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June 30, 2007

Hong Kong: Hong Kong has remained as before a magnet since it returned to China 10 years ago, and it will surely witness a "more splendid" future in the embrace of the motherland, Chinese President Hu Jintao said Wednesday.

Chinese president Hu Jintao Wednesday visits an exhibition in Beijing on Hong Kong's achievements in the decade since its return. Hong Kong has remained as before a magnet since it returned to China 10 years ago, and it will surely witness a "more splendid" future in the embrace of the motherland, Chinese President Hu Jintao said Wednesday. President Hu Jintao (C) visits the exhibition on Hong Kong's achievements in a decade in Beijing's Capital Museum on June 27, 2007. As part of celebrations marking the 10th anniversary of Hong Kong's return to the motherland, the exhibition presents Hong Kong's achievements in the forms of photos, videos, models and other installations. Hu made the remarks when visiting an exhibition in Beijing on Hong Kong's achievements in the decade since its return. Hong Kong's role as a free port and an international finance, trade and shipping center has remained unchanged under the "one country, two systems" policy, which has secured the consistency of the social and economic systems since the special administrative region (SAR) was established there in 1997, Hu said. The president also said that Hong Kong compatriots has become real masters on their soil as the SAR is witnessing more prosperous economy and the compatriots there enjoying better living and gradually progressing democracy since 1997. As part of celebrations marking the 10th anniversary of Hong Kong's return to the motherland, the exhibition held in the Capital Museum presented Hong Kong's achievements in the forms of photos, videos, models and other installations. Hu, accompanied by SAR Chief Executive Donald Tsang, highly praised the achievements that Hong Kong has accomplished. "With the compatriots' united efforts and the solid support from the motherland, I firmly believe Hong Kong will have a more splendid future," Hu said. Vice-President Zeng Qinghong unveiled the exhibition. Top legislator Wu Bangguo, Premier Wen Jiabao and the other members of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee Jia Qinglin, Wu Guanzheng, Li Changchun and Luo Gan also visited the exhibition Wednesday.

The exhibition on Hong Kong's achievements in a decade opens in Beijing's Capital Museum on June 27, 2007. As part of celebrations marking the 10th anniversary of Hong Kong's return to the motherland, the exhibition presents Hong Kong's achievements in the forms of photos, videos, models and other installations.

Fashion retailer Esprit Holdings Ltd, the best- performing stock in Hong Kong's benchmark index in the past five years, plans to spend $1 billion to acquire an international luxury brand by next year to boost sales of high-margin clothing. "I would like to integrate such a brand as a better sister of Esprit and as a role model to access good designers who normally wouldn't want to work for Esprit," Chief Executive Officer Heinz Krogner said in Hong Kong. "It doesn't need to be a huge company and it should not dilute earnings. We aim to buy knowledge of the luxury segment, not revenue." A luxury brand may boost Hong Kong-based Esprit in Europe, where it earns most of its revenue selling mass-market products such as jeans for about 70 euros ($94) and T-shirts for 20 euros. Esprit sells clothes in more than 40 nations and aims to open a new store, including franchised outlets, every day in the year from July. "Buying a luxury brand makes sense because Esprit wants to position itself in Germany at the higher end," said Erica Poon Werkun, a Hong Kong-based analyst at UBS AG. "Although Esprit targets the mass market, its products are more expensive than those of its competitors.' Kroger has previously expressed interest in Donna Karan International Inc. LVMH Moet Hennessy Louis Vuitton SA, the world's biggest luxury-goods company, bought Donna Karan in 2001 for $243 million. Esprit's profit in the six months ended Dec. 31 surged 28 percent to HK$2.4 billion ($307 million) on 25 percent more sales from Europe. Of the Hang Seng Index's current 39 constituents, Esprit is the best performing in the past 10 years. Since joining the benchmark in December 2002, the company's shares have surged 1,660 percent.

China: Beijing has detained 28 officials following a national audit for their role in misusing more than 46.88 billion yuan (HK$48.08 billion) in government funds last year, the top auditor said Wednesday.

The European aircraft maker Airbus said on Thursday it planned to deliver 300 A320 planes from an assembly line in north China's port city Tianjin by 2016 to satisfy the demand in the country. The assembly plant is a joint venture between Airbus and Tianjin Zhongtian Aviation Industry Investment Co., a Chinese alliance of China Aviation Industry Corp I, China Aviation Industry Corp II and Tianjin Bonded Zone Investment Co.

Beijing's Silk Market (or Xiushui Street) recently expended almost 3 million Yuan (400,000 US dollars) from the "intellectual property rights (IPR) protection fund" to dissuade 90 shops which may easily take part in infringement acts. This is to ensure the quality of the top-notch specialized silk area. Picture displays an old-fashioned brand shop in the Silk Market.

Employees assemble the wings to the body of an ARJ-21, China's first wholly-made airplane in a hangar in Shanghai, June 28, 2007. The final assembly began on May 30 this year, and the jetliner will come off the production line by the end of 2007 and start test flights in March 2008.

A boy selects online game software. China's online game market is seen growing 35% to hit $1.3 billion this year amid strong growth in Internet users, launches of high-quality games and yuan appreciation.

China says it will further modernize traditional Chinese medicine (TCM) in the next 20 years to improve its appeal at home and overseas as an effective alternative to Western medicine. In modernizing TCM, efforts will be made to improve standards, study new applications and standardize planting, production and processing of medicinal herbs, according to the report of the China National Center for Biotechnology Development. The government will also work to form a healthcare system where TCM and western medicine complement each other and build TCM into an industry with an annual output value of 400 billion yuan (US$52.6 billion), according to the center, which is under the Ministry of Science and Technology. "China will work to make sure that a TCM-based health system serves as an important pillar to people's health, and a healthcare service is established through which 85 percent of the country's rural population have access to TCM," said the report, released at an international conference on bio-economy. Currently, about 3,000 hospitals in China provide TCM treatments, with patient visits amounting to nearly 234 million each year.

Beijing poised to launch US$200b global fund - Mainland seeks better returns for US$1.2 trillion reserves. Beijing has moved a step closer to launching its huge state investment company, detailing plans for a US$200 billion reserve fund that could bankroll the nation's efforts to become a key force in international financial markets. The Ministry of Finance yesterday formally submitted a proposal for the bond issue to the National People's Congress, signalling the authorities want better returns for the country's US$1.2 trillion in foreign exchange reserves and at the same time raise "China Inc's" profile. While Beijing is increasingly moving to bring its rising economic power to bear on global markets, it is also trying to tame a flood of liquidity and runaway growth that has sent domestic stock markets soaring. The top legislature is today expected to endorse a bill that would scrap or reduce tax on interest income from personal bank savings to deter funds flowing into the equity markets. To fund the new investment company, the finance ministry will issue 1.55 trillion yuan of tradable special treasury bonds to buy US$200 billion of foreign reserves. The bonds would have a 10-year term or longer.

June 29, 2007

Hong Kong: Horse still to race on and even more joyously! What has been the genuine effect in a decade after Hong Kong's return to Chinese sovereignty? This question has arrested not only the attention of people across China, but given rise to a flurry of discussion around the world. Hong Kong will soon mark the tenth anniversary of its return to China. The Times magazine of the United States has carried a cover story on Hong Kong to the denial of a pessimistic and incorrect prediction of sister publication Forbes a decade ago that Hong Kong would gradually die after its return. The Times story cites Hong Kong as more vigorous today than anytime in history. Meanwhile, the New York Time noted in an article that the vestiges of British rule in Hong Kong will vanish and yet no one feels it sorrowful. Even the last Hong Kong Governor Chris Patten, who also served as Chancellor of Oxford University and the former EU Commissioner for foreign affairs, said recently: "Overall, Hong Kong remains a very special place 10 years after its proper and inevitable return to Chinese sovereignty." Such optimistic, affirmative appraisals have strong evidences to back up. The "fine and sturdy steed" of Hong Kong still races on and even more joyously. To date, it has acceded to the 190-plus international organizations in the name of "Hong Kong, China" and 134 countries and regions have granted it an entry visa exemption treatment. The number of aliens having immigrated to Hong Kong rose by a 60-fold in the past decade. Hong Kong's economy has revived with its best performance recorded over the past two decades, and its potential competitive edge ranks the first among the top 50 global economic entities, acknowledged a report from Japan. "Chinese sovereignty" and "Hong Kong way of life" best epitomizes what it looks like after a decade following it return to China most succinctly. Louis Cha, a Chinese scholar and an ace roving knight tales writer, depicts the present situation with a popular simile that Hong Kongers today are still under the thumbs of their wives instead of their regional government. A couple of media moguls, who are known for their free speech on their own, note they now enjoy much more rights to the job of editing over the past 20 years. Hong Kongers' demand for a unique social system, the way of life and core values has been retained and carried on without any "alterations". Many local residents were not sure whether or not to immigrate elsewhere overseas as they had felt that they dwelled on a tract of "borrowed" or leased land prior to Hong Kong's return to the motherland and, after the return, they have turned more and more resolved to take root in the city. The outcome of varied polls or social surveys conducted recently show that Hong Kong people have greatly increasing the recognition of their homeland and a growing number of locals turn to the interior region as their reliable rear area. With regard of a few crises in Hong Kong over recent years, the central government has exerted its utmost to help tide over their and resolve the related thorny problems there in cases of the Asian financial storms of 1997-98, the fight against SARS of 2003, forging CEPA and opening the "free accesses to travel' in early and mid of the first decade at the turn of the new century. Mr. Li Ka Shing, a wise Hong Kong businessman, was fair and square when he said Hong Kong did not need to cover any national revenue. On the contrary, central authorities has always taken to heart the interest of Hong Kong, so local people should valuate the priceless support of the motherland. Hong Kong's road ahead, nevertheless, is full of both opportunities and challenges. How to shape and enhance its competition edge, how to resolve the widening income gap, how to dissolve social bias and discrimination, and how to spur and carry forward democracy orderly and steadily? ¨C All these questions call for great wisdom and talents for the solution. Fortunately, People in Hong Kong know clearly what they need most and their society is more mature. Hong Kong has the type of people with the best intelligence and a most ideal pioneering spirit. Chief Executive Donald Tsang Yam-kuen has spurred himself on not to be reconciled to mediocre but to pursue things preeminent. In the incoming decade, Hong Kongers, with an utter devotion coupled with an all-out effort, will not have to simply repeat what they had accomplished over the past 10 years, and so the "superb Hong Kong spirit" is sure to re-emerge and demonstrate to the entire world vividly and distinctly.

A set of tower-shaped porcelain lights are seen during the trial period of a lantern fair in Nanjing, capital of east China's Jiangsu Province on June 26, 2007. The fair is part of the city's celebrations of the 10th anniversary of Hong Kong's return to China.

A dragon boat-shaped light is seen during the trial period of a lantern fair in Nanjing, capital of east China's Jiangsu Province on June 26, 2007. The fair is part of the city's celebrations of the 10th anniversary of Hong Kong's return to the motherland.

Lan Kwai Fong tops HK nightlife - As the World City of Asia, Hong Kong is known for its vibrant 24-hour lifestyle. And when the sun goes down, Lan Kwai Fong is the place to party, with its collection of bars, pubs, and restaurants. Lan Kwai Fong, Hong Kong's trendiest nightlife street. And it's probably the most westernized place in town, drawing thousands of tourists, expatriates, and locals every day. Lan Kwai Fong is a Hong Kong icon. It's a place where people of different cultures can meet, and find good food and drinks and late night fun. As the saying goes, if you work hard, you've got to play hard. And Lan Kwai Fong is just the right place to do it. Dutch tourist, said, "People here are friendly, open, welcoming. I feel like home." Australian tourist, said, "It's quite a bazaar with everybody outside drinking, dancing, standing." Many bar owners and customers here are foreign nationals. And no matter where they come from, Lan Kwai Fong has become part of their life. Mr. Fox came to Hong Kong over 20 years ago from California in the United States. At Lan Kwai Fong, he found a place that reminds him of home -- the California Restaurant. For the past 20 years, he's sat in this seat almost every day. Customer, Lan Kwai Fong, said, "I came here every…my second family…second child" 27 years ago, a young Canadian, Allan Zeman, opened the first restaurant in Lan Kwai Fong. It was he who later transformed the area into a dazzling bar street. And his name is now linked to many other Hong Kong successes besides the world-renowned entertainment zone. Allan Zeman said, "If the walls can tell the story, …so many different events happening in Lan Kwai Fong…became the meeting place where from all the world….They really made me the father of Lan Kwai Fong." Now Allan Zeman owns 17 restaurants in Lan Kwai Fong. After Hong Kong's return in 1997, he brought Lan Kwai Fong to Shanghai. And Zeman says his next stop will be China's capital city, Beijing.

One of the thrills for visitors to Hong Kong is one of its most popular sports--horse racing. Why does the sport hold such a special place in the hearts of local residents? And how has horse racing retained its characteristics over the many years? For over a century, horse racing has thrilled Hong Kong people, providing first-class entertainment to a highly enthusiastic public. Here at the Sha Tin race course, jockeys from different countries are making the final preparations. With a seating capacity of up to 85,000, Sha Tin is always packed during the race season. Mao Xuzhi, Sha Tin racecourse, HK, said, "Gambling is illegal here in Hong Kong, except for lotteries and horse racing. Their horse comes in first." This old punter, Mr. Huo, has been betting on horses for over 3 decades. Like all his fellow punters here, he enjoys studying the traits and performance of the horses. Mr. Huo says he loves to watch the jockeys in action. Another horse racing fan, Mr. Lee, says the sport has become a symbol of Hong Kong. That explains in part why horse-racing has been a big industry for the past 150 years. Winfried Engelbrecht-Bresges, CEO, the HK Jockey club, said, "Horse racing in Hong Kong is a life style. People of HK are very competitive. They like things fast. They like to be risky. Deng Xiaoping said horse-racing and dancing continue in HK. This is definitely the way what has continued here." Behind these gambling-mad crowds and the world-class horses and jockeys is the controller of all Hong Kong horse racing, the Jockey Club. It's also the city's biggest tax payer and charity donor. It gives about 1 billion Hong Kong dollars each year to charitable causes. Thanks to the central government's commitment and support after Hong Kong's return, the Jockey Club is still a winner after 10 years. And it's convinced that Hong Kong's special system will provide a solid guarantee for the future of the racing industry.

Hong Kong by day shines just as brightly. The city has a well-deserved reputation as a dining and shopping paradise. It serves up some of the best Chinese cuisine in the world, and the shops have visitors from all over opening their wallets. Dining is certainly one of the highlights of Hong Kong. Outstanding Chinese cuisine can be easily found here, like roast goose. Traditional cooking methods are well preserved, as well as authentic flavors. The momentum of the Hong Kong economy in recent years has ensured the local catering industry handsome profits. Kan Kun-Sing, owner Yung Kee restaurant, said, "Our business in the past decade was much better than before because Hong Kong remains a financial center and the economy is pretty good. Besides, more tourists are coming from the mainland and that has been really good for business." Dim Sum is another Hong Kong specialty. Steamed prawn dumplings, sponge cake and pork dumplings are just a few of the delicious mouthfuls. Western cuisine also has a place on Hong Kong tables. The huge flow of people and the wealth they bring have attracted many of the world's finest chefs and restaurants. Kevin NG, asst. general manager Sir Hudson, Italian restaurant, said, "We have seen great potential at present and also in the future for Italian food in Hong Kong. There are many factors, like people in Hong Kong, they are very willing to try new style, new design, also the spending power is extremely high." Equally amazing are the city's shopping options. From department stores and shopping malls to small boutiques and bargain stalls, there's something for everyone. Hong Kong's position of an international free trade hub enables the city to provide global shoppers the most diversified, quality merchandise at competitive prices. And it's not just the ladies who go on spending sprees. Australian shopper, said, "I have been here for two weeks and I have been shopping everyday and I can spend a year shopping, I think. (Q: How much have you spent?) Probably, some 6,000 US dollars. (Q: What did you buy?) Clothes, shoes, gifts for wife and everything." A pleasant shopping experience helps bring customers back again and again. According to the Hong Kong SAR government, the total revenue in the retail sector reached nearly 21 billion Hong Kong dollars in 2006, just over a fifth of the total of the entire tourism industry. Hong Kong remains one of the top destinations for dining and shopping in the world, but one thing has changed--the main driving force behind the growth. Last year, the Chinese mainland accounted for more than half of the visitors to Hong Kong. And they have tremendous purchasing power. This shows a close economic connection with the mainland is vital for Hong Kong's business prosperity.

China Mobile, the country's biggest mobile-telephone operator, yesterday surpassed HSBC Holdings to become Hong Kong's largest company by market capitalization as investors bet the red chip will launch a mainland listing as soon as August. The top spot, reached only days before the 10th anniversary of Hong Kong's handover, underscores the ascendancy of mainland companies in the city as well as investor demand for shares likely to benefit from a surge in the nation's stock market. China Mobile rose 0.65 per cent to close at a new high of HK$84.80, bringing its market capitalization to HK$1.7 trillion. HSBC fell 0.07 per cent to HK$144.10, lowering its market capitalization to HK$1.69 trillion.

The first issuance of China's yuan- denominated bonds in Hong Kong by China Development Bank will be available for retail subscription starting today with the minimum investment set at HK$20,000. As the coupon of the bonds is set at 3 percent - much higher than the typical 0.8 percent rate offered by local banks on yuan deposits - the response is expected to be robust. The retail order book will be closed on July 6. Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong said after the launch ceremony Tuesday that the second issuance of yuan bonds may come soon. "The management arrangement for issuing yuan bonds in Hong Kong by mainland financial institutions is already in place. There is actually nothing to stop them from coming," Yam told reporters. The Export-Import Bank of China, a fully government-owned policy bank under the direct leadership of the State Council, is believed to be the second mainland financial institution preparing to issue yuan bonds in Hong Kong. The bank said earlier its board had approved the issuance, and will proceed with the sale here after obtaining approval from the People's Bank of China.

President Hu Jintao will lead a delegation of senior central government officials for a three-day visit to Hong Kong from Friday to Sunday to celebrate the 10th anniversary of the establishment of the HKSAR. He will also officiate at the swearing-in ceremony of the chief executive and the principal officials of the third- term government Sunday. It will be Hu's first visit to Hong Kong as president, though he first visited the SAR in 1999. None of those accompanying Hu on the trip are from the Politburo Standing Committee. Chief Executive Donald Tsang Yam-kuen has also invited the governors of nine mainland provinces, as well as Macau Chief Executive Edmund Ho Hau-wah. Among the mainland leaders coming are Minister of Commerce Bo Xilai and State Development and Reform Commission director Ma Kai, who is expected to announce the further liberalization of Hong Kong professional services practice in the mainland under Phase IV of the Closer Economic Partnership Arrangement. As anticipated by local medical institutions, the new CEPA concessions will give medical practitioners more opportunities to practice and set up clinics in the mainland. In a brief announcement of Hu's visit, Tsang said: "At this historic moment to mark the 10th anniversary since the handover, we are greatly honored to have central leaders to attend the inauguration ceremony of the third term of the SAR government and relevant celebration activities in Hong Kong. "On behalf of the people of Hong Kong and the SAR government, I extend our warmest welcome and deepest gratitude to them." In the interests of security, Hu's itinerary was not announced. However, it is known Hu is keen to meet the local community and expected to visit the home of a local family after his arrival Friday morning. He is then expected be taken on a private sightseeing tour to familiarize himself with Hong Kong's latest developments as an international financial hub and shipping center. In the evening, he will attend a private dinner hosted by Tsang at Government House. Hu will have a full program Saturday. As chairman of the Chinese Communist Party Central Military Commission, Hu will first inspect the People's Liberation Army Hong Kong Garrison at Stonecutters Island. He will then go to Ocean Park to open the panda habitat where the new pair of giant pandas, Ying Ying and Le Le, will be making their public debut. The pandas were a gift from the central government to mark the 10th anniversary of the handover. Hu will also visit the Commission of Foreign Ministry before stopping for lunch.

China: China has banned the production of chlorofluorocarbons (CFCs) in line with global agreements to phase out the use of ozone layer-depleting products, the country's environmental watchdog said in a statement.

  A self-controlled train moves for a test run as it makes its debut at the Beijing Capital Airport in Beijing, June 26, 2007. The passenger train will be running between terminals of the airport after the third terminal is put to use before the Olympic Games.

China's Yan Zi gestures during her singles match against Italy's Tathiana Garbin at the Wimbledon tennis championships in London June 27, 2007.

Theme song for Chow's "Secret" debuts earlier than film - Taiwan pop king Jay Chow (L) promotes his directorial debut "Secret Cannot Be Told" with his lead actress Guey Lun-mei. Although the post-production work on pop king Jay Chow's directorial debut, "Secret", is yet to be finished, the themed song of the film has been scheduled for release in Asia on Thursday. The Beijing News reported on Wednesday. Chow's long-time partner Vincent Fang took charge of the lyrics for the song, which has been described by Chow as "a shining point" of the film. According to Chow, this time he tried to emulate Britpop in composing the song - quite a different approach from his other film music hits, such as "Ju Hua Tai", the theme song of "Curse of Golden Flower" and another song he made for Jet Li's kungfu film "Huo Yuan Jia".

Hollywood legend Robert DeNiro, seen here in 2006, is the co-founder of the Tribeca film festival which is heading to China despite strict movie censorship in the communist nation. The Tribeca film festival, co-founded by Hollywood legend Robert DeNiro, is heading to China next month despite strict movie censorship in the communist nation. The festival, which was set up in New York in 2002 as a response to the previous year's September 11 World Trade Center attacks, will appear in Beijing's artistic 798 quarter on July 10-11, Xinhua news agency said. The festival hopes to promote independent US and Chinese films, organisers said. "With films from China having played a major role in the Tribeca Film Festival's first six years -- and having won several of our major awards in the bargain -- we're happy to begin this new international collaboration," said Peter Scarlet, artistic director of the Tribeca Film Festival. Tribeca has screened 18 feature-length and short films from Chinese filmmakers since 2002, four of which have scooped festival awards, Xinhua said. The Beijing edition will open with an outdoor screening of Planet B-Boy, a documentary by Korean-American director Benson Lee about the resurgence of break-dancing. "Never in my wildest dreams could I have predicted that we would be showing Planet B-boy to an audience of 7,000 people... at the World Trade Center area, let alone at another outdoor screening on the other side of the world in Beijing," said Lee, according to Xinhua. Tribeca, named after the area of New York where it is based, was set up by De Niro, producer Jane Rosenthal and philanthropist Craig Hatkoff to try to help breathe life back into the downtown area following the 2001 attacks. In China, foreign and domestic movies often suffer at the hands of the government's censors. Only a handful of international films make it to national distribution each year, and those that do are often cut. China's film censors recently cut out large sections of the latest "Pirates of the Caribbean" film, cutting in half actor Chow Yun-Fat's role because it allegedly humiliated the Chinese people. The Oscar-winning "The Departed" faced a ban on the mainland this year.

