according to the financial services company Goldman Sachs Group Inc. Mazda Motor Corp has decided to halt production at its operations in China on Friday and Saturday, giving workers two extra days off for the National Day holiday. And Suzuki Motor Corp said it has stopped one of the two production shifts it normally runs in China. "Japanese automakers are adopting a more conservative strategy in the Chinese market, even more conservative than they took after the 2011 earthquake," Zeng said. The political tensions are likely to affect the companies' plans to promote their brands, he added. "When the current situation fades away, these companies may consider producing more localized brands, rather than ones that use the Toyota or Honda logo," he said. "The people who own cars with those brands will continue to be fearful." According to an estimate by China's Passenger Car Association, this year will see Japanese vehicles lose the lead they have had over German vehicles in the country since 2005. The Japanese car brands' market share will probably decrease to 22 percent this year and German brands' will increase to 22.5 percent, according to the association's projections.

Asian superstar Andy Lau and Osric Chau. Alfred Hsing (middle) plays a supporting role in the film, The Sorcerer and the White Snake, starring Jet Li Increasingly Asian actors from North America are finding that China provides the opportunities that are lacking in Hollywood. Liu Wei reports in Beijing. Osric Chau, 26, found himself on the set of his first Chinese film, a remake of the 2000 Hollywood hit What Women Want, on a spring day of 2010. Having portrayed a Tibetan monk in Roland Emmerich's disaster epic 2012, the Vancouver-born Chinese got the role to work with Asian superstar Andy Lau soon after he arrived in Beijing. He thought he recognized Lau standing not far from him and went up to him, to get to know him and practice his Chinese. He struggled in Chinese for 15 minutes and eventually discovered the man was Lau's photo double. "We talked about regular things, like nice to meet you, how is the film, just about everything except his name," Chau recalls, laughing. "For a while I did wonder how he could look so young and then I told myself it was because he was Andy Lau and he keeps in good shape." While China is where Chau's ancestors come from, it was still full of surprises. "One thing that I love about working in China is the possibilities," he says. Chau worked as a post-production coordinator, while acting as Lau's assistant. With his bilingual ability he helped visual, sound and editing employees communicate with the director. "It would never happen in Hollywood. They would have had someone for the position and would not let a person with no experience do it," he says. The 29-year-old actor Alfred Hsing has some anecdotes to share, too. The winner at the 2009 World Wushu Championships, like Chau, he is a young Chinese actor who grew up in North America, had some Hollywood experience, but is now part of China's entertainment industry. A graduate of UCLA's economics department, Hsing often asked for leave or ended his meetings early when working at an accounting firm, in order to act in films or television shows, or compete in martial arts contests. Two years later, he decided to become a professional actor. He had auditions and offers and won over his parents' support, but with an Asian face, he had to confront more challenges than Western actors. According to talent manager and producer Lillian Ng, who has rich experience working in both China and the US, Asian-American actors are typically typecast in Hollywood. Male actors typically audition for the Chinese restaurant storeowner, kung fu master, or comedic Asian character. Classic examples are Ken Jeong, Jackie Chan, and Jet Li. The female roles are mostly sex symbols, such as Lucy Liu and Maggie Q - though Sandra Oh has been offered breakout roles. "Although we are seeing more and more Asian (both native Asian and Asian-Americans) faces on the big screen, the opportunities for Asian actors are getting slimmer," she says. "Producers are inclined more to give the roles to well-known actors. Given the shrinkage of Hollywood productions, there are only so many Asian roles on offer, and most of the Asian actors are competing for the same role." In 2010, through a friend, Hsing knew Jet Li was looking for an assistant. He sent his resume and got the job after an interview. In Beijing, he had a role in The Sorcerer and the White Snake, co-starring Li, then in Feng Xiaogang's disaster epic 1942. Now he is shooting a romantic comedy starring Zhang Ziyi. Like Chau, he is impressed by the flexibility of Chinese sets. "In America, it is all about the actors' union and conditions," he says. "There should be food, lunch breaks and extra pay when you work overtime, but in China you finish the work only when the decision maker on the set says it is time." The bright side is, while he is a supporting actor in the Zhang Ziyi film, he can also work on the production team and learn about what goes on behind the scenes. "The Chinese film industry is still building a sophisticated system, so there will be chaos, but at the same time there are unconventional ways of getting things done, creativity and opportunities," says Ben Erwei Ji, managing director of RG Communications and a senior producer who has worked at both major Hollywood and Chinese studios. The Chinese film industry has been prosperous in recent years. The box office has soared, with an annual growth of about 30 percent since 2003. "The booming Chinese film market is definitely an important reason for more Asian actors to come to China to act," says Brian Yang, who has just wrapped up his part in The Man with the Iron Fists, a China-US co-production shot partly in Hengdian, a small town and shooting base in East China. "There were multiple productions in Hengdian. Take the wrong turn and you walk into another movie. Here is a comedy in production, but 500 meters away is a war story," he recalls. Wesley Wong, 25, is working on a master's degree in acting at Beijing Film Academy, after finishing his undergraduate studies at USC. He says that in 2007, there were only two Asian American/Canadian students studying acting at BFA, but in 2012 the school recruited six or seven. According to Wong, after Chinese-Canadian Dou Xiao, also a BFA student, led Zhang Yimou's Under the Hawthorn Tree in 2010, five young Chinese-Canadian actors arrived at the school to learn acting. While many assume these young actors with their bilingual abilities do not have to worry so much about getting jobs in such a flourishing industry in China, they suffer from confusion of identity and another kind of stereotype. "We don't exist here or there," says Brian Yang. "In Hollywood, we are minorities and stereotyped. We are what they think Chinese should be, not true Americans. But in China, we are Americans. We don't belong to either place." Alfred Hsing shares the pain. "I can only appear in stories that happen after reform and opening up," he jokes. Due to their "ABC" (American-born-Chinese) accent and temperament, these actors usually get roles as businessmen at international companies. Rarely can they play in rural stories or costume dramas. Cary Woodworth is a friend to Yang and some other Asian-American actors. The European-looking actor has worked in 10 Chinese productions since 2004. As an observer and insider, he understands his friends' predicament. "In the US, Asian-American actors are totally judged by their faces, and here in China, by their accent. Some of them are great actors who have things to give, but because they don't speak fluent Chinese, they lose a lot of opportunities." Yang once met a Chinese producer who told him: "We have plenty of Chinese actors who speaks perfect Chinese, so why should we cast someone who pretends to be Chinese?" But he tries to see the bright side of things. "I think there will be more stories that introduce the West to the East and the other way round. Hopefully there will be more films that need more actors who will bridge the two." Only when changes happen within the industries of both countries will actors have the best of both worlds, believes Osric Chau. "To change the stereotypes of Asians in Hollywood films requires more Asians to work in the industry as powerful decision makers, such as scriptwriters, directors and producers. Hopefully they will think more inclusively about Asian actors," he says. Lillian Ng, the talent manager and producer, suggests filmmakers in China be more open to these actors. "Their disadvantage may come be in communicating and connecting with the audience," she says, "but many of them are well seasoned bilingual actors, breaking through the language barrier and can play any character." Alfred Hsing, who has been practicing Mandarin very hard, was rewarded by an offer to play in a period drama in the 1940s. Although he missed it due to scheduling problems, he feels his effort has been acknowledged. "We must be fully prepared," he says.

Foreign banks in China made an extraordinary turnaround in 2011 as their performance outpaced their domestic counterparts, according to a report released by auditor KPMG LLP on Wednesday. But analysts said it will be difficult for foreign lenders to keep their growth rate this year as the international financial environment struggles and the interest spread narrows in China. Net profits of foreign banks in China grew by 109 percent last year, with interest income up by 57 percent, and non-interest income gaining 27 percent. "While there is a variance from bank to bank in terms of business models, what is clear is that most foreign banks did well last year and saw profits reach record levels," said the report, which surveyed 197 banks that represent 88 percent of all banking assets in China. It included the financial information for 33 of the 37 foreign banks that were locally incorporated before year-end 2011. The surge in profits was in large part due to net interest income both in terms of volume and margin, and improved performance in the global markets and treasury business lines, as well as increased activity in bond and foreign exchange trading, KPMG said. Banks in China, including both foreign and domestic ones, reported a 39 percent increase in profits last year, according to data from the China Banking Regulatory Commission. Interest income growth among the foreign players was driven more by an increase in net interest margin than by loan growth, which was only 6 percent from 2010 to 2011, the report said. And the average cost income ratio across the 32 foreign banks that released such information went down from 66 percent in 2010 to 52 percent in 2011. Foreign banks also exceeded domestic players in terms of asset growth as their assets expanded 24 percent in 2011, compared with the 18 percent average growth of the overall sector. While still modest as a percentage of total banking assets in China, foreign bank assets now account for 1.95 percent of total banking assets, up from 1.87 percent in 2010. The deposit pressures that have plagued foreign banks in the past also seem to be easing, with total deposits increasing 24 percent from 2010 to 2011, although this is down from the 44 percent from 2009 to 2010. And total non-performing loans, or NPLs, for the 20 foreign banks that disclosed such figures for both years are down 9 percent, leading to an NPL ratio of 0.24 percent, well below total sector averages. "By most metrics, with certain exceptions such as loan-to-deposit ratio and cost income ratio, foreign banks have largely outperformed their domestic peers," said the report. Simon Gleave, regional head of financial services at KPMG, was cited by the Wall Street Journal as saying: "In the two to three years prior to 2011, (the) banks had invested significantly ... and last year they started to see the beginning of the return on that investment." But despite the rapid growth, foreign banks still cannot form any substantial threat to their Chinese counterparts, and the surge in profits was mainly due to the fact that they have much less basis, said Zhao Xijun, deputy dean of the School of Finance at Renmin University of China. "And rising uncertainties in international financial markets will have more of an effect on foreign players than domestic banks," he said. The KPMG report also said that "China is still a challenging environment, and increasingly conservative regulation from the CBRC is impacting both foreign and domestic banks alike". The CBRC has released tougher capital requirements that branch-status foreign banks should follow. In addition, "despite the remarkably improved performance of foreign banks, they are still underrepresented as a percentage of net profits in comparison to their percentage of total banking sector assets". At the end of 2011, foreign banks accounted for 1.4 percent of total sector net profits.

Air and sea rescue teams helped 150 airplane "passengers" to safety on Wednesday as part of an emergency drill in Shanghai. "Passengers" wait to be rescued on the wings of a plane during an emergency drill, China's first search and rescue exercise involving a civil aircraft, on the Yangtze River estuary in Shanghai on Wednesday. A full-size model was placed in the Yangtze River estuary to simulate an aircraft that had ditched into the water with two broken engines, said Huang Jianwei, director of Shanghai Maritime Safety Administration's water safety command center. The drill, China's first search and rescue exercise involving a civil aircraft, was a simulation of United States Airways Flight 1549, which landed safely in the Hudson River in 2009 with 155 people on board, said Zhai Jiugang, deputy director of the maritime safety administration. The plane had lost power in both engines as a result of striking a flock of birds after taking off from La Guardia Airport in New York. The pilot of Flight 1549, Captain Chesley B. "Sully" Sullenberger, ditched the plane in the icy river, and all on board were rescued by a flotilla of converging ferries and emergency boats. The event became known as "Miracle on the Hudson", and Sullenberger became an American hero as a result of his grace under pressure. "We're confident that if a similar accident happens in water near the airport, we're capable of making a rescue," said Huang. The Shanghai drill was successfully completed in 40 minutes, he added. More than 20 boats and patrol vessels took part in the exercise, along with three helicopters and a maritime aircraft fitted with lifting equipment. The rescue was a race against time, as the aircraft would sink after 45 to 60 minutes, Huang said. Before Wednesday's drill, there were five rehearsal drills. Four of the rehearsals had failed due to strong winds capsizing the life rafts, Huang added. "We wouldn't be able to do the rescue exercise if the wind was stronger, because the aircraft couldn't land on the water in that case," said Zhai. Gu Yanjun, with the Donghai No 1 Air Rescue Service, who participated in Wednesday's rescue in a helicopter, said if a similar accident actually occurred, the air rescue team would arrive right after nearby fishing vessels offered their assistance "and then search and rescue boats would follow". The group of 150 volunteer "passengers" was made up of students at Shanghai Maritime University and flight crew from Eastern Airlines. All received professional training before the drill.

Hong Kong*:  Sept 28 2012 Share

Singapore-listed bakery chain BreadTalk plans to double the number of mainland outlets in the next two years. Founder and chairman George Quek said the company would have 550 outlets across the mainland by 2014, compared with about 300 now. He admitted that a shortage of local talent and dearth of quality retail space were the main stumbling blocks for the expansion. "We have the resolution and confidence in competing in this fast-growing market," Quek said. "The bakery business could grow on a fast track over the coming two decades, benefiting from the scale of the economy and people's increasing income." He expects mainland revenue to grow at least 30 per cent a year. Revenue from the mainland would account for more than 50 per cent of BreadTalk's total in three years, Quek said. A new class of consumer is emerging on the mainland, described by McKinsey & Co as "new mainstream consumers" with annual household income above 106,000 yuan. The global management consultancy estimates there are now 43 million such households. They are becoming more self-indulgent and loyal to certain brands, creating tremendous opportunities for foreign brands such as BreadTalk. "There is competition for good locations and talented employees," Quek said. "But we want to make our brand synonymous with food safety and tasty bread in this mammoth market." BreadTalk aims to open 200 outlets in Shanghai alone, up from 40 now. BreadTalk, which has a presence in 40 cities on the mainland, is competing against a clutch of overseas brands such as Taiwan's 85 Degree Bakery Café. "Location is the key to the success of an outlet," Quek said. "Despite the challenges, I believe our China businesses will outgrow any other market worldwide." About 85 per cent of BreadTalk's mainland outlets are profitable and Quek expects the percentage could rise to 90 per cent by the end of next year as the company fine-tunes marketing and management. "Capturing the rising generation of consumers will require ensuring products are relevant to consumers' needs and wants," said Max Magni, a partner and head of McKinsey's consumer practice in China.

Group CEO of Esprit, Jose Manuel Martinez Gutierrez, at the company's annual results meeting in Hong Kong on Wednesday. Retailer Esprit Holdings posted a jump in full-year net profit after store closure-related costs were less than expected but missed analysts’ forecasts as a slowing global economy weighed on sales, sending its shares plunging 8 per cent. Esprit, which sells everything from bed sheets to jeans and generates three-quarters of its sales in Europe, has been trying to restructure its business as it struggles with a slump in demand due to the euro zone debt crisis. The retailer in August hired an executive from Zara owner Inditex as its new CEO, reassuring investors about the company’s restructuring drive following uncertainty after a management reshuffle. “Looking ahead, the macro environment in FY12/13 continues to present challenges and uncertainties, such as slowing economic growth in China and the unresolved European debt crisis,” Esprit said in a statement, adding that it would continue this year to implement its turnaround plan “rapidly and consistently.” Esprit, which competes with Swedish clothing retailer Hennes & Mauritz and Spain’s Inditex, reported a net profit of HK$873 million (US$112.6 million) for its fiscal year ended in June, missing the average estimate of HK$1.01 billion in a poll of 10 analysts by Thomson Reuters. The result was higher than the HK$79 million profit posted a year earlier when the company took a one-time charge of HK$2.3 billion to set aside provisions for the closure of stores. The overall closure costs were less than expected and the company was able to write back HK$696 million of those provisions in the latest term. Turnover fell to HK$30.17 billion from HK$33.77 billion a year earlier, due to the sale of its North American operations, store closures and a tough business climate, it said. Retail turnover fell 6.1 per cent in local currency terms and wholesale turnover dropped 16.5 per cent. The company has earmarked HK$1.5 billion for capital expenditure for coming year, of which HK$400 million will be invested in new store openings, HK$700 million in refurbishments of existing stores and HK$200 million will be for IT projects. Esprit also said its new chief executive, Jose Manuel Martmnez Gutiirrez, would take up his post on Sept. 26. Inditex, the world’s largest clothing retailer, last week beat expectations with a 32 per cent jump in first-half profit, boosted by rapid expansion in fast-growing emerging markets. Esprit, which also competes with and US group GAP and Japan’s Fast Retailing, said last year that it would invest more than HK$18 billion (US$2.3 billion) up to 2015 as part of its restructuring plan. It also aims to double China sales to around HK$6 billion over the next few years and expand its points-of-sale network to 1,900 from 1,000. Esprit, founded in 1968 in San Francisco by Susie and Doug Tompkins who started selling clothes out of the back of their station wagon, shut all its stores in North America as of the end of March. The company has a market value of around US$2.2 billion, down from roughly US$8 billion at the end of 2010. The plunge in its share price had prompted speculation it could be a takeover target. Shares of Esprit have surged 29 per cent so far this year, outpacing an 11 per cent rise in Hong Kong’s benchmark Hang Seng Index. The stock was down 8 per cent after the results on Wednesday, lagging 0.9 per cent fall in the benchmark index.

Carlson Tong Ka-shing, KPMG's former chairman for China and the Asia-Pacific, is set to be appointed the next chairman of the Securities and Futures Commission. Tong, a retired accountant who chaired the stock exchange's listing committee from 2006 to 2008, was the most suitable candidate to replace Eddy Fong Ching, a government official, told the South China Morning Post. Fong is due to retire on October 19. "The SFC chairman needs to be someone who is independent as the regulator's work involves many investigations," he said. "It also needs someone who understands listings." The role is a non-executive one, introduced in 2005 when the government split the executive chairman's post into two - a non-executive chairman and a chief executive - to add checks and balances to the regulator. Fong, also a veteran accountant, has been chairman for six years. Tong is expected to work with chief executive Ashley Alder to carry out reforms including a tightening of the regulation of listing sponsors. Hong Kong-born Tong began his career with KPMG in Britain in 1979. He returned to Hong Kong in 1985 and was made a partner in 1989. He rose on the corporate ladder to become KPMG's China chairman in 2007 and Asia-Pacific chairman in 2009. After retiring last year, he has kept busy in public roles including non-executive director of the SFC and chairman of the English Schools Foundation. Hong Kong Investment Funds Association chief executive Sally Wong said the funds industry would like to meet regularly with the new chairman. "We look forward to establishing regular dialogues with Mr Tong, and the local fund industry hopes to see him help steer the development of a regulatory framework that can reinforce Hong Kong's position as a premier asset management centre," Wong said. Christopher Cheung Wah-fung, the legislator representing stockbrokers, said many brokers did not know Tong well. "I hope the new SFC chairman will listen to the concerns of brokers and develop policy that can help both large and small brokers to develop their business well," Cheung said.

Hong Kong Ballet's best show yet from emerging choreographers - First time choreographer Liu Miaomiao. Over the years the annual choreographic programme where Hong Kong Ballet's dancers try their hand at choreography has revealed considerable talent. The 2012 edition was the best yet and included work worthy of a place in the company's permanent repertoire. The evening's longest and most substantive piece, White Lies, by Yuh Egami and Ricky Hu, was a tour de force. Complex, ambitious and stylish, it has a cast of 14, a richly eclectic score with the emphasis on blues and effective designs with all the dancers (including the women) wearing Men in Black suits and fedoras. Egami and Hu know how to deploy their dancers en masse with skilful use of space as well as how to make individuals shine. Ye Feifei and Liu Yuyao are the epitome of sexy cool leading a witty routine to Howlin' Wolf's Spoonful. The fun side of the piece is balanced by the emotional intensity of Wei Wei's solos set to Nina Simone and his stunning duet with Wu Feifei and by the mournful, elegiac ending. Of the six short pieces in the rest of the show, three were notable for choreography firmly based on classical technique with the ballerinas on point, a refreshing change from the overemphasis on contemporary work in previous years. Li Yiran's Soundless stood out as a mature, accomplished work that marks a big step for its creator. Two couples dance individual duets, then come together changing partners briefly before returning to their original pairings. The movement and personality of Gao Shuainan and Gao Ge were particularly well contrasted and the piece was structured and polished. Two first-time choreographers impressed with duets that brought out the best in their dancers - the prime function of any pas de deux. Liu Miaomiao's Fin had some imaginative lifts that showed off Ye Feifei's gloriously pliant physique and fine partnering from Li Lin. Li Jiabo's intriguing Unable to Rewind had depth as well as disciplined complex form and was performed superbly by Jin Yao and Wei Wei. It was a big night for Li: a talented musician, he composed the attractive music for his own piece and arranged the score for White Lies, in which his dancing was also a stand-out. The remaining pieces were less successful. Jonathan Spigner's Overview Effect was an oddity set to the famous speech from Charlie Chaplin's The Great Dictator. It gets marks for ambition and having its heart in the right place. The contributions by guest choreographers from Hong Kong Dance Company, Xie Yin and Liu Yinghong, were a disappointment, looking like conventional Chinese dance rather than creating something new through a fusion with ballet.

Cathay Pacific lost a long-running dispute with its flight attendants over holiday pay, in the city’s top court on Wednesday. Quashing the airline’s challenge against an appeal court judgment, the Court of Final Appeal ruled that Cathay should include some allowances and commissions when it calculates its cabin crew’s holiday pay. The calculation should take into account commissions on duty-free sales, and allowances for line duty and ground duty, earned by attendants in the air and while waiting for flights, the court ruled. The dispute involved some 4,400 attendants and about HK$100 million in pay, the Cathay Pacific Airways Flight Attendants Union said. It stemmed from claims lodged with the Labour Tribunal about four years ago by flight attendants Becky Kwan Siu-wa, Vera Wu Yee-mei and Jenny Ho Kit-man. The tribunal initially ruled in their favour and ordered Cathay to pay the shortfall, but the airline won on appeal. That ruling was overturned last year by the Court of Appeal. The union welcomed Wednesday’s ruling, saying it helped to clarify the meaning of holiday pay for employees. “It helps to avoid further disputes between the employers and employees on this issue,” the union said in a statement. According to the union, more than 4,000 attendants have filed Labour Tribunal claims for the pay.

Hong Kong's Census and Statistics Department released the external merchandise trade statistics for August on Tuesday, which showed that the values of Hong Kong's total exports and imports of goods increased 0.6 percent and 0.9 percent year-on-year respectively. The value of total exports of goods in August increased by 0.6 percent from a year earlier to HK$311.7 billion ($40.2 billion), after a year-on-year decrease of 3.5 percent in July. Within this total, the value of re-exports increased by 0.7 percent to HK$306.2 billion in August, whereas the value of domestic exports decreased by 7.2 percent to HK$5.5 billion. Concurrently, the value of imports of goods increased by 0.9 percent from a year earlier to HK$347.7 billion in August, after a year-on-year decrease of 1.8 percent in July. A visible trade deficit of HK$36 billion was recorded in August. For the first eight months of 2012 as a whole, the value of total exports of goods dropped slightly by 0.2 percent over the same period in 2011. Within this total, the value of re-exports increased by 0.1 percent, whereas the value of domestic exports decreased by 15.6 percent. Comparing the three-month period ending August with the preceding three months on a seasonally adjusted basis, the value of total exports of goods decreased by 1.5 percent. Within this total, the value of re-exports decreased by 1.5 percent, whereas the value of domestic exports went up slightly by 0.5 percent. Meanwhile, the value of imports of goods increased by 1.5 percent. A government spokesman noted that merchandise exports remained sluggish in August. The small year-on-year increase in value terms mainly reflected the moderate pick-up in exports to Chinese Mainland and Japan. However, widespread weaknesses still prevailed across most major markets. The spokesman commented further that looking ahead, the persistently weak fundamentals of the advanced economies, including those relating to the debt crisis in the euro zone, will continue to cast a shadow over the global economic outlook. As such, Hong Kong's external trading environment will be likely to remain difficult in the near term.

 China*:  Sept 28 2012

The US divisions of Beijing Galloping Horse Film & TV Production Co Ltd and an Indian company won a bid at auction this week for some of the businesses and assets of the visual effects and animation company Digital Domain, which produced the effects for Titanic and other films. The Chinese entertainment company’s purchase of the Hollywood company, which filed for bankruptcy on Sept 11, is the latest in a series of deals that has seen Chinese firms invest in the US film industry or vice versa. Galloping Horse’s partner in the transaction is the India-based Reliance MediaWorks Ltd. The companies agreed to pay $30.2 million for Digital Domain’s special effects unit and various other businesses and assets. The Chinese company now owns 70 percent of the new joint venture and the Indian company 30 percent. Responding to criticism that Galloping Horse had overpaid, Ivy Zhong, vice-chairman and managing director of Beijing Galloping Horse Film, tried to distinguish the deal from the Chinese conglomerate Dalian Wanda Group Corp Ltd’s purchase of AMC Entertainment earlier this year, which some said came at too high of a price. "Wanda is responsible for AMC’s debt obligations, but we are starting with a clean slate with Digital Domain," she said. Noting that another bidder for Digital Domain had put forward a price of $15 million, Zhong said that was merely a starting price and was misinterpreted in some media reports. "At its highest, Digital Domain had a market valuation of $400 million. As its main business has not changed, we believe we got a very good deal." Digital Domain, which was founded in 1993 by James Cameron, the director of the films Titanic and Avatar, and the deceased special effects guru Stan Winston, was listed on the New York Stock Exchange in November 2011. "But soon it overreached itself and diverted from its main business," Zhong said. "It invested in everything from education and animation to even its own office buildings. It had a big cash flow problem. On top of that, it suffered from short selling." Digital Domain moved into film production by investing directly into Ender’s Game, a big-budget computer graphics-laden film based on a popular science-fiction novel. Zhong said she is relieved that the company’s troubles are behind it. Even the parties that had threatened to file lawsuits over the deal have now accepted it. "For example, the Canadian government was afraid we might leave Vancouver, where Digital Domain had an operation," Zhong said. "But we assured them we wouldn’t." As for Digital Domain’s animation business in Florida, one of the investment projects that almost brought down the company to its knees, "we don’t need to worry about it as it’s already shut down", Zhong said. John Textor, former CEO of Digital Domain, has been the subject of much blame for his management of the company. Critics have said he tried to do too much at once and was oblivious to economic realities. To prevent talented workers from being lost in the shuffle, Galloping Horse America has been quick to re-sign their contracts. "It is a competitive business, and we must not let our talent think they are being overlooked." In the merging of different corporations, Galloping Horse said it wants to ensure new employees are treated in a way they are used to. "We deal with the creative type here in China as well," Zhong said. "We know the most important thing is to respect them and their work." She said many of Hollywood’s biggest studios are clients of Digital Domain. Most of them have told her they will stay with Digital Domain under the new ownership arrangement. This is not the first time Galloping Horse has taken an interest in the Hollywood company. Before the bankruptcy, it had made a small investment in Digital Domain, buying "around 1 percent of its total equity", Zhong said. "Not all of that is lost," she said. She alluded to a "special arrangement", declining to talk about it in detail. As for whether Galloping Horse will bring some of Digital Domain’s technologies to China, Zhong explained that the effects company mainly works on movies that have a budget of $100 million or more. "Very few productions outside Hollywood are that expensive," she said. But it is possible that less-advanced technologies may be shifted to China or India to take advantage of the lower costs of labor found in those countries. "The US, China and India are at the cutting edge in the use of such technologies. So, a business that joins all three is in a better position to compete." In Galloping Horse’s vertically integrated business model, "Digital Domain will be upstream, so to speak", Zhong said. "Many people mistakenly put special effects in the category of post-production. But the kind of effects that Digital Domain produces, say, those used for virtual characters such as Gollum in The Lord of the Ring, have to be worked on from the beginning of the creative process. They’re not something you add at the last minute." "Digital Domain, which has changed hands many times, is among the best in the business," said Ben Erwei Ji, managing director of RG Communications. "It provides the missing link in Galloping Horse’s hope of becoming a full player in the entertainment industry." Hu Ming, vice-president of Huayi Brothers Media Group, one of the leading private film production companies in China, gave his blessing to the acquisition. "I believe it will prove to be a significant venture into the film sector," he said. "The acquisition is a good thing for our film industry as a whole, as domestic special effects companies still have a long way to go to be as original as their Hollywood counterparts," said Wang Guowei, president of National Film Capital Co Ltd, a government-backed film fund company.

Dispute Tests Japan Brands' Cushion in China - Workers cover up the logo of Japanese retailer Uniqlo in a Beijing shopping district last week. China's tough stance against Japan in an ongoing territorial dispute may have no bigger backer than Yao Xin, a 23-year-old legal assistant who says she refuses to buy Japanese products. "This is a very big government issue and I will stand by the government," she said. Ms. Yao made her vow while standing in a Uniqlo store, a retailer owned by Japan's Fast Retailing Co., in Beijing's Japanese-themed Ginza shopping mall. Informed that the blue-collared shirt she was fingering was being sold by a Japanese company, she said, "Oh, I didn't know." Fast Retailing on Wednesday renewed its pledge to expand in China. Ms. Yao illustrates the complexities behind a nearly four-decade commercial relationship that time and again has bounced back despite occasional diplomatic flare-ups between Tokyo and Beijing. Japanese cars, electronics and clothing have won a high-quality reputation in China, contributing to Japan's $161.47 billion in exports to China last year. At the moment, Japanese brands and business in China are suffering as the two sides argue over competing claims to group of rocky islands in the East China Sea. Japan's Nikkei Stock Average fell 2% on Wednesday, its largest daily percentage decline since May. The fall came after Toyota Motor Corp. and Nissan Motor Co. said they would begin holiday closures of Chinese plants earlier than planned due to softening demand. On Tuesday, the foreign ministers of the two nations met at the United Nations but failed to make headway in talks. Campaigns against Japanese brands have continued online nearly two weeks after the cessation of protests in a number of cities, in which some Japanese stores and car dealerships were vandalized. "Recommended actions: Make no missteps, absolutely do not buy Japanese products, not even those that were designed in Japan," wrote one Japan critic, Wang Wei , who has 41,000 followers on China's Sina Weibo Twitter-like microblogging service. Auto-industry experts blamed the tensions for a drop in China sales last month for Toyota and Mazda Motor Corp., though Honda Motor Co. saw a 15% rise from a year earlier. Branding experts say the road back for Japanese brands has been complicated by the rise of social-media services in China, which have given anti-Japanese activists greater ability to rally Chinese consumers. "Complaints now spread quicker and harder," said Nicole Fall, head of trends at Asia-focused consumer research firm Five by Fifty. Panasonic Corp. said that one TV station in Shanghai earlier this month stopped running commercials for Japanese wares and also suspended programs sponsored by Japanese companies. It's very difficult to predict whether and how much the political tensions might affect Japanese businesses in China this time, said Toshihiko Shibuya, a Panasonic spokesman based in Beijing. Past flare-ups include anti-Japan demonstrations in China in 2005 following visits by Japanese leaders to a controversial Tokyo war shrine that Chinese officials say honors World War II war criminals. In 2010, the detention of a Chinese fishing-boat captain involved in a collision with Japanese patrol boats in waters near the islands led to reports that China had cut off exports of key manufacturing minerals known as rare earths. But business over that period rose unabated, as Japanese exports to China more than doubled between 2005 and 2011. This year's furor has occasionally reached violent levels. Police in China have turned to social media for help in tracking down a man who last week allegedly hit in the head a man driving a Toyota in the western Chinese city of Xi'an, leaving him hospitalized. Still, Japanese brands have a considerable cushion in China. Prior to the recent dispute, Japanese car-brand dealers ranked the highest in perception of best service, according to a survey of nearly 15,000 Chinese vehicle owners from market research company J.D. Power. There's also confusion in China, where Japanese restaurants and stores are staffed—and sometimes owned—by Chinese. Online critics of the anti-Japanese push have pointed at China-owned businesses like sushi joints that have to put pro-China signs in their windows. "Many recognize that this is perceived as a loss of dignity," said Tom Doctoroff, North Asia area director and Greater China CEO of ad agency JWT. "It will die down, and they [Chinese consumers] will reassert their pragmatism." On Wednesday, Fast Retailing Chief Executive Tadashi Yanai said that his company has no plans to slow its China expansion down. "If possible we would like to open 100 stores in China annually and we have prospect of opening 80 stores this year," he said. Ban Lu, 30, said Uniqlo sells some of the best clothing she can find in Beijing and her government's standoff with Japan has no impact on her shopping habits. Ms. Ban, a native of China's northeastern Hebei province, said as she shopped at the Uniqlo store in Beijing's Ginza mall that the dispute was a government issue and should be separated from individuals' shopping decisions. "It's up to me what I want to buy, and quality is what I want to buy." The issue has also sparked humor attempts on China's Internet. One popular joke—tweaking the well-known taste of China's officials for luxurious foreign brands and sometime confusion over what is a Japanese brand as opposed to a different import—has one government functionary protectively asking his assistant whether anything he owns is Japanese. No, the assistant replies: His watch is Swiss, his clothing Italian, his car German and his mistresses Chinese. "In that case, let's unite the people and boycott Japanese goods!" he says. —Yoshio Takahashi and Hiroyuki Kachi in Tokyo contributed to this article.

A visitor checks a Hyundai Veloster mounted on the wall at a car expo in Beijing. Hyundai Motor Group said on Tuesday that it has set up an auto financing joint venture in China to start providing auto loans for Hyundai and Kia customers. South Korea’s largest automotive group will have a 60 percent stake in Beijing Hyundai Auto Finance Co. with an initial capital of 500 million yuan ($79 million). Beijing Automotive Industry Group will hold the remainder. The move will help increase its market share in the world’s largest car market, where cash is still the dominant method of payment for vehicle purchases. Hyundai said the new venture is aimed at tapping the growing demand from younger generations of Chinese who are more willing to borrow money to buy cars than their parents. “We are confident about our growth perspectives since only 10 percent of car purchases are financed by loans in China, a ratio that industry estimates will triple by 2017,” Ted Chung, chief executive officer of Hyundai Capital Services, said in a statement. Rivals like General Motors, Volkswagen and Toyota have been providing auto finance to their customers in China. Hyundai said its auto financing venture will catch up with early starters by rapidly processing loans in three days and by offering low-interest financial services to customers and dealers of Hyundai Motor Co. and its affiliate, Kia Motors Corp. During the first six months of this year, Hyundai and Kia sold combined 1.17 million vehicles in China, trailing General Motors and Volkswagen.

Fast Retailing says no plan to halt Uniqlo expansion in China despite anti-Japan protests - Japanese fashion icon Kyary Pamyu Pamyu (L) displays a rider’s jacket and a long skirt, a motif of Dracula, while other models represent an angel (R), a snow specter (2nd R) and Catwoman (2nd L) in Tokyo for the fall and winter collection of g.u., a sister brand of Japan’s casual chain Uniqlo. Japan’s Fast Retailing Co is not considering changes in the planned expansion of its Uniqlo clothing stores in China despite anti-Japanese protests there, its chairman said on Wednesday. “There is absolutely nothing like that,” Fast Retailing Chairman and President Tadashi Yanai said when asked about reports it was slowing down its China expansion. The firm, Asia’s top apparel retailer, is looking to add 80 more Uniqlo stores in China in the business year that started on Sept. 1, he told a briefing on its development and sales strategy for Uniqlo apparel for the upcoming winter season. “If it can be done, I would like to be able to add 100 stores annually, and at this time we have plans to add about 80 stores this year,” Yanai said. A territorial dispute between Asia’s two biggest economies has resulted in several Japanese companies operating in China being the target of protests and attacks. Fast Retailing closed as many as 60 of its casual clothing Uniqlo outlets in China during anti-Japanese demonstrations last week, but reported no damage to facilities or products. At the end of August there were 145 Uniqlo stores in China, up 65 from a year earlier.

China calls Diaoyus sacred territory in 'tense' Japan talks at UN - China claimed islands at the core of a row with Japan as its “sacred territory” in talks between the two countries’ foreign ministers, Xinhua news agency said on Wednesday, as neither side showed signs of backing down in a long-festering feud. Japanese Foreign Minister Koichiro Gemba urged China to exercise restraint at what he called a tense hour-long meeting over the dispute, which triggered violent anti-Japanese protests in China this month and is threatening ties between Asia’s two biggest economies, Japan’s Kyodo news agency said. Chinese Foreign Minister Yang Jiechi reiterated China’s “solemn position on the issue of Diaoyu Islands, which have been China’s sacred territory since ancient times”, Xinhua said. Japanese Chief Cabinet Secretary Osamu Fujimura told a news conference in Tokyo the two sides had agreed to keep talking. “There is no magic bullet in foreign diplomacy. We need to hold talks through various channels taking into account of broad perspective,” Fujimura told a news conference in Tokyo. Sino-Japanese relations deteriorated sharply this month after Japan’s central government bought the isolated East China Sea islands, called Senkaku in Japan and Diaoyu in China, from their private owner, sparking the anti-Japan protests across China. Sino-Japanese relations deteriorated sharply this month after Japan’s central government bought the isolated East China Sea islands, called Senkaku in Japan and Diaoyu in China, from their private owner, sparking anti-Japan protests across China. China’s meetings with Japanese diplomats – at the United Nations and a day earlier in Beijing – suggest Beijing does not want the tensions over the island chain, believed to be in waters rich in natural gas deposits, to lead to a rupture in relations. But the unyielding tone of China’s published remarks suggests that the row is far from over. Beijing has repeatedly called the islands its “sacred territory since ancient times”. “The Japanese move is a gross violation of China’s territorial integrity and sovereignty, an outright denial of the outcomes of victory of the world anti-fascist war and a grave challenge to the post-war international order,” said Yang, according to the Xinhua summary of his comments. Japan, which says the islands’ purchase was meant to fend off a more provocative bid by the nationalist governor of Tokyo, Shintaro Ishihara to have his metropolitan government buy them, is trying to keep communications channels open. China postponed a ceremony marking the anniversary of the resumption of diplomatic ties with Japan, but an official at the Japan-China Economic Association said Toyota Motor chairman Fujio Cho and Hiromasa Yonekura, chairman of Japanese business lobby Keidanren, and other representatives of Japan-China friendship groups would attend an event on Thursday in Beijing. Patrol vessels from the two countries have also been playing a tense game of cat-and-mouse in the waters near the disputed islands, raising concerns that an unintended collision or other incident could escalate into a broader clash.

Foreign Ministry spokesman Hong Lei on Wednesday reiterated China's position on the Diaoyu Islands as Shinzo Abe won the presidential election of Japan's main opposition Liberal Democratic Party (LDP). Hong said at a daily press briefing that he had no comment on the election results, as they are part of Japan's internal affairs. The spokesman did reiterate China's view on Sino-Japan relations, stating that current tensions were initiated by the Japanese side and that Tokyo must take full responsibility for what it has done. Hong urged the Japanese side to take concrete measures to correct its mistakes and return to the track of negotiation so as to create conditions for the improvement of bilateral ties. Japan's former Prime Minister Shinzo Abe beat his rival, ex-Defense Minister Shigeru Ishiba, to win the LDP's presidential election Wednesday. It makes 58-year-old Abe, who headed the LDP between 2006 and 2007, the frontrunner for the post of Japan's next prime minister.

Canada-China Chamber of Commerce inaugurated in Toronto - Chinese companies doing business in Canada now have a platform to band together with the inauguration of the Canada-China Chamber of Commerce (CCCC) in Toronto. Chinese companies doing business in Canada now have a platform to band together with the inauguration of the Canada-China Chamber of Commerce (CCCC) here Tuesday. Chinese Commerce Minister Chen Deming unveiled the CCCC plaque at a business luncheon held for the inauguration. The non-profit business organization, made up of more than 100 Chinese companies, aims to help Chinese businesses develop in Canada and protect their legitimate rights, said CCCC Chairman Wang Lijun. It will also provide these companies with a forum to address their concerns and queries, he said. "With this kind of platform, we can have very good communication and exchange ideas with the federal government and governments of lower levels so they can help us solve problems," he said. Another mission of the CCCC is to boost bilateral trade. The CCCC will also extend a helping hand to Canadian companies that try to enter the Chinese market, said Wang. Canadian Prime Minister Stephen Harper sent a congratulatory note to the inauguration.

Hong Kong*:  Sept 27 2012 Share

New World Development (0017) beat 11 other bids to win the Urban Renewal Authority redevelopment project on Sai Yee Street in Mong Kok yesterday. The redevelopment of the street, also known as Sneaker Street, is expected to cost up to HK$6 billion, or HK$24,994 per square foot. Market expectations for redeveloping the 26,673 square foot plot - situated in a cluster of sports shops and bounded by parts of Sai Yee Street, Nelson Street and Fa Yuen Street - range between HK$2.5 billion and HK$6 billion. This is the largest redevelopment launched by the URA this year and on completion will consist of a 53,346 sq ft of commercial space and a 186,711 sq ft of residential area. Shops on the ground floor of Fa Yuen Street and Nelson Street will be allocated to sports-related businesses, aiming to preserve the character of Sneaker Street. The commercial space will be divided equally between the URA and New World Development, which cannot sell any shops for five years after completion. Current tenants affected by the redevelopment will be able to rent back similar-sized premises at market value. The residential portion will hold 290 flats, with expected accommodation values ranging from HK$10,414 psf to HK$24,994 psf. New World Development has been enlarging its land bank in recent years. The group will announce its final results tomorrow. Separately, the group's project with Henderson Land (0012) - The Reach in Yuen Long - has so far received thousands of inquiries from potential homebuyers. Sample flats will be opened for public viewing this week. Sun Hung Kai Properties (0016) priced another 26 three-bedroom units at its Century Gateway in Tuen Mun yesterday at HK$8,077 psf - up by 2percent from the last batch to be put on the market.

Elderly residents may soon be able to retire in Guangdong under a new program being developed by the government. Speaking in Beijing on the second day of an official visit, Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor said she met top figures from the health ministry, the Hong Kong and Macao Affairs Office and the National Development and Reform Commission during which the plan was discussed. "I have been informed of the medical reforms taking place in the mainland and it is likely we may find more Hong Kong people willing to work and study there and even enjoy their life after retirement," Lam said after meeting Deputy Minister of Health Huang Jiefu. "I have told the deputy minister we hope to launch a program that will allow our elderly to retire in Guangdong," she said. "Besides their daily needs, the elderly are also concerned about medical services in the mainland." Lam said the government will look into arrangements for those wishing to retire in Guangdong. It will also help in the development of Chinese medicines. Later, Lam met National Development and Reform Commission deputy director Zhang Xiaoqiang who said 39 measures covering trade, finance, education, technology, tourism and mainland- Hong Kong operations - announced by President Hu Jintao in his July visit to Hong Kong - have been approved.

Sales of new homes in Hong Kong could reach record highs over the next two years as developers accelerate releases of residential projects, according to analysts. "We see the property up-cycle continuing until the end of 2014 at least," Lee Wee Liat, head of research at BNP Paribas Securities, said. "Primary-market transaction volumes should remain strong over the next two years, possibly hitting historical highs of 15,000 units and HK$150 billion in each of 2013 and 2014." Lee expects the number of deals in the primary market to reach 13,000 this year with a total value of HK$136 billion, compared to 10,501 deals last year at a total value of HK$133.32 billion. He forecast home prices would grow by a further 10 to 15 per cent from now until 2014. "Developers with the most projects available for sale can capitalise on high property prices will outperform," he said. Agents identified Cheung Kong as a likely outperformer, noting that it had more than 5,300 flats available for sale until next year. Its major projects include City Point, at West Rail's Tsuen Wan West station, and Lohas phase three in Tseung Kwan O. It was expected to achieve sales revenue of about HK$50 billion if all units were sold, agents said. Cusson Leung, an analyst at Swiss-based investment bank Credit Suisse, said developers would now focus on the primary market. "They are becoming more flexible on pricing and focusing more on asset turnover, and buying power will be absorbed by all the attention on primary projects," he said. Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong said last week the group would not hoard its supply of new flats. "We will put the new projects up for sale once we secure pre-sale consent from the government," he said after the company's final result announcement last week. Victor Lui Ting, deputy managing director, said SHKP planned to release HK$35 billion worth of units for pre-sale for the year ended June next year. Henderson Land and New World are also likely to release more projects from now to next year, compared with their launch programme this year. Lee said the key focus would be on their two joint-venture projects, the 928-unit Double Cove phase one at Ma On Shan and the 2,580-unit The Reach at Tai Tong Road in Yuen Long. More than 400 units at Double Cove phase one have been sold this month. Henderson Land Development also would start to see returns from its redevelopment projects, with five potential launches this year and six next year, Lee said.

Bank of America-Merrill Lynch to announce Asia lay-offs - Bank of America-Merrill Lynch (BAML) is set to join the latest round of financial sector lay-offs this summer with dozens of jobs to be cut in the world's fastest-growing region. Financial industry sources familiar with the matter told the South China Morning Post on Tuesday that the leading American bank is expected to make an internal announcement of its latest lay-off plan in Asia, including its offices in Hong Kong, Tokyo and South Korea, in the coming days. "Many department heads have submitted their lists of head count that will be cut. Some are still bargaining with bosses as they try to keep as many staff as they can," said one of the people, adding that the list of jobs to be cut will be finalized soon and affected employees will be informed this week. A BAML spokesman in Hong Kong declined to comment. In this round of layoff in the financial industry, BAML is not alone. In the past two months - traditionally off-limits for job cuts because many bankers and traders are on vacation -hundreds of jobs have been cut in Asia at financial institutions such as Daiwa Securities, Nomura and Credit Suisse, partly because of a weak market across the region. In Hong Kong, poor equity market turnover has hurt both the operations and profitability of global investment banks and of local brokerage houses. The combined average daily turnover for equities and warrants has barely topped HK$50 billion so far this year, compared with an average of HK$70 billion last year. "It is a relatively very small portion of all employees that the bank has in Asia but it will of course hurt office sentiment again. Everybody knows this is not the end but more likely just the beginning," of more layoff, said another of the sources, referring to BAML's latest layoff to be announced this week. BAML has thousands of staff in Asia and Hong Kong serves as its regional head office. 

A mainland woman wept when told she would spend the next two months in prison for breaching the conditions of her permit to visit Hong Kong. Shenzhen resident Zhang Zhuoyan, 44, pleaded guilty to working as a trader, though her multiple-entry permit does not allow her to take up employment. She was arrested on Wednesday in a crackdown on cross-border trade. Police and immigration officers raided the Advanced Technology Centre - a 10-minute walk from trader-crowded Sheung Shui MTR station - where people collect mainland-bound goods. Zhang told immigration officers she bought cosmetics and daily commodities that she planned to resell across the border for a profit after avoiding heavy import taxes. She pleaded not guilty at a hearing last week but had changed her mind by yesterday. Zhang, who supports her 70-year-old mother and earned about 1,000 yuan (HK$1,225) monthly from part- time jobs in Shenzhen, said she learned a lesson. Sha Tin magistrate Merinda Chow Yin-chu later noted that the prison term had been reduced from a standard three months after Zhang's plea for leniency. Besides Zhang, 130 other mainlanders were arrested last week. Six have now been convicted and jailed for two months. They said each trip with goods such as diapers and milk formula could earn up to HK$130. Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor, meanwhile, reported the problem of parallel traders to the State Council during a Beijing visit. She said Wang Guangya, director of the Hong Kong and Macao Affairs Office, agreed to assist in a clampdown.

The government commission set up to review the statutory minimum wage has agreed to raise it to HK$30 an hour, from the current HK$28, local media reported on Tuesday afternoon. The 13-member Minimum Wage Commission reached the compromise during the second day of its meeting, according to sources quoted in media reports. Workers’ representatives had called for an increase to more than HK$30 an hour, while employers opposed any increase. Their first meeting, on Monday, reportedly involved heated debate. The commission must submit its recommendation to Chief Executive Leung Chun-ying by the end of next month. Then the Executive Council will decide whether to adopt it. Earlier on Tuesday, Leung said he would consider the views of both workers and employers when studying the recommendation. “More importantly, [I will] consider Hong Kong’s overall and long-term interests,” he said.

HK to tighten visitor health surveillance - Hong Kong will tighten surveillance of visitors’ body temperatures at border checkpoints, to guard against a deadly new virus, the health chief said on Tuesday. Secretary for Food and Health Dr Ko Wing-man said little was known about the virus, except that patients’ symptoms included fever and lung complications. The new virus is a coronavirus related to the deadly Sars, or severe acute respiratory syndrome, that struck the mainland and Hong Kong in 2003. It has already killed a Saudi Arabian man and left a second man, from Qatar, in critical condition. Ko said the Department of Health would step up health checks on incoming travellers and question anyone with fever-like symptoms about their recent travels. Officers will have the authority to transfer such people to Health Department clinics for treatment and isolation, he said. Scientists are still studying how the virus develops, its incubation period and whether patients contracted it through contact with animals, Ko said. It is difficult to assess how much risk Hong Kong is facing, but currently there is no need to raise the city’s official health alert level, he said. Ko was speaking after returning from a World Health Organisation meeting in Vietnam.

Authorities are on full alert for a new SARS-like threat that - like the virus that rocked and ravaged Hong Kong nine years ago - can cause severe illness and death. It has surfaced in the Middle East, and travelers who have been to Qatar or Saudi Arabia and return with pneumonia are being targeted for isolation and checks for signs of the virus. Concern has been sharpened by the fact that the Haj, the annual pilgrimage of hundreds of thousands to Mecca in Saudi Arabia, will be in full swing by the middle of October. The 2003 SARS epidemic killed 299 people in Hong Kong among 774 worldwide, though a top health official here believes anything on such a scale this time around is unlikely. Severe acute respiratory syndrome is caused by what is called a coronavirus, taking its name from its crown-like outer part. Such a virus causes the common cold, but a mutation can be horrific. The scare comes after a World Health Organization alert yesterday following a confirmed case of the novel coronavirus infection in a 49-year-old Qatari man who traveled to Saudi Arabia prior to falling sick on September 3. He was admitted to a Qatar hospital in critical condition on September 7 and then airlifted to a London hospital on September 11. He was last night in critical condition after renal failure. The Health Protection Agency UK said virus samples from the man were almost identical to those of a 60-year- old Saudi who died earlier this year. Samples of matter from his lungs were sequenced by the Erasmus University Medical Centre in the Netherlands and reported earlier this month. The WHO is trying to determine the public health implications of the two cases and had not yet recommended travel restrictions. In Hong Kong, the controller of the Centre for Health Protection, Thomas Tsang Ho-fai, warned: "We need to step up surveillance [at] entry points ... to detect whether there is any trace of this coronavirus." But the new strain appears to have limited ability to spread between people. "This is a novel coronavirus," Tsang said. "We're not talking about the return of SARS." Tsang did send a message to doctors, however, saying that people who developed pneumonia from unexplained respiratory illnesses seven days after landing from travels must be reported. People suspected of carrying the virus must be under strict isolation in facilities where staff wear full protective gear, he added. And the Hospital Authority called a teleconference of all public hospital doctors yesterday on the virus. Still, Chinese University chair professor of respiratory medicine David Hui Shu-cheong said: "We need to wait for more information from WHO. We do not know exactly how infectious the disease is and whether this virus has the capacity to cause major outbreaks."

 China*:  Sept 27 2012

Billionaire US investor Wilbur Ross eyes JV in China shale tender - High profile US investor Wilbur Ross is in talks with Chinese companies to form a joint venture to participate in a long-awaited shale gas auction in China late next month. China, believed to hold the world’s largest reserve of shale gas, is offering 20 blocks in eight provinces with a total area of 20,002 square km. More than 100 Chinese companies, from utility firms to real estate developers, have shown interest. Ross, one of the world’s best-known distressed-asset investors, travelled to Beijing this week to discuss the possibility of a joint venture between Chinese firms and some of his investments in the United States. “Part of what I was in China about was talking about the possibility of joint ventures of some of our investments in the West and some of the Chinese companies,” Wilbur Ross, CEO of investment group WL Ross & Co, told Reuters at a conference in Singapore. “I think we will have a joint venture partner. Bids are due (late) October and we hope to be organised by then.” He declined to name the companies he was talking to. Beijing is allowing foreign-funded joint ventures controlled by Chinese investors to participate in the shale gas tender, a move experts say is aimed at luring international firms with technology and operational expertise. “The technology of horizontal drilling and fracturing is not that well developed yet in China,” Ross said. “There have only been 63 wells drilled with that technology where as there have been over 1 million drills in the United States. So I think there will be quite a few joint ventures between Chinese companies and American companies that have the technology.” He said investing in shale gas in China would be more expensive than the United States, but declined to say how much he was looking to spend. Shale gas is trapped in rocks and requires a technology called hydraulic fracturing, or fracking, to unleash. Since late 2009 China has been hunting for the unconventional resource but has little commercial production to date. A shale gas boom is turning the United States into a gas exporter. Ross, whose company manages around US$10 billion in assets, made a name for himself as a bankruptcy specialist, snapping up out-of-favour assets ranging from banks and textiles to steel and coal firms. Once dubbed the “King of Bankruptcy” by Fortune magazine, Ross has recently turned to the troubled shipping sector, buying a majority stake in energy transportation firm Navigator Holdings last month and helping finance Diamond S Shipping’s purchase of 30 oil product tankers in 2011. “We are very happy with our existing investments,” Ross said. “We would look for more investments probably mainly in liquids, rather than in containers and dry bulk.” The shipping industry is struggling through a severe four-year downturn, driven by a ship supply glut, rock bottom freight rates, high bunker fuel prices and global economic turmoil.

China tells Japan to 'abandon illusions' over Diaoyu claim - China told Japan on Tuesday it “must abandon any illusion” it has over a territorial dispute as the two sides held high-level talks over rival claims to East China Sea islands. Vice Foreign Minister Zhang Zhijun said China “will absolutely not tolerate any unilateral action taken by the Japanese side that infringes on China’s territorial sovereignty”, according to a ministry statement. “The Japanese side must abandon any illusion, face up to its erroneous actions and correct them with credible steps,” said the statement, released by China after the talks which were attended by Zhang and the Japanese Vice Foreign Minister Chikao Kawai. The discussions in Beijing were held after a long-running dispute over the Diaoyu Islands – known as Senkaku in Japan – flared up, leading to street protests across China. A number of Japanese companies, including Panasonic and Honda, were forced to temporarily halt production last week, as owners feared for the safety of their staff and property. China’s foreign ministry described Tuesday’s talks as “candid” and said the two sides agreed to keep discussing the issue, though cautioned that responsibility for progress rests with Tokyo. Japan should “meet China halfway so as to bring China-Japan relations back onto the right track of sound and stable growth at an early date”, the foreign ministry statement added, saying Tokyo “should recommit itself to the consensus and understanding reached between the leaders of the two countries”. China appeared to be encouraging Japan to return to the situation that has largely governed the decades-long dispute, whereby any provocation leading to an escalation of tension is simply avoided. Separately on Tuesday, the information office of the State Council – China’s cabinet – released a white paper on the row, criticising Japan for breaking the unwritten pact between the two countries over the islands. The paper emphasised what it described as an “important understanding” reached in the early 1970s as the two sides normalised ties. “The then leaders of the two countries, acting in the larger interest of China-Japan relations, reached important understanding and consensus on ‘leaving the issue... to be resolved later’,” the white paper said. In recent years however, the paper added, Japan’s actions, especially its recent nationalisation of the islands, have violated that spirit. “This severely infringed upon China’s sovereignty and ran counter to the understanding and consensus reached between the older generation of leaders of the two countries,” it said.

Beijing said it will deploy unmanned aircraft to monitor the Diaoyu Islands and other disputed islets as it postponed a ceremony to mark the 40th anniversary of Sino-Japan diplomatic ties. Xinhua News Agency said the bases for unmanned aircraft will be built in coastal provinces within the 12th five-year plan period. Xinhua said the postponement of the ceremony was due to the dispute over the Diaoyus. There are reports that Japanese police have landed on the island in anticipation of protests from Taiwan. There are still 10 mainland coast guard ships in Diaoyu waters. Beijing is set to lift the limit on the number of mainland boats fishing off the Diaoyus and will subsidize their fuel costs. Meanwhile, smaller-scale protests were reported in the mainland and Taiwan. A few hundred people gathered in Guangzhou to protest and in Taipei about 1,000 demonstrators turned up. Yu Qingsong, division chief of the State Oceanic Administration, said yesterday the government approved plans to "construct a full-coverage, all- dimensional and high-precision comprehensive monitoring system." The unmanned aircraft will be able to compensate for the limitations of satellite and aerial monitoring. They are comparatively low-cost and highly efficient. Images generated by unmanned aircraft will be more accurate than those from satellites and may fly continuously for more than 16 hours. The unmanned aircraft have already collected data from the area around Jiangsu, a province just above Shanghai. The administration is also planning to launch eight satellites over oceanic areas to strengthen the monitoring of the islands' waters before 2020. The secretary general of the Democratic Party of Japan and the country's former finance minister, Hirohisa Fujii, said both countries should put aside the Diaoyu Islands dispute. In reply to accusations by China and Korea that Japan has not fully reflected on its war atrocities against the two countries, he agreed the facts of history need to be shown to the younger generations of Japan.

The Chinese economy seems to have hit bottom in the second quarter of 2012 and will grow at 8 percent across the year, according to a report released by the Bank of China Ltd on Monday. Although the economy is still cooling, third-quarter growth is expected to be 7.7 percent, slightly higher than the 7.6 percent growth in the second quarter, the report said. "We see signs that indicate the ongoing destocking among manufacturers is coming to an end. Destocking in China usually lasts six to nine months, but this time around it has already lasted for 10 months," said Cao Yuanzheng, chief economist at BOC. Policies designed to stimulate the economy are likely to see GDP growth rise to 8.2 percent in the fourth quarter, resulting in the forecast 8 percent growth across the whole year, a figure higher than the official government target, the report said. "The tottering global economy has affected China throughout 2012 and there is little chance of a strong rebound in the long term," said Li Jianjun, an analyst at BOC's Institute of International Finance. Chinas' foreign trade is likely to register a single-digit growth rate this year as external demand has been cooled by the global economic slowdown. The report forecasts export growth throughout the year will stand at 6.3 percent, below the official target of 10 percent, while import growth will slow to 6.2 percent. The world's second-largest economy has shown signs of losing steam with second quarter GDP growth of 7.6 percent, the lowest in three years. Growth in industrial production weakened from July's 9.2 percent to 8.9 percent in August, also a three-year low, stirring calls for the government to announce more stimulus measures. International ratings agency Standard & Poor's on Monday lowered its forecast for China's GDP growth rate to 7.5 percent from its previous 8 percent. Andrew Palmer, an analyst at S&P, said the cut was generated by acknowledgement that the central government will not roll out a stimulus package on the scale that it did between 2008 and 2009 to guarantee a growth rate of 8 percent, as it is aware of the negative effects that last round of stimulus had, including pushing up inflation and property prices. China's manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, Bloomberg reported on Monday, citing a survey named China Beige Book. New York-based CBB International interviewed more than 2,000 company executives and bankers for the survey. Most other sectors show more resilience and greater confidence than manufacturing. Transport was the most optimistic sector of the economy in the third quarter, while the services sector in general is upbeat. "Our China leading indicator suggests further weakness in September, but we expect macro data to surprise on the upside in the fourth quarter, supported by a pickup in infrastructure and housing investment," said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. Nomura's China leading index continued to drop in August, as eight of the nine components weakened. The HSBC Flash China Manufacturing Purchasing Managers' Index, a key indicator of manufacturing activity, rose slightly to 47.8 in September from its August reading of 47.6, but still fell below the expansion line of 50. Chang Jian, a China economist with Barclays Bank, said the reading supports the forecast that real GDP growth is likely to slow to 7.3 percent year-on-year in the third quarter. But some sub-indices suggested slowdown in demand appears to be stabilizing on the back of various, albeit modest, supportive domestic measures and possibly stabilizing, but still weak, external demand, which would contribute to industrial restocking from 2013, Chang said. Despite some pickup in quarter-on-quarter momentum, year-on-year GDP growth is likely to slow further before stabilizing at 7.2 percent in the fourth quarter and picking up to 7.8 percent in the second half of next year, she said.

First aircraft carrier commissioned - China's first aircraft carrier was delivered and commissioned to the People's Liberation Army (PLA) Navy Tuesday, according to report by National Defense Ministry's official website. Overseen by top Chinese leaders, the carrier, with a name of "Liaoning" and hull number 16, was officially handed over at a ceremony held in a naval base of Northeast China's Dalian Port. China’s first aircraft carrier entered service on Tuesday, the defence ministry in Beijing said, as the country expands its blue-water fleet at a time of increasing maritime tensions in the region. President Hu Jintao and Premier Wen Jiabao attended a “commissioning” ceremony for the 300-metre vessel, state media said. The former Soviet ship that was bought from Ukraine was renamed Liaoning after the northeastern province that is home to China’s main naval port city of Dalian, where it was refitted. The commissioning makes China the last permanent member of the United Nations Security Council to have an aircraft carrier, and comes as Beijing’s economic and political significance grows. Numerous sea trials of the aircraft carrier – which was previously known by China only as Number 16 – since August last year were met with concern from regional powers including Japan and the United States, which called on Beijing to explain why it needed such a ship. “The PLA’s general armament department, the navy and all comrades participating in the carrier programme should make new contributions in promoting China’s weaponry construction and safeguarding national sovereignty, security and territorial integrity,” Wen said at the ceremony in Dalian. “It will also be of great significance in enhancing national defence power and the country’s comprehensive strength.” The US previously played down the importance of the aircraft carrier, saying that it had “limited” capability following its first sea trial in August last year. The Pentagon also said the vessel was the first step towards a future fleet of carriers expected to be built domestically in coming years. Taiwan’s intelligence chief said earlier this year that China has decided to build two aircraft carriers. However despite rumours that work has already begun, there is no evidence of construction of a domestically-built carrier. There had been speculation on what the vessel was to be called, with retired Major General Luo Yuan suggesting naming it Diaoyu, after islands in the East China Sea claimed by China, which are also claimed by Japan where they are known as Senkaku. Beijing on Sunday postponed a ceremony marking the 40th anniversary of the establishment of diplomatic ties with Tokyo. Tensions have also risen this year with Vietnam and the Philippines over disputed islands in the South China Sea. It will be of great significance in enhancing national defence power and the country’s comprehensive strength. Beijing confirmed last year it was revamping the former Soviet ship – originally called the Varyag – and has repeatedly insisted the carrier poses no threat to its neighbours. It says the ship will mainly be used for training and development purposes, but military commentators say China is developing strike aircraft and support vessels which would help the ship become fully operational. Pictures have been published in the Chinese press showing domestically-built planes on the carrier’s deck. Leading generals have also said that developing strike aircraft for China’s navy is a top priority for military bosses. “Having the aircraft carrier enter the ranks will be of important significance in raising the overall fighting capacity of our nation’s navy to a modern level,” the defence ministry said. It “will be effective in defending the interests of state sovereignty, security and development and advancing world peace and common development”. The ministry also said the vessel will increase China’s capacity to defend itself and “cooperate on the high seas in dealing with non-traditional security threats”.

Taiwan’s President Ma Ying-jeou on Tuesday voiced support for dozens of Taiwanese boats that entered territorial waters around bitterly disputed East China Sea islands to press Taipei’s claim. His comments came after dozens of Taiwanese fishing boats escorted by coastguard vessels traded water cannon fire with Japanese vessels around the the disputed islands claimed by Taipei, Tokyo and Beijing. “President Ma supports the fishermen’s patriotic actions and acknowledges the coastguard for claiming our sovereignty while protecting the fishermen,” his office said in a statement. “Ma urges the Japanese side to respect our fishermen’s rights in their ancestral fishing ground ... and hopes that all parties involved will peacefully resolve the disputes to share the resources in the East China Sea.” Japanese coastguard ships sprayed water at the fishing vessels, footage on national broadcaster NHK showed, with the Taiwanese patrol boats retaliating by directing their own high-pressure hoses at the Japanese ships. Taiwan’s coastguard confirmed that nearly 60 boats got close to the islands, some coming within three nautical miles – well inside the 12-nautical-mile territorial exclusion zone. “We are acting on behalf of Taiwanese fishermen to defend our rights to fishing in the area and to protect our livelihood,” said Tu Cheng-yuan, an official at the Suao fishermen’s association which organised the protest. Japan administers the uninhabited, but strategically well-positioned archipelago under the name Senkaku, which is called Diaoyu in Chinese. The intrusion complicates Japan’s already volatile territorial dispute with China. Taiwan has said that officers aboard some of the patrol ships sent to the area are fully-armed elite coastguard personnel.

An aerial view shows Japan Coast Guard patrol ship (bottom L) spraying water at fishing boats from Taiwan as Taiwan's Coast Guard vessel (top L) sails near Diaoyu Islands in the East China Sea, in this photo taken by Kyodo September 25, 2012. A group of fishermen from Taiwan said as many as 100 boats escorted by 10 Taiwan Coast Guard vessels would arrive in the area later on Monday. 

The Chinese government issued a white paper on Diaoyu Dao Tuesday, asserting the country's indisputable sovereignty over it and its affiliated islands. Diaoyu Dao and its affiliated islands are an inseparable part of the Chinese territory, it is China's inherent territory in all historical, geographical and legal terms, and China enjoys indisputable sovereignty over Diaoyu Dao, the white paper says. The white paper, titled "Diaoyu Dao, an Inherent Territory of China", was released by the State Council Information Office of the People's Republic of China. For quite some time, Japan has repeatedly stirred up troubles on the issue of Diaoyu Dao. On September 10, 2012, the Japanese government announced the "purchase" of Diaoyu Dao and its affiliated Nanxiao Dao and Beixiao Dao and the implementation of the so-called "nationalization". This is a move that grossly violates China's territorial sovereignty and seriously tramples on historical facts and international jurisprudence, the white paper says. China is firmly opposed to Japan's violation of China's sovereignty over Diaoyu Dao in whatever form and has taken resolute measures to curb any such act. China's position on the issue of Diaoyu Dao is clear-cut and consistent, the white paper stresses. "China's will to defend national sovereignty and territorial integrity is firm and its resolve to uphold the outcomes of the World Anti-Fascist War will not be shaken by any force," the white paper says. The white paper, divided into seven parts, elaborates on such contents as Diaoyu Dao is China's inherent territory, Japan grabbed Diaoyu Dao from China, backroom deals between the United States and Japan concerning Diaoyu Dao are illegal and invalid, Japan's claim of sovereignty over Diaoyu Dao is totally unfounded, and China has taken resolute measures to safeguard its sovereignty over Diaoyu Dao. The white paper says that Diaoyu Dao was first discovered, named and exploited by China, and it had long been under China's jurisdiction, according to the white paper. In the early years of the Ming Dynasty, China placed Diaoyu Dao under its coastal defense to guard against the invasion of Japanese pirates along its southeast coast. The Qing court not only incorporated the Diaoyu Dao Islands into the scope of China's coastal defense as the Ming court did, but also clearly placed the islands under the jurisdiction of the local government of Taiwan. Chinese, Japanese and other foreign maps also show that Diaoyu Dao belongs to China. The white paper says that Japan accelerated its invasion and external expansion after the Meiji Restoration and covertly moved to seize Diaoyu Dao. On April 17, 1895, the Qing court was defeated in the Sino-Japanese War and forced to sign the unequal Treaty of Shimonoseki and cede to Japan "the island of Formosa (Taiwan), together with all islands appertaining or belonging to the said island of Formosa" . The Diaoyu Dao Islands were ceded to Japan as "islands appertaining or belonging to the said island of Formosa". Japan's occupation of Diaoyu Dao during the Sino-Japanese War in 1895 is illegal and invalid. After World War II, Diaoyu Dao was returned to China in accordance with such international legal documents as the Cairo Declaration and the Potsdam Proclamation. No matter what unilateral step Japan takes over Diaoyu Dao, it will not change the fact that Diaoyu Dao belongs to China, the white paper says. Diaoyu Dao was returned to China after the Second World War. However, the United States arbitrarily included Diaoyu Dao under its trusteeship in the 1950s and "returned" the "power of administration" over Diaoyu Dao to Japan in the 1970s, the white paper says. "The backroom deals between the United States and Japan concerning Diaoyu Dao are acts of grave violation of China's territorial sovereignty. They are illegal and invalid. They have not and cannot change the fact that Diaoyu Dao belongs to China," the white paper says. On March 8, 1972, Japan's Ministry of Foreign Affairs issued the Basic View on the Sovereignty over the Senkaku Islands in an attempt to explain the Japanese government's claims of sovereignty over Diaoyu Dao, which is rejected by China as "totally unfounded". The white paper introduces China's resolute measures to safeguard its sovereignty over Diaoyu Dao since the 1950s and its latest forceful moves to respond to Japan's illegal violation of China's sovereignty over Diaoyu Dao. According to the white paper, as China and Japan were normalizing relations and concluding the Sino-Japanese Treaty of Peace and Friendship in the 1970s, the then leaders of the two countries, acting in the larger interest of China-Japan relations, reached important understanding and consensus on "leaving the issue of Diaoyu Dao to be resolved later." But in recent years, Japan has repeatedly taken unilateral measures concerning Diaoyu Dao and conducted in particular the so-called "nationalization" of Diaoyu Dao, the white paper says. "This severely infringed upon China's sovereignty and ran counter to the understanding and consensus reached between the older generation of leaders of the two countries. It has not only seriously damaged China-Japan relations, but also rejected and challenged the outcomes of the victory of the World Anti-Fascist War," the white paper says. According to the white paper, China strongly urges Japan to respect history and international law and immediately stop all actions that undermine China's territorial sovereignty. The Chinese government has the unshakable resolve and will to uphold the nation's territorial sovereignty. It has the confidence and ability to safeguard China's state sovereignty and territorial integrity.

Hong Kong*:  Sept 26 2012 Share

Sentiment remained strong in the primary property market over the weekend with two new projects - Sun Hung Kai Properties' (0016) Century Gateway and Henderson Land's (0012) Double Cove - recording healthy sales. Demand, however, eased in the secondary market. At least 155 apartments at Century Gateway in Tuen Mun were sold at the weekend, bringing totals sales in the project to 300. A mainland buyer bought four three-bedroom flats - priced at HK$7,875 per square foot - in the development yesterday, said Bernie Chan Kwong-yu of Midland Realty. It was the same story at Double Cove, in Wu Kai Sha, which saw sales of 30 homes during the weekend. A total of 430 apartments have been sold there so far. At The Riverpark in Tai Wai - a project by New World Development (0017) - eight units were sold over the weekend. Chan expects more transactions during the upcoming long weekend, particularly when mainland tours are organized to visit new projects. Sun Hung Kai also released another 24 three-bedroom flats and a special unit at Century Gateway. The 778-square-foot and 779-sq-ft flats were released at HK$7,931 psf while the special unit was priced at HK$15.02 million, or HK$13,323 psf. Soundwill Holdings (0878) also released 23 units at its Park Haven in Causeway Bay yesterday, priced at HK$20,323 psf on average. A special unit sold at the project at a record HK$29,950 psf. As for the secondary market, Centaline recorded only 25 transactions at the 10 major housing estates at the weekend, down from 32 the previous weekend. "Homebuyers are taking a wait-and-see approach," said Louis Chan Wing-kit of Centaline, as asking prices soar. The latest round of quantitative easing in the United States is also prompting homeowners to raise prices. One 635-sq-ft flat at Kornhill sold for HK$6.08 million, or HK$9,575 psf. The two-bedroom unit was originally bought for HK$2.93 million in 2005.

Dorsett Hospitality International (2266), a subsidiary of Far East Consortium International (0036), is seeking higher yields from its hotel business - by acquiring more properties. "High yields are our main target," said president and executive director Winnie Chiu Wing-kwan. The group bought two properties and sold one hotel, said Kevin Sun Wei-yung, vice president of development. It is also seeking to boost returns by converting industrial buildings into hotels. Two new three- and four-star hotels - Dorsett Regency Tsuen Wan and Silka Tsuen Wan - will be converted from industrial buildings. The sites were bought after the group sold a Sheung Wan hotel. "We sold the Central Park Hotel for HK$4 million per room and acquired an industrial building - Big Orange in Tsuen Wan - which only cost about HK$1.2 million per room after the conversion," Chiu emphasized. The two hotels, to be opened next year and in 2014, will enlarge the group's hotel portfolio to 12 in the region. The firm earlier sold Dorsett Regency Hong Kong in Kennedy Town to China Construction Bank (0939) for HK$800 million. The firm is set to launch a 322-room boutique hotel - Dorsett Regency London - in the first quarter of 2014, which will serve as its stepping stone to entering the European market, said Sun.

Two top officials stood their ground on a development plan for the northeastern New Territories, saying ditching it will go against the wishes of the public. Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor and Secretary for Development Paul Chan Mo- po defended their stance on separate occasions yesterday, a day after rural leaders who support the plan clashed with opponents. The public forum in Sheung Shui was attended by around 7,000 residents. The project will provide 54,000 housing units and affect 10,000 people living in the area. Lam insisted there is widespread public support for the planned government development in the New Territories. Land in older urban areas and new towns such as Tseung Kwan O have all become saturated with developments, she said, adding that the public had been consulted over three years on the plan. The latest round of consultation ends on Sunday. Meanwhile, in a TVB interview aired yesterday, Chan said scrapping the plan is out of the question. The development minister raised eyebrows when he revealed that resettling and compensating 10,000 residents would cost HK$40 billion. He denied that the development will provide a backyard for rich mainlanders. Lawmaker-elect for New Territories East Gary Fan Kwok-wai accused the government of using the housing issue to hide its plan of integrating Shenzhen with Hong Kong. Villagers at Ping Che who oppose the new town plan said they were not informed about the previous consultation exercise. One said the government is forcing them out of the area where they have lived for three generations.

Kwok comes calling and love is in the air - The mainstream media frenzy inspired by celebrity Aaron Kwok Fu-shing brightened proceedings at Sha Tin on Sunday, but even the Canto-pop star’s omnipresent sunglasses couldn’t hide the glaringly obvious. This was another dreary day that would have otherwise sunk into a mire of mediocrity – the monotony not helped by a select few trainers that would rather talk to horses than reporters. Kwok’s on-course arrival was eagerly anticipated by a ravenous press pack of what seemed like hundreds of entertainment reporters brandishing their comically over-sized microphones, Jockey Club officials handling a rush of one-off accreditations on what was kindly described by some as an “industry meeting” – i.e. no real feature races and zero glamour. The big race was an average Class Two handicap and even some of the winning trainers on the day seemed to lose interest, leaving reporters to fight over monosyllabic scraps of quotes. Kwok’s good mate and trainer, Caspar Fownes, has a touch of rock star in him, and seems to intuitively understand the need to promote the “industry” beyond the standard “who won and why?” Fownes is a genuinely funny man, who in another life could have been a talk show host. So when Kwok’s first ever runner in a race saluted, he played his usual part, whooping it up as only he can. Judging by the media mayhem, Kwok’s fame means he won’t ever be having a relaxing day at the races, but he was a good sport anyway, patiently answering questions for nearly 30 minutes after Calling With Love’s victory and providing the Jockey Club with priceless publicity. If only some of the licensees were so helpful in furthering the cause of their sport. At least our favourite trainer, Andy Leung Ting-wah, was back – his second winner in as many meetings definitely constituting a “hot streak” by his standards. “I’ve proven the handicapper wrong again,” he proudly exclaimed after Daily Double’s win, the same reason he gave for his first win of the season, stated as if there was a real skill in getting a horse with actual ability into the lowest grade possible. At least that quote, however counter-productive to his own interests and the image-building of racing, added some colour – more than the tight-lipped cynicism old-school trainer Peter Ng Bik-kuen served up yesterday. Despite training a double, Ng seemed on a mini media ban, sarcastically saying the key to Dane Patrol now being able to run a strong 1,000 metres was because “I told him he could do it”. Luckily, the rider of one of his winners, Derek Leung Ka-chun, added some humour, saying Ng’s Taknam had an action “kind of like a cow’s”. Still, Ng’s response wasn’t the shortest, or cleverest, answer to a question from this reporter; last season Me Tsui Yu-sak was asked, “Can I have a quick word in English?”, “No,” Tsui replied with a smirk before scurrying off – Well, he didn’t lie, it was a quick word and it was in English. Ng has now reached the same retirement age as the revitalised Leung and he is an extremely personable and knowledgeable chap. But he would rather talk about Champions League footie than the chances of one of his horses – what’s the point of that? He came through the ranks in an era where it was all about landing a bet and if any insight was shared, it was kept strictly for “friends of the stable”. Times have changed though, and participants now have a responsibility to promote the industry – just as Kwok did for free, providing trainers with a lesson in Publicity 101, as he blew into Sha Tin, and back out again, like a public relations tornado.

Huang suggests HK tap mainland expertise to advance Chinese medicine - The best way for Hong Kong to develop its Chinese medicine industry is to tap the expertise in neighbouring Guangdong, the chief secretary was advised in Beijing on Monday. Carrie Lam Cheng Yuet-ngor, who is on an official visit to Beijing, had asked for the central government’s support in developing the traditional medicine sector. Speaking after a one-hour meeting with Deputy Health Minister Huang Jiefu on Monday morning, Lam said Huang suggested the city co-operate more closely with Guangdong. “Vice-minister Huang said as Hong Kong had long had close ties with Guangdong, and Guangdong was the best place for Chinese medicine among all mainland provinces, so he encouraged us to work more closely with Guangdong in areas like scientific research and manpower training,” Lam said. Monday is the second day of her official trip to the capital – her first visit since taking office three months ago. She and Huang also discussed how the mainland’s medical reforms might affect Hong Kong retirees living in Guangdong, Lam said. Later on Monday morning Lam met officials from Beijing’s municipal government. In the afternoon, she is due to meet Wang Guangya, director of the Hong Kong and Macao Affairs Office, and to visit the National Development and Reform Commission and the Ministry of Foreign Affairs.

Beijing to help HK tackle parallel traders - Beijing on Monday offered to help Hong Kong crack down on parallel-goods traders in the city, the chief secretary said during a visit to Beijing. Chief Secretary Carrie Lam Cheng Yuet-ngor was speaking after meeting Wang Guangya, director of the Hong Kong and Macau Affairs Office, on Monday. She said Wang had promised that his office would co-ordinate with other mainland departments – such as public security and customs bureaus – to take measures to help Hong Kong rein in the traders. “Wang’s response was positive and proactive. He said his office would start this work once Hong Kong comes up with suggestions [for action],” Lam said. The chief secretary started her visit on Sunday. Later on Monday she was due to visit officials in the National Development and Reform Commission, the Ministry of Foreign Affairs, the Ministry of Health and the Beijing municipal government. The mainland traders stock up on everything from iPads to milk powder, taking advantage of lower prices and wider choice in Hong Kong, then resell them at a profit on the mainland. Hong Kong’s immigration and police arrested more than 130 mainlanders in connection with the practice in three raids last week. Their action came after Hongkongers living near Sheung Shui station protested against the local congestion and inflated prices caused by the traders.

