China.Hawaii Chamber of Commerce ®
Hong Kong.Hawaii Chamber of Commerce ®
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Hong Kong, China & Hawaii News Archive for Year 2002  Archive Jan 1, 2003.........:>
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Beijing Olympics Aug 2008 Sept 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 June 2009
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China Projects Bidding Information - update daily    Scholarship & Grants  News Archives in PDF Format 

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(approximate $ exchange rates: US$1 = HK$7.8, US$1 = RMB$6.3)

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

Wine-Biz - Hong Kong Brand Hong Kong Video

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

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

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

Meetings and Exhibitions Hong Kong - Converging Possibilities - English the Official Language http://www.youtube.com/watch?v=eUyutVdnPIo

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.

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

Thumbnail 奧巴馬和羅姆尼標籤中國人是騙子 - 你同意嗎 Obama & Romney labeled Chinese as Cheats & Crooks-do you agree? http://www.youtube.com/watch?v=EFJWRGvEjUI 

Ferries Accident on October 1 2012 - Day of condolence for Hong Kong vessel tragedy 全港哀悼撞船事故罹難者

Thumbnail HK Mourn Oct 1 12 Victims-Day of condolence for HK vessel tragedy on Oct 4th 全港哀悼撞船事故罹難者CCTV-香港三分钟 http://www.youtube.com/watch?v=R2gxB3iOCbo

Thumbnail China is doing the right things dealing with the challenges according the World Bank President Jim Yong Kim at this WSJ Interview http://www.youtube.com/watch?v=9Zn_BP0krBM 

Hong Kong*:  Nov 1 2012 

Vote on old-age allowance put off; lawmakers critical of government (By Tony Cheung and Colleen Lee) Government disappointed with delay, but even allies accuse it of mishandling the proposal. Old Age Allowance - Commonly known as "fruit money", the old age allowance is a monthly cash subsidy the Hong Kong government pays to senior citizens aged 65-69 with low incomes, and all elderly citizens aged 70 and over. The Leung Chun-ying administration in 2012 proposed to introduce a new means-tested subsidy called the Old Age Living Allowance, which provides HK$2,200 per month for the needy only. A Legco committee last night put off a vote on the government's proposal to introduce a HK$2,200-a-month old-age living allowance, meaning the intended beneficiaries will not be paid the allowance this month. A four-hour meeting of the finance committee ended with lawmakers still scrutinising the government's application for HK$3.1 billion to fund the measure. Committee chairman Tommy Cheung Yu-yan said discussions would resume on November 16 unless the government sought to bring forward debate. Secretary for Labour and Welfare Matthew Cheung Kin-chung voiced his disappointment. He reiterated that payments could not be backdated to October 1 unless the proposal was passed this month. The government says everyone aged 65 and over would be eligible for the allowance - an improvement on the current HK$1,090-a-month allowance - but would have to undergo a means test. They would qualify if their monthly income was not more than HK$6,660 a month and their assets did not exceed HK$186,000. At least 30 of the 69 lawmakers on the committee back the plan, with 24 pan-democrats opposed. Radical pan-democrats want the means test scrapped, while the Beijing-loyalist Federation of Trade Unions and the Democratic Party wanted those aged 70 and over exempted from the test. Lawmakers criticised the government for its poor handling of the issue and for polarising society. Industrial-sector representative Lam Tai-fai, seen as a government ally, said: "You are holding the elderly hostage … You are well aware that lawmakers do not oppose the allowance ... They are just saying your policy is not comprehensive." Another government ally, real estate and construction-sector lawmaker Abraham Razack, of the Business and Professionals Alliance for Hong Kong, criticised the administration's refusal to consider raising the asset cap. "I believe that the proposal will be passed …. But … your way of handling of the issue is hardly acceptable … [The government] has polarised society," he said. It was driving a wedge between old people with assets under HK$186,000 and those with more, he said, and between the younger generation and the elderly by warning of escalating public spending on the allowance if the government acceded to the critics' demands. Cheung said lawmakers planned to move at least 15 motions in connection with the proposal. The Labour Party's Dr Fernando Cheung Chiu-hung plans to table one to condemn the government for publicising the plan before Legco had approved it. Earlier in the day, Chief Executive Leung Chun-ying said he would not scrap the means test or raise the asset cap. "The government's stance on the proposal is that it will not make any adjustment to it," Leung said, speaking before an Executive Council meeting.

A whole New World of real estate fireworks (By Yvonne Liu) The real estate group hopes to emerge from the property pack and restyle itself as a major challenger to the biggest players in town. Sun Hung Kai Properties and Henderson Land pulled out of sponsorship of the New Year's Eve fireworks last year, creating a headache for the Tourism Board. But the organisers will not have trouble creating an exciting display this time round, with rival developer New World Development taking over funding of the show. To be called "New Year, New World", the show is a sign to many of the start of a new era for the property market. New World has ambitions to again become the third-biggest developer in the city. More strong players should be welcome in the market, which has long been dominated by Cheung Kong (Holdings) and Sun Hung Kai Properties. New World has a new sales and marketing team, following the retirement of former executive director Stewart Leung Chi-kin early this year. Their first project, The Riverpark in Sha Tin, was launched in June. The new team is already making a difference. The sales office, which cost HK$50 million to build, has a small theatre to play its television advertisements. The design and decor of the sales office are now on the same level as the other major developers. Other touches also are telling. Even with a mass residential project, the company provides high-end kitchen appliances. That's not new for the other major developers, but it is for New World. New World is trying to improve its brand image, something that could help it achieve higher selling prices and profit margins. The changes at New World may be partly due to the fact that the third generation of Cheng Yu-tung's family is more involved in the business. It may also be because the company is aware that housing supply will increase significantly and so will competition in the small-flat market. Sino Land, for example, is improving building quality and leading the market in the design of clubhouses, which became a major attraction of their projects. Data from the official "Hong Kong Property Review 2012" report suggest that the new housing supply will grow by 26 per cent next year. About 91 per cent of the flats would be less than 1,076 sq ft, compared with 74 per cent this year. With the supply of small flats set to grow, developers have to package mass residential projects as luxury developments in order to achieve higher prices. Also, as construction costs continue to rise, developers will have to resist cutting prices to lure buyers, even though supply is increasing. Packaging is their best tool for maintaining a high profit margin and competing with other developers. Advertisements, top-brand appliances and luxury clubhouses can perhaps convince buyers that the flats are value for money. Henderson Land is the most successful case of a company improving flat quality and running fancy ads to attract buyers in last few years. In 2004, it ditched its old-fashioned marketing strategy of hiring one-time stars to perform in its sales offices and adopted the new approach to promote the Grand Promenade in Sai Wan Ho. The switch helped it grab record-breaking prices for the project, a feat it repeated again and again, reaching a peak five years later with 39 Conduit Road in Mid-Levels. New World knows that when your competitors are improving, you can't avoid joining in.

HKMA steps in to market to defend Hong Kong dollar peg (By Reuters in Hong Kong) The Hong Kong Monetary Authority (HKMA) said on Tuesday it had stepped into the market by selling HK$2.7 billion (US$348.38 million) as the currency repeatedly hit the top end of its trading range. This is the fifth time in the past two weeks that the HKMA, the city’s de facto central bank, had stepped in as "hot money" continues to flow into the city. The authority had to intervene significantly after the 2008 global financial crisis to manage an inflow of capital between October 2008 and the end of 2009 that the authority has estimated at HK$640 billion. The latest intervention will lift the aggregate balance – the sum of balances on clearing accounts maintained by banks with the HKMA – to HK$165.72 billion on November 1. The Hong Kong dollar is pegged at 7.8 to the dollar, but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact. The currency was trading at 7.7500 against the US dollar at 6.25pm.

DAB lawmakers vow support for old-age allowance (By Lai Ying-kit) The government moved a step closer to passing its controversial old age allowance scheme on Tuesday, when the city’s largest pro-establishment party pledged its support for the measure. The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), with 12 votes in the 70-member Legislative Council, will vote for the proposal at a Finance Committee meeting this evening, party chairman Tam Yiu-chung told a press conference on Tuesday morning. Despite some reservations, the party is backing the plan in its current form to ensure speedy passage, to let poor elderly people receive the HK$2,200 monthly benefit with no further delay, he said. In recent days the DAB has remained unclear about how its members would vote, while asking the government to raise the cap for eligibility from the current level of HK$186,000 in assets. Tam said the party would continue to press its demand for a higher asset cap. “If we insist on our demand at this stage, we may go into a long-running deadlock,” he said. “Although the scheme has some imperfections, many people will be disappointed if its funding is rejected [by lawmakers].” The party decided to support the allowance partly because of a recent DAB opinion poll, in which 47.5 per cent of the 1,300 respondents said the allowance should be passed even with its current means test and asset limits. Thirty per cent said lawmakers should veto the scheme, while 22.5 had no opinion. When asked whether the decision would reinforce the public impression that the DAB is pro-government, Tam said, “The DAB is pro-elderly.” Lawmakers will hold a special Finance Committee meeting on Tuesday evening to discuss, and vote on, the allowance’s funding proposal. Earlier on Tuesday, Chief Executive Leung Chun-ying said he would scrap neither the means test nor asset cap requirements. “The government’s stance on the proposal is that it will not make any adjustment to it,” Leung said, speaking before an Executive Council meeting. Meanwhile, radical pan-democrats have said they are planning a filibuster for Tuesday evening’s meeting, in an attempt to gain concessions from the government.

Jewellery show held in Hong Kong - Models presented jewelries by the Emperor Watch and Jewellery in Hong Kong, south China, Oct. 30, 2012.

Hong Kong will still be offshore yuan center: US offcial (By Oswald Chen) - Hong Kong is still poised to be the leading offshore yuan financial center even if yuan currency becomes fully convertible immediately, Under Secretary for Financial Services and the Treasury Julia Leung reckoned. "Even though the US dollar and the Euro are two fully convertible international currencies, London is still the leading offshore trading center of these two currencies," Leung said. "(Similarly) in the process of the yuan becoming fully convertible gradually, Hong Kong will still have room to develop into a leading offshore yuan financial center." Leung, who gave the media briefing after the Hong Kong Investment Funds Association's 6th annual conference held in the city on Monday, warned that Hong Kong should not be complacent. "Once the yuan is fully convertible, it will threaten Hong Kong's position as an offshore yuan financing center. If Hong Kong cannot maintain its competitiveness and slash the cost of financial services activities, investors may turn toward the mainland onshore market." As to whether the recent yuan rally against the US dollar would provoke another capital inflow into the city, Leung said that she expected more "hot money" to flow into the city to search for more returns. However, the Hong Kong government would not introduce any measures to curb capital inflows, she added. Leung envisaged that the yuan appreciation prospects will induce more international organizations based in Hong Kong to adopt the Chinese currency as more yuan funds flowed into the city through the trade settlement channel. She expected offshore yuan financing activities in the city to be more broad-based as the issuance of dim sum bonds burgeoned, while yuan-denominated investment products would become more diversified and yuan trade settlement to balloon. At the same conference, Ashley Alder, the chief executive officer of the Securities and Futures Commission (SFC), said that the SFC will act proactively to understand the yuan currency policy of the mainland. He also noted that the SFC is liaising with the fund management industry to understand the Hong Kong Investment Funds Association's proposal to introduce yuan-denominated funds related to Hong Kong and overseas equity and bond investments. "The discussion will be based on whether there are adequate yuan liquidity, market demand and risk disclosure," Alder added. Yuan-denominated investment products in Hong Kong reached another milestone when the Hopewell Highway Infrastructure became the first company to issue yuan-denominated and Hong Kong dollar-denominated share tranches simultaneously in the city on Monday. Hong Kong Exchanges and Clearing Ltd (HKEx) Chief Executive Charles Li said that the "Dual Tranche Dual Counter" (DTDC) share-trading model will become a new channel for corporations to raise yuan capital. "If the market liquidity and legitimacy toward the DTDC model is adequate enough, this can help support the development of the DTDC share-trading model. Corporations which have strong yuan income streams will be induced to issue shares using the DTDC model because the channels can be utilized to raise yuan funds," Li said, admitting that the current yuan liquidity pool of nearly 600 billion yuan is still thin and not large enough to propel large-scale development of yuan-denominated share issuance activities.

 China*:  Nov 2012

PLA, U.S. army bands hold joint concert in Beijing - The Military Band of the Chinese People's Liberation Army (PLA) and the visiting United States Army Band Pershing's Own held a joint concert on Monday in Beijing.

Philip Morris Seeks an Edge in China (By Mike Esterl) Marlboro is the world's top-selling cigarette, but it has a minuscule 0.3% share of the market in China, where roughly a quarter of the population smokes. Now, Philip Morris International Inc., which makes and markets Marlboro outside the U.S., is trying to raise its profile in that enormous Asian nation by moving beyond simple smokes. In one curious effort, it is setting out to develop flu vaccines derived from a type of tobacco plant. In another project, closer to its core business, it is developing less harmful cigarettes, which it would aim to sell all over the world, but especially in China, where about 40% of the world's cigarettes are smoked but state-owned China National Tobacco Corp. enjoys a virtual monopoly. In September, Philip Morris said it would be licensing rights from Medicago Inc., a small Canadian biopharmaceutical company, to develop vaccines for sale in China. The seemingly incongruous move is underpinned and motivated by several different situations. Philip Morris already owns about 40% of Medicago. Philip Morris also has a goal of diversifying into different tobacco-related products. More important, the vaccine agreement in China has as much to do with cultivating relations with government officials as diversifying into a new business that may or may not take root, highlighting how much of a long-term play China remains for Switzerland-based Philip Morris, the world's second-largest cigarette company by volume, after China National Tobacco. "This is one other way they could endear themselves to the Chinese,'' said Bonnie Herzog, a global tobacco analyst at Wells Fargo. At a recent investor conference, Philip Morris acknowledged traditional cigarettes from foreign companies will continue to be a hard sell in China, where the government generates tens of billions of dollars in profits from tobacco. Retail cigarette sales in the country topped $160 billion in 2011, roughly a quarter of the global market, according to estimates by Euromonitor, a data service. "Why would they share their market?'' Philip Morris Chairman and Chief Executive Louis Camilleri told investors in June. "To come up with new technology is really the only avenue to get into a place like China.'' Thus Philip Morris's effort to develop next-generation cigarettes that are less harmful than current versions, with a serving of public health on the side. There are rising health concerns about cigarettes in China. More than 1 million people die annually in the country from tobacco-related diseases and officials have warned the number could triple by 2030 without action. Health authorities have been pushing to turn more public buildings smoke-free. Philip Morris is investing hundreds of millions of dollars trying to develop less-harmful cigarettes and executives have described the strategy as a potential "game changer'' in China. One version generates smoke at temperatures below combustion, releasing fewer toxins, but aims to mimic traditional cigarettes more closely than alternatives already on the market such as electronic cigarettes. Philip Morris has begun discussing its next-generation plans with CNTC and Chinese officials "are extremely interested,'' Andre Calantzopoulos, Philip Morris's chief operating officer, recently told investors. But he estimated the new cigarette products wouldn't be launched before 2016 or 2017. The vaccine is perhaps even further off in the future. Philip Morris said its China flu business hinges on the successful completion of clinical trials and securing regulatory approvals. "We're definitely talking years,'' added a spokeswoman for Philip Morris. Medicago specializes in producing flu vaccines from Nicotiana benthamiana, a relative of Nicotiana tabacum, the tobacco plant used in cigarettes. It represents one of several plant and cell-based alternatives to chicken eggs, which have been used for decades to make vaccines but are seen as slow and expensive. China has been among the countries hardest hit by H5N1 over the past decade and was swept up in the H1N1 outbreak of 2009 and 2010, which killed an estimated 280,000 people world-wide, according to a recent estimate. Under the Medicago deal announced in late September, Philip Morris will pay an initial $4.5 million for the rights to develop Medicago's pandemic and seasonal influenza vaccines for China. Medicago produced more than 10 million doses of an H1N1 or swine flu vaccine within 30 days earlier this year in a research project with the U.S. Department of Defense. It also has reported positive results from a Phase II clinical trial for an H5N1 or avian flu vaccine. The China program represents publicly traded Medicago's first foreign-licensing deal. Philip Morris began investing in Medicago in 2008, when it acquired a large minority stake in the Quebec-based company for roughly $15 million—pocket change for the cigarette maker. Both the next-generation cigarettes and the flu vaccines are expected to take several years to come to market, if ever. Philip Morris got its foot in the door in China in 2005, when it inked a strategic partnership with China National Tobacco, or CNTC. Under that arrangement, CNTC began producing Marlboros under license in China four years ago. Philip Morris also helps distribute CNTC brands outside China, including Poland and the Czech Republic. But as of last year, CNTC still boasted a 97% market share in its home country, according to Euromonitor International. Marlboro's 0.3% market share puts it behind more than three dozen CNTC brands including market-leading Hongtashan. China's biggest foreign brand last year, British American Tobacco PLC's 555, had a 0.5% market share.

GDP growth in 24 regions beats national average (By Zheng Yangpeng) A total of 24 provinces, autonomous regions and municipalities across China have delivered economic growth above the national average in the first three quarters, while growth in coastal regions ramped up in the third quarter, according to local government data. The Airbus A320 assembly line in Tianjin. The municipality in North China led the nation with 13.9 percent year-on-year GDP growth in the first three quarters. North China's Tianjin led the nation with 13.9 percent year-on-year GDP growth in the first three quarters, while Guangdong, the country's economic powerhouse, posted 7.9 percent year-on-year growth. In the first three quarters, China's economy grew 7.7 percent, the lowest in the past three years. National figures are not necessarily a compilation of local data. But an improvement for coastal regions' GDP figures suggests the country's growth decline might be stabilizing, as eastern provinces are regarded to be the most sensitive to economic fluctuations. Among the 11 regions that saw more spirited economic activity in the third quarter, seven are coastal areas. Guangdong's GDP growth in the first three quarters was 0.5 of a percentage point higher than that recorded for the first half of the year, while Zhejiang's growth in the first three quarters was 0.3 of a percentage point higher than in the first half. Li Wei, an economist at Standard Chartered Bank in Shanghai, said the acceleration in the eastern provinces' growth is "restorative" as it had generally been declining since the middle of 2011. Li attributed the growth to the slow recovery of the US economy and a batch of local government stimulus packages. "But the positive effects of the massive investment stimulus package introduced by the central government in 2009 are fading, while its negative effects are surfacing, which is taking its toll on central and western China," Li said. He added that the current economic slowdown is mostly cyclical rather than structural, as the absence of massive investment schemes and a global economic malaise, rather than weakening domestic demand, were the major contributory factors. Domestic consumption contributed to 55 percent of GDP growth in the first three quarters, which was the first time it had contributed to growth more than investment. But Ha Jiming, vice-chairman and chief investment strategist of Goldman Sach's investment management division for China, said in a recent interview that structural factors, such as rising labor costs, accounted for 40 percent of the current slowdown. "If structural factors, rather than cyclical ones, are the major causes, a large stimulus plan from the government would be of little help," Ha said.

Struggling tea village copes with lost glory (By Hu Meidong and Sun Li in Xiamen, Fujian) The first thing you notice when you enter Junying is the subtle fragrance of tea leaves that permeates the air. Located in the steep, verdant mountains of Fujian province, the village has been producing tea for 300 years, and today its plantations cover 386 hectares. Yet, get any one of its residents on the subject of tea, and you will likely be met with a deep frown. "The word 'tea' used to lift my spirits," said Gao Shuzu, who farms three-fifths of a hectare. "Now it just makes me more worried, as we've had a lot of setbacks in the past two years. "The tea I harvested this spring made me only about 10,000 yuan ($1,600). I was making six times that four years ago." Workers process tea leaves at a workshop in Junying, a small village and home of tieguanyin (Iron Goddess of Mercy), a variety of oolong, a dark tea, in Xiamen, Fujian province. Gao is among 500 residents in Junying - 80 percent of its population - who make a living growing and selling tea leaves. Another is Hong Mugen, who until early this year had stored about 10 metric tons of tea wrapped in plastic bags in a warehouse in the vain hope that prices would go back up. "Some of it was harvested in the spring of 2010," the year prices began to drop dramatically, the 42-year-old said. Hong said that eventually, he faced up to reality and decided to sell what he had in storage along with the leaves picked this spring from his 2-hectare plantation. The lowest price he got was 10 yuan a kilogram, and in the end he made less than 30,000 yuan net profit. "The situation has dampened the mood of villagers," he said. "Many stopped planting tea and became migrant workers in cities." Sunshine and water - Junying, about 66 km from downtown Xiamen, is more than 800 meters above sea level and is the home of tieguanyin (Iron Goddess of Mercy), a variety of oolong, a dark tea. "We have plenty of sunshine and water, but no industrial pollution," said Gao Quanyang, the village head. "The difference in temperature between day and night in the mountains is huge, meaning tea trees are less vulnerable to disease and pests. It makes the village a nice place to plant fine quality tea." Despite the low prices of the past two years, he said the village still produces more than 300 tons of tea annually. Wang Guiqing, general manager of Fujian Tea Import and Export, said the tea price issue is partially due to European countries' raising the testing standards on imports from China. China is the world's third-largest tea exporter, with its products sold to more than 120 nations and regions. Tea exports absolutely contribute to the profits for growers in Junying, Wang said. In 2011, the European Commission issued an order calling for stricter testing on Chinese tea exports to the European Union, stipulating that 10 percent of the goods should undergo onsite inspections for pesticide residue. Given the restrictions, the right thing to do is deal with tea in the domestic market, village head Gao Quanyang said. However, he said, despite the high quality of Junying tea, the village's products do not sell well in China, reflecting a lack of brand image. "Of course, we won't be sitting ducks. Changes have been made to tackle the crisis," he said. The first such change has been developing the production of organic tea. The village has contacted Xiamen's major tea companies, which will help coach grassroots growers about quality-control measures, including the use of pesticides and final processing. "Safety and quality are everything," Gao Quanyang said. "They are the fundamental elements of strengthening the brand, wining customers and meeting the testing standard set by other parties."

Hospitals to prevent theft of babies (By Cang Weiand Song Wenwei in Nanjing) Hospitals in Nanjing, Jiangsu province, are using security bracelets to keep newborn babies from being stolen from the maternity ward. Chu Zhiping, matron of the maternity department under the No 2 Hospital affiliated with Nanjing Medical University, said the security bracelet will sound an alarm if a baby is taken outside certain areas of the department. "Warnings will also be shown on nurses' computers so they can immediately know which baby has been taken and take action together with the guards," Chu said. She added that the bracelet, which contains all of the baby's information, such as health, mother's name and hospital-bed number, can be removed only by staff members. A newborn wears a security bracelet around his leg to keep him from being stolen from the maternity ward at the No 2 Hospital affiliated with Nanjing Medical University in Nanjing, Jiangsu province, on Friday Zhang Guoqiang. "The bracelet will sound an alarm if other people try to untie or cut it off, and it's very safe for the baby to wear the bracelet because the radiation it produces is very low," Chu said. No 2 Hospital has used the security bracelet since 2008. Other hospitals in the city have started using them or taken even stronger measures to prevent baby stealing. Gulou Hospital has security guards on duty round-the-clock. Only two visitors at a time are allowed during visiting hours. Babies can be taken out of the hospital only if a discharge certificate is provided. "Medical workers in our maternity ward must wear a special sign in front of their chest if they want to take babies from their mothers for treatment", said a matron named He at a hospital affiliated with Southeast University, who was previously interviewed by Yangtze Evening News. "Even a matron like me is no exception," He said. In Nanjing Maternity and Child Healthcare Hospital, the first class that the parents-to-be have to take is on how to check the identities of medical workers. In addition, more than 500 surveillance cameras have been installed as the facility. Hospitals and parents in China have been on high alert after repeated media reports of babies being stolen. In October, a 3-day-old boy was stolen by a woman in Huaiyuan county, Anhui province. In November 2011, a 6-day-old girl was taken out of a hospital in Xinghua, Jiangsu. A 1-day-old baby boy was reported stolen in Shanwei, Guangdong province, in the same month. "Though the security measures seem complicated, they are necessary because my wife and I cannot be alert every second," said Zhang Lei, who lives in the city's Gulou district and who became a father in October. "I can't imagine my baby being stolen or exchanged by mistake in the hospital. For me, the more complicated, the better."

Smiles abound for Air China's newest jumbo jet (By Wang Jun and Deng Yu in Seattle) Boeing delivers one of its 777-300ER jets to Air China at a ceremony on Monday at Seattle's Future of Flight Aviation Center. Boeing Co formally delivered one of its 777-300ER jets to Air China, the nation's flag carrier, at a ceremony on Monday at Seattle's Future of Flight Aviation Center. Air China representatives from Beijing and Los Angeles celebrated the delivery of the jet with Boeing management teams. Chi Zhihang, vice-president and general manager of Air China North America, said the Boeing 777-300ER provides a better customer experience and offers more legroom for passengers. The extended-range aircraft, which can fly up to 7,900 nautical miles (about 14,500 kilometers) before refueling, sports a distinctive paint job: Forty smiling faces of Chinese people adorn the exterior to honor the national aviation industry's role in linking China to the world. Twenty of the people pictured on the fuselage are front-line employees of Air China, each with a personal story that reflects the growth of civil aviation in China. The other faces belong to people selected by the airline and Boeing from a Chinese social media campaign this summer. Users submitted a photo and an inspiring message. "We hope this especially lively airplane will make the connection of bringing a smiling, confident and friendly China to the world," said Feng Run'e, Air China vice-president. "With the airplane flying around the world, we hope more business travelers will experience the superior in-flight comfort offered by Air China's 777-300ER," she said. "Boeing is celebrating its 40th anniversary in China. Over the past four decades, we have witnessed the rapid development of China's aviation industry and we're honored to be part of its success by providing our best products and services," said Ihssane Mounir, Boeing's senior vice-president of sales for Greater China, Japan and South Korea. "We look forward to carrying on this great tradition of growth and development over the next 40 years," he added. Two of the people whose faces were selected for the plane's exterior participated in the ceremony. Wang Yulin, flight attendant and one of Air China's image ambassadors since 2010, said she feels honored to be selected. She joined Air China in 2004 and started to fly the Boeing series one year later - mainly between China and the United States. Rong Kai, who joined Air China in 2008 and works at Ameco, Air China's maintenance, repair and overhaul provider, said he invented Air China's first landing gear kit to be used for Boeing 737NG landing gear overhaul. "It's the first time that we (Air China) worked with aircraft manufacturers to develop our own kit, which meets our needs better," Rong said. The kit is currently used by Ameco. Rong and his team have been collaborating with Boeing and Airbus to develop more new technologies and products. To date, 63 customers around the world have ordered a total of 1,380 Boeing 777 planes, the largest twin-engine jet. Air China has 167 Boeing planes, 55 percent of its fleet. Yang Rui, deputy general manager of Air China North America, said the airline has advocated use of fuel-efficient aircraft such as the 777-300ER, which is also designed to be quieter in flight than other commercial jets. In Air China's configuration, the 777-300ER has eight seats in first class, 41 in business class and 257 in coach. All offer improvements in privacy, comfort and entertainment options, Yang said. The airplane delivered Monday is the tenth of 19 Boeing 777-300ERs that Air China has ordered since 2008. The carrier received its first 777-300ER in the Chinese mainland in July 2011. Air China has been using the planes to expand routes, particularly in Europe. The nine Air China 777-300ERs currently in service have helped boost the carrier's competitiveness domestically and overseas. Cities served include Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Los Angeles, Frankfurt and Paris. Air China's 777-300ERs will gradually replace the Boeing 747-400s, which currently fly between China and North American cities. The airline currently uses 777-300ERs for twice-daily flights between Beijing and Los Angeles.

'No embargo' of rare earths on Japanese firms (By Wang Zhuoqiong) Exports decline due to sluggish economy not islands: Expert - Declining exports of rare earths are due to sluggish global demand and not tension with Tokyo, industry leaders said. No embargo has been placed on Japan over the Diaoyu Islands, Liu Yinan, vice-chairman of the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, said. The drop in exports to Japan reflects a general trend, Liu said, adding that exports of rare earths may experience an overall decline this year. Exports were 9,967 metric tons between January and September, according to the China Customs Statistics Information Center. That means, Liu said, only one-third of China's 2012 quota of 30,996 tons, had been used. Export volume dropped 11.5 percent from a year ago and was valued at $702 million, a sharp fall of 61.5 percent.

Yuan set to be more flexible (By Wang Xiaotian) Renminbi trading band may be broadened this year, say analysts - China might, in the last two months of the year, further broaden the permitted fluctuation limits of the yuan to the daily mid-point set by the central bank, analysts forecast. "We expect such fluctuation limits to be extended from the current 1 percent to 2.5 percent after the United States presidential election, and the 18th National Congress of the Communist Party of China (due to start on Nov 8)," said Lu Zhengwei, chief economist at the Industrial Bank. He said interest rates and banks' reserve requirement ratio are unlikely to be adjusted in November given the current economic situation.

Hong Kong*:  Oct 31 2012 

Beijing failed HK administrations on patriotism, says ex-think tank chief (By Gary Cheung) Think tank chief says Tung, Tsang fell short of central government's expectations on patriotism. The administrations of Tung Chee-hwa and Donald Tsang Yam-kuen never fully responded to Beijing's call to groom "patriotic forces" in Hong Kong, a former top government adviser says. In his new book, Governance and New Regime Building in the Hong Kong SAR since the Handover, Professor Lau Siu-kai writes that there were few Hong Kong officials who fully understood Beijing's policies towards the city and the legislative intent of the Basic Law. "As a result, the Hong Kong government did not fully govern in accordance with Beijing's policy towards Hong Kong," Lau said. "At times, the central government complained in private about the work of the Hong Kong government." Lau says that the central and Hong Kong governments held different views on the key question of "who were friends and foes?" "The central government never trusted the opposition force but the Tsang administration initially attempted to win them over to boost its popularity," he said. Lau, who stepped down in June after a decade as chief of the Central Policy Unit, the government's main think-tank, said the central government wanted to groom "patriotic forces" in Hong Kong but neither the Tung or Tsang administrations fully responded to Beijing's call. "Given the discrepancy in analysing the political situation and political strategy, it was unavoidable that the central and Hong Kong governments faced difficulties co-operating on the political front," Lau writes. He notes that the Hong Kong government had not taken the lead in safeguarding the central government's authority because it feared criticism that it proactively invited Beijing's interference in Hong Kong. In February 2010, the State Council's Hong Kong and Macau Affairs Office issued a statement saying that any "so-called referendum" - a reference to by-elections triggered by the resignations of five pan-democrat lawmakers - would be inconsistent with the city's legal status and a blatant challenge to the Basic Law and the central government's authority. "But the Hong Kong government said only that there was no legal ground for bannning the 'de facto referendum' and did not touch on the central government's solemn position," Lau said. "The central government was visibly dissatisfied with the Hong Kong government on this issue." Lau, who is now an emeritus professor of sociology at Chinese University, said that the Hong Kong government had asked the central government in recent years to come up with measures to improve cross-border economic co-operation. "But from the viewpoint of some mainland officials, these proposals were put forward only from the angle of Hong Kong interests and did not take into account the risks for the country," Lau said.

Regina Ip pledges loyalty to C Y and Carrie Lam in Exco (By Tony Cheung) Former rival says city's government is 'the weakest in history' but that the chief executive can count on her best advice to make it work. Regina Ip in her Wan Chai office. She believes her advice will help the administration to improve its public image. The government's ministerial team is "the weakest in Hong Kong's history" but the Executive Council will be well positioned to help it formulate policies that will win public support, according to new Exco member Regina Ip Lau Suk-yee. Ip, a former chief executive candidate, said that as an Exco member she would work with Chief Executive Leung Chun-ying and advise him on how to be more politically sensitive. Speaking to the South China Morning Post - in her first interview with an English-language newspaper since her appointment to Exco this month - Ip also dismissed concerns of rivalry on the council between herself, Leung and Chief Secretary Carrie Lam Cheng Yuet-ngor, Leung's most senior official. In September, Ip suggested Lam had tried to salvage her declining popularity by breaking down in tears on television and said that Lam's credibility had suffered in the administration that took office on July 1. Despite these remarks, Ip - believed by many analysts to be a likely contender for chief executive in 2017 - said there would not be any rivalry among the three on Exco. "We all have different roles to play. C. Y. plays the role of [chief executive], Mrs Lam, being [chief secretary], is tasked to assist him, and me, being a member of Exco, my constitutional role is to give him sound advice, the best advice that I see fit," said Ip, a lawmaker and chairwoman of the New People's Party. One of the most important issues facing Leung's administration was the lack of experienced civil servants to help with policy matters, she said. "In terms of experience and expertise … [Leung's ministerial team] is the weakest in the history of Hong Kong," Ip said, speaking in English. "There are only a handful of experienced officials who can provide continuity … and it is these experienced [administrative officers], experienced civil servants who perform better than newcomers because they have a known track record." Ip's appointment to Exco on October 17, along with functional constituency lawmaker Jeffrey Lam Kin-fung, took its membership to 31. In addition to the 16 non-official members (who include Ip and Jeffrey Lam), it includes the three senior principal officials (the chief, finance and justice secretaries) and 12 principal officials, or ministers. Ip identified Leung's three key challenges as the public's negative perception of him, a weak ministerial team and problems inherited from his predecessor, Donald Tsang Yam-kuen, such as shortages in housing and land. She believed that while it would take time to deal with the deep-rooted problems, Leung should nevertheless tackle his public image first. "It is a matter of perception that [Leung] seems to be too 'red', or pro-mainland, and actually there is a lot more he can do. [For example] by adjusting his image [and] avoiding doing things like calling on the [central government's] liaison office immediately after [his] election [as chief executive] … he could be more politically sensitive." In February, Ip declared her bid to run for chief executive but dropped out less than two weeks later, after she failed to secure the minimum 150 nominations required to file a bid with the Election Committee, which later chose Leung as chief executive.

Blackstone cashes up for more big mainland deals (By Ray Chan and George Chen) Conditions are right, says chairman of firm on lookout for 'below the trend' property targets. Stephen Schwarzman says Blackstone is not quitting the mainland's property market. Blackstone Group, the world's largest alternative asset manager, is on track to make big-ticket deals in Asia's property market. Stephen Schwarzman, a co-founder and chairman of Blackstone, said during a brief visit to Hong Kong on Friday that his firm would not quit the mainland's property market despite growing concerns about the outlook of the real estate sector. The worries come after years of efforts by Beijing to check rising property prices and speculation. Blackstone, already one of the largest property investors globally, raised a record US$13.3 billion this month for its seventh real estate fund for Asia and aimed to buy assets at "discount for size", said Schwarzman. The fund's mandate was to make deals when acquisition targets were "below the trend", he said. Conditions in Asian markets supported making large purchases, said Schwarzman, citing India, which generated double-digit returns on an unleveraged basis for the firm last year, while Australia also posted meaningful yields. "We look for deals that allow us to add value by making improvements, and changes to an existing project," he said. Blackstone would not buy a building just because "it looks nice". Antony Leung Kam-chung, Blackstone's Greater China head, said he was aware of some regulatory struggles between the various mainland government bodies that had become a factor in slowing approvals for fund-raising and deal-making by international private equity investors. In April, the South China Morning Post reported that the financial community was concerned about two big regulatory agencies that were battling it out behind the scenes for control over the fast-growing private-equity industry. The China Securities Regulatory Commission, the country's top securities watchdog, argued it should oversee private equity, while the National Development and Reform Commission, the top economic planner, contended it should police the industry. More recently, even the tax authority on the mainland has been mulling some new rules about investment returns for the private equity business. Leung, a former financial secretary in the Hong Kong government, said the private-equity industry on the mainland was still in its infancy and private equity investors there faced liquidity issues in the midst of an economic downturn. Leung, who accompanied Schwarzman during his visit to Hong Kong, said valuation levels for private-equity investors on the mainland were now closely related with values on the public market. Property valuations on the mainland had become more attractive "on the back of rising income growth and urbanisation, helping overall affordability", he said.

Nevada struggles with dark side of Macau casinos (By Joseph Menn) Macau junket operators move millions through Las Vegas with scant oversight. Macau is so influential that its favourite game, baccarat, has overtaken blackjack as the most lucrative card game in Las Vegas casinos. Macau, the only place in China where gambling is legal, opened its doors to Western casinos nearly a decade ago. Sands, Wynn and MGM all plunged in, and soon found themselves in close association with junket operators - middlemen that organise trips to the casinos, largely from Hong Kong and the mainland. Collectively, they're responsible for some 70 per cent of the Macau gambling trade. Mainland residents legally can move only US$50,000 per year out of China, but the junkets advance credit well above that level to their clients. They also collect payments due within China's old borders, where casinos can't advertise or use the legal system to recover debts. The US State Department has repeatedly identified Macau as a jurisdiction of "primary concern" for money-laundering, largely because of the junkets. Macau regulators have limited experience with the modern market and have yet to establish "robust oversight of junket operators" or an anti-money-laundering system "that meets international standards," according to a March report by the State Department's Bureau of International Narcotics and Law Enforcement Affairs. Macau requires the junkets to list their directors, but triads have grown adept at disguising their investments, just as the Mafia once did in Las Vegas. "If criminals are employing the best attorneys and accountants, and setting up more elegant ways of hiding ownership, it's possible that Nevada won't be able to find them easily," says Michael Rumbolz, of casino solutions company Global Cash Access. Even as Nevada has declined to crimp US casinos' behaviour in Macau, federal authorities have grown more concerned about the companies bringing cash and techniques from Macau to Las Vegas. Junkets have advanced millions of dollars in credit from Macau to their clients' accounts at Sands and MGM properties in Las Vegas, according to casino officials and ledgers recently exposed in a lawsuit between Sands and the fired head of its Macau operations, Steve Jacobs. As previously reported, one of the beneficiaries of a US$100,000 Sands transfer was Charles Heung Wah-keung, named in a 1992 Senate committee's investigation as an office bearer of the Sun Yee On triad. Other junket affiliates have registered as "independent agents" commissioned to bring high rollers to Las Vegas. In one sign of how important the Asian trade has become, baccarat, long the game of choice in Macau, has displaced its cousin blackjack as the most lucrative Nevada card game. Revenue from baccarat is now growing 10 times faster than any other form of gambling in Vegas. A particular weakness in Nevada's regulatory approach appears to be oversight of the agents. Applicants fill in an 11-page form with their business and legal histories, and casino sponsors pass them on to the state; no full suitability review is required, as would be the case for key employees at casinos. Virtually every time the control board has asked aspiring agents for more data, the applicants have simply withdrawn, suggesting a systemic problem, one state investigator says. Regulators fear that shadowy backers of the agents simply submit new names with cleaner records, he says. Registered agents, including junket representatives, can get credit from the casinos and re-lend to their clients, raising the prospect of loan-sharking. "Once [an agent] has chips, it's hard to have control. He could hand US$50,000 to his friend," says one former Sands executive. Tracking agent histories is not easy, and some with questionable associations have slipped through. At least three people with ties to just one of the many junket companies, publicly traded Hong Kong firm Neptune Group, became agents in Nevada for Sands, Wynn, MGM and Caesars Entertainment, which owns baccarat hub Caesars Palace, according to public records. A key former backer of Neptune is Cheung Chi-tai, named in the same 1992 Senate report as a top lieutenant of the Wo Hop To triad. In a more recent Hong Kong criminal trial, an informant testified that Cheung was a triad leader, and in 2008 ordered him to murder a card dealer suspected of cheating in a Sands VIP room in Macau where Cheung had an ownership interest. Lower-level triad members were convicted in the case, while Cheung was not charged. Cheung helped underwrite Neptune's purchase of a stake in junket operator Hou Wan in 2007, and for a time owned 8 per cent of Neptune. Though Cheung disposed of his stake, he has maintained other connections to Neptune, corporate records in Hong Kong and Macau show. For example, his 50-50 partner in a company begun in 2003, Lei In Peng, also owns a firm that has more than 18 per cent of Neptune's stock. Lei couldn't be reached for comment. Neptune's chairman, Lin Cheuk Fung, was an independent agent from 2005 to 2009, signing up to bring gamblers to Wynn and MGM casinos in Las Vegas. Neptune didn't respond to requests for comment and Lin couldn't be reached. Wynn acknowledged using Lin as an agent but wouldn't comment further. MGM spokesman Alan Feldman says only that his company had "a comprehensive and robust compliance programme that involves several former regulators and law enforcement officials who review all of our junket operators". Though Neptune's links are complex, they are easier to untangle than most junket operators because the company is publicly traded. Investigators in both Las Vegas and Macau say they simply don't know who stands behind many of the other junkets. Overall, says casino consultant and author Jim Kilby, the junket issue, "may be too big for gaming regulations".

Henderson Land has too many square feet (By Khor Un Hun) From 2008 to 2010 Henderson Land expanded its vast holdings of real estate in the mainland, Hong Kong and the New Territories. Hong Kong property developer Henderson Land Development has a peculiar problem: too much land. The company is the biggest agricultural land owner in the New Territories and owns millions of square feet of floor area in Hong Kong and the mainland. Between 2008 and 2010, Henderson Land, which was bullish on the mainland property market, aggressively expanded its land bank there at what it considered to be cheap prices. It also bought a lot farmland in the New Territories in the expectation the area would be developed into towns. Its property inventories rose by more than 60 per cent in that period. Property sales failed to keep pace, dropping from HK$11.1 billion in financial year 2008 to a low of HK$3.6 billion in 2010. The company as a result has a lot of property inventories on its books. Roughly speaking, it would take Henderson Land eight years to use all its property inventories at the current rate it is selling developments. By comparison, Cheung Kong (Holdings) and Sun Hung Kai Properties (SHKP) would use all their land in more than three years, and New World Development would take 4½ years. One might think a developer could never have too much property in Hong Kong. But the market discounts Henderson Land precisely because of its property excess. Let's break this down. Henderson Land's chairman Lee Shau-kee constantly reminds the market that the firm trades at a steep discount to its book value. On the surface, Henderson Land's price-to-book ratio of around 0.7 times is in line with conglomerates with extensive property interests such as Cheung Kong, SHKP and New World Development, which are trading between 0.68 and 0.83, according to Bloomberg. To recap, property companies are commonly valued using the price-to-book ratio, a comparison of the firm's equity value with its "book value", or the theoretical value of the firm if it goes into liquidation today. (See last week's column: "Cheap at twice the price".) However, Henderson Land's price-to-book ratio is inflated by its huge 40 per cent stake in Hong Kong and China Gas, which accounts for more than half of its market value. The latter, which supplies gas in Hong Kong and various parts of the mainland, has a market capitalisation of more than HK$170 billion and trades at more than four times its book value. The company also owns stakes in the listed firms Henderson Investment, Hong Kong Ferry and Miramar Hotels, which together with the investment in Hong Kong and China Gas, are worth a combined HK$72.6 billion. Stripping out these assets, Henderson's property development business on its own is priced by the market at about 0.4 times book value, and about 5.2 times earnings. One could perform a similar analysis for the company's fellow property conglomerates such as Cheung Kong, SHKP and New World Development by stripping out their non-property assets (Hutchison Whampoa and CK Life Sciences for Cheung Kong, SmarTone Telecommunications for SHKP and New World Department Store for New World Development), and see how Henderson stacks up against them (see table). This offers a like-for-like comparison of the big developers' valuations, as we are excluding non-property businesses that might muddy the picture. Based on this comparison, Henderson Land registers the second highest price/earnings ratio among its peers. So why does this company look so cheap based on the price-to-book ratio? Land is to property developers what inventory is to manufacturers. Too little of it and markets worry where profits are going to come from. For instance, Sino Land recently allayed investor concerns over its dwindling land bank after it bought two big pieces of land in Long Ping MTR West Rail Station and Tseung Kwan O Station jointly with K Wah International. However, having too much land lying around is not necessarily a good thing either, as it involves significant opportunity costs. Developers only make more money when they are developing and selling properties. Idle land ties up capital - forgoing the opportunity to invest that money elsewhere - and incurs financing costs. Based on the price/earnings ratios, it seems that the markets are pricing Henderson Land in line with its peers. But its return on equity, depressed by non-income producing land bank, is the lowest among its peers. Because it takes Henderson Land longer than its peers to realise profits on its property inventories, they are worth less - a dollar made tomorrow is worth less today one earned today. Henderson's land excess is risky - property prices could drop - and there are concerns over its ability to ramp up property sales if the real estate market goes into decline. Finally, in volatile markets, investors might not like taking a long view on Henderson Land's payoff potential. The land bank may turn out to be a shrewd investment; it may not. All things considered it may be best to go with the developer that it rapidly turning over its property inventory and fully utilising today's sky-high real estate prices.

Bauhinia think tank may lower profile (By Joshua But and Gary Cheung) Departure of Anthony Wu may be a sign that the think tank's influence is on the wane. Anthony Wu has ended his five-year chairmanship of the Bauhinia Foundation Research Centre. A major supporter of chief-executive contender Henry Tang Ying-yen has quietly stepped down as chairman of a once-key think tank that reportedly intends to keep a lower profile under the new administration. Anthony Wu Ting-yuk ended his five-year chairmanship of the Bauhinia Foundation Research Centre on September 17, but the news was announced only on the centre's website. Co-founded by Wu and Norman Chan Tak-lam, who is now the Monetary Authority chief executive, the centre was seen as Hong Kong's flagship think tank during the administration of chief executive Donald Tsang Yam-kuen. Tsang took office in 2005 and the centre was set up the following year. But it has lain almost dormant in the months following Leung Chun-ying's election. A person familiar with the think tank's management said it had purposefully taken a low profile since the leadership change. Another insider said its future was unclear. Wu was succeeded by director Dr Donald Li Kwok-tung and will remain one of the centre's two directors. Chinese University political scientist Ivan Choy Chi-keung said the fortunes of think tanks in the city were closely related to the rise and fall of the political power they belonged to. "The fading prominence [of the research centre] just mirrors the city's political landscape," he said. The South China Morning Post understands that the centre has scrapped its quarterly Hong Kong Consumer Confidence Survey. The survey, conducted by Lingnan University since 2009, sought to predict consumer confidence through economic expectations and behaviour. Preparation for this year's Leadership Conference, which the centre has organised annually since 2009, is also on hold. Wu acknowledged that the centre had conducted fewer studies in the past year compared with the initial years after its establishment. "But it has nothing to do with the political situation … We face no funding problems," he said. He said the centre stopped commissioning the confidence survey from the third quarter of this year, as it was drawing less attention than before. "The survey doesn't serve our original purpose as a think tank any more," he said. "We are now focusing on long-term policy studies, on topics such as land supply and housing." He said he and co-founder Chan agreed that the chairman's tenure should not exceed five years. "It's time to pass the torch to the younger generation," Wu said. A spokeswoman for the centre said the new management was putting together fresh ideas and directions, and would continue to research local policies.

Banks support Hang Seng as local developers hammered (By Reuters in Hong Kong) Hong Kong shares slipped on Monday as local developers tumbled on fears that new measures to cool soaring property prices will sap demand, but broader losses were limited by strong earnings by Chinese banks. The Hang Seng Index ended down 0.2 per cent at 21,511.1, the lowest close since October 17. The China Enterprises Index of the top Chinese listings in Hong Kong finished up 0.9 per cent at 10,546.2. In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings shed 0.5 per cent, its fifth-straight loss. The Shanghai Composite Index lost 0.4 per cent. They each closed at their lowest since September 26. Hong Kong real estate stocks reeled after the city’s government imposed a new 15 per cent tax on foreign and corporate real estate buyers and stiffened the resale stamp duty fees in the hope of calming property prices, which have surpassed historical highs hit in 1997. New World Development, which had soared more than 100 per cent year to date, dived 6.4 per cent. Agricultural Bank of China gained 3.1 per cent and China Construction Bank rose 0.9 per cent after both “Big Four” Chinese banks posted third-quarter earnings over the weekend that topped expectations.

Special meeting set for funding of old age allowance (By Lai Ying-kit) The chairman of the legislature’s Finance Committee invoked special powers on Monday to speed up scrutiny of the government’s proposed old age allowance. Lawmakers voted to schedule a special meeting, for Tuesday evening, when the Legislative Council committee will discuss the funding proposal. Committee chairman Tommy Cheung Yu-yan used his discretion to waive the normal five-day notice period required for the government to table the funding proposal. Cheung said that if the proposal were not put to a vote – and approved – by Wednesday, about 400,000 low-income elderly people might lose out on the new HK$2,200-per-month subsidy. But Cheung said it remained unclear whether legislators would complete their scrutiny, and be ready to put the funding proposal to a vote, after Tuesday’s special meetings. Also on Monday, Legco’s welfare panel spent the afternoon discussing the details of the allowance scheme, to which 57 concern groups sent representatives. The Finance Committee was originally scheduled to vote on the funding last Friday, but members delayed the ballot due to concerns over a means-test for applicants. The pan-democrats want the government to waive the means test for those age 70 and above, and the pro-establishment Democratic Alliance for the Betterment and Progress of Hong Kong wants the asset cap, currently set at HK$186,000, to be raised.

Hong Kong developers slump after new property curbs (By Reuters in Hong Kong) Number of second-hand buyers drops 40 per cent over the weekend to year-low. Hong Kong shares edged lower on Monday, as local developers tumbled on fears that new measures to cool soaring property prices will sap demand, but broader losses were limited by earnings-driven strength in Chinese banks. The Hang Seng Index ended down 0.2 per cent at 21,511.1 points, the lowest close since October 17. The China Enterprises Index of the top Chinese listings in Hong Kong outperformed, rose 0.9 per cent. On the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings slipped 0.5 per cent, while the Shanghai Composite Index was down 0.4 per cent. Both indices closed at their lowest since late September. Shanghai volume was the lowest in about one week. Hong Kong turnover sank to the lowest in almost two weeks, with the Hong Kong property and Chinese banking sectors seeing the bulk of the day’s trading. “There’s some rotation from Hong Kong developers into the Chinese banking sector today after CCB and AgBank posted pretty good results over the weekend,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales. Late on Friday, the Hong Kong government imposed a 15 per cent tax on foreign and corporate real estate buyers and stiffened the resale stamp duty fees in the hope of calming the city’s property prices, which have surpassed historical highs hit in 1997. “I think many were quite surprised by the severity of the 15 per cent special duty, so they took profits on the sector, which has done very well this year so far,” Wong added. Shares of New World Development, which before Monday were up more than 100 per cent this year, tumbled 6.4 per cent to their lowest close since September 28. Monday’s fall was the stock’s biggest daily loss in almost seven months. Both Henderson Land and Sino Land also slumped 6.4 per cent. Sun Hung Kai Properties lost 5.1 per cent and Cheung Kong Holdings shed 4.7 per cent. In a report on Monday, Citi analysts said any dip in the sector represented “an enhanced buying opportunity”, believing that stabilising home prices will remove policy risks and asset bubble concerns. In Hong Kong, China Construction Bank (CCB)rose 1.2 per cent and Agricultural Bank of China (AgBank) jumped 3.1 per cent after posting positive third-quarter corporate earnings over the weekend. Analysts had expected the profitability of banks to be hit by two central bank interest rate cuts since June. But the earnings had been supported by China’s landmark decision to let lenders set their own loan rates. Still, CCB’s 12 per cent rise in third-quarter net profit growth lagged AgBank’s 16 per cent gain and Bank of China’s (BOC) 17 per cent increase. BOC rose 1 per cent in Hong Kong on Monday, while Industrial and Commercial Bank of China (ICBC), which on Tuesday will be the last “Big Four” Chinese bank to post third-quarter earnings, inched up 0.6 per cent. China Petroleum and Chemical Corp (Sinopec) climbed 2.9 per cent in Hong Kong and 1.1 per cent in Shanghai after posting a smaller-than-expected drop in third-quarter earnings over the weekend. A positive China October purchasing managers’ index (PMI) reading, expected on Wednesday, could further suggest a stabilising of the Chinese economy and buoy interest in growth-sensitive sectors, particularly those with encouraging third-quarter earnings. Data over the weekend showed China’s industrial profits rose 7.8 per cent in September from a year earlier to 464.3 billion yuan ($74 billion), the National Bureau of Statistics said on Saturday, compared with a 6.2 per cent drop in August.

 China*:  Oct 31 2012

China watches US election avidly, but without envy (By Agence France-Presse in Beijing) A clay figurine of US President Obama is found among ones of Asian celebrities at a stall in Jilin, northeastern China's Jilin province. The world’s two biggest economies choose their next leaders in early November, an accident of timing that lays bare the vivid contrast between China’s opaque communist state and America’s riotous democracy. The rhythm of the presidential election in the United States has been set by three televised debates watched by tens of millions of voters, with campaigning carried out online as well as at boisterous rallies that draw thousands. On the other side of the Pacific, the power games are under way behind closed doors, as Communist Party leaders jostle for positions ahead of the regime’s once-in-a-decade leadership change starting on November 8 at a special congress. The victor of the November 6 contest between Democratic President Barack Obama and Republican challenger Mitt Romney is too close to call, but it is almost certain the new Chinese president will be Xi Jinping, currently vice-president in the one-party state. At a university campus in Beijing, Chinese students from diverse backgrounds said they were following closely the change in Washington, which was more lively and entertaining than the transition at home. State television relays events on the US campaign trail, while websites such as ifeng provided live streaming of the debates and social media networks buzz with discussion of the process and perceived China-bashing by the candidates. But many of the students’ comments made clear they had no desire to import Western-style democracy to China immediately. “Copying in a mechanical way American democracy would cause a lot of problems in China, even if we need to go that way in order to make progress here,” said 24-year-old Zheng Kailun, a philosophy student. Others admired how the US candidates faced off in the televised debates and even poked fun at each other at a gala dinner last week in New York. “Obama is a great performer in front of the public. He’s got a magnetic personality,” said Tu Zongchi, a student of international relations. But he also said he thought the American electoral system was “not applicable for China at the moment”. One issue with particular resonance in both countries is the personal finances of the candidates for high office. Obama has sought to highlight Romney’s enormous personal wealth and investments in China. The Republican released some of his tax returns – something unimaginable in China where leaders’ lives are meant to stay private. Last week, a New York Times investigation into investments said to total US$2.7 billion by Chinese Premier Wen Jiabao’s family was quickly blacked out by official censors. Zhang Shuo, a student of mechanical engineering who says he is avidly following the US election, said China’s system “largely meets our national needs”. “Perhaps in 30 to 50 years we will also reach the same level of democracy [as the US]. It’s an evolution,” he said. The students’ views that political reform will evolve slowly chime with most analysts’ and are in sharp relief to the clamour for democracy that filled the air of Beijing in mid-1989. Then, hundreds if not thousands of students were gunned down around Tiananmen Square after weeks of protests. Now, a new generation has come of age seeing the fruits of rapid economic growth. China’s leadership craves stability above all as a means to continue the rise, which has made the country a global diplomatic force and helped finance a military upgrade enabling Beijing to project its power. The growing might of the Middle Kingdom is a source of friction in the Pacific, where China’s ambitions clash with Washington’s desire to retain its role as the region’s pre-eminent force. On several occasions China has stressed its desire for stable US ties, and warned that it must not be made a scapegoat for America’s economic problems, as both candidates assail the country on the campaign trail. A victory for Romney could have an immediate impact on relations with the Republican candidate vowing to label China a currency manipulator on his first day in the White House. The move, avoided by the administrations of both Obama and former president George W Bush, would enable the United States to impose harsh retaliatory penalties on Chinese goods and has led some analysts to warn of a trade war. Chinese media have urged readers to take such declarations with a pinch of salt. “Willing or not, Democratic or Republican, the next US president shall have to tone down his get-tough-on-China rhetoric made along the campaign trail,” state news agency Xinhua said last week.

Christie's auction preview held in Beijing - The auction preview displays more than 300 items including Chinese paintings, Chinese porcelains, watches and so on.

Hotels buck weak global economy (By Hu Yuanyuan) Average daily room rate still growing across major locations - The average daily room rate - an index to gauge the prosperity of hotels - in Beijing, Hong Kong and Macao continued to grow despite the weak global economy, international real estate service provider Knight Frank said in its latest report. The Oriental Plaza in Wangfujing, in downtown Beijing. Robust economic development and growing numbers of tourists in China make it an attractive hotel market in need of more rooms. Hong Kong experienced the largest year-on-year growth among the five cities in the first half of 2012, with ADR gaining 12 percent, followed by Beijing with a growth of 11.4 percent, according to the report. "We believe China's tourism market will continue to grow rapidly in the next few years despite the gloomy global economic outlook," said Thomas Lam, head of Research at Knight Frank Greater China. Around 425 million people visited tourist sites around the country during the Golden Week holiday starting on Sept 30, up 40.9 percent over the same period last year. Revenue from tourism hit 210.5 billion yuan ($33 billion), an increase of 44.4 percent year-on-year, figures from the National Tourism Administration showed. Robust economic development and growing numbers of tourists in China make it an attractive hotel market in need of more hotel rooms. International hotel operators have shown strong confidence in China's market and are pursuing aggressive expansion plans. For example, Accor's upmarket brand Pullman is planning to open 25 hotels in the country by 2015, on top of its 14 existing hotels. Club Mediterranee plans to open five new resorts on the mainland by 2015, which will make China its second largest market in the world. Starwood Hotels & Resorts has opened 40 hotels in China over the last five years, with an additional 90 in the works. InterContinental, which now operates 162 hotels in China, has an additional 143 under development. "Sentiment in the Greater China hotel market is set to remain strong, with demand for hotel rooms being driven up by the increasing numbers of both local and international visitors," said Lam. "In our judgment, the hotel market in all the five major cities - Beijing, Shanghai, Guangzhou, Hong Kong and Macao - will benefit from increasing demand from tourists and business travelers, including those coming from the MICE (meetings, incentives, conferences and exhibitions) and corporate segments," Lam added. In the first half of 2012, hotel operators continued to expand in the Greater China region. Among the five major cities covered by this report, Guangzhou was the most active market in the first half of 2012, with more than 300 rooms added in the city. The bi-annual Canton Fair is the largest trade fair in China and attracts more than 400,000 visitors every year. Given its position as a major Asian business and exhibition center, Guangzhou should continue to generate a steady stream of business visitors. Shanghai's hotel market, in particular, is expected to benefit from the completion of major tourism projects, such as Shanghai Disneyland in 2015. Meanwhile, Shanghai is to be developed into a regional transportation hub for the Yangtze River Delta region with infrastructure projects in the pipeline such as Hongqiao Transportation Interchange linking the Huning Intercity High-Speed Railway with air and municipal public transport lines. A number of large convention and exhibition centers in Pudong, including Shanghai New International Expo Centre and Pudong Expo and Shanghai International Convention Center, will be holding many major international exhibitions in the coming years. The hotel markets in Hong Kong and Beijing, according to the Knight Frank report, are expected to grow steadily. Although already well developed, they offer unique competitive advantages that cannot be easily substituted. Also, both cities have a number of tourism projects in the pipeline that should further boost hotel demand. Beijing would benefit from the expansion of the MICE industry in the country and the central government's plans to develop the tourism industry into one of the pillars of the Chinese economy. New hotel supply is expected to be limited in Beijing in 2012 and the ADR and occupancy rate should increase steadily and rebound to pre-2008 levels, according to the report. Demand for hotel rooms in Hong Kong is expected to grow further, with a number of tourism-related projects in the pipeline, such as the expansion of Ocean Park and Hong Kong Disneyland as well as a new cruise terminal in Kai Tak.

China unveils huge radio telescope in Shanghai (China Daily) A 70-meter-high radio telescope, the fourth largest in the world, is unveiled at Shanghai Astronomical Observatory on Oct 28, 2012. The radio telescope, which will be used for space observation, differs from optical ones in that they use radio antennae to track and collect data from satellites and space probes.

Hong Kong*:  Oct 30 2012 

READY TO SETTLE (The Standard Hong Kong) Two siblings of the Chui family are trying to settle their disputes over the business of Fook Lam Moon - also known as the tycoons' canteen - just as a legal battle begins. A source said 95 percent of their differences have been resolved. Shareholder and director Chui Pui-kun, fifth son of the restaurant's founder Chui Fuk-chuen, and his younger brother, the seventh son Chui Wai-kwan, had earlier filed lawsuits to buy out the other's shares in the Wan Chai restaurant. The case will come before judge Anthony To Kwai-fung in the High Court this morning. The source said the siblings indicated their willingness to settle through negotiations after the death this month of another restaurant owner Kinsen Kam Kwan-sing, who had been in a legal fight with younger brother Ronald Kam Kwan-lai over the ownership of the Yung Kee Restaurant. Representatives of the Chui brothers have held several meetings recently in a bid to avoid taking the case to court, the source told Sing Tao Daily, sister newspaper of The Standard. The source said one of the possible options is for them to run the Fook Lam Moo restaurants in Wan Chai and Tsim Sha Tsui separately. In 2010, Chui Pui-kun filed two summonses against Chui Wai-kwan, requiring him to surrender copies of all minutes of the directors' meetings. The summonses followed a claim for damages lodged by Chui Pui-kun in 2009 against Chui Wai- kwan for defamation. Chui accused his younger brother of circulating libelous letters among shareholders and directors. Fook Lam Moon earned a reputation for serving fine Chinese cuisine, attracting celebrities and wealthy business people. Tycoons including Joseph Lau Luen-hung, Lee Shau-kee and Li Ka-shing are frequent patrons. Chui Fook-chuen, born in 1908, was head chef for the Hotung family during his teens. His catering business, Fook Kee, won success with catering services for privileged customers who threw lavish dinner parties at home. The name was changed to Fook Lam Moon in 1953. Chui Wai-kwan followed his father to become an apprentice at the age of 14 while Chui Pui-kun took care of the accounting side of the business. The first Fook Lam Moon restaurant was opened in 1972 in Wan Chai. It now has branches in Japan, Shenzhen and Shanghai.

MTR boss pleads over fares (By Kelly Ip) MTR Corp chairman Raymond Ch'ien Kuo-fung wants the public to understand that the railway operator needs a stable financial environment in order to provide an efficient service. Ch'ien also warned against making frequent changes to the fare adjustment mechanism, saying any system needs to be around for several years. He said the government is the biggest MTRC shareholder and the company will seek to generate a reasonable return for the public. The fare adjustment mechanism must not be too complicated, and the formula needs to find the correct balance between interested parties. Ch'ien said the company seeks the opinions of experts and the public when reviewing fares. About 20 members of a concern group staged a protest yesterday at Central MTR station during a walking race, accusing the government of not paying attention to the needs of the traveling public. Five members of the League of Social Democrats chanted slogans and presented a petition to Secretary for Transport and Housing Anthony Cheung Bing-leung. The Concern Public Transportation Affairs Alliance criticized the MTRC for raising fares while making billions of dollars in profit. Members wore vampire outfits to suggest the railway is sucking the public dry. "The government's consultation documents lacks concrete direction and makes it difficult for the public to express views," alliance spokesman Kong Kin-shing said.

Flat buyers back off as tough new property tax hits home in Hong Kong (By Johnny Tam and Tony Cheung) A surprise property tax hit home as fast as it came - within 24 hours of the introduction of a higher stamp duty, people were shunning flat sales across the city. Ministers rallied behind the tax and other new measures. They expressed confidence they would cool Hong Kong's super-hot property market; if not, they had plenty more initiatives "up their sleeves", one said. The measures came into effect at midnight on Friday, just hours after Financial Secretary John Tsang Chun-wah had announced them. He imposed a 15 per cent stamp duty on home purchases by non-permanent residents and companies, extended the special stamp duty on quick resales and raised the rates for the duty. In less than six hours, buyers snapped up 100 flats at a Yuen Long development to beat the new stamp duty on buyers. Secretary for Development Paul Chan Mo-po said on radio that the government needed to act swiftly. He dismissed concerns the measures would affect the city's competitiveness, saying they were aimed at tackling a fast inflow of hot money. "We have to react to the market. For things coming fast and fiercely, our measures have to be [launched] faster, more fiercely and accurately," Chan said. The government raised by 5 percentage points the rate at which it levies the special stamp duty on sellers introduced two years ago to curb speculation, and extended its effect on resales from two to three years. The rates now range from 10 to 20 per cent. On another radio show, Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said that without new initiatives, the property bubble could burst, dealing a serious blow to livelihoods. Chan expects prices to drop by10 to 20 per cent.

Old age welfare 'all about dignity' says ex-sailor (By Jennifer Ngo) Retired sailor Chiu See-poon's savings ran out long ago, making welfare his only option. Ideas on allowances and pensions for the elderly have been tossed around and taken apart by politicians and academics. But for Chiu See-poon, a former sailor who worked for 54 years before retiring at 74, it is really all about helping the elderly live a decent, dignified life. Now 86, Chiu has a lot to say about old age benefits in Hong Kong. He thinks a universal pension is the answer, but says the HK$2,200 monthly allowance now being debated can be only a short-term measure. And he is adamant applicants should not be means-tested. "[The universal pension is] not for us - we will probably be gone by then - but it is for the future of Hong Kong," he says. "Means tests are degrading and will affect [the elderly's] relationships with their families." Chiu himself has been on welfare about nine years now. Despite his years of labour and a move into public housing soon after his retirement, his savings did not last long. Opting to be on the dole strips many old people of their dignity, he says. Chiu started off with the British Navy in 1946 and switched to commercial ships after 10 years. From the 1950s to late 80s, he travelled the world. "I loved South America. They loved the Chinese!" he recalls. "If I could, I'd like to visit again someday." He retired as a sailor in 1988 and moved on to the Mariners' Club in Tsim Sha Tsui until his final retirement in 2000. "I loved working, earning my own keep and spending my own money. Looking back, of course, I wished I'd saved more, but back then I was never taught how. "It was really hard when my savings dried up and I had to apply for welfare." Many elderly people are in the same situation. Housewives who have never worked or manual labourers do not save much, he says. If they have no family, they are left to the mercy of society. A retired Chiu, not content with a life of chess and mahjong, does voluntary work with the Catholic charity Caritas. He also speaks up for elderly rights at the Council of Social Service. He recalls a certain Uncle Chan, whom he was assigned to help 12 years ago. "He had terminal cancer and was so skinny. The room was very dark and I remember thinking, 'I should just back out.' But he saw me standing at the door, so I had to go in." He died three months later, but not before Chiu helped reconnect him with his family. "His sister phoned to thank me. She said in his last days, he had people around him." For Chiu, helping people became his pride and motivation. He hopes people can recognise the elderly have much to give. "All these policies, whether it's welfare or this new elderly allowance, it's not just money. None of us feel good taking welfare or expecting to eat without paying. "The government says 400,000 elderly will benefit from [the allowance], but I think less than half would apply if there's a means test," Chiu said.

Asian Americans could be x factor in US swing states (Xinhua) Asian Americans could determine the electoral outcome in US swing states with large Asian populations, as US President Barack Obama and Republican challenger Mitt Romney are neck-and-neck in the race, experts said. In undecided states with rapidly growing Asian-American populations such as Nevada and Virginia, Asian Americans could provide the push that puts either candidate over the finish line amid a neck-in-neck race, said Mee Moua, president of the Asian American Justice Center and former Minnesota state senator, in an interview with Xinhua. Contrary to the often-held belief that Asian Americans are solidly in the corner of Democrats, Moua noted a 31 to 34 percent independent block within the Asian American community that is neither Democrat nor Republican. "People should not write this community off as already... bought by the Democratic Party," she said last month at a panel discussion at the Woodrow Wilson Center. Indeed, while Obama in the last election took 62 percent of the Asian American vote, the recession has had a devastating impact on small businesses and disproportionately impacted Asian Americans. As such, the president is not faring as well with Asian voters as he did in 2008, said Henry Olsen, director of the National Research Initiative at the American Enterprise Institute, in a panel discussion at that think tank Thursday. This comes amid a tightening race in which Romney on Friday tied Obama in Wisconsin after lagging behind by two points a week earlier, according to a Rasmussen poll. Obama has fallen slightly behind Romney in Florida, is locked neck-and-neck with Romney in Virginia and remains ahead in Ohio. A rapidly growing minority - There are nearly 18 million Asian Americans in the US, and the country's most rapidly growing minority has expanded by 46 percent over the last decade. In 2010 the group comprised 5 percent of the country's total population in 145 congressional districts and more than 600 cities. Most importantly for the upcoming presidential elections, 600,000 new Asian American voters entered the electorate in 2008, with a similar number of voters expected in November, according to the 2012 National Survey of Asian Americans and Pacific Islanders. The Asian population has doubled over the last decade in hotly contested Virginia, growing to nearly 14 percent, according to US census figures. In Fairfax county, 30-minute drive from the nation's capital, Asians comprise nearly 18 percent. Still, the group has one of the lowest rates of voter registration, and even those who vote tend not to do so in the same percentage as other groups. A recent study by APIAVote in association with Lake Research Partners found that both Democrats and Republicans have largely ignored this group of voters. Only 23 percent of Asian Americans say they have been contacted by the Democratic Party in the past two years and 17 percent by the Republican Party. But officials from the Obama campaign said they are fighting for the Asian-American vote."This campaign is not taking them for granted. We have a very active Asian American outreach program," said Cabinet Secretary and co-chair of the White House Initiative on Asian Americans and Pacific Islanders Chris Lu, in an interview with Xinhua. "Even groups that trend your way, you never want to take any of them for granted," he said. Romney has been quoted in US media as saying that he would not cede an inch to the Obama campaign, referring to the Asian American vote. Immigration reform - Of major importance to Asians living in the US is immigration reform, as many are unable to remain in the country after completing a university degree here because of difficulties obtaining work visas. The Obama administration has promised to overhaul the nation's broken immigration system but has been criticized for dragging its feet on the issue. Lu said the US needs to do more to encourage foreign students to start businesses here, but added that the visa issue remains a problem. When asked what specific steps the administration would take to rectify the situation, Lu said those would come with comprehensive immigration reform. He added that there are a number of proposals on the table, but did not give any specifics.

 China*:  Oct 30 2012

Industrial profits see first rise in six months (By Bloomberg in Beijing) Fourth quarter rebound will likely extend to next year amid signs growth is picking up again. Mainland industrial companies' profits rose last month for the first time in six months, adding to signs growth is picking up after a seven-quarter slowdown. Net income rose 7.8 per cent from a year earlier to 464.3 billion yuan (HK$572.3 billion), the National Bureau of Statistics said yesterday in Beijing. That compared with a 6.2 per cent decline in August, the year's largest drop. The report followed data showing that industrial production and retail sales had accelerated last month and a manufacturing gauge had risen this month. Premier Wen Jiabao said the economy would keep showing "positive changes", reported the official Xinhua News Agency last week. "As upstream commodity prices are falling, Chinese corporate profits have room to rise," said Wang Tao, chief China economist at UBS in Hong Kong. Industrial companies' profits in the first nine months of the year declined 1.8 per cent to 3.5 trillion yuan, according to yesterday's statement. That compares with a 3.1 per cent drop in the first eight months and a 27 per cent gain in the same period last year. Revenue in the first nine months increased 10.2 per cent from a year earlier to 65.7 trillion yuan, today's statistics bureau report showed. Sales rose 29.6 per cent in last year's January-September period. The economy would probably rebound in the fourth quarter, Jia Kang , a Ministry of Finance researcher, said at a conference in Beijing yesterday. The nation will achieve its full-year growth target of 7.5 per cent and "the rebound in the fourth quarter is likely to extend into next year," he said. "For short-term growth prospects, there will be no big problem," said Jia. "China's pro-growth policies will continue to have effect." The budget deficit might also increase a little next year, "but there will be no significant increase", Jia said. And while more local government bonds might be issued next year, "overall local government debt risks are under control", he said. Preventing any further slowdown is a chief challenge for the ruling Communist Party as it begins its once-in-a-decade leadership transition with a congress set to start on November 8.

Miss Chinese Cosmos crowned - A total of twelve contestants participated in the finale. Zhang Ziqi from Australia Region claimed the crown.

Construction work started Saturday on a major high-speed railway in China's western hinterland to promote local economic cooperation and development. The 643-km-long railway line for passenger transport links Xi'an, capital of northwest China's Shaanxi Province to Chengdu, capital of the southwestern province of Sichuan. The project will be completed in five years with an investment of more than 40 billion yuan (about 6.35 billion U.S. dollars). The travel time between the two cities will be shortened to three hours from 12 hours currently, after the new railway is put into operation. The line will have 127 km of tunnels to pass through the Qinling Mountains. China aims to basically complete the construction of a high-speed railway network with a total operating length of more than 40,000 km by the end of 2015.

China's soybean imports are likely to touch a record high of 57.5 million tonnes in 2012, up 9.3 percent year on year, due to the country's booming demand and shrinking domestic output. China's soybean growing area fell 13.8 percent from the previous year to 5.79 million hectares in 2012, marking five consecutive years of decline, according to data from the Ministry of Agriculture. The ministry forecast that yields will likely decrease 5.3 percent year on year to 1,693.5. kilos per hectare because of a summer drought, causing the country's total soybean output to a three-year low of 9.8 million tonnes. Falling domestic output suggested that China is becoming more dependent on the global market. According to the latest report from the U.S. Department of Agriculture, China's soybean imports will rise to nearly 61 million tonnes next year, up 3 million tonnes from 2012. "Brisk demand has pushed the country's soybean imports steadily up in recent years," said Xu Liang, an analyst at the Shanghai East Asia Futures. Margins at Chinese oilseed crushers have been eroded due to rising import prices of soybean. But analysts said prices may fall in the future as South American soybeans will be harvested and come to market soon.

Hong Kong*:  Oct 29 2012 

Rita Fans rejects talk of campaign against 'one country, two systems' (By Thomas Chan) Legco ex-president denies there is any campaign against ‘one country, two systems’. Veteran Beijing loyalist Rita Fan Hsu Lai-tai has dismissed a suggestion that remarks by ex-justice minister Elsie Leung Oi-sie and former mainland official Chen Zuoer were an attempt to undermine the "one country, two systems" formula. Fan, a member of the National People's Congress Standing Committee, said the two had the right to air their personal opinions. Chen, former deputy director of the Hong Kong and Macau Affairs Office, said on Wednesday "the rise of a pro-independence force is spreading like a virus". Fan said: "As a former mainland official, he must be saddened by Hongkongers waving the Union Jack in protests. I would like to ask [those youngsters] if they know what messages will be sent to others when they take out the flag?" She also addressed Leung's claim the legal profession in the city, including judges, lacked an understanding of the relationship between Hong Kong and Beijing. Leung said this had given rise to mistakes in top court rulings and, in her view, superseded the central government's power. "I think people have overreacted to her words and given them too much weight," Fan said. "[The remarks], in fact, can't affect judicial independence." Fan, a former president of the Legislative Council who will seek re-election to the NPC Standing Committee next year, called the "one country, two systems" formula deep-rooted. "There is absolutely no one who means to destroy it." But she said any system was open to challenge. On the same day Chen spoke out, retiring judge Mr Justice Kemal Bokhary issued a veiled attack on forces he suggested wanted to deprive Hong Kong of its independent judiciary, saying clouds heralding a "storm of unprecedented ferocity" were gathering over the rule of law. Leung's comments also prompted a strong reaction from the Law Society and the Bar Association in defence of Hong Kong's independent judiciary. Meanwhile, CCTV reported the PLA's Hong Kong Garrison recently conducted its largest ever military drill in the New Territories, prompting political analysts to describe it as an attempt to scare off pro-independence forces in the city. "No matter what intentions they have, in the public's eyes, the drill was echoing Chen's remarks," said Hong Kong-based political commentator Johnny Lau Yui-siu. "It is harmful to the 'one country, two systems' principle and makes people think the principle has disappeared." Lau said officials, such as Chen, who applied stereotypes to Hongkongers would intensify conflict with the mainland. Social activists, meanwhile, staged a protest outside the government headquarters at Admiralty yesterday against what they said was a deterioration in areas such as freedom of press and assembly.

Buyers rush to beat new duty on property deals (By Joyce Ng, Amy Nip and Joshua But) Investors snap up 100 new flats in Yuen Long before 15pc duty on non-local and corporate buyers kicks in at midnight to cool market. Buyers snapped up 100 flats at a new development last night as sales were brought forward to beat the introduction at midnight of government measures announced yesterday to cool the property market. At 6pm Financial Secretary John Tsang Chun-wah said he was taking "extraordinary measures under exceptional circumstances" because hot money was flowing into the city faster than before. He imposed a new stamp duty of 15 per cent on non-locals and companies who buy homes - a measure market watchers described as tough. Two hours after his announcement, mainlanders and locals were seen dashing to the Tsim Sha Tsui sales office of The Reach estate in Yuen Long, scrambling for new homes in time to avoid the tax. The government also raised by 5 percentage points an across-the-board "special stamp duty" on sellers to curb speculation, and extended its effect on resales from two to three years. Duty of 10 to 20 per cent of the price is payable if the property is resold in that period. A woman who arrived at 8pm at The Reach sales office said she was queueing for a Shenzhen friend who was making a late-night rush across the border. She said her friend wanted to buy a property to support the education of her child, who was born in Hong Kong. "She plans to use HK$14 million to buy two flats and then combine them into one." The property sector expects prices and sales volumes to drop at least 10 per cent. But market watchers warned the measures may merely divert cash to commercial and industrial properties, pushing up rents for businesses. The new rule sets non-local and corporate purchases of homes apart from those made by permanent residents, who will still pay between HK$100 and 4.25 per cent of the sale price. "The property market and the economy are heading in different directions. People find home prices unaffordable," Tsang said, citing a 21 per cent price rise in the price of small and medium-sized flats since January. "Prices in the third quarter have been fuelled further," he said, referring to the third round of monetary easing by the US Federal Reserve. "The risk of a property bubble forming is increasing. This may undermine macroeconomic conditions of the community and the stability of our financial system, threatening people's livelihoods." He noted that interest rates would remain ultra-low at least until mid-2015. The 15 per cent Buyer's Stamp Duty exempts permanent residents who buy homes under their own names, meaning it affects all those who make deals through companies. The levy is higher than the Additional Buyer's Stamp Duty introduced in Singapore last year, under which foreigners and non-individual buyers are levied 10 per cent of a home's value. Buyers who were not permanent residents accounted for 19.5 per cent of new-home purchases last year, up from 5.7 per cent in 2008. David Ng Ka-chun, head of China and Hong Kong research at Macquarie Capital Securities, said: "At least 20 per cent of primary market demand will be cut directly by the higher tax."

 China*:  Oct 29 2012

Wen family hits back at 'lies' on hidden fortune (By Minnie Chan and Teddy Ng) Lawyers for family issue unprecedented rebuttal to newspaper claims of US$2.7b in assets and deny premier's mother had US$120m investment. Premier since 2003, 70-year-old Wen served as vice-premier between 1998 and 2002. Earlier in his career he spent 14 years working in Gansu province’s geological bureau before being promoted in 1982 to vice-minister of geology and mineral resources. He became a member of the Politburo Standing Committee in 2002. Wen graduated from the Beijing Institute of Geology in 1968 and has a master’s degree in geology. Lawyers for Premier Wen Jiabao's family last night hit back at The New York Times for its explosive exposé about their wealth - the first time a top Chinese leader has issued a rebuttal to a foreign media report. Two lawyers released a statement on behalf of Wen's family shortly before 11pm denying, among other things, that the premier's 90-year-old mother ever held a US$120 million investment in Ping An Insurance, a central claim of the Times' report. In fact, the lawyers said, Wen's mother, Yang Zhiyun, had "never had other income or property" except for her government salary and pension. The claim was a critical element of the newspaper's article, which estimated that Wen's extended family controlled a fortune of at least US$2.7 billion. "The so-called 'hidden riches' of Wen Jiabao's family members in The New York Times' report does not exist," said the statement, first obtained by the Sunday Morning Post. The lawyers, Bai Tao and Wang Weidong, said they would continue to "make clarifications regarding other untrue reports" by the newspaper and reserved the right to hold it "legally responsible". It is believed that the statement has also been sent to the Times, but the paper had not responded to a request for comment as of early this morning. The lawyers' statement said, "Wen Jiabao has never played any role in the business activities of his family members", adding that "his family members' business activities to have any influence on his formulation and execution of policies". Although the Times' report detailed how several companies connected to Wen's family members had benefited from state action during Wen's, it never explicitly accused the leader of intervening on their behalf. The story said it found "no indication" he had. The story also did not allege any of the activities it described could be considered illegal, saying that loopholes in regulations allow the family members of senior officials "to trade on their family name". The paper said its findings were reviewed by "outside auditors". The lawyer's statement did not list any member of Wen's family by name and did not, for instance, respond to claims about the dealings of Wen's wife Zhang Beili's diamond empire or son Wen Yunsong's lucrative business deals with state-run enterprises like China Mobile. "Some were engaged in business activities, but they did not carry out any illegal business activity," the lawyers' statement said. "They do not hold shares of any companies." Political observers both in China and overseas said it was rare for Chinese state leaders to openly deny overseas media reports, but Wen was keen to protect his image as the "people's premier" and "Grandpa Wen". " The New York Times report is very damaging to the reputation of Wen Jiabao," said Steve Tsang, a China watcher at the University of Nottingham. "What Wen Jiabao's image is domestically in China is much more important to Wen."

Winter blues for textile makers (By Yan Yiqi and Zhang Jianming) Jishan Dyeing Plant has adopted advanced printing technology to reduce environmental pollution. Right: A view of East Market of China Textile City in Shaoxing county, Zhejiang province. Clothing companies in a county in East China are turning to innovation to beat downward trend in global orders. For Huang Yan this should be the busiest time of the year, when many Chinese companies are usually inundated with Christmas orders from overseas. But one afternoon early this month Huang says she has not received a single sales inquiry all day. The newspapers that lie on her desk have been read twice over and, having forgot to put a book in her bag before leaving home, she hopes she can find some unread dregs on a third reading. The saleswoman next door is chatting with another one across the hall, and one of the main topics, apart from children and husbands, is how rotten business is at the moment. Huang is a sales assistant at Zhejiang Weizi Textile, which owns two stores in the East Market of China Textile City, the country's largest market for textile products in Shaoxing county, in Zhejiang province, East China. Trade has been this slow for several months, she says, and for small factories like the one she works for the problem is acute. "It should still be Western customers' Christmas buying season, but you can see exactly what it's like." This one corner of China's largest textile market covering an area of 3.2 million square meters is a microcosm of the business climate in Shaoxing county. Shaoxing hosts the densest concentration of textile businesses in the country, with more than 1,000 large-scale textile companies generating a total annual turnover of 153.8 billion yuan ($25 billion; 19 billion euros). Textiles account for 64.5 percent of production in Shaoxing, says He Jiashun, the county's Party chief. "Shaoxing's economy is bound by a piece of cloth. A quarter of the world's textile product trading in terms of quantity is done through China Textile City here." But He says Shaoxing's booming textile industry has faced many hurdles in its efforts to expand. In the first three quarters of this year China Textile City sales revenue was 59.3 billion yuan, a 7.5 percent rise year-on-year. Revenue has grown an average of 10 percent in recent years, says Shou Lumin, deputy director of the Construction and Management Committee of China Textile City. From January to September China Textile City's average monthly exports were $255 million (195 million euros), a rise of 7.6 percent year-on-year.

China fleet continues patrolling Diaoyu waters (Xinhua) China's marine surveillance vessels continued routine patrols and law enforcement activities in territorial waters around the Diaoyu Islands on the East China Sea on Thursday. Comprising of four ships, the fleet of the China Marine Surveillance, spotted four Japanese coast guard ships at 5:30 am and radioed them to stop intercepting in China's law enforcement activities, according to the State Oceanic Administration. The Japanese ships were told to immediately leave China's territorial seas.

China says no concession on territorial sovereignty (Xinhua) China on Friday said it will take forceful measures in response to any moves that challenge the country's bottom line on sovereignty. "We want to live in friendship with all countries including Japan, but we have to uphold our principles and bottom line," Chinese Vice Foreign Minister Zhang Zhijun told reporters Friday night. Zhang said China pursues a policy of friendship and partnership with its neighboring countries and stays committed to the path of peaceful development. "However, should anyone want to challenge China's bottom line on the issue of sovereignty, China will have no alternative but to respond forcefully so as to remove disturbance and obstacles and move steadily on the path of peaceful development," he said. Zhang said Japanese government's "purchase" of the Diaoyu Islands, which was announced on September 10, constituted a grave violation of China's territorial sovereignty. 

Hong Kong*:  Oct 28 2012 

TVB actors Tisha Law and Otto Chan marry (By Vivian Chen) TVB personalities Otto Chan and Tisha Law fell for each other during rehearsals, and the curtain has gone up on their new life together. Tisha Law and Otto Chan married earlier this month at the Holiday Inn Golden Mile. When Otto Chan asked Tisha Law to marry him, he was so nervous that rather than get down on one knee, he fell on his knees. Former Mr Hong Kong pageant winner Otto and stage actress and businesswoman Tisha married on October 4 in the ballroom of the Holiday Inn Golden Mile in Tsim Sha Tsui. More than 600 guests attended, among them celebrity friends such as Connie Chan Po-chu, Liza Wang Ming-chun and John Chiang. "It felt like a TVB actors' party as well," said Tisha, daughter of veteran TVB actor Law Lok-lam. "Everyone had so much fun that we didn't leave until almost one o'clock in the morning." The couple met three years ago on the set of a play they were appearing in. "At first I thought he was a little childish and too playful," Tisha recalled. "He's definitely not the one always following orders on the set." They got to know each other better during rehearsals, which went on for a couple of months before the show premiered. "While we waited on set during rehearsals we talked a lot about our lives. Otto struck me as being different to the person I first thought he was," Tisha said. She was moved by Otto's charity work and natural kindness. "He might come across as a party person but in fact he doesn't go clubbing, nor does he smoke and he does a lot of voluntary work," she said. After knowing each other for about six months, they decided to become boyfriend and girlfriend. Despite winning Tisha's heart, Otto also needed approval from her father, who Otto had worked with. "It took a while for my dad to accept him," Tisha confessed. "He didn't think he was the right guy for me but now he really loves Otto." On Tisha's birthday in March she was expecting a quiet celebration with friends at an art-jamming session, Instead, Otto sprung a surprise. "He gave me boxing gloves as a birthday gift. I thought it was a joke and that he wanted me to exercise more," Tisha said. "But when I tried them on, I felt something like a box inside. In the box was a ring." Their friends began cheering as the ring box emerged from the glove. Otto was so nervous that he fell to his knees. "I was crying and laughing at the same time when I said yes," Tisha said. On their big day, Otto was so emotional his hands were shaking. "Otto isn't always the most romantic person but he remembers everything I've said. He's not only good to me but also my friends and relatives," Tisha said. "I know he'd put me first in any situation. That's all that matters." The couple have just returned from a week in Koh Samui and are planning a longer honeymoon in Europe.

Poor elderly may lose HK$2,200 after new scheme start date pushed back (By Tony Cheung) Minister says proposed old age living allowance could be introduced later than planned after pan-democrats delay debate on funding. Director of Social Welfare Patrick Nip Tak-kuen (left), welfare minister Matthew Cheung and Emily Lau Wai-hing. About 400,000 poor elderly could lose out on HK$2,200, the welfare minister said, after Legco voting on funding for a new old-age living allowance was put off. The government had said that if the measure were approved yesterday, the HK$2,200-a-month allowance would have been backdated to October 1. Now Matthew Cheung Kin-chung says the allowance, if approved, may be backdated to November 1. The new start date hinges on Legco's Finance Committee approving funding next month. Cheung suggested the delay meant the government might not be able to distribute the allowance in March, even if it received approval next month. "All the preparatory work is tightly linked and we don't have much space for flexibility," he said yesterday. "If the Finance Committee approves the funding later, the implementation date for the scheme will be delayed." The proposal will be up for discussion by Legco's welfare panel again on Monday. It was also on the Finance Committee's agenda in a four-hour session on Tuesday night. As the government requires a notice period of five working days to table its proposal again, it is understood the committee will discuss the matter on November 9 at the earliest, unless committee chairman Tommy Cheung Yu-yan waives the notice period requirement. Matthew Cheung said the Tuesday meeting "cannot be held any more". He said he would discuss with his colleagues when to table the proposal again. "I am very disappointed that the meeting has been adjourned … we need to go back and discuss the actual time [and date] tonight." The current old age allowance, widely called "fruit money", is HK$1,090 a month. The Finance Committee was to have gone through a six-hour session yesterday to scrutinise the issue, in an agenda that included voting on the proposal. But a lawmaker for the Beijing-loyalist Federation of Trade Unions, Chan Yuen-han, who is also chairwoman of the welfare panel, tabled a motion at the start to adjourn the meeting. "We believed that we should not be asked to vote on the proposal today, [since] we have not finished [discussing it on the welfare panel]," Chan said. Pan-democrats also slammed the government for "disrespecting" Legco. Leung Yiu-chung, from the Neighbourhood and Worker's Service Centre, said the government should allow enough discussion time for the welfare panel. "The government has never done things this way before." Chan's motion was passed after two hours of debate, with 35 lawmakers voting in favour of the adjournment - including six FTU lawmakers, 26 out of 27 pan-democrats, and three independents: Poon Siu-ping, Martin Liao Cheung-kong and Paul Tse Wai-chun. Pan-democrat Claudia Mo Man-ching was absent. The government only secured 23 lawmakers to vote against the motion, including 12 from the Democratic Alliance for the Betterment and Progress of Hong Kong. Regina Ip Lau Suk-yee and Michael Tien Puk-sun from the New People's Party, and the Liberal Party's Frankie Yick Chi-ming abstained.

New property tax introduced for non-local buyers (By Lai Ying-kit) The government took aim at the city’s overheated property market with another round of cooling measures on Friday, including a new levy on foreign buyers. Financial Secretary John Tsang Chun-wah said the new levy – 15 per cent of the transaction price – will apply to non-residents and all companies, including local and overseas ones, that buy flats in the city. A second measure extends the current special stamp duty on property resales. People who sell a property within three years of buying it will be taxed up to 20 per cent. The existing levy covers resales within two years of purchase and a tax of up to 15 per cent. Both measures will come into effect on Saturday. Tsang said the new measures would curb demand in the market and supplement other cool-down measures and plans to increase the supply of new flats. The property market had become “severely out of reach” for many Hongkongers while the economy remained stagnant, with slowing retail sales and exports but rising inflation, he noted. “Property prices have recorded a 20 per cent increase so far this year. The rises are [moving] in the opposite [direction from] the economy and become unaffordable for Hong Kong people,” he said. Tsang said he expected more capital to flow into Hong Kong after the United States launched its third round of quantitative easing in September, thereby adding to the demand for flats in the city. “There is a need to launch the new measures to control the demand,” he said. Foreign investors accounted for 19 per cent of all buyers of new flats last year, up from 13.7 per cent in 2010 and 5.7 per cent in 2009, according to government figures.