June 28, 2007

Hong Kong: President Hu Jintao will visit Hong Kong this week for celebrations marking the 10th anniversary of the handover, state media reported on Tuesday. Mr Hu will arrive in Hong Kong on Friday and stay until Sunday July 1 “to attend a mass gathering marking the 10th anniversary of Hong Kong’s return to the mainland,” Xinhua reported. This will be Mr Hu’s first visit to the city. The report did not say whether he would come with any other state leaders. Xinhua said Mr Hu would also attend the inaugural ceremony of the third-term Hong Kong Special Administrative Region government during the visit.

China Development Bank (CDB) announced Tuesday that it will issue five billion yuan (US$657 million) RMB bond in Hong Kong, and this is the first Chinese currency bond to be launched outside the Chinese mainland. The two-year bond, which will be synchronously sold to institutions and individual investors from June 27 to July 6, yields three percent annually. The return is relatively high compared to the 0.7 percent interest rate for six-month deposit here, with the anticipation of RMB appreciation. The minimum subscription for an individual investor is 20,000 yuan, and at least one billion yuan of the bond is targeting at retail investors. The joint lead managers and bookrunners for the bond issue are Bank of China (Hong Kong) and The Hong Kong and Shanghai Banking Corporation Limited. The distributors comprise of 14 placing banks with branches in Hong Kong, including Bank of Communications, China Construction Bank (Asia), Dah Sing Bank, and The Bank of East Asia. The bond did not apply for independent ratings. CDB Governor Chen Yuan explained that despite the bank's on-going market- oriented reform, CDB will adhere to its mission of helping to achieve the government's goals, and "our debt rating will also remain intact." CDB is China's largest policy bank and solely owned by the Ministry of Finance. It has been raising capital by issuing bonds since 1998, and has been given sovereign ratings by Moody's, Standard and Poor's and Fitch Ratings. Analysts say both Hong Kong and the mainland could benefit from floating RMB outside the mainland. "The issuance of RMB bonds here will strengthen Hong Kong's status as an international financial center," Ma Delun, assistant governor of the People's Bank of China, said at the launch ceremony of the bond. The issuance of renminbi bonds in Hong Kong signifies the city' s role as the country's premier international finance center, giving local investors more choice, said Henry Tang, financial secretary of the Hong Kong Special Administrative Region government, when addressing the ceremony. "The arrangement is a fresh step in Hong Kong-Mainland co- operation," he said.

Hong Kong the best business partner for Vietnam enterprises - Hong Kong is Vietnam's best partner for capturing business opportunities arising from the country's recent accession to the World Trade Organization, Mr Peter Woo, chairman of the Hong Kong Trade Development Council, told more than 200 business executives in Ho Chi Minh City today. Mr. Woo, who is leading a 17-member Hong Kong business delegation to Vietnam, said that Hong Kong is an ideal conduit for Vietnamese businesses. Through Hong Kong, they can get all the services support and contacts they need to connect with world markets. The TDC delegation visited Hanoi, the Vietnamese capital, on Monday and Tuesday before going on to Ho Chi Minh City. In Hanoi, the delegation met with the Vietnamese Prime Minister, Mr. Nguyen Tan Dung, who welcomed Hong Kong businesses to invest in Vietnam. Mr. Nguyen said that overseas investment was an integral component of Vietnam's economic development. He added that his government would provide favorable conditions to help Hong Kong investors do more business in the country, particularly in the financial, banking, insurance, securities, shipping and manufacturing sectors. The Prime Minister also agreed that Hong Kong has the infrastructure, as well as the international experience and contacts, to serve as a useful platform for Vietnamese companies looking to connect with world markets. Earlier, the delegation was briefed by Minister of Trade Mr Truong Dinh Tuyen and Vice-minister of Planning and Investment Mr Nguyen Bich Dat on the latest developments in Vietnam, including laws recently introduced to create a more effective business environment in the country.

Hong Kong will be the main beneficiary when the Hong Kong-Zhuhai-Macau Bridge is up and running, a senior official of the mainland's top planning body said yesterday. National Development and Reform Commission deputy chairman Zhang Xiaoqiang said a mainland study showed Hong Kong would enjoy 64 per cent of the economic benefit brought by the long-awaited bridge. But an academic who has studied the issue said his conclusions were exactly the opposite and the Pearl River Delta cities of Zhuhai , Zhongshan and Jiangmen would be the big winners. The 29km bridge is still at the planning stage despite a decade of negotiations. Mr Zhang said the mainland study, which projected the economic gain brought by an expected increase in cross-border traffic, also estimated that Guangdong would secure 26 per cent of the benefits and Macau 10 per cent. "The bridge will be effective in helping Hong Kong expand its hinterland," he said. But Mr Zhang said this did not necessarily mean Hong Kong should invest more in the bridge's construction because it would be up to companies interested in the project to negotiate a stake. "Under the principle of attracting more private investment, it will be up to the companies to decide who will contribute more," he said, adding that the governments would be responsible for financing checkpoints and links. Mr Zhang is also head of a special taskforce set up by the State Council late last year after the plan became bogged down by disputes over issues such as the location of checkpoints and the sharing of the construction costs, estimated at US$3.7 billion. He said some consensus had been achieved after several meetings between representatives from the three governments, but there was still no timetable.

M & A activity heats up in China - Mergers and acquisitions in China has soared to a record high in the first half of this year demonstrating the Mainland's budding affinity with investors and bankers. According to Thomson Financial, M & A deals have witnessed a surge in 58.3% to US$39.1 billion, slightly more as compared to the second half of last year. Despite a busy launch, the M&As in the first half of 2007 is still lagging behind its highest ever semi-annual figures of US$44.7 billion that was witnessed in the second half of 2000. Violet Chung, a senior portfolio manager at Pacific Capital Management, speculated that the M&A rise and fall cycle will be powered by a combination of low interest rates, especially in Japan, as well as high liquidity. A combination of factors such as a thriving stock market and a clamor for stakes in Chinese firms have made China into Asia's most dazzling platform for investment banking. China also radiates a growing allure for share sales, trailing behind the U.S. in global equity issuance in the first half of this year. Some of the largest money-making deals this year include the Rowsley purchase of solar energy company Perfect Field Investment, the Chinese government's US$3 billion investment in Blackstone Group as well as Dongfang Electrical Machine's US$2.8 billion offer for Dongfang Boiler. Marco Mak, the head of research at Taifook Securities, expressed confidence that the situation would remain upbeat for as long as companies are still in the process of restructuring and purchasing assets from parent firms. It is revealed that the technology sector is a haven for foreign investors, while the preferences of Mainland companies lie with foreign operations in the business sector. Mainland companies are also scrambling for IPOs. China CITIC Bank Corp's US$5.9 billion dual listing in Hong Kong and Shanghai was the world's second-largest initial public offering so far this year. This has propelled China to own 15.2% share of the global market, runner-up to the US in terms of IPO activity. To top it off, an icing on the cake is the number of Mainland firms going public on U.S. exchanges. With 10 companies raising US$2.2 billion on the New York Stock Exchange and Nasdaq Stock Market, a new record high has been set, doubling last year's full-year total.

Regulator to ease limits on domestic investments to HK - The China Banking Regulatory Commission will soon relax existing regulations on overseas investments by domestic investors, The Standard reported Monday, citing a mainland source. The Standard, citing the source, said the mainland regulator will soon allow domestic investors to invest about 70 percent of their funds in Hong Kong stocks, up from the current limit of 50 percent, under the Qualified Domestic Institutional Investor (QDII) program. Hong Kong is so far the only market approved for overseas investments under the QDII scheme. The minimum amount of money required for an investor to buy a product under the program will drop to less than 100,000 yuan (US$13,130) and could be as low as 10,000 yuan, the newspaper said. The new minimum investment represents a dramatic drop from the previous entry fee of 300,000 yuan for a single investment, it said. There have been discussions to allow trust funds to be included in the scheme, the source told the newspaper, without specifying the parties involved in the talks.

HSBC Holdings (0005) group chairman Stephen Green said Monday the lender's US subprime mortgage division will not be affected by last week's news that Bear Stearns, one of the largest global investment banks, will have to bail out two of its hedge funds that had bet heavily on subprime mortgage assets.

A HK$3 billion bid from Wheelock Properties (0049) has triggered an auction for a Wong Tai Sin residential site, where analysts believe developers could face potential uncertainty over the plot ratio.

Shares of refiner China Petroleum & Chemical Corp (0386), better known as Sinopec, tumbled Monday as investors rattled by the news of chairman Chen Tonghai's resignation dumped the stock.

Standard Chartered (2888), the British bank that makes most of its money in Asia, said it will introduce private banking services in eight to 10 more mainland cities by 2010 as the number of wealthy people soars.

RREEF, the property investment arm of Deutsche Bank and manager of the recently listed RREEF China Commercial Trust REIT (0625), is teaming up with a private equity firm to build more than 25 hotels in the mainland under the Hilton Garden Inn brand in a US$550 million (HK$4.29 billion) deal.

Hospital Authority chief executive Shane Solomon has apologized and retracted comments he made hours earlier accusing frontline doctors and their unions of leaking information on medical mishaps to bolster their demands for better pay. After attending Monday's meeting of the Legislative Council's health services panel, Solomon said: "I think the political purpose is to put pressure on the Hospital Authority and say that we have a crisis in medical staffing." His comments provoked an outcry from a legislator as well as the Frontline Doctors' Union, forcing him to backtrack. "I would like to apologize for the confusion and frustration that may have been caused to the parties concerned with my remarks made after the health services panel this morning," he said. "I'd like to clarify that the political motives which I mentioned were totally unrelated to the recent request for salary adjustment by Hospital Authority doctors and their unions. As these remarks may have created concerns on the legitimacy of their intention and recent actions, I've decided to withdraw them."

The controversy over the Hong Kong Institute of Education has taken a fresh twist, with its ruling council ordering Paul Morris to go on immediate leave as its president, and deciding not to keep him on as a teacher when his term ends in September. The council said yesterday's decision to send him on leave would enable the institute to "turn a new leaf". Professor Morris condemned it as unnecessary. Lawmakers, staff and student representatives called it unreasonable and irrational. Some lawmakers called it revenge for his part in the recent commission of inquiry into interference in the institute's autonomy, whose findings led former chief education civil servant Fanny Law Fan Chiu-fun to quit as anti-graft chief. Professor Morris said a council subcommittee had issued a directive saying: "With the president becoming a central character in the committee of inquiry, the committee has requested that the president be directed to take leave immediately and that he be directed not to make any public statement in relation to the HKIEd while on leave." He said: "I hope this decision doesn't send the wrong message to the academic community about the value the council places on academic freedom." The institute's ruling council made the decision at a meeting to discuss whether or not to offer Professor Morris a four-year professorship at the end of his term as president in September. The body, which is dominated by political appointees, voted 13 to five against offering him the job. Council vice-chairman Eddie Ng Hak-kim said Professor Morris had been sent on leave to allow a new management team to take over as soon as possible. Academic vice-president Lee Wing-on will serve as acting president. Mr Ng said the professor's contract stated he would be offered a professorship until 2011 if his performance as president was satisfactory. Council members felt there was some room for improvement in the president's performance, but said individual members had their own reasons for the decision. Speaking in a personal capacity as he was about to fly to Britain, Professor Morris said he was surprised the subcommittee set up to review the inquiry findings had come to the conclusion he should be sent on immediate leave and not be allowed to make any public statements.

China: Mexico and China Assess Bi-lateral Trade Relationship - Chinese and Mexican trade officials met on 29 May in Mexico City to discuss several aspects of their growing bi-lateral relationship. Mexico's Secretary of the Economy Eduardo Sojo said that the two countries need to develop a relationship based on dialogue and co-operation in order to better understand each other's interests and concerns. Mexican officials expressed concern about the mounting trade deficit with China, which reached an estimated US$22,700 million in 2006, and reiterated longstanding industry worries about China's enforcement of intellectual property rights, China's subsidization of export activities and the illegal transshipment of Chinese products through third countries. Sojo also highlighted the importance of finding ways to expand market access opportunities for Mexican agricultural products in China, including by enhancing bi-lateral co-operation in sanitary matters. Like other countries in the region, Mexico is trying to achieve a delicate balance in its relationship with China that seeks to attract Chinese investment and increase exports of industrial and agricultural commodities to China while ensuring that its manufacturing sector is not negatively impacted by rising imports from the mainland. Mexican businesses are keenly interested in exporting their products to China but, at the same time, many companies regularly complain about pirated or illegally imported Chinese products and favour a strong trade remedy regime to shield key industries from a flood of illegally subsidized and dumped products from China.

Cable towers of the bridge across the Hangzhou Bay in East China are seen on June 26, 2007. The 36-kilometer (22-mile) bridge that its builders claim is the world's longest sea-crossing structure was formally linked-up Tuesday just south of Shanghai.

China's President Hu Jintao (L) and Spain's King Juan Carlos review the honor guard during a welcome ceremony outside the Great Hall of the People in Beijing June 26, 2007.

Hainan Eld's Deer are seen at a natural reserve in South China's Hainan Province, June 1, 2007. Population of this species has increased from bottom 26 to 1,785 in efforts of the local government to protect wild animals.

HSBC Holdings, the European bank, said it would buy part of an office tower in Shanghai to house its China headquarters as it speeds up expansion in China. HSBC agreed to buy naming rights and occupy 20 floors of one of the twin towers of the Shanghai International Finance Center, to be completed by 2010, from Sun Hung Kai Properties, HSBC said in a statement to the Hong Kong Stock Exchange. The tower, a few blocks from the bank¡¯s current headquarters, would be renamed HSBC Building-Shanghai IFC. Stephen K. Green, the chairman of HSBC, disclosed the deal at a news conference in Shanghai, but he declined to say how much the bank had agreed to pay.

Yao Ming and his girlfriend Ye Li - China's All Star NBA centre Yao Ming will wed his teenage sweetheart from Shanghai in August, after an eight-year courtship, state press reported Monday. Yao, who has kept his love life closely guarded from the media, will marry Ye Li in a private family ceremony possibly in Shanghai, the eastern metropolis where they were born, met and began dating, the Titan Sports Weekly said. "This is a match based on pure love," the paper said. The 2.26 metre (seven-foot-six-inch) centre first met Ye in 1999 when he was playing for the Shanghai Sharks men's team and the 1.9 metre Ye was with the club's women's team. Ye has since gone on to play for the national side, but has been plagued with injuries in recent years. The two were seen walking hand-in-hand at the closing ceremony of the 2004 Athens Olympics, when their courtship first became public. According to Titan Sports, Ye, 25, has been a regular at Yao's home in Texas where he stars for the Houston Rockets. She has also studied English at the University of Houston. Yao, 27, is expected to return to China in July to train and will play matches with the national team in September. The paper played down widespread rumors on the Internet and in the Chinese media that Yao's wedding would be broadcast live on television, with China's Olympic gold medal-winning hurdler Liu Xiang acting as the master-of-ceremonies. "On that day there will be no media, basically it will only be relatives from both sides attending," the paper said. "Yao Ming and Ye Li are doing what they can to protect themselves. They do not want to see any outside factors interfering."

Shares in China COSCO Holdings more than doubled in its Shanghai IPO on Tuesday, after attracting a record $214 billion in subscriptions.

Thailand, Southeast Asia's second- biggest economy, plans to buy electricity from China for the first time starting in 2017 because the country is not building its own plants fast enough to meet an expected surge in demand.

June 27, 2007

Hong Kong: A mass meeting was held in Hong Kong on Sunday to celebrate the 10th anniversary of the People's Liberation Army (PLA) troops' stationing in the Hong Kong Special Administrative Region (HKSAR). An order of commendation in honor of the PLA troops in the HKSAR signed by Hu Jintao, chairman of the Central Military Commission (CMC), was read at the meeting. On July 1, 1997, the day of Hong Kong's historic return to the motherland, the PLA Hong Kong Garrison moved into the HKSAR on the orders of the CMC. Over the past 10 years, the PLA Garrison has firmly implemented decisions and orders of the Central Committee of the Communist Party of China (CPC), the State Council and the CMC, and has always observed the Basic Law of Hong Kong and the law governing the PLA garrison in the HKSAR, the order of commendation said. The PLA Garrison, which has respected the HKSAR Government and Hong Kong people, has made an outstanding contribution to the prosperity and stability of Hong Kong, it said. Ge Zhenfeng, deputy chief of the General Staff of the People's Liberation Army, said in his address that the PLA garrison troops in Hong Kong firmly put into practice the principle of "one country, two systems", and contributed substantially to Hong Kong's prosperity and stability. In the past 10 years, the troops won wide support from HKSAR government and Hong Kong people, who helped the garrison troops a lot to fulfill its responsibility for Hong Kong's defense affairs, Ge added. On behalf of the PLA's general headquarters, Ge expressed heartfelt thanks to the HKSAR government, all social sectors and Hong Kong people. Chief Executive of HKSAR Donald Tsang thanked the PLA garrison troops in Hong Kong for its contribution to Hong Kong's prosperity and stability during the past 10 years. He said the PLA garrison troops firmly implemented the principle of "one country, two systems" in the last 10 years and created a grand image by their actions. "Your efforts have won trust and admiration from Hong Kong people," Tsang said. Wang Jitang, commander of PLA garrison troops in Hong Kong, said that on July 1, 1997, the PLA Hong Kong Garrison began to carry its defense responsibility in Hong Kong, which opened a new page in the PLA history. Over the past 10 years, PLA garrison troops successfully accomplished all important tasks, carried the mission of safeguarding China's sovereignty over Hong Kong, while presented itself as a mighty and civilized force., China's largest online business-to-business (B2B) marketplace for global and domestic trade, plans what could be a $1 billion share sale in Hong Kong to help fuel growth, sources said. The company, a subsidiary of the Alibaba Group and 40 percent owned by Yahoo, picked Hong Kong over the New York and London stock markets for what would be the biggest initial public offering for a mainland Internet company. Investment banks Goldman Sachs and Morgan Stanley are arranging the impending public offering.

CEPA opens door to mainland securities brokers, fund houses - China securities brokerage firms and fund houses will be able to apply to set up in Hong Kong under the latest round of the Closer Economic Partnership Arrangement (CEPA), to be signed in the next few days before the 10th anniversary of the handover on July 1, according to sources. The agreement is also likely to allow local securities brokers to apply to set up across the border, although only a few big players will be qualified under the mainland's high capital requirements. Allowing mainland brokerages and fund houses to apply to the Securities and Futures Commission for Hong Kong trading licences will help mop up some of the excess liquidity in the mainland markets, said one source. At present, a number of mainland-owned securities firms are incorporated in Hong Kong but they deal mainly with Hong Kong investors. The new CEPA deal will allow mainland incorporated brokerages and fund houses to set up wholly owned subsidiaries or joint ventures in Hong Kong to serve their mainland clients. It is a timely move following last week's announcement by the China Securities Regulatory Commission allowing mainland mutual funds and securities houses to invest in overseas stock markets through the qualified domestic institutional investor scheme from July 5.

The initial public offering scene is set to heat up again this week with two eye- catching listing candidates, New World Department Store and Shanghai Fosun Group, aiming to raise a total of more than HK$13 billion.

Hang Seng Bank (0011) will pay HK$2.4 billion to parent HSBC (0005) to acquire the 50 percent of Hang Seng Life it does not already own.

Tsim Sha Tsui roars into life as about 50 groups perform a mega dragon and lion dance to mark the 10th anniversary of the handover. More than 2,000 took part in the event, which attracted hundreds of onlookers on the route from the Cultural Centre to Austin Road.

The Electronic Disclosure Project is to be introduced by Hong Kong Exchanges and Clearing today. Under this project, listed companies are only required to release their financial information to the HKEx electronically, as opposed to the previous requirement under which companies were mandated to publish their results in newspapers.

All 15 incumbent non-official members of the Executive Council, along with outgoing Chief Secretary for Administration Rafael Hui Si-yan, will remain in the chief executive's top advisory team.

Hong Kong Jockey Club chairman John Chan Cho-chak warned Sunday the club's long-standing role as a community donor cannot be taken for granted in the years to come in the face of growing challenges from other forms of leisure and entertainment.

The Hong Kong people's satisfaction with the territory's overall development since the handover has reached a record high of nearly 40 percent as the economy continues to improve, according to the latest survey conducted by the Chinese University of Hong Kong's Institute of Asia Pacific Studies.

Asia Pacific still key for HSBC, says incoming chief Flockhart - HSBC Holdings (SEHK: 0005) intends to make up to 50 per cent its profit from the Asia Pacific over the next decade, countering claims the bank is moving away from the region. Sandy Flockhart, the new chief executive of HSBC's Asia-Pacific unit who replaced Michael Smith, said the bank would continue to invest in the region, including in the mainland, India, Indonesia, South Korea and Taiwan. The resignation of Mr Smith was described by Goldman Sachs as evidence of tension within HSBC as it arguably expanded away from Asia. The group made 39.5 per cent of its profit from the region last year. Europe accounted for 31.5 per cent, North America 21.1 per cent and Latin America 7.9 per cent. Mr Flockhart said Asia remained important for the bank because of the tremendous growth potential. "We'll continue to invest in Asia as it's part of our DNA," he added. He said the bank would continue to grow "organically" and would expand through acquisitions if opportunities arose. The bank said earlier that it had invested more than US$2 billion in the region in the past three years as well as putting US$3.4 billion into associated companies. Mr Flockhart did not say whether a similar amount or more could be invested in Asia in the next three years. "If there are plans that show value to us, we'll invest [in them]," he said. HSBC's senior management, including group chairman Stephen Green, have said that they expect the Asia-Pacific region to account for 45 to 50 per cent of earnings over the next decade. Mr Flockhart said he would try to achieve that target and would prefer to "do it earlier rather than later". A source said HSBC had appointed Mr Flockhart, described as an emerging markets specialist, to reassure investors about its Asian operations after the departure of Mr Smith, who is taking up a position as chief executive of Australia & New Zealand Banking Group. Mr Flockhart admitted that finding good talent in Asia would be a challenge as lenders sought growth in the region. Mr Flockhart was president of HSBC's Latin American unit but previously served 12 years in Hong Kong.

China: "China's WTO accession is a win-win game", interview by People's Daily staff editor Liu Chao recently had an exclusive interview with Pascal Lamy, WTO Director-general, before his annual visit to China.