Demand from mainland buyers key to new long-term HK housing strategy - Members of committee tasked with drawing up long-term housing plan for city say restrictions may have to be imposed to keep prices in check. Hong Kong's first new long-term housing strategy in 14 years must take into account demand from mainland buyers to provide a basis for price-control measures, say members of the committee set up to compile the plan. One committee member said taxes and restrictions on loans to non-locals for second homes should also be explored to ensure housing serves local needs. The Long-Term Housing Strategy Steering Committee - due to meet for the first time next month and chaired by the housing minister, Professor Anthony Cheung Bing-leung - is tasked with coming up with a projection of the city's housing needs and making recommendations on how to meet demand. Cash-rich mainland buyers have been accused of inflating property prices, which this year surpassed their 1997 peak. But the government does not record how many homes are sold to non-locals. Estate agents provide estimates based on the spelling of clients' names, meaning those buying through companies are missed, but say mainlanders account for more than 20 per cent of luxury flat sales. Marco Wu Moon-hoi, a member of the committee and an adviser to Chief Executive Leung Chun-ying's election campaign, said the study should include a new category of demand from mainland buyers. "Times have changed. We cannot ignore their demand and have to consider how to accommodate their needs - provided they are genuine needs," said Wu, a former director of buildings. "We have to do a survey to find out how many of them buy a home for self-use, how many for long-term investment and for speculation. We also need to take into account those who come regularly for short stays." Fellow committee member, Michael Choi Ngai-min, said lawyers may be required to record the nationalities of buyers when processing transactions in future. Another member said the panel might have to go further in restricting non-local buyers. Professor Eddie Hui Chi-man, an expert in real estate at Polytechnic University, said the success of Leung's plans to make two new developments at Kai Tak available only to local buyers would be assessed, but less restrictive measures to curb speculation would also be explored. He said the authorities should look at extra stamp duties to curb excessive outside investment, like those introduced in Singapore last year, or tightening mortgage loans to outsiders buying a second property in the city. But Wu and Choi said long-term restrictions on non-local ownership would not fit in with Hong Kong's status as a free economy and the locals-only rule should be seen as a short-term measure to cool the market. "If a mainlander buys a home and leases it to locals, this will not affect housing supply," Choi said. Choi said the government had to make it easier for young people to buy or rent a home. It should look at the waiting list for public rental housing, where about a quarter of the 200,000 applicants are students or young graduates. The comments come amid a debate over plans for three new towns in the northeastern New Territories, which would displace thousands of villagers. The government says the homes are needed to meet a housing shortfall, but critics have accused it of failing to take into account changing projections for population growth, the need for government-subsidised home ownership and the impact of mainland buyers on the local market. The last attempt to project the city's housing needs and systematically identify sites to meet flat production targets was in 1998. The steering committee responsible for implementing the strategy was wound up as home prices slumped in 2003.

Shenzhen woman in cross-border raid jailed for 2 months - A mainland trader arrested during a high-profile crackdown in Sheung Shui last week was sentenced to two months in jail on Monday morning. Shenzhen resident Zhang Zhuoyan, 44, pleaded guilty to one count of breaching the conditions of her stay in Hong Kong by working as a trader. She was arrested on Wednesday in a joint operation by Immigration Department and police. They stormed the Advanced Technology Centre, a warehouse near Sheung Shui station where traders packed goods destined for the mainland. The prosecution said Zhang was found checking goods in the Advanced Technology Centre. She admitted that she had been buying cosmetic products and daily commodities, and was planning to resell them at a profit on the mainland. “By transporting them to Shenzhen, she could have resold them and made a profit,” the prosecution said. Zhang was visiting the city using a multiple-visit permit, the court heard. Magistrate Merinda Chow Yin-chu, of the Sha Tin Magistrates’ Court, said the two-month term was reduced from three months because of Zhang’s guilty plea. Besides Zhang, 130 other mainlanders were arrested in last week’s high-profile crackdown. Six of them have been convicted of the same offence and jailed for two months. Crowds of mainland traders doing business around Sheung Shui station, near the mainland border, have sparked recent protests by Hongkongers trying to use the congested station and nearby pavements. The government vowed to crack down before last week’s raids.

 China*:  Sept 26 2012

China's first aircraft carrier was handed over yesterday to the navy of the People's Liberation Army amid rising tensions over disputed waters in the East and South China Seas. The handover ceremony of the 300-meter ship, a former Soviet carrier called the Varyag, took place in northeast Dalian after a lengthy refitting by a shipbuilder, the Global Times reported. The announcement comes amid heightened tensions over maritime disputes in the region, where China's growing assertiveness has put it on a collision course with Japan, Vietnam and the Philippines. Beijing confirmed last year it was revamping the old Soviet ship, and has insisted the carrier poses no threat to its neighbors and will be used mainly for training and research purposes. But numerous sea trials of the aircraft carrier - currently only known as "Number 16" - were met with concern from regional powers including Japan and the United States, which called on Beijing to explain why it needs an aircraft carrier. China reportedly bought the carrier's immense armored hull - with no engine, electrics or propeller - from Ukraine in 1998 and began to refit the vessel in Dalian in 2002. The PLA, the world's largest active military, is extremely secretive about its defense programs which benefit from a huge military budget. China's military budget officially reached US$106 billion (HK$826.8 billion) in 2012, an 11.2 percent increase. According to a Pentagon report, Beijing is pouring money into advanced air defenses, submarines, anti-satellite weapons and anti-ship missiles that could all be used to deny an adversary access to strategic areas, such as the South China Sea. China's real defense spending is between US$120 billion and US$180 billion, the report said.

China’s poorer regions fare better in downturn: China Beige Book - Businesses in China’s poorer provinces are weathering the effects of economic downturn better than those in the country’s wealthier regions, the preliminary findings of a nationwide survey of senior executives revealed on Monday. The China Beige Book survey of more than 2,000 executives detected a broad downturn in business optimism, particularly among manufacturers, though there was relative strength in the retail and services sectors and a more pronounced growth picture in less prosperous, but rapidly developing inland provinces. “This faster growth is evident in Q3 in manufacturing, retail, services, and property to varying degrees,” said the survey, conducted between August 9 and September 3 by New York-based CBB International, based on the US Federal Reserve’s economic report of the same name. There was also evidence of a more optimistic outlook among executives in China’s domestically-focused industries. “While CBB Q3 results confirm manufacturing weakness, our survey extends to retail, services, property, and other sectors. Most other sectors show more resilience and greater confidence than manufacturing,” said the survey, which breaks the country down into eight regions. Transport was the most optimistic sector of the economy in Q3, the survey found, and the one area of business activity to have recorded stronger sales growth versus Q2, with 65 per cent of firms questioned posting gains - up 8 per centage points. Travel agents are particularly optimistic, with 71 per cent expecting stronger revenues in six months’ time. Some 60 per cent of shippers also anticipate revenue growth. The services sector in general is upbeat, with 67 per cent of firms questioned forecasting higher sales in six months, compared with 11 per cent of firms anticipating declines. It’s a different story in China’s export-oriented factories. “Manufacturers are considerably less optimistic than last quarter. Those expecting higher sales in six months fell 18 points to 53 per cent, predictions of falls doubled to 20 per cent,” the survey found. China’s economy is on course for its weakest annual expansion since 1999 with analysts expecting that China’s six-quarter long economic slowdown may extend into the July-September quarter, with full-year growth for 2012 likely to fall to 7.7 per cent according to a Reuters poll. The quarterly China Beige Book survey of face-to-face and telephone interviews gathers views on the current state of companies, industries, regions and the economy at large, comparing conditions to the previous quarter and asking respondents to anticipate conditions three and six months ahead. The survey sample includes executives from manufacturing, retail, service, transportation, real estate and construction, farming, and mining. Respondents ran businesses of every size from the micro-level - employing up to 19 staff - to large firms with more than 500 employees. It also canvassed opinions from 160 bank loan officers and branch managers. The survey found that China’s monetary policy easing measures had delivered a nascent recovery in the property sector - vital to the health of the economy as real estate directly affects 40 other industries - but that executives were broadly reluctant to borrow to invest and grow their businesses. That implies the effects of policy easing so far - including two interest rate cuts in June and July and the freeing of about 1.2 trillion yuan ($190 billion) for lending by 150 basis points of cuts to reserve requirement ratios at the country’s banks since November last year - may have reached their limit. Consumers were still spending, albeit at a slower pace of growth than three months ago. Sales revenue was up at 58 per cent of outlets questioned, 10 per centage points fewer than those recording expansion in Q2. Over two-thirds of retailers questioned expected higher sales in six months, compared to 11 per cent who predicted declines. Growth in business spending eased in Q3 from Q2, but 55 per cent of firms polled were making capital investments. Hiring growth is slowing and wage rises have cooled, though wage pressures have not, given slimmer revenue growth. Some 28 per cent of firms reported falling margins, up 11 per centage points on Q2. Only 44 per cent of firms reported rising profits. A detailed report of the survey’s full findings will be published in early October.

Ex-police chief Wang Lijun sentenced to 15 years over Bo Xilai scandal - Former Chongqing police chief Wang Lijun – who exposed China’s worst political scandal in a decade – was sentenced to 15 years on Monday morning for defection and other crimes at a court in Chengdu. Wang stood trial last week in the southwestern city in Sichuan province, where he sought asylum at a US consulate in February after falling out with former Chongqing party boss Bo Xilai. Wang was sentenced to seven years for bending the law for selfish ends, two years for attempted defection, two years of abuse of power and nine years for receiving bribes. Wang has no plan to appeal, CCTV reported. In a statement the Intermediate People’s Court found him guilty on each count, adding that the circumstances of the bending the law offence were “very serious”. But it said that Wang was shown leniency because he had reported the role of Bo’s wife Gu Kailai in the murder of British businessman Neil Heywood. He “actively helped with the re-investigation” which “played an important role in the breaking of the case by police authorities”, it said. “In accordance with that, and based on the facts, nature, circumstances and the degree of harm caused to society by the crimes committed by Wang Lijun, as well as his admission of guilt and repentance, the court has made the above verdict in accordance with the law,” court spokesman Yang Yuquan told reporters afterwards. Analysts have expected Wang to get a lenient sentence. While both defection and bribery can carry the death penalty in China, both prosecution and defence said Wang’s co-operation with the authorities meant he was eligible for a lighter sentence, according to the statement last week. The Chengdu court was under tight security on Monday and police sealed off the nearby area to keep onlookers and journalists away. With Gu already jailed, and Wang set to join her, the ruling Communist Party must next decide what to do with Bo, whose contentious downfall has dogged a leadership handover due to take place at a party congress as early as next month. Wang sealed his fate at a trial a week ago by admitting to the charges, according to an official account of the hearing published by Xinhua news agency. Only official media outlets were allowed inside the courtroom. “As for the crimes that the prosecution has alleged, I understand them, I admit to them, and I am repentant for them,” Wang told the court in Chengdu, according to that account. As well as the charge of sabotaging an investigation into Gu’s murder of Heywood in November last year, Wang also faced charges of defecting to a US consulate, taking bribes and conducting illegal surveillance. The main charges stemmed from a cascade of events triggered by Heywood’s murder. Officials have said the murder itself arose from a business dispute in Chongqing, the riverside municipality that Bo and Wang made into their fiefdom. After first helping Gu evade suspicion of poisoning Heywood, Wang then kept evidence of the murder, according to the official account of Wang’s trial. In late January, Wang confronted Bo with the allegation that Gu was suspected of killing Heywood. But Wang was “angrily rebuked and had his ears boxed”. Days later, Bo stripped Wang of his post as Chongqing police chief, and Wang, fearing for his safety, fled to the US consulate in Chengdu where he hid for more than 24 hours until Chinese officials coaxed him out. In August, Gu was sentenced to a suspended death sentence, which effectively meant life in prison. The Chinese government has not said what will happen to Bo, who in March was sacked as party boss and in April suspended from the ruling Communist Party’s Politburo, a powerful decision-making council with two dozen active members. So far, Bo has only been accused of breaching internal party discipline. But experts say the public citing of Bo’s angry rebuke of Wang has raised the likelihood that he too will face criminal charges, probably after the party congress. “The legal net around Bo Xilai has been slowly tightening,” said He Weifang, a law professor at Peking University who has closely followed the case. “He’ll certainly face a criminal trial.” Before then, party leaders could first expel Bo from the party and hand him over for criminal investigation. “The prosecutors said Wang exposed leaders to major crimes by others,” said Li Zhuang, a Beijing lawyer who opposed Wang and Bo for mounting a sweeping crackdown on foes in the name of fighting organised crime. Bo was the likely target of Wang’s allegations, said Li. “That was a slap around the ears that changed history,” Li said of Bo’s alleged actions against Wang. “Otherwise, Bo might still be in power and hoping to rise higher.”

75 Taiwan fishing boats sail to Diaoyu Islands - A total of 75 fishing boats from Taiwan sailed to the Diaoyu Islands on Monday afternoon from the port in Yilan. Taiwan flotilla leaves for disputed Diaoyus - Dozens of Taiwanese fishing boats on Monday set sail for disputed East China Sea islands that are also claimed by China and Japan and have sent tensions between the two Asian powers soaring. The fishermen aim to highlight Taiwan’s claim over the uninhabited islands -- known as Diaoyu in China but Senkaku in Japan -- which lie 400 kilometres from the Okinawan capital of Naha and 200 kilometres from Taiwan. The islands, which are administered by Japan, lie on vital shipping lanes and are believed to be located near potentially rich gas fields. The flotilla of 78 fishing boats flying Taiwan flags and brandishing demonstration signs left Suao, a port in northeast Taiwan, at 3pm HK time. They are expected to arrive around dawn on Tuesday. Once there, they plan to sail inside Japan’s 12-nautical-mile territorial zone surrounding the disputed islands. The numbers of vessels could swell, according to the activist group which organised the protest sail. “I’m certain there will be more based at other fishing ports to join us,” Lin Cheng-an, a spokesman for the Suao Fishermen’s Association, told reporters. Chen Chun-sheng, the head of the Suao association, said at the weekend: “Diaoyutai has been our traditional fishing ground for centuries. We pledge to use our lives to protect it or we’d disgrace our ancestors.” The departing boats carried signs written in Chinese characters reading “Diaoyutai belongs to Taiwan” and “Fighting for fishing rights for survival”. Taiwan’s coastguard sent at least 10 patrol boats alongside the fishing vessels, an official with the Coastguard Administration said. On Sunday, more than 1,000 slogan-chanting Taiwanese activists and their supporters rallied outside the de facto Japanese embassy in Taipei, calling for a boycott of Japanese goods. Tensions have mounted after Japan announced earlier this month that it had completed a planned purchase of some of the islands, prompting Taiwan to recall its envoy to Tokyo and triggering mass protests in China.

Selling to China’s diverse 1.34 billion has long been a challenge for many companies, but the difficulties are mounting as China’s population of consumers divides even further along class lines. According to new research from consultancy McKinsey & Co., a dichotomy is widening between a group of wealthier, younger consumers who want indulgent products that express individuality and a group of poorer consumers who are just now beginning to buy goods they want, not just those they need for basic living. A more sophisticated set of big-city shoppers–who are much more like their Western counterparts, have annual incomes of more than 106,000 yuan ($16,000) and are increasingly driven by emotion in buying products–are poised to become mainstream, making up 51% of the shopping population by 2010, a surge from 6% in 2010, according to the report. The less affluent group, who live in smaller cities and have household incomes of 37,000 yuan to 106 ,000 yuan ($5,900 to $16,700), will shrink to 36% of shoppers, down from 82% two years ago, McKinsey predicts. The consumer rift has significant implications for business leaders, who will now need to split their sales strategies, creating more diverse products and sub-brands to cater to the segments, the report said, adding that the once-successful strategy of using umbrella products to appeal to all shoppers across the country may no longer work in China. “Complexities are increasing,” said Max Magni, a principal at McKinsey & Co. China’s 1.34 billion shoppers have always varied by region, with the southerners preferring liquid soap to the Northerner’s bar soap, and the brands that have succeeded have catered to those differences, Mr. Magni said, adding that it will be more important going forward as brands face increased competition in China. Because the more sophisticated shoppers are increasing in number, their opinions and shopping habits are increasingly important. Marketers need to take note that buying will become more emotional, the report said. In a survey of 10,000 consumers in 44 cities, 23% of the more affluent, soon-to-be-mainstream urban shoppers said emotional benefits were a key factor in their shampoo purchases, compared to 14% for the lower-income consumer. Mr. Magni said consumers look for brands that make them feel happier or boost their social status. Brand loyalty will grow, with 40% of the soon-to-be mainstream consumers saying they will only buy cell phone brands they already prefer, in comparison to 28% of the lower-income shoppers, the report said. Reliance on the Internet for information will be critical too, with 79% of the mainstream saying they get product information on social media and find it credible in comparison to 49% of lower-income mass consumers. Though it doesn’t specifically mention China’s wealth gap, The McKinsey report comes shortly on the heels of new data that suggests the yawning chasm between China’s rich and its poor is even wider than previously thought. The top 10% of China’s population controls 56% of the country’s income, according to a 2011 survey of more than 8,000 households led by Gan Li, a professor at China’s South Western University of Finance and Economics and Texas A&M University in the U.S. While many economists had previously assumed that the Chinese households were holding back their consumption to horde cash for a rainy day, Mr. Gan’s study suggests that they aren’t buying for a much simpler reason: They don’t have the cash to spend in the first place.

Taipei Taiwan: Japan anniversary events postponed - Protesters denounce Japan’s so-called control of China’s Diaoyu Islands in Taipei on Sunday. China on Sunday postponed events, scheduled for later this week, marking the 40th anniversary of Sino-Japanese relations in what analysts called "a strong signal" indicating Beijing was adopting a tougher stance. Two associations - entrusted by the government to organize events to mark the anniversary - cited Japan's attitude over the Diaoyu Islands as the reason for the postponement. "Considering the current situation", events to commemorate the normalization of relations between the two nations will be "adjusted to an appropriate time", said a statement by the Chinese People's Association for Friendship with Foreign Countries and the China-Japan Friendship Association. Events were scheduled to take place on Thursday in Beijing to mark the signing of a joint statement between China and Japan on Sept 29, 1972. But "the atmosphere has been ruined" due to Japan's "buying" of the Diaoyu Islands in the East China Sea earlier this month, the statement said. Experts said it is necessary for China to keep pressing Japan. "China should be tough on the territorial issue," said Feng Wei, a specialist on Japanese studies at Fudan University in Shanghai. "China should take this opportunity to push Japan back to the negotiating table." Wang Ping, an expert on Japanese studies with the Chinese Academy of Social Sciences, said it is not a good time to celebrate the anniversary as the consequences triggered by Tokyo's "islands-purchasing farce" have not ended. "We have not seen any sincerity by the Japanese government to improve ties," Wang said. Foreign Ministry spokesman Hong Lei asked Japan on Saturday to immediately stop all acts that harm China's territorial sovereignty after about 30 Japanese police officers landed on the Diaoyu Islands citing, as an excuse, that they were preventing Taiwan activists from landing. More than 1,000 protesters in Taiwan rallied against Japan on Sunday in Taipei. China will use unmanned aerial vehicles to strengthen maritime surveillance over waters around the Diaoyu Islands, Xinhua News Agency reported on Sunday. Wang, from the Chinese Academy of Social Sciences, said China should "institutionalize" its patrol of the islands. Some Japanese politicians have called for Tokyo to change its policy, as tensions with China will hurt key Japanese sectors such as tourism and manufacturing. Hirohisa Fujii, top adviser to the ruling Democratic Party of Japan, said in an interview with Japanese broadcaster NHK that proposals to shelve the Diaoyu Islands dispute for future settlement should be respected. Fujii, 80, also chief consultant for Japanese Prime Minister Yoshihiko Noda in his re-election bid, urged young people in Japan to learn more about history and acknowledge basic facts, such as Japan had colonized Korea in the 20th century and launched an aggressive war against China. Hiromu Nonaka, former Japanese chief cabinet secretary, criticized certain Japanese politicians for making the wrong decisions in dealing with the islands, Xinhua reported. Nonaka said in a recent interview with Chinese media in Japan that the recent row is a pity and he felt sorry for the Chinese people. "As a Japanese man I feel disgraced. I feel terribly bad for the Chinese people and I want to express my sincere apologies to them," the 87-year-old senior politician said. Nonaka, who was also a member of Japan's lower house and former secretary-general of the Liberal Democratic Party, had planned to visit China in September. But the trip, to mark the establishment of diplomatic ties between China and Japan, was postponed. "The political parties in Japan do not seem to be working in the interests of Japan and the Japanese people," Nonaka said. "They do not have the country's future direction in mind and haven't realized the importance of maintaining friendly relations with neighboring countries." China passed the United States to become Japan's largest export-target country in 2009. "China has to let Japanese leaders realize that Japan should take China's position as seriously as it treats the US," Feng from Fudan University said, calling for Beijing to use more economic measures to press Tokyo.

Tennis player Li Na of China attends a news conference for the Pan Pacific Open tennis tournament in Tokyo September 23, 2012. Li stuck to the business of tennis before her appearance in this week's Pan Pacific Open in Japan, refusing to comment on a deepening political crisis between the two countries over disputed islands. China's Li Na stuck to the business of tennis before her appearance in this week's Pan Pacific Open in Japan, refusing to comment on a deepening political crisis between the two countries over disputed islands. Li sat stony-faced at a press gathering on Sunday as an official from the women's WTA tour said repeatedly last year's French Open champion would not answer questions on the row. "After the US Open I got a little bit sick," said Li, still struggling with a cough, before the questions turned to a more political nature. "My book was out so I was busy for three days signing autographs." Any inquiry about the diplomatic flare-up between China and Japan was immediately shot down by WTA officials. China had withdrawn its badminton players from last week's Japan Open as tempers flared over a group of uninhabited islands in the East China Sea. Japan pulled out of the second leg of the Asian Sevens Series in Shanghai. The Japanese government's decision to nationalise some of the islands -- known as the Senkaku in Japan and Diaoyu in China -- triggered angry protests across China. The political row escalated on the anniversary of Japan's pre-war invasion of its Asian neighbour, with relations between Asia's two biggest economies deteriorating rapidly. Li, who has had her share of run-ins with Chinese authorities, kept silent when asked if she had come under pressure for taking part in Tokyo. The 30-year-old insisted she will be fighting fit at the $2.16 million Tokyo tournament, and credited new coach Carlos Rodriguez for her more positive attitude. "I want to stand up again," said Li. "My ex-coach (husband Jiang Shan) didn't do a good job. It's very tough to be a coach and a husband. It's very tough to find the right balance. "My goal is the end of year (Championships in Istanbul)," she added. "I've reached number eight so I'm pretty close (to locking up her spot). "There's not much time left so I have to work even harder."

Hong Kong*:  Sept 25 2012 Share

Easier now to buy land on mainland, says Hang Lung's boss Chan - Local governments more willing to sell sites as they provide 30 per cent of revenue. Hang Lung Properties, which has HK$65.89 billion in investment on the mainland, is finding local governments more willing to sell land, chairman Ronnie Chan Chichung said. "It has definitely gotten easier," said Chan, whose company derives half of its rental earnings from its shopping centres on the mainland. "The local governments want to sell more and you have developers who are eager to buy." The value of land transactions on the mainland rose to 96.4 billion yuan (HK$118.2 billion) last month, the highest this year, as developers expect home prices to recover after two central bank interest rates cuts in June and July. Prices rose last month for a third consecutive month, said SouFun Holdings, the nation's biggest real estate website owner. Developers with improved sales and cash flows are showing renewed interest in land acquisitions. Seven of the country's biggest developers by market value, including China Vanke, bought land worth 8.9 billion yuan in major cities in the first week of this month, China Daily reported last week. "We have never stopped negotiating; the question is whether we are going to bite or not," said Chan. "Our situation is a bit different because we want our sites to be in the best location. So if you want something that's tailor-made, it obviously would take longer." Hang Lung last bought a site in Kunming in September last year, its first land purchase in the country in more than two years. Chan said in August last year the company was "financially capable" of increasing its initial investment on the mainland to tap the country's growing luxury spending. The company, which is planning to open at least one property in mainland cities every year, will next week open its second shopping centre in Shenyang. Hang Lung also has projects in Dalian, Jinan, Wuxi, Tianjin and Kunming. The mainland's economy expanded 7.6 per cent in the second quarter from a year earlier, the slowest pace in three years, as Europe's debt crisis crimped exports and the government's property crackdown cooled domestic demand. The slowdown may extend into a seventh quarter, according to Deutsche Bank, which cut its growth estimate for the world's second-largest economy to 7.5 per cent for the three months to September from 7.9 per cent. "With consumption down, obviously growth in rental wouldn't be too strong," Chan said. "But we don't have a problem renting our spots out." Rental profit from the mainland, which includes shopping centres in Shanghai, Jinan and Shenyang, rose 26 per cent to HK$1.17 billion in the first half, Hang Lung said in July. The mainland has more than 1,000 county-level governments and hundreds of city and municipal councils that rely on revenue from local taxes, land sales and central-government transfers because rules bar most of them from selling bonds. Land sales made up 30 per cent of local government revenue and in some cities accounted for more than half, according to a report by UBS in June last year.

Perry Dino captures Hong Kong protests in oil on canvas - Artist records Hong Kong demonstrations for posterity in oil on canvas. Local artist Perry Dino has chronicled Hong Kong's most controversial protest events the old-fashioned way. Dino, whose real name is Chan, painstakingly captured some of this year's most momentous occasions by painting in oils on canvas. His depiction of the ocean of protesters that swamped the government's headquarters in Admiralty earlier this month when tens of thousands rallied for days against the national education curriculum has been lauded by people who took part. Other pictures he painted include the hunger strikers involved in the same protest and the anti-national-education protest outside Chinese University. "I wanted to capture the moment by sitting down and painting what I saw," said Dino, 46. "This issue was so important to the people of Hong Kong and I wanted to record it for posterity." During his time drawing and painting at Chinese University protest he spent seven hours at the easel without a break. "It was a real physical challenge and I could not have done it without the support of the Hong Kong people. They were always encouraging me on," he said. Dino's first efforts at painting some of the city's dramatic scenes came during the Dolce and Gabbana controversy in January. when hundreds of protesters gathered after an apparent incident involving locals taking pictures of its Tsim Sha Tsui storefront - a shop guard reportedly said that only mainlanders could take pictures of the storefront. He followed this up by painting the sea of candles in Victoria Park on June 4 as a record number of people gave public voice to their anger in China's only large-scale event commemorating those killed in the 1989 Tiananmen Square crackdown. Organisers said 180,000 people took part in the vigil. Dino said that oil painting was the most difficult way of capturing what was happening, but to him it was also the most traditional, beautiful and vivid. He has no plans to sell the paintings, although they are in demand: instead he hopes to give them to a local museum where they could be seen by future generations. "These are hugely important events that will go down in Hong Kong history. I have two young daughters and I want them to never forget these issues when I have passed away," he said. Dino, a part-time teacher of visual arts, hopes that his efforts will also help the fight for the use of public space by artists.

Muslims in Hong Kong unite to protest incendiary film - About 800 Muslims and their supporters in Hong Kong marched to the US consulate on Sunday afternoon to protest an anti-Islam film made in the US that incited violent protests worldwide last week. 

Head of the China National Tourism Administration Shao Qiwei and Secretary for Commerce and Economic Development of Hong Kong city government Gregory So co- chaired the 2012 Hong Kong and Mainland Tourism Working Meeting in Beijing on Friday, with both sides discussing the direction of future tourism cooperation, the Hong Kong government said in a statement. Both sides reviewed recent tourism performance as well as mutual exchange and cooperation between the two places. They also decided on the detailed arrangements for implementation of tourism liberalization measures under Supplement IX to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). Regarding the central government's announcement in late June that Mainland tour groups taking cruises from Hong Kong to Taiwan could visit Japan or South Korea on the same cruise journey before returning to the Mainland, active and constructive discussion was held on implementation details, including the development of cruise itineraries and the arrangements for travel documents and tour groups. The Hong Kong government will make announcements on the related arrangements to the local tourism industry once all the details have been finalized. Regarding joint manpower training between the Mainland and Hong Kong, both sides reached consensus on the launch of a work exchange program between tourism organizations of the two places, with the first training course for Mainland tourism practitioners to be held in Hong Kong in late 2012. Two officials of the China National Tourism Administration will be placed with the Hong Kong Tourism Board and the Travel Industry Council of Hong Kong respectively for a six-week work exchange program. The first training course jointly organized by the Mainland and Hong Kong for Mainland tourism practitioners will be held in November this year. To tie in with the future tourism development of the two places, the course will cover basic knowledge of the cruise business and skills in cruise selling. In addition, both sides discussed joint overseas promotion of multi-destination itineraries comprising the Mainland and Hong Kong, and promotion of honest and quality tourism. They also exchanged views on enhancing the quality of tourism services. Shao expressed his support for tourism cooperation between the Mainland and Hong Kong, Hong Kong enterprises operating travel agencies in the Mainland, the development of Hong Kong-based cruise tourism, and joint efforts in improving the quality of tourism services. He also agreed that the two places would continue to maintain close cooperation and communication.

 China*:  Sept 25 2012

China envoy in Canada warns against politicising CNOOC-Nexen deal - China’s ambassador to Canada warned in remarks published on Saturday against letting domestic politics drive the Canadian government’s decision on whether to approve a Chinese state-owned oil company’s proposed US$15.1 billion takeover of Calgary-based Nexen. “Business is business. It should not be politicised,” Ambassador Zhang Junsai said in an interview with Canada’s Globe and Mail newspaper. “If we politicise all this, then we can’t do business,” he added, referring to the Canadian Industry Ministry’s review of CNOOC’s proposal to buy the Canadian oil and gas producer. The deal, if completed, would mark the first outright takeover of a large Canadian energy producer by a Chinese state-owned enterprise. The ambassador also said negotiating a full free-trade agreement within a decade would be the best way of assuring fair, two-way trade and investment between China and Canada. “It’s time to open up each other’s markets,” Zhang said in remarks that coincide with Chinese Commerce Minister Chen Deming’s visit to Canada. “It’s high time to do the exploratory work on the possibility of a free-trade agreement.” The newspaper said it was the first time that a senior Chinese representative called for early, accelerated talks on a free-trade deal. Concern that China has unfairly limited Canadian companies from investing there is one of the issues affecting the debate within Canada on whether the government should approve CNOOC’s bid for Nexen. Industry Ministry officials are looking closely at the bid to determine whether it is of net benefit to Canada. CNOOC, whose offer has already been endorsed by Nexen shareholders, said it did not expect Chen to raise its sensitive takeover bid during talks with the Canadian government. But Canadian Trade Minister Ed Fast fully expects to discuss ways to expand Canada’s relationship with China when he meets with Chen on Sunday, Fast’s spokesman said on Saturday. “Canada wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides,” spokesman Rudy Husny said in an e-mailed statement. “Minister Fast will continue this discussion when he meets with his counterpart [on Sunday] in Vancouver.” Canada’s priority is to remove what it considers to be Chinese trade barriers on goods and services, and increase exports such as lumber, grains, beef and value-added products, Husny said. In the Globe interview, Zhang said a free-trade treaty would go a long way towards expanding trade and investment between the two countries, an important goal for Canadian Prime Minister Stephen Harper. Harper wants to ease the dependence of Canada’s export-oriented economy on the United States, its main trade partner. Although Canada is seeking substantial foreign investment in its oil and gas industry, the CNOOC move is raising concern inside the cabinet, where some members are wary of letting a Chinese state-owned enterprise buy up domestic assets. Zhang said Canadian fears over China’s intentions are unfounded. “We are not coming to control your resources,” he said.

Taiwan activists rally against Japan over islands - Hundreds of slogan-chanting Taiwanese activists and their supporters rallied against Japan on Sunday amid an ongoing territorial dispute over an island group in the East China Sea. The demonstrators from several right-wing parties and civil groups called for a boycott of Japanese goods as they were marching past a department store known for its sales of Japanese-made items. “Down with Japanese imperialism!”, “Diaoyutai is ours, Japanese get out of Diaoyutai!” the crowd shouted, referring to the Chinese name for the islands that the Japanese call Senkaku. They unfurled banners and clutched anti-Japanese placards during the peaceful march. The island group is controlled by Japan and is also claimed by Beijing and Taiwan. The uninhabited islands lie 400 kilometres from the Okinawan capital of Naha and 200 kilometres from Taiwan. Apparently mindful of the growing clout of China and the island’s fast-improving ties with Beijing, the demonstrators called for co-operation with the mainland to solve the territorial dispute. Television images showed an activist waving a huge Chinese national flag to highlight the controversial appeal. Taiwan’s President Ma Ying-jeou has said Taipei has no intention of working with Beijing, mindful that doing so could hurt the island’s ties with Japan and cause concerns in Washington. Tension mounted after Japan announced earlier this month it had completed a planned purchase of some of the islands, prompting Taiwan to recall its envoy to Tokyo and triggering mass protests in China. Tens of thousands of anti-Japanese demonstrators took to the streets in cities across China, with some vandalising Japanese shops and factories, forcing firms to shut or scale back production. The islands lie on vital shipping lanes and are believed to be near potentially rich gas fields.

China postpones Japan ceremony over Diaoyus row - China postponed on Sunday a ceremony marking the 40th anniversary of the establishment of diplomatic ties with Japan, due to an ongoing territorial dispute, Xinhua news agency said. “Due to the current situation, the Chinese side has decided that the reception commemorating the 40th anniversary of the establishment of diplomatic relations will be postponed until an appropriate time,” Xinhua cited an official as saying. The unnamed official from the Chinese People’s Association for Friendship with Foreign Countries was referring to the ongoing row that centres on the Tokyo-controlled Senkaku islands in the East China Sea, which are claimed by Beijing under the name Diaoyu. The ceremony was due to take place on September 27. Asia’s two largest economies have wrangled about the islands since the 1970s, but the row flared in August after pro-China activists landed on one of them. Tensions escalated dramatically after the Japanese government subsequently bought three of them from their private owners. The Chinese friendship association has a close relationship with China’s foreign ministry. Officials at the ministry refused to immediately confirm the postponement. In Tokyo, a diplomatic source confirmed Beijing’s decision. “China informed the Japanese side” about the postponement, the source, who declined to be named, said without elaboration. The escalating row saw hundreds of Japanese rally on Saturday against Beijing’s handling of the issue, days after anti-Japanese protests saw shops and factories vandalised in China. Some 800 demonstrators waved national flags as they marched through downtown Tokyo, denouncing Beijing as a “brute state” and “fascist”. Protesters marched through the Roppongi entertainment district, near the Chinese embassy, shouting: “We will never give in to China’s military threat!” Japan’s coastguard said Saturday it was monitoring seven Chinese ships in waters near to the chain. There had been 14 in the area on Wednesday. China’s foreign ministry spokesman Hong Lei on Friday said many of the ceremonies marking the 40th anniversary of Sino-Japanese diplomatic ties had been impacted by the row. “Many plans have been ruined due to the mistaken actions of the Japanese side [and] many of the planned commemoration events have been impacted,” Hong told reporters. “This is something that we do not hope to see. The responsibility lies entirely with the Japanese side.”

Top Chinese security official makes surprise visit to Afghanistan - Top Chinese security official on Saturday made a surprise visit to Afghanistan, the first one by a Chinese leader in nearly half a century. China’s top security official has made the first high-level trip to Afghanistan by a senior Chinese leader in nearly half a century, meeting President Hamid Karzai in Kabul, state media said on Sunday. Zhou Yongkang made the four-hour visit on Saturday, in a secretive trip aimed at shoring up ties between the neighbours, Xinhua news agency reported. The visit was not previously announced due to security concerns, the report said. Late president Liu Shaoqi, the last senior Chinese official to visit Afghanistan, visited in 1966, Xinhua said. Karzai’s office said Zhou came to the war-battered nation to discuss the implementation of a strategic co-operation agreement that Karzai signed with his Chinese counterpart Hu Jintao in June. During a meeting with Zhou in his Kabul palace, Karzai said: “China is a good and honest friend of Afghanistan,” his office said in a statement. Beijing has stepped up diplomacy with Afghanistan in recent months as the 2014 deadline for the withdrawal of US and Nato troops approaches. China, which shares a 76-kilometre border with Afghanistan’s far northeast, has already secured major oil and copper mining concessions in Afghanistan, which is believed to have more than US$1 trillion worth of minerals. Karzai urged China to further invest in his poverty-stricken nation’s underground treasures, the palace statement said. The scramble for influence in Afghanistan is expected to intensify in the run-up to 2014, with its central position in a volatile region having shaped its history for centuries. Xinhua provided few details about the visit, other than quoting Zhou as saying: “It is in line with the fundamental interests of the two peoples for China and Afghanistan to strengthen a strategic and cooperative partnership... conducive to regional peace, stability and development.” Zhou, ranked ninth in China’s ruling Communist Party hierarchy, is China’s top security official and oversees a crackdown on religious extremism, terrorism and separatism in his nation’s Muslim-populated Xinjiang region, which borders Central Asia and Afghanistan. Zhou’s appearance in Kabul comes after Karzai pledged to work with China to fight terrorism and extremism in the region during a visit to Beijing in June, where he attended the Shanghai Cooperation Organisation meeting. The grouping, which is led by China and Russia and was set up to counterbalance US and Nato influence, granted Afghanistan observer status at the meeting.

Vietnam has become China's largest coffee supplier as China has seen an increase in coffee import in recent years, according to a Chinese official at the ongoing ninth Expo of China and the Association of Southeast Asian Nations (ASEAN) on Saturday. China mainly imports coffee from ASEAN countries, especially from Vietnam and Malaysia, said Wang Lei, deputy secretary-general of the ASEAN Secretariat at the expo which opened on Friday in Nanning, capital of south China's Guangxi Zhuang Autonomous Region. Customs data shows that China had imported 137,000 tonnes of coffee from 2007 to 2011, totaling 365 million US dollars. In 2011, China imported a total of 43,000 tonnes of coffee, a year-on-year increase of 41.9 percent. China imported 103,900 tonnes of coffee from Vietnam from 2007 to 2011, which amounted for 195 million US dollars, accounting for 90 percent of the total coffee imports from ASEAN countries, Wang said. China imported a total of 15,000 tonnes of coffee from Vietnam, amounting for 31.88 million US dollars in the first half of 2012, which accounted for 96.2 percent of the total coffee imports from ASEAN countries, Wang said. Moreover, statistics from China Coffee Association shows that there are about 13,600 cafes and 2,200 coffee-related enterprises in China with a total of 500,000 employee involved in the industry. At present, China's annual coffee consumption stands between 30,000 to 40,000 tonnes with annual growth rate of 10 percent to 15 percent. It is estimated that China's coffee consumption will continue to rise and reach 120,000 tonnes in 2012, Wang said.

Japan's "purchase" of China's Diaoyu Islands is having an economic impact on the two Asian economic powers across a range of key industry sectors, particularly travel and tourism. Customs officers inspect a vessel loaded with fish from Japan in Wenchang, Hainan province. China is strengthening customs inspections for Japanese products arriving at ports. Meanwhile, China is ramping up its customs inspections for Japanese products arriving at its ports, companies said on Friday. "We've heard from our employees in China that some Japanese products arriving at Chinese ports are facing stricter customs procedures," Tsutomu Suehara, a spokesman for Japanese trading house Sojitz, was quoted as saying by AFP. Wang Yuzhu, a researcher at the National Institute of International Strategy at the Chinese Academy of Social Sciences, said: "The most immediate influence is on tourism and consumption of Japanese products, while the impact on Japanese investment will last as long as three or five years." China Comfort Travel Group Co Ltd started to cancel its tour groups to Japan on Sept 11, when it announced it would stop selling all Japan tour products at the agency's 5,500 stores across China. In Beijing, all its Japan tour groups booked between Sept 16 and Oct 8 were cancelled and customers were refunded, said Yao Yao, head of the agency's marketing department. "Almost 400 people in Beijing withdrew from tour groups. It is uncertain when the groups could be reorganized, and the effect on the business may last to the end of this year." Hainan Airlines Co Ltd, which runs a weekly charter flight between Beijing and Okinawa-ken, cancelled the flight on Thursday because of insufficient passengers, said Dong Jun, the airline's public relations manager. Japan Airlines Co Ltd said it would reduce its daily flights to China, excluding Hong Kong, by three to 10 until Oct 27, while the Nikkei Business Daily said JAL had about 12,000 cancellations on flights between September and November, including 5,500 seats cancelled flying out of Japan and 6,500 seats cancelled from China. Shares in the airline had slumped 4.29 percent by the close on Friday, just two days after the carrier relisted in the second-largest initial public offering of the year. She Xing, a researcher at the Economic Information Department of Japan External Trade Organization, said that a spontaneous boycott of Japanese brands had seriously affected sales across the country, the most dramatic of which had been a slump in willingness by Chinese to buy Japanese automobiles. The country's automakers are reported to have lost $250 million in output owing to suspension of operations in China, caused by protests this week, and they now also face the risk that sales will halt altogether in the world's largest car market, according to an estimate by IHS Automotive. "This impact will continue, depending on the development of the dispute," She said. Chinese customs were reported to have stepped up customs inspections of Japanese products, and Japan's Chief Cabinet Secretary Osamu Fujimura said that Japan will respond appropriately to the situation. "We notice the tightening of customs clearance, but currently we are not sure it's targeting Japanese products," She said. The Ministry of Commerce also launched an anti-dumping investigation into imported pyridine from Japan and India. The authorities will examine whether and to what extent such imports hurt the Chinese pyridine industry, according to a ministry statement. The probe is expected to end within a year and could be extended for another six months, it said. Pyridine is an organic compound used as an important raw material and solvent in the production of pesticides, drugs, animal feed, food additives and other chemicals. A Reuters poll on Friday showed that 41 percent of Japanese companies see the islands dispute affecting their business plans. China is Japan's biggest trade partner with bilateral trade worth $340 billion in 2011. Japan's exports to China accounted for 19.7 percent of Japan's total exports in 2011.

Crab harvest season - A big hairy crab is on display next to Yangchenghu Lake in Jiangsu province on Sept 22, 2012. The crabs from the lake, an extremely popular delicacy in China, were officially on sale in the market beginning Saturday. The production is expected to hit 2,100 tons this year. 

Hong Kong*:  Sept 24 2012 Share

Chief Secretary Carrie Lam performs with Hong Kong Chinese Orchestra - Chief secretary opens season and joins ensemble for an impressive performance on the guzheng. Carrie Lam (left) makes her guest appearance with the orchestra. Photo: Hong Kong Chinese Orchestra. Only recently she was shedding tears on television, but Chief Secretary Carrie Lam Cheng Yuet-ngor was all smiles at her latest public appearance, when she took to the stage in an impromptu performance on the guzheng, or Chinese plucked zither. Lam, who admitted in a Cable TV interview that it had been tough going for her over the past month - amid pressure over the national education row, an influx of mainland visitors, parallel traders and the ongoing housing crisis - seemed in good form. Officiating at the opening of the 35th season of the Hong Kong Chinese Orchestra on Friday evening, Lam joined the 85-member ensemble to perform an excerpt from Ode to Water, the concert's feature work. Led by the orchestra's artistic director Yan Huichang, the audience joined in by waving their programmes, to create the effect of waves to match the music, especially the guzheng chords depicting the water flow. "We appreciate the chief secretary's support by putting aside her busy schedule to be with us," said Yan. "Few officials stay for the entire concert, but Ms Lam is one of those few, setting a fine example on respect for arts and performers," the maestro said. Orchestra CEO Celina Chin said it was wonderful for a high-level official to perform with the orchestra and the audience. "We want to play up the idea that music is for everyone in Hong Kong, and that the orchestra belongs to the community," she said."Conveying this through a musical instrument is so much more direct than, say, through an official speech." The brief excerpt was taken from the first of six acts of Ode to Water, an ambitious multi-media work by local composer Mui Kwong-chiu that fuses music with dance, video, sound effects, stage design, calligraphy, painting, and poem recitation in one organic whole. "It took me more than a year to work on this 75-minute piece, and it requires tremendous teamwork with the orchestra and other artists and professionals to make it possible," said Mui. He was pleased with the premiere, "except perhaps for a few technical fine-tuning details". The mega work started with the bass strings and drums synchronising with the video portraying the dawn of time and the birth of water. In the sunset scene, Tam Po-shek, a multi-talented artist, awed the audience with live calligraphy and painting depicting colourful evening clouds, and wild ducks in Act 2. Act 3, The Waterfall, featured tantalising guqin and guzheng, both zithers, which formed a trio with Tam on the vertical flute. The ensuing pas de deux by the Hong Kong Dance Company soloists on the Moon theme in Act 4, and the deafening lightning blitz and the serene polar light in the last two acts, displayed an array of innovative effects. The piece ended on a coda with Tam reciting a famous Tang poem from the balcony, fading out with the verse "go up another flight of stairs", which he certainly did.

Minister tells forum plans for New Territories new towns will go ahead - 6,000 people attend chaotic public forum over plans to develop northeastern New Territories; Paul Chan signals determination to build homes. A public forum on government plans to develop new towns near the border with Shenzhen descended into chaos yesterday but left officials determined to push the scheme through. At a fiery open-air consultation in Sheung Shui attended by 6,000 people, many chanting and waving banners, Development Secretary Paul Chan Mo-po said the project would not be shelved. He said the final round of consultations, which ends this month, would not be extended. Many groups oppose the plans to build three new towns on 787 hectares of land in the northeastern New Territories; some residents want to hang on to their land. But others would move in return for compensation. Yesterday's meeting in Man Kok village, Sheung Shui, was repeatedly interrupted by scuffles between supporters and opponents of the plans. The government, having caved in to pressure on national education in schools and multi-entry visitor permits for an additional 4.1 milllion people in Shenzhen, needs to win the battle over the new towns to keep its credibility. The fact that its opponents are not united could work in its favour. Chan said one argument for the development was undeniable - everyone wants somewhere to live. "I wish the public would understand that the land supply in Hong Kong is really limited," Chan told the crowd at the beginning of the forum. "The New Territories are the major source of our land supply. It is inevitable that the land will be needed for development." Throughout the three-hour forum, villagers, environmentalists and social activists waved banners and chanted slogans. The moderator repeatedly appealed for the crowd of 6,000 to remain calm and rational. A representative of villagers who will be displaced under the plan made an emotional plea for them to be allowed to stay in their homeland. "We do not want any compensation, and we will not move off our land. Please return the land to the farmers," said Cho Kai-kai, who represents an anti- development group formed by villagers from Sheung Shiu, Fanling North and Sai Kung. As Cho was speaking, a supporter of the plan jostled her. He said his village in Sheung Shui supported the plans, and urged the government to extend them to include their land. Police eventually intervened to separate supporters and opponents so speakers could express their views. Another fight started between villagers who support the project and protesters with a dragon-and-lion flag symbolising the autonomy of Hong Kong. Some activists fear the new towns will form a special economic zone with visa-free access for mainlanders. Chan was finally escorted from the venue by 30 police officers, but protesters still managed to throw a water bottle at the minister, which missed, and break through police lines to briefly encircle his car.

A residential site with sea views in Tseung Kwan O attracted bids from eight developers yesterday, reflecting their confidence in the industry despite official measures aimed at cooling the housing market. Eight developers, including Cheung Kong, Sun Hung Kai, Henderson Land, New World, Wheelock, and Nan Fung, submitted bids for the site located in a new residential area in front of the Tseung Kwan O MTR Station. Property consultants estimate the site will sell for between HK$2.19 billion and HK$2.44 billion, or an accommodation value of between HK$4,500 per square foot and HK$5,015 per sq ft. Accommodation value is the value of the land divided by the gross floor area of flats permitted to be built on the block. "The response was positive," Midland Surveyors director Alvin Lam said. Lam added that bidding interest did not appear to have been affected by the planned release of remaining Home Ownership Scheme flats for sale, and tighter lending conditions on second mortgages. Gregory Tam, associate director of valuation and advisory services at Colliers International Hong Kong, said the winning bid would provide an indicator of market sentiment. "If the site is sold at above HK$5,000 per square foot, it will reflect developers' optimism for the outlook of the sector in view of the low interest rate environment. If it is sold at below HK$4,500 per sq ft, it will show developers are cautious," Tam said. If the bids were cautious it could indicate that developers believed the government intended to announced more cooling measures, he said. The Tseung Kwan O site has a total gross floor area of 486,565 sq ft. Under the terms of the land lease, the winning bidder has to build between 520 and 546 flats. In August, K Wah International won a government tender for a nearby site in Tseung Kwan O for HK$1.169 billion, or HK$3,929 per sq ft. Tam said the present site was better located, and its selling price should be higher.

King of Kowloon's graffiti to appear in new M+ museum - Legendary figure who took his calligraphy to the streets is finally given art world's seal of approval with one of his works to go on public display in M+. The late graffiti artist known as the "King of Kowloon" has finally won official recognition, with one of his works finding a permanent home in a public museum. The West Kowloon Cultural District Authority has bought a pair of wooden doors bearing the celebrated calligraphy of Tsang Tsou-choi, a legendary figure who died in 2007. Tsang left a legacy of graffiti on lamp posts, pillars and walls around the city that was derided - and often painted over - by officials, even though his work was praised by critics. Now the debate about his artistic worth seems to have been settled once and for all. Tsang's painted doors will be in the new M+ museum's collection when it opens its doors in 2017 at the West Kowloon Cultural District. The museum is still being built. The doors are among M+'s latest acquisitions since Swiss collector Uli Sigg's donation of HK$1.3 billion of contemporary Chinese art in June. The doors are large - each is 1.7 metres high and 2.2 metres wide - and covered with calligraphy written in ink and acrylic. Red Dog Studio commissioned Tsang to create the work in 2003. Studio founder Timon Wehrli said he did it to create an inspiring work that would help to promote Hong Kong art. The studio reportedly sold the work to the museum for a sum - not disclosed - that was below market price, even though an auction house was also said to be interested in buying it. The purchase won praise. David Clarke, fine arts professor at the University of Hong Kong, said M+'s focus on visual culture makes it an appropriate home for the work - although Tsang's art originally belonged to the street. "It is part of Hong Kong's popular culture," he said. "'Art' is only one frame you can put on his works." M+ executive director Lars Nittve has said: "The position of the 'King of Kowloon' as an iconic figure and source of inspiration to many younger Hong Kong artists can hardly be disputed." Born in Guangdong in 1921, Tsang arrived in Hong Kong when he was 16. He began displaying his graffiti around town when he was 35, claiming to be the "King of Kowloon". Over the years his work became an iconic signature of the streets of Hong Kong, inspiring many artists and designers. But government officials were not impressed. In 2003, the then chief curator of the Museum of Art, Christina Chu Kam-luen, said Tsang's "works are marginal art and controversial", and that the museum "can't collect any controversial art". Yet the Venice Biennale invited Tsang to exhibit his work that year. Last year a private exhibition showed about 300 of Tsang's works at Quarry Bay's Artistree, and a Tsang piece sold for HK$800,000 at auction. Meanwhile, the M+ museum has also acquired paintings by Hong Kong artist Chu Hing-wah. Other new additions donated to the collection include works that have been shown at previous M+ exhibitions, such as Michael Wolf's portraits from Cantonese opera and Chu's gigantic lantern, Harbour Viewing Tower, at the Bamboo Theatre exhibition. Yu Lik-wai's mixed media installation Fantomas, exhibited at May's Mobile M+ in Yau Ma Tei, has also been donated.

Development minister suggested yesterday that some of the flats could be reserved for Hong Kong buyers. Paul Chan Mo-po was speaking a day before he was due to attend today's open-air forum in Sheung Shui, where more than 6,000 people, including villagers to be displaced by the project, are expected to call on him to scrap it. The development in the northeastern New Territories is seen as the administration's next political hot potato after a plan to introduce national education ran into strong opposition. Under consultation since 2008, the project met increasing opposition only this year, as sentiments mounted against "economic integration" with the mainland. Anxieties deepened as Chief Executive Leung Chun-ying talked of allowing mainlanders into the border area near the three towns without a visa. Chan said in a radio interview that the "Hong Kong property for Hong Kong residents" scheme could apply to some of the sites for land sale in future. "We are considering whether to introduce the scheme," he said. But a league of villagers said the locals-only rule was not enough to address their demands of "no removal and no demolition". The project, covering Fanling North, Kwu Tung North and Ta Kwu Ling together with Ping Che, will affect 10,000 residents. It is intended to provide 53,800 homes for 152,000 people. The government estimated it would have to spend HK$40 billion to assemble land ownerships from developers and rural landlords. Five newly elected lawmakers from the pan-democratic camp in the New Territories East constituency want the project to be halted, saying the government should start the consultation again to minimise the impact on villagers and active farmland. Stewart Leung Chi-kin, chairman of the Real Estate Developers Association's executive committee, joined the opposing voices, saying the government should keep its earlier promise to allow developers who had acquired land in the areas to take part in the project.

 China*:  Sept 24 2012

Mainland media's protest coverage looks inward - Protest coverage ran from calls for rational behaviour to tough questions on patriotism. A Chinese demonstrator throws an object at the Japanese embassy in Beijing. Protests against Japan's claim to the disputed Diaoyu Islands had swept across much of China. On Tuesday morning, CCTV's 9am newscast began with footage of the streets of Shenyang, the capital of Liaoning. Traffic in the city - formerly known by its Manchu name, Mukden - ground to a halt at 9.18am as air raid sirens and car horns wailed in remembrance of the 1931 Mukden Incident, which marked the start of Japan's invasion of northern China. Work stopped and people bowed their heads to observe three minutes of silence. The newscast then switched back to the studio, with the anchor announcing that "National Humiliation Day" had started in a "solemn and silent" mood. Before Tuesday, protests against Japan's claim to the disputed Diaoyu Islands in the East China Sea had already swept across much of China. Demonstrators attacked Japanese department stores and car dealerships. Authorities grew concerned the demonstrations could boil over, raising the risk of emboldened protesters turning on the government. CCTV sought to turn down the heat by encouraging mainlanders to "hold the bottom line" in "patriotic" demonstrations. Bai Yansong, a popular commentator, said the violence on China's streets was upsetting. "This isn't the right way to show your love for this country," he said. "We need to love the country rationally." It was a sentiment echoed by most of the mainland media, with The Beijing News saying "patriotism should be separated from irrational behaviour". In an editorial, the newspaper - under the control of Beijing's city government - said the central government had already imposed several effective sanctions against Japan. However, resolving the matter would "still require a long process due to the complexity of the issue, and one cannot expect the whole task to be accomplished at one stroke". It said shouting was no way to solve a territorial dispute and the focus should be on "making the nation stronger". The China Youth Daily agreed, saying "self-improvement is the best response". Both papers failed to mention some protesters not only shouted but also torched Japanese-branded cars. Shenzhen's Daily Sunshine said on Tuesday China needed "more rational citizens" and carried a front-page appeal from Shenzhen police calling for people to act with maturity. "Remember the humiliations, love China, unite together," it said. "But no more beating, smashing or looting." The Southern Metropolis News went further by linking anti-Japanese sentiment to democratic aspirations. It warned that if society's passions were aroused too much, social order would collapse. "Let's come back from the irrational demonstrations to reality," it said. "We should spend more time thinking about how to perfect our reforms … on a day of humiliation like this, we should understand a powerful China can only be created if reforms continue. "We cannot give up the islands, but we need to build a great country with powerful citizens." When editors of online news portals saw traditional print media boldly talking about reform and questioning the protesters' tactics, they realised they could do the same thing. Tencent.com published an article that said: "Creating an atmosphere of panic is not patriotism." It analysed nationalism on the mainland, suggesting the poor, the less educated, migrant workers and party members were more nationalistic than others. Shen Gezhi , a popular young writer, wrote on his microblog the protesters' violent behaviour should be forgiven because nationwide demonstrations were rare on the mainland and must have had official sanction. "Chinese people don't have much experience of protesting; they need some time to practise," Shen wrote.

Myanmar’s president says democracy won’t change friendship with China - Myanmar’s transition to democracy will not change the country’s traditional friendship with China, Myanmar President Thein Sein was cited as telling Chinese Vice-President Xi Jinping, amid concerns in China its neighbour could become a US ally. Chinese officials and media have expressed concern Washington’s renewed interest in slowly democratising Myanmar, formerly known as Burma, could be part of US designs to dilute China’s influence there and encircle China with pro-US states. Fears about China’s influence in Myanmar have been bolstered not only by Washington’s engagement with the country but also the US military’s strategic “pivot” back to Asia. But during a meeting on the sidelines of a trade fair in southern China, Thein Sein said Beijing should not worry. “Myanmar is at present in a transitional phase, but Myanmar pays great attention to developing relations with China, and its policy of seeing China has a true friend has not changed,” China’s foreign ministry cited Thein Sein as telling Xi. “China has for a long time provided a large amount of sincere support and help, and stood at Myanmar’s side at the most difficult of times. Myanmar’s people will never forget this,” Thein Sein added, in the statement released late Friday. It is Thein Sein’s second trip to China since he took office in March last year. He goes to the United States after completing this trip. With sanctions long blocking Western investments, China has emerged as Myanmar’s biggest ally, investing in infrastructure, hydropower dams and twin oil-and-gas pipelines to help feed southern China’s growing energy needs. The United States, along with the European Union, Japan and other Western countries, have moved to ease sanctions on Myanmar following the new army-backed civilian government’s efforts at pushing ahead with democratic reforms. China has long worried about its ties with Myanmar, with a history of resentment of China among the Burmese population and fierce public opposition to a US$3.6 billion Chinese-built dam at Myitsone that prompted Thein Sein to shelve the project last year, a move that stunned Beijing. Xi did not directly address that issue, saying only that “both sides should work hard to guarantee the smooth progress of certain important cooperative projects”. A more crucial scheme – twin oil and gas pipelines being built at huge expense across Myanmar and into China – appears safe despite unhappiness among some residents who live along its route and conflict with ethnic minority rebels close to the Chinese border.

China Spacesat Co., Ltd., the nation's key developer of small satellites, said on Saturday that it will obtain 116 million yuan (18.3 million U.S. dollars) in government financial support. Four projects, run by the company or its subsidiaries, have been declared as support targets of a national fund developed to foster the country's strategic emerging industries, according to a statement filed by China Spacesat to the Shanghai Stock Exchange. One project, the establishment of a logistics transport intelligent sensing and positioning system based on the country's Beidou satellite navigation system, will receive nearly half of the 116-million-yuan sum. The fund will help increase the company's research and development capabilities in satellite applications and boost its competitiveness and profitability, the statement said. The company reaped 113.9 million yuan in profits in the first half of 2012, a year-on-year increase of 15.2 percent, due to steady business expansion as China vowed to step up its technology-intensive emerging industries in the 2011-2015 period. Its share prices plunged 6.25 percent to 10.2 yuan on Friday at the Shanghai Stock Exchange amid the overall sluggish atmosphere of the bourse.

Former Japanese Chief Cabinet Secretary Hiromu Nonaka said he felt sorry for the Chinese people in a recent interview with Chinese media in Japan, criticizing certain politicians in his country for wrong decisions made over the Diaoyu Islands issue. Nonaka, 87, also former member of House of Representatives and ex-Secretary General of the Liberal Democratic Party, had planned to visit China late September to mark the 40th anniversary of the establishment of diplomatic ties between China and Japan. But the trip was forced to put off due to the soaring tensions between the two neighbors over a chain of islands claimed by both in the East China Sea. Nonaka, who has long been dedicated to building Sino-Japan friendship and relationship, said the recent row is a pity. "As Japanese, I feel disgraced. I feel terribly bad for the Chinese people and I want to express my sincere apologies to them, " he said in the interview. The senior politician said Japan's "purchase" of parts of the Islands has undermined the two countries' mutual trust and consensus which has lasted for several decades. He also rapped the Japanese government's improper ways in tackling the recent diplomatic crisis, which ignited the anger of the Chinese public who have staged widespread protests in many Chinese cities this week. "The current political parties in Japan do not seem to be working in the interests of Japan and the Japanese people. They do not have the country's future direction in mind, and haven't realized the importance of maintaining friendly relations with neighboring countries. All of these are important missions for Japan's young politicians. Unfortunately, they only care about the election and votes. It's very sad, and I feel very disappointed." Compared with his generation, Nonaka said the politicians nowadays always put personal careers first, instead of responsibilities and obligations to the whole nation. Nonaka stressed Sino-Japan relations are of crucial importance. As for the Diaoyu dispute, he suggested the two sides strengthen dialogue and strive for a proper way to solve the problem.

China announces names of geographic entities on Diaoyu Islands - The SOA and the Ministry of Civil Affairs jointly released a list of standardized names for the geographic entities on the Diaoyu Island and some of its affiliated islets.

The provincial officials of the post-1960s generation will gradually become bright scenery in China's political arena in the future. According to statistics, there are a total of 161 provincial leading cadres born in the 1960s. Young age, advanced degrees, owning practical experiences and background of humanities and social sciences are their typical characteristics. In the next five to 10 years, their thoughts and traits will affect China's local governance and their governing style will influence a group of younger cadres. Five to 10 years later, many of them will be expected to enter a higher leadership, affecting the future direction and fate of China. Remarkable background in social sciences - Statistics found that of the 158 provincial officials with a degree, 97 received degrees in humanities and social sciences, accounting for 61.4 percent, and 61 received degrees in science and engineering, accounting for 38.6 percent. This indicates that the era of engineers governing the country is fading while leading cadres with a background in humanities and social sciences are rising, which is consistent with the modern way of governing a country. Plentiful grassroots work experience - Most of these provincial cadres have rich grassroots work experience so the public has great expectations for the post-1960s generation provincial cadres. Analysts believe that corporate executives have clear advantages to serve as high-ranking officials, because they can introduce enterprise management practices into the Party and government agencies and change the ideas of some officials, especially professional officials in some special departments. Highlighting the people-oriented concept - The provincial officials from the post-1960s generation will pay more attention to people's livelihoods and have a pluralistic style. They value the legal system and will unfold their flexible, people-oriented concept. The post-1960s generation senior officials face huge challenges on how to reduce the gap between the rich and the poor, meeting social desirability, and reconciling different appeals, which will test their governance capacity. Their governing ideas will affect future China - China is entering the "deep water area" during the course of the Reform and Opening up, which involves more deep-seated conflicts of interest. The post-1960s senior cadres have profoundly realized that the Reform and Opening up is the only way out for China's future development.

Officials from US manufacturing giant United Technologies Corp have promised to continue investing in China, after officials opened a new 100 million yuan ($15 million) Otis Elevator factory in Chongqing municipality. With an initial annual production capacity of more than 15,000 elevators, the factory will supply elevators particularly to the rapidly developing cities of central and western China. Otis is the world's largest manufacturer of elevators, escalators and moving walkways, and now accounts for more than half of global new elevator sales, said Pedro Baranda, Otis' global president. Otis is owned by UTC, a global manufacturing operation behind a host of high-tech aerospace and building brands, including Pratt & Whitney aircraft engines and Sikorsky helicopters. UTC reported $4.4 billion in sales revenue in China in 2011, through its network of 25 manufacturing facilities and more than 40 joint ventures. "China's continued potential for urbanization and infrastructure development presents a great opportunity for the global elevator and escalator industry," said Baranda. "As the industry leader, our investment in this factory signifies our commitment to provide safe, energy efficient, and reliable products and services to our Chinese customers for many years to come." Otis figures suggest the country now accounts for one out of every two elevators it sells globally. It has so far installed approximately 400,000 elevators and escalators in China. It also exported 15 to 17 percent of the elevators it produced in its Hangzhou plant to overseas markets. According to the China Elevator Association, China is the world's largest elevator manufacturer and consumer, with annual sales totaling 95 billion yuan. Its figures shows that in 2011, China manufactured 406,000 elevators and 51,000 escalators in total, which accounted for 70 percent and 95 percent of the global new equipment installations of the year, respectively, with a combined year-on-year growth rate of 25.2 percent. Moreover, China exported 31,000 passenger elevators and more than 16,800 escalators to more than 140 countries and regions in 2011, according to China Customs statistics, making China also the world's largest elevator exporter. "Obviously, the elevator industry in China has a promising future, though the growth rate over the next five years will vary to some extent because the market demand depends on real estate and transportation infrastructure construction, which are heavily influenced by government policies," said Zhang Lexiang, deputy secretary-general of the association. Tom Vining, president of Otis China, added: "Our new facility in Chongqing will support the significant growth opportunities in central and western China and beyond. "We also foresee a growing replacement market, as real estate owners and developers start modernizing all of their old elevators." Louis R. Chenevert, chairman and chief executive officer of Otis parent UTC, added that despite the economic slowdown this year "China is an engine for growth of our whole group in the future". He added: "The only challenge we are facing now is how to support UTC's fast growth in China. "We need to always bring the latest technologies and most advanced products (here) and the faster we localize, the faster we can provide the latest products to meet the booming local demand. "UTC will put heavy investment in many new projects to come," he said.

'Connectivity' is the word - Measure is of 'strategic importance' for regional economic integration - Beijing on Friday pledged to advance China-ASEAN connectivity and FTA development in a bid to lift trade, while reiterating that China will not seek dominance through its growing economy. Vice-President Xi Jinping and other leaders of ASEAN members arrive for the opening ceremony of the Ninth China-ASEAN Business and Investment Summit in Nanning, capital of the Guangxi Zhuang autonomous region, on Friday. Analysts said increasing trade and economic ties have become an effective engine to ensure China-ASEAN ties stay on track as they have been recently shadowed by maritime claims. Addressing the annual China-ASEAN Business and Investment Summit, Vice-President Xi Jinping asked the regional countries to advance connectivity, which he said is "a measure of strategic importance" for integration and economic competitiveness. China is actively preparing for the establishment of the Chinese Committee on China-ASEAN Connectivity and will set up exchanges with ASEAN agencies. "We are also ready to set up an investment and financing platform for connectivity, step up land connectivity with ASEAN countries, build maritime connectivity networks and expand cooperation in areas such as ports, maritime logistics and port industries," said Xi. ASEAN members are among the top destinations for Chinese enterprises going global, and a key source of foreign investment in China in recent years. Strengthening land and maritime connectivity has been a key part for both China and ASEAN to lift trade ties. Trade between China and ASEAN surged from $7 billion in the early days of China-ASEAN relations to $362.8 billion last year. China and ASEAN have a trade volume target of $500 billion by 2015. The business summit, together with the China-ASEAN EXPO, which convenes at the same time, has become a major platform to realize goals set by the China-ASEAN FTA. The China-ASEAN FTA, launched two years ago, covers 1.9 billion people. China has been ASEAN's largest trading partner for three consecutive years and ASEAN has become China's third largest trading partner. Addressing the summit, Xi also called on regional countries to improve FTA development, advance trade and investment liberalization and facilitation, and optimize the mix of import and export commodities. "We should expand FTA coverage by acting in a spirit of openness, inclusion, equality and mutual benefit," said Xi. Xi also said at the summit that the future destinies of China and ASEAN have never been so closely linked with each other as economic globalization and regional integration develop. The more China progresses and develops closer links with the outside world, the more important it is for China to have a stable external environment, Xi said. Stressing that China will always be a staunch force for peace and stability in the region and the world at large, Xi said China will never seek dominance. Yet Xi also stressed that China is firm in safeguarding sovereignty, security and territorial integrity and is committed to resolving differences with neighbors concerning land, sea and maritime rights and interests through friendly negotiations. Xi made the remarks as some ASEAN countries have claims on some of China's islands and water areas of the South China Sea, and have taken measures that have strained ties. The annual expo has attracted leaders of several ASEAN members and business leaders. Myanmar highly appreciates China's support for ASEAN centrality in the evolving regional architecture, and for the ASEAN integration process in building the ASEAN Community by 2015, President U Thein Sein said on Friday at the opening ceremony of the expo. U Thein Sein also said it was important for all regional participants to work together to promote peace and development of the region as the present Asia-Pacific region has become the center of gravity in international relations and trade. Addressing more than 1,000 business leaders attending the ceremony, U Thein Sein also said ASEAN was happy to see a healthy economy growing in China and welcomes the robust economic partnership with China. "We wish to see peoples of ASEAN and China reaping the fruits of the ASEAN-China Free Trade Area," he said. A trade balance of $11 billion in favor of ASEAN was realized for the first time in 2011, according to U Thein Sein. Foreign direct investment from China to ASEAN more than doubled in 2011 compared to 2010. "This is a very good trend and we should keep its momentum," he said. According to U Thein Sein, the markets of ASEAN and China have their own characteristics and are endowed with natural and human resources. Qiu Hong, China's assistant minister of commerce, said at the forum on the China-ASEAN Free Trade Area that China and ASEAN should deepen mutually beneficial cooperation, suggesting that agreements be fully implemented and duties fulfilled to further open up markets to promote trade and investment. She said that by August, China reduced duties of about $50 billion yuan ($7.93 billion) for products from ASEAN. Cham Prasidh, minister of commerce of Cambodia and the ASEAN economic ministers chair for 2012, said at the forum that China-ASEAN relations have been a valuable way for ASEAN enterprises to come to China and they certainly have a bright future. Prasidh said the country hopes to export more garments and rice to China. "Cambodia has annual production of 2 million tons (of rice) per year. Hopefully we can sell 1 million to China," he said. He also encourages Chinese companies to invest in rice processing and import more agricultural equipment and heavy machinery for road construction from China. Prasidh attributed the increasing trade volume between the two countries to the China-ASEAN Free Trade Area. "Our leaders want to double the trade volume to $5 billion by 2017. This is all achievable because ASEAN is in place," he said. Participation of China in the economies of ASEAN members is very important for strengthening ties and development of the region, said Imron Cotan, Indonesian ambassador to China. "There is an idiom that I believe in: 'Never bite the hand that feeds you'," he said, noting investment from China is very important in terms of providing job opportunities in the region, especially amid the global recession.
"We need China just as China needs ASEAN," he said.

Hong Kong*:  Sept 23 2012 Share

Swire Properties to invest 12b yuan in more mainland joint ventures - The two joint deals,in Shanghai and Chengdu, will add to the 18b yuan committed so far. Swire Properties plans to invest a further 12 billion yuan (HK$14.7 billion) in two joint-venture commercial developments, in Shanghai and Chengdu, over the next four years. "By 2016, our mainland portfolio will account for one-third of the group's total gross floor area," said Martin Cubbon, Swire's chief executive. Speaking after the opening of the developer's 1.89 million square foot retail-office-hotel project in Beijing - Indigo - Cubbon said he expected the central government's move to curb demand in the overheated property market would offer more acquisition opportunities in future. Swire's mainland portfolio would increase to 13.5 million sq ft by 2016, he said. Indigo - a 50-50 joint venture between Swire and Sino-Ocean Land - is Swire's third development on the mainland, where its projected capital expenditure of 12 billion yuan will include the Daci Temple project in Chengdu and the Dazhongli project in Shanghai. The Daci Temple project is also a 50-50 joint venture with Sino-Ocean Land, and will cost about 4 billion yuan. It is expected to be completed by 2014. The Dazhongli project, a 50-50 joint venture with HKR International, will cost 8 billion yuan, and is set for completion in 2016. Swire has so far committed to investing 18 billion yuan in two developments in Beijing - Sanlitun Village and Indigo - and one, Taikoo Hui, in Guangzhou. Cubbon said more than 90 per cent of the office space and 85 per cent of the retail area at the Indigo development had been leased. Swire aims to achieve an average rent of 200 yuan per square metre for the office space in the project. It declined to disclose retail rents. Sino-Ocean Land chairman Li Ming said the group would develop about 200,000 square metres of commercial properties annually over the next several years. Indigo is located in Chaoyang district. It comprises 87,000 sq metres of retail space (Indigo mall), 55,000 sq metres of office space in a 25-storey office tower (One Indigo), and a 369-room hotel (East Beijing). A subway station on the proposed subway Line No 14, which is under construction, will be located in the Indigo mall basement. In Hong Kong, Cubbon said Swire had recently leased another flat at the Opus in the Mid-Levels. He did not disclose the monthly rent.

Sands gaming group to stake US$2.5 billion more on Macau - Gaming group plans further multibillion-dollar outlay to expand casino empire, following the opening of a new phase in Cotai Central project. Gaming mogul Sheldon Adelson's Las Vegas Sands plans to stake US$2.5 billion in new investment to expand its growing gambling empire in Macau. The new project, to be called The Parisian, will be located on Cotai and developed by Sands China - the Macau unit of Las Vegas Sands. "We will finance the project with about a billion dollars of equity and will raise the rest of the funding from international banks," group president and chief operating officer Michael Leven said. No further details were available. Leven revealed the plans during the launch on Wednesday of the second phase of the group's US$4.4 billion Sands Cotai Central project. The first phase, which incorporates a Conrad hotel and Holiday Inn hotel, opened in April. The second phase featured the opening of the 1,829-room Sheraton Macao Hotel. Sands China operates four projects in Macau, including the popular integrated resort, The Venetian. Sands China chief executive Edward Tracy said the Macau government approved 400 new gaming tables for the Cotai Central project several years ago. But the company has to wait until January - when a cap on the number of gaming tables in Macau is lifted - to add 200 of them. In the interim 165 tables have been moved from Sands Macau and The Venetian to Cotai Central. Chelsey Tam, an analyst at financial services firm Emperor Securities, said the opening of new facilities would attract visitors, but the venues opened in the first phase had not generated strong results. "Sands Cotai Central generated only US$52 million in earnings before interest and tax in the first 81 days of operation, compared to Galaxy's first 42 days of US$48 million," Tam said. But Tracy said he was happy with the performance of Cotai Central so far. "You have to remember we only have one third of a major development," he said. Revenue growth of the gaming industry in Macau, the world's biggest gaming hub by revenue, has slowed this year amid a growth slowdown in the mainland economy which has affected the numbers of visitors. But Tam said that in the long run gaming operators were not concerned by the present slowdown and were confident that visitor numbers and revenue would rise. "Visits as a percentage of the population in China are still way too low compared to that of Las Vegas. And don't forget the central government has not opened all cities to travel to Macau," she said. Grant Govertsen, lead analyst at Macau-based Union Gaming Research, expected tourism to Macau to continue to grow this year, "which is important in the context of even more new supply in Macau".

Ankie Beilke says her love of fine wines improves with age - Ankie Beilke grew up in Germany in a house with a wine cellar in the basement, so the model-actress developed her taste for wine at a young age. Now based in Hong Kong, her love of wine has not diminished. "I have it with almost every meal. I really love [Italian red] amarone and [French white] Chablis," said Beilke, who is half German, half Chinese. "When I started drinking wine, I used to like riesling because it's German. It's a light wine and easier to get into it because it's sweeter. But now I like wines that are heavier in taste, more rounded, full-bodied and oaky. I guess my palate has changed as my knowledge of wine has improved." Beilke was guest of honour at the China Wine Awards & China Spirits Awards at The Mira hotel in Tsim Sha Tsui on Tuesday. "When I have time, I want to do a sommelier [course] to learn more about wine. I was planning to do it this summer but unfortunately - well fortunately - I had to shoot an Italian-Hong Kong movie [ Naked Soldier], so maybe next year," she said. More than 100 judges blind-tasted wines and spirits from 37 countries - some with price tags of up to HK$10,000. At the event, Chateau Baccarat showed guests how a wine appears and tastes differently in different glasses. Chocolatier Cornelia Francesca Maeder shared tips on what wines paired well with her Swiss chocolates, and mixologists for Royal Dragon vodka concocted cocktails for guests to sample.

Police arrest more parallel traders amid crackdown - Law enforcement agencies vowed to crack down on parallel traders near the border as they made a second series of arrests on mainlander traders this week in North district on Friday afternoon. The latest arrests – 5 men and 3 women, all of whom hold two-way permits – were made at an industrial centre some 10 minutes’ walk from Sheung Shui MTR station, a hot location that parallel traders use to transport their wares back to the mainland. Immigration and police officers who jointly conduct the operation also served summons to three other Hongkongers involved in the trade at a shopping centre nearby for obstructing public access. Principal immigration officer Wong Yin-sang said the mainlanders were arrested on suspicion of breaching conditions of stay by illegally working in Hong Kong. “Our strategy is to take law enforcement action at any time and at any location, with a view to cracking down on the source,” Wong said. This was the second arrest of mainlanders amid snowballing discontent among residents in border areas over parallel goods traders. On Wednesday, the police and the Immigration Department arrested 131 mainland parallel traders in a crackdown launched after the government promised to cope with what residents see as an increasing problem. Of the 131 people arrested previously, Wong said eight people – four men and four women – had now been charged with breaching conditions of stay. The remaining 123 had all been repatriated and put on a watch list by the Immigration Department. “Although no prosecution has been laid against these 123 people, we have put them on our watch list. On their next visit to Hong Kong we will ask them the purpose of their visit in detail. If there is anything suspicious, we will deny them entry,” Wong said. The so-called parallel traders stock up on everything from iPads to milk powder, taking advantage of lower prices and a wider choice in the city – and avoid paying large duties on the goods on their return. Sheung Shui residents staged protests this week against the traders, who they say are a nuisance. Officials said mainlanders caught illegally working in the city risk having their travel permits cancelled.

The government will set aside HK$40 billion to resettle and compensate villagers affected by development of the northeast New Territories. Development Secretary Paul Chan Mo-po said money for about 10,000 people will match or exceed the sums to Tsoi Yuen Tsuen villagers whose homes were demolished last year to make way for the high-speed rail link to Guangzhou. Some HK$800 million from a compensation package of HK$2 billion went to Tsoi Yuen Tsuen people. There were 150 households affected, and people in squatter huts were offered up to HK$360,000 against a standard HK$120,000. Chan rejected claims from opponents of the northeast project that the aim is integration with Shenzhen or creating an area for wealthy mainlanders - a "back garden" for Shenzhen. Chief Secretary Carrie Lam Cheng Yuet-ngor insisted that the point of the development is to open more land and housing for SAR citizens. Chan said on a radio program that officials are still checking exact numbers of people and households affected, but the northeast NT project "is far larger" than the one in Tsoi Yuen Tsuen. There is also a review of the project under way to determine whether to increase the ratio of public housing flats to private residential units. Officials said earlier that the development plan for northern Kwu Tung, northern Fan Ling, Ping Che and Ta Kwu Ling was for around 50,000 flats for 150,000 people in the next two decades. But green groups, villagers and farmers resisting the project say it will destroy precious farmland and historic villages. These opponents also voice fears that the development area will become a "special zone" for mainlanders to travel freely for shopping. Lee Siu-wah, chairman of a concern group keeping tabs on affairs in northern Kwu Tung, said it is unfair to force villagers from their homes simply by offering compensation. Some villagers have also held a signature campaign to urge abandonment of the project. Heung Yee Kuk vice chairman Daniel Lam Wai-keung said the government should consider swapping land as an alternative. And Sheung Shui Rural Committee chairman Hau Chi-keung, said people should be allowed to stay in their home areas while receiving fair compensation for giving up village homes.

New World patriarch Cheng Yu-tung in hospital with unknown illness - Tycoon's son says the 87-year-old's health is not a serious problem as company shares dip. Hong Kong property tycoon Cheng Yu-tung, who retired as chairman of New World Development in March, is in hospital with an unknown illness. His eldest son, Henry Cheng Kar-shun, the firm's new chairman, confirmed his father was in hospital but said there was no serious problem with his health. A domestic helper at the elder Cheng's home said on the phone yesterday her boss had not yet been discharged from hospital. Shares of New World fell 1.77 per cent to HK$11.10 yesterday. The benchmark Hang Seng Index fell 1.2 per cent. Alex Wong Kwok-ying, asset management director at Ample Capital, said investors did not panic because the property empire had already been transferred to the second and third generations of the Cheng family. Another reason is investors know blue-chip property firms are well-established and their daily operations are not seriously affected, Wong said. Shares of New World have risen 12.23 per cent since Cheng's official retirement on March 31. Cheng, 87, who founded New World in 1970, is the first of the city's ageing property tycoons to step down from leading the businesses they largely built from scratch during the boom years of the 1960s and 1970s. Born in August 1925, Cheng was not from a rich family. After primary school, he was a trainee at Chow Tai Fook, the gold shop of his future father-in-law, Chow Chi-yuen. He married Chow's daughter, Chow Tsui-ying, in 1943 and they have four children. In 1989, Cheng retired as managing director of New World Development and passed control to his son, Henry. But the firm racked up debts of HK$25 billion and Cheng returned a year later to restore investor confidence.