Asia’s Best City for Shopping - Hong Kong (By Jason Chow) Hong Kong’s convenience and variety have earned it the top spot in a new index ranking Asia’s top shopping destinations. Hong Kong’s Tourism Board has long called the city a shopper’s paradise. Now, it can point to a study that hails the former British colony as Asia’s top shopping destination. Global Blue, a Switzerland-based company that helps foreign shoppers to obtain tax refunds, teamed up with the Economist Intelligence Unit to rank 25 cities in Asia-Pacific on their shopping offerings for visitors. The researchers made their rankings based on five categories: Shops, affordability, convenience, hotel and transport, and culture and climate. In the resulting study, titled the “Globe Shopper Index Asia-Pacific,” Hong Kong came out on top, scoring 68.5 out of 100 thanks to its convenience and wide selection of shops. The city was also praised for factors such as its long sales periods (the city’s stores marked down items for 22 weeks last year) and its shops’ multilingual staff. Hong Kong’s one weakness was in the affordability category. Owing to its popularity as a tourist destination, especially among mainland Chinese, the city’s hotels are often full, which in turn pushes up room prices. Taxis are also relatively expensive compared to other Asian cities. On the other hand, the cities that performed well on the affordability ranking – Ho Chi Minh City and Dhaka were the top two – often ranked low in other categories, such as convenience and variety of shops and brands. Last year, 41.9 million tourists flocked to Hong Kong, up 16% from 2010, and spent 253 billion Hong Kong dollars ($32.6 billion), according to the city’s tourism board. Sixty-seven percent, or 28.1 million, of the city’s visitors came from mainland China. The study put Kuala Lumpur in second place with a score of 65.1, while Shanghai and Beijing scored 63.1 and 60.7, respectively. Singapore came in fifth, followed by Sydney, Bangkok and Tokyo. While Kuala Lumpur doesn’t have Hong Kong’s international reputation as a shopping haven, the researchers pointed out that the city’s goods are cheap, the hotels are plentiful, and the metropolis has several gigantic malls, including three of the world’s top 10 shopping centers by size. Air-conditioned malls also help to make up for the Malaysian capital’s biggest weakness: The city ranked third to bottom in the study’s climate category. Global Blue, which tracks world-wide movements of tourist shopping dollars, projects that the rapid rise of travelling shoppers from mainland China will continue despite the economic uncertainty in the country. “We don’t see a slowdown at all,” said Per Setterberg, the company’s president. He added that while Hong Kong is a top shopping destination in Asia, many Asian shoppers still see the European capitals as their favorite places to shop in the world. “Those cities are the home to the large brands, and they want to go for the experience of shopping there.” The company’s first “Globe Shopper Index” study, released last year, focused on Europe. London ranked as Europe’s top shopping destination, followed by Barcelona, Madrid, Paris and Rome.

Now even Japan beats us when it comes to English (By Eddie Luk) The English proficiency of local youths has declined and the SAR is now placed seventh among 12 Asian neighbors, falling behind even Japan and South Korea. According to an international English study center, Education First, Singapore is ranked first among Asian nations, followed by Malaysia, India and Pakistan. South Korea and Japan are ranked fifth and sixth. In a similar study by the group between 2007 and 2009, Hong Kong was ranked second among 10 rivals. Hong Kong General Chamber of Small and Medium Business president David Ting Tit-cheung agreed with the findings, saying graduates cannot even write proper job applications. "It is apparent that the English proficiency level of university graduates and young workers has dropped in the past few years," Ting said. The education center operates in many cities and compares students' English proficiency through a standard test. The study involved 54 cities and nations covering 1.7 million test takers between 2009 and 2011. Hong Kong was ranked 25th. More than 400 people took the Hong Kong language test covering grammar, writing, reading and listening skills. The group's country manager, Joe Chiu Sung-kei, said the latest study shows that the proficiency level of local people has declined slightly when compared with that of counterparts. "In the past few years, the English proficiency level of Japanese and South Korean youths has improved." Although the study did not examine why English proficiency has deteriorated in Hong Kong, Chiu said he believes it may be related to the introduction of the mother-tongue as medium of instruction in schools after the handover. "Indeed, a student's exposure to the English language has been reduced in classes since the mother-tongue was used as a medium of instruction," Chiu said. Centaline Human Resources Consultants managing director Alexa Chow Yee-ping agreed. "Local workers generally spend more time studying Putonghua rather than English as they need to work in the mainland and communicate with their mainland clients amid closer economic integration," Chow said.

Lower rates, cash influx make shops hot property (By Sandy Li) Shops are expected to change hands briskly in coming months as an influx of hot money and lower borrowing costs for non-residential property spur investment interest, agents say. Figures from Ricacorp (CIR) Properties indicate transactions in retail properties increased 16 per cent last month from August to 448, and the total value edged up 2 per cent to HK$6.37 billion. "The inflow of hot money will add fuel to the fire," Kelvin Li Chun-lung, senior sales director at Midland Commercial, a unit of Midland Realty, said. Danny Chan Chu-hang, national director of Hong Kong capital markets at Jones Lang LaSalle, expects the retail investment market to benefit from positive sentiment. A growing number of investors were shifting to retail properties because the special stamp duty introduced by the government to cool the red-hot residential market did not apply to the sector, he said. To cash in on the market boom, Hang Seng Bank is offering three shops occupying the ground floor and the entire first floor of the Kam Heung Building in Aberdeen for public tender through Jones Lang LaSalle. Agents estimate the shops could fetch a bid of about HK$160 million. Tendering will close at noon on January 9. Flush with liquidity, Wing Lung Bank has cut mortgage rates for commercial properties and for flats held for leasing to 3.1 percentage points below prime, which stands at 5.25 per cent, plus a cash rebate of as much as 0.5 per cent of the loan amount, or a cap of HK$200,000. Prior to the reduction, mortgage rates for this category of properties were 2.6 to 2.9 percentage points below prime, with no cash rebate. "Lower borrowing costs and incentives will help to boost transactions," said Ivy Wong Mei-fung, the managing director at Centaline Mortgage Broker. She said Wing Lung reduced mortgage rates for commercial properties to attract new business because it had found the residential lending market too competitive. "It is not easy for small to medium-sized banks to compete with big players in the residential lending market," Wong said. She expects banks to become more aggressive in offering competitive rates for property loans over the next two months, as they have to fill their lending quota by the beginning of next year.

A fresh round of measures to curb property prices will take effecto from tomorrow, the Financial Secretary John Tsang Chun-wah said today. Despite a series of measures, including the special stamp duties introduced in 2010 to curb short-term speculation, home prices have surged amid an economic downturn, Tsang said. "The property market is going aginst the economic fundamentals," Tsang said. A new stamp duty will be imposed on non-permanent residents, after transactions by these buyers surged over the last few years. Transactions by foreign investors accounted for 19.5 percent of deals thus far, compared with 13.7 percent in 2011 and 5.1 percent in 2010. Home buyers without permanent residency, or those who purchase through a company, will have to pay a stamp duty at 15 percent of the home price. Meanwhile, the existing special stamp duty will be modified, Tsang said. A 20 percent levy will apply to flats sold within six months or less, while 15 percent will apply to those sold after six months but within a year of purchase. A 10 percent stamp duty will apply to apartments sold after a year but within 36 months of a deal. This means that a non-resident buying a flat in Hong Kong and reselling it within 6 months, will incur a special stamp duty of 20 percent plus another of 15 percent. Tsang said it was necessary to manage the supply-demand gap in local property market. "Home prices have grown rapidly despite the economic slowdown," Tsang told reporters. "The risk of a property bubble is growing."

HKRFU chairman urges government not to abandon Kai Tak stadium plan (By Alvin Sallay) HKRFU chairman urges powers that be to unequivocally end doubt over sports hub project or see city miss out on hosting 2019 World Cup games. Top rugby official Trevor Gregory has urged the government to unequivocally back building the Kai Tak sports hub so that the ambition of hosting games in the 2019 Rugby World Cup can be kept alive. "We are still in with a chance of hosting a few games but with what has happened these last few days, we need the Hong Kong government to clearly state it will go ahead with building a stadium at Kai Tak and work should begin on it immediately," said Gregory, chairman of the Hong Kong Rugby Football Union. The HKRFU's plans to host games of the tournament, which will be held in Japan, have been in the pipeline for a number of years, based on the premise that Hong Kong will have a state-of-the-art 50,000-seater stadium with a retractable roof ready at Kai Tak. Last weekend, the government cast doubt on the proposed HK$19 billion sports hub plan when a top adviser suggested the sports facilities could be moved to Sunny Bay on Lantau Island to make room for public housing. This has created a huge uproar in the sporting community with leading officials saying they would take to the streets in protest if it became a reality. Rugby, which stands to lose the most, has vehemently blasted the idea. Gregory yesterday called for the government to quell all uncertainty. "Next month the Asian Rugby Football Union will meet in Almaty, Kazakhstan for its council meeting and we will be trying to get some clarity with the Japanese Rugby Union on our chances to host some games of the 2019 World Cup in Hong Kong. Issues like this will certainly not help our case," Gregory said. "But this is not just about the World Cup. Even the future of the Hong Kong Sevens is at stake here. This tournament has clearly shown it brings huge economic benefits to Hong Kong, but we need a bigger stadium. The existing one at So Kon Po is no longer sufficient for our needs. "This is why it is imperative that we build one at Kai Tak. And work should start immediately. The further it is delayed, we have doubts it will be ready in time. At first we were told it would be ready in 2018, but now there are suggestions it might even be later, around 2020. This is terrible. It has been 20 years since we knew Kai Tak would close and the site is still empty. Hong Kong is a place where things get done, but not in this case," Gregory said. Gregory urged the government to call for tenders, sort out the financing model, and to begin work on the new sports hub - which is proposed to include two ancillary stadiums including a 5,000-seater indoor stadium - as soon as possible. "We can build a new stadium within two to three years. Just look at Singapore. They started work on their sports hub last year and it will be ready by 2014. So it is not impossible that we have a new stadium up and running by 2016 or 2017 if we can get everyone firmly committed to it right away. "Rugby in Hong Kong is taking off. We are Asia's sevens champions. Our women are ranked third in the region. The sport is taking off but it is a real shame that the union has to build all its facilities. The government is not keeping up with the sports community. Even the current stadium at So Kon Po was built thanks to the Jockey Club. The government only provided the land. "It is high time they came out and clearly stated their plans. We need clarity, especially if we are chasing the goal of bringing a few games from the 2019 World Cup to town," Gregory said.

What future for Hong Kong if the majority are silenced? Lau Nai-keung says a lynch-mob mentality is gagging true free speech. Recently many of my friends have told me they are deeply worried about our kids. If they are taught to hate their country, thinking that they are not Chinese, waving the British flag, and even openly taking an anti-China stance on international issues, what is going to happen to them in a few years when they will have to face up to reality? What will happen to Hong Kong when it has alienated itself from 1.3 billion people up north? How long will this anti-China brainwashing last? What will be the damage? Like the Cultural Revolution, which we all hate, the crimson phobia sweeping across our education system is pitting students against their parents and even against their own schools. It has filled our media and monopolised our attention. It seems no one has been spared. Verbal violence that would be banned as hate speech in many countries - including the champion of free speech, the US - has become the norm here. Anyone who dares to express an opinion that deviates from this anti-China, anti-government "intrinsic truth" will see their views silenced or twisted. Those very few whose views our dissidents cannot completely banish become targets of a lynch-mob mentality. Elsie Leung Oi-sie, the former secretary for justice and current vice-chairperson of the Basic Law Committee, came under scathing attack by Martin Lee Chu-ming and others - the chorus was later joined even by the Law Society and the Bar Association - after Leung spoke at an event on October 6. According to the Bar Association, she made references to the Ng Ka-ling judgment of the Court of Final Appeal in 1999 and said that the legal profession in Hong Kong, including judges, had a poor understanding of Hong Kong's relationship with the central government. She was also reported to have said that if the judges had the correct and necessary understanding, mistakes would not have been made. According to news reports, Leung also said that in relation to the issue of mainland women giving birth in Hong Kong, her preferred solution was for the chief executive to seek an interpretation of the Basic Law by the Standing Committee of the National People's Congress. Such a perfectly innocuous suggestion was deemed to be "undermining the authority and standing of the Court of Final Appeal and likely damage the rule of law in Hong Kong", and flogged in the media, with the poor lady pleading for her freedom of speech. Meanwhile, the anti-national education campaign groups that occupied the new government headquarters for days seem to believe they have a monopoly on the right to protest there. When some pro-national education groups applied to demonstrate there on the evening of October 17, their opponents not only followed suit, but accused national education supporters of barging in and picking a fight. The truth is, as records clearly show, that the supporters had applied and obtained police consent days before. During that night, guess who picked the fight. In any case, the spiral of silence is now broken. The silent majority are now gradually venturing out to voice their opinions and concerns. Although the dissidents have practically monopolised the mainstream media, and suffocated the opposition, in this information age there are many unconventional channels and there is simply no way for any group, not even the government, to silence any dissenting voice. In group e-mails and WhatsApp messages, tweets and microblogs, Facebook pages, personal blogs and public forums, different opinions are beginning to surface, more by the day. People are crying out: we sick and tired of this nonsense - it is time for it to stop. I have insisted all along that, in the information age, there is simply no way to brainwash people. National education and even the mystical Chinese Communist Party can never achieve this end, and fortunately, neither can our dissidents and their white-gloved backers. The battle continues, but it is not completely lopsided anymore. Lau Nai-keung is a member of the Basic Law Committee of the NPC Standing Committee, and also a member of the Commission on Strategic Development

Hong Kong's flu fighter Thomas Tsang resigns (By Lai Ying-kit) Thomas Tsang Ho-fai has resigned as head of the Centre for Health Protection and will leave his office before the end of the year, Secretary for Food and Health Dr Ko Wing-man said on Friday. Dr Tsang, 45, became controller of the Centre for Health Protection in 2007. The centre is part of the Department of Health, where Tsang has been employed for 20 years dealing with the prevention of communicable diseases. Tsang became familiar to the public during the fight against swine flu in 2009, and before that as a health department official during the 2003 Sars epidemic, which killed 299 people in Hong Kong, and during the 1997 bird flu outbreak. Ko said he had tried to persuade him to stay on, but Tsang wanted to take a break. “It is sad to see him leave, but we have to respect his decision,” Ko said.

Lam dismisses Kai Tak housing rumours (By Lai Ying-kit) The government will stick to its original plan to build a sports complex in Kai Tak, Chief Secretary Carrie Lam Cheng Yuet-ngor said on Friday, after several days’ uncertainty on the issue. Lam dismissed speculation in media reports this week that the planned sports complex would be moved away from Kai Tak to make way for the construction of more homes there. At a press conference on Friday, she acknowledged that officials had discussed other possible uses for the sports complex site. But they concluded that sports remained the best option, she said. “The initial conclusion was that it is difficult build a large number of flats at a site that has already been designed for sports use,” she said. “I hereby clarify, and formally make our stance clear, that the government will continue to take forward our original plan for the sports complex at Kai Tak.” The Kai Tak project aims to provide a high quality of life with low density and open space, in an urban setting for 89,800 residents. It will also be home to a world-class sports complex and cruise terminal. The sports complex plan calls for a main stadium with a retractable roof and 45,000 seats, a secondary stadium with 5,000 seats, an indoor sports arena with 4,000 seats and other leisure and recreation facilities. This week, media reports said the government was looking to move the proposed HK$19 billion stadium to Lantau Island, to make way for more flats in Kowloon City. Critics of the sports project said affordable housing had a higher priority. Top rugby official Trevor Gregory has urged the government to press ahead with the Kai Tak sports hub, so the city can pursue its ambition of hosting the 2019 Rugby World Cup.

 China*:  Oct 28 2012

U.S. report on Huawei, ZTE not final: U.S. ambassador (Xinhua) The United States Congress's latest report on Chinese tech firms Huawei and ZTE does not represent a "final conclusion" and the focus of the report is to exchange more information, U.S. Ambassador Terry Kramer said Thursday. Kramer, a telecommunications expert and head of the U.S. delegation for the World Conference on Information Telecommunications (WCIT), said at a news conference in Beijing that the report, which was released by the House Intelligence Committee on Oct. 8, does not represent the position of the administrative branch. Kramer said there is a great deal of room for economic and business cooperation between the two countries. In the report, the committee suggested that U.S. companies should avoid buying equipment from Huawei and ZTE. The two companies have been described as being under the control of the Chinese government and having entered the U.S. market through unfair means.

Wal-Mart to open 100 more stores in China (By Wang Zhuoqiong) Expansion in next 3 years to be driven by emerging middle class - Wal-Mart Stores Inc, the world's largest retailer in terms of sales, plans to open 100 new stores over the next three years in China, in a bid to maintain its growth momentum, which is being driven by the emerging middle class. A Walmart outlet in Wuhan, Hubei province. The most important challenge for retailers is serving customers in their local markets, and offering them the specific products they want to buy, says Mike Duke, president and CEO of Walmart. Mike Duke, president and chief executive officer of Wal-Mart, said in Beijing on Thursday that the company will prioritize large-store formats, such as hypermarkets, and its members-only stores, known as Sam's Club. "We are pleased that Wal-mart will be growing in China with 100 additional stores over the next three years," Duke said. He did not reveal the specific locations of the stores. The company, which entered the Chinese mainland in 1996, had 370 stores as of March. The company also said that it will add more distribution centers in the next three years to modernize its supply chain. Walmart's expansion plans are less ambitious than previously announced targets, but the company is still planning to grow faster in China than some of its international rivals. Disagreeing with the view that the market is saturated with large-sized supermarkets, Duke said that he still sees opportunities for one-stop stores, where customers can get all the products they need and "save money and time". Considering China's population, the number of hypermarkets is still much lower than in other countries, Duke said. The company's planned growth in the country will be mainly supported by the emerging middle class, which is the key group of customers the retailer wants to serve, Duke said. With prior development focusing on first-tier cities, the retailer is now heading to second- and third-tier cities, where consumption potential has not yet been fully released and the growth of residents' incomes has been on the rise in the past few years, said Zhao Ping, deputy director of the economic research department of the Chinese Academy of International Trade and Economic Cooperation. Zhao added that localization will be a vital process for multinational retailers, which will enable them to compete in smaller cities. Duke said that the company is planning to boost its localization efforts, adding that this is central to its future success in China. He added that the most important challenge for retailers is serving customers in their local markets, and offering them the specific products they want to buy. Duke first visited the company's headquarters in Shenzhen and then stores in Beijing on Thursday before he left for Shanghai on Friday to sign a deal to acquire a majority stake in Yihaodian, a local e-commerce website. Walmart will control 51.3 percent of the website, which recorded sales of 2.7 billion yuan ($428 million) in 2011. Analysts said the acquisition supports the retailer's plans to grab a larger share of the country's online shopping market. In March, Walmart appointed Greg Foran, a retail business veteran of 30 years, as its new China CEO. Speaking of the new leadership for China, Duke called it a change to advance the Chinese operations to a new level of growth and to serve more customers with more stores. "Greg, who comes with tremendous experience in managing large stores in an everyday-low-price environment will see things maybe his predecessors did not see," he said, adding that it is important to bring additional leadership and develop leaders inside the business that can support the company's growth.

China launches satellite for navigation (Xinhua) China successfully launched another satellite into space for its indigenous global navigation and positioning network at 11:33 p.m. Beijing Time Thursday, the launch center said. The satellite, launched from the Xichang Satellite Launch Center in the southwestern province of Sichuan, was boosted by a Long March-3C carrier rocket. China successfully launched another satellite into space for its indigenous global navigation and positioning network at 11:33 p.m. Beijing Time Thursday from the Xichang Satellite Launch Center in the southwestern province of Sichuan. It was the 16th satellite for the Beidou system, or Compass system. The network is planned to officially provide services for most parts of the Asia-Pacific region in early 2013 and begin offering global services by 2020. Since it started to provide services on a trial basis on December 27, 2011, the Beidou system has been stable, said a spokesperson of the China Satellite Navigation Office. The system has been gradually used in extended sectors including transportation, weather forecasting, marine fisheries, forestry, telecommunications, hydrological monitoring and mapping, according to the spokesperson. The newly-launched satellite will play an important role in improving the system's service, the spokesperson said. China started to build up its own satellite navigation system to break its dependence on the U.S. Global Positioning System in 2000. Between October 2000 and May 2003, the country set up a regional satellite navigation system after launching three Beidou geostationary satellites. Beidou-1 can not meet growing demand, so China decided to set up a more functional Beidou-2 regional and global navigation system, Qi Faren, former chief designer for Shenzhou spaceships, said in an interview in 2011. The Beidou-2 system will eventually consist of 35 satellites. Five Beidou satellites were sent into space early this year. The 11th satellite was boosted by a Long March-3C carrier rocket on February 25, the 12th and 13th were sent by a Long March-3B carrier on April 30, while the 14th and 15th satellites were launched on September 19.

CIC increases London property holding (By Diao Ying in London) China's sovereign wealth fund is expanding its presence in the United Kingdom by getting more involved in London's property market. China Investment Corporation, the manager of China's $410 billion sovereign fund, is in talks to buy Deutsche Bank's headquarters building in London for 250 million pounds ($403 million), according to British media reports. The planned purchase is taking place amid a shifting pattern of China's overseas investment in recent years, from financial assets such as bonds to real assets such as infrastructure and real estate, said Mark Williams, London-based chief Asia economist of macroeconomic research company Capital Economics. The building, known as Winchester House, is being sold by KanAm, the German open-ended real estate fund. The fund bought the building in 2003 and then leased it to Deutsche Bank. It is the head office of the bank's global investment banking operation, according to KanAm's website. The purchase would mean CIC has a presence in the property market in both of the two of London's financial centers — the City of London and Canary Wharf. CIC made its first investment in the UK's property market in 2009, when it became a shareholder in Songbird Estates, which owns Canary Wharf, in the wake of the financial crisis. The district is the home to the global headquarters of banks such as HSBC and Credit Suisse, and 90,000 people work there. The sovereign wealth fund is also involved in infrastructure projects in the UK. In January, it acquired an 8.86 percent stake in Thames Water, the UK's largest water and sewage company. The UK is more open to Chinese investment than other developed economies such as the United States, said Williams. The British government has maintained a position that China can be helpful when the economy in the UK is not doing well. "I expect a wave of Chinese investment in the UK in the coming years in sectors like real estate," he said. London's property market has been attractive to global investors due to its position as one of the world's main financial centers, and the fact that most global financial companies have a presence there. Many European banks' head offices are located in London. A report by property company Jones Lang LaSalle said investment in central London reached $11.76 billion at the end of the first half of this year, up 24 percent year-on-year. This was mainly driven by overseas investment, which amounted to $8.2 billion. "Despite continued economic uncertainty in the eurozone, we will continue to see investor demand driven by overseas capital, notably private Asian and sovereign wealth funds," the company said. In the first half of 2012, Asian investors accounted for 16 percent of transactions, according to the report.

Hong Kong*:  Oct 27 2012 

Falling metal bars kill bridge worker, injure 15 others (By Clifford Lo and Lai Ying-kit) Police and firemen inspect the accident scene at the construction site near Tung Chung. A worker was killed and 15 others injured – two seriously – when they were hit by falling metal bars at a construction site for the massive bridge across the Pearl River estuary on Thursday morning. The men were struck by a bundle of metal bars that broke free as a crane lifted them at about 10.30am, the Fire Services Department and police said. The construction site for the Hong Kong-Zhuhai-Macau Bridge project is an artificial island just east of Chek Lap Kok airport. Fire Services Department said two of the injured men were unconscious and the 15 were taken to three different hospitals. One was later declared dead at Princess Margaret Hospital. Rescuers from the Marine police and fire officers searched the debris, but found no workers were buried under the rubble, according to the Fire Services Department. A fleet of fire engines and ambulances were dispatched to the Tung Chung New Development Pier on Lantau, where the injured men were brought to shore. Construction work was halted at the site after the accident, and the Labour Department was investigating the cause of the incident, officers said.

The value of Hong Kong's total exports of goods rose 15.2 percent in September from a year ago to 313.2 billion HK dollars (about 40.4 billion U.S. dollars), after a 0.6 percent increase in August, the city's statistics department said on Thursday. Within the total, the value of re-exports increased 15.3 percent to 307.8 billion HK dollars, and the value of domestic exports climbed 10.2 percent to 5.4 billion HK dollars. The values of total imports of goods rose 14.9 percent from a year earlier to 358.3 billion HK dollars, bringing a trade deficit of 45.2 billion HK dollars. A government spokesman said the year-on-year growth of merchandise exports picked up notably in September, helped in part by the distinctly low base of comparison in the same month of last year and in part by some improvements in such major markets as the Chinese mainland and the United States. Looking ahead, the spokesman said although the more recent economic data for the Chinese mainland and the United States tended to indicate some pick-up, the global economic environment is still fraught with downside risks stemming from the euro debt crisis and looming U.S. fiscal cliff, while Hong Kong's trade outlook for the near term remains challenging. The total exports to Asia as a whole grew 20.1 percent from a year ago, with exports to the Philippines rising 25.7 percent, followed by the Chinese mainland 25.5 percent, Vietnam 18.7 percent and Singapore 16.8 percent. Exports to the United States rose 9.0 percent from a year earlier, followed by the United Kingdom 5.1 percent. For the first nine months of 2012, the values of total exports of goods rose 1.5 percent year-on-year, with the value of re- exports increasing 1.8 percent and that of domestic exports decreasing 13.1 percent. Concurrently, the value of imports of goods increased 2.5 percent, brining a visible trade deficit of 342.9 billion HK dollars in the first nine months.

Hong Kong stocks rose 46.45 points, or 0.21 percent, to close at 21,810.23 on Thursday. The benchmark Hang Seng Index traded between 21,710.84 and 21, 839.64. Turnover totaled HK$61.25 billion (about $7.90 billion).

 China*:  Oct 27 2012

China names new military chief of staff (By Associated Press in Beijing) China has appointed a new army chief of staff and other top officers in the run-up to next month’s national leadership transition as the nation attempts to professionalise the world’s largest standing military. The Defence Ministry announced on Thursday that Fang Fenghui is taking over as chief administrator of the People’s Liberation Army who supervises recruiting, training and other key functions. The appointment puts Fang, a former head of the military region that includes Beijing, firmly on track for a position on the Central Military Commission overseeing the 2.3 million-member PLA when the new lineup is announced at the Communist Party congress that begins November 8. The appointments were long anticipated as part of the shift to power under incoming party leader Xi Jinping, who, despite taking over the reins, is believed to have relatively little say in the naming of new military leaders. Instead, the selections reflect the choices of outgoing leader Hu Jintao, who oversaw the promotion of officers such as Fang during his decade in power. Fang, who commanded an elaborate military parade celebrating the 60th anniversary of the communist state in 2009, was promoted to full general by Hu in 2010. China’s armed forces have undergone a massive upgrading in weapons and tactics in recent years, spurred by double-digit percentage increases in the defence budget and Beijing’s increasing willingness to assert its maritime territorial claims. The PLA’s three other top army staff positions also received new directors. Zhao Keshi was named head of logistics, Zhang Youxia as head of armaments, and Zhang Yang as director of the political department, the ministry said. Several other deputy positions were announced, and the ministry earlier named former fighter pilot Ma Xiaotian to lead China’s air force, which has become increasingly vital to China’s defence strategy.

Opening show of China Fashion Week held in Beijing - Models present creations by Chinese designer Zhang Zhifeng during the opening show of China Fashion Week Spring/Summer 2013 in Beijing, capital of China, Oct. 25, 2012.

China's marine surveillance vessels continued routine patrols and law enforcement activities in territorial waters around the Diaoyu Islands on the East China Sea on Thursday. Comprising of four ships, the fleet of the China Marine Surveillance, spotted four Japanese coast guard ships at 5:30 a.m. and radioed them to stop intercepting in China's law enforcement activities, according to the State Oceanic Administration. The Japanese ships were told to immediately leave China's territorial seas. The CMS fleet returned to the Diaoyu Islands waters Saturday on patrol mission after two typhoons left the area.

Chinese flights triple in a decade (China Daily) A billboard on a street in Shanghai shows logos of various aviation companies. A China Eastern plane takes off from Beijing Capital International Airport. 

 

China's Huawei blasts US 'protectionism' - The chairman of the Australian division of the Chinese telecom equipment firm, Huawei addresses the National Press Club, Canberra, October 24, 2012. Huawei, which was founded by former People's Liberation Army engineer Ren Zhengfei, and ranked the world's second-biggest telecoms equipment maker, was barred from tendering for a $38 billion project in Australia's national broadband network this year on security grounds. Those fears were echoed by the US House Intelligence Committee this month, when it warned equipment supplied by Huawei and ZTE Corp, the world's fifth-largest telecom equipment maker, could be used for spying and called for their exclusion from government contracts and acquisitions. Lord said the Congressional committee's report should be "called for what it really is: Protectionism not security", dismissing it as part of an "ongoing trade conflict between the US and China". "The fiery rhetoric of the US Committee's report may make good headline-fodder in an election year, but it should really be seen as a missed opportunity," he told Australia's National Press Club. Lord said Huawei's future depended on its "complete transparency" on security and other issues, and dismissed questions about its links to the Chinese state, denying that client information had or ever would be shared. "Huawei would never allow any third-party country or individual to interfere with our equipment for an illegal purpose," he said. "Cyber security infringements, violations are illegal and we would never allow anyone to do that and we haven't ... We would never allow our equipment to be misused and I make that point quite strongly." John Lord, chairman of the Australian division of the Chinese telecom equipment firm Huawei, addresses the National Press Club in Canberra October 24, 2012. 

Ratings agency aims to rival 'big three' (By Wei Tian) Three ratings companies from China, the United States and Russia said on Wednesday they will jointly launch a new agency to challenge the current global ratings system dominated by the "big three" US agencies. The new agency, which will be known as Universal Credit Rating Group, will be co-initiated by China's Dagong Global Credit Ratings Co, US-based Egan-Jones Ratings, and Russia's RusRating. The agency will be formally established in the next six months, and will be headquartered in Hong Kong, Dagong's President Guan Jianzhong said at a news conference in Beijing. Although details on the amounts to be invested by each company still need to be finalized, it will be a balanced structure among the three sponsors, said Richard Hainsworth, president of RusRating. Dozens of companies from more than 20 countries have expressed interest in participating in the project, Guan was quoted as saying by Agence France-Presse. But the "big three" US agencies will not be considered for membership because of a divergence in principles and positions, said Guan. Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Ratings — the "big three" — currently control 95 percent of the global ratings market. However, the three companies were widely criticized for failing to sound an alert before the 2008 global financial crisis. Many debt instruments linked to the US housing market that sparked the crisis had been given highest ratings by the agencies. Sean Egan, president of the US-based Egan-Jones Ratings, said there is nothing more unethical than the current global credit ratings system, which sometimes downgrades a rating from the highest triple-A level to junk status within months. "If you're going to make a judgment on the future of a company, you should stick to it, if you're wrong, you have to accept it," said Hainsworth. "The old credit rating system has been necessary and useful in the past century, but we must remember it was developed in one segment in one economy, that was the public trading company in the US, whereas 60 percent of the global economy is made up of other companies," he added. The new agency's mission is to "construct a new credit ratings system within five years, and to meet the credit ratings needs of the world", according to the Beijing Declaration, unveiled at the news conference. "It will be a multilateral, independent, and international credit ratings agency comprised of private organizations whose responsibilities do not conflict with the ratings, and do not represent the interest of any particular country or group," Hainsworth said. The selection of Hong Kong as its headquarters also reflects the company's vision, because it's a place where Chinese culture was mixed with the legacy of the Western way of doing things, Hainsworth added. The new ratings are not intended to immediately replace the old system by the "big three" agencies, but to provide investors with more choices, Guan said. "If what we're saying is true, the old system will have to change, if not, then we'll fail. But I don't think we're going to fail," said Hainsworth. He said that the agency will strive to make profits via diversified sources of revenue, and he is confident that revenues will increase as credit ratings have become an increasingly important reference for regulators, in addition to the ratings paid by debt issuers and investors. The agency will engage in rating affairs worldwide, but the initial customers will mainly come from the US and European markets, said Jones. "The credit ratings system needs more voices," said Zhong Liang, director of public industry and sovereign ratings at Standard & Poor's. "Our job as a credit ratings agency is to make independent assessments and to release the information to the market."

Naming China currency manipulator 'disruptive' (Xinhua) Declaring China a currency manipulator would be highly disruptive, a senior advisor to US President Barack Obama's re-election campaign said on Wednesday. Jeffrey Bader made the remarks while attending a China policy debate between foreign policy advisers of the two candidates' campaigns held on Wednesday by the Committee of 100, an organization of prominent Chinese Americans and Johns Hopkins University. Bader, also a senior fellow at Brookings Institution, noted the Obama administration, if get re-elected, would maintain the key elements in its China policy. He said it is important to keep a balance between "a strong, positive relationship" with China, and strong and positive relations with US allies in the Asia-Pacific. "You can't do one without another," he added. Meanwhile, he said it is critical to set priorities in the next administration's China policy, which requires the understanding of both the important and "potentially disruptive factors" in US-China relations. For months, Republican presidential candidate Mitt Romney has vowed on various occasions that he would label China as a currency manipulator on day one of his presidency if elected. Bader said Romney's talks are an example of the kind of things he thinks that "upside-down the priority that would be highly disruptive". The next administration should "truly respect" China's rise and "what China has accomplished in the past years," he said. During the third and final presidential debate closed on Monday night, both Obama and Romney voiced willingness to work with China, yet also blamed the world's second largest economy for America's domestic woes. The Wall Street Journal noted in an article on Wednesday that Romney's tough rhetoric on the Chinese currency issue is not in line with facts and would harm the important China-US ties. Torpedoing the bilateral relationship because of an ill-advised campaign promise could have multiple unforeseen consequences, warned the newspaper.

Hong Kong*:  Oct 26 2012 

Opera hits right note with Diaoyus crew (By Eddie Luk) A delegate of the Chinese People's Political Consultative Conference has joined with performers of a Cantonese opera to raise HK$1 million so that Diaoyu activists may repair their fishing boat, Kai Fung 2, and buy another vessel. Lew Mon-hung said two Cantonese opera groups will stage a show next month to raise as much as HK$1 million for Kai Fung 2 - which was damaged during a collision with Japan Coast Guard vessels during its mission to the disputed Diaoyu Islands in August. Lew said the Cantonese Opera Entertainment Arts Society of Hong Kong, along with another performing group, will stage an opera at the Sunbeam Theatre in North Point on November 17. He has offered to match the donations received with those of his own. "So far, we have not finalized which opera artists will perform at the show," Lew said. "By organizing the fund- raising show, we hope that we can raise more money to improve the facilities in the Kai Fung 2 and even purchase a secondhand vessel, say, a container ship, which is stronger and which Japan Coast Guard may find difficult to stop." Lew said he was outraged that the Japanese government still made sovereign claims to the islands even after Chinese marine surveillance ships had recently patrolled in waters near them. "All Chinese people have to stay united to oppose any move by the Japanese government to occupy the Diaoyu Islands." Lew said the public has generally supported the show as tickets priced at HK$1,000 and HK$500 have already sold out. Meanwhile, Chan Miu-tak, chairman of the Action Committee for Defending the Diaoyu Islands, said he is happy to see locals supporting the move. "The repair of Kai Fung 2 has been completed," Chan said. "We will use the funds to cover our repair expenses on the vessel and even buy another one to launch our trip to the Diaoyu Islands in the future." Chan said the committee has not yet set the date for their next trip to the disputed islands. The Marine Department earlier passed safety checks on the vessel.

Lashing for lawmaker in illegal structure rumpus (By Kelly Ip) A lawmaker has refused to comply with a Buildings Department order to remove an illegal rooftop structure at his home. Chan Kam-lam, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said that after he received the order at his village home on Sha Tin Pass Road in August 2011, he filed an appeal using an offer made to New Territories residents to delay prosecution of those who registered such alterations. "I registered the structure in June this year," said Chan, questioning why he should be treated differently from other villagers. He said the rooftop structure and flower pots on the ground floor meet government requirements. However, a political commentator said the defiance of Chan only underlines the lack of political awareness and raises the question of how a person who flouts the law can call themselves a lawmaker. When told that the registration offer is only a temporary reprieve and that illegal structures will eventually have to be removed, Chan said he is not afraid of being charged by the department. He added that he will wait for the hearing on his appeal. Since Chan has not removed the rooftop structure after being issued with the order, his home was put on the department restricted list last October. A department spokesman said no enforcement action will be taken until the appeal is heard, withdrawn or abandoned. Earlier, the department said homeowners on the restricted list can neither register illegal structures nor seek a delay in a removal order. Those who do not comply with the order may be charged. Solicitor Wong Kwok-tung, chairman of the Appeal Tribunal, Buildings Ordinance, said Chan is contradicting himself by filing an appeal in addition to registering an illegal structure under the scheme designed for village homes. Eric Cheung Tat-ming, assistant professor at the University of Hong Kong, said generally the appeal should be heard within four months after the department sends out a written response. Political commentator James Sung Lap-kung said the series of scandals over illegal structures of government officials and lawmakers reveals their low political awareness. "Chan has violated the law. How can he make laws as a lawmaker?" said Sung, adding such a state of affairs is both ridiculous and unacceptable. "The issue of a removal order means his rooftop structure is a serious violation and Chan's attitude will only infuriate the public."

Rising yuan boosts mainland visitors's spending power (By Johnny Tam and Amy Nip) Bargain-hunting mainlanders expected to take advantage of exchange rate during visits to city. Internet users across the border are enthusiastically discussing plans to shop in Hong Kong as the yuan climbs to a 19-year high. The exchange rate has risen in the past few days, passing HK$1.25 as the yuan appreciated against the weak US dollar, to which the Hong Kong dollar is pegged. Beijing devalued its currency in late 1993. Mainlanders are expected to take advantage of the resulting "discounts" in Hong Kong. On Sina Weibo, the most popular microblogging service on the mainland, users posted messages yesterday saying "Everything over 20 per cent off in Hong Kong" and "Brothers, let's go [shopping]". Meanwhile, mainlanders already in the city were emboldened to spend more. "I don't have time to come more often, but I will definitely spend more because things are even cheaper now," a 28-year-old visitor from Shanghai said. She said she visited twice a year, spending more than HK$10,000 each time on fashion items and also household items like milk powder. A shop in Causeway Bay said it had yet to see more mainland visitors. "There are as many of them as always," a Fortress salesman said. In Sheung Shui, where parallel trading is a nuisance to residents, shops said they had raised prices because of higher rents, giving non-locals less incentive to buy goods in bulk to be resold across the border. About 40 internet users and residents joined a protest initiated on Facebook outside the Sheung Shui MTR station. Protesters said the government's intensified action against the practice had failed to deter parallel traders. Some had ways to get round new size and weight restrictions on luggage imposed on the MTR, they said. "They now pack the goods in small baggages or backpacks," Sheung Shui resident Tam Miu-ying, 59, said. "They make sure every carton they carry falls within the new size limits." On evenings when there were no police around, about 200 traders flooded the station, as in the past, she said. Fellow protester Dennis Wong said: "No matter how much work they do in Hong Kong to combat parallel trading, it won't be effective unless customs on both sides of the border work together."

Capital inflows drive Hang Seng to fresh 2012 high (By Reuters in Hong Kong) Hong Kong Monetary Authority headquarters at the IFC, Central. Hong Kong shares posted a fresh 2012 closing high on Wednesday, buoyed by expectations of more capital inflows into the territory after the Hong Kong Monetary Authority moved to weaken the Hong Kong dollar for the fourth time in less than a week. The Hang Seng Index closed up 0.3 per cent at 21,763.8, after earlier posting the year’s highest intra-day level at 21,802.5. The China Enterprises Index of the top Chinese listings in Hong Kong slipped 1 per cent. In the mainland, the CSI300 Index of the top Shanghai and Shenzhen listings ended down 0.2 per cent at 2,307.8. The Shanghai Composite Index closed up 0.1 per cent. Expectations of further capital inflows buoyed shares of bourse operator Hong Kong Exchange (HKEx) to its highest since late April after the Hong Kong Monetary Authority (HKMA) moved to weaken the Hong Kong dollar for the fourth time since October 19 to defend its 29-year-old peg to the US dollar. THe HKEx jumped 2.9 per cent, while local developers were among the biggest percentage gainers among Hang Seng Index components. Weakness in fashion retailer Esprit Holdings limited gains in Hong Kong. Esprit plunged 9.5 per cent after it announced plans to raise US$677 million to fund a restructuring of its key businesses. Losses on Wednesday brought Esprit’s share price to its lowest since August 6, paring gains after the company appointed an executive from larger rival Inditex as its new CEO.

HKMA intervenes again to weaken currency (Reuters in Hong Kong) A man looks on in front of a currency exchange booth in Hong Kong. Hong Kong’s dollar remains near the top end of its permitted trading range, despite repeated efforts by the city’s de facto central bank to weaken it. The Hong Kong Monetary Authority stepped into the currency market twice on Tuesday as the local currency hit the top end of its trading range. The Hong Kong Monetary Authority (HKMA) sold a total US$855 million worth of Hong Kong dollars in two interventions to maintain stability in the local currency. In the first intervention, it sold US$505 million worth of Hong Kong dollars at HK$7.75, the strong-side of the trading range of HK$7.75 to HK$7.85 to a US dollar during the day. With another US$603 million bought on October 19 to curb strength in its currency pushed up by capital inflows, the HKMA has drained US$1,458 million in total after the last intervention in December 2009. “The HKMA will remain closely vigilant of the market developments and act in accordance with the Currency Board mechanism to maintain the exchange rate stability of the HKD,” the HKMA said in an e-mail. The latest intervention will lift the aggregate balance, the sum of balances on clearing accounts maintained by banks with the HKMA, to HK$159.9 billion by October 25, according to Reuters data. The Hong Kong dollar’s strength is in line with other Asian currencies because the US Federal Reserve’s quantitative easing measures weakened its currency, traders said. The currency is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85 to the US dollar. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact.

 China*:  Oct 26 2012

Medical tourists to Japan unfazed by Diaoyus row (By Agence France-Presse in Tokyo) Wealthy seeking treatment seem unwilling to let argument between two nations get in their way. As relations between Tokyo and Beijing appear increasingly in need of major surgery, officials in the far north of Japan are hoping the infant industry of medical tourism can thrive unscathed. They are quietly confident that a row over disputed islands will have little impact on the growing number of relatively wealthy Chinese visiting Japan for its high-quality treatment, keeping the lifeblood pumping in an industry that analysts say could one day be worth US$7 billion (HK$54 billion) a year. For a tourism industry that was battered by the tsunami and subsequent nuclear disaster of last year, with visitor numbers down by around a quarter, that might be just what the doctor ordered. Zhang Lan, 30, two translators in tow, said as staff welcomed her to a well-equipped hospital in Asahikawa in Hokkaido: "I came here because Japanese medicine has a very good reputation in China." Treatments at the Asahikawa hospital range from head-to-toe check-ups, with a focus on cancer screening and neurological diseases, to anti-ageing and cosmetic surgery, including breast enhancements and liposuction. Getting a clean bill of health was at the top of Zhang's agenda, but she also liked the idea of breathing fresh air in a region known for skiing and nature tourism, a big change from her hometown of Shenyang , an industrial city in northeastern China. "I'm here this time for a follow-up to the last check-up, as the doctor said I needed careful observation of my stomach," she said of her US$2,400 trip, which took place before the current tensions erupted. "But I really liked the hot springs, the food and the sea the last time I visited. I'm not interested in big cities such as Tokyo and Osaka, because China has many big cities. Hokkaido is placid and pastoral. The air is fresh and you can relax here." Of the several hundred thousand foreign tourists who visit Hokkaido annually, the lion's share are from East Asia, with many keen to see the dramatic mountains, extensive pastures and rich woodlands. That image is a key selling point for Zhang's tour operator, Medical Tourism Japan, which brought 270 Chinese customers to northern Japan last year, a number it hopes will grow. Company president Katsuya Sakagami said most clients chose Hokkaido because it "has the image of being an 'Asian Switzerland' to the Chinese". "I was originally selling medical equipment and came to realise the potential of medical tourism for Chinese people." A long-running dispute over the sovereignty of islands in the East China Sea known as the Senkakus in Japan and the Diaoyus in China is a worry for the industry, said Kayo Uemura, researcher at the Development Bank of Japan. Violent anti-Japanese protests shook a number of Chinese cities last month after Japan nationalised the islands, and airlines linking the two countries reported a fall-off in demand. Japanese exports to China, its biggest trading partner, tumbled 14.1 per cent that month as a result of the row and the impact of a broader slowdown. Uemura said: "The territorial row could last longer than most Japanese had expected, so we have to watch how many Chinese tourists will come back to Japan, say, by the start of next year." Cho Shosho, a senior official and a medical translator at Medical Tourism Japan, said the company had noticed some impact from the row, including cancellations during the long Chinese holiday at the start of October. "But we think it is a temporary phenomenon," she said. "Wealthy Chinese are not very hostile to Japan and I think our customers want to come to Japan but are staying away because anti-Japanese sentiment is rising at the moment. "We are still receiving inquiries from Chinese customers and I think they will come back later, probably after the Chinese leadership change [in mid-November]. It will be like the temporary drop in tourism in Japan after the quake and tsunami disaster last year," Cho said. Japan's medical tourism sector is a sliver of the wider industry, with just 10,000 visitors annually, Uemura said. She said the potential demand could see those figures soar to more than 400,000, with Russians and Americans among those visiting in a market that could be worth 550 billion yen (HK$54 billion).

China overtook the US as the world’s top destination for foreign direct investment in the first half of this year, according to the United Nations Conference on Trade and Development (UNCTAD). China absorbed US$59.1 billion in foreign direct investment (FDI) in the first six months, down slightly from US$60.9 billion a year earlier, the agency said in a report. The United States attracted USUS$57.4 billion this year’s first half, down 39 per cent from a year earlier, it said. During last year, the US received US$227 billion in FDI while China attracted US$116 billion, according to UNCTAD. The third biggest recipient of FDI in the first half of this year was Hong Kong, with US$40.8 billion. The report said the third biggest last year was Belgium, with US$102 billion. In the first half of this year, developing economies received half of all FDI flows, matching the developed world for the first time, the report said, though the shift in the balance was driven by declines in FDI going into the US and the European Union. Global foreign direct investment inflows fell 8 per cent in the first half of this year to US$668 billion compared with a year earlier, the report concluded. “This reflects a protracted period of weak external demand with consequent strongly negative effects on exports and increasing uncertainty about high-growth emerging countries,” the report said. A slowdown in the volume of cross-border mergers and acquisitions also helped drive the first-half decline, the report said. It said that “early indications show that FDI flows to the United States might be stronger in the second half of this year.” China’s Ministry of Commerce reported last Friday that China attracted US$83.4 billion in FDI between January and September, down 3.8 per cent from a year earlier. Beijing is seeking to attract investment that will help it restructure its economy away from the low-cost manufacturing, which has driven rapid development for the past three decades, and into higher value-added enterprises. That in turn has pushed investors seeking low-cost labour to invest in other developing markets. “China is experiencing structural adjustments in their FDI flows, including the relocation of labour-intensive and low-end market-oriented FDI to neighbouring countries,” UNCTAD said. China becomes world's largest FDI recipient in first half of 2012 (Xinhua) China exceeded the United States to become the world's largest recipient of foreign direct investment (FDI) in the first six months of 2012, a report released by the United Nations Conference on Trade and Development (UNCTAD) showed on Tuesday. It's mainly due to a 39.2 percent fall in FDI flows to the U.S., compared to a three percent decline in China, said Zhan Xiaoning, director of UNCTAD Division on Investment and Enterprise. However, early indications show that FDI flows to the U.S. might be stronger in the second half of 2012, he said. Zhan said China once claimed the world's top destination for FDI in 2003. In the first six months of the year, China attracted 59.1 billion U.S. dollars in FDI while the U.S. attracted 57.4 billion U.S. dollars, according to the latest Global Investment Trends Monitor. As a result of the performance of the U.S. and a decline of 23 billion U.S. dollars in flows to BRIC countries, the global FDI stood at 668 billion U.S. dollars, dropping by eight percent over the same period of 2011, said the report. The report also showed that developing countries (without transition economies) for the first time absorbed half of global FDI inflows. UNCTAD projects the FDI flows will, at best, level-off in 2012 at slightly below 1.6 trillion U.S. dollars, according to the report. Zhan said the slow and bumpy recovery of the global economy, weak global demand and elevated risks related to regulatory policy changes continue to reinforce the wait-and-see attitude of many transnational companies toward investment abroad.

Scapegoating China for U.S. domestic woes unwise (By Wang Aihua) During the latest U.S. presidential election debate, both candidates have voiced willingness to collaborate with China but at the same time blamed the country for America's domestic woes. The candidates, Democrat Barack Obama and his Republican challenger Mitt Romney, should realize that simply blaming China will not do -- only by working on the origins of America's downward economic situation can they really solve domestic problems such as unemployment. Two main accusations the U.S. presidential candidates, in particular Mitt Romney, have been filing against China is that the country has "stolen" American jobs by absorbing U.S. capital and that it has "manipulated" its currency, the yuan, to keep the exchange rate at a lower level and retain competitiveness in exports. U.S. politicians seem self-contradictory on these fronts in the middle of election campaigns. One the one hand, the United States has repeatedly complained that China is not being open enough to foreign investment and that the foreign investment environment in China is worsening with the Chinese government gradually taking back its preferential policies on foreign companies. If the United States truly wants China to be a more attractive destination for foreign investment, it should not at the same time blame China for actually attracting capital from the United States. As the incumbent president and a former Massachusetts state governor, the two candidates should have enough knowledge and experience to know that capital flow in the free global market of today cannot be easily manipulated. Giving it a second thought, the candidates should be pleased because all these so-called "stolen" jobs have enabled American citizens to live decent lives with cheaper products at the cost of Chinese resources and manpower. Another card the candidates have been playing is about the Chinese yuan, which they insist has been kept by China at a lower value than it should. To "fight back," the Obama administration has already launched a series of protectionist moves against China-made products. Romney said he would label China a "currency manipulator" if he wins the election, and argued China has more to fear than the United States from a trade war between the two countries. However, even Obama himself acknowledged China's changes in exchange rates -- the yuan has appreciated by at least 31 percent since 2005 and U.S. exports to China have doubled during his tenure. Blaming China for the high unemployment and dim exports of the United States is an easy way for the Obama administration to divert responsibility and Romney to woo voters. To create jobs, however, the United States needs to loosen restrictions on exports of hi-tech products to China, open its arms to Chinese investment, and prevent the repetition of moves such as blocking Chinese telecommunications companies Huawei and ZTE without convincing evidence.

U.S. urged to ease restrictions on Chinese investment (Xinhua) Chinese Vice Premier Li Keqiang (2nd R) meets with former White House Assistant for National Security Affairs Stephen Hadley, former Deputy Secretaries of State James Steinberg and Richard Armitage as well as former Assistant Secretary of Defense Joseph Nye in Beijing, capital of China, Oct. 23, 2012. The U.S. has been urged to relax restrictions on high-tech product exports to China and eliminate unreasonable regulations for Chinese companies investing in its country. Chinese Vice Premier Li Keqiang made the comments when meeting with a U.S. delegation in Beijing. The delegation included former White House Assistant for National Security Affairs Stephen Hadley, former Deputy Secretaries of State James Steinberg and Richard Armitage as well as Joseph Nye, former Assistant Secretary of Defense. As the top two economies in the world, the U.S. and China are and will be highly complimentary to each other in the coming decades. The essence of bilateral trade cooperation is of mutual benefit, Li said. "The key to strengthen our cooperation is to jointly combat protectionism and provide a level playing field for businesses in the two countries," Li said. This year marks the 40th anniversary of resumption of contact between China and the U.S.. Relations have made historical achievements, the key to which is that both sides have enhanced mutual trust, enlarged common ground and strengthened mutual interests, Li said. China and the U.S. should stick to the right path to push forward ties and explore a new relationship pattern, Li said. He said both sides should deepen mutually beneficial cooperation, manage disagreements and disputes and promote bilateral ties toward healthy and stable development, Li said. Echoing the vice premier's views on bilateral ties, the U.S. said both the Democrats and Republicans supported a strong bilateral relationship. As former U.S. officials and long-term supporters to U.S.-China relations, they are willing to use their influence to contribute to bilateral friendly ties and regional stability and peace. Li also stated China's solemn stance on the Diaoyu Islands issue, stressing the international community should jointly protect the outcomes of the victory of the Second World War and the post-war international order.

Mo Yan, China's first Nobel literature laureate, could see his income exceed 200 million yuan ($32 million) this year, according to estimates from his publisher. Beijing Genuine & Profound Culture Development Co Ltd will publish more than 1 million copies of a collection of Mo Yan's works, which will net the writer 70 million yuan, China Economic Weekly reported. Mo's five new books, including Our Jing Ke, which hit the market on Oct 17, is also expected to bring him royalties of 40 million yuan, the report said. Meanwhile, Mo Yan - whose real name is Guan Moye - could further increase his revenue if his novels are adapted into movies. One of his film scripts has already been auctioned for 1.2 million yuan. The publisher said Mo Yan's income this year could exceed 200 million yuan, which could make him China's wealthiest writer. The author was chosen as the winner of this year's Nobel Prize for Literature on Oct 11, the prize comes with a financial award of 8 million Swedish krona ($1.2 million).

Asian economies turn to yuan (By Gao Changxin) A "renminbi bloc" has been formed in East Asia, as nations in the region abandon the US dollar and peg their currency to the Chinese yuan — a major signal of China's successful bid to internationalize its currency, a research report has said. The Peterson Institute for International Economics, or PIIE, said in its latest research that China has moved closer to its long-term goal for the renminbi to become a global reserve currency. Since the global financial crisis, the report said, more and more nations, especially emerging economies, see the yuan as the main reference currency when setting their exchange rate. And now seven out of 10 economies in the region — including South Korea, Indonesia, Malaysia, Singapore and Thailand — track the renminbi more closely than they do the US dollar. Only three economies in the group — Hong Kong, Vietnam, and Mongolia — still have currencies following the dollar more closely than the renminbi, said the report, posted on the institute's website. The South Korean won, for example, has appreciated in sync with the renminbi against the dollar since mid-2010. China has long vowed to raise its currency's global sway, along with the rise of its economy, which became the world's second-biggest last year. The goal has seen significant development in recent years as the country promotes renminbi-denominated cross-border trade and gradually loosens control over its capital accounts. As a result, Hong Kong has quickly risen to be the world's biggest offshore renminbi trading center, with about 600 billion yuan ($95 billion) in deposits. According to the latest report by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, renminbi-denominated trade accounted for 10 percent of China's total foreign trade in July. The figure was zero just two years ago. From July 1 to Aug 31, global payments in the renminbi rose 15.6 percent, according to SWIFT, as payments in other currencies fell 0.9 percent on average. The renminbi had a market share of 0.53 percent in August and has overtaken the Danish krone to become the 14th-highest global payment currency, the member-owned cooperative said. Cross-border trade settled in renminbi will triple to 6.5 trillion yuan ($1.03 trillion) within three years as relations with the world's second-largest economy grow, Royal Bank of Scotland Group PLC was quoted as saying by Bloomberg on Oct 9. Settlements will grow 12 to 20 percent this year, reaching $1.03 trillion in two years, up from $330.8 billion in 2011, said Janet Ming, head of the China desk for RBS in Europe, Middle East and Africa. "We're seeing a lot more customers starting to practice in renminbi," Ming was quoted as saying by Bloomberg. "For most companies and banks, China and India is where the growth is. If you're dealing with China, ignoring renminbi is not the right thing to do." Wang Jianhui, chief economist with Southwest Securities Co Ltd, agreed. "Investors are looking for new reserve currencies at a time when both the dollar and euro are under pressure. This is a good opportunity for the yuan," he said. The Royal Bank of Scotland predicted in a report on Monday that renminbi will become a fully convertible currency in 2015. The PIIE said that renminbi could rise to the status of an international currency in 10 to 15 years if the country can reform its financial market and allow greater access for foreigners via capital account liberalization. Forming the new renminbi bloc is the result of China's rise as the main trading partner in the region. China's share in East Asian countries' manufacturing trade has risen from 2 percent in 1991 to about 22 percent this year, according to the PIIE report. In fact, trade is also propelling the rise of the renminbi outside East Asia. The currencies of India, Chile, Israel, South Africa and Turkey all now follow the renminbi closely, in some cases, more so than the dollar. The renminbi would be more attractive if the country could further liberalize its financial and currency markets, the report said. Some fear that China might follow Japan's rise and fall over the past decades, but the institute thinks otherwise. "They should take note that even during the heady days of the Japanese miracle, the yen never came close to rivaling the dollar as a reference currency. There was never anything close to a yen bloc in East Asia," the report said.

China's development benefits all: US city official (Xinhua) China's development has not only brought better life for its own people but also contributed to world prosperity, and hence should be welcomed, a Texas city official has said. "If the world needs to advance, it should be built on previous advances. If China advances, the whole world will build on that success, " Danny Nguyen, council member of Missouri city, Texas, told Xinhua in a recent interview. "I knew of China when I was a kid in elementary school in Vietnman, studying the history of China. You know China and Vietnam have long relations and that is part of history. The two countries share many similarities," said Nguyen, who came to the U. S. in 1984 as an immigrant from Vietnam. As a city official, Nguyen came to have hands-on knowledge of China when he first visited China three years ago with a delegation headed by Houston Mayor Annise Parker to the Shanghai World Expo. Last year, he had the opportunity to visit southern China's cities Foshan and Shenzhen with a delegation from Fort Bend county, Texas, and helped hammer out a MOU between Fort Bend and Foshan. "China's economic performance over the past 30 years has been remarkable. It was outstanding. I have seen it with my own eyes. That's a unique success story," Nguyen said. In Foshan city, Nguyen said, "we were very impressed with all the transformation that has taken place in the city, all the buildings and industries. " This very dynamic city "is a good match for Fort Bend county," Nguyen said. The development, like what is taking place in Foshan, "is great for China, because in the process of transforming and improving economically, China has reduced poverty significantly, " said Nguyen, adding that the development enables China to provide a better-quality of living for its people. "In terms of the whole world, I think we also benefit from that (China's development). I believe the advancements of any country will have direct impact on the whole world, "Nguyen added. Asked if he thinks that China's development, like some people have said, may be a threat to other countries, Nguyen said: "I do not think China's development is a threat." "If you look at it from the social, cultural and economic perspectives, China's development is great," he said. "It is a great thing because it's beneficial to everyone. " "For example, there is a group of people going to school in a same group, and one person is doing extremely well. Do you think that person is a potential threat to others? I think that person's doing well is good news, because if a person advances, others will have the opportunity to advance too," said Nguyen. In Nguyen's view, the real threat to countries "is poverty, disease, pollution, not people to people." In that sense, China's development, which contributes to the world's prosperity, "should be welcome and is something that people should feel excited about, " he said. China's development is also good to the US in many senses, Nguyen said. "We (Americans) are able to have a lot of choices when it comes to shopping. The consumers benefit from it (China's development)." More and more Chinese people, who are much well-off today thanks to the country's economic development, are visiting and traveling to other countries, Nguyen said. Chinese tourists come to the US, spending money and purchasing products, he said. Nguyen said he once accepted a Chinese delegation of 50 delegates to Houston. "They (the delegates) spent money like crazy. That is only a small group. What I see is that the whole population of China will prosper and will have that purchasing power too. Isn't that great?" he said. The state of Texas enjoys close trade relations with China. As Texas' third largest trading partner, China bought more than 10.9 billion US dollars worth of Texas goods in 2011, Texas Governor Rick Perry said in a letter to a recent US-China cooperation forum in Houston. Nguyen also stressed the importance of the trade ties. " Without the cooperation between China and the US, I think a lot of companies in the US will close doors," he said. Nguyen expressed the hope that his visit to Foshan and the signing of a MOU between Foshan and Fort Bend "will really lead to economic development" on both sides. "The MOU encourages trade development. Foshan is very well known for porcelain, electronics and furniture. Fort Bend is a fastest-growing county. We invite them to set up manufacturing facilities, a distribution center and outlets here. The local government is very aggressive in providing incentives. We also encourage US companies to come to Foshan to purchase some supplies," Nguyen said. The Chinese companies' arrival will bring vast benefits to the local economy, Nguyen said. You see a piece of vacant land, it would turn into a building. When a vacant land transforms into a building, it creates commercial tax base, jobs, and you provide services to the local county, " he said. Nguyen said he has seen an increasing number of delegations to the US from China in the past two years, and he expects that trend to continue. "I would like to see more (Chinese delegations) in the future, " he said.

Hong Kong*:  Oct 25 2012 

Where now for the Hong Kong dollar? (By Bloomberg) Questions arise on future of the currency and its relationship with the yuan, with one hedge fund betting that the link to the US dollar will not last. Hong Kong's determination to maintain its exchange-rate peg to the US dollar has the confidence of currency-forward traders even as it fails to sway hedge-fund investor William Ackman. The founder of New York-based Pershing Square Capital Management said at the weekend that he was keeping a wager that would profit if Hong Kong let its currency appreciate. Two-year forward contracts are weaker than the average in the past three years and the median forecast in a survey is for an exchange rate of HK$7.76 against the greenback at the end of next year, within the allowed trading range of HK$7.75 to HK$7.85. The Hong Kong Monetary Authority said it bought US$603 million during New York trading hours on Friday after the currency's move to HK$7.75 obliged it to intervene. The linked exchange rate has given Hong Kong companies stability in commercial contracts while tethering monetary policy to that of the United States, where borrowing costs are being held down to help create jobs and prop up the housing market. Hong Kong's unemployment rate is near a four-year low and home prices are at record highs. "Any change in the peg would have certain costs but highly uncertain benefits," Robert Minikin, senior foreign-exchange strategist at Standard Chartered in Hong Kong, said yesterday. A shift "is likely to be long-delayed and perhaps come in the context of full yuan convertibility" he said, adding that the mainland currency was unlikely to trade freely for another 10 years or more. The city's officials have repeatedly said there were no plans to adjust the peg and HKMA deputy chief executive Arthur Yuen Kwok-hang said on Friday that the authority saw no need to alter the arrangement. Ackman said in September last year that he was buying Hong Kong dollar call options, which give investors the right to buy the currency at a set price by a specific date. The easiest way to allow the currency to appreciate would be to change the peg to HK$6 per dollar and then link to the yuan over three to six years, he said at a conference last year in New York. "Yes we continue to have the bet on," Ackman wrote in an e-mailed response to questions over the weekend. He declined to say whether he would be adjusting the size of his wager now that the upper limit of the peg was being tested. "The recent increase in demand for the local currency is related to a less-strained European market, weakness in the US dollar and declining US interest rates, which have prompted capital inflows into currency and equity markets in the region," the HKMA said in a statement on Saturday that gave details of the intervention, the first since December 2009. "Upward pressures have similarly been observed in other Asian currencies." Donald Tsang Yam-kuen, Hong Kong's former chief executive, said last year that the Hong Kong dollar's peg would stay at least until the yuan was freely traded. China ended a peg in 2005 and the People's Bank of China said last month it was moving toward full convertibility "in a steady and orderly manner". The goal was likely to be achieved by 2020, Chen Yulu, an academic adviser to the central bank, said in Beijing last month. Hong Kong linked its exchange rate to the US dollar in 1983 when negotiations between China and Britain over the city's return to Chinese rule spurred capital outflows. In 2005, policymakers committed to limiting the currency's decline to HK$7.85 per US dollar and capping gains at HK$7.75. Home prices that surpassed their October 1997 peak and rising costs of food imports are boosting the risk of asset bubbles in Hong Kong and fuelling calls for a review of the peg. Joseph Yam Chi-kwong, the former HKMA chief who helped introduce the currency link and defended it against speculators during the Asian financial crisis, said in June the city should review the exchange-rate system. He said alternatives included widening the trading band or turning the range into a "corridor" whose width, slope and centre could be periodically reviewed. Yam has been the most senior serving or former Hong Kong official to speculate on changes to the currency link. He fended off a speculative attack to weaken the Hong Kong dollar and break the peg during the Asian financial crisis in 1998, a policy that involved US$15 billion of stock purchases and proved profitable for the city.

Cargo airlines losing out to ocean container carriers (By Keith Wallis) More companies are shipping their products by sea instead of by air in a shift that is seen as a permanent trend by industry executives. Cathay Pacific Cargo has recorded a drop in freight volumes but is unsure whether it is because of a shift to sea transport. Airlines have permanently lost out to ocean container lines as box carriers grab an increasing share of the freight that was previously moved by air, according to logistics and cargo executives. Alfred Hofmann, the senior vice-president for sea freight in the Asia-Pacific at logistics giant Kuehne+Nagel, said the structural shift was permanent. "It's a trend that can't stop," he said. Hofmann's views were supported by Charles Wellins, a senior vice-president of supply chain solutions at Ceva Logistics, who said there was a growing shift to ocean freight by cargo owners who had a historic reliance on airfreight. Nick Rhodes, the director of Cathay Pacific Cargo, tended to agree with the prognosis. "Those guys are the experts as they see both sides of the logistics business," he said. "I suspect they are right and that much of the shift to sea is permanent. Only time will tell. Our loads are definitely down but it is hard to say how much is due to less production, more competition or modal shift. A bit of each, I suspect." Hofmann said the pharmaceutical industry and manufacturers of temperature-controlled products were at the "forefront of change" from airfreight to sea freight. He pointed out that high-technology electronic manufacturers aimed "to convert over 50 per cent of notebook shipments to ocean". "Some major players are above that mark," Hofmann added, without naming names. "Tablets go by ocean after the first wave by air," he told about 600 shipping, logistics and manufacturing executives at last week's Journal of Commerce TPM conference in Shenzhen. The International Air Transport Association, a lobby group of about 240 airlines, said Asia-Pacific airlines were the most exposed to weak cargo demand because the region's carriers had 40 per cent of the global cargo market. The association said cargo demand was down 6.6 per cent in the eight months to August, compared with the same period last year. Hi-tech industries began moving shipments from air to ocean about three years ago. At the time, cargo airlines such as Cathay Pacific Airways were unsure if it signalled a short-term trend in response to the poor economic conditions or a structural shift. Both Hofmann and Wellins said it was a structural issue. Hofmann added that the economic downturn sparked by the collapse in bank liquidity and trade caused by the Lehman Brothers downfall caused manufacturers to re-examine their supply chains. Pointing to the cost differential, moving 10 tonnes of cargo by sea from Shanghai to Los Angeles was slightly more than 5 per cent of the cost of moving the same cargo by air - US$2,600 versus US$46,000. Container line Matson said the transit time to ship a container from Shanghai to Los Angeles was 10 days, compared with four days by air, depending how much cargo owners paid to transport their freight. Logistics firm DB Schenker said shipping freight by sea from Shanghai to Hamburg would take 28 days, compared with four to six days by air. Hofmann said sea transport would be considerable cheaper, US$2,200 to ship 10 tonnes by sea against US$33,500 by air. But there are also challenges in shifting freight shipments from air to ocean. Hofmann said there needed to be better planning between manufacturers, logistics operators and shipping lines to achieve more reliable transit times and a reduction in overall lead time in shipping product. He added that cargo owners could achieve a reduction in costs by better inventory control and improved cash flow.

Hong Kong husbands lead mainland and Taiwan in doing housework (By Phila Siu and Gary Cheung) The city's married men do more around the house that those in the mainland or Taiwan. They may complain about spending so much of the day stuck in the office, but married Hong Kong men also find time to do an average of 1.41 hours of housework a day, according to a series of surveys. Married mainland men manage 1.1 hours and Taiwanese 0.73 of an hour. For married women, Hongkongers still lead with 2.7 hours of housework on average in a day, compared to 2.3 hours on the mainland and in Taiwan. "Hong Kong men also take on more housework than men in other South Asian countries," the report on the Hong Kong Panel Study of Social Dynamics says. "It shows that Hong Kong has better equality between men and women." It is the first part of a five-year study, completed at the end of last year by the University of Science and Technology's Centre for Applied Social and Economic Research. The mainland data comes from a 2010 Peking University survey, while Taiwan's prestigious Academia Sinica made their findings in 2006. Hong Kong men still lag behind married Scandinavian men when it comes to housework, said the director of the Hong Kong centre, Dr Wu Xiaogang. In countries such as Sweden and Denmark, where few families have domestic helpers, husbands put in about two hours a day, he said. The Hong Kong study polled more than 6,000 adults. It found that the more Hong Kong married women contributed to the family financially, the less housework they did. However, they return to more housework once they contribute 50 per cent or more to family finances. This is because men are still seen as economic pillars while women are responsible for the home and family. "While the couples' financial contribution to their family have some impact, the traditional gender ideology still cannot be neglected," the report says. Professor Joe Leung Cho-bun, of the University of Hong Kong's social work department, said: "I believe this ideology will change. But it is hard to say if this ideology is good or bad."

55 art galleries join forces to play role in developing cultural policies (By Vivienne Chow) Gallery leaders Karin Weber and Henrietta Tsui. More than 50 galleries have set up an industry association aimed at putting themselves back on the map at a time when the arts are developing rapidly in the city. The co-presidents of the Hong Kong Art Gallery Association say it will serve as a voice representing the industry in developing cultural policies. The association also hopes to maintain the professional standards of the growing number of galleries. "We need a voice to represent galleries. We are aiming at better co-operation between galleries," co-president Karin Weber said. The galleries have been overshadowed recently by record-breaking sales at art auctions and new ventures in the city by international galleries. The other co-president, Henrietta Tsui, said: "Art galleries are part of the art ecology. They play an instrumental role in arts development. Veteran galleries are responsible for the development of Asian art, because Hong Kong became a window for these new art forms. "We need to set the record straight and put [Hong Kong galleries] back into this ecology." Local veterans such as Hanart TZ Gallery, Plum Blossoms Gallery and Schoeni Art Gallery are among the founding members. They join international names such as Gagosian Gallery, White Cube and Galarie Perrotin on the members' list of 55. Tsui said many attempts had been made to set up a such an association in the past 30 years but none took off. According to a source familiar with the business, one of the reasons was that the various galleries could not agree on their business practices. Tsui and Weber say it will be different this time because the association took it seriously enough to draft principles of association that resemble a constitution. Following models in Europe, the association has also issued a code of ethics to its members to ensure professionalism and trustworthy dealing. The association might in the long run perform arbitration for clients and member dealers should there be a dispute. Another mission is to groom young local gallery operators, said Tsui, as they hold the keys to the industry's future. Mimi Gradel of Blindspot Gallery, one of the members, hoped the association would help new galleries to develop and expand. "As a young gallery our biggest obstacle is to stand out from the competitive environment of the art industry in Hong Kong and to seek buying interest from both overseas and Hong Kong," Gradel said. "The size of the collector circle and general lack of interest in art remain a big problem for local galleries like us." Sports, culture, performing arts and publication sector lawmaker Ma Fung-kwok said he welcomed the establishment of the association.

HKMA moves to weaken Hong Kong dollar again (By Agence France-Presse in Hong Kong) The Hong Kong Monetary Authority intervened in the currency market on Tuesday for the second time in a week as the local dollar hit its upper trading limit against the US dollar. The HKMA sold HK$3.91 billion (US$505 million) in forex markets, saying the move was necessary to “maintain stability” of the city’s unit. The intervention, on a public holiday, followed a similar move on Friday in New York. The authority is obliged to act by buying or selling the local dollar whenever it touches either side of the HK$7.75-7.85 trading band against the US dollar, to which it has been pegged for 29 years. The HKMA told reporters it “will remain closely vigilant of the market developments and act in accordance with the currency board mechanism to maintain the exchange rate stability of the Hong Kong dollar”. The authority sold local dollars worth US$603 million on Friday to curb the local unit’s rise, which it said had been fuelled by weeks of capital inflows from overseas. The US Federal Reserve’s monetary easing has also weakened the greenback. Friday’s intervention was the first since 2009. The moves reignited talk of abolishing the local currency’s peg to the US dollar, with some leading officials – including the former head of the HKMA Joseph Yam Chi-kwong – calling for a review. Yam said in a research paper earlier this year it was time for other options to be explored, including a peg to a basket of currencies or a complete float. The HKMA made multiple interventions to weaken the local currency in 2008 and 2009 at the height of the financial crisis, as traders moved into the Hong Kong dollar which was seen as a safe haven.

Hong Kong Special Administrative Region government held an annual official ceremony on Tuesday in commemoration of those who died in the defense of Hong Kong in World War Two between 1941 and 1945. Hong Kong's chief executive C Y Leung attended the ceremony and laid a wreath at the City Hall Memorial Garden. Senior government officials and representatives from the Judiciary, the Legislative Council and the Executive Council were also present at the ceremony. They were joined by representatives of the central government organizations in Hong Kong, members of the concerned consular corps, religious leaders, community dignitaries, former members of the Hong Kong Independent Battalion of the Dongjiang Column, war veterans' groups, uniformed groups and student groups.

Hundreds of national education supporters marched from Victoria Park to the government headquarters at Tamar, waving banners which said "Hongkongers are Chinese." Organizers said about 1,000 demonstrators took part but the police estimated there were less than 600. The protesters, responding to a call the group Caring Hong Kong Power made on the internet, wore white T-shirts and chanted slogans including "against the black shirts, return our rights to learn," referring to the anti-national education movement. Ng Chi-wah, a 68-year-old retiree, and his wife took their two grandchildren, aged five and three, to the march. "We want them to know about their country while they are young ... everything - good and bad," he said. "Those against national education can express their opinion, but they can't exploit the rights of those who want to learn." Organizers said the media had wrongly portrayed opponents of the curriculum as having the mainstream view. Some believe the authorities shelved the subject's guidelines because of pressure from opponents of the subject. "The government has listened to public opinion," said civil servant Lee Kin-shing, 47. "But we have also been supporting the education program, though not in a high-profile manner." He doubts that national education will "brainwash" his children. "It will not be easy," he said. An 18-year-old vocational school student, who joined the march against national education organized by the student group Scholarism in July, also took part yesterday to learn both sides of the argument. "I don't agree with some of their slogans like `against the black shirts,"' Alex Ng Yu-yat said. Former Democratic Party member Andrew Fung Wai- kwong, who was among the marchers, said he was disappointed that the authorities shelved the guidelines under pressure and wanted them to be reactivated.

 China*:  Oct 25 2012

China to protect inland shipping (By Reuters in Shanghai) China is to prohibit domestic companies from operating foreign-made ships on domestic waterways and will block foreign shipping service firms from selling services in China, according to regulations issued by China’s State Council. The rules protect the domestic shipping industry, hard-hit by overcapacity and slowing global trade, and could signal plans to restrict foreign companies from selling into upcoming waterway infrastructure projects approved as part of a 1 trillion yuan (US$160 billion) spending package in September. The rules, set to come into effect from January 1, prohibit ”foreign companies, financial organisations and individuals from operating waterway transport services”, the State Council said in an announcement on an official government website. Foreign shipping service enterprises are also banned from hiring Chinese ships or shipping space, “or using other means to covertly operate waterway transport services”. Chinese operators are also restricted from using foreign boats, unless there is a shortage of Chinese ships and the company gets permission from the State Council. Ships registered in the special governed zones of Hong Kong, Macau and Taiwan also need to adhere to the rules for foreign ships, unless given special exemption.

Rare bird rediscovered after 83 years (SCMP) It may not look like much but this is one of the world's rarest birds. Sillem's mountain finch was first spotted in Aksai Chin, Xinjiang, by Dutch ornithologist Jerome Sillem in 1929. It was not seen again until this June, when another was snapped by a French nature photographer, Yann Muzika, in the Yenigou valley, Qinghai, 1,500 kilometres away. Writing on his blog, Yann revealed that he 'did not venture into the upper reaches of Yenigou Valley... with any scientific goal, and it was not a birdwatching nor a photography expedition either'. He added: "It was just a trek with 2 friends, that was about to fail since Bertrand and myself were struggling hard with a food poisoning. "After setting up camp, there was still time to explore the surroundings and that’s when I had the first sighting, and photography, of a finch that I had not seen before. It was sitting quietly among a loose flock of what I identified as being female Tibetan Rosefinches (Kozlowia roborowski), a bird that I had not seen before either, but that was on my short list of 'birds to look for' during the trek." Not recognising the bird, and unable to determine what it was, Yann sent the photograph to Krys Kazmierczak of the Oriental Bird Images database for the Oriental Bird Club. Yann added: "He immediately realised the significance of the 'mystery bird" photo that had been emailed to him." Despite reaching the conclusion that this is the rare Sillem's mountain finch, Yann says he would like to obtain a blood sample from the bird in order to analyse its DNA.

Romney dismisses prospect of China trade war in last debate (By Agence France-Presse in Boca Raton, Florida) “It’s pretty clear who doesn’t want a trade war. And there’s one going on right now, which we don’t know about,” Mitt Romney said at the final debate on Monday. “It’s a silent one. And they’re winning.” US presidential candidate Mitt Romney on Monday dismissed suggestions that he would start a trade war with China as he and President Barack Obama both vowed a firm line with Beijing. Romney and Obama, who have both talked tough on China, adopted a milder tone on the Asian giant at their final presidential debate as they both pledged co-operation with the rising power despite disagreements on trade. “China’s an adversary and also a potential partner in the international community if it’s following the rules. So my attitude coming into office was that we are going to insist that China plays by the same rules as everybody else,” Obama said at the debate in Boca Raton, Florida. Romney repeated his promise that, if elected, he would declare China to be a currency manipulator on his first day in office, charging that Beijing has kept its yuan artificially low to flood the market with cheap exports. Asked by moderator Bob Schieffer whether such a move would trigger a trade war between the world’s two largest economies, Romney pointed to the gaping US trade deficit with China – which stood at nearly US$300 billion last year. “It’s pretty clear who doesn’t want a trade war. And there’s one going on right now, which we don’t know about,” Romney said. “It’s a silent one. And they’re winning.” Romney said that trade disputes with China went beyond currency rates. He recalled visiting a company that took in a faulty valve for repair under warranty and discovered that it had a duplicate serial number. “There were counterfeit products being made overseas with the same serial number as a US company, the same packaging, these were being sold into our market and around the world as if they were made by the US competitor. This can’t go on,” Romney said. But Romney, who has sharply criticised Obama in the past as allegedly failing to stand up to the rising power, said that the United States and China “don’t have to be an adversary in any way, shape or form”. “I want a great relationship with China. China can be our partner. But that doesn’t mean they can just roll all over us and steal our jobs on an unfair basis,” Romney said. Under Obama, the Treasury Department has stopped short of declaring China a currency manipulator – a step that could trigger retaliation against imports – and has instead preferred behind-the-scenes diplomacy. Obama, while pledging to do more, said that China’s currency rate was at its “most advantageous point” for US manufacturers since 1993 and that US exports have doubled since he entered office in January 2009. “We absolutely have to make more progress, and that’s why we’re going to keep on pressing,” Obama said. China has allowed its yuan to appreciate against the dollar by some 30 per cent since 2005. While China has faced international pressure, many analysts say Beijing has largely been responding to inflationary pressure. Scott Paul, executive director of the Alliance for American Manufacturing, a group formed by leading manufacturers and the United Steelworkers union, said Romney was “absolutely right on who has leverage in the US-China relationship”. “About one-third of Chinese exports end up in the US. Our consumer market is the best leverage we have. The idea of a trade war is nonsense,” he said. Paul also praised Obama’s focus on manufacturing in his remarks and said: “It’s clear that both candidates believe it is critically important that China play by the rules.” Charles Franklin, a political science professor at the University of Wisconsin-Madison, said the currency manipulation question marked a rare point of “real difference” between Romney and Obama. But the issue is “probably esoteric enough that it is hardly the primary motivation for voters going to the polls in November”, he said. John Frisbie, president of the US-China Business Council, which is made up of companies that do business with the Asian power, said that the top priority to support the US economy should be action at home. “Both presidential candidates have said they will ‘get tough’ on China, but evidence has shown that the best way to make progress is through comprehensive engagement and legal actions – not political rhetoric,” he said.

Dispute adds to Tokyo's woes (By Chen Jia) Exports to China fall 14.1% in Sept as Japan's deficit reaches $7b - Japan's exports to China dropped sharply in September, hit by the row over the Diaoyu Islands, adding to market concerns about the outlook for the world's third-largest economy in the fourth quarter. Workers oversee a container being loaded onto a truck at a port in Tokyo. Japan's exports fell the most since last year's earthquake as the global slowdown, the yen's strength and a dispute with China increase the odds of a contraction in the world's third-largest economy. The total volume of Japan's exports fell 10.28 percent year-on-year in September, which was the largest decline since the aftermath of the 2011 earthquake, leaving a deficit of 558.6 billion yen ($7 billion), according to data released on Monday by Japan's Finance Ministry. This is Japan's third consecutive monthly deficit. Its export volume has shrunk for four consecutive months since June as demand decreased amid weak global growth. The year-on-year drop was 5.79 percent in August and 8.11 percent in July. Japan's exports to China fell 14.1 percent year-on-year in September, the fourth consecutive monthly fall. The decline has accelerated from 9.9 percent in August and 11.9 percent in July, according to official Japanese data. "The significant contraction in Japan's exports was absolutely influenced by strained relations with China since September," said Yao Haitian, a researcher at the Institute of Japanese Studies at the Chinese Academy of Social Sciences. The gloomy export outlook may add to the problems faced by the world's third-largest economy, which could push the Japanese government to take more measures to stabilize growth, Yao said. According to a report from JPMorgan, the row between Japan and China is expected to drag Japan's gross domestic product down by 0.8 percentage points in the fourth quarter. Exports to China, Japan's largest trade partner, are the source of 2.8 percent of Japan's GDP, and its total exports usually contribute 14 to 17 percent of its economic growth. Japanese government lowered its economic expectations for a third straight month in October, as economic indicators showed decreasing machinery orders in August, indicating that the world's third-largest economy may be seeing the longest economic slowdown since the 2009 global recession. "Japan's exports to China may continue to decline in the coming months as the two countries have yet to find a way to resolve the issue," said Yao. Data from China's General Administration of Customs showed that the value of Sino-Japanese trade fell 4.5 percent year-on-year in September, when China saw an increase of 2.2 percent in its exports to Japan and a 9.6 percent decrease in imports. In the first nine months, the countries' trade saw a net decrease of 1.8 percent year-on-year to $248.7 billion, according to the General Administration of Customs. A report from the global market research provider Ipsos Business Consulting said the number of Japanese cars sold in China fell to 122,200 in September from 175,200 in August. The company said the chief contributor to the decline in sales was "the Chinese people's strong reaction to the Diaoyu Islands dispute". The dispute has also affected Japan's foreign direct investment in China. By the end of the third quarter, the growth of Japan's investment in China this year had slowed to 17 percent from 50 percent in the same period last year, reaching a total volume of $5.62 billion, according to the Ministry of Commerce. In the longer term, strained China-Japan relations may also hurt China's economy, specially in cross-border trade and investment, experts said. "It is important to figure out how to control the dispute and take measures to maximize the two countries' common interests," said Ju Jiandong, a professor at the School of Economics and Management at Tsinghua University.

Hong Kong*:  Oct 24 2012 

Hot money spurs developers to rush projects on to market (By Sandy Li and Lulu Chen) Surge in capital inflows prompts developers to catch record rally in property prices and rents and intervention in the currency markets. Potential buyers view a model of the Reach. More than 70,000 people have visited the show flats of the project, one of many being rushed to the market. Property developers are rushing new projects on to the market in response to hot money inflows that are helping to drive prices to record highs. After rising for four consecutive weeks, the main barometer of house prices, the Centa-City Leading Index, reached a new high of 111.19 for the week ended October 14 - tracking an 18 per cent increase in average prices on the secondary home market so far this year. According to Midland Realty, residential rents have also risen to a new record of HK$22.90 per square foot - up 14 per cent so far this year. Vincent Chan Kwan-hing, the chief executive of the residential department at Midland Holdings, said the third round of quantitative easing by the United States Federal Reserve, aimed at boosting the faltering US economy, had triggered a flow of hot money into Hong Kong. "It is having a positive effect on the city's stock and property markets, and riding on the improved sentiment, developers are speeding up the marketing of new projects," Chan said. HKR International yesterday sold 20 of 50 flats released at its Amalfi project in Discovery Bay at an average of HK$9,711 per square foot, agents said. "Cash is no longer king. Strong sales reflect investor and end-user preference for property as a way to hedge against rising inflation," said Louis Ho, a director at Centaline Property Agency. The market will this week focus on the imminent launch of the latest project, the 2,580-unit Reach, jointly developed by Henderson Land Development and New World Development. The biggest launch in terms of the number of units in the past 10 years, the project had attracted more than 70,000 visitors to its show flats since Friday, a spokesman said. Meanwhile, in an effort to combat the impact of hot money inflows, the Hong Kong Monetary Authority is likely to continue to intervene in the currency market to stem pressure on the Hong Kong dollar's exchange rate. The authority sold US$603 million worth of Hong Kong dollars at the strong side of its target trading range of HK$7.75 to the US dollar on Saturday. The move will have the effect of lifting the banking system's aggregate balance, or the sum of balances in the clearing accounts maintained by banks with the authority, to HK$153.3 billion. Analysts said the authority was likely to resort to more interventions in the future. The Hong Kong dollar is nominally pegged at HK$7.80 to the US dollar but the authority intervenes to keep it at between HK$7.75 and HK$7.85 against the US dollar. "Investors are looking for alternative investments with higher returns, and many see Hong Kong as a good option," said Adam Chan, a senior analyst with CCB International. In comments posted on his official blog yesterday, Financial Secretary John Tsang Chun-wah warned that the government would not hesitate to introduce further measures to stabilise home prices. "Home prices will come under downward adjustment pressure should the global economy turn sour dramatically. Small investors and participants should be well prepared and stay on high alert to the market risk," he wrote.

Pro-national education protesters march on Admiralty (By Ng Kang-chung) Waving banners and flags, protesters chanted "support national education" and "give us back the right to learn". Hundreds of parents and students marched through busy streets yesterday in support of national education - the second big event in a week to support the controversial subject. Proponents of the curriculum have been fighting back since the policy was all but dropped by Chief Executive Leung Chun-ying amid widespread protests from parents, teachers and opposition lawmakers, who likened it to "brainwashing" of children by Beijing. Waving banners and Chinese national flags, participants chanted "support national education" and "give us back the right to learn" as they marched from Victoria Park in Causeway Bay to government headquarters in Admiralty. The organisers, Caring Hong Kong Power, said there were 1,000 participants, but police estimated the turnout was about 600. "We like to let the government know that anti-national education is not the only view in Hong Kong," a spokeswoman for the group said. "There are also many people who want national education. "As Chinese, it is absurd that we should refuse to know our country. The critics are not only against the subject, they are against anyone who disagrees with them." Caring Hong Kong Power is a loosely organised group initiated last year by online forum users. They say they aim to counter the growing "anti-everything" sentiment in Hong Kong. Also in the crowd yesterday was Andrew Fung Wai-kwong, a former core member of the opposition Democratic Party. He attended another pro-national education rally outside the government headquarters last week. "My position is very simple and clear," Fung said. "I support us learning about China in a comprehensive and objective way." Fung quit the party in June after he was criticised by the party leadership for having expressed his intention to join the Leung administration.

Number of homes at Kai Tak site must be doubled, says adviser (Olga Wong) Housing crunch means plan for ex-airport site 'needs updating to relieve homes pressure'. The number of new homes planned for the former Kai Tak airport site should be more than doubled, to 70,000 units, a key government adviser said yesterday. Michael Choi Ngai-min, who sits on the Long-Term Housing Strategy Steering Committee, told an RTHK public affairs programme that the government needed to increase dramatically the amount of housing at the site to relieve the current housing crunch. "The low-density development in Kai Tak could barely address people's basic needs," Choi said, outlining a plan that he said could raise the total number of flats far above the current 30,000 and accommodate a population of 120,000. The proposal is the latest sign that the government may be reconsidering the existing plan for Kai Tak, which was approved in 2007. Development chief Paul Chan Mo-po granted a review on the plan last month and, on Saturday, housing chief Anthony Cheung Bing-leung suggested that the site still had room for more flats. Choi recommended boosting the number of private flats by raising to seven from five the plot ratio for 27 hectares set aside for residential building. He said the number of public and subsidised flats could be raised by relocating a proposed sports stadium planned to take up more than 20 hectares close to To Kwa Wan. The extra 39,500 units would be made up of 15,000 private, 17,500 public and 7,000 subsidised units, with a density equivalent to general housing estates in Kowloon, Choi said. The share of private flats would be lowered to 45 per cent from 55 per cent. The proposals face opposition from the sports sector and town planners, who argue that any big changes would violate the consensus reached in a public consultation on the future of the site that lasted two years. But Choi said the housing problem had become much more serious since 2007, with the waiting list for public flats doubling to 200,000 applicants from 100,000 five years ago. "It's true that the plan is a result of the pursuit of a better quality of life for the public in the past few years," Choi said. "But we must opt for change when more than 30,000 households are living in sub-units and the younger generation cannot afford a flat." A government source has said that the government is considering moving the stadium to Sunny Bay on Lantau Island, a suggestion met with huge opposition from the sports sector. Sports sector lawmaker Ma Fung-kwok said he would accept a new site only if it was more conveniently located, had better facilities and could be completed before 2020. "The stadium is a priority for our sector," he said.

Judge to head inquiry into Lamma ferry disaster (By Lai Ying-kit) Justice Michael Lunn at the High Court after the Nancy Kissel case. A High Court judge and a former audit director were appointed on Monday to conduct an inquiry into this month’s Lamma ferry disaster. Mr Justice Michael Lunn of the Court of Appeal will chair the two-member statutory commission of inquiry, working with fellow commissioner Benjamin Tang Kwok-bun, who served as the director of audit until June. The commission will investigate the facts and circumstances leading to and surrounding the collision of two ships off Lamma Island on October 1. The accident killed 39 people and injured more than 100 others. It will also review maritime safety conditions and recommend measures to prevent future accidents. Chief Executive Leung Chun-ying pledged one day after the maritime accident to exercise the power of the Chief Executive in Council by setting up a commission of inquiry. Leung said on Monday that Lunn and Tang were appointed because of their high public standing and distinguished records of public service. The commission is expected to complete its work and submit a report to Leung within six months. Lunn was appointed to the Court of First Instance in September 2003 and named justice of appeal of the Court of Appeal in December last year. He served as chairman of the Market Misconduct Tribunal from August 2005 to September this year. Tang served in various bureaus and departments during his civil service career. He was commissioner of insurance from January 2000 to November 2003 before serving as director of audit from December 2003 to June this year. 

Asia region is in need of gas trading hubs to provide an alternative to oil-linked imports amid the rising volume of gas consumption and trade here, Maria van der Hoeven, chief of the International Energy Agency (IEA), said at the Singapore International Energy Week on Monday. 