Construction will begin Thursday on an inter-city subway linking two cities in south China's Guangdong Province,heralding faster rail services in the Pearl River Delta area, one of the country's economic engines. The 32.16-km-long subway line linking Guangzhou, capital of Guangdong, with Foshan City, west of Guangzhou, will shorten travel time between Foshan city and downtown Guangzhou to about 40 minutes, down from 50 minutes. At an estimated cost of 14.7 billion yuan (1.9 billion U.S. dollars), the subway has 21 stops and will go into operation in 2012. The line will be linked to four subway lines in Guangzhou. The inter-city subway is one element of a planned fast rail service network along the Pearl River Delta area, adjacent to Hong Kong and Macao. The network will have seven inter-city rail lines with a total length of 588 kilometers, connecting Guangzhou with Dongguan, Shenzhen, Zhuhai, Zhaoqing and Foshan. Four of them have been completed and all the lines will be completed by 2020.

Bottles of milk exhibited at the World Dairy Expo & Summit/China 07 in Nanjing, Jiangsu Province June 21-23. China ranks 3rd after India and the United States in the production of dairy products in 2006.

Mandatory national security checks on foreign companies' acquisition of domestic players have been included to the draft anti-monopoly law submitted yesterday to the top legislature for a second reading. "Foreign mergers and acquisitions (M&As) of domestic companies or foreign capital invested in domestic companies in other forms should be examined if the cases are related to national security," said the draft submitted to the 28th session of the Standing Committee of the National People's Congress (NPC). There is already a national-security check framework in place for foreign M&As, but it has been included in draft legislation for the first time. According to a regulation jointly issued by six government agencies late last year, foreign investors have to apply for approvals from the Ministry of Commerce when their purchases of domestic companies affect national economic security, are in key sectors or lead to the transfer of operating rights of famous domestic brands. The legislative move reflects the government's efforts at clarifying the legal framework for foreign M&As, said Meng Jianbing, an expert with Seafront Law Office in Beijing, adding that lawmakers are learning from other countries such as the United States on how to protect national security. The requirement was added to the long-awaited anti-monopoly law against the backdrop of a fast-rising number of foreign M&As as well as foreign companies acquiring major State-owned enterprises or companies with famous brands. One case which has drawn widespread attention is US private equity firm Carlyle Group's attempted takeover of Xugong Construction Machinery, which did not pass regulatory hurdles following fears that China is selling strategic companies to foreign investors. According to official statistics, foreign M&As accounted for 5 percent of all forms of foreign direct investment annually up to 2004 but increased dramatically to 11 percent in 2004 and nearly 20 percent in 2005. Zhang Yansheng, director of the International Economic Research Institute affiliated to the National Development and Reform Commission, said it is crucial that foreign purchases of domestic firms go through security as well as anti-monopoly checks. But "the situation needs to be spelt out in more detail. For example, what kind of merger cases are related to national security"? The draft anti-monopoly law, which aims to provide for fair competition, was submitted for first review in June 2006.

Customers dressed in the traditional Han costumes have fun at a Han culture-themed restaurat in Beijing June 25, 2006. The Han culture has become a hit in the capital.

Teahouses become especially popular in the summer, as drinking tea can help you beat the heat. In China, tea is a traditional drink, that's not only good for your health but also can also cultivate your mind. Teahouses become especially popular in the summer, as drinking tea can help you beat the heat.

Wu Jingguo, chairman of Chinese Taipei Olympic Committee (CTOC), said he would let Taipei deal with the controversial torch relay issue after Beijing Games organizers restated their firm standing on the plan.

Chna property giant Hopson Development Holdings (0754) will shell out HK$6 billion to buy a Beijing project owned by chairman Chu Mang-yee.

Triumph International, the Germany-based lingerie firm, aims to double revenue from the mainland in five years, increasing its number of mainland outlets from 800 to 1,600.

June 26, 2007

Hong Kong: The world-acclaimed Chinese painting "Along the River During the Qingming Festival," and a batch of painting and calligraphy masterpieces arrived at the Hong Kong Museum of Art from Beijing Friday evening. These national treasures will be put on display in an exhibition entitled "The Pride of China: Masterpieces of Chinese Painting and Calligraphy of the Jin, Tang, Song and Yuan Dynasties from the Palace Museum" at the Museum of Art to celebrate the 10th anniversary of the establishment of the Hong Kong Special Administrative Region. Over the past three months, staff from the Museum of Art and the Palace Museum in Beijing worked out a detailed plan to ensure the utmost security for the delivery and display of the exhibits, which date back more than 1,000 years and are graded as first-class cultural relics. The success of the delivery Friday is also attributed to the assistance and special arrangements rendered by airports of Beijing and Hong Kong, and the tight security escort provided by the Beijing Municipal Public Security Bureau and Hong Kong Police, said an official with the Museum of Art. Highlight exhibits include Zhang Zeduan's "Along the River During the Qingming Festival" of the Northern Song dynasty, Feng Chengsu's "Copy after Preface to the Orchid Pavilion Gathering" of the Tang dynasty, Wang Shen's "Light Snow over a Fishing Village" of Northern Song dynasty, and Zhao Ji (Emperor Huizong of the Song Dynasty)'s "Auspicious Dragon Rock" of the Northern Song Dynasty.

A Memorandum of Understanding (MOU) aimed at strengthening co-operation and exchanges in health and medical areas between the Chinese mainland and the Hong Kong Special Administrative Region (HKSAR) was signed Friday. The MOU was signed by visiting Chinese Minister of Health Gao Qiang and Secretary for Health, Welfare and Food of the HKSAR government York Chow. Under the MOU, the two sides agreed to foster co-operation in various areas including strengthening the flow of health and medical information as well as the notification and contingency co- operation system on infectious disease outbreaks and public health emergencies. In addition, the two sides would encourage medical and health professional groups and relevant institutions in the mainland and Hong Kong to share experience through seminars and training programs. Speaking at the signing ceremony, Chow said that close co- operation between the health authorities of the mainland and Hong Kong was vital in meeting the numerous new challenges in public health. "The signing of the MOU today marks a major milestone in public health development and medical co-operation between the Ministry of Health and the Health, Welfare and Food Bureau of the HKSAR government," he said.

The central government will announce Hong Kong's new team of principal officials for the next term Saturday morning through the official Xinhua News Agency before Chief Executive Donald Tsang Yam-kuen and his 15 ministers meet the media to outline governance plans for the next five years.

Hong Kong Chief Executive Donald Tsang (R), standing beside Secretary for Justice Wong Tan Lung (L), Chief Secretary for Administration Henry Tang (2nd L) and Financial Secretary John Tsang, announces the new team of the Hong Kong government's principal officials during a news conference in Hong Kong June 23, 2007.

Front row L-R) Secretary for Commerce and Economic Development Frederick Ma, Secretary for Justice Wong Yan Lung, Chief Secretary for Administration Henry Tang, Hong Kong Chief Executive Donald Tsang, Financial Secretary John Tsang, Secretary for Education Michael Suen, (Back row L-R) Secretary for the Environment Edward Yau, Secretary for Financial Services and the Treasury K C Chan, Secretary for Labour and Welfare Matthew Cheung, Secretary for the Civil Service Denise Yue and Secretary for Home Affairs Tsang Tak-sing attend a news conference to announce the new team of principal officials appointed in Hong Kong June 23, 2007.

(Front row L-R) Secretary for Security Ambrose Lee, Secretary for Commerce and Economic Development Frederick Ma, Secretary for Justice Wong Yan Lung, Chief Secretary for Administration Henry Tang, Hong Kong Chief Executive Donald Tsang, Financial Secretary John Tsang, Secretary for Education Michael Suen, Secretary for Constitutional and Mainland Affairs Stephen Lam and Secretary for Food and Health York Chow, (back row L-R) Director of the Chief Executive's Office Norman Chan, Secretary for the Environment Edward Yau, Secretary for Financial Services and the Treasury K C Chan, Secretary for Labour and Welfare Matthew Cheung, Secretary for the Civil Service Denise Yue, Secretary for Home Affairs Tsang Tak-sing, Secretary for Development Carrie Lam, Secretary for Transport and Housing Eva Cheng and Head of the Central Policy Unit Lau Siu-kai attend a news conference to announce the new team of principal officials appointed in Hong Kong June 23, 2007.

Hong Kong's largest painting was unveiled yesterday to mark the 10th anniversary of the handover. Measuring 7.1 metres by 2.8 metres, Halcyon Days Pearl is seen as a sister work to Festive Day, another epic oil painting that fetched HK$23 million in 1997 - then a record for contemporary Chinese art. The painting features state leaders and Hong Kong's movers and shakers. It was painted by renowned artist Liu Yuyi and his daughter, Liu Haomei. At the heart of the painting is President Hu Jintao , who is handing a huge pearl to Chief Executive Donald Tsang Yam-kuen as other state leaders and top Hong Kong officials look on. "Festive Day was more solemnly themed when people still held doubts about Hong Kong's future," said Liu. "Now Pearl has harmony and happiness in the air." He said he included people of different political views. Near the edge of the painting stand such figures as Cardinal Joseph Zen Ze-kiun, former chief secretary Anson Chan Fang On-sang and Civic Party legislator Alan Leong Kah-kit. Tycoons Li Ka-shing and Stanley Ho Hung-sun were among the closest to the state leaders in the canvas. Some key members of the Democratic Alliance for the Betterment and Progress of Hong Kong and the Liberal Party were also close to the action. Liu, who has lived in Hong Kong since 1991, said he had not yet decided whether to auction the painting, although some interested buyers had contacted him in recent days. "I may just give it to the state," he said. "And I don't rule out the possibility of giving it to the Hong Kong government." In the background of the painting are Hong Kong's landmark skyscrapers and tourist attractions. Mount Everest sits in the deeper background to symbolise the support of the mainland.

Beijing twice considered taking back Hong Kong by force in the decades running up to the handover, according to a retired mainland official formerly in charge of Hong Kong affairs. In 1967, Huang Yongsheng , the then commander of the Guangzhou military region, had suggested a military invasion to quell rioting in the city, Lu Ping said in an interview with mainland satellite broadcaster Dragon TV that aired yesterday. "When premier Zhou Enlai learned of it, he gave an instruction late in the evening against [the PLA] proceeding," Mr Lu said. The second occasion on which the possibility had come up was during the visit of the then British prime minister, Margaret Thatcher, to Beijing in 1982. Late paramount leader Deng Xiaoping told her that mainland authorities would rethink the timing and means of restoring Chinese sovereignty over Hong Kong if there was major unrest once the July 1, 1997, handover was announced, Mr Lu recalled. "The [new] `method' referred to was its requisition by force," said the former director of the State Council's Hong Kong and Macau Affairs Office. Mr Lu's interview was part of a Dragon TV series to mark the 10th anniversary of the handover. The retired official is best remembered in the city for his trenchant criticism of its last governor, Lord Patten, whom he once called a "sinner for a thousand years" for trying to foster greater democracy in Hong Kong. Mr Lu is not the only former senior mainland official to have offered insights in the lead-up to the handover anniversary into what went on behind the scenes in the diplomatic battles between London and Beijing. Pro-Beijing newspaper Wen Wei Po published excerpts of a forthcoming book of memoirs by Zhou Nan , Xinhua's former Hong Kong director, in which he was quoted as saying Beijing had considered using "non-peaceful means" to get back Hong Kong when considering its reunification.

Cast member Maggie Q who was born and raised in Hawaii made his movie career in Hong Kong arrives for the film premiere of the film "Live Free or Die Hard" in New York, June 22, 2007.

New York-listed units in Blackstone Group jumped 21 percent in the first few hours after their debut, giving the mainland's state investment agency US$789.94 million (HK$6.16 billion) in gains on the US$3 billion stake it bought in the private-equity behemoth as China seeks to diversify its foreign reserve holdings and improve returns.

More than 1,000 public hospital doctors are expected to stage a sit-in at the Queen Elizabeth Hospital Saturday to fight for better pay and working hours. They are also calling on the Hospital Authority to restore the wage scales of new recruits to the levels they were eight years ago and for a pay rise similar to the 4.96 percent proposed for civil servants. Authority chairman Anthony Wu Ting-yuk, while calling on the doctors to be patient during the negotiations, assured the public services at hospitals would not be affected. Hong Kong Public Doctors' Association's president Paul Shea Tat-ming said previous salary cuts had affected morale and, subsequently, the quality of medical services. "Doctors used to be the creme de la creme of society, but now they don't even rank alongside professionals in the civil service," Shea said, adding: "We want to be paid a salary comparable to a professional in the civil service."

China: Hawaiian Airlines has decided against applying for one of the new air routes being opened up to China, a destination it had sought unsuccessfully two years ago. "Hawaiian remains interested in serving China and helping to develop its enormous potential as a visitor market for Hawaii, but the current difficulty for citizens of China to get tourist visas from the U.S. government has led us to conclude that a daily service between Hawaii and China is not commercially viable today," spokesman Keoni Wagner said yesterday. State Department figures released earlier this year indicated that visitors from the southern Chinese city of Guangzhou must wait an average of 22 days to obtain a visa to visit the United States. Hawaiian is one of the carriers that would be eligible to compete for the latest group of U.S.-China routes, which the U.S. Department of Transportation has reserved for airlines that don't already fly to China. Delta Air Lines Inc. and US Airways Group Inc. have already said they will compete for the new routes. Hawaiian tried for permission in 2005 to fly to China -- proposing a route connecting San Diego, Honolulu and Shanghai -- but lost out to Continental Airlines and American Airlines.

Chinese Vice Premier Zeng Peiyan on Friday warned people against cheating in the second national land survey that is to be launched on July 1st. Every organization and individual should provide or gather accurate land data, and the central government will tolerate no cheating or changing data, Zeng said during a teleconference in Beijing. He told ministries and local governments that up-to-date and accurate land data will help the government make tough land control measures and promote sound and rapid economic growth and social development. China conducted the first national land survey between 1984 and 1996. Given the huge changes that have taken place in urban and rural areas, the data are now out of date, the vice premier said. The primary task of the survey is to obtain information on the acreage, quality and distribution of the arable and basic farmland in the country, he told the meeting. This will help ensure no decline in the 1.8 billion mu (120 million hectares) of arable land, including the 1.6 million mu of basic farmland that is widely seen as critical to the country's food security, he noted. Local authorities should finish the survey before the end of June 2009 and report the new land data to the Ministry of Land and Resources on Oct. 31, 2009, said a circular issued by the State Council on Thursday. The circular said China will use advanced remote imaging technologies to survey land used for different functions including farmland, forests, land used by industry and infrastructure and development parks. Acreages and their distributions will be mapped and recorded nationwide. China will build an electronic database for all the survey findings and devise statistical and monitoring methods to track changes in land resources, and also set up a system to update the information quickly, said the circular. The survey will help the government ensure national food security and better protect farmers' interests and thereby bolster social stability, the circular stated.

China encourages share-holding reform for some of its weapons makers in a bid to expand financial and technical support, according to the recently issued government guidelines.

BOCOG vice president Jiang Xiaoyu talks to media on Saturday. Beijing insists that Taiwan will only be included in the 2008 Olympic torch relay under the terms of the written agreement reached with the island's Olympic Committee earlier this year. When the route was announced in late April, the Taiwan government said it could not accept the torch because Taipei's position on the relay -- after Ho Chi Minh City and before Hong Kong. The inclusion of Taiwan is important to the Beijing government, but hopes of a negotiated compromise look bleak. "As far as BOCOG is concerned, the passing of the Olympic flame through Taipei has been defined by BOCOG and the Chinese Taipei Olympic Committee," Jiang Xiaoyu, executive vice president of the Beijing Organising Committee for the Olympic Games (BOCOG), told a news conference on Saturday. "We hope they will stay free from artificial factors and return to the written agreement made by both sides, and validated by the International Olympic Committee. "If the CTOC can return to the agreement already made, the selection of the 120 torch bearers for Taipei will kick off after that." Jiang would not say whether BOCOG would consider negotiations with Taipei but an approach from the other side of the Taiwan strait looks unlikely. A spokeswoman for the Taiwan government Mainland Affairs Council said this week that BOCOG had described Taiwan as "China Taiwan" on its official Web site, not the Olympic name "Chinese Taipei". Although it had been changed back, the usage was picked up by the Chinese media and Taiwan was waiting for Beijing to suggest renegotiating the torch route "to express sincerity", the spokeswoman said. The 130-day, 137,000km torch relay, due to stop over in Taipei in late April 2008, will require 21,880 torch bearers, organisers said on Saturday. The Games start next August.

China has 80m middle class members - The number of Chinese officially described as "middle class" has risen by almost 15 million people in the last two years to 80 million in total, according to official sources. About 6.15 percent of the population were middle class, and the number was still rising, Hou Yunchun, director of the Research Office of the State Council, told a conference on wealth management, the Shanghai Securities News reported recently. Hou's estimate was based on the criterion of the National Bureau of Statistics (NBS), which defined middle-income households as having an annual income between 60,000 and 500,000 yuan (7,792 and 65,790 U.S. dollars). A study by the NBS in January 2005 showed about 5.04 percent of Chinese, or 65.5 million people, fell into this category. By January 2007, China still had 23.65 million people below the government poverty line, earning less than 85 U.S. dollars a year. The figure had fallen by more than 100 million since the government launched its campaign against rural poverty in 1986. The expanding middle class indicated China was entering "a sound cycle of development", said Shi Jianping, president of Beijing-based Central University of Finance and Economics. As personal wealth increases, Chinese commercial institutions are improving their wealth management services to customers with different needs, said Shi. A market survey from the Bank of China shows the Chinese private banking market is growing at an annual rate of 12 percent.

Telecom equipment maker Huawei Technologies has won a $700 million contract for China Mobile Communications Corp.

Chen Tonghai, chairman of China Petroleum & Chemical Corp (0386), better known as Sinopec, and president of parent Sinopec Group, surprised the market by resigning from the positions with immediate effect. The news was announced in an unusual manner by the State-owned Assets Supervision and Administration Commission, not by the company itself, and without giving exact reasons. In Beijing, rumors were rife that Chen has been detained, having "seriously violated party discipline." Web site NetEase 163 Friday said "Chen has resigned due to seriously violating party discipline, and will be replaced by SASAC Liaoning employee Su Shulin." Sinopec, Asia's largest oil refiner, said: "Chen Tonghai has resigned as a director and chairman of the board of Sinopec for personal reasons, with effect from June 22." Sinopec did not elaborate on what the "personal reasons" were, and the spokesman for the company could not be reached for comment. Chen, 58, was appointed chairman in April 2003, and has been president of Sinopec Group since March 2003, according to Sinopec's Web site. Vice chairman Zhou Yuan will be acting chairman until a replacement is elected. Su was appointed deputy general manager of China National Petroleum Corp - China's largest oil and gas producer - after explosion disasters at the Jilin chemical plant in 2005. After quitting his position with PetroChina (0857) last year, Su served as a party organizing chief in Liaoning province. Supported by robust economic growth in the mainland, together with the soaring demand for oil and oil products, shares of Sinopec have gained 25 percent this year, outpacing an 8.32 percent rise in the benchmark Hang Seng Index. Sinopec shares closed Friday at HK$9.05, a drop of 1.42 percent, before the announcement of Chen's resignation.

Financial service provider and mainland property investor First Shanghai Investment (0227) said the China Securities Regulatory Commission's announcement allowing mutual funds and securities houses to invest in overseas stock markets via the QDII scheme has spurred significant interest from investors.

Widespread fraud is hampering the development of China's public pensions system, which is ill adapted to meet the needs of a huge population that will soon be aging rapidly, according to a new Organization for Economic Cooperation and Development report.

The mainland's secretive military industries will be opened up to private investors - both domestic and foreign - as part of modernisation efforts by Beijing. Weapons makers would be allowed to raise money through initial public offerings at home and abroad, the Commission of Science, Technology and Industry for National Defence said yesterday. A few "key military enterprises with national strategic security concerns" would remain solely in state hands, the commission said. But it did not identify any specific enterprises or define exactly what strategic security concerns were involved. Mainland officials have dropped hints in the past few years that they would open up the ordnance industry to foreign and private investment. But yesterday's announcement and release of guidelines for the move was the first official confirmation and the first time details have been given of the extent of foreign and private investment. The government has set an ambitious target for reform of the military firms, with the guidelines saying the reform of the "qualified" weapon makers should be completed in the "next few years". The guidelines say companies engaged in the design, assembly and manufacture of weapons systems will be eligible for investment from both domestic and foreign companies and funds. The degree of openness to private capital would depend on the importance of the weapons systems a company produced, the commission's announcement said, without elaborating. The move aimed to modernise the shareholding of the companies that make the mainland's military hardware as well as upgrade the defence industries' capabilities and technology, the statement said. The commission is responsible for developing policies for defence-related industries and implementing the restructuring of military industrial enterprises and institutions. It is headed by Zhang Yunchuan, a member of the Communist Party Central Committee. In a strong indication of Beijing's intention to build up its own military conglomerates, the document said the government would also encourage the military industrial firms to undertake cross-shareholdings. Both the State-owned Assets Supervision and Administration Commission, which oversees the reform of state-owned companies, and the National Development and Reform Commission, which oversees the mainland's economic development, would contribute to the reform programme, the statement said. Although the scope and size of mainland's military industry has remained unclear, the central government has tried to reduce it over the past 20 years by forcing many underproducing firms to make goods for civilian use. The China Weapon Industries Group Corporation, the mainland's largest weapons-manufacturing group, owns 140 companies involved in research, distribution and manufacturing. By the end of last year, the corporation had total assets close to 140 billion yuan and revenue from its core business exceeded 100 billion yuan, according to its website. The corporation, formerly known as the China North Industries Group Corporation, makes amphibious assault equipment, anti-aircraft missiles and night vision equipment for the army, navy, and air force. One of its units, Mongolia First Machinery Group Corporation, is a tank manufacturer with total assets of 4.65 billion yuan. The China Weapons Equipment Group Corporation owns more than 50 companies that make both military equipment and civil vehicles including motorcycles and cars. The company's total assets and revenue both exceed 100 billion yuan. Beijing has officially budgeted US$45 billion for defence spending this year, but many experts believe real spending will be higher.

June 25, 2007

Hong Kong: The Chinese Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) is functioning smoothly, said the Vice Minister of Commerce Liao Xiaoqi on Thursday. Liao said the two sides had cooperated successfully in services, trade, finance, tourism and human resource since the CEPA was signed four years ago. The vice minister said the mainland has imported Hong Kong-made products worth one billion U.S. dollars, waiving 91 million U.S. dollars of tariffs. As of January 2006, the mainland scrapped all tariffs on products manufactured in Hong Kong. A total of 1,753 Hong Kong-based enterprises have invested in the mainland on favorable terms offered by the CEPA, said Liao. The terms include relaxed restrictions on shareholding and lower capital requirements for registering ventures, he added. There are 38 banks in Hong Kong which operate RMB business and RMB deposits in the special administrative region have reached 25.5 billion yuan (3.3 billion U.S. dollars), said Liao. The mutual recognition of professional qualifications is advancing quickly, said Liao, noting that 1,400 architects had recently been recognized by both sides. The vice minister also mentioned the tourism sector, saying 49 cities had been opened to Hong Kong tourists, drawing 19.7 million individual tourists.