Hu surges into badminton semi-finals in Japan - Hong Kong’s unseeded Hu Yun surged through to the semi-finals of the Japan Open on Friday as he saw off the eighth seed Nguyen Tien Minh of Vietnam to continue his excellent run of form. Hu, who defeated two-time champion Peter Gade on Wednesday and was the losing finallist in China last week, coasted to a 24-22, 21-15 victory in 42 minutes in Tokyo. “I don’t feel any fears against his shots because they are the shots I can comfortably hit back,” Hu said after his quarter-final win. “I always feel confident whenever I play against him. “I’m happy about the win, not because my opponents were seeded. When I beat a stronger player, of course, I’m happier. I don’t feel any pressure. I relax when I play and that’s why I’m doing very well recently.” In the semis on Saturday he will play either Kazumasa Sakai of Japan or Boonsak Ponsana of Thailand. The Japan Open is without any of China’s players after they boycotted the tournament over a territorial row between China and Japan. In the women’s quarter-finals, the fourth-seeded Bae Yeon-Ju of South Korea crashed to a 7-21, 15-21 defeat to home hope Eriko Hirose. Bae’s compatriot and the second seed Sung Ji-Hyun edged past Japan’s Ai Goto 12-21, 21-16, 21-14. “I had expected it to be a tough match. Today, I was able to move pretty well. That’s the key to the win. I was able to attack as I wanted to do,” said Hirose. “I’m really happy to reach the last four. My goal is to win a title in the Superseries, so I will do my best tomorrow as well by concentrating on each point. I want to stay on the court as long as possible.”

Taiwan ship nears disputed isles: Japan coastguard - A protest ship from Taiwan joined around a dozen state-owned Chinese vessels in waters near Japan-administered islands on Friday as a territorial row rumbled on. The Taiwan-registered ship was spotted 44 kilometres off Uotsurijima, the largest island in a group known as Senkaku in Japan and Diaoyu in China. Japan controls the islands though China and Taiwan also claim ownership. “This ship is not a government-owned vessel. By speakers and wireless communications we are warning the ship not to enter our territorial waters,” a spokesman for the coastguard’s Okinawa branch said by telephone. Under international law, territorial waters extend up to 22.2 kilometres from a shoreline. “The ship is insisting that the islands are part of their territory. They told us not to stand in their way.” Banners reading “Protect Diaoyu” and “Get back Diaoyu” in Chinese were seen on board, the coastguard said in a press release. It was the first time since July that a protest ship from Taiwan had been seen in waters near the island group. A total of 13 vessels from China’s maritime and fisheries authorities were spotted in waters off the disputed islands. Four of them moved into the so-called contiguous zone, a band a further 22.2 kilometres from territorial waters, off the island of Taishojima, in early afternoon and remained there as of 2pm Hong Kong time, the coastguard said. State-owned Chinese ships have gone in and out of the contiguous zone, briefly entering territorial waters on Tuesday, since the row flared up again when Japan nationalised three of the islands on September 11. Violent anti-Japan demonstrations spread through major cities in China for eight days but practically vanished on Wednesday, reportedly under orders from Chinese authorities. On July 4, a boat carrying activists and four patrol boats from Taiwan entered territorial waters around the islands.

iPhone 5 starts selling in HK - Customers show iPhone 5, the lastest version of Apple Inc's smartphone, in south China's Hong Kong, Sept. 21, 2012.

 China*:  Sept 23 2012

China will scrap customs supervision charges for foreign trade enterprises starting Oct. 1 to ease their burdens amid faltering trade, according to a circular released Thursday by the Ministry of Finance (MOF) and the National Development and Reform Commission. China will also exempt all outbound and inbound goods, as well as transport vehicles and containers, from inspection and quarantine fees from Oct. 1 to Dec. 31 this year, the circular said. The MOF estimated that the latest policy will save foreign trade enterprises around 3.5 billion yuan (550 million U.S. dollars). The move came after the State Council approved a raft of measures earlier this month to stabilize trade growth, including speeding up the export tax rebate process, reducing administrative costs for companies, lowering financing costs for small and micro-sized enterprises and increasing credit to qualified exporters. In the January-August period, China's total foreign trade reached 2.5 trillion U.S. dollars, an increase of 6.2 percent from last year but below the 10-percent full-year growth target set by the government for 2012.

China's National Tourism Administration (NTA) has canceled a plan to attend an international travel fair in Japan. The spokesman at the administration on Friday said that the NTA called off plans to exhibit at the event held by the Japanese Association of Travel Agents, which takes place from Friday to Monday. It is one of the biggest travel and tourism events in Asia. The decision comes after Japan's "purchase" of China's Diaoyu Islands on Sept. 10, which has aroused strong opposition from the Chinese government and public, with anti-Japan protests seen across the country over the past few days. Separately in a statement issued late Friday, the administration warned of safety risks to Chinese tourists who have plans to, or are currently traveling in Japan. If their safety is being threatened, Chinese tourists should report to Japanese police and the local Chinese embassy for help, the statement said.

InterContinental Beijing Beichen introduces moon cakes baked with meticulous care and only the finest ingredients. These are good as gifts on the auspicious occasion of the Mid-Autumn Festival. The moon cakes are available for a limited period only and in a range of festive flavors.

Chinese tradition says at the very beginning of a new year, when there's a bright full moon hanging in the sky, there should be thousands of colorful lanterns hung out for people to appreciate and thus, the Lantern Festival is celebrated in winter. But Shanghainese say we shouldn't waste such great weather in the late summer evenings, prompting the Shanghai International Lantern Festival in the fall. The festival, which lasts for 40 days, is held at Luxun Park in Hongkou district from Sept 5 to Oct 14. The theme of the Lantern Festival is harmony, blending and development, designed by a Zigong-based company in Sichuan province, which is famous for its magnificent ingenious assembly, exquisite workmanship and strong local customs. The Zigong lantern has been inscribed on the World Intangible Cultural Heritage. In the 1990s the Zigong Lantern Festival was held several times in Luxun Park. The festival is divided into three exhibition areas consisting of an international exhibition, a China exhibition and interactivity section. A total of 52 groups created giant lanterns, adopting special workmanship and introducing sound, light and electricity. In addition, environment-friendly and energy-saving materials such as LED lights are used for the lanterns. A 200-meter lantern in the shape of a dragon will be the highlight of the festival and will compete for the Guiness World Record of the world's longest lantern. Comprised of about 80,000 pieces of porcelain including ceramic bowls, dishes, plates and cups, it was made by more than 150 craftsmen from Jiangxi's Jingdezhen, the porcelain capital of China. "Cotton thread was used to keep the porcelain together, which is extremely hard to imagine as it requires exquisite workmanship - people have to come to check it out," says Liu Shengyang, lighting designer of the Shanghai International Lantern Festival. The dragon's head alone weighed 1,000 kilograms, he says. The dragon's head can move and puff smoke, says Liu. Other lanterns will feature themes such as London Olympics, Eiffel Tower, the Great Wall and the Shenzhou IX manned spacecraft.

Japanese firms complain of tougher Chinese customs inspection - China is tightening up customs inspections for Japanese products at its ports, firms said on Friday, as a diplomatic row over disputed islands appeared to spill over into multi-billion dollar trade ties. The move comes after Chinese state media threatened economic retribution over Tokyo’s nationalisation of the Japanese-controlled Senkaku islands, which Beijing calls Diaoyu. “We’ve heard from our staff in China that some Japanese products arriving in Chinese ports are facing a tightening of customs procedures,” Tsutomu Suehara, spokesman for Japanese trading house Sojitz, told AFP. However, he added: “It’s not to the extent that it affects our business”. Chinese customs took a similar route in 2010 when ties soured over the arrest of a Chinese trawlerman who had rammed two Japanese coastguard vessels. At the time, Beijing also imposed an export quota on rare earth minerals -- vital components used in high-tech products ranging from flat-screen televisions to lasers and hybrid cars. China controls more than 95 percent of the global rare-earths market. “Compared to 2010, when all Japanese products were targeted, this time the affected products are a lot fewer,” Suehara said. Sojitz had been told tighter inspections were occurring in the ports of Tianjin and Qingdao, he said. Another Japanese trading house, Itochu, said it had also learned of stricter customs inspections. “We heard that inspections of freight from Japan are being tightened in Tianjin, Qingdao and other major ports,” an Itochu spokesman told AFP. Transportation firm MOL Logistics said in a statement the number of customs inspections was “rising due to the worsening of Japan-China relations”. Asked about the heightened inspections, Japanese industry and trade minister Yukio Edano said he expects China “to act in line with international rules”. “We continue to gather information and are trying to confirm the facts. We will take appropriate measures depending on the situation,” he said. The daily Asahi Shimbun reported Chinese customs officials were boosting their inspections in Tianjin, near Beijing, while the Mainichi Shimbun said freight was backing up in Shanghai because of a stricter regime. “If Shanghai starts tightening inspections that would have a grave impact on Japanese firms, as the trading volume and the variety of items passing through there are a lot bigger than other ports,” Suehara said. Despite two-way trade being worth US$342.9 billion last year, according to Chinese figures, relations between Asia’s two largest economies are often rocky, troubled by historical grievances and the festering territorial row. The effects of the dispute were also being felt on the airline industry Friday, with former flag carrier Japan Airlines (JAL) seeing its recently relisted stocks plunge on the Tokyo bourse after it announced it was slashing services to China. The stock closed 4.29 per cent lower in a rising market, hours after JAL said flights from Tokyo to Beijing will be halved and those to Shanghai will be cut by a third. The carrier will also halve its Osaka-Shanghai schedule. The island row has rumbled for decades but flared again when the Japanese government said it had bought three of the uninhabited outcrops in the East China Sea. Tens of thousands of anti-Japanese demonstrators rallied across China, with some vandalising Japanese shops and factories, forcing firms to shut or scale back production. China has sent more than a dozen ships to waters close to the disputed islands, which lie on important sea lanes and near to believed oil reserves.

China's Xi: China-ASEAN cooperation sees growing gains - Xi Jinping said that China and the ASEAN have always been committed to mutually-beneficial development, resulting in growing gains in trade and economic co-op. China’s leader-in-waiting Xi Jinping sought to reassure Southeast Asian leaders on Friday that his country wanted only peaceful relations with them, following months of growing tensions over the strategically located South China Sea. Speaking at the opening of a trade fair in southern China for Association of Southeast Asian Nations (Asean) members, Vice President Xi said China’s own prosperity could only be guaranteed by having good relations with its neighbours. “The more progress China makes in development and the closer its links with the region and the world, the more important it is for the country to have a stable regional environment and a peaceful international environment,” Xi said. “Having gone through numerous vicissitudes in modern times, we are deeply aware of the importance of development and how valuable peace is,” he added, according to state media. Beijing’s assertion of sovereignty over a vast stretch of the South China Sea has set it directly against Vietnam and the Philippines, while Brunei, Taiwan and Malaysia also lay claim to other parts of the region, making it Asia’s biggest potential military troublespot. At stake are potentially massive offshore oil reserves. The seas also lie on key shipping lanes. Vietnam Prime Minister Nguyen Tan Dung is one of the Asean leaders attending the trade fair, held in the city of Nanning. Xi said China – currently also involved in a dispute with Japan over a group of uninhabited islets in the East China Sea – wanted the peaceful resolution for its diplomatic arguments. “We are firm in safeguarding China’s sovereignty, security and territorial integrity and are committed to resolving differences with neighbours concerning territorial land, territorial sea and maritime rights and interests peacefully through friendly negotiations,” he said. “China’s sustained development and prosperity offer an important and lasting window of opportunities to its neighbours, and promise important development opportunities to countries around the world, Asean countries included,” Xi added. China has resisted proposals for a multilateral code of conduct for the South China Sea, preferring to try to negotiate disputes with each of the far less powerful individual claimants. It has also stepped up activity in the region, including establishing a military garrison on one of the disputed islands, and accused Washington of seeking to stir up trouble far from home. Unprecedented arguments over the sea prevented an Asean summit in July from issuing a joint communique, the first time this had happened in the 10-member bloc’s 45-year history.

Hong Kong*:  Sept 22 2012 Share

Inflation eases in August, food prices slow - Hong Kong’s inflation eased to 3.7 per cent in August as increases in private housing rentals and food prices slowed down, the Census and Statistics Department said on Thursday. The year-on-year rise in the composite consumer price for August came down from 4.2 per cent in July. July’s figures did not include the effects of government’s payment of public housing rentals introduced last July. Taking the one-off measure into account, July’s inflation was 1.6 per cent. In August, the largest year-on-year increases in prices were recorded for housing and food, each of which rose 5.2 per cent. Electricity, gas and water came second, with a 3.6 per cent increase; clothing and footwear grew by 2.8 per cent. However, prices of durable goods fell by 1.3 per cent year-on-year. A department spokesman said inflation had receded thanks to slower year-on-year increases in food prices and private housing rentals. He also said there would be room for inflation to ease further in the near-term as increases in import prices would probably become moderate in an economic slowdown.

National education a must for Hongkongers, says former official - It is only natural for Hong Kong schools to teach a course on national education, a former top mainland official said on Thursday. “Every national must receive national education … Hongkongers have a responsibility to contribute to the country,” said Chen Zuoer, the former deputy director of the Hong Kong and Macau Affairs Office, who is visiting the city. Speaking at an event held by the Y. Elites Association, he advised Hongkongers to work together to settle the dispute over national education and to make the course a success. Commenting on recent protests against parallel goods traders in Sheung Shui, Chen said he was saddened that some Hongkongers had held up British flags at the scene. “If you are discontented with the central government, you can freely voice your opinions,” said Chen. “We can discuss it. Can holding the British flag help [solve the conflicts]?” But he acknowledged that the parallel goods trade was a problem that arose from the individual travel scheme, and it should be rectified. Beijing introduced the scheme in 2003. Some communities in North District have seen protests against parallel traders, who are accused of driving up prices of daily necessities by buying goods in bulk for resale across the border. On Thursday afternoon, Chen will appear at a launching ceremony for his book Negotiations on The Handover of Sovereignty of Hong Kong – A Witness Recount. From 1994 to 1997, he was a member of the Sino-British Joint Liaison Group responsible for discussing Hong Kong’s handover arrangements. In his book, Chen details heated exchanges between Beijing and London about the city’s future.

Russell Street tops world in shop rents - At US$2,800 per square foot a year, it is the most expensive place to lease street-level space. The average rent of street-level shops on Russell Street has surpassed Fifth Avenue in New York, making it the most expensive shopping street in the world, the latest research shows. According to property consultant Cushman & Wakefield, the average retail rent in the Causeway Bay street grew more than 13 per cent to US$2,800 per square foot a year in the second quarter. That was higher than the US$2,500 per square foot at Fifth Avenue. "It is the first time rent at Russell Street has been higher than that in Fifth Avenue. In the first quarter, the annual rent was US$2,471 per square foot, less than US$2,500 at Fifth Avenue," said Sigrid Zialcita, a managing director of research services at the firm. "It means the retailers are willing to pay higher rent for a store in Hong Kong. "You [international retailers] have to be here [Hong Kong] if you want to do business." The strong performance of Hong Kong retail rents was due to the influx of mainland tourists, a solid consumer base on the back of wage gains and low unemployment rate and limited supply of retail space, Zialcita said. Thanks to the aggressive expansion of international retailers, the firm said rental rates in prime shopping centres in Hong Kong were more than US$927 per square foot a year in the second quarter. Argentina ranked second with rents of US$500 per square foot a year. Beijing was third with US$404 while Shanghai was sixth with US$368. Michele Woo, a senior director of retail at Cushman, said international brands continued to expand in Hong Kong. "For example, Tiffany leased a 3,800 sq ft shop, which used to be a cinema at Times Square in Causeway Bay, while Burberry leased a 7,000 sq ft store in Russell Street," she said. Monthly retail rents in Causeway Bay surged 18 per cent to HK$2,000 per square foot in the third quarter, compared with the second quarter. The rent is 54 per cent higher than a year ago. Central's retail rents grew 25 per cent to HK$1,500 per square foot a month, while rents in Tsim Sha Tsui climbed 30 per cent. International brands such as Burberry have posted disappointing results recently and as the economies of Europe and United States remain in poor shape, they have had to focus on developments outside their home markets, in particular the mainland market. "Hong Kong, with the stable local consumption, is a good platform for them to do business," Woo said. "But they may cut their budget from opening three or five new stores to one store only."

Visa targets smartphone payments in Hong Kong - Global payments technology giant Visa plans to step up development in Hong Kong of a mobile payments infrastructure that is supported by a wide range of smartphones. The company, with a global payments processing network capable of handling more than 20,000 transaction messages a second, has certified about 40 different smartphone models from suppliers that include Samsung Electronics, HTC, LG Electronics, Nokia, Sony Mobile, and Research In Motion as ready for its mobile payments setup. Tom Tobin, Visa's country manager in Hong Kong and Macau, said those devices all support the technology called near-field communications, which can turn a mobile phone into a payments device, and Visa's payWave contactless payment application. The use of payWave-enabled Visa credit cards in Hong Kong "has reached critical mass", which would allow the introduction of an additional convenient payment system, Tobin said yesterday. There are now one million payWave-enabled credit cards in Hong Kong, a milestone that made the city Visa's "fastest-growing market" in terms of adopting the technology, Tobin said. Users need only wave their credit cards in front of a Visa payWave car reader at a store to complete their transaction. There are now 9,000 payWave card readers installed in more than 3,400 merchant outlets, including convenience stores. Mike Middlemas, Visa's regional director for mobile payment technology for the Asia-Pacific, said the company is in talks with banks to support smartphone payments. Banks with payWave-enabled cards include Hang Seng, Dah Sing, Aeon, DBS, Wing Lung and BOC Credit Card (International).

Jennifer Lopez announces first Hong Kong gig in 11 years - It has been an exciting year for local music fans, with a string of international acts coming to the city. Now Jennifer Lopez, 43, is the latest star to announce she is Hong Kong bound. The singer is being brought to town by BMA Music and The Tonno, and will perform for one night only on November 28 at the AsiaWorld-Arena as part of her Dance Again world tour. The concert programme includes Lopez's greatest hits and more recent tracks, including the Dance Again single from July. The show will see the return of J-Lo 11 years after she last performed in the city. One of the highest-paid Latina actresses, Lopez broke into the music scene in 1999 and has since released a string of popular albums. After taking a break from the music business, last year she released the Love? album, marking her pop comeback. Lopez, who is dating 25-year-old back-up dancer Casper Smart, also did a stint on the judging panel of American Idol. Tickets will go on sale on October 9 at urbtix.hk Prices range from HK$480 to HK$1,580.

Rio Tinto brings rare pink diamonds to HK as it entices Chinese buyers - A mining giant is showcasing dozens of the world’s rarest diamonds in Hong Kong, as it seeks to tap into the booming Chinese jewellery market. The 75 pink, red and blue diamonds are being shown at a private exhibition by Anglo-Australian mining firm Rio Tinto, which unearthed a huge 12.76-carat pink diamond in Australia in February -- the largest of the precious stones ever found in the country. The diamond, named the Argyle Pink Jubilee, is not on display, but has been donated to a museum. Less then 0.03 per cent of the world’s diamonds are pink, which command up to 50 times the price of white diamonds. Rio said the pink stones in its display could fetch up to US$1 million a carat when they go on sale later this year. “In the last five years, we really see the growth in China and India,” Rio’s Argyle Pink Diamonds division manager Josephine Johnson said Thursday, adding that Chinese buyers had shown greater interest in the rare stones. “We know that China is becoming more of an important market for us. In fact China is set to overtake the United States market by the year 2025 in terms of diamond consumption,” she added. A 1.32-carat square purplish-pink diamond called the “Argyle Siren” is star of the show at the 13-day exhibition which began on Sunday. Rio produces more than 90 per cent of the world’s pink diamonds from the Argyle mine in western Australia. It is not known how the diamonds acquire their pink tinge but it is thought to come from a molecular structure distortion as the jewel forms in the earth’s crust or ascends to the surface.

Merchants step up protest over Cathay Pacific's shark fin cargo ban - Shark fin merchants will stage their second protest in as many weeks today against Cathay Pacific's decision to stop carrying shark fins on its cargo flights. The plan was announced as Cathay revealed shipment figures yesterday showing that the volume of shark fin it transported comprised only a small part of the global trade. The merchants sought to step up their opposition despite admitting that the ban would not make a significant economic impact on their industry. "The ban will greatly harm our industry's reputation," Marine Products Association chairman Ricky Leung Lak-kee said. The protest will be held near the Admiralty offices of the Swire Group, a major shareholder of the carrier. The association will be joined by the Shark Fin Trade Merchants and the Hong Kong Dried Seafood & Grocery Merchants associations. Hong Kong is a major hub for the global shark fin industry. Data from the Census and Statistics Department showed that 83 countries or territories supplied more than 10,300 tonnes of shark fin products to the city last year. A Cathay spokeswoman said: "We will still take shipments when shippers provide proof that their shipments are independently verified sustainable shark and shark-related products." The spokeswoman said the ban was based on a report from the International Union for Conservation of Nature, a forum for governments, NGOs, scientists, business and local communities to solve conservation challenges. "The report provides compelling evidence that the majority of shark fishing is incompatible with our position on sustainable development," she said. Leung said he believed shark fin harvesting would not threaten the population. "It is nonsense that fishermen will cause the extinction of shark species," he said. "The ban is based on lies from environmental groups." Hong Kong Shark Foundation director Bertha Lo Ka-yan said "141 out of an estimated 500 shark species in the world are endangered or nearly endangered … This isn't something environmentalists are making up."

 China*:  Sept 22 2012

China 'to play its part' in euro zone debt crisis - Wen says both China and EU against trade protectionism. Chinese Premier Wen Jiabao said Thursday that Beijing will maintain its efforts to help resolve the euro zone debt crisis, after months of investing in European sovereign bonds. “China will continue to play its part in helping resolve the European debt issue through appropriate channels,” Wen told a business summit after political talks with European Union leaders in Brussels. “In the past few months China has continued to invest in bonds of European governments... and discussed ways of cooperation with the ESM,” Wen said, referring to the European Stability Mechanism, a new 500-billion-euro rescue firewall set up by euro zone leaders and due to become operational next month. “Europe is on the right track in tackling its debt issue,” Wen told the audience. “What is crucial now is to fully implement the reforms” it has agreed on economic governance, he said. Wen’s remarks saw a shift in tone from the “serious concerns” about spillover effects hurting China that he had expressed just three weeks earlier when German Chancellor Angela Merkel visited Beijing. Almost half of all European exports to China come from Germany, and a quarter of all European imports from China are into Germany. Wen highlighted that China had pumped tens of billions of dollars into the International Monetary Fund this summer, as global economies joined forces in a bid to limit the damage from a global economic downturn. And he said this was done for “strategic” reasons, saying the “essence” of China’s “stable” relationship with the EU bloc was “long-term” and “not affected by ideological differences or temporary setbacks.” Having visited 18 EU member states since 2003 to cement a trading relationship worth a billion euros a day, Wen said the present challenges also presented “huge opportunities” on both sides. While the economic picture was at a “critical juncture,” China and the EU were working on a host of levels to “scale-up” trade. The levers through which this would be achieved, Wen said, involved two-way investment with a “need to expand co-operation in infrastructure development” that could see Beijing invest in new EU project bonds. Likewise investment in technological innovation, where he cited nuclear energy or the information technology sector, or European offers of expertise whether in smart cars or sewerage as China steps up urban planning. Avoiding trade protectionism. Both China and the European Union reject trade protectionism, Wen also said on Thursday after a summit meeting with EU leaders. “We both (China and the European Union) follow free and open economic and trade policies, reject trade protectionism and work to advance economic globalisation,” Wen told a business conference on the sidelines of the summit. He also said he believed Europe was able to overcome its debt crisis, and that China continued to invest in European government debt. “Europe is on the right track in tackling its debt issue, and what is crucial now is to fully implement all the policy measures,” Wen said. Earlier in the day, Wen met European Commission President Jose Manuel Barroso and Herman Van Rompuy, president of the European Council, which represents national governments. The leaders were meeting against a background of growing trade disputes between China and the European Union.

Premier Wen attends 15th China-EU Summit in Brussels - Chinese Premier Wen Jiabao attends the 15th China-EU Summit in Brussels, Belgium, Sept. 20, 2012. Chinese Premier Wen Jiabao, in an address delivered at the 15th China-European Union (EU) summit here on Thursday, put forward a four-point proposal for the development of China-EU relations. The premier's proposal provides for the vigorous promotion of liberalization and facilitation of trade and investment; the establishment of joint research and development centers, technology transfer centers and joint incubators. The proposal also calls for the establishment of working mechanisms to promote bilateral cooperation in such sectors as transportation, electric power, and telecommunications. It also calls for the promotion of reforms of the international financial system to achieve new progress in order to maintain global economic and financial stability. Wen also spoke highly of the strategic leading role of the mechanism for regular meetings between Chinese and EU leaders.

Manufacturing activity in China stabilised in September after hitting a nine-month low in August, even though output dipped to its lowest level in 10 months, a survey of factory managers showed on Thursday. The HSBC Flash China manufacturing purchasing managers’ index (PMI) ticked up to 47.8, from 47.6 in August. There was a broad steadying across the sub-indexes in the survey. But while the economy may not have worsened in September, there were few signs of a fast turnaround. Rather, the PMI, which provides the first glimpse of September’s conditions for Chinese industry, seems to point to a month in which a slide was halted, but not reversed. “China’s manufacturing growth is still slowing, but the pace of slowdown is stabilising. Manufacturing activities remain lacklustre, thanks to weak new business flows and a longer than expected destocking process,” Qu Hongbin, chief economist for China at HSBC, said in a statement accompanying the survey. “This is adding more pressure to the labour market and has prompted Beijing to step up easing over the past weeks. The recent easing measures should be working to lead to a modest improvement from Q4 onwards.” China unveiled a series of measures last week to help stabilise export growth, including faster payment of export tax rebates and boosting loans to exporters. That was on top of a series of approvals for infrastructure projects worth more than US$150 billion, two earlier cuts to interest rates, the easing of bank reserve requirements that freed about 1.2 trillion yuan (US$190 billion) for lending and a steady series of liquidity injections into money markets. Still, purchasing managers in the survey had little cause for premature cheer. A sub-index that measures output fell to 47.0, its lowest level since November last year. After spending several months bumping just beneath the 50 mark that divides expansion from contraction, the overall PMI index is now at a level rarely seen since the 2008-2009 global financial crisis. The flash, or preliminary, survey offers an early peek at data for September, and suggests economic growth in China is still slack despite what many see as an improvement in the important property sector. China’s home prices showed a modest increase for a second consecutive month in August, rising 0.1 per cent from July, signalling a gentle recovery in the property market. Steel prices hit their highest point in a month on Wednesday, as signs of a pick-up in demand prompted mills to restock. Nevertheless, China appears on track for a seventh quarter of slowing growth in the third quarter this year, despite a number of measures designed to encourage private investment and infrastructure construction while avoiding a further pile-up in local government debt. So far the stimulus measures have not fed through to the broader economy, although inflation began to revive in August, led by higher food prices, after hitting a 30-month low in July . Many economists lowered their forecasts for the world’s second largest economy after weak July and August data, reflecting both external headwinds and domestic weakness. They now expect the third quarter to be the nadir, with full year growth dropping below 8 per cent for the first time since 1999. There were some green shoots in September that could support the idea of a late-year rebound. After several dismal months, HSBC’s sub-index tracking new export orders stabilised. Other brighter signs included rises in sub-indexes measuring total new orders, employment and backlogs of work. The tick higher in the new export orders index comes after hitting its lowest point since March 2009 the month before. Still, the Ministry of Commerce warned on Wednesday that exports could weaken through the end of the year, with ministry spokesman Shen Danyang calling the outlook grim. China cut interest rates in June and July and has been injecting cash into money markets to ease credit conditions to support an economy that notched a sixth straight quarter of slower annual growth, at 7.6 per cent, in the April-June period. Most analysts expect at least one more interest rate and two more cuts in banks’ required reserve ratios before the end of the year, to ease conditions and support growth. But some believe those measures could be held back until after the ruling Communist Party’s congress at some point before the end of this year in which a new generation of party leaders will be named. That will give the incoming team a boost by improving the economy and the national confidence, they argue.

China opens naval base to US defence chief Panetta - US Defence Secretary Leon Panetta had a rare first-hand look at a Chinese naval base on Thursday, as Washington pushes a security dialogue with a country that could rival US power in the Pacific. On the third day of his visit to China, Panetta flew to the eastern port of Qingdao, home to the headquarters of the Chinese navy’s northern fleet, becoming the first Pentagon chief to set foot in the facility. Chinese officers promised Panetta a tour of one of their newer frigates and diesel submarines, a day after he spoke at a military engineering academy in Beijing. In his speech to cadets and young officers, Panetta sought to reassure them that the US strategic tilt to the Pacific was not to curtail China’s power but an effort to promote stability in an area vital to the global economy. “Our rebalance to the Asia-Pacific region is not an attempt to contain China. It is an attempt to engage China and expand its role in the Pacific,” Panetta said on Wednesday. “It’s about creating a new model in the relationship of our two Pacific powers.” The Chinese navy’s latest warships and submarines are the subject of intense scrutiny by US military strategists, defence analysts and American lawmakers. They worry about Beijing’s increasing focus on precision-guided ballistic and cruise missiles that could render an array of bases and aircraft carriers vulnerable in key waterways. The growing rivalry with China is driving plans in Washington to fund stealth fighters electronic jamming equipment and other hardware. But the effect of Beijing’s military spending is open to debate, with some sceptics accusing the American defence industry and lawmakers of overstating China’s military prowess. For its part, China has questioned America’s plans, criticising proposals to deploy Marines to Australia and shift more ships to Southeast Asia. During his visit, Panetta has adopted a conciliatory tone, offering to work with Beijing as a partner to address common threats such as natural disasters or piracy. Panetta’s week-long Asia tour, which started in Japan on Sunday and will wrap up in New Zealand, came at a delicate time with tensions soaring between Beijing and Tokyo over disputed islands in the East China Sea.

Crisis on Diaoyu Islands 'will hit Japan trade' Islands issue to have damaging consequences, ministry says - Japan's "purchase" of the Diaoyu Islands will definitely affect trade and Japanese investment in China, the Ministry of Commerce said on Wednesday. Foreign direct investment in China fell in August, the ninth drop in 10 months, the ministry said. "Economic cooperation between China and Japan benefits both, but Japan's unlawful 'purchase' of China's Diaoyu Islands will definitely affect and damage trade, which we do not want to see. But Japan should take full responsibility," ministry spokesman Shen Danyang said at a news conference. "We are still discussing a trilateral free trade agreement between China, Japan and South Korea, but this will surely be affected by Japan's unlawful 'purchase' of the islands." Talks on the proposed FTA were expected to be launched in November. "The dispute will have severe, or even a decisive, impact on the FTA talks," said Yao Haitian, a researcher from the Institute of Japanese Studies at the Chinese Academy of Social Sciences. Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation with the Ministry of Commerce, agreed and said that the dispute will have a significant impact on trade and Japanese investment in China. Trade between the two countries declined by 1.4 percent from a year earlier to $218.7 billion in the first eight months, according to data from the General Administration of Customs. "Bilateral trade will see a further decline in September and October and Japanese investment in China will continuously slow down as investors are concerned about investment safety." China was the largest market for Japanese exports in 2011, while Japan was the fourth-largest market for Chinese exports. Bilateral trade in 2011 increased by 14.3 percent year-on-year to a record $344.9 billion, according to the Japan External Trade Organization. Japanese investment could target other countries, Yao said. "It will speed up Japanese investment in China moving to other emerging economies, including Vietnam and Thailand." Japanese investment in China increased by 16.2 percent, from a year earlier, in the first eight months, a much slower pace compared with the 50 percent growth in 2011 from the previous year. Chinese investment in Japan dropped by 11.1 percent in the first eight months, according to the ministry. Japanese automobile joint ventures in China, including Dongfeng Honda and Dongfeng Nissan, kept their production facilities closed on Wednesday, but many other Japanese businesses resumed operations. Japanese-invested businesses, including garment retailer Uniqlo, 7-Eleven convenience stores and Canon closed amid safety fears but reopened on Wednesday. Yang Song, deputy sales director with the Guangdong-based Dongfeng Nissan, and Li Peng, deputy sales director of the Hubei-based Dongfeng Honda, said on Wednesday that their plants remained closed. "We will monitor the development of the situation to see whether to resume production after Wednesday or later," they said. Nissan's plants in Zhengzhou, central Henan province, and Guangzhou, which operate in partnership with Dongfeng Motor Corp, remained closed on Wednesday. Dongfeng Nissan is the largest Japanese car producer in China. Li said Dongfeng Honda closed 104 outlets across the country and the company also received 2,120 canceled orders. He said the company's inventory has soared to 13,838 units, getting close to the level where production will have to be curbed. "Workers may be given extended leave from now to the end of China's National Day holiday on Oct 7," Li said. Japanese convenience store 7-Eleven reopened its outlets in two Chinese cities on Wednesday. All 180 7-Eleven outlets in Beijing and Chengdu, capital of Southwest China's Sichuan province, reopened after Tuesday's closure, said Liu Yue, a deputy manager with the company's Beijing office. "We are convenience stores that cater for the needs of ordinary people, and we will provide service as usual," Liu said. He said 7-Eleven stores in other cities in China did not shut down, and none of the shops suffered any damage on Tuesday, the 81st anniversary of the Japanese invasion of Northeast China. FDI flowing into China in the first eight months declined 1.43 percent in August from a year earlier to $8.33 billion, which is the ninth fall in the past 10 months. May saw a slight gain of 0.05 percent. The first eight months of the year saw FDI in China drop by 3.4 percent to $74.99 billion, according to the ministry. "Foreign investors held back investments amid China's extended slowdown. Over-capacity of China's industries is also responsible for the FDI drop," said Xiang Songzuo, chief economist of the Agriculture Bank of China. In contrast, China's outbound direct investment surged by 39.4 percent from a year earlier to $47.68 billion in the first eight months, according to the ministry. Foreign trade - Xiang said that the country's foreign trade "will grow by less than 7 percent in 2012 because trade with the EU dropped by 1.9 percent year-on-year in the first eight months. Data from the General Administration of Customs showed that China's exports rose by 2.7 percent year-on-year in August, up from 1 percent in the previous month but still below market expectations of 3 percent.

Hu Jintao likely to remain military chief, says Tung Chee-hwa - Former chief executive hints that outgoing party chief will follow practice of Jiang Zemin and stay on as chairman of CMC after congress. President Hu Jintao is likely to remain chairman of the Central Military Commission (CMC) after this year's Communist Party congress, which will see China's new leadership team named, former Hong Kong chief executive Tung Chee-hwa said. Tung, a vice-chairman of the Chinese People's Political Consultative Conference and chairman of the China-United States Exchange Foundation, told CNN on Tuesday that Hu may follow the practice of his predecessor, Jiang Zemin , and continue to head the military after stepping down as party chief at its 18th national congress. "I'm not privy to this information - based on past practice he will retain the position for some time," Tung told CNN's Christiane Amanpour in an interview. He also had "no doubt whatsoever" that Vice-President Xi Jinping would be China's next leader, and that the party congress would "happen sometime in October". As to Xi's two-week disappearance this month, which triggered concerns over whether the once-in-a-decade leadership transition would proceed smoothly, Tung said he merely suffered a back injury while swimming. "He [Xi] hurt himself in sport, and he's now recovered and he's now back at work," Tung said. Insiders said the usually cautious Tung would not make such remarks without at least tacit authorisation. There has been strong speculation that Hu will give up the post of CMC chairman, the most powerful position in the military, at the party congress, when he will retire as party general secretary. Jiang remained head of the CMC for two years until 2004 after retiring as party chief. Earlier reports had suggested that Hu planned to go into full retirement, but some observers say he might have changed his mind after a series of scandals that may have shaken his camp. One saw Hu protégé Ling Jihua transferred to head the party's United Front Work Department after his son was reportedly killed when he crashed a Ferrari in Beijing, dimming his prospects of elevation to the Politburo. "Hu's camp faces challenges after these scandals," said Lin Wen-cheng, director of the Institute of Mainland China Studies at Taiwan's National Sun Yat-sen University. "Leaving all his top posts would leave them no leverage in the power struggle." Antony Wong Dong, president of the Macau-based International Military Association, said Hu might want to stabilise his power base, and the recent diplomatic tensions faced by China could help him solicit support from army top brass. "The US and Japan are exerting pressure on China, and there are worries that the leadership transition will lead to a power vacuum that will make these countries act more provocatively," he said.

Wen in Brussels for China-EU summit - Chinese Premier Wen Jiabao (front R) arrives in Brussels, Belgium, Sept 19, 2012, to attend the 15th China-EU Summit and pay an official visit to Belgium. Chinese Premier Wen Jiabao arrived in Brussels on Wednesday to attend the 15th China-EU summit and pay an official visit to Belgium. In a written statement released upon his arrival, Wen said that since China and the European Union (EU) established comprehensive strategic partnership in 2003, their relationship has made remarkable progress and become one of the most influential bilateral relations in the world. "I will exchange ideas with the EU leaders on China-EU relations and issues of common concern, make plans for strengthening their relations and enhance pragmatic cooperation," Wen said, adding that the China-EU relationship is facing unprecedented development opportunities as the international situation undergoes profound changes. Noting that China attaches great importance to China-Belgium relations and regards Belgium as an important partner of cooperation in the EU, Wen said that with frequent high-level visits in recent years, the two sides have achieved great progress in various fields including politics, economy,trade and culture. "I expect to exchange views with Belgian leaders on further promoting China-Belgium friendly and mutually beneficial cooperation so as to work together to advance the two countries' relations and bring benefit to the two peoples," he said.

Hong Kong*:  Sept 21 2012 Share

Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor announced a clampdown on mainland goods couriers, warning they will be subject to a "stop, search and arrest" for violating their two-way permits. Anger has flared in Sheung Shui over distorted price rises and congestion caused by the couriers and there were scuffles during protests at the weekend. Lam announced the multipronged effort that will involve six departments - police, immigration, customs and excise, lands, fire services, and food and environmental hygiene. "If anyone is found holding a two-way permit and involved in commercial activities, it means they have violated their conditions of stay," Lam said. "Immigration will prosecute these people and after succeeding in prosecution, immigration will request mainland authorities to cancel their permit, forbidding them from entering Hong Kong." Lam said police will also crack down on couriers causing an obstruction and affecting public safety. "Customs will deploy more officers in Lo Wu and Lok Ma Chau stations to ensure the work of border officers won't be obstructed by an influx of goods couriers." The Lands Department and Fire Services Department will inspect industrial buildings in Sheung Shui to check for any safety violations. The Food and Environmental Hygiene Department will be responsible for the cleanliness in the district, removing unattended boxes of goods. "I hope North District residents will see an improvement soon," she said. The measures were announced after Chief Executive Leung Chun- ying declared war on the activities yesterday morning, saying he directed authorities to probe every aspect of the practice. Leung said he had also raised the issue with the central government, hoping that Shenzhen can take proactive measures to curb the activities. Couriers continued to queue up to enter Sheung Shui station from 2pm yesterday, carrying boxes of goods. More than 3,000 couriers reportedly cross the border on a daily basis. Customs and Excise Staff General Association welcomed the moves. "At the border, it is difficult to differentiate between genuine tourists and goods couriers that make us hard to prosecute those involved in commercial activities," said chairman Chan Che-kwong. Liberal Party lawmaker-elect and National People's Congress deputy James Tien Pei-chun said he has written to Beijing to call for greater attention to the border activities.

The special stamp duty may be reinforced to keep the lid on property as the government reviews its arsenal to counter the third round of quantitative easing by the United States. A source told Sing Tao Daily, sister publication of The Standard, that the special stamp duty implemented last year may be extended or increased after the review due by year end. The warning was made as property prices continued to hit records at the weekend after the US launch of the so- called QE3 despite the Hong Kong Monetary Authority's measures to cool the market by making it more difficult to secure a second mortgage. Financial Secretary John Tsang Chun-wah said last week the government will review the effectiveness of the special stamp duty which was introduced by the former administration and is designed to curb market speculation by imposing different levels of duties if property is resold within two years of purchase. In another development, the Heung Yee Kuk is planning to offer the government an old "land-swap" arrangement to solve the long-standing feud over village lands. Kuk representative Tony Chan Tung-ngok said the traditional way exploited the development interest of land owners, which is unfair and cannot reflect the development potential of lands. The Kuk suggested the old land- swapping arrangement which it said was very effective from the 1950s to 1980s. Chan said the authorities should provide an option of the entitlement besides paying cash to land owners. The proposed development of the northeast New Territories has drawn severe criticism from residents as well as other concern groups and border area residents will be forced to leave their lands which they have been farming for decades. There are also concerns that the northeastern zone will mainly serve the interests of mainlanders.

Hong Kong government cracks down on cross-border parallel traders - Those who break HK immigration laws risk losing their entry permits, enforcement will be stepped up and Beijing is asked to take action. Parallel traders from the mainland risk having their entry permits cancelled if they breach Hong Kong's laws, Chief Secretary Carrie Lam Cheng Yuet-ngor said yesterday. Lam said the city's government would ask Shenzhen authorities to cancel the permits if immigration laws were broken. She made the announcement after chairing a cross-departmental meeting to discuss the problem of thousands of traders who cross the border to buy goods in Hong Kong for resale. Earlier in the day, Chief Executive Leung Chun-ying said he would seek help from Beijing to clamp down on the parallel traders, who have been the subject of protests in North District. While buying goods in Hong Kong for sale across the border is not illegal in the city, the traders are breaching immigration laws by working in Hong Kong. "For those mainland parallel traders who are successfully prosecuted by the [Immigration] Department, we will request our mainland immigration counterparts to have their permits to Hong Kong cancelled," Lam said. Police would also step up enforcement against traders who obstruct streets, cause a nuisance or threaten public safety. They would also help the MTR Corporation implement its rules, including limits on the size of baggage carried by passengers, she said. The Sheung Shui MTR station, used by parallel traders to transport their wares, has been at the centre of the protests. Leung said yesterday that parallel trading had severely affected the daily lives of people in North District and disturbed social order. Relevant departments had been instructed to investigate every detail of how parallel trading was conducted in the city and the government would enforce the law vigorously. "I will make a request to the central government that it assist in combating traders from the Shenzhen side," he said. Parallel traders, who profit by avoiding heavy import taxes imposed by the mainland, were back at work on Monday after their numbers dwindled amid protests at the weekend. North District councillor Lau Kwok-fan said some 1,000 people gathered in an industrial zone around the Advanced Technology Centre in Sheung Shui every day. They were given goods to carry across the border, while a smaller number picked up products near Sheung Shui or Fanling MTR stations. Others were assigned to buy products in the neighbourhood and they gathered in supermarkets and pharmacies. Fellow councillor Law Sai-yan said most traders crossed the border between 3pm and 8pm, as they noticed that mainland customs officers on duty at that time were not as strict as those who worked the morning shift. It was hard for local immigration officers to prosecute traders as most of the traders were paid for their efforts in Shenzhen, he said. It would be better to tip off mainland officers who could prosecute the traders for importing products without paying tax.

Hongkongers more pessimistic about the city's future, HKU survey shows - Opinion poll shows that trust in Beijing is at a 15-year low and Hongkongers are now much more pessimistic about the city's future. Hongkongers have grown even more pessimistic about the city's future after fewer than three months under Chief Executive Leung Chun-ying's leadership than they were in the aftermath of a 500,000-strong protest that rocked the city in 2003. University of Hong Kong public opinion poll findings released yesterday also showed some 40 per cent of respondents expressed distrust towards Beijing authorities - the highest level since the end of British rule in 1997. Meanwhile, more people said they did not trust the local government than those who did. Observers said these were indications that it would be dangerous for the chief executive to initiate changes that would be seen as "political missions" to please Beijing during a high tide of "mainland phobia". Of 1,036 respondents polled between last Tuesday and Friday, 49.7 per cent expressed confidence in Hong Kong's future, compared with 37.7 per cent who said otherwise. The no-confidence level was the highest since August 2003 after the mass protest spawned by opposition to a planned national security law. This result was coupled with 34.6 per cent who answered "no" when asked if they had trust in local government, compared with 34.1 per cent who said "yes". Another 29 per cent were "50/50". The trust level, HKU said, had fallen to its lowest since April 2004, while trust in Beijing was at a 15-year low. The distrust percentage was down slightly from the March level found two weeks ahead of the once-in-five-years' chief executive election. Chinese University associate political professor Ma Ngok attributed the low trust level toward Beijing to a feeling of "mainland phobia". Ma said Hongkongers worried that their core values could be affected and there was disappointment that expected political and social reforms had not occurred on the mainland. Vivid anti-communist slogans used by pan-democrats during electioneering for the September 9 Legislative Council poll also strengthened locals' distrust of the mainland government, Ma said. However, the election results showed that the camp could not secure as many seats as predicted despite a high percentage of votes gained. Ma said this might have led to declining optimism about the future among some supporters. Political commentator Dr James Sung Lap-kung, of the City University's School of Continuing and Professional Education, said the trend reflected society's general dissatisfaction with the government's handling of the national education debate, which saw a week-long rally outside the government headquarters. Resistance was also seen among locals in further integration with the mainland, Sung said, including the recent issues of parallel goods traders and the Northeast New Territories' development plan. Sung said that if Leung focused on livelihood issues and steered clear of hot "political missions", such as reforming RTHK, "his rating should go up a bit". To do otherwise would be unwise, if not disastrous, he said. Pollster Dr Robert Chung Ting-yiu did not comment on the findings. But he cited other factors that would potentially have affected the ratings. These included the suspicious death of blind Tiananmen activist Li Wangyang in Hunan , as well as the Sino-Japanese row over the Diaoyus. Secretary for the Civil Service Paul Tang Kwok-wai conceded that the new government's low popularity was mainly a result of several controversial issues, such as the introduction of national education. Tang called on people to give the government more time to demonstrate its effectiveness, noting that civil servants' morale was "not bad".

Minimum wage for maids raised 4.8pc - The minimum wage for foreign domestic helpers will be raised by HK$180 to HK$3,920 per month, the government announced on Wednesday. This represents a 4.8 per cent increase in the minimum wage for Hong Kong’s 290,000 foreign domestic helpers. The change goes into effect on all contracts signed on or after Thursday of this week. A government spokesman said the rise was the result of a review of the wage levels conducted this year. The review weighed the city’s general economic and employment situation as reflected through a basket of indicators – including income movements, price changes and conditions in the labour market – he said. The last increase in the helpers’ minimum wage came in June last year, when it increased from HK$3,580 to the current HK$3,740. The spokesman said a minimum food allowance for the helpers would also be raised 12.9 per cent, from HK$775 to HK$875 per month. Under the Standard Employment Contract for hiring foreign domestic helpers, employers are required to either provide them with free food or pay the allowance. Contracts signed on or before Wednesday – with the pre-existing wage and food allowance levels – would still be processed by the Immigration Department, provided the applications reached the department by October 17, the spokesman said.

 China*:  Sept 21 2012

Chinese tourists spent an average of $7,107 each while visiting the US last year, up 14 percent from a year ago, a senior official from the National Tourism Administration said Tuesday. Chinese made a total of 1.36 million trips to the US in 2011, with package tourists staying in the country for 11 days on average, NTA chief Shao Qiwei said at a China-US tourism cooperation conference held in east China's city of Qingdao. Chinese tourists to the US increased from 710,000 in 2007 to 1.36 million last year, growing by 17.6 percent annually during the period, Shao said. Meanwhile, US tourists to China stayed in the country for 12.6 days on average in 2011, with per capita consumption reaching $2,348, Shao said. China and the US are each other's fourth-largest tourism destinations, Shao said, predicting that the citizens of both nations will make a total of 5 million trips to each other's countries by 2015. The number stood at 3.5 million last year, according to official data.

Xi Jinping slams Diaoyu 'purchase' Vice-president warns Tokyo not to undermine territorial sovereignty - Vice-President Xi Jinping on Wednesday said Japan's "purchase" of the Diaoyu Islands was "a farce" and warned Japan to stop any action that infringes on China's sovereignty. US Defense Secretary Leon Panetta carries his lunch tray before eating with cadets at the People's Liberation Army Engineering Academy in Beijing on Wednesday. "Japan should rein in its behavior, not utter any words and prevent any acts that undermine China's sovereignty and territorial integrity," Xi said in a meeting with US Defense Secretary Leon Panetta. The Pentagon chief's first visit to China since taking office coincided with escalating tension between China and Japan over the Diaoyu Islands. The Japanese government announced its decision to "purchase" the islands last week. Japan's "purchase" openly challenged the Cairo Declaration and the Potsdam Proclamation and intensified regional territorial disputes, Xi said. During a series of meetings with State and military leaders, including Xi, Panetta reiterated that the United States does not take positions over, what he termed, territorial disputes concerning the islands and called for all sides to be calm and show restraint to avoid confrontation. Addressing students at the military's Engineering Academy in Beijing on Wednesday, Panetta also sought to convince Beijing that the US strategic "pivot" to the Asia-Pacific region is not to contain China, amid concerns that Washington's increasing presence encourages its allies, like Tokyo, to engage in provocative behavior. The US rebalance in the region "is an attempt to engage China and expand its role in the Pacific", he said. "It is about creating a new model in the relationship of two Pacific powers.'' Panetta's remarks represent the latest effort by the US to build stronger military relations with the People's Liberation Army, said AFP, while analysts said the US stance toward China and Japan is often contradictory and its fundamental goal is to maintain a dominating role in international affairs. Before arriving in Beijing, Panetta started his weeklong Asia trip with a visit to Japan. While he was there, Tokyo and Washington agreed to install a second missile-defense radar system and the MV-22 Osprey military aircraft was given the go-ahead to begin flight operations in Japan on Wednesday. Washington says the Diaoyu Islands fall under the US-Japan security treaty and this is a severe interference in Chinese territorial sovereignty, said Liu Jiangyong, a specialist on Japanese studies at Tsinghua University. But Panetta tried to dismiss concerns during his speech, saying security treaties with allies do not necessarily mean Washington will not criticize their policies. Tokyo has been urged to shoulder responsibility to peacefully solve the issue through diplomatic means, said Panetta. He understood, he added, the history and pain left by World War II, but Chinese and Japanese people should work together for regional peace and prosperity instead of living in the past. The future security and prosperity of the US will be linked to Asia more than any other place in the world, but this is a region threatened by terrorism, nuclear proliferation, piracy and natural disasters, he said. Strong China-US relations are vital for the region, said Panetta. He called for Washington and Beijing to look beyond disagreements to areas where both share common concern and can work together. "We cannot let those disagreements and challenges blind us to the great opportunities that exist," he told the military academy. "If we work together and cooperate together, we can solve problems together." He acknowledged that improving relations and building trust will take time and that, "despite the distance, the distance that we have traveled over the past 40 years, it is clear that this journey is not yet complete, particularly for our two militaries''. But the Diaoyu Islands, illegally transferred from the US to Japan, is a time bomb to such relations, said Liu Youfa, vice-president of China Institute of International Studies. "The US wants to use the issue to leverage China-Japan ties and maintain its leadership in the region," he said. Japan's provocation sparked protests across China. A car carrying US Ambassador Gary Locke on Tuesday was surrounded by about 50 protesters outside the US embassy, which is close to the Japanese embassy. Foreign Ministry spokesperson Hong Lei on Wednesday said it was an "individual case" that is under investigation.

Mainland, Taiwan should safeguard territory integrity together: Jia Qinglin said both sides of the Taiwan Strait should safeguard the nation's territorial integrity, interests and dignity together through their own means.

China Modern Dairy Holdings (1117) plans to boost its milk output by 12 percent by 2015 through employing genetic modification techniques and more effective herd management. The firm, which is the largest raw milk supplier to China Mengniu Dairy (2319) wants to boost yearly output to 9 tonnes per cow from the present 8.09 tonnes per cow. It has 150,000 dairy cows. Regarding Mengniu's pledge to source 100 percent of its raw milk supply from self-operating farms, China Modern Dairy's new chairman Julian Juul Wolhardt said not too many large farms exist in the mainland that can satisfy Mengniu's demand. Mengniu took up 96.4 percent of the firm's sales in fiscal 2012. "Even if Mengniu invests 3.5 to 4 billion yuan (HK$4.2 billion to HK$4.9 billion) in setting up a farm, it can only satisfy about 5-10 percent of its yearly raw milk demand," said Wolhardt. The Inner Mongolia-based firm needs more time to be self-sufficient, he added. China Modern Dairy said it signed a 10-year contract with Mengniu in 2008 to supply 70 percent of its milk. But it would not rely too much on Mengniu in the future and instead further develop its own brand of dairy products. China Modern Dairy's vice chairman Lina Gao said the company's own branded milk is selling well in the mainland - at about 300,000 tonnes per day. The company recorded a profit of 398.5 million yuan in the year ended June 30, up 77.5 percent from a year ago.

Defence chief Liang Guanglie tells US counterpart to stay out of islands row - China's defence chief warns his US counterpart over American claim to a stake in the conflict. In a meeting with his US counterpart yesterday, Defence Minister General Liang Guanglie voiced "strong opposition" to Washington's claim that disputed East China Sea islands fall under its security pact with Tokyo. Liang also warned US Defence Secretary Leon Panetta - in China for the first time since assuming his post last year - that Beijing was ready to respond militarily to assert its sovereignty over the Diaoyus, which Japan controls and calls the Senkakus. He called on Washington to "concretely" demonstrate it would not take sides in the spat over the five uninhabited islands, which sit near potential supplies of oil and natural gas. "We reserve the right to take further action," Liang said after the talks. "Of course, that being said, we still hope for a peaceful and negotiated solution." Tensions remained high yesterday, as Tokyo reported 10 Chinese surveillance ships and a fisheries patrol boat in waters near the islands. Two Japanese activists landed on one island amid fresh protests in Chinese cities to mark the anniversary of the 1931 Mukden Incident. Thousands gathered outside the Japanese embassy in Beijing. Heavier security was visible in some cities, such as Shenzhen, in what appeared to be a greater effort to keep a lid on protests. Washington's claim that the islands fall under its post-war defence treaty with Tokyo has irked Beijing. "I want to make it clear that the Diaoyu Islands are China's inherent territory, which is evidenced by history and law," Liang said. For his part, Panetta called for calm on both sides of the East China Sea. He said Washington wanted expanded ties with the PLA, and invited China to take part in the 2014 Rimpac international military exercise in Hawaii. "The key is to have senior-level actions like we are engaging in, that reduce the potential for miscalculation, that foster greater understanding and that expand trust between our two countries," Panetta said. Panetta will next meet Vice-President Xi Jinping.

Bo Xilai's police chief Wang Lijun likely to be shown mercy by court - Report says Wang Lijun exposed vital clues in re-investigation of British businessman's murder by Bo's wife Gu Kailai as his two-day trial ends. Ex-Chongqing police chief Wang Lijun , whose trial on charges including defection and bribery ended yesterday, could receive relatively lenient punishment, the court was told. The name of his former boss, disgraced Chongqing Communist Party chief Bo Xilai , was not mentioned in Xinhua's report about the two-day trial, with analysts saying that indicated that Wang's case would have little impact on Bo's fate. Chengdu Intermediate People's Court said after two half-day sessions yesterday that it would deliver its verdict later. Wang, whose flight to Chengdu, the capital of neighbouring Sichuan , in February triggered China's worst political crisis in two decades, was charged with bending the law for selfish ends, defection, abuse of power and accepting bribes. Two charges against Wang, including defection and abuse of power, were heard in a four-hour closed-door session on Monday. A brief report by Xinhua said Wang attempted to defect to the US, while the abuse-of-power charge related to the forging of official approval documents and the "unauthorised use of technical surveillance measures". Yesterday, Wang was accused of taking 3 million yuan (HK$3.6 million) in bribes and trying to cover up the murder of British businessman Neil Heywood by Bo's wife, Gu Kailai . Although the session was said to be open to the public, access to the court was tightly controlled and foreign media were kept outside. The court statement said Wang surrendered after leaving the US consulate following his attempted defection, and "made an important contribution" to the re-investigation of Gu's case. The report said he had produced vital clues exposing serious offences by others. Xinhua quoted the prosecution as saying those mitigating factors could result in lighter punishment. Zhang Yunzhang , a former director of Minzu University's law school, said Wang was likely to receive a life sentence. He said that accepting so much in bribes could result in the death penalty, but because Wang had made important contributions to other cases, life imprisonment was more likely. Mo Shaoping , a Beijing-based lawyer, said he expected Wang to be sentenced to life imprisonment or 20 years. He added: "Three million yuan in bribes is not a huge amount in today's China." The trial could bring action against Bo, once a contender for the Politburo Standing Committee, a step closer. He has not been seen in public since the announcement in March that he was being investigated for violations of party discipline. Professor Zhang Ming , a political scientist at Renmin University in Beijing, said: "The [court] statement ignored Wang's wrongdoings when he was sweeping away organised crime in Chongqing together with Bo. This shows Bo is safe from the whole scandal." Last month, a court handed Gu a suspended death sentence for the murder of Heywood, 41. During her trial, there was also no mention of whether Bo was linked to her case. Zhang Lifan , a political affairs analyst, said: "It means either Bo has fully confessed to the party authorities or that someone is protecting him from criminal charges."

Chinese Vice President Xi Jinping met with U.S. Defense Secretary Leon Panetta on Wednesday, in the first high-level public meeting for China's presumed next president since canceling visits with other foreign officials in recent weeks. Mr. Xi, 59 years old, appeared with Mr. Panetta at Beijing's Great Hall of the People as part of a visit that the U.S. hopes will help cool regional territorial tensions and reassure China about its shifting its military focus to the Asia-Pacific region. "I believe that your visit will be very helpful in advancing the state-to-state and military-to-military relationship between our two countries," Mr. Xi said. Mr. Panetta said he is confident that the U.S. and China will be able to improve their communication and dialogue. "We are two great Pacific nations," Mr. Panetta said. "We want to begin what you have called a new model relationship." In a speech later Wednesday, Mr. Panetta asserted that the U.S. military shift toward Asia isn't an attempt to contain China, and he rejected the idea that the rise of China "will inevitably put it into conflict" with the U.S. Mr. Xi appeared healthy in his meeting with Panetta, which was briefly open to the media. His appearance is likely a signal that China's once-a-decade power transition is on track. As part of that transition, which is likely to begin in coming weeks, Mr. Xi is expected to succeed President Hu Jintao. His disappearance from public view at the beginning of the month sparked rumors that China's next top leader could be ill with back or heart problems. After last appearing in public Sept. 1, he canceled meetings with U.S. Secretary of State Hillary Clinton as well as the prime ministers of Singapore and Denmark. Mr. Panetta is on a three-day visit to China aimed at improving military-to-military ties, addressing Chinese concerns about the U.S. reinvestment in Asian security and tamping down territorial disputes between Beijing and U.S. regional allies. It comes as the U.S. has moved to add new missile defenses and build up forces in the Asia-Pacific region. In a speech at the Armored Engineering Academy in Beijing on Wednesday, Mr. Panetta said his message was that the U.S. was placing a renewed focus on Asia because the region was critical to its economic, diplomatic and security interests, not because Washington sees Beijing as a threat. "Our rebalance to the Asia-Pacific region is not an attempt to contain China," Mr. Panetta said, according to a copy of his prepared remarks. "It is an attempt to engage China and expand its role in the Pacific." Mr. Panetta said the U.S. wanted to create a new model for the relationship with China. Like his predecessors, Mr. Panetta emphasized that the U.S. requires a stable military-to-military relationship with China. In his speech, Mr. Panetta praised China's rise as bringing millions out of poverty and contributing to a strong world economy. "I believe that it can also make the world a more secure place, if we work together to build an enduring foundation for military-to-military relations between the United States and China," Mr. Panetta said. He invoked former President Richard Nixon's visit to China, and the new era of U.S.-Chinese relations it opened up, but noted the "journey is not complete." He said the U.S. and China must be "clear-eyed" about difficulties in the relationship, and realize that the two countries won't always agree. Still, Mr. Panetta said the U.S. and Chinese militaries must look for opportunities to cooperate and communicate more frequently. "We cannot let those disagreements and challenges blind us to the great opportunities that exist," Mr. Panetta said. "If we work together and cooperate together, we can solve problems together."

Honeywell International Inc is expecting more exports from its Chinese division as it benefits from more Chinese clients establishing themselves overseas, an executive with the US technology and manufacturing leader said. "Our exports from China has been growing 5 to 10 percent annually in the last two or three years for total industrial business, which was already higher than the historical figure," said Chris Dartnell, vice-president and general manager of strategic geographies at Honeywell Process Solutions. "The growth figure will continue to increase because of more big projects in the pipeline." Honeywell has been enjoying an average overall revenue growth of 21 percent over the last five years, Dartnell said. The Fortune 100 company has been providing tailored products and service for some of China's industrial giants such as China Shenhua Energy Co Ltd, PetroChina Co Ltd and Sinopec Group, which are also the major carriers of China's "going-out" strategy. Despite the fact that China's industrial activity continues to weaken, and key economic indicators such as the purchasing managers' index have fallen below the critical level of 50, Dartnell said he is still confident in the company's business prospects in the country. Amid rising concern over outflowing foreign capital caused by the economic slowdown, Honeywell has continued to invest in the Chinese market by opening a new office in Tianjin. The facility will provide engineering services and turnkey solutions - including design, systems integration, testing and training - for Honeywell process industry customers in China and the Asia-Pacific region. "This new facility demonstrates Honeywell's long-term commitment to the Chinese market," Dartnell said. "We continue to be very excited about China, for both the short term and long term." Dartnell's optimism isn't groundless. As the Chinese government continues to push forward upgrades of its industrial sector, China's automation industry has been enjoying a fast growth rate at around 30 percent a year over the last few years. Shen Minggao, head of China Research of Citi Investment Research, part of Citigroup Inc, said automation and mechanized production will be among the key growth engines for China's economic growth. There is still huge potential in China's manufacturing sector, and a better environment in the sector will greatly expand China's role in the global value chain, Shen said. Cashing in on the upgrade of the world's second-largest economy, Honeywell is building the country into an innovation base, as innovation becomes the driving force of its continued growth worldwide. In China, Honeywell has established research facilities in major cities such as Beijing, Shanghai, Tianjin, Nanjing, Suzhou and Xi'an.

Lenovo buys US firm to boost software offerings - Lenovo Group Ltd's assembly plant in Chengdu, Sichuan province. The company's latest strategy will concentrate on more profitable sectors such as enterprise business and servers. Chinese giant hopes to increase presence in PC service sectors. Lenovo Group Ltd, the world's second-largest PC maker by market share, has made its first foray into software development after buying the US-based cloud-computing company Stoneware Inc, for an undisclosed amount, which has millions of users in education and the US public sector. This year Lenovo has squeezed into the top five PC sellers in the US market, but it still seeking business opportunities to increase its share. The Chinese company launched a new strategy this year called "PC Plus", which means on top of its PC business, it plans to focuses on other product lines such as mobile Internet, and grow its cloud-computing offerings that allows users to access data remotely or control different devices via a single computer. "Adding Stoneware's cloud computing into the Lenovo line-up presents a significant opportunity to enhance our PC Plus offerings," said Peter Hortensius, senior vice-president of Lenovo, and president of the company's Product Group. "The talented team at Stoneware will fit in our long-term strategy." The purchase is Lenovo's third overseas acquisition in the past couple of months. It agreed to buy Brazilian consumer electronics maker CCE in a cash-and-shares deal worth approximately 300 million Brazilian reais ($147 million) earlier this month, and signed an agreement with US-based data-management company EMC Corp to develop and sell server and storage technologies in August. Analysts from the US-based IT research company IDC said they believed the deals will cement Lenovo's position in the enterprise, server and storage sectors while global PC growth slows this year. "The global and domestic PC markets are growing very slowly, and some even had negative growth this year," said Wang Jiping, a senior analyst from IDC China. Lenovo's PC Plus strategy will enable it to earn from more profitable sectors such as enterprise business and servers, Wang explained. In order to compete against mobile Internet products from rivals Apple Inc and Samsung Electronics Co, such as smartphone and tablet PCs, Lenovo will use Stoneware to build a "public cloud" for consumers, the company said. The service may be used to compete with Apple's iCloud service, which allows customers to store media content through the Internet. "The purchase of Stoneware is critical to Lenovo's broader PC Plus strategy. With the momentum of an expanding tablet PC and smartphone business and a newly formed joint venture with EMC, Lenovo aims to offer end-to-end secure solutions to business customers and cloud-based technology to consumers," Lenovo said in a statement. Stoneware has 67 employees, located in Indiana and Salt Lake City. As part of the agreement, it is expected that all US-based Stoneware employees will join Lenovo.

China launches two satellites for navigation system - China successfully launched another two satellites into space for its indigenous global navigation and positioning network at 3:10 am Beijing Time Wednesday, the launch center said. They were the 14th and 15th satellites for the Beidou system, or Compass system. The satellites, launched from the Xichang Satellite Launch Center in the southwestern Sichuan povince, were boosted by a Long March-3B carrier rocket. China launches the 14th and 15th satellites for the Beidou system into space from the Xichang Satellite Launch Center in Sichuan province at 3:10 am Beijing Time Wednesday.

Hong Kong*:  Sept 20 2012 Share

Mediation wins favour as way to solve disputes - The number of rows dealt with without court intervention has risen 56pc in past 10 years. A growing number of Hong Kong and Asian companies and individuals are turning to mediation to resolve their disputes rather than pursuing costly litigation through the courts. The number of mediation and arbitration matters heard in Hong Kong jumped 56 per cent last year to 500 from 2002, according to data from the Hong Kong International Arbitration Centre. Unlike taking court action, which requires both parties to hire lawyers to present their cases before judges, mediation gives the parties the option of hiring a mediator to hear both sides in a three-way discussion. A successful outcome will typically take about four hours. If the mediation process fails, the parties can move on to arbitration or litigation. Arbitration is where a dispute is referred to an arbitrator, who will hear all the evidence in the case and make a ruling. Going to court can cost millions of dollars in legal fees, while a standard four-hour mediation session can cost between HK$10,000 and HK$12,000. Similar to litigation, the cost of an arbitration varies, depending on the complexity of the case and the length of the hearing, according to Annie Chan Wai-hing, a partner and head of forensic and investigation services of accounting firm Mazars, which also provides mediation services. "Mediation is a cheaper and quicker way to solve disputes," Chan said. "It is suitable for cases such as disputes over contracts, financial or shareholder agreements, tenancy agreements and family disputes, or cases where allegations of criminal activity are not involved. Criminal cases must be handled by the courts." Chan expects the number of mediation cases to increase after the government-funded Financial Dispute Resolution Centre opened in June. The centre provides mediation and arbitration for people seeking claims of up to HK$500,000 against their banks or brokers. Chan said about 90 per cent of the mediation hearings ended in a decision accepted by both parties. Cases that remained deadlocked often involved emotional and personal issues. Rather than money, aggrieved parties often wanted no more than an apology. She said many cross-border business contracts with parties in other Asian countries or mainland China now indicated that in the event of a dispute, the parties would take the matter to mediation in Hong Kong. "Many Asian countries have confidence in the Hong Kong legal system, which is why Hong Kong can become a regional mediation centre," Chan said. "The challenge facing the development of mediation in Hong Kong arises from some lawyers' concerns that if people opt for mediation, there will be fewer court cases, which would affect their business." She said the key to successful mediation was ensuring that the mediator studied the case in detail and clearly understood the concerns of both parties. One of the most memorable mediation cases she recalled concerned a father and son warring over how to run the family business. Things had got so bad that they were no longer talking to each other. After mediation, the son agreed to refund the investment in the business made by his father and the father agreed to let the son run the business in his own way. "If the deadlock had not been solved by mediation, the case would have gone to the court," Chan said. "The key to the success of this case was that the mother urged the father and son to keep the family together to avoid appearing in court. So they finally agreed to reach an agreement."

HKT, SmarTone gird for more intense rivalry in mobile services - HKT and SmarTone are racing to unveil services that exploit the capabilities of smartphones. Days before the iPhone 5 makes its debut in Hong Kong, two of the city's leading telecommunications services providers have separately unveiled new mobile strategies designed to harness the capabilities of Apple's new handset and other advanced smartphones. PCCW subsidiary HKT, which runs 4G operator PCCW Mobile and the city's largest fixed-line network, yesterday launched its "Smart Living" service to help local consumers use their smartphones and media tablets for so-called home automation. The carrier will assist customers in automating controls, over Wi-fi connections, of multiple home settings - including lighting, curtains, air-conditioning, surveillance system, internet-linked "smart" television and other home entertainment devices - using a single interface on their smartphone or media tablet, such as HKT's Eye Tab. Apart from providing technical assistance, HKT will also sell what it calls best-value smart TVs and internet-ready hi-fi stereo systems through its refurbished PCCW-HKT retail stores. "Our design philosophy has been to put up-to-date information at customers' fingertips in a high-class, high-quality and paperless environment - and to make them feel at home," said Alex Arena, the group managing director at HKT. Arena said many of the 60 existing PCCW-HKT shops would be renovated over a two-year period. The flagship store for this new retail strategy was opened in Mong Kok last night. "We will open new flagship shops in prime locations," said Arena, without disclosing the cost of investment. He pointed out that the new services and shops would boost HKT's profile as "a premium brand". SmarTone Telecommunications, which was named by Apple last week as its initial local 4G network partner for the iPhone 5, yesterday showed a preview of its unique "Cloud Storage Manager" offering that is expected to be popular with many smartphone users. Douglas Li, the chief executive at SmarTone, said the online service could be accessed through a new mobile application that is downloaded to a user's smartphone or media tablet. It will manage, secure and provide a single login to all of a user's online storage subscriptions, such as Dropbox, Sky Drive and Google Drive. Advanced 4G networks based on the technology called long-term evolution (LTE) can provide theoretical online download speeds of up to 100 megabits per second. The fastest 3G networks run up to 42Mbps. SmarTone may be the local 4G network provider for the iPhone 5, but subscribers with other carriers can use the device on their operator's existing 3G networks.

China-Japan conflicts drags down HK market; Dongfeng plunges - Hong Kong stocks fell, led by Japan-related stocks, on concerns that a tensions between China and Japan over disputed islands are could hurt the world’s second and third biggest economies. “There may not be a real war, but trade war may be inevitable,” said Liao Qun, senior vice president for strategy & planning, China banking, Citic Bank. “Supply chains in many high-tech and auto industries would be cut off, which could affect production in those companies.” According to Liao, Japan accounted for 7.8 per cent of China’s total exports while China accounted for 23 per cent of Japan’s total exports in 2011. “Japan’s economy would contract if the tensions drags on into next year,” Liao said. The benchmark Hang Seng Index lost 56.18 points, or 0.27 per cent, to end at 20,601.93. The Hang Seng China Enterprises Index shed 97.03 points, or 0.99 per cent, to close at 9,683.89. Japan’s Nikkei 225 Index lost 35.62 points, or 0.39 per cent, to close at 9,123.77. In China, the Shanghai Composite Index lost 18.96 points, or 0.91 per cent, to close at 2,059.54. Protests took place in dozens of mainland cities, including Guangzhou, Wenzhou and Shanghai on Tuesday, as the country marked the anniversary of a 1931 incident that Japan used as a pretext to invade Manchuria before World War II. Some major Japanese firms have announced factory shutdowns in China on Monday, including carmakers Toyota and Honda. Dongfeng Motor Group (0489.HK), which operates a joint venture with Japanese car maker Nissan, lost 5.09 per cent to end at HK$9.13. Guangzhou Automobile (2238.HK), which makes cars with Toyota and Honda, fell 1.83 per cent to end at HK$5.36. Ajisen (0538.HK), the Chinese-owned restaurant chain operator that sells Japanese noodles, lost 0.80 per cent to finish at HK$4.97. Hop Hing Group (0047.HK), which operates Yoshinoya quick service restaurants on the mainland, shed 4.21 per cent to close at HK$0.46. “The risks of political transition (in Beijing) and Sino-Japan conflict are still overhanging the market today,” said Chad Kwok, portfolio manager for Guosen Securities HK Financial Holdings, who helps oversee US$400 million. “We are still quite bullish as the market is very liquidity-driven due to the low (prevailing) interest rates. After removal of short-term risks, there will be a big rally,” he predicted, adding that he is quite bullish on Hong Kong developers and commodity stocks. Commodities stocks retreated, especially oil and gold counters, after spot prices fell. Spot gold prices fell for a second day after hitting a six-month high last Friday. Zijin Mining (2899.HK) lost 1 per cent to close at HK$3.02. Weichai Power (2338.HK), the Chinese car equipment maker, lost 4.47 per cent to close at HK$23.5. The United States on Monday filed a trade complaint at the World Trade Organization, accusing China of giving hundreds of millions of dollars a year in subsidies to its auto parts makers to boost exports. Facial mask producer Magic Holdings (1633.HK) gained 1.94 per cent to end at HK$2.63, after posting 27.4 per cent increase in net profit for the first half. The facial mask producer projected "long term healthy and sustainable growth", given a relatively low penetration rate of facial masks compared with other skincare products in China.

Leung to urge Beijing to help stem tide of parallel traders - Chief Executive Leung Chun-ying will ask Beijing to help combat the flood of traders crossing the border from Shenzhen every day, he said on Tuesday. “Different [Hong Kong] government departments have started combating the activities. I will ask the central government to help combat them from the Shenzhen side,” he said before attending an Executive Council meeting. Parallel trading has severely affected the daily lives of North District residents and disturbed the social order, Leung said. Relevant government departments have been told to investigate every detail of how parallel trading is conducted in the city, and the government will enforce the law vigorously, he added. Leung made the comment after hundreds of Sheung Shui residents at the weekend protested against parallel traders outside the district’s MTR station. They criticised the traders for blocking roads, posing safety threats to passers-by and inflating the prices of retail goods. According to a government source, more than 3,000 traders are believed to engage in the activity every day, half of whom are Shenzhen residents who make trips back and forth several times a day. Parallel traders make a profit by buying products in Hong Kong and carrying them back to the mainland without paying import taxes. Under mainland law, taxes must be paid on 22 types of goods, including iPhones and wines, that are brought across the border into Shenzhen. 

More Hong Kong parents are paying the high cost of storing umbilical cord blood - Is storing the umbilical cord blood of your child worth the high cost?Elaine Yau investigates. The sales pitch of the blood bank is something first-time mother Mrs Leung couldn't ignore. When she gave birth to her son at Union Hospital last year, she was told her child's umbilical cord was rich with stem cells that may have the potential to treat Alzheimer's disease and traumatic brain injury in the future. Tempted by the promise, she shelled out HK$100,000 for the collection and storage of her umbilical cord and its blood, with private blood bank CordLife. "Of course, I don't want to use the cord or cord blood in future," says Leung, a marketing manager. "But they might come in handy if, unfortunately, diseases related to blood or the immune system strike in future. There are cases of successful treatment of those diseases using them." Increasingly, parents like Leung are using blood banks for collection and storage of cord blood. But doctors say the cases of using one's own cord blood for successful treatment are rare, and the lack of government regulation over the private blood bank industry leads to security concerns. A government spokesman says they do not have information on the number of companies that help people store umbilical cord blood. However, a Consumer Council study in 2010 listed six cord blood storage providers, whose cost of service ranged from about HK$6,000 to more than HK$30,000, CordLife, a Singapore-listed blood bank which entered the local market in 2005, is among the major operators. Arthur Lau Yi-king, its senior project and quality assurance manager, says its services are popular with local and mainland parents. Another provider, HealthBaby, says it has more than 20,000 customers. Cord blood is rich in haematopoietic (blood-forming) stem cells - called HSCs, which are primarily responsible for replenishing blood and regenerating the immune system. Typically, the umbilical cord blood is discarded after birth. For mothers who want the storage service, cord blood is retrieved from the umbilical cord and placenta after the baby is born and the umbilical cord is cut. The blood is stored at minus 135 degrees Celsius for future use. The first-ever successful transplant of stem cells from cord blood was in 1988. A six-year-old boy in Paris was afflicted with Fanconi anaemia, a blood disorder. Stem cells were used to regenerate blood and immune cells in the boy. Since then, stem cells in cord blood have been used to cure a series of diseases including blood cancers, solid tumours, and immunodeficiency and metabolic disorders. Recently, scientists at the Salk Institute for Biological Studies in California found a new way to convert cord blood cells into neuron-like cells that may prove valuable for the treatment of a wide range of neurological conditions, including stroke, traumatic brain injury and spinal cord injury. One of the Salk study's researchers, Alessandra Giorgetti of the Centre for Regenerative Medicine in Barcelona, says cord blood cells have advantages over other types of stem cells: they are not embryonic and thus they are not controversial. They are more plastic, or flexible, than adult stem cells from sources like bone marrow, which may make them easier to convert into specific cell lineages. Furthermore, the collection of cord blood cells is safe and painless and poses no risk to the donor, and they can be stored in blood banks for later use. Says Lau: "The HSCs can be applied in treatment of over 200 diseases like type-one diabetes and systemic lupus erythematosus [a connective tissue disorder involving the immune system]." HSCs are also found in bone marrow or peripheral blood that circulates through the body, and can be used to restore stem cells destroyed by chemotherapy or radiation therapy during cancer treatment. But Lau says cord blood stem cell extraction has advantages over bone marrow or peripheral blood extraction. "Patients receiving bone marrow transplants have to take immunosuppressants, whereas the incidence of developing graft-versus-host disease using cord blood is much lower as the patient is using his own stem cells. Using bone marrow or peripheral blood requires extensive donor search and a perfect match between donor and recipient. But [cord blood] is readily available when needed." Cord blood stem cells come in handy in cases where a suitable bone marrow donor cannot be found. Medical surveys show about half of the patients requiring a bone marrow transplant will not find a suitable donor within a critical period. It costs HK$100,000 to store cord blood and cord for 18 years at CordLife, or HK$36,000 for cord blood only. Since setting up in Hong Kong, Lau says, it has had one successful case of using cord blood. "Last year, the Queen Mary Hospital did a transplant on a two-year-old boy afflicted with neuroblastoma, a form of childhood cancer. The stem cells from the boy's cord blood stored at birth with us were infused back into his body after chemotherapy." The medical benefits of cord blood are established. In the first large-scale study on treatment for childhood leukaemia, researchers at the Medical College of Wisconsin found that umbilical cord blood is more successful at treating cancer than a bone marrow transplant.

 China*:  Sept 20 2012

Mainland police have turned to the internet to track down protesters who damaged vehicles, stores, restaurants and other establishments during a swarm of anti-Japanese rallies at the weekend. In Guangzhou, pictures of those accused of vandalizing Japanese-brand vehicles and property were posted on the police's official microblog with an eye for citizens to help in arrests. Errant protesters are also urged to turn themselves in on the promise of leniency. Authorities in Guangzhou have so far detained 11 people, while Qingdao police said several persons suspected of disrupting social order have been detained. In Xian, police said patriotism is not to be used as a cover for criminal action and that citizens are barred from organizing rallies through online chat forums or by sending text messages. However, in Beijing, scores of activists still protested outside the Japanese embassy yesterday. In Hong Kong, activists said they are determined to sail to the disputed Diaoyu Islands, even without police permission. Marine Department officials inspected the fishing boat they plan to use, Kai Fung 2, which was damaged in a collision with Japanese coast guard vessels last month. It lacks a high-frequency radio but the department only raised concerns about the boat's railings, which were bent during the collision. Tsang Kin-shing, a member of the Action Committee for Defending the Diaoyu Islands, said the department is satisfied with the repairs carried out but that it still needs to seek legal advice before granting the group a license. The latest attempt by the activists comes as a fleet of fishing boats from the mainland are reported to have left for the Diaoyus after the seasonal ban was lifted.