 China*:  Oct 24 2012

Diaoyus fallout sees China refocus RMB push to Australia, Canada (By G. Bin Zhao) G. Bin Zhao says the economic fallout from the Diaoyus dispute with Japan means China is now looking at Australia and Canada for direct currency tradingas part of its push for renminbi internationalisation. If direct trade with the Canadian dollar and the Australian dollar can be implemented quickly and smoothly, worldwide renminbi convertibility may be realised in three to five years. On June 1, direct trading began between the renminbi and the Japanese yen, a step which will play a significant role in the process of China's monetary internationalisation. However, the recent Sino-Japanese dispute over the Diaoyu Islands has affected economic and financial co-operation between these two countries, as well as the process for renminbi internationalisation. Therefore, it has become necessary for China to seek direct exchanges between the renminbi and other major currencies. This means the Australian dollar and Canadian dollar will become significant priorities. China is an important trading partner of both Australia and Canada; at the same time, Canberra and Ottawa have been hoping to strengthen their financial co-operation with Beijing. The direct trading of the Australian dollar and the renminbi has more economic significance for Australia than China. Since 2007, China has been Australia's biggest trading partner; today, it tops the charts for both Australian exports and imports. Last year, bilateral trade amounted to A$114 billion (HK$913 billion), accounting for about 23 per cent of Australia's total trade, two-thirds of which was Australian exports to China. Therefore, when China allowed direct trading between the renminbi and the yen, parties in Australia immediately expressed hope that the Australian dollar would be the third currency to be used for direct transactions, after the US dollar and the yen. Wayne Swan, Australia's treasurer, said at a meeting in Hong Kong in July that it was hoped the Australian dollar would realise an early direct exchange with the renminbi, thus greatly reducing bilateral trading costs. In a subsequent visit to Beijing, he expressed this wish to China's senior leaders. Compared with the volume of Sino-Australian trade, the volume of Sino-Canadian trade is smaller, at US$47.5 billion last year. At the same time, China has become Canada's second-largest trading partner and third-largest export market. From 2009 to the end of last year, investment by Chinese enterprises in Canada totalled C$16billion (HK$126 billion), and it will reach more than C$30 billion if the China National Offshore Oil Corporation acquisition of Nexen is approved. With China's rising demand for energy and resource products, investment in Canada must continue to increase; if its currency can be directly traded, Canada will become more attractive to Chinese investors. In addition, China and Canada can consider promoting the establishment of an offshore renminbi business in Toronto. One of the reasons Japan is willing to conduct direct yuan-yen trading is that Japan, in addition to trade and investment demand, is looking forward to boosting the Tokyo financial market and nurturing an offshore market for renminbi financial product transactions. Hong Kong is already an offshore renminbi centre; London and Singapore have also shown great interest and have implemented a number of positive measures. Compared with London and Hong Kong, Toronto has a unique location advantage, as well as many other benefits such as being in a time zone which makes it convenient to do business with all of South and North America, a large international population capable of speaking Chinese, many financial institutions, and developed and efficient financial markets. The local financial industry will benefit from great opportunities if offshore renminbi businesses are developed in Toronto. As renminbi internationalisation starts off, Toronto will create more opportunities for the local financial industry while strengthening its international capabilities. During his visit to China in February, Canadian Prime Minister Stephen Harper mentioned strengthening financial co-operation with China, and Premier Wen Jiabao proposed exploring the feasibility of a Sino-Canadian free trade agreement. Therefore, there would seem to be a sound political basis for the direct exchange between the Canadian dollar and the renminbi, and neither the Chinese nor the Canadian governments have reason to oppose the development of an offshore renminbi market in Toronto. Canada is a G8 member while Australia is also a major developed country; their economies play a vital role in the global market. If China's economic development is to be sustained, Australia and Canada will need to provide it with numerous resources, energy and hi-tech products over the long term. Directly traded currencies will not only reduce the costs of trade, but will also promote bilateral co-operation and development in trade, finance, investment and so on. The first landmark target for renminbi internationalisation is free convertibility worldwide. To trade directly with the currencies of major developed countries is an important step in reaching this target. In other words, after the US dollar and Japanese yen, the renminbi should aim to realise convertibility with the world's major currencies including the euro, the British pound, the Swiss franc and so on. Once this is managed, the goal of free convertibility will be largely achieved. If direct trade with the Canadian dollar and the Australian dollar can be implemented quickly and smoothly, worldwide renminbi convertibility may be realised in three to five years. Optimistically, 2015 is not impossible. G. Bin Zhao is co-founder and executive editor at China's Economy & Policy, the flagship publication of Gateway International Group, a global China consulting firm

Ex-security officials to try easing tensions (By CHENG GUANGJIN and ZHANG YUNBI) US group to encourage China-Japan talks over Diaoyu Islands row. A group of former national security officials from the United States are expected, in a semi-official visit, to try to defuse tensions between China and Japan over the Diaoyu Islands. The group, led by former US deputy secretary of state Richard L. Armitage, started the trip on Saturday and will meet Japanese Prime Minister Yoshihiko Noda on Monday and Chinese senior officials on Tuesday, Japan's Jiji Press News Agency said. Analysts said the visit may help ease the tensions that have arisen between China and Japan and make it easier for the countries to enter dialogues, adding that the US is expected to "do what it says it would do". US Secretary of State Hillary Clinton has endorsed the Armitage visit and given it quasi-official status, the New York Times said. The newspaper quoted a member of the group as saying there are no plans to put a specific proposal before the Chinese and Japanese, but that the group is prepared to discuss a variety of possibilities. Japan's Kyodo News Agency said the visit seeks to avoid long-term confrontation between China and Japan, and the US is expected to take steps to warm the countries' relations. Tensions have soared since the Japanese government completed an illegal "purchase" of the Diaoyu Islands in mid-September. The US has declined to take a position in the dispute but has said the Diaoyu Islands fall under the US-Japan security treaty, a contention that has drawn objections from China. The US stance on the Diaoyu Islands is related to its "pivot to Asia" strategy and its aim, as China's influence becomes greater, to strike a new balance of regional power in East Asia, said Shen Dingli, director of the Center for American Studies at Fudan University in Shanghai. But the continued tensions, especially with the US posing a greater military threat, will only damage the foundation the US stands on in trying to maintain order in the Asia-Pacific region, Shen said recently. The US and Japan have planned a drill to simulate retaking of a remote island from foreign forces. That action will form part of broader Japan-US maneuvers that are to start in early November. AFP reported on Saturday, though, that the governments are likely to cancel the drill out of a fear that it will provoke more anger in China. China dispatched naval vessels, aircraft and helicopters to the East China Sea on Friday, sending them there for a one-day exercise. Despite its call for a peaceful resolution to the islands row, Japan spared no efforts during Japanese Foreign Minister Koichiro Gemba's visits to France, Britain and Germany last week to argue in favor of its claim to the islands. But those on the trips only receive a cold response when they brought up the dispute, reported Japanese newspapeMainichi Shimbun, saying that none of the three countries visited has taken a position in the matter. When asked whether support was obtained during the trip, Gemba did not respond directly, only saying that each of the three parties is in a different situation and no details about the matter can be disclosed, Kyodo reported. Kyodo said Gemba had high expectations for the tour but found it hard to obtain support in the countries he visited. Meanwhile, Tokyo has started to turn to Moscow. During a meeting between Japan and Russia in Tokyo on Friday, the Japanese asked that Russia show understanding toward Japan's stance on the Diaoyu Islands. Japanese newspaper Sankei Shimbun said China's presence in the ocean is expanding and Japan and Russia have a "shared a belief about containing China". In a separate development, 64 Chinese crew members aboard a cargo ship were rescued after their boat caught fire on Saturday evening near waters off Okinawa, an official from the Chinese embassy in Japan told Xinhua on Sunday. Smoke was at first spotted at the stern of the cargo ship on Saturday night. Responding to the emergency, the Japanese coast guard dispatched aircraft and patrol vessels on Saturday night. The Chinese crew members were rescued early on Sunday morning, Kyodo News reported. Three of them were slightly injured. Uichiro Niwa, Japanese ambassador to China, warned on Saturday that the tensions could set the countries' diplomatic relations back before their normalization, which occurred 40 years ago. 

Hong Kong*:  Oct 23 2012 

Winners of cross-harbour swim retain their crowns (By Olga Wong) Winners Natasha Tang Wing-yung (left) and Ling Tin-yu (centre) after the race. The winners of last year’s revived cross-harbour race managed to stay champions again as 1,679 swimmers jumped into the harbour on Sunday morning. Both champions are members of the Hong Kong swimming team. The winner in the women’s category, Natasha Tang Wing-yung, a participant of the London Olympics, finished the race in 17.21 minutes. Male champion Ling Tin-yu was slightly faster, with a performance time of 16.57 minutes. Ling said that the moment he got in the water, his strategy was swim to his fullest. The race was said to be more competitive this year because the race route is 300 metres shorter but 1,800 people registered, an increase from last year’s 1,000. On Sunday, only 1,679 people showed up to race. The organiser, Hong Kong Amateur Swimming Association (HKASA), relocated the finishing point to Sai Wan Ho Harbour Park Public Pier to accommodate the large number of swimmers; last year it was at Quarry Bay Park. The starting point was Sam Ka Tsuen Public Pier in Lei Yue Mun. Participants came from all walks of life, including one who is deaf and another with polio, or infantile paralysis. The annual race, which was revived last year due to popular demand, is a tradition that attracted hundreds of swimmers and thousands of spectators dating back to 1906. The event was halted in 1978 due to a deterioration in water quality, but HKASA said they did not receive any complaints about pollution from the 1,000 competitors of last year’s race. “We have been monitoring closely the water quality based on latest information supplied by the Environmental Protection Department,” it said. Organisers added that the route was cleaned before the competition started. Agence France-Presse contributed to this report.

The Hong Kong Monetary Authority announced Friday that the Hong Kong banking industry will adopt chip-based technology to further strengthen the security of Automated Teller Machine services. In accordance with a circular dated June 1, 2011 issued by the HKMA, which sets out the chip card implementation details, authorized institutions offering ATM services are expected to complete the upgrading of their ATM terminals by the end of February 2013 to support chip-based authentication. The AIs concerned are also expected to complete the card replacement process by phases between 2014 and 2015. As an additional step to enhance the security of using ATM services, the overseas ATM cash withdrawal capability for all ATM cards (including debit cards and credit cards) issued by AIs in Hong Kong will be pre-set as "deactivated" with effect from March 1, 2013. This is to prevent fraudsters from withdrawing cash from a cardholder's account at ATMs outside Hong Kong using counterfeit magnetic-stripe cards with the card data obtained from card skimming. Given this security feature, card holders are reminded to activate the overseas cash withdrawal capability before traveling, if they think they may need to withdraw cash from ATMs outside Hong Kong. They could specify an expiry date for the activation period and set an overseas ATM cash withdrawal limit that is lower than the limit for local cash withdrawal. Deputy Chief Executive of the HKMA Arthur Yuen said although ATM fraud is not a significant fraud in Hong Kong in the past years, it is important for Hong Kong to stay at the forefront of the technology and be in line with international trend.

 China*:  Oct 23 2012

Softbank-Huawei links to raise US eyebrows (By Bloomberg in Washington) Softbank buys its mobile-phone network gear from Chinese companies which have been viewed as security threats by the United States and the relationship may become an issue as regulators review its bid for Sprint Nextel. Softbank's connections with Huawei Technologies and ZTE, China's two largest makers of phone-network equipment, probably will not kill its US$20.1 billion offer for 70 per cent of Sprint, said Stewart Baker, a former US Homeland Security Department official. It is likely that US officials will address those links when they scrutinise the deal, he said. The House Intelligence Committee in a report last month urged US companies to steer clear of Huawei and ZTE, citing concerns that the Chinese government could install malicious hardware or software in US telecommunications networks. "The flap over Huawei and ZTE means that at a minimum, the extent to which equipment from Huawei and ZTE would be introduced into the US infrastructure will be an issue," said Baker, a partner with Steptoe & Johnson in Washington. "This deal will probably end up getting approved but with a very detailed national security agreement." About 10 per cent of capital expenditure by Tokyo-based Softbank goes to Huawei and ZTE for equipment like base band units and antenna systems for its 4G mobile network. Alcatel-Lucent and Ericsson provide the core network. "I am aware in the US, the government is sensitively looking at it, and we understand national security," Softbank president Masayoshi Son said yesterday. "If the US government decides, don't do it, we would comply. It's only one of our group subsidiary companies using Huawei and ZTE. It's never our main investment," he said. Sprint chief executive Dan Hesse said that the combined company is set for an extensive regulatory review, and because of that does not expect to close the deal until the middle of next year. "We don't foresee any issues at all with respect to regulatory approval," he said. "This will be seen as a positive, it's pro-consumer, it's pro-competitive." The deal will build the third-largest mobile carrier as a competitor to market leaders Verizon Wireless and AT&T, he said.

Europe and China don’t need a trade war, EU trade chief says (By Reuters in Brussels) European Union Trade Commissioner Karel De Gucht. The European Union will not back down from protecting its industries against Chinese competition it sees as unfair, but mutual self-interest will prevent a damaging trade war, the EU’s trade chief Karel De Gucht said. Disputes with Beijing have taken on a bigger scale in recent months and Brussels brought its biggest ever trade case against Beijing in September after European companies accused China of dumping solar panels in Europe. The EU is also gathering evidence to see whether Chinese telecoms companies Huawei Technologies and ZTE are dumping or receiving illegal subsidies. “We are not going to shy away from what we have to do,” De Gucht said in an interview. “But we are not interested in escalating tensions. I believe that the Chinese also realise that this has to be kept within limits,” he said from his office in the European Commission. The growing trade spats come at a dangerous time. Europe’s economy is hardly growing and the continent is suffering from record unemployment, while China’s much-faster growth is cooling. Both downturns raise the spectre of social instability. De Gucht, who first got to know China during his term as Belgium’s foreign minister between 2004 and 2007, sees the tensions persisting precisely because China is seeking to produce sophisticated products that will compete with Europe. “China is facing a tremendous challenge: how to get a larger share of the value-added pie, as it otherwise can’t possibly take the next step in economic development, which Japan, Taiwan, South Korea, Singapore and Hong Kong have already taken,” De Gucht wrote in a book published this month called Freedom: Liberalism In A Time of Cholera. There he cites a Chinese curse: “May you live in interesting times.” Trade between China and the European Union has doubled since 2003, rising to 428 billion euros (US$558 billion) last year, making the EU China’s biggest trading partner. China is the second biggest destination for European goods after the United States. But ongoing disputes range from metal tubes to China’s restrictions of exports of rare earth metals. In the solar panel case, European makers want duties placed on Chinese imports amid a sharp drop in prices, something the United States has already implemented. EU diplomats say De Gucht could be using the solar panel dispute in Europe as leverage over Beijing to push the Communist government to cut what they see as illegal subsidies to Huawei and ZTE and avoid another formal trade case with Brussels. De Gucht declined to go into details about either case, but said he hoped solutions could be found. “You can imagine that: a mushrooming of problems between China and Europe,” said De Gucht, one of Europe’s most powerful commissioners and who leads trade policy on behalf of the EU’s 27 countries. “Both parties realise that this would be a very bad thing for the whole of the world economy.” The US ambitions of Huawei and ZTE were stopped in their tracks earlier this month as a congressional report urged American companies to stop doing business with the firms, raising fears of retaliation from China. The US House of Representatives’ Intelligence Committee warned industry that Beijing could use equipment made by the two companies to spy on certain communications and threaten vital systems through computerized links. Europe’s dealings with Beijing lack the geo-political dimensions of China’s relations with its other big trading partners, such as Japan, which is in a tussle over the ownership of some islands, and the United States, which has a naval fleet based in Japan to wield influence over the region. That means Europe lacks leverage beyond trade defence instruments, but also makes the partnership less complicated. “That fact deprives us of a number of possible levers, but on the other hand also facilitates a more rational discussion on a number of trade issues,” De Gucht said. Trade has always been a fundamental aspect of the European Union and is one of the few things that still unite eurosceptic Britain with EU enthusiasts such as De Gucht’s Belgium. The European Union implemented a landmark free-trade deal with South Korea last year, which went beyond tariff reductions and took in regulation and services. Now it is seeking to forge similar pacts with Japan and the United States. While a free-trade pact between China and Europe is unlikely even in the medium term, Brussels and Beijing could agree on an investment pact that would lay down rules for companies expanding in both regions, something De Gucht said was gaining momentum. “It is of prime interest for us,” he said. As things stand, burdens on European investors in China - including rules requiring companies to share their know-how with Chinese firms - makes deepening investment links problematic. “They are much more ready than in the past to put these topics, which are rather sensitive for them, on the negotiating table,” he said. “That doesn’t mean that China is suddenly an easy partner, but they realise they have to engage.”

Japan saves 64 Chinese seamen from burning freighter (By Agence France-Presse in Tokyo) Japan’s coastguard on Sunday saved all 64 Chinese seamen from their burning cargo ship, as the two nations remain locked in an acrimonious dispute over contested islands. The coastguard was alerted by Taiwan authorities late on Saturday about a fire on the 12,703-tonne Ming Yang and sent patrol vessels and aircraft to the scene, around 150 kilometres southeast of Okinawa. By 2.30am on Sunday a Japanese coastguard ship had saved 21 people who escaped on a life raft, while 43 others remained on the deck of the burning freighter, registered in Saint Vincent and the Grenadines. All of the Chinese seamen were rescued by 3.47am, with three of them suffering minor injuries, the coastguard said. It said the ship’s chief engineer had reported hearing sounds resembling an explosion from the main engine on Saturday evening. The Japan coastguard has been busy kept busy monitoring waters around disputed islands, known as Senkaku in Japan and Diaoyu in China, far to the west of the burning freighter. The coastguard said four Chinese official vessels were in contiguous waters around the islands on Sunday. Such vessels have been spotted in waters off the islands as the dispute escalated over the last two months, with the boats at times entering a 12-nautical mile territorial zone. Tensions between the two nations peaked in mid-September after Japan’s government bought a number of the disputed islands.

Chinese ship patrols in waters near Diaoyu Islands - Chinese fishery patrol ship Yuzheng-202 started patrol mission to waters near Diaoyu Islands Saturday morning.

China's autumn grain output to hit record high (Xinhua) China's grain output this autumn is likely to hit a record high and bring a ninth year of consecutive growth in the annual output, an official with the Ministry of Agriculture predicted on Friday. The acreage for growing grain crops is expected to expand by around 733,300 hectares to 111 million hectares this year, while the yield per unit will continue to rise to a record high, said the official, who declined to be identified. Despite the anticipated harvest, grain prices will go up mildly this year because of increasing production costs and government policies to support prices that are aimed at stabilizing farmers' income, according to the official. China's summer grain output reached 129.95 million tonnes this year, up 3.56 million tons, or 2.8 percent, from last summer, official figures showed. The country's grain output in 2011 rose to a record high of 571.21 million tons, a year-on-year increase of 4.5 percent, marking the eighth consecutive year of growth. Yields of autumn grain reached 412.18 million tons in 2011, up 5.1 percent from a year earlier.

Told you so (By Andrew Moody) Jacques says the simple take-home from his book is that "we will no longer live in a Western-shaped world". Author of When China Rules the World says events have left him more than vindicated. Andrew Moody reports in London. Martin Jacques says China doom-mongers were typically dismissive when he argued the former Middle Kingdom would have a central role in shaping the 21st century. In his book, When China Rules the World, which some regard as a potential classic, he forecast China would become the world's largest economy by 2027, albeit using Goldman Sachs data, and that we were all going to be living in a more Sinocentric world. His critics said the more likely scenario was that China was going to succumb to a crisis that completely knocks it off track. "They were right in that there was going to be one hell of a crisis. But what no one predicted was that it wasn't going to happen to China, it was going to happen to the West." Jacques was speaking in the sitting room of his expansive mansion flat in Hampstead, north London, an area favored by intellectuals and film stars alike. His book is now out in paperback after selling no fewer than 250,000 copies in hardback, many in translation in China. "It is not bad. It is better than a kick in the teeth. I remember my editor Stuart [Proffitt, publishing director, Penguin Press] saying he would be very happy if it sells 10,000," he says. The paperback has been substantially revised, some 25 percent longer than the hardback, with a new afterword to take into account the economic crisis, which was only beginning to play out when the book was first published in 2009. He says the intervening period, if anything, supports his view about the rise of China. "When I first wrote the book, I didn't know what the ramifications of the crisis were going to be. Now after three and a half years, we know that this is essentially a Western crisis and not a global crisis, which it was always described before,. "Most Western economies are smaller than they were when the crisis began and there is a profound political crisis of the governing elite, which you can see clearly in Europe." Jacques, a youthful 66, was still barely out of breath despite returning from a run on Hampstead Heath and up several flights of stairs to his apartment, beating myself and the photographer ascending more sedately in a creaky old lift. One of the biggest markets for the book has been China, where it has sold more than 100,000 copies in Chinese and made him much in demand as a speaker at conferences and on the lecture circuit. One of Jacques' biggest frustrations is that many of the critics of the book have never seen beyond the title. "Anyone who reads the book will see that it is very carefully considered, scholarly and serious. It is an analytical work, that it is not in the least bit glib," he says. Jacques insists there are two central arguments in the book that still hold true. "One is that the rise of China will mean we will no longer live in a purely Western-shaped world. Really my book was the first to argue this, you know," he says. "The second is that you cannot understand China in Western terms. You have got to understand the specificity and nature of Chinese culture. China is not like Western society. It is completely different." Although he has held a number of academic posts in Asia, including in Japan and Singapore, Jacques was perhaps best-known before writing the book for being editor of Marxism Today, which was one of the most successful political magazines in the UK in the 1970s and 1980s - read by both left and right, alike. He went on to be deputy editor of The Independent newspaper and is now a regular contributor to newspapers such as the Financial Times and the New York Times. When China Rules the World has had a huge impact on his life, partly because he had to complete it while still grieving for his late wife, the Malaysian-born lawyer Harinder Veriah, who died as a result of clinical negligence in a Hong Kong hospital, against which he has won a recent legal battle. "I remember thinking only my closest friends would ever know what finishing the book meant to me and what hell, pain and agony I had been through," he says. One thing that has changed since the book was published is that the estimates of 2027 when China would take over from the United States as the world's largest economy no longer seem fanciful. It has already become the second-largest, usurping Japan last year. "I remember someone saying to me in the audience at a talk that it would happen over a much larger time scale or not at all; 2027 now seems like an underestimate."Some are predicting it could be 2018."

New age vegetarians (By Sarah Marsh and Thomas Hale) Both chefs and diners are waking up to the awareness that going meatless does not necessarily translate to having lackluster meals. A new eating trend is popping up on the doorstep of the Peking duck, and it has nothing to do with meat, but plenty to do with a generation of young, rich, health-conscious consumers. Sarah Marsh and Thomas Hale restaurant-hop in Beijing to find out more. An array of colorful and carefully put together dishes is brought to the table. All of the traditional Beijing favorites are there, including a round tray filled with pancakes and strips of cucumber served with a hoisin dipping sauce. However, instead of Peking duck completing the dish, diners are served something quite different. They are instead presented with beancurd skin, milk curds and toon tree shoots. It might sound unusual but vegetarian food like this is taking over China's capital. A growing number of restaurant-goers now opt for vegetarian dishes over meat. The dish imitating Beijing's world-renowned Peking duck is served at the Gingko Tree in Sanlitun, a restaurant that opened on Oct 5, 2011. According to its owner, 32-year-old Wang Rui, when it first opened, the restaurant welcomed 20 visitors daily, but this number has now increased 500 percent to approximately 100. This is no one-off. Wang explains that more non-meat eateries are opening up all the time. "The trend started about seven years ago as the Chinese gradually became more aware of the health benefits. Lots of new vegetarian restaurants sprung up between 2002 and 2006," Wang says. About 15 years ago there were one or two vegetarian cafes but now there are nearly 100 and competition is fierce. Many vegetarian restaurants promote organic food, a growing phenomenon in China. The Seattle Times reported that overall Chinese organic exports have rocketed from $300,000 in 1995 to about $500 million in 2008. Both vegetarianism and organic foods are associated with healthy eating in China. There are three main types of vegetarian restaurant in Beijing. The first tends to be Buddhist or related to spirituality in some way - usually reflected in their candlelit and incense-filled decors. These venues tend to be expensive, and make traditional Chinese-style food. The second type markets itself on creating healthy food, and uses little oil and salt. The last non-meat eatery is Western, typically making dishes such as vegetable curry and sweet potato french fries.

Hong Kong*:  Oct 22 2012 

Hang Lung Properties sells Stanhope House to AIA for HK$2.4b (By Sandy Li) Hang Lung sells building to AIA as it continues to dispose of older and non-core properties. Insurance giant AIA Group is buying Stanhope House in Quarry Bay from Hang Lung Properties for HK$2.4 billion. With a floor area of 299,615 square feet, the price tag translates into HK$8,003 per square foot. AIA would use the premises for its "own office usage and investment purposes", the company said in a statement. The transaction is expected to be completed by December 11. Eric Ong, a director at Midland Realty's commercial department, said the price was reasonable. "There are only a few office buildings on offer for sale in the market, although Stanhope House is relatively old," Ong said, adding that the average rent at the building was about HK$27 per square foot. "It wouldn't be a surprise if office rents at Stanhope House rise 10 per cent over the next 12 months." Hang Lung said in August it would continue to sell its non-core properties in Hong Kong as the mainland now offered better returns and lower risks than the local market. Chairman Ronnie Chan Chichung said the developer had been looking to sell its older and non-core, low-rent properties for two years now. "In the past few months … we were given some reasonable and attractive offers. We'll continue selling when prices are good," Chan said. Hang Lung sold its 28-year-old office building in Cheung Sha Wan for HK$625 million in July, after selling Star Centre in Kwai Chung in May for HK$528 million and car parks in Park Towers in Causeway Bay for HK$220 million. The latter two, booked in its interim results, generated a profit of HK$220 million. Chan said the company had no plans to sell prime properties in core areas including Causeway Bay, Central and Mong Kok. According to Midland, 252 office deals were completed in August, up 11.5 per cent month on month. The rebound in sales occurred outside core business areas such as Cheung Sha Wan and Kwun Tong. In one deal, Park Building in Cheung Sha Wan, with a gross area of 149,395 sq ft, sold for HK$625 million. Shares of Hang Lung rose 1.33 per cent to HK$26.60 yesterday, while AIA eased 0.33 per cent to HK$29.90.

First national education classes taught at Tai Kok Tsui primary school (By Jennifer Cheng) Teacher Ken Sze gives his Primary Six students a lesson on the national flag at the Fresh Fish Traders' School yesterday. Four different-coloured hats were used to help pupils at a Tai Kok Tsui primary school grasp their first lessons in moral and national education yesterday while opponents of the controversial curriculum continued to demand that it be scrapped. Fresh Fish Traders' School headmaster Leung Kee-cheong invited parents and journalists to sit in on the lessons as Primary Six pupils learned about the national flag and younger children were instructed on such moral issues as family roles and telling lies. The school, serving mainly less-well-off children, will have seven lessons in the programme over the school year. The school has not assigned teaching materials, and teachers have been given free rein to impart what they like within the curriculum's framework. Media flocked to the only primary six classroom to observe how teacher Ken Sze Chi-king would tackle a lesson on the flag and flag-raising ceremonies. Sze, who usually teaches Chinese and is co-ordinating the programme, used four hats to symbolise objective, critical, emotional and optimistic ways of thinking about any given topic - a technique derived from Edward de Bono's book Six Thinking Hats. He first played a video of activists waving the national flag on one of the Diaoyu islands and another of a man burning the flag. This was followed by video of a flag-raising ceremony in Golden Bauhinia Square and the same ceremony after the National Day ferry disaster in which the flag flew at half mast. He then asked the pupils to put on one of the coloured hats and try to use the mode of thinking it represented to compare the different contexts in which the flag appeared. "I wanted to show the pupils that the flag itself is neutral, but it is the context that it is in that gives it meaning," he said. "Everything has hard facts, but why do we add meanings to it? I want them to have more than one way of looking at an issue, which includes being critical and emotional." Opponents have condemned the subject as "brainwashing" because it avoids controversial and negative topics about the mainland. But during the class, Sze brought up the suspicious death of activist Li Wangyang in June and the poisoned milk powder scandal that rocked the mainland in 2008.

Customs seize four tonnes of smuggled ivory (Agence France-Presse) Ivory tusks seized during an anti-smuggling operation are displayed during a customs press conference in Hong Kong on Saturday. Customs officers seized almost four tonnes of ivory worth about HK$26.7 million, hidden in shipments from Kenya and Tanzania, officials said on Saturday. The 1,209 pieces of raw ivory tusk and a small number of ivory ornaments were discovered in two containers marked “plastic scrap” and “roscoco beans”, shipped to Hong Kong earlier this week, a customs official said. The smuggled ivory, weighing 3.81 tonnes - Hong Kong’s largest ever seizure - was found hidden among bags of plastic scraps and beans by customs officers acting on a tip-off from counterparts in China. “The total seizure is worth about HK$26.7 million,” the customs department said, adding that it will step up efforts with mainland authorities to combat transnational smuggling activities. Chinese authorities arrested seven individuals, including a Hong Kong resident, in relation to the seizure, local radio reported. Under Hong Kong law, anyone found guilty of importing unmanifested cargo into Hong Kong faces imprisonment of up to seven years and a maximum fine of HK$2 million. In addition, those guilty of importing, exporting or possessing an endangered species for commercial purposes face up to two years in jail and a maximum HK$5 million fine, customs officials said. The international trade in elephant ivory, with rare exceptions, has been outlawed since 1989 after elephant populations in Africa dropped from millions in the mid-20th century to some 600,000 by the end of the 1980s. However, a rise in the illegal trade in ivory has been fuelled by demand in Asia and the Middle East, where elephant tusks are used in traditional medicines and to make ornaments. Africa is home to an estimated 472,000 elephants whose survival is threatened by poaching, illegal game hunting and habitat loss.

HKMA intervenes to curb HK dollar strength after capital inflows (Reuters) The Hong Kong Monetary Authority (HKMA) stepped in to the currency market on Saturday for the first time since December 2009 as capital inflows strengthened the Hong Kong dollar, causing it to hit the top end of its trading range. The HKMA sold $603 million worth of Hong Kong dollars at the strong-side of the trading range of HK$7.75 to a US dollar in a move that will lift its aggregate balance – the sum of balances on clearing accounts maintained by banks with the authority – to HK$153.3 billion on October 24. “The recent increase in demand for the local currency is related to a less strained European market, weakness in the USD and declining US interest rates, which have prompted capital inflows into currency and equity markets in the region,” an HKMA spokesman said in a statement. Traders said the recent strength in the Hong Kong dollar against the US dollar was in line with other Asian currencies because the US Federal Reserve’s quantitative easing measures had weakened its currency. The Hong Kong dollar is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85 to the US dollar. Under the currency peg, the HKMA is obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85 to keep the band intact. “The appreciation trend of RMB recently has attracted some money flows into Asia, including Hong Kong, to buy stocks and properties,” said Kenix Lai, senior market analyst at Bank of East Asia, referring to the strength in China’s renminbi that hit a record high against the US dollar this week.

 China*:  Oct 22 2012

China's port operators to increase rail links to inland cities (By Keith Wallis in Shenzhen) Port operators in Shenzhen are hoping to increase the cargo services to places like Chengdu and even a daily service to Changsha. There are now three rail services a week taking containers like these in Shekou to Changsha with a 30-hour transit time. Shenzhen ports in Shekou and Chiwan are planning to strengthen their rail freight links with China's western cities by setting up containerised cargo services to Chengdu, Chongqing and Kunming, a senior Shekou port official has confirmed. Erik Yim, managing director of Shekou Container Terminal (SCT), said the new railway freight services could start next year and would augment services between the two western Shenzhen ports and Changsha. He and other transport experts said further development of China's high speed rail network would be important to the growth of containerised cargo services because freight trains could use the tracks previously used for passenger services. "If railway conditions can be improved, we hope that we can have a daily service from Changsha within two years," he said. Rail freight experts are forecasting significant growth in containerised import and export cargo moved by rail, while operators DB Schenker Rail and DHL Global Forwarding are exploiting international containerised rail. Frederic Campagnac, general manager of rail transport consultant Clevy China, said: "Chinese container rail has a lot of room for development." Campagnac said around four million 20-foot equivalent units per year is moved by rail, a figure that has remained stable for about five years. He added that just 1 per cent of containers moved from Chinese ports are transported by rail compared with 85 per cent by road. "Personally, I think rail makes a lot of sense including between China and Russia and China and central Asia," he told about 600 shipping executives and cargo owners at the Journal of Commerce TPM conference here. Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council, said that "so far the Chinese government has not given containerised rail a priority". But he added that development of high-speed rail will leave the old capacity free to cater to cargo services. Ho said that while there was no definite time for the government to develop container freight, he expected it would "happen very quickly" once there was official backing. Campagnac said China United International Rail Containers, whose shareholders include New World Services with a 30 per cent interest, had opened eight container rail terminals. These facilities, including terminals in Kunming, Chongqing, Dalian, Qingdao and Wuhan handled 20 per cent more container volumes to 1.5 million in the year to June 30. Terminals in 10 more cities, include Shenzhen, Tianjin and Urumqi. Yim said container volumes have risen by about 10 per cent a year since rail container services to Shekou and Chiwan started in 2008. "There are three services per week from Changsha to Shekou with a 30-hour transit time," he said. Yim added that about 20 shipping lines, including Cosco Container Lines, Maersk, CMA CGM, APL and Taiwan's Yang Ming Marine use the service. DHL Global Forwarding, part of the Deutsche Post, will start dedicated weekly container rail services next month from Shanghai to Poland in conjunction with China Shipping Container Lines which is providing the containers. The train will cross the Sino-Russian border at Manzhouli, the oldest rail gateway between the two countries. Ambrose Linn, the firm's senior regional director for road freight and intermodal strategic accounts, said the service would be 90 per cent cheaper compared with shipping cargo by air. It would also be "less than 10 per cent more expensive that ocean freight", he said. Linn added the transit time would be 19 days from Shanghai to Warsaw compared with 30-32 days by sea. A second service would start next year. He said the service was being launched based on demand from hi-tech industrial companies and manufacturers of fast moving consumer goods. Linn conceded that the imbalance in trade between China and Europe meant freight trains returning to China would be less than 30 per cent full. The firm plans to target the vehicle and hi-tech industries in central and eastern Europe to try to build these volumes. Rival freight forwarder, DB Schenker Rail, an offshoot of German railway company Deutsche Bahn, launched container rail services between Shenyang and Leipzig in 2011 to supply BMW car parts to factories in China. Ho said the development of containerised rail gives exporters more options to transport their products to Europe rather than relying solely on ocean freight where transit times had lengthened as lines cut ship speeds to save fuel and money.

China demands anti-dumping, countervailing deposits on Japanese carmaker - China's customs watchdog said Friday it will demand that Nissan North America, Inc. pay cash deposits for possible anti-dumping and countervailing duties on certain types of cars exported into the country. The General Administration of Customs (GAC) statement came after the Ministry of Commerce (MOC) on Thursday announced a decision to initiate a new exporter review on anti-dumping and countervailing duties on Nissan products made in the United States. China started imposing two-year anti-dumping duties at rates ranging from 2 percent to 21.5 percent, as well as countervailing duties at rates from 6.2 percent to 12.9 percent, on sedans and sport utility vehicles with engines of 2.5 liters or greater displacement imported from the United States in December 2011. Last month, Nissan applied for separate anti-dumping and countervailing duty rates on its exports, saying it did not sell cars that were subject to the duties to China during the MOC's previous anti-dumping probes. The GAC said Nissan should set aside anti-dumping and countervailing deposits with Chinese customs at rates of 21.5 percent and 12.9 percent, respectively, over its exports beginning from Friday. No anti-dumping and countervailing duties will be levied on the company before the MOC completes its review, which will conclude on July 18, 2013 at the latest, said the GAC.

Diaoyu Islands row takes toll on cultural and travel sectors - The row between China and Japan over the Diaoyu Islands has spilled over to the arts and continues to hit the travel industry. China's main entry to the Tokyo International Film Festival has apparently been pulled, the event's organizers said on Friday. But the festival's secretariat said it would still screen Wang Jing's Feng Shui — the only Chinese film nominated for the festival's grand prize — because it had not received formal notification. A statement carried on Xinhua News Agency on Thursday said the producers were withdrawing the film in protest over the island row. Passengers line up at the Spring Airlines counter at Shanghai Pudong Airport. China's largest private low-cost carrier withdrew the offer of free roundtrip tickets between Pudong airport and Japan's Saga prefecture just days after it was launched. "The Japanese government and right-wingers have not shown a sincere attitude regarding the settlement of the dispute, which has seriously hurt the Chinese people's feelings," it said. The 25th annual festival is scheduled to be held from Saturday to Oct 28 this year, featuring 15 international films nominated for its top award, the Tokyo Sakura Grand Prix. "We have received an e-mail from an unnamed sender that had attached to it a joint statement purportedly from the film's three production firms, which said they are withdrawing the film," Nobushige Toshima, the festival's secretariat, told AFP. "The statement didn't have any representative's name, signature or seal on it," he said. "Therefore, we haven't received any formal communication so at the moment we are due to screen the film as planned." Toshima said the statement was similar to what had been reported by Xinhua. On Friday, the film's distributor, Beijing Antaeus Film Co Ltd, confirmed on its microblog the film had been withdrawn. "Because of tense relations between China and Japan, Feng Shui was withdrawn from the Tokyo Film Festival," the company said. The distributor said in a posting late on Thursday: "In the current environment, Feng Shui chose to give up when it was close to success. Indeed, it is a pity for the film but a source of pride for the Chinese people." Promotion pulled. The row also continues to cast a pall over flights from China to Japan, following massive cancellations during the National Day holiday earlier in October, which normally would have been a peak time for travel between the two countries. Spring Airlines, China's largest private low-cost carrier, withdrew the offer of free roundtrip tickets between Shanghai's Pudong airport and Japan's Saga prefecture just days after it was launched. "We canceled the offer last night after taking into consideration the feeling of netizens," airline spokesman Zhang Wuan told Reuters. The promotion, which would have seen customers pay just tax and surcharges totaling about 1,030 yuan ($160), aimed to boost demand after Spring Airlines' passenger volume dropped by half on some of its Japan routes. Spring Airlines also withdrew an offer of free tickets between Shanghai and Japan's Kagawa that was launched on Tuesday, the spokesman said.

Asia's biggest Apple store opens in Beijing (By China Daily) Apple's largest store in Asia opened on Oct 20, 2012 in Beijing's Wangfujing shopping district. According to John Browett, Apple's senior vice-president of retail, with an area of 2,300 square meters and more than 300 employees, the store is Apple's sixth store on the Chinese mainland and the largest in Asia, said Xinhua News Agency. 

Exercise to protect China (By Li Xiaokun and Zhao Shengnan) China on Friday held a large-scale drill simulating the PLA protecting Chinese administration ships disturbed by foreign ships in the East China Sea. A helicopter tries to save a fisherman during a joint exercise by civilian maritime authorities and the People’s Liberation Army Navy in the East China Sea on Friday. The drill comes amid a festering territorial dispute with Japan. When asked about the exercises, the Foreign Ministry said on Friday that Beijing is determined to protect its territory and called on Japan to return to negotiations. The exercise is likely a hard-line response from Beijing to a joint US-Japan drill targeting the Diaoyu Islands, experts and media have said. Friday's drill involved all the major Chinese maritime forces, from warships to maritime patrol and fishery administration ships. A fleet of 11 vessels and eight aircraft participated in the one-day drill. According to reports, the navy sent at least two missile destroyers as well as fighter planes and a hospital ship. It was based on the scenario of the navy sending warships and aircraft to protect Chinese law enforcement ships damaged in deliberate collisions by foreign ships in the East China Sea. The drill was announced by Xinhua News Agency late on Thursday. China has previously sent maritime surveillance ships and fisheries patrol vessels to waters near the islands as the territorial row escalated. On Tuesday, Japanese military aircraft spotted seven Chinese warships not far from the disputed islands. China said the ships were on a routine training mission. Xinhua said patrol vessels from the fishery administration and the marine surveillance agencies have recently been stalked and harassed by foreign vessels while carrying out missions. Hong Kong-based Wen Wei Po quoted a military critic as saying that the"high-profile notice" of Friday's drill is very rare as the PLA usually announces its exercises a few days after the actions finish. It is deliberately showing China's law enforcement capabilities in the East China Sea, it said. Xia Ziming, deputy head of the Directorate of Operations of the East China Sea Fleet headquarters, told China National Radio that this is the first time for the navy, maritime surveillance and fishery administration agencies to have a joint drill. “It is the largest one in recent years," Xia said. The Ministry of National Defense also posted reports high on its website, though it has yet to comment directly on the drill. When asked about the exercise, Foreign Ministry spokesman Hong Lei on Friday gave no direct answer, but said the Chinese government"is resolute and determined to safeguard national territorial sovereignty". Japan should be the one to take the responsibility for the escalating tensions, Hong said at a daily briefing. “We hope the Japanese side can squarely face the realities, correct mistakes and come back to the track of resolving the Diaoyu Islands dispute through negotiations," Hong said. Smooth coordination between military and civilian organs is the most prominent feature of this drill, Song Xiaojun, a military affairs commentator, told China Central Television. “China hopes to solve maritime disputes through peaceful negotiations, while such peaceful means is actually based on our administrative bodies' and navy's capabilities to handle security issues," he said. It's rare but important for the aircraft to join the"multi-dimension" drill as information sharing and coordination between vessels and aircraft should be improved, said Li Jie, a researcher from the Naval Military Studies Research Institute. “Various law enforcement forces have to properly work together as maritime rights can hardly be safeguarded solely by the navy now," he said. Feng Wei, an expert on Japanese studies at Fudan University in Shanghai, said the drill has sent a clear warning signal to Japan. But Japan's sense of crisis might also grow in the face of China's soaring naval strength, he noted. South Korea's Yonghap News Agency quoted an expert on foreign policies as saying that the drill is"obviously targeted at the US-Japan joint exercise" and exerting pressure on Japan. The Friday drill has come on the eve of a joint military drill between Washington and Tokyo scheduled to start on Nov 5, which will involve the simulated retaking of a remote island from foreign forces. This is the first time Japan and the US have had an"island retaking" drill on a Japanese offshore island. In another move, Japanese Prime Minister Yoshihiko Noda on Oct 14 reviewed a major exercise marking the 60th anniversary of Japan's Maritime Self-Defense Force, and was quoted saying that Japan faces"severe" challenges to its security. Furthermore, Japan's Nippon Foundation on Friday announced it was abolishing an exchange program for field grade officers from the PLA and Japan's Self-Defense Forces that it started sponsoring in 2001. The decision was made after the Chinese side asked to delay this year's activities due to the tensions. Feng Wei from Fudan University said China-Japan military ties, which have been flagging in recent years, were further hampered by the cancellation. China's exercise also takes place after dozens of Japanese parliamentary members, including two Cabinet ministers, visited the Yasukuni Shrine that honors Japan's war dead, including 14 Class-A war criminals. Chinese media slammed the head of Japan's top opposition party Shinzo Abe for also going, calling his visit a provocation. Tensions sharply rose between Beijing and Tokyo after the Japanese government last month"nationalized" some of the Diaoyu Islands. The move took ties between the world's second- and third-largest economies to the chilliest moment in decades. Anti-Japan protests broke out across China and hurt sales of Japanese-made products.

Hong Kong*:  Oct 21 2012 

This year's New Year countdown and fireworks display will be staged at the Hong Kong Convention and Exhibition Centre after a developer turned down a request to use the International Commerce Centre. The 118-floor skyscraper in West Kowloon is owned by Sun Hung Kai Properties, which withdrew its sponsorship last year after supporting the annual event for four years. "Our invitation was turned down immediately," Tourism Board chairman James Tien Pei-chun said. "We were told that the outer surface wall of ICC is too smooth and technically not suitable for a fireworks event." However, a deal has been signed with New World Development, which will help fund the December 31 display. The board will provide up to HK$6 million for this year's event and New World will shoulder most of the remaining costs. The display is estimated to cost a total of HK$12 million. Tien said the board is still searching for other sponsors and he does not foresee spending more taxpayers' money. Last October, Henderson Land and Sun Hung Kai Properties withdrew their sponsorship, leaving the Tourism Board scrambling to find funding. In the end, the authorities and the Jockey Club chipped in HK$1.5 million each, on top of the board's HK$5.5 million. This year, viewers can expect a longer pyrotechnic display and a more dazzling skyline for the show, which will last eight minutes, double the time of last year's display. 

So what does a $30 million luxury apartment in Hong Kong look like? (By SCMP) Amalfi is located on the shore of the Integrated Development Zone in Yi Pak Bay, a new prime area in Discovery Bay, and boasts a breathtaking coastal view. Hong Kong Resort Company Limited (HKR) launched its latest luxury residential development – Amalfi – located in a prime position in Discovery Bay on Tuesday. The average price of the initial 50 luxury units unveiled is a little over HK$9,700 per square foot. The units sit amid the low-density mid-rise coastal blocks and range in size from 600 square feet to more than 3,000 square feet. Named after a famous coastal resort area in southern Italy, Amalfi is located on the shore of the Integrated Development Zone and advertised as boasting an equally dazzling coastal view as its namesake in a bid to lure wealthy Hong Kong buyers. Ms Pandora Chan, senior manager of HKR, said that Amalfi has the potential to rival the luxury residential projects above Kowloon Station when further governmental strategic infrastructural planning is carried out in the future. The Hong Kong-Zhuhai-Macao Bridge is expected to complete in 2016. A new railway linking the two airports in Hong Kong and Shenzhen is under planning. A third runway will be added to Hong Kong airport while Disneyland also looks to expand. HKR expects all these infrastructures will benefit its luxury residential projects, turning them into the best-buy for potential buyers. Amalfi development, consists of two huge duplex units called Infinity Pool House and Vista Pool House. These units, each featuring a roof top swimming pool and sky garden measuring 1,300 square feet, are both situated in the prestigious waterfront area at the heart of Yi Pak Bay. 

ING Group sells Hong Kong, Macau, Thai insurance units to Richard Li (By Lulu Chen) Pacific Century Group boss Richard Li said the US$2.14 billion purchase of ING’s Hong Kong, Macau and Thailand insurance businesses was in line with the group’s long-term strategy.ING Group said it has agreed to sell its Hong Kong, Macau and Thailand insurance businesses to Richard Li Tzar-kai’s Pacific Century Group (PCG) for US$2.14 billion (HK$16.59 billion), as the Dutch banking group scrambles to meet improve liquidity and capital adequacy ratios. The deal, estimated at nine times estimated book value, is expected to bring ING a step closer to fulfilling conditions stemming from its government bailouts in 2008 and the year after and help Richard Li, younger son of Hong Kong tycoon Li Ka-shing, increase his presence in Hong Kong’s finance sector. “This acquisition is absolutely in line with PCG’s strategy as a long-term holder and developer of assets and investments in three areas: financial services; technology, media and telecommunications; and property projects,” Richard Li said. The proposed sale valued ING’s Hong Kong business at about US$2.1 billion (HK$16.3 billion) and the Thai unit at less than US$200 million (HK$1,55 billion), one person familiar with the deal said. ING Hong Kong and Macau operations boast about 400 employees and 1,600 tied agents. The group serves more than 270,000 customers. In Thailand, ING has about 480 employees and more than 4,000 tied agents. Earlier this month, the Dutch bank agreed to sell its Malaysian insurance business to Hong Kong-based insurer AIA for US$1.7 billion (HK$13.1 billion). Victorina de Boer, a spokeswoman for Amsterdam-based ING, declined to comment, as did a spokeswoman for Li who asked not to be identified. Li’s father has pledged financial support for his younger son’s ambitions to build his own businesses. Richard Li’s older brother, Victor I Tzar-Kuoi, is the heir to the property-to-ports empire their father created. Cheung Kong, Li Ka-shing’s flagship company, has a market value of US$34 billion. A deal with ING would follow Richard Li’s purchase of PineBridge Investments, a US$68 billion investment manager, from American International Group (AIG), AIA’s former parent, in 2010. In March that year, Richard Li’s Pacific Century Group completed the US$500 million (HK$3.88 billion) purchase of PineBridge as AIG sold assets to repay a US$182.3 billion (HK$1.4 trillion) US government bailout. The chairman of PCCW, he also controls HKT Trust, HKT and Pacific Century Premium Developments. Richard Li sold his stake in Hong Kong insurer Pacific Century Insurance to Fortis, the Belgian-Dutch financial services company now called Ageas, in 2007. ING is required to sell its insurance and investment management businesses before the end of next year after getting €10 billion (HK$102 billion) in state aid during the worldwide financial crisis. While executing the imposed divestment programme, ING is also selling banking assets to help speed up repayment of a remaining €3 billion with premiums.In the last two months, ING announced an agreement to sell its Canadian online bank for US$3.16 billion (HK$24.5 billion), its British internet business and a 33 per cent stake in China Merchants Fund, an investment management joint venture. The company also raised about US$ billion (HK$23.3 billion) last month by selling 54 million shares of United States-based Capital One Financial. The ING transaction is expected to close in the first quarter of 2013 and is subject to regulatory approvals. HSBC acted as sole financial advisor to PCG and JP Morgan acted as ING’s advisor.

HKEx chief Charles Li faces big challenges (By Enoch Yiu) The first part of a series on the future of the exchange looks at the fresh challenges facing the chief executive. HKEx chief executive Charles Li talks to the media. He faces a major task in guiding the bourse along its new course. Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia has had his contract renewed for another three years but it is too early for him to crack open the champagne to celebrate. Li gets a 6.38 per cent pay rise for his second term, meaning he will earn HK$8 million a year. However, he is likely to face a heavier workload coping with a global market slowdown and unpopular reforms at home. Among his challenges, he has to find ways to improve low market turnover which has dropped 27 per cent in the first nine months of this year. The euro-zone debt crisis as well as the mainland economic slowdown has damaged investment sentiment, severely reducing income to both the HKEx and brokers. "In his second term, Li may want to convince the Hong Kong government to consider reducing stamp duty, which will really help HKEx," said Brett McGonegal, chief executive and executive managing director of Reorient Financial Markets. "We believe a stamp-duty reduction will result in increased volume that would have a multitude of positive effects." Li, 51, was born in Beijing but has lived in Hong Kong for 18 years. He worked for an oil company and as a journalist before becoming a lawyer and then a banker. He was the chairman of JP Morgan's China division before joining the exchange as its chief in October 2009. Brokers consider Li a reformer. He has attracted more listings from international firms and made Hong Kong the world's largest market for initial public offerings in the past three years. This year, however, the bourse may drop out of the top 10. In the first eight months, new listings raised just under HK$43 billion, down 77 per cent from the same period of last year and hit the lowest level in 10 years. Li's biggest achievement in his first term was to extend the trading hours of the stock market from four hours to 5.5 hours a day. The market's two-hour lunch was cut to one hour from March this year. The longer hours are an attempt to match international practices that see many markets open between six and eight hours a day, without a lunch break. One of Li's boldest moves has been the diversification into commodities. In June, he led the HKEx in its first overseas acquisition with a £1.39 billion (HK$17.39 billion) bid for the London Metal Exchange, the world's largest metals market. The deal is awaiting regulatory approval, which is expected late next month or early December. However, Li's reforms have attracted plenty of criticism, particularly from Hong Kong-based brokers. Hundreds of them have organised several spectacular street protests over the past two years to oppose the extension of trading hour. "Mr Li was an investment banker and his policies only favour the international investment banks, not local brokers," said Christopher Cheung Wah-fung, the legislator representing the financial services sector. "I would like Mr Li to communicate with the local community in his second term." Cheung said he would lobby Li and the government to extend the lunch break to 90 minutes as an hour was too short for brokers to meet customers for business discussions. "The extension of trading hours has failed to boost turnover but rather turnover has declined," he said. Joseph Tong Tang, executive director of Sun Hung Kai Financial, also said Li needed to seek ways to improve the operating environment for brokers as some firms were cutting commission rates too low to compete. He also would like to see Li help local brokers enter the mainland market. "We have seen over 30 brokerages from mainland China already establish operations in Hong Kong but on the other hand there is no securities house in Hong Kong which can successfully set up operations in the mainland," Tong said. "Mr Li needs to think about how to help Hong Kong brokerages, at least on the regulatory front, to develop into China," he added. On the purchase of the LME, Cheung shared many analysts' views that the price was too high, representing 180 times its profit last year. "The expensive takeover is set to haunt HKEx shares for the short term," he said. "However, I must say that it makes sense for the HKEx to diversify its business for longer-term growth. The real challenge is for Mr Li to show its shareholders that the acquisition price is value for money.' This may be somewhat difficult. Li has no background in commodities trading, nor do his hundreds of staff who are experts in IPOs and stock trading. The acquisition of LME will require the hiring of a team to manage the London business. Meanwhile, weak market sentiment may make it hard for Li to finance the deal. The bourse has announced it was issuing US$500 million in five-year convertible bonds. A Credit Suisse report expects HKEx will need to issue about US$1 billion of additional equity for the acquisition. "However, given the current trading multiple of the stock, the dilution from such an issue is somewhat limited, and more an issue of sentiment," the Credit Suisse report said. "The investment case for HKEx is longer-term growth as China opens up. Further expansion into commodities trading, in our view, helps cement this role and reduces the risk that the HKEx gets marginalised."

Foreign, mainland Chinese firms in HK hit record high, says InvestHK (By Sandy Li) 7,250 foreign, mainland businesses set up shop in city, but economic turbulence may affect them. The number of foreign and mainland companies that have set up offices in Hong Kong has hit an all-time high of 7,250, but global economic uncertainties may have a short term negative impact on the multinationals' overseas expansion, says InvestHK. As of June, the number of overseas firms in the city had risen 4.3 per cent from a year ago, according to an annual survey jointly announced by InvestHK and the Census and Statistics Department. Simon Galpin, director-general of InvestHK, the government department in charge of foreign direct investment, said the number of people employed by these firms had also edged up 5.7 per cent to 388,000, an increase of about 20,000 compared with a year ago. "We have to recognise a difficult global economy and the slowdown in the mainland economy may have a negative impact on the number of foreign companies setting up in Hong Kong in the short term," he said. "We are confident, though, that in the long run, Hong Kong will continue to attract investors who plan to start or strengthen their operations in the region." Galpin also expressed confidence that InvestHK would reach this year's target of attracting 310 foreign firms to set up operations in the city. It would take about three or four years of discussion before these firms finalised their decisions, he said. If the global economic outlook turned sour, their overseas expansion plan might be deferred by a year or so. Galpin noted that Hong Kong's enduring advantages such as its low and simple tax regime, free market principles and strong rule of law should continue to attract overseas and mainland investors. Of the 7,250 companies that have set up offices here, 1,367 operated as regional headquarters, up two per cent from 1,340 a year ago, according to the survey. US companies topped the list with 1,388 firms in Hong Kong, followed by 1,218 from Japan and 853 from the mainland. In the survey, almost 40 per cent of respondents indicated the availability and cost of residential and business accommodation as an unfavourable factor for setting up office in Hong Kong. Meanwhile, a survey conducted by the Grant Thornton International Business Report indicated that 60 per cent of Hong Kong businesses had at least a quarter of its workforce under the age of 30, up from 52 per cent just six months ago.

The U.S. Securities and Exchange Commission (SEC) said on Thursday that a Hong Kong-based firm charged with insider trading has agreed to settle the case by paying more than 14 million U.S. dollars. The proposed settlement is subject to the approval of the District Court of New York. The SEC said in a statement that the Hong Kong-based firm Well Advantage "has agreed to the entry of a final judgment requiring payment of 7,122,633.52 dollars in illegal profits made from trading Nexen stock, and payment of a 7,122,633.52 dollar penalty. " The SEC alleged in a July complaint that Well Advantage stockpiled shares of Nexen based on confidential information that China National Offshore Oil Corporation (CNOOC) was about to announced an acquisition of Nexen, a Canadian oil company. CNOOC and Nexen announced before the markets opened on July 23 that CNOOC agreed to acquire Nexen for about 15.1 billion dollars. Nexen's stock subsequently rose sharply compared with the closing price of the previous trading day. Well Advantage sold those shares for more than 7 million dollars in "illicit profits" immediately after the deal was publicly announced, said the SEC. The SEC filed an emergency action against Well Advantage to freeze its assets less than 24 hours after the firm placed an order to liquidate its entire position in Nexen. "If approved by the court, Well Advantage has agreed to give up all of its ill-gotten profits from these trades and pay a substantial penalty on top of that," said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division's Market Abuse Unit. Well Advantage neither admits nor denies the charges, the statement noted.

 China*:  Oct 21 2012

Chinese film pulled from Tokyo festival amid Diaoyus row (By Agence France-Presse in Tokyo) China’s main entry to the Tokyo International Film Festival has apparently been pulled, the event’s organisers said on Friday, as a bitter row with Japan over islands spilled over to the arts. But the festival’s secretariat said it would still screen Wang Jing’s “Feng Shui” – the only Chinese film nominated for the festival’s grand prize – because it had not received formal notification. A statement carried on China’s state-run Xinhua news agency on Thursday said the producers were withdrawing the film in protest over the island spat. “The Japanese government and right-wingers have not shown a sincere attitude regarding the settlement of the dispute, which has seriously hurt the Chinese people’s feelings,” it said. The 25th annual festival is scheduled to be held from Saturday to October 28 this year, featuring 15 international films nominated for its top award, the Tokyo Sakura Grand Prix. The decades-old dispute over sovereignty of the Japanese-administered Senkaku islands, which China calls the Diaoyus, flared again in August and September. Street protests erupted in China, sometimes targeting Japanese firms, and diplomatic blows were traded at the United Nations General Assembly. But on Friday the head of the festival’s secretariat said they would show the Chinese film as planned. “We have received an e-mail from an unnamed sender that had attached to it a joint statement purportedly from the film’s three production firms, which said they are withdrawing the film,” Nobushige Toshima told reporters. “The statement didn’t have any representative’s name, signature or seal on it,” he said. “Therefore, we haven’t received any formal communication so at the moment we are due to screen the film as planned.” Toshima said the statement was similar to what had been reported by Xinhua. On Friday, the film’s distributor, Beijing Antaeus Film, confirmed on its microblog the film had been withdrawn. “Because of tense relations between China and Japan, ‘Feng Shui’ was withdrawn from the Tokyo Film Festival,” the firm said. The distributor said in a posting late on Thursday: “In the current environment, ‘Feng Shui’ chose to give up when it was close to success, indeed it is a pity for the film but a pride for the Chinese people.”

Ralls lawsuit against Obama a 'lesson' for China investors (By Toh Han Shih) Chinese-linked company's lawsuit against the president of the US fights unfair treatment, says affiliate's director as case goes high profile. Ralls Corp does not threaten US security and has not broken the law, yet it is blocked, said a perplexed Xiang Wenbo yesterday. Ralls Corp does not threaten US security and has not broken the law, yet it is blocked, said a perplexed Xiang Wenbo yesterday. A lawsuit by Chinese-linked Ralls Corp against US President Barack Obama, Treasury Secretary Timothy Geithner and the Committee on Foreign Investment in the United States (CFIUS) has been called a lesson for mainland companies expanding overseas. Ralls, of which mainland construction machinery maker Sany is an affiliate, has been ordered to divest its interest in four windfarms in the US state of Oregon amid national security concerns. "We do not threaten US national security, have not broken the law and yet we are blocked. So we are forced to go high-profile in this case," said Sany Group director Xiang Wenbo at a press conference in Beijing yesterday. The case will be heard in the US District Court of Washington DC on November 28, reported Xinhua. Ralls is owned by Sany chief financial officer Duan Dawei and Sany vice-president Wu Jialiang, according to Ralls' lawsuit filed with the court on October 1. "Everybody knows we have received unfair treatment in the US. The order was issued by President Obama. If we don't sue him, who do we sue?" Xiang was quoted on the website of the Phoenix television channel. Wu, who is also Ralls's chief executive, was quoted by Phoenix as saying the lawsuit is a sign of its faith in the rule of law in the US. "We will fight till the very end. We have no choice but to sue Obama and CFIUS. Normally, Chinese people would not resort to legal action, especially in foreign countries," Wu said. On September 28, Obama issued an order that Ralls divest its interest in the windfarms near a military base within 90 days, remove facilities from the wind farms within 14 days and Sany equipment is not to be used on these windfarms. "There is credible evidence that Ralls might take action that threatens to impair the national security of the US," said the order. In August, CFIUS ordered Ralls to stop construction and remove facilities from the windfarms, banned Ralls from selling Sany turbines to third parties for use at the windfarms and required Ralls to sell the windfarms' property only to buyers approved by the US government. Ralls' lawsuit is seeking a declaration from the court that the actions of Obama and CFIUS were unlawful and unauthorised. "In issuing respective orders, CFIUS and the President acted in an unlawful and unauthorized manner. By failing to provide Ralls with sufficient opportunity to be heard, CFIUS and the President have unconstitutionally deprived Ralls of its due process," the lawsuit said. On October 3, Xiang wrote in his blog: "The deeper reason for the ban is the rise of China's high-end manufacturing threatens US core economic interests. In my opinion, this action indicates China's economic honeymoon with the US and Europe is over!" Sany was co-founded by its chairman Liang Wengen, who was ranked China's sixth richest man by Forbes this year with a net worth of US$5.8 billion. There has been speculation that Liang might be the first entrepreneur to be appointed to the elite central committee of the Chinese Communist Party.

China’s navy drills amid isles dispute with Japan (By Associated Press in Beijing) Crew members stand on board Haijian 83 during their patrol activities around the Diaoyu Islands on October 10. China flexed some maritime muscle in its dispute with Japan over a chain of uninhabited islands, holding naval exercises in the East China Sea on Friday to strengthen its response to threats to its territorial sovereignty. Both countries have been displaying their naval prowess during a bitter dispute over the islands, called Diaoyu in Chinese and Senkaku in Japanese. Tokyo angered Beijing last month by nationalising some of the islands, in a move that sparked violent protests in China. Friday’s exercise involves 11 vessels from the East China Sea fleet and eight aircraft and will be coordinated with the marine surveillance agency and the fishery administration, the official Xinhua news agency said. Xinhua said patrol vessels from the fishery administration and the marine surveillance agency have recently been stalked and harassed by foreign vessels while carrying out missions. On Tuesday, Japanese military aircraft spotted seven Chinese warships not far from the disputed islands. China said the ships were on a routine training mission. On Sunday, Japan’s navy marked its 60th anniversary with a major exercise involving about 40 ships – including state-of-the-art destroyers, hovercraft able to launch assaults on rough coastlines and new conventionally powered submarines. For the first time, Japan’s navy was joined by warships from the United States, Singapore and Australia. Representatives from more than 20 countries, including China, attended the event staged in waters south of Tokyo. Japan also plans to hold a joint exercise with the US military later this year, reportedly using a scenario of taking a remote island back from a foreign intruder. Nearby Taiwan also claims the islands, which are uninhabited but surrounded by rich fishing grounds and possibly lucrative undersea energy deposits. China’s exercise also takes place after dozens of Japanese parliament members, including two Cabinet ministers, visited the controversial Yasukuni Shrine in Tokyo that honours 2.5 million war dead, but also commemorates 14 Japanese wartime leaders convicted of war crimes. Chinese media slammed the head of Japan’s top opposition party for also going, calling his visit a provocation.

Celebration for 63rd founding anniversary of China in Israel - Israeli President Shimon Peres attends a reception to celebrate the 63rd anniversary of the founding of the People's Republic of China, in Tel Aviv, Israel, Oct. 18, 2012.

US coal industry pins hopes on China's stimulus (By Joseph Boris and Yu Wei in New York) US producers of coal used in steelmaking have been seeing once-robust exports slow to a trickle, partly due to reduced demand from China. China's imports of metallurgical, or coking, coal dropped 22 percent in August, to 2.6 million metric tons, from the same month last year, according to the General Administration of Customs. The drop has prompted cutbacks and even closures at some mines in the United States. But recent steps to resume big Chinese infrastructure projects may not be enough to reverse that trend, given the limited export role of most US producers and the stiff competition they face at home from natural gas as a power source. While China's overall coal imports increased almost 5 percent in August, its imports of metallurgical, or coking, coal dropped 22 percent, to 2.6 million metric tons, from the same month last year, according to the General Administration of Customs. Through the first eight months of 2012, Chinese imports of the chief raw material in steel production totaled 34.1 million metric tons, up 29 percent from the same period in 2011. China, the world's biggest steel producer, imports nearly 15 percent of the coking coal it uses. In early September, the National Development and Reform Commission announced its approval of an estimated 1 trillion yuan ($157 billion) for 60 infrastructure projects intended to pull the Chinese economy from its slowest growth in three years. US exporters of coking coal hope the demand for the raw material will be boosted by China's new government stimulus spending on highways, ports and airport runways. The increased demand is likely to come from Chinese steelmakers, electricity generators, and metals and chemical manufacturers, leading to higher prices. It isn't clear, though, if that scenario will materialize or if China's domestic coal supplies will be enough to satisfy the higher demand. Either way, Chinese buyers of coking coal could find the market changed after months of falling prices have left them scrambling to defer shipments or renegotiate higher-price contracts to save money. After jumping to a record $330 per metric ton in early 2011, the world price of coking coal recently fell by nearly half to $170 a metric ton. For coal used for heating fuel, recent increases in the price of competing natural gas could prove to be a boon, as utilities switch back to coal. Last week, Dahlman Rose & Co forecast that Chinese steelmakers' demand for coking coal appears to be rising. Daniel Scott, an analyst at the company, wrote that margins on the spot market for certain Chinese-made steel products have increased by more than 30 percent since July, and he suggested that this will lead to higher prices of iron ore and coking coal. The extent to which Chinese demand is revived will be tied largely to the national economy. The National Bureau of Statistics, or NBS, announced on Thursday that China's economy grew 7.4 percent year-on-year in the third quarter of 2012, slower from 7.6 percent in the second quarter and 8.1 percent in the first. The slowing economy has hit domestic steel producers hard. According to the China Iron and Steel Association, 38 of 81 steelmakers recorded losses through the first seven months of 2012. The losses totaled 16.9 billion yuan, an increase of more than 400 percent from those companies' losses during the same period last year. "Demand from China is so great that its coal imports affect the global market for coal," said Luke Popovich, a spokesman for the Washington-based National Mining Association, the US industry's chief lobbying group. "Soft demand for metallurgical coal used in steelmaking and for steam coal used to generate electricity will obviously harm US producers." Last year, metallurgical coal dominated the US industry's exports, at 70 million short tons, compared with 38 million short tons for steam coal, which is used in power generation. The drop in Chinese imports of metallurgical coal has prompted cutbacks and even closures at some mines in Appalachia, the coal-rich region stretching from Pennsylvania to Tennessee. Virginia-based Alpha Natural Resources Inc, the world's third-biggest provider of coking coal to the steel industry, said in August - the same month China announced its import decline - that it would cut 1,200 jobs, about 9 percent of its work force. Earlier this year, Alpha laid off more than 700 miners and reduced production at more than 20 mines. "The large volume of Chinese steel production influences global metallurgical coal markets for both the amount produced and the price. Recent reduced global metallurgical coal demand has resulted in lower prices per ton and lower net coal production from most suppliers, including Alpha," company spokesman Rick Nida told China Daily. But exports to China, he said, are a relatively small part of Alpha's sales because the country tends to import coking coal mostly from coal producers in or close to Asia. Mike Mellish, an economist at the Energy Information Administration, the US Department of Energy's research arm, said the influence of China on US coal exports shouldn't be overstated. "Our exports to China during the past couple of years are significant in terms of US coal exports, but not so much in terms of the overall market for US coal producers," Mellish said, pointing out that demand from Europe - the industry's top customer - remains strong. At Arch Coal Inc, a leading producer and exporter that for years has sold thermal coal in China through a broker, the recent dip in demand is seen as a concern but one that's likely to wane fairly soon. The company remains optimistic about the long-term potential of world markets, spokeswoman Kim Link said. Arch Coal set an export record for the first half of 2012 and will continue to strengthen and form relationships with international customers while exploring opportunities to boost sales abroad, she said. The company, based in St Louis, Missouri, is developing the metallurgical-coal Leer Mine in West Virginia that, once up and running in mid-2013, could have China as an important customer.

Mo and his hometown mull over financial windfall from prize (By Xu Wei and Zhang Zixuan) As the first Chinese citizen to win the Nobel Prize for literature, Mo Yan will dwarf his peers when it comes to royalty income this year, according to the findings of new "rich list" of Chinese writers. Wu Huaiyao, a literature researcher who has been tracking royalty income of Chinese writers since 2006, predicts Mo can expect in excess of 100 million yuan ($16 million) globally, placing the Nobel laureate's name firmly at the top of his list. Noble laureate in literature Mo Yan takes questions from reporters in Beijing on Thursday. The writer made his first appearance in Beijing after he won the prize and gave a speech at a seminar held by the Chinese Academy of Arts on Thursday. Liao Pan / China News Service. Mo was announced as the winner of the Nobel Prize for Literature on Oct 11. He sat 20th in Wu's first ranking of royalty income in 2006, with 3.45 million yuan — but his Nobel win puts him back onto the list for the first time since. Wu said that he expects Mo's royalty income to snowball in the next few years, as his books sell out in stores and online booksellers across the country and beyond. The expected windfall is clearly playing on the 57-year-old writer's mind too. In a recent interview with China Central Television, the author joked he had already been thinking about buying a modest apartment in Beijing with the 8 million Sweden krona ($1.2 million) that comes with the Nobel Prize. Born in 1955 in a village in Gaomi, Shandong province, Mo has been quoted often as experiencing food shortages in his early years, and has used the memories as an inspiration for his work. In earlier interviews, he admitted that financial reward was one of the key motivations for him to take up writing as a career. "I heard writers could afford to eat dumplings three times a day," he once said, remembering his favorite meal as a child. Meanwhile, the local authorities in Gaomi have denied media reports that they had been coming up with plans to boost local tourism income on the back of Mo and his work, after the city gained worldwide attention through his Nobel win. The Beijing News reported on Thursday that Mo's hometown was mulling over a 670 million yuan investment to boost local tourism, quoting Fan Hui, an official from the administrative committee of a local logistics park, to which Mo's hometown village is subordinate. "It was only a tentative idea from the official and cannot represent the voice of the city government," said Wang Youzhi, a publicity official of the city. "Although the idea sounds promising, we are yet to take the whole situation into consideration," he said. The Beijing News also reported that the local authorities were considering giving subsidies to encourage farmers to grow more than 10,000 mu (667 hectares) of sorghum, to be used in an exhibition to highlight Red Sorghum — a 1987 film about a young woman's life working on a distillery for sorghum liquor, based on a novel by Mo. To local farmers, sorghum — a species of grasses, one of which is raised for grain and many of which were used as fodder — is a long-outdated agricultural product, due to its poor economic value. Nie Peng, a local farmer, said that if sorghum does appear once again in the fields of Gaomi, it would be treated as little more than decoration. "Its use as either as film set or on any tourist site, will need to be carefully examined before putting any money into such an idea," said the 22-year-old farmer, but added there can be some value in combining such an idea with other local culture. "With a bit of proper planning between the local government and local residents, who knows? But Gaomi can't pin all its future development hopes on Mo alone," he added.

Chinese investment in US hits new high (By Chen Weihua in New York) Foreign direct investment in the United States from China hit a record high through the first nine months of 2012 despite election-year rhetoric against the country and a congressional report casting national-security suspicions on two Chinese tech companies. During this year's first three quarters, Chinese enterprises poured $6.3 billion in FDI in the US, according to a report released Thursday by New York-based Rhodium Group, which tracks Chinese investments. The deal pipeline is strong, with major acquisitions pending in aviation, auto parts and energy, said Thilo Hanemann, the firm's research director. "While energy and advanced manufacturing continue to land the most investment dollars, 2012 deal flow suggests that Chinese investors are increasingly interested in US service firms, including entertainment, hospitality, finance and information technology," he said. During the third quarter ended Sept 30, Chinese enterprises spent $2.7 billion on 10 direct investments in the US. While the number of projects is smaller than in previous quarters, the average size of transactions this year reached an unprecedented level. The $2.6 billion acquisition of US cinema operator AMC Entertainment Holdings by Dalian Wanda Group, completed in early September, was the biggest overseas deal ever by a privately held Chinese company. The Chinese appetite for big deals has clearly grown, said Hanemann.

Hong Kong*:  Oct 20 2012 

Clinique launches new eye cream product in Hong Kong (By Charley Lanyon) Clinique reached new heights with the launch of its new eye cream on Tuesday - nearly 500 metres above sea level, to be precise. The event was held on the top floor of the ICC Tower in West Kowloon, meaning models, celebrities and socialities took a 100-storey elevator trip to the sky100 lounge. The world of skin care had been abuzz with rumours that Clinique's technology was being reformulated to work around the eyes, and the big names turned out in giddy anticipation to see if the reports were true. Singer-actress Charlie Yeung Choi-nei headed up a contingent of wrinkle-free (and looking to stay that way) celebrities, that also included TVB actress Eliza Sam and Cara Grogan. After posing for photos, the celebrities and other VIPs were whisked away for their own personal demonstration of the new cream far from the prying eyes of the paparazzi. Afterwards, they were obviously impressed and took every opportunity to gush about the new product. Clinique's staff dermatologist David Orentreich warned that "repetitive facial movements such as smiling [causes] wrinkles to become even more pronounced". But it was clear from the faces of the celebrities that smiling is a risk worth taking.

West Kowloon Arts hub funding rises to HK$23b (By Vivienne Chow) The West Kowloon arts hub’s endowment fund has increased HK$1.4 billion to HK$23 billion, and 80 people were hired last year, boosting the hub’s staff to 106. The West Kowloon Cultural District Authority’s annual report, released on Wednesday for the fiscal year ending March 31, also revealed that its chief executive Michael Lynch earned HK$4.5 million between his arrival in July, 2011, and March 31, 2012. Of that amount, HK$3.8 million was salary and the remainder, benefits and gratuities. The authority’s rate of return on its investments rose to 4.1 per cent for the year from 3.4 per cent the previous year. Profit on various investments grew by an impressive 40 per cent to HK$743 million from HK$529 million the year before. Despite the increase in profits and the initial endowment, there’s still not enough money to complete the 40-hectre site. According to a budget estimate conducted by Professor Chau Kwong-wing, head of Hong Kong University's real estate and construction department, it will take another HK$9.2 billion to HK$16.4 billion to build the arts hub at the scale and quality originally planned.

Unemployment rises amid signs of hiring slowdown (By Lai Ying-kit) Hong Kong’s unemployment rate rose slightly last month to 3.3 per cent amid signs that firms are getting more cautious about hiring, the Census and Statistics Department said on Thursday. That meant the seasonally adjusted unemployment rate for the three months ending in September went up by 0.1 percentage point, from 3.2 per cent in the June-August period, department figures showed. This was the first increase in the jobless rate since February. The number of people without jobs rose by around 1,300, to 132,900. Most of September’s job losses were in the insurance, manufacturing and retail sectors, the department said. Secretary for Labour and Welfare Matthew Cheung Kin-chung said the short-term outlook would become more uncertain “amid more cautious hiring sentiment and the moderation in domestic demand in recent months”. Also, the risks of a weaker global economy would overshadow Hong Kong’s situation, he said. “[For those reasons], there might be some upward pressure on the unemployment rate in the coming months,” Cheung said. However, a contrary trend emerged in the underemployment rate – a measure of those unable to find at least 35 hours of work a week. It decreased to 1.6 per cent from 1.7 per cent. Drops in underemployment were mainly reported in the construction, and food and beverage, sectors.

Chow Yun-fat, Huang Xiaoming promote 'The Last Tycoon' Actors (L-R) Sammo Hung, Francis Ng, Chow Yun-fat and Huang Xiaoming pose during a news conference on their latest movie "The Last Tycoon" in Hong Kong October 17, 2012. The movie, about gangsters in Shanghai, will be released in December 2012. Actors (L-R) Francis Ng, Huang Xiao-ming, Chow Yun-fat and Sammo Hung attend a news conference on their latest movie "The Last Tycoon" in Hong Kong October 17, 2012. The movie, about gangsters in Shanghai, will be released on December 2012.

 China*:  Oct 20 2012

Japan’s Hokkaido welcomes Chinese, despite row (By Agence France-Presse in Tokyo) Hokkaido Governor Harumi Takahashi confirmed the island's doors were open for Chinese tourists and investors at a press conference in Tokyo on Thursday . The governor of Japan’s tourist haven island of Hokkaido said on Thursday the doors were open for Chinese tourists and investors, despite frictions that have seen Beijing’s warships skirting Tokyo’s waters. Harumi Takahashi said it was “impossible” for the people of Hokkaido to dislike Chinese people, even as anti-Japanese feeling remains high in China and isolated reports of physical attacks there continue to emerge. “We welcome Chinese tourists and Chinese investment in tourism infrastructure,” Takahashi told reporters. “Tourism is an important industry in Hokkaido.” Takahashi made the comments as she also said local laws aimed at regulating transactions involving forests and waterways on the island were not intended to limit purchases by foreigners. The ordinance requires the Hokkaido government be notified three months before any transaction takes place and allows local officials to offer “advice” to the vendor. It was introduced following a public outcry when it was revealed there had been a surge in foreign ownership of Hokkaido’s forests and that many buyers were using Chinese capital. “The ordinance was introduced to preserve Hokkaido’s wealth of nature, delicious food and the openness of local residents, which Chinese people love,” Takahashi said. “It’s impossible that people in Hokkaido dislike China,” she added. As of April this year, around 1,000 hectares of Hokkaido’s forests are owned by 57 foreigners, officials said, adding 21 are Chinese companies or individuals. The governor’s comments come days after a Chinese naval flotilla sailed through waters near Japanese islands in the latest maritime incident in months of tensions over disputed islands. They also come the day dozens of Japanese lawmakers visited Yasukuni Shrine, which honours war dead including Class A war criminals, following a visit on Wednesday by opposition leader Shinzo Abe, which angered China and South Korea. Takahashi said she hoped Hokkaido can “boost relations with China at a regional level at a time when country-to-country level relations are sour”.

China's Haier passes 50 pct share threshold in New Zealand whiteware maker - One of New Zealand's oldest and most reputable whiteware makers looked set Thursday to slip into Chinese ownership after the directors advised shareholders to accept a takeover offer from Chinese giant Haier. The independent directors of Fisher & Paykel Appliances Holdings Ltd. (FPA) unanimously recommended shareholders accept Haier's offer, which was raised from the 1.20 NZ dollars (99 U.S. cents) a share on the table last month to 1.28 NZ dollars Thursday. FPA chairman Keith Turner said the independent directors had carefully considered a full range of expert advice, including an independent adviser's report and regarded the increased offer as representing fair value. "We also note that the increased offer is within the independent adviser's valuation range of 1.28 to 1.57 NZ dollars per share," Turner said in a statement. Major shareholders, representing approximately 14.1 percent of the stock, had also committed to accept the new offer, in addition to Allan Gray Australia, wich had accepted the previous offer in respect of its 17.5 percent shareholding. "This means that with Haier's existing 20 percent shareholding, Haier will achieve its minimum acceptance condition of more than 50 percent of the voting rights of FPA and will gain a controlling interest in the company when the offer becomes unconditional," said Turner. Directors acknowledged that the share price was likely to drop below the offer price if Haier failed to gain a 90 percent acceptance rate. FPA shareholders have until Nov. 6 to accept the increased offer from Haier. The recommendation followed an announcement from Haier New Zealand Investment Holding Co. Ltd. that the Accident Compensation Corporation has confirmed it would accept the new offer for its 7. 2 percent shareholding, as had AMP Capital Investors and Harbour Asset Management, which held 4.5 percent and 2.4 percent shareholdings respectively. Liang Haishan, chairman of Haier New Zealand Investment and president of Haier White Goods Group, said it was important for Haier to proceed with the independent board's full support. The new offer price would represent a 71 percent premium to the pre-offer price of FPA shares, Liang said in a statement. Earlier this month, the independent directors unanimously recommended that shareholders turn down the previous offer on the grounds that it did not adequately reflect their view of the firm' s value based on their confidence in its strategic direction. The takeover looked set to stir a controversy over the loss of New Zealand assets similar to the sale of the 16 Crafar dairy farms to China's Shanghai Pengxin group. Economic development spokesperson for the main opposition Labour Party David Cunliffe said Fisher and Paykel was a New Zealand "innovation icon." "The threat of an overseas takeover of Fisher & Paykel is now very real and the likelihood of excellent skilled jobs going overseas is worryingly high," Cunliffe said in a statement. "If Fisher & Paykel is sold it will be the latest in a long line of sell-offs, which has seen over 30 high-tech companies go offshore in the past decade. That means a lot of quality, skilled jobs are disappearing." Based in Qingdao, Shandong Province, Haier Group employs more than 80,000 people around the world and had global revenues of 23. 3 billion U.S. dollars last year. Haier acquired 20 percent of Fisher and Paykel Appliances in 2009, establishing cooperation agreements in research and development, sourcing, manufacturing and marketing. Fisher & Paykel Appliances Holdings, the parent company of Fisher & Paykel Appliances and Fisher and Paykel Finance, is listed on the New Zealand and Australian stock exchanges and employs more than 3,300 staff worldwide. Established in New Zealand in 1934 and first listed in 1979, the company has manufacturing plants in New Zealand, Italy, Thailand and Mexico.

In Pictures: China economy slows, growing 7.4 pct in Q3 - China's economy has slowed for the seventh straight quarter, growing 7.4 percent year-on-year in the third quarter, the National Bureau of Statistics (NBS) announced. China's economy has slowed for the seventh straight quarter, growing 7.4 percent year-on-year in the third quarter of 2012, the National Bureau of Statistics (NBS) announced Thursday. The figure was lower than the 7.6-percent growth seen in the second quarter and the first quarter's 8.1-percent growth but was still in line with economists' predictions that third-quarter economic output would grow between 7.4 and 7.5 percent. China's GDP reached 35.35 trillion yuan (5.61 trillion U.S. dollars) in the first three quarters, NBS spokesman Sheng Laiyun said at a press conference. "The GDP grew 7.7 percent in the first three quarters and the economy is generally stable," Sheng said. During the first half, the GDP grew by 7.8 percent. "Compared with the first half, we have seen some improvements in the third quarter," he said, citing a trade rebound and other major economic indicators showing that growth has picked up. NBS data released Thursday showed that total retail sales in September hit 1.82 trillion yuan, up 14.2 percent year on year, with a month-on-month growth rate of 1.46 percentage points. Industrial value-added output grew 9.2 percent in September, up 0.3 percentage points compared to August. Fixed asset investment rose 20.5 percent year-on-year to 25.69 trillion yuan in the first nine months, with growth accelerating slightly by 0.1 percentage point from the first half. "We are fully confident that the economy will meet its growth target of 7.5 percent this year," Sheng said. China lowered its growth target for 2012 to 7.5 percent amid sluggish demand and global economic woes. "We are seeing positive factors that will drive a rebound for the economy," said Tang Jianwei, senior finance analyst at the Bank of Communications, China's fifth-largest lender. China's exports saw a surprise surge in September, rising 9.9 percent to 186.35 billion U.S. dollars. Export growth sharply increased from 2.7 percent in August, according to customs data. Imports grew 2.4 percent to 158.68 billion U.S. dollars, ending three months of consecutive drops. Tang predicted that exports will continue recovering in the fourth quarter on improvements in the EU and U.S. economies following a new round of quantitative easing (QE3) in the United States and the launch of a permanent bailout fund, the European Stability Mechanism, in the eurozone that aims for financial stability in the region. Tang said a rise in people's disposable incomes and a stable employment situation further paved the way for recovery, which will be boosted by more consumption and a faster pace of investment following an upcoming leadership transition. NBS data showed that China created 10.24 million new jobs in the first quarter, exceeding the annual target of ten million. During the same period, the disposable incomes of urban residents rose 9.8 percent, while those of rural residents grew 12.3 percent. Tang predicted that the GDP will rise 7.8 percent this year based on the nation's growth-stabilizing efforts. "We are maintaining a 7.7-percent growth forecast for the year and a similar forecast for 2013," said Alaistair Chan, an economist at Moody's Analytics. The country has made stabilizing growth a top priority this year amid the economy's downward pressure. The government has expedited export tax rebates for enterprises as a way to stabilize trade. It has also approved a raft of investment projects to shore up growth. The central bank has twice cut the reserve requirement ratio for banks and lowered benchmark interest rates this year. During recent talks on China's economic condition, Premier Wen Jiabao said China's economic growth has started to stabilize and witnessed positive changes. However, Wen said that the foundation for a stabilized economy is not solid enough due to significant drops in corporate profits and fiscal revenue growth. China's inflation eased to 1.9 percent in September from 2 percent in August. Despite the lessened pressure, Sheng said the country should continue to be wary, warning of imported inflation likely to be caused by QE3 and loose monetary policies in the yen and euro regions. Sheng Laiyun said that the nation will continue to prioritize growth-stabilizing efforts while pushing forward economic restructuring and industrial upgrading. The NBS's preliminary data showed that the tertiary industry grew 7.9 percent to 15.5 trillion yuan in the first three quarters, accounting for 43.8 percent of the GDP, up 1.2 percentage points from one year ago. Zhuang Jian, an economist at the Asian Development Bank, said cost-effectiveness will improve if growth is increasingly powered by restructuring, the healthy development of small- and micro-sided companies and more private investment.

Apple to open largest Asia retail store in Beijing - A new Apple store scheduled to open on Oct. 20 in Beijing will be the company's largest retail store in Asia, a senior company official said Thursday.

Hong Kong*:  Oct 19 2012 

Debut directors in spotlight at Hong Kong Asian Film Festival (By Hedy Bok) (From left) Longman Leung Lok-man, Chin Ka-lok, Aaron Kwok Fu-shing, Lam Ka-tung and Sunny Luk Kim-ching kick off the Hong Kong Asian Film Festival on Tuesday. The stars of Cold War kicked off the Hong Kong Asian Film Festival on Tuesday, but the festival spotlight this year will shine on rising directors with a social conscience. From Hong Kong, there is Gilitte Leung, whose Love Me Not tells the unlikely love story between two friends who are gay and lesbian, and Lai Yan-chi, who examines the impact of urban development through the eyes of Tsoi Yuen Tsuen villagers in her debut feature N+N. "Media coverage of the demolition of Tsoi Yuen village mainly focused on high-profile disputes between villagers and the government," says Lai, the 29-year-old director, "but I wanted to understand how the ordinary villager felt." Shanghai filmmaker Ying Liang's When Night Falls (2012, photo above), which made the official selection at multiple international film festivals including in Toronto and Busan, is another one of the festival's highlights. The movie, based on the true story of a man sentenced to death for killing six Shanghai policemen after a trial many believe was unfair, was first publicly screened at the Hong Kong Academy for Performing Arts earlier in the year despite repeated warnings from Chinese authorities. Gary Mak, organiser of HKAFF, said: “Supporting new directors has always been our main goal. Hopefully we can help bring these talents together and provide a platform for them to learn from each other." This year's festival also features a selection of North Korean films, including The Flower Girl (1972), a North Korean classic adapted from an opera supposedly written by "The Great Leader" Kim Il-sung, and the internationally produced Dear Pyongyang (2005), a documentary by Korean-Japanese director Yang Yong-hi which records her reunion with brothers in Pyongyang after years of reluctant separation. The festival opens on November 2 with Hong Kong crime thriller Cold War, which was also the opening film for this year's Busan Film Festival.

White House finds no evidence of spying by Huawei (By Reuters in San Francisco) "Huawei is a US$32 billion independent multinational that would not jeopardise its success or the integrity of its customers’ networks for any government or third party," said Huawei's US spokesman Bill Plummer (right). A White House-ordered review of security risks posed by suppliers to US telecommunications companies found no clear evidence that Huawei Technologies had spied for China, two people familiar with the probe said. Instead, those leading the 18-month review concluded early this year that relying on Huawei, the world’s second-largest maker of networking gear, was risky for other reasons, such as the presence of vulnerabilities that hackers could exploit. These previously unreported findings support parts of a landmark US congressional report last week that warned against allowing Chinese companies Huawei and ZTE to supply critical telecom infrastructure. But it may douse speculation that Huawei has been caught spying for China. Some questions remain unanswered. For example, it is unclear if security vulnerabilities found in Huawei equipment were placed there deliberately. It is also not clear whether any critical new intelligence emerged after the inquiry ended. Aided by intelligence agencies and other departments, those conducting the largely classified White House inquiry delved into reports of suspicious activity and asked detailed questions of nearly 1,000 telecom equipment buyers, according to the people familiar with the probe. “We knew certain parts of government really wanted” evidence of active spying, said one of the people, who requested anonymity. “We would have found it if it were there.” White House National Security Council spokeswoman Caitlin Hayden declined to comment on the review. A spokesman for Huawei said the company was not familiar with the review but it was not surprised that no evidence of Huawei espionage was found. Last week’s report from the Republican and Democratic leaders of the House Intelligence Committee noted the potential for spying through Huawei gear installed to manage traffic on wireless networks. The committee also criticised Huawei’s leadership for failing to provide details about its relationships with Chinese government agencies. Huawei, whose chief executive officer, Ren Zhengfei, founded it 25 years ago after he was laid off by the Chinese army, has rejected the House report as unfair and inaccurate. China’s Commerce Ministry has also called the accusations “groundless”. “Huawei is a US$32 billion independent multinational that would not jeopardise its success or the integrity of its customers’ networks for any government or third party. Ever,” the company’s US spokesman Bill Plummer said on Wednesday. The House Intelligence Committee’s report did not present concrete evidence that either Huawei or ZTE have stolen US data, although it said a classified annex provided “significantly more information adding to the committee’s concerns” about the risk to the United States. Speculation has swirled about the contents of the secret annex, and both committee chairman Mike Rogers and some intelligence officials have hinted at evidence that Huawei has participated in espionage. Rogers, the report’s lead author, stoked concerns by saying some customers had seen routers sending off “very valuable data” to China. But in the one case a committee staff member pointed out, the victim – Leap Wireless International – said that while some of its computers were infected with viruses earlier this year, an investigation found no evidence that the infection was deliberate or that confidential data had been stolen. Pressed about why the White House review and unclassified version of the House Intelligence Committee report had not turned up a “smoking gun”, two officials familiar with intelligence assessments said US agencies were most concerned about the capability for future spying or sabotage. Similarly, Chris Johnson, a former CIA analyst on China, said he had been told that the White House review had come up empty on past malicious acts. Nonetheless, officials emerged from the review with “a general sense of foreboding” about what would happen if China asked Huawei for assistance in gathering intelligence from US customers, he said. “If the Chinese government approached them, why would they say no, given their system?” Johnson said. Preventing state spying through technology is a high priority for US President Barack Obama’s administration, which is lobbying for legislation to raise private-sector security standards and readying a more limited executive order along those lines. Interviews with more than a dozen current and former US government officials and contractors found nearly unanimous agreement that Huawei’s equipment poses risks: the company could send software updates that siphon off vast amounts of communications data or shut them down in times of conflict. More than anything else, cyber experts complained about what they said was poor programming that left Huawei equipment more open than that of rivals to hacking by government agents or third parties. “We found it riddled with holes,” said one of the people familiar with the White House review. At a conference in Kuala Lumpur last week, Felix Lindner, a leading expert in network equipment security, said he had discovered multiple vulnerabilities in Huawei’s routers. “I’d say it was five times easier to find one in a Huawei router than in a Cisco one,” Lindner said. Lindner, who spent months investigating Huawei code, said the vulnerabilities appeared to be the result of sloppy coding and poor procedures, rather than any deliberate attempt at espionage. Huawei is looking into his findings, he said. Some in the US government, however, have said the alleged poor security practices at Huawei could be a deliberate cover for future attacks. One computer scientist, who helped conduct classified US government research on Huawei routers and switches four to six years ago, told Reuters that he had found “back doors” that his team believed were inserted with care. He said these back doors could enable attackers to install malicious software that would make critical government networks inoperable, allow hackers to gain entry into highly classified systems and enable them to spy on all traffic. He requested anonymity because he was not authorised to discuss the research. Huawei has denied the existence of these back doors. Plummer also noted that any vendor’s gear could be targeted by hackers, and the company would address any vulnerabilities it finds. The United States’ closest allies have rendered a split verdict on Huawei. Earlier this year, Australia barred Huawei from becoming a contractor on the country’s National Broadband Network, and Canada said last week that Huawei could not bid to help build a secure national network. In Britain, however, a spokesman for the Cabinet Office said Huawei’s products were fully vetted and did not represent a security concern. Dutch Ruppersberger, the ranking Democrat on the House Intelligence Committee and co-author of the report, told Reuters that the burden of proof had been on Huawei and ZTE, which cited Chinese government restrictions in limiting their responses. “China has the means, opportunity, and motive to use telecommunications companies for malicious purposes,” Ruppersberger said. Republican Rogers’ staff did not respond to questions about the contents of the classified annex or the White House review.