The government of the Macao Special Administrative Region has collected 11.24 billion patacas (1.4 billion U.S. dollars) in direct gaming taxes in the first five months of this year, seeing a remarkable year-on-year rise of 45.4 percent. The statistics issued Friday by the Finance Services Bureau ( FSB) showed that the gaming taxes accounted for 73.9 percent of the government total revenue in the period. Macao's 26 casinos pay 35 percent of their gross receipts as direct tax to the government. The region, with a population of 508,000, has a 150-year history of gaming industry and is the only part of China where casino gaming is legitimate.

"I'm very confident in Hong Kong's promising future under the principle of 'one country, two systems' created by Deng Xiaoping with his foresight and sagacity and my belief in Hong Kong's future will never change," tycoon Li Ka-shing said. Recalling the ten years of Hong Kong's return to its motherland, Li Ka-shing, a local grown legend and a world famous tycoon, perhaps is the best example of Hong Kong dream. His secret of making fortunes, as hundreds of his stories tell, is hard work plus deeply connecting his roots with the fortune of Hong Kong. Looking back the decade, Li's rule of belief in Hong Kong's future again has done its magic. As the chairman for both Cheung Kong Holdings and Hutchison Whampoa, Li has an empire of 240,000 staff, operating business in 55 countries and regions. His business is fast growing during the decade and the way to his enlarging riches is still his unshakable belief in Hong Kong. When some Hong Kong people worried about the return and fled away, Li just kept his hope in Hong Kong as always. Hong Kong's return to the motherland is a great achievement of the principle of "one country, two systems", a framework to show China's sovereignty over Hong Kong but keep Hong Kong's social and economic scheme, including people's living style and that guarantees Hong Kong's peaceful return and its social stability, Li told Xinhua last week as Hong Kong is preparing a grand celebration for its tenth anniversary of return to the motherland. Hong Kong did have a tough time as the newly established Hong Kong Special Administrative Region received a severe stroke during the financial turmoil in 1997 followed by fearful plague of SARS in 2003, an ordeal that made Hong Kong people lost their fortunes, even lives. Now, talking about the difficulties and sad moments Hong Kong has experienced, Li again said his belief in Hong Kong's future has never changed, especially when Hong Kong's future is in Hong Kong people's hands with the strong support of its motherland. "Hong Kong does not need to share any expense of the country, yet whenever Hong Kong meets any difficulties, the central government will exert its most to help. Hong Kong should remember the tough moments that we went through with our motherland side byside," Li said. Looking forward to the future of Hong Kong, the tycoon, who has been living in Hong Kong for over 60 years, said no matter what moment it is, his belief and hope in Hong Kong are always the same. "Hong Kong's economy is now on a right track and the economic development of Chinese mainland is bringing Hong Kong great chances. If a person in my age is still working hard, young people should work even harder for Hong Kong's future development," He added.

Flag-guards of C.C.C. Heep Woh Primary School (A.M.) rehearse a flag raising ceremony in Hong Kong June 22, 2007. The school will hold an event to celebrate the 10th anniversary of Hong Kong's handover to China on July 1.

Flag-guards of C.C.C. Heep Woh Primary School (A.M.) rehearse a flag raising ceremony in Hong Kong June 22, 2007. The school will hold an event to celebrate the 10th anniversay of Hong Kong's handover to China on July 1.

Hong Kong's gross domestic product (GDP) rose 5.6 percent in real terms in the first quarter this year over the same period last year, compared with the 7.3 percent growth in the previous quarter, official figures released Friday indicated. Analyzed by sector and on a year-on-year comparison, net output in all service sectors taken together rose 7.6 percent in real terms, after 9.6 percent growth a quarter earlier, said the Census and Statistics Department of the Hong Kong Special Administrative Region government. Net output in the wholesale, retail and import and export trades, restaurants and hotels grew 7.7 percent in real terms, compared with the 10 percent rise in the previous quarter. Growth in local consumer demand, robust external trade and the expansion of offshore trade and inbound tourism all contributed to the rise, said the department. The financing, insurance, real estate and business services sector's net output rose 15.2 percent in real terms compared with the 17.4 percent increase in the fourth quarter. The growth impetus came mainly from banking services, on the back of a substantial rise in commission and service income. Also relevant was a leap in net output of the stock brokerage companies, underpinned by a significant rise in stock market turnover, said the department.

The bullish stock market has brought a bonanza not only for investors, but also for Hong Kong's 2.3 million employees, as the net average return from equity investment under the Mandatory Provident Fund has surged to a record 8 percent this year, compared with 6.99 percent last year.

Shares of Hong Kong Exchanges and Clearing (0388) hit a record high as the market operator celebrated the seventh anniversary of its listing, largely thanks to the inflow of funds under the qualified domestic institutional investor scheme. HKEx shares jumped 7.2 percent Thursday to close at HK$110.20, on strong turnover that exceeded HK$2 billion. HKEx has a market capitalization of more than HK$117 billion. The market operator made its trading debut June 27, 2000 and on its first day the shares closed at HK$8.25, more than double the HK$3.88 cash alternative offer available to existing shareholders before the listing. Analysts are upbeat on the prospects for the stock. Tung Tai Securities associate director Kenny Tang Sing-hing said robust turnover in the equities and derivatives market will continue to boost HKEx's income and share price. "QDII funds can help increase turnover in the stock market." He expects average daily turnover on the bourse this year to nearly double to more than HK$60 billion from HK$33.9 billion last year. HKEx's turnover-related fees, including trading fees and tariff, and clearing and settlement fees, climbed by two-thirds last year driven by rising turnover amid market rallies. Net income almost doubled to a record HK$922.5 million in the first quarter this year from HK$478.8 million in the same period last year, HKEx reported last month. It attributed the strong growth to the buoyant cash and derivatives markets. Average daily turnover on the Hong Kong exchange in the first quarter jumped 70 percent to HK$52.9 billion from HK$31.2 billion a year earlier.

Hong Kong Airlines has signed a preliminary agreement to purchase 51 Airbus jets valued at about US$5.6 billion (HK$43.68 billion) to enable it to challenge larger rival Cathay Pacific Airways (0293) on long-haul routes.

Abuse of the party drug ketamine can lead to permanent organ damage, doctors have warned. According to doctors at Tuen Mun and Princess Margaret hospitals, abuse of ketamine - the second-most abused drug in Hong Kong - may cause severe bladder dysfunction or even kidney failure. It is the first time the drug has been linked to severe damage in vital organs, and it is also the first time such damage has been recorded anywhere in the world. The doctors' report, to be published in the August issue of the Hong Kong Medical Journal, said they have detected severe bladder and kidney damage among 10 Hong Kong young adults, aged 21 to 30, who have abused ketamine for up to four years. In certain cases, damage was so serious that patients could hold no more than 15 milliliters - or one tablespoon - of urine and needed to urinate every 15 minutes. One of the abusers also experienced acute kidney failure, where the kidneys cannot concentrate urine without losing vital electrolytes. Such failure is potentially life-threatening and requires intensive treatment.

Measures to combat bird flu are being stepped up, including a crackdown on the smuggling of birds into Hong Kong from the mainland, health chief York Chow Yat-ngok said. Speaking at a two-day meeting among Hong Kong, Guangdong, Shenzhen, Zhuhai and Macau officials to discuss health, animal and plant quarantine and food safety controls, Chow said there have been 10 cases of birds dying from the deadly H5N1 virus in the territory so far this year. He said customs officials have been taking further steps to deal with bird smuggling as Hong Kong is now facing a bigger threat from avian flu. The secretary for health, welfare and food urged authorities in the five regions to strengthen cooperation on this front. To prohibit pet bird traders from selling birds of unknown sources, the Agriculture, Fisheries and Conservation Department has decided to introduce a number of new licensing conditions. Thomas Sit Hon-chung, the department's assistant director (inspection and quarantine), said the new conditions would ensure that all the birds kept on the premises of licensed animal traders were from approved sources. The birds should either be legally imported to Hong Kong accompanied by valid health certificates or acquired from other licensed animal traders and covered by documentation, such as invoices and sale receipts, detailing the species, quantity, date of transaction and source. Under the new licensing conditions, only birds free from infectious diseases are allowed to be sold.

Paddlers prepare for the annual Hong Kong International Dragon Boat Race, to be held off the Tsim Sha Tsui East waterfront tomorrow and on Sunday. Crews from South Africa, Australia, the Philippines and two local teams were among those who practised yesterday.

The French supply vessel and flagship FNS Var was in Hong Kong this week to shore up strategic exercises with the PLA Navy and to show the city's increasing French population that their nation was behind them. This was the message yesterday from Rear Admiral Jacques Launay after a series of high-profile meetings with Hong Kong and mainland officers and officials. Admiral Launay said there had been few exercises between the two navies in the past, but several ships from the mainland would be arriving in the Mediterranean in September and the French hoped to return later in the year to return the favour. But he refused to be drawn on the political implications of the visit or the desire to increase military exercises between the two nations. "I am a military man, not a politician," the admiral said in response to questions on whether the French navy had conducted exercises with Taiwan. "I cannot really answer these questions for you. "But I can say we have a good relationship with the navy of China and there is growing co-operation between the two countries." The admiral, returning from a meeting with a senior official in the security bureau, said the navy played a key role in showing the French community it was behind them. "The French community is very big in Hong Kong now and the consulate is one of the more developed ones we have. We want to show the community we are there behind them and out there in the region. We want to show them we have an interest in their security and co-operation in the region." Admiral Launay hailed the ship's food, saying the head chef had previously worked for a cabinet minister. He said one of his and the crew's biggest disappointments was they would not be in town for celebrations marking the 10th anniversary of the handover.

Chief Executive Donald Tsang Yam-kuen will lead three ministers and a top aide on a three-day visit to Beijing on Tuesday before the start of his new term on July 1. During the visit, which precedes one by President Hu Jintao to Hong Kong, Mr Tsang will open an exhibition on Wednesday marking Hong Kong's 10 years as a special administrative region. The exhibition will be held at the Capital Museum from next Thursday to July 17. Mr Tsang will be accompanied by Financial Secretary Henry Tang Ying-yen, Secretary for Housing, Planning and Lands Michael Suen Ming-yeung, Secretary for Civil Service Denise Yue Chung-yee and director of the Chief Executive's Office John Tsang Chun-wah. All four officials are expected to serve in Mr Tsang's new term as ministers, with Mr Tang expected to replace Rafael Hui Si-yan as chief secretary. Mr Hui will be Acting Chief Executive while Mr Tsang is in Beijing. It is not known if Mr Tsang will meet state leaders during his visit to the capital, the second this month. He attended a forum early this month marking the 10th anniversary of the implementation of the Basic Law. Mr Tsang's visit to the capital next week forms part of a series of frequent high-level exchanges between officials in Beijing and Hong Kong. Mr Hu is due to arrive in Hong Kong next Friday to take part in handover anniversary celebrations. Apart from attending the swearing-in ceremony of the new Hong Kong government, he will open the border checkpoint for the Western Corridor.

China: Chinese police have put 35 people under criminal detention and are hunting for 20 others involved in the forced labor scandal in northern Shanxi Province.

China will substantially forgive debt owed by Iraq and also help with the reconstruction of the war-torn country. That was the pledge made by President Hu Jintao when he met his Iraqi counterpart Jalal Talabani in Beijing yesterday. No specific figure was available but Talabani was quoted as saying ahead of the trip that he would like to have $8 billion in debt cancelled. Hu said China respects the rights and choices of the Iraqi people, and will continue to support and participate in the reconstruction of Iraq. The government will encourage domestic enterprises to invest in Iraq and help with training of personnel. Foreign Minister Yang Jiechi said last month that China will grant 50 million yuan ($6.5 million) to Iraq this year to help with public health and education programs. Hu lauded Talabani's visit - the first by an Iraqi president since the two nations established diplomatic relations in 1958 - and said the six-day trip shows that Iraq's new government "pays great attention to relations with China". Talabani said Iraq treasures the traditional friendship between the two countries. Baghdad welcomes Chinese firms to join other international firms in bidding for oil-exploration contracts, and hopes to revive a frozen oil deal after a domestic oil law is adopted, the Iraqi ambassador to China said earlier. He was referring to a 1997 deal struck by China National Petroleum Corp to develop the billion-barrel Al-Ahdab field. The $1.2 billion contract was signed by the company and the government of former Iraqi leader Saddam Hussein.

The Fifth China International Software and Information Service Fair opened on Thursday in Dalian, a port city in northeast China's Liaoning Province. More than 700 IT businesses, including Lenovo, Intel, Siemens and Toshiba are demonstrating consumer electronics, integrated circuits, IT outsourcing and consultancy, digital entertainment and other services and products at the fair.

China will spend 20 billion yuan ($2.6 billion) to add 1.7 million hectares of arable land by 2020, a senior official of the Ministry of Land and Resources (MLR) has said.

China's policy not to use basic food crops, especially corn, to make biofuel as a substitute for petroleum is a "sound decision", a Food and Agriculture Organization (FAO) official said yesterday.

The Blackstone Group will sell part of its shares to China's state foreign exchange investment company at its initial public offering (IPO) scheduled for Friday, the group announced Thursday. Blackstone, one of the largest private equity firms in the U.S., announced the IPO of 133,333,334 common units priced at 31 U.S. dollars each, with a total value of 4.1 billion dollars. Its common units are slated to begin trading on Friday on the New York Stock Exchange, marking the biggest U.S. IPO in five years. For such general corporate purposes as purchasing interests in its business from its existing owners, to repay short-term borrowings, to provide capital to invest in its existing businesses and to expand into new and complementary businesses, Blackstone said it is to implement the agreement with China's state foreign exchange investment company by selling its non-voting common units worth 3 billion dollars to the latter. Blackstone and China's state foreign exchange investment company, the latter still in process of establishment, reached an agreement on May 20. Under the agreement, the Chinese company will buy the shares at 95.5 percent of Blackstone's IPO price and hold them for at least four years while the deal will be closed concurrently with Blackstone's IPO. Although the deal has been widely welcomed by Wall Street, some U.S. lawmakers, in a throwback to the Cold War, urged the U.S. Security and Exchange Commission (SEC), the Department of Treasury and the Department of Homeland Security to delay Blackstone's IPO due to what they called national security reasons. In a letter to the SEC and the other two departments, Democratic senator Jim Webb said "in making this request, I express my concern regarding the enormity of this public offering and the large investment from a foreign government." However, the SEC ignored his proposal and approved Blackstone's IPO, saying an IPO may be delayed only if a company had issued "material misstatements or omissions." The Blackstone Group, a leading global alternative asset manager and provider of financial advisory services, deals with such businesses as the management of corporate private equity funds, real estate opportunity funds, hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. It also provides financial advisory services on mergers and acquisitions, restructuring, reorganization and fund placement services.

Taiwan singer-actor Jay Chou (R) and Taiwan actress Guey Lun-mei pose during the news conference of Jay Chou's new self-directed film "Secret" in Shanghai June 21, 2007.

Agricultural Bank of China 's restructuring is expected to accelerate after Xiang Junbo's appointment as president. Xiang, the former deputy governor of People's Bank of China, the country's central bank, will replace Yang Mingsheng as president, sources close to the bank confirmed. Yang will become vice-chairman of the China Insurance Regulatory Commission , the sources said. Xiang's experience in the central bank and the National Audit Office will help bring credibility to the bank's long-awaited reform, experts said. Xiang, 55, joined the National Audit Office in 1996 and was appointed as the central bank's deputy governor in 2004. "The detailed reform scheme is likely to come out after Xiang's appointment," said Zhao Xijun, a professor at Renmin University of China. Issues like whether to introduce strategic investors will be resolved soon, he said.

Crackdown on bribes given to TV censors - Spotlight falls on 'fees' paid to get shows aired. China's media watchdog has vowed to fight corruption in television drama approvals after a prominent writer blew the whistle on censors taking bribes. "TV production companies can report to the administration if censors collected unwarranted fees. If proved true, we will strictly deal with it," Li Jingsheng , the State Administration of Radio, Film and Television's (Sarft) director of TV drama, said in an online forum last week. Mr Li's remarks came amid heated discussion over a letter to the administration by prominent novelist Wang Shuo , published on his blog last week, claiming that a drama's broadcast depended on bribes given to a small group of censors. Wang, who used to write TV dramas and had one of his novels adapted into a series, said the group, usually comprising retired or senior artists, had "absolute power" to demand bribes from production companies in the name of censorship fees and had done so since the 1990s. TV drama director Ye Jing agreed with Wang's claims and was quoted in the Beijing News as saying he paid more than 100,000 yuan in "censorship fees" for a show he made in the 1990s, which despite being censored three times did not end up getting a green light because of its "vulgar taste and wrong direction". Sarft and its provincial subordinates decide which dramas are suitable for mainland audiences and expenses incurred in the censorship process are covered by their administrative budget. Mr Li admitted a few provincial agencies failed to follow the rules, partly because there were so few TV dramas produced in their region, and they had not yet established censorship panels or a budget. Their expenses usually included venue rental, accommodation, food and wages paid to censors, he said. He said some programs involved special or sensitive issues such as religion, ethnic minorities and foreign affairs, and required expert examination. The cost of these added expenses would normally be passed on to the production company. Mr Li said a Sarft circular issued in September demanded its provincial subordinates improve their censorship budget systems.

Google has won preliminary approval from the central government to provide internet content in the mainland, the company said yesterday, potentially allowing it to offer news in the world's second-largest internet market. The licence from the Ministry of Information and Industry could also help Google attract more advertising revenue, analysts said. "We have made very positive progress on the ICP [internet content provider] application and have received preliminary approval," spokeswoman Marsha Wang said. She declined to say what further procedures may be required for final approval to offer news in the mainland, although analysts said the move helped to add legitimacy to its operations in the country. "It's definitely a very positive move for Google," said Edward Yu, the president of researcher Analysys International. "The licence to provide content to audiences is critical to attract big advertisers, and also helps them try to have more content." The mainland's web search market leader,, received a licence at the beginning of this year to provide news. Baidu had 21 per cent of the country's 1.37 billion yuan online advertising market in the first quarter, compared with 7 per cent for Google China, Analyst said. Google yesterday said it had more visitors to its mainland website from January to April than the whole of last year, after the company increased investments and services. "Our traffic is up," said Sukhinder Singh Cassidy, a vice-president for Asia-Pacific and Latin America. "Google is closing the gap with Baidu on advertisers."

June 23 - 24, 2007

Hong Kong: The late Chinese leader Deng Xiaoping pledged to keep Hong Kong's three capitalistic characteristics - horse racing, dancing and stock exchanges - intact for at least 50 years after its return. This pledge is being upheld as the Special Administrative Region marks the 10th anniversary of its return to the motherland. Today, more Chinese mainland residents are playing the Hong Kong stock markets, attending its horse races and visiting Lan Kwai Fong, Hong Kong's top entertainment center. For over a century, horseracing has thrilled Hong Kong people. Race days are held on most Wednesdays and weekends from September to June. During the season, many can be seen burying their heads in newspapers at teahouses studying the form of horses. "After Hong Kong's return, horse racing has not only been retained, but has grown with the support of the central government and Hong Kong people," said Kim K.W. Mak, executive director of the corporate development department of the Hong Kong Jockey Club. Mak said the jockey club is now striving to provide its best facilities for the coming 2008 Beijing Olympic Games. It will host the equestrian events. The club manages two racecourses - Happy Valley and Sha Tin - attracting more than 2 million racegoers each racing season. The club's betting turnover, exceeds HK$16.3 billion every fiscal year. It contributes 1.3 percent to GDP, and 10 percent of the government's tax revenue. It is also one of the 10 biggest employers in Hong Kong, employing more than 5,000 full-time workers and 20,000 part-time staff on race days. As the largest charity organization in Hong Kong, the club was a major donor to the anti-SARS campaign in the spring of 2003. Today, the people of Hong Kong enjoy stability in every aspect of their lives. "We don't see any difference in our way of life after 1997," said Wong Yim-fat, a fishmonger in Hong Kong. "Though there have been hard times, we have come through it, believing things can only get better." Wong now plays the stock markets and has had some luck with the Hang Seng Index rising from 15,196 points in July 1997 to about 21,685 today. "Actually, as masters of our own society, we feel there is more freedom and opportunities following Hong Kong's return," Wong said. Wong said he is happy with his decision to remain in Hong Kong after its return and not seek to emigrate as some of his friends and relatives did. "Many of my friends who have emigrated have come back, after finding out that things have not changed," Wong said. Before 1997, many Hong Kong people were uncertain about its future and left for other countries. Official figures from Hong Kong Customs show that more than 300,000 people moved to America, Australia and Canada between 1990 and 1997. Ten years later, many returned because of Hong Kong's stability and prosperity. Renee Chu, an assistant computer officer at the Chinese University of Hong Kong, was one of those who left before 1997. Following her parent's wishes, Renee left for Australia in 1990 when she was still a middle school student. "At that time, they were concerned about Hong Kong's future and wanted us to receive a better education abroad," she told Xinhua News Agency in a recent interview. After graduating from university, Renee returned to Hong Kong in 2000 as it offered better job opportunities. Hong Kong was hit by an economic downturn and an outbreak of SARS after 1997, but that did not stop the Chu family from returning. "There are always good and bad times for a place," Renee said. "My parents return to Australia from time to time," Renee said, "but their stays have become shorter. They now spend more time in Hong Kong and the mainland." Most Hong Kong people were able to gain residency abroad because of their technological skills and investments. While Hong Kong has retained its attraction for locals, it has also lured more people to its shores. Official statistics show that the number of overseas people in Hong Kong - Indians, Filipinos and British - account for 71,000 out of a population of 6.9 million. The culture of tolerance can be seen in the busy streets. There are restaurants and shops from all nations. "Hong Kong is really a very tolerant and free-spirited city. The cultural tolerance and perfect mixture is reflected in the diversity of our international visitors," said B.C. Lo, vice-president of public affairs, Hong Kong Disneyland. Hong Kong, however, has undergone some subtle changes too. This is evident in the choice of passport. Ten years after Hong Kong's return to the motherland, many Hong Kong people have abandoned their British National (Overseas) or BNO passports in favor of the Hong Kong Special Administrative Region (HKSAR) passport. According to Hong Kong Immigration Department sources, in the past 10 years, as many as 4 million, or 60 percent of Hong Kong's population of permanent residents, have applied for HKSAR passports, and the number is growing. The HKSAR government has managed to obtain visa-free access to as many as 134 countries or regions. BNO passports enjoyed visa-free access to only 114 countries. The passports are still valid. The safety ensured by Chinese embassies and consulates as well as a sense of nationalism have also been key factors in the popularity of HKSAR passports. Wong Yim-fat is of those who think HKSAR passports are not only more convenient, but also offer consular or embassy protection from the Chinese government in times of distress. "While holding a BNO passport, you felt like a second-class citizen," Wong said. "But a HKSAR passport gives you all the privilege that a Chinese citizen enjoys." According to Lu Xinhua, commissioner of the Ministry of Foreign Affairs in the HKSAR, not only Hongkongers have enjoyed an uplift in their international status, but also the HKSAR government. During the past 10 years, the HKSAR government has joined more than 50 international, intra-government organizations and 200 international treaties with the proper identity of Hong Kong, China. "Under the Basic Law, we have tried our best to help exchanges between the HKSAR government and the international community, in order to forge its long-term prosperity and stability," Lu said.