War anniversary stokes anti-Japan protests across China - The 81st anniversary of a Japanese invasion brought a fresh wave of anti-Japan demonstrations in China on Tuesday, with thousands of protesters venting anger over the colonial past and a current dispute involving contested islands in the East China Sea. Outside the Japanese embassy in Beijing, thousands shouted patriotic slogans and demanded boycotts of Japanese goods. Some threw apples, water bottles and eggs at the embassy, which was heavily guarded by three layers of paramilitary police and metal barricades. Japan’s Kyodo news agency reported that protesters were throwing bricks and rocks at the Japanese consulate in Shenyang in China’s northeast. Similar protests took place in Guangzhou, Wenzhou, Shanghai and other Chinese cities as the country marked the anniversary of a 1931 incident that Japan used as a pretext to invade Manchuria before the second world war. In many provinces, including Liaoning, Gansu, Yunnan, Sichuan and Anhui, local governments sounded sirens at 9.18am to mark the September 18 anniversary, the official China News Service reported. Many China-based Japanese businesses were shut Tuesday as a precaution, after several days in which anger over the island dispute produced occasional outbreaks of violence, including the torching and looting of Japanese-invested factories and shops. Read popular blogger Han Han's take on the recent anti-Japan protests spreading across China. Tensions have been growing for months in the dispute over ownership of East China Sea islands called the Senkaku in Japan and Diaoyu in China. The disagreement came to a head last week when the Japanese government said it was purchasing some of the islands from their private owner to thwart a Japanese politician’s plans to buy and develop them. Protests since then have been the largest anti-Japanese demonstrations since 2005, reflecting ever-present anger towards Tokyo that periodically bursts to the surface. China’s authoritarian government rarely allows protests, and the wave of anti-Japanese demonstrations clearly received a degree of official approval.

Merkel urges dialogue to solve EU-China solar dispute - German Chancellor Angela Merkel reaffirmed Monday that her position after the European Commission launched an anti-dumping investigation against China solar companies that the issue should be settled through political dialogue. "There are very clear deadlines in the process of such (anti-dumping) cases. The deadline of opening the case has now come," Merkel said when answering a question from Xinhua, adding that the EU investigation is the need of legal procedures. "But whether it will follow with provisional measures, yes or no, will be decided several months later," she said. "That time is available to us for what I discussed with (Chinese) Premier Wen Jiabao, namely, a dialogue." In July, Germany's SolarWorld and other European solar panel makers filed a complaint seeking import tariffs on Chinese-made solar products, claiming that their Chinese competitors have received low-interest loans from the government. The European commission decided to start a formal investigation on September 6, which activated the largest trade dispute involving China in terms of trade volume. China's solar product exports were valued at $35.8 billion in 2011. The EU receives a share of more than 60 percent, or $20.4 billion. During her visit to China, Merkel told Premier Wen that she hoped the European Commission and China could solve the issue through communication, rather than by resorting to anti-dumping proceedings. "We want to solve this dispute politically, through dialogue, and we should use the time when investigating the case. There are many months to go and we should get started soon," the chancellor said. "This is not only the hope of Germany, but also of the European Commission," she said, adding that she heard some German companies are now open to start a negotiation. Merkel believed that no one in the EU nations would want to block such a dialogue, and the two sides should put all facts and questions on the table and discuss them thoroughly and substantially.

Chinese, US defense chiefs hold talks - US Secretary of Defense Leon Panetta stands at attention next to China's Defense Minister Liang Guanglie at the Bayi Building in Beijing Sept 18, 2012. Panetta is on his second official stop of a three-nation tour to Japan, China and New Zealand. Chinese Defense Minister Liang Guanglie held talks Tuesday with visiting US Secretary of Defense Leon Panetta. Liang, also state councilor, held a welcoming ceremony for Panetta before their talks at the headquarters of China's Central Military Commission. Panetta arrived in Beijing Monday evening, kicking off his first visit to China as Pentagon chief. China is the second leg of his week-long Asia-Pacific visit, which also brings him to Japan and New Zealand.

Hong Kong*:  Sept 19 2012 Share

Expanded power resources to bolster HK's role as data centre hub - City's role as a data centre hub will be bolstered by 'cleaner energy' but local environmentalists have reservations. Hong Kong's goal to become the Asia-Pacific's prime hub for data centres is poised to gain more traction as the expansion of key electricity infrastructure gets underway. However the city may also need to step up efforts to develop "cleaner" energy to support more of this infrastructure in future. CLP Power announced in July the development of the city's first substation dedicated to data centres in Tseung Kwan O, where many of these high-energy consuming facilities are located. More network-capacity development projects are now being planned to meet the expected growth in electricity demand at other districts, said Paul Poon Wai-yin, the chief operating officer at CLP Power. "With the incentive measures implemented by the government in late June 2012 to transform [old] industrial buildings into [modern] data centres, the corresponding load demand in traditional industrial areas, such as Sha Tin, Kwai Chung, Tsuen Wan, and Kwun Tong will be increased," Poon said. CLP Power declined to provide its estimate of total annual power requirement of data centres in Hong Kong, but pointed out that it was supplying electricity to more than 40 data centres in its local area coverage. Total electricity sales in CLP Power's supply area - covering Kowloon, the New Territories, and most of the outlying islands - reached 31,168-gigawatt hours last year. The average annual growth in demand in that area, where CLP Power operates more than 13,500 substations that serve about 80 per cent of the city's population, ranged from 1 to 2 per cent in the past decade. "In the United States, the power consumption of data centres is something like 2 per cent of [the country's] total [annual] consumption," Poon said. "In Hong Kong, the percentage should be less than that number." A data centre is a secure, temperature-controlled facility equipped to house large-capacity server computers and data-storage systems, which are maintained with multiple power sources and have high-bandwidth links to the internet. Market researcher and consultancy Frost & Sullivan said large data centres in Asia tend to be located in the most expensive cities - Tokyo, Hong Kong, Singapore, Shanghai, and Sydney. The financial services, trading and logistics, information technology, telecommunications, and content development and media industries account for more than 84 per cent of the total demand for data centre space in Hong Kong. Technology analyst firm Gartner estimated total revenue from data centre services in Asia reached US$10 billion last year. But it also noted that data centre operational costs are continuing to rise, with up to 50 per cent of operating costs associated with heating and cooling. The city is accelerating efforts to expand its power infrastructure to meet the demand from providers like China Mobile, multinational companies such as Google, and large local enterprises like Hong Kong Exchanges and Clearing, which are establishing advanced, more energy-efficient data centres here. The Office of the Government Chief Information Officer, the agency that sets Hong Kong's policies for information and communication technologies, said early this year that it received about 60 inquiries about the setting up of new data centres and provided assistance to some 10 projects. A big advantage for establishing a data centre in the city is having two local utilities (the other is Hongkong Electric), deliver what is called a "supreme level" of electric power reliability, which is at over 99.999 per cent. The city's government chief information officer, Daniel Lai, said: "The two electricity companies are connected with enough capacity to provide emergency support to each other in the event of generator failure, and hence reducing potential loss of supply to customers." Lai added that the "average duration of unplanned power interruptions each year per customer in Hong Kong was 2.6 minutes or less". Taylor Man, executive vice-president at NTT Com Asia, which is building the city's most advanced data centre in Tseung Kwan O, said the local power system "has logged significantly less downtime per year on average than Tokyo, New York or London". When CLP Power's 4,400 square metre Chun Yat Street substation in Tseung Kwan O starts operations in mid-2014, it will have a 300-megawatt capacity that can serve about 10 advanced data centres which are expected to be operating in the district at that time. That capacity would theoretically allocate an average of about 30MW per data centre. Poon, however, said: "It is difficult to make a comparison [of power consumption levels] since the scale of each data centre can be different". Still, Frost & Sullivan described the global operation of data centres as an "energy-guzzling business", which uses up "nearly 2 per cent of the world's electricity supply". It said many of the older data centres have had to upgrade their cooling systems to handle new equipment, such as so-called "blade" servers. These computers require less space, but consume more energy. Greenpeace International, the environmental advocacy group, has long criticised the increased use of coal, gas and nuclear energy to power data centres. Many of the new facilities are being used for cloud-computing applications. Yau Yeung, Greenpeace's local "Clean Our Cloud" campaigner, said in a report by Computerworld Hong Kong that the government had no metrics for assessing the environmental impact of energy used by data centres. A Greenpeace report found that Hong Kong's current power grid mix is 54 per cent by coal, 23 per cent by nuclear energy, and 23 per cent by natural gas. It also estimated that electricity generation accounted for 67 per cent of local greenhouse gas emissions. However, Poon said CLP Power continued to explore opportunities to increase so-called renewable energy in its power-generation mix. "For example, we are conducting a feasibility study on developing a 200MW offshore wind farm in Hong Kong. We also have the city's first commercial-scale standalone solar project on Town Island supplying electricity to the inhabitants there."

Boutique film festivals offer relief from the mainstream - Small festivals ensure art-house films are accessible to cinemagoers in the face of mainstream blockbusters, video on demand and digital downloads. Seven years as a programmer with the Hong Kong International Film Festival (HKIFF) has taught Bede Cheng Tze-wang a thing or two about the sometimes harsh realities of the modern film world. Up against the marketing might of the globe's largest studios, smaller films are often lost in the shadows, unable to find a distributor or a cinema owner willing to take the risk that out there - somewhere - is an audience who believe bigger isn't always better. There's also the spectre of video on demand, DVDs and, more and more, downloads to compete with as film lovers turn away from what's offered in cinemas to watch art-house films in the comfort of their own homes. "The space for art-house is getting smaller and smaller in Hong Kong, sadly," says Cheng. "Theatres are very expensive pieces of real estate and so their owners have to squeeze in as many screenings of the big, popular films as they can. France is an exception, because its art-house industry is supported by the government and cinema owners, but not many countries can say the same." Cheng believes the key to competing with the mainstream is diversity, and that's just what lies in store for Hong Kong filmgoers in the coming months as a series of small-scale festivals look to expand the city's cinematic landscape. The demise of Wan Chai's Imperial Cinema and Cine Art in 2004 and 2006, respectively - both victims of rising rents and the apparently irresistible lure of flash new multiplexes - left Broadway Cinematheque in Yau Ma Tei as the lone venue in town with a predominant commitment to art-house films. But a string of small festivals has sprung up to partly fill the gap, in many cases supported by the likes of the Hong Kong Arts Centre, canny programmers with the city's major cinema chains and the HKIFF, which has in the past few years declared its desire to ensure art-house films are given an airing throughout the year. The first Cine Italiano! - Italian Film Week (September 21-26) is an example of this: it's a joint production by the Italian Consulate, the HKIFF and the Broadway Circuit that will bring eight contemporary Italian titles to town. Included are the Andrea Segre-directed Shun Li and the Poet, which stars mainland auteur Jia Zhangke's partner and collaborator, Zhao Tao, and saw her named best actress at the 2012 David di Donatello Awards, the highest honour in Italian cinema. "The Italian Consulate approached us due to our track record," Cheng says. "There have been many exciting films coming out of Italy in the past few years, but they usually don't get a lot of distribution here. They gave us a pool of films to choose from and we picked the newer and better ones. "A lot of Italian films are made for the domestic market and they don't usually travel too much - not even to festivals - so this is a good opportunity to see some things that we have missed out on in Hong Kong. That's what film festivals are all about." Derek Lui was thinking the same thing while he was sitting in a packed cinema in West Hollywood earlier this year enjoying a screening of David Gelb's documentary Jiro Dreams of Sushi. As the UA Cinema Circuit's film programming manager, Lui helped bring the CineHub concept to town and was looking to extend its reach. "Through CineHub we have been working with different distributors and collaborators to bring in niche films," he says. "We want to give breathing space to these kinds of film. The whole industry faces problems like competing with downloads but we think when it comes to art-house films, people look for the experience of seeing it on a big screen. "The impact is different and that's what people want - the big-screen experience." Jiro Dreams of Sushi - which has become a festival favourite and was screened at the HKIFF this year - set Lui thinking about the films Hongkongers might like to see but rarely got the chance. And the end result is the Culinary Film Festival (October 6-28), which will screen four films with foodie-friendly themes including El Bulli: Cooking in Progress, which takes a look inside the most acclaimed kitchen in the world, now defunct. "You have to find an audience for art-house films and look for productions that people in Hong Kong might like," says Lui. "The whole world knows about our fascination with food and the films we have chosen look at cooking as an art - we think this has great appeal here." Meanwhile, the Hong Kong Jewish Film Festival (November 10-18) is preparing for its 13th edition and will again show what can be achieved with a combination of clever programming and pure commitment. Howard Elias, who founded the festival, firmly believes there's an audience out there for small art-house films. "I think Hong Kong audiences are becoming more receptive as more kids are returning to Hong Kong after studying overseas, where they are exposed to such films," says Elias. "I was recently invited to present an Israeli film to a group of cinephiles who meet once a week to watch foreign films. Most of the audience were young Hong Kong Chinese who, I would guess by their level of English, had studied overseas. They loved the film." Elias may be running a smaller-scale festival, but its success has brought with it some pretty big ambitions - and an insight into why sometimes smaller can be better for an audience. "I would like to think that we're the most important film festival in Hong Kong, but we're not there … yet," he says. "We certainly are the friendliest and the best organised, according to surveys we do every year. We also give our audience total access to our guests. I've been to other festivals both here and overseas where the guests are whisked in and whisked out. If you're not an A-lister, good luck getting any face time with any of these people." That access adds an intimacy the larger festivals are unable to provide, says Elias. "Our guests are told to be completely available to our audience - for one-on-one discussions or even just a cup of coffee. They love it and our audience does too. I would like to think that we're raising the bar in Hong Kong on how a festival should be run." Other festivals coming up over the next few months include Kino/12 (October 25-November 11), which will again showcase German cinema and has Berlin Silver Bear winner Andreas Dresen ( Grill Point) as its director in focus. The Hong Kong Asian Film Festival (October 26-November 11) is still finalising its line-up, as are the annual French Cinepanorama and the Hong Kong Lesbian and Gay Film Festival (both November). While the needs of the Hong Kong audience are the primary concern of these events, it is interesting to learn that those people who make the films get just as excited when they do come around. Ivan Cotroneo, whose Kryptonite! is screening as part of the Italian programme this month, is one such example. "There's no bigger and sweeter dream for someone who tells stories than having an audience who connects with you," he says. "I'm on the other side of the world, but I'm deeply convinced that we, as human beings, are not islands. We respond to each other, and things that make us laugh, move or cry are the same all around the world. So I hope the screening of my movie will prove once again that we are all part of the same world, both physically and emotionally. And that's what these wonderful occasions are for."

National education supporters marched from Wan Chai to the government headquarters at Tamar yesterday. Holding banners and chanting slogans, the group said they backed attempts to introduce the subject by Chief Executive Leung Chun- ying and Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor. Economics professor at Hong Kong University of Science and Technology, Francis Lui Ting-ming, said a failure to understand the country better may cause locals to lose out to global competition. "The subject can be separated from brainwashing, which will depend on how it will be taught," Lui told a radio program yesterday.

Slow weekend for HK property after cooling measures introduced - Slow weekend for sellers as people wait for effects of cooling measures. Home seekers are becoming more cautious as they digest the implications of the measures introduced by the city's central bank on Friday to cool the overheating housing market, according to some estate agents. Over the weekend, five estates tracked by Midland Realty recorded zero transactions in the secondary residential market. For Amoy Gardens in Kowloon Bay, Tsuen Wan Centre in Tsuen Wan and Sunshine City in Ma On Shan it was the second consecutive week when no sales were registered. In Taikoo Shing - the city's most actively traded estate - Midland Realty recorded three deals over the weekend, compared to two a week ago. "The number of flat-view bookings have declined 10 per cent," said Herman Po, sales manager at the Taikoo Shing branch of the Hong Kong Property Services Agency. He said buying interest was being deterred by the Hong Kong Monetary Authority's announcement making second mortgages harder to get in a move to combat the US Federal Reserve's third round of quantitative easing measures. Under the new rules, house buyers who have more than one mortgage can borrow up to only 40 per cent of their monthly income, down from the typical 50 per cent. Kenneth Chiu, assistant sales manager for Centaline Property Agency's Taikoo Shing branch said it had concluded one deal as of 7pm yesterday, compared to three on Saturday. "But transaction prices have shown no sign of falling because owners are standing firm on their asking prices," he said. A 675 square foot flat with a 400 sq ft rooftop at Taikoo Shing changed hands for HK$8.3 million yesterday. Lawrence Ng, sales director at Midland Realty's Mei Foo Sun Chuen office, said one investor, who holds about eight flats on the estate, sold one of his flats at lower than the original asking price. He agreed to sell a 1,144 sq ft flat for HK$7.65 million, or HK$6,688 per sq ft, for about 4 per cent below his HK$7.98 million asking price, said Ng, adding that the transaction price was in line with the market level. He expected to conclude eight deals over the weekend, the same as the previous week. Henderson Land Development's joint venture development, Double Cove, in Ma On Shan sold about 18 new flats yesterday while about 60 flats at Century Gateway, built by Sun Hung Kai Properties, in Tuen Mun have been snapped up since 107 went on sale on Wednesday.

MTR fare mechanism under review - The government on Monday launched a review of the much-criticised fare adjustment mechanism for the MTR Corporation. A spokesman said on Monday it had noted public views that MTR’s profit level, service performance, public affordability and acceptability should also be taken into consideration in the rail operators’ annual fare reviews. In 2007, the government decided to use the composite consumer price index and transport workers’ wages as major factors in determining if the MTR Corporation should be allowed a fare rise. However, Hong Kong then entered an inflationary period and the formula has since been blamed for allowing the railway operator to raise fares for three years. The spokesman said the government aimed to complete the review by early next year. A public consultation was launched on Monday to garner views on the existing fare formula. It will continue until October 31. The consultation paper on the review can be viewed at the websites of the Transport and Housing Bureau (www.thb.gov.hk) and the Transport Department www.td.gov.hk 

Man who burned flags is arrested at anti-Japan protests in Hong Kong - A man was arrested yesterday as hundreds of Hong Kong demonstrators marched on the Japanese consulate, protesting against Tokyo's assertion of control over the disputed Diaoyu Islands in the East China Sea. Organisers said 5,000 people took part in the rally that began in Victoria Park, while police put the figure at 850. Aside from Hongkongers, the marchers also included visitors from the mainland and Macau. The protest remained largely peaceful, but the man was arrested after he set fire to a Japanese and an American flag at Hysan Place in Causeway Bay. Protesters chanted slogans saying that the Mukden Incident, which Japan used as a pretext to invade China in 1931, should not be forgotten. The anniversary of the incident is on Tuesday. Japanese military flags and a letter to Japanese prime minister Yoshihiko Noda were burnt when the marchers arrived at the consulate at Exchange Square. The crowd remained calm as protesters passed the Japanese Sogo department store in Causeway Bay, only chanting slogans calling on people to boycott Japanese goods. A branch of the popular Japanese fast food chain Yoshinoya on Hennessy Road closed its doors. Meanwhile, activists said they planned to sail to the disputed Diaoyu Islands tomorrow after an earlier voyage last month when they were arrested by the Japanese authorities and returned to Hong Kong. The activists said they would visit the Marine Department this morning to demand that it check their boat, the Kai Fung No 2, and allow it to sail again. Its licence had been suspended for safety issues after its return from the Diaoyus, which Japan calls the Senkakus. But Tsang Kin-shing, a member of the Action Committee for Defending the Diaoyu Islands, said the damaged sections had been fixed. Tsang said he and boat owner Lo Chau also planned to travel to Beijing to lodge a complaint in the capital's court that the arrest of the protesters who landed on the islands last month was an act of "kidnapping" by the Japanese authorities.

Macau bribery trial of Hong Kong tycoons postponed - The bribery trial involving Hong Kong tycoons Joseph Lau Luen-hung and Steven Lo Kit-sing was adjourned to next year, a Macau court heard on Monday. Lau and Lo were charged with offering a HK$20 million bribe to Macau’s former public works chief Ao Man-long. Ao was sentenced to 29 years in May. Clerks at the Macau Court of First Instance announced that presiding Judge Alice Costa was sick and two other judges had been assigned to different hearings. “This case is relatively complicated. It is impossible to handle it today,” a clerk said. The case was adjourned to January 7. Lo went to the court with his wife at 8.30am on Monday protected by some guards. Ao was also escorted to the court. Valente, who represented Lo, said Lau was sick and could not appear. He said the court should inform people in advance when a case is adjourned. “It is very bad for the image of justice in Macau and it bothers people very much,” he said.

 China*:  Sept 19 2012

Vice-President Xi Jinping will meet US Defence Secretary Leon Panetta in Beijing tomorrow - a session announced just hours after the Pentagon chief risked angering China with a new deal to expand Japan's missile defences. The meeting, confirmed by US officials, will be president-in-waiting Xi's first with a foreign leader since he dropped from view for two weeks amid intense speculation about his health and the leadership transition. Xi missed four scheduled meetings with foreign officials before reappearing at an event on Saturday. Within hours of boarding his plane last night, Panetta risked deepening China's fears over the US military "pivot" back to the region with the provision of a second radar installation for Japan. While Panetta's staff repeatedly insisted the move was geared to preventing North Korean missiles reaching Japan or the US, the news was already alarming Chinese military analysts and scholars. Xu Guangyu , a senior researcher at the China Arms Control and Disarmament Association in Beijing, said Panetta had used "deceitful words". He said: "They [will] target China as the missile defence system is able to provide 360 degrees of coverage. "Russia opposed the US plan to set up a defence system in eastern Europe, which Washington claimed would only target Iran … but the location of the system is so close to Moscow." Pentagon officials said the additional radar - to be based at an unconfirmed location in southern Japan - would free up US naval ships equipped with Aegis systems, which are crucial to its evolving ballistic missile defences, to cover wider areas. The US has been discreetly working to extend the system to better cover its allies South Korea and Australia - something being closely monitored in Beijing. A study produced by the Congressional Research Service last month noted that the US keeps five Aegis ships at Yokosuka in Japan as part of 16 in the Pacific. They are state-of-the-art vessels that could soon spread more broadly across East Asia. Japan also has its own such Aegis ships. Shi Yinhong , an expert in US affairs at Renmin University, said the meeting between Xi and Panetta would be crucial. "This is the first meeting between Xi and a foreign leader in two weeks and this implies that Xi still pays high regard to the Sino-US relationship," he said. Shi said Xi and Panetta would also inevitably discuss the ongoing territorial disputes between Beijing and Tokyo over the East China Sea. A senior Pentagon official said Panetta wanted to "start looking forward to maintaining ties with what could be future leaders of China". The official added: "This … reflects a continuation of a dialogue that Secretary Panetta began when he hosted the vice-president at the Pentagon earlier this year."

China's Ministry of National Defense confirmed Monday that the Chinese and US navies conducted their first joint anti-piracy drill in the Gulf of Aden on the same day. The drill, conducted by the Chinese missile frigate Yiyang and the US guided missile destroyer USS Winston S. Churchill, lasted for more than five hours, the ministry said. The drill was praised by the Chinese side as being conducive to increasing mutual understanding and trust between the two navies and deepening bilateral cooperation in non-conventional security fields.

Fishermen from Fujian and Zhejiang provinces may resume their activities near the disputed Diaoyu Islands today after a three-month seasonal moratorium, China National Radio said. More than 1,000 fishing boats go to the islands, disputed with Japan, every year.

Japanese firms shut China plants amid growing tensions - Major Japanese firms have temporarily shut factories and offices in China after angry protests flared across the country, the result of a territorial dispute that has triggered one of China’s worst outbreaks of anti-Japan sentiment in decades. The row between Japan and China, over a group of uninhabited islets in the East China Sea, has led to violent attacks on well-known Japanese businesses such as car-makers Toyota and Honda, forcing frightened expatriates into hiding and sending relations between Asia’s two biggest economies into crisis. Ratcheting up tensions further on Monday, Chinese state media warned Japan it could suffer another “lost decade” if trade ties soured. Japan counted China as its top trade partner last year, with total two-way trade of more than US$340 billion. “I’m not going out today and I’ve asked my Chinese boyfriend to be with me all day tomorrow,” said Sayo Morimoto, a 29-year-old Japanese graduate student at a university in Shenzhen. Protests broke out across dozens of Chinese cities at the weekend, some violent, in response to the Japanese government’s decision last week to buy some of the disputed islands from a private Japanese owner. The move incensed Beijing. The protests focused mainly on Japanese diplomatic missions but also targeted shops, restaurants and car dealerships in at least five cities. Toyota and Honda reported arson attacks had badly damaged their stores in Qingdao. Japanese electronics group Panasonic said one of its plants had been sabotaged by Chinese workers and would remain closed through Tuesday – a memorial day in China when it marks the anniversary of Japan’s 1931 occupation of parts of mainland China. Tokyo has warned its citizens about large-scale protests in China on Tuesday. Many Japanese schools across China, including in Beijing and Shanghai, have cancelled classes this week. Japanese Prime Minister Yoshihiko Noda, who met visiting US Defence Secretary Leon Panetta on Monday, urged Beijing to ensure Japan’s people and property were protected. Panetta said the United State would stand by its security treaty obligations to Japan, but not take sides in the row, and urged both sides to exercise calm and restraint. “It is in everybody’s interest ... for Japan and China to maintain good relations and to find a way to avoid further escalation,” he told reporters In Tokyo. The dispute over the islands – called the Senkaku by Japan and the Diaoyu by China – intensified last week when China sent six surveillance ships to the area, which contains potentially large gas reserves, in response to Japan’s purchase. The overseas edition of the People’s Daily, the main newspaper of the Chinese Communist Party, warned that Beijing could resort to economic retaliation if the dispute festers. “How could be it be that Japan wants another lost decade, and could even be prepared to go back by two decades,” said a front-page editorial in the newspaper. China “has always been extremely cautious about playing the economic card”, it said. “But in struggles concerning territorial sovereignty, if Japan continues its provocations, then China will take up the battle,” the paper said. Japanese Foreign Minister Koichiro Gemba said on Monday, after talks with Panetta, that Tokyo and Washington agreed the disputed islets were covered by the Japan-US security treaty. “I did not bring up the topic today, but it is mutually understood between Japan and the United States that the islands are covered by the treaty,” he said after meeting US Defense Secretary Leon Panetta in Tokyo. Japanese electronics firm Canon will stop production at three of its four Chinese factories on Monday and Tuesday, citing concerns over employees’ safety, Japanese media reports said, while All Nippon Airway reported a rise in cancellations on Japan-bound flights from China. China is Japan’s biggest trade partner and Japan is China’s third largest. Any harm to business and investment ties would be bad for both economies at a time when China faces a slowdown. Qingdao police announced on the internet on Monday they had arrested a number of people suspected of “disrupting social order” during the protests, apparently referring to the attacks on Japanese-operated factories and shops there. In Shanghai, home to China’s biggest Japanese expatriate population of 56,000, one expat said his family as well as other Japanese customers had been chased out of a Japanese restaurant on Sunday by protesters near the Japanese consulate. Guangzhou police said on Monday, on an official microblog, that they had detained 11 people for smashing up a Japanese-brand car, shop windows and billboards on Sunday.

China launches WTO challenge over US anti-subsidy tariffs - China filed a complaint at the World Trade Organisation on Monday to challenge a new US law on “countervailing duties”, or tariffs intended to combat export-promoting subsidies. The complaint, filed hours after the United States said it would launch a wide-ranging trade complaint against China’s support for car exports, potentially affects close to 30 products that have previously been targeted by US duties, a trade official familiar with the case said. He said the complaint was aimed at a US law passed in March which allowed the United States to apply countervailing measures to Chinese exports retrospectively. Commerce Ministry spokesman Shen Danyang said China hoped the United States could “correct its mistaken policy and appropriately resolve China’s concerns”. “China has, under various circumstances, repeatedly reiterated that it resolutely opposes the abuse of trade remedy regulations, opposes trade protectionism, and will staunchly exercise its WTO-member rights to protect the legal rights of its domestic industry,” Shen said. In a brief statement on the initial filing by China, the WTO said the products included steel, tyres, magnets, chemicals, kitchen appliances, wood flooring and wind towers. China will file a full complaint with more details in the next few days. Under WTO rules, China’s filing of the complaint has set the clock ticking on a 60-day period during which the United States can try to settle the dispute in bilateral talks. After that, China could ask the WTO to adjudicate.

Hong Kong*:  Sept 18 2012 Share

First openly gay legislator Raymond Chan helps pluralistic society - Hong Kong does not seem to be at the forefront as far as gay rights are concerned. Despite efforts to promote equal opportunities for all regardless of sex, race, age, religion and political conviction, the issue of sexual orientation remains a taboo for many in our society. Although the level of tolerance has, thankfully, increased over the years, gays and lesbians are still expected to keep a low profile in public. It is, therefore, a welcome change for newly elected lawmaker Raymond Chan Chi-chuen to openly declare he is gay after a successful maiden bid in New Territories East. The political novice of the radical People Power party said he had not attempted to hide his sexual orientation during the campaign, though he had not wanted to use what he called a "private matter" for publicity. This is understandable, given that our society remains largely conservative. Whether a prior acknowledgement by Chan of his sexual preference would have helped or undermined canvassing is no longer meaningful. He will be put to the test if he seeks re-election four years later. But his readiness to come out of the closet is commendable. What matters should be his performance in Legco rather than his sexual orientation. Homosexuals have long been accepted in politics and public office overseas. The appointment of 70-year-old lesbian Johanna Sigurdardottir as Iceland's prime minister in 2009 hardly stirred any controversy. Today, there are more gay ministers, mayors and lawmakers in Britain, France and Germany than there used to be. Chan's becoming the first self-acknowledged gay politician does not necessarily boost public recognition of gay rights. But a more positive profile for homosexuals in the public domain certainly helps improve perceptions. Chan has vowed to fight for a legal amendment to allow gay marriage. There is no reason why the issues should not be put to an open debate. This is what a diverse and pluralistic society should embrace.

Home prices remain stable after HKMA's cooling measure - Property agents see no change in sales volume, and expect business to pick up again soon. Property sales remained steady yesterday after Hong Kong's central bank clamped down on second mortgages to combat the US Federal Reserve's third round of quantitative easing measures (QE3) and major developer Sun Hung Kai Properties cut the prices in its new Tuen Mun project. Property agents said the sales of second homes were stable compared with a week ago. "Only two flats at Taikoo Shing were sold yesterday, the same as a week ago. And there was no increase in visitors," said Centaline Property director Patrick Tsang. "Property markets usually go quiet in the first few days after the government releases new housing rules. But the sales will pick up soon after the home seekers have digested the news." On Friday, the Hong Kong Monetary Authority announced that mortgage repayments of borrowers with multiple loans cannot exceed 40 per cent of their monthly income, down from 50 per cent. Meanwhile, in the new-home market, Sun Hung Kai Properties cut its Century Gateway flat prices by at least 20 per cent. The average price of the second batch of 58 flats in Tuen Mun was HK$8,148 per square foot. For example, a 923 sq ft flat released for sale yesterday was going for HK$6.92 million, 22.6 per cent less than the HK$9.51million price tag of a 982 sq ft flat on the same floor of the same block last week. Sun Hung Kai Properties deputy managing director Victor Lui Ting denied that prices had been reduced and said the cost difference was because of the appliances in the flats. But property agents said only about 60 flats had sold since the project was launched on Wednesday because prices were too aggressive. Henderson Land and New World Development yesterday also released a new batch of 100 flats for sale at Double Cove in Ma On Shan at an average price of HK$8,618 per square foot, after the developers sold about 250 flats on Friday. Secretary for Transport and Housing Anthony Cheung Bing-leung yesterday warned that QE3 would increase the risk of a housing bubble in Hong Kong. But he added: "The government is ready to take action to stabilise the market if prices fluctuate a lot."

Hong Kong protesters join anti-Japan chorus - Scores of protesters on Sunday afternoon participated in a march to the Japanese consulate to protest Tokyo’s assertion of control over the disputed Diaoyu Islands. Organiser said 5,000 marched from Victoria Park in Causeway Bay to the consulate at Exchange Square in Central. Police put the figure at 850. Marchers, which included locals and mainland and Macau visitors, demanded that the Japanese government stop its claim of sovereignty over the islands in the East China Sea, which China calls Diaoyu and Tokyo calls Senkaku. On Tuesday, Japan announced it would buy the island chain. Anti-Japan protests have broken out in cities across the mainland, including in Beijing, Shenzhen, Shanghai and Qingdao. Protesters in Hong Kong also chanted slogans, saying the Mukden Incident, which Japan used as a pretext to invade China in 1931, should not be forgotten. The incident’s anniversary is on Tuesday. They burned Japanese military flags and a letter to Japanese Prime Minister Yoshihiko Noda outside the consulate. Two Japanese flags with a cross on them were dragged on the ground in the protest. “Japanese flags are used to sweep the floor,” said Tsang Kin-shing, member of the Action Committee for Defending the Diaoyu Islands. A man lighted and waved a flag that melded the Japanese and American emblems as the crowd reached Hysan Place. He was arrested by the police for disorder in a public place soon after. The crowd remained calm when they passed by Japanese department store Sogo, only chanting slogans “boycott Japanese goods”. A branch of the popular Japanese fast food shop Yoshinoya on Hennessy Road blocked its windows for protection, but stayed open for business. A shopkeeper said she was told by police that protesters could cause problems. A visitor from Xian said she took part because she wanted to help put the pressure on Japan. “Many of my friends joined the protest in Xian. And I feel the need to take it to the street even though I am in Hong Kong now,” she said. “People across China have to unite in getting Japan out of the Diaoyu Islands.”

 China*:  Sept 18 2012

China's private companies set to play a bigger role in overseas deals - Policy changes seen leading to less state domination of foreign deals as 'going out' strategy enters the next phase. China's aggressive overseas expansion, hitherto state-dominated, is increasingly being driven by the private sector and the market, spurred by recent changes to government policies. "For the past 30 years, China's 'going-out' was government-directed. Now the government's policy of encouraging private companies to go out will harmonise China's growth with the world," said Chen Feng, chairman of HNA Group, China's fourth-largest airline operator. Chen was speaking at the recent China Overseas Investment Summit in Hong Kong. State-owned enterprises (SOEs) accounted for 98 per cent of the mainland's overseas deals in the first quarter, with most of the deals focused on resources and energy, according to A Capital, a Sino-European venture capital firm. And in the first seven months this year, total non-financial overseas investments soared 53 per cent to US$42.2 billion, according to the National Development and Reform Commission. Last year the mainland's overseas investment grew 8.5 per cent to US$74.65 billion, of which non-financial overseas investment rose 14 per cent to US$65.58 billion, according to official mainland data. At the end of the year, there were 18,000 mainland firms in 177 countries with a cumulative investment of US$424.78 billion and assets totalling US$2 trillion. "Chinese private companies, due to their special advantage of being flexible and ability to break into markets, are gradually becoming a major force in China's going out strategy," said NDRC vice-chairman Zhang Xiaoqiang. In June the NDRC and other government bodies published a set of policies to encourage mainland private companies to invest overseas. "This is to give an important role to Chinese private companies in overseas investments and drive the rapid growth of overseas private Chinese investment," said Zhang. The policies were aimed at encouraging more mainland private companies to set up offices in Hong Kong to conduct overseas investment, he added. The measures included financial support and insurance for private companies investing overseas, simplifying approval procedures, and making regulations more favourable for private overseas investments. Private firms would be encouraged to invest in infrastructure, oil, gas, and even military industries overseas, which are currently dominated by SOEs. "China needs to ask whether its current overseas investment strategy is consistent with its future role on the world stage. Overseas investment should shift from state-owned enterprises to private enterprises," said Liao Shuping and Zhang Yongsheng of the Development Research Centre of the State Council, in a study published in The Australian newspaper. In their study the writers said the dominance of state-owned enterprises in China's global investment meant private mainland companies were perceived to collude with the central government. Having more private mainland companies invest abroad was a way to overcome trade conflicts and protectionism that dog many SOEs, Ni Xiangyu, director of Tianjin Binhai Hi-tech Industrial Development Area, said at the Hong Kong summit late last month. Private firms are a good platform for forging informal people-to-people exchanges, which lubricates the success of overseas deals, Ni said. For example, many mainland private companies have successfully acquired vineyards in Europe and the US, because they took the time to create rapport with their foreign counterparts, Ni added. In 2011, 87 per cent of mainland companies involved in outbound mergers and acquisitions were listed, according to data from Capital IQ, a provider of financial information. In comparison, in 2007, almost half the Chinese companies involved in outbound deals were not listed. Private mainland firms such as HNA, a conglomerate headquartered in Hainan that owns Hainan Airlines, are aggressively preparing for overseas acquisitions. "During a global crisis, when funds retreat, there are opportunities for overseas mergers and acquisitions," said Chen, who is also a member of the Chinese People's Political Consultative Conference National Committee. Last December, HNA and Hong Kong-based Bravia Capital jointly acquired US conglomerate General Electric's GE SeaCo, the world's fifth-largest container leasing firm, for US$1.05 billion, according to its website. HNA also acquired two Turkish companies last year, said Chen. Katherine Tsang King-suen, greater China chairwoman of Standard Chartered, said the process of "going out" did not always run smoothly, and she cited the example of Chinese television maker TCL Multimedia Technology Holdings, which suffered a HK$1.52 billion net loss in the first nine months of 2006 due to its television manufacturing operations in Europe. "Investing in Africa is full of complexity and challenges," added Tsang, who is the sister of former Hong Kong chief executive Donald Tsang Yam-kuen. Some mainland companies encountered problems even when investing in developed countries.

US luxury retailers go online to tap Chinese market - Retailers target growing internet users in the most populous market by setting up web shops. As Neiman Marcus Group prepares to start selling its wares in China, the United States luxury retailer is not opening stores. It is setting up shop on the web. Neiman Marcus, Macy's and Milly, the women's clothier, are all tiptoeing into China - striking partnerships with local web entrepreneurs because opening stores there is expensive and complicated. The moves coincide with slowing economic growth in China that has prompted shoppers to pull back. Still, Neiman Marcus was making a long-term bet on the world's most populous consumer market, chief executive Karen Katz said. "We believe the Chinese economy, like every economy, is going to have ups and downs," Katz said. "We know that long term, the potential of the luxury consumer is tremendous. There is still quite a big opportunity there." Even with the slowdown, online sales would triple to more than US$360 billion by 2015, Boston Consulting Group said. The number of internet users would grow to 700 million from 500 million, it said. China's luxury market would grow by as much as 22 per cent this year, by far the fastest rate of any region, according to Bain & Co, also a consulting company. The deals with Chinese companies mean Macy's and Neiman Marcus can learn more about Chinese shoppers' buying habits before deciding whether and how to scale up. The strategy is also cost-effective. Macy's is spending about US$15 million on its China web venture; by contrast it is lavishing US$400 million on a renovation of its New York flagship store. "It's a very clever way of dipping their toe in the water," said Robert Burke, who runs a consulting firm. "What's driving it is the sheer numbers. The number of consumers and their appetite to spend are going to be highly attractive to retailers and brands." In its first international foray, Neiman Marcus, owned by Warburg Pincus and TPG Capital, is developing a new namesake e-commerce website with a Hong Kong partner. It has invested US$28 million in the closely held Chinese company. Macy's, the second-largest US department store chain, will begin selling an assortment of its moderately priced INC apparel on www.omei.com next spring. It made a US$15 million equity investment in the parent VIPStore. Shangpin.com a website that says it sells authorised, current-season international designer and contemporary goods at full price, debuted this month. Milly and Tracy Reese, whose fashions are worn by Michelle Obama, are among 80 brands selling their goods through the site, whose Chinese name means "fashion" and "quality". Sensing opportunity, private-equity firms are investing in Chinese e-commerce. Shangpin has attracted US$60 million in capital from international investors including Walt Disney-backed Steamboat Ventures. Warburg Pincus and KPCB China invested US$120 million in fashion e-tailer www.xiu.com last year. These web-only ventures face several barriers. Brand recognition remained low in China, while shoppers preferred to see the actual products and were leery of receiving counterfeit goods, Burke said. They also were reluctant to spend large sums online, said Claire Chung, a vice-president for global business development for Shangpin. The country's average online transaction size was the equivalent of US$31, she said. "We are going to have a lot of work to do to educate the consumer about Neiman Marcus," Katz said. "What is important is this message of history, heritage and authenticity because they don't know our brand." To that end, the Neiman Marcus site will work to be a kind of personal shopping guide. Milly chief executive Andy Oshrin said he had been reluctant to enter the Chinese market before he found the right partner in Shangpin. The e-commerce approach was a better alternative to building the Milly brand in China himself with expensive stores and marketing, Oshrin said. Online sales of Milly's colourful, print dresses already tended to outperform those in stores, he said. "It was a way to enter China strategically," he said. China has its own tastes and quirks. Shoppers preferred washable clothing because dry cleaning was less available, said Winnie Foon, a Shangpin vice-president for global merchandising. Www.neimanmarcus.cn would offer full-price, current-season fashions specifically pitched to the Chinese luxury customer by a Shanghai-based chief merchant, Katz said.

Vice-President Xi Jinping makes first public appearance for two weeks - Vice-president, presumed to be leader in waiting, returns to spotlight after two-week absence looking fit and happy at university in Beijing. Vice-President Xi Jinping re-emerged onto the public stage in Beijing yesterday after a two-week absence that fuelled rumours he was ill. Xi, the nation's presumed next leader, arrived at China Agricultural University for a national day popularising science. He delivered a 10-minute speech, twice as long as scheduled, standing outside in the sun underneath a banner showing the past four generations of communist leaders. "The vice-president looked in great health," said a professor in the university's electrical engineering department, who accompanied Xi for most of his visit. "It was hot outside and he didn't even sweat that much." State television showed Xi smiling and walking without any need of support. He was shown engaged in conversation with teachers and students. Xinhua also issued reports of his visit with pictures. Professor Zhang Ming, a political scientist with Renmin University, said Xi's return would put an end to the rumours. "He's back and everything is fine," Zhang said. Xi disappeared from public view on September 1 after delivering a speech at the Party School. His failure to meet visiting US Secretary of State Hillary Rodham Clinton and Singaporean Prime Minister Lee Hsien Loong in the following days prompted questions at home and overseas about the 59-year-old's health - and whether he would take over at the party's 18th national congress, likely to be held next month. With no official explanation for Xi's absence, rumours began to circulate that he was resting after injuring his back, or had fallen seriously ill. The silence was broken on Wednesday when media including China News Service reported that Xi had expressed condolences to the family of a party veteran who died recently. Teachers and students at the university who saw Xi yesterday said he appeared to be in robust health. The vice-president arrived on the campus at about 9.30am and stayed outside for about 40 minutes. His speech was about agriculture technology and food safety. Xi shook hands with a dozen elementary school pupils and encouraged them to study hard, the teachers said. Beijing-based political analyst Chen Ziming said the party was sticking to the outmoded practice of treating the health of state leaders as secret. But he said that Xi's reappearance at least showed the party congress would get "under way as expected". Also attending the university function was Ling Jihua, formerly the closest aide of President Hu Jintao. It was Ling's first public appearance since losing his position this month as director of the Central Committee's General Office. He now heads the party's United Front Work Department. Unlike other principal officials, Ling was not shown on state television's main newscast. Li Daoliang, a professor, said Ling stopped at a display showing advances in aquaculture technology. He was amazed to know that Chinese fishermen could use smartphone applications to assist them, the professor said.

Joining work of Huanggang Yangtze River bridge completed - The joining work of the Huanggang Yangtze River bridge, the 6th road-rail bridge over the river, is finished on Sunday in Huanggang, Hubei Province.

Shadow cast over Japan tourism - The recent "purchase" of the Diaoyu Islands by the Japanese government has cast a shadow over the nation's recovering tourism industry. According to China's major travel agencies, many tourists are canceling trips to Japan following the incident. Japan's booth at the China Incentive, Business Travel and Meeting Exhibition in Beijing. Travel from China to Japan during the National Day Holiday has plummeted by more than 30 percent compared with the same period last year. China Comfort Travel Group Co Ltd, one of the leading Chinese travel agencies, announced that its 220 branches and 5,500 offices across the country have stopped organizing tours to Japan since Wednesday. "Almost all the tours to Japan after Sept 16 have been canceled," said Ding Qingyuan, general manager of Jiangsu China Travel Service's outbound tour center. As a result, China Comfort Travel Group terminated a contract to send 50,000 Chinese tourists to Japan, which was signed earlier this year to commemorate the 40th anniversary of the normalization of diplomatic relations between China and Japan. Gu Zhen, a representative of Nanjing Youhao International Travel Service, said that the number of tourists choosing Japan as a travel destination during the National Day Holiday has dropped by 30 to 50 percent compared with the same period last year. Most travel agencies in cities in Jiangsu province, such as Suzhou, Nantong and Jiangyin, have also suspended tours to Japan. "The travel agency has stopped advertising tours to Japan, and all the tourists canceling tours to Japan are allowed a full refund," said Li Meng, deputy general manager of China International Travel Service's outbound tour department. "The cancellation will bring huge financial loss to the travel agency," said Li. About 20 percent of tourists from Shanghai have also canceled their travel plans to Japan, according to major travel agencies in Shanghai. "We value the friendship between China and other countries, but we won't make any concession on issues concerning sovereignty and territorial integrity," said Yang Jun, a spokesman for the Shanghai government.

Newly appointed Japanese ambassador to China dies: Kyodo - Newly appointed Japanese ambassador to China dies in Tokyo on Sunday. Shinichi Nishimiya, 60, has been hospitalized after collapsing in Tokyo, Japanese authorities said Thursday, just two days after he was named to the post amid high tensions between the two countries.

Hong Kong*:  Sept 17 2012 Share

HK activists vow to set sail anew for Diaoyu isles - Advocacy group expects mainlanders to partake in visit poised for Tuesday despite safety-related suspension of vessel. Hong Kong activists have pledged to sail to the disputed Diaoyu Islands again as early as Tuesday, amid a police reminder that their vessel's licence is suspended for safety issues. The Action Committee for Defending the Diaoyu Islands is expected to be joined by several mainland activists. But a co-ordinator who tried to visit Hong Kong disappeared near Shenzhen's border on Thursday. The committee, which says it has about 50 members, is also mobilising a global anti-Japanese rally for tomorrow. Japan's consulate in Hong Kong has reminded its citizens to avoid the protests and to refrain from making radical comments. Committee member Tsang Kin-shing, also known as "The Bull", says they will inform the Foreign Ministry in Beijing for protection before setting sail on Tuesday at the earliest. Last month, they succeeded in docking at the Diaoyus, also known as the Senkaku Islands in Japan. This time, the group seeks to commemorate the Mukden Incident, which Japan used as a pretext to invade China in 1931. "Japan provoked 1.3 billion Chinese by buying [part of the islands on Tuesday]," Tsang said. "I believe Chinese people around the world are angry at Japan invading our lands." Police Commissioner Andy Tsang Wai-hung said the licence for Kai Fung No2, the activists' vessel, had been suspended. "It is the Marine Department's responsibility to ensure the safety of ships. The police also have the responsibility to support the department's enforcement action," Andy Tsang said, when asked if marine police would intercept the vessel when it sets sail again. "Bull" Tsang says the suspension on Tuesday was due to four "safety defects" the marine authorities cited, including a hole in the hull. The activists have fixed the problems and will invite the authorities to inspect the vessel again on Monday. Tsang says the activists will break through the police cordon if the authorities use any unreasonable excuse to stop them from sailing. The Marine Department said the vessel's owner should apply for the suspension to be lifted after the repairs were completed. Meanwhile, the People's Rights Union of China said its member Wu Chengfang, who was travelling to Hong Kong to discuss mainland activists' participation in the rally and subsequent voyage, went missing when she tried to visit the city on Thursday. Union chairman Liu Weiping said he feared she had been caught by security personnel. The Action Committee plans to mobilise 2,000 to 3,000 people to march from Victoria Park to Japan's consulate in Central tomorrow. Tsang, who vowed to sue Japan over his detention last month, also urged Chinese nationals elsewhere to march to their local Japanese embassy.

C.Y. Leung names his nominator as City University council chairman - Staff criticise the appointment of mainland adviser Herman Hu to head university council. Businessman and mainland adviser Herman Hu Shao-ming, a nominator of Leung Chun-ying for chief executive, was yesterday named the third City University council chairman in a year. His appointment, made by Leung who previously held the post for four years, was dismissed by staff as a political reward. Hu - the chairman of Ryoden Development and a Standing Committee member of the Chinese People's Political Consultative Conference of Shanghai - has been a member of the university council for eight years, the university said on its website. While acknowledging Hu's familiarity with the school's management, staff association chairman Dr John Tse Wing-ling called the appointment "CY Leung's reward for his friends". "Is society really that short of experts?" Tse asked. "Having been in the council for so many years, it will be hard for Hu to inject any fresh ideas." He also pointed to a "problematic" pay policy that Hu had helped initiate as head of the university's human resources council that had left staff salaries lagging behind inflation. Tse said he expected Hu to follow Leung's line, although the new chairman appeared willing to listen to others' views. Hu's term will run from October 1 to the end of 2014. Businessman Raymond Or Ching-fai has been acting chairman since June, after previous chairman David Sun Tak-kei, having succeeded Leung only three months earlier, was appointed Director of Audit. Education minister Eddie Ng Hak-kim and City University president Way Kuo welcomed the new appointment. Leung drew criticism from staff during his four years as chairman especially after his introduction of staff pay reforms. He was also accused of attempting to weaken the staff association's power. A staff questionnaire conducted before Leung's rise to Hong Kong leader showed he scored only less than 1 point on a scale of 10 in terms of chairmanship performance.

Seven co-operation deals signed as HK delegation visits Guangdong - Hong Kong officials agree to joint efforts at annual meeting in Guangdong. Seven agreements on co-operation in areas ranging from railways to software development were signed by Hong Kong and Guangdong officials yesterday, as Chief Executive Leung Chun-ying led a delegation to the province for the first time since he took office. Leung was accompanied to the 15th conference on Hong Kong-Guangdong collaboration in Guangzhou by Chief Secretary Carrie Lam Cheng Yuet-ngor and the ministers of development, housing, environment, labour and commerce. At a press conference with Guangdong's governor Zhu Xiaodan , Leung said he put a lot of emphasis on Hong Kong's partnership with the province. "We have drawn up a list of projects and set priorities for them. They will be looked after by special task forces in the coming year," Leung said. Before the conference began, Guangdong party secretary Wang Yang praised Leung as "the chief executive who knows Guangdong best". The seven agreements signed covered joint efforts in several areas, including a study by the MTR Corporation and Foshan authorities into a possible inter-city loop line between the cities of Guangzhou and Foshan ; removing trade barriers for professionals so they can practise in more places; joint weather forecasts; and an agreement on software development signed by Cyberport and a Guangdong software trade association. Zhu, meanwhile, said Guangdong and Hong Kong would jointly appeal to the central government to remove trade barriers for professionals, and the province should become a testing ground for this. "This will be our new starting point," Zhu said. Professionals from Hong Kong, such as architects and surveyors, have complained of obstacles to practising independently on the mainland despite being allowed to do so. They have to sit examinations and be affiliated to a mainland firm. On the inter-city rail link, the MTR said it would discuss with the Foshan government opportunities to invest, construct and operate the line between Guangzhou and Foshan, which would be connected to the Hong Kong-Shenzhen-Guangzhou high speed railway. The Hong Kong Observatory said the strengthening of technical exchanges would help it forecast severe weather and mitigate natural disasters.

63 more schools plan to raise fees - Parents of children at international and direct subsidy establishments face paying more after the ESF's 4 per cent increase is approved. More parents at international and direct subsidy schools face single-digit percentage rises in tuition fees this year if the Education Bureau approves their applications for higher charges. School managers say inflation has made it hard to maintain current fee levels. They cite greater expenses in offering remuneration packages, including benefits such as housing to retain quality foreign teachers. Parents of thousands of pupils at schools run by the English Schools Foundation, the largest English-language education provider in the city, will pay 4 per cent more on average from this year, after the bureau approved the increase. Now, a total of 63 international and DSS schools have applied to the bureau for fee adjustments, compared to 53 DSS schools that did not do so. The Hong Kong International School was one of those that felt a need to boost its income. Its chief advancement officer, Erik Dierks, said the management had gone to great lengths in slowing the pace of fee growth, but had run up against rising costs. "We have always wanted to keep [the rate increase] as low as possible. The reason we [still] do it is market driven," Dierks (pictured) said yesterday. "We need to retain the best faculty in the world, and the costs include housing for staff, which goes up with inflation." The school was seeking to add up to 4 per cent to its current charges, he said. The latest bureau figures show 36 international schools and 27 direct subsidy schools, including elite institutions with a strong focus in foreign-language training, had applied for fee increases for the 2012/13 academic year. Most of those DSS schools asked for single-digit rises, said Chan Wai-kai, external secretary of the Direct Subsidy Scheme Schools Council. Chan noted that under a new school management scheme, schools were barred from making high-risk investments and should cut fees if they accumulated a large surplus. The scheme was set up after some schools were found to have invested heavily in property and stocks. One of the DSS schools that notified the bureau it would not raise fees in 2012/13 was St Paul's Co-educational College Primary School. "Our financial situation has remained sound since the last fee increase three years ago," said Kim Tsoi, the school's director of community relations. He said a fee rise would be avoided when unnecessary. Most schools popular among expatriates raised fees by as much as 10 per cent over the past two years, the South China Morning Post found in a survey of international schools. The ESF followed its fee rises announced in April with a new debenture scheme on Wednesday that asked parents to pay a non-refundable HK$500,000 to reserve a place for their children in 2013 and beyond. The expatriate community has been complaining about the years of school fee increases that have made English-language education in Hong Kong less affordable. Observers say a lack of such school places, coupled with an influx of local and mainland children whose parents are seeking alternatives from the standard Hong Kong curriculum, have prompted schools to raise charges.

 China*:  Sept 17 2012

Huawei and ZTE deny US spying allegations - Executives from Chinese firms tell US lawmakers they operate independently. Executives of ZTE and Huawei Technologies, China's two largest phone-equipment makers, tried to dispel allegations by US lawmakers that their potential expansions may increase cyberattacks and spying. Instead, in what was described as the first appearance by Chinese executives at a congressional hearing, they heard accusations that they have not co-operated with an investigation or shown that they are independent from a government accused of stealing US intellectual property. After Thursday's hearing, one member of the House Intelligence Committee joined a colleague in urging law firm DLA Piper's Washington office to reconsider representing ZTE, citing "threats your client may pose to the national security of the United States." "We have been hindered by unsubstantiated, non-specific concerns that Huawei poses a security threat," Charles Ding, a corporate senior vice-president who testified for Huawei, said in his testimony. The exchanges showed the Chinese companies may face more restrictions on supplying the gear that powers networks used by US consumers as well as banks, utilities and technology companies shifting data around the country. The hearing also continued a pattern of tension between the US and China on a variety of economic matters. On Thursday in Washington, US Ambassador to China Gary Locke said the yuan needs to appreciate against the US dollar. Republican presidential candidate Mitt Romney has said he would label China a currency manipulator on his first day in office if elected. Huawei and ZTE, both based in Shenzhen, told lawmakers at the hearing the companies are not controlled by the Chinese government, which Mike McConnell, a former US director of national intelligence, has called the "the most prolific" state thief of US intellectual property. The companies have not provided full answers and supplied "very few" documents that relate to the committee's probe, committee chairman Mike Rogers, said during the hearing. "We need answers to very specific questions. And when they don't answer those, it just raises more suspicions," Rogers told reporters after the hearing. Huawei, which was banned from tendering for work on Australia's national broadband network, also urged Australia not to discriminate against foreign communications companies. Last year it was blocked from participating in Australia's US$38 billion broadband network. "We were disappointed. We were not given the reasons for the decision," Huawei Technologies Australia chairman John Lord told an Australian parliamentary intelligence committee yesterday.

Anti-Japanese protests erupt across China over islands row - Protests reported in fifty other Chinese cities. Thousands of Chinese besieged the Japanese embassy in Beijing on Saturday, hurling rocks, eggs and bottles with protests reported in other major cities in China amid growing tension between Asia’s two biggest economies over a group of disputed islands. Paramilitary police with shields and batons barricaded the embassy, holding back and occasionally fighting with slogan-chanting, flag-waving protesters who at times appeared to be trying to storm the building. “Return our islands! Japanese devils get out!” some shouted. One of them held up a sign reading: “For the respect of the motherland, we must go to war with Japan.” Protester Liu Gang, a migrant worker from the southern region of Guangxi, said: “We hate Japan. We’ve always hated Japan. Japan invaded China and killed a lot of Chinese. We will never forget.” As tension escalated, and reports emerged of other protests around the mainland, Japan said its foreign minister had cut short a visit to Australia and flown back to Tokyo. The long-standing territorial dispute escalated dramatically on Friday when China sent six surveillance ships to a group of uninhabited islets in the East China Sea, raising tension between the two countries to its highest level since 2010. China was responding to Japan’s decision on Tuesday to buy the islands, which Tokyo calls the Senkaku and Beijing calls the Diaoyu, from a private Japanese owner despite Chinese warnings against doing so. Sino-Japanese ties have long been plagued by China’s bitter memories of Japan’s military aggression in the 1930s and 1940s and present rivalry over resources and regional clout. Relations between the two countries, whose business and trade ties have blossomed in recent years, chilled in 2010, after Japan arrested a Chinese trawler captain whose boat collided with Japanese Coast Guard vessels near the islands. In Shanghai, streets around the Japanese consulate, in the western part of town, were cordoned off on Saturday. Hundreds of police let small groups of people in at a time to protest. Japanese media said big anti-Japan protests were also being held in the Chinese cities of Xian, Changsha, Nanjing and Suzhou, with some reports of violence as people attacked Japanese restaurants and businesses. Japan’s Kyodo news agency said that the demonstrations were the biggest in China since the two countries normalised diplomatic relations in 1972. Pictures on China’s popular Twitter-like Sina Weibo showed hundreds of protesters marching down a street in the southwestern city of Kunming with banners and Chinese flags. Users also reported protests in other, smaller cities. The government appeared to be making little attempt to censor posts and pictures about the demonstrations. There have been sporadic protests around China throughout the week, although those in Beijing had been small and largely peaceful.” The latest dispute flared up last month after Japan detained a group of Chinese activists who had landed on the islands. Diplomats say Tokyo and Beijing want to keep the row from escalating, but managing the situation can be difficult given that China is undergoing a leadership change, an election is looming in Japan and mutual mistrust runs deep. China’s ruling Communist Party, which likes to project an image of stability, rarely permits protests to take place. While Beijing is under strong popular pressure to take a tough line with Japan, it will also be cautious not to let the protests spin out of control. “I think the government is encouraging this,” said one protester, who gave his name as Uda Chen. “They could have stopped all of us approaching when we were at the subway station. The government has taught us to be anti-Japanese at school, so if they want us to stop it would be like slapping their own mouths,” he added. The influential Chinese tabloid, the Global Times, published by Communist Party mouthpiece the People’s Daily, said backing off was not an option for China. “China should be confident about strategically overwhelming Japan,” it wrote, saying the Chinese military should “increase their preparation and intensify their deterrence” against Japan. “China will not shy away if Japan chooses to resort to its military,” the widely read paper added.

Three Gorges Dam reduces water discharge - The dam started on Sept. 10 to reduce water discharge with a full-capacity storage test. The water lever in the dam was monitored to reach 165 meters on Sept. 14.

Vice President Xi attends activities for science popularization day - Vice President Xi Jinping arrived at China Agricultural University Saturday morning for activities marking this year's National Science Popularization Day.

Several thousand protesters pelted Japan's embassy in Beijing with eggs and plastic bottles, and crowds attacked a Japanese-owned department store in central China, as popular anger escalated over Tokyo's plans to purchase contested islands in the East China Sea. Hundreds of police struggled to maintain order outside the embassy in central Beijing. Groups of protesters confronted police in full riot gear, berating them for protecting the building. 

The Chinese economy will expand between 7.7 percent and 7.8 percent in 2012, surpassing the 7.5 percent growth target set earlier this year, a researcher from the country's top think tank said. "Policymakers have taken into account the changes in the domestic and external environments when setting the growth target earlier this year," said Fan Jianping, director of the Economic Projection Department with the State Information Center, China's top think tank, in a recent interview with Xinhua. Although China's GDP has slowed for nine consecutive quarters, Fan said, the country is still capable of achieving economic growth of between 7.6 percent to 7.8 percent in the July-September period. The Chinese economy slowed to 7.6 percent in the second quarter of this year, marking the slowest pace of growth in more than three years. As the government has adopted a series of measures, including hastening the approval of major projects, the economy will begin stabilizing in the second half, Fan said, adding that he expects such measures to play a counter-cyclical role in stimulating the economy. He noted that the new round of macro control policies is quite different from the 4 trillion yuan ($631.7 billion) stimulus measures rolled out in 2009. The prime target for the 4 trillion yuan stimulus package was to safeguard growth through proactive fiscal and monetary measures, but the new round of macro control policies has to stabilize economic growth, on the one hand, while preventing a rebound in home prices, on the other, Fan said. "It will be a little difficult to strike a balance this time around," he said. The researcher said he expects economic growth to remain at relatively low levels for a while, and a V-type recovery looks unlikely as policymakers have to make some progress in restructuring the economy. "At such a stage, it won't be our best option to blindly pursue double-digit economic growth," he added.

In China, Cargill finds a sweet spot - Cargill implements Hazard Analysis Critical Control Points systems in all plants across the country to ensure food safety. Diversified food demand keeps the growth engine chugging for US agribusiness company. US agribusiness giant Cargill Inc is looking to further expand its presence in China as the country's demand for diversified food products continues to be on the upswing. The multinational company is looking to expand all lines of its business in China, with particular emphases on animal protein, animal nutrition, food ingredients and health-promotion businesses. The company is also building a new $67 million high fructose plant in Luohe, a city in Central China's Henan province. Slated for completion by June 2013, the new project will help Cargill provide better services to its customers in China. Cargill posted lower earnings of $1.17 billion from its continuing operations across the globe during fiscal 2012, which ended on May 31 this year. In contrast, the company has posted record earnings of $2.69 billion during the same period in 2011. Though not in line with its expectations, the fiscal 2012 performance was still one of its better years for earnings and ninth in the company's history. Revenues for the period were $133.9 billion, up 12 percent from a year ago. The food-ingredient business posted a third consecutive year of record earnings in fiscal 2012. The company invested over $4 billion to support its customers and on global growth plans, including acquisitions, joint ventures, and new or expanded facilities. Robert Aspell, president of Cargill Investment (China) Ltd, says a significant amount of Cargill's global capital expenditure was focused on China as the nation had an integral role to play in the company's overall growth plans. "Rising incomes and accelerating urbanization in China are driving demand for more diversified and convenient diets. Higher income has also increased the consumption of meat proteins and vegetable oils. Cargill still sees the upside on the daily caloric intake of consumers in China, especially on proteins," Aspell says. "Packaged foods and beverage companies are also expected to reap robust returns from China." To feed a population of more than 1.3 billion, more agricultural products are now produced and sold in China than anywhere else, and this has boosted the overall food consumption in China during the past 10 years. China, India and Brazil have all become fast growing markets for international agricultural product marketers and producers from the US and Europe. In 2011, China imported $95 billion worth of agricultural products, compared with just $12 billion in 2001. The 2011 figures also represented a 30 percent year-on-year growth, according to the Agriculture Ministry. Ding Shengjun, a food supply and security researcher at the Academy of State Administration of Grain, says processed foods such as canned foods, especially those related with cooking and restaurants, have grown fast in China. "The demand for juices, soft drinks, yogurt and milk will provide all sorts of opportunities for the food and ingredient business. The sector has been showing excellent potential," Ding says. According to the National Bureau of Statistics, in recent years the average person in China has been consuming 5 percent more meat, 10 percent more milk, and 8 percent more cooking oil than five years ago. Affected by the global economic environment, extreme climate and unstable international food prices, Cargill saw lower margins from its oilseed-processing and beef-processing businesses in fiscal 2012. Aspell says that Cargill views the current economic slowdown in China as "a bump on the road". "Cargill believes that China will continue to be a sweet spot for investment. During our interactions with food, feed and meat companies, our main customers, we realized that all of them anticipate explosive growth in China. We plan to grow side by side with them." At the same time, Aspell says this is also good news from a consumer perspective as it means "responsible companies making serious investments to produce affordable and safe food in China". Cargill entered China in 1972, and has since ventured into different products ranging from animal proteins and grains to oilseeds. Cargill (China) currently has more than 7,000 employees and 52 plants across the country. The company has partnered with the World Wildlife Fund to train 25,000 corn farmers in China by the end of 2014. Its goal is to improve yields by 20 percent, reduce waste by 10 to 15 percent, conserve water and reduce its overall environmental impact, including its carbon footprint, through fertilizer optimization. Ten demonstrations farms are currently underway in Northeast China's Jilin province. For new growth drivers, Aspell says the most obvious is the modernization of livestock and the food supply chain, which is a big area in which there are lots of investments. Cargill has also made significant long-term investments in China's agriculture supply chain such as oilseeds processing, animal feeds, refined oil, fully integrated poultry business, starch and sweetener business, food specialty and health promotion products. In 2011, Cargill launched a fully integrated project covering each part of the poultry supply chain in East China's Anhui province to minimize food disruption, from feed production, chicken breeding, raising, hatching, slaughtering and processing. Aspell says the company will continue to introduce new technologies in food safety, poultry raising, animal nutrition, disease prevention, environmental protection and energy savings. The total investment in the project is expected to be around $200 million. According to Aspell, China has more or less progressed in the right direction when it comes to improving agricultural production capacity and quality. On the grain production side, the county's overall output has grown substantially since 2005. Corn production alone has seen a 40 percent increase since 2005. The better yields have led to higher rural incomes and stable food production. "At Cargill, we believe that to meet the growing global food needs, one of the key essentials is an open global market where countries grow what they are really good at, export their surpluses and buy what others can produce more efficiently," he says. "China's entrance into the WTO was a critical step that ensured that China could use the global food system efficiently to fill in the gaps in its overall supply. "We would like to see responsible investments in terms of investing in the right parts of the supply chain. Too often we see too much money move into parts of the supply chain that already have more than sufficient capacity. We see this in many industries in China." In addition to agricultural investments, Cargill is also working with its key customers to deliver innovation in areas like nutrition, new menu item, and risk-management solutions. These innovations will help to bring increased menu and product diversity, while ensuring a sustainable source of food at a fair value. Food consumption is normally a good indicator of the economy and the population size. In China, food consumption is rising and so are the types of food that people are eating. Foods have become more sophisticated and people now look more for convenience, Aspell says. Ding from the Academy of State Administration of Grain says foreign food traders and their investment in China's agriculture business can help the nation ease the pressure on natural resources and ensure the country's food supplies, because they are proficient in the international food trade, green agricultural technologies and producing food with better quality. "The participation of foreign food companies and growing demand for agricultural products in China have brought more choices to consumers, as they have better and more options to pick products that they think are cheaper, safer and better in taste," Ding says.

China's new policy that exempts passenger cars from road tolls during holidays is expected to spur unprecedented road traffic during the country's upcoming Golden Week holiday. The public, including the country's 236 million licensed drivers, will be exempt from about 10 billion yuan ($1.58 billion) in highway tolls during China's longest-ever eight-day Golden Week holiday, running from Sept 30 to Oct 7 this year. The policy will greatly benefit people planning to drive themselves to their holiday destinations, but it will also generate massive traffic pressure, said Chen Xiongzhang, a communications researcher with Guangxi Normal University. In early August, the State Council approved a plan to lift road tolls for passenger cars taking highways during major Chinese holidays. Passenger cars with seven seats or less and motorcycles will get a free pass on toll roads, bridges and tunnels during Spring Festival, Tomb Sweeping Day, Labor Day and National Day, said the notice issued by the State Council on Aug 2. People have long complained that toll gates cause highway traffic jams during national holidays. Moreover, tolls take up 30 to 40 percent of expenses incurred by those driving themselves to destinations throughout China. The holiday free-pass policy has met with a warm response among the majority of private car owners. An online survey conducted by Sina and Tencent, two major Chinese web portals, revealed that nearly 80 percent of respondents have planned to drive themselves to their destinations during the upcoming holidays. Some netizens have posted a "money-saving travel map", showing exactly how much toll money will be saved where the policy is in effect. Meanwhile, the policy doesn't just benefit the private owners of the country's 43.22 million private automobiles, as it has also encouraged more people to rent cars for their holiday journeys, according to some major car rental companies. In the early 1980s, the Chinese government issued the "building highways with loans" policy to finance highway construction. Since then, tolls have become the major source of revenue for repaying these loans. To date, over 75 percent of China's freight transport and over 90 percent of passenger transport is carried out on the country's highways. Though a major boon to the public, the free-pass policy will put unprecedented pressure on the country's highways during the annual travel peak seen every Golden Week, said Chen. Moreover, the upcoming eight-day Golden Week holiday will combine the Golden Week and Mid-Autumn Festival, traditionally a time for family reunions in China. Highway traffic pressure during this year's holidays is expected to increase several times over, said Lei Zhixiong, an expert with the Traffic Police Headquarters of Guangxi Zhuang autonomous region. In previous years, the holiday travel rush would peak in the first two and last two days of the Golden Week, but the new policy will see the rush extend throughout the entire holiday, he said. Nearly all trunk roads to provincial and regional capitals and popular tourist destinations will be congested, Chen predicted. China has not set up a complete transportation information collection system encompassing the highway, railway, aviation and shipping sectors. The lack of this system makes it difficult for government authorities to evaluate and guide traffic pressures. The upcoming holiday will offer the country a chance to form an advanced traffic management system, he said.

Hong Kong*:  Sept 16 2012 Share

Miramar shopping malls undergo facelift - Miramar Hotel and Investment, the hotel investment arm of Henderson Land Development, will carry out a facelift of its shopping centres in Tsim Sha Tsui to target local shoppers. The shopping complex at the Mira hotel in Nathan Road would be combined with the nearby Miramar Shopping Centre and rebranded as Mira Mall, said Felix See, the chief operations officer at Miramar. The renovation of the four-storey shopping complex at the hotel has been completed. The second phase of the renovation of the shopping centre has started and the project is expected to be completed in three years. "Mira Mall is targeting local female shoppers instead of mainland tourists. We have noticed that the spending power of local shoppers is high as well," See said. Helen Mak Hoi-lun, a director of retail services at consultancy Colliers International, sees it as Miramar's marketing strategy to differentiate itself from other shopping centres. The first phase of Mira Mall provides a retail space of 100,000 square feet, with 90 per cent of the space already leased. The company believes it will be fully let when it opens next month. Including the second phase, the shopping mall covers 500,000 sq ft and features about 140 shops. The two shopping centres will be connected through a footbridge and an underground passageway. "We are expecting rents will increase significantly after the renovation," See said. Meanwhile, Miramar will open a new hotel, Mira Moon, in Wan Chai in April next year. It will provide 91 rooms. It will also convert 6 Knutsford Terrace, a commercial and office building in Tsim Sha Tsui, into a 50-room boutique hotel next year. It will open two years later. "Despite the economic outlook being uncertain, we are prudent and optimistic on the outlook for the hotel and retail markets. But I think hotels in prime locations will not be affected. The occupancy rate can reach 80 to 90 per cent," See said. "The performance of Hong Kong's retail market remains positive. However, the mainland's economic growth has slowed this year. The outlook for the local retail market will depend on whether the slowdown will continue." Shares of Miramar rose 0.98 per cent to HK$9.30 yesterday.

Local designers' combined exhibition in Hong Kong - Three creative veterans who put Hong Kong on the global design map are the subjectof a combined exhibition. Hong Kong is in the midst of a golden era of design, with an industry that attracts key clients from around the world. But only a handful of years ago, Hong Kong designs were unknown by all but a few insiders. Now, three pioneering creatives from different disciplines who helped put the city on the design map are showcasing a selection of their works. Opening next Thursday at the IFC Mall, the "Hong Kong Design, Design Hong Kong" exhibition will feature the work of architect and interior designer Steve Leung, lighting designer Tino Kwan, and product and jewellery designer Dennis Chan. It will comprise photographs, models and film installations of projects the three veterans have completed over the past 15 years, a period that has seen the Hong Kong design industry flourish into an international hub. "Hong Kong is a gateway to China," says Chan. "A lot of foreign brands and corporations want to get into China, and I think they have realised that design is one of the keys to success. Designers in Hong Kong are here to bridge the gap. They understand Chinese culture, but they are also very international." Leung says that, since 1997, Hong Kong designers have, culturally speaking, become much more influenced by the mainland. This has led them to rethink their perspectives and concepts, making it easier for them to work there. The mainland's rapid growth led to a huge demand for architects and designers. Leung believes Hong Kong designers were in the right place at the right time, with the right skill set to take advantage of this surge in development. The influx of foreign designers has also had an effect on the mainland market. Contemporary and avant-garde design has become commonplace in China, which now has one of the largest markets in the world for such design and is closely watched by professionals across the globe. This gives Hong Kong designers working there international exposure. "Nowadays, furniture and product suppliers from Europe and America ask me to design for them," Leung says. "I couldn't imagine that happening 15 years ago." Despite these developments, design is still not an everyday part of Hongkongers' lives. "Hong Kong is transforming into a design community, but a lot of people here are not interested," Leung says. "They see design as a difficult thing to understand. But the opposite is true. Design is a part of life." The designers hope to show how design can enhance everyday life, whether through creating more comfortable living environments or more efficient workspaces. Good design is also able to ease the toll that modern life takes on the environment, they say. One of the reasons the exhibition is being held at the IFC Mall is to ensure that people who might not otherwise go to a design centre or gallery will experience it. "We want to bring our work to people in the street ... to everyone," says Leung. The designers also hope the exhibition will show how successful local designers have become in recent years. "I'm very proud that we're having this exhibition, because we can show that Hong Kong designers have become very international, and are able to design like the Americans or Europeans," Kwan says. Leung will exhibit more than 100 projects, from interior design to architecture and furniture design. Of particular interest are two show flats he designed in 1997, in Hong Kong and Beijing. Leung thinks that they are some of the first examples of successful contemporary design in Hong Kong and the mainland. Kwan has chosen a cross-section of designs from the various categories of projects he has worked on. These range from hotels to private residences and restaurants. Some of his favourite designs are the award-winning Shanghai Peninsula, The Venetian in Macau and a private residence in Shek O. Chan will display pieces and images from his jewellery brand, Qeelin, including Wulu, a piece worn by actress Maggie Cheung Man-yuk at the Cannes Film Festival in 2006. He will also include behind- the-scenes videos and advertising campaigns, to give visitors a look at how his collections are put together. Hong Kong's design industry shows no sign of slowing down. The designers hope others in the field will follow suit, and try to engage the public in their work by staging similar exhibitions. "There are some very good opportunities for designers in Hong Kong at the moment," Leung says. "I think this will go on for the next 20 or 30 years. It's really just beginning." Hong Kong Design, Design Hong Kong runs at Oval Atrium, Level 1, IFC Mall from Sept 20-24. Inquiries: 2980 0550.

Macau corruption trial of Hong Kong tycoons may be adjourned - Barrister defending one of two Hong Kong tycoons accused of offering land deal bribe expects backlog and legal snags to force adjournment. The corruption trial of Hong Kong tycoons Joseph Lau Luen-hung and Steven Lo Kit-sing, which is due to start on Monday in Macau, may be adjourned over pre-trial hitches and an "impossible" court schedule. The two businessmen were charged for allegedly offering a HK$20 million bribe to Macau's former public works chief Ao Man-long to secure a land deal for a luxury property project. Jorge Neto Valente, a veteran Macau barrister representing Lo, told the South China Morning Post he expected the Court of First Instance to adjourn the case on Monday as the prosecution had not disclosed all documents to the defence, and some important witnesses had not been informed or allowed to testify. Further, presiding judge Alice Costa is set to hear eight cases that morning, in 15-minute intervals. "Eight scheduled trials in one morning is not possible," Valente said. "The court is expected to postpone, if not all, at least some of them. I believe ours will be postponed. "This is very unfair. This implies a waste of time … When everybody expects a postponement, the court should inform people to avoid wasting their time. This is very bad for justice," he said. There would be six other defendants facing the court, and some would likely not show up on Monday, he added. However, the court list in Macau judiciary's website showed that the trial would still go ahead at 9.15am on Monday. Lau, chairman of Chinese Estates, and fellow tycoon Lo are accused of paying to advance the La Scala luxury residential project in 2005 - a deal that Macau's government recently voided. Ao, the public works chief, was sentenced to 29 years in May. Valente said the court had not decided whether to allow a crucial defence witness to be deposed in a court overseas, where he resides, despite the defence making an application in July. Another important witness, a Macau government official, was not in the city at the moment, while at least four other witnesses had not been informed by the court that they would testify, Valente said. The defence lawyer also said Costa, the judge, was said to be sick and had been on leave for the whole week. It was not sure if she would appear in court on Monday, Valente said. He speculated it would take at least two months before the trial resumes, depending on court schedule. A Macau government spokesman said the administration had no information regarding the trial arrangement of the judiciary. Valente, who also represented Chinese Estates in the case where the La Scala deal was invalidated, said it would submit documents to the Court of Second Instance today to appeal against the government's decision.

HKMA curbs home loans to prevent property bubble after US stimulus - The Hong Kong Monetary Authority has ordered banks to curb home loans to borrowers with more than one mortgage to prevent the city being flooded with hot money after the United States announced an aggressive new stimulus plan to spur growth. The city has among the most expensive residential property prices in the world, driven higher in recent years by voracious demand from rich buyers from the mainland and a lack of supply. The runaway real estate market has created festering social and political problems, and forced the HKMA into uncharacteristic action in a territory known for its open economy. In another step taken on Friday, the HKMA said it would restrict the maximum length of a mortgage to 30 years. Some banks had been offering home loans of up to 40 years. “That’s exactly what we had been expecting,” said Alfred Lau, property analyst at Bocom International. “This is also sensible, to increase the downpayment requirement for non-occupied units. Obviously it’s for investment demand. This is the right direction.” The Financial Secretary John Tsang Chun-wah warned later on Friday that if retail sales continued to slump, and exports remained sluggish, Hong Kong would enter recession in the third quarter, having seen a narrow decline in gross domestic product in the second quarter. Tsang said the HKMA’s moves would not affect first-time home buyers but aimed to minimise risks. He explained that they were in response to moves by the US Federal Reserve on Thursday “that were more aggressive than we expected.” Hong Kong has already been attempting to restrain rampant home-price growth and cut out speculation. The HKMA earlier introduced restrictions on the maximum amount that people can borrow on high-value homes, and a tax penalising the fast resale of homes to deter speculators. Properties resold within six months of purchase can attract a tax as high as 15 per cent of the entire transaction price. On Friday, HKMA chief executive Norman Chan Tak-Lam said he was acting in response to the US stimulus measures, renewed signs that Hong Kong’s red-hot property market will overheat and to maintain the stability of the banking system. For people borrowing on a second property, the HKMA said it was lowering the loan-to-value ratio, or the amount of a second home’s purchase price that people can borrow, to 30 per cent, if the loan was based on the borrower’s net worth. If the borrower’s main income comes from outside Hong Kong, the buyer will have to make a bigger downpayment. They will now have to put down 20 percentage points more on a property’s purchase price than a local. For instance, locals can borrow up to 50 per cent of a home’s value if the property is worth more than HK$10 million, but overseas buyers must put down at least 70 per cent. Home prices are a key focus of the administration of the new Chief Executive Leung Chun-ying, a former property surveyor who took office on July 1. He has pledged to introduce more public-rental and subsidised housing, including a controversial plan to restrict the sale of some property plots to Hong Kong citizens and permanent residents. Hongkongers complain that mainland buyers have been flooding the city’s property market with cash, accounting for a record 51 per cent of purchases last year’s third quarter. The Federal Reserve kicked off another aggressive stimulus programme on Thursday, known as QE3, saying it would pump US$40 billion into the US economy each month until it saw a sustained upturn in the weak jobs market. Hong Kong, with one of the world’s most open economies and a property market that is easy to enter, has low transaction costs and no capital-gains tax. That makes the city’s housing market a popular target for “hot money” when liquidity enters the global economy, as expected with QE3. The curbs announced on Friday are likely to hit Hong Kong property stocks next week, after they surged based on the Fed’s move. Shares of Midland Holdings, the largest listed property brokerage in Hong Kong, jumped as much as 11 per cent in Friday trading, but fell back when it became clear that the HKMA’s would be making an announcement after the market had closed. Midland still closed 7.5 per cent up, making it the second-strongest performer in a Hang Seng Construction and Properties Index that gained 3.16 per cent. Mainland developer Sino-Ocean Land was the top gainer, up 7.6 per cent.