Google opens window into secretive data centres as it announces Hong Kong move (By SCMP) Internet search giant offers tour of its nerve center. Google is opening a virtual window into the secretive data centres where an intricate maze of computers process Internet search requests, show YouTube video clips and distribute email for millions of people. The unprecedented peek is being provided through a new website unveiled on Wednesday which features photos from inside some of the eight data centres that Google Inc. already has running in the U.S., Finland and Belgium. Google is also building data centres in Hong Kong, Taiwan, Singapore and Chile. Virtual tours of a North Carolina data centre also will be available through Google’s “Street View” service, which is usually used to view photos of neighbourhoods around the world. The photographic access to Google’s data centres coincides with the publication of a Wired magazine article about how the company builds and operates them. The article is written by Steven Levy, a journalist who won Google’s trust while writing “In The Plex,” a book published last year about the company’s philosophy and evolution. The data centres represent Google’s nerve centre, although none are located near the company’s headquarters in Mountain View, California. As Google blossomed from its roots in a Silicon Valley garage, company co-founders Larry Page and Sergey Brin worked with other engineers to develop a system to connect low-cost computer servers in a way that would help them realise their ambition to provide a digital roadmap to all of the world’s information. Initially, Google just wanted enough computing power to index all the websites on the Internet and deliver quick responses to search requests. As Google’s tentacles extended into other markets, the company had to keep adding more computers to store videos, photos, email and information about their users’ preferences. The insights that Google gathers about the more than 1 billion people that use its services has made the company a frequent target of privacy complaints around the world. The latest missive came on Tuesday in Europe, where regulators told Google to revise a seven-month-old change to its privacy policy that enables the company to combine user data collected from its different services. Google studies Internet search requests and Web surfing habits in an effort to gain a better understanding of what people like. The company does this in an effort to show ads of products and services to the people most likely to be interested in buying them. Advertising accounts for virtually all of Google’s revenue, which totaled nearly $23 billion through the first half of this year. Even as it allows anyone with a Web browser to peer into its data centres, Google intends to closely guard physical access to its buildings. The company also remains cagey about how many computers are in its data centres, saying only that they house hundreds of thousands of machines to run Google’s services. Google’s need for so many computers has turned the company a major electricity user, although management says it’s constantly looking for ways to reduce power consumption to protect the environment and lower its expenses. The company’s data centres are located in: Berkeley County, South Carolina; Council Bluffs, Iowa; Douglas County, Georgia; Mayes County, Oklahoma; Lenoir, North Carolina; The Dalles, Oregon; Hamina, Finland; and St. Ghislain, Belgium. Other data centres are being built in Quilicura, Chile; Hong Kong, Singapore and Taiwan. 

C.Y. targets four most urgent problems facing Hong Kong (By Gary Cheung, Tony Cheung and Stuart Lau) Chief executive identifies housing, environment, poverty and the elderly as serious problems but stands firm on old-age allowance concessions. Chief Executive Leung Chun-ying yesterday took aim at what he termed four deep-rooted problems plaguing Hong Kong, in a speech to Legco that amounted to a mini policy address. Identifying the issues as housing, the environment, poverty and the elderly, he said sustained and higher economic growth was needed to provide the resources to tackle them. On housing, he said measures already introduced to stabilise the property market were only the start and he had more he could launch as needed "just by making a phone call". Leung stood firm against calls for concessions in the means test for the new old-age allowance but promised to study a possible universal retirement protection scheme - a pledge certain to trigger a heated debate. Breaking tradition, Leung delayed his first policy address from this month until January, saying it will give the government more time to consult lawmakers. But yesterday he presented a de facto policy address without fresh policy initiatives. He spelled out his governing philosophy, such as a more proactive role in economic development, and elaborated on his positions on such thorny issues as the relationship between Hong Kong and the mainland. Leung also acknowledged growing anti-mainland sentiment in some areas, saying: "We shouldn't close our borders and live in isolation. Hong Kong's core values are widely recognised by members of the public and will not be undermined by interaction with the mainland and other countries." Leung said the government would introduce further timely measures to ensure steady development of the property market. At a meeting with senior editors after the speech, Leung said: "I have some measures in my pocket and can announce them just by making a phone call." The Monetary Authority moved on September 14 to cool the city's overheating property market by making second mortgages harder to get. This came a day after the US Federal Reserve unveiled a third round of quantitative easing measures (QE3) to provide liquidity and to keep US interest rates low until 2015. Leung told the editors that apart from the living allowance for poor elderly, he would study the universal retirement protection scheme. A working group on social security and retirement protection will be set up under a soon-to-be-revived Commission on Poverty, which is expected to define a poverty line for Hong Kong. But Leung said there was little the government and employers could do if Hong Kong failed to maintain a higher pace of economic growth. Professor Joe Leung Cho-bun, of the University of Hong Kong's social work department, said given the complexity of the issue, it was unlikely anything would emerge on the retirement protection scheme in the next five years. Leung also said the government would not relaunch the embattled government restructuring plan in the near future, as reported by the South China Morning Post on Wednesday. Civic Party leader Alan Leong Kah-kit dismissed Leung's address as a "waste of time". "It's so hollow that there were echoes in the Legco chamber," Leong said.

PricewaterhouseCoopers is set to impose a no-pay leave policy and career breaks of up to six months for its thousands of staff in Hong Kong to cut costs amid global economic uncertainty, sources said. No layoffs are being planned, but the move may prompt other accounting firms to impose forced leave as well. It will be the first time since the financial tsunami in 2008 that a big-four accounting firm has made such a move. All employees of PwC must take 12 days of leave before the end of the year - including on October 22 and December 21, 24 and 31. Of the 12 days, eight will not be paid. Staff can choose either to deduct the eight days' pay in one lump sum in November or spread the amount evenly over five months. A voluntary career-break program will also be launched in which staff can go on sabbatical from two weeks to six months. They will still be paid 20 percent of their salaries. The circular does not state how much will be saved but it stresses that 2013 will be an even harder year. A drastic decline in initial public offering activities this year has had a significant impact on accounting and financial professionals. The other big four firms - KPMG, Ernst & Young and Deloitte Touche Tohmatsu - have no such plans at the moment. KPMG and Ernst & Young even said they will continue hiring. Middle-tier accounting firm RSM Nelson Wheeler said it has not heard any of its peers planning to implement a no- pay leave policy. "We have less business inquiries recently but no drastic cost-cutting plan," staff partner Chris Wong Wo-cheung said. But he recalls that some of the middle-tier firms followed the big four's move of imposing a no-pay leave policy during the financial tsunami. Meanwhile, a survey by CPA Australia found that 72 percent of 211 finance and accounting professionals believe Hong Kong's unemployment rate will be between 3 percent and 4.9 percent next year. The current rate is 3.2 percent. "There could likely be more layoffs going forward due to a range of external and internal factors, including a flat IPO market," said Bernard Poon, divisional president for greater China. "But more than half of the respondents stated that 2013's economic outlook will be satisfactory."

Chief Secretary Carrie Lam Cheng Yuet- ngor will lead the government team today to fend off a motion calling for education minister Eddie Ng Hak-kim to step down over his handling of national education. The motion was tabled in the Legislative Council by pan-democrat lawmaker Ip Kin- yuen, who said Ng lacks commitment, credibility and competence and should accept responsibility for what happened and resign. "During the Legco meeting we will study whether the government has any political responsibility, and whether there are problems in the policy and in handling the issue," Ip said. "We will come to a conclusion." The Civic Party's Kwok Ka-ki said under the accountability system, a senior official should accept responsibility and step down if he or she does not perform well. But Kwok believes that Chief Executive Leung Chun-ying is the real culprit as he appointed Ng as secretary for education even though Ng had no experience in government administration and was not familiar with education policy. Kwok said Ng also did not have the sincerity or technique to deal with the national education row. Christopher Chung Shu-kun of the Democratic Alliance for the Betterment and Progress of Hong Kong said instead of accusing the education chief of refusing to have an open dialogue with teachers, parents and students, his critics should question those who rejected a dialogue with Ng. Regina Ip Lau Suk-yee of the New People's Party said she did not agree with either the motion against Ng or the withdrawal of the national education curriculum. She said the guide was approved by former education minister Michael Suen Ming-yeung. Lingnan University political scientist Li Pang-kwong believes Lam has entered the fray to take the pressure off Ng. "It is a strategy we can understand as Ng is a new official," Li said. "The arrangement will take away some of the pressure and focus on Ng." He believes the motion will fail because the pro-establishment parties have the majority. Opponents and supporters of national education are expected to stage rallies outside the Legco complex before the debate begins. Supporters of the curriculum will also demonstrate and police said they will keep the two sides apart on the podium.

Proposed Flying Fox zipline attraction for North Lantau is discussed today (By Simpson Cheung) Proposed adventure tour carrying hikers 300 metres over North Lantau, opposed by eco-campaigners, will be discussed today. Adventurers could soon be flying high above the valleys of North Lantau on a 300-metre zipline if a British tour group has its way. The Country and Marine Parks Board, an advisory committee for the Agriculture, Fisheries and Conservation Department, will today discuss the building of the Flying Fox tour attraction proposed for Lantau North Country Park near the Ngong Ping 360 cable car terminal. But it is already expected to draw objections from green groups and hikers as it would "deprive the general public of a large area of natural habitats", roughly six hectares, a government paper showed. The Tourism Commission, invited to a briefing session in mid-August, generally supported the building of the attraction. It would comprise two sets of cross-valley parallel ziplines, each 300 metres long, linked by about a kilometre of connected hiking trails and a 50-metre-long suspension bridge over the Sham Wat Gorge. Each tour would take about 60 to 90 minutes and accommodate 60 people an hour, or 480 a day. The attraction would create at least 20 local jobs, said the report. But the Country and Marine Parks Authority paper said there was no precedent for allowing use of government land within a country park for fee-charging commercial activities. It would also be controversial if access to this area was confined to visitors who had paid the fee, the paper said. "The potential benefits of the proposal in terms of tourism promotion might be offset by the impact on the environment and the need to handle the foreseeable objections from the general public and green or hiking groups," it said. The paper also said the Ngong Ping cable car operator would be a partner in the project. Flying Fox was willing to pay rental to the government and stressed the business was self-sustaining, without the need for government investment. Green Power chief executive Man Chi-sum opposed the proposal, saying any activity which caused a potential threat to the environment and ecology should be avoided in country park areas. Ken Ching, director of the Eco-education and Resources Centre, said construction work in Lantau North Country Park would affect the ecology of the eagle owl, of which there were fewer than 10 in Hong Kong, and the white-bellied eagle, a second class-protected species of which there were only about 15 to 20 in the city. In its proposal, Flying Fox said Hong Kong needed to develop its eco-tourism infrastructure to compete with rival destinations in the region and to help show its conservation work to visitors. It added that Hongkongers also needed a healthier lifestyle. "It is an irony that Hong Kong's worldwide image is of an iconic urban landscape, when 70 per cent of the land is countryside and 43 per cent of the territory is designated country or marine parks," the proposal said. Flying Fox, the trading name of British-registered Zip Adventures, was founded in 2007 by Jonathan Walter, who served with the British Army in Hong Kong, and Richard McCallum, who worked with Swire Group and Cathay Pacific in the city. The company runs three zip-line tours in India, with a fourth under construction.

Pan-democrats lose out in battle for Legco panel power (By Tony Cheung) Beijing loyalists end up chairing 16 out of 20, setting stage for a conflict. The pro-establishment camp secured 16 out of 20 chairmanships on Legislative Council panels and subcommittees yesterday, three more than in the previous legislature, including the much-coveted panel on administration of justice and legal services. The outcome was a blow for the pan-democratic camp, whose four chairmanships fell short of the seven it occupied in the last four-year term. The refusal of Beijing-loyalist lawmakers - who form the majority in Legco - to grant more chairmanships to the pan-democrats sets the stage for an escalating tussle between the two sides. Their next battle will take place on Friday in the Finance Committee meeting, when Beijing loyalists will seek, amid pan-democrats' opposition, to change rules to ban filibusters. Dr Li Pang-kwong, a political scientist at Lingnan University, said the pro-establishment camp's bagging of the chairs was "a preventive measure against filibustering and an attempt to regain an initiating role". However, it was likely to worsen straining ties, and pan-democrats might resort to more radical means of protest, he said. Pan-democrats Lee Cheuk-yan and Cyd Ho Sau-lan of the Labour Party, the Civic Party's Alan Leong Kah-kit and People Power's Wong Yuk-man secured chairs. The chairs were for panels on manpower, on the environment, on food safety and environmental hygiene, and on information technology and broadcasting, respectively. The Democratic Party's Emily Lau Wai-hing and the Civic Party's Dennis Kwok Wing-hang, Kwok Ka-ki and Leong lost their bids to head up the constitutional affairs, legal services and transport panels, and the public works sub-committee. Since last month, the pan-democrats had sought to reach a consensus with their rivals, including splitting panel chairmanships so each camp would get two years at the helm. The two sides agreed to split the chairmanships of the four now chaired by pan-democrats, and five others that they would be allowed to chair two years later. Political scientist Dixon Sing Ming, from the University of Science and Technology, said the outcome reflected the wishes of Beijing and Chief Executive Leung Chun-ying, to ensure a smoother passage of government proposals. "In the next few years, Legco will discuss important policies, for example, electoral reforms," Sing said. Independent legislator Priscilla Leung Mei-fun, who beat Dennis Kwok to chair the legal services panel, courted controversy right away when she proposed holding the meetings at 10.45am on Fridays, instead of the current 4.30pm on Mondays. Pan-democrats objected, accusing her of discussing the matter with the Legco secretariat before she was elected chairwoman. Leung promised to try to come up with a better timeslot. Firing an opening salvo on the part of the Beijing-loyalist camp, Ip Kwok-him, from the Democratic Alliance for the Betterment and Progress of Hong Kong, said he would seek an amendment on Friday to the Finance Committee's procedures, to ban lawmakers from tabling more than one motion on every funding proposal. The present rules allow a lawmaker to move a motion without prior notice before an item is put to the vote. In June, People Power lawmakers moved nearly 1,000 motions, causing a marathon series of meetings that helped block a government restructuring plan. Ip emphasised that his amendment would not limit lawmakers' right to speak. "Sixty-nine lawmakers can still table 69 motions, but the amendment is necessary to ensure smooth proceedings at meetings". Lau slammed Ip's proposal as the equivalent of turning Legco into a rubber stamp. "It is like declaring war on the pan-democrats; if you take away our right to speak, the world will think Legco is completely meaningless." Only a simple majority for is needed for Ip's amendment to pass. Albert Chan Wai-yip of People Power warned that it might launch another filibuster to stop it from getting through.

Creations of HK designers presented at Taipei IN Style 2012 - Models display creations during a fashion show featuring creations by Hong Kong designers during the Taipei IN Style in Taipei, SW China's Taiwan, Oct. 17, 2012.

‘Voluntary Career Break’ For Hong Kong Workers (By Te-Ping Chen) More auditors in Hong Kong can expect to be taking extra-long holidays, courtesy of the city’s sluggish IPO market. This week, accounting firm PricewaterhouseCoopers announced that to help avoid layoffs, employees in mainland China and Hong Kong will be offered a chance to take an additional 12 days’ holiday in the coming months, of which eight of them will be unpaid. The company is also launching a “voluntary career break” program, which allows such staff to take extended holidays ranging between two weeks and six months, during which they are paid 20% of their regular salary. Some three-quarters of PwC’s revenue is driven by auditing services, the company says, which have taken a hit as new initial public offerings in Hong Kong have dwindled this year. The last time PwC launched similar vacation plans for staff was during the downturn in 2009, the company said. “Our profession is quite volatile,” PwC China human capital partner Yvonne Kam said Wednesday. “In a buoyant economy, we work really hard. But in downturns, we can afford to be taking more time off and to spend it with friends and families.” So far, she says, employee response has been positive, and that many had already been planning to take off time around the year-end holidays. Hong Kong has been the global IPO capital for the past three years, according to data provider Dealogic, meaning that more money was raised through IPOs in the city than anywhere else in the world. However, during the first three quarters of 2012, there were just $5.76 billion in new Hong Kong listings. That represents an 80% drop in value, and the lowest figure on record for that period since 2003. Such a slowdown in value has hurt banks and prompted cost-cutting, with banks lowering salaries and shedding employees. Bank of America Merrill Lynch, for example, is planning to cut 16,000 jobs by the end of the year. Last month Deutsche Bank AG also laid off about 80 bankers in Asia, with around 45 jobs eliminated in Hong Kong, while others, including brokerage Nomura Holdings Inc. 8604.TO +3.27%, have also begun to scale down staff numbers in the region. Late last year, PricewaterhouseCoopers announced it was planning to significantly expand its presence in China and Hong Kong, adding an additional 5,000 people to its roster of 10,000 in Hong Kong and on the mainland by 2016. On Wednesday, Ms. Kam said those plans remained on track. “We have very aggressive plans to grow and nothing’s going to stop us from doing that,” she said. The company currently has a total of 16 offices across Hong Kong and mainland China, with a combined 13,000 staff. Analysts say Hong Kong’s IPO market isn’t poised for a strong rebound anytime soon, and PwC says it expects the market to stay stagnant for the coming few months. “But we hope the economy will revive really soon,” says Ms. Kam. There are no current plans to implement layoffs, the company said.

Cheung Kong Holdings (0001) expects to price special units at One West Kowloon for as much as HK$24,000 per square foot - making them the most expensive flats in Cheung Sha Wan. The 286-unit project between the group's Banyan Garden project and the Feoso Building on Lai Chi Kok Road will be put on the market by the end of this month. It is expected to secure pre-sale consent next week. "Two special 1,300 sq ft units will be priced at HK$31 million, or HK$24,000 psf," said Francis Wong Si-chung, real estate director at Cheung Kong. There are four three- to four- bedroom special units available, ranging in size from 1,100 to 1,300 sq ft. An exhibition of the project will be held in the mainland including Shenzhen and Guangzhou. Also, Discovery Bay developer HKR International (0480) plans to launch the flagship batch of its latest development, Amalfi, this week at the earliest. Amalfi One has 28 specialty units sized at more than 2,000 sq ft with prices reaching at least HK$12,000 psf, HKR sales and marketing senior manager Pandora Chan Sau-chun said. A total of 164 luxury homes divided into three 16-story mid-size blocks make up the group's latest development on Lantau. Also, Henderson Land (0012) will price units at the The Reach in Yuen Long on Friday at the earliest. Three-bedroom units will be released first in the 2,580-unit project, said Thomas Lam Tat-man, general manager of sales at Henderson. Show flats will be opened to Henderson Club members today and to the public tomorrow. Separately, Chinese Estate Holdings (0127) vice chairman Lau Ming- wai warned investors about the risk of the latest round of quantitative easing by the US Federal Reserve and said property prices could turn south.

 China*:  Oct 19 2012

China turf war looms for coffee makers (By Bloomberg in Geneva) A Nespresso coffee maker. Nestle aims for China sales. Nestle rules the high-end coffee market in Europe with Nespresso capsules. Green Mountain Coffee Roasters dominates the US, leaving China as the biggest market grab for premium portioned coffee. Nestle has prepared for rising demand with Nespresso machines celebrating the year of the dragon decorated by Hong Kong-based luxury brand Shanghai Tang. Starbucks said in April it planned to introduce its Verismo single-serve system in China next year. With Chinese consumers drinking only three cups of coffee per capita each year, compared with 604 for the French, the companies are betting that there is latent demand in cities such as Shanghai, where rising wealth is whetting appetites for western luxuries. Mondelez International, the snacks and coffee business spun off from Kraft Foods, is also considering introducing its Tassimo coffee maker in China. "There may be a bit of a fight in China as the coffee market there generally is embryonic," Jon Cox, an analyst at Kepler Capital Markets, said. Sales of coffee pods in China climbed 50 per cent last year, compared with 19 per cent growth for standard ground coffee, according to researcher Euromonitor International. Still, they represent only about 0.1 per cent of the country's coffee market, illustrating the scale of the opportunity for manufacturers. "The number of middle-class consumers in China is expected to increase five-fold between now and 2030, so it could be that coffee companies think the inflection point for single-serve in China is now," Warren Ackerman, an analyst at Societe Generale in London, said. Nespresso, which entered the country in 2007, has three boutiques there. Its expansion plans haven't been disclosed. Nestle, whose Nescafe instant brand is the source of two-thirds of all coffee in the country, may say today that organic revenue increased 6.3 per cent in the nine months to the end of September, according to the average of 12 analysts. Excluding price increases, sales gained 3.2 per cent, the estimates show.

Cross-strait relations nearing 'deep water zone' (By Lawrence Chung in Taipei) As Xi Jinping prepares to take charge in Beijing, Taiwanese experts believe cross-strait talks, while cordial, are nearing a 'deep water zone'. Mainlanders wait for coaches outside The Grand Hotel in Taipei. More than 4.14 million mainlanders have visited the island since Taipei allowed travel in 2008, which has added HK$56 billion to the Taiwan economy. The frosty wind that blew across the Taiwan Strait for decades has warmed considerably in recent years as both Beijing and Taipei focused on areas of agreement rather than dispute. Since then-Kuomintang leader Lien Chan's landmark meeting with President Hu Jintao in 2005, the two governments have signed numerous co-operation pacts allowing more people and capital to flow across the strait even as they remain military foes. But such deals have just scratched the surface of any potential reconciliation. And, as Vice-President Xi Jinping prepares to take the helm in Beijing, Taiwanese experts agree cross-strait talks are nearing a "deep water zone" where more vexing problems will become increasingly unavoidable. "With the two sides signing 18 co-operation agreements on economic and other non-political issues, they will have to face the thornier political issues," said Wang Kung-yi, a professor at the Institute of International Relations and Strategic Studies at Tamkang University in Taipei. As they wade into deeper waters, the two sides will have to begin confronting political and ideological rifts that fuelled the Chinese civil war and led Chiang Kai-shek's Kuomintang to flee to Taiwan 62 years ago. On one side sits Taiwan, a developed capitalist democracy with a population of 23 million. On the other is the mainland, a rapidly developing country of 1.3 billion that has nonetheless shown few signs of abandoning Communist Party rule. Beijing still regards Taiwan as a breakaway province and says it would be willing to take it back by force if necessary. While Taiwanese overwhelmingly oppose reunification - more than 90 per cent in one recent poll - they have generally supported warming policies advanced by President Ma Ying-jeou. Ma's defeat of Dr Tsai Ing-wen, of the pro-independence Democratic Progressive Party, in February was widely seen as an indication that the Kuomintang's efforts to bolster ties with the mainland would continue. Similarly, few expect Xi to veer far from the current path, in which both sides have accepted merely that they belong to "one China". But Beijing remains anxious for reunification and is expected to push for more political dialogue after the upcoming party congress. Taiwanese authorities, including the National Security Council, the Mainland Affairs Council and the ruling KMT, have been watching the leadership change closely, trying to assess its possible impact on cross-strait relations. "Based on what has happened over the past four years between us and mainland China, current relations are mutually beneficial," Ma said in June. "So, we do not expect cross-strait ties to have significant changes due to the leadership change." He placed particular emphasis on Xi's familiarity with cross-strait issues. The Communist Party's leader-in-waiting served 17 years as a local official in nearby Fujian province. "His understanding of Taiwan is very deep," Ma said. Hu has also sought to calm any concern that cross-strait relations might sour after he retires as party chief. During a meeting on the sidelines of the Asia-Pacific Economic Co-operation forum earlier this month, he assured Lien that Beijing's current policies toward Taipei would remain. "They want a stable transition of power," Lien said. As more difficult issues arise, analysts said Ma may try to slow down talks. The president now says he does not foresee starting political or peace talks with Beijing anytime in the next few years - something he had proposed early in his tenure. While the Ma administration seeks to focus on resolving economic and other "pressing" issues, growing economic ties could force other issues to the fore. More than one million Taiwanese were estimated to be living and working on the mainland. More than 4.14 million mainlanders have visited the island since Taipei started allowing travel in July 2008, adding NT$210 billion (HK$56 billion) to the Taiwanese economy. The mainland has become Taiwan's top trading partner, accounting for some 40 per cent of its exports last year compared with 15 per cent for the United States. Trade between the two totalled more than US$100 billion last year. Cross-straight relations expert Tung Li-wen, a professor at Central Police University in Taoyuan, said the incoming leadership was likely to employ a new approach to show that it has consolidated its power. "Politically, it will use 'Taiwan and the mainland both belong to one country'," Tung said. "Economically, it will continue to offer sweeteners to woo Taiwanese." Culturally, Beijing would try to replace an "identification with Taiwan" among Taiwanese with an "identification with China", Tung said. It would try to expand ties in the traditional pro-independence hotbed of southern Taiwan and build bridges with pro-independence political groups. A clue as to how Beijing plans to approach future talks may have been provided by Political Consultative Conference Chairman Jia Qinglin on July 28, when he said the "mainland and Taiwan both belong to the same country, so the relationship between both sides is not a nation-to-nation relationship". Chen Ming-tong, a former chairman of Taiwan's Mainland Affairs Council, said the remark appeared to be an attempt to push through the "one-China framework" by eliminating the "state-to-state" relationship between the two sides. So far, Ma has accepted only the "1992 consensus" in which the both sides accepted that only one China exists, while reserving its own interpretation of what that means. For Taipei, it is the Republic of China. For Beijing, it is the People's Republic of China. "Beijing has tried to take the Republic of China out of its 'one China' equation with Jia's definition," Chen said. Mainland leaders will have to proceed with caution. A National Chengchi University survey conducted in April found less than 10 per cent favoured unification compared to 22 per cent who preferred independence. Some 62 per cent favoured maintaining the status quo. Chao Chung-shan, president of Foundation on Asia-Pacific Peace Studies, said Beijing had adopted a more patient approach in recent years after decades of demanding immediate reunification. "Instead of taking it in a big mouthful, it is swallowing it bit by bit," Chao said. Lien has proposed using a "building-block approach" to work toward more politically sensitive issues, such as a potential peace deal. He said the two sides can start with peripheral issues and build up to a mutual trust. In the meantime, academics and think tanks from both sides could hold regular peace forums to brainstorm solutions. As Beijing tries to bring Taiwan closer to the mainland, many Taiwanese are hoping Beijing will enact political reform to bring it closer to Taipei. During a visit to Taiwan in July, former US ambassador to China Jon Huntsman said Beijing's next leaders understand that "change is inevitable, but they would not proceed to it quickly for concerns about instability". Huntsman told his Taiwanese audience that cross-strait discussions would naturally become more difficult and confrontational in the coming years.

Beijing cancelled visa for former US ambassador (By SCMP staff) Beijing cancelled the visa for former US ambassador Jon Huntsman, who was set to speak in Shanghai last month, according to an interview by Foreign Policy on Wednesday. Beijing cancelled visa for Jon Huntsman, former US ambassador and a Republican presidential candidate. Beijing cancelled the visa for former US ambassador Jon Huntsman, who was set to speak in Shanghai last month, according to an interview by Foreign Policy on Wednesday. Huntsman, a former governor in the US and Republican presidential candidate, was invited to speak at the World Money Show convention in Shanghai. The government intervened and pressured the organisers to disinvite him, said the interview. Huntsman’s visa application was eventually denied. Huntsman believed his tendency to criticise the Chinese government on human rights and other issues was too risky for the Chinese Communist Party, especially amid a sensitive time ahead of its leadership transition. “And at a time of leadership realignment, the biggest deal in 10 years for them, they didn’t want the former U.S. ambassador saying stuff that might create a narrative that they would have to fight,” he told Foreign Policy. The Chinese Communist Party’s 18th Congress is scheduled to start in Beijing on November 8. A new generation of leaders, including Xi Jinping and Li Keqiang, are expected to be placed in the Party’s top positions, replacing the current leadership headed by Hu Jintao. It’s seen as the most significant leadership transition for China in decades.

Diaoyu Islands stance reiterated in China-U.S. ministers' meetings - China reiterated its solemn stance on the Diaoyu Islands, as U.S. Deputy Secretary of State William Burns visited China on Wednesday. According to a press release from the Chinese Foreign Ministry, Foreign Minister Yang Jiechi met with Burns and Vice Foreign Minister Zhang Zhijun held talks with the U.S. visitor on Wednesday. During the meetings, the Chinese side said that maintaining stable development of Sino-U.S. ties is in the two sides' common interests, and they should seriously implement the consensus reached by the two leaderships to expand talks, mutual trust and cooperation, said the press release. The Chinese officials also called for each country to respect the other's core interests and grave concerns, as well as properly handle sensitive issues, saying Sino-U.S. ties should always be kept on a positive and correct track of development. Burns said the Obama government highly values the development of bilateral ties, and will work with China to build a cooperative partnership based on mutual respect and mutual benefit, shape a new type of relationship between major powers, and push forward bilateral relations, according to the press release. The two sides also exchanged views on regional and international issues including the Middle East.

Yuan continues record run against dollar (By Gao Changxin) China's central bank fixed the onshore yuan rate 0.12 percent up at 6.3028 against the US dollar on Wednesday, a four-month high. The move help push the onshore yuan spot to a 19-year high of 6.2532 and offshore yuan spot to an all-time record of 6.2540. The currency appreciated in the forward market both onshore and offshore. It's not the first time the yuan has hit records in recent months, as the US' new round of quantitative easing cheapened the greenback. The yuan touched a high of 6.2578 in mid-day trading on Oct 12 after breaking through 6.30 for the first time in decades in Sept 20. The Chinese currency has fluctuated more widely and frequently after the country widened the yuan's fluctuation band against with US dollar earlier this year. The People's Bank of China announced in April that the yuan's daily fluctuation band will be widened from 0.5 percent to 1 percent, underlining the country's determination to make its currency more market-oriented. In a briefing in Beijing on Wednesday, Foreign Ministry spokesman Hong Lei denied charges that China manipulates its currency. People's Bank of China Deputy Governor Yi Gang said earlier that the yuan's exchanged rate is close to market equilibrium. The appreciation also came as Chinese exports grew more than expected in September, achieving a trade surplus of $27.67 billion. A currency tends to appreciate amid trade surplus in a free foreign exchange market.

New Hebeng high-speed railway begins operation - Stewards attend the opening ceremony of Hebeng high-speed railway in Hefei, capital of east China's Anhui Province, yesterday. The new Hebeng high-speed railway, which connects Hefei and Bengbu, two cities of east China's Anhui Province, began to operate yesterday. The railway covers a distance of 132 kilometers and trains will run on it at a designed speed of 350 kilometers per hour.

Olympic star Li Ning sells 25pc stake (Reuters in Hong Kong) The founder of Li Ning Co (2331.HK) is selling a 25 percent stake in China’s best-known sportswear group to his talent management firm Viva China Holdings (8032.HK) for HK$1.36 billion (US$175 million), as the sports sector grapples with an economic slowdown and fierce competition. Viva China is controlled by Olympic gymnast Li Ning, the founder and chairman of the company that bears his name and which is backed by US private equity group TPG Capital and Singapore sovereign fund GIC. Viva said it would buy 266.37 million Li Ning shares, or a 25.23 per cent stake, from Victory Mind Assets Ltd and Dragon City Management (PTC) Ltd, which are controlled by Li Ning and his brother, Li Chun. Viva did not hold any Li Ning shares prior to the deal. “The transaction is not expected to result in any change to the business strategies, management and day-to-day operation of the group,” Hong Kong-listed Li Ning said in a statement. Viva said the purchase was aimed at expanding its business scope in China in the sports sector and it would enable the two companies to explore strategic development opportunities in sports advertising and sponsorship. The Hong Kong-based company said it would settle the deal through the issue of new shares after consolidating 5 existing shares into one. Trading in shares of both companies will resume on Wednesday. Shares of Viva, which has a market value of US$160 million, are down nearly 37 per cent so far this year. Li Ning, which competes with local brand Anta Sports as well as Adidas and Nike, announced last week a partnership deal with NBA All-Star Dwyane Tyrone Wade to promote and develop basketball in China. Last Friday, Li Ning said its chief financial officer, Chong Yik Kay, had resigned, marking the latest departure from senior management as the company grapples with a slowdown in the world’s second-largest economy. That news came three months after the company, whose share price has dropped by more than half since March, named Li Ning and TPG managing director Kim Jin-Goon to lead the company after then-CEO Zhang Zhiyong quit. In August, Li Ning posted an 85 per cent slide in first-half net profit as unsold inventories piled up. Marketing costs rose and it warned full-year revenue would fall, and said it may post a loss.

Toyota to shut Tianjin car factory for one week (By Charlotte So) Move follows falling sales of Japanese cars triggered by tension over disputed islands. Toyota Motor Corp will shut its production lines in Tianjin for a week, after a drop in sales of Japanese cars triggered by the diplomatic row between China and Japan. The world's largest carmaker decided to close the factory, which is a joint venture with First Automobile Works, better known as FAW, from October 22 through October 28, Japan's Nikkei newspaper said yesterday. Toyota, which plans to cut its overall output by half on the mainland this month from a year earlier, may make deeper cuts in the coming months, the paper said. Two production lines that produce Crown and the Reiz models will be idled for a week. The remaining line, which makes models such as the Vios subcompact, will close for just two days, the paper said. The Tianjin plant produced 500,000 cars last year. Sales of Japanese car brands tumbled 40.8 per cent year-on-year on the mainland last month amid a rise in anti-Japanese sentiment. Last month, Toyota's sales on the mainland fell 49 per cent year-on-year to 44,100 units. Honda's were down 40.5 per cent to 33,931 units, while Nissan dipped 35.3 per cent to 76,100 units. On the other hand, sales of foreign car brands, such as BMW, Audi and Mercedes-Benz surged. BMW said its sales in the nation rose 59 per cent year-on-year to 29,631 units last month. To take advantage of the growth momentum, BMW opened its first dealership in Beijing this week. Local brands such as Geely Automobile also saw exceptional growth in car sales by selling 44,600 units last month, according to China Association of Automotive Manufacturers' data. The association said the growth in Geely was ahead of other brands, but did not specify the increase. Protests and calls for boycotts of Japanese products broke out across China in September after Japan "purchased" three of the disputed East China Sea islands, known as the Diaoyus in China and the Senkakus in Japan. Some Japanese carmakers stopped production temporarily last month after mobs took to the streets in major mainland cities.

Hong Kong*:  Oct 18 2012 

Lingnan University president Chan Yuk-shee has resigned on medical grounds just days after becoming involved in a row about the over- admission of students (Winnie Chong and Kelly Ip). The university said while Chan has recovered from a recent illness, it is in its best interests to initiate a search for his successor now to provide more stable and longer-term leadership. The Education Bureau said it respects Chan's decision, adding that he has contributed to tertiary education for many years. He has been president of the university since September 2007. Chan said he wants to spend more time "doing the things I like" but will continue to serve as president until a replacement is found. He was recently involved in a row surrounding the admission of students by the Community College at Lingnan University and Lingnan Institute of Further Education. On Sunday, students presented him with a petition accusing the community college of enrolling more students than there are seats. They said classes are held at different sites and some have to walk through a wet market to get to them in Tsuen Wan. Chan rejected suggestions he is resigning because of the row, adding he has been considering the move for some time. "Nobody wants to give students problems while studying and the university is investigating the issue," he said. Council chairman Bernard Charnwut Chan said the council has accepted Chan's resignation and expressed deep appreciation of his services. The council wishes Chan good health and said it looks forward to receiving more support and advice. The council will set up an eight-person committee to search for a new president through global recruitment. University Students' Union president Chan Shu-fai said it is a pity the president has resigned. He said Chan is humble and willing to listen to opinions and to communicate with students. However, the resignation gave no details about health problems. He could not be sure if the move is related to the admissions row since the investigation has not been completed.

Jimmy Lai to sell Taiwan media operations (Reuters in Taipei) Next Media Ltd, controlled by Hong Kong media mogul Jimmy Lai, will sell all its Taiwan newspaper, magazine and online video assets to a Taiwanese consortium for around US$600 million, media reports said on Tuesday. The buyer group includes banking group Chinatrust’s former vice-chairman, Jeffrey Koo Jr, and petrochemicals firm Formosa Group’s president, Wang Wen-Yun, Taiwan’s China Times and United Daily News reported, citing sources close to the buyers. Next Media had said earlier this month that it was in talks to sell the business, which includes the Taiwan edition of the Apple Daily newspaper and local publications Next Magazine and free paper Sharp Daily. Next Media also sold its Next TV operations in Taiwan earlier this month. Shares of Next Media were suspended on Tuesday.

Pro-government lawmakers to head majority of Legco panels (Lai Ying-kit) Lawmaker Priscilla Leung Mei-fun attends the election for the chairman and deputy chairman of the Panel on Administration of Justice and Legal Services of Legislative Council in Tamar. Leung was elected as the chairman of the panel. Pro-government lawmakers were elected on Tuesday to chair 16 of the 20 panels and subcommittees in the Legislative Council for the coming four years. In one key new acquisition, the pro-government camp won the chairmanship of the legal services panel for the first time in years. Dr Priscilla Leung Mei-fun, of Professional Forum, beat the Civic Party’s Dennis Kwok Wing-hang, the legal sector lawmaker, by 19 votes to 13 in a poll by panel members. The position had been held by pan-democrats and legal sector lawmakers for many years. The 16 panels won by pro-government lawmakers included financial affairs, public works, industry and commerce, and housing and constitutional affairs. Pan-democrats took the reins of only four panels: information technology and broadcasting, environmental affairs, manpower, and food safety and environmental hygiene. Last week the pro-establishment camp won three other key positions in the legislature. Jasper Tsang Yok-sing was re-elected Legco president while pro-business lawmakers won the chairmanships of the finance and the house committees. Chinese University political scientist Ivan Choy Chi-keung said the pro-government camp was trying to prevent future filibusters by pan-democrats, by taking tighter control of panel meetings. Choy said Tuesday’s vote results might intensify the struggle between the pan-democrat and pro-government camps, leading to more street protests.

What Hong Kong Workers Really Want (By Te-Ping Chen) Job seekers fill in job application forms during the Hong Kong International Airport Job Expo 2012 in Hong Kong on August 5, 2012. Workers in Asia clock more hours on the job than any other continent, and with Hong Kong as one of Asia’s hardest-working places, a new survey says the city is sorely in need of better work-life balance. A number of creative efforts to boost employee happiness have been tried in Hong Kong, from art-jamming and pâtisserie baking classes to staff music therapy and beauty workshops, offered by various banks and brokers. But what employees really want is more flexible working hours and extra paid leave, finds an annual survey of 1,000 workers by the nonprofit Community Business, which partners with companies to promote good corporate citizenship. Over 70% of workers say such initiatives are key to workplace productivity and happiness, though only half of employers currently provide them, the survey found. “There seems to be some mismatch between what companies provide and what employees want,” says Robert Chung, who heads the University of Hong Kong’s public opinion program, which conducted the survey. Such a mismatch, Community Business says, poses a threat to the ability of Hong Kong companies to attract and retain talent. Earlier this year UBS UBSN.VX +1.67% reported that Hong Kong workers work an average of 2,296 hours at the office—the fifth-longest number of hours among all 72 cities surveyed, beaten only by Bangkok, Seoul, Cairo and Mexico City. According to UBS, people in Asian cities work the longest (2,154 hours per year), followed by workers in Middle Eastern, South American and North American cities (1,904 annual hours). Long workdays in Hong Kong—the average work week is 49 hours—are blamed for everything from depression to the city’s notoriously low libido levels. Working long hours, Community Business argues, doesn’t necessarily mean getting more done. Some of the length of city’s workdays comes down to what the nonprofit terms “presenteeism”—that is, workers being scared to leave the office before their boss does, for fear of appearing uncommitted to their job. Over 20% of workers surveyed say that they see such behavior in their offices. “People sit there in the office and it doesn’t really matter if they’re working. Sometimes they’re not really working, they’re just there, so the boss will see their presence,” says Amanda Yik, Community Business senior project manager. “It doesn’t really mean that you’re productive.” On a scale of 1 to 10, the average worker this year rated their work-life balance satisfaction a 6, a number that’s stayed largely consistent for the past six years, says Community Business. 

 China*:  Oct 18 2012

Rocket launch set to complete regional 'GPS for China' (Stephen Chen) Satellite launch expected this month will complete second phase of Beidou, China's answer to GPS, giving coverage of Asia-Pacific. China is likely to launch its 16th Beidou satellite later this month, completing a crucial stage in the construction of its home-made satellite navigation system. The Beijing News, quoting an anonymous source, said yesterday that the satellite would enable the system to extend its signal coverage over the Asia-Pacific region from Afghanistan to the Western Pacific, and from Mongolia to Australia. An official from the Beidou Navigation Satellite System Management Office in Beijing said yesterday that the launch schedule was subject to change. "It is in our plan but many factors, such as weather, can cause postponement," he said. "In a sensitive period, before the party congress [next month], we are not allowed to disclose the launch date until we receive the instructions from higher authorities." China has marked three stages in the development blueprint for the Beidou system, which it hopes will rival the US Global Positioning System (GPS) network. The first stage, an experimental network consisting of three satellites covering China, was completed in May 2003, six months after Hu Jintao became Communist Party general secretary. It was begun under his predecessor, Jiang Zemin . Hu is expected to hand the position on to Vice-President Xi Jinping next month. It has been widely speculated by people in China's space industry that the second stage of the system, covering the Asia-Pacific region, would be finished during Hu's term, becoming one of his political monuments. Construction of the third stage, with global coverage, is scheduled to be finished by 2020, within Xi's term in office. People involved in the project said they hoped that Xi could continue to support it with the same generosity as his predecessors, if not more. Liao Chunfa , a key researcher involved in the Beidou project, said that without state leaders' consistent support, Beidou could fail. "It is more difficult to maintain than to build a satellite navigation system. It requires state leaders to pass the determination from one generation to the next." By 2020, Beidou is expected to comprise a network with 35 satellites, providing Chinese military and civilian users around the world with positioning, navigation and timing services rivalling those of GPS. Like GPS, Beidou was developed primarily for military purposes. In the 1990s, the Chinese military used GPS for their long-range missile guidance but discovered that the United States could direct missiles to the wrong targets by manipulating signals. Chinese leaders then decided to build their own global navigation system, according to mainland space experts familiar with the Beidou project.

Chinese warships spotted in waters near Japan island (Agence France-Presse in Tokyo) A Chinese naval flotilla including destroyers sailed through waters near Japanese islands on Tuesday, in what one commentator said was a sign of things to come as China flexes its military muscles. The seven warships – at least one of which was capable of firing missiles – passed close to territory internationally recognised as Japanese. The two nations are already embroiled in a bitter wrangle over a separate island chain. A defence ministry spokesman said it was the first time the Chinese navy had used the passage, but Ryo Sahashi, a specialist in international politics at Kanagawa University said it would not be the last. “Generally speaking, China acts in accordance with its government’s claims,” he said. “It is likely that we will see similar acts repeated in the future,” he said, while cautioning it was too early to assess the full meaning of the move. China’s increasingly well-funded navy is somewhat hemmed in by the long chain of Japan’s Okinawan islands and must pass relatively near them to get into the Pacific from the East China Sea. However, there are gaps between the islands that allow vessels to stay well away from Japan’s contiguous zones, an area that extends a further 12 nautical miles beyond the 12 nautical miles of territorial waters. A defence ministry spokesman said the seven Chinese naval ships had been involved in exercises in the Pacific Ocean, and “they passed through a wider space between Okinawa island and Miyako island on their way out” on October 4. “They passed through the narrow strait on the way back, and this is the first time we have confirmed that they passed through this gap,” the spokesman said. He said a Japanese spotter aircraft had logged the vessels 49 kilometres south-southeast of Yonaguni island at 6am HK time. The flotilla comprised two destroyers, at least one of which had missile capacity, two frigates, two submarine rescue ships and one supply ship. “They were moving north, from the Pacific Ocean to the East China Sea,” the spokesman said. At one point the vessels entered contiguous waters, a ministry spokeswoman said. Under the United Nations Convention on the Law of the Sea (UNCLOS), to which both Japan and China are signatories, foreign vessels including military ships have the right to use the contiguous zone. But a state is allowed to exercise control to “prevent infringement of its customs, fiscal, immigration or sanitary laws and regulations within its territory or territorial sea”, UNCLOS says. “At this time, we are not seeing such acts as helicopters flying from these naval ships and approaching toward our nation or the ships sailing within our territorial waters,” Defence Minister Satoshi Morimoto told a press briefing. “We are continuing to be on alert and maintaining surveillance of the area waters with aircraft and ships. We will continue to carefully collect information about the movement of the Chinese naval vessels.” He said these Chinese exercises had been going on since 2008. “They have gradually expanded the area of activity but we cannot tell what intentions lie behind that,” Morimoto told reporters. Jiji press reported on Tuesday evening that the flotilla was moving northwest towards the Chinese coast. The move comes after days of relative calm in a long-running dispute over the sovereignty of a small group of islands in the East China Sea. Tokyo and Beijing are at loggerheads over the Senkaku islands, which are administered by Japan but claimed by China, which calls them the Diaoyu Islands. Over the last few weeks Chinese government ships – maritime surveillance ships and fisheries patrol vessels – have repeatedly sailed close to the archipelago, but the country’s armed forces have apparently stayed away. The dispute flared in August after landings by nationalists from both sides and the subsequent nationalisation of the islands by Tokyo. Large public protests rocked Chinese cities, forcing Japanese firms to shutter or scale back their operations. Two-way trade, worth well in excess of US$300 billion last year, is starting to show signs of impact from the dispute. Carmaker Toyota was reported on Tuesday to be planning to temporarily close a factory in China because of falling demand for Japanese goods.

BAML appoints Margaret Ren as China chairman (George Chen) Margaret Ren, daughter-in-law of former Chinese Premier Zhao Ziyang. Bank of America-Merrill Lynch has appointed Margaret Ren, a well-known mainland banker as its new China chairman, according to an internal memo seen by the South China Morning Post on Tuesday. Ren, who is well connected to the Chinese government given her family background, joined BAML from BNP Paribas. She used to work for Merrill Lynch for various senior positions. BAML is the result of Bank of America's acquisition of Merrill Lynch during the 2008 global financial crisis. BAML declined to comment. Ren left Merrill Lynch in 2009 to join BNP Paribas as as Chairman and CEO of Corporate Finance, Greater China and her departure to BNP was widely regarded a loss for Merrill, which was rescued from near collapse earlier in 2009 by Bank of America. Prior to working at Merrill, Ren was a star banker at Citigroup, where she was suspended by the bank over an inquiry into the 2003 IPO of China Life Insurance, in which she played a key role. Ren left Citigroup soon after and was cleared of any wrongdoing in issue by the US Securities and Exchange Commission in 2006.

Mainland tourists made 1.45 million trips to Taiwan in the first nine months of the year, statistics from the National Tourism Administration showed Tuesday. The figure marked a 73.6-percent rise year on year, the administration said in an online statement. The increasing tourist flow came as mainland residents in more cities have been allowed to apply to travel to Taiwan as individuals under a cross-Strait agreement. Mainlanders started traveling to Taiwan in groups in July 2008, while individual travelers in certain cities received permission to visit the island in June 2011. Last year, about 1.23 million Chinese mainland tourists visited Taiwan and the figure is expected to hit 1.8 million this year. The Chinese mainland is currently the largest source of tourists for Taiwan. Mainland tourists account for about 30 percent of the island's visitors.

Chinese customs officials have been told to strengthen inspections of mobile devices with Internet-based maps and to seize items using illegal maps, according to the national mapping authority. The detained goods will be transferred to local bureaus of the National Administration of Surveying, Mapping and Geoinformation (NASMG) for further investigation, said a report from the Legal Daily, which cited an anonymous official from the administration. "Illegal maps" include unauthorized maps with mistakes in the drawing of a country's border, missing important islands or leaking confidential geographic information, the report said. The NASMG has noticed that many Internet-based maps used by cell phones and tablet computers were actually "illegal maps." Telecommunications authorities are also required to work with the NASMG to improve the supervision on mobile devices. Failure to provide proper maps may result in revocation of network licenses, the report added. A draft regulation on mapping activities has set out more restrictions for Internet map services, which requires providers to place data servers within China's territory and use only approved maps. Failure to demonstrate China's complete territory when drawing up related maps may result in tougher punishment, according to a draft, which is currently open for public to give comments until Oct. 26.

On otters, opium and tea (By Kelly Chung Dawson) A US author examines China's trade with his homeland from the time of colonial America. Kelly Chung Dawson reports in New York. After the colonists of New Netherland introduced tea to what would eventually become New York, the import spread quickly through the American colonies. By the 1770s, Americans were estimated to have been drinking up to 1.3 billion cups a year. A burgeoning trade relationship with China helped feed that demand, which - along with a Chinese desire for sea otter pelts and sandalwood - fueled further exploration and trade between the two cultures. In When America First Met China, author Eric Jay Dolin traces the history of that relationship, which began when the Empress of China set sail on Feb 22, 1784, with a crew of 42 men under captain John Green. In the century that followed, trade with China was vital to US economic growth, Dolin argues. "It helped create the nation's first millionaires, instilled confidence in Americans in their ability to compete on the world's stage and spurred an explosion in shipbuilding that led to the construction of the ultimate sailing vessels - the graceful and exceedingly fast clipper ships," Dolin writes. In those years, the United States bought tea, silk, porcelain and other exotic items from China. The Chinese wanted sea cucumbers, furs and, strangely, a less potent (and less expensive) form of ginseng grown in New England's mountains and forests. In response to China's increasing visibility today, the author set out to write a thorough history to provide context for what he views to be the most important relationship in US foreign policy, he says. "Our relationship with China did not begin 40 years ago," Dolin says. "It goes back to the origins of our country. It has been a long relationship and, in most ways, a positive one. We should understand that this fixation on China was in the beginning an exclusively economic interest - we looked at them as a way to pump up our economy and to get the goods that we wanted. "I find that fascinating because, despite the greater connections we have now, those economic ties are still, to some extent, what the relationship is defined by. We had a trade deficit back then, and we have it now. The US' long-held dream about China becoming this enormous marketplace for American goods still remains unrealized." A fundamental problem that still exists, he argues, is that China was largely self-sufficient. Despite encouraging trade, it has remained less dependent on US goods than vice versa, he says. And until the British introduction of opium to the Chinese market, that power dynamic defined early US-China interactions. "The Chinese looked down on foreigners as uncivilized barbarians," he writes. "That didn't mean, however, the Chinese eschewed contact with foreigners. In fact, they welcomed it and encouraged it. But that contact had to take place within the larger context of Chinese exceptionalism. In other words, the barbarians had to know their place, which was well beneath that of the Chinese." This led to a series of clashes between the two cultures on Chinese territory in the early years of the relationship. But the growth of the opium trade, and the subsequent Opium Wars of 1839-42 and 1856-60, which resulted in the Treaty of Nanking and the ceding of Hong Kong to Britain, fundamentally changed the balance of power, he writes. "China was for thousands of years the premier country or empire in the world, but by the end of the 1700s and the early 1800s, that imperial structure began to crumble," he says. "When the Americans went over, they didn't witness the highest level of imperial Chinese splendor. They had a jaundiced and condescending view of the country." Dolin first became interested in the history of US-China trade while researching his 2011 book Fur, Fortune and Empire: The Epic History of the Fur Trade in America. That history included details of early business transactions between Native Americans and American traders, who sold seal and sea otter pelts to eager buyers in China's Canton (now Guangdong's provincial capital Guangzhou). "That was my first inkling that there was something interesting about trade relations between China and the US," he says. "Whenever I write a book, I almost always pick a topic that I don't know a lot about. I want to remain interested and excited, so that not only is the reader surprised by the material, but so that I am also continually surprised." What startled him most was the history of American involvement in the Opium Wars, he says. The details of those wars are common knowledge in China, and yet the average American knows "next to nothing" about that history, he says. "Americans were very involved in nurturing the drug trade and were in the thick of it during the wars," he says. "But here in the US, we don't learn about them. That was just a total surprise to me and one of the most dramatic parts of the book to write because it's a very dramatic story." And it's one that he feels bears lessons for Westerners in dealing with China, he says."It's important that we acknowledge that this traumatic period of history took place," he says. "Modern China does not have amnesia when it comes to the 1800s. I am not Chinese, but I've heard several people make the argument that when Westerners are very aggressive in their relations with the Chinese, Chinese might, to some extent, view those actions through the lens of the Opium War. "It's a painful history for China, so the Chinese might be particularly sensitive to being bullied or pushed around by the West. It's important to understand that. How a businessman or politician might internalize that to make decisions is up to them. "My objective is only to illuminate history so that people today can take that background and put it in their own framework to better understand the people they're dealing with today." Dolin's research was drawn from hundreds of books, articles and archives that were often available online. In the closing chapter of the book, Dolin writes: "Although America and China still often view each other unfavorably, and many issues still profoundly divide the two nations, perhaps a respective (and respectful) backward glance over our historic shoulders to see where we have been will enable us to focus more clearly on how far we have come since we first met - and to travel more hopefully into the future." Although some might write that sentiment off as "Pollyanna gobbledygook", his intentions are earnest, he says. "We're going to be dependent on each other for many years to come, and I'm genuinely hopeful that we will be partners in the future."

New Shanghai college a lesson in joint action (By Wang Hongyi in Shanghai and Cheng Yingqi in Beijing) China, US combine forces in education to cultivate talent. Shanghai New York University, the first institution of higher education jointly established by China and the United States, was officially founded on Monday. The venture will be a melting pot for cultivating innovative talent and will help China tackle its brain drain, experts said. "China's education reforms aim to better cultivate student ability to innovate and think independently, to provide comprehensive development and maximize their potential," said Yu Lizhong, president of NYU Shanghai. "That is what this college will do." NYU Shanghai, based in the Lujiazui financial area, was established by New York University and Shanghai's East China Normal University. The first Sino-US college operating as an independent legal entity, NYU Shanghai is expected to welcome its first 300 students next year from across the world. There will be 151 places for Chinese students. About 40 percent of the faculty will be recruited globally, while the student-to-faculty ratio will be 8-1, half the average in Chinese universities, Yu said. Related reading: A 30-year bond between schools remains strong. The founding of Shanghai NYU has drawn global attention and may herald an era of more international students coming to China and give a greater choice to domestic students. According to a report in September by the Social Sciences Academy Press, about 340,000 Chinese students went abroad for further study in 2011. Among them were a growing number of students from renowned high schools who skipped China's college entrance exam, or gaokao. Last year, 76,800 high school students began studies overseas. "This is a considerable number, and includes many excellent students," said Chen Qun, president of East China Normal University. "Chinese universities should take a close look at themselves. They should accelerate reforms of education models and ensure the nation keeps the country's best students," Chen said. Joint education ventures between China and other countries are nothing new. Many Chinese universities have gone down this route, including Xi'an Jiaotong University teaming up with Liverpool University and the University of Nottingham establishing a campus in Ningbo, Zhejiang province. "Joint education institutions should have a clear position and innovative methods," Chen said. NYU Shanghai will initially position itself as an arts and science research university. Students will spend the first two years studying liberal arts, including languages, social and cultural foundations, writing, mathematics and science before they choose a major. "Liberal-arts education will help students better understand science and society, and help establish a solid foundation for further study," said Wang Xiaojing, provost and vice-president of NYU Shanghai. "We will not copy the US education model. NYU Shanghai will provide a new opportunity for innovative education and research," Wang said. Upon graduation, students will receive degrees from New York University and NYU Shanghai. Annual tuition for each student from the Chinese mainland will be about 100,000 yuan ($15,900), which will be officially announced after being approved by the Shanghai pricing authorities. NYU Shanghai is expected to accommodate an estimated 3,000 Chinese and international students. Wang Huiyao, director of the Center for China and Globalization, said opening extensions of overseas universities is a good way to tackle the brain drain. "Students don't have to go abroad to get a Western education. World-class universities are on our doorstep," he said. The introduction of foreign students will push domestic education reform, he said. "Just like what the opening-up policy did to China's economy, we need the reform and opening-up for education," he said.

Hong Kong*:  Oct 17 2012 

Hong Kong's Victor Li, son of 'Superman', has hard act to follow (By Reuters in Hong Kong) Victor Li Tzar-Kuoi is the elder son of Li Ka-shing, a rags-to-riches tycoon known as “Superman” in Hong Kong, his adoptive home. Li Ka-shing in 2012 anointed Victor Li to follow him at the helm of flagship property developer Cheung Kong (Holdings) Ltd, and Hutchison Whampoa Ltd, a conglomerate whose activities span ports, telecoms retailing, energy and infrastructure. His younger brother is Richard Li Tzar-kai, chairman of phone, pay-television and Internet company PCCW Ltd, formerly Hongkong Telecom. Back in the days before e-mail, Victor Li, the heir to Asia’s largest family fortune, used to sleep with a fax machine by his bed, ready for his famously restless father, Li Ka-shing, to send through instructions at any time of night. And on several occasions at meetings, before the elder Li walked into the room, young Victor asked - only half in jest - for the gathered executives to beg his dad to go easy on him, say sources who have worked with the Li family over many years. The eldest son of Li Ka-shing, a rags-to-riches property tycoon known as “Superman” in his adoptive Hong Kong, has always had big shoes to fill - and some members of the city’s business and political elite now wonder if they will ever really fit. Li Ka-shing, 84, anointed Victor, 48, as his successor at a shareholder meeting in May. Then in July, the eldest son took up a two-thirds stake in the family trust, giving Victor control of a business empire valued by Forbes magazine at US$25.5 billion. The group’s assets span property, ports, power, water, supermarkets, drug stores and telecoms, and it has such a pervasive presence in Hong Kong that most of the city’s 7 million people do business with it virtually every day. The group, led by flagship property developer Cheung Kong (Holdings) Ltd, spans 52 nations and employs 270,000 people. Though an octogenarian, the elder Li is an active man outside of work, known to still play golf several times a week. He is active inside the Cheung Kong office tower as well. He is still the name and face of the company and continues to make the key business decisions, according to sources familiar with the group’s inner workings. But the day will come when Victor Li will be in charge. For some, Victor is a numbers-focused manager, a master of detail who has a track record of running assets well - and a man who has had to deal with some immense personal challenges, including being kidnapped for ransom in his early 30s. For others, he is too focused on the bottom line, lacking some of the people skills of his more outgoing and charismatic father, raising doubts over whether the next leader of the Li empire will be as adept at the wheeling and dealing that characterised his father’s reign. And for a few, he is a more complex character altogether, someone who, according to people who have worked with him, struggles to trust those around him - a trait not surprising for a man whose status as heir has made him a target for envy and greed from a very early age. “He is a chip off the block - his father has passed to him everything that he knows about the business,” said Simon Murray, chairman of commodities trading powerhouse Glencore International Plc, who has worked with the man he calls ”K.S.” as well as both sons over the years. “However there is something else that his father has that Victor has to develop, the character of his father, which includes characteristics like humility, the ability to trust,” adds Murray, who was formerly managing director of Li’s ports-to-telecoms conglomerate, Hutchison Whampoa, and still sits on Cheung Kong’s board. Li Ka-shing and Victor both declined interview requests for this article, which is based on conversations with more than 20 people who have dealt with them. A reserved and devoted family man who enjoys wind surfing, Victor Li has taken his children on hiking trips in Bavaria, Germany and peppers his conversation with comments about their progress, according to sources who know him. “Victor is a very intelligent man,” said Aron Harilela, son of the founder of Hong Kong’s best-known Indian-owned business, Hotel Holdings. “He delegates a lot more than his father would, and the depth of information is a lot greater.” Harilela and Victor Li know each other from the Hong Kong General Chamber of Commerce, where Harilela recalls a discussion they once shared over landfills in Hong Kong. Victor Li rattled off data on trash disposal in the city. “He always has information that a lot of people don’t have,” Harilela said. Victor, still in his early days as the family’s controlling shareholder, was thrust into the spotlight on October 1 when a pleasure cruise for staff of one of the conglomerate’s subsidiaries turned to disaster. It collided with a ferry and sank, killing 39 people, all from the company boat. Li Ka-shing and Victor rushed to the hospital where victims were sent, both men immediately pledging money to support the families struck by the tragedy. Within the worlds of Hong Kong business and politics, however, a different portrait of Victor Li emerges. One senior government source echoed comments made by some business sources who said he was too focused on the details and not enough on nurturing relationships.They draw a sharp contrast between father and son, who could hardly have been brought up in more different circumstances. Li Ka-shing was born in Chiu Chow, China, and moved to Hong Kong when he was 12, quitting school when his family relocated. His father died three years later. Li Ka-shing went from a factory worker to launching a plastics business, the first step in his path to creating a business empire. Victor grew up destined to be a billionaire, a Stanford University graduate groomed for decades as heir apparent. He is rarely seen in public without bodyguards, a legacy of his 1996 kidnapping by a notorious Chinese gangster, Cheung Tze-keung, also known as “Big Spender”. According to media reports, he was seized at gunpoint between his office and home, handcuffed, blindfolded, held overnight and then released upon payment of a ransom. Li Ka-shing negotiated Victor’s release face-to-face with Cheung, who wrapped himself in explosives as a threat to kill both of them, in case the billionaire had been followed by police, according to a March 2011 article in the South China Morning Post. The wife of another of Cheung’s kidnap victims, Hong Kong tycoon Walter Kwok, said she understood Li paid a ransom of HK$1 billion (US$129 million) in cash, according to the South China Morning Post. “Big Spender” was caught and executed in southern China in 1998. Two decades later, Victor Li keeps his private life away from public view. Victor’s younger brother, Richard, 45, has a more relaxed demeanour than his elder sibling, preferring to wear open-neck shirts in contrast to the conservative suits and ties favoured by his brother, who has spent 20 years in the family business. In contrast to his brother, who guards his private life, the birth of Richard’s first son in 2009 with actress Isabella Leong was splashed over local media pages. Richard, chairman of phone, pay-television and Internet company PCCW Ltd, is a regular target of Hong Kong’s famously aggressive press, which has cast him as a playboy and architect of some bad business deals. But Richard wins praise from some executives in Asia for his entrepreneurial daring and desire to blaze his own trail. They say his willingness to take risks is a hallmark of his father, renowned as a deal-maker who can make snap decisions based on relationships and his instinct for businesses he likes. In announcing Victor Li as his formal successor in May, Li Ka-shing also pledged to continue to back Richard’s ventures - another sign for some that the younger son, who dropped out of Stanford University, has a special place in his father’s heart. Some sources, however, said Victor Li’s quiet achievements were too easily overlooked by those outside the family business and that he had championed two of his father’s most successful technology deals - large, early-stage investments in Facebook and Skype. They said Victor Li also had more of a regional focus than his father, a perspective that should serve the group well as it extends beyond its Hong Kong-China stronghold and ventures deeper into property markets like Singapore. “That is very much driven by Victor,” said a source close to the family. “I think he is more strategic than his father. He is very risk conscious, about the need to manage risk, the need to mitigate risk.” Several sources say the real test for Victor Li will come when his “Superman” father is no longer around, especially in Hong Kong where Li Ka-shing’s network of strong relationships may begin to suffer without him there to nurture them. “You find that with KS, he is very long on memory, particularly those who have helped him. In that sense he is a very, very true friend,” said a retired bureaucrat who has worked with the family. “I can’t say the same of Victor.”

Beauty clinic guidelines will have some legal force, Minister Dr Ko Wing-man, Secretary for Food and Health says (By Lo Wei) Guidelines for the beauty industry to be drawn up by a government committee after four women fell dangerously ill following blood transfusions would have "certain functions in law enforcement" even though they were not legally binding, the health minister said yesterday. Dr Ko Wing-man was speaking a day after Medical Association president Dr Tse Hung-hing questioned the use of guidelines and doubted they would be legally enforceable. The committee was set up after one of the four women who suffered septic shock following supposedly therapeutic transfusions at branches of DR Beauty died. The other three remain in hospital; one of them, a 56-year-old woman surnamed Wong, is in critical condition. Dr Ko, the Secretary for Food and Health, said the guidelines would make a distinction between beauty treatments and medical procedures. "We hope to launch the guideline as soon as possible, in the next few months. It will not be legally binding, but as long as it is proposed by the Department of Health and the industry for reference it will have certain functions in law enforcement," Dr Ko said. A working group under the committee will also look into laboratory standards if treatments involved procedures at such facilities, he said. The Department of Health may carry out inspections at such laboratories, Dr Ko added. Medical Council chairman Professor Joseph Lau Wan-yee said the council had suspended its work on the case after police began a criminal investigation into the matter. The council normally launches investigations after receiving complaints, but can also initiate investigations into incidents that raised widespread public concern, he said. It would resume its probe after the conclusion of the police investigation, he added. On Saturday police questioned the boss of DR Beauty, which has 40 centres in the city. Meanwhile, lawmaker James To Kun-sun, who has been assisting the son of Wong, disputed the claims of a man, known only as Mr Leung, who has said he is acting on behalf of Wong's family. Wong's son had said he did not know who this Mr Leung was, according to To. "It's very suspicious," he said. But Leung responded that Wong had asked him to fight for her rights.

DBC radio begins 'revival campaign' after announcing closure (By Simpson Cheung) After announcing it was going off the air last week, Digital Broadcasting Corporation has bounced back for a seven-day “revival campaign”, co-founder Albert Cheng King-hon said on Monday morning. Cheng was in a combative mood on Monday morning – the first day of the campaign – hitting back against a letter from the government asking him to explain the campaign. “Our politically appointed officials do not know what loyalty is. So they do not understand this campaign,” Cheng said. “We will follow broadcasting law to host our programmes, only that our hosts have loyalty and refuse to be paid. This is what Greg So Kam-leung would never understand,” he said, referring to the secretary of the Commerce and Economic Development Bureau, who had asked for the clarification. When the four-month-old station said it was going off the air last week, announcers said that some volunteers wanted to work this week without salary, to keep the station on the air for seven more days. Cheng praised their loyalty then as well as on Monday morning. Another host, former lawmaker Andrew Cheng Kar-foo, said the station’s licence was still valid, and it was not illegal for it to continue broadcasting. The lawyer said the station had raised more than HK$1.2 million from October 11-13 to support its legal expenses, but was still far from its target HK$10 million. He is helping the station handle a legal dispute with its chairman, Bill Wong Cho-bau. Lawmaker and former journalist Claudia Mo Man-ching, a guest speaker on the broadcaster, said the station’s demise was a sign of the deterioration of freedom of speech in Hong Kong. “If DBC really stops broadcasting, there will be one choice less, and Hong Kong’s freedom of broadcasting will also diminish,” she said. A listener surnamed Luk called the broadcaster’s phone-in programme on Monday to encourage other listeners to complain to the Ombudsman that the bureau had not fulfilled its responsibility to resolve the dispute among that station’s shareholders. Albert Cheng had called on the government to mediate the shareholders’ dispute about funding, but the department said it had no role to play in a commercial dispute. DBC chief executive and board member Morris Ho Kwok-fai, together with Albert Cheng and Ronald Arculli, had proposed buying Wong’s stake at a 50 per cent discount or selling him their stakes on the same terms. But Wong rejected their offer and made no counter-offers. Wong later hit back, saying Albert Cheng had refused to provide documents to prove company’s financial soundness. Wong, a major shareholder and member of the Chinese People’s Political Consultative Conference, had stopped investing in the station. Albert Cheng called that political suppression aimed at silencing his frequent criticisms of the government.

Nearly half of MPF funds lost money, says watchdog (By Lai Ying-kit) Ron Hui of the Consumer Council issues the agency's findings in North Point on Monday. Almost half of all Mandatory Provident Fund investments have lost money over the past five years, the Consumer Council said on Monday. The council studied the performance of 523 funds, contained in 39 schemes from 15 MPF providers, from July to last month. Of the 341 funds that provided data, 159, or 46 per cent, posted an average loss in each of the past five years. A Japan stock fund performed worst – losing 14.04 per cent on average every year. The best performer was a global bond fund that posted an annual average gain of 5.81 per cent. The council also found that the fees charged by MPF providers varied significantly, from 0.17 per cent of total assets to 4.62 per cent. Council chief executive Connie Lau Yin-hing said larger fees did not guarantee better returns from a fund. “Some can achieve good performance and, at the same time, charge fees at a lower-than-average level,” she said. There was room to lower MPF fees because more operations had been computerised, she said. The MPF is a compulsory pension scheme established in December 2000. It requires employees to pay five per cent of their salary, which is matched by their employer – up to a combined total HK$2,500 a month – to an MPF provider such as a bank or fund company. In November, employees will be able to transfer all of their contributions to a new provider of their choice once a year. A major criticism of the MPF scheme has been that employers choose the providers and employees cannot switch even if they are unhappy with the services, fees or performance.

 China*:  Oct 17 2012

Global banks hiring staff in China (By Kwong Man-ki in Beijing) While global giants cut back on staffing around the world, some are moving to take advantage of services aimed at a burgeoning middle class. A HSBC branch in Shanghai. The bank is still hiring staff in the mainland. Banks are shedding staff around the world to cut costs this year with the exception of the mainland, where several European lenders are hiring to support the expansion of their networks. Three European banks - Britain's HSBC and Standard Chartered, and Germany's Deutsche Bank - are hiring people for various functions on the mainland, according to headhunting sources. Elsewhere in the sector hundreds of positions have been cut at international banks including Deutsche Bank and Credit Suisse in Hong Kong. Most cuts have come in the investment banking areas rather than the retail and commercial banking sectors, as they seek to generate more cash from traditional services such as lending and deposits. But on the mainland banks such as HSBC are continuing to build their branch networks and are adding to their headcounts according to a headhunter familiar with HSBC's hiring plan on the mainland. Robert Grandy, a managing director specialising in the financial services industry at recruitment firm Korn/Ferry, said the expansion was likely to continue in the medium term. "Most of the firms seem to be committed to the market in China," he said. However, the hiring was selective, said Robert Parkinson, chief executive of RMG International Business Consulting in Beijing. "You might have banks letting support staff, IT and accounting people go, but they are still hiring (in other areas). " According to Grandy, new hires were in areas such as transaction banking, trade finance, and cash management. Cherol Cheuk, general manager of the Shanghai office of recruitment consulting company Hudson's, said although foreign banks were hiring, they had become more cautious and were focused on hires that could generate more cash flow. "Banks are tending to hire more local people to fill spaces as sales staff and relationship managers who can bring in more local customers," she said. Meanwhile, the growing wealth of mainlanders also has created room for foreign banks to grow private banking business, Parkinson said. According to a survey by the Hurun Report and GroupM Knowledge, there were 1.02 million millionaires in the mainland in July, 6.3 per cent up on the previous year. Parkinson said foreign banks needed to recruit staff skilled in asset and fund management. "They need people who have expertise in getting money out of China," he said.

Cambodian former King Norodom Sihanouk dies at age of 90. Cambodian retired King Norodom Sihanouk died of natural cause at the age of 90 in China's capital city of Beijing on Oct. 15, 2012. Chinese Vice President Xi Jinping visited Cambodia's former Queen Norodom Monineath Sihanouk on Monday morning to express his condolence and sympathy following the death of former King Norodom Sihanouk. Xi, on behalf of the Communist Party of China (CPC), the Chinese government and the people, expressed deep condolence and sincere sympathy to the former queen, King of Cambodia Norodom Sihamoni, other members of the royal family, the Cambodian government and the people. "We are greatly shocked and grieved to learn that His Majesty former King Sihanouk died this morning in Beijing," Xi said after a silent tribute in front of a portrait of Sihanouk, who died of illness at the age of 90 early Monday morning. Xi said Sihanouk, a great leader loved and esteemed by the Cambodian people, devoted his life to national independence and peaceful development of his country. He spoke highly of Sihanouk as an old friend of the Chinese people, who forged a profound friendship with generations of Chinese leaders and made an indelible contribution to create and cultivate China-Cambodia relations. Xi said Sihanouk would live in the hearts of Chinese and Cambodian people forever. Xi said he believed that the friendship between the two nations would continue and develop. Monineath thanked Xi for his visit. She said former King Sihanouk was a loyal, old and good friend of the Chinese people, who pursued a long-term friendly policy towards China and lived in the country for a long period. She said China was a second home for Sihanouk and her as the Chinese took care of them during their stay. She also thanked those for the treatment given to Sihanouk after his seizure. Monineath said she believed the Cambodia-China friendship and cooperation would continue to prosper. Chinese State Councilor Dai Bingguo, director of the General Office of the CPC Central Committee Li Zhanshu and Foreign Minister Yang Jiechi accompanied Xi to visit the former queen. Born on Oct. 31, 1922, Norodom Sihanouk reigned Cambodia from 1941 to 1955 and again from 1993 till his voluntary abdication on Oct. 7, 2004 in favor of his son, the current King Norodom Sihamoni.

Chinese students will study laureate's works (By Cheng Yingqi and Luo Wangshu) After winning the Nobel Prize for Literature, Mo Yan will soon have the honor of having tens of millions of Chinese high school students exposed to his work in textbooks. The Language and Culture Press under the Ministry of Education said on Saturday that it has decided to add one of Mo's novellas, A Transparent Carrot, to textbooks now being complied for high school students who take certain elective Chinese courses. Nobel laureate Mo Yan's books are the focus of attention at a Shanghai stor on Saturday. His books, not surprisingly, have been flying off the shelf. By its decision, the press, which publishes textbooks and teaching materials for primary and secondary schools, places the new Nobel winner in the same league as Lao She, Lu Xun and a number of Chinese and foreign writers whose works appear in the textbooks read by more than 25 million high school students across the country. A Transparent Carrot, published in 1985, depicts the lives and inner worlds of ordinary Chinese people in the countryside. The novella, which contains stylistic features that would eventually become characteristic of Mo's writing, quickly gained renown for its sharp descriptions that verge on the fantastical. Zhang Xiafang, a staff member of the high school educational research group of the Language and Culture Press, said the Nobel Prize certainly helped editors to decide to pick Mo's work for inclusion in the textbook. "The prize is a really big deal in Chinese literary circles," Zhang was quoted as saying by Beijing Times on Sunday. "This is a historic event. So letting our students know about his work is necessary." Zhang said the novella will appear in the textbook that will start to be used in the spring. Also in the textbook will be 40 other literary masterpieces by renowned writers from China and abroad. Wang Xuming, president of the Language and Culture Press, confirmed the news about Mo's work on Sunday. The decision, made two days after the announcement of Mo's receipt of the prize, elicited praise from many teachers. Zhang Ting, a Chinese literature teacher at the Beijing No 5 High School, said it is important that students be exposed to modernistic works written by Chinese authors. "Many of my students love works of modern Western literature, such as One Hundred Years of Solitude by Gabriel Garcia Marquez," Zhang said. "It's absolutely OK for them to love modern Western literature, and there is nothing wrong with them choosing what kind of works they want to read. But students should know more about modern Chinese works." The reading textbooks now in use in most Chinese high schools contain only a single article by a contemporary writer — Yu Hua's Leaving Home at Eighteen — and students are, as a result, less familiar than they should be with contemporary Chinese literature, she said. "Now Mo has won the Nobel Prize," Zhang said. "I hope this is not only an achievement for Chinese literature, but also a chance for young people to receive an education in contemporary Chinese literature." Some critics said the decision to place Mo's work in the textbook was not made for the right reasons, noting that it only came after he received the Nobel Prize. "Mo's novella was published many, many years ago," said Xiong Bingqi, deputy director of the 21st Century Education Research Institute, a non-governmental research organization. "Why are these editors putting his work into textbooks only after he received the Nobel Prize? "The Nobel Prize should not be the only criterion used to measure the educational value of teaching materials, but this seems to be how things are done now." Zhou Limin, a writer from Shanghai, said on his micro blog on Sunday: "I'm not opposed to letting students read Mo's literature. I only dislike it that textbook editors are blindly chasing after the Nobel Prize without using their own judgment." Another concern is that high school students will find it hard to understand Mo's works, which consist mainly of social commentary, critics said. Besides seeing his work placed in textbooks, Mo can bask in a few other glories stemming from his receipt of the Nobel Prize. His books have sold out at many bookstores, two of his works are to be translated into Russian and published before the end of the year, and stamps commemorating his achievement have been issued in Shandong province, where Mo was born and now lives.

Sharp rise in online sabotage (By Cao Yin) Online attacks on domestic networks, originating from IP addresses and servers in other countries and regions, have grown sharply this year, according to a government specialist who warns that Internet security faces increasing threats. About 7.8 million computers were affected in 27,900 attacks, originating in other countries and regions, between January and June, according to the National Computer Network Emergency Response Technical Team. The United States hosted many of the overseas command and control servers used in the attacks (24.2 percent), followed by Japan (17.2 percent) and South Korea (11.4 percent), the team reported. "Online attacks against our country are coming from outside our borders and the situation is growing more serious," said Zhou Yonglin, the team's administration and operation director, in an exclusive interview. The number of computers affected so far this year almost equals the number caused by 47,000 attacks in 2011. Hackers use IP addresses and servers overseas to infect networks with Trojan viruses and create Botnets, collections of compromised devices, Zhou said. Authorities went on red alert in April when Anonymous, an international group of "hacktivists", said it planned to destroy 46 websites run by enterprises, including five in China. That same month, hackers from the Philippines defaced several Chinese websites and left insulting messages amid a dispute between Beijing and Manila over Huangyan Island. Team GhostShell, another hacktivist group, also threatened in June to infiltrate government, education and medical websites in China. Although there is a threat from abroad, Zhou added that "it is possible that someone in China could control an IP address or server overseas to launch an online attack on Chinese websites and computers". An emergency response team, a department under the Ministry of Industry and Information Technology, has been monitoring the Internet since 1999. Zhou said that some attacks are obvious, such as when a hacker "defaces" a Web page either to express an opinion or simply because they can. "Many Chinese websites lack the capability to repel attacks which is why they are often broken into and tampered with," he said. Other attacks are aimed at spreading sophisticated malware codes that infect computers and install a "back door", he said. "This allows a criminal to steal private information, infiltrate inner networks or use the malware as a proxy to attack other computers," the director said. "Back-door software is the most dangerous threat to online security as such attacks are hard to identify by webmasters and users." According to the team's report, 12,950 overseas IP addresses controlled 15,638 Chinese websites using back-door software between January and June this year. A criminal can install malware on an online store or forum to monitor operations and transactions, and steal user accounts or passwords, Zhou said. This information can then be used in future fraud. Some people also create fake versions of popular websites to dupe netizens into handing over money or private details. "This is called phishing ... and is often targeted at online shopping platforms, such as Taobao (China's largest Internet marketplace), as well as banks and even popular TV shows," Zhou said. Fraudsters recently scammed people using a fake homepage for Xingguang Dadao, a talent show on China Central Television, that asked for bank account numbers and passwords. "We deal with several cases like this every month," Zhou said, adding that, between June to August his team handled more than 100 cases involving students and their parents being swindled by fake college-registration websites. Despite having the world's largest number of Web users, people on the Chinese mainland are relatively unaware about online security. According to the China Internet Network Information Center, almost 80 million of the country's 538 million netizens are primary, middle or high school students. Ji Yuchun, also with the team's administration and operation department, said technical countermeasures currently used to protect users are unable to cope with the emerging challenges. "We can't ignore the fact that some people hack websites for fun, but many do intend to connect and form organizations to commit attacks together for larger interests," she said. "Also, attacks are becoming more sophisticated. Hacker industry chains have been established across the world." Both Zhou and Ji expressed concern over the new Flame virus, which has been used to target the Middle East and, according to media reports, was developed for political purposes. During the first half of the year, the team has handled 2,440 cases that involved working with overseas partners and are establishing links with foreign agencies. The authority has already met twice with the East West Institute, an international think tank with headquarters in the US, to discuss how to tackle the online threat, Zhou said. "International cooperation is essential to halt attacks and enhance security for everyone on the Internet," he said. As well as efforts by government and official agencies, residents and online operators must be cautious when using the Internet or publishing information online, Ji said. The team has also called for more specific rules to regulate the Internet and protect online security.

School where lessons focus on leadership (By Tang Yue) Growing reputation of the Party's training academy attracts increasing number of high-profile foreign visitors, reports Tang Yue. While it's always been famous in China as a must-go place for all senior officials preparing for leadership positions, the Party School of the Central Committee of the Communist Party of China - usually simply known as the Central Party School - is now an increasingly popular destination for foreign leaders during their tours of the country. The past decade has witnessed a growing number of foreign leaders or heads of international organizations visiting and addressing the students. Henry Kissinger (L), former US secretary of state; Angela Merkel (R), chancellor of Germany, Yingluck Shinawatra, prime minister of Thailand (L); Lee Hsien Loong (R), prime minister of Singapore, Donald Rumsfeld (l), former US defense secretary; Mario Monti (R), Italian prime minister. Ban Ki-moon (L), UN secretary-general; Herman Van Rompuy (R), European Council president. UN Secretary-General, Ban Ki-moon, has visited the school, so has Herman Van Rompuy, the president of the European Council. Other guests include the German Chancellor, Angela Merkel, and Donald Rumsfeld, the former United States' secretary of defense. This year alone, the Communist Party's cadres-training academy has played host to three serving prime ministers. Italy's Mario Monti visited in March, and was followed by Thailand's Yingluck Shinawatra a month later. Both were paying their first visits to China since taking office and insisted on including the school in their itineraries. Last month, the Singaporean Prime Minister Lee Hsien Loong paid his second visit to the school - seven years after he became the first foreign official to deliver a speech in Chinese there. "So many foreign leaders want to visit our school now. I'm afraid we have to give priority to high-ranking officials and top scholars because of the busy schedule," said Gong Li, director of the school's Institute of International Strategic Studies. Gong revealed that Rumsfeld turned down a suggestion from the Chinese government that he should deliver a speech at Peking University when he visited China in 2005. Instead, the US politician insisted on calling at the Party school. He had good reason. Unlike regular educational institutions, the Central Party School gathers together the country's rising leaders. Since its foundation in Jiangxi province in 1933, the institution, which moved to the capital in 1949, has trained more than 60,000 officials through a range of programs.

Hong Kong*:  Oct 16 2012 

Renovated Mount Davis hostel offers stunning views for just HK$130 a night (By Joanna Chiu) Renovated hostel on Mount Davis, which costs from just HK$130 a night, is attracting more mainland guests to marvel at its stunning location. Kuo Kuo, from Shandong province, says staying at a hostel is a good way to meet people from all around the world. Hong Kong saw the world's biggest price jump in hotel prices last year, but there is still one way to get a million-dollar view for a budget price. One of the city's oldest hostels has undergone a HK$9.54 million renovation in a bid to attract more local and mainland visitors and promote wider acceptance of hostelling culture. A stay at the Jockey Club Mt Davis Youth Hostel, perched 269 metres atop Mount Davis in Pok Fu Lam, costs from HK$130 a night for Hong Kong Youth Hostels Association (HKYHA) members and offers stunning views of Victoria Harbour. In comparison, a harbour-view room on the top floor of the Peninsula hotel, at 117 metres, costs at least HK$7,128 a night, while a room at the Ritz-Carlton in the city's tallest building, the International Commerce Centre, will set you back at least HK$6,050. The average hotel rate in the city is HK$1,270. Since the Jockey Club-funded renovations were completed earlier this year the hostel has seen a 10 per cent rise in the number of mainland guests, who now make up 30 per cent of its clientele. "The hostel is much nicer after the renovation and it's very cheap for Hong Kong," said Kuo Kuo, a 22-year-old traveller from Shandong , who stayed at the hostel twice in the past year. But he thinks Hong Kong hostels need more than a revamp to attract mainland visitors. "Many parents from the mainland don't want their children to stay at hostels because they think it's safer to travel in a tour group," he said. For Kuo Kuo, the opportunity to meet travellers from all around the world at hostels beats tour buses and "boring" hotels. Travellers wanting to stay in the city's youth hostels have to register for a membership card before booking. Membership rates are from HK$50 a year. According to a spokeswoman for the HKYHA, those who stay at Hong Kong hostels are in their early 20s and 30s, even though the seven hostels in the city have no age limits. But the spokeswoman said that older adults and local young people might not find the hostel culture appealing. Mt Davis offers shared accommodation in dormitories, as well as in two-, four- and six-bed rooms. While the hostel provides cooking supplies and a shared fridge, guests have to do their own cooking, shopping and washing up. "Hong Kong's young people are often pampered at home," the spokeswoman said. "They might not be used to doing chores, and expect more than we offer in the hostel." Taxi driver Leung Koon said locals might be avoiding the hostel for another reason. "Foreigners don't know that Mt Davis is haunted," he said, intriguingly. Hostel manager Jessica Wong Wing-chee related the ghost story: "A taxi driver dropped off a guest at our hostel and was going back down the hill when a girl waved at him from the side of the road and got into the taxi. When he turned around a while later, she wasn't there." For those who are not superstitious, want a budget mountaintop retreat and can't find a taxi, the hostel provides a free shuttle service to Sheung Wan.

Cast members promote "Cold War" in Shenyang - Director Lok Man Leung, actor Aaron Kwok and director Sunny Luk pose at a promotion activity of the film "Cold War" in Shenyang, Oct. 14, 2012.

 China*:  Oct 16 2012

China writers praise Mo Yan for dissident release call (By Agence France-Presse in Beijing) An independent Chinese writer’s group has welcomed calls by Nobel prizewinner Mo Yan for the early release of jailed fellow laureate Liu Xiaobo, but questioned his stance on freedom of speech. Some dissidents accused Mo Yan of being a communist stooge after he won the literature award on Thursday. But overseas supporters of Liu have welcomed comments by the 57-year-old writer, that he hoped the jailed dissident and 2010 peace prize laureate would be freed as soon as possible. The Independent Chinese PEN Centre – run by exiles and domestic writers outside state control – made a statement on its website on Saturday backing Mo Yan’s support for Liu, who is the honourary president of the organisation. “Our organisation thanks Mo Yan for calling for Liu Xiaobo’s freedom,” the statement said. It also urged Mo Yan to join the organisation in “focusing on freedom of speech and writing in China, especially with regards to other writers like Liu Xiaobo who have been jailed, and help them to recover their freedom as soon as possible”. Prominent critics of China’s government, including the artist Ai Weiwei and the exiled former prisoner Wei Jingsheng, had earlier accused Mo Yan of being a sellout due to his cooperation with Chinese authorities. The Independent Chinese PEN Centre “noted with regret” that Mo Yan had been “neglecting for a long time the PEN Centre’s purpose of safeguarding the freedom of speech for writers”. It added: “There’s a big contradiction between the realist tendencies of his works and the political personality of an official writer, and this has caused wide controversy after his winning of the Nobel Prize.”

China central bank says currency near equilibrium (By Associated Press in Tokyo) Zhou Xiaochuan, governor of the People’s Bank of China, stayed away from the IMF meetings, but one of his deputies delivered his remarks on Sunday. China’s currency has reached its equilibrium rate and its value is mainly determined by the market, rather than intervention, Beijing’s central bank chief said on Sunday, signalling there is little likelihood of major movement in the yuan’s value in the near future. In a speech delivered by one of his deputies, Zhou Xiaochuan, governor of the People’s Bank of China, also warned that too much monetary easing by major economies puts inflationary pressure on China at a time when it is striving to boost growth while keeping prices under control. Zhou’s remarks came as the issue of China’s exchange rate against the US dollar resurfaced in the US presidential race, with Republican nominee Mitt Romney accusing President Barack Obama of ducking an important decision on whether Beijing is manipulating its currency to gain a trade advantage. The Treasury Department was due to announce a decision on that on Monday, but it said on Friday that the decision would not come until after global finance officials meet in early November, most likely after the November 6 presidential election. The US has long urged China to lift controls on foreign exchange markets that Washington contends keep the Chinese yuan undervalued, making the country’s exports relatively less expensive in overseas markets. Zhou said China’s central bank has refrained from intervening in the market in the past year, while the exchange rate against the US dollar has remained at about 6.3 yuan per dollar. “The rate, the spot rate and future rate, determined by the market supply and demand, basically are very close to the equilibrium rate,” he said. The yuan has appreciated more than 30 per cent against the US dollar in nominal terms since 2005, Zhou said, adding that the currency had “appreciated quite a bit in the past 15 years”. Zhou outlined progress China has made in reforming its financial sector and setting up foreign exchange markets, in the speech delivered following the annual meeting of the International Monetary Fund and World Bank, held this past week in Tokyo. Zhou himself was among several top bankers and other officials who stayed away from the meetings, apparently to express China’s anger over a territorial dispute with Japan that erupted into sometimes violent anti-Japanese protests last month across many Chinese cities. IMF and World Bank officials downplayed the friction over disputed islands in the East China Sea, saying they were confident China and Japan, the world’s second- and third-largest economies, recognise they have more to gain from co-operation than from conflict. On Friday, Japan’s foreign minister, Koichiro Gemba, confirmed that the two sides had held high-level discussions in Tokyo and plan vice-ministerial level talks in a next round. Gemba did not give a timeline. In his talk, Zhou reiterated Beijing’s concern over inflationary pressures that China and some other developing countries say can be worsened by monetary easing in the US and Europe. Fighting inflation is his No 1 priority, he said. In a question-and-answer session, Zhou’s deputy, Yi Gang, said China plans an appropriately sized stimulus package to counter its economic slowdown. It will be “large enough to stabilise growth but not too large to cause negative impact or problems in the future,” Yi said. The task is complicated by so-called quantitative easing that unleashes liquidity in global markets, spurring speculation in commodity and energy markets, he said. But Yi said the outlook for price stability was fine this year, with the consumer price index likely to fall to 2.7 per cent for the year, well below the government’s 4 per cent target. “The key word is to ensure stability,” he said.

China’s IMF boycott ‘a sign of things to come’ (By Agence France-Presse in Tokyo) World delegates meet in Tokyo for IMF and World Bank meetings. China's foreign minister pulled out last week. China’s top level boycott of global financial meetings in Japan this week is a sign of things to come, analysts say, as an economically emboldened Beijing shows struggling Western nations it doesn’t need to play by their rules. With global growth slowing, many in the developed world are looking to Beijing to pick up the slack, and the annual meetings of the International Monetary Fund and World Bank seemed a good place to press the point. But while Tokyo was graced with global financial luminaries such as Timothy Geithner from the US and Wolfgang Schaeuble from Germany, China’s finance minister and central bank chief both stayed at home. Beijing gave no official reason for sending their deputies, with foreign minister Yang Jiechi telling reporters in Beijing only that “the arrangement of the delegation for the meeting was completely appropriate”. Observers say China’s stay-away was the result of a spat with Japan over disputed islands, and points to Beijing’s calculated willingness to use its financial muscle to make a political point. “China made this decision by precisely weighing the disadvantages of the no-shows against the advantages of its presence,” said Yoshikiyo Shimamine, executive chief economist at Dai-Ichi Life Research Institute in Tokyo. “It was an example of how China won’t always act within the Western-dominated framework and doesn’t see any contradiction between such absences and its responsibility as a major power,” he said. IMF chief Christine Lagarde rapped Beijing, saying it would “lose out” by not showing up, while World Bank President Jim Yong Kim urged the two countries to sort out their differences for the good of the global economy. China – whose predicted growth of 7.8 per cent this year is slower than the blistering pace of the last few years, but still leaps and bounds ahead of the West – merely shrugged. In his report to a key committee that advises the IMF board, deputy central bank governor Yi Gang said the failure by Washington and Tokyo to fix their fiscal problems was the reason the global economy was struggling. “Uncertainties related to fiscal sustainability weigh on sentiment and confidence, negatively affecting consumption, investment and hiring decisions,” Yi said. “The slow recovery in these major advanced economies poses costly spillover effects to the rest of the world,” he added. While Chinese officials did take part in a number of meetings and seminars, their absence at a Japan-chaired lenders’ gathering on Myanmar was noted, with Tokyo saying it was “disappointing”. Japanese politicians repeatedly urged Beijing to look at relations “from a broader standpoint”. The dispute over Tokyo-controlled islands known as the Senkakus in Japan and the Diaoyus in China flared in August and September with landings by nationalists from both sides and the subsequent nationalisation of the islands by Japan. Street protests erupted in China, alongside consumer boycotts of Japanese goods, as reports emerged that firms were finding their China operations hampered by sudden extra red tape. Japan’s big three automakers – Toyota, Nissan and Honda – reported plunging sales, while airlines said tens of thousands of bookings had been cancelled. Figures released in China this week showed trade with Japan slumped 1.8 per cent to US$248 billion for the year’s first three quarters, although the customs bureau made no link with the row. Analysts say Beijing is likely to continue to conflate bilateral political issues with multilateral financial ones. Yoshinobu Yamamoto, honourary professor of international politics at the University of Tokyo, said at a time when the world needed China to be paying attention, it was focused instead on the sovereignty spat. “The move was intended to expose Japan to international pressure to solve the spat with China,” he said. “For Beijing, the top priority is national governance. For the sake of this objective, China is likely to take similar action in the future.” But some argue that China’s behaviour is self-defeating because it will make it seem like a less attractive place to do business. Some Japanese insurance firms have reportedly stopped offering coverage against riots for companies operating in China and manufacturers are said to be looking anew at third countries as a base for operations. Dai-Ichi Life’s Shimamine said Beijing runs the risk of cutting its nose off to spite its face. “China’s policy of putting weight on politics has given the impression that China has risks and is not an easy country to deal with,” he said.