A baby dressed as a panda rests on stage during a promotional event at a shopping mall in Hong Kong June 21, 2007, to celebrate the 10th anniversary of Hong Kong's return to Chinese sovereignty on July 1.

Efforts by Hong Kong Exchanges and Clearing (HKEx) to attract more foreign companies will not cause harm to mainland companies already listed or considering listing on the bourse, Chairman Ronald Arculli said. Instead, the move will help enhance Hong Kong's image as an international bourse and will benefit mainland companies on the exchange, the head of operator of the world's second largest listed exchange told China Daily. "We are widening listing sources from emerging markets. Our senior staff recently traveled to countries like Russia and South Korea to promote the Hong Kong exchange among local businesspeople," he said. As the world's seventh-largest exchange in terms of capitalization, Hong Kong sees an urgent need to cast its net outside the mainland. Many of the mainland's largest firms have already listed in Hong Kong, but the central government now actively encourages blue-chip firms to list on the mainland.

Independent Commission Against Corruption commissioner Fanny Law Fan Chui-fun resigned Wednesday after a commission of inquiry found she had interfered in the freedom of two academics when she was permanent secretary for education. But, in an open letter distributed after the announcement of her resignation - which takes effect July 1 - Law insisted she had not interfered with academic freedom and suggested the situation in which she was placed was due to "the unhealthy political situation in Hong Kong." She said: "I do not believe I have interfered with academic freedom. I therefore regret, and am disappointed with, the commission's conclusion. "Clearly, there are serious and irreconcilable differences between me and the commission over the boundary of academic freedom. "To safeguard the dignity of a civil servant in the implementation of government policies and in the discharge of duties, I have decided not to remain in the public service. I have no regret about leaving the public service, but I do have concerns. If my departure could stimulate discussion and reflection on the unhealthy political situation in Hong Kong, this would be my last contribution as a civil servant." Law's resignation was announced after the commission which had been looking into allegations of government meddling into the affairs of the Hong Kong Institute of Education had cleared Secretary for Education and Manpower Arthur Li Kwok-cheung of all charges but said Law had acted improperly with regard to two academics.

Sandy Flockhart, an experienced banker with a broad understanding of emerging markets, is returning to Hong Kong to head up the Asian operations of Hongkong and Shanghai Banking Corp.

The commission of inquiry Wednesday dismissed allegations senior government officials had interfered with the institutional autonomy of the Hong Kong Institute of Education but said there was improper interference in academic freedom by Fanny Law Fan Chiu-fun, the anti-graft chief who immediately announced her early retirement. Secretary for Education and Manpower Arthur Li Kwok-cheung said he welcomed the findings and that he was "naturally pleased to have been exonerated of any wrongdoing or misdeeds by the commission of inquiry." The commission found the allegation Li had tried to force the institute's president Paul Morris to merge HKIEd with the Chinese University of Hong Kong was not established. In addition, the allegation by former institute vice president Bernard Luk Hung-kay he was told by Li he would have to "pay" for refusing Li's demand was also not established. But Law, then permanent secretary for education and manpower, was found to have acted improperly when she asked Morris to try to curb criticism of the government's education reforms by the institute's academics. Although the commission cleared Li of wrongdoing, it concluded "it was more likely than not that Professor Li used the word `rape' in connection with the proposed merger of HKIEd and CUHK."

The Hong Kong Institute of Education's council has strongly defended outgoing anti-graft chief Fanny Law Fan Chiu- fun, describing her departure as a "loss to both the education sector and Hong Kong." Council member Anthony Chow Wing-kin said the commission of inquiry's report did not produce adequate evidence that Law had interfered with the institute's academic freedom and autonomy. "She has made lots of contributions to Hong Kong. She has contributed not only to the education sector, but also to other sectors in Hong Kong as well. It's a pity to lose her," Chow said. Another council member, Ma Shiu- leung, said although Law had interfered with academic freedom, she had launched many initiatives for the good of local education. Chow admitted there "seemed to be" some communication gaps between the institute and the government. The council, he said, will study the commission's report thoroughly and try to find ways of bridging those gaps. He also said the institute had taken steps, on the advice of its legal advisors, to remove an article written and posted on the institute's intranet by former institute vice president Bernard Luk Hung-kay. "The HKIEd storm was triggered by that article. If any article posted on the intranet is found to be inaccurate, it should be removed," Chow said. Asked if there will be any changes to the council's membership, Chow stressed there "would not" and "should not" be any changes. "The incident is a lesson for the council to improve our management, especially when it comes to communication between the institute and the government," Chow said, adding they still have a lot of work to do, including the preparation of a blueprint to be submitted to the government in applying for university status for the institute at the end of this month. James Sung Lap-kung, a professor of politics at the City University of Hong Kong, said he was surprised that the report chided Law, while Secretary for Education and Manpower Arthur Li Kwok-cheung was found not guilty. In his view, Law should not step down.

The chief executive has been urged by a top academic to take the lesson of the HKIEd seriously and reflect on weaknesses of the ministerial system. Officials and academics yesterday expressed concern about the possibility of growing distrust between the government and the agencies they oversee in the wake of the HKIEd controversy. The judicial hearing into allegations of official pressure for a merger of the HKIEd and the Chinese University of Hong Kong, as well as attempts to curb dissent, revealed distrust between the Education and Manpower Bureau and the teacher training institute. HKIEd president Paul Morris even recorded a conversation with education minister Arthur Li Kwok-cheung in November 2005 - a tape which was played at the hearing. Some government officials have said the relationship with the agencies was at times fragile. Poon Wai-ming, chairman of the Senior Government Officers' Association, believed that former permanent secretary for education and manpower Fanny Law Fan Chiu-fun's experience would not affect morale in the civil service and bureaucrats should not be asked to think twice before offering their "objective views". "In this age there is nothing off-the-record. We should take responsibility for our words. As long as what we say is reasonable when debating with people, we should have no problem because we are doing our jobs," Mr Poon said. James Sung Lap-kung, a political scientist of the City University, feared officials would revert to their bureaucratic practice of being "ambiguous" when faced with questions. Academics also voiced concern that they may be reluctant to publicly criticise the government, citing other experiences of tampering by officials. Chairman of the Federation of Hong Kong Higher Education Staff Associations, Shum Kar-ping, said academics would exercise greater care before criticising the government for fear of losing their jobs. Professor Shum said academics had lost confidence in the government after it was alleged that Mrs Law had demanded dismissals.

China: PetroChina Company Limited, a subsidiary of China's largest oil producer China National Petroleum Corporation (CNPC), on Wednesday announced plans for a public offering of up to 4 billion A shares on the Shanghai Stock Exchange.

AmCham Shanghai holds 2007 China Trends Conference - Against the backdrop of being located in arguably the hottest business market in the world, Phil Branham, president of B&L Group, and past AmCham Shanghai Chairman, noted, There is a great deal of confusion about China's future, in his opening remarks for AmCham Shanghai's first annual China Trends Conference. Our guest speakers today will offer us on an outlook. He added: No one has a crystal ball. His comment framed the mission of the day-long event, held in the Pudong Shangri-La Hotel on June 8 and attended by nearly 300 business executives. Expert panelists reviewed hot topics such as expansion into 2nd and 3rd tier cities, legal and investment trends, government relations and human resources. The keynote address featured a lively presentation about the upcoming 2010 Shanghai Expo by Zhou Hanmin, deputy director general for the Bureau of Shanghai World Expo Coordination. It's not an Expo for the city, it's an Expo for the world, he said. The conference concluded with a panel of journalists including members of the Pulitzer Prize-winning team from The Wall Street Journal.

Aircraft models are displayed at the booth of China National Aero-Technology Import and Export Corporation (CATIC) during the 47th Paris Air Show in Paris, France, June 20, 2007. Five Chinese aero corporations, including China Aviation Industry Corporation I (AVIC I) and CATIC, attended this year's air show.

Buildings in Shanghai. According to the statistics released by the National Bureau of Statistics on Tuesday, the national real estate climate index in May was 103.32, up by 0.67 points as compared with that in the previous month, 1.45 points higher than that was in the same period last year. The real estate market remains picking up amid the country's cooling down measures.

China's President Hu Jintao (L) and Iraq's President Jalal Talabani review the honor guard during a welcoming ceremony outside the Great Hall of the People in Beijing June 21, 2007. Talabani is on a week-long trip to China.

China's central bank unveiled on Wednesday a second set of gold and silver coins to commemorate the 2008 Beijing Olympics. The second set consists of eight commemorative coins, two made with a third ounce of gold, one with five ounces of gold, four with an ounce of silver, and one with a full kilogram of silver. The brass-alloy coins, which are legal tender and can be used as normal currency, were put on the market by the China Gold Coin Incorporation the same day. All the coins carry the logo of the Beijing Olympics on one side. Images on the other sides vary from Olympic mascots, dragons, the Great Wall to the Summer Palace, as well as martial arts scenes and dragon boat racing. China released the first set of Beijing Olympics gold and silver commemorative coins in September 2006, and a third set will be issued in 2008. Finland began the practice of Olympic Game hosts issuing commemorative coins back in 1952 .

Google's China headquarters in Tsinghua Science Park, Beijing. The company denied the report that Google Inc has won approval from the Chinese gov't to provide Internet content in China.

Two workers install solar panels over the curved roof of Beijing's National Indoor Stadium, dubbed with 'Bird's Nest', June 19, 2007. Beijing News reported that the host city has finished the installation of a total of 1,124 solar panels, with a lifespan of about 25 years. 1,100 of them have been installed atop the roof, each spanning 1.2 meters long and 0.8 meters wide. The other 24 replace the glass curtain wall on the stadium's southern face. When the solar modules are put into use, they are expected to save 904.8 tons of standard coal in their lifetime.

June 22, 2007

Hong Kong: Hong Kong Jockey Club Institute of Chinese Medicine Limited (HKJCICM) announced today that it had signed a collaboration and services agreement with Phynova Group PLC in the United Kingdom ("Phynova") (AIM: PYN), a developer of pharmaceuticals derived from Chinese botanical drugs targeting viral and metabolic diseases and cancer, on 5 February 2007 to develop novel anti-cancer drugs based on Chinese medicines.

The Equestrian Marketing Programme in Hong Kong is part of the marketing programme of the Beijing Olympics that aims to give Hong Kong enterprises a platform on which to further build their corporate and product image, says Yuan Bin, Director of Marketing Department of BOCOG. The marketing programme will target at the service sector in Hong Kong.

Duan Qi-hua, a partner in Duan and Duan (2nd from right) and InvestHK's Philip Kung (2nd from left) officiating at the ribbon-cutting ceremony with other guests - Chinese mainland law firm, Duan and Duan, recently opened its first office in the city. This is one of many firsts for this innovative legal practice. It was the first independent partnership law firm to establish itself in China and one of the first to launch into the international market, with offices in Seattle, United States. With its new office in Hong Kong, the company will provide advice in corporate law, international investments and trade, finance, mergers and acquisitions, arbitration and litigation. With its proven track record within the mainland market and legal system, the company aims to guide clients through the cultural, linguistic and legal complexities of doing business in China. They have partnered with J. Lai and Company, an established Hong Kong law firm to further enhance their cross-border strengths and connections. Duan Qi-hua, a partner in Duan and Duan said the company would focus on the legal needs of the local, mainland and international communities. "Hong Kong is the ideal base to set up operations. The city provides a platform for the international community to gain access to opportunities in China. Equally Chinese companies are able to use Hong Kong to launch themselves globally," he said. Mr Duan, observed that since China’s accession to the World Trade Organisation a greater number of foreign companies were looking to invest in the Mainland. The country’s new found confidence was also reflected in the number of Chinese companies looking to expand on to the international stage. "There is a huge demand from Hong Kong’s international business community for legal services which advise on successfully expanding into the Mainland. This is an ideal time for Duan and Duan to bring its experience to the Hong Kong market," said Mr Philip Kung, the Acting Associate-Director General of Investment Promotion at Invest Hong Kong. "Hong Kong has a strong legal community, which offers new companies in the city the chance for networking and referrals," he added.

YouTube goes multilingual - Literally, it might be known as Voustube, Voitubo or Vocetubo, but the world's most popular video-sharing site introduced local-language sites in nine countries yesterday that will all just go by YouTube. Chad Hurley and Steve Chen, the co-founders of YouTube, which was acquired by Internet search leader Google for $1.76 billion last year, told a news conference that the nine country sites will eventually feature locally popular content. Until now, while user-generated videos and comments could be posted in any language, the site framework and navigation menus have been in English only, while the featured pages users first see are heavily skewed to US tastes. The site's US-slant was incongruous with more than half of YouTube's audience coming from outside the United States, Chen said. He said expanding overseas had always been part of his plan, but didn't become viable until Google bought YouTube. YouTube unveiled national sites for Brazil (, Britain (, France (, Ireland (, Italy (, Japan (, the Netherlands (, Poland ( and Spain ( During the first stage of the international move, each site will offer fully translated local homepages and video search functions. Over time, each national site will have an entirely "local" feel that will allow for country-specific video rankings and comments in various sections, YouTube said.

A general view of Hong Kong skyline seen from the Peak in Hong Kong in the evening of June 16, 2007, about two weeks before the 10th anniversary of Hong Kong's handover to China.

A general view of the Hong Kong Island skyline is seen from the Peak in Hong Kong in the evening of June 16, 2007, two weeks before the 10th anniversary of its handover to Chinese rule.

A general view of the Hong Kong skyline is seen from the Peak in Hong Kong in the evening of June 16, 2007, two weeks before the 10th anniversary of its handover to Chinese rule.

Former Prime Minister Margaret Thatcher has said her fears that Hong Kong's economy could not prosper after the handover have proved to be largely groundless. She said she has not been disappointed by Hong Kong's development since Britain handed over the former colony to China a decade ago. "I think we must be realistic," Thatcher said in a rare interview broadcast Tuesday by British Broadcasting Corp. radio. "Let's think over a moment how great our private worries were about what would happen in Hong Kong after the handover. Now those worries have largely proved groundless." Thatcher, an ardent advocate of free markets, said she believed that economic freedom could not thrive without political freedom. "But the pace at which this occurs will depend on what happens within China itself," she said. Britain formally withdrew from Hong Kong on June 30, 1997.

Hong Kong Special Administrative Region (HKSAR) Chief Executive Donald Tsang said on Monday that the implementation of 'One Country, Two Systems' has been a success in Hong Kong. Tsang said in a letter named "Hong Kong Letter - Just because you are here", which was broadcast on Radio Television Hong Kong ( RTHK) on Monday morning, that the ten years since 1997 was a significant period of time for Hong Kong. "Looking back over the past decade, Hong Kong people will have different thoughts and recount different experiences." "My feelings are a mix of joy and grief, " he said. Tsang said the past decade has been full of challenges. Since its return to the motherland 10 years ago, Hong Kong people have encountered unprecedented difficulties, including the Asian financial turmoil, avian influenza and SARS. But ultimately Hong Kong people weathered all these crises. "I remember the stress, the sadness and, at times, the total exhaustion brought about by these challenges. But, I also remember our society overcoming these difficulties, and the maturity of Hong Kong people in dealing with them," Tsang said. Tsang reviewed that many Hong Kongers were rather skeptical about the concept of "One Country, Two Systems." But at present Hong Kong enjoys a closer relationship with the Chinese mainland. Hong Kong people communicate and co-operate with the Chinese mainland every day for business, travel and cultural exchanges. "Surveys have shown our sense of national identity is the strongest it has been," Tsang added. "we can truly say that the implementation of 'One Country, Two Systems' has been a success." "We can certainly strive to do even better; but we can also say that our achievements in implementing this unprecedented undertaking have been truly remarkable," he said. At the end of the letter, Tsang stressed that "Never settle for mediocrity, strive for excellence" is a mantra he holds for himself, and his administration. He promised to build a more open government and lift the economy to new heights in his new term in the next five years.

The People's Liberation Army (PLA) troupe is performing in town to celebrate the 10th anniversary of Hong Kong's reunification with its motherland and the army garrison in the SAR. The show will also be held today. With its theme "Holy" and its unique blend of music, dance, poetry and paintings, the show depicts the ten years the garrison has spent in Hong Kong, and the city's achievements under the "One Country, Two Systems". "I've been most impressed with the stability and prosperity of Hong Kong in the last decade, as well as the love Hong Kong people show towards the country," said Xiong Yan, director-in-chief of the troupe. Premiered in 2004 on the mainland, the show "Holy" has won various artists' and actors' awards, notably the special jury's prize at the national contest held by the Ministry of Culture last year. To establish a further connection between the troupe and the audience, the show has been modified to highlight the historical moments of Hong Kong in the past decade and the love of PLA towards local people. "I'm confident the Hong Kong audience will embrace the themes, since they show the best of our Chinese culture and our patriotic sentiments," said executive director of the troupe Su Yuguang. Comprising a prelude, a prologue and three movements, "Holy" will feature the national flag-raising ceremony that symbolizes the handover ceremony and relive the holy moments for the Hong Kong audience. The second movement, with songs entitled "Hong Kong, I stand by you" and "A soldier's heart", shows slices of life and work of PLA in Hong Kong, and their dedication to protecting the city. Love runs through the third movement, as the troupe sings "Love in Hong Kong", "Calls of love" and "The romance of thinking of you". The songs touch on their yearning for their loved ones at home, as well as their passion for Hong Kong. With its expanded themes, the number of actors of "Holy" has also been increased from 100 to 260 for this special performance at the Hong Kong Coliseum, including nationally renowned performers as well as junior artistes in PLA. "Some of our crew came to live in Hong Kong in 2004, to have real glimpses of the life of PLA in this city," said Su. "We're confident that our performers can make the passion and joy come to live and deliver it to our fellows in Hong Kong." One of the lead singers of "Holy", the award-winning Tan Jing, expressed her excitement for sharing the joy of the anniversary of reunification with the Hong Kong people.

Cast members, Karen Mok (left) and Ronald Cheng, attend the premiere for "Mr. Cinema" in Hong Kong, on Wednesday, June 13, 2007.

Safeguarded by the Basic Law, residents in Hong Kong enjoyed more freedom and rights after it returned to the motherland, said Elsie Leung Oi-Sie, vice chairwoman of the Commission for the Basic Law of the Hong Kong Special Administrative Region (HKSAR) of the Standing Committee of the National People's Congress of China. Leung, former secretary for justice of the HKSAR, said during an interview with Xinhua recently that the principle of "one country, two systems" has been successfully implemented in Hong Kong during the past 10 years.

A view of the Hong Kong Handover Ceremony held in Hong Kong on the night of June 30, 1997. The ceremony marked the restoration of Hong Kong from the United Kingdom to the People's Republic of China.

Chinese and British national leaders pose for a group photo at the end of the Hong Kong Handover Ceremony held in Hong Kong on the night of June 30, 1997. The ceremony marked the restoration of Hong Kong from the United Kingdom to the People's Republic of China.

Performers put on a show in Beijing to celebrate the handover of Hong Kong to China on the night of June 30, 1997. Characters on the screen read "Hong Kong has a better tomorrow.

MTR Corp (0066) has won its first contract outside the Greater China region, announcing a 50-50 joint venture with the UK's Laing Rail has been selected to operate an upgraded overground railway in east and north London for a minimum seven years.

Former permanent secretary Fanny Law Fan Chiu-fun on Wednesday resigned her position as head of the ICAC. Her resignation came after a commission of inquiry investigating alleged government interference in the Hong Kong Institute of Education’s affairs on Wednesday submitted a report on its findings to the chief executive. The report found that Mrs Law had improperly requested the institute to curb two academics who had criticised education reforms. Chief Executive Donald Tsang Yam-kuen said on Wednesday afternoon he had accepted Mrs Law’s resignation. Mrs Law had been appointed as Commissioner of the Independent Commission Against Corruption on October 31, 2006. Previously, she had been Secretary for Education and Manpower until 2002, when the Principal Officials Accountability System was introduced in Hong Kong by former chief executive Tung Chee-hwa. Mrs Law has a reputation for outspokenness. In early January 2006, she sparked a heated public controversy when she rejected causal connections between the deaths of two teachers who had committed suicides within four days in the first week of January and pressure imposed by education reforms. Mrs Law had said: “If the prime reason [for the deaths] is education reforms, why has there been only two teachers who have committed suicide?” Her comments greatly angered teachers and Mrs Law later apologised. However, on January 22, 2006 between 7,500-15,000 teachers launched a public protest against Mrs Law and the educational reforms.

China: China would cut or eliminate export tax rebates for 2,831 commodities representing 37% of the total number of items listed on customs tax regulations.

China held a state-level anti-terrorist exercise for the 2008 Beijing Olympic Games on June 19, 2007. The exercise, dubbed "Great Wall No. 4", focused on security work for the Beijing Olympic Games and tested Chinese police's capacity to handle a hostage-taking incident during the Olympics.

China on Tuesday called for less pressure on agriculture issue as the World Trade Organization (WTO) Director-General Pascal Lamy was visiting Beijing in an effort to revive the stalled Doha trade talks. "The Doha round of trade talks should not exert more pressure on China on agriculture issue as China has already taken the lead in liberalizing the trade," Chinese Agriculture Minister Sun Zhengcai was quoted by a statement posted on the Web site of Ministry of Agriculture. On Monday and Tuesday, Lamy met with Chinese officials from the ministries of finance, agriculture, and the central bank. "The pressure on China in the agricultural trade talks should be eased since the country, with nearly 900 million rural people, has made hefty cuts to import tariffs on farm produce and has a long-standing trade deficit in farm produce," Finance Minister Jin Renqing told Lamy. China's tariff duties on farm produce have been cut to 15.3 percent this year from 54 percent in 2001, according to the statistics of the Finance Ministry. Globally, tariffs on agricultural products currently average 62 percent. Jin also said that China will make further contributions to the Doha Round talks, and that the country has honored commitments made before it joined the WTO in 2001 by slashing tariffs and further opening its markets.