 China*:  Sept 16 2012

We vow not to give in even an inch, Taiwanese president Ma tells Japan - Taiwanese president fires verbal warning and dispatches two ships to the East China Sea to protest against Japan's decision to buy. Taiwan sent patrol ships to the hotly contested East China Sea for a fishing escort drill yesterday, the latest symbolic protest against Japan's decision this week to buy three of the five uninhibited Diaoyu Islands. The move came just two days after Beijing dispatched two marine surveillance ships in its own show of force near the disputed islands, which the Japanese call the Senkakus. Beijing, Taipei and Tokyo, all claim sovereignty over the islands, although the Japanese have controlled them since 1972. Meanwhile, Taiwanese President Ma Ying-jeou reiterated Taipei's claim over the Diaoyus during a history seminar. Ma said the Diaoyus had been Taiwan's territory since before 1895, the year the Qing dynasty government in Beijing ceded Taiwan to the Japanese after the first Sino-Japanese war. "In terms of sovereignty, we vow not to give in even an inch," Ma said. In yesterday's display, two Taiwanese Coast Guard Administration vessels - the 500-tonne Lienchiang and the 600-tonne Hualien - sailed for a point 25 nautical miles west of the Diaoyu Islands. They were trailed by a larger observation ship with 40 journalists and 60 fishery union officials. There, the patrol crews demonstrated how they would escort Taiwanese fishing boats seeking to fish in the marine-life-rich waters near the contested chain. They briefed the observers on each ship's onboard weapons - a 20-mm cannon and two 50-mm calibre guns - that could be used to protect fisherman. "Our duty is to escort our fishing boats wherever they operate in our territorial waters," said Lee Mao-jung, the deputy director-general of the Taiwanese coastguard. Lee said the drill staged yesterday was to assure the public and fishermen of the government's determination to protect their legal activities within Taiwan's territorial waters. In the past, Taiwan fishermen who entered the waters have often been chased away by the Japanese coastguard. The decades-old dispute over the potentially resource-rich islands escalated this week after Tokyo signed a deal with a private Japanese landowner to purchase the three islets for 2.05 billion yen (HK$203 million). Earlier this week, Taipei recalled its top envoy from Tokyo and lodged a formal protest with the Japanese government.

China commentary slams Romney’s ‘foolish’ China-bashing - US Republican presidential candidate Mitt Romney’s attacks on China and promise to name the country a currency manipulator if elected are foolish and hypocritical, China’s official Xinhua news agency said on Friday. In a strongly worded English-language commentary, Xinhua said Romney’s anti-China rhetoric, if converted into policy upon him assuming office, would trigger a catastrophic trade war and damage the already weak global economic recovery. “It is rather ironic that a considerable portion of this China-battering politician’s wealth was actually obtained by doing business with Chinese companies before he entered politics,” Xinhua wrote. “Such blaming-China-on-everything remarks are as false as they are foolish, for it has never been a myth that pushing up the value of China’s currency would be of little use to boost the chronically slack job market of the world’s sole superpower, not to mention to magically turn the poor US economic performance around.” Romney has repeatedly pledged to get tougher with China on its trade and currency practices, including pledging to quickly declare China a currency manipulator if elected. His opponent, President Barack Obama, has accused Romney, who founded and led private equity firm Bain Capital, of outsourcing jobs to both India and China. China says the yuan’s exchange rate is essentially set by market forces, and that the currency has appreciated about 30 per cent against the dollar since a landmark revaluation in 2005. The Chinese government has generally been silent in the run-up to the November presidential poll due to a policy of non-interference in the affairs of other countries. But state media has waded into the debate to lambaste what it sees as attempts to play the “China card”, in a reflection of official thinking and concern the country’s name is being unfairly dragged through the mud overseas. Xinhua said such China-bashing had been “a cancer in US electoral politics, seriously plaguing the relations between the two countries". “It has also become a handy tool for US politicians who try to court the votes and support of ill-informed voters by ratcheting up antagonistic sentiment towards China, while truly serious social and economic woes within the United States have been left unfixed.” The United States should “put its own fiscal house back in order, substantially slash its tremendous military expenditure, and optimise its economic structure”, it added. “It is advisable that politicians, including Romney, should abandon ... short-sighted China-bashing tricks and adopt at least a little bit of statesmanship on China-US ties.”

Xi recovering from bad back, set to make appearance - China’s leader-in-waiting Xi Jinping could make a public appearance as early as Saturday as he recovers from a bad back, sources said, dispelling rumours about his health after he dropped out of sight at the start of this month. Xi has been out of the public eye for almost two weeks and has skipped meetings with foreign leaders and dignitaries, including US Secretary of State Hillary Clinton. Chinese government officials have repeatedly refused to say what happened to him, fuelling speculation that has included Xi suffering a heart attack, a stroke, emergency cancer surgery and even an attempted assassination. But three sources close to the Chinese leadership, who are familiar with internal accounts of Xi’s condition, said the 59-year-old has been nursing a back injury the entire time, obeying doctors’ orders to get more bed rest and undergo physiotherapy, while spending time preparing for the leadership transition later this year. “He is fine now. He went for physiotherapy for three days,” one source said. “He should make a public appearance soon.” Xi has been undergoing physiotherapy sessions within Beijing’s walled and tightly guarded Zhongnanhai leadership compound, said a second source close to senior party officials. “It wasn’t serious but very painful and he was ordered to have bed rest,” the second source said. A third source said Xi could make a public appearance as soon as Saturday, but no other details were immediately available. The sources all spoke on condition of anonymity due to the sensitivity of discussing the health of leaders, which has long been considered a state secret in China. Xi last appeared in public on September 1. He pulled a back muscle while swimming shortly before US Secretary of State Hillary Clinton arrived on an official visit on September 4, the sources said, forcing him to scrap a meeting with her the next day and also with Singapore Prime Minister Lee Hsien Loong. The ruling Communist Party’s refusal to comment on his disappearance from public view and absence from scheduled events is in keeping with its traditional silence on the question of the health of top leaders, but it has worried or mystified most China watchers. On Wednesday, state media carried comments attributed to Xi for the first time since he dropped out of sight, but there was no public sighting of him or any new photograph. There has been no direct official comment addressing the rumours and the refusal to quell the speculation is widely seen as out of step with the country’s global economic and military significance and has been likened to the kind of old-style communist secrecy practiced during the cold war. Beijing has yet to formally announce a date for the party’s five-yearly congress at which Xi is tipped to replace Hu Jintao as party chief, though it is still expected to be held in mid or late October at the earliest. In March next year, he is to formally take up the reins of the world’s second-largest economy. Xi has been working overtime during his recovery to prevent any delay in the congress opening, the second of the three sources said. “He cancelled all external and internal public functions to concentrate on preparatory work for the 18th congress. “He has been working with Li Yuanchao and Li Zhanshu,” the source added, referring to the party minister in charge of personnel and the new chief of staff to Hu respectively. The two Lis are not related. Xi and the two Lis have been rushing to finalise a list of new full and alternate members of the party’s elite Central Committee, the keynote speech of Hu at the upcoming 18th congress and the agenda of the pre-congress 7th plenum of the 17th Central Committee. Li Zhanshu, one of Xi’s closest allies who is also acceptable to the Hu camp, was named chief of staff only in September, confirming a July 18 story. On the government’s reluctance to comment on Xi, Cheng Li, an expert on Chinese politics at the Brookings Institution, a think-tank in Washington DC, said: “It’s perfectly understandable. What can you say? If you say he’s in hospital, people think: ‘Oh my god, he’s dying.’ That will spur a new round of sensational stories.” “With all these things going on, I perfectly understand why they are so hesitant. There’s another kind of mindset: ‘It’s our own business. We’ll let you speculate the rumours, let you embarrass yourself later on.’” The uncertainty surrounding Xi’s absence has had no impact so far on Chinese or foreign markets, which have been absorbed by Europe’s debt crisis and China’s own economic slowdown. But investors have been keeping a close eye on the mystery surrounding Xi, after months of high political drama in China. Senior leader Bo Xilai was suspended from the party’s 25-member Politburo in April and his wife convicted of the murder of a British businessman. Blind human rights activist Chen Guangcheng escaped from house arrest in April and took refuge in the US embassy before leaving for New York. In another scandal this month, a senior ally of President Hu was demoted after sources said the ally’s son was killed in a crash involving a luxury sports car.

Tensions between Japan and China escalated Friday when an unusually large group of Chinese patrol ships entered Japanese "claimed" territorial waters for a few hours near disputed islands in the East China Sea, as Beijing tried to assert its sovereignty. The Chinese defensive action came days after Tokyo announced plans to purchase three of the contested islands it controls from a Japanese private owner to keep them out of the hands of nationalist Tokyo governor Shintaro Ishihara, who had intended to use the territory to further inflame the situation. Six Chinese surveillance ships sailed into waters around a disputed archipelago on Friday, with Beijing saying they were there for “law enforcement” around islands Japan nationalised earlier this week. The move – dubbed “unprecedented” by Tokyo – came as it was reported Japanese nationals had been physically attacked in China, marking the latest stage in a deteriorating row between Asia’s two biggest economies. Tokyo summoned the Chinese ambassador to protest what it insisted was an incursion into territorial waters around islands it controls, called Senkaku, but claimed by Beijing, which refers to the islets as Diaoyu. However, China was resolute, with the foreign ministry issuing a forthright statement claiming the boats were patrolling sovereign territory. “Two Chinese surveillance ship fleets have arrived at waters around the Diaoyu Islands and adjacent islands on September 14, this year to start patrol and law enforcement,” the statement said. “These law enforcement and patrol activities are designed to demonstrate China’s jurisdiction over the islands and safeguard its maritime interests.” Japan’s coastguard said the ships had all left the area by around 1.20pm, approximately seven hours after the first vessel had arrived. Japan’s Chief Cabinet Secretary Osamu Fujimura said the foreign ministry summoned China’s ambassador, Cheng Yonghua, to lodge a protest. “We understand that the dispatch of six ships is surely an unprecedented case,” he told a press conference. Fujimura said Yonghua had reiterated Beijing’s claims to the islands in the East China Sea, which lie around 400 kilometres from the Okinawan capital of Naha and 200 kilometres from Taiwan. Japan urged “that China do its utmost – above all else – to secure the safety of Japanese nationals in China”, he said. Fujimura’s comments come as the Japanese consulate in Shanghai reported a series of physical attacks. “A group was dining late at night, and they were harassed and assaulted by Chinese,” said a statement on the consulate’s website. The consulate said bottles were thrown at some Japanese, and drinks and food were poured over others, while one person was reported having a pair of glasses broken. In two of the incidents the assailants asked “Are you Japanese?” before acting, a Japanese diplomat in Shanghai told AFP on condition of anonymity. Tokyo’s foreign ministry has warned its nationals to be aware of anti-Japanese demonstrations and to avoid drawing attention to themselves. The embassy in Beijing said Japanese should avoid approaching the building, where protests have been reported, unless absolutely necessary. Relations between the two countries – often rocky because of a difficult history – have worsened since pro-Beijing activists were arrested and deported after a landing on one of the islands in August. They were followed days later by Japanese nationalists, who raised their flag there. Protests broke out in China and have continued since Japan on Tuesday announced it had nationalised three of the islands in the chain. It already owns another and leases the fifth. The purchase was intended at least partially to head off an attempt to buy them by Tokyo’s provocative Governor Shintaro Ishihara, who charged Japan was not doing enough to protect its territory. Commentators say Prime Minister Yoshihiko Noda’s solution – nationalising the islands and continuing its policy of doing nothing with them – was an attempt to navigate between rising nationalism at home and China’s growing assertiveness on the oceans. But Beijing’s reaction has been sharper than many analysts expected. Some observers have pointed to the forthcoming leadership change in China’s Communist Party and say the islands issue is being used as a way to distract public attention from the less-than-smooth transition. The People’s Daily, the party mouthpiece, on Friday called Tokyo’s actions a violation of China’s territorial sovereignty and an affront to its citizens. “Is Japan prepared to pay the price for its vicious actions?” the commentary in the paper’s domestic edition said. “They will be regarded as an invasion of China’s inherent territory and thus China will resolutely strike back.”

Pushing the reset button - Pushing the reset button. Small LED lighting producers in China are banding together to take on the industry's multinational giants in the West - The invention of incandescent lamps by American inventor Thomas Edison more than a century ago not only marked the beginning of the modern lighting industry, but also the birth of pioneering conglomerate General Electric. Today, the global wave of phasing out incandescent lamps is doing the same trick. With the dawn of energy efficiency, many international companies are trying to catch that spark that will push them ahead in the industry, not least of all companies in China. But if there was ever a time for a Chinese lighting company to make a breakthrough, that time is now. On Oct 1, China, the world's largest lighting market, is hitting the reset button with its ban on the sales of incandescent lamps. The upcoming move, in addition to the Chinese government's desire to increase efficiency, cut down its carbon intensity and manufacture more LED (light emitting diode) products, is set to slowly but significantly change the nation's lighting market. "The possibility of the reset of the new world order in lighting lies in two simple facts. One is the potentially huge LED lighting market in China, the other is the Chinese government's strong desire to build LED lighting into a strategic new industry," says Wang Fei, a Shenzhen-based analyst with LEDinside, a unit under the consulting firm TrendForce. "The combined home advantage can help Chinese producers to be among the world's top 10 lighting producers in 10 years." Both LED lighting reports released in 2011 by HSBC Climate Change, HSBC's global research subsidiary, and the global consultancy McKinsey identify China as the most important market for LED lighting. Both say China's massive population, rapid urbanization, rising incomes and economic development create the most growth potential in the LED market worldwide. According to McKinsey, the size of China's overall lighting market is projected to grow twice as fast as the global average, reaching 13 billion euros ($16.79 billion) by 2016 (or 17 percent of the global market), with its LED lighting market reaching 11 billion euros by 2020 (accounting for 20 percent of the world's total revenues). Philips, the leading lighting producer based in the Netherlands, expects LED lighting products to account for 50 percent of the general lighting market in China by 2015.

363 million people to travel during Golden Week - People visit Yuyuan tourist mart in Shanghai, Sept 12, 2012. More than 87 percent of people have plans to travel during the 8-day National Day holiday this year. According to a report by the China Tourism Academy, 363 million travelers are expected to spend 180 billion yuan ($28.4 billion). The holiday, known as Golden Week, will start on Sept 30 and end on Oct 7, with both the Mid-Autumn Festival and National Day holidays.

Hong Kong*:  Sept 15 2012 Share

Firemen’s union moves a step closer to goal of 48-hour week - A firemen’s union fighting for a 48-hour work week has won the Fire Services Department’s consent to consider the proposal in the next few years, the union said on Thursday. Until now the department has proposed cutting the work week from the current 54 hours to 51 hours, which the majority of firefighters has opposed. Thursday’s development came after 10 representatives of the department’s Staffs General Association – which wants a 48 hour week – met senior department officials to discuss their demands. Lee Tak-kei, the association’s chairman, said the department agreed to consider further cutting their hours to 48 a week in the next three to six years – after a transition period at 51 hours per week. Also at the meeting were officials from the Security Bureau and the Civil Service Bureau. Management will work out a timetable on how to implement the change, Lee said. The association, which represents 4,500 workers, has threatened industrial action and other protests unless their demands are met. They have already staged a work-to-rule protest, refusing to carry out clerical, cleaning or security duties.

SHK Properties posts record profit despite scandal - Sun Hung Kai Properties, the world’s second-largest real estate developer, posted earnings that narrowly beat expectations on Thursday, building on last year’s impressive performance thanks to strong property prices and low interest rates. The company, whose billionaire co-chairmen are facing charges in an alleged bribery case, reported a record underlying profit of HK$21.7 billion for the company’s this year fiscal year that ended in June, compared with HK$21.5 billion last year. Analysts had expected underlying income of HK$21.0 billion for the this year year, according to StarMine, based on the mean estimate of 19 analysts polled by Reuters. Since the results are based on sales locked last year, the company’s performance has yet to see any effect from the high-profile scandal involving brothers Thomas and Raymond Kwok. The company’s co-chairmen, who deny any wrong-doing, are due in court next month to face charges that they paid a senior government official to favour their interests. The Kwoks deny any wrongdoing, and Rafael Hui, a former Hong Kong chief secretary who has also been charged over the case, has not commented since his arrest. Once the darling of the investment community and considered one of Hong Kong’s best-run companies, Sun Hung Kai’s shares have underperformed peers since the arrests. The stock is down 7.9 per cent in the last six months, compared with a 3.3 per cent gain in the Hang Seng Properties Index. It rose 0.75 per cent on Thursday. The results marked the firm’s second successive record performance in terms of annual underlying profit, considered by investors a more meaningful figure than net profit since the net figures include valuation gains that depend on the property market rather than the performance of the company. Alfred Lau, property analyst at Bocom International, noted rental income, the company’s earnings base, had come in at HK$11.1 billion, ahead of his HK$10.7 billion estimate. “The rental growth momentum is still accelerating,” he said. “This will mean better grounds for them to maintain this record profit going forward.” Sun Hung Kai, which developed Hong Kong’s two tallest buildings, the International Finance Centre and the International Commerce Centre on either side of Victoria Harbour, is celebrating the 40th year of its listing. However, it did not declare a special dividend to honour the occasion, something it did 10 years ago and which it had been expected by analysts to repeat. The Kwoks are continuing at the helm of the company while they fight the charges against them and Sun Hung Kai contends that it is “business as usual”. It has continued to release new properties, and in July agreed to pay HK$6.9 billion (US$889.8 million) for a huge waterfront plot in Hong Kong, a price far less than the market had expected. Market watchers say the effect of the case has been priced into the stock. More than half of the company’s public float is now held by people who knew about the court case when they bought the shares, according to Daiwa Capital Markets analyst Jonas Kan. The fourth quarter could prove an inflection point for the shares, he added, particularly if the court hearing does not produce a negative surprise.

Decision on mainland mums due 'within 3 months' - The government has come up with “a direction” for addressing the mainland mothers issue, and will decide on its next course of action within three months, the justice chief said on Thursday. Speaking after attending a legal forum in Guangzhou, Justice Secretary Rimsky Yuen Kwok-keung said the government had been getting advice from a British queen’s counsel on how to deal with the longstanding issue of mainland women giving birth in Hong Kong. Yuen did not reveal further details about the British lawyer or the government’s direction, except to say that it was “positive”. In April, Leung Chun-ying, who was then chief executive-elect, announced a “zero quota” for mainland women giving birth in the city’s public and private hospitals from next year. The decision was popular among Hongkongers, who fear that a surge in mainland children gaining Hong Kong citizenship will increase competition for health care and education. Yuen said the government was planning to finish its assessment of the issue and make a decision on the issue within three months. At present, mainland women who are at least seven months pregnant are denied entry at the border if they cannot prove they have booked an obstetrics bed at a Hong Kong hospital. Leung’s “zero quota” came in response to an influx of pregnant mainland women that has left some of the city’s public hospitals overstretched. Public hospitals, whose quota of 3,400 for non-local women was fully booked this year, will not take bookings next year for non-local deliveries.

 China*:  Sept 15 2012

Taiwan sends ships near disputed Diaoyu Islands - Two Taiwanese coastguard ships on Thursday set sail for waters near a disputed archipelago in the East China Sea, officials said, amid an ongoing territorial row among Taiwan, Beijing and Japan. The vessels are expected to get about 37 to 56 kilometres west of the disputed Diaoyu Islands to offer round-the-clock protection for Taiwanese fishermen, said a coastguard official. The move came after Japan announced on Tuesday that it had completed its planned purchase of the islands, which are known as Senkaku in Japanese and are also claimed by Taiwan and Beijing. Taipei has recalled its envoy to Japan to protest the Japanese move while Beijing has dispatched two patrol ships to assert its sovereignty following the purchase. The islands have long been at the centre of a territorial dispute between Japan and Beijing and a major row was sparked last month after activists from both sides sailed to the archipelago. Japan arrested 14 activists who sailed to the area from Hong Kong, triggering protests by Beijing and Taiwan, and moved swiftly to deport them. Days later Japanese activists landed on one of the islands and raised a Japanese flag. The islands, which are about 160 kilometres from Japan’s Okinawa chain and about 200 kilometres from Taiwan, lie on vital shipping lanes and are believed to lie near potentially rich gas fields. Observers said national pride was also a major reason for the acrimony in the dispute.

PLA puts military heat on Japan over Diaoyu Islands - Beijing urges Japan to retract decision to buy disputed Diaoyus. The People's Liberation Army stepped up its sabre-rattling yesterday in what was seen as a warning to Japan that it is ready to safeguard China's sovereignty in the escalating dispute over the disputed island chain in the East China Sea. In a front-page report, the PLA Daily said the army's navy, air force and strategic missile corps had staged joint military drills in the Yellow Sea and in the Gobi Desert early this month, detailing a string of all-weather, live-fire exercises by the Nanjing Military Command. One of the key missions of the command is to defend the East China Sea, where China and Japan claim sovereignty over the Diaoyu Islands, known as the Senkakus in Japan. Shenzhen Satellite Television said yesterday that the Chengdu, Jinan and Guangzhou military commands had also launched intensive military exercises in recent days, including seaborne assaults and sea-to-sea missile interceptor drills. Experts said the drills were clearly a warning to Japan. "The string of PLA drills is aimed at warning Tokyo that if it attempts to deploy its maritime self-defence force to deal with our patrol ships, we are ready to defend our national interests when any conflicts happen," said Xu Guangyu, a senior researcher at the China Arms Control and Disarmament Association in Beijing. Beijing sent marine surveillance ships to waters near the Diaoyus on Tuesday, in response to the Japanese government's purchase of the islands. The Foreign Ministry's director general for Asian affairs, Luo Zhaohui, called on Japan to retract its decision to buy the islands from their private Japanese owner when he met Japanese counterpart Shinsuke Sugiyama yesterday. Sugiyama said both countries would continue to communicate on the islands issue, but Japanese Foreign Minister Koichiro Gemba told a press conference in Tokyo yesterday that it was impossible for Japan to abandon the purchase of the islands. The US has called for calm.

China warns Japan tensions may damage trade ties - China warned Japan on Thursday that trade could be hurt by the flare-up in tension over a group of disputed islands that is fraying ties between Asia’s two biggest economies. The latest warnings from China brought a call for restraint from Japan, which on Tuesday announced it had bought the disputed islands in the East China Sea from a private Japanese owner, an act Beijing called a violation of its sovereignty. “With Japan’s so-called purchase of the islands, it will be hard to avoid negative consequences for Sino-Japanese economic and trade ties,” Chinese Vice Minister of Commerce Jiang Zengwei told a news briefing. The islands were at the centre of a chill in 2010 after Japan arrested a Chinese trawler captain whose boat collided with Japanese coastguard vessels near the disputed area. The United States this week urged both sides to tone down increasingly impassioned exchanges over the longstanding row. China is Japan’s largest trading partner. In last year, their bilateral trade grew 14.3 per cent in value to a record US$345 billion. Jiang hinted that his government saw nothing wrong with peaceful boycotts of Japanese goods. China is a major market for Japanese cars and electronics, and China’s National Business Daily newspaper said that travel agents had reported cancelled bookings for tours to Japan. “I still haven’t seen any actions by Chinese consumers in response to the Japanese violation of Chinese territorial sovereignty, but if we do see them expressing their stance and views in a reasonable way, I think that would be their right,” Jiang said. Speaking in Tokyo, Japanese Foreign Minister Koichiro Gemba called for both sides to keep the broader picture of their relationship in mind when dealing with the spat. “It is important that both Japan and China respond calmly with a broad picture in mind. I believe stable progress in Sino-Japanese relations should not be hindered by this development, and would like to ask China to take calm and appropriate steps,” he told reporters following Jiang’s comments. A Nissan Motor executive said last week that the tensions were already affecting business with China. The row is the latest episode in troubled relations between the neighbours. The dispute erupted again last month when Japan detained a group of Chinese activists who had landed on the islands, known as Senkaku in Japanese and Diaoyu in Chinese. China’s Foreign Ministry on Thursday repeated its condemnation of the Japanese purchase of the islands. “People from all walks of life in China are greatly indignant at Japan’s act, and China will continue to take decisive measures,” ministry spokesman Hong Lei told reporters. The row has been compounded by domestic political concerns on both sides, with China’s ruling Communist Party preoccupied with a looming leadership handover, while Japan’s ruling Democrats struggle with poor poll figures ahead of elections expected late this year. Those complications could make it even harder for the two governments to find a quiet way to back down. “The Diaoyu Islands dispute is pushing China and Japan towards confrontation, and Japan has chosen the wrong opponent at the wrong time and in the wrong place,” said a commentary in the Global Times, a popular Chinese tabloid. “The Diaoyu Islands conflict is a new turning point in the deterioration of Sino-Japanese relations.” On Thursday, protesters gathered at the Japanese embassy in Beijing, waving banners and the Chinese national flag while singing the country’s national anthem and shouting slogans. Police allowed them to take turns standing in front of the embassy in groups of 40 or so. A few demonstrators tossed water bottles over the gates and into the compound. “Down with Japanese imperialism! Get the hell out of the Diaoyu Islands! Boycott Japanese goods! Declare war on Japan!” some of them shouted. Japan’s Foreign Ministry on Wednesday issued an advisory for Japanese nationals in China, urging them to stay away from rallies and refrain from behaviour that might attract attention. In 2005, a surge of anti-Japanese resentment spilled over into sometimes violent protests in Chinese cities, and demonstrators trashed Japanese-owned shops. One demonstrator said bitter memories of Japan’s wartime occupation of China and other Asian neighbours continued to stoke public anger. China’s official memorial day for the war on September 18 could act as another focus for that ire. “It’s more than about the Diaoyu Islands,” said Han Xue, an office worker holding a small Chinese flag. “It’s about wanting to avenge all the millions of Chinese the Japanese killed in the war. We can never forget that.”

Japan’s New China Ambassador Falls Ill - Only two days after his appointment, Japan’s new ambassador to China was rushed to the hospital with a sudden illness in Tokyo. Shinichi Nishimiya, a 60-year-old career diplomat, collapsed near his home in Shibuya Ward Thursday morning and was carried to the hospital, unconscious, in an ambulance. A witness told the Japanese media he saw Mr. Nishimiya, wearing a suit and carrying a briefcase, fall suddenly, face down, on the street. A foreign ministry spokesman said the ambassador was being treated at a hospital after taking ill, but declined to offer further details about his condition. As of 6 p.m. JST Thursday, Mr. Nishimiya remained in the hospital, according to the spokesman, who did not elaborate on the situation. Having received approval from the cabinet as the top diplomat to China on Tuesday, Mr. Nishimiya was scheduled to leave for Beijing in mid-October. With Japan and China locked in an increasingly contentious row over disputed islands, Mr. Nishimiya’s new job comes with numerous challenges. Tokyo had chosen Mr. Nishimiya, a lifelong foreign service officer, to manage the relationship with the powerful neighbor, after his predecessor, a businessman appointed with fanfare two years ago, stumbled recently. As anti-Japan sentiment flares up and protest rallies unfold in many parts of China, the ambassador now must pay closer attention to the safety of Japanese residents and businesses based in China, while conducting the delicate task of trying to mend frazzled ties with officials in Beijing. Last month, an unknown man attacked the car carrying his predecessor, Uichiro Niwa, and ripped its flag, upsetting officials in Tokyo. The atmosphere grew even more acid this week after China lashed out at the Japanese government’s decision to purchase the contested islands from a private owner to keep them out of the hands of Shintaro Ishihara, Tokyo’s nationalist governor. Tensions mounted as China sent in patrol boats to the waters near the Japan-controlled islands, known as Senkaku in Japan and Diaoyu in China. And there are signs the bitter diplomatic confrontation is beginning to spill over to bilateral economic ties. On Thursday, China’s vice minister of commerce, Jiang Zengwei, said Japan’s decision to buy the islands could hurt trade with Japan. “If some Chinese consumers want to express their views [on the island purchase] in a reasonable way, we think that’s their right and we fully understand,” Mr. Jiang said. Aichi Prefecture said Thursday its plan to hold a bilateral comic and cartoon show in Jiansu Province next month to celebrate the 40th anniversary of the restoration of the bilateral diplomatic ties was postponed. Underscoring the difficulty of managing the thorny relations, Mr. Niwa, a former trading company chief with extensive business experience in China, had come under criticism from some politicians in Japan, after commenting in a media interview that Mr. Ishihara’s attempt to purchase the islands could bring about an “extremely grave crisis” between the two nations. Mr. Nishimiya has held various key positions at the foreign ministry, serving as deputy foreign minister in charge of economic affairs and consul general in New York.

Chinese go online to buy latest iPhone - It's that time again - another new Apple Inc product launch, when buyers all over China face the challenge of working out the best way to get their hands on one, in the cheapest and quickest way possible. When the iPhone 4 was launched, it arrived in Beijing three months late; the new iPad was 120 days late. But even before the latest iPhone 5 was due to debut in selected stores around the world on Wednesday, customers in China have already been able to book them over the Internet. As soon as the US-based electronic giant announced it will release its handset iPhone 5 on Wednesday in the United States, Chinese vendors started to dump old versions of the iPhones, in preparation for sales of the new one. The price of an iPhone 4S in this classic gray market - where sales of old versions of a product can also often provide a good indication of demand for a new product - has dropped about 1,000 yuan ($158.50) in the last few weeks in Beijing's Zhongguancun electronics market, said one vendor, Li Lianhai. In his tiny 14-square-meter store, iPhones and iPads are piled up to the ceiling. "The price of the 32-gigabyte iPhone 4S has dropped from 5,200 yuan three weeks ago to 4,500 yuan, because vendors are afraid they'll have trouble unloading their stocks of them following the release of the iPhone 5," Li said. Online, China's biggest e-commerce website Taobao.com already has sellers posting adverts for iPhone 5s for customers to pre-order. A 16 GB iPhone 5 costs more than 6,000 yuan online, about 1,000 yuan higher than Apple's official price; but in one online store, more than 50 customers have already booked one. "You don't need to queue all night, and worry about someone taking your spot when you go to the restroom - we'll send your iPhone 5 straight to you once it comes to the market," said an advertisement on Taobao. When the US company released its iPhone 4, hundreds of Chinese spent the whole night waiting in front of the Apple stores to buy one of the popular handsets. In July, Apple announced it sold 26 million iPhones in the quarter ended June 30. Its release of the iPhone 5 on Wednesday could materially affect US gross domestic product in the fourth quarter of the year, according to JPMorgan Chase analyst Michael Feroli who estimates the new version will add 0.25 to 0.5 percent the country's year-on-year growth rate. The Chinese mainland has always been the last region to have Apple's products. "I booked an iPhone 5 online because I don't think Apple will release it in the Chinese mainland at the same time as the US and Hong Kong," said one Taobao customer who just pre-ordered one online under the Taobao ID "Bao Dudu". "Gray market dealers are always faster than official stores."

China's J-10 jets practice night flight - China's fighter jet J-10 takes off from a military airport during night combat training in Southwest China's Yunnan province on Sept 10, 2012. The training is aimed at improving combat capability in all weather. 

Hong Kong*:  Sept 14 2012 Share

Thirty out of the 107 units at Century Gateway project in Tuen Mun were sold within hours of sales starting yesterday. Sun Hung Kai Properties (0016) expects to cash in HK$1.2 billion from all 107 flats put on the market. Prices of the flats available for sale averaged about HK$12,246 per square foot. "Buyers were mainly from northwest New Territories, constituting 60 percent, while 20 percent were from Kowloon and 10 percent from Hong Kong Island," said Allen Woo Chi- yuen, Sun Hung Kai Real Estate Agency's assistant general manager. The remaining 10 percent were frequent commuters between the mainland and Hong Kong. A high-level special unit of 1,777 square feet with an additional rooftop was launched yesterday for HK$31.1 million, or HK$17,501 psf. The project provides 1,075 units sized between 550 and 1,200 sq ft in the first phase. Over half are three- or four-bedroom units. Separately, Cheung Kong Holdings' (0001) Kowloon Tong project Le Chateau is expected to cost at least HK$40 million per unit. "The project will be launched this month with an asking price of HK$25,000 psf," Cheung Kong sales manager Helen Fung Hoi- lun said. Show flats will be open by next week at the earliest. Meanwhile, CLSA's head of property research Nicole Wong said property prices have risen by 12 percent in the first seven months, higher than the original forecast of 8 percent. She expects a 14 percent increase for the whole year from 2011. But prices are expected to rise by just 1.5 percent next year due to a 15 percent increase in supply. Also, the gloomy outlook of the global and mainland economy will slow price rises.

Fun and health mix in Lan Kwai Fong - Mr Lan Kwai Fong Allan Zeman’s redeveloped New California Tower in Lan Kwai Fong is scheduled to open a year from today, on September 10, 2013, with a mix of lifestyle (for which read gyms) restaurants, clubs and bars. Taking the top floor is Coup de Ta from Singapore Marina Bay Sands, with Pure Fitness gym signed up for the six floors that were formerly the office space. That still leaves eight more floors to fill with restaurants, bars, more restaurants and more bars. And underneath all these centres of indulgence, a gym...wonder how that will work. Exercise then indulge or indulge then exercise? Not surprisingly I hear Harlan Goldstein, formerly of Aberdeen Marina Club, then Harlan’s in IFC, which ended in, well, tears, and now The Strip House in LKF, has signed up too, though details are sketchy as yet. Will it be a cheeky concept like his current not-at-all-tacky red and black Moulin Rouge inspired eaterie? Come on Harlan, surprise us with something a bit classy – and original. Lan Kwai Fong Parties On - Lan kwai Fong is booming. Anyone who has elbowed their way through LKF on a Friday or Saturday night recently will have been overwhelmed by the sheer volumes of people down there. Whatever tales of economic gloom and doom abound in Europe (unemployment 11 per cent), Hong Kong seems to have skipped a beat and still be partying on. New restaurants and bars, even cake and muffin shops – fifty percent of which, statistically, will fail – have opened up all over the place. These include Blue Smoke (Southern hospitality whatever that means, barbecue I think, LKF), Blue Butcher (steak house, Hollywood Road), The Brick House (Mexican, LKF), Harringtons (“time honoured gastro pub style food, LKF), Lupa (Italian, floor below Las Vegas steakhouse Carne Vino, both above Gap on Queen’s Road Central, both Mario Batali designed and Socialito (Mexican, Wyndham Street). Word on the street is that several of these have set their operators back HK$10 million or more to get them up and running: Carne Vino, Lupa, Blue Butcher and Soicalito. So who is keeping these restaurant table so busy that it’s hard to get a midweek lunch reservation? There’s a new crowd, it seems. None of these places are cheap, so these diners have jobs. “Or,” as one restaurateur puts it,” they live at home with Mum and Dad, mortgage paid, work in service industries, and like to play at least as hard as they work. Many have been educated abroad, they like to eat, drink and party. And they do.” And then, he adds: “there’s the “White boys and girls” as they are called – the generation who grew up here with expatriate parents, got HK ID cards, went back to Europe or the US after graduating, can’t get jobs now and so have come back here, where there’s plenty of work. They, in fact, all the Facebook generation, consider Hong Kong very cool at the moment.”

Loh named environment deputy, amid cabinet appointments - Christine Loh Kung-wai, an outspoken critic of Hong Kong environmental policy, was named undersecretary for the environment on Wednesday morning, amid a flurry of other appointments. Loh, 56, a former legislator and chief executive of the policy think tank Civic Exchange, will take office immediately, the Chief Executive’s Office announced. Two other undersecretaries and two political assistants were named to the cabinet of Chief Executive Leung Chun-ying on Wednesday. Deputy police commissioner John Lee Ka-chiu, 55, was appointed undersecretary for security; and incumbent Undersecretary for Transport and Housing Yau Shing-mu, 52, will remain in that post. Yau takes office on Saturday and Lee on October 1. Ronald Chan Ngok-pang, 29, was appointed political assistant to the secretary for constitutional and mainland affairs. He was a special assistant to former chief executive Donald Tsang Yam-kuen. Caspar Tsui Ying-wai will continue as political assistant to the secretary for home affairs. Tsui, a member of the pro-government Democratic Alliance for the Betterment and Progress of Hong Kong, took up the position in June 2008. Chan assumes office immediately and Tsui will begin on October 8. The Chief Executive’s Office said these appointments were the result of recommendations by the head of their respective policy bureaus. Leung has now appointed five undersecretaries and two political assistants for his 12 ministers. Undersecretary for Financial Services and the Treasury Julia Leung Fung-yee and undersecretary for Home Affairs Florence Hui Hiu-fai have been in office since July 1, when Leung’s terms started. Under the political appointment system introduced by Tsang in 2008, each minister has an undersecretary and a political assistant. “The selection process for undersecretaries and political assistants for the remaining bureaus is under way,” the Chief Executive’s Office said.

‘Resist communism’ platform may antagonise Beijing, warns Fung - The “resist communism” electioneering platform used by some pan-democrats risked widening the gap of mistrust with Beijing, a veteran member of the camp said on Wednesday. Speaking on RTHK radio on Wednesday morning, lawmaker Frederick Fung Kin-kee said such a rejection of the mainland as a whole would worsen the relationship between the pro-democracy camp and the central government. “If mutual distrust persists, there might not be real universal suffrage in 2017. A negative impact would be created,” said Fung, a member of the Association of Democracy and People’s Livelihood, who won a “super seat” in Sunday’s election. During electioneering for Sunday’s legislative election, the Civic Party emphasised its determination to “preserve Hong Kong values” and “resist communist ideas”. Beijing authorities have pledged Hongkongers a one-person, one-vote election for the city’s chief executive, but the details have not been provided. The Civic Party also stood firm against the government’s introduction of a course on national education, which critics say could brainwash students. The government has now shelved the deadline for making the course compulsory. Also on the radio programme, Beijing loyalist Chan Yuen-han continued her criticism of “unscrupulous tricks” by fellow members of the pro-establishment camp during the final moments of the campaign. The Federation of Trade Unions (FTU) candidate first vented her anger on Monday, condemning rivals for telling voters outside polling stations that “Chan had already won”, so they should vote for other candidates instead. On Wednesday morning she said: “Competition is fine, but when it comes to lies, it’s very unsatisfactory.” Chan ended up winning one of the five super seats. She blamed one poll winner for “not doing much work, but only relying on the political group’s backing”, without naming names. Among the five “super seat” winners, Starry Lee Wai-king from the Democratic Alliance for the Progress and Betterment of Hong Kong, was the least experienced politically. Observers said she beat fellow DAB member Lau Kong-wah, in part, by making a last-minute, public appeal for more support on voting day. Chan, meanwhile, rejected claims that the FTU had close ties with “the grandfather” – or Beijing authorities. She did not reply directly when asked whether the pro-establishment camp would dare say “no” to Beijing, adding that she dared to confront Hong Kong’s large property developers, and urged the chief executive to do the same. The super seat functional constituencies are so named because they are chosen by a large electorate – from Hong Kong’s 3.2 million voters who do not have a vote in any other functional constituencies.

Hong Kong activists clash with police over island dispute - Anti-Japanese protesters scuffled with police in Hong Kong on Wednesday as they attempted to enter the Japanese consulate following Tokyo’s decision to buy disputed islands in the East China Sea. Around 15 protesters shouted anti-Japanese slogans, burned Japanese flags and called for the Japanese to leave the islands, which are claimed by Beijing, Japan and Taiwan. “We are extremely angry,” said Tsang Kin-shing, who was among a group of Hong Kong-based activists who landed on the islands last month and raised the Chinese and Taiwanese flags. Tokyo agreed to purchase the islands, known in Japan as Senkaku and in China as Diaoyu, for 2.05 billion yen (HK$203 million) on Monday, prompting Beijing to send two patrol ships to the area. “Japan is using the issue of Diaoyu Islands to reignite public sentiment, so I believe all Chinese people are angry,” Tsang told reporters. He said the group that made the successful landing on the islands last month was preparing another trip from Hong Kong. “Our ship will leave any time,” he said. Premier Wen Jiabao has said the islands were “an inherent part of China’s territory” and vowed his country would “never ever yield an inch” on its sovereignty. The islands lie in a strategic shipping area with valuable mineral resources thought to be nearby.

Nomura fires almost 30pc of its HK research team. Nomura International (Hong Kong) Ltd., the Hong Kong-based subsidiary of Japan’s largest broker Nomura Holdings, on Wednesday fired almost 30 per cent of its research team as the broker tries to cut costs as the euro zone crisis, slowing mainland growth and faltering US economy hit the financial services sector worldwide. Nomura fired 15 research analysts in its Hong Kong office, out of a total of about 50 research analysts in the team, according to sources, who declined to be named. Sources also said more lay-offs were expected next week in its investment banking department. They gave no further details. Nomura said on September 6 that it would slash US$1 billion in costs to repair its balance sheet. While Hong Kong had appeared to weather the downturn caused by the euro zone sovereign debt crisis better than Europe and the United States, the region is not immune, and is starting to feel the pinch, with some highly paid bankers being laid off recently. "We thought the worst days would be over soon, but now it seems it is far from the end" of staff cutbacks, a veteran with a European bank in Hong Kong told the South China Morning Post last week. Late last month, Spain's BBVA laid off about 50 employees in Hong Kong. Most of them were equity-related sales people and traders, including some in the sophisticated structured-products team. Those lay-offs were followed last week by Deutsche Bank, which cut about 80 jobs in its Hong Kong and Tokyo offices. Those affected were mostly sales and trading staff and some equities-related bankers and research analysts. The German bank first set up its Hong Kong office in 1958. It has more than 1,400 employees at its Hong Kong office, according to the company's website. Hong Kong is one of the bank's "four hubs" in the Asia-Pacific region, along with Singapore, Sydney and Tokyo. Both Deutsche Bank and BBVA declined to comment last week. Daiwa Securities, which cut about 100 jobs in Hong Kong early this year, also laid off staff in the city recently, including several senior executives. The previous staff cuts involved mostly relatively junior positions.

 China*:  Sept 14 2012

Haier offer for F&P units sparks wider interest in NZ whiteware maker - New Zealand kitchen appliance maker Fisher and Paykel Appliances Holdings has been approached by firms interested in buying some of its divisions after Chinese white-goods maker Haier Group offered to take over the entire company. Shares in F&P Appliances jumped to a four-year high of NZ$1.175 (96 US cents) on Wednesday after Haier offered NZ$869 million to take over New Zealand’s largest appliance maker, putting its market capitalisation around NZ$850 million. Haier, parent of Qingdao Haier Co and Haier Electronics Group Co, said late on Tuesday that it had offered to pay NZ$1.20 a share in cash for a full takeover, a 2.5 per cent premium on its current price. Haier already owns 20 per cent of F&P. “It’s a reasonable offer,” said Shane Solly, portfolio manager at Mint Asset Management in Auckland. “The intellectual firepower and the engineering prowess that the Fisher and Paykel team have had for a long time has significant value to a large manufacturer such as Haier.” F&P disclosed earlier this week that Haier had approached certain shareholders about purchasing their stakes, and F&P Chairman Keith Turner on Wednesday said other companies had since shown interest in the firm’s divisions. In addition to producing refrigerators, washing machines and double-door dishwashers, F&P also manufactures automated production equipment, and has a consumer finance arm. “Now that the takeover statement has been made, we have had some responses from parties interested in various parts of Fisher and Paykel,” Turner said on Wednesday, while declining to give details. Haier has indicated that it could sell the profitable consumer finance division if the takeover is approved. The New Zealand deal is seen as a bid by Haier to reduce its reliance on a slowing domestic economy, and as a tempting offer for F&P’s shareholders at a time when demand is slowing for its products. It would also strengthen Haier’s overseas presence. F&P controls up to 20 per cent of the Australian white-goods market, while it dominates the New Zealand market. Roughly half of F&P’s production is sold in Australia and 25-30 per cent in New Zealand, with the remainder going to the United States, Europe, Britain, the Middle East and Singapore. F&P has said the offer has the support of fund manager Allan Gray, its second-largest shareholder which owns 17.5 per cent of the company. Haier’s first overseas foray was a failed attempt in 2005 to buy US white-goods maker Maytag after teaming up with Bain Capital and Blackstone Group. Washington DC-based Carlyle Group agreed in 2011 to buy 9 per cent of Haier’s Hong Kong-listed unit (1169.HK), investing up to US$194 million through convertible bonds. Carlyle’s investment provided capital for Haier’s expansion plans and emerged just days after Haier decided to buy Panasonic Corp’s Sanyo Electric washing machine and refrigerator units in Japan and Southeast Asia for US$130 million. F&P has been hit by the global credit crisis and slow demand aggravated by a high New Zealand dollar. Some analysts said the company had turned a corner in the past year and faced a strong outlook. F&P has moved most of its manufacturing to low-cost Mexico and Thailand. The offer comes as China’s home appliance makers are grappling not only with reduced demand, but also intensifying competition from local and foreign brands that have hurt their bottom lines and prompted them to seek new avenues to spur growth. 

Health authorities are investigating a claim that genetically modified rice was tested on Chinese children as part of a Sino-US research project, and one researcher has been suspended. China is already the world's largest grower of GM cotton and top importer of GM soybeans. But while authorities have approved homegrown strains of GM rice, they have remained cautious. Introducing the technology on a commercial basis is a cause for much public concern about food safety. The Chinese Center for Disease Control and Prevention probe started after a report last month from Greenpeace. By Greenpeace's account, a US Department of Agriculture-backed study used 24 Chinese children aged from six to eight to test "golden rice," a new type containing beta carotene and intended to alleviate vitamin A deficiency. According to the CDC, no domestic institutions were cleared to participate in such a research program. But the International Rice Research Institute is working with nutrition and agricultural research organizations to develop and evaluate golden rice for reducing vitamin A deficiency in the Philippines and Bangladesh. Research by Massachusetts-based Tufts University and Chinese scientists was published in the American Journal of Clinical Nutrition in August. It aimed to show the rice could provide a good source of vitamin A for children, but CDC investigators have now asked Tufts University to help in its probe. Andrea Grossman, involved in public relations for Tufts, said there was concern about the allegations, and protocols in the 2008 research were being checked. The Greenpeace report sparked a wave of criticism on Weibo, with the researchers accused of a breach of ethics for testing poor, rural children. One of the Chinese authors, Shi-an Yin, has been suspended from work after his responses were inconsistent, the CDC said. People's Daily quoted him as saying he helped collect data for the study but was unaware it involved GM rice.

Europe was the location of the greatest number of merger and acquisition deals that Chinese investors made in non-resource industries in the second quarter of 2012, according to a report published on Tuesday by the equity investment firm A Capital. The report said that Chinese companies made merger and acquisition deals worth $5 billion in Europe in the quarter, accounting for 48 percent of the total money that the companies put into such deals in the world during that period. Moreover, 95 percent of Chinese companies' non-resources deals were related to the European market. "Europe's economy is structurally complementary to the Chinese one," said Andre Loesekrug-Pietri, chairman of A Capital. "And, in our view, this should increase even more with the Chinese rebalancing toward more consumption and sustainable development." Loesekrug-Pietri said many prominent companies and industrial clusters in Europe specialize in environmental technology, automobiles, consumer brands, new materials and similar businesses. These are also businesses in which Chinese firms need to move up the value chain. "The stunning proportion of all non-resources deals, i.e., in the industrial or services sectors, that flowed into Europe in the second quarter is probably a direct consequence of this strategic focus," said Loesekrug-Pietri. The report said Chinese investors put about twice as much money into Europe in the second quarter as they had in the same period a year before, making large investments in Portugal, Germany and France. Europe has remained the leading destination for such spending quarter after quarter, evidence that European companies remain attractive to Chinese investors. Loesekrug-Pietri said such spending is likely to continue, especially since the European market remains open to Chinese investment. The report also said that recent investments in European companies show that Chinese investors are looking to put their money into stable assets. As examples, it cited China Three Gorges Co, a State-owned clean-energy conglomerate that specializes in hydropower development and operation, which invested in the Portuguese utility company EDP Energias de Portugal SA; and the Chinese sovereign wealth fund China Investment Corp, which invested in the utility company Thames Water Utilities Ltd. The report said more and more investors are finding that the best way to acquire high-quality assets that normally would not be for sale is to go for a minority stake in them. Doing so also greatly lowers the risk of running into public-relations difficulties. Of the total value of the merger and acquisition deals Chinese companies made in the world this year, 70 percent came from deals in which a minority stake was acquired. Loesekrug-Pietri said mergers and acquisitions are risky in themselves and even more so when they are made across borders. Many Chinese companies are now conducting these sorts of transactions for the first time. To hedge against these risks, he suggested that Chinese companies team up with a local partner like A Capital that has a local understanding of the opportunities, or taking minority stake as a first step to avoid disrupting the current management and being left without proper international management resources.

Hong Kong*:  Sept 13 2012 Share

Former lawmaker ChristineLoh receives Hong Kong Government appointment. An environmentalist and former legislator, Christine Loh Kung-wai, has been appointed as the Under Secretary for the Environment. Ms Loh, who yesterday stepped down as head of the think-tank, Civic Exchange, will work as a deputy to Wong Kam-sing. Loh was a lawmaker between 1992 and 2000. She has been in the forefront in policy research in areas such as environmental protection, urban planning and design. Her appointment is seen as a boost to Leung Chun-ying's administration on the environmental front. Meanwhile, a former Deputy Police Commissioner, John Lee Ka-chiu, has been appointed Under Secretary for Security. The government also announced that former journalist Yau Sing-mu will continue his portfolio in housing and transport. Loh takes up office today while Lee and Yau will assume office on October 1 and September 15 respectively. Two political assistants have also been appointed. Ronald Chan Ngok-pang, a member of the Savantas Policy Institute, will serve under the Secretary for Constitutional Affairs. He has previously worked as a special assistant to the Chief Executive's Office. DAB member Casper Tsui Ying-wai will continue to serve under the Secretary for Home Affairs. Chan assumes office today and Tsui will take up office on October 8.

A High Court judge yesterday ordered Digital Broadcasting Corp to release documents about the radio station to chairman and major shareholder Bill Wong Cho-bau. Justice Jonathan Harris said it was inconceivable for a director to be unable to gain access to papers detailing a firm's financial situation. He said the company should simply tell Wong where they are and allow him unrestricted access. However, lawyer Daniel Fung Wah-kin said his client has been denied access despite making repeated requests since July. But Victor Dawes, for DBC founder Albert Cheng King-hon and chief executive Maurice Ho Kwok-fai, said more time is needed to get the documents ready. A deal was struck with the two officials to let Wong see those concerning accounts and employment contracts, between September 11-21. Cheng and Ho will submit an affidavit to confirm any missing documents. Wong, a member of the Chinese People's Political Consultative Conference, holds a 20percent stake in DBC, while Cheng and Ho together control 30percent. Up to HK$150 million has so far been invested in the company and trouble started when management, headed by Cheng, asked for HK$50 million more. Wong and the stakeholders rejected the request, claiming Cheng refused to reveal the company's financial situation, something which the latter denies.

Hong Kong Open organisers hold crisis meeting in bid for funds - Organisers of the besieged Hong Kong Open will hold crisis talks with the government tomorrow (Wednesday) in a bid to attract multi-million-dollar funding for the golf tournament in November. In a last-ditch attempt to attract a major sponsor, officials from the European Tour and the Hong Kong Golf Association will make a joint representation to the government’s Mega Events Fund, asking for millions of dollars in funding. The success of this application will have a bearing on whether a blue-chip backer will come in as title sponsor. “If we get government funding, we are assured of getting additional funding, of getting a title sponsor,” HKGA chief executive Iain Valentine said. “But even if we don’t get MEF money, I assure you the tournament will still go ahead, sanctioned by both the European Tour and the Asian Tour.” Hong Kong’s oldest professional sporting event celebrates its 54th anniversary in November. The European Tour has co-sanctioned the tournament, won last year by Rory McIlroy, since 2001. But there have been reports the European Tour, struggling to unearth sponsors, might pull out. Valentine denied the European Tour was considering bailing out of the US$2.75 million showpiece at the Hong Kong Golf Club (November 15-18) in Fanling. The European Tour has already cancelled four tournaments this season due to a lack of sponsors – the Majorca Open, Czech Open, Madrid Masters and the Castellon Masters. “I can assure you that is just a rumour,” Valentine said. “This tournament will go ahead. The European Tour is sending an official to be present at our presentation to the government for funding. Our relationship with the European Tour is strong.” Last year the Hong Kong Open, backed by Swiss bankers UBS, received HK$8 million from the Mega Events Fund. UBS ended a seven-year relationship with the tournament in 2011, but it is understood they are now thinking of returning once again after Omega backtracked on a decision to sponsor the tournament. It is understood UBS will only come in if the MEF decides to back the tournament again.

Occupy Central protesters evicted from HSBC building - Security guards on Tuesday afternoon continued the removal of a handful of “Occupy Central” protesters remaining on the ground floor of HSBC’s headquarters beyond a court deadline ordering them to leave. The eviction began on Tuesday morning when the protesters were told to remove their furniture from the plaza and leave immediately. While some belongings were removed without resistance, minor scuffles occurred as activists refusing to leave lay down on mattresses and chairs. Scores of security staff and bailiff officers walked through tents, sofas and tables to reach the defiant activists. They encircled the protesters before grabbing them by their limbs and carrying them individually to a pavement outside the HSBC building. During stand-offs, some protesters shouted at guards telling them to leave. “Get away. This is a private place and these are private properties,” one female activist shouted at a team of bailiffs standing aloof next to her. Some other protesters were chased around the plaza by security guards while attempting to escape but they were caught and pushed to the ground. A woman who claimed to have come to the scene earlier on Tuesday to support the activists said the bailiffs had not followed appropriate procedures for eviction. “Eviction notices must have been displayed in prominent positions at the site on at least two occasions before the eviction. You have not done this yet – and you are saying you are enforcing the law? Can anyone explain to me, on what laws your action is based on? What procedures are you following?” the woman wearing a black T-shirt said on a microphone. On Tuesday afternoon, about 20 protesters, three tents and a few sofas and bookshelves remained in the plaza after the guards and bailiffs returned from a lunch break. Some of the protesters who had been removed early in the day attempted to return to the protest camp – but were blocked again by security guards. The defiant protesters have remained at the site since the High Court ordered them to leave the plaza by August 27. Other activists in the anti-capitalism campaign, which started in October last year, had already left the protest site by the deadline. Granting an application by HSBC, the court ruled on August 13 that the protesters – been inspired by last year’s Occupy Wall Street movement in the United States – had no legal basis to occupy the site. It gave the activists two weeks to leave.

Artist Louis Pearl performs bubble art in Hong Kong - Artist Louis Pearl performed the bubble art for citizens as a preview of his upcoming performance in Hong Kong, south China, Sept. 11, 2012.

Samsung Lee meets Li Ka-shing for broader co-op - Samsung Electronics Chairman Lee Kun-hee met with Hong Kong billionaire Li Ka-shing on Thursday in a bid to discuss broader partnership between the two sides. According to an e-mailed statement by Samsung, the two heads of Asia's representative conglomerates had face-to-face talks in Hong Kong, discussing ways for new business expansion between the two companies. The two heads also promised to strengthen their existing partnership in the fields such as handset and network businesses. The meeting was attended by Samsung corporate strategy chief Choi Gee-sung and Lee Jae-yong, the chief operating officer at Samsung Electronics and only son of Chairman Lee, along with Victor Li, vice-chairman of Cheung Kong Holdings controlled by Li Ka-shing.

 China*:  Sept 13 2012

China sends ships to Diaoyus after Japan moves to assert claim - China has dispatched two patrol ships to “assert its sovereignty” over islands at the centre of a row with Japan, state media said on Tuesday, as Tokyo completed its purchase of the disputed territory. The two marine surveillance ships had reached the waters around the Diaoyu islands – known in Japan as the Senkaku islands – and would “take actions pending the development of the situation”, the Xinhua news agency said. The arrival came as the Japanese government announced it had completed its planned purchase of the islands, which lie in a strategically important shipping area with valuable mineral resources thought to be nearby. “This should cause no problem for Japan’s ties with other countries and regions,” said Japan’s Chief Cabinet Secretary Osamu Fujimura. “We have absolutely no desire for any repercussions as far as Japan-China relations are concerned. It is important that we avoid misunderstanding and unforeseen problems,” he told reporters. Beijing had earlier summoned the Japanese ambassador and lodged a strong protest over Tokyo’s move to purchase the islands, while vowing to take counter-measures. Premier Wen Jiabao said the islands were “an inherent part of China’s territory” and vowed his country would “never ever yield an inch” on its sovereignty. However, the ships China dispatched were from the State Oceanic Authority and not military vessels, and analysts downplayed the significance of the move, saying the deal may even allow Beijing and Tokyo to temper tensions. “That some patrol vessels were deployed in the vicinity of the islands was almost inevitable, but now, at least, there is no longer a risk that some nationalist Japanese politician would gain control of the islands,” said China expert Jonathan Holslag. “Most decision-makers in Beijing are relieved that the Japanese national government bought the Senkaku/Diaoyu Islands,” added Holslag, head of research at the Brussels Institute of Contemporary China Studies. On Sunday, President Hu Jintao urged Japanese Prime Minister Yoshihiko Noda not to go ahead with the purchase in brief talks held on the sidelines of the Asia-Pacific economic summit in Vladivostok. “China-Japan relations have recently faced a severe situation due to the Diaoyu Island issue,” a foreign ministry statement quoted Hu as telling Noda. “Japan must fully recognise the gravity of the situation and should not make wrong decisions.” Officials at China’s State Oceanic Administration, which dispatched the two surveillance ships, were not immediately available to clarify whether the vessels were armed. Often testy Japan-China ties took a turn for the worse in August when pro-Beijing activists landed on one of the islands. They were arrested by Japanese authorities and deported. Days later about a dozen Japanese nationalists raised their country’s flag on the same island, Uotsurijima, prompting protests in cities across China. Japan’s government currently leases four islands and owns a fifth. It does not allow people to visit and has a policy of not building anything there. State television and all major Chinese dailies in China on Tuesday highlighted Beijing’s condemnation of the purchase. Around 200 people in eastern Shandong province took to the streets on Tuesday to protest, carrying banners and singing China’s national anthem. The islands, which lie around 200 kilometres from Taiwan and 2,000 kilometres from Tokyo, are also claimed by Taipei, which strongly protested the Japanese move on Tuesday. “We strongly demand that the Japanese government revokes this move,” Taiwan’s foreign minister Timothy Yang told reporters in Taipei. “Japan’s unilateral and illegal action cannot change the fact that the Republic of China [Taiwan’s official name] owns the Diaoyu islands.”

Shanghai Says It Will Rebrand ‘Japanese’ Marathon - The gathering Sino-Japanese storm over a set of disputed islands has sent Shanghai authorities sprinting away from the Tokyo chemical company that has sponsored one of the city’s proudest sporting events for the past 16 years while also pledging to set new hurdles in front of Japanese participation in an upcoming tourism parade. A press conference for the upcoming Toray Cup Shanghai International Marathon was thrown into disarray on Tuesday when local authorities abruptly called a halt to the proceedings. In a statement later, officials explained that the event could not go ahead as planned given current circumstances surrounding the Senkaku Islands. Relations between China and Japan have grown increasingly testy in recent weeks owing to a series of provocations related to the Senkakus, a set of rocky islands in the East China Sea that are administered by Japan but claimed by China, where they are called the Diaoyu Islands. The disruption of the Toray press conference came on the same day that China sent two government surveillance vessels to the islands – a response to Japan’s announcement on Monday that it planned to buy some of the islands from private owners. In a statement posted on its official feed on Sina Corp.’s Weibo microblogging service, the Shanghai Municipal Sports Bureau said the marathon, an event named for Tokyo-based Toray Industries Inc., could not go ahead because “a marathon sponsored by and named for a Japanese company is not suitable to be launched” at such a time. “As a traditional Shanghai brand, the 2012 Shanghai International Marathon will still be held as planned,” the bureau added, citing the marathon organizing committee. In addition to problems with the marathon, also threatened is Japan’s participation in an annual Shanghai tourism festival set to kick off on Friday night with a large parade of national floats, authorities said. Dao Shuming, the director of the Shanghai Tourism Bureau, told reporters at another press conference on Tuesday that Japan’s float would be subject to unspecified restrictions this year. “In regards to float participation, under current circumstances, that would temporarily not run as arranged by the previous plan,” he said. Asked to comment Tuesday, a Shanghai Municipal Government spokesman said: “I would like to add that we cherish the friendship with people from other countries. But we definitely would not step back on the issue of territorial sovereignty.” Shanghai has traditionally been one of China’s more Japanese friendly cities, with a large and visible population of Japanese tourists, students and executives, plus numerous Japanese restaurants and cultural events. But the city, occupied by the Japanese during World War II, has also been a volatile place for Japanese, who say they sometimes tell locals they are another nationality. In April 2005, tens of thousands of people marched in anti-Japanese protests that stretched several kilometers through the center of Shanghai and marked one of the city’s biggest demonstrations in modern times. Demonstrators smashed Japanese restaurants, hurled insults outside the consul general’s residence and then for several hours pelted the country’s consulate with eggs, bottles and rocks. The marathon known up to this point as the Toray Cup had 25,000 entrants last year. It is one of Shanghai’s Big Four annual sporting events, along with a Formula One auto race, the Tennis Masters and an international athletics event. Tuesday’s press conference was to have featured Chen Yiping, Shanghai’s vice-director of sports, and a senior member of Toray’s China management team. But even as they were being introduced, the event was abruptly cancelled, said a Toray spokeswoman who was there. “It was stopped after a short time,” she said. “We have never faced (such) an occasion previously.” The spokeswoman said Toray had no plans to revoke its race sponsorship but said the event -– planned for December -– is ultimately owned and controlled by the Shanghai government. The race’s website has since been taken down.

Chinese firms ramp up presence in Thailand - COFCO Biochemical (Thailand) Co Ltd's factory in Rayong Industrial Zone in Thailand. The Thai subsidiary of China National Cereals, Oils and Foodstuffs Corp, China's largest food processing, manufacturing, and trading company, spent 100 million yuan ($15.8 million) to buy a citrate factory and another 100 million yuan on upgrades. The Second Thai-Lao Friendship Bridge, which connects Mukdahan Province in Thailand with Savannakhet in Laos. A fourth bridge connecting Chiang Rai Province in Thailand with Ban Houayxay in Laos has been approved by authorities and will be partly financed by China. Investors view the Southeast Asian nation as a springboard into the rest of the region, as Wei Tian reports from Bangkok - In the second act of Siam Niramit, a historical cultural performance about ancient Thailand, popular among foreign tourists in Bangkok, a 16th-century Chinese trading boat docks at a port on stage. Fully loaded with delicate silks, porcelain and other treasures from China, the arriving outsider quickly wins over the hearts and minds of local residents. Today, the humble trading vessel has been replaced by thousands of planes and cargo ships transporting goods between the two countries worth billions, ensuring ties between the two nations are strong and deep-rooted, both socially and economically. According to the latest statistics from the Thailand Board of Investment (BOI), for instance, China was the country's second-largest source of foreign direct investment in 2011. Chinese companies have applied to take part in more than 180 investment projects in the last five years, worth a total investment of $4.15 billion. Data from Thailand's travel bureau show China has become the largest source of visitors to its famous southern seaside resort of Phuket. The importance given to links with China is clearly illustrated at the newly built multimillion dollar Bangkok Suvarnabhumi International Airport, where noticeboards and signs are in Thai, English and Chinese. Liang Wanshan is among the new generation of Chinese coming to Thailand. As general manager of COFCO (China National Cereals, Oils and Foodstuffs Corp) Biochemical (Thailand) Co Ltd, Liang was sent to establish a local team after China's largest food processor, manufacturer and trader spend 100 million yuan ($15.8 million) to buy a local citrate factory last year. Eight months after Liang first arrived in Thailand, a modern factory is taking shape in the east of the country's Rayong Province. But its redevelopment wasn't easy. "At first, I was shocked by how simple and crude the factory was," Liang said. Apart from investing in the site, the company spent another 100 million yuan on upgrading and overhauling the equipment on site, 20 percent of which was in the necessary environmental protection systems. "Maintaining a good relationship with local residents is vital for foreign investors in Thailand, and environmental protection was always a sensitive issue," he said, adding that the previous owner had issues with local residents over the factory's environmental record. COFCO decided right from the start it needed to play a key role in the local community. Having already hired 80 employees locally, Liang said he expects to have a full capacity of 300 people when fully operational next year. "We are keen to employ as many local people as possible in senior management positions," he said. According to a recent report from global management consulting company McKinney & Co, one of the biggest issues facing Chinese companies looking for international expansion remains being able to find enough managers with overseas experience. It said creating the perfect balance between local people and incoming Chinese has to be carefully planned, and success can often depend on whether that balance is right. Liang said that he insists his Chinese managers employed to work in Thailand have been fully trained, not only in the local language and laws, but also in local culture and customs. "We also provide Chinese lessons for our local staff," he added. Within his workforce there are also Chinese managers hired locally, such as Jing Jing, a Chinese graduate who has been working and living in Thailand for more than five years. "It's actually been quite easy to knit myself into the local community," said Jing, a graduate from Guangxi Zhuang autonomous region who speaks fluent Thai, "because we don't actually look that different, which helps too". After generations of immigration, the Chinese are the second-largest ethnic group in Thailand, accounting for 14 percent of the country's total population. "I also like the fact that most things are cheaper here, the lifestyle is very easy going, plus flight tickets from Nanning (the capital city of Guangxi Zhuang autonomous region) to here are actually cheaper than to many Chinese cities, making Bangkok closer to home than Beijing or Shanghai," added the 30-year-old office worker. "I know many like me who have married local people, and others who have bought property or become successful entrepreneurs. "Many are now being hired by Chinese companies who have established an office or factory in Thailand," she said, adding that she knows of around 100 of her college friends working for Chinese companies in Bangkok, including for some big names such as Huawei and Haier. Since 2007, nearly 30 Chinese companies have established a presence in the Rayong Industrial Zone, involved in industries ranging from electronics and auto parts, to rubber and metal. COFCO Biochemical said that one of the reasons for its acquisition of a local factory was to secure a better supply of raw materials, particularly cassava, a crop grown for its edible starchy root which is a major source of carbohydrates, of which Thailand is a main producing area. "The acquisition will help diversify our raw material supply, and contribute to the expansion of our citrate business, further improving regional distribution and enhancing economic benefits," the company said.

Hong Kong*:  Sept 12 2012 Share

The government will study whether to introduce absentee voting for Hong Kong permanent residents living abroad, Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen said yesterday. After casting his votes at St Stephen's Girls' Primary School on Park Road, Tam said the issue of absentee voting had been raised in the past. "When we review the system again in preparation for the 2016 Legislative Council election, if the council or certain sectors want us to study [absentee voting], we will certainly do so," he said. Meanwhile, Filipinos in Hong Kong have been queuing up in the Philippine consulate to register for absentee voting in next year's mid-term legislative elections in their country. About 12,000 Filipinos, who are mostly domestic helpers, have so far signed up ahead of the October 31 deadline, said Noel Servigon, Philippine Consul- General in Hong Kong. Those who voted in absentia during the 2010 presidential elections are encouraged to check if they are still on the voters' list. A registration campaign was staged at Chater Garden in Central yesterday. Servigon said it was ironic Filipino domestic helpers could not vote in the Legislative Council election. Overseas Filipinos can make a difference as absentee voters. From April 13 to May 13 next year they can vote for 12 of 24 Filipino senators and for one-party list representatives in the 286-seat House of Representatives.

MTR may raise licence fees for 4G telecoms services - High-speed mobile service may be delayed if the railway firm imposes higher charges on mobile operators. The delivery of 4G mobile services on the MTR's railway system could be further delayed if the railway firm tries to raise the fees wireless network operators pay to offer their service in its trains and stations. As negotiations continue between MTR and Hong Kong's five 4G service providers, a person close to the talks said:  "Telecommunications network operators pay hundreds of millions of dollars worth of charges annually to the MTR for providing their services on its railway lines." One 3G network operator is paying HK$25 million a year for using a handful of radio frequency bands, including 900 megahertz and 2100MHz, on which it delivers mobile services to subscribers travelling on the MTR. Without elaborating, the person familiar with the talks said: "The MTR may charge even more for [firms to provide] 4G service." For consumers, higher fees paid by telecommunications network operators to the MTR may have an impact on charges included in the mobile subscription contracts they sign up for. Most of the network operators have tacked on HK$12 for MTR, tunnels, mobile service fee and administration charges to their users' monthly bills. But one operator said its monthly administration fee was not based on any MTR fee it paid. "If we based that on the charges we pay, the administration fee will be a lot higher," said the operator, which declined to be identified. Each mobile network operator also has to pay a fee before doing any construction in the MTR station area. A person familiar with the charge said it was a one-time payment of about HK$70,000 per station, based on a work proposal approved by an MTR-appointed consultant, whose fee is paid by the operator. All telecommunications systems and network equipment within the MTR are installed and maintained by its authorised contractor. An installation fee is charged and shared by all participating telecommunications operators, and the equipment becomes MTR property. Another person familiar with the talks said all the operators aimed to convince the MTR to keep new 4G-related fees low or lower than what they already paid to provide existing mobile services. He said the talks with the MTR started "a few months ago". CSL, Three Hong Kong, PCCW Mobile, SmarTone Telecommunications and China Mobile Hong Kong all provide 4G services based on long-term evolution (LTE) technology. Each of their 4G LTE networks can provide theoretical online download speeds of up to 100 megabits per second. Concerns about higher fees that the MTR could charge 4G network operators may have been fuelled by the MTR's first-half results. The firm's net profit fell for the first time in three years. The MTR, however, reported last month that its first-half revenue related to telecommunications increased 2.5 per cent to HK$167 million. MTR chief executive Jay Walder said: "In order to meet increasing mobile data demand, we facilitated telecoms operators to increase 3G data capacity and signal reception, as well as conducting a technical trial for 4G."

Political groups ferry elderly and disabled to HK polling stations - Elections are a powerful driving force for people to exercise their hard-fought right to vote - but there are always those who need to be driven. Such was the case yesterday with groups affiliated to pro-government candidates offering free rides to the polling booths to elderly people, the disabled and villagers in remote areas. Strictly speaking, this goes against the Elections Ordinance, which says "a person engages in corrupt conduct at an election if he offers an advantage to another person as an inducement to vote at the election for a particular candidate". But that didn't stop coaches and taxis being hired to transport voters, while there were plenty of private cars used to carry people to and from various polling stations in Kowloon West and New Territories West. Some even travelled in luxury, with a Mercedes Benz ferrying elderly people from Sheung Lok House on the Sheung Lok Estate in Ho Man Tin to a nearby polling station at Ho Man Tin Government Secondary School. "The car was arranged by the residents' committee," said a 69-year-old passenger, who declined to be named as he waited to be picked up at a sitting-out area on the estate yesterday afternoon. The driver said he was helping his friend, who was the chairman of the committee, to take the elderly to the polling station. "It's very difficult for them to walk on a scorching summer's day," he said. A residents' committee volunteer spoke to the people waiting to get into the car. "If you support Mr Cheng, you may want to cast your ballot for candidate No8 … but of course you have the right to vote for whoever you want," he said, referring to Dr Cheng Lee-ming, the Ho Man Tin district councillor. The volunteer added: "We will organise another picnic soon … visiting the Heritage 1881." Cheng could not be reached for comment.. In Wang Toi Shan Shan Tsuen, Yuen Long, private cars ferried voters to and from the polling station at the former Toi Shan Public School. One campaigner wearing the colours of the pro-government New Territories Association of Societies brought a disabled villager to vote in a car that had Hong Kong and mainland number plates. He said: "We were just trying to help voters in need." New Territories taxis bearing a candidate's number brought voters to a polling station in Shung Ching San Tsuen. Meanwhile, four voters called police when they were told other people had voted with their identities. The cases involved four polling stations in Sha Tin, Tsuen Wan and Tseung Kwan O. Officers said their identity cards had not been stolen or lost.

Albert Ho resigns as Democratic Party chairman amid election losses - Albert Ho Chun-yan announced on Monday he was stepping down as Democratic Party chairman after admitting to “serious failures” in his party’s Legislative Council election campaign. The Democrats only managed to win four out of 35 seats in the geographical constituencies, dropping three seats in the New Territories East and New Territories West. Ho bowed in front of the press and expressed his “most sincere apologies”. Discussing the election result, Ho said he did not think his party had paid a price for negotiating with the central government’s liaison office or for supporting the government’s 2010 electoral package. “I still believe the reform package we passed in 2010 served the interests of Hong Kong, and had the support of the general public,” Ho said. “But in recent months, the public has been impatient with the current administration, and maybe some of them preferred to choose people who were much more aggressive in their stances and roles, that might cause some to lose votes.” But Ho believed this was not the main cause of the failure, and his party would meet to review the results and develop future strategies. Ho also refused to comment on whether the Civic Party’s excess votes contributed to the Democrats’ defeats. “I don’t want to criticise our allies, because in an election, every party has their choice and can only make their best bid to win.” He emphasised that he was determined to step down, and it was unlikely anyone could change his mind. Vice-chairwoman Emily Lau Wai-hing will be the acting chairwoman before a new chairman is elected at the end of the year. “We need to rejuvenate the party’s image, and be more lively when we express ideas,” Ho stressed. “Our leadership right now still believes firmly that being rational and practical is the right direction forward… there is still the need to negotiate with Beijing, to achieve universal suffrage, and I think other parties should consider that too.” 

Secondary market transactions in two major New Territories districts -Tuen Mun and Wu Kai Sha - have stalled following the weekend release of price lists at two new projects, Century Gateway and Double Cove. Sun Hung Kai Properties (0016) priced units at its Century Gateway scheme in Tuen Mun lower than expected at an average HK$11,238 to HK$11,298 per square foot. Henderson Land (0012), meanwhile, priced flats at its Double Cove project in Wu Kai Sha at the same level as market expectations. Over the weekend, secondary property market deals in Tuen Mun plunged by as much as 60 percent from the previous week. No second-hand flats were sold in Wu Kai Sha, agents said. Potential homebuyers are now focused on the primary residential market, they said. Sellers, on the other hand, have adopted a wait-and-see attitude. "Buyers in the districts have long waited for new quality projects so they can upgrade," said Bernie Chan Kwong- yu, Midland Realty district sales director in Tuen Mun. Don Wong Chi-hong, Centaline senior branch manager in Ma On Shan, expects homeowners in Tuen Mun and Wu Kai Sha to be the biggest beneficiaries. "Asking prices are [already being set] higher than the market prices," Wong said. Prices of another 47 Century Gateway flats were released yesterday at HK$11,298 psf, following the 60 units which were priced HK$11,238 earlier on Saturday. The Double Cove flats - 160 units, all about 1,000 sq ft - were divided among different price lists. Prices of 110 units were first released on Saturday - 60 at HK$8,758 psf and 50 at HK$8,774. To compare, a 1,159 sq ft unit in Lake Silver, a Sino Land (0083) development nearby, is about HK$7,500 psf on average, said Jacky Lau Fat-lee, Centaline branch manager in Ma On Shan. Century Gateway units will be available from Tuesday and Double Cove flats from Thursday at the earliest. Overall, Centaline recorded 31 transactions at the 10 major housing estates over the weekend - four more than last week.

 China*:  Sept 12 2012

Premier Wen Jiabao said China will "make absolutely no concession" on territory after Japan's decision on Monday to "nationalize" the Diaoyu Islands. Survivors of the Japanese mass bombing of Chongqing, between 1938 and 1944, protest outside a Chongqing court against Japan's wartime actions and Tokyo's plan to "nationalize" China's Diaoyu Islands on Monday. Survivors of the bombing have filed a lawsuit against Tokyo. Tokyo's decision sparked a focused and determined response from Beijing, including the possibility, experts said, that territorial coordinates, clearly defining the islands' geographic location, could be sent to the United Nations. Top legislator Wu Bangguo, on a visit to Iran, also reiterated Beijing's stance that the islands belong to China and have for centuries. Wen's remarks came a day after President Hu Jintao told Japanese Prime Minister Yoshihiko Noda, during an encounter at the APEC summit, that "Japan must realize the seriousness of the situation". Observers of ties between Asia's largest economies said Beijing has, for the first time, placed extra emphasis on territorial sovereignty over waters around the islands, in a "powerful response" to Japan. The risk has increased that Sino-Japanese relations will spiral out of control over the issue, they said. The Japanese government officially decided to "purchase" the islands on Monday afternoon and Osamu Fujimura, chief cabinet secretary, said the aim was to "nationalize" the uninhabited islands in the East China Sea as soon as possible. Fujimura did not disclose the purchase price, but Japanese media reported last week that the government was set to pay 2.05 billion yen ($26.26 million). The deal is likely to be finalized on Tuesday. China-Japan ties have been strained since Shintaro Ishihara, the right-wing Tokyo governor, unveiled plans on behalf of the city government to "buy" the islands in April. Noda announced a plan in July to "nationalize" the islands, a move that prompted immediate protests from Beijing. In response to the developments, Beijing announced territorial coordinates — base points and baselines — for waters off the islands. It also announced plans to implement "normalized surveillance and monitoring" of the islands. Diaoyu: Strong protests lodged. The Foreign Ministry said in a statement that records show the islands were first found, named and used by the Chinese, and have been included in China's maritime defense sphere since the Ming Dynasty (1368-1644). Japan seized the islands through illegal means at the end of the Sino-Japanese War (1894-95). But two key declarations during World War II, Cairo and Potsdam, legally returned the islands to China, the statement said. Japan's stance on the islands is a blatant denial of the victory of a global anti-fascist war and a serious challenge to the post-war international order, the statement said. Foreign Minister Yang Jiechi also summoned, and made representations to, Japanese Ambassador to China Uichiro Niwa on Monday. The unilateral measures that Japan has taken are "illegal and ineffective", he said. "China strongly urges Japan to immediately revoke the wrong decision to 'buy' the islands ... Otherwise, consequences arising from it can only be shouldered by Japan." China's Ambassador to Japan Cheng Yonghua also made representations and submitted a note of protest to Japan's Foreign Ministry. In Beijing, Premier Wen Jiabao said during a speech on Monday at the China Foreign Affairs University that the Diaoyu Islands are an inalienable part of China's territory and China will "absolutely make no concession" on issues concerning its sovereignty and territorial integrity. "The Chinese government and its people cherish their country's hard-won national sovereignty and dignity more than anybody," Wen told the students. This is the first time the Chinese government has placed extra emphasis on sovereignty over its territorial waters around the islands, and sovereignty rights in the waters, said Zhang Haiwen, deputy director of the China Institute for Marine Affairs. "The baselines and base points define the territorial land and waters of the islands, and will further help nail down relevant exclusive economic zones," Zhang said. Beijing may immediately submit the definitions to the United Nations secretary-general, she added. Shi Yinhong, an expert on international politics at Renmin University of China said the move enhances the legal basis to back China's assertion of sovereignty over the islands, and is a "powerful response" to Japan's illegal attempt to "nationalize" them. "We have to be prepared for Japan's looming sovereignty infringement in a strategic way, involving all kinds of measures, including defensive ones," Shi said. The major task for Beijing, Shi said, is to prevent Tokyo "reaching for a yard after taking an inch" when encroaching on Chinese territory, he said. The Japanese government and right-wingers share the same beliefs on the islands, said Gao Hong, deputy director of the Chinese Academy of Social Sciences' Institute of Japanese Studies. "Although the Japanese government insisted that there would be fewer risks if they 'bought' the islands instead of Ishihara, there is no essential difference between the Japanese government's plan and Ishihara's claim." Qu Xing, head of the China Institute of International Studies, said there would be long-term complications if the Japanese government managed to "buy" the islands. It will leave less room for diplomacy, Qu said.