Chinese surveillance ships patrolling Diaoyu Islands - A series of Exclusive photos of Chinese surveillance ships patrolling around Diaoyu Islands is publicised firstly by the website Xinhuanet.com on Oct. 14, 2012.

Chinese scientists have set a world record by harvesting 12,575 kg of seed cotton on a single hectare of land in northwest China's Xinjiang Uygur Autonomous Region, data released Sunday showed. The output, 838.31 kg per mu (0.067 hectares), has surpassed the former world record by over 100 kg per mu, said Li Xueyuan, deputy director of the Cash Crop Research Institute under the Xinjiang Academy of Agricultural Sciences. The record was achieved on an experimental field in the Tarim Basin. in southern Xinjiang through the use of new varieties of cotton and quantitative management methods, Li said. Xinjiang, the largest cotton producer in China, is expected to reach 3.2 million tonnes in cotton output for 2012 on an area of 24.7 million mu, accounting for half of the national yield.

China launches two satellites (By Xinhua) China successfully launched two satellites, Practice-9 A/B, into space at 11:25 am Beijing Time Sunday, the launch center said. The satellites, launched from the Taiyuan Satellite Launch Center in North China's Shanxi Province, were boosted by a Long March-2C carrier rocket and sent to the predetermined orbit. The Long March 2C carrier rocket carrying two satellites blasts off from the launch pad at the Taiyuan Satellite Launch Center in Taiyuan, capital of North China's Shanxi province, Oct 14, 2012. Satellite A and Satellite B, which form Shijian (practice)-9 satellites, successfully entered preset orbits on Sunday morning.

China's trade climbs in Sept amid bottoming-out (By Li Jiabao) China's exports significantly expanded in September while imports resumed growth after a decline in August, suggesting a recovery in overseas markets and a moderate improvement of domestic demand amid a bottoming-out in the world's second largest economy. Economists and analysts are still cautious about China's foreign trade outlook owing to the medium and long-term pressure from the festering EU debt crisis and worrisome fiscal outlook in the US despite improvement in overseas demand. China's exports increased by 9.9 percent in September from a year earlier, a record monthly high and much higher than the 2.7-percent growth in August. Imports, meanwhile, stepped out of the 2.6-percent fall in August, registering a gain of 2.4 percent in September, according to data from the General Administration of Customs on Saturday. Total foreign trade in September grew by 6.3 percent year-on-year while the trade surplus widened to $27.67 billion from $26.7 billion in August. Foreign trade from January to September went up by 6.2 percent from a year earlier with exports rising 7.4 percent and imports gaining 4.8 percent, yielding a trade surplus of $148.31 billion. "The full year is likely to see a trade surplus of over $200 billion," said Wang Jun, a senior economist with China Center for International Economic Exchanges. "Trade figures of September are relatively satisfactory. China's exports in the coming two or three months will keep up the momentum as the manufacturing index [also known as the purchasing managers index, or PMI] improves in the US and EU, in addition to Christmas demand and the central government's measures to boost China's foreign trade," Wang said. The State Council introduced a raft of measures in September to stabilize trade growth, including speeding up export tax rebates, reducing administrative costs for companies, lowering financing costs for small and micro-sized enterprises and increasing credit to exporters. Yi Gang, deputy governor of the People's Bank of China, said on Friday that the easing monetary policies introduced by the developed economies, including the US and the EU, boosted their demand and benefited exports of emerging economies while warning against the risk of inflation. "Import growth will maintain a moderate pace in the following months owing to weak domestic demand," Wang added. China's GDP growth will be 7.4 percent in the third quarter, a seventh straight quarterly slowdown, and 7.6 to 7.8 percent in the fourth quarter, and the whole year will see economic growth of 7.8 percent, according to Wang. "The third quarter will probably be the bottom for China's economic growth slowdown and signs for the economic growth to step out of the bottom are taking place," Wang said. The National Bureau of Statistics is scheduled to release third-quarter data for economic growth, industrial production and fixed-assets investment on Thursday. China's purchasing managers' index rose to 49.8 in September from 49.2 in August, an increase after four consecutive drops, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Oct 1. A reading below 50 indicates contraction, while one above that level indicates expansion. "The ongoing spat with Japan over the Diaoyu Islands has impeded China's import growth in the past month as imports of key parts from Japan for domestic processing trade saw a significant drop," Wang said. Zhu Baoliang, a researcher from the State Information Center, said that imports in the coming months will see faster growth because of "a price surge of commodity goods and an inventory adjustment of domestic enterprises are basically finished". Trade with the EU, China's largest trade partner, fell 2.7 percent year-on-year to $410.99 billion in the past nine months, while trade with the US, the country's second-largest trade partner, increased 9.1 percent to $355.42 billion, according to the customs administration. Meanwhile, China's trade with Japan dipped 1.8 percent to $248.76 billion, faster than the 1.4 percent decline recorded in the first eight months. "China's foreign trade still faces pressure in the medium and long term because unemployment continues to trouble the US economic recovery," said Chen Hufei, a researcher from the Bank of Communications, who added that a real demand recovery in the eurozone is not expected soon. "October will probably see a single-digit export growth because of the slow recovery of global economy, rising costs at home, and frequent trade friction during the US presidential election. In addition, the (immediate) outlook for China's exports to Japan is not optimistic," Chen said.

Hong Kong*:  Oct 15 2012 

Hong Kong flat prices reach record highs for third week (By Sandy Li and Yvonne Liu) Hong Kong's home prices show no sign of cooling, with flat prices in major housing estates climbing to record highs for three straight weeks. The Centa-City Leading Index compiled by Centaline Property Agency, which tracks prices at 100 mass and luxury housing estates across the city, rose to 111.11 for the week to October 7, up 0.88 points from the previous week. Centaline said the third round of quantitative easing by the US Federal Reserve had pushed up home prices 2.72 per cent in the last three weeks. "The rising trend will continue as we have seen residential prices breaking records in many housing estates," Patrick Chow Moon-kit, head of research at Ricacorp Properties, said. He said the index could reach 115 points by the middle of next month as the market sentiment remained strong. The index tracks secondary market home prices, with the benchmark of 100 reflecting prices in July 1997. Land Registry and the Companies Registry data show that a 5,628 sq ft house at The Royal Oaks in Sheung Shui was sold for HK$94 million, or HK$16,700 per sq ft, on September 20. The property, which also comprises a 7,000 sq ft private garden, is the most expensive in the housing estate. It was bought by Thousand Policy, a company owned by property investors. Meanwhile, Centaline branch manager Roy Wong said a 404 sq ft flat at the Tsuen Wan Centre changed hands for HK$2.63 million, or HK$6,510 per sq ft, making it the highest recorded unit price since 1998. The Lands Department said yesterday it would release two residential sites - one in Tseung Kwan O and the other in Jordan, Kowloon - for public tender on November 9. The Tseung Kwan O site, in Area 68A1, can yield a total gross floor area of 429,731 sq ft, while the other in Kwun Chung Street, Kowloon, will provide a total gross floor area of up to 26,275 sq ft. The tender will close on December 7. Centaline estimates the two sites could fetch a total of HK$2.21 billion.

Shifting equity market seen lifting Hong Kong Exchange Fund performance (By Lulu Chen) HKMA chief says the launch of US Fed's QE3 could put pressure on interest rates for banks. Hong Kong's Exchange Fund could have improved its performance in the third quarter due to changes in the equity market, the city's Monetary Authority chief Norman Chan Tak-lam told reporters yesterday at the Treasury Markets Summit in Hong Kong. The Exchange Fund, which has the mandate of supporting the stability of the Hong Kong dollar under the oversight of the Hong Kong Monetary Authority (HKMA), is expected to announce its performance for the past quarter in November. Chan also said the US decision last month to release a third round of quantitative easing has not spiked hot money flows to Hong Kong, but could continue to pressure interest rates for banks. The government has a set of property price controlling measures on hand which could be put into effect when the timing is appropriate, said Chan. Hong Kong's property prices have spiked since 2008, when the US Federal Reserve launched its first round of quantitative easing measures to push liquidity into the economy. Chan said it is uncertain whether property prices will go up from here owing to the lingering crisis in the euro zone and the US fiscal cliff, which could increase tax and slash spending, causing a slowdown in growth in the world's largest economy. The HKMA will pay close attention to economic developments and push forward measures to counter slowdowns at the right time, said Chan. Hong Kong banks have been aggressive in taking yuan deposits recently, mainly because of better demand in yuan loans, said Chan. Yuan deposits in Hong Kong fell in August after a gradual increase over four months. But the currency hit a new closing high yesterday against the dollar, as China's central bank set the midpoint slightly stronger for the second consecutive day, indicating more tolerance for mild yuan appreciation. The yuan has reversed the trend of depreciation against the dollar since the middle of last month, partly because of the monetary easing in the US. But one Standard Chartered economist said conditions do not remain ripe for the yuan to appreciate drastically this year. Senior economist Kelvin Lau expects the yuan to gain more momentum next year with the US dollar/yuan spot rate reaching 6.19 at the end of 2013.

Agent for 'rubbish-dump' Mid-Levels flats fined HK$244,000 (By Joyce Ng) The property agent in charge of selling The Icon luxury Mid-Levels development was fined HK$244,000 yesterday after issuing misleading promotional materials for "rubbish dump" flats. In addition Chow Kwok-hung, a member of staff of the agent, Centaline Property Agency, was fined HK$10,000 and reprimanded for making misleading statements to buyers. Buyers complained about the state of the flats when they took possession of them last year. One buyer complained that her HK$10 million flat looked like a "rubbish dump" - a reference to unfinished flooring and piles of construction debris lying around. She said she took possession of it one month after completing the purchase. Later, most of the 26 buyers - who had paid between HK$8.7 million and HK$12.88 million for their flats - accepted a buy-back offer from the developer or compensation. The penalties were handed out by industry watchdog the Estate Agents Authority following a disciplinary hearing in August in which people who had bought flats at The Icon gave evidence. Centaline was sole agent for sales at the 17-storey Conduit Road project, built by developer Winfoong International. It is rare for the authority to lay charges of misleading buyers against a real estate firm, and Louis Chan Wing-kit, managing director of Centaline, said the company would appeal against the verdicts, including that on Chow. During the disciplinary hearing, a customer testified that Chow had told her the flat would have an open kitchen - as featured in the agents' promotional leaflets - but she found the actual kitchen was enclosed. Winfoong said at the hearing that it had not vetted Centaline's leaflets. The watchdog requires property agents to use promotional materials that are endorsed by the developer.

 China*:  Oct 15 2012

Mo Yan's Nobel Prize win sees Chinese publishing stocks rise (By Sophie Yu) Many bookstores have set up special sales counter for Mo Yan's works. The awarding of the Nobel Prize for literature to Chinese novelist Mo Yan gave media and culture sector stocks a boost on the A-share market. Xinhua Media, a Shanghai-based company engaged in book publishing and newspaper management, rose 10.1 per cent, the maximum increase allowed in a single day, closing at 6.23 yuan, while the Shanghai composite index remained stable. Other media and culture-related stocks that performed well included Hubei's Changjiang Publishing and Media, up 6.3 per cent, Time Publishing and Media, up 3.9 per cent, and Northern United Publishing & Media Group, up 2.7 per cent. "I can only say that Chinese investors are good at associating," said Li Daxiao , director of Shenzhen-based Yingda Securities. "At best, Mo's triumph will increase investors' attention towards a culture industry that has remained a pond of dead water." Li said that the real impact of Mo Yan's Nobel Prize win would be the cultural confidence and national pride that it brought to the nation, as well as a wave of enthusiasm and interest among readers of contemporary Chinese literature. Qiao Mu , director of the International Communication Research Centre at Beijing Foreign Studies University, said the surge in the stock market was bound to be temporary. "The mainland stock market likes speculation and so called 'news'," Qiao said. "The assumption of a bigger platform for Chinese culture overseas prompted the rise in the stock market. But this is a short-term stimulus and is unsustainable. Perhaps it will fall next week." Beijing Genuine and Profound Culture Development, which has the sole publishing rights to Mo Yan's works on the mainland, said its steps towards an initial public offering had been accelerated by his win.

Nobel laureate Mo Yan praised for urging dissident's release (By Agence France-Presse in Washington) China’s Nobel Prize-winning writer Mo Yan won praise on Saturday from supporters of the jailed dissident Liu Xiaobo after the officially tolerated writer called for his fellow laureate’s freedom. Mo Yan, who has been on the defensive against activists who accused him of being a communist stooge, told a news conference a day after winning the prestigious prize that he hoped Liu would be freed “as soon as possible.” Initiatives for China, a Washington-based democracy advocacy group that has campaigned for Liu’s freedom, said it was “extremely pleased” by the comments by Mo Yan - whose penname ironically means “Don’t speak.” “We know that Mo Yan, a son of peasants, in his heart is a writer who deeply cares about the people suffering at the bottom of Chinese society,” the group said of the author who previously participated in “infamous communist propaganda.” “Anyone familiar with his work can clearly see such a sentiment reflected throughout his writings,” it said. The group voiced hope that Mo Yan would speak out about Liu Xiaobo and the dissident’s wife Liu Xia, who has spent some two years under house arrest, in his speech to accept the award in Stockholm. China’s state-run media have hailed Mo Yan as a national hero, a sharp contrast to the blackout imposed when Liu Xiaobo won the prestigious Nobel Peace Prize two years ago. Liu, also a writer, was sentenced to 11 years in prison on Christmas Day 2009 after leading a manifesto for democratic change called Charter 08. Jared Genser, founder of the group Freedom Now who serves as Liu’s international legal counsel, hailed Mo Yan for his “courageous call” for the dissident’s release. Prominent Chinese government critics, including the artist Ai Weiwei and the exiled former prisoner Wei Jingsheng, had earlier accused Mo Yan of being a sellout due to his cooperation with Chinese authorities.

China's export growth picks up in September - China's exports rose 9.9 percent year on year to 186.35 billion U.S. dollars in September, official data showed Saturday.

African trade to surpass EU, US - Forecasts for solid growth give China confidence in continent (By Hu Yuanyuan) Africa is likely to surpass the EU and the US to become China's largest trade partner in three to five years, a senior commerce official and government adviser said. In the process of China's ongoing strategic repositioning in the global market, increasing effort is being made to build economic ties with the continent, said former vice-minister of commerce Wei Jianguo in an interview with China Daily. In 2012, China's trade with Africa will probably hit $220 billion, up 25 percent year-on-year. According to Wei, China's exports to Africa grew 22 percent in the first nine months this year, while imports jumped by 21.5 percent during the period. The Ministry of Commerce said that in 2011, China's trade with Africa hit $166.3 billion, a jump of 83 percent over 2009. Currently, the EU is China's largest trade partner, with bilateral trade volume of $567.2 billion in 2011. The US is the second largest trade partner with China, with bilateral trade volume of $446.7 billion, according to the General Administration of Customs. But trade with Africa is expected to close the gap quickly. "I expect China-Africa trade to see faster growth next year, as more Chinese companies have already been beefing up their business activities on the continent," said Wei, who is vice-chairman and secretary-general of the China Center for International Economic Exchanges, a high-level government think tank. China's confidence in its future African ties, Wei added, is also based on the forecast that the EU's economy will remain sluggish in the coming three to five years and that US economic growth would linger at a low level. The IMF said in its recent report that the EU will probably see a net decrease of 0.2 percent in its economy in 2012. Although growth is expected to be stronger in 2013, it will remain at a low level of 0.5 percent. The IMF's forecast for the US economy was 2.2 percent for 2012 and 2.1 percent for 2013. "Due to the recession of the global economy, it is almost impossible for China to achieve a foreign trade growth target of 10 percent for the year, and the situation for next year remains grim," Wei said. He called for more government policies to support export-oriented enterprises, including expanding the scope of products that enjoy tax rebates, hiking the tax rebate rate and quickening the rebate process. "The decline in exports and imports may pose the biggest challenge for China's economy in the coming months. September and October may be the worst time for China's exports as it is the key season for exporters to grab Christmas orders," said Wei, who is also a guest economist of China Daily. The World Bank on Monday lowered its forecast for China's GDP growth to 7.7 percent this year due to lackluster exports and lower investment growth. It also lowered the country's growth forecast in 2013 to 8.1 percent, from 8.6 percent. On the enterprises side, Wei said Chinese exporters should quicken their pace in diversifying their target markets, adding it is now the best time to invest in Africa. Africa, which faces similar development opportunities to China's in the 1970s and 1980s, boasts a huge potential consumption market. According to IMF estimates, GDP growth for the Middle East and North Africa may reach 5.3 percent in 2012 and 3.6 percent in 2013. The figure for sub-Saharan Africa is 5.0 percent this year but will be 5.7 percent next year. China's investment in Africa, Wei estimated, will grow by 30 to 40 percent this year. "But this is not enough, and we should further strengthen our investment, especially in the infrastructure, agriculture and manufacturing sectors," said Wei. China's non-financial direct investment in Africa increased 58.9 percent year-on-year to $1.7 billion last year, according to the Ministry of Commerce. By the end of 2011, Chinese investment stock in Africa reached $14.7 billion, up 60 percent compared with 2009. For Cheng Zhigang, secretary-general of the China-Africa Industrial Cooperation and Development Forum, Chinese investment in Africa centered on energy, minerals and infrastructure. Alassane Ouattara, president of Cote d'Ivoire, said they hope more Chinese companies invest in private sectors to stimulate economic growth and create more jobs for local people, especially young people. "Chinese investment is the cornerstone for our country to maintain a double-digit GDP growth from 2014 to 2015," Ouattara said when attending the Fourth Conference of Chinese and Africa Entrepreneurs in July.

Milking the overseas market (By Li Xiang) A Synutra International's booth at an infant products show in Beijing. The company is the first successful case of a Chinese company investing in the European Union's dairy industry, after it injected 100 million euros into the French dairy cooperative Sodiaal. Dairy producers from China need the best raw materials from abroad to be competitive at home. Chinese dairy companies are boosting their investments in Europe to gain access to high quality sources of raw milk in hopes of winning back market share and restoring consumer confidence in the country's scandal-plagued industry. The most recent move came from Synutra International, China's third-largest infant formula producer, which signed an investment deal worth 100 million euros ($130 million) with French dairy cooperative Sodiaal, the fourth-largest dairy group in Europe. The deal involves building two milk-drying plants in the Brittany region of France. The facilities, which are expected to be operational by early 2015, will have a production capacity of up to 100,000 tons of whey and milk powder per year. The production will be entirely dedicated to supplying Synutra, according to Sodiaal. Synutra's venture was the first successful case of a Chinese company investing in the European Union's dairy industry since Shanghai-based Bright Food lost its bid for a 50 percent stake of Yoplait, a sub brand of Sodiaal, to American company General Mills last year. "This opportunity allows Synutra to secure its long-term supply of high quality raw materials and fuel Synutra's future growth while maintaining the highest quality standards for our products," says Zhang Liang, chairman and CEO of Synutra, in a statement. European countries such as France have extensive resources and experience in the milk-processing sector and the highest safety and quality standards. "Gaining access to these areas is the main motivation behind the recent boom of Chinese investment," says Xu Qinghua, head of China business services at accounting firm Ernst & Young in France. "Unlike the case of Bright Food, Synutra adopted a gradual and less aggressive approach. Its investment is not targeted at owning control of a foreign company. Instead, the partnership focused on building facilities and opening the Chinese market," Xu says. "Being a private company also gave Synutra an advantage as the French side can be sensitive about Chinese companies with government backgrounds." For Synutra's French partner Sodiaal, a long-term alliance with a Chinese dairy producer was a good fit with its global strategy to boost the industrial and technological capacities of its production sites, in addition to helping open the Chinese market to its products. "The Synutra Group will bring its in-depth understanding of Chinese consumer expectations, its dynamic position in this fast-growing market and its ability to invest in innovative and high-performance facilities," says Yves Rambaux, CEO of Eurosrum, the dairy ingredients business unit of Sodiaal Group, which is closely involved in the new project. Over the past five years, Eurosrum has exported an annual average of 35,000 tons of milk, whey and demineralized whey powder to China, according to Rambaux. "Our ambition is to respond to the growing demand from the Chinese market and we will be opening an office in China soon to be as close as possible to the market and to our local contacts," he says. In 2008, a series of contamination scandals involving several major dairy producers in China severely damaged domestic consumer confidence and led to a dramatic reduction in the market share of domestic brands. It also gave foreign brands a significant boost in the Chinese market, as consumers became willing to pay a premium for foreign brands as they remain concerned about the safety of domestic dairy products. The market share of imported milk powder in China recently reached 50 percent, up from 30 percent in 2008, and the market share of imported high-end infant powder in the Chinese market is even higher, at 70 percent, according to industry experts. While the price of foreign dairy brands has been soaring over the past several years, the price of imported raw milk has dropped steadily. This price inversion has prompted many Chinese dairy producers to seek to control their overseas sources of cheap milk, industry analysts said. In June, Chinese infant formula producer Biostime signed a 10-year financing and supply agreement with the Denmark-based European dairy giant Arla Foods. The deal will secure Biostime a dedicated annual capacity of 20,000 metric tons of infant formula powder for the next 10 years, according to a statement issued by the two companies. Beverage producer Wahaha Group also began to source its infant formula from a Dutch milk powder company several years ago, which helped package the product in the Netherlands and export it to China. Analysts said there is ample room for Chinese dairy companies to further expand their presence in Europe, as many countries in the region are struggling with financial difficulties and high unemployment rates. "The timing of Synutra's investment is good because Europe is now struggling with a capital shortage, unemployment issues and low growth prospects," Ernst & Young's Xu says. Once completed, the project between Synutra and Sodiaal is expected to employ approximately 100 employees locally, according to media reports. The desire to meet Chinese consumers' increasing demand for good quality dairy products and to restore the market share lost to foreign brands will continue to drive more Chinese capital into dairy industries abroad, industry experts said. China is the world's largest infant formula market and is expected to overtake the United States as the world's largest dairy market by 2020. Before looking up to the European markets, Chinese dairy investment has long targeted at the acquisition of dairy farms in New Zealand and Australia, the world's two major exporters of dairy products. China Investment Corp, the country's sovereign wealth fund, recently sought to invest in Australia's largest dairy farm, which planned to raise $180 million equity to double milk production. A Shanghai-based company, Peng-xin Group, also rolled out an ambitious plan to invest $210 million to purchase 16 dairy farms of 8,000 hectares in New Zealand. But a local court blocked the attempt due to concerns that Pengxin had exaggerated the benefits it would bring to the local farms. The backlash against China's massive purchase of dairy estates overseas has raised questions as to whether this is a sustainable investment method. Industry analysts said that Chinese dairy companies could face similar difficulties in Europe when they make investments and acquisitions as the European companies often prefer job-creating and sustainable partnerships based on mutual benefits and trust rather than one-off opportunities.

Hong Kong*:  Oct 14 2012 

Peak house sold at loss as owner raises fast cash (By Sandy Li) Sale of 4,650 sq ft home bought at record price in 2010 results in HK$36m setback for owner. No. 8 Severn Road sold at a loss. Hong Kong-listed electronic component maker Sino-Tech International Holdings, which bought a detached house on the Peak for a record price in 2010, has ended up incurring a loss on the deal despite the city's soaring property prices. Land Registry data showed China LWM Property, a wholly owned subsidiary of Sino-Tech, sold the 4,650 square foot house at 8 Severn Road for HK$61,290 per square foot, or HK$285 million, to Ever Mark, in which both Sammy Sean Lee and Lui Ngok-che are directors. Both Lee and Lui resigned as executive directors at another Hong Kong-listed company, Sun's Group, in August 2009, three months after the firm was renamed as Loudong General Nice Resources (China). In 2010, Sino-Tech stunned the market when it paid HK$60,215 per square foot, or HK$280 million, for the house, making it the most expensive home in Asia in terms of price per square foot. The firm announced the disposal last month and said it had made an estimated loss of about HK$36 million from the disposal, after taking related commissions and the relevant legal fees into account, according to a company statement filed to the stock exchange. Based on the valuation report prepared by an independent professional valuer, it said the carrying value of the property was HK$315 million, or HK$67,741 per square foot as at June. However, the company said "the group may face cash-flow constraints" if the disposal could not be accomplished in the near future. "The house has been offered on the market for nearly a year. That the company agreed to sell even though it could not break even indicates it needed to raise cash badly," a property agent said. Sino-Tech said the net proceeds from the sale of the house would be about HK$279 million, of which HK$146 million would be used to repay bank borrowings secured by the property. The remainder of HK$133 million would be used as general working capital. In 2010, Sino-Tech bought the pricey property despite the company suffering a net loss of HK$532.18 million that year. The loss widened to HK$936.81 million last year. In the first half of this year, the firm reported a net loss of HK$72.92 million. Shares of the company last traded at 7 HK cents. The stock has been suspended from trading since March 14.

Cargill profits rebound, but drought to challenge - Cargill said quarterly earnings more than quadrupled from a year ago following its worst quarter in two decades and the agribusiness giant expressed confidence it will handle continuing fallout from historic droughts in the United States and elsewhere. Cargill, one of the world’s largest privately held corporations and a bellwether of world commodity markets, said net earnings totaled US$975 million for the first quarter of fiscal 2013, ended August 31, compared with US$236 million a year ago. Profit rebounded from US$73 million for the March-May quarter, the company’s lowest quarterly earnings since 1991. “We are cautiously optimistic about the rest of the year,” said Cargill spokesman Mark Klein. “We’re pleased with the improvement in the first quarter. We expect challenges ahead. But we think we are in a good position to help customers manage tighter supplies and volatility in markets.” Standard & Poor’s analyst Chris Johnson, who downgraded Cargill’s outlook to “negative” in August, said a rebound had been expected but last year’s unusually weak quarter meant the company still faced stiff hurdles. “When you compare this quarter to last year, you are going to have a good rebound. That was the majority of the positive momentum,” Johnson said. “One quarter doesn’t necessarily indicate that they have fully come back.” Cargill reported weak results in three of the four quarters in fiscal 2012, citing volatile commodity markets and soft world economic growth, even before the drought began hurting crops and livestock across the United States, the largest exporter of corn, soybeans and wheat. Revenue for the first quarter dipped to US$33.8 billion from US$34.6 billion a year earlier, the company said in a statement. Revenue was US$34 billion in the prior quarter. Cargill Chief Executive Greg Page attributed the improved performance to the company’s broad reach into most major areas of the world’s food production systems. Cargill operates as both an agricultural supplier and consumer - a leading crop processor and exporter, a maker of livestock feeds as well as a livestock feeder, a manufacturer of meats and cocoa and ethanol, a global commodity trader, and a risk manager in world financial markets. So the company can tap its advantages up and down the food supply chain, as well as its shipping, banking and hedging expertise in dozens of markets. “By investing steadily, we’ve been able to significantly boost the breadth and depth of the products and services we offer our customers,” Page said. “And that has strengthened the balance, diversification and resilience we strive for in our business.” Page warned, however, that the full effects of drought and other weather-related damage to US and world crops were still working through the supply chain and would challenge food processors, livestock feeders and exporters in the months ahead. The company said it expects more “atypical” trade flows as the weather has altered the normal distribution of raw materials around the world, pushing more international buyers to non-US origins. “Cargill’s North American grain handling volumes for exports are anticipated to be lower than pre-drought expectations, and it may be a challenging year for the company’s animal protein businesses globally,” it said. The US Agriculture Department on Thursday said that US corn stockpiles will fall to the lowest level in 17 years before the next harvest - a bare three weeks supply. US soybean stocks will be the lowest in eight years. USDA also cut its estimate for Australia’s wheat crop by 12 per cent due to drought, a reminder of the challenges Cargill faces in finding grain to fill its giant export pipelines for Asia, Europe and the Middle East. Russia and notably the Black Sea region have also been hit hard by drought. Cargill’s top competitors in world grain markets, like ADM and Bunge, have also been pressured in the last year by volatile markets. ADM said in February it was cutting 1,200 jobs worldwide to reduce costs. Bunge is slowly recovering from hits to its sugar, fertilizer and biofuels businesses. Both are due to report quarterly earnings in coming weeks. Cargill is much larger and more diversified than those companies, with 142,000 people in 65 countries. On August 15, Standard and Poor’s revised its outlook for Cargill to negative from stable, citing doubts about a 2013 earnings rebound. But S&P reaffirmed Cargill’s strong credit ratings. “They still have a couple headwinds,” S&P analyst Johnson said on Thursday. “The biggest headwind, which is the main driver for our negative outlook, is their animal nutrition, beef business and other animal protein businesses are still weak given the drought. The other headwind is that the drought will mean less volume out of North America to either handle or process but that’s probably not as big of an impact as beef.” Cargill said its latest quarterly results were balanced, with improved earnings across all five business segments -- agricultural services, food ingredients, food and crop processing, risk management and an industrial sector that includes metals, salt and other commodities. There were no significant losses in any one business unit and results were aided by efforts in the past 12 months to lower costs, streamline work flows and reassess capital spending. Page said Cargill spent US$8.1 billion on supply-chain investments in the last two years. The company’s big risk management and fund investment businesses, closely watched by analysts, also posted positive results. Cargill’s operations in the euro zone in particular have been hit by turmoil in the region’s currency and domestic markets, analysts say. “Risk management and financial sector, like the other four, improved,” said Cargill’s Klein. “The sector was aided in part by strengthening global financial markets.”

Elsie Leung defends her right to 'free speech' (By Lai Ying-kit) Former secretary for justice Elsie Leung Oi-sie defended as “free speech” her earlier criticism of Hong Kong’s judiciary, as her back-and-forth argument with two legal bodies continued on Friday. “I have the right to free speech, too, and my opinion does not affect judicial independence whatsoever,” she said in Nansha, Guangdong. The public argument began last Saturday, when Leung criticised the city’s legal profession, including judges, for lacking an understanding of the Beijing-Hong Kong relationship. Leung had urged the government to seek an interpretation of the Basic Law from Beijing. Four days later, the Bar Association and the Law Society issued strong defences of the city’s independent judiciary, with the Law Society warning the government to “act cautiously” before seeking any interpretation of the Basic Law from Beijing. On Friday, Leung, the deputy director of the Basic Law Committee, said she was not the first person to comment openly on court cases. “There were times when academics made criticisms on matters relating to the Hua Tian Long case, when it was about to be heard at the appeal court. Why did the Bar Association and the Law Society not issue any statement at that time?” “I find I need to defend my freedom of speech,” she said. The Hua Tian Long case was a lawsuit in 2010 between the owner of a floating derrick - the Guangzhou Salvage Bureau - and a Malaysian company over a breach of agreement. At issue was whether the owners could claim Crown immunity in the lawsuit and whether, after the handover, the mainland government enjoys the privilege in general. Crown immunity allows the sovereign or the state to avoid liability when sued. It was the first time the issue had appeared before the Hong Kong courts. In her criticism on Saturday, Leung said the legal profession’s poor understanding of the Beijing-Hong Kong relationship had led to mistaken rulings, in which the top court had superseded the central government’s power. Leung urged the government to seek an interpretation of the Basic Law from the National People’s Congress Standing Committee to solve issues related to mainland women giving birth in Hong Kong. In their statements, the Bar Association and the Law Society on Wednesday warned against any interference - or even the perception of interference - with the judiciary’s independence.

Writers praise Mo Yan's Nobel win at Hong Kong literary festival (By Joanna Chiu) Colm Toibin talks at the International Literary Festival in Central. News of Chinese writer Mo Yan’s acceptance of the Nobel Prize in Literature came as some of the world’s best authors were in the city for the Hong Kong International Literary Festival, which will run until Sunday. During Friday’s festival programme, notable writers Colm Tóibín, from Ireland and Pankaj Mishra, from India, praised Mo for his win. Tóibín, whose novels and essays have been translated into 30 languages, said that Mo’s win could lead to greater international success for other authors who don’t write in English. “English can be very insular, and book stores often don’t want to carry foreign authors,” he said. “I think [Mo’s] work in translation will be a big discovery for a lot of readers [and] will encourage publishers all over the world to take notice.” Mishra, a journalist, novelist and travel writer who lives in London and India, responded to Chinese activists’ criticisms of Mo Yan’s win. “There’s been a lot of negative reactions to Mo Yan’s win … [with people saying] that a true Chinese writer is a dissident living abroad, as if something’s not right with someone winning an award who lives in China.” Chinese artist-activist Ai Wei Wei had called Mo’s win an “insult to humanity and to literature,” criticising him for having “no involvement with the contemporary struggle”. Mishra said, “My problem with that is, when Toni Morrison wins a Nobel Prize no one calls [English artist] Damien Hirst to ask what he thinks about it. Why is Ai Wei Wei always called up to say what he thinks about anything?” Mishra will appear in Hong Kong again at the Asia Society on Tuesday evening to speak about his new book, From the Ruins of Empire: The Revolt Against the West and the Remaking of Asia. On October 25, Tóibín will release his latest novel, A Testament to Mary, which is written from the perspective of the Virgin Mary twenty years after crucifixion.

Lam defends liaison official's public role in ferry disaster (Ada Lee) Chief Secretary Carrie Lam Cheng Yuet-ngor attends the Legislative Council's House Committee special meeting on the National Day boat tragedy in Tamar. The chief secretary has defended a Beijing liaison official’s public role after the Lamma ferry disaster, saying it was only “natural” for Beijing’s representatives to show concern at such times. Carrie Lam Cheng Yuet-ngor made the remarks on Friday, after some lawmakers criticised the government for allowing Li Gang, deputy head of the liaison office, to upstage Chief Executive Leung Chun-ying at a hospital during the October 1 tragedy. The two men were visiting injured survivors of the ferry collision that left 39 people dead. Critics said such incidents could damage the city’s image because it is supposed to have a high degree of autonomy from Beijing. Speaking during and after a special meeting of the Legislative Council’s House Committee, Lam said the city was in charge of its own rescue operations. “It would be difficult for me to comment on individual lawmaker’s perceptions,” she said, adding that Li’s appearance at the hospital had not been prearranged. The Civic Party’s Claudia Mo Man-ching said Leung could have politely turned down Li’s visit, or Li could have issued a statement instead of appearing at the hospital. Lawmaker Frederick Fung Kin-kee said Li’s appearance had been unnecessary.

 China*:  Oct 14 2012

COSCO, China Shipping unite in domestic container trade (Reuters in Hong Kong) China’s top two shipping giants, China COSCO and China Shipping, will join forces in a move that is a first for the domestic coastal container shipping industry and which is aimed at weathering a severe market downturn. China Shipping Container Lines Co Ltd (CSCL) said it had agreed with COSCO Container Lines Co Ltd, a unit of China COSCO Holdings Co Ltd, to jointly operate trade routes from north and northeast China to Fujian and Shantou in the southern province of Guangdong from mid-October. The two shippers, with a combined market share of 80 percent in the domestic coastal container trade, would each deploy ships to jointly operate the routes, CSCL said. “This move is just the start of an intensive cooperation in domestic container shipping between CSCL and COSCO,” CSCL said. Global container freight rates have been battered by a slowing global economy and supply glut last year. Rates have, however, rebounded in the second quarter on rising U.S. demand and shipping firms’ determination to cut excessive capacity. “Hopefully this cooperation can provide stability to domestic coastal shipping rates,” said Geoffrey Cheng, an analyst at BOCOM International. Shares of both CSCL and China COSCO have outperformed the broader market in the past five weeks, and were nearly 30 per cent up from their year low on September 5. The blue chip Hang Seng Index was up 10 per cent in the same period. Shares in China COSCO, which also operates the world’s largest dry bulk cargo fleet, are still down around 6 percent so far this year, while CSCL’s stock has been flat.

China denies visa to Japanese in Taiwan orchestra (By Agence France-Presse in Taipei) China has denied visas to three Japanese members of a Taiwanese symphony orchestra ahead of a planned mainland tour, an official said on Friday, linking the move to a simmering territorial row. The National Symphony Orchestra, Taiwan’s leading classical ensemble, plans to go ahead with its visit to China despite the visa denials, which come amid tension between Beijing and Tokyo over an island cluster in the East China Sea. “The Japanese musicians didn’t get the visas probably because of the timing around the Diaoyu island controversy,” said a staff member of the orchestra, using the Chinese name for the islands known as Senkaku in Japanese. “We are still trying as there are three more weeks before the tour,” she said, adding the orchestra, which has over 90 members, would be able to perform even without the participation of the three Japanese. The orchestra is scheduled to perform in Beijing, Shanghai and the east Chinese city of Wuxi as part of an East Asia tour. Tensions over the islands escalated last month after Tokyo nationalised three of them, causing a wave of angry protests in China which also claims the islands. Japan administers the uninhabited but strategically well-positioned archipelago, which lies in rich fishing grounds and on key shipping lanes in the East China Sea. Taipei too claims the islands and dozens of Taiwanese fishing boats escorted by coastguard vessels traded water cannon fire with Japanese vessels around the disputed islands last month.

President Ma Ying-jeou’s (馬英九) of Taiwan splashes out for Diaoyutai ads in US newspapers (By William Lowther) President Ma Ying-jeou’s (馬英九) administration spent an estimated half million US dollars to place full page advertisements in four leading US newspapers on Wednesday, which coincided with Double Ten National Day. Heavy, dense and filled with hard-to-read type, the identical ads took the form of a closely argued 10-point claim to the Diaoyutai Islands (釣魚台). They ended with an appeal to the US government and people to support Ma’s peace initiative. According to newspaper sources, the three-color ads cost about US$175,000 in the Wall Street Journal; US$150,000 in the New York Times; US$100,000 in the Washington Post and US$75,000 in the Los Angeles Times. Known as the Senkaku Islands in Japan, the islands have been under Tokyo’s control since 1972, but are also claimed by Taipei and Beijing. The ads were headed: “The Republic of China (Taiwan) Proposes: The East China Sea Peace Initiative,” and said that a major dispute with potentially grave consequences “to regional peace and economic prosperity” was now raging around the islands. Steps to reduce tension and foster peace need to be taken immediately, the ads said. They detailed Ma’s two-stage East China Sea peace initiative, based on the concept that while sovereignty is indivisible, “resources can be shared.” The initiative calls on China and Japan to join Taiwan in shelving territorial disputes through negotiations, formulating a Code of Conduct in the East China Sea and engaging in joint development of resources. “Over the long run, we can move from three parallel tracks of bilateral dialogue (between Taiwan and Japan, Taiwan and the Chinese mainland, and Japan and the mainland) to one track of trilateral negotiations,” the ads read. They called for five key actions — development of an East China Sea code of conduct; joint conservation and management of living resources; joint exploration and exploitation of the non-living resources; joint marine scientific research and protection of the maritime environment and joint exercises to maintain conventional and unconventional security. The ads were placed by the Taipei Economic and Cultural Office in New York.

A place where billboards create landscapes (By Raymond Zhou) Colorful advertisement billboards make the night in Guangzhou even more vibrant. 

From books to blockbusters (By Raymond Zhou) Photographers take pictures of books written by Chinese writer Mo Yan during the book fair in Frankfurt on Oct 11. A scene from Red Sorghum, which was adapted from Mo Yan's novel of the same title in 1986, starring Jiang Wen (left) and Gong Li (right). Mo Yan's works have had mixed success on the big screen. Mo Yan's brush with cinematic fame started with a bang. In 1986, Mo published Red Sorghum as a novella; the following year the film version swept the world off its feet and went on to collect the Golden Bear award at the 38th Berlin International Film Festival. Red Sorghum jump-started many high-octane careers, including Zhang Yimou as China's pre-eminent filmmaker and Mo as a major literary figure. Both have acknowledged the other's contribution to their mutual success. For Mo, "without the movie, I'd have been known only within literary circles". However, the experience also exposed his ignorance about filmmaking as an art form separate from literature. When Mo first saw Gong Li on the set, he was not impressed. "She looked like a college girl to me, without any trace of the female lead I envisioned for the part," he said. "She would ruin the movie." In addition, the thick script he helped adapt from his own work was slashed by Zhang to only "seven or eight pages". The end result, of course, took him by surprise. The five-minute bridal sedan scene alone leapt from page to screen with striking visuals and unforgettable energy. "And I was so wrong about Gong Li," he said. Zhang's other film of another Mo Yan novel, however, was an abysmal failure. Happy Times (2000), based on Mo's writing, got mixed reviews both inside and outside China, with US film critic Roger Ebert calling it "creepy", even though the premise is eerily similar to Charlie Chaplin's City Lights. Mo said that, unlike Red Sorghum, which also removed many plotlines from the original, Happy Times deleted "some of the most valuable things from my novel". But Mo accepted that turning book to film is a double-edged sword. "It is a pity, but once I give the rights to a filmmaker, it's none of my business. If the adaptation is good, I'd be happy because it will promote my book; if it's not good, it may have the adverse effect but that's not my shame." Another failed project with Zhang was Cotton Fleece, which Mo wrote specifically for him. "I had Gong Li in mind when I was working on the story, her mannerisms and her way of speaking." He also set the crucial scene in a cotton field, knowing that Zhang has a penchant for vibrant colors. But Zhang didn't like it. It also had scenes of the "cultural revolution" (1966-76) which were potential censorship minefields. The screenplay was later picked up by a newcomer from Taiwan and turned into a little-known feature. Another of Mo's works fared better on screen. Nuan (2003) is set in rural China, but instead of the Bacchanalian abandon typical of Mo's style, the story is delicate and subdued, more a trait of its director, Huo Jianqi. Mo has always believed that his better works such as Big Breasts and Wide Hips,Life and Death Are Wearing Me Out and Sandalwood Punishment are made for cinema. He lamented at the 2010 Shanghai Book Fair that no filmmaker had the foresight to adapt these stories, and said he would be more than willing to serve as their scriptwriter. The consensus is that Mo's works have too much graphic sex and violence to be palatable for the big screen, which needs to be more sanitized than novels. Compared with other writers, Mo has limited exposure to the glitter of showbiz, but his take on the symbiosis of the two art forms is unique. For one, he does not believe in the conventional wisdom of using literature for storylines. "The more valuable thing novelists can provide for filmmakers is an ambience, a setting for values and intelligence, not just the plot." On top of that, money has been a temptation to Mo just as it was to William Faulkner and other US writers who ventured into the muddy waters of Hollywood. "I tried screenplays in the 1990s," said Mo. "I had a clear motive to make money." He was paid 15,000 yuan ($2,100) for each television serial episode, three times the market price. But he had to endure grueling rewrites. His conclusion: Do not treat scriptwriting purely as a moneymaking tool. Be serious about it. Back in 1987, Mo earned 800 yuan for the rights to Red Sorghum. That was in addition to the 1,200 yuan he got as one of three writers for the script. "I was so excited I was awake the whole night. Nowadays, 800 is a pittance. Some writers make millions by selling the movie rights to their novels." Mo has been left wiser after his occasional forays into the business of films. "Do not think of movie stuff when you write a novel. Do not pander to directors. It's their job to pick what's useful to them from the novels."

Chinese leader congratulates Mo Yan on Nobel win - Chinese leader Li Changchun wrote the China Writers Association on Thursday to congratulate Mo Yan, vice president of the body, on his winning of the 2012 Nobel Prize in Literature. In his congratulatory letter, Li said Mo's victory reflects the prosperity and progress of Chinese literature, as well as the increasing national strength and influence of China, according to an official statement issued on Friday. As China moves rapidly with its reform, opening-up and modernization drive, great creative vitality has emerged in Chinese literary circles, Li said. "Basing their writing on the life of the people and the traditions of the nation, Chinese writers have created a great many excellent works of Chinese characteristics, styles and spirits," reads the letter. Li, a Standing Committee member of the Political Bureau of the Communist Party of China Central Committee, expressed hope that Chinese writers will focus on the country's people in their writing and create more excellent works that will stand the test of history. "Thus, Chinese writers can contribute more to the prosperity and development of Chinese culture, as well as the progress of human civilization," he continued in the letter. The Swedish Academy announced in Stockholm on Thursday that Mo Yan would receive the 2012 Nobel Prize in Literature, making him the first Chinese national to win the award. Mo Yan, a pseudonym for Guan Moye, was born in 1955 and grew up in Gaomi in east China's Shandong Province. In his writing, Mo draws on his youth and the province of his birth, which are most apparent in his novel "Red Sorghum," which was made into a film by director Zhang Yimou. "Big Breasts and Wide Hips" and "Life and Death are Wearing Me Out" are also among his most famous works. His works have been translated and published in English, French, Swedish, Spanish, German, Italian and Japanese. In Mo's works, "hallucinatory realism merges with folk tales, history and the contemporary," according to the official Noble citation. "Through a mixture of fantasy and reality, historical and social perspectives, Mo Yan has created a world reminiscent in its complexity of those in the writings of William Faulkner and Gabriel Garcia Marquez, at the same time finding a departure point in old Chinese literature and in oral tradition," said a biographical notes posted on Nobelprize.org.

Hong Kong*:  Oct 13 2012 

'I am very lucky': Tony Leung Ka-fai on the three women in his life (By SCMP) Tony Leung Ka Fai, left, and co-star Aaron Kwok pictured at the 17th Busan International Film Festival last week as they promoted their film, Cold War. They say behind every great man there is a great woman - and award-winning Hong Kong actor Tony Leung Ka-fai has revealed he has three. In an interview with Darizi Men's, the actor - who stars in the upcoming movie Cold War - spoke of the support he gets from his wife and daughters. "I feel I am very lucky, when I was young I was already married with children. I had a complete family, which enabled me to maintain stability." And he admitted that sometimes his acting affected his emotions off the set and talked about how one upsetting scene left him overcome with rage: "Ordinarily when I get home, the dogs at home would welcome me. Yet that day when I got out of the car, they scattered. That rage was so strong that even pets were able to sense it," he said. Despite winning the Hong Kong Film award for Best Actor three times, Ka-fai insists he's just an ordinary person who, after 30 years in the film industry, craves simplicity. He said: "I always see myself as an ordinary person. The fact is I really am an ordinary person. Acting is only my profession. I am just like an ordinary person. I am working at business hours and resting when I am off; like an ordinary citizen I ride the MTR, cross the harbor on the ferry. I always feel, my performance life is the exciting one. My own life is very ordinary."

Hong Kong is becoming a heaven for hotdog lovers - Hongkongers are tucking into thehumble hot dog with increasingrelish, writes Vicki Williams. Chilli dog with cheese (left) and Japanese spicy dog at Pi Hot Dog Gallery. The Chicago and the Thai from The Frank. "Toppings are really important, too: the more relish, sauerkraut, onions, chilli, you name it, you can put on a dog, the better," he says. Hot dog enthusiast Ned Kelly, originally from Scotland, says it is about quality: "Toppings are important, but they shouldn't be there to hide poor quality franks. Quality is paramount, served, of course, in a fresh bun." DJ and F&B professional Andy Curtis, a Briton who has lived in Hong Kong for much of his life, looks for a bite that is "juicy, tasty meat, not dry, with a crunchy but not chewy skin served in a soft, warmed bun". An increasing number of outlets in Hong Kong are getting the recipe just right. The Frank, which opened in mid-September, is one. Candace Suen got inspiration for the 11 dogs it offers when she visited the US. All the classics such as the New York (with mustard and sauerkraut), the Coney Island (mustard, sauerkraut and onions) and the Chicago (mustard, onion, sweet pickle relish, pickle, tomato, chillies and celery salt) are available. The outlet also offers Asian-inspired hot dogs created by Suen, such as the Thai (spicy chorizo frank, Thai chilli mayo, pork floss, crispy onion and fresh chilli). For spice lovers there is the suicide (spicy chorizo, grilled onions, spicy mayo, jalapeno, crispy onions). Customers can also create their own hot dog by choosing from five franks and 18 toppings. 

Yuan-Denominated IPO to Launch in Singapore (By P.R. Venkat and Prudence Ho) A Singapore real-estate investment trust backed by Hong Kong billionaire Li Ka-shing hopes to raise $800 million in what would be the city-state's first yuan-denominated initial public offering, people with knowledge of the deal said. The IPO of Dynasty REIT, which is sponsored by ARA Asset Management Ltd. and plans to start taking orders for its offering this week, would be the second flotation denominated in the Chinese currency outside mainland China. Mr. Li, Asia's richest man, and Singapore-listed ARA were also involved in the first offshore yuan IPO, last year's $1.6 billion offering in Hong Kong of Hui Xian REIT, which has stakes in Beijing office properties. ARA, partly owned by Mr. Li, is a manager of offices, shopping malls and logistics assets across Asia. It plans to inject three Chinese commercial properties into Dynasty REIT's initial portfolio. The assets are in Shanghai, Nanjing and Dalian. Singapore is positioning itself as an alternative to Hong Kong in the offshore yuan market, which has been growing rapidly. At the end of August, yuan deposits in Hong Kong totaled 552.3 billion yuan ($87.8 billion), according to the Hong Kong Monetary Authority, jumping fivefold from July 2010, when Chinese authorities relaxed key rules for yuan's circulation in the territory. Singapore has more than 60 billion yuan in bank deposits. Yuan deposits are an important form of liquidity for investors and companies that trade in the currency. One of the people with knowledge of the deal said earlier that ARA decided to denominate the deal in yuan because most of the assets are based in China and it believes in the long-term strength of the currency. Still, Hui Xian REIT shares have fallen since they were listed, and another person cautioned that this IPO may not be an easy sell amid worries about a slowing Chinese economy. Hui Xian REIT closed Tuesday at 4.01 yuan, down 23% from its IPO price of 5.24 yuan. Singapore is going up against London, Tokyo, Taipei, Luxembourg and Kuala Lumpur among others in its effort to become the world's second offshore yuan-trading hub after Hong Kong. In July, the Singapore government said that under an agreement with China, one of the two eligible Chinese banks now operating in Singapore will be authorized as a clearing bank for yuan, also known as the renminbi. A potential expansion of yuan trading into other countries could help with China's goal of making the yuan a widely used currency for cross-border trade and investment. Since late last year, Chinese authorities have taken a number of small steps to foster global use of the yuan, including making it easier for yuan funds to move in and out of the mainland and giving foreign investors greater access to domestic securities markets. Dynasty REIT plans to sell more than one billion units in the IPO and could file its preliminary prospectus to the Monetary Authority of Singapore as early as Tuesday, the people said. ARA said last month that it had received approval from the Singapore Exchange to proceed with the listing of Dynasty REIT. Singapore has a long history of REIT listings. REITs and business-trust offerings accounted for over 95% of the more than $7 billion raised in Singapore's larger IPOs last year, including the $5.5 billion IPO by Mr. Li's Hutchison Port Holdings Trust. Singapore currently has 25 REIT listings with a total market capitalization of more than $34 billion. Hong Kong has eight. Singapore-listed REITs on average give an annual distribution yield of between 6% and 7%, offering an attractive investment in a low-interest-rate environment. Some local banks offer just 0.25% interest on Singapore dollar deposits over a 12-month period.

Hong Kong Golden Week Loses Some Shine (By Te-Ping Chen) - Hong Kong luxury retailers hoping for a Golden Week sales boost were left hanging last week, as sales of watches and jewelry—goods typically coveted by mainland Chinese shoppers—actually dropped compared with last year. The so-called Golden Week, a national holiday period that coincides with the anniversary of China’s founding, is a time when many mainland tourists travel to Hong Kong to indulge in some heavy retail therapy, with the average overnight visitor spending more than $1,100 per trip. This year, though, even as the number of mainland tourists rose, the value of sales in certain luxury sectors actually fell from a year earlier, according to a new survey. “Mainland tourists may be tightening their belts due to the economy,” said Brenda Yeung of the Hong Kong Retail Management Association, whose members represent some 7,000 retail outlets and which commissioned the survey. Nearly one million mainland tourists arrived in Hong Kong over the holiday period this year, up nearly 25% from 2011. But those who were in the market for luxury goods spent with less gusto. Watch and jewelry sellers recorded single- and even double-digit percentage declines in sales values compared with 2011, said Ms. Yeung. Meanwhile, most retail sectors recorded single- or low double-digit percentage growth, compared with mid- or high double-digit percentage growth in the previous two years. Though the association originally expected an 8% jump in retail sales in Hong Kong during the Golden Week, in the end, the boost was probably closer to 5%, said Ms. Yeung. Those findings come on the heels of other disappointing news for the city’s luxury sector. In August, according to Hong Kong’s census and statistics department, sales of luxury goods such as jewelry, watches and clocks dropped by 5% from a year earlier, even as the value of overall retail sales grew by 4.5%. Meanwhile, provisional property statistics released Tuesday by the city’s ratings and valuations department show that the price of luxurious apartments—those bigger than 1,100 square feet—dropped slightly for the first time this year in August as demand has softened. Retail rents experienced heady growth of between 20-25% in the past couple of years, but in the face of the slowing pace of sales, they’ve stayed relatively stable in 2012, says Joe Lin, CBRE’s senior director of retail services. “Two or three years ago, [retailers] were just offering as much as possible in order to get the shop they liked,” said Mr. Lin, adding luxury jewelry brands might have paid up to 50% more than the market rate for prime space. Now that the picture’s changed, he says, “they will no longer do things like that—at least not in the short term.”

New State-level zone to boost ties with Hong Kong, Macao (By Lan Lan) The central government has unveiled a development plan for Nansha New Area, a State-level pilot zone in Guangdong province, to foster closer business ties with Hong Kong and Macao. As the country's sixth State-level zone, Guangzhou's Nansha district will enjoy a slew of preferential policies on tax, land management, financial innovation and industrial development. Fan Hengshan, director general of the Department of Regional Economy under the National Development and Reform Commission, said it would take about a decade to build Nansha into a high-quality living area and an example of modern urbanization with fully fledged public services and facilities. The region will be granted the right to pilot mechanisms to drive growth. For example, the new financial agencies built in Nansha will be encouraged to explore businesses such as futures, credit insurance and financial leasing. It will facilitate custom checks and relax controls on the length of residence of qualified foreigners, and allow qualified medical and construction service institutions and personnel to do business in the area. Located in the southern tip of Guangzhou, Nansha covers an area of 803 square kilometers. It has an obvious geographical advantage as it is only 38 nautical miles from Hong Kong and 41 nautical miles from Macao. The city's green coverage has reached 41 percent, while it has per-capita green park space of 38 square meters. In October 2011, Nansha won a gold medal at the United Nations' 15th Annual International Awards for Liveable Communities. But the award did not come easy. In 2006, China Petrochemical Corporation and Kuwait National Oil Company planned to jointly invest in a petrochemical project in Nansha, which was approved by the NDRC. The project was expected to bring an annual after-tax profit of 3.59 billion yuan ($550 million) after becoming operational. But the project was finally relocated due to environmental concerns. Liu Yong, a researcher at the Development Research Center of the State Council, said the toughest choice facing places such as Nansha is whether to go for growth or safeguard the environment. Nansha will focus on developing the manufacturing and modern service sectors, including shipping logistics, high-tech innovation and leisure tourism, automobiles and shipbuilding. By 2025, the service sector is targeted to account for 65 percent of the area's GDP. The service industry accounted for 43.1 percent of China's total GDP in 2011. Nansha New Area will also pilot economic reforms and explore the economic structural transformation of the Pearl River Delta area. Zhu Xiaodan, governor of Guangdong province, said closer ties with Hong Kong and Macao will be fostered. Cooperation with Hong Kong and Macao will gradually move from processing trade to the service sector, especially producer services and high-end services, said Zhu.

 China*:  Oct 13 2012

China's foreign minister on Thursday described as "completely appropriate'' a decision not to send two top finance officials to global economic talks in Japan, which Beijing is involved in a bitter territorial spat with. China has not given official reasons for the no-shows at the annual meetings of the International Monetary Fund and the World Bank, but foreign minister Yang Jiechi said "the arrangement of the delegation for the meeting was completely appropriate'', AFP reports. Yang made the brief comment in response to a reporter's question during a joint press appearance with German Foreign Minister Guido Westerwelle after the two held talks on their bilateral relations. Yang gave no further comment on the issue. People's Bank of China Governor Zhou Xiaochuan had been due to deliver a lecture on Sunday, the centrepiece of the final day of the annual conference. But the IMF said he will be represented instead by his deputy. The World Bank said it had been told the Chinese delegation would be led by the vice finance minister rather than Finance Minister Xie Xuren. IMF chief Christine Lagarde said on Thursday that China would "lose out'' by not sending Zhou and Xie. She called on Beijing and Tokyo -- embroiled in a spat over a chain of islands in the East China Sea -- to settle their row quickly, adding that ''countries in this region are very important for the global economy''. "We have a lot of substantive issues to discuss, great debates, great seminars organised. I think they lose out by not attending the meeting,'' she said.

Mo Yan: a dark satirist who tells the 'big stories of China' (By Raymond Li) Mo Yan rose from the countryside to write epic works on the country's tumultuous 20th century. Mo Yan (left) has won a raft of awards, including the Mao Dun Literature Prize. Mo Yan has come far from Gaomi, where he was born to a farming family in the early days of communist rule, but his writing has never left. The rural county in eastern Shandong province, with its rich, earthy landscape, has provided the setting for several of his accomplished works, not least his 1987 breakthrough Red Sorghum: A Novel of China - a tale of the brutal violence that plagued the countryside in the 1920s and 1930s. Born Guan Moye, he left school aged 12 to work on a farm during the Cultural Revolution. A stint in a factory followed before he joined the People's Liberation Army in 1976. It was there the future Nobel Prize laureate began writing and studying literature. Early on, he adopted the pen name Mo Yan - "don't speak" - in Chinese. The author often got in trouble as a chatty child and figured it was better to express himself through writing. Crafting a style that has been compared to the magical realism of Gabriel Garcia Marquez, Mo Yan went on to author works, such as Big Breasts and Wide Hips, Republic of Wine and Life and Death are Wearing Me Out. He has written dozens of other novels, novellas, and short stories, often eschewing contemporary issues, instead reflecting on China's tumultuous 20th century with a dark sense of humour. Backdrops for his works include the 1911 revolution that toppled the last imperial dynasty, Japan's wartime invasion, communist China's failed land reforms of the 1950s and the chaos of Mao Zedong's 1966-76 Cultural Revolution. He studied at the PLA's institute of arts and literature and later at Beijing Normal University, where he received a master's degree in literature and art. His first short story was published in 1981. Chinese literary expert Eric Abrahamsen called Mo Yan "a great writer" who tells "the big stories of China". "So many of modern China's stories are political in nature, simply because politics has shaped so much of recent Chinese history," said Abrahamsen. "He's also very canny about what can and can't be written." His latest novel, 2009's Frog, is considered his most daring yet, due to its searing depiction of China's "one child" population control policy and the local officials who enforce it with forced abortions and sterilisations. The heroine of the novel is a midwife who is an enthusiastic advocate of such practices. "A writer should express criticism … at the dark side of society and the ugliness of human nature, but we should not use one uniform expression," Mo said, according to China Daily. Although the fantasy and satire of Mo Yan's books have been branded "provocative and vulgar" by state media, and resulted in an occasional ban, much of his work has remained in print. Mo Yan's ability to escape the censors has made him stand out among Chinese authors. But his support for the practices that have led to the banning - and even imprisonment - of some of his peers has made him a controversial figure. Mo Yan, one of China's leading writers of the past half-century, yesterday won the Nobel Literature Prize for his writing that mixes folk tales, history and the contemporary. "Through a mixture of fantasy and reality, historical and social perspectives, Mo Yan has created a world reminiscent in its complexity of those in the writings of William Faulkner and Gabriel Garcia Marquez, at the same time finding a departure point in old Chinese literature and in oral tradition," the Swedish Academy said. This is the first time a Chinese national and the second time a Chinese- born writer has won the prize, after Gao Xingian, who received French citizenship in 1987, was honored in 2000. Mo Yan, 57, is perhaps best-known abroad for his 1987 novella Red Sorghum, a tale of the brutal violence that plagued the eastern China countryside - where he grew up - during the 1920s and 30s. The story was later made into an acclaimed film by leading Chinese director Zhang Yimou, and won the Golden Bear at the Berlin film festival in 1988. The Academy's permanent secretary, Peter Englund, said the Academy had spoken to Mo Yan by telephone and quoted the author as saying he was "overjoyed and terrified" at being given the prize. Mo Yan, whose real name is Guan Moye, has written dozens of novels, novellas, and short stories, generally eschewing contemporary issues and instead looking back at China's tumultuous 20th century. Mo Yan grew up in Gaomi in Shandong province, the son of farmers. As a 12-year-old during the Cultural Revolution he left school to work, first in agriculture, later in a factory and in 1976 he joined the People's Liberation Army and began to study literature and write. He chose the pen name Mo Yan, which means "Don't speak," and his first short story was published in a literary journal in 1981.

German Foreign Minister Westerwelle due in China for talks (By Agence France-Presse in Berlin) German Foreign Minister Guido Westerwelle will travel to China on Wednesday with a delegation of major business figures to mark 40 years of diplomatic relations between the countries, a spokesman said. The visit, running to Saturday, will include a “strategic dialogue” with his counterpart Yang Jiechi and Vice-Premier Li Keqiang on issues including Syria, Iran’s nuclear programme, trade ties, human rights and the euro zone crisis. North Korea and fears over an escalation of a dispute between Tokyo and Beijing over a Japan-administered island chain that both countries claim will also figure on the agenda, spokesman Andreas Peschke added. Westerwelle will also meet with independent bloggers and open a new German consulate in the northeastern city of Shenyang, the country’s fifth in China. Westerwelle will have 11 business executives from Europe’s top economy on board. “Germany and China have enjoyed 40 years of increasingly close diplomatic ties,” Peschke told reporters. “Integrating China into an ever-more globalised world order with new power centres in Asia, Africa and Latin America is one of the key questions of our time.” Diplomatic sources also said Berlin was keen to “feel the political pulse” in Beijing ahead of a once-in-a-decade transition next month, when President Hu Jintao will cede his position as head of the Communist Party to Vice-President Xi Jinping. They added that Westerwelle sought to improve the working conditions of foreign correspondents in China after complaints of state interference. It will be Westerwelle’s second visit to China this year, following talks between the two governments in Beijing in August led by German Chancellor Angela Merkel and China’s premier, Wen Jiabao. With the three-year-old eurozone debt crisis showing signs of spreading to China, the world’s second largest economy, Beijing views Germany as a key player in tackling the problem. Germany is China’s top trade partner in the European Union with nearly half of all European exports to China coming from Germany. Meanwhile, nearly a quarter of all EU imports from China land in Germany. Bilateral trade between the two powers reached US$169 billion last year, an 18.9-per cent rise on the previous year.

Sky is the limit for global ticket firms (By Charlotte So) Airline booking giants Amadeus, Galileo and Abacus are scrambling for their share of the mainland market after Beijing scraps monopoly. Mainland airlines will add 4,583 planes to their fleets by 2030 while the number of passengers has grown an average 15.3 per cent. Beijing's decision to break the monopoly of state-controlled TravelSky Technology in online air ticket sales has put foreign players in a dogfight for the robust and thriving market. Before the change on October 1, TravelSky, which is owned by the big four state-backed airlines - China Southern Airlines, China Eastern Airlines, Air China and Hainan Airlines - was the only computerised reservation system for flight bookings and ticketing on the mainland. It generated 2 billion yuan (HK$2.45 billion) in sales a year. TravelSky is one of the highly regulated businesses that Beijing has promised to open up since it joined the World Trade Organisation in 2001. After more than a decade of waiting, foreign travel companies, including European-based Amadeus, United States-based Galileo and Abacus, which is owned by Cathay Pacific Airways, Dragonair and Singapore Airlines, will get a foothold in the second-largest air traffic nation in the world. These companies have so far been allowed to process only the bookings for overseas carriers, which account for just 4 to 5 per cent of total bookings. About 318.6 million reservations were made on domestic and international airlines on the mainland last year. "It's a very exciting moment for us," said Winnie Lau, general manager at Abacus Distribution Systems (Hong Kong). For international carriers alone, the number of bookings was projected to reach 16 million this year, compared with 12.83 million last year, she said. Hong Kong's projected booking volume is 11.4 million. Abacus, which has a 75 per cent market share in Hong Kong, Taiwan and Macau, is to ramp up its operations in Beijing, Shanghai, Shenzhen, Guangzhou and Chengdu by hiring more staff to handle the expected increase in business. It has appointed Ooi Chee Teong as the new general manager on the mainland, working alongside chairman Zhai Fuhua, an ex-official of the Civil Aviation Administration of China. "We expect to see double-digit growth in our segment of flight bookings on foreign carriers in 2013," Lau said. Amadeus China, a subsidiary of Amadeus, one of the world's largest global distribution system, also said it was preparing for the huge market on the mainland. China is set to be the largest travel market by 2015. "Travel agencies are happy to have their hands on the most advanced tool to help them searching for the air fares in a more efficient way," said Bart Tompkins, the newly appointed managing director for Amadeus China. Tompkins spearheaded the company's office openings in Russia and Japan before relocating to Beijing last month. Amadeus had invested €2 billion (HK$20 billion) over the past eight years in upgrading their system to be more timely and reliable, Tompkins said. The company will ramp up its three offices on the mainland and reach out to other cities when international carriers expand their network on the mainland. Amadeus and Abacus said it would take four to five days to train agents and to familiarise them with their systems. A new challenge will be the limited supply of skilled operators and Lau foresees a scramble for the relatively small pool of experienced people. Tompkins said the size and the complexity of the agent network meant it would take a while for the newcomers to gain a meaningful share of the market.

Mo Yan, born on February 17, 1955, is a renowned Chinese author. He is the winner of the Nobel Prize for Literature in 2012. Mo is best known in the West for two of his novels which were the basis of the film Red Sorghum. He was appointed a deputy chairman of the quasi-official Chinese Writers' Association in November 2011.  Chinese writer Mo Yan, now the 2012 Nobel Literature Prize winner, seen on July 19, 2010 on a TV series in Ningbo, east China’s Zhejiang province. After Nobel, Mo Yan’s Books Should Win Wider Audience - Chinese writer Mo Yan was named the winner of the Nobel Prize for literature on Thursday. If past recent winners are any indication, Mo Yan’s previously published books will now find plenty of new readers. In the year since Swedish poet Tomas Transtromer won the 2011 Nobel Prize for literature, his 2006 book, “The Great Enigma: New Collected Poems,” sold about 17,000 copies in the U.S. in all formats. Until the prize was announced, the book had sold about 3,000 copies. “It’s a really great performance for a book of poetry,” said Jeffrey Yang, an editor at New Directions Publishing Co. who acquired the book.

Huawei, ZTE hit back at 'biased' US market report (By Diao Ying in London, Shen Jingting in Beijing and Li Xiang in Paris) The US congressional report against Huawei and ZTE is based on rumors and aimed at impeding competition from China, according to the companies. Both Huawei and ZTE claim to have been open and transparent during the year-long investigation and said they were disappointed after the House of Representatives' intelligence committee warned American companies to avoid buying from them. The report, unusual in that it is a government action against two individual companies from China in a highly competitive global industry, reflects political anxiety at the rise of Chinese companies operating in the US. It "employs many rumors and speculation to prove non-existent accusations", Huawei, the world's second-largest network equipment vendor, said in a statement posted on its website. "We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market." David Dai, a spokesman for ZTE, said on Wednesday, "We tried to mitigate the doubts of the US by offering objective third parties to test our credibility during the investigation. We were disappointed with the result, although it did not surprise us." According to Wu Hequan, an academician at the Chinese Academy of Engineering, US bias against Chinese telecom companies is deep-rooted and not easy to overcome. "The frequent charges and accusations from the US side have already tarnished the market's reputation as an open and fair one," he said. Huawei and ZTE, which are both still at an early stage of development, should not give up on the lucrative US market completely, he added. "When the dust settles, time may tell people that Chinese companies are trustworthy, but they should insist on being there in the first place," Wu said. Chinese telecommunication companies, including Huawei and ZTE, have gained global market share rapidly in recent years and that has caused "admiration, jealousy, and doubt" in some quarters, said Dai. Internet and communication technologies are developing so rapidly that being part of the industry is "like sailing against the tide", said Dai. "You drop out very fast if you don't adapt to changes." An example of this is the decline of Finnish company Nokia, the industry's former main player. It took less than five years for it to fall from the world's No 1 to a loss making company in 2012. Unlike established Western telecommunication companies, both Huawei and ZTE started from scratch and have been able to adapt quickly to change. Like most Chinese manufacturers, they are hard working and diligent. These qualities enable them to seize opportunities rapidly during a period of industry reshuffle, according to Dai. Such rapid success would not be possible in traditional industries, according to Dai. "If we were in the energy industry there is no way that we could capture the market so fast," he said. Most European countries are far more open to both companies and they have participated in many infrastructure projects there. Huawei is well established in the UK, where it provides telecommunication equipment to key domestic companies such as British Telecom. And in Germany ZTE is involved in building the national broadband network. Although some media reports have suggested that European countries could follow the lead of the US in restricting both companies' activities, Dai said Europe in general is open to them. Despite the wide media attention given to the report its direct impact on the companies is small, according to Dai. It mainly talks about systems products in the US, while the bulk of their profits there are from selling end products such as mobile phones, he said. ZTE's US sales amounted $400 million in 2011. Systems products mentioned in the report accounted for just $30 million or this, less than 10 percent of total US sales, he said. The company's overall US performance has been good, he added. "Overall the decision does not influence our business much," he said. "The US remains a very important market for us and we will continue to communicate with them."

Lenovo surpasses HP to lead PC market (Xinhua News Agency) China's IT giant Lenovo has surpassed US-based Hewlett-Packard, or HP, as the world's largest PC maker in market share, a research firm report shows. According to the third quarter estimate report released by the US-based Gartner on Wednesday local time, Lenovo's PC market share is estimated to surge 9.8 percent year on year to 15.7 percent, 0.2 percentage point higher than that of HP. Research firm IDC said in a research report that Lenovo's PC sales volume is expected to jump 15.7 percent to a record high of 13.8 million in the third quarter, but its market share will remain 0.2 percentage point below HP's. It said Lenovo has been the PC maker with the fastest growth over the past three consecutive years. "Although competition was fierce in the PC market, I firmly believe there is still room for continuous profit growth," said Yang Yuanqing, chairman and CEO of the Lenovo Group. Yang said becoming a leading enterprise in the PC market is just a milestone during the company's development, as it is also looking to become a leader in other markets, such as the smartphone market.

US upholds high tariffs on solar panel imports (By Ariel Tung in New York) Chinese companies hope ruling can be reversed by ITC. The US Commerce Department has affirmed steep tariffs ranging from 18.32 percent to 249.96 percent on Chinese solar panel imports, finding that their production was made artificially cheap because of unfair subsidies from China's government, resulting in "dumping" in the US market. For some of the Chinese companies, the anti-dumping tariffs are slightly lower than preliminary tariffs announced in May, but anti-subsidy duties imposed on these companies have more than tripled. Wuxi-based Suntech Power was given a tariff of 31.73 percent, and Changzhou-based Trina Solar Energy received a tariff of 18.32 percent. Anti-subsidy duties of 14.78 to 15.97 percent were imposed on the Chinese producers. Although the Commerce Department announced its final decision on Wednesday, the International Trade Commission is conducting its own investigations. If the ITC found that the Chinese manufacturers have not harmed the US solar-cell industry, it has the authority to reverse the ruling. It is expected to make its decision on or before Nov 23. Some industry insiders said the tariffs could worsen already tense trade relations between China and the US. "It will inevitably lead to a rhetorical rebuke from Beijing and a reminder that China is challenging US anti-subsidy policy at the World Trade Organization and in US courts," said White & Case international trade attorney Scott Lincicome, author of a new Cato Institute paper on US subsidy. The tariffs ruling on China was brought on by SolarWorld Industries America Inc, a US subsidiary of German producer of photovoltaic cells and modules. Last October, SolarWorld filed a complaint to the Commerce Department, claiming that Chinese manufacturers were able to sell their goods cheaply using subsidies from their governments. While making his case last week at a hearing conducted by the ITC in Washington, Gordon Brinser, president of SolarWorld's US business, claimed China's subsidies caused prices of photovoltaic cells and modules to fall sharply. The company cannot compete "with the Chinese government or with the Chinese producers that fail to play by the rules", he told the commission. Jigar Shah, president of Coalition for Affordable Solar Energy (CASE), said it was "a bad decision" to impose anti-dumping duties. The coalition was formed last year by a group of US solar developers and installers to oppose the duties. "The tariffs will not help SolarWorld," Shah said. "Many of the Chinese mainland manufacturers are now importing solar cells from Taiwan, Malaysia and elsewhere." The tariffs only apply to solar cells and modules made in the Chinese mainland. Marco Mangelsdorf, co-founder of ProVision Solar Inc in Hawaii which designs and installs rooftop solar-panel systems, said his business has been "hurt deeply" by the solar tariffs levied on China. In June, he received a tax bill from US Customs, saying that he owed more than $138,000 for having purchased Chinese-made modules early this year. The penalty is 250 percent more than what he paid for his supply of panels from China. "The tariffs are not good for anybody," he said. "The trade relationship between China and the US will definitely go down." Some critics say that SolarWorld, the largest producer of solar panels in the US, has managed to build its business due largely to financial support from Germany and the US. Barry Broome, president and CEO of Greater Phoenix Economic Council, said SolarWorld's claim is hypocritical and SolarWorld is heavily incentivized in its country. Between 2003 and 2011, the German manufacturer received more than 137 million euros ($176 million) in government aid, according to the Center for Solar Research. "They are not making money. It's their last shot to survive. The tariffs war is not about 'my subsidies are better than your subsidies'. We have to get the pricing down. That's the goal. If we get cheap solar, the community can benefit from it," Aaron Chew, a senior analyst at investment firm Maxim Group in New York. Shah expresses hope for the Commission's final ruling in November. "It's a very difficult case but I think the ITC will be more likely to side with our position."

Hong Kong*:  Oct 12 2012 

A woman doctor at the center of a blood transfusion scandal that made four women seriously ill with septic shock is being questioned by police. The doctor, surnamed Mak, once worked as a consultant at Asia Pacific Stem Cell Science in Sha Tin, where it is alleged she gave more than 40 intravenous injections to clients of the DR beauty center in Causeway Bay. Two of the four women are still in critical condition, a third is serious and the other is stable. Police investigators want to ascertain if the doctor knew what fluid was being injected into the women. Police and Department of Health officials have raided the company's laboratory and taken away syringes and medical waste in the past few days. Police will also contact Stephen Chow Heung-wing, the doctor-founder of DR beauty center, soon. This came as the Medical Association urged the government to introduce legislation to supervise medical procedures at beauty parlors. Last night, the association held a meeting to discuss the issue and hopes to make recommendations to the government on how to prevent such incidents. The association's president Gabriel Choi Kin said: "We hope that the government can strongly regulate medical procedures conducted at beauty salons as many beauty treatments, including facial laser treatment to reduce clients' facial wrinkles, are not conducted by medical professionals. "It will pose a high risk to customers if the beauty salons' staff fail to perform the treatment appropriately." Health authorities said on Sunday highly resistant bacteria related to the tuberculosis germ - called mycobacterium abscessus - have been found in the four women taken ill with septic shock. Secretary for Food and Health Ko Wing-man said last night that the police and the Department of Health are trying to establish the relationship between DR and Asia Pacific Stem Cell Science. Any legislation to regulate beauty salons would depend on the outcome of the investigations, he added. A total of 44 people have had the treatment, known as DC-CIK, for cosmetic reasons. The experimental procedure is said to prolong the survival rate of cancer patients after surgery, radiation or chemotherapy, and involves a transfusion of specially processed blood. The mortality rate from septic shock or bacteria in blood can reach 50 percent but mortality in those infected with mycobacterium abscessus is much higher.

Few flats available for HK$2m or less, except in Tuen Mun and Yuen Long (By Sandy Li) Price rises this year mean the only flats available for HK$2 million or less are in old buildings in Tuen Mun and Yuen Long. With the prices of Hong Kong homes at all-time highs, people hoping to enter the market with budgets of HK$2 million or less are finding the search increasingly difficult. Options available at this price have been narrowed down to small flats in Tuen Mun and Yuen Long, mostly in buildings that are more than 30 years old and have no lifts. "Tuen Mun used to be known as a haven for first-time home buyers as flat prices in the area lagged behind increases in the rest of Hong Kong," said Pun Ka-yan, business director of Many Wells Property, an agency that focuses on the Tuen Mun residential market. "But the number of flats priced at HK$2 million or below is falling sharply." According to the firm's research, there are at present 230 flats on sale in the area at HK$2 million or less; down from 1,284 in January this year. The flats include Home Ownership Scheme units and public housing flats on which owners have settled land premiums and that are now available for sale. Compared with a 15.7 per cent rise in average home prices in Hong Kong so far this year, the firm's study found that prices in Tuen Mun have soared by more than 41 per cent, from HK$3,307 per square foot to HK$4,676 per sq ft as at October 7. A 359 sq ft one-bedroom flat in the Lee Bo Building was now on offer at HK$1.8 million, said Pun, and the drawcard supporting the price in the 30-year-old building was its location - just 15 minutes by bus to the nearby On Ting station on the MTR Light Rail system. Home seekers who want a bigger flat at this price level would have to hunt among Home Ownership Scheme flats on which owners had paid the required land premiums and were therefore now free to sell, she said, citing the case of a 496 sq ft flat in 21-year-old Siu Hin Court that is on offer at HK$1.8 million. Bill Lau, a sales executive at property agent Yearsfull, which focuses on the Yuen Long home market, said most flats priced at about HK$2 million would be sold very quickly. "At the moment there are about 10 flats for sale in this price range, compared with earlier this year when there were lots of flats for sale priced at about HK$1.5 million," he said. Flats in the area were popular among investors who could rent out a one-bedroom flat for HK$6,000 a month, Lau said. Patrick Chow, head of research at Ricacorp Properties, said only a handful of flats priced for sale at HK$2 million or below were available, mainly in older buildings in districts such as Shau Kei Wan, To Kwa Wan and Sham Shui Po. "The buildings are likely to be 40 to 50 years old," he said. Data from Ricacorp Properties show that 19,643 flats priced at HK$2 million or below were sold last year, at a total value of HK$15.35 billion, which accounted for 26 per cent of all home sales in the year. By comparison 51,961 flats priced at HK$2 million or below changed hands in 2010, and the total value of HK$76.90 billion accounted for 42 per cent of all home sales.

Old-age allowance will be inflation-adjusted, says welfare chief (By Patsy Moy) The monthly payment and means test for a new old age allowance will be adjusted for inflation as early as February, the welfare chief said on Wednesday morning. Speaking on a radio programme, Secretary for Labour and Welfare Matthew Cheung Kin-chung defended the widely criticised means test for the new HK$2,200 old-age allowance. To qualify for the plan, a single person cannot have assets of more than HK$186,000, or earn more than HK$6,600 a month. For a couple, the monthly income limit is HK$10,520 and the asset limit HK$281,000. Cheung said the HK$186,000 cap will probably rise to more than HK$190,000 next year due to inflation. The monthly income cap and dole amount will also rise, he said, providing no figures. The asset cap will be adjusted for inflation using the Social Security Assistance Index of Prices, which it uses to adjust CSSA welfare payments to reflect changing prices. “The new subsidy will be like other welfare schemes in using this index,” Cheung said. “So we believe the asset limit for the new special subsidy will rise to over HK$190,000 by February.” He insisted the means test is necessary to focus public resources on people who are truly needy – despite demands from various political parties and unions that it be shelved for people over age 70. The new subsidy should not be linked with a universal pension scheme that many lawmakers are promoting, Cheung said. “The new subsidy and a pension scheme are two completely different things and should not be mixed up.”

Lawmakers sworn in amid protests in Legco (By Lai Ying-kit) Newly elected legislators attend the first Legco meeting of their four-year term on Wednesday. Seventy newly elected lawmakers were sworn in as the Legislative Council began its new four-year term on Wednesday morning. The lawmakers took turns before Kenneth Chen Wei-on, secretary general of the Legco Secretariat, pledging their loyalty to the People’s Republic of China and the Hong Kong government. After the swearing-in, the lawmakers re-elected veteran Beijing loyalist Tsang Yok-sing as Legco’s president, or speaker. He had been expected to win with ease since his backers in the pro-establishment camp hold almost two-thirds of the seats. Tsang received 43 votes, beating challenger and Civic Party leader Alan Leong Kah-kit who had 27 votes. Legco adjourned until its next meeting, scheduled for next Wednesday. 香港特別行政區第五屆立法會10日舉行首次會議,全體70名議員參加了宣誓就職儀式,曾鈺成再次當選為立法會主席。  據新華社報道,會議首先舉行香港特區第五屆立法會議員宣誓就職儀式。按照香港基本法規定,立法會議員在就職時必須依法宣誓擁護《中華人民共和國香港特別行政區基本法》,效忠中華人民共和國香港特別行政區。上午11時許,參加當天宣誓的全體70名議員逐一上臺,在傳媒和公眾的見證下,宣誓擁護《中華人民共和國香港特別行政區基本法》,效忠中華人民共和國香港特別行政區,盡忠職守,遵守法律,廉潔奉公,為香港特別行政區服務。隨後,議員們以不記名投票方式選舉立法會主席,曾鈺成以43票當選為第五屆立法會主席。這是他繼上屆當選為主席後連任立法會主席。曾鈺成當選後表示,自己會盡忠職守,與各位議員一起做好工作,讓立法會能夠有效履行憲制責任,不負市民所望。曾鈺成1947年5月生於廣州,1983年獲香港大學教育碩士學位。他是香港政治團體民主建港協進聯盟成員,曾出任香港特行政會議成員、香港機場管理局董事會成員、香港特區廉政公署投訴委員會委員等公職,2008年10月當選為香港特區第四屆立法會主席。立法會是香港特別行政區的立法機構。香港特區第五屆立法會於今年9月選舉產生,由70名議員組成。所有議員均由選舉產生,其中地方選區和功能界別各通過選舉產生35名議員。按照《中華人民共和國香港特別行政區基本法》,第五屆立法會議員任期至2016年9月30日結束,任期四年。

 China*:  Oct 12 2012

Japanese carmakers report Sept sales as 'disastrous' (By Li Fangfang) Japanese automakers reported a "disastrous" decline in sales in September in the world's largest vehicle market as rising anger over Japan's illegal "purchase" of China's Diaoyu Islands kept consumers away from their showrooms. Toyota Motor Corp said on Tuesday that its September sales in China dropped 48.9 percent year-on-year to 44,100 units, the biggest decline since January 2008. Honda Motor Co also reported that its monthly sales dived 40.5 percent year-on-year to 33,931 units in September, the lowest figure since May 2011. According to Dongfeng Motor Corp, the Chinese partner of Nissan Motor Co, sales of the Japanese brand's made-in-China vehicles decreased 34.6 percent from a year earlier, while Suzuki Motor Corp said its sales in China dropped 42.5 percent year-on-year. On Friday, Mitsubishi Motors Corp announced a sales decline of 63 percent in September, while the month saw Mazda Motor Corp's China sales drop 36 percent. "Japanese automakers and their suppliers face a tough future in China in the immediate aftermath of the protests that took place in mid-September," said Namrita Chow, senior analyst of IHS Automotive. Nissan, Toyota, Suzuki and Mitsubishi had all previously been enjoying sales growth in China, but the next few months are likely to see severe declines which could seriously harm their prospects of meeting their 2012 sales targets. The outlook for Japanese carmakers in China "does not augur well, with IHS Automotive forecasts expecting an immediate drop in sales and production amid concerns that the situation may extend for a longer period than previously thought", Chow added. IHS Automotive currently estimates that output and sales for Japanese automakers in China will be cut by 200,000 units this year, amounting to around 20 percent of sales of Japanese branded vehicles in China. In 2013, IHS Automotive expects a fall of around 100,000 units based on the two countries finding a peaceful resolution in the immediate future. "Their (Japanese automakers') future depends on how quickly diplomacy can solve the situation," said Chow. "Should the situation spiral and Japanese OEMs (Original Equipment Manufacturers) start cutting output even more, lost volumes will significantly increase." China has been the most important market for Japanese automakers since 2005. In 2011, Nissan's sales in China accounted for about 27 percent of its global total, while Toyota sold about 12 percent of its vehicles in China. The world's largest automobile market also accounted for 20 percent of Honda's global sales, while the figure stood at 18 percent for Mazda. Statistics from consulting firm AlixPartners show that by the end of August, Japanese automakers' market share in China dropped from 21.6 percent in 2011 to 21.2 percent, while German brands boosted their holding from 21.3 percent in 2011 to 23.3 percent. South Korean vehicle producers saw their market share in China increase by 0.3 percentage points to 9.3 percent. For the first time since 2005, Japanese automakers have lost their leadership in China's automobile market. German luxury vehicle brand BMW AG reported 55 percent year-on-year sales growth in September, with sales of its lifestyle brand Mini surging by 121 percent. Also from Germany, Audi AG's sales in China increased 20.5 percent year-on-year in September while Mercedes-Benz sold 10.6 percent more vehicles than last year in the country. General Motors, the largest foreign automaker in China in terms of sales, said on Monday that it sold an all-time high of 244,266 vehicles in its biggest market in September, an increase of 1.7 percent from September 2011. Hyundai Motor Co and its affiliate Kia Motors Corp said that their combined sales increased 9.5 percent to a record high in September.

China Voice: U.S. Congress won't let business be business (By Liu Jie) The U.S. Congress's latest allegation regarding China's tech firms makes it clear that doing business in America is not 100 percent about business, but has to battle with willful and malicious suspicion and deeply-rooted political prejudice. The Congress said Huawei and ZTE are a threat to U.S. national security based on previous cyberattacks that came from China. The lengthy report, however, full of vacant and untenable accusations, could neither prove that Chinese companies are involved in espionage nor that their normal contact with the government has jeopardized the security of the U.S. information system. Threatening national security is enough to get any foreign business out of the U.S., as it outweighs everything else, no matter how lucrative the business may be for the country. But when such horrific and sensational charges become a convenient tool to block competitive foreign companies and gain political favor during the election season, it only serves to undermine the credibility of the U.S. Congress and downgrade the U.S. business environment for Chinese investors. The U.S. Congress concluded its investigation and released its report at a critical time for Huawei, as the company is gearing up to expand its presence in the United States. In anticipation and fear of Huawei's huge potential, as the company had run astonishingly successful in 140 countries in the world with their quality but inexpensive products, the congressmen, on behalf of the intertwined domestic interest groups, certainly know how disastrous the the report will mean for Huawei, the world's second largest telecom equipment maker whose overseas business generates 70 percent of its annual income. It suggests the U.S. fear of made-in-China products has spread from labor-based consumer goods to technology-intensive equipment that could threaten the American core competence. Chinese investors have been holding the notion that complying with business norms will be good enough to smooth their expansion in the United States. However, the Huawei case alerts them such a notion is their wishful thinking and naive illusion. Persistent political bias is the invisible hurdle they have to overcome. The U.S. government has a tradition of giving the cold shoulder to Chinese investors, as a number of Chinese companies, state-owned and private, have been blocked from acquisition deals due to being painted as national security threats. Such an indiscriminate labeling also reveals an absurd and bigoted belief that business heavyweights from China are nothing more than a frightening behemoth, as if the McCarthy-era Communist witch-hunting of the 1950s still prevails today. Treating Chinese companies with strong prejudice based on a selected ideology looks outdated and awkward at a time when free trade and investment have brought unprecedented benefits to the world. In marked contrast to Huawei's reception in the United States, the company received approval for a two-billion-U.S.-dollar investment and procurement plan in the United Kingdom last month. Discarding bias in favor of pursuing a win-win situation is not impossible, but has already taken place.

Iron ore at 10-week high on China restocking, stimulus hopes (By Reuters in Singapore) Chinese steel futures rose to two-month highs on Wednesday, driven by hopes of more stimulus measures from Beijing to aid a slowing economy and backing further gains in iron ore prices that have leapt by more than 12 per cent in the past two days. Chinese steel producers, the world’s biggest buyers of iron ore, returned to the spot market this week hungry for the raw material after last week’s National Day holiday, helping push iron ore prices to their highest in 10 weeks. But traders said some buyers are turning cautious given the rapid rise in prices, also abetted by fewer available spot cargoes, suggesting the price rally could soon hit a wall if steel demand does not take off. The most briskly traded rebar contract for January delivery on the Shanghai Futures Exchange peaked at 3,699 yuan (US$590) per tonne intraday, its highest level since Aug. 13. It closed up 0.4 per cent at 3,682 yuan. Benchmark iron ore with 62 per cent iron content climbed 6.2 per cent to US$117.20 a tonne on Tuesday, its highest since August 1, according to data provider Steel Index. Iron ore has now gained 12.5 per cent over the past two days. “The price recovery is due to expectations of more policy measures by China to boost consumption growth including steel as well as restocking,” said Helen Lau, senior commodity analyst at UOB-Kay Hian in Hong Kong. Apart from cuts in interest rates and banks’ reserve requirement to boost liquidity, China approved 1 trillion yuan worth of infrastructure projects last month to lift a slowing economy. China is also likely to start a new round of incentive policies to encourage vehicle purchases in rural areas, the official China Securities Journal reported on Wednesday. Prices for spot iron ore cargoes have been rising since the Chinese returned to the market on Monday. Miner BHP Billiton sold a cargo of 57.7-per cent grade Australian Yandi iron ore fines at US$108.85 a tonne on Tuesday, up from US$106.65 on Monday, traders said. Rio Tinto sold two cargoes of 61 per cent-grade Australian Pilbara blend fines at US$119.01 per tonne, traders said, exceeding the price for the higher 62-per cent grade. Vale is selling on Wednesday a 90,000-tonne cargo of 63.2-per cent grade iron ore after selling a shipment with the same specifications at 121.67 per tonne on Tuesday, said a Singapore-based trader. Rio Tinto is holding a tender for 75,000 tonnes of 64.5-per cent grade material. BHP Billiton is offering another 100,000 tonnes of Yandi fines and 90,000 tonnes of 61-per cent grade MAC fines, the trader said. “Steel mills were quite active in restocking over the past two days, but the sentiment has been waning a little bit since yesterday and traders are reluctant to book forward cargoes at the current high levels,” said a Shanghai-based iron ore trader. “We planned to buy some, but we are still cautious.” Lau at UOB-Kay Hian said the current iron ore rally is mostly sentiment-driven and could stall if China’s steel demand disappoints again. “It has to be supported by a real recovery in steel demand to be sustainable,” she said.