The curtain rises, and a new breed of companies comes to the center stage. This time it is not the well-known behemoths of Chinese industry, it is tens of thousands of smaller and nimbler companies: the small- and medium-sized enterprises (SMEs). These companies will soon represent two-thirds of China's gross domestic product, and three-quarters of its GDP growth: nobody can overlook them any more. Conquering those Chinese SMEs is increasingly high on the priority of many companies - foreign as well as domestic, for banks as well as for IT companies and industrial goods players. Companies are fighting for SME-experienced sales teams, forging new partnerships with local distributors and dealers, and launching new "SME products". But making business with those SMEs is very difficult: price levels tend to be very low and distribution depends on expensive and dense sales networks. No surprise then that the SME market generally appears underserved. The Boston Consulting Group has researched the SMEs in China and found three fundamental patterns: While SMEs are a huge factor especially in China's industrial sectors, most of them still are "sweatshops" with very low labor productivity. There is no such thing as the typical Chinese SME. Segmenting them intelligently and then going after the most promising segments is vital. Success with SMEs depends on executing a "four-point program": adapted value propositions, local reach, innovative sales and distribution systems, and low-cost operational models. The share of SMEs in the Chinese GDP grows from year to year. They are mostly industrial, wholesale and retail companies, entrepreneur-driven and privately owned, and strongly concentrated in the eastern and southern boom provinces. But while they are the powerhouses of the economy, most of them share a similar problem: very low productivity. While labor productivity has already reached much more than 50,000 yuan per employee/year in large enterprises, it's still about 30,000 yuan for the SMEs - with an ever-widening gap.

Residents spray water at each other on boats during a dragon boats race to celebrate the Duanwu Festival (Dragon Boat Festival) in Shishi, South China's Fujian Province June 19, 2007. The festival is to commemorate China's patriotic poet Qu Yuan (340 BC - 278 BC), who drowned himself to protest against the corrupt government.

Wu Hua, a resident from central China's Henan Province, displays his works combining Chinese traditional Peking opera masks with Olympic elements at his home June 19, 2997. Wu said he is willing to present his works to athletes from home and abroad as goodwill gifts.

Three "unsound" bridges have been found in Foshan city in south China's Guangdong province after one collapsed after being hit by a sand barge last week.

China's uncrowned hotpot queen, He Yongzhi, 54, with her pot of sizzling, bubbling specialty that has put her home -- the mega-city of Chongqing in the southwest -- on the culinary map of China, in the municipality of Chongqing, 16 June 2007. China's uncrowned hotpot queen has spiced up the lives of her compatriots for 25 years and now she wants to take the strong flavours of her native cuisine to the rest of the world.

US Deputy Secretary of Treasury Robert Kimmitt visits a Home Depot store in Beijing yesterday. Kimmitt is on a tour of China to reassure that the US remains open to foreign investments.

A Guangzhou court has sentenced three Chongqing men to up to three years in jail for manufacturing thousands of fake Louis Vuitton purses valued at more than 10 million yuan.

Beijing's first envoy to Costa Rica in six decades has taken up his post, sealing the Central American nation's switch in allegiance. The mainland sent Wang Xiaoyuan to Costa Rica as its business attach� and is likely to install him as ambassador following the establishment of diplomatic relations between the two countries on June 1. After presenting his paperwork to Costa Rican officials on Monday and meeting Foreign Minister Bruno Stagno, Mr Wang said the mainland would be patient over restoring ties with other nations that currently side with Taiwan. "China is a fact that nobody can close their eyes to. Some have their reasons for not recognising China and we can wait for them," he said. Mr Wang, 52, a diplomat since the 1970s, is Beijing's first envoy to Costa Rica since Mao Zedong's communist forces defeated Chiang Kai-shek in 1949 and forced him to flee to Taiwan. Costa Rica's change of sides left Taiwan with just 24 allies, most of them small, poor nations in Central America, the South Pacific and Africa. In comparison, more than 170 countries have diplomatic ties with Beijing. Costa Rican President Oscar Arias has said the move, ending decades of Taiwanese patronage for politicians' pet projects in Costa Rica, would increase business opportunities for his country. Other Central American nations have said they will not follow Costa Rica's move for now, but Guatemala Foreign Minister Gert Rosenthal has warned countries could be forced to examine their positions. Perfect World, a Beijing-based online game developer, aims to join Nasdaq-listed mainland rivals such as Shanda Interactive and NetEase with a listing on the United States exchange as early as next month, sources said. Perfect World, which seeks to expand overseas and strengthen its research and development team, is expected to apply for a listing on Nasdaq shortly and aims to complete the initial public offering as early as next month, the sources said. Online game player The9 is also listed on the exchange. Credit Suisse and Morgan Stanley are the co-sponsors of the deal, according to sources. The two firms declined to comment. Perfect World's share sale will come as the mainland online gaming market is catching the interest of institutional investors. Shanda shares have gained 42 per cent this year, closing at US$28.50 on Friday, while The9 shares are up 38 per cent, ending at US$44.56. "We believe the Chinese gaming market will continue to grow at a robust pace," SIG analyst Guo Haiya said. "The market is more resilient than the saturated Korean and Taiwanese markets, giving rise to [a few] recent hits, including Zheng Tu, Wen Dao, Mo Yu, Popcart and Sun." Perfect World has developed and introduced four massive multi-player online role-playing games - Perfect World, Perfect World International Edition, Legend of Martial Arts and Zhu Xin - since it was set up in 2004 by Chi Fu-feng and is expected to launch two more games this year. It has also licensed its games to companies in Taiwan, Japan, Malaysia, Vietnam and the Philippines. "The games launched by the company have quickly gained popularity in the mainland," a market source said. Perfect World, in which Hong Kong private equity firm SAIF Partner bought a 20 per cent stake for US$8 million last year, said its first game Perfect World, launched in 2005, had attracted more than 20 million registered users after costing 200 million yuan in development. The Legend of Martial Arts, developed at a similar cost, drew more than 300,000 peak concurrent users in October last year. Launched last year, Legend of Martial Arts, ranked third and Perfect World International Edition fourth in a poll this month of the top 10 popular online games by game industry portal The mainland's most popular game, Fantasy Westward Journey by NetEase, drew peak concurrent users of more than 1.5 million this month. Perfect World has more than 600 staff in Beijing, most of whom are responsible developing the new game. The company has put "enormous effort" into the Perfect World game in the past two years, a market source said. "The game's three-dimensional graphics, innovative player interface, rich cultural content and excellent operation helped build a strong foundation for the company." In-game advertising is also gaining a presence in casual games with the potential of being built into other online games and boosting revenue. Perfect World founder Mr Chi is also the founder and owner of education software developer Beijing Golden Human Computer.

China Telecom (SEHK: 0728), the country's largest fixed-line telecommunications network operator, has signed a landmark interconnection deal with Cable & Wireless Group that will extend the British carrier's reach inside the corporate markets of 200 cities across the mainland. The new link recently went live and involved the MultiProtocol Label Switching (MPLS) networks of China Telecom and C&W's standalone Europe, Asia and United States business division. The financial terms were not disclosed. Stuart Dobbin, head of Asia for the C&W unit, said the deal expanded the British firm's capability on the mainland by delivering managed internet protocol services through CN2, China Telecom's MPLS network. "China Telecom also extends its own service capability worldwide through Cable & Wireless' global network," Mr Dobbin said. MPLS is a network setup used to speed up data transmission over combined internet protocol and traditional circuit-switched communications networks. Mr Dobbin said the interconnection with China Telecom's CN2 infrastructure provided more resiliency, security and diversity to C&W corporate customers. More than 100 of the global carrier's 3,000 customers worldwide have each been doing business, preparing to expand or about to set up shop at various locations in the mainland. For the past seven years, the company only dealt with China Netcom (SEHK: 0906), the smaller of the mainland's two nationwide fixed-line telecommunications network operators, to provide customers with advanced data communications links to the main cities of Beijing, Shanghai and Guangzhou. "As manufacturing and other industries move from tier-one to tier-two and tier-three cities in China, it becomes increasingly important for service providers to extend service throughout the various regions in the country," said Tim Dillon, a vice-president at research firm International Data Corp. "Interconnection agreements and good relationships with the [mainland] carriers are absolutely essential to offer true end-to-end MPLS service capability to customers with Chinese affiliates." Mr Dobbin said talks between C&W and China Telecom followed soon after the British firm completed a US$40 million network and capacity upgrade of its network across Asia. That was carried out in direct response to rapid growth in demand for its internet protocol virtual private network managed services in Asia. "As always, we are led by and responding to customers' requirements. Customers are crying out for a global provider that understands the differing business needs across disparate geographic locations," Mr Dobbin said. The six-month-long upgrade, which was completed at the end of the first quarter, involved deploying 36 incremental MPLS nodes across 13 countries in the region. No comment from China Telecom was received as of press time. According to a report from CLSA Asia-Pacific Markets, broadband infrastructure investments will account for 36 per cent of China Telecom's capital expenditure this year as its broadband service subscriptions continue to grow. C&W has been present in the mainland since the mid-1990s, although its heritage in the country dates back to the laying of the first telegraph cable connecting Singapore, Hong Kong and Shanghai in the 1870s.

June 21, 2007

Hong Kong: Donald Tsang supports cross-border trading - Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region said in a recent interview that he supports exchanges in Shanghai and Hong Kong trading stocks listed on each other's markets. Relevant issues are under negotiation, he said. Tsang is the highest official who publicly supports the cross-border share trading plan and confirms its on-going negotiation. A source close to the securities regulator told the Shanghai-based Oriental Morning Post that at present, regulators are encouraging Hong Kong-listed companies to make public offerings in the mainland market. Other than that, issuing a China Depositary Receipt is thought to be a feasible way to achieve cross-border trading. Insiders believe that cross-border trading may face problems of settlement or foreign exchange control, and so it will be hard to achieve in the short term. Professor Hua Sheng, head of Yanjing Overseas Chinese University, said the adoption of cross-border trading might divert arbitrage fund to the relatively cheaper Hong Kong market from the Shanghai and Shenzhen bourses. But in the long run, it could help squeeze bubbles in the mainland market and is conducive to the healthy development of China's A-share market.

Yahoo Inc. Chairman Terry Semel stepped down as chief executive in a surprise move Monday, ending his increasingly ineffectual pursuit of online search leader Google Inc.-- a a losing battle that had demoralized Yahoo's shareholders and employees. The Sunnyvale-based company appointed co-founder Jerry Yang as its new CEO and named Susan Decker as its president. Decker, who had been touted as Semel's heir apparent, was recently promoted from Yahoo's chief financial officer to oversee the company's advertising operations. Semel, 64, will remain chairman in a non-executive role after spending the past six years running the company. "I saw myself as more of a coach than a player going forward," Semel told analysts and media during a Monday conference call. Signaling Semel's decision was voluntary, Yahoo said he will not receive a severance package. The former movie studio executive already has made a fortune since joining Yahoo in May 2001, having realized nearly $450 million in gains by exercising some of the stock options that he received during his tenure. Despite Yahoo's recent struggles, Semel received another big bundle of stock options last year that boosted the value of his 2006 compensation package to $71.7 million. That was more than any other CEO among 386 publicly held companies covered in an Associated Press analysis of executive compensation using new rules dictated by the Securities and Exchange Commission. In Monday's conference call, an emotional Yang hailed Semel as "a role model and mentor" and then sought to defuse recent speculation that Yahoo might be sold to Microsoft Corp. or another suitor hoping to exploit the recent turmoil at the company. "I am totally excited and energized about assuming the leadership of this great company," Yang said. "We have a long and prosperous future if we execute correctly." Yang, 38, still owns a 4 percent stake in the company. Fellow co-founder David Filo, who is helping to run Yahoo's technology group after the sudden retirement of the department's leader earlier this month, owns a 6 percent stake. Monday's shake-up unfolded less than a week after Semel faced off with shareholders disillusioned with a nearly 30 percent drop in Yahoo's stock price during the past 18 months as its financial growth fell further behind Google's torrid pace. Mountain View-based Google now makes more money in a single quarter than Yahoo does in an entire year. The contrast represents a startling comedown for Yahoo, which was the larger of the two companies when Google went public in August 2004. Since then, Google has steadily expanded upon the Internet's largest advertising network to create nearly $140 billion in shareholder wealth as its stock price increased by more than six-fold. Yahoo's stock, meanwhile, is worth a little bit less than when Google went public.

Turnover on the stock market broke the HK$100 billion threshold for the first time in history Monday, boosted by window-dressing at investment funds before the end of the month and by speculative switching out of small-cap stocks by funds, sending the blue-chip and H-share indexes to fresh records.

The system of pegging the Hong Kong dollar to the US dollar is still the most appropriate arrangement for the near future, said Hong Kong Monetary Authority chief executive Joseph Yam Chi- kwong. The local currency's future has been hotly debated in recent weeks. Antony Leung Kam-chung, the former financial secretary, has suggested the government consider pegging the Hong Kong dollar to the yuan when the mainland currency becomes fully convertible. A Bank of China (SEHK: 3988) (Hong Kong) internal report also suggested it was time to review the peg mechanism and explore ways to "accommodate" the yuan's growing importance in the local economy. And former chief executive Tung Chee-hwa revealed that he and top aides including Mr Leung had contemplated scrapping the peg in August 2002. Mr Yam said: "The US dollar will continue to be the appropriate anchor for the Hong Kong dollar for the foreseeable future." Speaking in an interview about financial developments since the handover, he said although Hong Kong was now more integrated with the mainland than in 1997, the city's business cycle was still more in line with that of the United States than the mainland's. Mr Yam stressed the strength of the currency's peg to the US dollar, saying it had passed several tests since being set up in October 1983, from the world stock market crash in 1987 to the Asian financial crisis of 1997 and 1998. He said the Monetary Authority had refined the peg mechanism to ensure it was sound, and noted that the Hong Kong dollar had not been affected when the yuan breached the psychological level of 7.80 to the US dollar early this year, effectively attaining parity with the local currency. It has since strengthened further. Looking back, Mr Yam said the government's intervention in the stock market in 1998 to support the Hang Seng Index as a way of fending off currency speculators had been a last resort. It had been done to prevent financial markets becoming too volatile. If the government had not acted, the consequences could have been very serious. r Yam was part of the team, along with the then financial secretary, Donald Tsang Yam-kuen, and the then secretary for financial services, Rafael Hui Si-yan, that orchestrated the government's purchase of HK$118 billion in Hong Kong-quoted shares to foil a speculative attack by hedge funds betting that the dollar peg would be scrapped. Instead of dropping the peg and allowing the currency to devalue, the government intervened, driving away the speculators but attracting criticism that it had flouted the free-market ethos of Hong Kong. "It was difficult for us and we experienced very mixed feelings: on the one hand, we believed - and still believe - very strongly in free markets. "On the other hand, we did not want to see foreign capital manipulating Hong Kong's free market." Looking forward, he said greater use of the yuan outside the mainland was inevitable. "Hong Kong is the ideal testing ground to help the yuan enter the international market," he said. Developing yuan business was an important part of the city's quest to strengthen its status as an international financial centre, he said.

The government is still studying whether the West Kowloon Cultural District can support itself financially, an official said yesterday, warning that the number of arts facilities might have to be reduced to minimise the funding gap. Home Affairs Bureau Permanent Secretary Carrie Lam Cheng Yuet-ngor told lawmakers that all revenue generated by the 40-hectare development would be used for cultural development. Her comment came after a government financial assessment found that the revenue from commercial and residential land use on the site, under the current height and gross floor area restrictions, would not cover the capital cost and recurrent deficit of the arts and cultural facilities within 50 years. The government's financial adviser also recommended that the bureau outsource the construction and operation of the facilities, and avoid using land sales to subsidize the development directly. "The government cannot use endless sums of public money to support cultural development, and we are now studying how to minimize the significant funding gap," Mrs Lam said at a meeting of the Legco subcommittee studying the development. She added that the government would unveil the financial arrangements together with the concept plans for the troubled project next month. According to suggestions by panels advising the government about the museums and performing arts and tourism aspects of the development, the first phase of 12 theatres, including a large performance venue, would start operating in 2016. The museums and exhibition centre in phase two would not begin operating until 2026 and 2031. Members of the Legco subcommittee criticized the slow pace of development of the cultural hub. They urged the government to announce details of its design as early as possible. "We don't want to see another cultural centre with no windows standing next to the harbour," said Emily Lau Wai-hing, in a reference to the Tsim Sha Tsui arts complex. Mrs Lam said the authority that would oversee the project was expected to be set up by the end of next year, but the design competitions for at least three landmarks had prolonged the preparations.

China: China's banking regulator has punished eight bank branches involved in two cases of State-owned enterprises illicitly using loans for stock market and property market investment.

The Hangzhou Bay Trans-sea Bridge, the world's longest of its kind in east China's Zhejiang Province, has been linked up successfully at 3:00 p.m. on June 14, 2007. The gigantic bridge strides across Hangzhou Gulf and links up the Haiyan County of Jiaxing and Cixi, a city of Ningbo. It runs a full length of 36 kilometers.

China, the world's second-largest energy consumer, will this year begin offering corporate income tax preferences to overseas investors in natural gas processing, marketing and construction of urban gas pipelines in a move to use more of the clean energy source.

Seven-tenths of China's rural areas do not have any more young laborers to transfer out - The Chinese Academy of Social Sciences (CASS) released a green paper on population and laborers in 2007. The green paper pointed out that three-fourths of all villages in China did not have young and strong laborers to transfer out. The rate of increase in laborers has been dropping year by year. It is expected that the supply exceeding the demand of labors will be reversed during the period of the 11th "Five-Year Plan". The Development Research Center of State Council took a survey on the utilization of the rural labor force. This survey covered 2,749 administrative villages in seventeen provinces and autonomous regions. We learn from the survey that laborers in 74.3 percent of all villages in China left their home to work in urban areas. Only one-fourth of villages had laborers to transfer out. The proportions of this survey were as follows: 71.6 percent in eastern regions, 76 percent in central regions and 76.4 percent in western regions. The reduction in the numbers of labors who move away suggested that wages of rural workers have increased year by year. The green paper pointed out that since more rural workers are needed in coastal areas, wages of rural workers have increased gradually. From 2003 to 2006, the per capita monthly income of rural workers increased from 781 Yuan to 953 Yuan.

Data published by Ministry of Commerce of China show that, from January to May of this year, China's high-tech product imports and exports exceeded US$200 billion to reach US$232.49 billion, up by 20.2 percent more than in the same period last year, and making up 29 percent of the total value of foreign trade. The value of exports is US$125.76 billion, up 24.3 percent over the same period of last year, and the value of imports is US$106.73 billion, up 15.8 percent.

Thirty couples gather at the People's Square in Chongqing for a group wedding ceremony Monday, June 18, 2007. The city is this year celebrating its 10th anniversary as a municipality.

A young girl dressed in a Red Army costume does the splits in the water during the Kong Zhu Piao contest, or single bamboo rafting, in which competitors must get across the water on a bamboo pole while striking difficult poses, in Zunyi, South China's Guizhou Province, June 18, 2007.

Residents stop to catch a look at a 2-meter-high "Zongzi", also known as glutinous rice dumpling, in front of a department store in Beijing on June 18, 2007 for the traditional Dragon Boat Festival.

The annual Duanwujie (Dragon Boat Festival) is coming. Chinese people traditionally eat zongzi (glutinous rice dumplings) to celebrate it. So here we give you some places to get zongzi.

Defending champion Yan Zi is to compete in the women's doubles event at the upcoming Wimbledon Open with new partner Peng Shuai, an ace single who just recovered from injury. The new formation came after Yan's former partner, Zheng Jie, withdrew from the Grand Slam tournament because of injury, according to website The other Chinese duo in the event is Sun Shengnan and Ji Chunmei, while remaining compatriots, Sun Tiantian, Li Na and Yuan Meng, will join foreign players to compete. Yan Zi and Zheng Jie became the first Chinese crowned Grand Slams last year after pocketing both women's doubles titles in the Australian Open and Wimbledon Open. This year's Wimbledon Open will kick off on June 25.

A week after 15-year-old gymnast Wang Yan broke her neck at the national championships in Shanghai, a similar tragedy has struck another Olympic hopeful. Tang Miao, a key player on the men's national volleyball team, broke his neck while warming up for a training session in St Petersburg, Russia. Volleyball star Tang Miao is facing permanent paralysis after he broke his neck while warming up for a training session on Wednesday in Russia. Tang's injury will not only be a huge blow to the men's national team but also to the women's team, as his wife Zhou Suhong (left in inset picture) is captain. Zhong Ti The 25-year-old, who was approaching the peak of his career, could be paralyzed for life after the accident. The accident happened on Wednesday when Tang's local Shanghai team was tuning up for a friendly with a local team as part of celebrations for the "Year of China in Russia." A consular official said Tang's head collided with the wall when he went to save a ball, which increased the damage in his lumbar and cervical vertebrae.

China Mobile (0941) will become the first red-chip firm in the mainland when it launches a Shanghai offering as early as next month, raising up to 80 billion yuan (HK$82 billion) in what will be the mainland's largest-ever equity offering, sources said Monday.

NPC deputy takes up cause of persecuted Shanxi whistleblowers - A National People's Congress deputy from Shandong has taken up the fight against the persecution of three government officials in Jishan county, Shanxi , who exposed the county party secretary's alleged corruption. Wang Quanjie said he had written to NPC Standing Committee calling for an inquiry into the suspended jail terms meted out to three low-level county officials after exposing government irregularities last year. Yang Qinyu said yesterday he and two colleagues, Nan Huirong and Xue Zhijing, who worked for the Jishan county government had become concerned about administrative irregularities under party secretary Li Runshan. Mr Yang said the trio, all in their early 50s, compiled a report in March last year accusing Mr Li of wrongdoings such as land-use abuses and posted 37 copies to various government departments, including the office of Yuncheng's mayor. They were detained for up to 100 days before two were found guilty of defamation in August and a third was found guilty last month. They were sentenced to a year's jail, suspended for three years. Whistleblowers have often met with retribution. Mr Wang said yesterday the criminal proceedings against the three civil servants were "a typical case of a reprisal orchestrated by local leadership that gives little regard to democracy". Mr Yang, the director of Jishan's legislative affairs committee and a member of the county people's congress, said he was arrested without the approval of the county congress. He said he had held on to a job but had been demoted and his salary cut by a fifth. The men have lodged appeals with the Yuncheng Intermediate People's Court. "We've done nothing wrong," Mr Yang said. Mr Wang said people should not face charges for faulty tip-offs unless the leak was intended to be malicious. "Even if their accusations were defamatory, they should be tried - but not in the same jurisdiction so as to avoid conflicts of interest," he said. Mr Wang said the NPC Standing Committee had confirmed that it had passed his proposals on to the Shanxi government and the authorities would have to come up with some form of redress within three months.