Japan moves forward on Diaoyu Islands purchase - Japan will nationalise a group of islands at the centre of a territorial dispute with China, the government said on Monday, as Tokyo tries both to appease nationalists and keep Beijing onside. In a deal reported to be worth 2.05 billion yen (HK$203 million) Premier Yoshihiko Noda’s administration agreed to buy three islands it already runs, but which China claims as its own. “During the ministerial meeting today, we agreed that we will obtain the ownership of the three Senkaku islands as quickly as possible,” Chief Cabinet Secretary Osamu Fujimura told reporters, using the Japanese name for what China calls Diaoyu. The decision to purchase the islands, which will be formally owned by Japan’s Coast Guard, was aimed at their “quiet and stable maintenance”, he added. Noda has been somewhat bounced into the deal by Shintaro Ishihara, the outspoken right wing governor of Tokyo, who said he wanted them developed to protect Japanese sovereignty. China has reacted with muted irritation since reports emerged that the Japanese government was going to buy the chain. Analysts say Noda’s solution – owning the islands and not doing anything with them – is the best thing he could do because it will go some way to assuaging nationalist fervour at home while not annoying China too much. Fujimura said the purchase from private Japanese landowners is “not an issue that would stir problems with other countries”. “Having said that, we hope that it doesn’t influence broader Japan-China relations. After the Chinese side expressed interest, diplomats from both countries have kept in close contact.” Often testy Japan-China ties took a turn for the worse in August when pro-Beijing activists landed on one of the islands. They were arrested by Japanese authorities and deported. Days later about a dozen Japanese nationalists raised their country’s flag on the same island, Uotsurijima, prompting protests in cities across China. In a commentary ahead of the official announcement, China’s official Xinhua news agency reiterated Beijing’s claims over the islands, which lie around 200 kilometres from Taiwan, and 2,000 kilometres from Tokyo. “A recent string of Japanese provocations over Diaoyu Islands, over which China holds indisputable sovereignty, has already thrown bilateral relations into a scalding pot,” the agency said. “No matter in what form, such a move is both illegal and invalid, and is firmly opposed by China. The Japanese government must bear full responsibility for whatever repercussions may arise. “Pushing ahead with a provocative unilateral move serves nothing but to undermine the hard-won China-Japan strategic relationship of mutual benefit.” But analysts say both sides are trying to reduce the diplomatic temperature as they eye the 40th anniversary of normalised ties at the end of the month. Japan’s government currently leases four islands and owns a fifth. It does not allow people to visit and has a policy of not building anything there. The islands sit in a strategically important shipping area and valuable mineral resources are thought to be nearby.

China's travel agencies are already getting excited about Super Golden Week with the rare combination of the Mid-Autumn Festival and the National Day holidays. Although the holiday is three weeks away, most of the country's travel agencies are busy preparing various products to lure customers. Shoppers walking in Beijing Avenue in Guangzhou, the capital city of Guangdong province. Tourism is more than just traveling and sightseeing: It also involves other business sectors including catering, lodging, shopping, entertainment and transportation. It is estimated that every yuan added to tourism revenues generates 10.2 yuan in added value for the service industry. And every one direct job opportunity will secure more than five indirect job positions. According to Ctrip.com, the country's leading travel service by business volume, its reservations for Chinese and overseas package tours have seen a much higher than usual rise with prices up 20 to 30 percent for domestic tours compared with those for off-season breaks. Booking tours to some international destinations has already become difficult. Super Golden Week will start on Sept 30 and end on Oct 7. It is the longest national holiday after China canceled the seven-day holiday for May Day and added the Mid-Autumn Day as one of the national holidays in 2008. Despite the global economic recession and slowing growth of China's national economy, tourism is still the fastest-growing industry in China, said Liang Da, an expert with the National Bureau of Statistics, having been something of a novelty 30 years ago. It's not just about traveling and sightseeing but also involves other business sectors including catering, lodging, shopping, entertainment and transportation. Tourism makes up more than 4 percent of China's gross domestic product. In fact, tourism contributes much more than the 4 percent. It has added value in that people don't just appear at a scenic spot for an hour or two and then disappear. They have to get on a train, a bus or an airplane. They need to eat, drink and sleep. And they buy souvenirs, postcards and take loads of pictures. All these things have an impact on service sectors. It is estimated that every 1 yuan added to tourism revenues generates 10.2 yuan in added value for the service industry. And every one direct job opportunity will secure more than five indirect job positions. The number of domestic tourists increased by 13.5 percent year-on-year in 2011. They spent nearly 2 trillion yuan ($315 billion), accounting for 10 percent of total Chinese residents' outgoings in the year. "Tourism is a relatively low cost businesses but yields fat profits and has a very high added-value element," Liang said. "With more than 110 tourism-related sectors and 80 million employees, the country's tourism will very much affect the country's economic growth."

China Mobile's short message services fell to 46.5b yuan last year from a peak of 53.6b - Short message services, which once experienced explosive growth in both revenue and volume in China, have now almost exhausted their potential after a more-than-decade development. Launched in China in 2000, the services quickly became popular among most mobile phone users. Chinese people loved to send greetings, express their concerns, swap information or tell jokes via short words on cellphones. During holidays, especially the traditional Chinese Spring Festival, millions of people will exchange blessings via text messages with family members, close or long-lost friends. More than 30 billion short messages were sent from Chinese people during Spring Festival this year. From 2000 to 2008, the volume of short message-sending over the network of China Mobile Ltd, the nation's biggest telecoms carrier, rose to 607 billion from a mere 500 million at the very beginning. However, the rapid growth has dramatically slowed in the past three years. With a little year-on-year increase, the number of short messages sent via China Mobile network reached 736 billion in 2011. China Mobile's revenue from its short message service fell to 46.5 billion yuan ($7.3 billion) last year from a peak of 53.6 billion yuan in 2009. Shen Hongqun, deputy manager of China Mobile data business department, said wireless data traffic has replaced short message services to become the biggest revenue source for China Mobile's data business in the first half of the year. Instead of a short message business, Shen said: "Wireless data traffic, applications and information services could be the most important parts of China Mobile's data services business in the future." Ted Chan, partner of the Boston Consulting Group, said the rapid development of short message services in the early years was largely due to it being highly cost effective. "Back then phone services were still relatively more expensive (0.4 yuan to 0.6 yuan a minute), while operators charged 0.1 yuan for a short message," Chan told China Daily by email. "The short message service was quite a cost-effective way to communicate, especially when you just need a quick reply and do not want to disturb others," Chan said. But as the smartphone penetration rate lifted in China, together with advanced 3G and 4G mobile technologies greatly improving network speed, more cost-effective services, including instant messaging tools and Weibo, have distracted customers from short messages. "The short message services and voice services users are migrating to data and the market will be dominated by data in the coming years," said Ning Wright, partner of KPMG China. The trend will change end-users' behavior. They are willing to pay more money and spend more time on data related services such as mobile music, mobile gaming and mobile instant messaging services, she added. In addition, compared with other innovative mobile applications, short messages are very basic in terms of display and cannot send any attachments such as photos to share. "Relatively speaking, short message services cost more than other web-based applications, which are mostly free," Wright said. Looking into the future, analysts said the short message business in China, if it remains in its current format, will face a steady decline. "One of the ways to slow down the drop in demand for short message services is to offer them as an add-on package to voice services either free of charge or at a very low cost to attract customers with low spending power," Wright suggested. Ge Changwei, from the marketing department of China Mobile's Zhejiang subsidiary, argued in his microblog that it would be better for China Mobile to give up promotional activities on short message services. "It is impossible to really push the short message business with simple promotions because the service has fallen into a recessive phase," he said. Ge suggested reducing the favorable packages that have free short messages or abandoning super low short message service offerings. "We'd better secure revenues from short message services rather than hand out further promotions," he said.

Asia's largest cruise liner arrives in Tianjin - Tourists walk through the luxury cruise liner, Voyager of the Seas, at its home port in Tianjin, Sept 9, 2012. The ship, built at the cost of $750 million, boasts 1557 guest rooms with a capacity of nearly 4,000 passengers. Tourists and journalists visit Voyager of the Seas at its home port in Tianjin, Sept 9, 2012. The ship, operated by Royal Caribbean International, carried more than 3,000 Taiwan tourists in its maiden voyage to Tianjin. Its last stop in China was Shanghai.

Hong Kong*:  Sept 11 2012 Share

Analysts said it would not be surprising to see more divestment by AIG of its stake in the near future, assuming that the equity market strengthened in the fourth quarter. "AIG will definitely continue to sell the stake in AIA, [as] it only reduced less than 30 per cent of the available-to-sell portion this time," said Peter Pak, an executive director of BOCI Securities. This is the third time AIG has sold down its stake in the insurer, following the US government bailout of the parent company during the financial crisis. AIG chief executive Robert Benmosche is looking to reduce its bailout bill, which has swelled to US$182.3 billion. AIA's new business has delivered eight consecutive quarters of growth under the guidance of chief executive Mark Tucker, who took over the company in 2010. Meanwhile, China Pacific Insurance, the mainland's third-largest insurer, fell the most in a week before recovering to close with a slight loss after an investor dumped a block of shares at a discount. The investor offered to sell 112.7 million China Pacific shares at HK$22.18 to HK$22.87 each, according to Bloomberg. The stock closed 0.43 per cent weaker at HK$23 on a day of strong gains in the market, after hitting a low of HK$22.55 in the morning. China Pacific reported a 55 per cent drop in profit for the first half to 2.64 billion yuan (HK$3.22 billion). This was mainly due to weakening investment income and slowing premium growth. In July, funds controlled by American private equity firm Carlyle also sold US$738 million worth of stock in China Pacific.

Air Astana direct flights to Kazakhstan boost HK links to Central Asia - President Peter Foster says regional business and tourism ties are strengthened by direct flights between city and Kazakhstan. Tourism and business links between Hong Kong, South China and Central Asia have been strengthened following the launch last week of direct flights by Air Astana between Hong Kong and Kazakhstan. Peter Foster, president of Air Astana, said Hong Kong was a destination in itself for travellers from Kazakhstan. But it could also be used as a transit hub for Kazakhs and other travellers from central Asia visiting southern China, Taiwan, the Philippines, and Australia. "Hong Kong and Macau are a draw in themselves. Hong Kong is also a very convenient and logical point of transfer between flights," he said. Foster, who has worked at Cathay Pacific Airways and Philippine Airlines, indicated this arrangement could benefit Cathay Pacific. While there was no code-share between Air Astana and Cathay Pacific, he enjoyed "good relations" with Cathay Pacific, he said. Foster said Air Astana's flights to Almaty, the former capital of Kazakhstan and considered the commercial hub of the country rather than the capital Astana, would open up the country and Central Asia to Hong Kong tourists. "Hong Kong travellers are the most adventurous of any in Asia," Foster said, adding that from Almaty tourists can fly to Uzbekistan and travel along the Silk Road to Bukhara and Samarkand. Other destinations include nine domestic cities as well as Baku in Azerbaijan, Dushanbe in Tajikistan, Tashkent in Uzbekistan, and Tbilisi in Georgia. Flight time between Hong Kong and Almaty is between six and seven hours, while the "entire Central Asia region is within 12 hours of Hong Kong", Foster said, making Almaty a more convenient transit city than more convoluted routings. Kazakhstan was also "excellent" for skiing, with mountainous regions in the south and north of the country that eventually lead to the Himalayas. As the ninth-largest country in the world, equivalent in area to the size of Western Europe, Kazakhstan was a nation of "breathtaking beauty", Foster said. Extensive mineral, oil and gas deposits have fuelled exploration and development by foreign companies boosting business investment. Traveller arrivals in Hong Kong from Kazakhstan are tiny compared with countries such as Russia, but the Air Astana flights have a potential to bring in more than 35,000 visitors per year from the region. Hong Kong is Air Astana's second destination in China after starting flights to Beijing 10 years ago. The airline also flies to Seoul and Kuala Lumpur. Foster said the carrier operates two return flights per week between Hong Kong and Almaty using Boeing 757 aircraft than can carry 16 business and 150 economy class passengers. "It's early days, but it's started fine," he said, with aircraft operating about 65 per cent full. The focus was on passenger traffic rather than cargo because "Kazakhstan does not export much by air" and there was an imbalance with inbound airfreight. Flights were launched on August 28, several weeks later than planned. Foster said the delay was caused while visa-free access for both Hong Kong and Kazakh passport holders was finalised. Further flights between Hong Kong and Almaty would be added as traffic developed, but pointing to the airline's experience in Thailand, Foster said the carrier started with a twice-weekly service to Bangkok four years ago that was now a daily flight. "We hope to add a flight frequency at the start of every new season," he said, adding that Air Astana aimed to launch flights between Almaty and Ho Chi Minh City.

A history of how national education was introduced in Hong Kong - It started as a learning objective, then Hu Jintao and Donald Tsang gave more weight to fostering a sense of identity among young Hongkongers. "[National education] did not erupt out of a piece of rock all of a sudden," Chief Secretary Carrie Lam Cheng Yuet-ngor said on a radio programme last Sunday. People may not like the way she said it, but it was true. The idea of "learning about one's national identity and making a contribution to the country" was introduced as a learning objective in a report by a government advisory body in 2001. The next year, guidelines for the first time encouraged schools to foster recognition of national identity as one of five major values and attitudes among pupils. But while the teaching of elements of today's moral and national education curriculum were already being encouraged in class, the turning point came on June 30, 2007, when President Hu Jintao said at a banquet organised by Hong Kong to commemorate the 10th anniversary of the handover that importance should be placed on national education in the city. Hu said: "I have something special to say about young people in Hong Kong because they represent the future of Hong Kong, indeed, the future of China … We should foster a strong sense of national identity among the young people in Hong Kong … so that they will carry forward the Hong Kong people's great tradition of 'loving the motherland and loving Hong Kong'." Three months later, then chief executive Donald Tsang Yam-kuen vowed in his policy address that more weight would be given to national education elements in the curriculum. He also pledged to encourage schools to stage more national-flag-raising ceremonies, and subsidise more mainland study trips. That prompted some criticism, but Tsang courted more controversy in his 2010 policy address, announcing plans to launch "moral and national education" as a subject. Tsang, and the then secretary for education, Michael Suen Ming-yeung, reassured the public that national education classes would only be introduced after the curriculum for moral and civic education had been reviewed. Critics, including legislators, said the initiative was a "brainwashing program". Criticism continued for the next two years. But two months ago, a political bomb exploded - days after Chief Executive Leung Chun-ying and education minister Eddie Ng Hak-kim took office - when the government confirmed that, over six years, at least HK$72 million in public funds had been granted to two companies, led by a Beijing loyalist educator, to produce biased national education material. The guides for teachers said, among other things, that "multi-party politics could 'victimise' people, while concentrated political power could create 'selfless' government that brought stability". In late July, at least 32,000 angry Hongkongers, teachers and parents took to the streets in what became a 10-day marathon protest culminating in an "Occupy Tamar" campaign at the government headquarters in Admiralty. Last night, Leung climbed down, saying the curriculum would not be mandatory in his current term.

US, Britain reject claim they incited anti-national-education rallies - US and Britain deny allegations of inciting anti-national education rallies to hurt Beijing. The US and Britain rejected claims they are manipulating anti-national-education protests in Hong Kong in a bid to "cripple" the city and undermine Beijing's ability to rule. Both the US and British consulates strongly rejected commentaries on ATV and in the Hong Kong edition of China Daily - a central government mouthpiece. The commentaries said Western powers were pulling strings behind the scenes to disrupt China's modernisation drive and destabilise Hong Kong. A British consulate spokeswoman said: "We strongly deny any accusation of interference in the national education issue by the UK. We are strong supporters of 'one country, two systems'. "Education policy is one of the areas over which Hong Kong has autonomy. The issue of national and moral education is therefore a matter entirely for the Hong Kong government and people. … any suggestion of interference in the issue by the UK is absurd." A spokesman for Britain's Foreign Office in London also backed the statement. Last Monday, on ATV Focus, local pan-democrats were described as "destructive powers" who "are backed by London and Washington", aiming to cripple the city and prove China is an incapable ruler. Scott Robinson, a spokesman for the US consulate, said: "There is no basis to the claims made by ATV … The United States does not endorse any particular politicians or political parties in Hong Kong and Macau. "Our activities here are the normal diplomatic activities that all countries engage in." It is understood that ATV Focus is the responsibility of Louie King-bun, a former senior editor at the Beijing loyalist newspaper Ta Kung Pao, which ran a front-page report in a similar tone. The China Daily editorial the day after the broadcast was an excerpt of Ta Kung Pao's report. ATV declined to comment yesterday.

Live coverage: Hong Kong heads out to the polls for Legco elections - Chief Executive Leung Chun-ying was at the polling booth early on Sunday morning. 

 China*:  Sept 11 2012

China's inflation rate climbs in August - China's annual rate of consumer inflation ticked up to 2.0 per cent in August from July's 30-month low of 1.8 per cent, official data showed on Sunday, suggesting that room to ease monetary policy to shore up growth may be narrowing. Economists polled by Reuters had forecast inflation to pick up to 2.0 per cent in August. Month on month, however, inflation was a touch ahead of forecasts, up 0.6 per cent in August versus July. Analysts had anticipated a rise of 0.5 per cent. Food inflation was up 3.4 per cent on a year ago while non-food prices rose 1.4 per cent. "Inflation is coming back quickly. Together with rising home prices, it will limit the scope for further policy relaxation," said Dong Xianan, economist with Peking First Advisory. Separately, the National Bureau of Statistics said China's producer price index dropped 3.5 per cent in August from a year earlier, which compared to forecasts for a 3.3 per cent decline. It marked the sixth straight month of producer price deflation, putting a further squeeze on corporate profits already dampened by a drop-off in demand at home and abroad courtesy of global economic headwinds stemming from Europe's sovereign debt crisis. Investors widely expect the central bank to ease monetary conditions further as part of the government's campaign of "policy fine-tuning" unveiled in the autumn of 2011. The People's Bank of China has cut interest rates twice since June and trimmed banks' required reserve ratios (RRR) in three 50 basis point steps since last November that has freed an estimated 1.2 trillion yuan (US$1.5 trillion) for new lending. But a seeming recent preference for using money market operations over interest rates to boost liquidity conditions in the economy is seen as a sign of the policy dilemma facing a central bank and a government super hawkish on inflation and wary of aggressive rate cuts. Food prices have eased sharply in 2012, but are still running at an annual rate of 5.9 per cent so far - sticking above the government's overall inflation target of 4 per cent. That is especially pertinent to policymaking as most household income in China is spent on basic necessities. Average annual urban disposable income was 21,810 yuan in 2011. Meanwhile average home prices in China's 100 biggest cities edged up for the third straight month in August, a private survey showed. The modest 0.2 per cent month-on-month uptick raises fears in some quarters that Beijing may bolster a two-year campaign to curb housing inflation, even though economists blame domestic economic sluggishness on property tightening. The NBS will publish home price changes for August on September 18. "With CPI rising off what should prove the bottom of the inflation cycle - up both year-on-year and month-on-month - it would seem, at first glance, to place the government in a bit of a quandary," analysts at IHS Global Insight wrote in a note to clients after the inflation data. "They need further stimulus to revive growth, but have less room to absorb the inflationary pressure of that stimulus." China's economic growth has slowed for six straight quarters and analysts expect the trend to extend to a seventh when third quarter GDP data for 2012 is published. Growth in Q2 was 7.6 per cent, its slackest in more than three years. Recent data have cemented views that growth for the full year will be its lowest since 1999 and may fall below 8 per cent. Officials last week revealed they had given the green light to 60 infrastructure projects worth more than US$150 billion, as Beijing seeks to energise the economy. The announcement fuelled investor hopes the world's growth engine may get a lift in the fourth quarter of the year and beyond. China's powerful economic planning body, the National Development and Reform Commission, announced approvals for projects that analysts estimate total more than 1 trillion yuan, roughly a quarter of the total size of the massive stimulus package unleashed in response to the global financial crisis in 2008. Chinese President Hu Jintao urged Asia-Pacific nations on Saturday to speed up infrastructure development to help face the "grave challenges" from the global economy. Fixed asset investment contributed 3.9 percentage points to China's 7.6 per cent Q2 growth. Qiu Xiaohua, former head of the National Bureau of Statistics and now a senior researcher with the China National Offshore Oil Corporation, told a forum in the city of Xiamen on Sunday that the government still had room to act to bolster growth - and urged it to do so. "I think the government should accelerate the pace and further increase the strength of policy fine-tuning to give a lift to the economy," Qiu said, adding that he expected Q3 GDP growth to slow to 7.4 per cent or less. "If the government is quick to take proper measures to boost growth, the economy will start to stabilise and the GDP may pick up from the fourth quarter," Qiu said.

Hu Jintao pledges boost for world economy despite China slowdown - China's economy faces downward pressure, president tells Asia-Pacific; calls for stability. President Hu Jintao yesterday warned of a further slowdown in the Chinese economy and pledged to boost domestic demand to help counter the obstacles hindering a global recovery. "Economic growth is facing notable downward pressure," Hu said at the Apec summit in Vladivostok. "Some small and medium-sized companies are having a hard time and exporters are facing more difficulties. "We have an arduous task of creating jobs for new entrants to the labour force." China is boosting spending on infrastructure, including 800 billion yuan (HK$979 billion) in new subway and rail projects, as economic growth slows. The economy expanded 7.6 per cent from a year earlier in the second quarter, the slowest pace in three years. Exports rose 7.8 per cent in the first seven months of the year, compared to a 23.4 per cent rise in the same period last year. Hu said China's economy was characterised by a "lack of balance, co-ordination and sustainability" and that it would promote "inclusive growth to improve people's lives". "We will boost domestic demand and maintain steady and robust growth as well as basic price stability," he said. The economies of the 21 Asia-Pacific Economic Co-operation forum members, which account for roughly half of all global economic activity, all face a downturn. A sharp decline in trade growth in the region - to 4.6 per cent in May from 12 per cent in December - has spurred calls for more trade initiatives. Hu urged Asia-Pacific to spearhead infrastructure development, remove obstacles to attracting investment and promote regional co-operation. In addition to economic growth, Hu also urged Asia-Pacific nations to help ensure peace in the region, amid a series of territorial rows that have inflamed nationalist tensions. "To maintain peace and stability and the sound momentum of economic growth in Asia-Pacific is in the interest of all countries in the region," he said. "It is our shared responsibility." Tensions between China and Southeast Asian nations, especially Vietnam and the Philippines, are running high because of the South China Sea disputes. A diplomatic row between Beijing and Tokyo also erupted after activists from China and Japan planted flags last month on the disputed Diaoyu Islands in the East China Sea, which are known as the Senkakus in Japan. Japan and South Korea have also clashed over sovereignty of the Korean-occupied Dokdo islands, which Japan calls Takeshima. Chinese Foreign Ministry spokesman Qin Gang said Hu discussed maritime territorial disputes with the leaders of Vietnam and Indonesia on the sidelines of the Apec meeting. Qin also said China would not back down on the Diaoyus dispute, saying that China was determined "to safeguard national sovereignty and territorial integrity". "Japan should take concrete actions to meet the Chinese side halfway," Qin told reporters. Hu told his Vietnamese counterpart, President Truong Tan Sang, on Friday that countries involved in the disputes should refrain from taking provocative moves. Meanwhile, Philippine Foreign Affairs Secretary Albert del Rosario said a meeting between Hu and Philippine President Benigno Aquino was being arranged.

Chinese, Chilean presidents attend signing ceremony on FTA - Chinese, Chilean presidents attend the signing ceremony of a supplementary agreement on investment of the China-Chile Free Trade Agreement in Vladivostok.

Yin Zhijun (in white cap), the general manager of Lao She Teahouse, sells dawan cha with her father Yin Shengxi, founder of the teahouse. This photo was taken in 1999. Tourists flock to this teahouse, attracted by the performances, the sing-song orders of the waiters, the old-world ambience and a simple serving of tea. Ye Jun tells us more about an old Beijing tradition. A big bowl of tea offered to the thirsty is priceless, according to Yin Zhijun, general manager of the Lao She Teahouse in Beijing. That's why the teahouse still offers dawan cha, tea served in a big bowl, although the tradition has become almost obsolete elsewhere in the capital. At the turn of the 20th century, these big bowls of tea were sold everywhere at roadside tea stands, a convenience offered to travelers, visitors and residents. But after New China was established in 1949, the tea stalls were abolished. Lao She Teahouse was started in the early days of the economic reform of the 1980s, when the founder started selling big bowls of tea. As business boomed and the teahouse earned a reputation, the owners restored it to its former glory in 2004, and another tradition was revived and maintained to this day. That bowl of jasmine-scented oolong tea is probably still the cheapest drink in Beijing, available in front of the Lao She Teahouse in Qianmen, at the heart of the capital. A bowl costs 2 fen ($0.03). But if you don't have the exact change, you just pay with what you have. The counter is manned by two of Lao She Teahouse's waiters, and they sell tea drawn from a portable container, alongside two plastic buckets full of porcelain bowls and a paper box for the coins. Many people no longer have 2-fen coins, so they often pay with a 5-fen coin, or a 10-fen coin. The tea is available daily from 10 in the morning to 4 in the afternoon, and at least several hundreds will stop by each day, according to Yin. During peak tourist periods such as the May Day holidays or the National Day vacations in October, the tea stall serves more than a thousand thirsty patrons a day. Lao She Teahouse makes very little from the almost-free service. The nice, aromatic bowl of jasmine tea comes at a price. According to one manager, the tea used costs about 100 yuan ($15.74) per 500 grams, not a bad quality tea judging from its taste and price. Two fen per bowl hardly covers the cost. In fact, the teahouse invests hundreds of thousands each year in the tea, water, hygiene and labor needed to maintain the tea stand, according to Yin. It is a homage to the teahouse's founder and history. Yin Shengxi, Yin Zhijun's father, resigned from the civil service in 1979 and applied for a license to sell tea. "It was just when China had started the economic reform and opening-up policy. When visitors to Beijing arrived at Tian'anmen Square, they would have just gotten off the train and had nowhere to quench their thirst," says Yin. "A bottle of carbonated drink cost about 15 fen. People were drinking water from a hose on Tian'anmen Square," she remembers. Yin Shengxi and his daughter decided to provide jasmine tea in big bowls to these thirsty travelers, and set up shop at the west gate of the Qianmen watchtower. Each bowl sold for 2 fen. Soon the elder Yin added other small goods, selling albums, scarves, flashlights, foldable umbrellas and watches. By 1988 he had enough money saved to open up Lao She Teahouse. Yin Shengxi was among the first private entrepreneurs in the 1980s, when private business was again allowed after years of a planned economy. His dawan cha became a symbol of Beijing. He was also one of the first to invite folk artists to perform in his teahouse, and they included ballad singers, storytellers and cross-talk performers. They remain the main attraction of the teahouse today. Lao She Teahouse is said to be the only one in Beijing to have gathered all six traditional styles of teahouses under one roof. The first-floor restaurant offers tea at 38 yuan ($6) per person, while a courtyard style high-end teahouse on the second floor offers pots of tea from 100 to 120 yuan and a place for people to meet. As the business matures, that little tea stall in front is no longer economically viable. Instead, it is now a reminder of the past, a last visage of what was, what had been. It is a sentimental link to the past and for its current boss, the daughter of the founder, it is a way to repay society and a symbol of the company's social responsibility. She always sends new recruits of the company to run the stall in front of the teahouse, so they understand the company's mission to integrate enterprise and culture. Yin wants to see the idea taken a step further. She thinks the Beijing government should set up affordable tea stalls for the old people in the city, just as her father had helped the thirsty visitors to Tian'anmen. She feels that the aging population of the city can seek some comfort in that big bowl of tea. It is a bowl of tea that best represents the common people, and their culture, she says.

China and Canada signed foreign investment promotion and protection accord on Sunday as President Hu Jintao met with Prime Minister Stephen Harper on the final day of the Asia-Pacific Economic Cooperation summit. Both leaders held the signing will put great impetus to bilateral investment and China-Canada tie. President Hu Jintao, right, meets with Canadian Prime Minister Stephen Harper in Vladivostok, east Russia, Sept 9, 2012. Meeting on the sidelines of the Economic Leaders' Meeting of APEC, Hu said China and Canada tie has become more prominent given that the world is undergoing complex changes. Hu urged the two sides to preserve the "hard-won" momentum, strive to push the strategic partnership, and move forward on "a steady and healthy track". Hu also called on Canada to advance political trust, trade ties with China. The two leaders witnessed the signing of the Canada-China Foreign Investment Promotion and Protection Agreement. Harper said the signing will push China-Canada tie to move further. Harper also said Canada is ready to work with China on Asia-Pacific affairs, and strengthen political dialogue and communication on major world issues. The Canada-based CBC News said that the "Sunday morning meeting is considered the centerpiece of the prime minister's trip to the APEC summit in Russia because of his government's focus on expanding trade with the Asian economic giant". The meeting also comes at a key time as Harper's government reviews CNOOC Ltd's $15.1 billion takeover of Nexen Inc., a Calgary-based oil and gas producer. Bloomberg quoted Harper as saying on Saturday that Canada will be open to investment from China as long as the Asian country is willing to reciprocate. China has already invested heavily in Canada's natural resources sector, but the Nexen bid has sparked concern because CNOOC is a state-owned company, not a private company. Prior to arrival at the summit, Harper said the onus is on China to show that its state-run enterprises can be trusted to play by the same rules that applied in Canada, according to CBC News. Bilateral trade between Canada and China, Canada's second-largest trade partner, reached $47.5 billion in 2011, up 27.8 percent compared with that in 2010.

The United States welcomes more Chinese investment and there is virtually no sector that is off-limits to Chinese investors, US ambassador to China Gary Locke said on Saturday. He made the remarks in an interview with Xinhua at the ongoing 16th International Fair for Investment and Trade in the southeastern city of Xiamen. Locke said although the foreign direct investment flows between the world's two largest economies had grown rapidly in recent years, there are still plenty of room for growth. As of the end of 2011, Chinese investment into the US accounted for less than 3 percent of the country's total foreign direct investment and roughly 1 percent of the total foreign investment the US received. To encourage more foreign capital inflows, Locke said the US has initiated specialized program called "Select USA." and it will hold a large investment conference for top Chinese companies this coming December. Locke cited Tianjin Pipe's steel pile mill investment in Texas and Wanda Group's acquisition of AMC Entertainment as successful Chinese investment in the US. Asked to comment on recent reports about foreign businesses planning to leave China due to rising labor and materials costs, Locke said the phenomenon is always happening throughout the world. A report jointly released by the US Chamber of Commerce and the AmCham Singapore said 21 percent of American companies plan to shift part of their investment or operations in China to Southeast Asian countries in the coming two years due to China's rising production cost. Locke said China could see this shift as an opportunity to move up the value chain. He said decades ago America had started to move its simple manufacturing to Mexico, Taiwan, Hong Kong, the Republic of Korea and then the Chinese mainland, so that it can focus on high-end industries. "The challenge and the key is to keep providing good-paying jobs to Chinese people and focus on education and technology," he said. Locke said the US welcomes Chinese government's steps to ease restrictions on foreign investment, and he said he expects more policy changes concerning the foreign capital in the financial service sector. Locke was elected as Washington state's 21st governor in 1996, becoming the first Chinese-American governor in US history. He was appointed Ambassador to China in 2011.

Hong Kong*:  Sept 10 2012 Share

Approvals send investors on the high road again - Infrastructure and cement stocks rose yesterday on news that the central government has approved the construction of 2,018 kilometres of highway projects, as well as new ports, water plants, waterways, and rail projects. But analysts reacted with caution to the news, expressing concern over the financing of so many infrastructure projects, whose total costs they estimate will exceed 1 trillion yuan (HK$1.22 trillion). "It's in line with what China has been trying to do since April, namely to accelerate infrastructure projects and boost investment," said Standard Chartered senior economist Kelvin Lau. "The investment component of China's GDP will get a lift, but the problem is that if any bad debts arise, it will be three to four years before we know." Untroubled by such concerns, Hong Kong investors chased shares in China Resources Cement 14 per cent higher on the news yesterday, while shares in China National Materials rose 9.8 per cent, China National Building Material 8.8 per cent, and Anhui Conch Cement 8.5 per cent. Shares in China Communications Construction, which builds ports and roads, were up 6.1 per cent. On September 5 and 6, the National Development and Reform Commission approved a wide range of infrastructure projects including the construction and renovation of 2,018 kilometres of highways and metro rail projects. Given that every kilometre of highway costs 70 million to 100 million yuan to build, the bill could reach between 141.26 and 201.8 billion yuan, estimated Nomura analyst Jim Wong. In addition, the total cost of the metro rail projects approved in the past few days exceeds 800 billion yuan. On September 5, the NDRC gave approval to a mainland finance leasing company to borrow 2 billion yuan in Hong Kong to support the shipping sector. It also gave the nod to China Export-Import Bank to take out an international loan of US$1.2 billion to support Chinese airlines; and China Eastern Airlines to take out an international loan of US$210 million to finance the purchase of aircraft. "China is going to have trouble if it wants to get listed expressway companies to build highways," said Nomura analyst Jim Wong. "Even local governments are not incentivised to build highways. The roads will still get built, but funding is getting increasingly difficult."

Restaurateurs anticipating an influx of visitors from across the border have reduced their forecasts of extra earnings by HK$1 billion. Retailers' hopes of better business were also dashed yesterday when Hong Kong secured agreement from Shenzhen to delay the issuing of multiple-entry visitor permits to 4.1 million non-permanent residents. Chief Executive Leung Chun-ying said multi-entry permits, due to be issued from September 1, would not be issued in the short term while the government studied the city's capacity to cope with the extra visitors. Simon Wong Ka-wo, president of the Federation of Restaurants and Related Trades, predicted lower growth in the sector. "We had expected the increase in the number of tourists to bring an additional HK$1 billion turnover for the industry," Wong said. Mainland visitors spent HK$5 billion on food last year, 5 per cent of the catering industry's overall turnover. Per capita spending by mainland visitors on food dropped from about HK$1,000 in 2003 to HK$200, he said, reflecting changes in consumption patterns. "People would rather shop than dine," he said. William Wong Wai-sheung, of jewellery retailer Luk Fook Group, described the reversal as the "bursting of a dream". Hongkongers are concerned about the number of mainland visitors, with some claiming the city is already "overrun". Residents also fear the multi-entry permit may ease the way for illegal workers or parallel traders. Business aside, residents of the two cities gave mixed responses to the scheme being delayed. Au Kwok-ho, 30, a coffee trainer in Hong Kong, said he hoped it would be scrapped. "There are more mainlanders than Hongkongers in any busy area, such as Times Square and Langham Place," he said. "I don't even want to go to these places on my days off." Simon Lam Chi-shing, 50, said the easing of permit rules would benefit the city's economy but Hong Kong was not ready to put the policy into place. A better plan should be worked out first. "Parallel traders really cause problems in Sheung Shui," Lam said "The government should set an upper limit on the daily entry of mainland travellers if the scheme is to be implemented." Businessman James Yeung Yangxi, who would be eligible for a multi-entry permit, said he did not care about the scheme even though he would benefit from it. "I come to Hong Kong mainly for sightseeing," he said. "The scheme mainly makes things easier for frequent business travellers, but not me." But Hunan migrant worker Huang Chunlan, who works in a luxury department store in Shenzhen, said: "We [non-permanent residents] should have the same right as permanent residents, even if very few of us can afford to shop in Hong Kong every month."

Hong Kong’s government on Saturday backed down on a plan to force school children to take Chinese patriotism classes, after weeks of protests and on the eve of crucial legislative polls. “The amendment of this policy means that we are giving the authority to the schools,” the city’s leader, Leung Chun-ying, told reporters a day after activists said more than 100,000 protesters rallied at government headquarters. “The schools are given the authority to decide when and how they would like to introduce the moral and national education,” he added, blaming the mandatory nature of the policy on his predecessor’s government. The proposal to introduce mandatory “national education” classes in all schools from 2016 was condemned as brainwashing by students and teachers, and sparked weeks of protests that brought scores of thousands onto the streets. The government said the subject was important to foster a sense of national belonging and identity, amid rising anti-Beijing sentiment in the semi-autonomous southern city of seven million people. Schools were meant to adopt the subject voluntarily this year but many said they wanted more guidance from the government about how it should be taught. A survey released last week showed 69 percent of students opposed the classes. Course material funded by the government extolled the benefits of one-party rule, equated multi-party democracy to chaos, and glossed over events like the bloody Tiananmen crackdown and the mass starvation of Mao’s regime. Lawmaker Anna Wu, who chaired a committee studying the policy, said the government had decided on a course of action that was “the most inclusive and most liberal”. “It is also very consistent with academic freedom and therefore I support this move,” she said. The former British colony goes to the polls on Sunday to elect a new 70-seat legislature, which will play a crucial role on the city’s path to direct elections for its leader in 2017 and the legislature by 2020. Pro-democracy parties were using the education furore to galvanise their supporters, hoping to boost their representation in parliament and maintain a veto over constitutional amendments. Leung took office in July after being put in power by a small committee of mainly pro-Beijing elites.

 China*:  Sept 10 2012

China will achieve strong economic growth in future, says Hu - China will ensure steady and robust growth by boosting domestic demand and rebalancing its economy to help counter the obstacles hindering a global recovery, President Hu Jintao pledged on Saturday to Asia-Pacific leaders gathered for a regional summit. Asia remains the brightest spot in the global economy but is facing challenges. Chinese growth slowed to a three-year low of 7.6 per cent in the second quarter, and Hu acknowledged that Beijing is struggling to create enough jobs and cope with the adverse impact of the European debt crisis on its own economy. “The global economy has reached a critical juncture, and we face the arduous task of overcoming major difficulties standing in the way in order to achieve full recovery and ensure steady growth,” Hu told business leaders gathered on the sidelines of the Asia-Pacific Economic Cooperation summit in this Russian Far East seaport. Revitalising trade and growth is an urgent priority for Apec, whose aim is to dismantle barriers and bottlenecks that slow trade and business while nurturing closer economic ties. Both China and host Russia pledged to do what they can to support those aims. “The recovery of the global economy is faltering. We can only overcome negative trends by enhancing the volume of trade ... enhancing the flow of capital. It is important to follow the fundamental principles of open markets and free trade,” Russian President Vladimir Putin told fellow leaders Saturday as they began their annual “informal retreat.” The priority goal is to fight protectionism in all its forms,” Putin said. “It is important to build bridges not walls.” With President Barack Obama absent from the Apec summit this election season — Secretary of State Hillary Rodham Clinton is attending in his place — the Russian leader has showcased his country’s aspirations to play a more active role in the Pacific Rim region. Clinton welcomed Russia’s recent admittance to the World Trade Organization. America’s exports to Russia could double or even triple as the country implements its commitments to open its markets further, while Russia itself could raise its GDP by about 11 per cent in the long run, she said, citing World Bank estimates. “Fostering a balanced and stable economy is a challenge too sweeping and complex for countries to approach in isolation,” Clinton said. “If we do this right, globalization can become a race to the top, with rising standards of living and more broadly shared prosperity.” Hu, the Chinese president, acknowledged that his country’s own robust growth has slowed as the government curbed bank lending to counter a property market bubble and soaring prices, just as the debt crisis in Europe slammed demand for its exports. “Economic growth is facing notable downward pressure,” Hu said. “Some small and medium-sized companies are having a hard time, and exporters are facing more difficulties.” Hu is due to step down as China’s top leader following a Communist Party congress this fall. But he promised to “ensure the continuity and stability” of the country’s economic policies. “We will boost domestic demand and maintain steady and robust growth as well as basic price stability,” he said. China’s effort to wean itself from heavy reliance on export-driven growth has helped to rebalance its trade and will generate $10 trillion in demand for imports during the five-year period from last year-2015, Hu said. Russia’s hosting of the Apec summit highlights a renewed focus on developing its neglected but resource-rich Far East. Earlier, Putin promised regional business leaders that they can count on Russia, which has long focused mainly on supplying oil and gas to Europe, to be a reliable energy supplier. Moscow also has ambitious plans to develop its railroads, roads, seaports and airports in the resource-rich but long neglected east of the country to provide a bridge between Asia and Europe, Putin said.

Hong Kong*:  Sept 9 2012 Share

Tearful Carrie Lam says she put reputation on the line - Chief secretary blames national education controversy for damaging her approval rating, as she loses her composure in TV interview. A tear rolls down Chief Secretary Carrie Lam's cheek as she defends tough political choices while on Cable TV. Chief Secretary Carrie Lam Cheng Yuet-ngor broke down in tears in a televised interview, admitting her credibility has suffered in the new administration. Losing her composure, Lam said that becoming entangled in the controversial national education debate had damaged people's faith in her. "Someone said I have had my popularity diminished by getting into the controversy of national education. Perhaps they are right," she conceded. "I said before that I didn't care much about my popularity. But did I make use of it? Yes," Lam told Cable TV yesterday. Despite entering her third month in the new administration facing strong public opposition to most policies, Lam defended Chief Executive Leung Chun-ying for having the courage to speak up for the city's interests. "I decided to be part of Leung's team because I would have let people down if I, as an official who was relatively popular in the last administration, just left the government behind. "That would have been jumping ship," she said, tears rolling down her face. "To a certain extent, I have gambled my integrity and credibility on the government. I'm fine with criticism against me. But I really hope that Hong Kong will be a better place in five years." Lam's popularity rating dipped two percentage points last month, from 64 per cent to 62 per cent, compared to July. She attributed the fall to the public's distrust of Leung, as well as to increasing conflict with the mainland over issues such as births in Hong Kong. "From the working experience with Leung in the past two months, I can seriously say that, in every matter, the interests of Hong Kong people have been his highest priority," she said. "He has the courage to express the people's concerns to the central government. The central government also responded quickly based on its trust and support for Leung," she said. After the interview, Lam explained she had been emotional because the public was suspicious of the government no matter how hard it worked. Ray Yep Kin-man, social and public administration professor at City University, said public discontent stemmed from officials' misconduct in the last administration, and had been worsened by further episodes in the new government. "A clean government is the basis of public trust," he said. "The distrust gets bigger when fear and anger against the mainland and the Communist Party intensify." He said Lam had believed her popularity could be used to help the government. "I guess that's why she's upset," he said, citing executive councillor Anna Wu Hung-yuk as another example. "Wu has been recognised for her contribution to freedom and human rights. But her popularity could be ruined in a day," he said, referring to criticism of her leadership of a committee advising on national education.

Expatriates in Hong Kong are getting smaller pay packages than their peers in Japan, India and South Korea, claims a management consulting firm. According to ECA International, the average package for expat middle managers stands at US$231,000 (HK$1.80 million) per year. Middle managers in Japan, however, take home US$374,000 on average. Those in India get US$298,489 and in South Korea US$242,213. However, expats in Hong Kong receive the fourth-highest compensation package in Asia - US$231,485. Of the 17 Asian locations analyzed, China ranks 14th in terms of total package (US$165,113). The survey shows that cash salary components of total packages, both in Hong Kong and the mainland, are among the lowest in the region. However, unlike Hong Kong, the benefits component in the mainland is also typically relatively low, even in costly tier-one cities. "In China, compensation for international assignees tends not to vary much between tier-one and tier-two cities. The cash salary of an employee, based in Beijing, will often be similar to an expatriate performing the same role in Chendgu," Lee Quane, ECA regional director for Asia, said. "A total package usually comprises three elements: cash salary, benefits and tax," Quane said. "Accommodation and international school costs are driving up the value of the benefits awarded to international assignees in Hong Kong, to the extent that the benefits element is often greater than the assignee's net take-home pay." Expat salaries are calculated in a number of ways, but most packages will include some sort of benefits to cover accommodation, children's education, utilities and cars, and these can have a significant impact on remuneration. Leaving benefits out of the equation, cash salaries for assignees increased by around 2percent in Hong Kong last year, the lowest rate of increase in Asia. Tax and social welfare requirements, such as MPF, form the third main component of the assignee package that companies need to consider in evaluating assignee costs and packages. More than 250 companies with 10,000 assignees in 143 countries took part in the survey.

The head of a committee overseeing the introduction of national education has held out an olive branch, saying scrapping the subject is one of the options. Anna Wu Hung-yuk also praised the students for organizing a successful campaign and disagreed with comments on an ATV program that they are political pawns. But this failed to appease the students and hunger strikers who insist the protest will continue until the subject is scrapped. Wu said she was given to understand by Chief Secretary Carrie Lam Cheng Yuet-ngor that the committee is free to discuss any option, including discontinuing the subject or extending the three-year launch period. Teachers can also teach the subject without following the curriculum guideline, Wu said. She added the committee is free to discuss whether it should be taught as an independent subject or part of other subjects, and that schools have the autonomy to decide. Wu said she respected those who organized the protest. "I don't think they are political pawns or election chessmen. As they have clearly said, they are afraid of brainwashing. I agree with this point as every Hongkonger is afraid of being brainwashed. Therefore, I don't think they are tools." However, Chief Executive Leung Chun- ying showed no sign of bowing to pressure. "The key thing is not whether one should go ahead with the subject or not," he said. "The key thing is to explore the many, many possibilities between the withdrawal of the subject and going ahead with it." In Beijing, education minister Yuan Guiren said he is aware of the SAR government's position that there is a wide room for discussion. It is the first time a senior Beijing official has commented on the issue. Yuan said there is national education in every country and each designs the curriculum according to its own situation.

Three primary schools that will teach national education have posted curriculum guides online to dismiss speculation about the use of biased learning materials. Acting on mounting public concern, the three have laid out key teaching points on their websites to reiterate their impartiality on the subject. Detractors fear national education may become a tool for brainwashing pupils. New Territories Women and Juveniles Welfare Association Limited Leung Sing Tak Primary School in Tai Po says in a statement issued to its alumni on Tuesday that it has merged the national curriculum into civic and moral education teaching. It says the learning materials do not make any reference to the controversial "China Model" teaching guide, which contains no mention of the Cultural Revolution or the June 4, 1989 crackdown in Tiananmen Square and portrays a centralised political regime as a "selfless" contributor to stability. Headmaster Chu King-yuen said the China module had been incorporated into the school curriculum since 2000. "We aim to give our students a broader scope of knowledge," he said. "Hong Kong has been handed over to China, so it's essential for students to learn more about our history and identity." The other two schools are STFA Lee Kam Primary School and Po Leung Kuk Hong Kong Taoist Association Yuen Yuen Primary School in Tuen Mun. The three are among seven primary schools that have admitted the under-fire subject is part of their curriculum in the new academic year. The Education Bureau has not revealed the actual number of primary schools that have shown interest in teaching national education. STFA Lee Kam says in a notice to parents that its course is unbiased and would touch on both positive and negative aspects of the country. It says the learning kits are compiled by its own teachers, who have used suitable material from textbooks, newspapers and video clips to stimulate pupils' curiosity. Meanwhile, Baptist Lui Ming Choi Primary School in Sha Tin, another of the seven, has yet to decide whether to launch the subject despite escalating pressure from alumni and parents. The school had previously said it would consider suspending the curriculum, and would post any updates on the website of its sponsoring organisation as soon as possible. In one set of Primary Two teaching materials, a test aims to find out if pupils are qualified to be "good sons and daughters of China". Teachers are also instructed to ask pupils to say loudly, "I am happy to be a Chinese", if they agree. LESSON PLAN: Traditions and culture; Historical figures such as Dr Sun Yat-sen and Tang Dynasty poet Li Bai; Natural landscape and resources; The national anthem, which is sung while standing up; The meaning and origin of the national flag National identity in which students are asked to say "I am happy to be a Chinese" if they agree; Modern history; Relationship between Hong Kong and the mainland and Societal problems.

HK market posts biggest gain in over 7 months on stimulus hopes - The Hong Kong stock market posted its biggest gains in more than seven months, after the European Central Bank revealed a more ambitious than expected bond purchase plan and China’s announcements of substantial infrastructure sector investments lured buyers back into the market. Today’s market is “a strong, short-covering, relief rally”, said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about US$8 billion. He said those stocks that had lost the most recently posted the biggest gains on Friday "such as materials and industrial sectors,” he said. He said many short-term buyers sought out these sectors in search of short-term gain. The benchmark Hang Seng Index closed up 3.09 per cent, or 592.86 points, at 19,802.16 on Friday, marking its biggest single-day gain so far since January 17 this year. The Hang Seng China Enterprises Index (HSCEI) gained even more, up 3.96 per cent, or 358.82 points, to end at 9,428.21, after onshore market gained sharply. The National and Development Reform Commission (NDRC), China’s top economic planner, on Thursday approved another 30 projects including highway construction, port transformation and sewerage treatment. On Wednesday it also approved 25 urban railway projects worth more than 700 billion yuan. Anhui Conch Cement (0914.HK), the country’s largest cement-maker, surged as much as 8.52 per cent to close at HK$21.40, on speculation that China’s sudden emphasis on infrastructure projects will boost demand for building materials. China National Building Material Company (3323.HK) jumped 8.84 per cent to HK$7.88. “More than 20 per cent of China’s gross domestic product is driven by infrastructure construction. And if the projects are lauched smoothly, it will be a big boost to the economy,” said Alma Yang, a fund manager at Shenyin Wanguo Asset Management (Asia). Friday’s market was also lifted by improved sentiment after the European Central Bank said policymakers had agreed to an unlimited-bond purchase plan in a bid to ease the borrowing cost of debt-laden countries. Esprit Holdings (0330.HK), a clothier whose major revenue comes from Europe, rose 2.11 per cent to HK$12.58. HSBC (0005.HK), Europe’s biggest bank, gained 2.45 per cent to finish at HK$68.900. Shenying Wanguo’s Yang expects market to keep trending up for one to two weeks. She is bullish on infrastructure-related firms, such as railway-equipment maker China Railway (0390.HK) and China Communications Construction (1800.HK). China-related shares posted the strongest rebound on Friday’s market after the onshore market posted its biggest gain in eight months on speculation that Beijing plans a slew of stimulus policies to save the world’s second biggest economy from a “hard landing”. The Shanghai Composite Index gained 3.7 per cent, or 75.84 points, to close at 2127.76, the highest level in nearly eight months. Up to 36 firms on the HSCEI, which tracks 40 Chinese enterprises, gained on Friday. Coal-maker Yanzhou Coal (1171.HK) gained most on the gauge, up 9.12 per cent to 11.26. Carmaker Dongfeng Motor (0489.HK) rose 6.52 per cent to HK$9.97, after official data showed record car sales in China in August. However, investors said whether it was uncertain whether Friday's rebound will turn into a longer-term rally. “It will need another three to four weeks to see if the Chinese government will roll out supporting measures, especially in terms of financing, to make sure all approved projects get started smoothly. If they do not, it will be another story,” Shenyin Wanguo’s Yang said. Barring’s Kiem Do said,“Things come and go. When people calm down and realise that the policy change is a two- to three-year story and could not change the company’s profile in the next 12 months, one has to sell again,” 

The central government has indefinitely suspended a new policy that would allow 4.1 million non-residents of Shenzhen to enter Hong Kong on multiple-visit permits, Chief Executive Leung Chun-ying announced on Friday. The policy would not come into force until its impact on Hong Kong was assessed further, and the city’s ability to cope with the influx was confirmed, Leung told a press conference at government headquarters. “The mainland authorities have agreed to consider implementing the measure only after it is certain that Hong Kong is capable of accepting the visitors,” he said. “There is no timetable right now.” Leung made the announcement after a discussion, between his immigration and security officials and mainland authorities, Hongkongers’ concerns about the influx of visitors the plan could cause. It was originally going to allow 4.1 million non-residents of Shenzhen to enter Hong Kong from September 1, using multiple-visit visas under the individual visit scheme. The visas were previously available only to Shenzhen’s 2.8 million permanent residents. That plan caused consternation among many Hong Kong residents, who felt the surge would overwhelm local infrastructures and push up prices of consumer goods. Leung said the current policy would remain in place. It allows 4.1 million Shenzhen non-residents to travel to Hong Kong on a single-visit permit or a dual-visit permit. “The prerequisite for implementing the new measure is that it will not affect Hong Kong people’s lives,” Leung said. The relaxation was earlier put on hold until September 20 because Hong Kong and the mainland needed time to discuss its impact.

 China*:  Sept 9 2012

Taiwan warns Japan against nationalizing disputed islands - Taiwan’s president used a high-profile visit to a Taiwanese islet on Friday to warn Japan against making any attempts to nationalise islands that are part of a disputed chain in the East China Sea. Escorted by warplanes and naval vessels, President Ma Ying-jeou flew by military helicopter to Taiwan’s Pengchia Islet, which lies off northern Taiwan, only about 140 kilometres west of the disputed chain. The chain – known as Senkaku in Japan and Diaoyu in China – is controlled by Japan but also claimed by the mainland and Taiwan, and has been a key part of simmering regional tensions over rival territorial claims. Japan’s government reportedly is planning to buy several of the islands from their private Japanese owners. Analysts say Ma chose the Taiwanese islet to make his well-measured gesture to raise international attention without further aggravating tensions. Disputes have flared over island chains in the East China and South China seas, rich fishing grounds with potentially lucrative oil and gas reserves. But diplomatically isolated Taiwan – which China claims a part of its own territory 63 years after the two sides split amid civil war – has been largely left out of the spotlight. Ma called on the East China Sea chain’s three claimants – Taiwan, China and Japan – to put aside their disputes and hold dialogues to jointly develop the rich resources there. He suggested bilateral or trilateral talks “to resolve the issue in a peaceful way.” Ma also asked commanders at two Taiwan-controlled islets in South China Sea’s Pratas and Spratly island chains to strengthen guards. Those chains are claimed by Taiwan, China, Vietnam, the Philippines, Brunei and Malaysia. “Ma has tried to avoid provoking tension, but as Taiwan’s leader, he must make a gesture even though the impact may be limited,” said Lo Chih-cheng, a political scientist at Taipei’s Soochow University. While Taiwanese media were generally sceptical about the visit’s impact, some say Ma’s trip may manage to rebut Beijing’s appeal for a united front with Taiwan over the disputes. Many Taiwanese fear Beijing may be using its warming economic ties with Taiwan in recent years to further its goal of unifying with the self-ruled democratic island. “The mainland is trying to create the false scenario of cross-Strait co-operation in the East and South China” seas, Taiwan’s China Times said in an editorial.

Chinese, Vietnamese presidents meet on ties - Chinese President Hu Jintao (R) meets with his Vietnamese counterpart Truong Tan Sang in Vladivostok, east Russia, on Sept. 7, 2012.

Hu meets KMT honorary chairman in Vladivostok - Hu Jintao meets with Honorary Chairman of Chinese Kuomintang party Lien Chan in Vladivostok, east Russia, on Sept. 7, 2012.

Chinese, Russian presidents meet on cooperation - Chinese President Hu Jintao (L) meets with his Russian counterpart Vladimir Putin in Vladivostok, Russia, Sept. 7, 2012.

Hong Kong*:  Sept 8 2012 Share

CE announces residential sites reserved for HK buyers - Two sites at the former Kai Tak airport have been selected to build flats that will be sold only to Hong Kong buyers, Chief Executive Leung Chun-ying said on Thursday afternoon. The sites are part of a pilot scheme under the so-called “Hong Kong land for Hong Kong people” proposal floated by Leung in his election manifesto. The property programme is widely viewed as a way to deflect criticism after mainland buyers helped drive up prices 89 per cent since the end of 2008, making the city the world’s most expensive place to buy a home. Mainland buyers, who must still secure a visa to travel to Hong Kong, accounted for an all-time high of 51 per cent of purchases in the third quarter of last year. Flats to be built on the two sites can be sold only to permanent Hong Kong residents for the first 30 years after their completion, Leung said. The sites are expected to provide about 1,100 apartments. “Amid a shortage of flats in the past, this proposal in my manifesto has received positive responses from the community,” he said. Leung has ordered Lands Department and legal officials to work out the details on changing the terms of land sales to developers. Leung, who took office on July 1 and has seen his popularity ratings plummet, said the government would start the controversial program in the first quarter of next year. Hong Kong is famous for its free economy and lack of restrictions on foreign purchases. The chief executive made the announcement during a visit to the Kai Tak site, where the construction of a cruise terminal is expected to be completed next year.

Tapas could be big thing in Hong Kong - With an emphasis on socialisingand drinking,it's little wonder tapas restaurants havetaken off in the city, writesVicki Williams. For Barcelona native Lluis Tarrida, tapas are not a meal, they are something that you nibble on in the convivial atmosphere of a bar. "In Barcelona, eating out is never just about tapas. Tapas are things to have with drinks at a bar before going for dinner with friends or family. The emphasis is on the socialising and the drinking, but always with tapas, which stimulate the appetite," says Tarrida, chef at Comilonas private kitchen. In other parts of Spain, things are different. In Madrid, people have a meal of just tapas, visiting bars and restaurants specialising in these snacks that are a short walking distance from each other. In Hong Kong, it is also possible to tapas bar-hop for snacking with drinks, or have them as dinner. But does the food give diners the real taste of Spain? For Tarrida, who has lived in Hong Kong for 10 years, it increasingly does: "More people in Hong Kong are familiar with Spanish cuisine and so are more willing to experiment. As a result there are now more restaurants serving authentic tasting dishes." He believes that BCN, which opened in June, is one example: "The food is very good, the tapas are evolved, and I like the social aspect - the interaction with the chef and other diners." The first British chef to complete an internship at the famed El Bulli restaurant in Catalonia, Spain, Jason Atherton is hoping to recreate that social vibe. He will be opening a tapas restaurant in Wan Chai late next month. So are tapas going to be trend-obsessed Hong Kong's next big thing? With the recent opening of BCN, this month's opening of a branch of New York's Boqueria, and Atherton's arrival, it's certainly a possibility. Here are some notable entrants of the past few years. Boqueria Hong Kong; The restaurant is named after Barcelona's famous food market, and will feature an open kitchen serving traditional tapas. There will be a second serving more substantial dishes designed for sharing - whole fish, suckling pig and paella. The menu will be similar to that of the New York restaurant, with signature tapas such as bombas de la Barceloneta (beef and potato croquettes, salsa brava, aioli), and patatas bravas (crispy fried potatoes with a spicy tomato sauce and aioli). Draught Estrella Damm beer and a range of Spanish wine, sherry, cava and sangria are planned to complement the food. David Izquierdo, formerly of Uno Mas, is heading the kitchen. He is back in town after spending a year in his native Spain. Communal dining will feature, and there will also be a tapas bar seating 30. To create a buzz, the restaurant will be hosting a complimentary cocktail-style tasting evening of paella, snacks and sangria on September 19. BCN: This features intimate bar seating that provides direct interaction with Spanish chef Edgar Barahona, who has an encyclopaedic knowledge of the cuisine and Michelin restaurant experience. It also gives a modern take on tapas that attracts a Spanish-speaking clientele. So it is little wonder that BCN (BarCeloNa) is fully booked for dinner for the next two months, although single diners and couples may get a seat. Thankfully, lunch is still an option, and a good one as it allows diners to inexpensively sample many of the dishes served in the evening (tasting menus only).

China falls as HK climbs global ranks - City's sound infrastructure helps it into top 10 of World Economic Forum's competitiveness table while mainland drops to 29th place. The mainland has slipped in a global ranking of competitiveness, partly because of its closed financial markets. Hong Kong's sound infrastructure, however, helped lift the city into the top 10. European countries still dominate the world's most competitive markets this year, as ranked by the World Economic Forum (WEF), despite the region's debt crisis. Switzerland retains its top position from last year. The WEF's report measures not only economic performance but assesses 144 countries and territories on other aspects as well, such as infrastructure, education system, investment and business environment. Hong Kong moved up to ninth from 11th last year, owing in part to its good infrastructure for transport, telecommunications and electricity. The city ranks behind Switzerland, Singapore, Finland, Sweden, the Netherlands, Germany, the United States and Britain but ahead of Japan. The WEF said Hong Kong's "financial markets are second to none, revealing high efficiency and trustworthiness and stability of the banking sector". But it warned: "Although the quality of education in Hong Kong is good, participation remains below levels found in other advanced economies. Improving educational outcomes will also help boost Hong Kong's innovative capacity, which remains constrained by the limited availability of scientists and engineers, among other things." Mainland China fell to 29th from 26th last year, returning to its 2009 level. "The deterioration is more pronounced in those areas that have become critical for China's competitiveness," the report said, noting that its financial market development fell six places to 54th. However, its macroeconomic situation remained favourable. "China runs a moderate budget deficit; boasts a low, albeit increasing, government debt-to-GDP ratio of 26 per cent; and its gross savings rate remains above 50 per cent of GDP," it said. Edward Chow Kwong-fai, a deputy chairman of the Business and Professionals Federation of Hong Kong, said the report was fair. "Mainland China should not only focus on economic development but also needs to improve its social infrastructure to enhance its overall competitiveness worldwide," Chow said. "China has not changed its policy on foreign direct investment, yet we have seen these types of investments fall recently. "This shows foreigners may slow down their investment in China not because China has not opened up enough, but rather, because of their internal problems and the euro-zone crisis." The euro zone is likely to have slipped back into recession this quarter, Reuters reported yesterday. A survey showed a seventh month of contraction for the private sector as new orders dwindled. Markit's composite purchasing managers' index for last month fell to 46.3 from July's 46.5.

No more corporate funding for DBC radio, says co-founder - Troubled radio station Digital Broadcasting Corporation will not accept any more funding from tycoons and affluent corporations, co-founder Albert Cheng King-hon said on Thursday morning. Speaking on his radio programme, Cheng said the station would rely on income from commercials and donations from the public. He rejected speculation that media tycoon Jimmy Lai Chee-ying might inject funds. Lai, whose Next Media publishes the Apple Daily newspaper, appeared on the programme as a guest host. Cheng said last month that DBC had to shut down because a major shareholder, Beijing loyalist businessman Wong Cho-bau, refused to top up his investment due to political reasons. Asked why would turn down more funding from tycoons, Cheng said he felt “betrayed by a good friend” – referring to Wong, who has filed a High Court writ against DBC about the station’s bookkeeping. The case is due for a hearing on Monday. Cheng said the financially troubled station would continue to operate, but he did not know how long it could last. Lai’s Sharp Daily will broadcast some of the station’s programmes on its website. “Jimmy Lai just turned up in the station [on Wednesday] morning, saying he wanted to be a host on my programme,” Cheng said. “I was surprised. We haven’t talked to each other for many years.” Speaking after the show, Cheng said: “There’s no formal agreement between us. I just think it’s worth co-operating with [Lai]. I will not accept any injection of funds from him and he would not invest in us, either.” Next Media announced through the Hong Kong Exchanges and Clearings on Tuesday that it had been approached by “independent third parties” who were interested in acquiring its print media business in Taiwan. Lai did not respond to questions about that news on Thursday morning, but he was quoted in an Apple Daily story saying that his business in Hong Kong would not be sold.

 China*:  Sept 8 2012

Chinese President Hu Jintao arrived in Russia's Far Eastern city of Vladivostok Thursday for the annual economic leaders' meeting of the 21-member Asia-Pacific Economic Cooperation (APEC) forum slated for Saturday and Sunday. At the meeting, President Hu and other leaders of APEC members will discuss trade and investment liberalization, regional economic integration, food security and establishment of reliable supply chains, as well as cooperation in fostering innovative growth. As the world economic and financial situation remains gloomy, with lower growth in major economies, serious debt crisis in euro-zone, high unemployment in many advanced economies, APEC leaders will work out measures to ensure stable growth in the region. In an address published by the APEC website on Aug. 25, Russian President Vladimir Putin said that Russia's chairmanship comes under the motto "Integrate to Grow, Innovate to Prosper." "Hand in hand with our APEC partners, we are promoting trade and investment liberalization, closer integration, food security, cooperation in the field of prevention and mitigation of natural disasters" and diversification and improvement of transportation and logistics chains. "I am confident that the summit will contribute to broadening cooperation in the Asia-Pacific and give a new impetus to sustainable development worldwide," he said. Chinese officials said that at the meeting, Hu will present China's views on how to promote the world and regional economic growth, and elaborate China's stance on the topics of this year's meeting. Hu is scheduled to deliver a key-note speech at the APEC CEO summit. In his speech, Chinese officials said, the Chinese president will talk about China's current economic situation and economic policies, and make proposals on developing infrastructure for sustainable growth in the region. During the meeting, Hu and other leaders will meet members of the APEC business Advisory Council (ABAC) to seek their recommendations for future work in specified priority areas, such as pushing forward the Doha Round negotiations, strengthening regional economic integration, enhancing food security, establishing reliable supply chains, and expanding cooperation in fostering innovative growth. "We believe that President Hu's attendance at the meeting will play an important role in promoting development of the Asia-Pacific region, advancing the process of regional cooperation and deepening friendly and cooperative relations between China and other APEC members," said Ma Zhaoxu, assistant foreign minister, at a press briefing last week. Since APEC's birth in 1989, it has grown to encompass 21 members spanning four continents, and represents the most economically dynamic region in the world. The region accounts for approximately 40 percent of the world's population, around 57 percent of world GDP and about 48 percent of world trade. APEC's 21 member economies are Australia, Brunei, Canada, Chile, China, China's Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Chinese Taipei, Thailand, the United States and Vietnam. 

Model of China's first large passenger aircraft the C919 on display at an international aviation exhibition in Beijing. Eaton Corp, as a main systems supplier of the project, forecasts it could achieve $2 billion in sales. Eaton maintains steady path - Company targets $2 billion sales in China as it looks to boost non-US revenue to 60 percent. Alexander Cutler, 61, chairman and chief executive officer of Eaton Corp, has spent 37 years working at his company - more than half of his age. The Yale University graduate with bachelor of arts and master of business administration degrees said he still enjoyed operating in the industrial manufacturing sector because he keeps learning new things and "you never do the same thing twice here". During his time at Eaton, Cutler has been division controller, assembly plant manager, president and chairman. Despite not having a technology background, Cutler has had to learn his company's every new innovation. "If you do every job in a company for 37 years, you get to know the technology pretty well," Cutler said. Innovation is Eaton's key to success. The company, based in the United States, was established in 1911. The company boasts of being a diversified power management company with more than 100 years of experience providing energy-efficient solutions that help its customers manage electrical, hydraulic and mechanical power. Its 2011 sales were $16 billion. The company says on its website it is a global technology leader in electrical components, systems and services for power quality, distribution and control. It provides: hydraulics components, systems and services for industrial and mobile equipment, hydraulics and pneumatic systems for commercial and military use, truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. Eaton has approximately 73,000 employees and sells products to customers in more than 150 countries. The company achieved record net income in the second quarter of this year despite the global economic downturn. Eaton's net income per share was $1.12 in the second quarter of 2012, an increase of 15 percent over the same period in 2011, according to its financial report. "That is the result of a lot of new products with new technologies that we introduced solving consumer's problems with energy utilization," Cutler said. Eaton released several advanced plans on Aug 14 to improve the efficiency and power performance of its commercial vehicles' hybrid power system. Economic downturns are a good time for companies to invent new technology, Cutler said, because the markets are not really moving fast enough to support investment. Several of other companies supplying similar services to Eaton's have also escaped damage from the current global financial crisis. "In the safety, energy and environment industrials, business is not so bad and we can even see signs of improvement," said Shane Tedjarati, president and chief executive officer of global high growth regions at systems giant Honeywell International Inc, based in Shanghai. Tedjarati also confirmed a decline in commercial vehicle sales, Eaton's major business 10 years ago. As CEO of Eaton since 2000, Cutler led the company from being a truck parts supplier into becoming a diversified power management company over the past decade. The advantages of being diversified became manifest in the recession, with declines in certain sectors offset by successes elsewhere. Eaton's different business sectors have experienced different results this year. Its vehicle division had fewer sales and lower profit in the second quarter of 2012 while other businesses experienced improvements to different degrees. Sales of Eaton's truck parts business in the second quarter of 2012 amounted to $625 million, a decrease of 7 percent year-on-year. Sales of its automotive parts business declined by 8 percent. "The truck and car parts business used to account for 70 percent of our whole business 10 years ago but now it is no more than 30 percent," said James W. McGill, president of Eaton Asia-Pacific. The diversified strategy helps to ensure the company's consistent success. Even in 2007, when sales of trucks decreased by 44 percent year-on-year, Eaton still managed a positive performance, McGill said. The company expanded its business through a series of mergers and acquisitions, which is how Cutler ended up at Eaton. In 1979, Eaton acquired the company he used to work for and he was made a division controller. Eaton acquired the electrical division of Delta Plc in 2003 and purchased Powerware Corp for $560 million for its power system business in 2004. In order to expand its aerospace business, Eaton acquired the aerospace fluid and air division of Cobham Plc in the United Kingdom and the aerospace division of PerkinElmer Inc in the US in 2005. Eaton has made acquisitions in many different regions almost every year. "About 40 percent of Eaton's annual business growth was from acquisitions and 60 percent came from new products and technology," said Cutler. Now, Eaton has two groups - industrial and electrical - and four business divisions engaged in the electric, hydraulic, aerospace and vehicle businesses. However, integrating the different businesses is no easy task. "Every time, you bring two companies together, their cultures are different," Cutler said. The company has developed what it calls the Eaton Business System to integrate newly purchased businesses. EBS is Eaton's uniform way of doing business, Cutler said. The company holds a lot of teaching and training courses on how to do things the Eaton way for new staff members. "That is the best process to bring the different segments together," he said. In many ways, it is not different from hiring graduates from schools and teaching them the company's language, Cutler added. Eaton entered China in 1993 and its target of $1 billion sales in the country was achieved in 2010. "Our goal is $2 billion sales in China's market by 2015," Cutler said. According to Eaton's plan, 60 percent of its sales will be generated outside the US by 2015, half from developing nations. "The biggest element will be from China," Cutler said. As a supplier for the C919 project, China's first large passenger aircraft, Eaton forecast it could achieve $2 billion in sales. The commercial aerospace project is a long-term business with deliveries of the C919 starting in 2016. Eaton needs to expand its other businesses besides aerospace in China in order to meet the $2 billion target. "The electrical business is still our main business in China," Cutler said. "Almost every business segment is growing fast in China." China's strong demand for infrastructure projects (as partly reflected in the charts above, which highlight the country's outputs of power generating equipment and AC motors in the country) give international manufacturers like Eaton great business opportunities, Cutler said, even though the economy is slowing down this year. Eaton's rivals are also enjoying good business in developing countries. Honeywell, for instance, achieved year-on-year growth of more than 20 percent in China in 2011. More than 55 percent of the company's revenues are generated outside the US now. Both manufacturers have adopted a localization strategy to continue expanding in China. "We expanded local manufacturing capabilities and service offerings across China," said Tedjarati. In 2011 Honeywell built a friction materials plant in Chongqing, a turbocharger plant in Wuhan, in Hubei province, and a personal protective equipment plant in Chuzhou, in Anhui province, as well as a satellite sales office in Xinjiang Uygur autonomous region. Eaton's localization strategy is deep. It has more than 10,000 staff working for its 18 main manufacturing bases and four research centers in China. The company's China innovation hub "centralab" was completed on July 25. Work there will focus on the most advanced technological innovation. It is one of the company's five centralabs worldwide. "We have localized our business and most of our products are produced in China for the China market," said Cutler, who visits China almost every year.

International Chinese Television Network, the largest Chinese television media company in the United States, will launch a new program aiming to introduce Chinese tourism and culture to American audience from November this year. The program was launched in Beijing on Wednesday. The program, which is named Joy in China, will offer people in the US a new platform to know Chinese historic and scenic spots, modern metropolis from an international perspective, said Li Yan, president of Beauty Media Co Ltd, the parent company of ICN. "The launch of this one-hour program will show the image of Chinese cities, promote Sino-US economic and trade development and cultural exchange, as well as provide a new platform to promote the influence of Chinese culture overseas," Li said. Mark Lewis, commercial officer at the US embassy in Beijing, believed the new service is very helpful and informative to US citizens who want to travel to China. "The number of American people traveled to China has been on the rise each year. In the first half of this year, about 1 million American people had visited China," said Lewis. "ICN's new program will facilitate the greater exchanges of people in US and China." In 2009, Beauty Media acquired ICN, becoming the first Chinese media company to gain access to America's digital terrestrial broadcast network. ICN has 16 channels, covering Los Angeles, New York, San Francisco, Houston, Seattle, Austin, Dallas in US, and Vancouver, Toronto in Canada. About 100 viewers in North America can watch its program by the wireless and cable.

The number of Americans applying for visas to China has remained flat since the country revised its rules for visitors from the United States. "We have seen a stable number of applications since the launch of new visa rules on Aug 1," said Chen Xiongfeng, a visa-affairs officer at the Chinese Embassy in Washington. "The feedback from visa officers is positive." Chen said the new rules are in line with other countries' procedures and require Americans applying for Chinese tourist or business visas to submit a letter from an authorized tourism agency, a company or an individual inviting them to China. The letter should include personal information of both host and invitee , along with information such as the purpose of the visit, arrival and departure dates, places to be visited, and who will pay for the visitor's accommodations in China. Applicants also can, but aren't required to, submit materials including a copy of their round-trip ticket or hotel reservation, Chen said. The visa officer spoke in response to media reports that China has tightened visa rules and that the changes could jeopardize the country's aim of becoming the world's top tourism destination. About 2.12 million US-based visa holders visited China in 2011, according to the Ministry of Public Security. "The new, complicated rules will impede China's tourism industry," the manager of a Chinese-visa service provider in California told China Daily. He declined to be identified by name. Tim Caswell, a Californian, received a visa to China at the end of August. "My biggest problem was that the nearest consulate from my house is 300 miles away and doesn't accept mailed applications," he said. But for about $400, Caswell was able to use an outside service to process a rush order through the mail to get his visa from China's consulate in San Francisco in two days. Chen blamed the misperception over the new rules on concerns expressed by travel agents. Under the new visa rules, visiting China has become less burdensome for Chinese-Americans and their families. According to Chen, Chinese expatriates' spouses and children with US citizenship, as well as Chinese-Americans born in the Chinese mainland, Hong Kong, Taiwan and Macao, and their spouses and children, are eligible to apply for long-term, multiple-entry visas that are valid for two years. Visa officers will determine if these applicants should receive a long-term visa based on their individual cases. "That's good news for me and I have booked an airplane ticket to China in October," said Ed Wang, a Chinese-American who frequently flies between San Francisco and Hong Kong. Under an agreement between Beijing and Washington on the provision of business and tourism visas, US citizens or permanent residents can apply for a single- or double-entry visa valid for one year or a multiple-entry visa valid for six months or a year. China is in talks with the United States about possibly extending the period of visa validity, Chen said.

Hong Kong*:  Sept 7 2012 Share

Shares of pay-television operator i-Cable Communications (1097) soared as much as 43 percent in afternoon trading yesterday on rumors that the Executive Council has discussed the granting of free TV licenses in the SAR. The stock hit 41 HK cents at 2.30pm, compared with Monday's closing of 29 HK cents. It later closed at 37 HK cents yesterday, up 29 percent. "There are no negotiations or agreements relating to intended acquisitions or realizations which are discloseable under Rule 13.23 of the Listing Rules," i-Cable said in a filing announcement, explaining it had no idea why its shares had surged. Shares of TVB (0511), one of the two free TV operators in Hong Kong, fell as much as 8.3 percent yesterday, before closing 4 percent lower at HK$53.85. Shares of i-Cable and TVB have been volatile since June due to speculation over the granting of free TV licenses and confusion over broadcast rights for the London Olympics. i-Cable earlier bid a record HK$124 million for the broadcasting rights in expectation that it would operate a free TV channel before the Games. It finally reached an agreement with free TV operators TVB and ATV on broadcasting the London Games after government intervention. Apart from i-Cable, chairman of City Telecom (1137) Ricky Wong Wai-kay and PCCW- controlled NOW TV are also seeking free TV broadcasting licenses. In a separate development, Next Media (0282), controlled by media tycoon Jimmy Lai Chee-ying, has received inquiries from undisclosed potential buyers who want to acquire its print media business and certain assets in Taiwan including Taiwan Apple Daily, Taiwan Sharp Daily and Taiwan Next Magazine Bundle. "The company is currently in an early stage of negotiation with these parties in relation to such a transaction," the firm said yesterday. Next shares rose 10 percent to 55 HK cents yesterday supported by the proposed takeover.