Zhou Xiaochuan, governor of the People's Bank of China. China central bank chief pulls out of IMF meeting amid Diaoyu row - what appeared to be a snub to host Japan (By Reuters in Tokyo) The International Monetary Fund said on Wednesday that China’s central bank governor will not lead the Chinese delegation at the IMF’s semi-annual meeting this week, in what appeared to be a snub to host Japan. Zhou Xiaochuan’s failure to attend the meeting follows a deterioration in relations between China and Japan over their competing claims to sovereignty of some islands in the East China Sea. The row has been marked by violent protests and calls for boycotts of Japanese products in China. Japanese car makers, including Toyota Motor, later reported a tumble in auto sales in the world’s biggest car market. If he [Zhou] is not coming, it is regrettable that a representative of the Chinese authorities does not participate in this important international meeting in Tokyo. We were informed two days ago that Governor Zhou’s schedule might require him to cancel his lecture in Tokyo,” an IMF spokeswoman said. “It has now been confirmed that his deputy Yi Gang will represent him.” Zhou had been set to deliver what amounted to a closing keynote lecture on Sunday. A Japanese government official said Zhou’s absence would be “regrettable”. The IMF comments confirm a report on Tuesday by Xinhua that China’s delegation will not be led by its most senior finance officials. According to Chinese protocol, only the most senior officials usually lead such trips. China’s delegation will be led by Yi Gang, vice head of the People’s Bank of China, and Vice Finance Minister Zhu Guangyao, Xinhua said. The disputed group of islands, called Senkaku in Japan and Diaoyu in China, are located near rich fishing grounds and potentially huge oil and gas reserves. Taiwan also asserts its sovereignty over the uninhabited islets. Japan is scheduled to host the IMF and World Bank annual meetings for the first time in nearly half a century. About 20,000 people are expected to attend the event, making it one of the world’s largest international conferences. “If he [Zhou] is not coming, it is regrettable that a representative of the Chinese authorities does not participate in this important international meeting in Tokyo. At all events, Japan-China economic relationship is very important and Japan will continue to communicate with China from a broader standpoint,” said a Japanese government official. Earlier this week, Xinhua also reported that China’s state-owned banks Industrial and Commercial Bank of China (ICBC) , Bank of China , China Construction Bank and Agricultural Bank of China , will not attend the IMF and the World Bank meetings. Tokyo and Beijing have traded increasingly sharp words in the dispute, which has seen both countries send patrol boats to waters near the disputed islands, raising concerns that an unintended collision or other incident could escalate into a broader clash. US Secretary of State Hillary Clinton urged China and Japan to let “cool heads” prevail in the dispute. Japanese Prime Minister Yoshihiko Noda said in late September that his country will not compromise on the islands, saying they were “an inherent part of our territory in light of history and also under international law.” Chinese state media say the islands have been “sacred territory since ancient times”. The dispute has bubbled as several Asian governments have argued over sovereignty of islands in the South China Sea. But the Senkaku/Diaoyu row escalated in September when Japan bought the islands from their private owner to prevent fiery nationalist politician from buying them.

89% of US firms in China 'in profit' (By Tan Yingzi in Washington) Amid slow growth in much of the world, China remains a bright spot for US companies, with nearly nine out of 10 that do business in the country turning a profit in 2011, according to a survey issued on Wednesday. Two-thirds of companies interviewed by the US-China Business Council said revenue from their operations in China grew by 10 percent or more in the past year. Three-quarters said profit margins from China operations were the same as or better than their company's overall margins. The Washington-based council represents about 240 US companies selling goods and services in China, including nearly all US-based multinational corporations. The figure of 89 percent of US companies reporting a profit from business in China was the highest total since the council in 2006 began surveying its member companies for its annual China Business Environment Survey. The report is a gauge of business conditions and challenges in what has become the world's second-biggest economy. According to the USCBC, China is a $250 billion market for US companies. Fully 94 percent of companies report that they're doing business there mainly for access to the Chinese market, not to develop an export platform, the report said. According to the US Trade Representative's Office, China was the third-biggest market for US exports in 2011, totaling $103.9 billion, up 13 percent ($12 billion) from the previous year, and 539 percent higher than in 2000. US exports to China accounted for 7 percent of all US exports in 2011. "Despite market growth, company optimism is tempered by rising costs, domestic competition, and continuing regulatory and market-access barriers," USCBC President John Frisbie said. "Although 90 percent of respondents said they are optimistic or somewhat optimistic about business prospects over the next five years, a sizable number - 45 percent - said they are less optimistic than three years ago." Recruitment and retention of employees remains the top challenge for US companies operating in China, while the ability to obtain business licenses ranks second. Competition from Chinese companies, both State-owned and private, comes in third. Though "cost increases" is the fourth-most-cited challenge in the survey, companies said they were the main constraint on their ability to increase profits. Other challenges included enforcement of intellectual property rights, uneven local enforcement and implementation of laws and policies, and investment restrictions. Despite rhetoric during the US presidential campaign, the Chinese government's policies on currency and exchange rates again was not one of the top 25 of challenges cited in this year's council survey, suggesting that the issue is not seen as curbing US companies' competitiveness in China. Some US lawmakers and economists have criticized China of deliberately undervaluing the yuan currency to reduce the cost of exporting Chinese goods and thereby gain an unfair advantage in foreign markets. Republican presidential challenger Mitt Romney has said he would label China a currency manipulator on his first day in office if elected, and recently cited as part of his economic-recovery plan "confronting nations like China that cheat on trade and steal American jobs". "This is a clear reminder to all US-China commercial stakeholders that we need to focus on the issues that matter most and develop effective solutions to the top challenges facing American companies doing business with China," Frisbie said. The yuan has appreciated 40 percent against the dollar after adjusting for inflation since China initiated currency reforms in July 2005, according to the US Treasury Department. The US-China Business Council advised US companies, government officials and other "stakeholders" to engage with China's government and address problems through established mechanisms such as dispute-settlement bodies in the World Trade Organization. "Developments in the US-China relationship have proven that direct engagement with China and close coordination with other trade partners produces meaningful results on issues that impact US workers and businesses," the council's report said. The two countries have been conducting a number of high-level exchanges on economic and trade matters, including the annual Strategic and Economic Dialogue and the Joint Commission on Commerce and Trade.

Hong Kong*:  Oct 11 2012 

Shop landlords feeling the heat of falling luxury goods sales (By Yvonne Liu) Owners are under pressure to curb stratospheric rents as mainland shoppers lose their appetite for luxury goods. Causeway Bay, awash with luxury-brand shops, could soon feel the downside of wary mainland shoppers. Disappointing sales over the "golden week" holiday may put pressure on landlords of street-level shops in core shopping districts to further reduce rents, some market analysts say. Sales of jewellery, watches and expensive gifts - which are the most popular items on the shopping lists of mainland visitors - fell 3.4 per cent in value in August compared with a year ago. The decline was the sharpest among all retail items, and also the first time this sector recorded a fall since July 2009. "Spending by mainland visitors is lower due to the weak mainland economy and also a change in their shopping habits," said Joe Lin, senior director of retail services at property consultancy CBRE. The decline in mainland spending was likely to provide a reality check for retailers who had unrealistically high expectations of sales and landlords who had lifted rents too far. "I think we will now see a return to more realistic rentals," he added. Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king said the eight-day holiday break saw fewer mainland visitors coming to Hong Kong and a decline in their spending. "Many mainlanders like to follow a trend," Lin said. "Previously there was a trend to go shopping in Hong Kong, which was seen as a status symbol. Now mainlanders have more choice and the latest trend is to go shopping in Europe or Korea." He said retail rents had been driven higher by expectations of a sharp and sustained growth in mainland spending in the city. "Now there is a signal that the market is changing and many retailers are finding they cannot afford the expensive rents," he said. "International brands are turning conservative in leasing shops." In response to the new mood of caution among retailers, some landlords had cut their asking rents by 20 to 30 per cent in the past two months, but this was still higher than current rental levels, Lin said. "For example, a landlord who wanted HK$6 million a month for his shop cut it to HK$4.8 million because of a lack of interest," he said. "Now it is on the market at HK$4.5 million - but even that is higher than going rents in the area of about HK$3 million." Simon Lo Wing-fai, director of the research and advisory department at Colliers International, said retailers were no longer willing to pay premium rents. "They have had to cut their budgets," he said. He expects no rent growth in the fourth quarter, after they grew 7 per cent in the first three quarters. "I think weakening spending by mainland tourists will not improve in the coming 12 months. But in the long term the outlook is positive." Retail property investor and developer Emperor International Holdings bought shops in prime locations in the past two years, spending HK$285 million on two shops in Tsim Sha Tsui that offered initial yields of just 1.5 and 1.9 per cent. It made the investments based on the view that yields could rise to 3 per cent when the leases expired and they were able to raise the rents. But executive director Donald Cheung Ping-keung remains optimistic. "The weak spending by mainlanders will be short term," he said. "It will get better when the economy improves." Lo of Colliers agrees. "Growth on the mainland will be much better next year, and sales of luxury goods in Hong Kong will benefit. I think retail rents will rise 5 to 10 per cent next year."

World's No 1 golfer likely to play in Hong Kong Open (By Alvin Sallay) HK$15 million handout from Mega Events Fund has Hong Kong Open organisers confident star can be persuaded to defend his title. Organisers of the UBS Hong Kong Open are on the verge of signing up world No 1 Rory McIlroy after receiving a record HK$15 million handout yesterday from the government's Mega Events Fund. "We have been in serious discussions with McIlroy and now we have the money from the Mega Events Fund, we hope to confirm a deal soon," Hong Kong Golf Association chief executive Iain Valentine said. The MEF yesterday announced it had earmarked HK$26.85 million to support four mega events from its last round of applications. This includes two sports events, the other being HK$8 million for an exhibition game between Manchester United and champions Kitchee next July at Hong Kong Stadium. The two non-sporting events are the Dragon and Lion Dance Extravaganza 2013 (HK$1.4 million) and the Hong Kong Well-Wishing Festival (HK$2.45 million). MEF chairman Jeffrey Lam Kin-fung said the prime consideration for funding was over the amount requested by organisations. It depended on how much any individual applicant applied for, not based on us [the committee]," Lam said. Organisers of Hong Kong's oldest professional sporting event were delighted after bagging the largest funding for an individual event since the MEF was set up in 2009 with an aim to provide financial support for mega arts, culture, sports and entertainment events. Last year the Hong Kong Open received HK$8 million. "We wanted US$2 million this year and we have basically got what was asked for. We are very thankful for this huge support," Valentine said. "With this money, we can now press ahead and try to secure McIlroy. We couldn't confirm anything until the money was assured as we would have looked silly if we had gone ahead with a deal only to find out we didn't get MEF backing. "But now it is confirmed, we hope to make an announcement soon that our defending champion, and world number one, is returning to Fanling." Money from the MEF cannot be used to boost prize money and can only be used for "promotional activities", which includes paying appearance fees for big-name players. And they don't come any bigger than the two-time major winner from Northern Ireland, the hottest player in the world, who was also a member of Europe's Ryder Cup-winning team. McIlroy's appearance fee is now believed to be in the region of US$2 million. "Of course we are talking to other players, too. But our priority is McIlroy. If he doesn't come for some reason, we will approach others," Valentine said. The MEF funding is a huge boost for the Hong Kong Open which will be played from November 15-18 at the Hong Kong Golf Club. The tournament has endured some anxious times with UBS agreeing to return as title sponsors last month. Prize money has also been slashed from US$2.75 million to US$2 million. "With MEF support this renowned international golf tournament will be able to strengthen its line-up by inviting leading professional golfers from around the world," said assistant commissioner for tourism Vincent Fung Hao-yin, who is also the secretary of the fund's assessment committee. "The Hong Kong Open has contributed to raising the city's international profile." The MEF was established in 2009 for a term of three years with an initial fund of HK$100 million. Nearly half this amount was not utilised at the end of the first term, in March this year. This money was added to an additional HK$150 million as the MEF was extended for another five years.

Man United to play in Hong Kong thanks to HK$8m Mega Events Fund handout (By Chan Kin-wa) Mega Events Fund cash seals big match between HK champions Kitchee and Manchester United. English soccer giants Manchester United will play in Hong Kong next July, thanks to a HK$8 million handout from the government's Mega Events Fund. Alex Ferguson's Red Devils will play Hong Kong champions Kitchee, who hosted fellow Premier League stars Arsenal in a successful, money-making sell-out at the Hong Kong Stadium this summer. The government yesterday agreed to help towards the costs, saying the event would be expected to attract 40,000 spectators, a full house at the So Kon Po venue, including 8,000 tourists. Ken Ng Kin, chairman of the Kitchee Foundation and team boss of First Division champions Kitchee, said they were in final negotiations with the Old Trafford club. Manchester United last visited the city in 2005 when a crowd of 34,000 watched them beat the Hong Kong team 2-0. It is believed the 19-time English champions will play three matches in Asia next summer, with the first stop in Malaysia, followed by Hong Kong before travelling to the mainland for the last match. It is understood Kitchee had wanted to bring Manchester United to Hong Kong this summer, but a reported appearance fee of US$2 million scared off the domestic champions. "Kitchee would need to charge HK$1,200 for the highest priced tickets, even if they wanted to break even for the match under such a staggering appearance fee," said a source. "It would be a big risk and that's why the plan fell through. "Now, with the support of the fund, they can lower the ticket prices to minimise the risk and that's why Manchester United can return." Kitchee charged HK$880 for the most expensive ticket for their exhibition match against Arsenal in July and it was sold out within weeks. A similar pricing standard would probably be used for the Manchester United game. Manchester United are second in the Premier League standings after seven matches, four points behind leaders Chelsea. While boasting stars such as England's Wayne Rooney and Ashley Young, Robin van Persie of the Netherlands and Javier Hernandez of Mexico, summer signing Shinji Kagawa will be a big crowd-puller for the large Japanese community in Hong Kong.

Thousands apply for kindergartens as mainland kids born in Hong Kong return (By Dennis Chong) At Sheung Shui kindergartens, applications may already have exceeded places as mainland children born here return to study. Streams of parents queued for hours to register their offspring at Fung Kai Kindergarten, Sheung Shui, as the annual scramble for places began. It expects 1,400 applicants for just 240 slots. Pressure on northern kindergartens is mounting as children born in Hong Kong to mainland parents return to be educated. Thousands of applications from mainland parents are expected by Sheung Shui kindergartens as children born in Hong Kong to parents from across the border in recent years return to be educated. Applications received by just two of the 17 kindergartens in the town bordering Shenzhen may already have exceeded the total number of places available. At Fung Kai Kindergarten yesterday, hundreds of parents, many speaking Putonghua, formed a queue that stretched across the road outside. "It is scary," said a Hong Kong parent who waited four hours to get an application form. The pressure on northern kindergartens is expected to grow as more children born in Hong Kong to mainland parents reach school age. Educators have warned that the demand will spill into other areas. The number of such births increased steadily until the government stepped in to curb the influx. By noon, Fung Kai Kindergarten had received 500 applications for the 240 places available for the next school year. Principal Leung Man-shan said the school expected at least 1,400 applications. She said it did not measure how many of its youngsters had a mainland background as it meant little to them. "As educators, if children come with a Hong Kong birth certificate, we need to enrol them," Leung said. But she added that a third of the school's current pupils travelled from Shenzhen every day. At Sheung Shui Wai Chow Kindergarten, principal Wong Shuk-chun said the school had received 800 applications in an enrolment exercise late last month, although it had only 120 places for next year. She added that the kindergarten would try to maintain a 50:50 balance between children of local and non-local families. Despite possibility of multiple applications, demand for the two kindergartens alone is likely to have surpassed the 1,465 new places offered by the 17 non-profit Sheung Shui kindergartens. The Hong Kong parent who had waited for four hours at Fung Kai Kindergarten, giving his name only as Lam, said he had applied to three schools in the district for his child, who will have to compete with other children in interviews in the coming weeks. A mainland father from Anhui province, who was also in the queue, said his child was born in Hong Kong in 2010 because of the mainland's one-child policy. "Back at home, I would have been fined 200,000 to 300,000 yuan," he said. Officials have repeatedly insisted that is difficult to gauge how many children would return to Hong Kong for their education after being born in the city. The number of children born in Hong Kong to mainland parents rose to 33,000 in 2010 and to 35,000 last year, after which the government imposed new rules at borders and hospitals. North District Councillor Lau Kwok-fan said education demand had exceeded supply in the district, adding that the government should set out policies to divert demand to other districts.

Property prices in Hong Kong continue to set records (By Joyce Ng and Sandy Li) New records are being set every month, with highest point in August more than double that in 1999, but rents seem to be rising more slowly. Hong Kong home prices are continuing to break records, while rents are rising at a slower pace and even dropping in some sectors, according to latest figures. The difference in the trends of prices and rents might be a sign that demand for homes is decreasing, an analyst said. According to data released by the Rating and Valuation Department yesterday, the overall price index of private residential units hit the highest point, 210.6, in August, a 2.1 per cent increase from July's 206.1. The index uses the 1999 price level as the base point of 100. The index climbed over the 1997 peak (172.9) last year and since March has been setting new records every month. The biggest growth has been in smaller homes. Prices for the two smallest categories - flats smaller than 430 sq ft and between 430 sq ft and 750 sq ft - rose 2.3 per cent from July to August. In terms of actual prices, flats smaller than 430 sq ft sold for an average of HK$10,305 per sq ft on Hong Kong Island that month, also a record in that category. Meanwhile, the overall rental index rose from 144.7 to 146.5, a 1.2 per cent rise in the same period, slower than the 2.2 per cent from May to June and 1.5 per cent from June to July. In the category of the smallest homes, rents have been dropping on Hong Kong Island and Kowloon since June. Rents for larger homes continued to rise. Edward Yiu Chung-yim, who taught real estate at the University of Hong Kong and now runs a research centre, said slower growth and even decreases in rents could reflect a change in actual demand. "Rents reflect the actual demand for occupying the homes, such as the number of new families or foreigners staying in Hong Kong, while the price level reflects this basic factor but also money supply," Yiu said. He added that today's super low interest rates had diverted most cash to the property market. Yiu estimated that actual demand may slip given that the retail sector had slowed down. For now, that doesn't seem to be the case in remote Tin Shui Wai, where prices are catching up with the rest of the city. Prices at Kingswood Villas in Tin Shui Wai registered the biggest growth among the 10 housing estates monitored by Centaline Property Agency. In August, average transaction prices at Kingswood Villas were HK$3,723 per sq ft, an increase of 22.1 per cent from last December. "The big jump in Tin Shui Wai is because prices were lagging behind the rest of Hong Kong, where prices … rose sharply last year," said Wong Leung-sing, of Centaline.

We wanna be millionaires ...(By Victor Cheung) Young people have the grandest aspirations but lack the wisdom to achieve them, an old saying goes. This is also starkly true, according to a survey out yesterday that measured the investment behavior of those aged between 20 and 29, or the so-called post-80s generation. Leo Cheung Ka-kui, head of direct business at JPMorgan Asset Management, said post-80s youth often set the most aggressive goals for wealth growth and retirement planning among all age groups. "They hope to become millionaires by the age of 33 and retire at 55, both of which are the most aggressive goals amongst all respondents," he said. But despite their optimistic attitude, they face the widest gap between goals and reality. An Ipsos survey commissioned by the retail fund house showed that buying a home is the top priority for those aged between 20 and 29, with 58 percent wishing to use their savings and investments for the purpose. People from this age group also tend to spend more on traveling and education than those from other age groups. Post-80s respondents believe they need about HK$6 million to guarantee a carefree retirement life - similar to other age groups, the poll said. But although 59 percent said they are worried about retirement, most are unable to save enough. About a quarter said they saved less than HK$2,000 a month in preparation for retirement, while almost half said they plan to save no more than HK$5,000 a month. Almost half do not save or invest regularly and, among those not investing, more than half do not have any capital to invest. More than 40 percent have problems understanding investment products, knowing whether a specific product is suitable for them or even taking the first steps toward accumulating wealth. Cheung said investment is key to buying a home or meeting retirement goals, especially in the current ultra-low interest environment. For example, it will take 10 years to save enough to make a downpayment of HK$3 million for a flat if one saves HK$5,000 a month. For those who save just HK$2,000, achieving the HK$6 million retirement plan would take 250 years without bank interest or investment returns. Terry Pan San-kong, JPMorgan's head of Hong Kong business, said young people will have to start investing early and regularly and develop long- term financial goals for which financial discipline remains crucial. Cheung added that while the performance of the Hong Kong stock market has been mediocre, the performance of several bond funds has been very appealing, giving annual returns of more than 10 percent. The online poll covered 1,610 respondents aged between 20 and 59.

Book closes for panel on hot-button lesson (By Winnie Chong) A special government committee set up to launch moral and national education has voted itself out of a job by suggesting the guidelines be shelved. In announcing the end of her short term as chairwoman, Anna Wu Hung-yuk said: "I express my gratitude to the Education Bureau and our committee members who devoted a lot of time and bore great pressure to deal with the issue and come to the result. The committee will be terminated as quickly as possible after all the formalities are over." Wu said once the curriculum guide is shelved, there will be no further need for the committee as there will be nothing to review or amend. Her recommendation that the work of the committee be terminated was accepted by Chief Executive Leung Chun-ying, who set it up on August 22 in the hope of convincing the public to accept the teaching of national education in schools. "The present curriculum guide of the subject still makes people feel a bit uncomfortable, so we will formally suggest that the government shelve it," Wu said. She added the government had amended the policy on September 8, giving schools the autonomy to decide if and when to introduce the subject. As such the committee did not suggest scrapping the subject. Leung said he accepted the committee's recommendation but refused to withdraw the subject completely. He explained that since schools have full autonomy to decide whether and how to introduce the subject, the government will not demand the use of the guidelines nor will they be used as the basis for school inspections. Sources said not all committee members agreed on shelving the curriculum guide and that two members abstained from voting. Professor Ma Hing-keung, of Hong Kong Baptist University's department of education studies, admitted that he was one of those who abstained. He said the issue has turned from an education problem into a political one and he hopes schools can return to normal and work for moral, civic education or national education. Bobo Yip Po-lam, spokeswoman for the Alliance Against National Education, said they were disappointed the government did not scrap the subject. She added they planned to continue to rally outside the government headquarters on Wednesday next week. They also plan to monitor the government to ensure the subject is not relaunched. National Education Parents' Concern Group convener Eva Chan Sik-chee said she hopes schools would fully consult parents when choosing their teaching materials. Student group Scholarism says it will monitor what the government does next.

'Rent subsidy' for 30,000 (By Candy Chan) About 30,000 people low-income earners are expected to be given a one-off cash subsidy, the Community Care Fund has decided. Its executive committee chairman, Law Chi- kwong, said the scheme will cost HK$91 million. Successful applicants will get between HK$3,000 and HK$8,000 - depending on the number of people in their household. "The grant, which is equivalent to about two months' rent, is aimed at improving the living conditions of low-income groups who are inadequately housed," Law said. The cash will be deposited in bank accounts, he said, adding it is not mandatory that people use the money to pay the rent. He said the scheme is intended to reach out to those living outside the government's existing safety net system. "This one-off measure enables us to locate these specific low-income groups which otherwise would not be identified. We can learn from this experience and come up with other long-term or regular measures to help them," Law said. The subsidy will be given to those who are homeless or living in bed-spaces, cubicles or temporary housing. The income limit for applicants is HK$8.740 for individuals, HK$13,410 for two-person households and HK$17,060 for three-person households. In addition, their monthly rent should not be more than half their earnings. About 30,000 people in 13,000 households, who do not receive Comprehensive Social Security Assistance are expected to benefit. Applications will be accepted until April 8. Society for Community Organization is among the 42 social service centers and non- government organizations tasked with reaching the target groups. About 20 people turned up at its office yesterday - the first day of registration. "I regard this as a one-off sweetener," said an applicant from a four-member family. "It won't help much in the long run but it will alleviate some of our current financial difficulties." Community organizer Ng Wai-tung welcomed the plan, saying his organization will be going all out to identify the really needy to prevent the plan from being abused. But he suggested the authorities should consider more long-term measures such as adopting rent controls in old districts to help those not covered by the dole.

DBC announces closure after investors pull out (Amy Yip) Albert Cheng announces the closure of DBC Radio on Tuesday. Troubled digital radio broadcaster Digital Broadcasting Corporation will stop airing programmes on Wednesday night as it is no longer financially viable. Speaking on a DBC programme on Tuesday, founder and host Albert Cheng King-hon said regular programming would stop at 5pm. From 5pm to 8pm, hosts of weekend programmes will go on air to bid farewell to listeners. The decision was made after shareholders failed to reach a consensus over funding of the four-month-old station. Chief executive and board member Morris Ho Kwok-fai said an urgent board meeting was called on Tuesday, but the number of attending board members failed to meet the 90 per cent minimum required to make such a decision. Ho claimed board member Joseph Pang Yuk-wing, who was also representing fellow member Bill Wong Cho-bau, told him the two would no longer continue to fund the company. Together with Cheng and Ronald Arculli, Ho had offered to buy the shares from other members at half the original price. But the other members did not agree to this proposal and made no counter offers. “I have no choice. I cannot help it,” Ho said after apologising to listeners for the service halt.

Commission to investigate Lamma ferry disaster (Lai Ying-kit) Chief Secretary Carrie Lam announces on Tuesday that an independent commission will investigate the cause of the Lamma ferry disaster. An independent commission will investigate the ferry disaster off Lamma Island that left 39 people dead last week, Chief Secretary Carrie Lam Cheng Yuet-ngor said on Tuesday. The commission will be asked to find the causes of the October 1 collision and the circumstances surrounding it. It must also assess the general condition of marine safety for passengers, the state of the city’s monitoring system, and make recommendations on how to prevent future accidents, Lam said. The commission will have the power to summon witnesses but no authority to establish criminal or civil liability. Speaking at a news conference at government headquarters, Lam said one or two judges would probably make up the commission. “Based on past experience, the commission will not have a lot of members. Usually it is one [or two], and they are normally judges.” It may be difficult to find judges experienced in shipping collision cases because such events were rare in Hong Kong, she said. But the commission could hire maritime experts to help with its probe. Lam did not give a timetable for appointing commission members, but said the government would act quickly. Thirty-nine people were killed and more than 100 injured when the Lamma IV and the Sea Smooth collided in the waters off Lamma Island shortly after 8pm on October 1. The Lamma IV, carrying about 120 people on their way to watch the National Day fireworks in Victoria Harbour, was largely submerged after the collision. The government plans to use the Community Care Fund – set up to help low-income families – to assist the families of victims, Lam said. The Executive Council has approved the plans in principle. The commission must submit a report to Chief Executive Leung Chun-ying six months after it is formally appointed.

Chief Executive of Hong Kong Special Administrative Region (HKSAR) Leung Chun-ying addresses a reception to mark the 30th anniversary of tobacco control in Hong Kong, south China, Oct. 9, 2012. 

The average daily room rate in Beijing, Hong Kong and Macao continued to grow in the first half despite the lackluster global economy, said a report on Tuesday from international real estate service provider Knight Frank. (By Hu Yuanyuan) The average daily room rate, or ADR, is an index used to gauge conditions in the hotel industry. Hong Kong saw the largest year-on-year growth in the first half of the year, with its ADR up 12.0 percent, followed by Beijing with a growth of 11.4 percent. "We believe that China's tourism market will continue to grow rapidly in the next few years despite the gloomy global economic outlook," said Thomas Lam, head of research at Knight Frank Greater China. Robust economic development and the growing number of tourists in China make it an attractive hotel market, which needs more rooms. Encouraged by the country's strong economic performance and the rapid development of second and third-tier cities, international hotel operators have shown strong confidence in China's market and are pursuing aggressive expansion plans. "The sentiment in the Greater China hotel market is set to remain strong, with demand for hotel rooms being driven up by the increasing numbers of both local and international visitors," Lam said. International hotel operators, such as Club Med, Richfield Hospitality and Starwood Hotels & Resorts, are expected to further pursue their aggressive expansion plans in China, Lam added.

 China*:  Oct 11 2012

China sets up new department to flex economic muscles for global goals (By Li Jing) The Foreign Ministry has set up a new agency to manage "economic diplomacy" in yet another sign that China intends to continue flexing its economic muscle to pursue its international goals. The newly established department of international economics is to "ensure China will be better involved in global co-operation and governance … in a bid to safeguard national interests and economic security", Foreign Minister Yang Jiechi said at the agency's inaugural meeting in Beijing yesterday. State Councillor Dai Bingguo told the meeting that economic matters were becoming ever more important to China's overall foreign policy. Until now, overseas economic affairs had been shared by the ministries of agriculture, commerce, finance and others. Analysts said the move, which comes at a time of increasing territorial disputes between China and its neighbours, showed that its leaders intended to keep leveraging on the country's status as the world's second-largest economy in international conflicts. Japanese carmakers reported tumbling Chinese sales last month after Tokyo bought the disputed Diaoyu, or Senkaku, islands, leading to calls for boycotts of Japanese products. Both Toyota and Suzuki saw monthly sales drops of more than 40 per cent from a year earlier, leading to concerns that the market share of Japanese brands in the world's biggest car market would continue to shrink. Shi Yinhong , an expert on foreign relations at Renmin University, said China had used economic weapons to punish some countries in the past, but "they were mainly ad-hoc reactions instead of a conscious strategy". For instance, China blocked imports of Philippine bananas during a flare-up in the country's territorial dispute in the South China Sea earlier this year. Analysts said Beijing had adopted a more aggressive approach because its economic sweeteners, such as foreign aid and favourable trade policies, failed to achieve desired results.

Dispute 'to hit global economy' (By WEI TIAN and ZHANG YUNBI) Rippling fallout from Diaoyu issue imperils world trade, experts warn. The fallout from the Diaoyu Islands will have global economic consequences, experts said, as the International Monetary Fund downgraded its world outlook. Concerns grew after four State-owned banks, including the Industrial and Commercial Bank of China, the world's largest lender by market value, confirmed that it will not attend the IMF-World Bank annual meeting that opened on Tuesday in Tokyo. Central bank governor Zhou Xiaochuan and deputy governor Yi Gang are still on the scheduled event list on the IMF's website but the itinerary of Finance Minister Xie Xuren has not yet been decided, a ministry spokesman said. The news was the latest indicator of strained ties between the world's second and third-largest economies as a result of the Japanese government's decision in September to "purchase" the Diaoyu Islands, which belong to China. "Tensions between the two countries, with annual trade worth $350 billion, will definitely put pressure on the world economy," said Jiang Yuechun, director of the Department for World Economy and Development at the China Institute of International Studies. The affected areas will spread gradually from trade, to financial cooperation before becoming global, he said. "This will be a smaller version of the collapse of Lehman Brothers which will cause a ripple effect and harm the global economy," said Yao Haitian, a researcher from the Institute of Japanese Studies at the Chinese Academy of Social Sciences. Hiromasa Yonekura, chairman of the Japan Business Federation, on Tuesday told Shinzo Abe, leader of Japan's opposition Liberal Democratic Party, about his concerns over the issue. The deterioration of Japan's ties with China is "exerting influences on the economic circle", Japanese newspaper Sankei Shimbun's website quoted Yonekura as saying. The IMF lowered the growth forecast on Tuesday for both China and Japan by 0.2 percentage points from its projections in July. The forecast for China stands at 7.8 percent, and Japan's stands at 2.2 percent. The forecast for global economic growth in 2012 was also downgraded to 3.3 percent in the World Economic Outlook that was unveiled at the event. "The world recovery continues, but it has weakened," said IMF chief economist Olivier Blanchard at a news conference. "In developed countries, growth is now too low to make a substantial dent in unemployment, and in major emerging countries growth, which had been strong earlier, has also decreased." Speaking ahead of the Tokyo meeting, Christine Lagarde, head of the IMF, warned the world could not afford to have the two countries distracted by the islands. "Both China and Japan are key economic drivers that do not want to be distracted by territorial division," Lagarde was quoted by Kyodo News Agency as saying. "The current status of the global economy needs both Japan and China fully engaged," she said. The warning came as the World Bank and Asian Development Bank recently slashed their growth estimates. Although the weak global economy was mainly a result of the sluggish recovery in the United States and the ongoing eurozone crisis, the fallout from the islands will become more obvious over the next three to six months, Jiang said. "For example, less demand for raw materials as a result of halted cooperation programs will affect imports from a third country, such as Australia or Brazil," he said. According to Yao, the gap between China and Japan may provide a chance for other countries, as Japan may relocate its investment to Southeast Asia and China may also issue favorable policies to foreign investment from other developed countries. "However, the replacement of productivity cannot be completed overnight, and a reduction in production will result in a break in the global supply chain, as both China and Japan are important sources of semi-manufactured goods," Yao said. Following anti-Japan protests in dozens of Chinese cities last month, many academic conferences and cultural exchanges were also canceled and airlines have canceled flights due to lower demand. Major Japanese automakers, including Toyota and Nissan, are slowing production in the world's biggest car market. Concerns have been raised that currency exchanges, and other financial dealings between the two governments, will also be suspended. "As both sides are in a standoff, and Japan is preparing for a general election, they may not unleash any more substantial retaliatory measures," said Jin Baisong, a researcher with the Chinese Academy of International Trade and Economic Cooperation.

Islands dispute benefits carmakers' competitors (By Li Fangfang) Mercedes-Benz cars at the 2012 Nanjing International Auto Expo that concluded on Friday. Automakers from South Korea, Germany and the United States are benefiting from the sales slump of Japanese manufacturers in China after anti-Japan protests. Animosity toward Japan gives boost to US, European, South Korean firms. Japanese automakers are losing market share in China to their European, US and South Korean rivals as animosity toward Japanese products amid the dispute over the Diaoyu Islands proves a drag on their sales in the world's largest automobile market. German automakers, including Volkswagen Group, BMW AG and Daimler AG, have yet to release their sales figures for September. Analysts, though, said they expect them to reveal a "beautiful" performance, especially as those companies' Japanese competitors have been hit seriously by the anti-Japanese protests that broke out in mid-September after the Japanese government's illegal "purchase" of the Diaoyu Islands. Statistics from the China Association of Automobile Manufacturers suggest that German carmakers' share of the Chinese market for passenger cars surpassed their Japanese rivals' for the first time in August. South Korean and US automakers have also reported that they saw their vehicle sales in China reach a record high in September. South Korea's Hyundai Motor Co and its affiliate Kia Motors Corp said their combined sales increased 9.5 percent year-on-year in the month, going from 116,763 vehicles in September 2011 to a record high of 127,827 vehicles last month. The South Korean company said it expects to exceed its previous goal of selling 1.25 million vehicles in the world's top automobile market in 2012. And General Motors, the largest foreign automaker in China by sales, reported on Monday that it and its joint ventures saw their September sales reach a record high this year. The Financial Times reported on Friday that Toyota Motor Corp has decided to reduce its output at its Chinese factories by more than half in October and to cease exporting its premium brand Lexus vehicles to China. The company cited the Diaoyu Islands issue as a reason behind both decisions. The newspaper reported that Toyota's sales in China decreased by about 40 percent from a year earlier in September, citing an unnamed person briefed on the data and the company's production and export plans. Yet, Liu Peng, a spokesman for Toyota China, told China Daily that the report contained misinformation, saying "we will adjust our production plans according to market demand at all times. But these details about the production cut come from nothing but idle speculation". "And as for imports of Lexus luxury vehicles, we will never stop those." Toyota plans to release its official September sales figure for China within a week. Its sales in the country are the source of about 10 percent of its global business. The Japanese newspaper Nikkei meanwhile reported that Mazda's sales in China had decreased by 35 percent year-on-year in September. And Shen Li, public relations director of Nissan China, said Nissan has no plans to slow its production in China or reduce its 2012 sales target for the country. Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said the dispute over the Diaoyu Islands has had effects "far beyond our expectations, effects that will last for a long time". "They (Japanese automakers) are finding it impossible to meet their sales target for the year," Luo said. "And the situation will be hard to remedy in the future." The first half of the year had seen Japanese automakers just starting to recover from the effects of the earthquake and tsunami disaster that struck their country last year, prompting Nissan and Toyota to initially lift their sales goals for 2012 by 20 percent. "But China's vehicle market is only going to be affected to a small extent, as Chinese consumers show little loyalty to particular brands," Luo said.

Washington does not accept Japan's claims to Diaoyu Islands (By Zhao Shengnan) http://www.hkchcc.org/uscongressionalresearchservicediaoyuislands09252012.pdf A US Congressional report said Washington has never recognized Japan's sovereignty over the Diaoyu Islands and takes no position over the territorial row between Japan and China. The report, published on Sept 25 by the Congressional Research Service, said the US recognizes only Japan's administrative power over the Diaoyu Islands after the Okinawa Reversion Treaty was signed in 1971. China-Japan relations hit the lowest point in years after Tokyo's so-called purchase of the Diaoyu Islands on Sept 10, a move sparking wide protest across China. The islands have been Chinese territory for centuries. During Senate deliberations on whether to consent to the ratification of the treaty, the US State Department asserted that the US took a neutral position with regard to the competing claims of Japan and China, despite the US' return of the islands to Japanese administration. "Department officials asserted that reversion of administrative rights to Japan did not prejudice any claims to the islands," said the report from the Congress' think tank, the public-policy research arm of the US Congress. Chinese Foreign Ministry spokesman Hong Lei on Monday said he noted the US' neutral position on the Diaoyu Islands in the report and added he hopes the US will "walk the talk". Analysts said the report, which reflects the Obama administration's stance over the territorial row between its ally and China, is an effort to ease the escalating tension but can hardly change the US' Japan-tilt policy. However, according to the report, the Diaoyu Islands fall under the scope of the 1960 US-Japan Security Treaty since 1972, which stipulates that the US is bound to protect "the territories under the administration of Japan". Under the treaty, the US guarantees Japan's security in return for the right to station US troops — about 50,000 — in dozens of bases throughout the Japanese archipelago. Washington has been ambiguous on the Diaoyu Islands issue as it supports Tokyo with the US-Japan Security Treaty, but has warned Tokyo not to break the "red line" of China or cause large-scale conflicts, said Feng Wei, an expert on Japanese studies at Fudan University in Shanghai. Both Japan and the US have made some compromises in front of China's all-round countermeasures over the issue, and "Washington is especially worried that the China-Japan territorial dispute could threaten US and Japan's economy as well as the Asia-Pacific stability amid its strategic pivot to the region", he said. On Friday, Japanese Foreign Minister Koichiro Gemba delivered a written statement to Taiwan saying that the Japanese government hopes to resume talks on fishing in the waters in the East China Sea. But at the same time, two US aircraft carrier strike groups have been deployed since mid-September to the Western Pacific in an apparent attempt to keep the activities of the Chinese military in check and as a response to China's launch of its first aircraft carrier at the end of September, Japan's Yomiuri Shimbun said on Oct 6. Hong told a regular news conference that Chinese marine surveillance ships and fishery patrol ships will continue their official duties in waters near the Diaoyu Islands, which are under China's jurisdiction. Fishery authorities said on Saturday that five fishery patrol ships were in the area during the National Day holiday from Sept 30 through Sunday to continue their patrol missions. Four Chinese marine surveillance ships also arrived in the waters on Oct 2. "Safeguarding China's territorial sovereignty and maritime rights and interests is the Chinese military's sacred duty," Hong said. He also once again urged Tokyo to correct its mistakes and return to negotiations to resolve the dispute, as well as to strictly comply with the one-China policy and properly handle relevant issues. In sensitive situations like this, favoring one party helps little in de-escalating a potentially violent conflict, Mike Honda, a Japanese-American and US representative for California, said on his blog earlier this month. "If this conflict becomes violent on the East China Sea, we will see shipping thwarted, more factories closed, costs of imports climb and other foreign policy decisions affected," he said. Liu Yedan contributed to this story. http://www.hkchcc.org/uscongressionalresearchservicediaoyuislands09252012.pdf  

China issues white paper on judicial reform - The Information Office of the State Council issued Tuesday a white paper on judicial reform. Apart from reviewing China's judicial system and reform process, the white paper focuses on maintaining social fairness, justice and human rights protection. "China aims its judicial reform at strengthening its judicial organs' capability in maintaining social justice by optimizing the structure of the judicial organs and allocation of their functions and power, standardizing judicial acts, improving judicial proceedings, and enhancing judicial democracy and legal supervision," it says. Maintaining that improving the protection of human rights is an important goal, the white paper noted that China's Criminal Procedure Law amended in 2012 included "respecting and protecting human rights." In terms of protecting human rights, effective measures are being taken to deter and prohibit extorting confessions by torture, better protect the rights of criminal suspects and defendants, and protect attorneys' rights to exercise their duties. Measures are also being taken to strictly control and prudently apply the death penalty. Judicial reform, an important part of China's political system reform, remains a long and arduous task. The white paper vows continuous efforts to strengthen reform with a goal of establishing a "just, effective and authoritative socialist judicial system with Chinese characteristics." An English version of the white paper has been published by the Foreign Languages Press in Beijing.

Hong Kong*:  Oct 10 2012 

Hong Kong's official foreign currency reserve assets amounted to US$301.2 billion at the end of September, up by US$3 billion on August's figure, the Monetary Authority announces.

Controversial guidelines on national education shelved (By Dennis Chong and Johnny Tam Chief executive admits controversy over subject had polarised Hong Kong society and hindered schools but proposals will not be scrapped. Leung Chun-ying (right) meets the media with Chief Secretary Carrie Lam and Secretary for Education Eddie Ng Hak-kim. Chief Executive Leung Chun-ying says the controversial guidelines for national education will be shelved - but not scrapped outright. He made the announcement yesterday, 11 days after a government panel recommended "invalidating" the guide. Controversy over the subject, aimed at instilling in pupils a sense of belonging towards the motherland, had polarised society and hindered school operations, Leung admitted. "I hope [the policy change] can … rebuild mutual trust in society," he said at the Chief Executive's Office in Admiralty. Shelving of the guidelines, handed to schools in April, means they can decide what is taught and choose their materials, which would not be subject to the Education Bureau's approval. Leung refused to answer questions such as whether he had bowed to public pressure and whether it was a political setback for him. The Civil Alliance Against National Education hailed the "achievements of a civic society" and said the move would mean most public schools would not go ahead with the lessons. Anna Wu Hung-yuk, chairwoman of the Committee on the Implementation of Moral and National Education, said at noon that its formal report to the chief executive would recommend the guidelines be shelved due to "continuing unease". But she did not mention the term "invalidate", which she used after a meeting on September 27. It is understood her choice of the word drew criticism from some committee members, who said it would mean schools that started the subject had no reference as a guide. Wu said the committee agreed national, moral and civic education was an important part of a pupil's life, so the subject should not be scrapped. Schools should be allowed to teach it if they decided to. She also said the decisions were supported by most members, with two abstaining votes. The government's phased voluntary introduction of the subject was to have started last month in primary schools. It would have become compulsory at public primary and secondary schools, by 2016 at the latest. But critics branded the subject a move to indoctrinate future generations in Hong Kong, with topics presenting a biased view of mainland China. Leung backed down on the compulsory introduction of the subject on September 8, allowing schools the choice to run classes. The climbdown was announced after 10 days of protests last month that culminated in an "Occupy Tamar" rally of tens of thousands at the government's offices. More than a dozen activists went on a hunger strike at a camp and thousands of university students boycotted classes. Beijing loyalist Fanny Law Fan Chiu-fun maintained yesterday that national education was necessary for students to know more about the motherland. Wong Hak-lim, vice-chairman of the Hong Kong Professional Teachers' Union, said national education had been effectively scrapped because schools did not necessarily need to launch it and the guidelines were no longer mandatory. Eva Chan Sik-chee, co-founder of the Parents Concern Group on National Education, said she believed some schools would still teach it. " We hope the schools will choose and make suitable teaching materials, and at the same time consult the opinions of parents," she said. A few schools, which said they would still introduce the subject, said balanced views and material would be presented to pupils. Leung Kee-cheong, principal of the Fresh Fish Traders School, said: "We will teach the good side of the country to make students proud, but we will also teach students the dark side of the country to make students committed [to China's future development]." Leung Siu-tong, principal of Wong Cho Bau School in Tung Chung, said it would still use the guidelines. "Shelving means one can still take it from the bookshelf," he said.

No cooling on property sales (By Karen Chiu) Red-hot buying sentiment helped developers offload 250 new units over the weekend, with Sun Hung Kai Properties' (0016) Century Gateway project continuing to take up the lead. Two hundred units were sold at the Tuen Mun development, with most being one- bedroom units on sale for the first time. So far, about 900 of the project's 1,075 units have been sold, reaping HK$6 billion for the territory's largest developer. SHKP deputy managing director Victor Lui Ting said the 100 units remaining will be released in the coming two to three days and their prices will be marked up by 3 to 4 percent. Also, the first batch of 30 units at Kadoorie Hill - Wheelock's (0020) Price Edward Road West project - were sold over the weekend, generating HK$1.12 billion. On Saturday, four more units at the 66-unit project were priced at HK$17,415 per square foot on average - up 2 percent from the previous lot. Meanwhile, 17 units were sold at Henderson Land's (0012) Double Cove in Wu Kai Sha, while Sino Land (0083) sold 14 units at its Providence Peak project in Tai Po. Secondary market sentiment stayed stable, with Centaline recording 33 transactions at the 10 top housing estates, up from 30 during the previous weekend. "Potential homebuyers are now taking a wait-and-see approach as home sellers have been raising asking prices," said Louis Chan Wing-kit, Centaline's chief executive of residential units. Five of the benchmark estates - Tai Koo Shing, South Horizons, Mei Foo Sun Chuen, City One Shatin and Metro City Plaza - saw a drop in transactions. An 856 square foot unit at Tai Koo Shing was sold at a record high of HK$10.18 million, or HK$11,892 psf. The three-bedroom unit was bought for HK$4.94 million in 2007. The Centa-City Leading Index stood above 110 this week, up 0.3 percent week on week, and is expected to rise to 115 by the end of the quarter, said Wong Leung-sing, associate director of Centaline's research department.

Broadband firms rush to raise fees (By Natallie Cai) Broadband users must prepare to cough up more the next time they renew their service contracts as network providers rush to increase prices by axing gift packages and charging much more for fringe services. HKT Trust (6823), the city's dominant fixed-line operator, said it will start charging clients an installation fee of HK$680 from today and also require them to pay another HK$680 if they move within the contract period. Both installation and relocation fees were previously waived by the company. "We raised the fees due to inflation," an HKT salesman said when asked to justify the latest charges. The increases were foretold by HKT managing director Alex Arena. In August, he said broadband prices "are biased to go up rather than down." Competitor i-Cable Communications (1097) will continue to offer a 50 megabit-per-second broadband service for HK$99 per month. But additional TV programs granted earlier to boost broadband users will be dropped. Customers now have to pay an extra HK$149 a month for TV channels during the contract period. "We don't have to rely on program giveaways to promote our services," a salesman said. "The services aimed to attract customers during the London Olympic Games in August, but now it is over." Hong Kong Broadband Network, which shocked the market by offering low-cost plans, has already canceled its HK$99 monthly offer for 100-mbps services with wi-fi access by the end of June, and raised the tariff to HK$168 per month for 24 months with a fee waiver of three months. After the deduction, HKBN charges HK$147 per month during the contract period. New customers also have to pay an installation fee of HK$380. Sales staff with broadband service providers are less enthusiastic after the price war and since chairman of City Telecom (HK) Ricky Wong Wai-kay - well known for a low-price strategy - withdrew from the telecoms industry. "The firms narrowed profit margins in the past few years when they cut prices for bigger market share," Bright Smart Group director Francis Kwok Sze-chi said. "When the market becomes mature, it is time for them to charge more through value-added services."

Chief secretary Carrie Lam defends Hong Kong's judicial independence (Johnny Tam) Official responds to former justice minister's claims that city's judges lack understanding over issue of mainland mothers giving birth. Chief Secretary Carrie Lam Cheng Yuet-ngor leapt to the defence of the city's judicial independence after former justice minister Elsie Leung Oi-sie launched a withering attack on local judges over the weekend. Lam was the first official to respond to the remarks by Leung, deputy director of the Basic Law Committee, who said on Saturday that the legal profession in Hong Kong, including judges, lacked an understanding about the relationship between the central government and the special administrative region. Leung said this lack of understanding gave rise to mistakes in previous rulings in which the top court has superseded the central government's power. She said inviting Beijing to interpret the Basic Law was the "most secure" solution to curbing the influx of mainland women coming here to give birth. Hong Kong is a law-abiding community and judicial independence is its core value. Her remarks contradict what Secretary for Justice Rimsky Yuen Kwok-keung said a few months ago when taking up his post - that seeking a reinterpretation of relevant Basic Law clauses was not "an appropriate solution". Responding to Leung's remarks, Lam said: "Hong Kong is a law-abiding community and judicial independence is its core value." She added: "Dealing with the issue of the influx of mainland mothers giving birth in Hong Kong involves complicated legal matters," pointing out that Yuen had already been investigating the matter in person. Last month the government invited a Queen's Counsel from the United Kingdom to advise on how to reverse a law that automatically grants right of abode to all babies born to mainland parents in the city. The Court of Final Appeal ruled in 2001 that mainland babies born in Hong Kong had right of abode regardless of their parents' nationality. Political scientist Ma Ngok of Chinese University criticised Leung, saying the former secretary for justice should respect the city's judicial independence. "What Ms Leung said was shocking. Someone who has been the secretary for justice should not have made such a comment on our judicial system. She was putting pressure on our judges," Ma said. He added that the damage caused by Leung's remarks would not be eased even if Chief Executive Leung Chun-ying spoke out in defence. "It won't make any difference no matter what he says." The academic said the Hong Kong government should stand firm on the city's autonomy instead of relying on the central government to reinterpret the Basic Law. He was also worried that Lam's response was only an "official remark" and that she did not show genuine intent to speak up for the city's judicial system.

Auctions consolidate HK's status as art powerhouse (By Ng Kang-chung and Jolie Ho) Hong Kong's status as an art auction powerhouse was underlined yesterday with record prices and frantic bidding at two sales. In its debut sale in the city, China Guardian, a major mainland auction house, performed beyond expectations, reaping HK$354 million, which was almost three times the predicted HK$120 million. At another auction, Sotheby's set a record, despite pulling one item from sale because of an ownership dispute. China-born artist Lee Man Fong's painting Fortune and Longevity, which had a pre-sale estimate of HK$12 million, sold for HK$34.26 million. Sotheby's said it was a record for the artist, now based in Singapore, and for any Southeast Asian paintings at auction. China Guardian's sale of about 300 fine Chinese paintings and calligraphy was held at the Mandarin Oriental hotel in Central. The star of the show was a 1922 landscape painting series by Qi Baishi called Album of Mountains and Rivers. It went for HK$46 million, nearly double the pre-sale estimates. A 1936 work by Xu Beihong, The Eagle and the Pine Tree, was sold for HK$21.275 million. Ren Yi's Birds and Flowers, from 1891, sold for HK$17.25 million, while The Sun after the Rain, a highly coloured work dating from 1965 by Li Keran, fetched HK$16.1 million. China Guardian, a national auction firm, was set up in 1993 and is now believed to be the world's fourth largest art auctioneer. A spokesman for the company described the response to the auction as "very good". The Sotheby's auction at the Convention and Exhibition Centre was part of an autumn sale that started on Friday and ends tomorrow. But Sotheby's cancelled the sale of a painting by Chinese ink master Chang Dai-chien, also known as Zhang Daqian, which was estimated to fetch at least HK$12.8 million, following a dispute over its ownership. Last week, Lu Chieh-chien, a Taiwanese Buddhist nun, filed a writ at the High Court against the auctioneer, claiming the painting, To Paint a Tang Dynasty Gentleman Holding a Horse's Rein in the Suburbs at Autumn, belonged to her late father and would seek compensation from the auction house if the work was sold. Sotheby's regional chief executive Kevin Ching Sau-hong said the work had been withdrawn from its fine Chinese paintings sales today. "Sotheby's takes issues of title seriously," Ching said. "In view of the present situation, we will withdraw from the auction [the Zhang painting]." Ching added Sotheby's had already contacted the person who put forward the painting and would not be involved in the dispute. "This has nothing to do with us. They have to deal with it on their own. If they fail to resolve it, they will have to bring it to the court," he said. Ching said Sotheby's had procedures to check the provenance of auctioned items and it was not uncommon to see objects being withdrawn. Lu says the painting, presented by Chang to her father in the 1950s, was given to her on her marriage. She passed it to her brother when she became a nun, and it was then entrusted to an employee of their family, Shu Dun-sie, when her brother moved to Shanghai in 1996. Lam To-sang, a friend of the Lu family, said Lu believed in the loyalty of Shu, who had worked for the family for more than 20 years and was now in his 80s. Shu's daughter told police in Taipei that her father had a mental illness and was now living in a home for the elderly. Lam said Shu's daughter had told Lu she was only a distant relation of Shu when she found him last month. Lam said if Lu succeeded in getting the painting back she might donate it to Hong Kong. The planned museum for the West Kowloon Cultural District, M+, is one of the considerations. "Lu was born in Hong Kong. Chang gave the painting to her father in Hong Kong and now it has been put up for auction in Hong Kong. She thinks this has a lot to do with Hong Kong," Lam said.

Anna Wu Hung-yuk at the Committee on Implementation of Moral and National Education meeting at Central Government Offices on Monday. Keep national education, drop guidelines: panel (Lai Ying-kit and Johnny Tam) After weeks of intense speculation, a key government adviser said on Monday that while the national education course should not be cancelled altogether, the course guidelines should be shelved. Anna Wu Hung-yuk, chairwoman of the Committee on the Implementation of Moral and National Education, made her comments to reporters during the noon break in the committee’s third meeting. The committee members agreed that national education was an important subject that should be taught in schools, she said. There was no need to scrap it because the government last month gave schools the authority to decide for themselves whether to teach the course. “This change in policy gives schools the autonomy on whether, when and how to teach the subject,” said Wu. “With this in mind, our committee members think it is not appropriate to withdraw it. “Members agree that the set of guidelines cause much anxiety [in the community] and therefore we will recommend to the government that it should be shelved.” Previously she had said only that the committee would recommend the guidelines be “invalidated”. The committee will make its recommendations to the government soon. A spokeswoman for the Civil Alliance Against National Education, Yip Po-lam, welcomed Wu’s comments, saying: “The result of the committee’s meeting marks progress for our anti-national education movement.” Yip said she hoped Chief Executive Leung Chun-ying would follow the committee’s advice and throw out the course guidelines – removing them from the Education Bureau’s online resources site. The national education curriculum became a challenge for Chief Executive Leung Chun-ying after he took office in July. Tens of thousands of protesters camped out near the government headquarters for 10 days last month. Some went on a hunger strike while university students boycotted classes. That action resulted in the government’s climbdown on the issue, giving public schools the option of implementing the subject rather than making the classes compulsory. Officials say the subject will instil national pride but opponents are concerned it could turned into a tool for indoctrination. Leung is scheduled to speak at press conference at 5pm on Monday.

HK Int'l Jazz Festival kicks off - 2012 Hong Kong Int'l Jazz Festival opens in Hong Kong, south China, Oct. 7, 2012.

In Hong Kong, a New Auction Rivalry Brews (By Jason Chow) Lee Man Fong’s ‘Fortune and Longevity’ fetched HK$34.3 million at Sotheby’s, the highest price paid for any Southeast Asian artwork at auction. Sotheby’s and China Guardian went head to head for the first time on Sunday as the two auction houses staged competing autumn sales in Hong Kong. And in this opening match – in which Guardian held its first ever sale outside of mainland China – the Chinese newcomer outdid the venerable English stalwart. Art lovers spent a total of 885 million Hong Kong dollars (US$114.2 million) at the two sales, with Guardian taking the bulk of it: In its sale of Chinese paintings, calligraphy and furniture at the Mandarin Oriental, the company generated HK$455 million, with 90% of works sold. Across town at the city’s convention center, Sotheby’s drew HK$430 million in its sales for Southeast Asian, 20th-century Chinese and contemporary Asian art. Established in 1993, Guardian focused its sale on ink paintings, a highly sought-after category for Chinese collectors, which typically outsells all other art including contemporary and 20th-century works from China. It remains to be seen how Sotheby’s will fare in its sale of Chinese ink and calligraphy works, which go on the block today. The top-selling item at the Guardian sale was “Album of Mountains and Rivers” by Qi Baishi, one of China’s most highly prized ink masters from the 20th century. In the packed hotel ballroom of more than 250 people, mostly from mainland China, the bidding for the work went on for around 10 minutes, with more than 20 interested buyers chasing the price to HK$46 million — far above the HK$26 million estimate — with a mainland collector emerging as the winner. Sotheby’s also turned heads with its most expensive work of the day: Indonesian artist Lee Man Fong’s “Fortune and Longevity,” an oil painting over 2.5 meters wide, which generated HK$34.3 million, almost three times its $12 million estimate. Sold to an anonymous buyer, the work set a new record for any Southeast Asian piece at auction. Although the Guangzhou-born Fong was prolific in his lifetime, “the bigger-format pieces like this one are few and far between,” said Mok Kim Chuan, Sotheby’s Southeast Asian art expert, who believes that fewer than 80 of them exist. Other top items at the Sotheby’s sales included Liu Wei’s “Revolutionary Family Series – Invitation to Dinner,” which fetched HK$17.5 million, a record price for the contemporary Chinese artist, from an anonymous buyer. Meanwhile, ever-popular Chinese 20th-century painter Sanyu’s “Potted Chrysanthemums” generated HK$30.9 million from an Asian gallery. But at the Sotheby’s sales, many works by major artists, including Zao Wou-ki, Zhang Xiaogang and Yue Minjun went unsold. After a torrid 2011 followed by disappointing results in this year’s spring sales, this weekend’s figures show that buyers’ moods remain mixed, with some willing to pay far above estimates for certain works while leaving others by significant names unsold. But Hong Kong collector Linus Cheung, who visited both Guardian and Sotheby’s auction rooms, thought that market sentiment proved resilient, particularly in the Chinese ink painting category. “Judging from today, the results were good,” he said. “I couldn’t even get a seat at the Guardian sale.” In today’s ink and calligraphy auction at Sotheby’s, one of the most anticipated items, “Riding in the Autumn Countryside” by Zhang Daqian, has been pulled after a Taiwanese Buddhist nun contested its ownership, claiming that the work belonged to her and not the seller. “Sotheby’s takes issues of title seriously,” the company said in a statement after it decided the withdraw the work, which was estimated to fetch as much as HK$12.8 million at auction. The next auction joust between a major Western firm and a mainland house will take place Nov. 23 to 25 as both Christie’s and Beijing Poly International Auction, the world’s third-largest auction house, will hold competing sales in Hong Kong. The November event will mark the first time Poly holds an auction outside of mainland China. Sotheby’s fall 2012 auctions continue today and conclude on Tuesday.

Brother in row over Central restaurant dies (By Eddie Luk ) Kam Kwan-sing, who two years ago asked the court to liquidate the famous Yung Kee restaurant in a bitter feud with his younger brother, has died. The exact cause of his death on Friday night has not been revealed. In 2010, Kam applied to liquidate the roast goose restaurant in Central after a row with Kam Kwan-lai. The court completed the hearing earlier this year but is yet to return a ruling. A barrister said the death will not affect the the ruling. Kam's family are now focusing on funeral arrangements. Barrister Albert Luk Wai-hung said the court ruling will still apply despite the death. In recent years, Kam had been writing a food column in Sky Post. In his last column, published on the day of his death, he wrote about food along the Yangtze River. Kwan-sing and Kwan-lai held equal shares in the restaurant, which earned a Michelin star in 2010. A row over the shares started years after the restaurant's founder, their father Kam Shui-fai, died in 2004. Testifying in the High Court hearing earlier this year, Kwan-sing said he had been in charge of promoting staff until his younger brother challenged him. He said Kwan-lai would suddenly appear and accuse him of failing to follow formal procedures and had then attempted to push him out of management. Kwan-sing testified that Carrel Kam, the son of Kwan-lai, had on one occasion insulted him in front of more than 10 employees. The elder Kam was seeking to wind up Yung Kee Holdings, to buy out his brother's shares or to sell his share to his brother.

Few takers for aircraft-repair jobs (By Winnie Chong) Hong Kong faces a shortage of aircraft maintenance technicians, according to a company that says only 90 percent of its vacancies could be filled. Youngsters are reluctant to join the industry as it involves working in a dirty environment, China Aircraft Services training and development manager Keith Au Yeung Wai-kei said. Au Yeung said there are only about 200 aircraft maintenance engineers in Hong Kong. The company, which provides various aircraft maintenance and cleaning services at Chek Lap Kok, employs more than 1,000 staff. The entry-level salary for assistant mechanics, who are usually diploma or higher diploma holders, is between HK$8,000 and HK$10,000. But the salary can double or go even higher for those who are able to obtain a professional license as an aircraft maintenance engineer, after the requisite working experience, as well as professional qualifications from further studies. The company's commercial and customer support officer, Jack Li Cheong-yuen, said other countries are experiencing similar shortages as the aviation industry is booming globally. Australia, for example, welcomes aircraft maintenance experts who wish to emigrate there. Au Yeung said some people enter the aviation field under the false belief that the high-technology industry is attractive. But they soon discover it is beyond their expectations and drop out as aircraft maintenance involves routine tasks, which must follow set procedures. He advised youngsters who are interested in the career to learn more about the nature of the job and be prepared to do routine work, some of which is outdoors. They also have to work shift duties and overnight, he said. Those who can adapt to this environment after a year usually stay in the field, Au Yeung said. But if they really wish to advance, they must be prepared to study in their own time and obtain a professional license. "Many people find this difficult because it requires language proficiency. It also means less time for the family," Au Yeung said. Li said it could take from four to eight years for a person to obtain a license and become an engineer with the authority to pass an aircraft that has been maintained or repaired. Chief executive Angus Cheung Him-wah added that competition in the aviation industry is getting fiercer, with many flight operators cutting costs because of the influx of budget airlines.

 China*:  Oct 10 2012

China tests world's first alpine high-speed rail line - The weather-proof CRH380B bullet trains serving the line can accomodate temperatures from minus 40 degrees Celsius to 40 degrees Celsius above zero.

South Korea's automakers reported record sales in China last month while Japanese manufacturers posted declines. The shift came after anti-Japan protests flared in the world's largest vehicle market. Hyundai Motor, South Korea's No1 automaker, claims it and affiliate Kia Motors sold a combined 127,827 vehicles. And the two companies expect to exceed their 1.25-million-unit target this year. A conflict about sovereignty over the Diaoyu/Senkaku Islands claimed by Beijing and Tokyo resulted in demonstrators smashing Japanese-branded cars and torching auto showrooms last month. Sales in the mainland of Toyota Motor, Japan's largest maker, fell 50percent in September from August, while Nissan Motor, the second-biggest producer, has reported a 35percent drop. Anti-Japan sentiments in the mainland began to affect car sales from September, and South Korean firms were among key beneficiaries along with other global companies, said Eric Choi, a Seoul-based auto analyst at Shinhan Investment. Nissan will weigh the impact of the protests before deciding whether to revise its China sales target, executive vice president Takao Katagiri said on Friday. At Toyota, meanwhile, a spokesman, said the company would continue to adjust output based on patterns of demand. Other Japanese auto firms are feeling the pinch. Mazda Motors' deliveries in China fell to the lowest in 19 months in September, and Mitsubishi Motors had a 63percent fall in sales last month. 

China defends telecom firms Huawei, ZTE after US report (Reuters in Beijing) China’s foreign ministry said on Monday that Chinese telecoms companies operate according to market rules, urging the United States to “set aside prejudices” when it came to Huawei Technologies and ZTE. “Chinese telecoms companies have been developing their international business based on market economy principles. Their investment in the United States embodies the mutually beneficial nature of Sino-American economic and trade relations,” said ministry spokesman Hong Lei. The foreign ministry statement came after the US House of Representatives’ Intelligence Committee leaders said in a draft of a report that Huawei and ZTE should be kept from the US market because they cannot be trusted to dodge Chinese state influence and thus pose a security threat. The report will be released later on Monday. Telecom giants hit back at allegations (By By TAN YINGZI in Washington and CHEN LIMIN in Beijing) US report accusing firms of being security threat sparks angry denial - Two telecom giants rejected as "baseless" the findings of a US congressional investigation that accused them of posing a national security risk. The allegations indicated growing commercial disputes between China and the United States, especially in the high-tech sector, trade experts said.
Huawei Technologies Co, the world's second-largest telecom equipment manufacturer in terms of revenue, described the US congressional report as containing "dangerous political distractions” from normal business practice. "Baseless suggestions purporting that Huawei is somehow uniquely vulnerable to cyber mischief ignore technical and commercial realities, recklessly threaten American jobs and innovation, do nothing to protect national security, and should be exposed as dangerous political distractions from legitimate public-private initiatives to address what are global and industry-wide cyber challenges,” Bill Plummer, Huawei's US vice-president of external relations, said in an e-mail to China Daily. The US House of Representatives’ Intelligence Committee said that Huawei and ZTE Corp, the world's fifth-biggest telecom gear maker, should be excluded from the US market because they pose a security threat. ZTE urged the committee to extend equal treatment to all telecom equipment makers because "most or all US telecom equipment is made in China, including that provided by Western vendors”, it said in an e-mail to China Daily. China hopes the US will "respect reality, discard biases and improve economic relations between China and the US, not vice versa”, Foreign Ministry spokesman Hong Lei said on Monday. The report, which came amid rising trade disputes between the two countries, surprised experts. "The report is not just about economic issues, but goes further with guesswork about alleged conspiracy," said Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation Institution. "It has obvious political intentions because displaying a tough attitude to Chinese companies may help win more votes with a presidential election campaign going on,” he said. More trade disputes are likely to happen in the advanced industries like telecommunications, compared to low-end manufacturing, as Chinese companies move up the value chain and expand globally, Huo said. There has been an increasingly large number of trade investigations into Chinese exports, led by the US, since 2009. The committee launched a security probe into the two companies in November. In May, a congressional delegation, including some of the committee members, went to China where they met Ren Zhengfei, Huawei's board chairman, and the top management of ZTE. On Sept 13, Charles Ding, Huawei's corporate senior vice-president, and Zhu Jinyun, ZTE's senior vice-president for North America and Europe, testified at the House committee hearing. This was the first time the Chinese telecom companies had the chance to communicate with US authorities in public. In an interview after the hearing, Zhu told reporters that, due to different social and cultural backgrounds, there was one thing he felt difficult to explain to Americans: the relationship between the government, the Communist Party and the enterprise in China, especially when many Congress members still harbor a Cold War mentality and know little about China's development. "ZTE really understands American concern about cyber security, but we expected more constructive solutions from the US government to address the issue instead of just finger-pointing,” Zhu said. In a draft of the report made available to Reuters, the panel leaders said that US intelligence must stay focused on efforts by Huawei and ZTE to expand in the US and tell the private sector as much as possible about the purported espionage threat. "US network providers and system developers are strongly encouraged to seek other vendors for their projects," it said. The report is likely to have an impact on Huawei and ZTE, both of which are expanding aggressively overseas to fuel growth, said analysts. "The two companies have been trying to build a larger presence in the US market but failed, and the report is likely to make their business in the US even harder,” said Xiang Ligang, a Beijing-based industry specialist and president of industry website cctime.com. The companies may find it more difficult to win deals with US telecom carriers and their mobile phone business will be affected, he added. Huawei, which ranks only after Sweden's Ericsson in the global market, conducts 70 percent of its business outside China. It reported sales of $1.3 billion in the US last year. The Wall Street Journal reported earlier that Huawei is preparing for a public offering, but the company denied the report later. ZTE has a smaller footprint in the US, mainly through sales of devices like smartphones. Its sales in the US were $30 million last year. The document cited what it called long-term security risks associated with the companies’ equipment and services but it did not provide detailed evidence, at least not in an unclassified version. A classified annex provides "significantly more information adding to the committee's concerns,” the draft said. Based on classified and unclassified information, Huawei and ZTE, "cannot be trusted to be free of foreign state influence and thus pose a security threat to the US and to our systems”, it said. CBS aired a segment on Huawei on Sunday evening during 60 Minutes. The committee's chairman Mike Rogers told the program's host Steve Kroft: "If I were an American company today, and I’ll tell you this as the chairman of the House Permanent Select Committee on Intelligence, and you are looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers’ privacy, and you care about the national security of the United States of America.” Plummer, the only person from Huawei who appeared on the show, insisted that Huawei is a company just doing business. The company's "$32.4 billion in revenues last year” was obtained from "150 different markets, 70 percent of our business is outside of China. Huawei is not going to jeopardize its commercial success for any government, period”, he told Kroft. 

Mainland retail sales jump 15pc during "golden week" holiday (By Sophie Yu) Mainland's toll-free policy helps boost travel demand and spur consumption. Retail sales of consumer goods rose 15 per cent to 800.6 billion yuan (HK$980.17 billion) on the mainland during the eight-day "golden week" holiday that ended yesterday, surpassing industry expectations. The Ministry of Commerce said the retail sector, restaurants and tourism all saw robust growth during the Mid-Autumn Festival and the National Day holiday between September 30 and October 7. Precious metals, including gold and silver, jewellery and digital products were among the most popular items sought by consumers, the ministry said. The mainland has for the first time waived toll charges for expressways during a major holiday - a measure that lured millions of people to go on a holiday in their cars. On the first day after the tolls were removed, highways were so packed that cars were stuck in endless queues for hours. Tourism has been developing fast on the mainland, in step with a growing middle class, and has opened up more jobs. More than 13 million people are now working in the sector, according to official numbers. Wang Xianqing, a professor specialising in retail and distribution at the Guangdong University of Business Studies, said the growth in retail sales during the "golden week" holiday was beyond industry expectations. "The domestic economy has been weak and the retail sector has remained feeble for a while," he said. He had estimated sales growth of 5 to 10 per cent. The better-than-expected growth showed the government's stimulus measures were working, Wang said. He said almost every city and town had hosted shopping fairs, offering discounts and a greater product range. The toll-free highways bolstered travel demand and people were likely to consume more when they were travelling, Wang said. He expects the retail market to cool after the holiday. "The strong growth during the holiday period doesn't mean China's economy or its retail sector is improving. The performance during the holiday does not reflect the general situation." Retail sales rose 17.5 per cent to 696.2 billion yuan during the "golden week" holiday in 2011, which was a day shorter than this year.

Hsieh wraps up visit after meeting top CCP officials (By Chris Wang) The former premier said his trip was not political, yet media painted it as the DPP reaching out to China, a claim the party’s chairman denied - Former premier Frank Hsieh, center, cheers on two Taiwanese contestants at the International Bartenders Association World Cocktail Championship in Beijing. Former premier Frank Hsieh (謝長廷) met China’s State Councilor Dai Bingguo (戴秉國) and Association for Relations Across the Taiwan Straits Chairman Chen Yunlin (陳雲林) in Beijing yesterday in what appeared to be the climax of his landmark five-day visit to China. Hsieh became the most senior member of the former Democratic Progressive Party (DPP) administration to meet with high-ranking Chinese officials. The 66-year-old met with Dai, who also serves as the director of the general office of foreign affairs leadership group of the Chinese Communist Party’s (CCP) Central Committee, yesterday afternoon. Hsieh then met with Chen, who oversaw and participated in the signing of 18 cross-strait agreements over the past four years and had frequently been criticized by the DPP, at a dinner banquet, Hsieh told a press conference in Beijing last night. Hsieh, who was regarded as a moderate on China policy, also attended an international bartending competition yesterday morning where he cheered on the Taiwanese team. The event was the main purpose of his trip, which began in Xiamen in China’s Fujian Province on Thursday. Although Hsieh, who supported the “constitutional one China (憲法一中)” and “constitutional consensus (憲法共識)” formulas, reiterated that the only goal of his “apolitical” trip would be initiating the DPP’s active engagement with Beijing, all eyes were still focused on his meetings with CCP officials. After meeting with prominent Chinese think tanks in Xiamen and Beijing, Hsieh met China’s Taiwan Affairs Office (TAO) Director Wang Yi (王毅) on Saturday night for a two-hour closed door meeting. Hsieh told reporters yesterday that he told Wang the DPP “did not think the so-called ‘1992 consensus’ existed” and said there alternative options existed that could replace the policy, such as “one Constitution, two interpretations (憲法各表)” — Hsieh’s brainchild. Hsieh said the two exchanged opinions on comments he had made earlier in Xiamen calling for both sides of the Taiwan Strait to “transcend their differences” because “shelving differences alone was not enough to conduct bilateral engagements.” “Seeking common ground while shelving differences” (求同存異) has been the approach adopted by the CCP and the Chinese Nationalist Party (KMT) on cross-strait exchanges. Wang then explained to Hsieh how the so-called “1992 consensus” was reached, Hsieh said, adding that while both sides fail to agree with each other at the moment, “with wisdom a solution would come up over time.” Wang understood the DPP’s ideology very well, Hsieh said. TAO spokesperson Yang Yi (楊毅) said the meeting “was healthy for both sides,” but played down its significance, adding that Wang received Hsieh out of hospitality. Hsieh’s trip has been closely watched by DPP and KMT politicians, and international media despite his insistence that the visit was made in a private capacity in his role as chairman of the Taiwan Reform Foundation. DPP Chairman Su Tseng-chang (蘇貞昌), who has a rocky relationship with Hsieh, said yesterday in Yilan County that the visit was “Hsieh’s private trip regardless of who he met and what he said” and that Hsieh’s comments did not represented the DPP’s position. “No communication platform between the DPP and the CCP is being established,” he added. DPP members remained split over Hsieh’s “constitutional one China” and “constitutional consensus” initiatives, and on his visit.

China’s Type 052 series destroyers are considered a rough analogue of the U.S. Navy’s Arleigh Burke-class destroyer - New Destroyer a Significant Development for Chinese Sea Power (By Gabe Collins and Andrew Erickson) Now that the People’s Liberation Army Navy (PLAN) has commissioned its first aircraft carrier and may be looking to assemble one or more carrier groups over time, what about the rest of the fleet? One development that carries broad implications for the enhancement of Chinese sea power is the recent launch of the first editions of the new 6,000-ton Type 052D Luyang III-class destroyer, which marks a new stage in the PLAN’s prolonged period of experimentation with different destroyers. The Type 052D represents an evolution of the existing Type 052C Luyang II-class destroyer. The latter are now in mass production, with 8 hulls in service, the first commissioned in 2004. At least six 052Cs have been launched since the end of 2010, according to Chinese media reports, of which two are reportedly in service at present. Beijing appears to have decided that the Type 052 series, a rough analog of the Arleigh Burke-class destroyers that form the backbone of the U.S. Navy, is the latest class of warship whose design is good enough to justify large-scale production. While China mass-produced lower-quality Romeo- (Type 033) and Ming-class (Type 035) submarines and Jianghu-class (Type 053) frigates in an earlier era, today’s large-scale warship production meets much higher standards and is geared primarily to replacing older vessels entering mass obsolescence rather than expanding the fleet numerically. That said, it is well within China’s shipbuilding capabilities to both boost the quality of the fleet and boost its numerical strength, should the country’s leadership decide to do so. If China fielded 10-15 advanced destroyers like the Type 052D, it would, holding other numbers constant, become the second-largest surface combat force in the Asia-Pacific region after the U.S. Navy. Given the rapid ramp-up of Type 052C production in the past several years, we think the prospect of similar mass production of the Type 052D is quite possible. As a mass-produced vessel class, the Type 052D may now be joining China’s 60+ Houbei-class (Type 022) missile catamarans, 16-19 Jiangkai II-class (Type 054A) air defense frigates, 13 Song-class (Type 039) and 8-9 Yuan-class (Type 041) conventional submarines, and 3 Yuzhao-class (Type 071) amphibious assault ships. Why mass production of the Type 052D matters strategically - The Type 052D’s emergence suggests that China’s naval shipbuilding capability is maturing further, with China State Shipbuilding Corporation (CSSC) ‘s new shipyard on Shanghai’s Changxing Island becoming a capable facility for constructing modern surface combatants. It offers further evidence that China can produce warships quickly using modular construction techniques and perhaps other advantages such as lower cost labor than its competitors can access. Series production tends to reduce unit costs because shipyard workers and suppliers find ways to increase efficiency as they spend significant time and energy on the same tasks and improve their operational practices. Analysis by RAND (pdf) demonstrates that doubling the procurement rate of warships in the U.S. decreased unit costs by 10%. Given that Chinese shipbuilders are still building up their modern naval construction industrial base, the efficiency gains in China are likely to be larger as domestic efficiency increases and Chinese manufacturers displace foreign parts that may cost more. The modular construction capabilities now on display in CSSC’s yards took time to develop, but now China’s warship builders are creating a wide and deep base of expertise in the area. CSSC has been employing such techniques on the Jiangkai series frigates, the first hull of which was commissioned in 2005, as well as the Type 052C and now the Type 052D. This shows that at least three different Chinese shipyards are now able to mass produce advanced surface combatants, which demonstrates that China’s military shipbuilding institutions are clearly becoming “learning organizations.” The 052D differs significantly from its predecessor the Type 052C in several important ways. It has a completely different type of vertical launch system (“VLS”), with missile canisters instead of what look like revolvers; a different gun system; and what appear to be bigger phased-array radar faces. The VLS system is potentially the biggest development. The 052C’s likely complement of 64 VLS tubes with a more advanced surface-to-air missile (“SAM”) will offer strong area air defense capability, which can enhance the combat effectiveness of other PLAN surface ships and submarines by protecting them from enemy strike and anti-submarine warfare aircraft. Meanwhile, China’s long-established cruise missile industry is producing a wide range of extremely capable anti-ship cruise missiles (ASCMs). China’s record to date of developing advanced ASCMs gives every reason to believe that new variants of even greater capability will continue to emerge and be outfitted on PLAN vessels like the Type 052D. Strategic questions moving forward - A host of important questions remain regarding the Type 052D, the answers to which would help military planners and policymakers outside of China better understand the impact that the ship is likely to have. The answers to many of these questions—for instance, how good shipboard electronics systems are and how well crews can use their ship to fight modern battles—will become clearer over time as the PLAN makes decisions regarding operational approaches and training intensity and more Chinese sailors gain experience through both tours in the Gulf of Aden and exercises closer to home. The Type 052D appears to be a very modern warship that, with continued improvements in China’s maritime surveillance and targeting infrastructure and more intensive training of crews, can help make the PLA Navy even more formidable throughout the Asia-Pacific region. Regional neighbors such as the Philippines, Vietnam, Japan and South Korea are likely to respond by augmenting their own navies and reaffirming diplomatic and security ties with the U.S. Andrew Erickson is a professor at the U.S. Naval War College and a research associate at Harvard’s Fairbank Center. Co-founder of China SignPost (洞察中国), he blogs at www.andrewerickson.com. Gabe Collins is co-founder of China SignPost, founder of ChinaOilTrader.com and is a J.D. candidate at the University of Michigan Law School.

Chinese tourists head overseas during holiday (By Zhang Yuchen) A large number of Chinese tourists flocked to Thailand, South Korea and Europe during China's National Day holiday. It's estimated that the number of tourists booking overseas trips rose by 50 percent from last year. South Korea emerged as the most attractive destination for Chinese tourists keen to exploit this year's longer-than-normal holiday, because of the stronger yuan and the ease of obtaining a visa and travel. The Korea Tourism Organization said that 100,000 Chinese tourists visited the country during the holiday, a rise of 35 percent from last year. The tourist hotspot of Jeju Island alone hosted nearly 33,000 Chinese visitors between Sept 29 and Oct 3, a 59 percent increase over last year, according to the Korea JoongAng Daily newspaper. Most first-time visitors tended to stay north of the Han River, where famous tourist sites such as the Mt Nam peak and the Gyeongbok Palace are located. However, regular visitors tend to spend their time in Gangnam, south of the river, shopping. Duty-free stores in the Gangnam area have seen sales rise, reflecting the increase in the number of Chinese tourists who regularly visit the country. Medical tourism is also becoming more popular. Dermatologists in Gangnam are attracting more and more Chinese customers, who come on a regular basis for procedures such as skin whitening, according to the Chosun Ilbo newspaper. During the holiday season, charter flights to Thailand, especially Bangkok and Phuket, were available from many second- and third-tier cities. Tourism industry insiders said Thailand is popular with Chinese tourists because of it's relatively inexpensive and easy to get to. Meanwhile, long haul flights to France, Germany and Belgium were booked well in advance and tour agencies had sold all their seats to the Middle East and Africa by early September, making destinations such as Turkey, Egypt, South Africa and Dubai the best reserve options.

Hermes defies the trend of slipping sales (By Xu Junqian in Shanghai) Shanghai store expands as China volume rises more than 25 percent - The white, life-sized paper pony standing proudly in the display window of the newly expanded Hermes store at Plaza 66, Shanghai's most exclusive shopping mall, characterizes the French luxury house's confidence in China. People entering a Hermes shop in Hong Kong. Recession, or no recession, Hermes' sales are going up every year globally and in China particularly. The increase for Hermes will continue over the next five years, said Leo Lui, president of Hermes China. While many luxury retailers are undergoing an unprecedentedly difficult year in China, a one-time beacon of sales growth, Hermes is continuing to increase its presence in one of its most important markets, if not the most. "The expansion is mainly due to popular demand here. Last year, Chinese customers contributed 25 percent of our total sales. Five or six years ago, the proportion was less than one percent," said Leo Lui, president of Hermes China, on Sept 11, one day before the grand re-opening of the newly enlarged shop. The outlet, first opened in 2001, has been increased in size from 180 square meters to a 540 square meter space with a brown sugar-colored facade that echoes the "low-key profile" of the brand. "We don't want to be the kind of store that can be remotely distinguished from streets away," said Lui. "We find our Chinese customers are becoming more and more sophisticated and in dire need of products of high quality and nice materials, instead of big logos." Sitting next to brands such as Louis Vuitton and Tiffany in this 66-floor mall and office building, the new Hermes store, covering two floors connected by a white spiral staircase, will be the largest one on the Chinese mainland with merchandise ranging from the brand's signature silk scarves and leather bags to babywear and household products, the latter branded items being sold in the mainland for the first time. "It's true the year of 2012 has probably been the toughest one for many luxury companies in China after the past decade of prosperity, as the real estate market dried up and stocks turned rather gloomy," said Lui. In July, the British luxury company Burberry Group said in its financial report that sales in its Chinese stores accounted for only half of that of the previous year. China's biggest luxury watch retailer, Hengdeli, also complained to the Shanghai-based Oriental Morning Post that sales growth had already slowed down to single digits in the past couple of months. The latest half-year financial report released by Hermes International on August 31, however, showed that global sales reached 1.59 billion euros ($2 billion) during the first six months of 2012, a rise of 22 percent. China alone, according to Lui, registered a robust sales growth of more than 25 percent. "Recession, or no recession, Hermes' sales are going up every year globally and in China particularly," said Lui. "The increase for Hermes will continue over the next five years." Ben Cavender, associate principal from the Shanghai-based China Market Research Group, revealed the reason: "There are basically two kinds of luxury consumers in China, the ultimately wealthy and the aspiring middle class," he said. "What we are seeing right now is that affluent consumers are moving upmarket in their purchasing decisions and are favoring more exclusive ultra-luxury brands such as Hermes over the mass luxury brands such as Louis Vuitton or Gucci that have done well in China in the past. "This group of affluent buyers has already had the experience of purchasing the more mainstream luxury brands and no longer feels the need to buy luxury accessories that are immediately obvious to everyone on the street. Instead, they are looking for exclusivity and the best of the best, even if only a few people will be able to tell what they have purchased. This is opening the door for ultra-luxury brands such as Hermes or Bottega Veneta, or expensive one-off pieces." The door certainly seems to have opened for Hermes. Its latest financial report stated the company will increase its supplies in order to meet growing demand. Lui said there will be another eight to 10 stores opening or being renovated in China over the next five years, excluding China's first Maison Hermes, due to be inaugurated in Shanghai in 2014 and the fifth of its kind globally. "We are taking it step by step, with no rush," said Lui, whose office sits beside and overlooks the Maison Hermes, a 100-year-old building with an H-shaped exterior. "The incredible geographical coincidence is saying that the building was built for Hermes a century ago, isn't it?" said Lui, looking down on the premises.

Hong Kong*:  Oct 9 2012 

Hong Kong shares ferry victims' agony as mourning draws to a close (By Jennifer Cheng) With the death of nine-year-old Tsui Hoi-ying on Friday - the 39th victim of the disaster - people who visited a condolence point yesterday said they could viscerally feel the agony of her mother, who had already lost her husband in the tragedy. Yesterday was the last of the three days of mourning marked by the government. The Sunday Morning Post visited a condolence point in Leighton Hill Community Hall, which has seen an average of 1,000 visitors a day since Thursday, according to a staff member. One of the visitors was Elizabeth Chan, who works at Pamela Youde Nethersole Eastern Hospital. Her colleagues had been treating Hoi-ying as she battled for her life, she said. "I heard that when her mother was brought to the hospital, she did not know her husband was dead but was told her daughter was in critical condition. "Upon hearing what happened to her, she fainted. You can just imagine how heartbroken she must be right now. I have an eight-year-old daughter myself," said Chan, who grew emotional as she spoke. As it was the weekend, many parents were seen dropping in to leave a message of remembrance with their young children in tow. The Home Affairs Bureau had set up 18 condolence points in each of the city's districts throughout the days of mourning. Another visitor to the Leighton Hill condolence point was Candy Law Suk-ling and her daughter Katie, who is Tsui's age. "Even though Hong Kong is just a small city, I've really felt that everyone was united in the face of disaster," said Law. "In the future, I will have to teach my daughter how to face emergency situations, such as where to look for life vests and exits on a boat." The nightly Symphony of Lights fireworks display over Victoria Harbour was suspended during the three days of mourning and will recommence at 8pm tonight. Chan said her colleagues at the hospital had undergone a lot of emotional toil in helping the patients from the crash. "It is certainly different from dealing with regular patients because this is a tragedy that happened in an instant." She urged the government to reach out to the victims and their families by offering them professional counselling. "Their families have been torn apart, and they may lose the will to live if they do not receive professional guidance," she said.

CY walking fine line between integration and HK independence (SCMP Editorial) Hong Kong remains an international city, a free economy and an open society - cornerstones of our way of life under the one country, two systems concept. The city is open for business, and pleasure, to all comers, subject to any jurisdiction's right to determine who can enter and how long they can stay. So many mainlanders have been allowed to come that a proposed expansion of the multiple-entry permit scheme was recently put on hold to meet concerns about the city's ability to absorb more visitors. That move reflects a venting of simmering negative sentiment towards mainland visitors, who are blamed for a range of social ills from soaring property prices and rents to packed maternity wards. This issue has fallen into the lap of new chief executive Leung Chun-ying. Ironically, as a previous government's emissary to Beijing, he was instrumental in prising open the door to more mainland tourists to help the city's economy recover from the Sars downturn. Now he is trying to keep the welcome mat in the doorway. In an exclusive interview with the Post, he said that if mainlanders no longer felt welcome the city would suffer a serious blow. It would certainly not be consistent with our best interests. Increasing integration with the Pearl River Delta region is key to Hong Kong's future development. But the rising profile of mainlanders in our daily lives tests the city's renowned spirit of tolerance and independence. How we meet this challenge is important to our future success. Leung says we should be mindful of how the mainland views Hong Kong in the light of actions at demonstrations such as displaying the British and old colonial flags. In the context of Hong Kong's robust pluralism, some would see this as political mockery that is not to be taken too seriously. But a country ultra sensitive about territorial sovereignty may not see it that way, nor many patriots. A flag, after all, is a symbol of sovereignty and allegiance. If it symbolised anything else in this case it is the legacy of core values that underpin a free economy and a vibrant civil society. This may reflect a more worrying concern - that the line between the two systems is becoming increasingly blurred. If our values are to be upheld, Leung is right to say the government needs to manage the relationship with the mainland and communicate with Hong Kong people to ease their concerns. That will be the underlying challenge of dealing with livelihood issues.

'I'm not forcing Gigi,' stunned Cecil Chao says of marriage bounty (By Vivienne Chow) Tycoon out to set record straight on his good intentions for daughter in marriage bounty offer. Real estate tycoon Cecil Chao Sze-tsung says he was stunned by the global reaction to his offer to pay a HK$500 million marriage bounty to the man who could win his daughter's heart. "All the reaction was very shocking. I really didn't expect this," the 76-year-old told the Sunday Morning Post. "All I want is for my daughter to have a better chance to choose a better path for her life." Chao made the offer after his daughter Gigi Chao, 33, apparently married her same-sex partner of seven years, Sean Eav, in a civil ceremony in France. The story went viral. Cecil Chao, who is the chairman of property developer Cheuk Nang (Holdings), became an international celebrity. And now, the story could be hitting the big screen. It has been reported that Borat star Sacha Baron Cohen is teaming up with Paramount Pictures to produce The Lesbian, said to be inspired by the story of Chao and his daughter. Chao said he learnt about the film project only through the media and needed to find out more before deciding whether it might be defamatory. He wanted to set the record straight. "People get the impression that this looks like Romeo and Juliet, and that I'm this conservative father. But I'm not. "I'm not forcing her on anything. I'm not forcing her to change what she is. I just want her to have a wider choice. Let Gigi decide what she wants." On whether he knew about her love life, Chao said: "She has never told me she was gay." Chao, who has never been married, has three children borne by different women. He has often been portrayed by the media as a flamboyant playboy with the money and charm to date beautiful women from around the world. "It's true that I have a very colourful life. But I work very hard to build this little empire. I made the money by myself from scratch," he said. "I love my freedom. And [Gigi] has all the freedom she wants."