June 20, 2007

Hong Kong: RMB bonds good for China, Hong Kong - Earlier this month, the People's Bank of China (the central bank) and the State Development and Reform Commission promulgated provisions involving issuing renminbi bonds in the Hong Kong Special Administrative Region. Ready to make this major move toward financial reform, China Construction Bank, Bank of China and Import-Export Bank of China published their plans to float renminbi bonds in Hong Kong. Back in 2003, the Chiangmai (Thailand) Declaration, in the wake of the Asian financial crisis in the late 1990s, urged that regional financial cooperation be reinforced to stave off possible future financial catastrophes. The declaration placed development of the Asian bond market at the core of regional financial integration. China holds a particularly important place in regional monetary cooperation. But its backward bond market brings uncertainties for the Asian bond market and financial cooperation. As a result, it is difficult for the country to get involved in overall financial cooperation with other countries. However, it is desirable to make the best use of Hong Kong's advantageous position as an international financial center and as a bridge between the Chinese mainland and the rest of the world. Cooperation between the mainland and Hong Kong may offer a channel for China to participate in future Asian financial cooperation. As a matter of fact, issuing renminbi bonds in Hong Kong was much talked about back in 2004. But at the time, the volume of renminbi circulating in Hong Kong and renminbi deposits in the special administrative region were limited. Moreover, a significant portion of renminbi in Hong Kong was circulating through underground avenues. All taken, the time was not right for floating renminbi bonds in the special administrative region. Things are different now. The channels through which the mainland and Hong Kong conduct financial cooperation are fairly developed and the renminbi deposits in Hong Kong reached 25.5 billion yuan ($3.2 billion) at the end of April. All this indicates that the time is ripe for floating the renminbi. Issuing renminbi bonds is of great significance for Hong Kong. First, Hong Kong's position as an international monetary hub has been challenged since the Asian financial crisis. In addition, the weak local bond market erodes the monetary stability of Hong Kong. Seizing the opportunity of floating renminbi bonds, Hong Kong is expected to promote a set of monetary facilities covering payment and clearance, which facilitates the development of the local bond market. In turn, some of its structural defects as an international financial hub will be removed. Second, floating renminbi bonds will help reduce the risks evolving from rising stock prices and also provide Hong Kong residents with a new monetary product. Finally, Hong Kong's institutional and technical infrastructures relevant to floating renminbi bonds will be improved. The financial cooperation between the mainland and Hong Kong will grow. All this combines to provide more powerful support for overall economic cooperation between the two. Issuing renminbi bonds in Hong Kong is equally important to the mainland because the undertaking helps quicken the pace of the renminbi's internationalization and convertibility. In Hong Kong, a free capital market, the price of renminbi bonds will fully mirror international investors' expectations of the renminbi's revaluation. This is of reference value for the foreign-exchange reform of the Chinese currency. In addition, the floating of renminbi bonds will give China more say in pricing renminbi derivatives. Monetary products such as renminbi bonds are expected to strengthen Hong Kong's status as the center of renminbi offshore derivatives. Also, floating renminbi bonds in Hong Kong indicates that the opening of the Chinese mainland's capital market has taken another step forward. With this as a starting point, a richer variety of bonds and securities is expected to be issued in the future by many more institutions. Floating renminbi bonds in Hong Kong will in turn spur the development of the bond market on the mainland. At present, the mainland bond market still falls short of the needs of the country's rapid economic development, though this market has made impressive advances in recent years. In addition, this bond market needs to be standardized. Floating renminbi bonds in Hong Kong helps in this respect, stimulating the buildup of the mainland bond market's infrastructure and creating progress in transaction rules.

Mainland authorities may not open the door soon for mainland investors to directly invest in Hong Kong shares, according to a top securities brokerage. Sun Hung Kai & Company (0086), which operates as Sun Hung Kai Financial, said mainland authorities may want A-share investors become more mature first by investing through the qualified domestic institutional investors scheme. The China Banking Regulatory Commission has granted US$14.7 billion (HK$114.66 billion) in QDII quotas. In mid-May, commercial banks were allowed to invest US$13.9 billion overseas, half of this in Hong Kong, the only exchange approved for such funds. Joseph Tong Tang, chief executive of wealth management, capital markets and brokerage at Sun Hung Kai Financial, said Beijing will take a gradual approach to mainlanders investing overseas through mutual funds. "If the government eases all restrictions, too many uncertainties will be created in the fund flows," he said. Sun Hung Kai Financial maintains a close relationship with mainland securities firms as it bides its time until authorities review requirements on foreign acquisitions of domestic brokers in the fourth quarter. "We have done a lot of preparation in every aspect of business including securities, futures, forex, and mutual funds," Tong said. "We monitor mainland policies closely. As soon as policies allow further opening up of the market, we shall make our move." Foreign investors are only allowed to acquire up to 33 percent of a mainland brokerage. Two years ago, China Securities Regulatory Commission halted applications for stake acquisitions. Tong said officials recently said they will start accepting applications again before year's end.

The Mainland & Hong Kong Closer Economic Partnership Arrangement (CEPA) has created 36,000 new jobs for Hong Kong people from 2004 to 2006, and 1,000 more for those working on the Mainland. These are the findings of the Hong Kong SAR Government's second study on CEPA's economic impact, submitted to the Legislative Council. It forecasts another 3,600 jobs will be created in Hong Kong this year. For trade in goods, it said 89 percent of responding companies considered CEPA beneficial to the economy, and 77 percent felt the preferential trade arrangement was beneficial to the manufacturing sector. CEPA induced additional capital investment in the manufacturing industry, amounting to 305 million HK dollars in 2005 and 2006, and a planned investment of 240 million dollars in 2007 and beyond. Moreover, mainland people using the Individual Visit Scheme had made 17.2 million trips to Hong Kong as at the end of 2006, accounting for 39 percent of all the Mainland visitors. They generated an additional 9.3 billion HK dollars in tourist spending in 2006, almost 38 percent higher than in 2004.

Nanyang Commercial Bank (NCB), a subsidiary of the Bank of China Hong Kong (BOCHK), is likely to become the first overseas bank to directly transform into a mainland corporate bank. The Hong Kong-incorporated NCB has applied to the China Banking Regulatory Commission (CBRC) to become a mainland-registered corporate bank and it will move its headquarters to Shanghai after CBRC grants its approval. BOCHK executive Wang Yumin revealed that NCB will focus on high-end Renminbi business after gaining mainland corporate bank status.

The EcoPark occupies 20 hectares of land in Tuen Mun Area 38 and will be developed in two phases. The EcoPark is a key Government initiative to promote recycling industry in Hong Kong and jump-start a circular economy by providing long term land for the environmental and recycling industry. The EcoPark invites overseas and local companies to submit 'Expression of Interest' from 18 March 2006 to 20 April 2006. Please refer to the EcoPark website at for more information.

The gap between the rich and the poor in Hong Kong has widened in the past decade, according to government statistics released on Monday. The Census and Statistics Department figures showed the Gini Coefficient for individuals’ employment income increased to 0.5 last year from 0.483 in 1996. The co-efficient measures income disparity on a scale from zero to one. Zero represents a high degree of equality and one shows a large degree of inequality. Commissioner for Census and Statistics Fung Hing-wang said the figures indicated a widening gap in employment income. “The increased dispersion in the distribution of employment income from 1996 to 2006 was associated with the changes in the demographics of the population and the structure of the economy over the period, including the income differentials due to gender, life cycle and education,” he said. Mr Fung said this was the first time the department had used data collected from the latest population census-by-census in the study of the territory’s income distribution. Employment remained the main source of income for Hong Kong people, with 78.6 per cent of people with income in jobs last year, compared with 82.1 per cent a decade ago. The median monthly income of the working population increased 5.3 per cent, from HK$9,500 in 1996 to HK$10,000 in 2006. In real terms, that was an increase from HK$9,348 to HK$10,000. Mr Fung said the figures showed Hong Kong had more households at both ends of the income distribution last year than 10 years ago. The percentage share of households with monthly income at current prices below HK$4,000 increased from 6.7 per cent in 1996 to 9.2 per cent in 2006, while those with monthly household income at HK$40,000 or above grew from 15.0 per cent to 17.0 per cent. “One of the reasons for the increase in the former was the increasing number of older-person households, and the increase in the latter was mainly associated with the growth of two-earner households and improvement in educational attainment of the population,” he said. Between 1996 and 2006, the median monthly household income edged down slightly, from HK$17,500 to HK$17,250. In real terms, the median monthly household income in 1996 and 2006 were broadly stable, at HK$17,220 and HK$17,250 respectively. Mr Fung said a comparison of Hong Kong’s income disparity with foreign countries could help to have better understanding of the income distribution in Hong Kong. But he said caution must be taken when interpreting results of such a comparison. “Amongst all the selected economies, Hong Kong has a higher Gini co-efficient comparable to those of United Kingdom and Canada. Hong Kong is an open, city economy with a strong agglomeration of service sector activities which are highly developed and well diversified, employing workers with multifarious experience and skills,” he said. “Given this nature, income disparity in Hong Kong tends to be greater than in those places with a preponderance of manufacturing and agricultural activities. Moreover, there is a common trend towards greater income disparity in many economies. Hong Kong is not unique in moving in this direction,” he added. The figures are contained in Thematic Report: Household Income Distribution in Hong Kong. It is available at:

Tickets to a PLA cultural show marking the 10th anniversary of the handover were snapped up in just over an hour yesterday morning. More than 1,000 people queued up outside the PLA headquarters at Tamar for free tickets to the show well before officers started handing them out at 8.30am. Each person was entitled to a maximum of three tickets and all 4,500 had gone in about 75 minutes.

Chan Ka-keung, the dean of Hong Kong University of Science and Technology's school of business and management, who has experience with the government and Chief Executive Donald Tsang Yam-kuen, has laid the pathway to be a member of Mr Tsang's cabinet team. Professor Chan, 50, tipped to take over from Frederick Ma Si-hang as secretary for financial services and the treasury, was invited with nine other academics to join a brainstorming session in November 1997 to discuss methods for defending the peg to the US dollar without reducing its impact on the economy. The Hong Kong dollar had been under speculative pressure since October flowing from the East Asia financial crisis, which started in Thailand on July 2. Then-financial secretary, Mr Tsang, chaired the meeting. Democrat Sin Chung-kai, who sat on the HKUST Council and the Competitive Policy Review Committee with Professor Chan, said he had a good academic background in finance and intimate market knowledge but lacked experience as a minister. "A good person in academics does not necessarily make a good minister," Mr Sin said. But a senior government official offered a vote of confidence to Mr Tsang that Professor Chan would be a good minister, saying he is a gentleman with a clear mind and good skill in handling personnel issues. It is not difficult to find Professor Chan's influence in the government. He has similar views to the administration on economic and financial issues. He says Hong Kong should play a greater role in mainland economic development and supports a fair-competition law. As a panellist at the mainland's 11th Five-Year Programme summit, Professor Chan said that while the mainland was the main driver for Hong Kong's initial public offering market, the city should attract more Asian companies, particularly from India. In the past five years, he has sat on about 15 government advisory bodies, including the Economic Relaunch Strategy Group, Securities and Futures Appeals Tribunal, and the Civil Service Training and Development Advisory Board. Professor Chan is a low-profile person despite his many contributions in the public sector. But he is outspoken in his role as chairman of the Consumer Council. A council member said Professor Chan has good connections with participants in the market through his work on several panels.

Alibaba, the mainland's leading e-commerce company, has chosen a Hong Kong initial public offering later this year rather than selling shares in New York in a deal that could be worth up to US$1 billion, according to sources. A decision by Alibaba founder Jack Ma to bring to Hong Kong what could be the biggest initial public offering for a mainland internet company contrasts with other leading players in the sector, which have listed or are seeking a listing in the Nasdaq. Goldman Sachs and Morgan Stanley are arranging the public offering. The two banks and a spokesman at Alibaba declined to comment. "Jack Ma is a Sarbanes-Oxley hater and doesn't feel it's necessary to do a US listing," said source. Sarbanes-Oxley was a piece of US legislation implemented five years ago in the wake of corporate scandals including Enron, Arthur Andersen and WorldCom. It tightened accounting practices for publicly listed companies and holds corporate chiefs more accountable to investors. Many companies complain that compliance with the law is prohibitively expensive and critics say it has convinced many foreign companies to seek initial public offerings in jurisdictions such as London or Hong Kong where regulators have a lighter touch. The US securities regulator last year started a series of changes to the more onerous parts of the law. Technology companies have favoured New York listings because of the higher valuations they can garner there. Even so, that may not be true for Alibaba. "The investor base will be a bit different because there will be more retail involvement in Hong Kong but I don't think listing in Hong Kong will make that much difference in terms of valuation because it's a concept stock similar to Baidu and there'll be a lot of frenzy and hype," said a source., the most-used internet search engine in the mainland, listed on the Nasdaq in August 2005. Its shares have risen five times above its offer price and traded at US$143.07 on Friday. There are other reasons why Hong Kong, which is Alibaba's official headquarters and a centre for global trading, is a better alternative for Alibaba.

China: Air Canada will double its daily Beijing-Vancouver service and increase its Shanghai-Toronto non-stop flights in July, the carrier's Beijing Office said on Sunday. "These added flights represent an increased capacity of nearly 50 percent for the growing Chinese market, which continues to thrive due to strength in both leisure and business travel," said Daniel Shurz, vice president of Network Planning of Air Canada. "With these enhancements Air Canada strengthens its position as the carrier with the most frequent flights between China and Vancouver and the only airline with non-stop service from eastern Canada to China." The added Beijing-Vancouver daily flight will operate between July 2 and October 1, using a 211-seat Boeing 767-300 plane. Effective on July 1, The Shanghai-Toronto service will increase to daily service starting for the summer peak and continue as a three-day-a-week service for the 2007-2008 winter schedule. In total, Air Canada will operate five daily non-stops between China and Canada this summer, the most of any airline. Montreal-based Air Canada provides scheduled and charter air transportation for passengers and cargo to more than 150 destinations on five continents.

Members of China's badminton team pose for photos after the awarding ceremony for Sudirman Cup World Team Badminton Championships in Glasgow, Scotland, June 17, 2007. China claimed the Sudirman Cup for a record sixth time after beating Indonesia 3-0.

Rogue companies. Secret profits. Legal threats. Allegations of evil deeds and tyranny. It may sound like an overwrought corporate thriller, but all are elements in a dispute between French firm Danone and its mainland partner which has underlined the lingering risks of doing business in China. The case has seen a successful Sino- foreign joint venture devolve into a catfight of charges and recriminations. For many, it's a cautionary tale about getting into bed with a mainland partner. "In my mind, there is no reason to have a [mainland] partner anymore," said Mic Mittasch, an Australian who was involved in joint ventures but now runs a wholly foreign-owned business in Beijing creating production lines for manufacturing firms. "A lot of firms that have them are now looking to cut down on the partner's influence." The French maker of Danone yogurt and Evian water is now trying to do just that with its estranged partner Wahaha, China's biggest drinks company. Since joining forces in 1996, Danone has injected tens of millions of dollars to gain access to Wahaha's China distribution network in a venture run by Zong Qinghou, one of China's most successful businessmen. But Danone this month filed a suit in the United States accusing Zong of setting up dozens of rogue companies that sold the joint venture's drinks, but with none of those profits going to the French firm. Danone said the underhand dealings have cost it US$100 million (HK$780 million). Zong has since resigned, but not without fighting back with accusations that Danone was attempting a "hostile takeover" of their various joint venture companies. His loyalists in the company vowed to resist Danone's control with increasingly angry rhetoric, including allegations of "evil deeds," quotes from revolutionary leader Mao Zedong and protests from local staff. The case seems ripped from the pages of the 2002 book Mr China, a frequently hilarious real-life business memoir by Tim Clissold, a representative in 1990s China for the Wall Street investment fund Asimco. The book recounts one battle after another with a series of duplicitous mainland partners who used Asimco's money to build rogue factories making competing products or to pay off debts. Clissold and his team eventually lost hundreds of millions of dollars. But other Western companies in China today continue to experience such problems. "With our Chinese partner, if you gave them a finger, they would take the whole arm," said Anders Maltesen, general manager of Tianjin Alstom Hydro, which makes turbines for the Three Gorges hydroelectric project. Alstom, the French engineering group, has steadily bought out its mainland partner since the venture was formed in 1995 due to repeated squabbling. "In China, a signature on a contract is often viewed as merely the start of negotiations," he said. Zong has threatened to pull out of the venture and sue his estranged partner, while the new Danone-appointed chairman Emmanuel Faber has vowed to stand firm while leaving the door open to a settlement. Whatever the outcome, experts say the affair underlines the risks of joint ventures. Formerly required by mainland law, they were a way for companies to gain access to overseas cash while providing foreign investors immediate market share and a guide through an alien business, legal, and cultural environment. But with China's market and legal systems more developed today, the risk of a joint venture going sour once the mainland party no longer needs money often outweighs the benefits, said Edward Smith, director of Beijing Consulting Group. "The bottom line is, a joint venture can often be more work than just going it alone," said Smith, who steers clients toward wholly foreign-owned arrangements. "There are some very well-trained Chinese professionals around today, so most of the services a partner would bring can now just be bought in the marketplace."

Actress Maggie Cheung walks on the red carpet in Shanghai Grand Theater on Saturday night, June 16, 2007, before the opening ceremony of the 10th Shanghai International Film Festival.

Chinese actress Chen Hao walks on the red carpet in Shanghai Grand Theater on Saturday night, June 16, 2007, before the opening ceremony of the 10th Shanghai International Film Festival.

Chinese actress Zhou Xun walks on the red carpet in Shanghai Grand Theater on Saturday night, June 16, 2007, before the opening ceremony of the 10th Shanghai International Film Festival.

Korean actor Lee JunKi walks on the red carpet in Shanghai Grand Theater on Saturday night, June 16, 2007, before the opening ceremony of the 10th Shanghai International Film Festival.

Hot air balloons cross the Qiongzhou Strait - Hot air balloons float during a contest over the Qiongzhou Strait between Guangdong and Hainan provinces in south China, June 17, 2007.

Director-General of the World Trade Organization (WTO) Pascal Lamy on Monday hailed China's performance since its entry into WTO in 2001. "Lamy fully appreciates China's overall performance since it entered the WTO in 2001".

Celebrate Dragon Boat Festival with rice dumplings - The annual traditional Chinese festival Duanwujie (Dragon Boat Festival) falls on June 19 this year. Traditionally, Chinese people make zongzi (glutinous rice dumplings) and eat them at home to celebrate this festival. Yet for office workers, tight work schedules makes it almost impossible to make zongzi themselves. So here are some recommended places to buy zongzi in Beijing and Shanghai. Zongzi is a kind of rice dumpling wrapped in bamboo or reed leaves to form a pyramid. The stuffing is mostly made of glutinous rice and complemented with Chinese dates, red beans, and salty meats. Generally speaking, zongzi is divided into two categories, salty zongzi which is popular in South China, and the sweet ones in North China.

China remains popular destination of overseas capital - China approved fewer joint ventures but attracted more foreign direct investment in the first five months, indicating the country is still a popular destination of overseas capital, Yao Shenhong, spokesman with the Ministry of Commerce said on Wednesday. A total of 15,072 joint ventures were approved by the ministry from January to May, down 3.75 percent year-on-year, bringing in US$25.28 billion, up 9.87 percent from a year earlier, Yao said.

June 19, 2007

Hong Kong: More than 1,000 Canadian community, business and political leaders on Friday shared the message of "One Country, Two Systems" in Toronto at a gala that marks the 10th anniversary of Hong Kong's handover to China. Speaking at the opening ceremony of Bauhinia Gala held at the Metro Toronto Convention Center, Bassanio So, Director of the Hong Kong Economic and Trade Office (HKETO), told the participants that the Fortune magazine had made a prediction before the handover that "it's over" for Hong Kong, and the Time magazine had also said at that time that Hong Kong "is bleeding." "Today, we have bowled over the world with our stellar economic dynamism and resilience, thanks to the entrepreneurship of the Hong Kong people," So said. Hong Kong's economy, riding on the booming economy on China's mainland, is now "on its best-ever shape" since the handover, So noted. With spearheading by the Center for Information and Community Services of Ontario, a leading community organization providing settlement services for new immigrants, the gala was supported by almost 30 community and business associations in the Greater Toronto Area, as well as the HKETO and Hong Kong Tourism Board in Canada. Chinese Ambassador Lu Shumin, Ontario Premier Dalton McGuinty, Chinese-Canadian Senator Vivienne Poy, federal government representative, member of Parliament Michael Chong and Chinese Consul General in Toronto Zhu Taoying were present at the event.

South Korean singer Nicky Lee(L) and Taiwan's Jolin Tsai pose after winning the Best Male/Female Vocalist-Mandarin awards during the 18th Golden Melody Awards in Taipei.

There is an urgent need to deal with the price differential between H shares and A shares, Financial Secretary Henry Tang Ying-yen has warned. In an interview with The Standard and its sister publications Sing Tao Daily and Eastweek, he said Hong Kong has been exchanging views with the mainland on the hot topic. "But it would be inconvenient for us to disclose what we have been discussing," he said "As you understand, we don't want to see the mainland stock markets affected by our comments. "My feeling is that the central government is aware of the problem ... They have indeed taken some measures like the launch of QDII [qualified domestic institutional investors scheme]. "Increasing their scale and coverage will, to a certain degree, allow capital to flow into Hong Kong in an orderly manner." Since February, Tang, with Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong, has suggested more than once that an arbitrage mechanism be set up between Hong Kong and the mainland to solve the wide differential between mainland- listed A shares and Hong Kong-listed H shares. An arbitrage system would allow investors to buy A shares and sell them in the H-share market, or vice versa, narrowing the price gap between the two classes of shares. In March, the State Administration of Foreign Exchange, the foreign exchange watchdog, said it was studying a Hong Kong government proposal to reduce the price differential between A shares and H shares through an arbitrage mechanism. But no further information was disclosed. Tang said the share-price difference will become a cause for concern when a market correction takes place. "Investors wouldn't mind the difference if they can make profits in a surging market," he said. "But they will question why they should pay a premium [in the mainland markets] when the same stocks are available in Hong Kong. At this point, there's the problem. When it happens, my feeling is the [central] government will have to respond to it properly ... This is a question of great urgency." Tang cautioned individual investors to be prepared for upheavals in the stock markets this year, recalling a similar warning he made late last year that "the volatility in the markets would be huge and Joseph Yam had also made such warnings on a couple of occasions." He said the SAR government will make sure the Hong Kong stock market operates in an open, stable manner and be properly monitored by the authorities. Declaring that it is not for the administration to say whether the market has become too hot or not, Tang urged investors to understand all risks involved amid rising market volatility. In remarks before blue chips rallied to a new record Friday, Tang said: "You must ask yourself how much risk you can bear." The Hang Seng Index closed at an all-time high of 21,017.05 points Friday, while the Hang Seng China Enterprises Index, which tracks the H shares of 41 mainland companies, ended up 2.35 per cent to close at 11,443.91 points, its best closing since December last year. Turnover soared to HK$83.36 billion - the second-largest in history after the HK$94.99 billion record set on May 14. Analysts attributed the bull run that raised total market capitalization to HK$15.39 trillion to QDII funds streaming into Hong Kong, chasing big caps listed here. Many believe that with the inflow of funds expected to continue, blue chips may test further highs.