High prices peg back Hong Kong home sales despite rise in supply - Big run-up in prices leaves owners in no rush to sell and buyers hoping values will fall, a standoff that's caused a drop in deals. Homeowner Winnie Cheung has no intention of profiting by selling her apartment in the blue-chip housing estate of Taikoo Shing in Quarry Bay, even though its value has risen by some 55 per cent to HK$7 million in three years. "The rapid rise in home prices is a bit crazy," said the young sales executive. "I have several friends who sold their flats but the money they received was hardly enough to buy a similar-sized flat in Taikoo Shing. "They ended up either buying smaller flats in the same housing estate or moving to a less convenient location." Cheung and her husband bought a 662 square foot flat in Taikoo Shing for HK$4.5 million, or HK$6,790 per square foot, in May 2009. "Even though the government's move last week to increase flat supplies may bring down home prices, flat values in Taikoo Shing are unlikely to return to the levels they dropped to in 2009," she said. Chief Executive Leung Chun-ying last week announced a 10-point plan to increase supply to stabilise home prices. The measures include the sale early next year of 830 Home Ownership Scheme (HOS) flats in Tin Shui Wai that were put on hold because of a short-piling problem in 2000; selling 1,000 flats in Tsing Yi under the My Home Purchase Plan to families earning less HK$40,000 a month at a discount; converting the Chai Wan Factory Estate into public housing to create 180 units; and rezoning for residential use 36 sites designated for "government and recreational" purposes. Homeowners like Cheung are in no hurry to sell or refuse to lower their asking prices because they don't expect the measures to trigger a drop in prices. Buyers, meanwhile, are hoping that prices will come down. The conflicting expectations, say agents, are contributing to slowing sales. Ricacorp Properties data shows that sales in the 50 estates that it monitors dropped 14 per cent to 297 deals during the week of August 27 to September 2, compared to 344 a week earlier. "That is a seven-week low. The government measures have cooled market sentiment but owners' high asking prices are also killing buyer interest," said Ricacorp director David Chan. Meanwhile, Sun Hung Kai Properties' 1,075-unit Century Gateway in Tuen Mun will also lure buyers away from the secondary market, and Patrick Chow, head of research at Ricacorp, said sales of second-hand homes may fall by as much as 70 per cent in coming weeks. Kenneth Chiu, assistant sales manager for Centaline Property Agency's Taikoo Shing branch, shared Chow's view, noting that the number of flats for sale in Taikoo Shing had fallen to a record low of 710 from 770 at the start of last month. Given the limited choices, he expects home sales in Taikoo Shing to slow this month, though flat prices have so far shown no signs of falling. Chiu said a 675 sq ft flat at Taikoo Shing changed hands over the weekend for HK$7.92 million, or HK$11,733 per square foot, in spite of the new measures. "The price is the highest on record for a unit of this size in the estate and the buyer does not believe the government measures will have an adverse impact on the property market," said Chiu. He said a 2,319 sq ft flat with a 1,402 sq ft rooftop at Taikoo Shing sold on Monday for a record HK$31.4 million, or HK$13,540 per square foot. In Tuen Mun, a 452 sq ft flat in The Trend Plaza sold for HK$2.79 million, or HK$6,172 per square foot, over the weekend - the highest price recorded for the estate. Paul Louie, of Nomura, said the government's move to increase supply and help restore the elasticity of supply was a step in the right direction. "The government reiterated that it would continue to monitor the housing market for potential overheating. If required, it will introduce more appropriate measures at the right time," he said. Cusson Leung, of Credit Suisse, said if home prices continued to rise the government might reduce loan-to-valuation ratios for the purchase of a second home, or increase the special stamp duty for homes sold within two years of purchase. However, office worker Woo Man-yee said: "No matter how expensive the flats are, there are many non-local buyers who seem to have unlimited amounts of money. Only when you suppress demand from this group will flat prices slow down."

Two "middle-class private hospitals" are expected to be built in Wong Chuk Hang and Tai Po. The news came as Secretary for Food and Health Ko Wing-man said that public and private hospital systems must develop hand in hand, and not compete at the expense of each other. Tenders for the Wong Chuk Hang and Tai Po facilities - part of four earmarked for the development of private hospitals - closed in July, Ko said, and their results will be known by the end of the year or early next year. Ko said he is keeping an open mind on possible changes to the "strict" tender criteria depending on how it goes with the first two projects. He said standards used in the process "reflect the administration's intention of having these new private hospitals as middle-class private hospitals, not luxury ones." Land premiums only account for 30 percent of the assessment, with Ko conceding that "the 70 percent set aside for technical criteria has been criticized as being too stringent." The way forward is to have a "balanced and sustainable development of the dual-track hospital system." Ko also admitted the brain drain of medical staff is partly due to misapprehensions that the government favors the development of the private sector. Ko said an important plank in the dual-track system is the proposed voluntary Health Protection Scheme, details of which are being worked out by PricewaterhouseCoopers. Key features of the scheme and the critical volume that it needswill be in the PwC report. The latter, he said, will be the number of people needed for the scheme to have an impact, which means convincing a significant number of people to go from the public to the private sector. Ko is confident of the scheme's passage through the Legislative Council even if the economy sees a downturn. "It's more important for Hong Kong people to see that there is a need to take care of their own future medical care because by 2030 we will have one quarter of people in the elderly range," he said. The turnover rate for doctors in the year ending March was 4.8 percent, compared to 5.2 percent previously.

Hong Kong doctors said on Tuesday they support a new European medical guideline which recommends that all elderly patients be screened for irregular heartbeats. This is because recent evidence shows it is a common disorder and a major cause of strokes. The European Society of Cardiology’s latest guidelines, published at the end of last month, also recommended that patients suffering from irregular heartbeats, with a high risk of stroke, take anticoagulant drugs to lower the risk. Local experts stress that the new guideline was applicable to Hongkongers. “We suggest that when elderly patients see a doctor, they could ask them to feel their pulse. If the beat is irregular, they should do an electrocardiogram to check for atrial fibrillation,” said Dr Lam Yat-yin, an associate professor of medicine and therapeutics at Chinese University. Atrial fibrillation is the most common kind of irregular heart rate disorders. It is found in an estimated one of every 100 people in Hong Kong. It has many causes including high blood pressure, diseases of the heart and lung and carbon monoxide poisoning. Diagnosis is usually late, as many patients do not show obvious symptoms. Early diagnosis and medication could prevent the occurrence of strokes, when blood vessels in the brain are blocked by platelets formed by the disorder, said Lam. A Chinese University study released last year found that 15 per cent of Hongkongers with the condition were not on medication, and 44 per cent were taking antiplatelet drugs. Only 41 per cent were taking Warfarin, the most common anticoagulant drug. Anticoagulant drugs lower the risk of stroke caused by atrial fibrillation by 60 to 75 per cent, compared to just 20 to 30 per cent with antiplatelet drugs, said Vivian Lee Wing-yan, an associate professor of pharmacy at the university, citing previous studies. She said many patients choose aspirin, the most common antiplatelet drug, because it does not require diet restrictions linked to anticoagulant drugs. She urged doctors and patients to discuss and choose the most suitable drug – after the patient’s risk of stroke and bleeding were assessed. A newer anticoagulant drug, Clopidogrel, is more effective and has a lower risk of bleeding than traditional medications, said Lee. The drug, however, is not subsidised at public hospitals.

Chief Executive Leung Chun-ying has decided not to attend a key regional summit this week, to spend more time dealing with “domestic duties” in Hong Kong. The decision was announced in a short government statement on Wednesday afternoon. The Asia-Pacific Economic Co-operation Summit in Vladivostok, Russia, will be held on Friday and Saturday. Financial Secretary John Tsang Chun-wah will attend the meeting instead of Leung. Tsang returned from a pre-summit meeting in Moscow about a week ago. Leung has asked Tsang to “make every effort to arrange a meeting with the president of the Philippines during the Apec meetings, and to convey the demands of the victims and bereaved families of the hostage incident”, the statement said. Eight Hongkongers were killed and seven injured in the Manila hostage incident of August 2010. Earlier this week Leung told survivors of the attack that he would pass on their demands for compensation and an apology to Philippine President Benigno Aquino, at the Apec meeting. Leung’s administration has been dogged by public opposition to the introduction of the national education course in schools. Thousands of protesters have gathered outside government headquarters this week demanding the course be withdrawn, despite Leung’s efforts to allay their concerns by setting up a committee to study the implementation of the subject. The protesters – including students, parents and teachers – are concerned that the subject will be used to indoctrinate young people. Officials say it aims to build national pride, and plan to make it a compulsory course in three years. Tsang will return to Hong Kong on September 11. In his absence, Secretary for Financial Services and the Treasury Professor Chan Ka-keung will act as financial secretary. Apec was set up to promote economic growth in the region. In the 1994 Bogor Declaration, its leaders pledged to promote the free flow of goods, services and capital among Apec economies.

The gold price in Hong Kong went up HK$1 to open at HK$15,700 per tael on Wednesday, according to the Chinese Gold and Silver Exchange Society. The price is equivalent to $1,698.97 a troy ounce, up $0.11 at the latest exchange rate of $1 against HK$7.756.

Asian-American voters 'crucial' - With their candidate, President Barack Obama, locked in a tight race against Republican nominee Mitt Romney, Democrats are counting on Asian-American voters to push them to victory in November, the party's national chairwoman said on Monday. "We know the AAPI vote is going to be crucial in battleground states," Debbie Wasserman Schultz, the chairwoman, told an audience of party activists from the Asian-American and Pacific Islander community on Monday before the start of the Democratic National Convention in Charlotte, North Carolina. In swing states such as Virginia, Nevada, Pennsylvania and her home of Florida, any margin of victory, if it comes, will be small, Wasserman Schultz said in urging the grassroots Democrats to work hard for every vote. "So just like in 2008 in those states, the turnout among AAPIs is going to be critical. Making sure we do everything we can to deploy and turn out that vote is going to be essential to Barack Obama's victory," Wasserman Schultz said. She also serves Florida's 20th Congressional District in the US House of Representatives. Americans of Asian and Pacific Islander descent are among the fastest-growing demographic groups in the United States, consisting of about 16.6 million people, or 5.4 percent of the country's population, according to the most recent federal census. By 2050, this group is expected to make up 9.7 percent of the US population with more than 40 million people. Asian-Americans are often described as the best-educated and highest-income minority in the US, and in recent years their community has become more engaged in national politics. About 100 Asian-American delegates attended the 2008 Democratic Convention in Denver at which Obama was first nominated. For this year's DNC, the number of attendees exceeds 300, according to convention organizers. Democrats' efforts to reach out to this increasingly important voting group appear to be paying off. Four years ago, 62 percent of Asian-American voters said they had cast ballots for Obama, according to a Pew Research Center poll. Earlier this year, another Pew poll found that more than 50 percent of Asian-American registered voters identify themselves as Democrats while about 30 percent are Republicans. Wasserman Schultz said her party appeals to Asian-American and Pacific Islanders due to its shared values with the community and commitment to diversity. This year, 14 of the 17 AAPI candidates running for Congress this year are Democrats, she pointed out. Jay Chen, whose parents immigrated to the US from Taiwan and who is a candidate for California's 39th Congressional District, told China Daily after Monday's speech that he believes Asian-Americans will vote for Obama again. "The Democratic Party is always better toward minority issues and immigration issues, accommodating their linguistic needs. That's why more Asian-Americans gravitate toward it," he said. Even in some congressional districts, such as Chen's in the Los Angeles area, where more Asian-Americans are registered as Republicans than Democrats, "we know that most of the Asians will still vote for Obama", he said. "Asians may register one way but they will always vote for whom they think is best, they don't just follow party line," added the Democratic challenger to Representative Ed Royce, a Republican who is seeking his fifth House term. The biggest challenge is to make sure members of the community are registered to vote, Chen said. "In my race, there are lots of voters of my parents' generation who are very excited to see me running because when they started out, they just wanted to get a job. Now they see how important it is to get involved in politics," Chen said.

 China*:  Sept 7 2012

China pledges to defend territory after Japan island reports - China pledged on Wednesday to take “necessary measures” to defend its territory after Japanese media said Tokyo had agreed to buy a contested group of islands. Japan’s government will pay private Japanese landowners US$26 million for three of the islands, known as Senkaku in Japan and Diaoyu in China, the reports said, citing unnamed government sources. “We cannot help but ask where is Japan trying to lead China and Japan relations to?” said foreign ministry spokesman Hong Lei in response to a question about the reports. “The Chinese government is monitoring developments closely and will take necessary measures to defend its national territorial sovereignty.” The chain, which lies on vital shipping lanes, is believed to sit on top of potentially rich gas fields. China’s state media slammed the reported purchase as a prank, saying it would test Japan’s credibility over a “historical commitment” made in a landmark 1978 bilateral friendship treaty to resolve the issue. “The Japanese government has ridiculously reached an agreement with the self-claimed Japanese ‘private owners’ of China’s Diaoyu Islands to formally purchase them soon, a daredevil move that could further wreck its ties with Beijing,” Xinhua news agency said in a commentary. Often testy Japan-China ties took a turn for the worse in August when pro-Beijing activists landed on one of the islands, Uotsurijima. They were arrested by Japanese authorities and deported. Days later about a dozen Japanese nationalists raised their country’s flag on the same island, prompting protests in cities across China. Last week the Japanese ambassador’s car was targeted in Beijing when an unidentified man ripped the national flag off the vehicle.

China offers assurances over South China Sea as Clinton visits - China promised on Wednesday to ensure freedom of navigation in the tense South China Sea and told Secretary of State Hillary Clinton it was willing to work on a code of conduct to manage disputes. After weeks of escalating tensions in the strategic sea and a war of words between Washington and Beijing, the Pacific powers toned down the rhetoric and pledged co-operation as Clinton met with most of China’s top leadership. “Freedom and safety of navigation in the South China Sea is assured,” China’s Foreign Minister Yang Jiechi told a rare joint news conference with Clinton inside the imposing Great Hall of the People. “For China and our neighbouring countries, the South China Sea is really a lifeline for exchanges, trade and commerce. There is no issue currently in this area, nor will there ever be issues in that area in the future,” he said. His assurances may be met by scepticism from neighbouring countries such as the Philippines and Vietnam, which have accused China of carrying out a campaign of intimidation as its economic and military clout grows. The United States has rallied behind the Southeast Asian nations and sharply criticised Beijing’s recent establishment of a remote garrison in the South China Sea, through which half of the world’s cargo flows. Yang said that China had “plentiful historical and jurisprudential evidence” for its claims to virtually all of the South China Sea, a position that has led Beijing to consider much of the disputed areas to be within its own waters. But he sounded upbeat on Clinton’s calls for an eventual code of conduct in the South China Sea, which would establish rules and means of dialogue to prevent maritime incidents from escalating into full-fledged conflict. Pointing to his recent tour of several Southeast Asian nations, Yang said that China agreed to “work towards an eventual adoption of a code of conduct” on the basis of consensus. Yang said without elabourating that he hoped for “success” at the East Asia Summit in November in Cambodia. Clinton has said that she wanted to see progress on the code in time for the summit after talks in July by Southeast Asian foreign ministers failed to make headway. Clinton, who met Yang for a dinner on Tuesday that stretched past midnight, said it was “in everyone’s interest” for China and the 10-member Association of Southeast Asian Nations to seek a code of conduct. She denied charges that the growing US military and political focus on Asia was aimed at containing China, saying that President Barack Obama’s administration did not want “unhealthy competition”. “Both President Obama and I have said frequently that the United States welcomes the rise of a strong, prosperous and peaceful China,” she said. The show of conciliation stands in marked contrast to the tone of China’s state-run press which has ripped into the United States nearly daily ahead of Clinton’s visit. Just as Clinton was meeting Chinese leaders, the overseas edition of the People’s Daily warned on Wednesday against the United States “sowing discord” among China’s neighbours, calling such a strategy “a counterproductive waste”. Yang, asked if he shared the dire media assessments of US intentions, said: “Nowhere else do China and the United States share more converging interests and interact more frequently than in the Asia-Pacific region.” Clinton met President Hu Jintao and much of the top leadership but Vice President Xi Jinping – who is expected to take power next year – called off talks at the last minute. While China has in the past used abrupt cancellations to show displeasure, the two sides played down the absence of Xi, who made friendly gestures during a visit to the United States earlier this year. Yang warned against “unnecessary speculation”. One US official said that Xi planned to send a letter to Clinton and that she would likely meet later with someone else involved in the leadership transition. Clinton’s last visit to China in May was overshadowed by a row over blind dissident Chen Guangcheng, who dramatically escaped house arrest for the safety of the US embassy. China eventually allowed him to move to New York to study. Clinton pointed to human rights as she said that the United States and China “do not always see eye to eye” on all issues. Concerns have mounted over China’s treatment of Tibet which has seen a wave of self-immolations.

China's leading private conglomerate Dalian Wanda Group Co. on Tuesday completed a high- profile acquisition of AMC Entertainment Holdings, Inc., valued at roughly 2.6 billion U.S. dollars, in Los Angeles, California, Tuesday. With the completion of the deal between Wanda and AMC, the second largest cinema owner in the United States, Wanda will be added with 338 multiplex theaters and 4,865 screen, including 2, 171 3-D screens and 124 IMAX screens to its assets, becoming the world's largest cinema owner. The Beijing-based Wanda, which originated from Dalian, a coastal city in northeast China's Liaoning Province, controls 94 theaters and 805 screens in China. It also operates hotels, department stores, tourism and other businesses. "We are very pleased to have completed the acquisition of AMC and begin this new chapter in Wanda's international development," Wanda Chairman and President Wang Jianlin said at a press conference held at an AMC theater in west Los Angeles. "Throughout this entire process we have been impressed with the expertise and dedication of AMC's management team and associates." After the acquisition, Wanda will operate AMC as a wholly-owned subsidiary and invest up to an additional 500 million U.S. dollars to support its strategic and operating initiatives. Under the agreement, AMC, based in Kansas City, Missouri, will continue to control film programming as well as to keep its headquarters in the present location. Its 17,000-strong associates will continue to operate theaters in 32 states across the United States. "We are enthusiastic about combining AMC's leadership in the U. S. with Wanda's leadership in China, the world's fastest-growing market," AMC chief executive officer and president of AMC Gerry Lopez said. "We strongly believe in our shared common interests in advancing the movie industry and we feel this partnership creates one of the world's premier location-based entertainment companies. " Wanda announced its willingness to acquire AMC including its debts in May. The deal is Wanda's single largest investment outside China and is also the Chinese conglomerate's first acquisition in North American movie market.

The Ministry of Railways has raised its target for railway construction spending this year to 496 billion yuan ($78 billion) from 470 billion yuan in a move seen as part of the government's latest efforts to shore up the slowing economy. "The investment on new railways will be at least 67 billion yuan a month from September till the end of this year," China Railway Group's President Bai Zhongren told a news conference in Hong Kong on Tuesday. This is at least the third time this year that the ministry has raised its investment target since the start of July when Premier Wen Jiabao said promoting investment growth is key to stabilizing economic expansion that has fallen to the slowest pace in three years. In its previous moves, the ministry has raised its spending target from 406 billion yuan to 470 billion yuan. The latest investment target (496 billion yuan) is 35 billion yuan more than last year’s spending of 461 billion yuan. Meanwhile, data from the ministry showed that total investment in railway fixed assets during the first seven months of 2012 was 30 percent less from a year ago, due to fewer new projects and lack of funding. "The Ministry of Railways will hold a mobilization meeting soon, which is very rare and it demonstrates its determination on boosting the railway construction," said Bai. Liao Qun, chief economist of China Banking Group at Citic Bank International, told China Daily that currently, one of the major measures used by the central government to stabilize the country’s economic growth is increasing investment in infrastructure projects. "The scale of the spending on infrastructure this year won't be as large as it was in 2009, as the central government only needs to deliver 7.5 percent GDP growth for the country," said Liao. China’s official PMI, one of the earliest indicators of China’s economy, fell more than expected to 49.2 in August from 50.1 in July, the lowest in nine months, giving rise to expectations of more policy easing by the government. S&P Capital IQ analyst Hooi Tow Chew also said in a report that the central government is set to step up infrastructure projects' approvals to support economic growth. He pointed out that China Railway Group will benefit from this move as railway construction contracts are expected to pick up following the increase in the railway spending budget. China Railway Group, the country's leading heavy infrastructure company, posted a decline in its first half net profit as the country spent less on building new railway lines. "I can tell you for sure that the second half of this year will be better than the first-half (for China Railway Group)," Bai said. During the first half of 2012, the company’s new infrastructure construction contracts was 200.72 billion yuan, up 13.36 percent year-on-year; by the end of June, the company's backlog of infrastructure construction contracts was 937.34 billion yuan, 4.3 percent more than it had at the end of last year.

Hong Kong*:  Sept 6 2012 Share

A HK$200 million subsidy is being offered to 4,300 vendors from 43 fixed-hawker areas for them to improve stall safety, relocate or simply surrender their licenses. The scheme, announced by Secretary for Food and Health Ko Wing-man yesterday, comes after a blaze on Fa Yuen Street in Mong Kok killed nine people and injured dozens in November when flames spread from stalls to nearby buildings. Ko visited fixed-pitch hawker areas on Bowring Street in Jordan and Marble Road in North Point. "A one-off grant will be made to those who renovate their stalls at the same locations, those who relocate and those who decide to give up their licenses," he said. The scheme - which works out to an average of HK$46,000 each vendor - involves moving stalls away from the entrances of residential buildings to clear fire escapes and upgrade fire safety, or subsidizing their owners to have them rebuilt. It may also cover the license buyback. Ko said he plans to spend six to eight months discussing its details with vendors and district councils while the implementation will take five years. He said the amount of subsidies depends on the size of stalls, amount of fireproof materials to be used and whether stalls need to be relocated. When asked whether the scheme will be made statutory, Ko said the government will enforce the law accordingly in terms of fire safety, and he hopes vendors will join the scheme in order to reduce fire risks. Most of the covered hawker areas are close to residential, commercial and composite buildings. Some hawkers are apprehensive of the scheme, saying they will not move if the new location is unsatisfactory. "I won't move to the end of the street when my stall is located at the entrance, where I have more business," one hawker said. Another said the government plan is too late. "I have already spent HK$2,500 on the stainless steel box for the electrical system, will they pay me back?" she asked. Yau Tsim Mong district councillor Wong Kin- san said though the scheme's intention is good, it is difficult for vendors to decide whether to apply for subsidies without further details - including how much exactly each of them may receive. 

At least six primary schools have decided to press ahead with launching national education this year. According to opponents of the subject, the six include Fresh Fish Traders' School at Tai Kok Tsui, Baptist Lui Ming Choi Primary School in Sha Tin, HKFEW Wong Cho Bau School in Tung Chung and NTWJWA Leung Sing Tak Primary School in Tai Po. The others are Po Leung Kuk Hong Kong Taoist Association Yuen Yuen Primary School in Tuen Mun and Hon Wah College (Primary Section) in Siu Sai Wan. There are more than 500 primary schools in Hong Kong. Baptist Lui Ming Choi, which reportedly asked teachers to sign a confidentiality agreement, said it could not answer media questions as it was busy with the start of the new term. About 20 alumni set up a roadside booth outside the school calling on administrators to shelve the subject. Alumni spokesman Wong Ho-lun said the school did not consult parents beforehand. "It is also odd that the school has asked all teachers to sign confidentiality agreements as no other subject gets this treatment," Wong said. He urged the school to seek a consensus with parents before its launch. Peggy Li Chan Yuen-yee, whose son is in Primary Five, was dissatisfied as the school did not inform parents about the subject launch and agreed her son should boycott national education classes. Another parent said he did not know the content of the subject and feared it could be indoctrination. He said a school strike is the last resort. Leung Siu-tong, principal of Wong Cho Bau, said the school will allow students to study on their own in the library if they do not want to attend national education classes. Fresh Fish Traders' School principal Leung Kee- cheong said students should know more about China, adding that topics like the June 4 crackdown and activist Li Wangyang will be in the syllabus. At the Po Leung Kuk Hong Kong Taoist Association Yuen Yuen Primary School, the subject will deal with traditions, festivals, historical figures and national development in the first three years, and Hong Kong and mainland cooperation, Confucius, infrastructure projects and mainland social problems in the next three. Meanwhile, principal Liu Ng Ka-yee said the Hennessy Road Government Primary School will not launch national education this year. "As teachers do not have adequate preparation, the school will only launch the subject when teachers and parents accept the subject and when they have prepared the teaching materials," Liu said.

Hong Kong-Shenzhen combined travel card launching in both cities - Commuters between Hong Kong and Shenzhen will be able to use a single card for transport in both cities from today, but will have to wait for more advanced features. A commemorative version of the two-in-one card, "Hu Tong Xing", will be available in both cities today, while regular cards will go on sale next week, the two sponsoring companies announced yesterday. Co-developed by Octopus and its Shenzhen counterpart, Shenzhen Tong, the card can be used on public transport and in shops but does not support features such as automatic topping up from users' credit cards. The launch follows the release in July of the Octopus-Lingnan Pass, which can be used in Hong Kong and 16 cities in Guangdong. Both cards have two "e-purses", allowing users to top up with Hong Kong dollars in the city and yuan across the border. The Hu Tong Xing's release begins today with the sale of 3,800 commemorative versions, for HK$298 each, available at 26 MTR stations. The regular cards go on sale at all stations next week, for HK$98. Those prices do not include any value in the cards, which are not refundable. Lin Maode, the president of Shenzhen Tong, said the companies were looking at merging the three cards - Octopus, Lingnan Pass and Shenzhen Tong - but had met with technical issues. Octopus Holdings' chief executive, Sunny Cheung Yiu-tong, said they would like to launch the card and let commuters try it out first before adding more features, such as allowing users to top up both purses in either city. Asked if the card was meant to assist the relaxation of entry-permit rules in Shenzhen, Cheung said the companies had talked about the card "for a long time". "It's unrelated… but we did expect more people to cross the border every day," he said. About 10,000 Octopus-Lingnan Pass cards have been sold in Hong Kong, Octopus said. Dr Hung Wing-tat, a transport analyst at Polytechnic University, said the card would be convenient for those who travelled frequently between the cities. "One at least does not have to wait until arriving at the city to buy a card," he said. Resolving the technical issues to add new features to the cards should be easy, he said.

Stephen Chiau’s ex-girlfriend sues him for HK$80m - For years, prominent comedian, actor and director Stephen Chiau Sing-chi benefited from the financial skills and advice of his then-girlfriend, Alice Yu Man-fung. In return, he paid her a salary plus millions of dollars in commissions. Now she is suing him, claiming an HK$80 million commission on the “expected” sale price of a luxury house on The Peak – which has yet to be sold. In a writ filed with the High Court on Monday, Yu said Chiau would not have been able to get into the highly lucrative deal – to redevelop the Skyhigh development on the Peak – without her assistance. The claim involves one of four houses at 10 Pollock’s Path, The Peak, a joint venture by Chiau and Ryoden Development. The four luxurious houses have been redeveloped and three of them have been resold. The third dwelling, owned by Ryoden, went for a record HK$800 million in May last year. The fourth house, owned by Chiau, has yet to be sold. But Yu is suing for a 10 per cent commission on the expectation that it will fetch the same eye-watering price of HK$800 million. Yu claims she introduced Chiau to the high-flying deal when she learned from market sources, in 2004, that the distressed assets arm of Citibank would auction the property at 10 Pollock’s Path. Yu says her help was instrumental in the Skyhigh project, because without her social network power to bring in Ryoden as an investor, Chiau would not have enough money to close the deal. She says she received from Chiau HK$14.9 million in commissions for the sale of two houses at the development. Filings with the land registry showed the two houses were sold for HK$350 million and HK$300 million in September 2009. Yu started urging Chiau to pay her HK$80 million commission on the fourth house, after Ryoden’s windfall HK$800 million sale. In July last year, Chiau suggested that he would sell the house in four years, and he would pay the commission over the intervening period, according to the writ. In March, it says, Chiau sent her a cheque for HK$10 million plus a letter saying the HK$10 million was a “gratuitous payment”, denying that he owed to her any commission. According to the court paper, Yu signed a written agreement with Chiau in 2002 to become his personal financial consultant, paying her a salary of between HK$20,000 and HK$59,000 a month. They made an oral agreement that Chiau would pay Yu 10 per cent after-tax profits on successful investments as commission.

Withdrawing national education classes not an option, C.Y. Leung says - Chief Executive Leung Chun-ying stepped into the national education controversy on Tuesday morning, saying that while withdrawing the programme is not an option, there is wide latitude for adjusting details to address public concerns. Speaking to the media on Tuesday morning, Leung said he and his ministers were “very willing” to discuss the issue with activists and opponents. But he said the precondition for talks “cannot be withdrawing or not withdrawing” the program. “I do not think we need to take a stance on that now. Between withdrawing and not withdrawing the subject, the room for negotiations is very big,” he said. “Instead, [the dialogue] should be about aspects of the programme that are creating anxieties,” Leung said. Asked why he ignored activists’ calls to meet them at a protest venue on Monday evening, Leung said any talk would have been futile: activists would only have shouted slogans about withdrawing the programme at top officials who attended. “I believe that under these circumstances, if I and other officials spoke to them there, they would have shouted the ‘withdrawal’ slogans,” he said. He invited Hongkongers to voice their concerns with the government-appointed committee on the issue, chaired by Executive Council member Anna Wu Hung-yuk. “If they have anxiety about the subject, I hope they can voice their views to the committee – giving the reasons why they think the subject should be withdrawn,” Leung said. He repeated Chief Secretary Carrie Lam Cheng Yuet-ngor’s announcement yesterday that the government has no plans to clear out the protesters camped outside the central government headquarters. The “Occupy Tamar” protest began on Thursday afternoon at 4pm. Leung also addressed rumours that the government would release national education teaching materials for schools to use. “The government will not publish teaching materials. What the committee will assess is the materials for teachers to use for reference,” he said. Meanwhile, at 9am on Tuesday, another hunger striker protesting against national education – Chim Man-man – had to quit due to her deteriorating health. That left ten people, two women and eight men, continuing with the hunger strike. The vice-president of the Professional Teachers’ Union, Wong Hak-lim, one of the hunger strikers, said discussions with the government’s committee would be futile because most of its members support the curriculum. Chim, a member of the Tertiary Student Action group, had not eaten for 58 hours. Saying she felt dizzy, with low blood sugar, she went home to rest. “I’m disappointed in the government, because they did not respond to public concerns. I hope the government can make up for it by listening and discussing with the public,” said Chim. There were around 100 people at the protest area on Tuesday morning, and the atmosphere was quiet. The hunger strikers are now fasting “indefinitely”, said Lam Man-wa, a strikers’ spokeswomen. “They will last for as long as they can with the doctor’s approval.” Some new hunger strikers have appeared to replace those who quit. All are members of the Civil Alliance Against National Education. The fasting began on Thursday with three 18-year-old members of the secondary pupil group Scholarism. The three lasted 56 hours, until Saturday at midnight, before stopping due to health concerns. They passed on the baton to ten others who continued the fast, including university students, a parent, teachers and a professor. Two female strikers quit because of health concerns yesterday. They are Dr Ho Chi-kwan, a retired Polytechnic University associate professor and Linda Wong Sui-hung, a parent and barrister. Three new strikers – two unrelated parents and one social worker – joined on Monday night at 10pm to replace the two who quit. They are parents Debora Poon Suk-ying, Anthony Yiu Koon-tung and social worker Sean Wong Pong-ho. One striker ended her fast on Tuesday. A striker entering his 58th hour on Tuesday morning was 63-year-old James Hon Lin-shan, deputy director of the Professional Teachers’ Union. He said his health was fine and he “still has hope” that the government will withdraw the curriculum. “We are reaching a consensus that the general public opposes national education. We have to protect our children,” he said. Meanwhile, the local Asia Television (ATV) broadcaster came under fire by internet users on Monday for its short editorial programme, ATV Focus, that accused London and Washington of backing the protests against the national education scheme. The ATV narrator said the Western powers want to “cripple Hong Kong and show the world that China cannot control Hong Kong”. “Anti-national education is a topic created for the election by the destruction camp [pan-democrats].”

 China*:  Sept 6 2012

U.S. Secretary of State Hillary Clinton faces a Chinese government and public increasingly skeptical of heightened U.S. strategic engagement in the Asian-Pacific region when she meets with Chinese leaders here. Mrs. Clinton was welcomed by Foreign Minister Yang Jiechi after she arrived in Beijing from Indonesia on Tuesday evening, the latest leg of a closely watched Asia-Pacific tour. The trip has once again underlined the Obama administration's desire to refocus its foreign policy on Asia, a region critical to global economic growth yet fraught with territorial disputes, military build-ups and heightened nationalism. "We are committed to building a cooperative partnership with China; it is a key aspect of our rebalancing in the Asia-Pacific," Mrs. Clinton told Mr. Yang, according to a State Department statement. Mrs. Clinton is also expected to meet with Chinese President Hu Jintao and Vice President Xi Jinping during her visit. Mr. Xi is expected to succeed Mr. Hu as Communist Party chief during a once-a-decade leadership transition beginning later this year. Among her most difficult tasks, Mrs. Clinton will likely press Chinese leaders over deepening territorial disputes with neighbors over portions of the South China and East China seas. Washington has repeatedly said it doesn't take sides in territorial disputes but maintains an interest in protecting freedom of navigation in the region. The visit isn't expected to spur diplomatic breakthroughs. Rather, it is viewed by diplomats and analysts as paving the way for a regional summit in November, where the U.S. and some territorial claimants will likely push to discuss territorial disputes in a multilateral setting. Beijing has resisted similar efforts in the past, and prefers handling disputes on a bilateral basis. A barrage of commentaries in state media in recent days underscored mistrust of Mrs. Clinton's strategy. Many in China fear the U.S. is attempting to contain China's rapid economic and political ascent. The trip is possibly Mrs. Clinton's last to Beijing as secretary of state. She is expected to step down from the position following November's presidential election. "We hope Clinton can reflect upon the deep harm she is bringing to the Sino-U.S. relationship in the last few months before she leaves office and try to make up for it," read an editorial in the Global Times, a popular tabloid affiliated with the Communist Party's flagship People's Daily. The Chinese Foreign Ministry last month in a strongly worded statement questioned U.S. intentions in the region. A spokesman for the ministry sounded a cautious note ahead of Mrs. Clinton's visit during a daily press briefing on Tuesday. "We hope the U.S. side can keep relevant promises and do more to boost regional peace and stability and not the opposite," said Hong Lei, the ministry spokesman. During her visit, analysts say, Mrs. Clinton will be looking to balance pressing for China's cooperation on regional hot-button issues with a need for China's broader cooperation on wider diplomatic concerns over Syria and Iran. But Chinese analysts say there is concern among Chinese officials and the public that the U.S. is being disingenuous when it say its refocus on Asia isn't designed to contain China's influence, even as its strategy appears to increasingly be driving a wedge between China and some of its neighbors, including Vietnam and the Philippines. "Sometimes it's not a matter of being soft or tough," said Wu Xinbo, who researches U.S.-China relations at Fudan University in Shanghai. "It's a matter of trust and credibility."

Chinese President Hu meets with Singaporean PM in Beijing - Chinese President Hu Jintao meets with Singaporean Prime Minister Lee Hsien Loong at the Great Hall of the People in Beijing, capital of China, Sept. 4, 2012.

Bottoms Up, Profits Up: Moutai Defies China Slump. A customer walks past a glass case displaying Maotai liquors with different price tags at a supermarket in Shenyang, Liaoning province August 8, 2012. Officials wring their hands about China’s slowing growth. Stock analysts warn of slumping profits at listed Chinese companies. Nervous economists call for more economic stimulus. Times may be tough in China but not everyone shares the pain: Kweichow Moutai, the maker of the fiery liquor that looks harmless but has the kick of jet fuel, is finding plenty of reason to celebrate amid the gloom. The company, which comes close to being a “national champion” and says that its form of baijiu (or “white alcohol”) is one of the world’s three most famous liquors, announced that it is raising the prices of some of its beverages by 20-30%. That launched the shares of the company’s stock nearly 6% on the Shanghai stock exchange on Tuesday. Talk about elastic demand. Analysts who follow the stock were tipsy with delight, saying the move puts the company on track to meet its target of a 51% increase in 2012 revenue. “The price hike, which is in line with our expectations, will offer strong support to Moutai’s full-year earnings growth,” GF Securities said, adding the higher prices could bring Kweichow Moutai additional revenue of at least 2 billion yuan ($317 million ). The brokerage house expects Kweichow Moutai to post earnings per share of 13.34 yuan this year and 18.22 yuan next year compared to 8.44 yuan in 2011. What is their secret? Taking a cue from a slogan on the company’s website – “Drinking with Bosom Friends: There is Knowledge in Drinking Moutai” – perhaps the secret lies in the knowledge, widely held, that this is the drink of choice for conspicuous consumption, and most conspicuously at state banquets. While the company offers some “common liquor” for those with a moderate budget, it has a full lineup for the tippler with a passion and a reliable expense account. There’s the Elite General and Classic Moutai Prince. And, if the aim is to impress your closest friends (or maybe bestowers of official favors), there’s the Golden Luxury gift liquors. Moutai also has aged 15-year, 30-year, 50-year and 80-year offerings that pack a wallop, particularly to someone else’s tab. Despite official pledges to remove luxury items – including baijiu — from state banquet tables, apparently it’s tough to change old habits. In one of the more candid though perhaps regrettable moments for the company since the luxury ban was announced, a Moutai official was quoted by reporters as asking: “If you don’t drink Moutai (at government functions), what would you drink?” The same report quoted a deputy chief of Hubei province’s statistics office as saying that the amount of alcohol – not just Moutai of course — consumed at state banquets was enough to fill Hangzhou’s West Lake. While we haven’t got around to measuring, we’ll concede that it might be a lot.

Giant panda Hubao eats bamboo shoots at the Bifengxia Panda Base in Ya'an, Sichuan province on Sept 3, 2012. Two pandas, known by their Chinese names as Wujie and Hubao, will leave for the new River Safari zoo in Singapore on Sept 5. Wujue will be renamed Kai Kai and Hubao will be renamed Jia Jia, the pandas are on a ten year loan to Singapore. Wujie is a 5 year old male and Hubao is a 4 year old female, the pandas will be available to be viewed by the public in December once they have adapted to their new environment. 

Chinese companies accounted for more than half of this year's Asia Fab 50, a list compiled by Forbes.com of the 50 best publicly traded companies in the Asia-Pacific region, despite the economic slowdown. In the list, 27 companies were from China, according to Forbes.com. Technology companies are starting to make their presence felt on the list. Chinese Internet giant Baidu Inc is new to the list this year. It runs Baidu.com, the country's largest search engine. Billionaire Robin Li founded the company in 2000 and took it public in the United States in 2005 at $27 a share. The company's stock price is now more than $100, but still has 87 percent of analysts rating it as "buy in". During the second quarter of this year, it reported a 70 percent growth in profits, reaching 2.77 billion yuan ($436 million), benefiting from China's large Internet user base and robust advertising sales. Wang Zhan, vice-president of Baidu Inc, told China Daily that even though he doesn't know the criteria for membership of the list, he believed that the high-tech industry is the most competitive industry in China, especially the Internet field. "A technology company will die soon if it can't react to the market fast enough," said Wang. Chinese footwear maker Belle International Holdings also joined the list this year. The company now controls more than 50 percent of China's medium and high-end footwear market. According to Forbes, Belle Chief Executive Sheng Baijiao is worth nearly $1 billion. The company, whose retail network covers more than 30 cities with 16,000 stores, started out making women's shoes, but is now entering the men's footwear and children's footwear markets. In March, to extend its sales network, it signed a $140 million deal with Big Step, a Nike and adidas distributor with 600 retail outlets. Another sector well presented in the list is real estate. Although China's real estate market has been rocky over the past year, three Chinese property developers still got on the list — returnee China Vanke, newcomer Longfor Properties Co Ltd and Poly Real Estate. Taiwan-based snack maker Tingyi Holding Corp a perennial Fab 50 company, maintained its place on the list this year. However, Chinese companies are still not as developed as their counterparts in Western countries in terms of profit and capital turnover rate, said China Business Management Academy researcher Li Jin. Some Chinese companies such as online games provider NetEase Inc and agricultural producer New Hope Liuhe Co Ltd are expected to join the list in the near future. Chen Limin contributed to this story.

Hong Kong*:  Sept 5 2012 Share

Aircraft maintenance service provider Hong Kong Aircraft Engineering Co (0044) is upbeat about the future of the local private jet market, which is expected to mature in the next two to three years. "Private jets are a trend in airline business worldwide. They are very popular in the United States and Europe, and this trend will also take place in Hong Kong," HAECO chief executive Augustus Tang Kin-wing told The Standard. Currently, the company is remodeling five private jets built by Airbus and Boeing. "Customers require higher-end services on their jets. They pinpoint the color and woodgrain and even the chairs. Some want a bathroom or a bed in the cabin," Tang said. Taikoo (Xiamen) Aircraft Engineering Co, in which HAECO holds a 58.55 percent stake, operates the only Airbus- approved private jet remodeling center in Asia. HAECO will continue to look for new investment opportunities in the mainland TAECO recorded a 41 percent decline in net profit during the first half. Tang said the firm's aircraft maintenance business remains stable at this stage, but is likely to be subjected to economic turbulence ahead. In the first half, HAECO earned a net profit of HK$482 million, up 13.4 percent from the same period last year.

Hong Kong win gold and silver in women's table tennis at Paralympics - Hong Kong won two medals at the Paralympic Games yesterday with Wong Ka-man taking the gold medal and Yeung Chi-ka silver after a thrilling Class 11 table tennis singles final, which Wong won 6-11, 11-7, 8-11, 11-9, 12-10. Anzhelika Kosacheva of Russia won the bronze. It was the city's first Paralympic gold in London. 

A Hong Kong-owned company says it has completed the acquisition of bankrupt car maker Saab and will move ahead with its business plan to make electric cars under the Swedish brand. National Electric Vehicle Sweden, or NEVS, said Monday it expects to introduce its first electric vehicle "in approximately 18 months." Saab, which has more than 3,000 workers, filed for bankruptcy in December last year after its previous owner, the Dutch luxury car maker Spyker, failed to revive the loss-making brand, formerly owned by General Motors. NEVS said it will use the Saab name but not the present logo for its electric cars. It didn't disclose what it paid for the acquisition, which included Saab's factory in Trollhattan, southwestern Sweden.

Hong Kong faces risk of recession, Tsang says - Hong Kong is facing growing risks of a technical recession and rising unemployment after retail sales and exports shrank, Financial Secretary John Tsang Chun-wah has warned. Tsang wrote on his blog on Sunday that the city would not be able to escape the impact of the European debt crisis as recent figures showed signs of a slowdown. “July’s retail sales figures are very worrying,” he said, referring to a 1.3 per cent growth that month, down from 8.5 per cent in June. Internal consumption, he said, was the major driving force to support the city’s modest 0.7 per cent and 1.1 per cent growth in the first and second quarters as exports had largely lagged. If retail sales continue to lag, the city’s economy “may record a negative growth again” in the third quarter following a 0.1 per cent contraction in the second quarter, Tsang said on his blog, which is in Chinese. “It will be difficult for exports to return to growth in the short term,” he said. “The risk of a technical recession is increasing and unemployment will probably rise.” Hong Kong’s economy contracted 0.1 per cent in the second quarter, reversing the 0.6 per cent quarter-on-quarter growth in the first three months of the year. The contraction, attributed mainly to the worsening euro debt crisis and slower recovery in the United States, prompted the government to lower its forecast for Hong Kong’s economic growth this year to 1 per cent to 2 per cent, down from 1 per cent to 3 per cent. Tsang did not give any forecast in the blog, written after he returned from the Asia-Pacific Economic Co-operation finance ministers’ meeting in Moscow. He will attend an economic summit in Vladivostok next week.

 China*:  Sept 5 2012

The world's biggest heavy-duty engine maker, Weichai Power (2338), will invest 738 million euros (HK$7.2 billion) in Germany. It is the single largest investment by a mainland firm in the European powerhouse despite the global slowdown. Shangdong-based Weichai said it will have a 25 percent stake in KION - a loss making forklift maker in Germany - for 467 million euros. Weichai will also acquire 70 percent of Linde Hydraulics - a subsidiary of KION - for 271 million euros. The state-owned enterprise will be granted an option to top up its shareholding in KION to 30 percent before an initial public offering. It will also have an option to buy the remaining 30 percent stake in Linde Hydraulics. Weichai said it will become a leading company in the field of high pressure hydraulics. KION's pre-tax loss amounted to 58.9 million euros last year. Linde earned a pre-tax profit of 24.2 million euros in 2011 while it made a loss of 4 million euros in 2010. Weichai's first-half net profit fell 46 percent to 1.9 billion yuan (HK$2.3 billion) while revenue dropped 26 percent to 27.1 billion yuan. 

Natural Dairy (NZ) Holdings (0462) said its half- yearly loss more than doubled as its cash almost dried up. The company said last night that its net loss for the six months to May was HK$331 million, compared with HK$154 million in the first half of 2011. Revenue dropped 47percent to HK$30.8 million, and gross loss amounted to HK$4.23 million, against a HK$9.53 million gross profit a year earlier. But general and administrative expenses tripled in the period to HK$216 million. It set aside HK$30.5 million of trade receivables from a customer, and faced renovation costs and exchange losses. As of the end of May, Natural Dairy had only HK$2.5 million cash and pledged bank deposits, a 98percent plunge from six months ago. The company admitted the market response in milk, milk powder and the just-started beverage business has been "unsatisfactory," but the profit level would improve in the coming year with repositioning and the implementation of distribution strategies. The company did not declare a dividend for the period. The company is involved in several ongoing cases including corruption and money laundering charges. Chen Keen, former chairman, has been accused of taking HK$73 million and two properties in New Zealand from UBNZ Assets Holdings' owner Hao May in an attempted takeover of the company. Hao was also charged with laundering NZ$150 million (HK$934.72 million) through UBNZ. Natural Dairy now holds 20percent of UBNZ. The mainland dairy industry was also a focus of North America-based shortsellers as scandals involving milk adulteration have been widespread over the past few years.

Chinese navy training vessel "Zhenghe" arrives at Indonesia - People wave flags to welcome the arrival of the Chinese Navy training vessel "Zhenghe" at Tanjung Perak port in Surabaya, Indonesia, Sept. 3, 2012.

Grape expectations from Argentina - Farmers harvesting grapes in a vineyard in Mendoza, Argentina. The country's wine makers, the world's fifth largest producer by volume, are eager to try their fortunes in the Chinese market, although it appears now there is no one capable enough of challenging the French wine makers' position in China's wine market. A beginning should be as good as it is simple. That's what Antonio Mompo, manager for Wines of Argentina in Asia, the South American country's wine export organization, had in mind when he set out to promote Argentinian wine in China. "Argentine wine has a simple and fresh taste, which is easy to drink and caters to the Chinese sweet palate," Mompo said. He believed this simple and pleasant mouthfeel can help the Chinese develop the habit of drinking wine. Yet industry data seem to argue that the country has already become a confirmed wine drinker. A significant increase was seen in the country's wine supply over the past seven years: It surged from fewer than 400 million liters in 2004 to 1,400 million liters in 2011, according to a report by Rabobank. In 2011 alone, bottled wine imports into China jumped by 65 percent from the previous year to 241 million liters, the strongest growth since the global financial recession in 2007/8, according to the report. Strong growth, huge potential and the ability to devour a large amount of premium wine make China one of the most important export markets for wine suppliers across the world. France, among the foreign suppliers, continued to dominate China's wine market in 2011, growing volumes to more than three-and-a-half times that of Australia, its nearest runner-up, according to the Rabobank report. Although there seems to be no one capable of challenging France in the Chinese market in the near future, competition among lesser rivals is still fierce. Being one of the newcomers, Argentine wine makers, currently the world's fifth largest producer by volume, are eager to try their fortunes in this bewilderingly complicated market as well. New World wine - Just like many things in the New World, wine was brought to Argentina by immigrants from Italy and Spain in the late 19th and early 20th century. But whereas many New World wine-making countries, including Chile, New Zealand and Australia, exported most of their wine, Argentine people drank most of theirs at home. At a certain point in time, each person in Argentina imbibed the equivalent of 90 liters of wine every year. The amount is around 30 liters nowadays. "When I was young, there were three kinds of drinks in the house: water, water with wine and wine - and the amount of wine was determined by the age of the person," Laura Catena, an author, cited an Argentina winemaker, a 90-year-old descendant of a wine-making family, as saying in her book Vino Argentino (Argentine Wine). The high level of domestic consumption helps explain why the world remained unfamiliar with Argentinian wine until about three decades ago. The turning point, brought about by a man named Nicolas Catena, Laura Catena's father, came in the early 1980s. An economist by training, Nicolas Catena, determined to challenge Europe's position, launched a revolution in the central area of western Argentina's Mendoza region, which now produces 70 percent of the nation's wine. After studying viniculture, Nicolas Catena found in Mendoza the cool climate that was typical of the world's most famous wine regions by planting at higher elevations. Sheltered by the Andes Mountains from Pacific rains, the coolness and low precipitation allow vines to ripen slowly and retain acidity, allowing resultant wines to develop heightened aromas and complex flavors. Malbec, the most famous wine grape varietal, is another key factor in Argentina's rise to becoming a major winemaker in the world. The Malbec grape, one of five Bordeaux varietals (the others are Merlot, Cabernet Sauvignon, Carberet Franc and Petit Verdot), used to be very popular with French wineries. Unfortunately, the emergence of phylloxera in the late 19th century, a disease caused by an aphid-like insect, wiped out the grape completely in its French homeland. To the East - At the same time, brought over by immigrants from the Old World continent, the Malbec grape adapted successfully to Argentina's soil and sunny climate and was widely planted. Combining dark, ripe concentrated flavors with a rich and smooth texture, the Malbec grape soon became one of the fastest growing wine exports, winning world recognition for its second home. Naturally, winemakers in Argentina expect Malbec to charm the Chinese just as it did in other markets. "Compared with European wines, Argentine wines have softer tannins and cleaner aromas, making it taste less aggressive," said the renowned Mariano Di Paola, head winemaker at Rutini Wines in Mendoza. Despite not being one of the largest producers in volume among Argentine wineries, Rutini (owned by La Rural Vinedos y Bodegas SA) is currently the largest seller to China, with its sales far ahead of its nearest follower in recent years. But the company's success in China not only relies on its wine's simple, inviting tastes but also on a number of marketing factors. "Rutini Wines is a well recognized brand among the Chinese circle in Argentina and was mainly sold to East China's Fujian province - where its members came from. The wine thrived based on that connection," said Antonio Mompo from Wines of Argentina. In addition, the fact that the name "Rutini" is easy to pronounce and remember in the Chinese language helped the winery to establish its presence, enabling it to sell a lot of premium wines to the Chinese market, said Sol Asensio, Rutini Wines export manager for Asia and Latin America. To consolidate its position in China, Rutini Wines intends to continue promoting its image as a high-end wine producer in Argentina. "We are trying to become the Chateau Lafite for Argentine wines," Asensio said. Argentine winemakers are by no means shy of competing in quality with other foreign wine suppliers, including France. Unlike other countries, the climate in Argentina is very stable so the vineyards do not have distinctively good years or bad years, said Gonzalo Carrasco, winemaker at Terrazas de los Andes winery. Moreover, warm or cold years give different fruit profiles to the wines, he added. "As a result, our wine's quality has been improving each year and it is easy for our customers to form a certain expectation before opening a bottle of Argentine wine," he said. "They seldom feel disappointed." Terrazas de los Andes winery, owned by the French luxury group LVMH Moet Hennessy Louis Vuitton SA, exports 80 percent of its wine every year, its top three markets being the United States, the United Kingdom and Brazil. China is now indisputably the most important market, Carrasco said. "And we are confident of our own styles (in wine)." Another advantage for Argentine wine is its reasonable price, which will help Argentine winemakers confirm their market position, many Chinese wine critics believe. "The Chinese will soon realize this is a good wine at a good price," said Tommy Lam, wine program director at Shanghai Jiaotong University. 'China, a continent' Not all wineries in Argentina can draw on the connection among Chinese people like Rutini does to promote their images. One big challenge for the South American country's winemakers is to find a reliable partner and establish distribution channels in China's complicated market. "We are constantly looking for new opportunities to develop the Trapiche brand in China," said Ramiro Eduardo Barrios, area export manager at the Trapiche winery. Owned by Argentina's largest wine producer Penaflor SA, Trapiche is the country's largest exported premium brand. Barrios also expressed concerns about the popularity of premium Argentine wine in China's gift market. "The numbers are good but you just don't know whether this will help promote the brand," he said. Another concern for the winemakers about China's market, Barrios added, is its slack regulation. This has led to numerous fake and counterfeited premium wines, causing quite a stir in the international winemaking industry. French wines suffered the most. The situation came to a head this year as Chateau Lafite was pressed to launch a campaign to fight fake products in the country. "All in all, China is definitely a core market for Trapiche and we envision big growth rates over the next few years for Trapiche and Argentina as well," Barrios said. A reliable and capable Chinese partner becomes all the more important against this background. Catena Zapata, the winery owned by Nicolas Catena's family, is a case in point. "We wasted a few years, but we finally found a good partner," said Jorge Crotta, export manager at the winery. Catena Zapata is now in an exclusive partnership with a Chinese company Beijing BETC Group, which owns two high-end restaurants featuring Argentine food, one located in Beijing and the other in Shanghai. Since the partnership was formed in 2011, sales of Catena Zapata's wine have increased steadily, Crotta said. "We are working closely in China to avoid infringements of our wine," he added. People with experience in the industry, however, do not encourage winemakers to concentrate on China's big cities such as Beijing, Shanghai and Guangzhou. "Competition in first-tier cities such as Beijing and Shanghai is very fierce. There is only limited space for a newcomer such as Argentine wine," said Antonio Mompo from Wines of Argentina. With nine years of industry experience in China's market, Mompo was convinced that the real business potential for the wine industry lies in China's emerging second- and third-tier cities, where increasing disposable income enabled the residents to try some affordable foreign wine. "Rutini's success is very telling - just one province in China is enough to push up its sales," Mompo said. "China is a continent in terms of business strategies. It is very complicated and all its submarkets are very important," he added. Submarkets, in the meantime, may also have lower thresholds. It does not require a big brand promotion to enter these markets, which means there are opportunities for small wineries. Krontiras is a small winery in Mendoza and this year it managed to send a container of premium wine to an importer in Northwest China's Shaanxi province. "This is our first container to China. We hope this could lead to something and we are very optimistic," said Thanassis Vafiadis, manager at the winery.

Hong Kong*:  Sept 4 2012 Share

Harrow International School at Tuen Mun opens today - Hong Kong campus of famous British school in Tuen Mun opens to 700 pupils today. More than 700 pupils start classes at the Hong Kong campus of Britain's famed Harrow School today. Based in Tuen Mun, Harrow International School Hong Kong was allocated a 3.7-hectare site in So Kwun Wat near Tuen Mun in 2009 as part of the government's efforts to increase the availability of international school places. It also received a HK$273 million interest-free construction loan from the government. With an ultimate capacity of 450 primary and 1,050 secondary pupils, it is required to reserve at least half of its places for non-local youngsters. But the school declined to give a breakdown of its first intake by age or the percentage of non- local pupils, saying it was busy preparing for the start of the new term today. Parents or their employers face annual fees of HK$150,000 in addition to debentures and capital certificates ranging from HK$600,000 to HK$3 million. Tuition fees for its pre-kindergarten, K1 and K2 groups stand at HK$118,700. Hong Kong is the third Asian city, after Beijing and Bangkok, where the top-ranked British day and boarding school has set up a campus. It is expected to help meet the increasing demand for British curriculum school places here, driven by a 35 per cent growth in the British expatriate population over the past five years, from 24,990 in 2006 to 33,730 last year. There was also a 37 per cent increase in the number of English-speaking school-aged children (aged 19 or below), from 18,300 in 2006 to 24,980 last year. The not-for-profit school states on its website its mission of "grooming future leaders". Alumni from the original school in London include former British prime minister Winston Churchill, India's first premier Jawaharlal Nehru and the late King Hussein of Jordan. But critics say the government's concessions to the school were "too generous" and more support should have been given to schools in genuine need. Waiting lists are common for well-known international schools in Hong Kong. The English Schools Foundation received 2,300 applications last year for only 1,020 places in this academic year. It is lobbying for a substantial increase in its HK$283 million annual government subvention to match the level of direct subsidy schools. Additional money was needed to replace ageing school buildings, and maintain teaching and other expenses, it said. Another leading school, the German Swiss International School (GSIS), has started a four-year redevelopment plan to enhance its facilities and learning environment. Its spokesman declined to give exact figures but confirmed they had waiting lists for most year groups, including kindergarten and Y1. GSIS deputy principal Dr Joachim Prinz declined to comment on the government's generous provision for Harrow, but was confident his school would remain competitive with local international schools.

Hong Kong struck gold and silver at the Paralympic Games yesterday after Wong Ka-man (above) overcame teammate Yeung Chi-ka in a thrilling women's Class 11 table tennis singles final. It was the city's first Paralympic gold in London and marked the first Hong Kong 1-2 in table tennis Games history. Wong won 6-11, 11-7, 8-11, 11-9, 12-10.

The Truth About Hong Kong's Tycoons - Big business is making food retailing more competitive. 'Hong Kong's Tycoons Coming Under Attack," this newspaper reported on Friday. The three Kwok brothers who jointly control the territory's largest property developer, Sun Hung Kai, were charged with bribery last month. Meanwhile, public frustration with high food prices is running high, and the super rich make an easy target. Sin Yat-Ming, a professor at the Chinese University of Hong Kong's business school, was quoted suggesting the tycoons are making excessive profits: "[T]he developers control the whole supply chain in Hong Kong, so it's not easy for a newcomer to break in." Not so fast. Doubters of Hong Kong's laissez faire credentials frequently cite the fact that the two large supermarket chains owned by the tycoons account for 80% of supermarket sales compared to much lower figures elsewhere. But dig a bit deeper and a different picture emerges. Hong Kongers still buy more than 60% of their food from wet markets and other shops. True, the supermarkets' share is growing. That's in part because they adopt international best practice in managing supply chains, so they provide lower prices. It's also because a more hygienic environment appeals to younger customers. Moreover, comparisons to larger economies are misleading. For instance, Wal-Mart is the biggest retailer in the U.S. but only has a 2.5% market share, making it seem that Hong Kong with its big chains is uncompetitive. But look at Boston, a metropolitan area with a population similar to Hong Kong's. According to Supermarket News, in 2009 the Stop & Shop chain had a groceries market share of 23.1%, while the No. 2 and No. 3 chains had 20.1% and 17.5% respectively. Threats to competition nearly always come from government, as those familiar with the corruption, rent-seeking and state-protected cartels common elsewhere in Asia know. One reason food prices are stubbornly high in Hong Kong is the small number of companies licensed to import from mainland China, supposedly to safeguard food safety. Hong Kong continues to root out alleged cronyism (as the prosecution of the Kwok brothers should show) and allows creative destruction to drive productivity growth. Sometimes that means large enterprises will emerge top-of-the-heap when they are most efficient. But as long as there are low barriers to entry, they will not be able to earn excess profits. The critics of Hong Kong's tycoons should look at the facts before they look for scapegoats.

Hong Kong Central Hospital closes after 46 years - Sadness as court ruling forces facility to shut after nearly half a century of providing cheap private care, including 60pc of abortions every year. Staff and patients wept as the Hong Kong Central Hospital in Mid-Levels closed yesterday. It became the first private hospital to shut in the city after a court ruling ordering it to vacate the site by tomorrow. Bosses had urged the landlord, the Anglican Church, to allow it to stay until October 30, but as of yesterday, it had not received an answer. The private hospital, the city's largest provider of abortions, has for 46 years offered low-cost services to patients who would struggle to afford private care elsewhere. The closure has led to fears women could be forced to seek illegal or unsafe terminations. "Even though the hospital is old and small, it had an important role in the private healthcare system," said medical superintendent Dr Cheng Chun-ho. "We provide a relatively cheap service to those grass roots-level patients who cannot afford other private institutions and did not want to join the long queues in public hospitals." The Court of First Instance ruled three months ago that the hospital would have to leave the site on Lower Albert Road, after its lease ran out in June last year. Cheng said most medical equipment had been sold and he has been helping staff seek jobs. All clinical services were shut down by 10pm yesterday as staff said their goodbyes. Cheng said the accounting office would continue to operate next week. Chan Chun-man, 50, a valet and doorman at the hospital for more than a decade, and Doris Tam, 25, a member of the admissions staff for five years, were both sad to leave yesterday. Chan said: "A hospital is a life-saving place. It should not be allowed to close down like this." He said the government had not been helpful in solving the dispute on the tenancy or providing another site. The land was provided by the church in 1966, in an attempt to help doctors fleeing the mainland carry on their practices. The hospital was run by a trust and was well-known for its safe and cheap abortion services. It carried out about 6,000 abortions every year, 60 per cent of the total carried out in the city. Cheng said the strength of the abortion unit was not down to a conscious decision by management, but rather the fact that "the patients chose us for our service". He said it exposed the inadequacy of abortion services and sex education in the city. The Family Planning Association said it could expand its abortion service from 2000 to 3000 terminations a year. But it only serves women who are up to 10 weeks pregnant, while it is legal to terminate pregnancy up to 24 weeks with the permission of two doctors. Public hospitals conduct about 1,000 abortions each year, while many other private hospitals are reluctant to perform any termination of pregnancy for religious reasons. The Anglican church denied suggestions the abortion service was the reason it decided to step up its redevelopment plans. The dispute over the tenancy first broke out in 2009, when hospital bosses were told the building would have to make way for a HK$800 million plan for a museum and gallery.

Kowloon East revamp to embrace creativity, planner tells Venice panel - New district must embrace creativity, planner tells Venice Biennale panel. Small businesses and creative industries will not be wiped out by the redevelopment of Kowloon East, says the man tasked to oversee the vast area's transformation into the city's next business district. However, some of those who live in the area remain sceptical of the government's plans. Ling Kar-kan, head of the Development Bureau's "energising Kowloon East" initiative, spoke last week at the Venice Biennale of Architecture, where Hong Kong has a series of exhibits on the industrial and residential areas of Kwun Tong, Ngau Tau Kok and Kowloon Bay, along with the former Kai Tak airport. He was joined in discussion by several prominent architects and critics from Hong Kong, the mainland and Europe. Ling said that a key part of the Kowloon East plans would be to support creative communities and small businesses. "We cannot just build another central business district with the traditional singular use of finance and banking. We need a wide range of activities and services." Last year, the government announced that Kowloon East would become a so-called CBD2, providing an alternative to the existing business districts of Central, Admiralty and Wan Chai. The area is one of the most diverse in Hong Kong, with a large residential population, a string of ageing industrial areas and the former airport site, now being redeveloped as a residential and commercial area. Ling told the panel the area should be an incubator for small and medium-sized enterprises and cultural industries that have already taken root, including film studios and design firms. The initiative would also create informal cultural venues and an industrial heritage park. "We would like to save the industrial heritage of this area," said Ling, without elaborating. Fellow speaker Rocco Yim Sen-kee, the architect who designed the new government headquarters in Admiralty, sounded a note of caution. "You don't have diversity when the government is involved," he said, pointing out that the government favoured a standardised approach to development, with schools and housing following strict templates. "I don't know if it exists, a top-down diversity," said British architect Professor Peter Cook. "The great opportunity you have is to work with an area while it is still alive. You don't need to design every single inch - let life grow close to the factories. Un-design is a good solution." In response, Ling said that he was pushing for a more ad hoc approach to Kowloon East's development, saying Hong Kong's character came from a certain "orderly chaos" and improvisational spirit, and that over-regulation should be avoided. His words were met with wariness by some Kowloon East residents, including biennale exhibitors like the rooftop HK Farm, which grows rooftop herbs and vegetables in Ngau Tau Kok, and Hidden Agenda, a factory-building music venue the government has tried to shut down. Hidden Agenda member Wong Ah-kok staged an impromptu protest at the biennale, holding up a hand-drawn sign reading "save art" while urging visitors to understand the plight of Kwun Tong artists.

Tin Shui Wai to get market run by Tung Wah Group of Hospitals. A new market offering 200 stalls at low rents will provide business opportunities and cheaper basic goods for poor residents of Tin Shui Wai, one of the city's most troubled districts, the government says. Chief Secretary Carrie Lam Cheng Yuet-ngor yesterday unveiled a pilot scheme for a market on 38,000 sq ft of government land in the new town in the northeast New Territories, known as the "city of sadness" for its high level of poverty and a spate of suicides. Lam said government departments had pledged HK$10 million to finance the necessary infrastructure, and that the first of the stalls, available for just HK$800-$1,000 per month for the sale of groceries and other necessities, could be available as soon as the Lunar New Year holiday in February. "We know that local residents might not have many choices in shopping, while the prices for daily necessities are even more expensive than in the urban districts," Lam said. She said the scheme had been introduced to address the concerns of residents, in line with promises by Chief Executive Leung Chun-ying. Residents have long considered Tin Shui Wai badly planned, and Leung faced calls during the election to tackle expensive commodity prices in the town. The Link Reit, which manages malls and other facilities on public housing estates, has been accused of squeezing out small businesses by pushing up rents. The Link operates all but one of the nine malls in Tin Shui Wai. Lam said the market would be run by the non-profit Tung Wah Group of Hospitals and the government would provide HK$2 million to help run the operation. Viola Chan Man Yee-wai, chairwoman of the Tung Wah Group of Hospitals, said: "We target rents of between HK$800 and $1,000 a month, but we would consider waiving the first two months of rent to tenants who encounter financial difficulties." A spokeswoman for the group said low-income residents would be given priority in renting the stalls, along with non-governmental organisations and other social enterprises. District councillors welcomed the government's initiative - which is in line with Leung's election manifesto - to create more jobs and business opportunities in the remote new town where residents often face long and expensive journeys to work. Ken Chow Wing-kan, a Yuen Long district councillor, said the rent levels were acceptable and the new market stalls would not affect the businesses of shopping malls in the area - most of which focus on luxury commodities. Another district councillor, Lee Yuet-man, said the district's popular dawn market - where hawkers sell cheaper food and clothing every day from 7-10am - could be a nuisance to those living nearby. The new market stalls could provide an alternative venue for the hawkers to run their businesses, Lee said.

Hong Kong’s secrets to longevity – tea, tai chi and mahjong. Covered in smog and cramped apartment towers, Hong Kong is not usually associated with a healthy lifestyle. But new figures show that Hongkongers are the longest-living people in the world. Hong Kong men have held the title for more than a decade, and recent data show women here are overtaking their Japanese counterparts for the first time, according to the governments in Tokyo and Hong Kong. Hong Kong women’s life expectancy rose from an average 86 years in 2010 to 86.7 years last year, while Japanese women’s longevity was hit by last year’s earthquake and tsunami, falling to 85.9 years, census figures reveal. So what is Hong Kong’s secret to a long life? Experts say there is no single elixir, but contributing factors include easy access to modern health care, keeping busy, traditional Cantonese cuisine and even the centuries-old Chinese tile game of mahjong. “I love travelling, I like to see new things and I meet my friends for yum cha every day,” Mak Yin, an 80-year-old grandmother of six says as she practises the slow-motion martial art of tai chi in a park on a Sunday morning. Yum cha is the Cantonese term to describe the tradition of drinking tea with bite-sized delicacies, or dim sum. The tea is free and served non-stop, delivering a healthy dose of antioxidants with the meal. “My friends are in their 60s – they think I’m around their age too, although I’m much older than them,” Mak laughs. Mak’s favourite food is steamed vegetables, rice and fruit. Cantonese food is famous for steamed fish and vegetables – dishes that use little or none of the cooking oils blamed for heart disease, obesity and high cholesterol. But before Mak enjoys her afternoon tea, she joins a group of elderly people for her morning exercise of tai chi, an ancient Chinese practice said to have benefits including improving balance and boosting cardiovascular strength. A study published in the New England Journal of Medicine in February found that tai chi reduces falls and “appears to reduce balance impairments” in people with mild-to-moderate Parkinson’s disease. Another factor behind Hongkongers’ longevity, experts say, is work. While others long for the day they can retire and kick up their heels, many people in Hong Kong work well into their 70s and even 80s. Hong Kong does not have a statutory retirement age and it is common to see elderly people working in shops, markets and restaurants alongside younger staff. “Many old people in our city remain working, that contributes to better psychological and mental health,” Hong Kong Association of Gerontology president Edward Leung says. “For older people, a lot of them are stressed because they have nothing to do and they develop ‘emptiness syndrome’. This causes mental stress.” Fishmonger Lee Woo-hing, 67, says he could not bear to sit at home and do nothing. His inspiration is local tycoon Li Ka-shing, Asia’s richest man, who still runs his vast business empire in his 80s. “If Li Ka-shing continues working at the age of 84, why should I retire?” asks the father of four during a break from his 14-hour shift at a bustling market in Central. “If I just sit at home and stare at the walls, I’m worried that my brain will degenerate faster. I’m happy to chat with different people here in the market.” Hong Kong’s cramped living conditions are famously unhealthy, fuelling outbreaks of disease and viruses including bird flu and severe acute respiratory syndrome (Sars) which have killed dozens of people. The city’s reputation won it the dubious distinction of a starring role in director Steven Soderbergh’s 2011 disaster thriller Contagion, about a deadly virus that spreads from Hong Kong to the United States. But in the day-to-day habits of ordinary people, experts say Hong Kong is a great place to grow old. A popular way of keeping busy and meeting friends is mahjong – a mentally stimulating tile game that can help delay dementia, according to ageing expert Alfred Chan of Lingnan University. “It stimulates the parts that control memory and cognitive abilities. It helps old people with their retention of memory,” he says. The complex rules and calculation of scores make mahjong mentally demanding. But the social aspects of the four-player game are just as important. “In mahjong you need to play with three other people. It is a very good social activity, you have to interact with each other constantly,” says Chan, who has studied the game’s effects on the well being of elderly people. “It is also a self-fulfilling game because if you win – whether you play with money or not – it gives you a sense of empowerment.” Mahjong parlours are popular in Hong Kong, and mahjong tables are a must at Chinese wedding banquets. “I’m in semi-retirement. I work in the morning and hang out with my friends by playing mahjong in the afternoon,” says 67-year-old tailor Yeung Fook, on the sidelines of a game in his modest garment shop. “I’m happier when I work. It’s boring to just sit at home.”

Peng Chau: An industrial hive turned rural idyll - With its car-free streets, understated low-rise houses and plentiful greenery, Peng Chau looks very much like many of Hong Kong's outlying islands. It enjoys a reputation as a rural idyll cut off from the city's hustle and bustle. Islanders are widely thought to lead simple, reclusive lives. That is probably why Peng Chau made headlines recently, when news broke of flats trading hands at prices akin to those on Hong Kong Island. But Peng Chau has never been merely a pastoral haven. Remote it may be, but the island once bristled with industrial activities. It hosted factories making more than 30 types of goods (such as teakwood furniture and textiles) and Southeast Asia's biggest match factory. Chung Yuet-ngor's life echoes the changes that have swept over Peng Chau in recent decades. Born and raised on the island, the 57-year-old worked at an island knitwear factory during her teens. Today she works as a cleaner in Discovery Bay, like many fellow islanders. It was one of the few options left as the factories closed and moved to urban Hong Kong and the mainland. Peng Chau was once a self-sufficient community that rarely felt the need to be in touch with the outside world, Chung says. 'People rarely left Peng Chau, except for the vegetable growers who had to take their produce to sell in places like Central or Hung Hom.' Now there are fewer choices for the comparatively less-educated and low-skilled islanders if they are to continue living on Peng Chau, according to Chung. That is why many have taken on menial jobs in Discovery Bay, the high-end residential complex just a short ferry ride away. Even so, Chung seems happy with her island life. 'I'm earning HK$5,500 a month and don't have to pay rent,' says Chung. 'Life is good.' This carefree attitude towards life is shared by Ma Chun-tim, 58, who was born on Peng Chau to a couple who arrived on the island in 1946. Ma wove rattan goods and carved ivory products for a living before the global embargo on ivory goods in the 1990s. Since then, he has served several terms as Peng Chau's representative on the Islands District Council. 'After the match factory closed down, the calfskin factory came - but that went into decline because of the pollution [it caused],' says Ma. 'After that, there were factories doing bowl embellishment, light bulbs and rattan goods. I think the bowl factories closed down in the 1990s because they were relocated to mainland China.' The first industry to take root on the island was lime kilns, in the 19th century, according to Green Peng Chau Association, a non-governmental organisation dedicated to protecting the island's natural and cultural heritage. At its height it spawned 11 factories across the island, as businesses cashed in on the island's supply of oyster shells, clam shells and coral - burning them to produce the lime. The lime was widely used in construction, ship maintenance and paper and dye production. But the early 20th century brought cheaper lime from mainland China and Japan, and the kilns gave way to match-making as Peng Chau's most prominent industry. But Peng Chau's industries dwindled as more sophisticated and cost-effective operations grew in urban Hong Kong. The lime business gave way to cement; the match-makers succumbed to lighters near the end of the 1970s. Today, not a single factory is left on the island. 'People in different eras have different ways of sustaining lives,' says Ma: when one trend ends, another begins anew. As if to prove this cyclical view of history, more people are now moving to Peng Chau - not to work, but simply to live there. At first there were the Pakistani, Indonesian and Filipino workers seeking inexpensive housing near their workplaces in Discovery Bay. Then came the urbanites, looking for a quieter way of life. Finally there was the near-inevitable arrival of the property developers. In March, Sino Land bought a 50,000 sq ft residential site on the island at what was considered a rock-bottom price of HK$19 million. Two months later, 30 bids were entered for another lot up for public tender. This has propelled property prices on the island, and has attracted homebuyers and investors. Chung and Ma say they understand what draws city dwellers to Peng Chau: the lower rents and the greener environment on the island. 'We continue to live our own lives and there is still peace on the island,' Chung says. It's a view shared by Peng Chau's younger indigenous residents, whose experiences of working and living in the city has not altered their affection for the island. 'We greet each other when we see each other,' says Wong Chi-pong, 25, who was born and raised on the island. He welcomes the influx of newcomers, who have brought in money to refurbish crumbling houses. They have also brought new perspectives for saving and developing the island's artisanal traditions. Wong is a project assistant at the Conservancy Association Centre for Heritage in Western District. He is also part of a new generation of islanders who cherish their cultural identity more than ever before. A move to the city is not on the cards, he says. 'I like the lifestyle in Peng Chau. I want my children to grow up here.'

 China*:  Sept 4 2012

Club Med in talks for third Hainan luxury resort - French resort operator Club Méditerranée is negotiating with a mainland developer to form a joint venture to build its third luxury resort on Hainan Island. "Discussions are at an advanced stage," Club Med chairman and chief executive Henri Giscard D'Estaing said. D'Estaing said no specific opening date had been set for the company's third Hainan resort. The group was exploring a potential site in Yunnan and hoped to open five new resorts in the mainland by 2015. "By then, China will become our second-biggest market," he said. Next year, Club Med, in which mainland conglomerate Fosun has a 9 per cent stake, will open its second resort in Guilin. In the winter of 2010 it opened a ski resort in Yabuli between Harbin and Mudanjiang in Heilongjiang. "In general, we are looking for large sites with an area of 15 hectares. Normally, our hotels are low-rise and we need to offer our customers an array of sport activities such as tennis courts, a golf driving range, and spa," he said. D'Estaing would not disclose Club Med's total investment in China to date, but he said that its ski resort in Europe involved an investment of €80 million (HK$779.85 million), while a beach resort typically cost about €60 million. Club Med's business model was to seek partnerships with local developers as a way to expand its portfolio in worldwide, D'Estaing said. "Leveraging on our brand as a global resort, we take responsibility for sales and marketing; while our joint venture partner will finance the construction of the resort." Olivier Horps, Club Med's chief executive for Greater China, said the group's upcoming resort in Guilin was a joint venture with a Taiwanese partner while the Heilongjiang project was with a mainland partner. Horps said the number of visitors to Club Med's Yabuli ski resort rose to 10,000 in the second year of operation, up 20 per cent from 2010. Seventy-five per cent of the visitors were mainlanders - largely from Shanghai - and expatriates working in the mainland. The remainder were international customers from Hong Kong, Malaysia, Singapore, Taiwan, and Australia. Club Med employs about 400 staff in China, and will expand to 750 staff when its second resort in Guilin opens next year. In the six months to April, there were 29,995 customers from China to Club Med resorts worldwide, up 31 per cent from the same period a year earlier. Chinese visitors contributed revenues totalling €18.62 million in the first six months of its reporting year to April this year, about 33 per cent higher than revenues of €13.96 million in the same period last year. Faced with a deepening debt crisis in the euro zone, D'Estaing said Club Med would target visitors from Brazil, Russia, India, and China, who account for about 20 per cent of the group's customers.

On the right track to railway reform - China Shenhua Energy's plans to invest more than 10 billion yuan in coal rail projects is a sign the rail sector is being liberalised. In a sign of further reforms in the country's rail sector, China Shenhua Energy hopes to invest more than 10 billion yuan (HK$12.23 billion) in coal rail projects. Shenhua, the Hong Kong- and Shanghai-listed unit of Shenhua Group, the mainland's biggest coal producer, was in talks with the Ministry of Railways to invest in new rail projects, said Zhang Xiwu, chairman of the state-controlled firm. "The ministry is liberalising private investment in rail projects," he said. The company had already invested in the Jitong railway in Inner Mongolia, Zhang said. He said Shenhua had a plan to increase its coal railway network from 1,600 kilometres at present to 3,170 killometres by 2015. Jefferies analyst Julian Bu said: "The railways ministry has almost 100 per cent control of rail projects. Because the ministry is heavily in debt, the trend is that over time China will liberalise this sector. The ministry is being forced to relinquish part of its control over rail projects." The ministry suffered an after-tax loss of 8.8 billion yuan in the first half of the year as it struggled to cope with rising operating costs and mounting debts, financial magazine Caijing said in a report on its website, citing official figures. The ministry's debt-to-assets ratio climbed to 61 per cent at the end of June, it said. On July 30, a State Council meeting called for major infrastructure projects to draw private investment in railways, urban development, energy, telecommunications, finance, health care and education. On August 16, another Hong Kong-listed coal company, China Coal Energy, announced it had formed a joint venture with the ministry and 14 other investors to invest in and build a 1,837 kilometre coal railway from Inner Mongolia to central China, with an investment budget of 154 billion yuan. An HSBC report called this "a new direction in railway development funding". "It is the first time the Railways Ministry has taken a minority stake in a major project," the HSBC report said. The bank said in another report that the private sector would be the key to financing future infrastructure projects. After 2015, railways and ports would be a significant part of Shenhua's business, said Zhang. "Railway and ports are a necessary resource. Whoever has railway and ports has sustainable growth capability," he said. Shenhua owns four operational rail lines, two ports and 12 ships. In addition, Shenhua has more than 650km of railway under construction. The new lines under construction included those in Bazhun, Zhunchi and Ganquan railways, Zhang said. Shenhua also plans to increase the coal capacity of its operational Shuohuang railway.

Hu names protégé Li Zhanshu as key aide to Xi Jinping. Li Zhanshu , newly appointed director of the General Office of the Communist Party's Central Committee, appears to be a transitional figure despite being named to one of the most powerful positions in Beijing. Like his predecessor Ling Jihua , Li rose through the Communist Youth League, a key base of support for President Hu Jintao . Observers compared Hu's decision to put Li in the post, which manages the daily activities of top officials, to former president Jiang Zemin's appointment of his own protégé, Wang Gang , during Hu's rise a decade ago. Hu is expected to hand over party leadership to Vice-President Xi Jinping after the 18th party congress this autumn. Li, 62, was previously the party boss of Guizhou province. "It seems Hu has appointed Li to help Xi, the incoming new secretary general, in dealing with extremely complicated and crucial party matters day in and day out," a Beijing-based media source said. The source said that Li was someone who was also seen as acceptable and trustworthy to Xi, because he had been the magistrate of Wuji county in Hebei province in the early 1980s, when Xi was in charge of nearby Zhengding county. It is believed that Li and Xi have stayed in touch over the years. Li subsequently served as the Communist Youth League's Hebei provincial secretary from 1986 to 1990. However, Li's age means his prospects for further promotion are limited, even if he manages to get a seat on the Politburo after the 19th party congress in five years. He would be 72 - and thus due for retirement - by the 20th party congress in 2022. Meanwhile, several sources said they expected that Li's predecessor, Ling, would also have few opportunities for advancement after his transfer to head the party's central United Front Work Department. There had previously been speculation that Ling - Hu's closest aide - could possibly get a seat on the Politburo. But the sources now expect that Li will be given a consolation posting, such as Jiang's protégé Wang Gang and Du Qinglin , another director of the united-front agency. Wang was named vice-chairman of Chinese People's Political Consultative Conference after he retired. Du was given the same title when he was leading the United Front Work Department. A source in Beijing said Ling's political problems were made worse by his ties to the corruption case of disgraced former railways minister Liu Zhijun .