China art auctioneer debuts in Hong Kong market (Reuters in Hong Kong) A leading China auctioneer holds a debut sale in Hong Kong on Sunday, lured by the city’s international buyers, low tax regime and stable regulatory framework in a trend that could bring more competition for global firms. China Guardian’s sale of Chinese art and classical furniture follows its rise as the world’s third largest auction house on the crest of China’s art market boom, with sales of US$1.77 billion last year. “We want to win over more overseas market and buyers,” said Wang Yannan, the president of China Guardian and the well-connected daughter of former Communist Party leader Zhao Ziyang. The sale, though relatively small, is seen as a symbolic foray by China’s top auction firm into the turf of goliaths Christie’s and Sotheby’s who have long dominated international auction hubs like Hong Kong, New York and London. China Guardian’s key rival, Poly International is also planning an inaugural Hong Kong sale in late November, while A&F Auction and Beijing Rongbao Auction aim to enter Hong Kong in one or two years, according to art market reports. China’s wave of millionaire buyers and investors have helped propel Hong Kong into the world’s fourth largest art auction hub, with nearly 7 per cent of global art auction revenue last year, according to French art database Artprice.com. “It’s great for competition,” Francois Curiel, Christie’s Asia president, said. “Whenever I see more auction houses coming into the market, the pie became larger.” Some, however, felt the field was getting crowded. “It’s like separating a bowl of rice into two,” said Tim Lin of the Lin & Lin Gallery in Beijing and Taipei, referring to increased competition for Hong Kong’s multi-billion dollar art auction market. “How long will they last? It’s everyone’s guess.” Art dealers and experts say the Chinese expansion into Hong Kong is also being driven by a tightening regulatory environment in China that has grappled with widespread art crimes including tax evasion, a proliferation of fakes, money laundering and manipulative bidding practices. In April, a large-scale Chinese customs probe into tax evasion on art imports delivered a blow to the art market, with at least six prominent art dealers, collectors and artists being investigated, according to art dealers and Chinese media reports. “The tax probe had a huge impact on the spring auctions in China,” said the owner of an art gallery in Taipei who is a frequent buyer in the Chinese art market but who declined to be identified because of the sensitivity of the matter. “Everyone finds himself in danger so the market is extremely cold.” According to market research firm ArtTactic, total auction sales this spring from the biggest four auction houses in the China market dropped to US$1.5 billion, 32 per cent lower than the autumn season last year and 43 per cent less than a year before. “The tax investigation has cast a shadow on the Chinese art market,” said David Lin of Taipei’s Lin & Lin Art Gallery. “It has a psychological effect on buyers and sellers in China ... The chain reaction is going to last for a while.” China Guardian’s this year auction sales tally dropped 46 per cent to 2.14 billion yuan (US$340 million) this spring season, from 3.98 billion yuan in the last year autumn auction, but Wang attributed this largely to a stuttering Chinese economy. “It also has something to do with the slowdown in the economy, but it has nothing to do with the tax,” Wang of China Guardian, said. Art market experts, however, say Hong Kong’s laissez-faire economy, solid regulatory framework and zero-tariffs on art imports, make it a secure and stable alternative for China’s auction firms. Although Beijing has lowered its import duties on arts to 6 per cent from 12 per cent since the beginning of this year, another 17 per cent of value-added tax still poses a huge burden to Chinese auction houses. “Hong Kong is a more liberal tax region,” said Simon Young, a law professor at the University of Hong Kong. “One would have wondered why they didn’t move sooner.”

Two German tourists who were injured in a road crash on Monday in north China have been transferred to Hong Kong for further treatment, tourism authorities said. (Xinhua Editor:梁军) The two, Thomas Neucrer and Dorothea Hess, were transferred to Hong Kong on Thursday, and another four Germans were still receiving treatment in two hospitals in Beijing, said a written statement by Beijing Municipal Commission of Tourism Development issued late Friday. Among them, Bettina Johanna Deubel, who was in Beijing's Jishuitan Hospital, needs to undergo a craniotomy for her serious injuries, according to the statement. Six people, including five German nationals and a Chinese driver, died and 14 others were injured after a tourist bus rear-ended a container truck and caught fire around 8:30 a.m. Monday along an expressway near Beijing. The bus, carrying 19 German passengers, was arranged by the Beijing-based China Youth Travel Service.

 China*:  Oct 9 2012

China holds aces in island spat with Japan (By Andy Sharp) Japan's increased dependence on China for export sales gives Beijing the upper hand in a territorial dispute that triggered street protests and forced Chinese units of Japanese companies to close plants. The chart of the week compares Japan's exports to China, the European Union and the United States in billions of yen, showing sales to China more than doubling between 2002 and 2011 as it became the No1 market. Exports to the US dropped by almost one third and EU demand changed little. China took Japan's spot as the second-largest economy in 2010, in dollar terms. China's share of Japanese exports doubled over the decade to 20 per cent. By contrast, the US bought about 15 per cent of Japan's exports last year, half the proportion in 2002. The shift underscores China's clout in a fracas over control of islands called Diaoyu in Chinese and Senkaku in Japanese. "Neither economy benefits from this dispute, but the damage to Japan will be bigger," says Hiromichi Shirakawa, chief economist in Tokyo at Credit Suisse Group and a former Bank of Japan official. "China seems to have more bargaining chips with Japan than ever before." More than 40 Uniqlo clothing stores run by Fast Retailing were shut in China, with plant or retail units of Toyota Motor, Sony and Nissan Motor among those shut or disrupted. Protesters threw bottles and branches outside the Japanese embassy in Beijing, others marched in Shanghai waving Chinese flags and shouting anti-Japanese slogans. The latest flare-up escalated after Tokyo Governor Shintaro Ishihara in April proposed using public funds to buy the islands from a Japanese owner, which the national government did last week for 2.05 billion yen (HK$203 million). Baidu, China's largest search engine, put a banner on its website which if clicked took users to a separate page with the message, "The Diaoyu Islands belong to China!"

Beijing boosts air monitors in bid to give clearer readings (Associated Press in Beijing) Beijing authorities have completed a network of monitors that will more accurately measure air quality in the smog-ridden city after being pushed into it by public pressure and pollution reports from the US embassy. The Beijing Municipal Environmental Monitoring Centre said on Saturday that an additional 15 monitoring stations had begun releasing real-time data on small particulates known as PM2.5. The tiny pollution particles that may result from the burning of fuels in vehicles and power plants can penetrate deep into the lungs, so measuring them is considered a more accurate reflection of air quality than other methods. Chinese citizens have prodded their government into publishing more detailed pollution data since the US embassy started publishing on Twitter PM2.5 readings taken from its rooftop. Beijing started releasing PM2.5 data in January. It now has 35 monitoring stations set up in central Beijing and its suburbs, including near tourist favourites Tiananmen Square, the Temple of Heaven and the Beijing Botanical Garden. The monitors will run for a three-month trial, and then the city’s environmental protection department will formally use PM2.5 to evaluate the city’s air quality, rather than relying on the larger particles it currently measures. White mist sat stubbornly among the captial’s skyscrapers on Sunday as people travelled home on the final day of an eight-day public holiday that had brought with it mostly blue skies as industry shut down. “Is it fog or is the PM2.5 higher than normal?” Zhao Yiyi, at Beijing Airport, wrote on Sina Weibo. She added: “Such air quality, it’s horrible.” Just after lunchtime, the US embassy, which measures the air from its rooftop, tweeted that the PM2.5 reading, at 137 micrograms per cubic meter, was unhealthy. The Beijing environmental monitoring website reported a similar reading from a nearby station for that hour, but it didn’t interpret the data. Guidance on the website suggested that such a reading would be termed satisfactory if it became part of the daily air quality roundup. The US embassy rates pollution levels according to a US Environmental Protection Agency standard, which is more stringent than the one used by the Chinese government. Appearing frustrated with the dueling standards, the Chinese government told the embassy to stop publishing the data in June. It said it wasn’t fair to judge Chinese air by American standards because China is a developing country and noted that US environmental guidelines have become more strict over time. US consulates in Shanghai, Guangzhou and Chengdu also post readings of the cities’ air quality on Twitter. Last month, the US ambassador to China indicated that its remaining consulates in Shenyang and Wuhan would also monitor air pollution levels. “We’ve been criticised by the Chinese government for having such a monitor, but we feel it’s a duty – our duty to inform our dependents and our Americans of the air conditions there so they can make appropriate decisions regarding the health of their children and themselves,” Gary Locke said, according to the transcript of the event at the Carnegie Endowment for International Peace in Washington, DC. “We’re expanding this to all the different consulates throughout China.” Explaining PM2.5 to the audience, Locke said: “It’s the really invisible stuff that can really cause a lot of damage to respiratory systems and health. It’s almost akin to being exposed to secondhand smoke constantly, or even smoking several packs a day.”

Latest customs data indicated Thursday China's exports to emerging markets have been expanding, suggesting a decreasing reliance on demand from developed economies. (Xinhua Editor:厉振羽、梁军) The General Administration of Customs announced Thursday that the Association of Southeast Asian Nations (ASEAN), Latin America and Africa accounted for 9 percent, 6.4 percent and 3.8 percent of China's exports in 2011, up from 7.2 percent, 2.9 percent and 2.1 percent, respectively, in 2002. Chinese exports to India and Russia in 2011 rose by 1.8 and 1 percentage points from 2002, respectively, according to the data. Exports to the United States and Japan dropped by 4.4 and 7.1 percentage points in 2011 compared to 2002, respectively, the data showed. The United States and Japan are China's second-largest and fourth-largest trading partners. Exports to the European Union, China's largest trading partner, rose by 2.5 percentage points last year compared to 2002, the data showed. In 2011, the trade volume of China's private firms accounted for 28 percent of China's total foreign trade, up 19.4 percentage points from 2002, while that of state-owned firms accounted for 20.9 percent, down 17.3 percentage points from 2002, the data showed. Last year, the trade volume of foreign-invested firms in China accounted for 51.1 percent of the total, down by 2.1 percentage points from 2002, the data showed.

Senior mainland official meets Frank Hsieh - Chinese mainland's Taiwan affairs chief Wang Yi and Frank Hsieh from Taiwan on Saturday held a meeting which was regarded as "beneficial" by both, a mainland spokesman said. During the meeting in Beijing, Wang, director of the State Council Taiwan Affairs Office, briefed Mr Hsieh on the latest development and the prospect of the mainland, said the office's spokesman Yang Yi. Wang also explained the mainland's policies on Taiwan, Yang said. Both sides regarded the meeting as "beneficial", Yang said. Hsieh is visiting the mainland in his personal capacity as the chairman of the Taiwan Reform Foundation, the spokesman said. Frank Hsieh, former head of Taiwan's opposition Democratic Progressive Party (DPP), waves to media during a visit to the Institute of Taiwan Studies under the Chinese Acadamy of Social Science in Beijing, Oct 6. Hsieh was on a five-day "private" visit to the mainland.

Hong Kong*:  Oct 8 2012 

Ferry probe to take 6 months, says Marine Department (By Jolie Ho) The Marine Department said on Saturday it would take about six months to finish its investigation into the cause of the National Day ferry disaster. “The investigation will focus on whether the crew of the two vessels contravened maritime regulations or whether anything was wrong with the safety equipment,” department director Francis Liu Hon-por said. Liu was speaking during a televised interview on last Monday’s ferry disaster, when two passenger vessels collided off Lamma Island. The tragedy has now left 39 people dead. Liu ruled out heavy traffic as a cause of the collision. The location of the accident, northwest of Lamma Island, was not busy at the time, he explained. Liu said the department might also require ferries taking people to watch firework displays keep a formal list of passengers. It might also require these vessels ensure all children on board wear life jackets. Liu said these measures were currently only covered by guidelines and were not enforceable by law. “Under these guidelines, if we find any problems, we may advise them or issue a [warning] letter, but we cannot charge them,” he added.

Ferry inquiry to focus on role of both skippers as death toll rises to 39 (By Clifford Lo and Simpson Cheung) Collision claims its 39th fatality as initial investigation finds that the two captains failed to post a lookout as catastrophe loomed. The death toll in the National Day ferry disaster last night rose to 39 when one of its youngest victims died of her injuries, four days after the two passenger vessels collided off Lamma Island. After the government raised the death toll by one, a source at Pamela Youde Nethersole Hospital said nine-year-old Tsui Hoi-ying had died of multiple organ failure at 8.53pm. She is the eighth child to have died in the disaster, in which her father, Tsui Chi-wai, 42, also died. Her mother is still being treated in hospital. The announcement of her death came shortly before rescuers announced, at 10.40pm, that they had called off their search for any more victims or survivors. The government said police investigations had accounted for all people on board the Lamma IV launch and the Sea Smooth ferry at the time of Monday's collision, and that they would now be speaking to witnesses. A government source with knowledge of the investigation into the accident suggested that lapses by both skippers contributed to the collision. Both captains had apparently failed to keep a proper lookout and took insufficient action to avoid a collision that led to the city's deadliest maritime disaster in four decades, according to the source, who added that each captain should have been able to see the other's vessel approaching. "They should have seen each other because they were running on a reciprocal [head-on] course," the source said. "From the extent of the damage, [it seems] the two boats were travelling at speed. Both parties apparently failed to take sufficient action to avoid the collision." More than 100 police officers are now focusing on criminal liability. The Marine Department will concentrate mainly on the cause of the collision. Investigations thus far have shown that the two vessels were travelling at their normal operating speeds - 13 to 14 knots for the Lamma IV and more than 20 knots for the Sea Smooth - at the time of impact. The source said this suggested the captains had "failed to slow down or did not have time to reduce the speed of their vessels". Police have taken initial statements from 80 survivors who were taken to hospitals. They aim to approach as many passengers as possible, except children, to take detailed statements. Accounts of the collision will also be sought from some of the 1,000 disciplined services officers who took part in the rescue. Hong Kong and Kowloon Ferry, operator of the Sea Smooth, and Hongkong Electric both said they would not comment on anything related to the investigation at this stage. The 24-metre Lamma IV, carrying 124 passengers and three crew, had a nine-square-metre hole ripped in the left rear of its hull and the damage extended into its engine room. A maritime specialist who declined to be named said the Lamma IV was unlikely to be repaired and would probably be broken up once the investigation and any criminal proceedings had been completed. The day after the collision, police arrested seven crew members, including the two skippers, on suspicion of endangering the safety of others at sea. All seven were granted bail.

 China*:  Oct 8 2012

A Coach store in Shanghai. The American company positions itself as an "accessible luxury brand". A glo restaurant in London. Many Chinese dinners prefer "authentic" British fare. Money talks as shoppers seek status - Brands adopt a stylish approach for customers buying into image. The purchasing agent has a growing presence in China and enjoys a unique position as they bring the world of retail to consumers. When you search on the biggest online shopping website, Taobao, more than 100,000 such agents will pop out. As their name suggests, they buy international brands from overseas and sell them to Chinese customers. The scale varies but stores they supply sell virtually everything from clothes, luggage to milk powder and vitamins. Cosmetics and designer bags seem to be the most popular. The reason is not hard to fathom. Despite the agents taking their profits from the sale, these brands are still cheaper than those sold in city franchise shops. This is the pricing strategy of international brands, analysts said. George Yip, professor and co-director of the Center on China Innovation at China Europe International Business School, says international brands factor in costs involved in entering new markets into their pricing strategy. Yip is also the author of Managing Global Customers. "Foreign companies, generally, sell to a higher level on the economic pyramid in developing countries like China. So their customers can afford to pay the price," said Yip. "This is also a typical foreign-market penetration pricing policy. Start high and move down later to expand the customer base," he added. "High prices are sustainable if customers will pay and if there is no cheaper competitive alternative." The "higher levels on the economic pyramid", the upper and middle class in China, are expanding rapidly. With the Chinese market becoming a major money engine for international brands, these multinationals are adjusting their pricing strategies accordingly.

Japan picks Masato Kitera as ambassador to China (By Teddy Ng and Keith Zhai) Ambassador chosen for mediating skills, NHK reports, amid military maneouvres. Masato Kitera, 59, is a career diplomat. The Japanese government has picked as ambassador to China a career diplomat who nonetheless has little Chinese experience, to help ease escalating Sino-Japanese tensions. Japanese broadcaster NHK and Kyodo news agency reported yesterday that Tokyo had picked Masato Kitera to replace its current ambassador Uichiro Niwa. Kitera, 59, has extensive experience in Africa and Europe. After joining the Foreign Ministry in 1976, he became the director general for African affairs and served in Japanese missions in France, Geneva and Thailand. He became the assistant chief cabinet secretary last month. Tokyo earlier announced plans to appoint Shinichi Nishimiya to replace Niwa, but Nishimiya died last month after collapsing on a Tokyo street. Kyodo News reported on Wednesday that Tokyo would extend Niwa's term for another month. There are calls in Tokyo to appoint diplomats with expertise on China as the country's ambassador, but NHK reported that the government was having trouble finding the ideal candidate. Tokyo chose Kitera because of his renowned mediating skills and the hope that he could improve Sino-Japanese ties, which have been pushed to their lowest point in more than two decades in a territorial row over the Diaoyu, or Senkaku, islands in the East China Sea, the broadcaster said. Chinese analysts do not expect Kitera to have much success. "Naming someone who has no China experience simply tells us that Tokyo does not pay much attention to Sino-Japanese ties," said Zhou Yongsheng , a Japanese affairs expert at China Foreign Affairs University. The news of Kitera's selection came as Beijing has stepped up military manoeuvres in the East and South China seas. Ni Lexiong , director of a research institute on sea power and defence policy at the Shanghai University of Political Science and Law, said Beijing decided to step up military actions in response to recent US moves. The USS George Washington carrier group has been operating in the East China Sea and the USS John C. Stennis carrier group is close to the South China Sea. Meanwhile, the Tokyo District Public Prosecutor's Office said yesterday it had decided not to prosecute a formerly Tokyo-based Chinese diplomat, Li Chunguang , who was reportedly suspected of spying on Japanese military technology. Beijing had denied the claims.

H&M: China is the fastest growing market (By Wang Chao) Karl-Johan Persson says H&M's concept of fashion caters to all styles and has huge potential in China. Sept 20 was a big day for H&M, the Swedish multinational retail-clothing company. While celebrating the opening of its 100th Chinese store in Nanning, capital of the Guangxi Zhuang autonomous region, it opened its first store in Kuala Lumpur, Malaysia. Established in 1947, H & M Hennes & Mauritz AB (operating as H&M) is known for its range of clothing. In terms of revenue it ranks second globally behind Spain-based Inditex, parent company of the clothing brand Zara. It is followed by US clothing brand Gap. H&M's 100th Chinese store opens in Nanning, capital of the Guangxi Zhuang autonomous region, Sept 20, 2012. As of the end of August, the company operated in 45 countries with more than 2,629 stores. According to its interim report, released in July, during the first half of the financial year revenue generated by H&M increased by 12 percent year-on-year. The Swedish brand has been expanding quickly since its entry into China in 2007. It is not able to release its Asian sales figures, due to company regulations, but Karl-Johan Persson, CEO of H&M, indicated that China is the fastest growing market in terms of store numbers. Persson is the son of chairman Stefan Persson and grandson of Erling Persson, the founder of H&M. Persson founded H&M in 1947 after visiting the US where he was inspired by a store selling low-priced clothes. Unlike the famous European brands which usually belong to the premium group, H&M sells a philosophy, as Persson puts it. He terms this "democratic fashion". "We create democratic fashion, and we want to sell to all," he said. Karl-Johan Persson says H&M's concept of fashion caters to all styles and has huge potential in China. This principle is reflected in the design and style of the garments - from basics to exaggerating designer series, and from plain shirts to colorful dresses. Although loose and oversized garments often give Chinese shoppers the illusion that this is a typical "European style", Persson said that "European element" is not the selling point of H&M, at least it is not what the company intended. "The company is founded in Sweden, so there is certain amount of 'Swedishness' in this brand, but we don't want to stress our nationality to customers," he said. The brand does some local adaptation from time to time, but generally, 80 percent of products are the same globally. "Take the new Malaysian store for example. Of course we refer to our experiences in other hot countries like Singapore, and as you can see, there are not as many thick clothes or down coats in these places as in Sweden," Persson said. "But in terms of other adaptations, we make them along the way as we operate the store."

Intel to invest in 2 Chinese tech firms (By By CHEN JIA in San Francisco) Two Chinese companies are among 10 investments totaling $40 million that US-based Intel Corp plans to make around the world, the chip maker announced this week. Arvind Sodhani, president of Intel Capital.- Intel Capital, the company’s investment and mergers-and-acquisition arm, said at its annual Global Summit near Los Angeles on Wednesday that it will invest in UUCun, a mobile-Internet platform that links phone makers, app developers and advertisers, and Transmension, a developer-distributor of 3-D games for televisions via IPTV, cable and smart-TV technologies. A breakdown of the amount of investment UUCun and Transmension will receive wasn’t disclosed, nor were other terms. The money will come through the Technology Fund II overseen by Intel Capital’s China branch with the goal of promoting innovation in technology development and business operation. "With the rapid evolution of the digital media landscape, it is critical for healthy ecosystems to be developed to support these new consumption models and enhance the consumer experience," said Richard Hsu, managing director of Intel Capital China. "Transmension and UUCun are companies that drive innovation in the ecosystem, and Intel Capital’s investment reinforces our commitment to foster China’s IT innovation and industrial development." Since its first foray into China in 1998, Intel Capital has invested over $650 million in more than 100 Chinese companies, in industries including mobile Internet, cloud computing, digital media and health care. Led by Hsu, Intel Capital China has six investment directors based in Beijing, Shanghai, Hong Kong and Xiamen. Eight other companies — four in the United States and one each in Brazil, India, South Korea and Taiwan — will share in the $40 million investment, Intel Capital said. The Global Summit, now in its 13th year, unites about 1,000 Intel Capital-funded entrepreneurs with executives of market-leading companies to exchange ideas and explore possible deals. "Business deals happen when Intel Capital brings together our vast global network with our portfolio company innovators," Arvind Sodhani, president of Intel Capital, said Wednesday. "The 10 new investments in innovative companies announced today stand to benefit greatly from these long-standing company-building resources."

Shanghai tightens security after Federer death threat - Roger Federer of Switzerland attends the draw ceremony of the Shanghai Masters tennis tournament in Shanghai October 6, 2012. Shanghai Masters organisers have increased security for the tournament starting on Saturday after an online threat to decapitate world number one Roger Federer, the Shanghai Youth Daily newspaper reported on Friday. Shanghai Masters organisers have increased security for the tournament starting on Saturday after an online threat to decapitate world number one Roger Federer, the Shanghai Youth Daily newspaper reported on Friday. "On October 6 I plan to assassinate Federer in order to exterminate tennis," read a post by "Blue Cat Polytheistic Leader 07" on a Federer fan website on Sept. 25, the newspaper's website said. The paper said the post was accompanied by a "very scary" computer modified image showing a decapitated Federer. Federer may go directly from the airport's VIP arrival hall to his hotel as part of the precautions, Yang Yibin, the tournament director, told the paper in an interview earlier in the week. It said Shanghai police were investigating. Local journalists said Shanghai municipal authorities had told local media not to report the issue.

Hong Kong*:  Oct 7 2012 

Lamma traders say visitor numbers have dropped after tragedy (By Thomas Chan, Jennifer Cheng and Simpson Cheung) While ferries to and from Lamma are packed with mainland tourists, traders on the island say business is suffering following Monday's collision between a ferry and a Hongkong Electric motor launch in which 38 people died. The death toll yesterday rose to 39. Islanders also said Hongkongers had cancelled holiday rentals. Islands district councillor Chan Lin-wai said it was understandable people might want to avoid the island - usually a magnet for day-trippers - out of respect for a community in grief. But he hoped things would eventually return to normal and said islanders would welcome religious groups wanting to pray for the victims or hold rituals in their honour. Hong Kong and Kowloon Ferry Holdings - owner of the Sea Smooth ferry, one of the two vessels involved in the collision - appeared to be doing good business yesterday. Most of the visitors appeared to be mainlanders. They constituted about 70 per cent of weekday tourists, said the traders. One woman on a day trip with her family from Shenzhen said: "It's an isolated incident and doesn't shake my confidence in Hong Kong's transportation." The seafood restaurants and cafes in Main Street, Yung Shue Wan, were packed with diners at lunchtime. But one cafe owner, Hory Fong, said there had been a 20 per cent drop in business. "The most obvious drop was the day after the tragedy took place," she said. "I hope the situation will get better by Christmas." Bali Holiday Resort, which has 30 rooms for rent, said there had been cancellations from Hongkongers. "They said they didn't want to come to Lamma so soon after the incident," a member of staff said. Nine-year-old Tsui Hoi-ying became the 39th fatality last night. She had been in critical condition since Monday's collision and died of multiple organ failure. Thirteen survivors are still in hospital. The name of one more child victim was also confirmed yesterday - 10-year-old Lam Wai-yi, from Good Hope School in Choi Hung, who died with her mother. Wai-yi's seven-year-old sister, Lam Wai-hei, was among those still in hospital, as was marine police officer Yeung Ming-hong, 31, one of the first rescuers to reach the scene and who suffered a broken knee and rib. Meanwhile, the weekly morning assembly at St Stephen's Preparatory School in Stanley said prayers for seven-year-old Primary Two pupil Nicholas Chi-ho Belshaw, who was among the seven children who died in the National Day tragedy. Deputy principal Gordon Wong Sing-tung said pupils read out messages on cards of condolence, some of which will be given to Nicholas' family. His mother, Wendy Ie Hwie, also died in the collision but his sister, Emma Belshaw, survived.

Li & Fung in talks to buy New York's Synergies - Li & Fung, a global supplier of apparel, is in advanced talks to buy Synergies Worldwide, a small New York-based supplier. The move would help Li & Fung gain a better foothold in the fast fashion and discount clothing space. Fast fashion refers to apparel retailers that respond quickly to changing styles by moving new merchandise into their stores throughout the year. Li & Fung is now negotiating the finer points of a deal with Synergies, which specialises in low-cost sourcing and has a strong foothold in manufacturing centres such as India, Pakistan and Bangladesh, a source said. A Li & Fung spokesman said the company did not comment on market rumour, and Synergies did not respond to requests for comment. Suppliers such as Li & Fung and Synergies act as middlemen, working with manufacturers of apparel and other goods to manage the flow of products to retailers. With 60 per cent of Li & Fung's sales destined for US-based retailers, investors are increasingly concerned about the impact of sluggish US growth and data that has pointed to weak consumer spending. In the US, fast fashion and discount retailers are the two segments that have been doing well in the brittle economy, successfully taking market share from rivals that operate on more traditional supply chain processes. Li & Fung's shares slumped in August after the exporter posted weak interim results. The company suffered a further blow last month when Wal-Mart outlined a new sourcing arrangement with the company, triggering concern over the longer-term prospect of Li & Fung's sourcing business. Li & Fung, which is halfway through a three-year growth plan that aims to increase core operating profit to US$1.5 billion by next year, has said it would expand organically and through acquisitions. Some analysts questioned whether its acquisition-led business model still works. Synergies has a stronger foothold in Europe, where its clients include Zara owner Inditex, Promod and Alcott.

Leung Chun-ying 'has no magic wand' for Hong Kong's problems (By Tony Cheung) Chief executive says he inherited some serious issues from last administration, and that there is no quick way to turn them around. Chief executive Leung Chun-ying yesterday defended his flagging popularity and said he had inherited many problems from the previous administration. There was no "magic wand" that would quickly turn things around, he said. Leung, whose performance rating fell below the "pass" mark of 50 for the first time in a recent poll, likened the problems to a game of chess that was begun by his predecessor Donald Tsang Yam-kuen. Leung said his performance over the past three months should be compared to that of the last leg of Tsang's administration from April to June, as both leaders dealt with similar political conditions and problems. "My administration is not playing a new game of chess, but a game that existed on June 30 [the day before Leung took office], a game that was already under way," Leung said. A Chinese University poll of 700 respondents, which was released on Thursday, put Leung's rating in September at 48.8 out of 100 - a few points above Tsang's score of 41.8 in the same survey in June, his last month in office. "Hong Kong's issues are not problems that can be solved in a matter of days. It will take two years to turn around or to stop the downward trend," said Leung, who will mark his 100th day in office on Monday. "If someone believes he has a magic wand, I want to hear about it. But in the past three months, I haven't seen a magic wand," he said at a lunch with the press. Asked if he thought he had "inherited a mess", Leung stressed he was not criticising Tsang but saying his own administration could only continue to confront reality, including the shortage of homes and a slack economy. (While Leung spoke of a shortage of homes, Tsang, in his 2011 policy address, said the city had 2.6 million homes for its 2.35 million households.) Leung said: "Some Hongkongers may think we don't need to worry about doing business, and that our tourism industry will be blooming forever. Do we ever imagine that we will suddenly lack tourists one day?" During the "golden week" holiday, the number of foreign tourists plunged more than 20 per cent compared to last year, and the number of visitors overall would have dropped if not for mainland tour groups, he said. According to immigration statistics, a total of 550,932 mainland tourists arrived from October 1 to 4, representing a 9.8 per cent increase year on year. Leung denied the public had lost trust in the government in the wake of big protests against national education and a string of housing scandals that implicated him and his top ministers. Chief Secretary Carrie Lam Cheng Yuet-ngor broke down in tears in a televised interview last month, attributing her fall in popularity to the public's distrust of Leung and the city's increasing conflict with the mainland. Leung refused to comment on a report that Paul Chan Mo-po had got behind the wheel of his car on Tuesday after drinking alcohol at a lunch. Leung said he would discuss the matter after a police investigation. Chan, meanwhile, told RTHK his car "definitely did not cross [a] double white line", rebutting an Apple Daily report - with a picture - that suggested otherwise. He also criticised paparazzi for following him and his family. Leung said ministers and civil servants were co-operative and had high morale - allowing him to roll out a series of livelihood and housing measures in his first 100 days. On October 17, Leung will address the new Legislative Council for the first time on his vision for Hong Kong's development.

Cecil Chao lesbian marriage 'reward' offer to be Sacha Baron Cohen movie (By Vivienne Chow) British comic to make film of tycoon's HK$500m reward offer for wooing his lesbian daughter. Hong Kong playboy tycoon Cecil Chao Sze-tsung's offer of HK$500 million to the man who succeeds in marrying his lesbian daughter Gigi Chao is heading for the big screen. British comic actor and filmmaker Sacha Baron Cohen has signed with Paramount Pictures to develop The Lesbian, a film based on the family drama that went viral around the world, according to showbiz media. Variety and The Hollywood Reporter say the film will be produced through the Golden Globe-winning star's company Four by Two Films. Cohen is also likely to star in the movie, but writers have yet to be confirmed. Cecil Chao was not available for comment, but Gigi Chao said she was not aware of the project as no one from Paramount or Hollywood had contacted her. Asked if she was upset by the plan to turn the bizarre plot into a movie, Gigi Chao said: "I think it is just a manifestation of the deeper social issues at play. One has to admit that this situation is a bit comic and tragic at the same time." Last month Cecil Chao, a 76-year-old property developer, offered HK$500 million to the man who succeeds in marrying his 33-year-old daughter after learning she had walked down the aisle five months ago in a civil ceremony in France with her female partner of seven years, Sean Eav. The news went viral after it was reported in the South China Morning Post, and marriage proposals flooded in from all over the world. Cecil Chao has never married but boasted in a 2001 interview of having had 10,000 girlfriends. Gigi is the oldest of his three children, all borne by different mothers. Film producer Peter Tsi Ka-kei said it was amazing how quickly Hollywood had picked up the idea. He said the story had universal appeal and it was a great premise for a comedy. While it is not known whether the marriage bounty will ever be paid, Tsi predicted Hollywood would make the story sympathetic to gays. "Being gay-friendly is politically correct in Hollywood nowadays," Tsi said. "It's a cute pitch. It's like how two generations of characters are learning to respect each other." He said that as long as the film did not quote any real names and stated that it was inspired by a true story, the film company did not need to contact the family, or people involved. Born in London, Cohen is a former stand-up comedian who rose to international fame with his controversial Da Ali G Show. He won a British Academy of Film and Television Arts award for best comedy and, later, with the mockumentary Borat, he earned a Golden Globe for best actor.

Hong Kong chefs Olympic challenge (By Elle Kwan) Chefs from the Hong Kong team prepare for the Culinary Olympics at their base in Pok Fu Lam. For Hong Kong's sporting heroes the Olympics are already a memory, but our national culinary team is still in training and dreaming of gold. The team's culinary Olympics start tomorrow in Erfurt, Germany. "Everyone says that taking part is the most important thing, that it doesn't matter if you don't win - but it does. We want to come first," says Hong Kong Chefs Association competition organiser Anita Cheng Wai-ching. Cheng is calling time in the practice kitchen at a rehearsal. She squints at a clock on the wall and checks it against her watch. "It is 11 o'clock. One-and-a-half hours to go," she shouts over the kitchen din. Beyond her, chefs hover, some at the stoves with steaming metal pots, others with pans of spitting seafood sausages. One prods a slab of pork belly, another lifts a tray of lightly browned biscuits from an oven, hoisting it above his shoulder and marching towards his workstation. The team arrived at the Vocational Training Council training restaurant in Pok Fu Lam for a practice session at 4am. At 6am, prep done, they began cooking a three-course dinner they hope will win gold at the Culinary Olympics. Like its sporting counterpart, the cooking competition takes place every four years and aims to showcase the world's best talents. Oscar Chow Kwok-ho, who works at The Sheraton, is team manager. For now, Cheng is letting him concentrate on the kitchen tasks at hand, but in the competition he will keep the time, as she is today, and approve dishes to be judged, after overseeing production. "I'm not nervous today, but in Germany I might be scared," he admits. Each course contains three elements. The appetiser comprises a terrine of sea bass, salmon and oyster with a Brittany lobster sausage and crab beignet. The sausage, which has taken the team months to perfect, is the riskiest element given how prized sausages are in Germany. The main course plays to a home strength that should also appeal to the German palate; suckling pig served three ways. Dessert is a lemon curd sphere with Japanese citrus yuzu ice cream and crumb topping. Today is the sixth time the team has prepared the meal, and the emphasis is on adding processes without adding time. "We need to get it right with limited space and limited equipment in the time required," Chow says. The kitchen has been set up exactly like the German test kitchen, from layout down to the number of cutting boards available. At any moment during preparation chefs know where the equipment is and the order in which to use it. "We plan so well ahead that there is little need to discuss anything," says Cheng. However, such efficiency might appear to European judges as if the team is not communicating, and so she reminds them to interact. She reminds them of many things. "I have to remind them to pee. They forget," she says, explaining that they get engrossed in their work. "It is such a job of passion." She checks the clock again, and shouts: "11.45." Members of the six-strong cooking team take holidays from their day jobs at some of the city's top kitchens to take part in the contest. Among the line-up is Calvin Choi Chun-fai, who began his career in 1993 with no formal training and now heads the kitchen at The Steak House at the InterContinental Hong Kong. Tim Chan Man-shun comes from the Jockey Club, pastry chef Ken Lee Siu-fai works at the Harbour Grand Kowloon. The team was chosen last July after members of the Hong Kong Chefs Association were invited to submit applications. Only one, Chui Wai-sum, took part in the 2008 competition. "I'm the only one young enough to take the stress," the 37-year-old jokes. They've been practising ever since, mostly after work, with sessions beginning at 10pm. For some, it will be their first international competition. Lee began cooking as an apprentice in 1990, and has worked for hotels chains such as the Hyatt and JW Marriott since. He won gold at a local competition last year, which prompted his Olympic application. "For me, it's a good experience," says Lee. "But this is not just for me. In five, 10 years, there will be younger Hong Kong chefs. I want to pass on what I learn to them." Participating in such competitions is a way to expose local chefs to international talent, hone skills and showcase Hong Kong in the worldwide arena, but the local team says it is at a disadvantage without greater support. Sponsors - Hopewell Group is the biggest cash sponsor - are relied upon to help fund the 10-day trip, including flights and accommodation, ingredients, equipment and space to practise. Budgets are limited. European teams enter the competition space with huge refrigerated trucks, says Mak Kam-kui, team coach and the chefs' organisation's vice-president. Chow has pre-ordered essentials, such as the main course baby pork cutlets, but the Hong Kong team will hit the supermarket and make last-minute changes according to what's available, Kam explains. "12.25. Five minutes," shouts Cheng as chefs flurry around the lines of white plates on the counter, each adding a component. Chef Tse Nam-yung uses tongs to position lobster sausages and the first plates are away.

Court dismisses Albert Ho's legal challenge to Leung’s victory (By Austin Chiu) Seven months after Leung Chun-ying won the chief executive election, the High Court dismissed a legal challenge to his victory on Friday. Mr Justice Johnson Lam Man-hon threw out a petition from Albert Ho Chun-yan, refusing Ho’s request that he extend the deadline for filing the challenge. Ho, the former Democratic Party chairman, finished third in the March election. Ho has argued that Leung was not duly elected because he had made false statements about illegal structures during his campaign. But Lam said Ho’s case had little merit. “Since Mr Ho’s case has no real prospect of success, it would not be in the interest of justice to grant him an extension of time,” Lam wrote in his judgment handed down on Friday. Under the law, an election petition should be filed within seven days of the announcement of the election result. But Ho filed his petition three months after the election because the suspected illegal structures at Leung’s home were not revealed until then. At issue is whether Leung made a false statement when he attacked election rival Henry Tang Ying-yen over illegal structures at Tang’s Kowloon Tong home. Ho claimed that by criticising Tang, Leung implied he himself had made no unauthorised alterations to his house, but six suspect structures were found there. Ho is the former chairman of the Democratic Party.

MTR limits luggage weight to combat parallel traders (By Lai Ying-kit) Parallel traders operating at Sheung Shui MTR station. The MTR Corporation will restrict the weight of passengers’ luggage at four stations near the border from next week, to crack down on parallel-goods traders, the railway announced on Friday. Beginning on Tuesday, a new rule will ban passengers from carrying luggage weighing over 32 kilograms onto trains in Sheung Shui, Fanling, Lo Wu and Lok Ma Chau. Electronic scales will be placed outside station entrances, and MTR officers will weigh heavy-looking luggage before travellers can enter. If passengers refuse to have their luggage weighed, they can be denied entry, given a warning or even prosecuted. MTR Corp’s head of operations, Francis Li, said the new measure was designed to complement an existing rule limiting the size of luggage, to stop passengers transporting parallel goods in large amounts. “We have to keep the impact of luggage on other passengers under control, and make sure passengers complete their journeys free of inconvenience and interference,” Li said. Parallel traders stock up on products ranging from baby milk formula, red wine and smartphones in Hong Kong, then resell them on the mainland at a profit. Residents of Sheung Shui protested last month against the crowds of traders, saying they crowded Hongkongers out of MTR stations and nearby areas. That protest prompted the continuing official crackdown on traders.

Hong Kong Adds 1 to Crash Death Toll (By Te-Ping Chen) A young girl hospitalized in critical condition after Hong Kong's worst maritime disaster in a generation succumbed to her injuries late Friday after a four-day fight, raising the death toll from the tragedy to 39. The girl, Tsui Hoi-ying, was 10 years old, the Hospital Authority said, and died around 9 p.m. Friday. She had been thrown into the water Monday night after the boat she was on with her family collided with a high-speed commuter ferry and quickly sank, killing nearly one-third of those on board, including her father. There were no fatalities and few injuries on the ferry.

 China*:  Oct 7 2012

Thumbnail http://www.youtube.com/watch?v=EFJWRGvEjUI

Former Secretary of State, Henry Kissinger and former Governor of Utah, former Ambassador to China, and current Presidential hopeful, Jon Huntsman to discuss U.S.-China relations http://www.youtube.com/watch?v=5aa6zV8J2Nc  

Dr Henry Kissinger: Candidates' China rhetoric criticized (By Tan Yingzi & Sun Chenbei in Washington) Henry Kissinger says both candidates have been making irresponsible comments about China during the campaign. Both candidates have labeled China as "Cheats" and "Crooks". US should adjust and cooperate, say experts - Harsh campaign rhetoric about China from both US presidential candidates is a big foreign policy mistake that will hurt bilateral ties, experts from each country said on Thursday. The next American president should adjust to the rising economic power of China, welcome Chinese investment, manage any conflict and increase cooperation, they said. Challenger Mitt Romney has vowed that he would label China a "currency manipulator" if he makes it to the White House, and he reiterated during Wednesday's presidential debate that he would take on China in trade disputes as one of his five economic fixing plans. Both President Obama and Romney have blamed China for American job losses and a trade deficit, and have also criticized each other for outsourcing jobs to China. In a panel discussion on Wednesday afternoon before the first presidential debate, Henry Kissinger, former US secretary of state, said both candidates had been making irresponsible comments about China during the campaign. "In each country there are domestic pressures that emphasize disagreements that arise, and we see that in our political campaign, in which both candidates are using language that I find extremely deplorable," Kissinger said at the Woodrow Wilson Center in Washington. "Both used the word 'cheat' as applied to China, in trade," Kissinger added, saying that "theoreticians" unschooled in the nuances of the US-China relationship "want to turn this into a crusade." Former US ambassador to China Stapleton Roy said both candidates are making "two fundamental mistakes" in dealing with China in the campaign. "First of all, the issue is not currency manipulation," he said from the Carnegie Endowment for International Peace, a Washington-based think tank. "China's current account has been declining sharply. Its accumulation of foreign exchange reserves has slowed markedly, and its currency has appreciated over 30 percent since 2005, and it's continuing to appreciate." What really concerns the US business community, he added, was intellectual property protection, market access and investment conditions. "The second mistake is when you're trying to manage a difficult relationship, you don't make it more difficult," he said. Elizabeth Economy, director of Asia studies at the Council on Foreign Relations, said both candidates have targeted China as a scapegoat for America's economic ills instead of engaging the Asian country in a "serious or substantive" manner. "What should they be talking about?" she said. "I think the issues that we're going to discuss today - namely, how can the US enhance its economic position vis--vis China and the bilateral relationship? Are there opportunities for the United States and China to cooperate more on global issues? And does the US have it right when it comes to the pivot or rebalancing, as I guess it's now called more broadly within Asia?" Yan Xuetong, director of the Institute of International Studies at Tsinghua University in Beijing, said the candidates' accusations of China of "stealing" American jobs have a negative impact on China-US relations and undermine the cooperation between them. On security and military matters, former ambassador Roy said both the US and China have a legitimate right to develop defense, but the next American president should control the growing military build-up. "The question is how much is enough?" Roy said. "I think the next American president and the current American president have a responsibility to try to bring an unconstrained competition over military capabilities between the Chinese military and the US military under control. Otherwise we are going to pour trillions of dollars into a competition which is not driven by the reality of the differences that we have with China, that simply don't justify that high level of spending." On the attitude towards Chinese investment, experts agree that Chinese money is a good thing for the American economy, but Washington needs more transparency in its review process on foreign investment. The Committee on Foreign Investment in the US has rejected several high-profile deals from China in recent years over concerns about national security. Last Friday, President Obama blocked the proposed purchase of a wind farm in Oregon by a Chinese company on the grounds that it could damage America's national security interests. "I think they (CFIUS) make mistakes," said Chas Freeman, chairman of Projects International and a leading China hand. "They do it on a fairly routine basis, and they reflect fair amount of paranoia within the Beltway that's quite contradicted by attitudes in the country at large." 

中國屢遭負面渲染 奧巴馬和羅姆尼標籤中國人是騙子 基辛格怒批兩候選人 (美聯社華盛頓3日電

美國前國務卿基辛格3日發表言論,嚴厲批評奧巴馬和羅姆內兩位總統候選人在競選中大肆渲染對中國的質疑 。 他指出,兩位候選人關於中國在貿易問題上使用欺詐手段的言論,應受到「強烈譴責」。 上周,奧巴馬和羅姆內不約而同發布廣告,允諾將對所謂的中國在貿易中的一系列違規操作行為採取強硬手段。中國的貿易行為常被政客指責為導致美國人失業的罪魁禍首。 基辛格是40年前中美重新建交的重要推手,他至今仍強烈支持中美兩個超級大國間應建立更友好的合作關係。 儘管基辛格此前公開背書羅姆內,但他當天明確表態反對羅姆內稱中國操控貨幣的說法,表示所有的中國專家都會反對這種提法。 基辛格說,只有那些紙上談兵的理論家們才喜歡這種叫法,因為他們缺乏同中國打交道的實際經驗,便只能施以口誅筆伐,企圖打敗中國。 基辛格的這番言論是在華盛頓的威爾遜中心發表的。奧巴馬和羅姆尼標籤中國人是騙子.

Zadig & Voltaire fashion boss apologises over China gaffe (By Agence France-Presse) Company founder Thierry Gillier said remarks had been taken out of context. Thierry Gillier has apologised for saying that Chinese tourists would not be welcome at an exclusive new hotel in Paris. The boss of French clothing firm Zadig & Voltaire has apologised for saying that Chinese tourists would not be welcome at an exclusive new hotel planned by the company in Paris. Company founder Thierry Gillier told fashion industry journal Women’s Wear Daily late last month: “We are going to select guests. It won’t be open to Chinese tourists, for example.” The article has since been amended to remove the reference to Chinese tourists and instead refers to “busloads of tourists”. But that did not stop outraged Internet users posting angry messages on social media and websites in China. “This is obviously racial discrimination. Not every Chinese is uncultivated, there are many more who are cultured,” said one user on popular portal Sina.com. “I think this pretentious brand will lose an important market if it really turns down Chinese.” In a statement released on Thursday, Gillier said the remarks had been taken out of context and apologised for any offence caused. “These reported words do not reflect either my line of thought or my ethics,” he said. “My remarks were doubtless clumsy and, taken out of their context, I understand they might have hurt my friends from China, France or elsewhere, and I am deeply sorry for that.” The hotel would be an “intimate address”, the statement said, adding that Gillier “admits he expressed himself in an inappropriate way to explain that his hotel was not suited to mass tourism”.

Li Na edges Peng to enter top eight at China Open - Home favourite Li Na came from one set down to defeat compatriot Peng Shuai 4-6, 6-2, 7-6 (3) in a marathon battle which lasted two hours and 27 minutes.

Niche high-end products beat established brands (By Wang Wen) Shoppers select bags at a duty-free store in Sanya, Hainan province. Luxury, but without showing off, is what Chinese consumers look for now. Consumer preferences give boost to names that aren't well-known When Sun Sisi planned to buy a new handbag, the 27-year-old Beijing office worker, who already owns some LV and Chanel handbags, turned her focus to niche brands this time. "I am tired of the big names, and it is more important that I do not want a bag that many people on the street already have," Sun said. Sun is not the only one thinking this way in China's big cities. Luxury, but without showing off, is what Chinese luxury consumers are looking for now, especially in cities like Beijing and Shanghai. The luxury consumers' new preference has helped some niche brands, which are not well-known, to grow fast in China, while some mass-market brands are seeing slower growth. Burberry Group PLC, which recently released its trading update for the three months through June 30, said its revenue growth in the Asia-Pacific area dropped to 18 percent from 67 percent in the same quarter of 2011. Gucci brand's sales in the Chinese mainland increased by 17.2 percent in the first half of 2012 compared with the same period of 2011. Meanwhile, leather-goods maker Bottega Veneta, which targets an elite clientele and insists on no logo, had a 62.4 percent sales growth in the mainland during the period, according to the half-year result of PPR SA, which is the parent company of both Gucci and BV. "Chinese luxury consumers are gradually giving up the brands, which the public is familiar with, and picking up the niche brands," said Zhou Ting, executive director of the research center for luxury goods and services at the University of International Business and Economics in Beijing. This is normal for luxury consumers in big cities, where the familiar brands' market is saturated, and price is no longer their concern, Zhou said. "People in big cities start to look for the luxury items that are more suitable for them and different from others'," she added. Twenty-six luxury brands attended the Sparkle Roll Luxury Brands Culture Expo in Beijing in early September, and most of them are not well-known by the public, like Parmigiani, DeWitt and Royal Asscher. But the low publicity does not affect the brands' business in China. Sparkle Roll Group Ltd, which is a distributor of most of the brands attending the expo, said that it sold 150 Richard Millie, 102 DeWitt and 319 Parmigiani watches in 2011. The 571 watches produced HK$188 million ($24.25 million) in sales for the company, which means the average price of each piece arrived at about 270,000 yuan ($42,800). The high price is not a problem for Chinese multimillionaires, who are searching for suitable luxury items on which to spend their wealth. Jerome De Witt, founder of Montres DeWitt SA, an independent watch brand from Switzerland that he established in 2003, explained why a price of tens of thousands of dollars does not deter Chinese people from buying the watches. "We contact with consumers directly and share experience with people," De Witt said. The luxury consumers care more about the experience of buying and wearing the watches, rather than the price, he added. Montres DeWitt entered the China market four years ago and has three authorized stores - in Beijing, Shanghai and Dalian. China already is one of the five main markets of Montres DeWitt and buys about 200 pieces from the stores every year, De Witt said. Some niche brands got their buyers in China, even before they occur at China's market. Laurent Lecamp and his young team came to Beijing for the luxury expo in September to introduce his brand - Cyrus, which is a new watch brand in Switzerland but received the award "Best Independent Brand" during the Nuit de I'horlogerie de Monaco (Watchmakers' Night of Monaco) in 2011. "We do not have any distributors in China yet, but our products already have Chinese consumers, who bought the watches overseas," said Lecamp, founder and managing director of Cyrus Watches RL SA. He said Cyrus is considering opening its stores in China, although only 480 Cyrus watches will be produced this year. "Cyrus' consumers are the group of people who want to be different from others, no matter in China or any other countries in the world," Lecamp said. Chinese luxury consumers' preference on the niche brands also shows the business opportunity to small French chateaus. "Chinese residents do not just buy names, but the taste of wine they like," said Bernard de Laage de Meux, development director of Chateau Palmer in Margaux, a wine-producing region in Bordeaux. He said that in the past, only the most famous wine brands, like Lafite and Latour, could be popular in China, but many Chinese consumers turn to the smaller chateaus now. "Our chateau welcomed Chinese visitors almost every week, and they show their interests in our wine," he added. Some uncommon luxury products also find their consumers in China. Buben & Zorweg, the world's largest "time mover" manufacturer, has three boutiques in China, and the store in Beijing sells two products every month on average. China is one of the brand's best markets, together with Middle East, eastern Europe and Russia, said Christina Zorweg, company president. "Our customers are super-rich people who own several top watches before buying a time mover," Zorweg said. The buyers of time movers priced from 20,000 to 3 million yuan cannot show off the large products anywhere. "They only enjoy our products at home," he added. However, because of the low production rate and the attention on private contact, the business of niche brands is still around the big cities in China, and the mass-market brands occupy the larger market in second- and third-tier cities. Consumers in smaller cities choose the luxury brands according to their publicity rather than the difference, UIBE's Zhou said. "The structure of China's luxury market makes clear that niche brands are popular in big cities, and mass-market brands enjoy the business in smaller cities."

Hong Kong*:  Oct 6 2012 

Hong Kong thriller opens Asia’s top film festival (By Mathew Scott in Busan, South Korea) - The Hong Kong film Cold War will launch the Busan Asian Film Festival. Left to right, the film's star actor Tony Leung Ka-Fai, co-directors Sunny Luk and Longman Leung, and actor Aaron Kwok pose for photographs after a press conference in Busan, South Korea, on Thursday. A glittering line-up of top Asian cinema stars converged on the South Korean port city of Busan on Thursday for the opening of the region’s premier international film festival. Along with Korean heartthrobs Lee Byung-hun and Jun Ji-hyun, Chinese stars Tang Wei and Cecilia Cheung are attending the 10-day Busan International Film Festival. Chinese actress Zhang Ziyi — currently taking legal action against a number of news outlets over claims the Crouching Tiger, Hidden Dragon star was a prostitute who had sex with senior Chinese officials — is also scheduled to attend. Launching the 17th edition of the festival will be the world premiere of Hong Kong thriller Cold War, which stars screen veterans Aaron Kwok and Tony Leung Ka-fai. “It’s an honour to have this film open BIFF, the first time a Hong Kong film has done so,” said Kwok at the event’s opening press conference. “We hope it will remind the world that there are a lot of talented filmmakers in Hong Kong and they are still making exciting films.” In the tradition of Hong Kong thrillers such as Infernal Affairs (2002) — remade by Hollywood into the Oscar-winning The Departed (2006) — Cold War looks at corruption in the city’s police force. Co-director Longman Leung said he hoped the film would help refocus attention on Hong Kong cinema, which has been hit by falling production numbers and attendances in recent years. Festival director Lee Yong-kwan said in choosing a Hong Kong production to open the gala, the festival was serving its intended purpose of promoting films from the region. “We want to encourage Asian cinema and encourage talk about Asian cinema,” he said. By late Thursday fans were entering the high-tech US$150 million (HK$1.16 billion) Busan Cinema Centre and thousands more had gathered outside before the stars started to arrive. Featuring more than 300 films and a much-anticipated performance on Saturday from South Korean rapper Psy, whose “Gangnam Style” has become a global sensation — organisers hope the event will attract more than 200,000 people. Zhang, who is suing US-based Chinese online news outlet Boxun News over the prostitution claims, is scheduled to meet the press on Friday. In June she also launched legal action against Hong Kong’s Apple Daily newspaper and its sister weekly Next Magazine over claims that she was paid for sex with one-time rising Chinese political star Bo Xilai and others. Bo was sacked from his post as boss of Chongqing city in March, unleashing China’s biggest scandal in decades. Authorities said last month he would face justice for a litany of crimes, including abuse of power. Media attention has also focused on the screening of North Korean romantic comedy Comrade Kim Goes Flying. Its co-director Kim Gwang-hun is the first North Korean director to have been invited to the event. Other programme highlights include a sidebar devoted to Afghan films saved from the Taliban by the Afghanistan National Film Archive, and a Window on Asian Cinema section featuring 49 films from 11 countries, including 13 world premieres. South Korean cinema is currently experiencing a stellar year and there will be a special outdoor screening of The Thieves, which this week became the country’s all-time box office champion, having now been seen by 13 million moviegoers and having earned 93.6 billion won (HK$651 million). Busan’s main competition, the New Currents Award for debut or second-time Asian filmmakers, offers two prizes of US$30,000 and has this year attracted a field of 10 productions from eight countries, including Lebanon and Iraq. The winners will be announced on October 13, the final day of the event.

哀 城 香 港 不 是 冷 酷 無 情 地 方 (星島日報報道)昨日,本港瀰漫一片哀愁,平日熱鬧非常的中環街頭、銅鑼灣時代廣場等多處地方,正午十二時寂靜無聲,數以百萬計巿民自發低頭,默哀三分鐘,悼念十.一海難三十八名死者亡靈,不少人更飲泣落淚;至晚上,過百萬巿民在港燈專頁點擊燭光,期望「逝者安息、生者堅強」,希望所有人都能勇敢地走出慘劇陰霾--天道無常,尚幸人間有愛!南丫島十‧一撞船釀三十八人死亡慘劇,成為香港四十一年來最嚴重海難,政府宣布昨為「全港哀悼日」,香港市民在正午十二時,一起為死難者默哀三分鐘。在港燈堅尼地道的總部,董事總經理曹棨森率領二百多名穿上黑色衣服的員工默哀,每人都神情哀傷,部分人更低頭飲泣。他發 言時指港燈有七名員工在海難中離世,另外四人仍然留醫,但眼見很多無名英雄落海救人,又有不少善心人關心,令他感到人間溫暖,「香港不是一個冷酷無情的地方」,感謝各界支持。  他指明白災後心靈的創傷,需要長時間撫平,祝願同事要堅強,「逝者安息,生者堅強。」公司會向他們及家屬,提供「人盯人」的跟進工作,支援和慰問死傷者家屬。港燈又隨即在中環聖約翰座堂舉行公眾追思會,有約五百名港燈員工和巿民出席。曹棨森由曹太攙扶到場,他已雙眼通紅不斷喘氣,而身旁的曹太也不停用紙巾拭淚,兩位都面帶愁容,神情哀傷。「雖然經過多種災禍……此恩領我平安度過,更將領我回家。」追思會以詩歌《奇妙恩典》開始,主禮牧師其後燃點三十八支蠟燭,每一支蠟燭燃起,神職人員就敲一下鐘聲,象徵和悼念事故中三十八名死難者,然後低頭默哀一分鐘,為事故中所有受影響的人禱告,不少出席者都禁不住飲泣落淚,又有人仰天歎息,似是慨歎天意弄人。追思會後,不少出席者都在教堂外的弔唁冊寫上心意。在港燈培訓部門工作的譚小姐認識其中兩名遇難人士,感到非常難過,這幾天因此失眠,祝願所有死傷者家屬都能重新振作。港燈在網頁內設立專頁,深切哀悼離世的同事和其他遇難人士,希望陪伴倖存者走過困難一刻,永遠懷念海難中的死者。至昨晚八時,已有超過一百萬位巿民點擊蠟燭圖案,表達心意。港燈也將網頁的顏色轉為黑白色,以示悼念,又委託基督教家庭服務中心設立捐款戶口,為受今次海難事件影響的人士提供援助.

救 災 不 分 中 港   優 點 互 相 參 詳 - 全城哀悼日,不止港人響應,內地官民和外國代表亦致唁,人道關懷凌駕政治國界。今次海難事故令人痛心,官方和民間的應急善後安排,獲得內地訪港人士好評,港人在多次應變中,都發揮出正能量,這些經驗值得好好總結,日後發揚光大。比起內地諸如溫州動車事故等災難應變,本港的應變和救急部署透明度一向較高,機動性強,體現對死難者和生還者的尊重,以及社會各方面的關懷,這是社會日積月累的情操、核心價值和體制發揮作用,是寶貴的無形資產。本港向來對災難消息的發報都要求實事求是,少作隱瞞淡化,這樣可以減少無根據揣測和謠言,能夠及時激發社會各方面的資源來配合。近年內地有部分地方設法提供透明度,包括公布已獲證實的死者名單,顯示這些遇難者是有血有肉有摯愛親朋的人,而不是一堆乾巴巴的數字,這方面中港應該互相總結經驗,不斷優化安排。港粵合作搜救有制可依 - 今次的搜救調動,發揮一貫的高效率,各部門工作統籌配合迅速到位,紀律部隊人員及現場平民英勇救人,挽回了不少生命。廣東省應港府要求派船來港協助搜救,有人質疑是否需要,實際這是按照港粵簽署了的合作協議機制進行,發揮守望相助的功能。中聯辦主任彭清華昨日柔性解釋,協助是出於人道立場,香港方面可以提供具體資料澄清疑慮,避免影響日後合作。這類合作早在回歸前已經展開,累積發展成二○○八年港粵雙方簽署的《應急管理合作協議》,及二○一○年九月的《海上搜救合作安排》,廣東省並與澳門簽訂類似協議,列明合作救援的具體條件和程序,三方地位平等,大家輪流統籌每年一次的聯合海上搜救演習。今次海難一如既往,由本港統籌指揮,前綫水警、消防員和醫護人員在救人後短時間現身說法,說明救援工作在本港主導下如何運作,一樁樁救人事迹展現人性光輝的一面。以人為本提升救災質素 - 大型災難的應變機制,多年來已經形成可以迅速到位自動運作的有機體,按章運作已經可以發揮較高效率,工作人員「以人為本」的信念,提升了臨場應變的能力,例如屍體第一時間運到鴨脷洲海怡半島碼頭後,現場哭聲震天,當局迅速運去水警基地,以免影響現場一帶居民,並且用布覆蓋屍體,照顧家屬情緒,這些就不是按章辦事就會做得到的。救急扶危之外,各方面的善後工作紛紛到位,有志願機構提供輔導,安排全城哀悼讓市民抒發情緒。問責方面,已經拘捕兩船有關工作人員,並且會展開死因聆訊,而將會設立的調查委員會,查根究柢後會建議如何避免意外重演。今次內地提供協助,是善意的支援,不應引起介蒂。香港有用的經驗,內地人表示讚賞,內地政府宜深入研究參考及考慮引進.

Hong Kong mourns Lamma ferry victims (By Stuart Lau and Lai Ying-kit) - Flags flew at half mast across Hong Kong on Thursday, marking the start of three days’ mourning for the 38 people killed in Monday’s ferry disaster. At noon, Chief Executive Leung Chun-ying and senior officials led in observing three minutes of silence at the government headquarters in Admiralty. Both the national and Hong Kong flags will be at half-mast until Saturday. Across the city, hundreds, if not thousands, of Hongkongers paid tribute to the victims of the tragedy. Workers at government offices, the Hong Kong Exchanges and Clearing, the Legislative Council, schools and Hongkong Electric – which owns the wrecked ferry Lamma VI – also fell silent. In Times Square, Causeway Bay, more than 100 people, Hongkongers and tourists alike, silently watched the live broadcast on the giant TV screen above the square. Many bowed their heads and closed their eyes, thinking about the collision between two vessels off Lamma Island. “I was thinking of the Hong Kong and Kowloon Ferry vessel leaving after the crash. I’m still feeling angry,” said Terence Wong, 46, after the three minutes’ silence. Another mourner, who only gave his surname as Man, said: “I work in Times Square, so I came down to pay my respects here – just to share in Hongkongers’ feeling of heartbreak.” After the noon service, Leung and other officials went to the Leighton Hill community hall in Wan Chai, where they signed a book of condolences organised by the government. The government has set up condolence points - mostly in community halls - in all 18 districts for the public. People can sign condolence books over the next three days. (The list of condolence sites.) The central government’s liaison office in Hong Kong also held a ceremony in memory of the victims. Office director Peng Qinghua rejected media allegations that his deputy, Li Gang, was interfering in city affairs by visiting survivors at Queen Mary Hospital after the accident on Monday night. “It is a matter of course for the mainland authorities to give a helping hand. I believe as long as the issue is humanitarian and not political, no one would think [we should] stay away and turn a blind eye to deaths,” Peng said. On Thursday afternoon, family members of Hongkong Electric employees who died in the tragedy held a memorial service at sea. A ship carried them to the site of Monday’s collision, where they cast flowers onto the water. That event followed a similar service, at the same site, by employees of Hong Kong and Kowloon Ferry, whose vessel Sea Smooth was involved in the accident. Also in the afternoon, a memorial service was held at St John’s Cathedral, in Central. Thirty-eight candles were lit, and the church bell was rung to commemorate the victims – seven of whom were students. Meanwhile, Education Secretary Eddie Ng Hak-kim said his bureau was arranging help for the schools and families of students who died in the disaster. Psychologists and other specialists would be sent to visit them to offer assistance. “It is a tough time for us. I hope they can recover from sadness and pass this difficult time soon,” Ng said. At Kau Yan School in Sai Ying Pun, which lost a Primary Five boy in the tragedy, the principal said some pupils were too young to understand what had happened. But he hoped they would learn something about the value of life through the three minutes’ silence, and prayers for the victims, held at noon.

Hong Kong mourns ferry crash victims - Leung Chun-Ying, together with other senior officials and lawmakers, observed three-minute silence to mourn victims of vessel collision off Lamma Island.

Flags to fly at half-mast in HK to mourn victims of ferry crash - Employees of Hong Kong Electric pay tribute to those died on their company boat during a ferry collision on Monday, in Hong Kong, Oct 3, 2012. HONG KONG - National and regional flags at all government buildings in Hong Kong will be flown at half-mast for three days starting on Thursday to pay last respects to the victims of a fatal ferry crash, the city government said in a statement Wednesday. At midday on Thursday, a ceremony led by Hong Kong Chief Executive CY Leung and other principal officials will be held in front of the city government's headquarters to observe three minutes of silence in mourning. Except for emergency and immigration services, other government services will be suspended during the period. All staff on duty will observe the three-minute silence at their work places. Thirty-eight people including at least five children were killed after two ferries collided on Monday evening off Hong Kong's Lamma Island. As at 4:00 pm local time on Wednesday, 22 injured people remained in hospital, two of them were in critical or serious conditions.

Legco president Jasper Tsang vows not to surrender on filibusters (Tony Cheung) Jasper Tsang says he will fight any obstructive tactics by pan-democrats in the next session. Jasper Tsang Yok-sing, the incumbent Legco president, is confident lawmakers will re-elect him to the council's top post next week. The man who brought lawmakers' marathon 33-hour filibuster to an end said he would do it again as he staked his claim for a second four-year term as president of the Legislative Council. Jasper Tsang Yok-sing, from the Beijing-loyalist Democratic Alliance for the Betterment and Progress of Hong Kong, is confident of victory, He called his re-election on Wednesday "a political reality", given that he has only one rival, the Civic Party's leader, Alan Leong Kah-kit, and given the pan-democrats' minority position - 27 versus 43 pro-government legislators. But he emphasised yesterday that he would always listen to pan-democrats' suggestions and opinions, "because I know co-operation is still needed". He added: "I have to face all legislators regardless of whether Alan Leong runs or not." While pledging to be open to opinions from across the political spectrum, Tsang also made it clear that there were promises he could not make - including the pan-democrats' request that he never halt a filibuster again. The 33-hour filibuster in May by members of People Power and the League of Social Democrats opposed to amendments to by-election rules ended when Tsang halted the debate. This intervention drew criticism that he had abused his powers. He was unrepentant yesterday. "My promises are very simple - I will abide strictly by the rule of procedures, the Basic Law and the law [of Hong Kong]. I will also fully protect the lawmakers' right of speech, and at the same time, protect the effective operation of the legislature. "If you ask me to promise that I would never kill any filibuster, how could I do that? Forget the pro-establishment lawmakers, even my voters would find it unacceptable." Tsang reiterated that the marathon filibuster - a delaying tactic in which a debate is extended in order to wreck a vote on a proposal - had hamstrung the legislature's operations. He also referred to a ruling by the High Court in May that lawmakers had no constitutional right to launch a filibuster.

Hong Kong Exchanges and Clearing (0388) said it is undergoing a streamlining process with staff leaving the company. While not denying media reports that HKEx is engaging in its largest firing spree since its listing 12 years ago, its head of corporate communications called the exercise restructuring rather than downsizing. "On the contrary, we will be adding new teams for the new business, such as the planned over-the-counter clearing service, the joint venture with the Shanghai Stock Exchange ... and the London Metals Exchange that we will be acquiring," said Henry Law Man-wai. "We examine the functions of various departments, and if we find resources could be used elsewhere, we do it," he said, adding the HKEx will first consider internal transfers for streamlined units. He declined to give headcounts. Hong Kong's financial sector is experiencing its worst employment situation since the 2008-09 financial crisis. Hundreds of traders and analysts have been axed from various investment banks since the beginning of the year amid thin trades and deals. Adding to the woes were media reports yesterday saying that HKEx, led by chief executive Charles Li Xiaojia, a former investment banker, is requiring many of its departments to compile a redundancy list of low- to high-ranking employees. The layoff rumors follow the sudden departure of Eric Landheer, head of issuer marketing, who joined the firm only 19 months ago. With trading and listing income dropping, quarterly staff costs shot up 43 percent since the ambitious Li took office as he tries to diversify its businesses. Hong Kong is set to lose the leading position in the global new share market this year, which it held from 2009 to 2011. Initial public offering proceeds from Hong Kong so far this year lag New York, Tokyo and Kuala Lumpur. Meanwhile, HKEx said the evening futures market, originally scheduled to launch in the third quarter this year, will be delayed to March to ensure brokerages are up and ready.

 China*:  Oct 6 2012

Toyota, Nissan trim China production after protests (Reuters in Tokyo) A Nissan in Shanghai. The Japanese top carmaker aid it would halt production at a joint venture in China starting on Thursday. Japanese automakers Toyota Motor, Nissan Motor and Suzuki are curtailing production in China in the wake of anti-Japan protests that shuttered dealerships and darkened their sales prospects in the world’s top car market. Nissan, Japan’s top automaker in China, said it would halt production at a joint venture in China starting on Thursday, three days earlier than planned, and extending through next week’s national holiday period. A Toyota executive in Beijing, who spoke on condition of anonymity, said it was “likely” the automaker would cut output in China in the coming weeks. A Toyota spokeswoman said the company had no immediate comment. Suzuki, meanwhile, said it had stopped one of two shifts that it normally runs in China. Production slowdowns are a normal feature of the auto industry in mature markets like the United States, where they are used to keep inventories from ballooning and avoid pressure for automakers to offer deep discounts that erode profitability. But the steps by the Japanese automakers to cut output in China are an anomaly in a market that has driven the industry’s global growth over the past decade and where most automakers had been adding capacity until China’s economic slowdown in recent months caused production to outpace sales. The latest auto production adjustments come on top of general cutbacks Japanese auto makers had been making prior to the disruptions caused by anti-Japan protests. Japan and China are at odds over a group of islands in the East China Sea, called Diaoyu in China and Senkaku in Japan. A decision by Japan to buy the islands from private owners sparked the latest flare-up in tensions between the Asian neighbours that has smouldered since the end of the second world war. Executives and analysts have said lingering resentment in China could hurt demand for Japanese cars, consumer electronics and other goods at a time when slowing growth in Asia’s biggest economy may weigh on overall consumer spending. Bank of America Merrill Lynch analyst Bin Wang said his checks with Japanese auto dealers in Guangdong province since the protests showed that sales were down on average by 60 per cent. The slowdown had boosted sales for German, American and Korean brands, he said. “Dealers believe that the current sentiment on Japanese-branded cars could be longer than the previous island dispute in October 2010,” he said in a research note issued on Friday. China’s economy grew at its slowest pace in more than three years in the second quarter. A factory survey in August showed China’s manufacturing sector contracted at its sharpest pace in nine months. The Asahi newspaper reported on Wednesday that Toyota would completely halt China production in October and stop all exports to China from Japan. The Toyota executive said that report was not accurate. The Nikkei business daily said Toyota would add four days to a planned eight-day holiday closure at its mainstay plant in Guangdong province, which builds 30,000 cars a month, beginning on Wednesday and will operate only one shift instead of two when it reopens in October. A Toyota spokeswoman said she could not comment but said the company would issue a statement later on Wednesday. Toyota sold about 900,000 vehicles in China last year. It had set a target of one million sales this year – a target that now may be at risk – and a long-range goal of 1.8 million by 2015. On a combined basis, Japanese auto makers had a roughly 19 per cent share of China’s passenger car market in August before the protests. That was down from 20 per cent in July, according to China Association of Automobile Manufacturers. Production at other Japanese companies has yet to return to normal more than a week after the biggest demonstrations, which at times degenerated into violent attacks on Japanese run stores and factories in China. Panasonic, which closed three factories that were damaged in the protests, reopened the last one on Tuesday, but production at that component factory has yet to return to normal, a spokeswoman for the company confirmed.

Hsieh lauds China during visit (By Chris Wang) The former premier acknowledged the sensitivity of the visit, but said it was important that the DPP showed it could handle Taiwan’s cross-strait interests. A market economy with socialist characteristics has liberated productivity in China, so perhaps in the future it will similarly be able to develop a democracy with socialist characteristics, former premier Frank Hsieh (謝長廷) said yesterday in Xiamen, China’s in Fujian Province. On the first day of his first visit to China in 18 years, Hsieh said the changes in China have been phenomenal and he hoped that his visit would deepen mutual trust between the Democratic Progressive Party (DPP) and Beijing. The former DPP chair arrived in Xiamen, the first stop of his five-day trip, and headed to Dongshan Island, where he received a warm welcome from local people also surnamed Hsieh (謝) and attended a traditional ceremony to worship his ancestors in the afternoon. Hsieh played down the possible political ramifications his act of worship may have, saying that the aspiration to search for one’s roots is an integral part of human nature and “politics should never go beyond human nature.” Hsieh later visited Tongbo Village, which came to be known as “the widows’ village” after the Chinese Civil War, where Chinese Nationalist Party (KMT) troops conscripted 147 men, 91 of them married, out of approximately 200 villagers before it retreated to Taiwan in 1949. The village was later “liberated” by the Chinese Communist Party (CCP). There is neither hatred nor resentment between the DPP and the CCP, Hsieh said, adding that his visit to the village was an attempt to confirm that people have learned valuable lessons from the cruelty of war. “There should never be war again,” he told reporters after visiting a memorial museum in the village. Speaking to reporters yesterday morning at Taiwan Taoyuan International Airport prior to his departure, Hsieh said that the trip was “risky” because it involved many unknown factors and could have unforeseen consequences. He stressed that the DPP has to prove to the voters that it is capable of handling cross-strait issues, taking care of Taiwanese businesspeople in China and making people’s voices heard. Hsieh is scheduled to visit Xiamen University today, before leaving for Beijing in the evening. He will be in the Chinese capital to attend an international bartending event — the main purpose of his trip — where he is also to visit Beijing National Stadium, nicknamed “the Bird’s Nest,” and attend a closed-door meeting with members of the Chinese Academy of Social Sciences, before returning to Taiwan on Monday.

Japan to keep ambassador to China for another month (Teddy Ng) Rising tensions over Diaoyus have made it hard for Tokyo to choose a new ambassador. Uichiro Niwa tough to replace - Japan will keep its current ambassador to China in Beijing for another month as rising bilateral tensions over territorial disputes in the East China Sea have made it harder for Tokyo to appoint a replacement, Japanese media said. Citing Japanese government sources, Kyodo news agency reported yesterday that Tokyo "began making arrangements" on Wednesday for Uichiro Niwa to remain ambassador to China until the middle of next month. Niwa's previously announced successor, the career diplomat Shinichi Nishimiya, collapsed and died on a street last month. Nishimiya, the head of the Japanese foreign ministry's North American affairs bureau, was regarded as a tough negotiator with Chinese officials. Niu Zhongjun , a Japanese affairs specialist at the China Foreign Affairs University, said the territorial disputes created complications for Japan in naming a new ambassador to China. "There are Japanese diplomats who are familiar with China," he said. "But appointing a China-friendly ambassador may trigger criticism among right-wing groups." Tensions between the countries have been rising, resulting in terse remarks from Beijing and sometimes violent anti-Japanese protests in mainland cities. Besides the continued presence of Chinese government ships in the vicinity of the Diaoyus, Japan's defence ministry said seven PLA warships were spotted yesterday evening in the international water northeast of Miyakojima, Okinawa prefecture, heading to the Pacific. It is the first time they have been seen in the waters since the renewed dispute over the Diaoyus in September. Pictures shown on broadcaster NHK suggested the warships, including destroyers, frigates, as well as a submarine tender, are of the North Sea Fleet. Takehiko Nakao, Japan's Vice-Minister of Finance for International Affairs, said yesterday he expected that Chinese officials would participate in the annual meetings of the IMF and World Bank in Tokyo next week. The withdrawal of several major Chinese bank executives from the meeting raised concerns with IMF chief Christine Lagarde that the territorial row could affect the shaky global economy. In Washington, former Secretary of State Henry Kissinger told a forum on Wednesday that the US should "not take a position on the sovereignty or any other aspect" of the dispute. Meanwhile, China is expected to face pressure from Japan and other neighbours in the expanded meeting of the Association of Southeast Asian Nations maritime forum in Manila today over various territorial disputes.

Ambassador: Diaoyu Islands are Chinese (By Zhang Chunyan in London) - British newspaper The Daily Telegraph's website on Wednesday published an article written by the Chinese ambassador to Britain that states the "purchase" of the Diaoyu Islands by the Japanese government is invalid, and nothing can change the fact the islands are the territory of China. The opinion piece, written by Ambassador Liu Xiaoming argues that the Cairo Declaration, published on Nov 27, 1943, stated in explicit terms: "All the territories Japan has stolen from the Chinese, such as Manchuria, Taiwan and the Pescadores, shall be restored to the Republic of China. Japan will also be expelled from all other territories she has taken by violence and greed". The declaration was further supported by the Potsdam Proclamation, released on July 26, 1945. "The terms of the Cairo Declaration shall be carried out," the proclamation said. Liu wrote that these documents show the Diaoyu Islands are China's territory. "The Japanese government accepted the Potsdam Proclamation in the Japanese Instrument of Surrender, and pledged to faithfully fulfill its obligations stipulated in the provisions of the Potsdam Proclamation," Liu wrote. "All of these facts show that in accordance with the Cairo Declaration, the Potsdam Proclamation and the Japanese Instrument of Surrender, Diaoyu Dao, as affiliated parts of Taiwan, should be returned, together with Taiwan, to China," Liu wrote. Liu also compared the different attitudes of Germany and Japan following World War II. In 1970, West German Chancellor Willy Brandt traveled to Poland and dropped to his knees before the monument to the Warsaw Ghetto uprising of 1943. "Many in the world were deeply moved by this famous gesture of repentance and apology. The extraordinary courage and sincerity of Germany won it trust and respect." Unlike Germany, Liu wrote, Japan has never seriously reflected on its militarist past or made a serious apology. "Such a remorseless attitude has made it difficult for Japan to earn the trust of its neighbors and the forgiveness of people around the world." Displaying total disregard for the post World War II agreements, Japan implemented its plan of "purchasing" China's Diaoyu Islands, he wrote. Liu stressed that the so-called "purchase" of the Diaoyu Islands is illegal and invalid and cannot change the fact that the islands belong to China. Historical records show it is an indisputable fact that the Diaoyu Islands belong to China. China's Ming and Qing dynasties exercised sovereignty over the islands. The Diaoyu Islands and its affiliated islands were marked on maps as Chinese territory in the early Ming Dynasty (1368-1644). According to Liu, the British authorities supported China's sovereignty with maps, including A New Map of China from the Latest Authorities, that was published in Britain in 1811, and A Map of China's East Coast: Hong Kong to Gulf of Liao-Tung, that was compiled by the British Navy in 1877. Both maps marked the Diaoyu Islands as Chinese territory. This year marks the 40th anniversary of the normalization of China-Japan relations. The two countries had planned to celebrate a Year of Friendly Exchanges between the Chinese and Japanese people and nearly 600 events were planned. However, Liu noted, all plans were shelved following Japan's illegal "purchase" of the Diaoyu Islands. "It is imperative that Japan respects history and facts," Liu wrote.

Taiwan ex-PM heads to China on landmark visit (Agence France-Presse in Taipei) Frank Hsieh (centre) and his wife Yu Fang-chih (right) at Taoyuan International Airport in Taipei on Thursday. Former Taiwan premier Frank Hsieh left for China on Thursday for a trip which makes him the most senior politician ever from the China-sceptic opposition party to visit the mainland. The visit, described by local media as “ice-breaking”, came amid debate in the Democratic Progressive Party (DPP) about whether to change its China policy. “I hope to prove that the DPP is capable of handling cross-strait relations and solving problems for Taiwanese businessmen based in China,” he told reporters at the airport. Hsieh served as prime minister from 2005 to 2006 and retains major influence in the DPP. He was the party’s presidential candidate in the 2008 elections but lost to Ma Ying-jeou of the Beijing-friendly Kuomintang party. Hsieh had earlier said that the purpose of his trip is to “build mutual trust”, although he declined to say if he would meet Chinese government officials during the five-day visit. His first stop will be the southeastern coastal city of Xiamen, followed by a visit to nearby Dongshan Island where his ancestors lived before emigrating to Taiwan. Later, the trip will take him to Beijing, where he plans to visit the Olympic stadium and attend an international cocktail contest as a guest of the International Bartenders Association. Leading DPP members have debated whether their party needs to change its China policy, after voters in January re-elected Ma for a second and final four-year term. Tensions with China soared in the eight years to 2008, when the DPP ruled Taiwan, but have eased markedly since Ma took office four years ago. Beijing still claims sovereignty over the island and has threatened to invade should it declare formal independence. The two sides split in 1949 at the end of a civil war.

Chinese marine surveillance ships will continue to patrol in the waters off the Diaoyu Islands, Foreign Ministry spokesman Hong Lei said on Wednesday. Hong made the comment in response to a question after it was reported in the media that Japanese right-wingers entered waters off the Diaoyu Islands on Wednesday. Four Chinese marine surveillance ships arrived in the waters off the Diaoyu Islands on Tuesday after the Japanese right-winger's intrusion. State Oceanic Administration said on Wednesday that the patrol team -- composed of Haijian 50, Haijian 15, Haijian 26 and Haijian 27 -- are carrying out normal rights-safeguarding activities around the Diaoyu Islands. "China is closely watching the development of the issue. Chinese marine surveillance ships will continue to patrol in the waters off the Diaoyu Islands," Hong said. China firmly opposes the Japanese right-wingers' illegal entrance to the waters off the islands, Hong said. "What is the right-wingers' purpose in repeatedly provoking trouble on the Diaoyu Islands under the current situation, especially when China and Japan are busily consulting with each other on the dispute? Why is the Japanese government again indulging them?" In recent years, it has been Japanese right-wingers that have seeked to use the Diaoyu Islands issue and create provocation and cause tensions and conflicts between China and Japan, Hong said. Looking back at history, Japanese right-wingers once led the country to militarism and are the source of war, bringing profound suffering to Asian countries and their people, Hong said. He added that the dispute over the Diaoyu Islands is also an outstanding problem of the war. "We must stress that history cannot be overturned, denied or forgotten. Chinese people, Asian people and the world at large should be highly alert to the ambitions of the Japanese right-wingers," Hong said.

Hong Kong*:  Oct 5 2012 

Captains may have averted an even bigger disaster (SCMP Staffs: Olga Wong, Clifford Lo, Keith Wallis and Dennis Chong) Vessels both swerved late to their right, avoiding a head-on collision; police investigate whether there was a failure to give way - The captains of the two ferries may have averted a head-on crash, and an even bigger disaster, by both swerving right, said a marine engineering expert who studied photos of the wreckage. Louis Szeto Ka-sing, a specialist in vessel design and maintenance at the Hong Kong Institute of Engineers, said this would explain the damage to the left sides of the two ferries. "The captains were sitting on the right side of the vessels. It would be natural for them to turn right to protect themselves after finding they were getting too close and could collide," Szeto said. "By the time they hit, the smaller vessel would have completed its turn. So the head of the ferry could have crashed into the launch's end." Pictures of the wrecked vessel, the Lamma IV, which was moved to shallow waters off Lamma Island on Tuesday night, show a hole of three metres square under the water line, Szeto said. The pictures confirmed his earlier view that two of the six watertight compartments below deck could have been damaged and filled with water, leading to the quick sinking of the launch. Police said they were investigating whether a failure by the captains to give way was to blame for the collision of the public ferry, the Sea Smooth, and the Lamma IV, which led to 38 deaths and more than 100 injured. Detectives from the marine police regional crime unit will talk to survivors to collect evidence. "We will investigate why they did not see each other and whether crew members of the two vessels involved were negligent in the incident," a government source said. Shipping experts yesterday confirmed that the Sea Smooth had an onboard automatic identification system that tracked its position before and after the collision, as was mandatory for all high-speed vessels by the International Maritime Organisation, a branch of the United Nations. "The AIS equipment on Sea Smooth should show investigators the ferry's path in the minutes leading up to the collision. But without similar tracking plots from the Lamma IV the information from Sea Smooth will tell investigators only half the story," said one shipping insider. Chief Executive Leung Chun-ying pledged on Tuesday to exercise the power of the Chief Executive in Council by setting up a commission of inquiry. The commission is expected to be more powerful than the usual investigative committees. It can issue arrest warrants to compel the attendance of any person not complying with a summons and enter any premises for inspection. It is a criminal offence for anyone to refuse to attend such a hearing. Several commissions of inquiry have been set up since the handover. In December 1996, now-retired Justice Woo Kwok-hing was appointed to head a commission to investigate the blaze in the Garley Building in Nathan Road that left 40 dead. About two years later, Woo again headed a commission to investigate the chaos after the opening of Chek Lap Kok airport. Then chief secretary Anson Chan Fang On-sang was forced to apologise for the saga, although the Woo commission did not place specific blame on Chan, who was involved in the opening. In 2007 Court of Appeal judge Justice Wally Yeung Chun-kuen headed the inquiry into allegations of government intervention in academic freedom at the Hong Kong Institute of Education.

HK enters three-day mourning for ferry tragedy victims (Phila Siu) Hongkong Electric staff members mourn the victims of Monday night's ferry disaster at the company's Kennedy Road headquarters yesterday. Hong Kong goes into three days of mourning today for the 38 people killed in the ferry disaster. Chief Executive Leung Chun-ying and other principal officials will observe three minutes of silence outside government headquarters in Admiralty at noon. Government services except immigration and emergency services will stop during that time so that staff can observe the silent tribute. Flags on all government buildings will be flown at half-mast for three days. The government has set up condolence points in all 18 districts - mostly in community halls - for the public to mourn the victims of Monday night's tragedy. People can sign condolence books there from 1pm to 9pm today, and from 9am to 9pm tomorrow and on Saturday. British Prime Minister David Cameron wrote to Leung on Tuesday that his thoughts were with the families and friends of those who had lost their lives, and with the many survivors. The US consulate general in Hong Kong, Stephen Young, also offered his deepest condolences. The Education Bureau called on teachers and pupils in all schools to observe three minutes of silence at noon. Lawmaker-elect Chan Ka-lok proposed that all lawmakers-elect observe a minute of silence next Wednesday before they are sworn in. Hong Kong Disneyland and Ocean Park will also observe three minutes of silence at noon. Their SAR flags will also be flown at half-mast for the three days. Halloween activities at the two amusement parks will go on as scheduled, but Disneyland will cancel its fireworks tonight. The Symphony of Lights at the Victoria Harbour will be suspended for three days. Meanwhile, Hongkong Electric group managing director Tso Kai-sum observed three minutes of silence with about 200 staff members at the company's Kennedy Road office lobby yesterday. "I hope we can all turn sadness into energy. When the sadness is gone, let us make our company a better company," Tso said. The company has also put several condolence books at the lobby for staff to sign.

Mother tells of 'miracles' that saved family as Lamma IV sank in disaster (By Simpson Cheung) Mother who slid down deck of sinking vessel, the Lamma IV, to grab lifebelts for her girls tells of 'miracles' that unfolded to save her family. A mother on board the Lamma IV with her family told last night of her life-or-death decision as disaster struck. Hebe, 30, risked her own life by sliding down the slanted deck of the sinking vessel to grab two lifebelts to save her children. But then an elderly woman asked her for one of them. "I really hesitated," said Hebe, who was on her way back to the upper-deck cabin where her husband and daughters, aged six and four, waited. "If I gave her one lifebuoy, I would have one less to save my daughters. In the end, I gave her one and went back to grab another. But by that time, the vessel had tilted more and I dropped into the sea." Hebe made her dash down the deck against her husband's wishes and had to struggle to save her own life. But she managed to help save others before learning hours later that the rest of her family had also survived the National Day collision between the Lamma IV and the public ferry Sea Smooth that claimed 38 lives. She said her family was saved by a series of miracles. After plunging into the sea, she found she was trapped underwater by a rope wound around her neck. "I cried: 'Lord, save me'," the Christian woman, who did not want her full name published, said. "And after a while, the rope really unwound. So I swam up, but it seemed to take ages to get to the surface." She then saved a struggling woman and her year-old son and helped them board a rescue boat. Meanwhile, the vessel had sunk into an increasingly vertical position in the water with her husband and daughters still trapped in the cabin. The husband - who won a lucky draw with other Hong Kong Electric staff for the voyage to view the National Day fireworks - had time to untie only one of the tightly-attached safety vests from under the seats and gave it to his elder daughter, who knew how to swim, so he could concentrate on saving the younger child. "I told my elder daughter, in case of danger and if Daddy could not be with her, I would let her swim by herself so Daddy could take care of younger sister," he said. He said he and his children were sitting on one of only two rows of seats that were intact and out of the water. One row was on top of them, with two to three adults. All the other rows of seats had broken free and were now under water. "When the vessel turned 70 to 80 degrees it was just like a domino effect - all the seats fell down." He said the situation in the cabin was too horrible to recall. He placed his two daughters, who he said behaved very calmly, between his body and the seats to hold them firmly for 20 minutes before divers came to break the windows. "I felt a bit anxious, yet peaceful at that time. I knew the Lord had arranged the seats for us. After a while, those seats also fell into the sea and we fell near the hole in the glass." They had to struggle to get through the hole as many people were also fighting to get into the tight space. The daughters and their father were rescued separately by two boats. The family spent over two hours in three separate hospitals before learning they were all safe. Hebe recalled that they were sitting on the deck when their vessel was hit by the ferry. Many people fell down and were injured, including the younger daughter, whose nose and eyelids were bleeding. The family then took refuge in the cabin, where, she said, the "miracles" started to unfold.

A passenger on Lamma IV said the accident could have been avoided if the boat had left the pier on time. And it was the quick thinking of another Hongkong Electric pleasure craft, whose passengers threw lifebuoys to people on Lamma IV, that might have saved many of the 127 passengers and crew. A sub-editor of Ming Pao Daily who identified himself as Chiu, pictured, nursed a broken arm and a cut face and said: "I lost my balance when the boat sank and turned upside-down. I grabbed my daughter and son immediately and gave them lifebuoys on the boat's rail. "Within 30 seconds the deck we were on was already under water. Luckily, I was able to swim to safety." The boat was scheduled to leave Yung Shue Wan at 8pm but because many passengers had just finished meals on Lamma, the captain decided to sail at 8.15pm. "As the fireworks would start at nine, there was no need to rush," Chiu said. "I am pretty sure that the boat was not speeding." When Lamma IV and ferry Sea Smooth collided, a bang was heard from the back of the boat, shaking it, he said. "The boat started turning over in two minutes. Many passengers did not know what had happened until they sank into the water," he said. His sister was among the dead. Meanwhile, a Primary Three student at Kowloon Tong Government Primary School died in the ferry disaster, its principal Lee Tai-sang said. The boy's mother also died. The boy's father and elder sister survived. The University of Hong Kong confirmed two alumni died. "We are shocked and saddened to learn about the loss of two of our recent graduates/ students, Mr Koo Man-cheung and Mr Leung Ka- kit," said the university website.

黃子翹(左)救出昏迷的八歲女童,可惜女童終告不治。許家俊(右)回憶指,現場的場面有如《鐵達尼號》。回天無力 英雄有淚 - 世紀海難吞噬卅八條寶貴性命,無情海浪卻淹沒不了人間有愛。從煉獄中走過來的拯救人員憶述,事發後現場有近百人在海面伸手掙扎,不斷高叫「救命!救命!」至少四、五十人被困「南丫IV」號船艙,不斷拍打窗戶求救,現場猶如《鐵達尼號》翻版。首位破窗而入的消防員勇救一名昏迷的八歲女童,竭盡全力施心外壓搶救的過程中,他禁不住感觸落下男兒淚,可惜女童最終返魂乏術,令他深感哀痛,但傷者的鼓勵和互助救人精神令他深受感動,坦言已將生死置諸度外:「當中我無諗有咩危險,只係想用最後一啖氣去救人!」 命喪於十•一海難的三十八人之中,至少有五名小童,當中包括一名被困船艙的八歲女童。率先破窗進入船艙的香港仔消防船消防員黃子翹,昨日與十多名來自六個救援部門的人員親述救人過程,他回憶最印象深刻的一幕,是在船艙發現三名浮在水面的昏迷傷者,分別是一名老婦、一名成年人及一名八歲女童。為女童心外壓「以為有得救」 「當時個女仔(八歲女童)已經冇知覺,我不停為佢做心外壓,見到佢口吐異物,仲以為有得救……!」黃子翹坦言,當時女童的父親已被救起在岸上,看見女兒獲救即不斷高呼「救我個女!救我個女!」令他一度感觸落淚,可惜最終三人均證實死亡,他坦言當刻十分難過。 鐵鏈擊斷骨 水警頂硬上 - 前赴海難現場救援的人員,亦因以身犯險、英勇上船救人而與死神擦肩而過。三名最先到場的水警甫趕抵現場即上「南丫IV」救人,然而一百公斤重的船錨卻突然從半沉的船身上方掉下,電光火石間其中一人走避不及慘遭船錨鐵鏈擊中,背部肋骨及右邊膝蓋骨折,至今仍留醫,其餘兩水警亦有不同程度傷勢。水警南分區特遣隊警長李偉謙憶述,當時幸得同僚提醒他們閃開,「否則我哋都不堪設想」。「小朋友叫我哋加油」 李偉謙及兩名同袍接報後五分鐘已到場,當時「南丫IV」船身已垂直插海,三人隨即登船與消防一起救人,期間上方突有一米乘一米船錨跌下,幸而快艇駕駛員大喊「閃開」,三人才避過一劫,不過,同僚「康B」楊銘康卻遭連着的鐵鏈擊中,背肋骨骨折、被壓至跪低亦令右邊膝蓋骨受傷。 康B卅一歲,加入警隊六年一直守水警。李憶述康B一直沒透露傷勢,直至自己叫康B幫手救人,康B才指「我用唔到力,隻腳郁唔到」。李偉謙自己亦遭掉下的鋼梯擊中右邊頭頂及遭玻璃割傷手,餘下一名同僚扭傷腰部,但仍不顧傷勢繼續救人。他感激市民鼓勵:「(現場)有小朋友叫我哋加油,去救多啲人!呢啲係我哋嘅動力,受咗傷都唔覺得痛!」據知康B及後被送往廣華醫院救治,現仍在浸會醫院留醫。 律敦治醫院醫管局急症科專科護士林啟昌則透露,當晚接收了廿五名病人,當晚處理的最後兩名傷者就是李偉謙等兩人,因兩人「救晒啲人先至嚟」,感到慘劇當中仍有令人感動的小插曲。多支救援隊伍亦功不可沒,飛行服務隊第一波已協助四名傷者空路送院,是次行動亦是該隊有史以來時間最長一次;醫管局醫護人員夠鐘休班但「全部唔走」、有人「放大假都返嚟救人」;醫療輔助隊、聖約翰救傷隊志願人士自願留守協助救援運送傷者,盡顯人性光輝。

Government land reserves will be used up by 2017 if it does not develop new towns such as those in the northeastern New Territories. That's the warning from executive councillor Franklin Lam Fan-keung, who yesterday criticized opponents for lacking a sense of crisis. "The 400 hectares of land reserve that the government currently holds, and the land already sold, can only provide about 190,000 new flats," Lam told RTHK. "With the demand for 45,000 units every year, it can only satisfy needs for the next four years." There will be a land vacuum starting from 2017 if new towns are not developed in the northeast, or if the government does not look into different ways of opening up land, he claimed. In general, society now wants the government to provide 45,000 units annually - including 20,000 for public housing, 20,000 for private housing, and 5,000 under the Home Ownership Scheme, he said. But only about 50,000 new units may be provided by developing the northeastern New Territories, which means only satisfying demand for just over a year. "Those who oppose the northeast New Territories development don't understand the land shortage situation we are facing. They lack a sense of crisis," said Lam, who was formerly a star equity analyst with an investment bank. He said the four years of public consultation allowed for the development in the northeast is too long, and the government should review how to shorten the consultation process to meet the pressing need s of the general public in buying flats. Lam agrees with the suggestion of another Exco member, Bernard Charnwut Chan, that the government should review the consultation format being used. "Regarding the development of the northeastern New Territories, many people expressed their opinions only at the final stage of consultation, just like students doing revision right before examinations," Chan said. The government should therefore consider shortening the period for consultation, but with the proviso that quality is not affected. Regarding tourism, Lam agrees the current support facilities in Hong Kong are insufficient, especially relating to the number of hotels and shopping malls - with more badly needed. He stressed that Hong Kong is an open society, and the economy depends greatly on the development of the service sector. "Hong Kong cannot enclose itself and prevent visitors from coming." There were proposals to allow nonpermanent residents of Shenzhen to visit Hong Kong with multiple- entry permits. But the plan was suspended following protests and after considering Hong Kong's inability to cope with millions of more visitors.