Expats in Singapore arm children for Chinese century - As far back as 25 years ago, US investor Jim Rogers already believed China would be the next economic superpower and young people the world over should prepare for the future by learning Mandarin. Now 69, the billionaire had a chance to practise what he preached when he moved in 2007 to Singapore with his wife Paige Parker, 43, after visiting Hong Kong and Shanghai in search of an ideal place to bring up his children. Their daughters Happy, now nine, and Baby Bee, four, are studying in public schools in Singapore, which promotes mastery of Mandarin as part of its own ethnic Chinese heritage and, more pragmatically, to give its people economic opportunities. "Singapore has the best education in the world, the best healthcare, the best everything. I think that the best gift that I can give two children born in 2003 and 2008 is to know Asia and to speak Mandarin," Rogers told AFP. Rogers, who is also an author and financial commentator, is among the growing ranks of Western parents keen to prepare their children for the "Chinese Century." Singapore has been a major beneficiary, welcoming foreign professionals and investors attracted by its rapid economic progress and expatriate-friendly lifestyle. English is the main language of instruction in Singapore, a former British colony, but students in public schools are required to study a second language. Mandarin is mandatory for the ethnic Chinese majority and optional for the rest. A number of foreign parents who are not on expat packages cannot afford international schools in Singapore and have to send their children to local schools. But for a wealthy man like Rogers, who co-founded the Quantum Fund with legendary investor George Soros and now runs his own firm out of Singapore, sending his children to public schools is a matter of choice. He and his wife even hired a governess from China to make sure the girls continue speaking Mandarin at home. Fear and rote learning - French expatriate Emmanuelle Bizard, 32, who moved to Singapore in August 2011, enrolled her four sons in local schools to help them integrate into Singapore society and take advantage of the low school fees. "Singapore welcomes us, so it is important for us to make an effort to meet Singaporeans and live a 'Singaporean experience', It makes our experience more real" she said. Her only disappointment with local schools is their lack of feedback sessions for parents. "In France, we can see the teachers of our kids very easily, even every day if we want, so we have a lot of feedback. But here, we have marks and a feedback session every term," she added. Another criticism of local schools is the focus on rote learning and their highly competitive environment, but Rogers has no problem with it. "When they grow up, they have to compete with the Asians, and they should have the same demands, the same rigorous education that the Asians have, and that's why we are here," Rogers said. He believes critics of Asian education systems have not experienced them closely enough. "The US has been in decline for a few decades now as its education has deteriorated. Asia has risen in that time. The results speak for themselves." Singapore's public schools are renowned for producing students who excel in maths and science competitions, and other Asian countries consider the city-state's curriculum and teaching methods a benchmark to aim for. Singapore ranked seventh out of 100 participating countries at an annual mathematics competition for high school students held in Argentina in July. In the same month, the Singapore team clinched third position in a field of 28 countries at the International Young Physicists' Tournament in Germany. Despite the effusive praise from Rogers, not all expatriates are convinced of the Singapore way. There is also a growing clamour from Singaporean parents to reform the education system towards greater creativity, with less emphasis on rote learning and exam marks. American-born expatriate Rachel Kraut, 49, moved her four children from public schools to the German school in Singapore after several unpleasant encounters. "The main problem was many of the teachers' attitudes, and their teaching methods are fear-based," said Kraut, an associate professor at Nanyang Technological University's School of Biological Sciences, who is married to a German. She said her children worried about exams when on holiday and feared making mistakes because some teachers would humiliate students in class. Kraut said she was shocked when one of her daughters told her that she saw a boy being caned in class in fourth grade. "The idea was not to make learning fun and interesting, it was, ¡¦if you don¡¦t do this, your future is ruined," Kraut said.

Tokyo dispatches team to survey disputed isles - A team of Japanese surveyors on Sunday sailed to a group of disputed islands in the East China Sea which the nationalistic governor of Tokyo wants to buy, in a move China described as “provocative”. Tokyo Governor Shintaro Ishihara, known for his outspoken views, dispatched the team, which arrived at the island chain claimed by both countries, known in China as Diaoyu and in Japan as Senkaku. Ishihara wants to buy them from their private owners to highlight Japan’s claim and build a small harbour for fishing vessels. The 25-member team remained on their boats to survey the shoreline and waters around the rocky uninhabited isles, Japanese television showed. The national government rejected their request to land on the islands. “Seeing it with your own eyes is different from seeing them on a map,” Seiichiro Sakamaki, the Tokyo official leading the team, told Japanese television networks as he stood aboard a survey ship near the islands. “The scale and size are very clear to see. The governor has asked what could be done to build a small harbour. We want to check the islands with that in mind,” he said. Ishihara, a vocal critic of China, has previously said he hoped to visit the islands himself in October when he sends another survey mission. Chinese state media said the surveyors were acting “illegally”, describing Sunday’s mission as the “latest provocative move that infringes on Chinese territory”. “To curb such provocations and ease tensions over the islands, the Japanese government should avoid being crippled by the right-wingers and handle relevant issues from the overall interests of the Sino-Japanese relations,” a commentary on Xinhua news agency said. Testy Japan-China ties turned for the worse in August after pro-Beijing activists landed on one of the islands, which are controlled by Japan. They were arrested by Japanese authorities and deported. About a dozen Japanese nationalists raised their country’s flag on the island days later, prompting protests in cities across China. The car of the Japanese ambassador was targeted in Beijing when an unidentified man ripped the national flag off the vehicle. Japan’s national government is also considering buying the islands for 2.05 billion yen ($26 million) from the same landowners with whom Ishihara is negotiating, the Nikkei newspaper said Sunday. By avoiding Ishihara’s direct involvement in managing the disputed islands, Japan wants to prevent the dispute with China from heating up further, local media have said.

Hong Kong*:  Sept 3 2012 Share

China has agreed to delay a controversial plan to relax travel restrictions for millions of Shenzhen residents for at least three weeks. This follows mounting concern in Hong Kong that local facilities would be overrun by tourists. The Chief Executive Leung Chun-ying said the government will use the extra time to liaise with the relevant mainland authorities to ensure the territory can cope with the influx. Leung said he had reflected local concerns about the policy to the central government. The plan to loosen visa requirements for millions of people in mainland cities, including neighbouring Shenzhen, was supposed to take effect from Saturday but had been delayed by three weeks to allow for consultation, he said. "We will use the coming three weeks to liaise with the central government,'' Leung said in a press conference. More than four million non-permanent residents of Shenzhen could be allowed to enter Hong Kong with multiple-entry visas for the first time under the plan. Some reports said the total number of people affected by the looser rules could number up to 10 million, posing a logistical headache for the already crowded city of seven million people. Hong Kong received 28.1 million mainland visitors last year, a 23.9 percent rise over the year before and almost 70 percent of total arrivals. Security Minister Lai Tung-kwok said the three-week delay would allow mainland authorities to "properly respond to the Hong Kong situation'', adding that visitors needed to "come here according to our handling capacity''.

Hong Kong could face a maid shortage by 2017 - Growing economies may see Indonesia and the Philippines urge citizens to pursue skilled jobs. Domestic helper agencies in Hong Kong say there could be an acute shortage of maids by 2017 as the Indonesian and Philippines governments plan policies to discourage their citizens from doing such work overseas. Two factors are at work: the economies of Indonesia and the Philippines, which suppy the vast bulk of Hong Kong's 300,000 helpers, and rising demand for maids among the city's families. Indonesia set a target in January for the number of migrant workers sent abroad to reach zero by 2017. The situation in the Philippines is less clear. The Philippine Daily Inquirer reported last week that the government is considering a plan to end deploying domestic helpers abroad by 2017 but a spokesman for the country's consulate in Hong Kong said ''it is not the intention''. Both countries, however, are seeking better conditions and more clearly defined terms of employment for their overseas workers, while encouraging skilled citizens to work at home. The number of domestic helpers in Hong Kong continues to grow but the growth has slowed, statistics from the Immigration Department show. The increase was 17,903 in 2010 but it dropped to 14,280 last year. At the same time, agencies say, an illegal trade is growing in the hiring of mainland helpers on two-way visit permits, which forbid them from working. Indonesia's proposed ban comes under its Domestic Worker Roadmap 2017, which is now being drawn up. "Under the road map, we target zero sending-out of domestic maids," Manpower and Transmigration Minister Muhaimin Iskandar said in January. The Philippine labour attaché in Hong Kong, Manuel Roldan, said the government's intention was to encourage skilled Filipinos to work at home or abroad and not become domestic helpers. But the government would not ban its citizens from working as domestic helpers overseas if they wished. Maid agency representative Joe Chow Kui-kuen said Indonesia's economy had improved over the years so many Indonesians preferred to work at home. ''In the past, our customers could choose the helper they liked from three candidates. Now they do not have the choice to choose,'' said Chow, chairman of Asosiasi PPTKI Hong Kong, which represents 239 agencies. An agency owner, who spoke on condition of anonymity, said mainlanders on two-way permits are cheaper - about HK$3,000 a month compared to HK$3,800 for an overseas helper - and they speak Chinese. He said about one per cent of agencies were doing this illegal business. He expected the practice to grow if bans in Indonesia and the Philippines go ahead. An Immigration Department spokesman said the government had no plans to import domestic helpers from the mainland. He said 155 foreigners were arrested last year for working illegally as domestic helpers in Hong Kong. The number was 97 in the first seven months of this year.

 China*:  Sept 3 2012

Beijing, Taipei sign yuan clearing pact - Taiwan becomes the third offshore trading centre after Hong Kong and Macau, signalling more competition ahead in yuan settlement. Beijing and Taipei signed a yuan clearing agreement yesterday, a move that analysts say will help globalise the use of the currency but create competition with Hong Kong. Taiwan would allow interbank trading of the yuan, creating a new exchange rate for the currency, central bank governor Perng Fai-nan said yesterday. The two monetary authorities are also negotiating a currency swap deal that will allow Taiwan to hold yuan assets in its foreign-exchange reserves. "The deal will help Taiwanese companies move their yuan assets back to the mainland and lessen their exchange risks," Perng said in Taipei. "Taiwan will have its own yuan spot rate, called 'CNT', as opposed to 'CNH' in Hong Kong." Yang Yi, a spokesman for the mainland's Taiwan Affairs Office in Beijing, said the pact would lower the costs and currency risks of cross-strait trade and deepen economic co-operation between the two markets. Mainland China has been expanding its currency relations with trading partners to promote greater use of the yuan in global trade and investment. With the latest agreement, the yuan can now be cleared offshore in three locations - Taiwan, Hong Kong and Macau - with London and Singapore vying to be next. About 30 per cent of Taiwan's exports are bound for mainland China, while the island is the mainland's fourth-biggest importer. Relations across the Taiwan Strait have thawed since Taiwanese President Ma Ying-jeou came to power in 2008 and the two sides signed a trade accord, namely, the Economic Co-operation Framework Agreement. Paul Mackel, head of Asian foreign exchange research at HSBC, said yuan policy would continue to be much more focused on internationalisation. Raymond Yeung, senior economist with Australian bank ANZ in Hong Kong, said an average 4 per cent of global payments with mainland China and Hong Kong were now settled in yuan, based on the latest Swift statistics. "As Taiwan and the mainland now have a much closer economic relationship [due to the new currency pact], it is possible that a higher penetration to 10 per cent could be reached within the next six to 12 months," he said. "Trade settlement flow in the yuan across the strait could potentially reach US$12 billion a year and we believe the so-called CNT deposit market could also be built up very quickly." The agreement might lead to a transfer of yuan liquidity to Taiwan from Hong Kong, which Beijing designated an offshore centre for trading in 2010, said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole. Yuan trade settlement conducted in Hong Kong in July dropped 7.4 per cent from June to 223.4 billion yuan, while yuan deposits rose 1 per cent to 563.2 billion yuan as at the end of July, the Monetary Authority said. "The deal will likely allow development of the offshore deliverable market in Taiwan across asset classes, and create more arbitrage opportunities for the onshore and offshore yuan curves," Kowalczyk wrote. "There may be some withdrawal of yuan liquidity from Hong Kong to Taiwan as a result." Yuan trading in Shanghai has weakened 0.9 per cent this year, after strengthening 31 per cent from when it was revalued in July 2005 up to last year. In Hong Kong, it traded at a premium of as much as 2.6 per cent in October 2010; yesterday it traded at a discount of 0.1 per cent. 

China official PMI slumps to 9-month low in August - China’s official factory purchasing managers’ index fell to a lower-than-expected 49.2 in August from 50.1 in July, official data showed on Saturday, in a result that is likely to strengthen the case for further policy steps to bolster growth. The official PMI dipped below 50, which demarcates expansion from contraction, for the first time since November last year, in the latest sign that the world’s second-biggest economy is struggling against global headwinds. Economists polled by Reuters this week had expected the August official PMI to slip to 50. China cut interest rates in June and July and has been injecting cash into money markets to ease credit conditions to support the economy that notched a sixth straight quarter of slower growth in the April-June period. But analysts are divided over whether that will be enough to stop the slowdown extending to a seventh quarter. The PMI’s output sub-index eased to 50.9 in August from July’s 51.8, the National Bureau of Statistics said. A flash PMI published last week by HSBC plunged to a nine-month low of 47.8 in August, as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter. According to the latest Reuters poll, China’s annual economic growth could pick up to 7.9 per cent in the third quarter from a three-year low of 7.6 per cent in the second quarter in response to government policy fine-tuning. A raft of weaker-than-expected July data had cooled market expectations for any quick economic recovery, especially as the central bank sticks to its “prudent” policy stance for fear of reigniting property and inflation risks. Still, analysts believe the central bank will continue to loosen policy further by cutting interest rates and banks’ reserve requirement ratio in coming months to support growth. The HSBC PMI has been below 50 for 10 straight months, reinforcing calls from analysts and investors for further measures from Beijing to support economic growth. The official PMI generally paints a rosier picture of the factory sector than the HSBC PMI as the official survey focuses on big, state-owned firms, while the HSBC PMI targets smaller, private firms that have limited access to bank loans. There are also differing approaches to seasonal adjustment in the surveys. The final HSBC reading will be published on September 3, as will the National Bureau of Statistics’ services PMI. 

US military in Asia 'beneficial', Ambassador Locke tells China - US envoy to Beijing Gary Locke on Saturday tried to ease China's fears that Washington wants to hem it in by emphasising American military presence in Asia was not targeted at a single country. "We strongly believe -- and I believe most in the region would agree -- that our security presence here is beneficial to the countries of the region and necessary for the continued vitality of the Asia-Pacific," Locke said. "Our security presence is not aimed at any one country," he said in a speech at Peking University, noting that the United States was also boosting its diplomatic and economic engagement in the region. Locke's remarks came days ahead of a planned visit to Beijing by US Secretary of State Hillary Clinton to discuss the two countries' sometimes tense economic and security relationship. Chinese state media have accused Washington of trying to contain China by befriending regional countries -- a view that has been reinforced by Clinton's decision to start her trip in the often-overlooked South Pacific. Clinton -- the first US secretary of state to attend an annual South Pacific summit -- announced in the Cook Islands on Friday US$32 million in aid projects. She emphasised, however, that there was ample room for all countries -- including the United States and China -- to work together to help Pacific nations. Chinese media have warned the United States against seeking to exploit recent escalations over territorial sea disputes between China and its neighbours, including Japan, the Philippines and Vietnam. Some countries in the region already have US military support while others seek closer security ties to counter what they call China's growing assertiveness in the sovereignty disagreements. Locke also stressed the importance -- but also the challenge -- of strengthening US-China cooperation, highlighting contentious issues such as trade relations, currency policies, Iran, Syria and human rights. "A China that is more open to all views, ideas and expressions, will lead to a stronger and more secure China," he said. "We've got a long way to go" in US-China cooperation, he said, "but I'm hopeful that working together we can escape from historical patterns and instead forge a legacy of cooperation and partnership.¨

Hong Kong*:  Sept 2 2012 Share

Merkel means business in Beijing with heavy-hitting delegation - Chancellor's heavy-hitting team kicks off visit with a dozen deals - now all she has to do is convince China of Europe's promise. German Foreign Minister Guido Westerwelle will address a luncheon in Hong Kong. German Chancellor Dr Angela Merkel has brought Germany's largest ever business delegation with her to China, but experts say the fast-changing global economy could cast a shadow over her mission. The chancellor arrived in Beijing yesterday accompanied by seven cabinet ministers and two dozen leading German businessmen. A separate delegation led by Foreign Minister Guido Westerwelle arrives in Hong Kong today. This is the second visit in five years by Westerwelle, who will give a luncheon speech on the debt crisis in Europe. The unprecedented high-level visits by German officials underline the country's eagerness to foster stronger ties with China. "Both our governments are working hard to further deepen and broaden our strategic partnership," Westerwelle told the South China Morning Post ahead of his visit. "An important pillar of our comprehensive partnership is our dynamic economic relations." Merkel's two-day visit to China got off to an auspicious start. The two governments announced a dozen major deals at a press conference by the chancellor and Premier Wen Jiabao - including ICBC Leasing's US$3.5 billion order for 50 Airbus jets. But Mark Williams, the chief Asia economist for Capital Economics, said it was hard to judge if her visit was successful based only on the deals announced. "Governments always come under pressure to demonstrate visible gains from a high-profile visit - usually in the form of orders for products which probably would have happened anyway," the London-based economist said. "But the successes of a visit lies in incremental progress." Still, the growing economic links between China and Germany - the world's second- and fourth-largest economies - are undeniable. While German manufacturers still sell more of their products to other European nations, China is expected to soon overtake the US as its largest trading partner outside the continent, according to the Association of German Chambers of Industry and Commerce. German exports to China have almost tripled in the past five years. Westerwelle said the trip's goal was to develop a deep and wide-ranging relationship. A key mission for Merkel and Westerwelle is to convince Chinese leaders that Europe can keep its debt crisis under control. Beijing sees Berlin as the de facto decision-maker in Europe and is eager to hear from the chancellor on the region's prospects. "Chancellor Merkel has a difficult sales job," Williams said. "To policymakers in Beijing, Europe must look divided, its leaders bickering among themselves, unable to get on top of a crisis that seems to be dragging on interminably." The German foreign minister admitted the euro-zone crisis had shaken faith in the region. "It is true: the debt crisis has morphed into a crisis of trust in the project of European integration," he said. But Germany remained "deeply committed to the European Union and Euro currency" and he was confident the region would emerge from the crisis "stronger than ever". Westerwelle said the measures Europe took would rest on three legs: budget consolidation, structural reforms to restore competitiveness and "solidarity with weaker partners". The minister noted "encouraging signs" in Ireland, Italy, Portugal and Spain. Curiously he did not mention Greece, whose debt troubles have propelled the crisis. But even if Merkel can make a convincing case to her Chinese audience about Europe's promise, it remains unclear whether China is in a position to help as its own growth slows. Williams pointed out that Chinese investments in Europe were far below the level needed to make a meaningful difference, and the situation was not going to change soon. "Now that the People's Bank [of China] is no longer accumulating huge quantities of foreign exchange reserves, it has less to invest abroad," Williams said. "In any case, risks to the euro are skewed to the downside, making any sizeable investment in the single currency a bold call for a manager of the state's foreign exchange reserves."

Unions demand more staff to meet Shenzhen rush - Immigration Service Officers Association chairman Ngai Sik-shui says more staff were urgently needed at the border. Immigration unions are demanding the appointment of 400 extra staff members to cope with an expected increase in the number of mainland visitors following Shenzhen’s relaxation of the Individual Visit Scheme. On Friday, 10 representatives from four unions covering Immigration Department staff met their bosses to raise their concerns over increased work due to the influx. From Saturday, Shenzhen will allow 4.1 million non-permanent residents to make multiple visits to Hong Kong under a change in permit rules. Immigration Service Officers Association chairman Ngai Sik-shui said existing facilities and manpower at border checkpoints would be insufficient to cope with the extra work and more staff were urgently needed. Ngai said the workforce not only had to perform routine border checks, but also had to deal with other issues such as mainland women trying to enter the city to give birth, cross-border students and other emergencies. “It is impossible to estimate how many more people will enter the city with multiple-visit permits,” he said. “We estimate that manpower will be a big issue. It is imperative to act now.” Ngai said the workforce would need at least 400 extra staff members to handle routine border checks and emergencies. The unions called for a response to their demands from the department’s top officials within one month. Individual Visit Scheme permits were previously available only to Shenzhen’s 2.8 million holders of hukou or residents’ permits. Non-permanent residents had to return to their home provinces to apply for permits. The move to allow millions more visitors to cross the border has caused consternation among many Hong Kong residents, who feel the surge will overwhelm local infrastructure and push up prices of consumer goods.

Mainland puts new Shenzhen visitor plan on hold - The mainland had agreed to put its plan to issue multiple-visit permits to non-residents of Shenzhen on hold for three weeks until there had been further assessment of its impact on Hong Kong, Chief Executive Leung Chun-ying announced on Friday afternoon. Leung said at a press conference that the central government acknowledged there was a need to assess Hong Kong’s capacity to take in the expected increase in incoming mainland visitors before the new permits were issued. “The central government has agreed that Hong Kong’s capacity to receive them [the visitors] must be assessed and the number of visitors be adjusted according to actual situation,” he said. Leung said the agreement came after he reflected on Hongkongers’ concern over Shenzhen’s new travel permit rules to the central government. The new policy would have allowed 4.1 million non-residents of Shenzhen to enter Hong Kong from Saturday using multiple-visit visas under the Individual Visit Scheme. Leung said a group of Hong Kong officials would meet their mainland counterparts in the coming three weeks to discuss the new scheme’s impact and the setting up of a mechanism for Hong Kong and Shenzhen to decide on a suitable number of visitors. The group would be led by Secretary for Security Lai Tung-kwok and Secretary for Commerce and Economic Development Greg So Kam-leung. Lai said they would tell the mainland about the capacities of Hong Kong’s border checkpoints and tourist attraction points so that Shenzhen could have a better idea of reasonable numbers when issuing permits. Individual Visit Scheme permits were previously available only to Shenzhen’s 2.8 million holders of hukou or residents’ permits. Non-permanent residents had to return to their home provinces to apply for permits. The move to allow millions more visitors to cross the border has been causing consternation among many Hong Kong residents, who feel the surge will overwhelm local infrastructure and push up prices of consumer goods.

Hong Kong Discovers 140 Million Year-Old Supervolcano - People stand on large hexagonal columns of volcanic rock, southeast of Hong Kong in this handout photo released August 30, 2012. Some 140 million years after it erupted and then toppled into the sea, an ancient supervolcano in Hong Kong is making headlines. The government announced Thursday that it had located the supervolcano—the first discovery of its kind in southeastern China—while surveying in the area in southeastern Hong Kong. The volcano is now extinct and poses no threat to Hong Kong. What makes the volcano super? When it last exploded 140 million years ago, it would have darkened the sky with 312 cubic miles of ash, enough to blanket all of Hong Kong, said Denise Tang of the government’s civil engineering & development department, which discovered the volcano. About 50 other such supervolcanos are known to exist around the world, she said. The original base of Hong Kong’s supervolcano would have measured about 11 miles in diameter, and the vista of vaulting, hexagonal rock columns and small islands it left behind remain gorgeous reminders of its dramatic geologic past. They can be toured by boat, but Ms. Tang was quick to warn any would-be tourists to use caution before making any expeditions. “Although it’s very beautiful,” she said, “there’s no facilities, no pier facilities, so we actually do not recommend people try to land on the island.”

 China*:  Sept 2 2012

Premier Wen accompanies Merkel to visit Palace Museum - Chinese Premier Wen Jiabao accompanies German Chancellor Angela Merkel to visit Palace Museum in Beijing, Aug. 31, 2012.

China signs deal for 50 Airbus planes - A delegate gets information from an Airbus booth during the 68th International Air Transport Association (IATA) annual general meeting in Beijing June 11, 2012. China and Germany signed a series of cooperative documents Thursday, including a procurement deal for 50 Airbus planes. The signing ceremony was attended by Chinese Premier Wen Jiabao and German Chancellor Angela Merkel, after both co-chaired the second round of Chinese-German intergovernmental consultations in the morning. China's ICBC Leasing and Airbus signed the procurement deal for 50 Airbus A320 planes with a worth of $3.5 billion. The two countries also inked more than 10 other cooperative documents, including an agreement about Airbus plane assembling in China. The documents range from aviation, automobile, communication, energy, environment, health to maritime cooperation. Merkel arrived in Beijing Thursday morning, kicking off a two-day official visit to China at the invitation of Chinese Premier Wen Jiabao.

China investment in US rises, creates jobs, despite campaign rhetoric - Pin Ni, president of Wanxiang America Inc., poses for a portrait at his warehouse in Elgin, Ill. Pin Ni, president of the American arm of the private Wanxiang Group, an auto parts and renewable energy manufacturer that has close to 6,000 employees in the U.S., said negative views of China and political tensions between the two governments deter some companies. Yet in reality, he said, that's little impediment to doing business. U.S. presidential candidates talk tough on fighting what they see as China's unfair trade policies, but Chinese companies are investing more than ever in the U.S. and supporting thousands of American jobs. With two separate billion-dollar deals in shale oil and gas, a struggling chain of movie theaters and other major ventures in the works, investment from China is set to hit record levels in 2012. Its cash-rich companies have expanded their presence here in the past three years, keen to get closer to the lucrative American market and tap U.S. know-how. The jobs created far from offset what American politicians and some economists see as the millions of jobs lost because of China's currency policies and theft of intellectual property. Also, Chinese investment, especially in telecommunications and other sensitive businesses, isn't always welcome. But the growth in investment underscores how the relationship between the U.S. and China is more complicated than depicted on the campaign trail. Cheap Chinese products have benefited American consumers, and China's massive purchases of Treasury securities have helped finance the U.S. budget deficit. And while Chinese investment in the U.S. is barely off the starting blocks given the size of its economy, some believe it could become a major source for American jobs. "There's a huge amount of ignorance in the U.S. market place of how to take advantage of potential Chinese investment," said Larry Morrissey, independent mayor of Rockford, Illinois, a city of 150,000 which hosts three major Chinese companies. While money is tight in the U.S., he said, Chinese firms want to invest and have the funds to do it. But in the presidential campaign, China seems to attract only negative attention. "They steal our intellectual property rights. They block access to their markets. They manipulate their currency," Republican vice presidential candidate Paul Ryan told supporters in Ohio last week. He accused President Barack Obama of allowing China to treat him like a "doormat" and vowed Mitt Romney would crack down on China cheating. Obama, who has sought deeper ties with China, says his administration has nevertheless stepped up trade complaints, and announced one in response to Chinese tariffs on U.S. auto exports during a campaign trip to Ohio in July. But the administration, as well as the Republican-supporting U.S. Chamber of Commerce, are actively seeking Chinese investment. They want to capitalize on the ambitions of state-owned and private Chinese companies to expand from the developing world to developed countries. The private Rhodium Group, which closely tracks Chinese foreign direct investment, or FDI, puts the total attracted to the U.S. since 2000 at $20.9 billion. It predicts that Chinese companies could invest between $1 trillion and $2 trillion internationally by 2020 and a significant chunk could come to the U.S. "Chinese firms are arriving at the inflexion point at which it makes sense for them to be developing more of a commercial presence in the United States and Europe," said Daniel Rosen, partner at the New York-based group. While China is still far from emulating the outward expansion of Japanese companies into the United States the 1980s, this could be a formative example. Fears then that the U.S. economy might be dominated by Japan proved unfounded. Today, Japanese-affiliated companies employ about 700,000 Americans. As a strategic and emerging military rival of the U.S., however, China brings with it more baggage. China still restricts foreign investment in much of its own economy. Many of its biggest companies looking to invest abroad are state-controlled. Cybersecurity is also a major concern because of repeated reports of cyber-attacks on Western companies and government departments originating from China. That has dented the prospects for its telecommunications and technology giants. Attempts by Huawei, a private Chinese company founded by a former army officer, to acquire 3Com in 2008 and failing U.S. computer company, 3Leaf Systems, in 2011 were floored by security concerns. U.S. lawmakers have often weighed into the debate. The House Intelligence Committee is investigating Huawei, one of the world's biggest suppliers of telecoms gear, and its rival, ZTE, examining their ties to the Chinese government. It is also probing reports that ZTE is supplying surveillance equipment to Iran. Lixin Cheng, CEO of the American arm of ZTE, says the company has cooperated in the probe but denies that ZTE is influenced by the Chinese government. (The company is state-owned but has a portion of its shares publicly traded). He describes the allegations as "noise coming from guys who don't want competition here so they can protect their market share." But Cheng says handset sales have been rising and he remains bullish on the company's prospects in supplying American mobile network carriers, which account for about 90 percent of handset sales in the U.S. Pin Ni, president of the American arm of the private Wanxiang Group, an auto parts and renewable energy manufacturer that has close to 6,000 employees in the U.S., said negative views of China and political tensions between the two governments deter some companies. Yet in reality, he said, that's little impediment to doing business. Ni set up Wanxiang America from a home office in Mt. Prospect, Illinois, in 1994, essentially as a sales outlet for the parent company. It now has 27 manufacturing facilities across 14 states, annual revenues of more than $2 billion, and supplies most of the major American auto manufacturers. He said that only about 10 percent of the parts it supplies in America are now sourced from China. "Our labor costs are higher (in the U.S) but our overall costs are lower because it's more efficient here," he said. Mayor Morrissey said Wanxiang had acquired a struggling auto parts manufacturer in Rockford. Attracted by the Chinese company's long-term commitment to the U.S., Rockford chose Wanxiang to develop a $12.5 million solar panel manufacturing plant employing 60 people, and a large solar power farm, as part of the city's strategy to attract more green business. Two other major Chinese firms have investments in Rockford, including Dalian Machine Tool Group which acquired Ingersoll Production Systems and employs 100 people. Rockford is also in talks with Wanxiang about plans to modernize the city center. "A lot of American cities are completely on the sidelines," said Morrissey, who has made several trade missions to China. "I don't see many cities, especially cities of our size, doing what we are doing, of being proactive and looking to exploit the opportunities there are for Chinese investment." Joy Huang, president of Connect East, which advises mostly Chinese state-owned enterprises on working in the U.S., said companies want to establish their own brand presence here — something few Chinese firms have achieved, other than appliance-maker Haier and computer-maker Lenovo. She said the main challenge is learning to comply with the myriad regulations and customizing products for picky American consumers. Chinese companies are targeting a wide range of industries, also including aerospace, banking, metals processing and plastics. In a sign of those diversifying interests, conglomerate Dalian Wanda Group announced in May it is acquiring cinema chain AMC Entertainment Holdings for $2.6 billion, the biggest Chinese takeover of an American company to date. Both the Rhodium Group and the Heritage Foundation, a Washington-based conservative think tank that maintains a database of major Chinese FDI across the world, predict a record year in 2012. But Derek Scissors, an expert on China's economy at Heritage, remains skeptical that augurs a spiraling takeoff in Chinese investment into the U.S. He said Chinese FDI in the past eight years has tended to spike from one region to another: first in Australia, then sub-Saharan Africa, and most recently in Latin America. With the global energy firms now turning their attentions to shale oil and gas in North America, "we're next on the hit parade," Scissors said.

Mainland government officials yesterday boarded a Taiwanese coastguard frigate for the first time, in a rare joint search and rescue drill involving hundreds of crew members, Taiwan coast guards said. Around 600 rescuers and coastguards from Taiwan and the mainland took part in the manoeuvre in waters near Kinmen, a Taiwan-controlled island group off the mainland's southeastern coastline, the Coast Guard Administration said. A group of mainland officials led by deputy transport minister Xu Zuyuan watched the exercise on board the 2,000-tonne Taiwanese frigate, Tainan. "It's the first time ever that [mainland] Chinese government officials [have] been on board a coastguard vessel from Taiwan," coastguard spokesman Hsieh Ching-chin said. "It's significant historically and symbolically." Kinmen was the scene of bloody battles in the 1940s and 1950s when communist troops repeatedly tried to seize the fortified island group. Yesterday's manoeuvre, only the second of its kind between the two sides, involved 18 rescue and coastguard vessels and two helicopters from Taiwan, while the mainland dispatched 11 ships and one helicopter. The exercise played out a scenario where an aircraft crashed into the ocean, hitting a passenger boat shuttling between Kinmen and the mainland. Beijing still considers Taiwan part of its territory awaiting reunification, by force if necessary, even though the island has governed itself since 1949.

Private companies accounted for nearly half of China's outbound investment in 2011, a senior trade official said on Thursday, while expecting the proportion to continue expanding as the government supports investors seeking overseas projects. In 2011, China's outbound direct investment in the non-financial sector reached $68.58 billion, among which around 45 percent was from non-State-owned enterprises, said Shi Ziming, commercial counselor at the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce. Although SOEs still accounted for around 90 percent of China's cumulative ODI by the end of 2011, Shi was confident the private sector would play a bigger role. "Private enterprises will definitely play a more and more important role in the process of the nation's outbound direct investment activities. "They will probably surpass State-owned enterprises as the major force of China's investment wave," Shi said. According to the top 100 non-financial Chinese companies ranked by ODI in 2011, Lenovo Group Ltd, Huawei Technologies Co Ltd, and Geely Holdings Group are the three largest private investors overseas, ranking 25th, 27th and 31st. The report did not give the exact amount of overseas investment by each company. These major private investors are also among the leaders in the latest ranking of the top 500 Chinese private companies by revenue, which was released on Thursday by the All-China Federation of Industry and Commerce. According to the league table, in terms of revenue in 2011, Huawei took second place, Lenovo ranked fourth and Geely was sixth. Jiangsu Shagang Group, China's largest private steelmaker, secured the top spot with annual revenue of 207.5 billion yuan ($32.7 billion) in 2011. It ranked fourth among overseas private investors. Construction equipment maker Sany Heavy Industry Co Ltd, which gained a worldwide reputation earlier this year after it bought a 90 percent stake in German concrete pump manufacturer Putzmeister for 324 million euros ($407 million), was the fifth-largest overseas private investor and China's 10th largest private company. The 500 largest private companies reported combined revenue of more than 9.3 trillion yuan in 2011. In another league table complied by the Statistical Society for Foreign Economic Relations and Trade of China, which ranked China's top 500 private foreign traders, Huawei came top with an export-import volume of 11.7 billion yuan. Huang Mengfu, chairman of the federation, said it has been a general trend for China's private companies to expand overseas. "To become world-class enterprises, China's private companies should introduce more global talents and capital, and meanwhile respect local regulations and the environment," Huang said. Ren Hongbin, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation, said private companies with complementary advantages should expand overseas "in groups", in order to enhance the competitiveness and lower their risks in global operations. According to the Ministry of Commerce, by the end of 2011, a total of 18,000 Chinese companies had made investments abroad, among them, 78 percent had made a profit or broke even, and 22 percent suffered losses. "Many worry that State-owned enterprises' performance overseas is bad, but to be frank, it is much better than expected. Their business performance is fairly good, and it's not a concern," Shi said. Out of the 2,000 institutions and branches set up abroad by Chinese SOEs, 73 percent made a profit or broke even, and only 27 percent suffered losses. To help Chinese enterprises expand their horizons globally, the central government has taken a series of steps to encourage investors' participation in international projects. The National Development and Reform Commission said this month applications will no longer need to be filed for overseas resource development projects with an investment worth less than $30 million. In February, the nation's top economic planning agency gave approval powers for resource projects with an investment of up to $300 million, and non-resource projects with an investment of up to $100 million.

Hong Kong*:  Sept 1 2012 Share

Most of Chief Executive Leung Chun-ying's housing measures involve increasing the supply of new flats. Chief Executive Leung Chun-ying on Thursday afternoon announced a series of housing measures to help Hongkongers buy homes amid rising property prices. Most of the measures involve increasing the supply of new flats to address rising demand in the short and medium term. Leung said the rental option of the My Home Purchase Plan, a rent-or-buy programme to help those in the “sandwich class”, would be dropped, meaning some 5,000 new flats to be built over the few years would be sold directly. The first batch consisting 1,000 flats in Tsing Yi would be available and open for application early next year, Leung said. Some 800 unsold flats under the Home Ownership Scheme, mostly in Tin Shui Wai, would be put up for sale next year. In the middle-term, Leung said 36 vacant government and community sites would be turned to residential use to provide about 11,900 public and private flats. The Urban Renewal Authority will also launch two pilot schemes next year to redevelop industrial buildings into residential flats and commercial offices. On the so-called “flats for Hong Kong people” proposal, Leung said his government had begun drafting laws to create new terms for land sales that would require developers to sell the flats only to Hongkongers. “Once the conditions are in place the policy can be introduced,” he said. One long-term housing measure was a plan to launch a new scheme to help Hongkongers buy homes, which would be designed by the Housing Society. A new steering committee will be set up to assess the housing needs of different community sectors, and to form long-term land and housing policies to meet their needs. The committee will be chaired by Secretary for Transport and Housing Anthony Cheung Bing-leung. The chief executive said he was concerned about the heated property market given the unstable global economy and high liquidity in international markets.

The latest Cheung Kong Holdings (0001) project may be available for sale as early as next week. Le Chateau in Kowloon Tong comprises 31 four-bedroom duplex units, ranging in size from 1,673 square feet to 2,052 sq ft and carrying a minimum price tag of HK$30 million. "The price will be set in accordance with other luxury apartments in the area," Cheung Kong senior sales manager Fung Hoi-lun said. The average selling price in Kowloon Tong currently stands at HK$25,000 per square foot. Rival developer Sun Hung Kai Properties (0016) starts presales next week of its latest project - Century Gateway in Tuen Mun - executive director Victor Lui Ting said. And Wing Tai Properties (0369) will launch presales by the year-end at The Pierre, its Mid- Levels development in Coronation Terrace. The luxury boutique tower with a gross floor area of 40,000 square foot will have 70 flats and is scheduled for completion by 2014. Also, a 50:50 joint venture project with the Nan Fung Group in Ko Shan Road, Hung Hom, is under construction. Sales at the 160,000 sq ft gfa development start next year. Executive director Dennis Au Hing-lun, meanwhile, expects Grade-A office rents outside of Central to rise further in the second half. This comes after rents at its major Grade-A commercial property -Landmark East in Kwun Tong - doubled to more than HK$26.50 psf this year, from HK$13 in 2009, on the current decentralization trend in Grade-A office space.

Chinese University doctors have discovered that infertile women lack the necessary genetic process in their uterus which makes them unable to conceive even if they use in-vitro fertilization. The new cause of implantation failure does not only solve one of the "long- standing mysteries" of human reproduction but also sheds new light on the cause of miscarriages and low success rate of test-tube baby techniques. It also opens a new way for diagnosing infertility and contraception - or even an anti-pill that will reverse infertility, said Chan Hsiao-chang, Li Ka Shing professor of physiology and director of Epithelial Cell Biology Research Centre at the university. The ground-breaking study, published in last month's issue of Nature Medicine, came ahead of the grand opening ceremony yesterday of the Lo Kwee- Seong Integrated Biomedical Sciences Building, as the university stakes its claim to be the "leader in biomedical research" in the SAR. Chan said for pregnancy to occur, women need to have an "epithelial sodium channel" in their uterus as an "initial starting point." Without that channel, women cannot have the embryo implanted in their womb. "The next step we propose is to have an infertility diagnostic tool. The other one could be the target for contraception - by targeting the channel to prevent pregnancy," she said. Director of the School of Biomedical Sciences professor Chan Wai-yee said the discovery of this sodium channel could also be used to find an "anti- contraceptive pill" for women to conceive. Patents have been filed for the discovery but the university still has to find interested companies to take it further. However, the center will focus on cutting-edge technologies to study cancer and inflammation, neuro-degeneration and reproduction, thanks to a HK$150 million donation by Vitasoy founder Lo Kwee-seong, Chan Wai-yee said. Dean of Medicine Fok Tai-fai said: "Corporate support of research is important. There is nothing unethical in itself unless there is ulterior motive."

A Sha Tin Christian school will cancel two weekly morning assemblies - which include Bible studies - to make way for national education. The move by Baptist Lui Ming Choi Primary School has upset parents who chose it for its religious character. The school told parents in a letter that the contentious subject will be taught to all grades on Monday and Friday mornings in the new school term, which starts on September 3. The letter said students' progress in the subject would be evaluated four times a year. A parent who declined to be identified said the 8am to 8.30am time slot was formerly used for morning assemblies. "I chose this school because it is a Christian school," she said. "The school needs to clearly define what it is doing. Is it sacrificing its educational philosophy and moral teachings?" In a three-hour briefing session for new students on Saturday, the school managers said the national education subject would proceed but did not provide details, the parent said. She said that if she was consulted, she would suggest that national education be taught in other class hours or during extra-curricular activities. School principal Wong Kit-lin said most of the elements of the new subject were irrelevant to national education and the school would focus on the civic education as well as the moral components. She said students would still get to pray during the lessons. Only a small number of the city's 500 primary schools have indicated that they will heed the Education Bureau's advice to launch the subject voluntarily in this school year. Concerns intensified last month after a set of teaching materials published by a pro-Beijing group described the Communist Party as a "selfless" and "unifying" regime. Critics said the subject was an indoctrination tool for Beijing. HKFEW Wong Cho Bau School yesterday said the subject would be taught in a weekly 40-minute session. The school is run by the publisher of the teaching materials, the Hong Kong Federation of Education Workers.

Police officer Leung Wai (left) and Sergeant Sit Ching-fung pose in Tuen Mun with their cut-out figures, which will be used as a warning to drivers to be careful. Meet the new traffic police who will be on the roads in the northern New Territories today. The life-sized cut-out copies of two real officers, Leung Wai and Sergeant Sit Ching-fung, are aimed at reducing the number of accidents, even though they will not be able to physically stop or arrest speeding drivers. The "officers" also don't get paid, don't need holiday or sick leave and will be on duty from 9.30am to 6pm. They each weigh 9kg and are made of cardboard and aluminium alloy, costing the force HK$10,000 in total. "We hope drivers passing by [the cut-outs] will pay extra attention to their driving when they think that there are officers around," said Tony Tsang Kin-keung, acting superintendent of the enforcement and control team of the traffic division for the New Territories north region. He said the number of accidents on the region's three highways rose 12.5 per cent from 367 in the six months to July of last year to 413 in the same period this year. Tsang said the three main causes were motorists not paying attention while driving, being too close to the vehicle in front and careless overtaking. Similar cut-outs have proved effective in reducing the number of traffic accidents in Britain, Canada and on the mainland. In Prague, the Czech Republic, cut-outs of female officers in miniskirts caused the number of accidents to increase. But the Hong Kong cut-outs are in more serious poses, with one holding a radar speed gun and the other with a clipboard in hand. During the two-month trial, the pair will be moved to various locations along the Tolo Highway and in Tuen Mun and Fanling. "If they [the cut-outs] prove to be effective ... we may have more of them in other districts," said Tsang. He also said that after the trial, the cut-outs may get "extra shifts" during peak hours. Ng Kwan-sing, chairman of a taxi union, said: "It may be able to deter drivers from outside the district from speeding, but drivers in the district won't be fooled once they get used to them." He also said having more actual police officers on duty on the road to enforce the law would be more effective.

Grey market helps HK, traders say - Mainland parallel importers hit back at criticism and say they contribute to the city's economy. Mainland parallel importers have hit back at criticism of their activities by the chairman of the tourism board, James Tien Pei-chun, calling it despicable and discriminatory. The importers, who buy goods in Hong Kong for sale back across the border, insisted they were contributing to the city's economy through their activities. Yesterday Tien attacked Shenzhen's deicision to relax travel-permit rules from next month, saying the move would lead to more mainlanders joining the parallel-imports business. He said the border city should defer the launch of multiple-visit permits for its 4.1 million non-permanent residents. Tien said many coming to Hong Kong with the permits would not be genuine visitors, but parallel importers or illegal workers. Some of the 50 mainland parallel importers gathered around Sheung Shui station at noon yesterday said Tien's remarks were discriminatory and despicable. One woman from Shenzhen said they had been contributing to Hong Kong's economy because they did not only resell milk powder and cosmetics to make a profit, but also shopped and ate in the city like tourists. "How can that not be beneficial to the [Hong Kong] economy?" she asked. She has been helping take goods to a Shenzhen seller one day a week for the past year. She makes three trips a day, being paid 100 yuan for each trip. While she criticised Tien's remarks as "discriminatory", she said she was concerned that the multiple-trip permits would harm her business because more mainlanders might join the trade. Another Shenzhen woman said she was angry about Tien's remarks, asking: "What is he treating us mainlanders as?'' She said she had had enough of Hong Kong people's rude attitude every time she made a bulk purchase in a pharmacy. This woman, who buys goods in Hong Kong to sell in her Shenzhen shop, and makes a profit of HK$20 on a can of milk powder, expects the number of mainlanders in the trade to increase fivefold under the new permit rules. "It will be hard for Hong Kong's border control staff to handle the influx," she said. The trade is popular despite a mainland law change last year meaning importers risk up to three years' jail for tax evasion.

 China*:  Sept 1 2012

Brilliance China (SEHK: 1114) Automotive will consider declaring a dividend next year after it completes most of its investment projects. The Shenyang-headquartered carmaker - which has a 50-50 joint venture with Germany's BMW - declared no interim dividend this year despite reporting a 41.6 per cent rise in net profit to 1.33 billion yuan (HK$1.63 billion). Chairman Wu Xiaoan said this was because it still needed to invest in certain projects. But he added that shareholders might be rewarded next year. "We will consider paying a divided next year according to sales performance. But we are confident we will outperform the overall growth rate of 20 per cent we have forecast for the mainland's luxury auto sector next year," Wu said. But JP Morgan analysts warned that the company might have to book up to 600 million yuan of start-up losses in next year's financial statements for a new electric car model expected to enter production in late 2013. Brilliance said sales of BMWs in China jumped 46.9 per cent year on year to 80,792 in the first six months - nearly double the luxury car market's average growth of 25 per cent. Brilliance said it was likely to exceed its sales target of 153,000 units forecast for this year, backed by a new 3-series China-only car launched in July. The company's minivan business continued to be a liability, with both sales and gross profit margin down due to slower sales of high-end minibus models. Brilliance said sales were likely to remain sluggish until it launched new models in 2014. The company - which JP Morgan named as its top car share pick - has cut its dealership target for this year to 350 from 370. Meanwhile, slowing mainland demand for commercial trucks dragged down Dongfeng Motor (SEHK: 0489)'s net profit by 8.36 per cent to 5.37 billion yuan during the first six months. The mainland carmaker, which has a joint venture with Nissan, Honda, and Peugeot, said car sales grew 21.6 per cent to 939,500 units, while sales of commercial vehicles fell by 18.84 per cent to 236,753, but price cuts squeezed gross profit margins in both segments.

Mohammed Mursi meets Xi Jinping at the Great Hall of the People yesterday. Mursi meets next leader Xi during 'valuable' visit - Egyptian president's first state visit outside Middle East and Africa underscores China's importance as source of trade and investment. Egyptian President Mohammed Mursi met China's future leader yesterday on the second day of a visit that seeks to deepen economic and diplomatic ties despite Beijing's uneasiness with the Arab spring revolution that helped bring him to power. Mursi hopes that his trip will bring trade and investment to shore up his country's flagging economy. On Tuesday, China pledged US$200 million in credit for the National Bank of Egypt, with the sides also signing agreements on agriculture, telecommunications, the environment and other areas. Vice-President Xi Jinping told Mursi yesterday China placed "tremendous value on this visit". "It is hoped this visit will further increase our mutual understanding and trust, promote greater co-operation and exchanges between our two countries, bring new vitality to bilateral relations and open a new chapter in friendly contacts," said Xi, who is due to take over as president next spring in a transition of power to a younger generation. Mursi responded by terming Egyptian-Chinese ties as a "strategic relationship" he hoped to enhance with his meetings in Beijing. Mursi, an Islamist who took office in June as Egypt's first freely elected civilian president, met President Hu Jintao on Tuesday. It is Mursi's first state visit outside the Middle East and Africa since becoming president, underscoring China's importance as one of five permanent members of the UN Security Council and as a vital source of trade and investment. The visit is also seen as part of a reorientation of Egyptian foreign policy away from a heavy focus on the US. In a separate meeting yesterday, Premier Wen Jiabao told Mursi that China would strengthen trade and economic co-operation with Egypt. China and Egypt should co-ordinate more closely to ensure both ongoing and settled projects proceed smoothly, he said. Wen said the two sides should co-operate more in the fields concerning people's livelihood and development. He also called on the two sides to improve regulations on investment promotion and protection so as to create good environments for co-operation. Mursi was preceded to Beijing by a delegation of 80 Egyptian business leaders who planned to discuss investment projects with 200 Chinese counterparts. The trip is also a chance for the countries to rebuild their relations in the wake of the popular uprising last year that drove longtime president Hosni Mubarak from power, paving the way for democracy and Mursi's election. Mursi leaves Beijing today to attend the world gathering of self-described non-aligned nations in Iran, the first visit to that country by an Egyptian head of state since relations between them were severed in 1979.

Li Na advances at U.S. Open - Li Na of China enters to next round at the 2012 U.S. Open tournament in New York, the United States, Aug. 29, 2012.

Top executives of General Electric Co., one of the world's largest companies, are urging countries such as the U.S. and Australia to open their doors wide to Chinese investors to help boost financing for infrastructure needs. In an interview, GE Vice Chairman John Rice said broader Chinese investment could fund transportation infrastructure such as bridges and airports in the U.S. and developing countries. GE, which had sales of $147.3 billion last year, provides products including aircraft engines, railroad cars and roadway lighting in 150 countries.

China to Continue Investing in Europe - German Chancellor Angela Merkel, left, is greeted by Chinese Premier Wen Jiabao after a joint press conference at the Great Hall of the People in Beijing on Thursday. China will continue to invest in European government debt, though on the condition of a full evaluation of risk, Chinese Premier Wen Jiabao said Thursday. At a press conference held jointly with German Chancellor Angela Merkel, who is here on her second trip to China this year, Mr. Wen said China will also strengthen talks with the European Central Bank and others in an effort to help the debt-laden continent ride out its crisis. Mr. Wen said the euro-zone debt crisis was a major focus of his talks with Ms. Merkel on Thursday. The key to solving the crisis is to "strike a balance" between fiscal tightening and economic stimulus, Mr. Wen said, acknowledging that solving the crisis will take a long time. China maintains its confidence in the euro and will continue to buy European government bonds to help debt-ridden European countries to ride out the crisis, Mr. Wen said. Ms. Merkel said "big progress" has been made toward arresting the crisis, but it is not over yet. European countries have the "political will" to revive market confidence in euro, she said. European officials have expressed hope that China could deploy significant amounts of its huge foreign-currency reserves to invest in EU bailout funds. China has been a regular buyer of bonds issued by the European Financial Stability Facility and also the sovereign debt of various euro-zone nations, but the level of its investment remains unknown. Mr. Wen's remarks echo some recent comments made by Chinese officials. At an EU-China meeting in Beijing in July, Dai Bingguo, the Chinese co-chairman of the talks, pledged that "China is sincere and firm in supporting European efforts to deal with the sovereign debt problem." Ms. Merkel and Mr. Wen pledged to strengthen their own economic ties, amid signs both are being affected by the euro-zone crisis. On Thursday, China and Airbus unveiled a procurement deal with the leasing arm of Industrial & Commercial Bank of China Ltd. involving 50 Airbus A320 jetliners valued at $3.5 billion, according to the state-run Xinhua news agency, one of a number of deals announced during Ms. Merkel's visit. Xinhua didn't disclose financial terms. Chinese Premier Wen Jiabao and Ms. Merkel attended the signing ceremony, Xinhua said. Airbus is a unit of Franco-German European Aeronautic Defence & Space Co. Airbus also signed an agreement to build an assembly line in the Chinese city of Tianjin under an agreement it valued at $1.6 billion, according to German officials, and Germany's Volkswagen AG signed an agreement to invest about $290 million in Tianjin. Under the agreement, Volkswagen will build a plant in Tianjin to make auto parts. The pact marks Volkswagen's continued bet on the growth in China's auto market, said an official with the Administrative Commission of Tianjin Economic-Technological Development Area. Meanwhile, officials said Chinese telecommunications equipment maker ZTE Corp. and Germany's IET Holding GmbH signed a $1.3 billion pact for a telecommunications project. Ms. Merkel is seeking to improve relations between Europe's largest economy and the world's second-largest economy. She is accompanied by an entourage of seven cabinet ministers and nearly two dozen leading German industry executives. Trade between China and Germany has grown steadily over the past decade, reaching about €144 billion (about $180.6 billion) in 2011, an increase of 10% from the year before, according to the German government. German companies invested €26 billion in China last year, dwarfing China's investment in Germany of about €1.2 billion. About 5,000 German companies have set up shop in China, employing 220,000 people, according to statistics from the German Chamber of Commerce in China.

China and Germany signed a series of cooperative documents Thursday, including a procurement deal for 50 Airbus planes. The signing ceremony was attended by Chinese Premier Wen Jiabao and German Chancellor Angela Merkel, after both co-chaired the second round of Chinese-German intergovernmental consultations in the morning. China's ICBC Leasing and Airbus signed the procurement deal for 50 Airbus A320 planes with a worth of $3.5 billion. The two countries also inked more than 10 other cooperative documents, including an agreement about Airbus plane assembling in China. The documents range from aviation, automobile, communication, energy, environment, health to maritime cooperation. Merkel arrived in Beijing Thursday morning, kicking off a two-day official visit to China at the invitation of Chinese Premier Wen Jiabao.

Nebraska gets busy beefing up trade links - Heartland state sets pace in growing relationship with China When Nebraska Governor Dave Heineman visited China for the first time on a trade mission in 2007, he was surprised at how much his hosts already knew about his state in the US heartland. Chinese business leaders he met on that trip impressed the governor when they mentioned that famous Nebraskan often called the most successful investor of the 20th century, and how much they wanted to be the "Chinese Warren Buffett". "We've got a great role model in Warren Buffett, but I want it to go beyond Warren Buffett," Heineman told China Daily at the Republican National Convention in Tampa, Florida. "I want the Chinese people to understand the warmth, the hospitality and welcoming atmosphere we have in Nebraska - that we will give your businesses the opportunity to grow and prosper." The state's relationship with China has become closer in recent years. After the governor made a second trip to China in July, the state opened a trade office in Shanghai for further economic exchanges. Heineman expects the Shanghai office will bring "fruitful" results as Nebraskans and Chinese seek more business opportunities on each other's territory. Recently five Chinese companies decided to set up their US headquarters in Nebraska. Heineman said the state offers low-cost energy, a business-friendly tax environment and, due to its central location, the ability to transport goods anywhere in America in two days. "A number of others have made commitments to us when we were in China this time," he said. One of these was Shanghai Liuhe Qinqiang Food Co. Its chairwoman, Lu Jingjing, recently said that the agribusiness company decided to open an office in Omaha, the state's biggest city, to focus on meat exports to China. "We want to help them, so as they grow and prosper they will tell other business leaders in China and encourage them to come to (invest in) Nebraska," Heineman said. China, the United States' third-biggest market after Canada and Mexico, imported more than $100 billion in US goods and services in 2011, according to the US-China Business Council. China is Nebraska's fourth-largest trading partner and among its fastest-growing overseas markets. The state's exports to China (chiefly corn, soybeans and meat) have grown by 30 percent in each of the past three years. "Obviously we have a good relationship with Canada and Mexico - they are our northern and southern partners. But we are looking throughout the world," said Heineman, adding that fast growth may make China the state's No 1 trading partner. The governor's optimism about the Chinese market isn't deterred by a recent slowdown in the pace of growth in the world's second-biggest economy. The current 7 percent to 8 percent expansion in the economy is "good enough", he said, given China's size, population and growing middle class. The past few years have seen numerous US governors leading high-priority trade missions to China in pursuit of bilateral investment. This year, five US governors including Heineman have brought business executives from their states to explore the growing Chinese market, while a few more have lined up trips to China in coming months. Heineman, the current chairman of the National Governors Association, believes the US and China have "an obligation to the entire world" given their status as economic superpowers. "If China and America are strong, the world's going to be. And economically we need to be connected, and we need to have a strong relationship. In my state we would like to do our part," he said. Nebraska hosted reciprocal trade missions in 2008 and 2011, when more than 100 Chinese business leaders came to explore opportunities in the Cornhusker State. "We want to export to China, and we want you to invest in our state; it's a two-way street," said Heineman, who said Nebraska will host a third visit from a Chinese delegation sometime in 2013. While the US is experiencing a weak economic recovery, many states have been active in seeking foreign investment. On his recent week-long visit, Heineman met with Vice-Premier Wang Qishan. In Xi'an, he met with Shaanxi Governor Zhao Zhenyong as well as a number of business executives who were eager to learn more about the state. Heineman wants Nebraska to build a lasting relationship with China. "This is a partnership we want for a lifetime," he said. "We are not there for a partnership for a day. We want you to come to Nebraska to become part of our community and we want you to be here forever." The state is working to establish a sister-state relationship with China's northwestern Shaanxi province, whose central location is similar to that of Nebraska in the US. Such an arrangement would encourage more exchanges in education, business and other areas, Heineman said. For the governor, "going to Xi'an is like coming to Nebraska".

Hong Kong*:  Aug 31 2012 Share

A Hong Kong court will rule next month on whether Ernst & Young can use state secrets as an excuse for withholding information from the securities regulator. According to a writ filed by the Securities and Futures Commission with the High Court on Monday that was made available to the public yesterday, Judge Jonathan Harris will rule on September 11 on whether he is "satisfied that there is no reasonable excuse" for the accounting firm to refuse to comply with the SFC's request to share documents related to a listing candidate. The writ says the SFC issued nine notices from April 2010 to October 2011 to E&Y for accounting records of mainland waste water treatment company Standard Water, which the accounting firm was helping to apply for listing on the Hong Kong stock exchange in 2009. The SFC writ says E&Y failed to produce the documents and failed to help the commission "conduct an investigation concerning Standard Water" by refusing to share the documents citing restrictions under the mainland's secrecy law. Standard Water filed an application in November 2009 to list in Hong Kong. In March the following year, E&Y informed the exchange that it had resigned as Standard Water's reporting accountant and auditor as it had found certain inconsistencies in its documents. Standard Water withdrew its listing application soon after. Although the company eventually did not list, the regulator has the right to check that listing sponsors ensure firms do no provide misleading information in their listing applications. In response to the SFC action, E&Y said yesterday: "We understand our obligations to the SFC and endeavour to fully comply, while also meeting our compliance obligations with mainland China's laws and regulations. "Ernst & Young supports close working relationships between Hong Kong and mainland China audit regulators on matters of public interest. We will work closely with the relevant regulators, and trust that there will be a quick resolution to enable our full compliance with applicable laws and regulations." Since E&Y had resigned as auditor for Standard Water in March 2010, it had not issued an accountant's report for the initial public offering, E&Y said. The accounting industry has mixed views on the case. Roy Lo Wa-kei, deputy managing partner of ShineWing (HK), said he was surprised that E&Y refused to give the SFC the documents it sought. Hong Kong Institute of Certified Public Accountants chief executive Raphael Ding Wai-chuen, however, supported E&Y, saying: "Hong Kong accounting firms need to comply with the mainland's secrecy law requirements."

China's Olympic gold medalists and their coaches received a check for HK$10.2 million from the Macau government to share it among themselves. The check, presented by Macau Chief Executive Fernando Chui Sai-on on Sunday, was made out in Hong Kong dollars rather than patacas for easy convertability. This was revealed by the group yesterday on the last day of their visit to the gambling capital. There were 70 people in the delegation, including 47 medalists and 23 coaches and officials. A spokesman for the Macau government said it was up to the mainland authorities to decide how the money would be shared. According to people familiar with the mainland system, the athletes will usually share part of the sum with the remainder going to their sports team and the state. Macau also gave the 2008 Beijing Olympics' gold medal winners HK$10.6 million. According to a report on the value of Olympic gold medals by the China Brand Research Institute, the commercial worth of a gold medalist varies. The potential "advertising contract" for badminton king Lin Dan could be about 6million yuan (HK$7.3 million) while swimmer Sun Yang, who won the 400- and 1,500-meter freestyle, could rake in from 3million to 5 million yuan. Ye Shiwen, who won the 200m and 400m individual medley, is worth about 1.5 million to 2 million yuan. A Hong Kong Home Affairs Bureau spokeswoman said the SAR government did not give any similar incentive although the Olympians received HK$25.2 million from a number of enterprises in Hong Kong.

Hong Kong director Wong Kar-wai will head the jury at next year's Berlin International Film Festival, one of the most prestigious events in global cinema. The Berlinale's organisers praised Wong as one of the world's most celebrated filmmakers who has charmed international audiences with his "distinctive signature and the poetry of his works". "Since the 1980s, the Berlinale has established itself as a platform for contemporary Chinese cinema, which is another reason why we are honoured Wong Kar-wai will be presiding [over] the International Jury 2013," said director of the Berlinale Dieter Kosslick. Wong said in a statement that he was greatly privileged to return to Berlin for his appointment as jury president. It is not the first time Wong has chaired such a jury. In 2006, he was named jury president at the prestigious Cannes Film Festival. Other Hong Kong filmmakers who have sat on the Berlinale jury include Hong Kong-born Chinese-American director Wayne Wang, veteran producer Nansun Shi and Taiwanese actress Shu Qi. Shanghai-born but Hong Kong-raised, Wong began his career at TVB (SEHK: 0511) before making his directorial debut in 1988 with As Tears Go By, starring Andy Lau Tak-wah and Maggie Cheung Man-yuk. International acclaim followed with a string of hit features, including Days of Being Wild (1990), Chungking Express (1994) and Fallen Angels (1995), which were screened at the Berlinale's Forum, reserved for daring and experimental films. But it was Happy Together that sealed Wong's screen-master status, winning him best director at Cannes in 1997. Afterwards, came a sultry tale of forbidden romance, In the Mood for Love (2000), which won local actor Tony Leung Chiu-wai the best actor award at Cannes. Wong's next film The Grandmasters has already been a decade in the making. The biopic of Bruce Lee's mentor and martial arts legend Yip Man stars Leung in the lead role alongside actress Zhang Ziyi and is reported to open later this year.

Hong Kong exporters with factories across the border are battling overseas buyers who delay settling bills but want quicker delivery of finished goods. Yeung Chi-kong, executive vice-president of the Toys Manufacturers' Association Hong Kong, said sluggish demand had prompted overseas buyers to delay orders and payment to exporters, weakening exporters' ability to pay their own suppliers, and even banks, creating a "triangular debt" situation. Triangular debt, exacerbated by Beijing's tight credit regime, had ballooned so much that it could potentially be worse than the global financial crisis of 2009. "Overseas importers are dragging their feet in settling bills by as long as 90 days in many cases against the usual period of about 60 days," Yeung said. "Exporters are in distress." He said the period between the placing of an order and the shipment, also known as the lead time, had been shortened dramatically to less than a month from a common practice of two to three months. "Buyers lack confidence," he said. Triangular debt is a key concern of mainland policymakers, who want economic stability in the lead-up to the leadership transition at the Communist Party's 18th Congress in Beijing in a few weeks. Sources at the Ministry of Commerce and the China Banking Regulatory Commission (CBRC) confirmed mainland media reports that ministries were looking into the problem and formulating measures. The CBRC source said one measure would stipulate that banks loosen the tap by rolling over loans to loss-making state-owned enterprises; and extending loans to small and medium enterprises grappling with short-term cash problems but operating in a long-term promising market. Zheng Xinli, a researcher and deputy director with the party's Central Policy Research Office, warned of an outbreak of profit decline, triangular debt and unemployment if the economic slowdown deepened further. "It's hard to say whether the economy will rebound or continue softening in the third quarter," he said. Profits at mainland industrial companies fell for the fourth month in a row in July. A preliminary reading of a purchasing managers' index for manufacturing, compiled by HSBC/Markit Economics, showed the lowest level since November. Export growth almost stalled in July and new yuan loans and industrial production both trailed estimates. "A new round of triangular debt is forming," said Li Xunlei, vice-president and chief economist at Haitong Securities. "Companies are involved in guaranteeing one another's debts with fake or inflated collateral, or using borrowed money from loan sharks in property speculation. These rampant practices pose a challenge to the central government." Concern about the deteriorating situation was underscored in Premier Wen Jiabao's visit to Guangdong last week, his fourth field trip to key regional areas in about two months. Shuttling among industrialised centres in Guangzhou, Dongguan and Foshan, Wen said difficulties in stabilising the economy were "still relatively large". He called for concerted efforts to stabilise exports to meet the nation's economic target. Federation of Hong Kong Industries deputy chairman Stanley Lau Chin-ho said consumer confidence was so fragile in the euro zone and the United States that Hong Kong exporters across the border were likely to see sales tumble as much as 30 per cent this year. "No one knows how long the bleak export [outlook] will last," Lau said. "Many overseas customers are delaying shipment of finished goods, and naturally asking for a delay in payment." The problem of receivables - the money that clients owe businesses - is apparent in the railway sector, where heavy spending on high-speed links has made it difficult for companies in this business to pay their bills. For example, trade receivables of state-owned CSR, which makes trains, ballooned 157.3 per cent to 35.22 billion yuan (HK$43.09 billion) as of June 30 from the beginning of this year, mainly because of customer delays in paying for the company's rolling stock.

Chain stores in Tseun Wan, including pharmacies, are reaping the benefits of more mainland visitors. New Territories businesses and residents remain divided on whether more mainland visitors would be good or bad for them. Worries about next month's opening-up of multiple-entry permits to 4.1 million non-permanent residents of Shenzhen range from rising rents and prices to a scarcity of train seats. But many shopkeepers welcome an increase in business. The extra visitors are expected to spread from the busiest tourist and shopping areas to new towns stretching from the border district of Sheung Shui to more distant Tsuen Wan, bringing both stress and opportunities. "I see mainlanders everywhere, even when I go to the markets," Tsuen Wan resident Trevina Law, 59, said. "Not only do they crowd the markets, the shopkeepers raise the prices of goods, like rice, oil and salt, because the demand for their goods has increased." Steve Luk, whose shop Luk Kam Kee, King of Melon Seeds, has been in Tsuen Wan since 1948, said the influx of mainlanders had already brought changes. Rents had risen about 20 per cent in a year, while the cost of shop space on major streets had risen to levels that Luk described as "not worth it". Only big chain stores like Mannings, Watsons, Broadway and jewellery shops could pay such prices and they had taken over many local businesses, dominating main streets such as Tai Ho Road, he said. "Luckily, the local community is still supportive of small businesses," he added. A Sheung Shui resident told Commercial Radio yesterday it was impossible to find a seat on East Rail trains unless he went to the Lo Wu terminus first. On the other hand, many shops including pharmacies welcomed the relaxation in permits as the growing numbers of mainland visitors had been a major boost to business. Rejecting accusations of profiteering, the operators said rising costs were the reason for higher prices. Mainlanders are still keen to visit despite being aware that many locals do not welcome them. Zhang Zheng-min, 60, from Shenzhen said: "I visit Hong Kong for my pleasure. If I want to purchase goods, I will buy them. We don't have to be wary of what the Hongkongers think." Another visitor said: "We bring more benefits to the city than harm."

Preview of new fashions at Lee Gardens in HK - Models present new creations at a preview of new fashions at Lee Gardens of south China's Hong Kong, Aug. 29, 2012.

Hong Kong is getting ready to roll out the doormat for more mainland Chinese tourists—much to the chagrin of many residents. Starting Sept. 1, an additional four million visitors from the neighboring mainland city of Shenzhen will be allowed to more easily obtain multiple-entry visas to visit Hong Kong, an arrangement that’s helped stoke fears that the city will be overrun by mainland Chinese tourists, whom some locals have begun resentfully dubbing “locusts.” Analysts estimate that the Sept. 1 arrangement will boost the number of visitor arrivals from mainland China by as much as 15%. Last year, 28 million mainland Chinese visitors came to Hong Kong, a city of just 7 million residents. Such tourists come to shop for luxury goods, buy property and even give birth, embittering locals who feel they are being priced and crowded out of their own homes and subways. Last year, visitors to Hong Kong spent a combined $263 billion. Mainland tourists, who make up two-thirds of all visitors toHong Kong, are an economic lifeline for the city, where the tourism sector employs 6% of all residents. Already, visiting Hong Kong is so convenient that residents of Shenzhen make regular trips to the city to buy their soy sauce and other daily goods. Though Shenzhen’s permanent residents can easily apply for multiple-entry visas to Hong Kong, this week’s expansion will grant Shenzhen’s students and migrants—that is, those who aren’t permanent city residents—the same privilege.

 China*:  Aug 31 2012

Tokyo's Foreign Minister said it is time to address relations with China that have soured over a territorial dispute as an incident targeting the Japanese ambassador added to tensions. Monday's incident in which the national flag was ripped off a car carrying the envoy in Beijing came amid widespread anti-Japan demonstrations over a disputed East China Sea island chain known in China as the Diaoyus and in Japan as Senkakus. Describing the incident as "very regrettable," Foreign Minister Koichiro Gemba said yesterday he would send an envoy to deliver a letter to President Hu Jintao. He declined to elaborate on the contents, but said it is a good opportunity to address ties that have soured over the island dispute. "I believe that we must exchange opinions now on the situation of Japan- China relations, on the situation of the region as a whole, including the Korean peninsula, as well as the global situation," Gemba said. Chief Cabinet Secretary Osamu Fujimura, the government's top spokesman, hinted at the wider diplomatic issues at play, saying the letter to Hu is about "developing stable Japan-China relations based on a broad view." Despite their large and mutually important trade relationship, ties between Tokyo and Beijing are often blighted by historical animosities, especially wartime atrocities. Finance Minister Jun Azumi hinted last week that Japan may freeze its plan to buy South Korean government bonds amid a separate diplomatic tussle with Seoul. He added: "I hope that [China] will avoid inviting a situation that would worsen" relations. Ambassador Uichiro Niwa was not hurt in the Beijing incident and there was no other damage to his diplomatic vehicle, according to the Japanese embassy. Senior Vice Foreign Minister Tsuyoshi Yamaguchi was expected to leave for Beijing yesterday to deliver the letter from Prime Minister Yoshihiko Noda to Hu. The United States, a close ally of Japan, reacted to the flag incident by saying that it is "concerned" more broadly about relations between Japan and China, Asia's two largest economies. Tensions between the neighbors flared earlier this month after pro-Beijing activists landed on one of the disputed islands, which are controlled by Japan. They were arrested by Japanese authorities and deported. About a dozen nationalists raised Japanese flags on the island days later. Thousands of Chinese citizens in more than 20 cities have protested over the past two weeks. Japanese businesses, restaurants and cars were targeted in some cities, including Shenzhen.

First-half earnings at China Mengniu Dairy fell to 645 million yuan, a result that the company partly attributed to a fall-out from quality-related scandals. China Mengniu Dairy (SEHK: 2319) plans to undertake more quality-control measures, after sales were severely hit by quality-related scandals in the first half of the year. The largest dairy producer on the mainland saw its net profit plunge 18 per cent to 645 million yuan (HK$789.16 million) in the first six months while revenue fell 1.2 per cent to 18.4 billion yuan. The company, based in Inner Mongolia, said sales volume plunged nearly 30 per cent after a government check in December found its milk products contained unsafe levels of flavacin M1, a cancer-causing substance. Chief financial officer Wu Jingshui blamed the drop in net profit on aggressive spending on marketing to regain consumer confidence, and extra costs for product inspection. "The incident has taken a bigger toll on Mengniu than expected," said Sunny Kwok, an analyst at Guotai Junan Hong Kong. "It will affect sales expectations for the rest of the year as well." The dairy producer, plagued by a series of quality scandals in recent years, was in the media spotlight again this month. A Mengniu sales manager in Yiwu city, Zhejiang, reportedly falsified the production date on 3,000 boxes of milk products that were about to expire. Chief executive Sun Yiping, who is a former senior executive of Cofco, the largest stakeholder in Mengniu, said the company had compensated affected consumers and was working to ensure that such incidents did not recur. She said the incident did not have any significant impact on the company. Mengniu said it was establishing upstream milk sources and improving its internal control system. In the first half, revenue generated from liquid milk products amounted to 15.9 billion yuan, about 86 per cent of the total revenue. Ice cream and other dairy products accounted for 11.7 and 1.4 per cent respectively. The overall gross profit margin stood at 25.7 per cent, down 0.3 percentage points from a year earlier. Mengniu did not propose an interim dividend for the reporting period. Its shares closed at HK$23.10 yesterday, up 0.4 per cent.

Top offshore oil producer CNOOC (SEHK: 0883) is inviting foreign companies to explore for oil and gas in another 26 blocks, including 22 in the South China Sea, although an analyst said none of these were in disputed territory. Experts said the tender, which also covers blocks in the Bohai Sea off north China and in the East China Sea, was probably the largest offered by China National Offshore Oil Corp (CNOOC) since the 1990s - a sign that the oil giant wants to boost exploration as its output growth slows. The tender comes two months after CNOOC invited international firms to bid for nine blocks in the western part of the South China Sea, a move Vietnam said was illegal as the blocks encroached on its territorial waters. China at the time insisted the tender in June was in accord with Chinese and international law and urged Vietnam not to escalate the quarrel. Huang Xinhua, a geologist at energy consultancy IHS, said none of the latest blocks appeared to be in disputed areas. One of the blocks is in northern Bohai Bay, with three in the East China Sea, 18 in the eastern part of the South China Sea and four in the western South China Sea, the company said on its website www.cnooc.com.cn They cover a total area of 73,754 square kilometres. The three deep-water blocks in the eastern part of the South China Sea are at depths between 700 and 3,000 metres, it said, adding that foreign firms had until November 30 to view data packages for all the blocks tendered. "The tender should be CNOOC's largest in terms of the number of blocks offered since the 1990s, showing CNOOC really wants to beef up its exploration in offshore China with the help of international firms," Huang said. The three deep-sea blocks, which cover a total of 15,365 square kilometres, as well as areas in the Qiongdongnan basin in the western part of the South China Sea, were attractive as hardly any drilling had been carried out there so far, Huang said. In this round of auctions, block 65/12 is near block 65/24, which Vietnam singled out in a March as violating its sovereignty. The area sits one nautical mile from the Paracel Islands, which China and Vietnam fought over in 1974. China calls them the Xisha Islands and Vietnam calls them the Hoang Sa Islands. "China must assert its sovereignty over these blocks as preliminary geological assessments suggest huge oil and gas exploration potential," said Gordon Kwan, the Hong Kong-based head of regional energy research at Mirae Asset Securities. "China's rising global dominance can fend off any political or military challenges that could come" because of the new tenders.

President Hu Jintao leads the way for Mohammed Mursi during his welcoming ceremony in Beijing yesterday. China is hosting Egypt's new president despite its uneasiness with the Arab Spring revolution that helped bring him to power, while the new leader seeks to shore up his country's flagging economy. On the first day of President Mohammed Mursi's trip, China pledged US$200 million in credit for the National Bank of Egypt and leaders signed deals on agriculture, telecommunications, the environment and other areas. Mursi, an Islamist who took office in June as Egypt's first freely elected civilian president, was welcomed by President Hu Jintao at the Great Hall of the People. It is Mursi's first state visit outside the Middle East and Africa since becoming president, underscoring China's importance as one of five permanent members of the UN Security Council and as a vital source of trade and investment. The visit is also seen as part of a reorientation of Egyptian foreign policy away from a heavy focus on Washington. "Mr President has chosen China as one of his first countries to visit and this fully shows that your country attaches great importance to the desire to develop relations with China," Hu said after a welcoming ceremony. Xinhua quoted Hu as saying China understood and respected the will of the Egyptian people and supported them in choosing a political system and path of development in accordance with their country's situation. Hu also called for more contacts between the two countries' officials and an expansion in economic ties. Mursi was preceded to Beijing by a delegation of 80 Egyptian business leaders, who planned to discuss investment projects. The trip is also a chance for the countries to rebuild their relations in the wake of the popular uprising last year that drove Hosni Mubarak from power, paving the way for democracy and Mursi's election. Beijing was decidedly cool towards that movement, criticising what Chinese state media derided as thuggish "street democracy". Yesterday's talks also touched on the Syrian crisis. Both countries were opposed to a military intervention, Egyptian presidential spokesman Yasser Ali said. "I presume that there is an understanding from both sides that we have to work together to stop the bleeding in Syria's streets, and the other understanding also regarding the military [intervention] in the Syrian scene is not accepted by both countries." Before leaving Cairo, Mursi said he would pursue a "balanced" foreign policy, reassuring Israel its peace treaty was safe, hinting at a new approach to Iran and calling on Bashar al-Assad's allies to help lever the Syrian leader out.

Ford readies Lincoln launch in China by 2014 - Ford Motor Co will launch its Lincoln brand in China within two years as it races to catch up with rivals in the world's largest auto market and home to a growing number of luxury buyers. President of Ford Asia Pacific and Africa Joe Hinrichs, Ford Motor's CEO Alan Mulally, Group Vice President, Global Marketing Sales and Service of Ford Jim Farley, Chairman and CEO of Ford Greater China Dave Schoch (L - R) pose with a Lincoln MKZ Concept car in Beijing in this handout photo provided by Ford Motor (China) Ltd. on August 28, 2012. The additional investment to launch Lincoln, which Ford did not disclose, comes on top of around $5 billion that the US automaker has spent since 2006 in a market where it lags some way behind General Motors and Volkswagen. As Ford builds its top-tier nameplate, it is also developing a low-cost car under the mainstream brand to appeal to more price-sensitive consumers in the fast-growing cities in western China. This vehicle will compete with GM's Sail car. The US automaker, which joins several other companies looking to expand or launch luxury auto brands in China, is building its dealership network from scratch and will begin selling Lincoln vehicles in the second half of 2014. "The brand in China could be a bright spot for Lincoln globally," Ford's global marketing chief Jim Farley said during a Beijing media event on Tuesday. "We have a chance to be different here." To succeed in China, Ford said it will slowly court dealers who can help burnish Lincoln's image. Ford is also in the early stages of reviving the brand's stale image in the United States, where sales peaked two decades ago. Ford will launch a refashioned MKZ sedan in the United States this year in a bid to attract younger, more affluent buyers. Much of the design, including push-button transmission, was influenced by Chinese consumer tastes. "We're trying to revitalize the Lincoln brand image and the sales and satisfaction image in the US," said Dave Schoch, Chairman and CEO of Ford Motor China. "Here we have a clean sheet of paper. We don't have the legacy issues." Despite slowing growth in new vehicle sales, China has already overshot the United States as the world's largest auto market. By 2020, analysts expect luxury sales in the country will surpass those in the United States. By 2015, Ford aims to double its production capacity and dealers in China. Executives, including Chief Executive Alan Mulally, flew to Ford's manufacturing hub in Chongqing earlier this week to mark the groundbreaking of a third assembly plant. But Ford faces considerable challenges in launching its Lincoln brand. A heavy import tax of at least 25 percent will eat into margins as Lincoln initially will not build cars in China. Competition is also mounting. Toyota Motor Corp's Lexus, Nissan Motor Co Ltd's Infiniti and GM's Cadillac are among those looking to expand in China to appeal to a growing number of luxury buyers. One prominent dealership operator in China said he sees "little chance" for the brand to take off the way BMW, VW's Audi and other German brands have, adding that the brand would face a better chance if the market was growing at the torrid pace of 2009 and 2010. But under current circumstances, "there's just no way I would take a chance with Lincoln," said the operator, who declined to be named. 

 *News information are obtained through various sources: South China Morning Post, The Standard, Hong Kong Trade Development Council, Hong Kong Economic and Trade Office, Hong Kong Government, Asia Society, Wall Street Journal, China Daily, Xinhua, World Journal, The Singtao Newspaper, TVB, CCTV Stations in China and others that are deemed reliable, but not guaranteed

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