Residents upset US visa-free status continues to evade Hong Kong (Christy Choi) Residents unhappy over US move to grant Taiwan visa-free status while denying HK the same right despite years of lobbying. Travel and business leaders have expressed frustration that Hongkongers continue to be denied visa-free access to the US, after it was announced that the privilege would be extended to Taiwan beginning next month. "It's disappointing, because we've been asking for it for quite some time, and they still won't give it to us," Travel Industry Council executive director Joseph Tung Ya-chung said yesterday. "We behave well, never cause trouble and spend handsomely, so why do they give it to Taiwan and not Hong Kong?" The Hong Kong government has for many years been lobbying the US government for admission to the list of countries on the Visa Waiver Programme where pre-approved, low-risk travellers can travel to the US visa-free for tourism or business for up to 90 days. The last discussion on the issue took place last November, when then Chief Executive Donald Tsang meet US Secretary of State Hillary Rodham Clinton. Taiwan on November 1 will become the 37th country or territory on the list, which includes the UK, Australia and New Zealand. It is the fifth Asian member, after Brunei, Japan, Singapore and South Korea. American Chamber of Commerce in Hong Kong president Richard Vuylsteke said the chamber had also been lobbying the US State and Homeland Security departments for more than five years, the last time in June. "It's not for the lack of trying," he said, adding that the process had hit some snags but was still on the table. He could not say exactly what the snags were. "All of the reasons Taiwan was approved ... Hong Kong is also very strong in," he said. "My private speculation is they don't know how to handle mainland Chinese with [Hong Kong] resident status." Vuylsteke said Hong Kong as a special administrative region of China was a special case. "Of course, Taiwan is not a one-on-one equivalent. It has a different kind of status." The US consulate in Hong Kong said that because many factors were involved in qualifying for the programme, "we cannot predict the length of time it will take for Hong Kong to meet all of the requirements". Vuylsteke, who was formerly president of the American Chamber of Commerce in Taipei, said the Taiwanese government had worked closely with the State and Homeland Security departments to iron out the kinks in the details. A University of Hong Kong politics specialist said that by granting Taiwan the visa waiver, Washington was rewarding president Ma Ying-jeou's government for lifting its ban on US beef earlier this year. Richard Hu, an associate professor from the University of Hong Kong's politics and public administration department, said the move would boost tourism from Taiwan to the US, but that the decision was more a politically motivated gesture than an economic-based decision. "Hong Kong already has the 10-year multiple entry visa arrangement. Both sides don't [have] any urgency to upgrade it to the visa waiver program," said Hu. Last year, there were 128,512 Hong Kong visitors to the US and 131,712 the previous year. US President Barack Obama had said earlier that the Taiwan move was to bolster tourism. Ma has been lobbying the US government since 2008 to make Taiwan part of the Visa Waiver Program. Currently, 147 countries and territories grant visa-free access or visa-on-arrival facilities to HKSAR passport holders, according to the Hong Kong government. These include the US territories of Guam and the Northern Mariana Islands. The government would not confirm when it began negotiating with the US on the waiver program.

 China*:  Oct 5 2012

Diaoyus dispute affecting financial ties as Chinese banks pull out of Japan summits (By Kwong Man-ki in Beijing) Employees at a state-owned bookshop package maps of the disputed Islands. The withdrawal of Chinese banks from upcoming global banking summits in Japan shows that the territorial row between the two Asian economic powers is already taking its toll on international financial relations. Several Chinese lenders, including the state-owned "Big Four", have recently cancelled their registrations to attend the International Monetary Fund and World Bank Group summits planned for Tokyo next week. Three of the Big Four - the Industrial and Commercial Bank of China, the Agricultural Bank of China and the Bank of China - have also pulled out of the Sibos conference on interbank communications, which is scheduled to be held in Osaka later this month. The moves come amid escalating political tensions stemming from efforts by Japanese leaders to purchase three of the five disputed Diaoyu, or Senkaku, islands in the East China Sea. Analysts said the banks' action couldn't have come at a worse time as global leaders struggle to rein in the European debt crisis and jump-start sluggish growth around the world. Meetings such as the IMF and World Bank Group summits provide academics, central bankers, finance ministers and senior banking executives a rare opportunity to share ideas and draft plans to solve systemic problems. "The European problems need to be solved through global co-operation," said Sun Lijian, an economic professor at Fudan University. "This may hurt the co-operation." Moreover, Chinese banks could be passing up an opportunity to advance Asia's role as a global economic engine and push reforms to international financial organisations long sought by China, Sun said. The Big Four, which also includes China Construction Bank, had registered months ago to attend the summits starting on Tuesday in Tokyo. Privately, some bankers told their contacts that they should blame the Diaoyus dispute, according to sources familiar with the matter. Some smaller mainland banks also cancelled, the sources said. The banks' decision to withdraw was first reported by The Wall Street Journal on Tuesday. Meanwhile, an official with the Society for Worldwide Interbank Financial Telecommunication (Swift), which is organising the Sibos conference from October 29 in Osaka, confirmed the three big banks had pulled out. Sibos - Swift International Banking Operations Seminar - is one of the most important annual gatherings in global finance.

Hong Kong*:  Oct 4 2012 

Thumbnail 全港哀悼撞船事故罹難者http://www.youtube.com/watch?v=mvfw3cIU69w (Cantonese Language)

Thumbnail Day of condolence for Hong Kong vessel tragedy http://www.youtube.com/watch?v=OKH52KjDbY4 (English Language)

Thumbnail Li Ka-shing (李嘉誠) http://www.youtube.com/watch?v=qZZ52Z_opWo Thumbnail http://www.youtube.com/watch?v=AZVxeMbiq_E

Thumbnail China President Hu Jin-tao and Premier Wen Jia-bao sent their condolence to victim families http://www.youtube.com/watch?v=fbMqGmEA1qM 

Day of condolence for Hong Kong vessel tragedy 全港哀悼撞船事故罹難者 - 致哀: 各政府建築的國旗和特區區旗物會連續三天下半旗,悼念在南丫島撞船事故中遇難的人士。今天(10月4日)為「全港哀悼日」,行政長官梁振英率領部分主要官員下午1時到跑馬地禮頓山社區會堂簽署弔唁冊,沉痛悼念南丫島撞船事故中的38名遇難者。 政務司司長林鄭月娥、民政事務局局長曾德成、保安局局長黎棟國和食物及衞生局局長高永文亦有簽署弔唁冊,以示哀悼。 行政長官與各主要官員正午12時在政府總部東翼前地默哀三分鐘。在默哀期間,除緊急及出入境服務外,其他政府服務暫停,當值的政府人員在辦公地點參與默哀。社會各界亦有自發加入默哀儀式。另外,各政府建築物的國旗和特區區旗連續三天下半旗誌哀。民政事務總署在全港18區設立弔唁處,供市民前往弔唁。 Deep condolences: Flags at all the Government's buildings will be flown at half-mast for three days, as a mark of respect for the victims of the Lamma Island ferry tragedy. To express deep condolences to the victims of the vessel collision off Lamma Island, Chief Executive CY Leung has marked today as a day of condolence. Flags at all the Government's buildings are being flown at half-mast for three days from today to October 6, as a mark of respect for the victims. At noon, Mr Leung led principal officials in observing three minutes of silence at the Central Government Offices, Tamar, in mourning for the victims. Mr Leung, together with Chief Secretary Carrie Lam, Secretary for Home Affairs Tsang Tak-sing, Secretary for Security Lai Tung-kwok, and Secretary for Food & Health Dr Ko Wing-man, later visited Leighton Hill Community Hall in Happy Valley to sign a condolence book.

Ferry company denies 'hit and run' (By Simpson Cheung) Nelson Ng, general manager of Hong Kong and Kowloon Ferry, weeps on Wednesday while denying his company's vessel abandoned the stricken Lamma IV immediately after Monday's collision. Insert, the Lamma IV after being towed to a beach on Lamma Island for inspection. A tearful ferry company boss has rejected claims that Sea Smooth, a vessel owned by his firm, was guilty of a “hit and run” in Monday night’s disaster off Lamma Island. Nelson Ng Siu-yuen, general manager of Hong Kong and Kowloon Ferry Holdings (HKKF), wept on Wednesday during his first press conference since the disaster, saying one of his relatives lost two children in the tragedy. The death toll has reached 38, with more than 100 injuries from the collision involving Sea Smooth and another ferry, Lamma IV. “We feel deep regret about this sea tragedy,” said Ng. “We hope all the deceased can rest in peace… I have promised not to tell, but now I want to tell you that I personally have relatives… two children passed away.” He had reported his family’s loss to the board of directors and would not let his personal situation affect his handling of the situation for HKKF, Ng said. He hit back against media reports suggesting that Sea Smooth, carrying more than 90 passengers, drove away irresponsibly after the collision with Lamma IV. It was unfair to blame his company’s ferry before police finish their investigation, he said. Ng asserted that the captain remained at the scene to check the stricken ship for a while after the collision. But he did not know how long the ship stayed at the site. The Sea Smooth has been in service for 10 years, and the company checked it for seaworthiness just last month, Ng said. Its captain received his sailing licence in 1985 and has worked for HKKF for three years, with a clear sailing record. The captain, an engineer and a sailor were arrested on Tuesday and have been released on bail. Sea Smooth was on its final voyage of the day and its captain, surnamed Lai, had worked for more than 10 hours, Ng said. But he rejected suggestions that the captain was overly tired or that the ship had deviated from its proper course. Lai is still in hospital with rib injuries and is also being treated by a psychologist, so Ng was unable to ask him how the collision happened, he said.

Li Ka-shing Pledges Support for Victims' Families (By Isabella Steger) Billionaire Li Ka-shing's business empire touches almost every part of Hong Kong, but the boat crash that killed 38 people hit especially close to home. Through several layers of holding companies, Mr. Li controls Hongkong Electric, whose boat was filled with company employees, their friends and families when it collided with a ferry on Monday night. All of the fatalities, which included five children, occurred on the Hongkong Electric boat and seven of the dead were company employees. Mr. Li, Asia's richest man, rushed back to Hong Kong when he heard about the crash and visited the Queen Mary Hospital on Tuesday night, where some of the survivors of the accident are being treated. "Of course I'm sad. I left Hong Kong yesterday (Monday), and as soon as I found out about this accident I dropped everything to come back," the 83-year-old Mr. Li told reporters, holding back tears and dabbing his face with a tissue. Hongkong Electric would give HK$200,000 ($25,791) to each family of the dead to take care of immediate needs. The Li Ka Shing Foundation, Mr. Li's personal charity, will also donate a further HK$30 million ($3.9 million) to the victims' families. One of the two boats involved in the collision was owned by Hongkong Electric, which is owned by Power Assets Holdings Ltd., which through two more companies is a member of Mr. Li's Cheung Kong Group. The Hongkong Electric boat carried revelers who were about to watch the city's National Day fireworks. The boat sank after it was hit by a commuter ferry, with 38 confirmed dead so far, including five children. Mr. Li also acknowledged that the company was facing difficulties compiling a list of victims, but said that Hong Kong Electric's employees were trying to put the names together. Li Ka-shing said part of the difficulty involved in putting together the list of victims was because not everyone on the boat was a direct family member of the dead, which meant they may not be able to account for friends who may be dead or missing. Flags outside Mr. Li's company headquarters Cheung Kong Centre in Central district are flying at half mast. Many tycoon-controlled companies in Hong Kong have paternalistic relationships with their employees, who often work there for decades. Mr. Li's public appearance and pledge highlights the role of Hong Kong's tycoons in the city's economy, where a small number of families control much of its commercial activity. It also comes at a time when tensions are running high in the city as resentment over land prices, corruption and declining standards of living are building up. Nicknamed 'Superman' in Hong Kong for his legendary rags-to-riches story, Mr. Li and other tycoons have faced criticism for rising costs in the city. Hongkong Electric serves Hong Kong Island and Lamma Island, and is the smaller of the city's two power suppliers by revenue after CLP Group. Its history dates back to the turn of the last century. Hutchison Whampoa Ltd., one of the Li family's flagship companies, bought a majority share in Hongkong Electric in 1985 from developer Hongkong Land . The boat was filled with Hongkong Electric employees and their family members and friends, who set off to Victoria Harbour to watch the fireworks after a tour of the company's power stations on Lamma Island, followed by dinner. Employees entered a lottery for tickets on the boat, which allowed them to bring three guests.

They are the prides of Hong Kong - keeping law and orders, rescuing and saving lives

(L-R) Hong Kong Flag at half mast, The flags of Hong Kong Electric, Hutchison Whampoa, Cheung Kong, Cheung Kong Infrastructure and CK Life Sciences International, companies owned by Li Ka-shing, fly at half mast as staff pay their respects to the victims of a fatal ferry collision in Hong Kong October 2, 2012. The flag of Hutchison Whampoa Ltd., owned by Hong Kong tycoon Li Ka-shing (李嘉誠), is being lowered to half-mast as a sign of respect for the victims of a fatal boat accident in Hong Kong October 2, 2012. 

Hong Kong goes into three days of official mourning from Wednesday October 3 2012 for the 38 people (By Mary Ann Benitez), including five children, killed in the Lamma ferry tragedy. The death toll may rise further in wake of a tragedy that saw a Hongkong Electric-owned pleasure boat collide with a passenger ferry in the SAR's worst maritime accident in decades. The Hongkong Electric boat Lamma IV did not have a passenger list. Among the missing are a couple's 10-year-old son and seven-year-old daughter. The passengers on Lamma IV were on their way to watch the National Day fireworks in Central when their boat was allegedly rammed by a Hong Kong and Kowloon Ferry catamaran and sank within minutes of leaving Yung Shue Wan pier. The 27-meter-long Lamma IV, which could carry 224 passengers and eight crew, was struck on its port side, throwing passengers overboard and sinking in minutes, in a collision with Sea Smooth, a 28-meter catamaran heading to Lamma from Central. The ships' captains and five crew members have been arrested. Last night the death toll stood at 38 - 30 found in the water and eight dead on arrival at hospital. A total of 101 people were sent to five hospitals. Two are in critical condition and two serious, while 66 have been discharged. Sixteen bodies have so far been identified, including the five children. The Marine Department is investigating while police are examining criminal liabilities. A coroner's court will also be convened. The Lamma IV has been raised from the sea bed by two barges. The Sea Smooth allegedly left the scene of the accident on Saturday night after it took in water. Chief Executive Leung Chun-ying said he will set up a commission of inquiry to look into the causes of the tragedy. It was the worst maritime disaster since 1971 when a Hong Kong- Macau ferry sank during Typhoon Rose, killing 88 people. Hong Kong flags will be flown at half-mast and officials will cancel non- essential activities during the mourning period. A three-minute silence will be observed at the Tamar government headquarters tomorrow at noon. Books of condolence will be opened in all 18 districts for three days. President Hu Jintao, Premier Wen Jiabao and Vice President Xi Jinping yesterday expressed condolences and urged the Hong Kong government to spare no efforts in recovering the missing and in helping the victims' families. Director of Marine Francis Liu Hon- por said the Lamma IV sank quickly. "We utilized all resources and personnel, and the difficulty was that the ship had already sunk, with the bow almost pointing straight up," he said. The ship had to be stabilized before a search could be made for anyone trapped inside. The search area was extended yesterday, using Government Flying Service helicopters and other vessels, as some of those missing may have been swept further out. Director of Fire Services Andy Chan Chor-kam said the fast currents, high waves and poor visibility made rescue difficult. "The boat listed and a lot of objects became dislodged and got in the way of frogmen getting inside the cabin," he said. Divers will check the seabed for the next two days. "Because of the currents, it is likely that some victims or missing people may have been washed further out from land and we will be conducting sea and air searches," he said. The Islands District Council will hold a meeting on the disaster this morning. Yu Lai-fan, a councillor for Lamma, will ask the government to carry out a safety assessment of the Yung Shue Wan pier area. SKIPPERS SEIZED IN VESSELS PROBE (By Kelly Ip) The 54-year-old captain of the Hong Kong and Kowloon Ferry catamaran, who allegedly left the scene of the collision, has been arrested along with six others, including his counterpart on the pleasure boat that sank. The seven were arrested on suspicion of endangering the safety of others at sea. Aged 50 to 63, they include the catamaran Sea Smooth's captain - who was in the custodial ward at Queen Elizabeth Hospital for treatment for shock - and three male crew members. Also arrested were the pleasure boat Lamma IV's captain, 56, and two male crew members. Six of them were released on bail and are required to report back to police in the middle of the month. The Sea Smooth captain will also be released on bail later, police said last night. Secretary for Security Lai Tung- Kwok said yesterday more people will be arrested. Police Commissioner Andy Tsang Wai-hung said traffic in the sea area was not especially heavy at the time of the collision. "We have deployed more officers from the regional crime unit and we will check related radar records from both vessels," he said. The vessels were not overloaded. The maximum penalty for such a conviction is a fine of HK$200,000 and four years' imprisonment. The arrests came after the captain of Sea Smooth sailed away from the stricken ferry to dock at the pier in Yung Shue Wan, Lamma, after the collision off Pak Kok Tsui. One of the passengers onboard Sea Smooth said passengers feared the ship might sink too and asked the captain to keep sailing as they were close to the pier by then. "Some of us fell off our seats after the ships collided," a passenger surnamed Yip said. "When the catamaran moved again, some water flooded in from the front and passengers panicked again." A Hong Kong and Kowloon Ferry spokeswoman said the captain is still in Queen Elizabeth Hospital. She said the Sea Smooth has had regular maintenance checks. "We still have colleagues being treated at hospitals and it is not a convenient time to contact them," she said. After police announced the arrests, a spokesman for the ferry company said it will cooperate in the investigation. His colleague said about 100 commuters were on the catamaran and that 10 were admitted to hospital. Docked at the Yung Shue Wan pier, Sea Smooth had a big hole in its port bow. Rails on the bow had collapsed. Marine Department senior official Chung Siu-man said under normal circumstances, if a vessel is sinking, another vessel should stay in the area to help in the rescue. But he said it is too early to determine where the greater blame lies. Hong Kong Polytechnic University department of mechanical engineering professor Lo Kwok-keung estimated the collision force at about 500 to 600 tonnes - "equivalent to the collision of 10 double-deckers." Merchant Navy Officers' Guild Hong Kong general secretary captain Chung Tung-tong estimated the catamaran and pleasure boat were traveling at (37 and 28 kilometers an hour at the time of the collision.

Relatives of victims in a fatal ferry collision pay their respects by throwing ghost money into the waters off Hong Kong yesterday. At least 38 people died and about 100 were injured in Monday night’s incident, authorities said. The National Day holiday brought thousands of extra visitors to Lamma Island, the third-largest island in the territory. The Hong Kong Electric vessel was about five minutes into its journey from Lamma to Victoria Harbour when it came into contact with the ferry, operated by the Hong Kong and Kowloon Ferry company. Hong Kong Electric is owned by Asia’s richest man, Li Ka-shing (李嘉誠), whose son issued a public statement yesterday promising HK$200,000 (US$25,800) to the families of each of the deceased.

A total of 38 people were killed and scores injured when a passenger ferry collided near Lamma Island with a vessel carrying company employees on a pleasure cruise to watch holiday fireworks on Monday evening. It was the deadliest maritime accident in the territory since 1971, when 88 people were killed as a Hong Kong-Macau ferry sank during a typhoon. Hong Kong is one of the world’s busiest ports, with more than 425,000 vessels arriving and departing in 2010, according to official figures. On any given day, scores of cargo ships can be seen moored in clusters around the port, and at night the horns of passing leviathan container vessels ships echo towards the city. But fatal accidents are rare on Victoria Harbour’s crowded waters, despite high-speed hydrofoils vying for space with red-sailed tourist junks, luxury private yachts and the 100-year-old Star Ferries that connect Hong Kong to Kowloon. Researchers say that while it remains one of the world’s safest ports, increased vessel traffic and risks associated with land reclamation works along the harbour front call for urgent government attention. “People will start querying whether Hong Kong’s marine traffic management has been kept up to pace,” said Albert Lai, the founding chairman of think-tank The Professional Commons and a trained civil engineer. “It certainly affects Hong Kong’s international reputation as a shipping hub,” he added, calling for a review of marine traffic systems. Despite the importance of marine transport to the city’s seven million population, passengers said the ferry crew involved in Monday night’s incident appeared to have no training on how to respond to such an emergency. “The crew was terrible, useless. They just stood around as we were putting the life jackets on... The crew didn’t seem to know what was going on,” said Clare Kirkman, a 43-year-old Briton who has lived on Lamma for 10 years, on Tuesday. “The worst thing is that they seemed more concerned with getting the life jacket from us when we got to the pier. It was a good 10 or 15 minutes until we got to the ferry pier but I didn’t see any ambulances or police. “It was a quiet ferry but it was concerning that the ferry people weren’t more helpful. God forbid if it had been a school ferry.” Residents of Lamma – a sleepy, car-free island inundated with thousands of day trippers on weekends – expressed anger at the number of ferries put on to cater for the holiday crowds. “I have seen ferries back-to-back, but this was just ridiculous. I don’t think they should be able to bring so many people to the island,” said Kay Travers, a Lamma resident of 18 years. Officials said the incident was still under investigation and have refused to speculate about the cause of the accident. Six people were arrested, three crew from each vessel, said the territory’s security chief Lai Tung-kwok. All of the dead and most of the injured were aboard the party boat which was taking staff and families of power company Hongkong Electric on a cruise to watch the fireworks. The single-hulled vessel with a capacity of 200 people sank within minutes of the impact, leaving only its blue bow poking above the choppy waves. Shipping experts say that given the intensity of traffic, the rate of fatal incidents in Hong Kong is low. But Lai pointed out that water traffic had risen significantly in recent years as soaring accommodation prices on Hong Kong drove more and more people to live on outlying islands such as Lamma. He said the hundreds of hectares of land reclaimed along Victoria Harbour over the past decade made journeys on small boats more perilous, as they were pushed into lanes used by powerful high-speed ferries. “The harbour has become smaller, making the waves generated by ferries crossing the harbour higher and making the water more choppy,” he said. Asked if the accident damaged the port’s reputation, Chief Executive Leung Chun-ying said: “This is definitely an isolated incident. The marine territory of Hong Kong is safe.”

Relatives of the victims of the Lamma ferry sinking leave Kwai Chung mortuary on Tuesday. Members of Hong Kong's Disaster Victims Identification Unit (DVIU) arrive at Kwai Chung mortuary. Relatives of missing ferry passengers gather at Kwai Chung mortuary (Joyce Man) Relatives of the victims of the Lamma ferry sinking leave Kwai Chung mortuary on Tuesday. Dozens of people gathered at Kwai Chung Public Mortuary by 10am on Tuesday morning, looking for relatives who went missing in the Lamma ferry disaster. The mood was sombre and subdued as the relatives gathered in the building’s hall, some talking to mortuary officials. Others wept openly while some speculated aloud about the ferry collision on Monday evening. One man at the mortuary, who gave his surname as Leung, said he was looking for his father-in-law, who had boarded the ferry to watch the fireworks with his daughter and a granddaughter. His father-in-law was not a strong swimmer, Leung added. A woman who identified herself as Mrs Shum said she and her family were searching for a cousin of her husband’s, and a niece of the cousin, who was seven or eight years old. “No one thought it would turn out like this,” Shum said. But she was relieved that two other relatives had survived the disaster and been discharged from hospital. One man, who identified himself as Mr Li, arrived at the mortuary searching for his older sister after looking for her in vain elsewhere. “I went to piers and three hospitals to look for her but there was nothing,” he said. “So I came to the mortuary to see whether there might be information here.” His sister, a social worker with grown children, boarded the ferry on Monday night with three friends who were employees of Hongkong Electric. The Lamma IV ferry was taking employees of Hongkong Electric, and their family members, to watch a National Day fireworks display on Monday evening, when the disaster happened shortly after 8.20pm. Earlier on Tuesday morning, specialists on the police disaster victim identification team were seen offloading items from the wreck at the Marine Police Aberdeen Base.

Lawmaker acts as spokesman for families of ferry victims (By Olga Wong) Survivors and families of the Lamma ferry disaster found a spokesman in lawmaker Wong Kwok-hing, who met senior managers of Hongkong Electric on their behalf on Tuesday morning. The death toll rose to 36 early on Tuesday. The victims are all employees of the power firm and their relatives, whose chartered ferry, the Lamma IV, sank off Lamma Island on Monday night. When he heard of the disaster, Wong rushed to Queen Mary Hospital to help the survivors, he said on a radio programme on Tuesday morning. He was called by worried members of 13 families, who asked him to find out what had happened to their 24 relatives on board the Lamma IV. Wong learned that 10 of the 24 missing people had survived and four had died, but he could not find the other 10, he said. He criticised Hongkong Electric for not disclosing the names of employees and their family members who were on board, and urged the company to pay employees’ medical and burial expenses. But company spokesman Yuen Shui-see told the media that the company could not disclose the names without getting the consent of the staff members involved. The company has set up a committee to co-ordinate the assistance being offered to survivors and victims’ families, and it would pursue the question of who was liable for the disaster, Yuen said. “We would do our best to assist, in terms of both manpower and money. We are now doing whatever we can think of. We feel so sorry and shocked,” he said. The company’s chartered vessel was on a National Day jaunt to see a fireworks display when it collided shortly after 8.20pm with a public ferry carrying passengers from Central to Lamma Island. In face of criticism that the public ferry, operated by Hong Kong and Kowloon Ferry, left the scene after the accident, one passenger on the ferry said the captain pulled away at the request of frightened passengers. “The passengers were in a panic after the crash and some were injured,” he said. “They asked the captain to take them to the pier.” The ferry had taken on a lot of water by the time it moored at the pier, he said. Yuen said the company chairman and deputy chairman, Li Ka-shing and his son Victor Li Tzar-kuoi, had expressed their sympathy for the survivors and next of kin. Victor Li visited some employees in hospital to offer assistance, and the flag was lowered at the company’s headquarters, Cheung Kong Center in Central, Yuen said.

Hong Kong will officially mourn those who died in the worst maritime disaster since 1971. The government anounced that Thursday will be a day of mourning as a mark of respect to the 37 people who died in a collision involving a Hong Kong Electric Company vessel and a Hong Kong and Kowloon Ferry catamaran near Lamma island on Moonday night. Six crew members were arrested following the tragedy. Twenty seven are still in hospital. Two are in critical condition, while 66 have been discharged. Health minister Ko Wing-man said a command center was set up at the Hospital Authority to oversee the emergency response. The government said today the number of fatalities from the ferry collision off Yung Shue Wan on Lama Island has risen to 37. A ferry and a pleasure craft collided off Lamma Island to the southwest of Hong Kong Island at about 8:23 pm yesterday. More than 100 people on board were transferred to five hospitals, with nine severely injured. The central government sent a letter expressing condolences and sympathy to the families of victims of a ferry collision off Yung Shue Wan on Lamma island last night. In a letter, the Hong Kong and Macao Affairs Office of the State Council told the Chief Executive Leung Chun-ying that Beijing was extremely concerned about the accident and will spare no efforts in providing help if needed, Xinhua reports. The central government has asked Guangdong Province to send four salvage vessels to help Hong Kong police with rescue work. A ferry and a pleasure craft collided off Lamma Island to the southwest of Hong Kong Island at about 8:23 pm yesterday. As of early morning today 36 people have died. More than 100 people on board were transferred to five hospitals, with nine severely injured, it said.

President Hu Jintao, Premier Wen Jiabao and Vice President Xi Jinping on Tuesday expressed condolence over Monday's deadly ship collision in Hong Kong and urged the HK government to spare no efforts to rescue the missing people and comfort the victims' families. Hu, Wen and Xi had all made calls to learn about the relief work. They urged the maritime rescue center and other involved departments to fully cooperate with the Hong Kong government in rescue and provide all the help needed. The central government had asked neighboring Guangdong Province to send four salvage vessels to help Hong Kong police with rescue work after the accident occurred. Other leaders, including State Councilor Liu Yandong, had also convoyed sympathy to the injured and the families of the victims of the collision. A ferry and a pleasure craft collided off Lamma Island to the southwest of Hong Kong Island at about 8:23 p.m. on Monday evening. A condolence ceremony will be held on Oct. 4 across Hong Kong and Hong Kong regional flags at government buildings will be at half-mast for three days starting Thursday.

38 die in Hong Kong ferry disaster - At least 38 dead after an evening cruise to watch the National Day fireworks celebration ends in tragedy. Investigations into the cause of a ferry collision that killed 38 people and left 101 injured continued on Tuesday afternoon as authorities boarded the half-submerged boat. It was still unclear whether all 124 passengers from a Hongkong Electric ferry which sank near Lamma Island on Monday night were accounted for. The boat was packed with utility company employees and their families, and three crew members, on their way to watch a fireworks display in celebration of National Day in Victoria Harbour. It collided with a Hong Kong and Kowloon Ferry (HKKF) boat headed for Lamma Island from Central around 8.15pm on Monday night. The Hongkong Electric vessel was half sunk in the water with the bow pointing up at an angle of 90 degrees. Of the passengers on the Hongkong Electric ferry, 38 have been confirmed dead and 93 injured. Of the 93 injured, two are listed in critical condition, two in serious condition, 23 as stable and 66 were discharged from hospital. Eight onboard the HKKF ferry were injured and treated at a local clinic on Lamma Island. “Twenty-eight were certified dead at the scene while eight others were certified dead upon arrival at hospitals,” the government said earlier in a statement. Two other deaths were announced later on Tuesday. Before the start of a press conference dealing with the disaster late Tuesday afternoon, Chief Executive Leung Chun-ying and a team of government officials observed a minute of silence in honour of the victims. Leung offered his deepest condolence to the families of the victims and to those injured and promised that an independent panel would be set up to investigate the disaster. He declared Thursday as a mourning day for the city and said flags at major government buildings would be flown at half-mast for three days starting on Thursday. All government workers, except those involved in emergency services, would observe three minutes of silence at Thursday noon. Condolence books would be available in all of Hong Kong's 18 districts for residents to sign starting from Thursday. Police commissioner Andy Tsang Wai-hung said at the same press conference that the police do not have a complete list of passengers’ names. “We must build this list one by one, by asking survivors if they still have any missing friends,” he said. “This is a very time-consuming because some survivors were discharged and some were never admitted to hospital." Hongkong Electric has identified 19 of the dead. Five of them are Hongkong Electric employees, while the other 14 are friends and family. Of the 124 people on board, around a third or a quarter are employees of the company. The others were the family and friends of employees. Victor Li Tzar-kuoi said all resources will be poured into helping the families of the deceased and those injured. He also said the company would be giving HK$200,000 to each family of the deceased for emergency use. Teacher Chris Head, 48, a Lamma resident of 18 years who was on the Central to Lamma ferry, told the Post: “Initially we were trying to put on our life jackets so we were more concerned with that. But after a few minutes – probably about five – I could see that the end - I couldn’t tell whether it was the bow or the stern - of the boat was sticking vertically out of the water and I thought ‘Shit! This is real’. I could see it going upright and sinking, just like the Titantic.” A man brought ashore at the pier near South Horizons in Aberdeen said: "After 10 minutes out, a boat crashed into ours from the side at very high speed. The rear of the ferry started to sink. I suddenly found myself deep under the sea. I swam hard and tried to grab a life buoy. I don't know where my two kids are." Another woman at the pier said: "I swam for a long time to reach the surface and swallowed a lot of water. Then I found a rescue boat." Some of those rescued were taken to Queen Mary, Ruttonjee, Queen Elizabeth, and Pamela Youde Nethersole Eastern Hospitals for treatment, with some on stretchers and unconscious. Rescue workers try to board the stricken ferry in the early hours of Tuesday morning. While they earlier waited for ambulances at the Ap Lei Chau pier, they were wrapped with blankets or aluminium foil to keep warm. A paramedic at Queen Mary Hospital said some of the survivors were suffering hypothermia and four had to be resuscitated. Without naming Hong Kong and Kowloon Ferry, Yuen Sui-see, Hong Kong Electric's director of operations, blamed the other vessel for the tragedy. "The ferry rammed the side of our boat. They didn't bother and just left," he said. Yuen said the power company's captain was experienced and sailed in the waters daily. He said there was no problem with safety or overloading as it was able to carry 200 passengers. A spokeswoman for Hong Kong and Kowloon Ferry said the ferry was arriving at Lamma from Central. She said no one on that ferry fell into the sea but a few passengers had sought treatment at a Lamma clinic. Earlier in the day, Leung visited disaster victims in Queen Mary Hospital where he said he had met had met HK Electric management and said that the cause of the accident would be thoroughly investigated. Before this Leung said that an all-out effort by all relevant departments was being made to search for those who had fallen into the sea after the collision. "I and senior officials will closely monitor the situation," he said. "We will do whatever we can." In an unusual appearance, Li Gang, a deputy director of the central government's liaison office in Hong Kong, went to the hospital with Leung and offered his condolences. "We are deeply sorry about the dead citizens," Li said. He said he would liaise with Guangdong and request them to send salvage ships. Hong Kong and Kowloon Ferry company continued to run ferries to the island after the accident occurred on Monday night. One passenger on a ferry that set off from Central at 11.30pm told how others travelling on the ferry fell silent as it slowly made its way past the area where several ships and a helicopter were still searching for survivors. Another Lamma resident said that hundreds of people had queued at Lamma's pier throughout Monday afternoon and early evening to get to Central in time to see the fireworks. She said Hong Kong and Kowloon Ferry company were running ferries to the island every 15 minutes to cope with demand. Hong Kong and Kowloon Ferry officials were unavailable to comment, but a spokeswoman told Cable TV that “several” passengers on the ferry were injured. Police said the collision was under investigation and refused to comment on its possible causes. The twin-hulled ferry involved in the collision was moored at one of Lamma’s piers on Tuesday, with a gaping hole in its left hull. It was believed to have been travelling from Hong Kong to Lamma when the collision occurred close to its destination, allowing it to dock and disembark its passengers before it took on too much water. Marine Department senior official Chung Siu-man told reporters it was too early to determine which vessel was at fault. “If there is a collision, usually the boat would stay to offer assistance to the other boat, but according to the initial report we received, some passengers on the ferry were injured,” he said. The National Day holiday brought thousands of extra visitors to Lamma island, the third-largest island in Hong Kong, with a population of only around 5,000 people. It was the second National Day calamity after a 15-year-old boy was swept away in Shek O and drowned and another was missing.

Ferry captains held, as Leung vows inquiry on Lamma crash (By Agence France-Presse and Clifford Lo) Chief Executive Leung Chun-ying (centre) observes a moment of silence with his team on Tuesday. The captains of a ferry and a pleasure boat which collided off Lamma Island, killing 38 people in the city’s worst maritime disaster in decades, were arrested on Tuesday with five other crew, officials said. More than 120 passengers and crew were on a Hongkong Electric company vessel to watch a huge National Day fireworks display in Victoria Harbour on Monday evening when the collision occurred near Lamma island. Scores of people were thrown into the choppy water from the company boat, which sank within minutes, leaving only its bow protruding from the waves. The stricken ferry Sea Smooth limped to Lamma where its shaken, but relatively unharmed passengers disembarked. Officials said the captain and three other personnel from the ferry had been arrested, along with the captain of the company vessel and two of its crew, for “endangering the safety of others at sea”. Six of the detainees were released on bail, and the ferry captain was to be released on bail later, they added. Police chief Tsang Wai-hung said the suspects “did not exercise the care required of them by law to ensure the safety of the vessels they were operating and the people on board”. The arrests came after Chief Executive Leung Chun-ying declared that Thursday would be a day of mourning. He promised a thorough investigation by a committee that will be set up to establish how the disaster happened. And he dismissed suggestions the city needed to overhaul its maritime rules to cope with its growth as a global trade and travel hub. “This is definitely an isolated incident. The marine territory of Hong Kong is safe,” he said. Before the start of his press conference, Leung and a team of government officials observed a minute of silence in honour of the victims.

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Leon Lai and Gaile Lok announce end to relationship (SCMP) Hong Kong singer-actor Leon Lai Ming and wife of four years Gaile Lok Kei-yi announced on Wednesday that they had officially split up, citing serious differences in their “life philosophies”. The statement, released by the couple’s management agency Paciwood Music & Entertainment, said the two had “shared many happy memories together and still cared deeply for one another” but, after carefully consideration, decided to end the relationship. “Hopefully, the public will allow the two their personal space during these difficult times so they can adapt to their new lives and stay focused on work,” the statement added. “On behalf of Ms Gaile Lok and Mr Leon Lai, we would like to express their sincere gratitude to the media and friends, for their support and care.” The pair began dating in 2005 and wed three years later at a secret wedding in Las Vegas. Model Lok, who is 14 years younger than Lai, has been the subject of a string of rumours regarding an extra-marital affair.

Hong Kong mogul sells loss-making Taiwan TV arm (By Associated Press in Taipei) High profile Hong Kong media mogul Jimmy Lai has admitted defeat and is selling Next TV to Lien Tai-sheng, owner of Taiwan’s Era Television. Hong Kong media mogul Jimmy Lai announced he will sell his prized Taiwan television business, best known for its fanciful animated takes on political and celebrity scandals, because of big financial losses. In a brief letter to employees of his Next Media Group on Tuesday, Lai apologized for his “failure” in running Next TV. Next TV has incurred losses of over US$340 million since it was founded in Taipei three years ago, says Next Media’s Apple Daily newspaper. At the TV unit’s much ballyhooed launch, Lai pledged to invest heavily to build a “world class, high-quality digital video and sound platform.” The group’s television unit and an affiliated company will lay off 500 employees as part of the sale to Lien Tai-sheng, owner of Taiwan’s Era Television, according to Apple. The profit-making Apple Daily and a weekly magazine will not be affected. Apple editor-in-chief Ma Wei-min blamed the TV business’ heavy losses on Taiwan’s “complicated” political and commercial environment, noting Lai has run into strong opposition because of his “consistently uncompromising anti-Beijing stance.” Taiwan’s freewheeling democracy protects freedom of speech, but many businesses have distinctive pro- or anti-China positions. Taiwan and China split amid civil war in 1949, but trade across the 160-kilometre (100-mile) wide Taiwan Strait has boomed amid warming relations in recent years, raising the commercial stakes for media companies on this island of 23 million people. Like the Next Media group’s newspaper and its weekly magazine, Next TV is best known for its coverage of scantily clad starlets, its paparazzi-generated entertainment news, and its racy reports of corruption and scandals among politicians and celebrities. Next TV first attracted international attention with its computer-enhanced animated news featurettes, a Lai brainchild that was introduced in 2009. The clips offer fanciful interpretations of cutting edge news events, and made arguably their biggest splash in November 2009, when one depicting golf superstar Tiger Woods arguing with his wife over an extramarital affair went viral on the Internet. But the company was encountering difficulties at home, held back by its lack of a broadcasting licence for its news channel, which was only granted in July 2011, after Lai promised regulators he would avoid overly sensational animated reports portraying sex and violence. That limited its broadcasts to entertainment, sports, and movies, significantly crimping profits. Also hurting it was its failure to be picked up by a cable TV channel, the conventional way of attracting advertising revenue in Taiwan. Lai launched the Apple Daily and Next Magazine in Taiwan in 2001. Their successful operations have put pressure on Taiwan’s traditional, more conservative news media, which look pale and uninspired compared to Lai’s glitzy stable of products.

Fireworks show held in HK to celebrate National Day - Fireworks light up the sky over Victoria Harbor to celebrate the 63rd anniversary of the founding of the People's Republic of China.

Fourteen Hong Kong-based banks have set up operational branches on the Chinese mainland in nine years after the signing of a key economic plan, the People's Daily reported Tuesday. These branches of HK banks constitute 42 percent of the total overseas banks and hold respectively 35 percent of the total assets and 38 percent of the profits of overseas banks, according to the daily, the flagship newspaper of the Communist Party of China. The mainland and Hong Kong signed the Closer Economic Partnership Arrangement (CEPA) in 2003 and since then a series of supplements annually, which give preferential policies and measures to Hong Kong service providers to enter mainland market. The signing of CEPA relax restrictions for HK banks to invest in or buy shares of mainland commercial banks as well as lowered the requirements of the asset size for HK banks to set up branches on the mainland. As of the end of this June, six HK banks had invested in or bought shares of six mainland-based banks, the daily reported.

U.S. Secretary of Homeland Security Janet Napolitano announced Tuesday the decision to add China's Taiwan to the Visa Waiver Program (VWP). According to her, starting Nov. 1, eligible tourists from Taiwan will be allowed to enter and stay in the United States for up to 90 days without a visa. The island became the latest member of the VWP, joining 36 others in the list. In fiscal year 2011, the VWP accounted for 18.3 million visitors to the United States, or more than 60 percent of tourist and business travelers entering the country.

 China*:  Oct 4 2012

China, Japan 'too important' for territorial row, IMF chief says (By Agence France-Presse in Tokyo) Christine Lagarde, managing director of the IMF - The shaky global economy needs Japan and China to be fully engaged, the head of the IMF said, warning the world could not afford for the two countries to be distracted by their bitter territorial row. Speaking to Japanese media ahead of the annual IMF meeting in Tokyo next week, Christine Lagarde said the two economic powerhouses needed to show a bit of neighbourly tolerance for the good of the whole world. “Both China and Japan are key economic drivers that do not want to be distracted by territorial division,” Kyodo News agency quoted Lagarde as telling reporters in Washington, in an interview published on Wednesday. “The current status of the economy and the global economy needs both Japan and China fully engaged,” she said. China and Japan, the world’s second and third largest economies, are at loggerheads over a group of uninhabited islands in the East China Sea. Tokyo administers the chain under the name Senkakus, but they are claimed by Beijing, which calls them the Diaoyus. Chinese government ships regularly venture into waters around the islands, routinely ignoring orders to leave by Japanese coastguard vessels. Increasingly vitriolic diplomatic exchanges, including at the United Nations in New York last week, and mass anti-Japanese protests in several Chinese cities have further unsettled the pair’s already fractious relationship. Japanese firms operating in China were forced to shutter or scale back their operations when mobs attacked factories and shops. Some companies also complained of tightened customs inspections and difficulties obtaining visas for their foreign staff. Lagarde said neighbouring countries had to display “a certain degree of tolerance” if they were to rub along effectively. The IMF managing director was speaking ahead of her trip to Japan next week when Tokyo hosts meetings of the IMF and the World Bank, in what will be the world’s largest single gathering of finance officials, bankers and non-government organisations. Dow Jones Newswires reported late on Tuesday several big Chinese banks had cancelled their participation in events connected to the meetings, in what it said was a sign of the bilateral row leaching into the broader, economic realm. Most of the banks have not given a reason for their last-minute pull-outs but one unnamed person was explicit. “Quite frankly, it’s Japan-China relations,” Dow Jones quoted an official at the Tokyo branch of the Agricultural Bank of China as saying. The bank will withdraw from both IMF-related events and another financial industry conference planned in the western Japanese city of Osaka at the end of October. The global economy has struggled to shrug off the effects of the sovereign debt crisis in Europe, slowing growth in China and lingering concerns over the faltering US economic recovery. Lagarde said European countries “have made huge progress” already on the road to recovery, but “more needs to be done”, according to Kyodo. She said the “fiscal cliff” in the United States – the anticipated termination of income tax cuts and a massive spending reduction in early next year – also poses a threat to the global recovery. “My dearest objective is that the countries participating in the IMF annual meeting in Tokyo would be prepared to come together, act together and try to go beyond the crisis to sustain the recovery,” she was quoted as saying.

China banks withdraw from IMF-linked events in Tokyo (By Agence France-Presse in Tokyo) Chinese banks have pulled out of events linked to annual meetings of the International Monetary Fund and World Bank in Japan next week, a report said, as Tokyo and Beijing remain locked in a diplomatic row. Although many of those apparently planning no-shows gave no specific reason, Dow Jones Newswires said on Tuesday, it is the latest sign that a festering spat over islands in the East China Sea is having a wider impact on bilateral, and now multi-lateral ties. “Quite frankly, it’s Japan-China relations,” Dow Jones Newswires quoted an official at the Tokyo branch of the Agricultural Bank of China as saying to explain why the bank was pulling out of IMF-related events. The bank is still sponsoring and participating in a meeting of the Institute of International Finance – a global association of financial institutions – that takes place in Tokyo on the sidelines of the IMF meeting, the report said, citing another anonymous official. A bank official declined to comment on the report, saying the Tokyo branch was not authorised to speak on the issue. The Bank of Communications has also pulled out of IMF-related events, Dow Jones reported, adding that China Construction Bank said its China-based officials had scheduling problems that were preventing them from attending. The Bank of China had not decided if representatives would attend the IMF meetings, it said. Officials from the banks were not immediately available for comment. Japan’s vice finance minister Takehiko Nakao said Tokyo had not been officially informed of the boycott, but was aware of the reports. “It’s very disappointing,” he said, adding the economic relationship between the two countries was very important. “Political difficulties shouldn’t prevent this kind of exchange between Japan and China taking place,” he said. Tensions between Beijing and Tokyo remained high this week, with Chinese government ships returning to waters off the Japanese-controlled islands on Tuesday and again on Wednesday. Last week Japanese and Chinese diplomats clashed at the United Nations in New York over the ownership of the islands known as the Senkakus in Japan and the Diaoyus in China. China is seeking a bigger say in world affairs, commensurate with its growing financial clout, but commentators say actions such as the withdrawal of its banks from the IMF-linked events undermine that ambition. “China may rightly demand a seat at the head table, but what signal does it send when they go off in a huff over these types of issues?” said Fraser Howie, who has written on China’s financial system. “Such boycotts are pointless. They only harm China and make China out to be an unstable and unreliable partner.”

Japanese convenience store chain Lawson Inc. will expand its business in China by increasing the number of its stores as planned despite recent tensions between the two country, said company president Takeshi Niinami on Wednesday. Niinami said the number of customers in China has not dropped drastically, and the company aims to expand its business there by hiring Chinese nationals locally, adding that "the situation is a lot calmer now." Lawson had 393 stores in China as of Aug. 31 this year, and Niinami said the company will follow its plan to increase the number to 10,000 by 2020.

Personal care market to keep growing (By Wang Zhuoqiong) Sector gets boost from healthy retail environment, higher incomes - China's beauty and personal care sector will continue to see robust growth in the next four years, according to an industry report. Consumers are likely to increase expenditure on beauty products, thanks to promotions by key industry players and a healthy national economy, a report by Euromonitor International said. Premium beauty and personal care products accounted for the majority of the industry's sales growth in 2011, according to a report by Euromonitor International. Premium skin care, makeup and fragrances witnessed strong growth last year, with consumers trading up from mass brands, the report said. An anticipated baby boom this year is expected to drive the growth of baby and child-specific products, while older age groups will continue to drive sales of anti-aging skin products, the report said. Men's grooming is likely to see ongoing growth due to increasing demand from younger Chinese men, it added. One of the notable trends is that fast-growing e-commerce has resulted in declining sales through traditional retail channels in 2011, the report found. Department stores and superstores are considered two major channels for beauty and personal care products in China, with department stores mainly providing middle-to-high-end goods and superstores focused on low-to-middle-end goods. Online retail has grown rapidly, thanks to increasing Internet access and use of e-commerce websites such as Alibaba Group's business-to-consumer platform Tmall.com. E-commerce appeals to many Chinese consumers due to its accessibility, attractive prices and convenient delivery services. In 2011, online sales of beauty and personal care products increased by 84 percent, the report said. Online retailers' target consumers of beauty and personal care products are middle- and high-income female consumers. E-commerce advertising has also increased and can be regularly seen on TV channels, such as CCTV, as well as outdoors in public transportation stations, the report said. By the end of 2011, a large number of leading international and domestic companies in the beauty and personal care market - including Procter & Gamble (Guangzhou) Ltd, L'Oreal China, Unilever China Ltd and Shanghai Jahwa United Co Ltd - have set up stores on Tmall.com because of its popularity. Shiseido China Co Ltd began to use Tmall.com in February 2012, according to the report. Several leading companies in the beauty and personal care market have been working to build up official online platforms targeted at Chinese consumers. One notable example in this respect was Shiseido's efforts. In 2011, the company launched its official website, through which consumers can directly purchase its Pure & Mild branded products. Shiseido also plans to add five more beauty and personal care brands, such as Za and Tsubaki, to its official online store in the near future, the report said. Individual sellers on Taobao.com, China's largest consumer-to-consumer website, have also contributed to growing online sales of overseas beauty and personal care products. Recently, a former Chinese flight attendant was sentenced to 11 years in jail for smuggling overseas cosmetics, which are subject to import duties. She sold the products through her online store on Taobao.com. The Ruder Finn/Ipsos China Luxury Forecast 2012 reveals that there has been a huge spike in online shopping. About 10 percent of luxury goods and about 17 percent of luxury cosmetics were purchased online. Another finding of the Euromonitor report was that premium beauty and personal care products accounted for the majority of the industry's sales growth in 2011. Premium skin care, makeup and fragrances witnessed strong growth last year, with consumers trading up from mass brands, the report said. The trend is attributed to rising disposable income combined with product innovation. As a result, an increasing number of high-income consumers have turned to department stores to purchase premium cosmetics products, said the report. Meanwhile, many low-income consumers continue to struggle with rising inflation, which has pushed up the prices of many mass-market products. However, demand for mass-market cosmetics still increased, although at a slower rate compared with premium cosmetics in 2011, the report said.

A Chinese-owned company has sued US President Barack Obama for blocking its wind farm project purchase deal, claiming that the president's order exceeded its constitutional rights and failed to provide detailed evidence. In an amended complaint filed on Monday in the US District Court in Washington, Ralls Corp, a company owned by Chinese nationals, said Obama acted in "an unlawful and unauthorized manner" in issuing the order without providing "any evidence or reasoned explanation" for his decision to use a national defense law in prohibiting the acquisition and ordering the company to divest the four wind farms. Ralls also contended that Obama and the Committee on Foreign Investment in the United States (CFIUS) failed to give the firm "sufficient notice and opportunity to be heard prior to prohibiting its acquisition of the wind farms and imposing extraordinary restrictions on the use and enjoyment of its property interests." By filing the complaint, "Ralls continues to show its profound faith in transparency and due process, and seeks only fair treatment under the law and the Constitution," said Tim Xia, counsel for Ralls Corp, in a statement. US President Barack Obama on Friday issued a presidential order to prevent Ralls Corp, from owning four wind farms in Boardman, Oregon, citing national security risks for their locations near the Naval Weapons Systems Training Facility. Ralls Corp is owned by two executives of Sany Group, China's largest machinery manufacturer. It was the first time in 22 years that a US president has blocked such a foreign business deal. During this election year when the US economy is mired in tepid growth and high unemployment rate, both Democrats and Republicans are using China-bashing tactic to woo some blue-collar voters. As the campaigns intensify, Obama has been facing mounting pressure from his Republican rival Mitt Romney who blamed him for not being tough enough on China. The Chinese government has repeatedly urged the United States to abide by its commitment against protectionism and maintain a free, open and just international trade environment.

WTO chief downplays China-US trade imbalance (By Tan Yingzi in Washington) With the changing nature of global trade, a new way to measure bilateral trade balances will see China's surplus with the United States reduced by half, said World Trade Organization Director-General Pascal Lamy on Monday. In today's world, high-tech products are made around the world, with components and parts being manufactured in many countries, he said. The country where the final assembly takes place only contributes a small part of the final value of the product. "If we were to measure trade in value-added rather than gross statistical terms, bilateral trade balances would look very different," he said during his speech at the Brookings Institution, a Washington-based think tank. He cited the example of the iPhone, which is assembled in China. Goods and services contributing to the phone's final assembly come from 15 companies located in many different countries. China only gains 4 percent of the added value, but when a $400 iPhone is sold in the US, standard trade accounting lists it as $400 credit to China's side of the ledger and $400 debit for the US. "WTO economists believe that China's $295 billion trade surplus with the United States would be reduced by nearly half if two-way trade were measured in valued-added terms." Given the importance of the China-US relationship for the world, he urged people to look at those numbers more closely. In this year's US presidential campaign, both President Barack Obama and Republican challenger Mitt Romney have voiced harsh rhetoric about China's trade practices, blaming it for US job losses and the trade deficit. They also have criticized one another for outsourcing jobs to China. Many US lawmakers and manufacturers have accused China of keeping its currency weak in order to boost exports. Romney has played tough on the China issue during his presidential campaign. He vowed that he would label China a "currency manipulator" once he got to the White House. A recent PEW Research Center survey shows that most US citizens consider the large amount of US debt held by China, the loss of US jobs to China and the US trade deficit with China to be very serious problems. The WTO chief affirmed that the US is still the world's most popular investment destination, and said more jobs will be created here. "The cost of labor is by no means the only variable companies consider when deciding where to manufacture or source their component," he said. He listed sound domestic polices, good education, adequate social services and infrastructure as critical elements in determining the flow of foreign direct investment. "This explains why many companies building everything from aircraft and automobiles to furniture and padlocks have increased investment in US-based production facilities," he added. Earlier on Monday, when meeting with reporters, Lamy dismissed concerns about the increasing number of trade disputes between China and the US, saying they are a natural result of a maturing economic relationship, according to The Financial Times. "Trade frictions are a statistical proportion of trade volumes, and trade disputes are a statistical proportion of trade frictions," he said.

Premier forecasts 'brighter future' (By Zhao Shengnan) Wen Jiabao tells reception to mark 63rd anniversary of New China that reform, opening-up will continue. Premier Wen Jiabao reiterated on Saturday his adherence to institutional reform and opening-up policies before a once-in-a-decade leadership transition. "We are in an important period of strategic opportunities for development," Wen said at a reception to mark the 63rd anniversary of the founding of the People's Republic of China, which falls on Oct 1. Chinese leaders attend a reception marking the 63rd anniversary of the founding of the People's Republic of China, at the Great Hall of the People in Beijing on Saturday. China's National Day falls on October 1. "The power of reform and opening-up, as well as the persevering spirit of the nation, will lead China to a brighter future." The reception came one day after Beijing announced the 18th National Congress of the Communist Party of China would open on Nov 8, which Wen said would be an important meeting "to build on past achievements and open up new prospects for future development". Wen's comments underlined the most important items on the agenda of the current administration and are likely to guide the next leadership and maintain the focus on domestic development, commentators said. All nine members of the Political Bureau Standing Committee of the Central Committee of the CPC attended the reception, along with hundreds of diplomats, officials and other guests. The 18th National Congress comes at a crucial time for China, as the leadership it selects and the decisions it makes will have a profound impact on the world's second-largest economy, and more importantly, on its people, said Xinhua News Agency. Although challenges loom, the coming transition period is seen as full of strategic opportunities to build China into a prosperous society by 2020. China is currently experiencing mounting downward pressure after three decades of almost two-digit economic growth and an average annual growth of 10.7 percent from 2003 to 2011, according to official statistics. The slow-down has caused concern in the international community as China is one of the world's most important economic engines and is responsible for about 10 percent of the world's gross domestic product, while contributing more than one-fifth of global growth in 2011. Wen urged the country to keep a cool head, adding China is still at the primary stage of socialism and productivity is not high. "There is still a long way to go before we can build China into a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious," he said. Qin Yaqing, vice-president of China Foreign Affairs University, said China's rise is not only about economic achievements, as it has to continue working in a comprehensive manner to deal with the economy, politics and culture. "To maintain China's peaceful and sustainable rise, we cannot wait for, but need to create a period of strategic opportunities through a series of domestic efforts amid the complex international environment," he said. China will advance further and enhance productivity, Wen said. "We must promote socialist democracy and rule of law, uphold social equity and justice, improve the educational and moral standards of our people and achieve freedom and all-round development of the people." "To realize modernization in a developing country with over 1 billion people is an unprecedented endeavor that needs painstaking exploration. But no hardship will prevent us from forging ahead." Wen also reiterated the government's policies on Hong Kong, Macao and Taiwan province, vowing to maintain the long-term prosperity and stability of Hong Kong and Macao, and to promote peaceful development across the Taiwan Straits. On foreign affairs, the premier said China will pursue an independent foreign policy of peace and firmly safeguard national sovereignty and territorial integrity. The remarks came at a time when Beijing and Tokyo are locked in an ongoing territorial dispute over the Diaoyu Islands, which have belonged to China since ancient times. Russian Communist Party leader Gennady Zyuganov said the CPC has studied the defeat of the Soviet Communist Party, but added he believed China's success would continue, Xinhua reported.

Japan's territorial dispute with China appears to be spilling onto the stage of global finance meetings. Several big Chinese banks say they've canceled participation in the high-profile annual meeting of the World Bank and International Monetary Fund to be held in Tokyo next week as well as in the constellation of events taking place alongside. Some of the banks say they've also pulled out of another big financial-industry conference scheduled to take place in the western Japanese city of Osaka at the end of the month. Most of the banks haven't given a reason for their last-minute no-shows. But the withdrawals come amid an escalating tit-for-tat between China and Japan, whose government recently purchased a set of islands in the East China Sea that are also claimed by China and Taiwan. China has shown its displeasure by canceling some diplomatic events and sending patrol boats into what Japan considers its territorial waters—with one group going through Tuesday. Some Japanese companies have reported falling demand for their goods in China and unusually strict inspections as well as processing delays at Chinese ports. An official at one bank said the island dispute was likely the reason for the pullout from the meetings. "Quite frankly, it's Japan-China relations," said an official at the Tokyo branch of the Agricultural Bank of China Ltd., explaining why the bank was pulling out of both IMF-related events and the Osaka conference, which is sponsored by the Belgium-based Society for Worldwide International Financial Telecommunication, or Swift, a group set up by financial institutions to handle transactions. The bank is still sponsoring and participating in a meeting of the Institute of International Finance—a global association of financial institutions—that is taking place in Tokyo at the same time as the IMF meeting, another official said. The moves by the Chinese banks are the latest sign that souring relations between Asia's two biggest economies are starting to affect the broader economic realm, and go beyond regional squabbling. The annual meeting of the IMF and World Bank is the largest single gathering of finance and economic officials, nongovernmental organizations and bankers. Organizers estimate some 20,000 delegates will be in Tokyo for a range of meetings and seminars, taking place Wednesday through Sunday. China has long sought a more important role in such global forums, even as its dynamic economy has been playing an increasingly significant part in bolstering global growth. But some experts warn that letting bilateral spats spill into key economic and financial areas may be a sign China isn't quite ready to be at the international leaders' table. "The point is really about China being a global player," said Fraser Howie, a Singapore-based co-author of "Red Capitalism," a book on China's financial system. "China may rightly demand a seat at the head table, but what signal does it send when they go off in a huff over these types of issues. Such boycotts are pointless." China has argued for more say for emerging markets in the matters of both the IMF and the World Bank. An official at the Tokyo branch of the Bank of Communications Corp. another big Chinese lender—said it had pulled out of IMF-related events, while a Tokyo-based official at the China Construction Bank Corp. said attendees from China had canceled due to "scheduling problems" but that some Tokyo staffers were planning to go. An official at the Tokyo branch of the Industrial and Commercial Bank of China Ltd. said it had pulled out of the Sibos conference, and that nobody was coming from headquarters in China for next week's events in Tokyo. An official from Bank of China Ltd.'s Tokyo branch said bankers still hadn't decided whether to attend the IMF meetings. Organizers for Sibos, scheduled for Oct. 29-Nov. 1, confirmed that the ICBC, Agricultural Bank of China and Bank of China had officially withdrawn from the exhibition and speaker participation, but overall registrations were still running ahead of target. A few Chinese speakers appear to have dropped off the IMF and World Bank schedules as well. The latest schedule for a British Broadcasting Corporation-sponsored debate on rescuing the global economy, for instance, leaves out China Investment Corp. President Gao Xiqing, who was originally scheduled to be a panelist. A BBC spokesperson said that Gao Xiqing had "accepted an invitation to join the panel, but has subsequently made the decision not to travel to Japan for the meeting and so will be unable to take part in the debate. We are still in the process of looking for a suitable replacement for Mr. Gao.'' The CIC couldn't be reached for comment. "We are aware of the changes in the schedule by some participants in the IMF-World Bank Annual Meetings, but have not been informed why their plans are changing," said IMF spokesman Jeremy Mark. "It is not unusual for the lineup of speakers to change in advance of the meetings." A World Bank spokesman declined to comment on any matters related to shareholder participation.

China is aiming to build separate passenger and freight networks within its railway system, one of the world's busiest. It may come true on some bustling lines in 2015, when a high-speed passenger transport network is expected to become fully operational. According to a five-year plan on China's transport system recently approved by the State Council, China's cabinet, China will create a high-speed railway backbone network featuring four east-west lines and four north-south lines by the end of 2015. The Ministry of Railways told Xinhua that the total milage of high-speed railway will reach some 18,000 km by then. China's high-speed lines, which should have an average speed of over 200 km per hour, stood at 6,894 km in August, fewer than last year as a speed cut was executed after the Wenzhou accident, according to the ministry. Railway expert Wang Mengshu said that as new high-speed lines open, transportation capacity will be released from conventional lines, which will gradually turn into freight lines. "Putting passenger and freight on separate tracks will greatly increase traffic volume," said Wang, also an academician of the Chinese Academy of Engineering. "The plan indicates that China will continue to develop high-speed trains to address its transportation bottleneck." The plan is long-awaited as China's high-speed railway development has been set back by the Wenzhou collision last July that left 40 dead. The crash seriously dented China's enthusiasm for high-speed rail. China halted work on new lines and conducted nationwide safety checks. A total of 54 people, including minister-level officials, were punished following the accident. Local railway bureaus and stations have been ordered to improve train scheduling and management, as well as conduct more intensive work safety training. A railway ministry report released in July says that signaling and lightning diffusion equipment has been checked and reinforced at more than 1,000 railway stations. The changes were in response to the two major causes of the Wenzhou accident, management failure and faulty signaling equipment. "With technical solutions and disciplined operation, China's high-speed railways will be safer," said Huang Qiang, chief researcher at the China Academy of Railway Sciences. Wang said China should always bear the accident in mind and learn from past mistakes. "This will be highly important in China's further pursuit of technological innovation and advancement." Wang held that China should persist in the high-speed railway development. "Over the past 15 years, China has raised the speed of its conventional lines six times, leaving little room for further improvements," said Wang. "It will be very dangerous if we continue to raise the speed of conventional lines. Therefore, we must build new dedicated passenger lines." Passenger trains have shared the same tracks as freight trains since the creation of China's rail system. The shared railroad system has made it difficult to meet market demand on busy lines. World Bank figures show that China has by traffic volume the world's second business freight railway and the busiest passenger railway. Wang noted that China had only 93,000 km of railways by the end of 2011. "The railway mileage per capita is shorter than the length of a cigarette." "The railway density in China is far from adequate to serve the world's second-largest economy," he said. Ye Tan, a well-established economic commentator in China, said the creation of a high-speed network will leave more conventional lines free to carry cargo and meet market demand. She also eyed high-speed railways as an alternative to replace the property sector to create jobs and drive China's flagging economic growth, which cooled to 7.6 percent in the second quarter, the lowest in the past three years. While construction slowed down after the Wenzhou accident, the Chinese high-speed railway sector has seen some breakthroughs in research and development and international cooperation in past months. In August, China's North Locomotive and Rolling Stock Corporation Limited delivered to Siemens AG a batch of high-speed train compartments worth 14.3 million U.S. dollars, marking the first such export to Europe. In April, China South Locomotive and Rolling Stock Corporation Limited won a bid to provide high-speed trains for Hong Kong. The trains will run on the Hong Kong section of an inter-city high-speed railway connecting Hong Kong, Shenzhen and Guangzhou. The deal marked the first time for a Chinese company to sell high-speed trains to Hong Kong. Foreign leaders have shown interest in Chinese high-speed railway. During her visit to China in April, Thai Prime Minister Yingluck Shinawatra rode a high-speed train from Beijing to Tianjin. At the end of the 33-minute trip, traveling about 120 km, she said it is convenient and Beijing and Tianjin seem to be one city. Thailand and China signed an agreement on strengthening railway cooperation during Yingluck's visit, according to a joint statement issued by the two governments. Passengers are returning to China's high-speed rails. Some 52.6 million passengers traveled on the Beijing-Shanghai high-speed railway in its first year of operation, which ended on June 30. More than 144,000 passengers on average travel on the line daily. While more major Chinese cities are getting connected with high-speed lines, a larger network is under plan to link all cities with a population of 500,000 people or greater. According to the five-year plan, China will form a 40,000-km-long network, composed of lines with an operational speed of 160 km-plus per hour, by the end of 2015. But it remains uncertain whether all the projects specified in the plan can be accomplished, as the Ministry of Railways, the main investor for China's rail projects, faces a heavy debt-to-asset ratio of as much as 60 percent. The capital-strapped ministry issued a statement earlier this year inviting private investors to participate in the funding of rail projects. The ministry promised it will treat private capital and public funds equally. Ye said private capital has been reluctant to enter the sector, as it has been plagued by poor efficiency and backward management. She has repeatedly urged for more reforms in the sector. Wang thought the invitation lacks details. "Private capital will be very cautious about entering the railway sector unless there is a good profit distribution scheme for all parties involved."

Tian'anmen screens show best of China to world (By Wang Xiaodong) In Tian'anmen Square in the heart of Beijing, tourists from all over the world are gazing up at the two big LED screens set up in the center of the square. The two giant screens are showing videos of the city's scenic and cultural spots, such as the Great Wall and the numerous golden-roofed palaces of the Forbidden City. The two screens are both 40 meters long and 5 meters high, and they each stand on a 2-meter-high concrete base. The giant LED screens in Tian'anmen Square attract a lot of attention. "We had to use special cameras to produce the videos, because of the screens' high definition," said a producer with Beijing TV, which produced about 20 of the videos displayed on the screens. The definition is so good the pictures shown on the screens are twice as clear as those for TV programs," she said on condition of anonymity. "I've never seen so vivid images on so large screens before," said Wang Ying, a tourist from Anhui province. "The pictures are so clear and the color so bright, I can see them clearly even in daylight." The screens come alive in the early morning when the national flag is raised in the square, and are switched off in the late afternoon when the flag is lowered. Promotional videos of the natural or cultural wonders, or social and economic development of other places in China are also being displayed on the screens. But for now, only promotional videos from provincial-level governments, that is, provinces, autonomous regions and municipalities, are being screened, according to the Administration of Tian'anmen Area, the government department in charge of the square. Commercial advertising is banned, the committee said. Since the two screens were set up in September 2010, more than 50 videos have been displayed. Each video is limited to about five minutes, and English captions have been added to some of them. In recent years the Chinese government has been taking steps to introduce itself to the world. In 2009, the Ministry of Commerce made a 30-second short video about Chinese companies working with foreign partners to produce quality products. The promotional video was also broadcast on CNN. A promotional video about China also illuminated New York's Times Square in January last year. The 60-second video - which featured basketball superstar Yao Ming and astronaut Yang Liwei, among other celebrities - was shown 300 times a day over the following month. Huang Shengmin, dean of China University of Communication's school of advertising, talking to China Daily about the Times Square video at the time, said it was a milestone moment, signaling that China was more than ready to embrace the world.

Chinese government ships in waters of disputed isles: Japan (Agence France-Presse in Tokyo) A Chinese marine surveillance ship cruises near the disputed islands known as the Senkaku islands in Japan and Diaoyu islands in China on Tuesday. Chinese government ships returned to waters off disputed Japanese-controlled islands on Tuesday, the coastguard said, a week after they last left and days after heated exchanges at the United Nations. Four maritime surveillance ships entered the waters shortly after 12.30pm, where they remained for about six hours, ignoring demands from Japan’s coastguard to leave. “Patrol ships from our agency have been telling them to sail outside of our territorial waters. There has not been any response” from the Chinese ships, the agency said. It was the first time in about a week that Chinese ships had entered the waters, following a lull in a diplomatic row over the sovereignty of the islands known as the Senkakus in Japan and Diaoyus in China. Foreign Minister Koichiro Gemba said the Japanese government lodged an immediate protest with China over the latest case, telling reporters: “We want the Chinese side to exercise self-restraint.” In Beijing, foreign ministry spokesman Hong Lei said China was “strongly unsatisfied” with moves by “Japanese right-wingers” to enter waters around the islands. “If left unchecked, such provocative behaviour could complicate the situation, and China is paying close attention,” an online statement said. Official Chinese vessels repeatedly sailed into the archipelago’s waters until Monday last week, defying warnings from Japan’s well-equipped coastguard. The islands lie in rich fishing grounds and on key shipping lanes. The seabed in the area is also believed to harbour mineral reserves. Last week Chinese and Japanese diplomats at the UN General Assembly in New York traded insults, with China’s Foreign Minister Yang Jiechi accusing Japan of theft. Japan’s deputy UN ambassador Kazuo Kodama retorted that the islands were legally Japanese territory and said “an assertion that Japan took the islands from China cannot logically stand”. Historical grievances stemming from Japan’s wartime expansionism also complicate the argument, as does a claim of ownership by Taiwan. That claim was pressed on Tuesday last week when dozens of fishing boats were escorted into island waters by the Taiwanese coastguard, sparking water cannon exchanges with Japanese coastguard vessels. The decades-old dispute came to the fore earlier this year when the China-baiting governor of Tokyo, Shintaro Ishihara, announced he wanted to buy the island chain from its private Japanese landowner. Nationalists from both sides staged island landings before Prime Minister Yoshihiko Noda stepped in to outbid Ishihara, who had amassed well over a billion yen (US$12.8 million) in public donations towards the cost. The government completed its purchase of three of the five islands in the chain – it already owned one and leases the fifth – on September 11. Observers said Noda’s move to nationalise the islands had been an attempt to cool down a potential international problem. But Beijing reacted furiously and unleashed diplomatic vitriol on Tokyo, while tens of thousands of protesters poured onto the streets in cities across China. In demonstrations that commentators said had at least tacit approval from the authorities, Japanese businesses were targeted for violence and arson, with some forced to close temporarily. The protests escalated, culminating a fortnight ago on the 81st anniversary of the Mukden Incident, an episode marking the beginning of Japan’s occupation of swathes of modern-day China. Chinese state media announced late last week that the Communist Party congress – at which a generational leadership change is expected to take place – would begin on November 8. China-watchers had said a behind-the-scenes tussle over who will occupy key positions has been going on for some time, complicating Beijing’s behaviour over the island dispute. Japan’s political scene is also fragile and prey to nationalist sentiment. A weakened Noda is expected to call a general election over the coming months in which his fragmenting party looks set to fare badly.

Frank Hsieh of Taiwan's opposition DPP announces mainland China visit - Frank Hsieh to become most senior figure from island's opposition DPP welcomed to mainland (Agence France-Presse in Taipei) Taiwan's former premier Frank Hsieh Chang-ting yesterday announced a planned trip that would make him the most senior politician from the island's Beijing-sceptic opposition party to visit the mainland. The trip, described by local media as an "ice-breaking" visit, came amid debate in the party about whether to change its policy towards the mainland. Hsieh, who was Taiwan's premier from 2005 to 2006 and retains major influence in the Democratic Progressive Party, said he would leave on Thursday. "The purpose of the trip is to build mutual trust," he said, declining to divulge whether he would meet mainland government officials during the five-day visit. Beijing said it welcomes visits to the mainland by DPP members, Taiwan's Central News Agency reported. "This has been our policy all along," Yang Yi , spokesman for the mainland's Taiwan Affairs Office, was quoted as saying. Hsieh's first stop will be the southeastern coastal city of Xiamen , in Fujian province followed by a visit to nearby Dongshan Island, where his ancestors lived before relocating to Taiwan. Later, Hsieh will go to Beijing, where he plans to visit the Olympic stadium and attend an international cocktail contest as a guest of the International Bartenders Association. In January, Taiwanese voters re-elected President Ma Ying-jeou of the Kuomintang party, endorsing the Beijing-friendly policies he has pursued since taking office in 2008. Since then, leading DPP members have debated whether their party needs to change its policy towards the mainland, in part to reflect Beijing's fast-expanding regional and global influence. "The DPP should face the reality … if the DPP keeps refusing to change its position and let the Kuomintang and the Chinese communist parties work hand in hand, I'm afraid the DPP will never be able to get back into power," Hsieh said. Hsu Yung-ming, a political science professor at Taipei's Soochow University, said that "although the [DPP] party authorities have not decided to amend their [mainland] China policy at the moment, the results of the visit could be used as a key reference in the future".

Hong Kong*:  Oct 2 - 3 2012 

Closer ties between HK, mainland China 'essential', says Leung (Colleen Lee) National Day Flag-raising ceremony at Golden Bauhinia Square, Wan Chai. Increasing integration with the mainland is the key to solving many of Hong Kong’s social problems and developing its economy, Chief Executive Leung Chun-ying said on Monday in a speech marking the national day holiday. Officiating at the 63rd anniversary celebrations of the People’s Republic of China, Leung told an audience of hundreds at the Hong Kong Convention and Exhibition Centre: “We must realise it is inevitable and essential for Hong Kong to develop alongside the mainland. We must embrace every opportunity that the development of our country brings to Hong Kong,” Leung told hundreds of guests. “After more than 30 years of hard work, Hong Kong has established an unprecedentedly large external economy in Guangdong. It has contributed to the fostering of Guangdong’s development. “More importantly, it has sustained Hong Kong’s economic growth and created employment for Hong Kong people. These are all facts that we must realise,” Leung said. Economic development was the key to solving social problems, he said. “The HKSAR government cares about people’s livelihood. At the same time, Hong Kong must achieve a higher and [more] sustainable economic growth rate in order to address various long-standing problems including housing, poverty, an ageing population and pollution.” At the end of the chief executive’s speech, radical lawmaker “Long Hair” Leung Kwok-hung shouted: “End one-party dictatorship. Give power back to the people.”

Hong Kong workers are striving, not thriving - Daniela Yu and Steve Wang say a survey that reveals Hongkongers' discontent with their job - and their life - should make employers sit up (Daniela Yu and Steve Wang) Fewer than one in four Hong Kong workers consider their lives to be "thriving" - one of the lowest levels among all developed Asian economies surveyed by Gallup last year. Respondents were classified as "thriving", "struggling" or "suffering" according to how they rate their current and future lives on a scale of 0 to 10. Those who rate their life now a seven or higher and their life in five years an eight or higher are classified as "thriving"; those who rate both a four or lower are considered "suffering". Those in between are "struggling". In general, a high level of "thriving" respondents is associated with a high per capita gross domestic product. However, this appears not to be the case in Hong Kong. Although Hong Kong's GDP per capita is second only to Singapore's among developed Asian economies, most of the city's workers are not thriving. Their low well-being may be hurting their company's productivity. Fewer than half - 45 per cent - consider themselves "extremely productive" in their current jobs, ranking Hong Kong at the bottom of all 22 Asian economies surveyed. Hong Kong workers' evaluations of their financial and career situations may help explain their relatively low overall well-being. The rising cost of living is significantly affecting workers' financial well-being. According to the Land Registry, home prices surged 70 per cent from 2009 to a 14-year high in June, making them increasingly out of reach. Relatively limited career prospects may also be a factor. More than 60 per cent of workers said they didn't learn anything interesting the day before and half were dissatisfied with the availability of good job opportunities. This dissatisfaction may be partly attributable to an influx of mainland and foreign talent, which is outpacing the growth in quality jobs. This has intensified competition for quality jobs, jeopardising Hong Kong employees' career prospects. Consequently, people may feel they are far less productive as they are stagnant in their jobs. The research points to a direct link between low career well-being - defined as workers' views of their own job situation - and low productivity and retention. Poor financial well-being can lead to employee disengagement. While employers in Hong Kong have little control over macroeconomic trends, they should consider how to improve employees' financial and career well-being. Achieving financial security is about more than just raising wages. Organisations can influence their workers' sense of security by offering education programmes to help them make better decisions on how they spend their money and save for retirement. The research suggests career well-being may be the most important element to achieving high overall well-being, given how closely it is related with one's daily experiences. To improve career well-being, companies should look to change the mindset that equates career growth with promotion. For example, by focusing on developing employees' strengths, companies can better motivate them, which ultimately leads to better career well-being - and higher productivity. (Daniela Yu and Steve Wang are senior consultants with the strategic consultancy firm Gallup in Hong Kong and Princeton)

‘Golden week’ shopping arrives amid uncertain times (Agence France-Presse in Hong Kong) Giving gifts is crucial if you want to get ahead in Chinese politics or business, but what do you do when you don’t know whether your boss is about to be promoted or tossed out of a job? Judging by sales of certain luxury goods in the shopping heartland of Hong Kong, that’s a conundrum facing more than a few well-heeled mainland visitors during the “golden week” holidays from October 1. The break is a boom sales period for Hong Kong stores, but this year it’s coinciding with a slowdown in the Chinese economy and the build-up to Beijing’s once-a-decade leadership transition. The crucial congress that will name the new chiefs of the secretive Communist Party will take place on November 8, state media has announced. Few analysts expect any surprises at the very top – Vice-President Xi Jinping appears certain to replace President Hu Jintao – but what happens at lower levels of China’s vast machinery of state is anyone’s guess. Rumours are swirling of deep divisions within the party’s elite, and many analysts say this leadership transition is the most turbulent since Jiang Zemin’s appointment as party leader in 1989. Evidence of this uncertainty could be on display in the jewellery shops of Hong Kong, where sales of expensive watches, a bellwether of the luxury gift market, have fallen in recent months, analysts and retailers said. “There’s definitely a decrease in sales this year of about 20 to 30 per cent,” said Wong, a salesman at a fancy watch shop who refused to give his full name. “It feels like the customers that actually buy things have decreased. There is a big change.” Analysts put this slump down to China’s slowing economic growth – at 7.6 per cent in the second quarter it’s the slowest since March 2009 – and a drop in overnight stays by mainland tourists. “If you’re coming for an overnight stay you probably have a bigger budget and you also have more time to spend it,” HSBC Greater China Economist Donna Kwok said. “Looking at the big picture, the most important thing is that China, for now, is in slowdown mode.” But there are also signs, largely anecdotal in nature, that at least some of the fall in certain categories of luxury goods could be linked to doubts about who will be in power after the all-important party congress. Chinese consumers spent an estimated US$49 billion on luxury goods last year, a quarter of a global market worth US$197 billion. They are poised to overtake Americans this year as the biggest buyers of luxury goods in the world. Analysts say around 20 per cent of the luxury goods Chinese people buy are for gifts, and gifts are often used to grease the wheels of guanxi, the Chinese term for relationships that help win jobs and promotions. Drilling down a bit further, one segment of the gift market that could serve as an informal indicator of guanxi is watches, and logically it follows that the more expensive the watch the more powerful the receiver. “For sure the watch segment has been a bit weaker and the watch category lends itself well to gift giving,” said Aaron Fischer, head of consumer research at Hong Kong-based brokerage CLSA. “I think with the current political climate, and a bit of a clampdown on corruption, and also a desire to reduce the level of conspicuous consumption, we’re seeing some of those flashier products perform a little bit worse.” Hong Kong Tourism Board figures show that mainlanders accounted for some 30 per cent of the growth in watches and jewellery sold in Hong Kong in 2010. In the first half of this year, sales growth in that segment of the luxury market was only 2.2 per cent, compared to 32 per cent in the same time last year. The boss of a leading luxury goods distributor in Hong Kong said the political uncertainty surrounding Beijing’s power transition was forcing some gift givers to delay their purchases until the dust settled. He said products that could be affected included expensive French wines, a trendy new addition to the list of acceptable items to give your Chinese boss if you really want to make an impression. One politician who will not be receiving gifts from ambitious employees is former Chongqing city party boss Bo Xilai, a favourite for one of the top posts in the all-powerful Politburo who was dramatically sacked earlier this year after his wife was accused of murdering a British businessman. The wife, Gu Kailai, was given a death sentence commuted to life in prison last month, and the police chief who exposed the scandal, Wang Lijun, was sentenced to 15 years in prison on Monday. China’s state media announced on Friday that Bo will “face justice” for a litany of serious crimes, indicating it will come down hard on the one-time rising star as it prepares to usher in a new generation of leaders. 

Leung Chun-ying pledges to tackle Hong Kong's core issues - Chief executive reassures voters he can handle any challenge the city throws at him, after one of the rockiest starts in Hong Kong politics (Thomas Chan) After a tumultuous first 90 days in office, chief executive Leung Chun-ying has pledged to tackle the city's controversial issues quickly. Yesterday, Leung said he would rule on national education as soon as the committee reviewing its future reached a conclusion, rather than waiting for a written report, which might take months. Summing up his political baptism of fire, the chief executive said he and his team could rise to any challenges the city presented. He said: "I know the kitchen is hot, that's why we need people in it.'' Leung said many Hongkongers' objections to national education were oversimplified, focusing on the course having an excessively pro-Beijing bias and calling for its withdrawal. During the Commercial Radio interview, Leung discussed whether scrapping the subject was synonymous with telling schools that wanted to launch the subject to rein in their plans. On another sensitive subject, he slammed claims the government's development plan for the northeastern New Territories was an attempt to "sell Hong Kong land to mainlanders". "Such claims are nonsense and groundless," he said, pointing out that when the plan was first introduced in 2008 no such allegations were made. Leung also pledged his allegiance to Hong Kong over the mainland, saying he would stand by the city if conflicts emerged between the two. He cited his ban on mainland women giving birth in Hong Kong starting next year as an example, and the hold he had put on Shenzhen allowing non-permanent residents to hold multiple-entry visas to visit the city. However, not everyone was convinced by his words. "I don't think his performance lives up to his slogans," said Chinese University political scientist Ivan Choy Chi-keung. "So far, I haven't seen him pushing through any policies amid tough challenges." Choy said tens of thousands of Hongkongers taking to the streets to protest against the government's policies during Leung's first three months marked "the toughest beginning" of any chief executive. Despite the committee's recommendation that the government "invalidate" the proposed implementation of the national education curriculum, he said opponents were still worried the subject might be revived. Leung said he was keen to build bridges in the legislature. After most pan-democratic parties boycotted his lunch for new-elected lawmakers last week, he said he wanted to develop his relationship with the camp over more lunches and activities. Emily Lau Wai-hing, acting chairwoman of the Democratic Party, said the first thing Leung ought to do was to clear up the problems he faced about his integrity and rebuild the public's confidence in him. "Co-operation is built upon trust," Lau said. "If there is no trust, how can we co-operate?" She suggested Leung invite independent political heavyweights, such as former chief justice Andrew Li Kwok-nang, to investigate the scandal surrounding the illegal structures at his properties on The Peak.

Tai Hang dragon dance marks colourful start to Chinese holiday (Jolie Ho and Amy Nip) The dragon studded with incense makes its way through Tai Hang in the annual parade. Thousands of people thronged in Tai Hang yesterday to watch the area's heritage-listed dragon dance, kicking off the Mid-Autumn Festival and National Day celebrations. Paraded along the narrow streets by 300 dancing Tai Hang residents, the 61-metre fire dragon swung its head and tail to the cheering of crowds. Though the full moon that is celebrated by the festival will appear tonight, Hong Kong families celebrated early yesterday as office workers started a four-day break. Lee Wai-fong, who saw the dance for the first time, waited for three hours with her family to secure a good spot. "I think it's quite special. There is incense all over the dragon, and it's cultural heritage," she said. The dragon dance, which made it to the National List of Intangible Cultural Heritage in China last year, originated in 1880 as an act to ward off a plague that broke out in Tai Hang village. The Tai Hang Residents' Welfare Association can host the dance each year until 2014 with HK$935,000 in funds donated by the Jockey Club Charities Trust. Other people visited Victoria Park, also in Causeway Bay, to admire a six-storey-high "Golden Moon" lantern. LED lights illuminated the fabric, creating different shades and effects. Meanwhile, millions of mainlanders were getting on trains and planes for the longest "golden week" to date. The holiday period that follows National Day tomorrow will be one day longer than usual because it coincides with the Mid-Autumn Festival. Workers will have eight days off from today. During that period, 740 million are expected to travel, the most on record, according to Xinhua. By 10pm yesterday, the Immigration Department had recorded 316,766 people entering Hong Kong, while 482,466 people left the city.

Apple fans descend on new store in Kowloon Tong - Hundreds queue overnight to be on time for start of business at shop Kowloon Tong (Bien Perez) Apple fans at the new store at Festival Walk in Kowloon Tong. Apple welcomed hundreds of eager fans, some of whom had waited in line overnight, at the launch of the technology giant's 385th branded store, at the Festival Walk mall in Kowloon Tong. The new Apple Store launched yesterday is the company's second in the city after a larger, flagship local shop was opened at Central's IFC Mall in September last year. It is the firm's seventh in China, where there are also two stores in Beijing and three in Shanghai. Apple staff gave a hearty cheer to 16-year-old J. J. Ng, who was the first person through the door of the new shop when it opened at 10 am. "I was here since 6 o'clock last night," Ng said. "I might not buy anything. I just wanted to have a look." Ng was also one of the first in line at the launch of the IFC Mall Apple Store last year, where he bought an iPod touch media player. The Kowloon Tong shop appears to have one of the most spacious retail areas among Festival Walk's tenants, but it is roughly half the size of Apple's two-level, 15,000 sq ft flagship store in Central. Denny Tuza, Apple's retail market director for Greater China, said that the new shop "is a great complement to our IFC Mall store". Apple recruited more than 200 new staff to serve in the Festival Walk location. "That brings our total Apple retail employee count to about 600 in Hong Kong," Tuza said. "Many of them come from across the whole of Hong Kong, some from as close as City University right across the street "We have 385 stores today and in the past 12 months, we've welcomed over 350 million people to our stores." China is Apple's second-largest market after the United States. But retail expansion in the country by Apple, maker of the iPhone and iPad, has been slow, despite a forecast it made in 2010 that there would be 25 physical Apple Stores completed across the country by the end of this year. The store's opening came a day after Apple's chief executive, Tim Cook, posted a public apology on the company's website for the faulty and much criticised Maps application, which comes with the newly released iOS 6 mobile operating software used on the iPhone, iPad and iPod touch. "We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better," said Cook, who suggested trying alternative mapping programs such as those from Google or Nokia.

Hong Kong doesn't need democracy lite - Regina Ip laments that the rights and responsibilities that come with democratic development have not been fully understood, in particularby those who reduce them to campaign slogans (Regina Ip) Observers of the Legislative Council election earlier this month would have been disappointed if they had looked for a "game-changing" debate between the candidates from the pan-democrat and pro-establishment camps, in the mould of the Nixon-Kennedy duel in the first televised US presidential debate in 1960, or the leaders' debate between then British prime minister Gordon Brown and his challengers David Cameron and Nick Clegg in April 2010. It was particularly disappointing because there was no lack of issues worthy of serious discussion. Apart from various socio-economic issues likely to dominate the new legislative agenda, such as standard working hours and the need for "universal retirement benefits", one issue stood out during the campaign - namely, what are the core values of Hong Kong? Indeed, many pan-democrat candidates made "defending Hong Kong's core values", "safeguarding Hong Kong", or "preventing Hong Kong from turning red or being subsumed by mainland China" a central theme of their platforms. Even some candidates from the pro-establishment camp made "saying no to the government" or "standing firm against Article 23 of the Basic Law" their chief slogan. It is a pity that, because of the number of candidates, the debate forums organised by the television networks generally allowed candidates at most one minute to introduce themselves, and three minutes to present their policy platforms, during which time other candidates were allowed to interrupt or talk over them. The televised sessions are more like high-decibel shouting matches, and quickly degenerated into strident, personal attacks. The debate on Hong Kong's core values barely got under way during the election. For the sake of a better understanding of Hong Kong, it is well worth the effort to pick up the pieces and tease out the issues involved. Candidates clearly wanted to capitalise on Hong Kong people's fear of being subsumed into mainland China's way of life. In the past year, cases of alleged human rights abuse, the elite power struggles on the mainland, plus recurrent distrust of its food safety and hygiene standards have reinforced Hong Kong people's wish to be kept separate from the mainland. This, despite Hong Kong being an integral part of the country and ever more dependent on the mainland for food, water and business. What constitute Hong Kong's core values? Implicit in the pan-democrats' clarion call to "defend Hong Kong" is their canonisation of the rule of law, individual rights and freedoms, and a democratic system of government. Unfortunately, while large numbers of people have latched on to these buzzwords as the be-all and end-all, few have fully understood their meaning. Take the rule of law for example. While many in Hong Kong would equate the rule of law with saying no to Article 23, or legislative interpretation by the Standing Committee of the National People's Congress, some legal experts from the West think otherwise. When Larry Kramer, then dean of Stanford Law School, addressed a gathering of Hong Kong's crème de la crème last year, he said the rule of law meant different things to different people. Based on his experience of helping the rule of law develop in East Timor, he thought its prime objectives must be to ensure physical security, followed by the protection of property. Within our community, few promoters of rights and freedoms are willing to acknowledge that rights and freedoms are not absolute. A delicate balance is implicit in the famous Article 19 of the International Covenant on Civil and Political Rights, which says that the exercise of the rights enshrined in that article - the right to hold opinions without interference, and the freedom of expression - carries "special duties and responsibilities", and may be subject to certain restrictions, including respect for the rights or reputation of others. Yet, gross simplificatio