Beijing's endorsement of veteran leftist Tsang Tak-sing as head of the Home Affairs Bureau in the chief executive's new team, expected to be announced later this week, shows the central government's eagerness to build up a patriotic base in the territory - 10 years after reunification with the motherland.

Former RTHK chief Cheung Man-yee has launched an attack on the review committee on public broadcasting, saying it misled the public when explaining its opposition to turning the station into an independent public broadcaster. The panel, headed by veteran journalist Raymond Roy Wong, recommended creating an independent broadcaster but said RTHK could not be transformed into such a broadcaster because it was a government department and the staff wanted to remain civil servants. Ms Cheung said that was an oversimplification. "The panel is very smart and put up some very clever reasons why RTHK does not fit with the new body, but people should not reduce this issue to a `rice bowl matter' for a few hundred staff members. This is misleading," Ms Cheung said. "Some support staff want to remain civil servants, but a plan to resolve this problem has been in place for 20 years." She said the panel should not use these technical problems to obscure the bigger picture. "One of the panel members, Mathias Woo, was frank enough to state it was because of RTHK's political stance that it is not suited to the new structure. The issue is press freedom and the principle of `one country, two systems'." Ms Cheung said she agreed with the general perception that RTHK would shrink to a small department under direct government control. "If the government kills RTHK, it will be a very unwise and provocative action," she said. "The image of the government will be severely undermined and they will leave Hongkongers with a bad memory. RTHK is one of the remaining yardsticks of Hong Kong's `one country, two systems'." Ms Cheung acknowledged RTHK was facing an "uphill battle" for survival. "We are now in a very passive situation. There is not much that we can do, but we have to work on it." The former director said the government had decided to make RTHK independent as early as in 1986 in a review of its future, but the plan, including the transfer of staff from civil service, had been delayed when it was decided to give priority to the setting up of the Hospital Authority. The scheme was shelved in 1989 because of the Tiananmen Square crackdown and again in the 1990s because of the controversy over political reform. "It was agreed a long, long time ago that there should be an independent broadcaster which should be free from political and commercial interests and that RTHK should be transformed into such a body," Ms Cheung said. "We have been waiting for this for over 20 years." She said some of the criticisms of RTHK were unfair. "People always argue over a government-funded broadcaster continually criticizing the government," she said. "This concept is wrong. This is taxpayers' money, so what's wrong with a publicly funded body monitoring the government's performance? It is just like the Audit Department checking on official accounts. "Hong Kong has had a public broadcaster for decades and it has contributed so much to press freedom. We should let it go on." She again urged the government to conduct a public consultation over the future of RTHK as soon as possible and "not to leave a knife hanging over" its head. The government has promised to consult the public on the issue for three months, but did not say when it would begin. "We cannot keep waiting. There is an ageing problem within RTHK, both in the terms of equipment and general programs," she said.

If there's any international sport in which Hong Kong could dominate, it would be mahjong. Hongkongers have clinched 15 of the 32 second-round seats yesterday at the first annual World Series of Mahjong in Macau. The top three among the 32 all came from Hong Kong. More than 360 mahjong experts from across the world have gathered in Asia's gambling capital to chase a US$500,000 grand prize. To enter the tournament, they defeated tens of thousands of contestants in online qualifying matches last month. Unsurprisingly, a majority of competitors have come from the greater China region. Players from Japan, America, Britain, Denmark, the Philippines and Malaysia have also taken part at Wynn Macau casino-hotel. "I was ranking quite low but caught up on a bit of luck," said Lau Lai-fun, a Hong Kong player who ranked No1 last night. "I must win." The second-round contestants also included 13 mainlanders, two Taiwanese, one Dane and one Macau resident. The three-day competition organised by World Mahjong Limited ends today. It has the largest cash prize ever for a mahjong tournament with a total of US$1 million. Among the 256 players who entered the second round yesterday, 104 were from Hong Kong. The battles were to continue early today with contestants fighting to be world champion. Taiwan's Hsu Nai-lin, who hosts a variety TV show featuring gambling, secured a seat.

China: China investors sold more US Treasury securities in April than any time in at least seven years in a signal the nation may be diversifying the world's largest foreign-exchange reserves. The mainland, which owns more US debt than any foreign nation except Japan, sold a net US$5.8 billion of US Treasuries, the first drop in holdings since October 2005, according to Treasury Department figures that go back to 2000. The central government held US$414 billion of the US$4.4 trillion in marketable US Treasuries in April, according to a US Treasury report released on Friday. The mainland, whose foreign-exchange reserves reached US$1.2 trillion in March, is seeking to lift returns on its investments. That may push up yields on US Treasuries, traditionally among the top investments for reserves, and erode demand for the US dollar. The central government announced in March it would establish an agency modelled on Singapore's Temasek Holdings to manage part of its foreign-exchange reserves. Analysts estimate the State Investment Company may start with US$200 billion in capital. Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, cautioned against conclusions based on one month, saying the figures were revised regularly. "There's no clear sign they are going to dump treasuries," Mr Chandler said, noting that mainland officials had said they had no intention of doing anything that would devalue their holdings. Greg Anderson, director of currency strategy at ABN Amro Bank in Chicago, said he was unconcerned about the decline in the mainland's holdings of Treasuries because the country was still buying US assets, providing support for the US dollar. The central government agreed last month to invest US$3 billion in New York-based buyout firm Blackstone Group through the soon-to-be-formed State Investment Company. US Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke have repeatedly played down fears of a treasuries sell-off by foreign investors.

Singapore Airlines plans to increase its transport capacity on the Shanghai-to-Singapore route by 25 percent before July 1 this year in preparation for China's outbound travel peak in summer. From June 17, Singapore Airlines will offer three more direct flights a week from Shanghai to Singapore, the China office of Singaporean Airlines announced here on Saturday. The airline company will add another four direct flights a week beginning July 1, bringing the number of direct flights on the route from 28 to 35 a week. In total, the airline will offer 69 flights a week from Beijing, Shanghai, Guangzhou and Nanjing to Singapore. "East China has always been an important market for us and the increased capacity will offer our customers more choices," said Ho Yik Wing, general manager of Singapore Airlines China.

Beijing-based Huaxia Bank announced on June 15 that it has obtained approval from the People's Bank of China and the China Banking Regulatory Commission to issue up to 15 billion yuan (US$1.98 billion) worth of bonds in the domestic inter-bank market.

China will need at least 240,000 civil aviation personnel over the next 20 years, according to the latest report from China Academy of Personnel Science.

The General Administration of Civil Aviation of China (CAAC) and France-based Thales Group have agreed on the purchase of a flight simulator in Beijing. CAAC and China Aviation Supplies Import and Export Group Corporation (CASC) signed a contract to buy a set of fully-operational Airbus A320 flight simulator from Thales Group, an international electronic and systematic solution provider. The first flight simulator CAAC purchased will be used to facilitate training for its own supervisors. They will decide whether a domestically-made simulator meets the requirements for A320 flight simulation. The simulator has two components: an A320 1.5.0-standard D grade full-operational flight simulator and an A320 flight maintenance exerciser. The flight maintenance exerciser is a low-level training device, which can simulate the piloting environment in a classroom. With the assistance of the aviation electronic supply software and reality piloting model, it creates an authentic effect that is very similar to the full simulator. The A320 full simulator and exerciser will be installed at the Sino-Europe Training and Support Center. The center will operate and maintain the A320 simulator set for CAAC.

A plane of China Southern Airlines left Guangzhou Saturday morning for Taipei to undertake the charter flight program for the Duanwu Festival. An Airbus-319, carrying 44 passengers, took off from Guangzhou at 10:34 a.m. Saturday. Another flight is scheduled to take off on June 21. Passengers aboard the flight include people returning home for family reunions, businessmen and tourists. The plane flies via Hong Kong before it enters Taiwan air space. Zongzi, the festival food for Duanwu, were offered to passengers. Five mainland airlines and six Taiwan airlines will make 21 round-trip flights from June 15 to June 22, according to the Civil Aviation Administration of China. The cities involved are Beijing, Shanghai, Guangzhou and Xiamen on the mainland, and Taipei and Kaohsiung in Taiwan. The first non-stop charter flights across the Taiwan Strait were launched during the Chinese Spring Festival period in 2005. Before that there had not been direct air links across the Taiwan Strait for more than five decades. In June 2006, the mainland and Taiwan agreed to open charter flights for other traditional festivals, including Qingming, Duanwu, and the Mid-Autumn Festival. Duanwu, also known as the Dragon Boat Festival, falls on the fifth day of the fifth month of the Chinese lunar calendar, or June 19 this year. It is for commemorating a patriotic Chinese poet over 2,000 years ago. During the festival, boat races are held and people eat Zongzi. Wrapped up with bamboo leaves and with glutinous rice inside, Zongzi has various fillings ranging from meaty to confectionary.

Director-General of the World Trade Organization (WTO) Pascal Lamy arrived in Beijing on Sunday as he tries to revive the stalled Doha trade talks .

China Communications Services Corp is acquiring from its parent company, China Telecommunications, network maintenance and construction businesses in six provinces, sources said yesterday. The network construction, maintenance, design and operation company, which was spun off from China Telecom (SEHK: 0728) in a HK$3.27 billion initial public offering in December, will take over operations covering Jiangsu, Guizhou, Hunan, Anhui, Jiangxi and Sichuan, doubling the number of provinces it serves in southern China. Shares in China Communications surged yesterday to close up 5.12 per cent at HK$5.75 on speculation about the injection. In the initial public offering prospectus, the company budgeted about HK$935 million in cash for the acquisition of its parent's network construction and maintenance operations in 15 provinces in the 18 months from December. In April, it reported a better than expected net profit rise of 17 per cent, to 696 million yuan, for last year. "The company will benefit from the proposed TD-SCDMA 3G network trial by China Mobile (SEHK: 0941, announcements, news) Communications later this year for the network design and construction contract," said Wong Chi-man, an analyst at Everbright Securities. Separately, international accounting firm Ernst & Young yesterday said foreign telecommunications operators were eyeing entry into the mainland after Beijing issues 3G licences. "European operators like France Telecom are all hungry to get into the China market, as they are facing slow growth in their home market and turn to high growth in emerging markets such as China and India," said Richard Ireland, a partner of E&Y's telecommunications sector. China Telecom is the only one of the four mainland telecommunications players listed in Hong Kong not to already have a foreign partner. Separately, China Telecom would acquire two overseas companies and one mainland firm from the parent for 1.41 billion yuan, it said yesterday.

June 18, 2007

Hong Kong: An environmental friendly polymer bank note with anti-counterfeit measures will be launched in Hong Kong next month, said Financial Secretary Henry Tang Friday. Besides the distinctive anti-counterfeit measures, the new 10- Hong Kong-dollar bill, which is to be launched on July 9, has two other favorable features, according to the authority. The first polymer bill in Hong Kong is suppose to be cleaner than paper bill, since polymer substrate is much less porous than paper. And also the polymer can be recycled after use which fits the environmental concern of the public. Henry Tang said the first 50 million new 10 dollar bills will be gradually in circulation next month and the issue of polymer notes with different values will be considered if the new bill is well accepted by the public.

A joint venture by the Hong Kong Productivity Council, the special administrative region's major industry support service provider, and the Productivity Promotion Center of Shenzhen government is expected to be operational this October. The aim of the joint venture is "to further support the development of manufacturing and science and technology enterprises in the Pearl River Delta area", said Wilson Fung, executive director of Hong Kong Productivity Council. "We believe that such a joint venture will provide an ideal platform for enterprises stationed in Shenzhen as well as the rest of the Pearl River Delta to obtain their required services promptly," Fung said. According to Fung, the joint venture, called the Shenzhen and Hong Kong Productivity Foundation, will soon house six service and supporting centers. They include: an environmental protection technology center, electronics and automotive technology center, software and digital entertainment industry center, technology transfer center, management consultation center and intellectual property and brand-building center. The services provided will include technology commercialization and business matching, product development and technology consultancy, standards and quality testing, training, business consultancy as well as the promotion of Hong Kong's professional services. "We will further diversify our services later to cope with the market need then ... There is just a huge demand (for such support and services) from enterprises operating in the Pearl River Delta area," Fung said. Over 80,000 Hong Kong enterprises now have businesses in the Delta region and the new foundation will allow the Hong Kong Productivity Council to provide prompt support and services to them, Fung said "We hope to expand to other major cities but our priority now is to serve the enterprises in the Pearl River Delta area," he added. With a total investment of HK$1.54 million, the Shenzhen and Hong Kong Productivity Foundation is 65 percent owned by Hong Kong Productivity Council while its Shenzhen counterpart owns the remaining 35 percent. It is located in the heart of Shenzhen Advanced New Technology Zone and covers an area of 2,100 square meters. "It can very conveniently and effectively provide the support services required by both local and multinational hi-tech companies stationed in the zone," Fung said. He stressed that the foundation was established mainly to help both local and Hong Kong enterprises.

In a stunning outburst just two weeks ahead of the handover anniversary, PCCW chairman Richard Li Tzar-kai claimed the SAR government is losing its nerve over the need to consistently carry out the best and most stable policies for Hong Kong - a failing he says might deter investment and harm the economy. "I was disappointed that the courage that the prior [colonial] government had has been lost since the handover, and that the new government has not stood firm concerning policies that will ensure a consistent business environment," Li - the youngest son of tycoon Li Ka- shing - told The Standard, and sister publications Sing Tao News and Eastweek in an exclusive interview. Li is the first businessman to have spoken out over the deteriorating local business environment since the 1997 handover, saying it was his biggest disappointment of the past 10 years. "High profit return is one of the main considerations in attracting funds," Li said. "However, investors will also consider seriously whether policies can be consistently executed and a stable running environment ensured." Li said that during his seven-year tenure at PCCW (0008) he had had many opportunities to participate in government policy discussions but that his experiences were totally different to those he had before 1997. He claimed that current government officials were not sufficiently responsible and lacked the courage to carry out consistent policies. "They seem to have adopted the old Chinese saying that `doing less is better,' lacking the courage to face any changes," he said. "If the government bends toward certain pressure groups at one time and to others at another time, the inconsistency will be a negative factor for the business world." Li used the example of the funds that flowed out of Hong Kong around the 1997 handover period to show how bad such political risks can be, as an uncertain investment environment could have affected the economy. Using the controversial Cyberport as an example to illustrate his unhappiness over the need for consistency, Li said he was disappointed by the government's approach. Former chief executive Tung Chee- hwa intended to use Cyberport to promote Hong Kong as the regional technology hub to attract investment in 2002. However, PCCW was assigned the development and management rights without proper tenders, sparking widespread criticism among local developers. The government finally gave in and separated management rights between residential and nonresidential blocks, with PCCW handling only the residential sites. "I cannot say Cyberport's performance has been bad, as the profit return it has made was above our expectations," Li said. "But from a broader perspective, the Hong Kong economy benefited less because the government has not implemented policies accordingly to make sure the well-intentioned aim of gathering foreign high-quality technology companies has been in place." Despite the fact that PCCW was deprived of the right to manage the nonresidential blocks as originally planned due to complaints over conflicts of interest, Li said the government should have hired other experts to take charge to make sure the aims were well taken care of and that policies were consistent. "Of course, the current tenants of Cyberport all are innovative technology firms, but if you ask me whether the government has done a good job in attracting top technology firms from overseas, I would say it has done too little." Compared with the promotions the Hong Kong Trade Development Council had mounted before the handover, Li said he would score the government fewer than two marks and the TDC a full 10. Li contrasted the Cyberport episode with the successful bid against former Thai premier Thaksin Shinawatra for the satellite broadcasting frequency for Star TV. "During the bidding process, the then British Department of Trade and Industry really helped us beat our competitor."

PCCW (0008) chairman Richard Li Tzar-kai says he is waiting for "opportunities to overcome the hurdles" beyond his control. "I tried my best to control the variables which were under my control, and I can only wait for chances to overcome those beyond my control," Li said when asked the reasons for his failure to sell his stakes in the company last year and whether that had anything to do with the pressure applied by the "mainland side." He declined to elaborate further. Plans by Li to sell his large stake in PCCW to a consortium assembled by former investment banker Francis Leung Pak-to - a man with close ties to Beijing and to Li's father, Li Ka- shing - were scuttled in November following public personality clashes between Li and the buyers. The younger Li had previously tried to exit the company by selling PCCW's assets to a foreign private equity group at a premium price, a move that was vetoed by Beijing. "I have no plans that need to be announced at this stage [about any plan to sell his stakes] but we will continue maximizing the shareholders' return in terms of profit and stock price," Li said. Meanwhile, he said he is very confident in the position of pay-TV unit Now TV as it has already secured more than half the market. "We have already got more than 50 percent market share, according to the latest figures on hand," Li said. "I believe the ARPU [average revenue per user] will continue to increase, not by lifting the subscription fees but by enriching the TV content." Li said he is keeping his eye on a TV market which has a "higher population than Hong Kong's" and the company will be involved in the actual management rather than just offering consultancy services. "But it won't be China. We already have about 500,000 pay-TV subscribers [in the mainland]." PCCW joined one of the consortia bidding for one or more of the fixed- line licenses being offered in Saudi Arabia in March. The company said Wednesday its Hong Kong fixed-line division will launch an interactive multimedia service platform called "eye" which local households can use to play music, pay bills or buy movie tickets. The company predicts there will be 300,000 new subscribers within three years. "The `eye' service is very definitive and the United States and some European countries will follow suit [in launching the service]," Li said. He also clarified that the largest shareholder of the Hong Kong Economic Journal is a consortium and that he is only the consortium's "satellite." Li secured a 50 percent stake in the Chinese-language financial newspaper for HK$280 million in August.

Vinda International Holding is seeking listing committee approval for its HK$1 billion initial public offering on the Hong Kong bourse.

HSBC Holdings (0005), which has been following a strategy of earnings diversification, is eager to secure up to a 7 percent share of all markets in which it operates, group chief executive Michael Geoghegan said.

A jailed former student activist has been selected by Chief Executive Donald Tsang Yam-kuen to become the next secretary for home affairs, an informed source said. If confirmed, Tsang Tak-sing, a full- time adviser to the Central Policy Unit and the former Tai Kung Pao editor-in- chief, will become the first convicted person to become a minister in Hong Kong. Tsang, who is also a local deputy to the National People's Congress, was an 18-year-old St Paul's College student in 1967 when he was sentenced to two years in jail for breaching the Public Order Ordinance by distributing leaflets denouncing "colonial education" and the opium war. According to his brother, Jasper Tsang Yok-sing, an Executive Council member and Democratic Alliance for the Betterment and Progress of Hong Kong founder, Tsang was a timid boy. He declined to comment further, saying he would wait until the names of the ministers were announced. Tsang's youngest sister Wai-yu, a 15-year-old student in 1967, was also arrested and jailed for one month for a similar offense. After their release in 1969, the siblings were denied the opportunity to continue their education and barred from entry into local universities. They then joined pro-Beijing newspapers. In 1998 Tsang was recruited by the government think-tank and in 1999 he became the first Justice of the Peace with a criminal record when appointed by former chief executive Tung Chee-hwa. Tsang was out of town Thursday night and not available for comment.

Tuen Mun Hospital will be used as a teaching hospital in a Hospital Authority deal expected to turn out at least 120 nurses a year. Officials hope the choice of the regional hospital in the western New Territories can help ease the worsening shortage of nurses in Hong Kong as well as alleviate the unemployment situation in the area and reduce the youth crime rate. The agreement to use Tuen Mun Hospital for nurse training was signed Thursday by the Hospital Authority and the Hong Kong Institute of Technology. Present at the ceremony were Hong Kong Institute of Technology president Joy Shi Mei-chun, HA Network Service director Cheung Wai-lun and Australian professors Jarlath Ronayne, Carol Morse and Lorna Moxham. A program to train nurses has been ongoing since 2005 in the wake of the SARS epidemic but will now be stepped up, according to hospital officials. The program aims to combat youth crime by attracting students to the hospitals where they can "serve the people of Hong Kong," Shi said.

The independence of Hong Kong's judiciary cannot be compromised, the chief justice has said, dismissing fears that a speech by the National People's Congress chairman last week suggests it is under threat. But the top judge warned that vigilance had to be exercised to ensure that this "pillar of Hong Kong's society" was maintained. In a rare interview, to mark the 10th anniversary of the handover, Andrew Li Kwok-nang asserted the power of the courts to rule freely, including in sensitive cases involving the Basic Law. He said Beijing's power to make interpretations of Hong Kong's constitution that were binding on the courts had to be recognised, but that such interpretations should be delivered only in "very exceptional circumstances". "The independence of the judiciary is fully guaranteed in the Basic Law and is a pillar of Hong Kong's society. The exercise of judicial power by the courts is not subject to any interference by the executive, by the legislature or by anybody else," he said. "What is spelled out is an independent judiciary ... there is no doubt that judicial independence and its separation from the branches of government are fully guaranteed by the Basic Law. No one has questioned this."

A high-level panel set up to ease Hong Kong's worsening poverty yesterday completed its two-year study with a call for a "one-stop shop" for job seekers and better co-ordination on existing services. The Commission on Poverty also suggested relaxing the asset limit for elderly people applying for welfare and setting up a children's development fund to help needy youngsters. The current asset limit for a single elderly applicant is HK$34,000. But the panel stopped short of suggesting a time limit on Comprehensive Social Security Assistance (CSSA) payments, despite fears that an indefinite subsidy would discourage recipients from seeking work. Releasing the 127-page final report, Financial Secretary Henry Tang Ying-yen said the commission, which he chaired, had laid a good foundation for the next government to follow up. "This report does not mark the end of the commission's work. It just signifies the beginning of the next stage of work," he said in response to concerns the commission would be disbanded. He said it would be up to the next administration, which takes office on July 1, to decide how to carry forward the recommendations. Government figures show the numbers of those below the age of 59 living in households with income below average CSSA payments fell from 692,800 in 2005 to 618,600 last year. The number of elderly poor people remained unchanged at 204,000. About 128,200 CSSA recipients are considered able to work, or 2.6 per cent of the population aged 15 to 59. Eighty-eight per cent of the recipients have been receiving welfare payments for more than a year. Mr Tang said members agreed there was no need to draw a poverty line to identify who would need help.

China: Chinese travelers changing the world's tourism pattern - In 2006, the number of Chinese tourists who traveled abroad reached 34.52 million, a record high in history. From January to March of this year, the number already reached 9.7 million, 14.5% higher than in the same period last year. Wu Wenxue, vice chairman of the China Tourism Association, said at a forum on tourism in Beijing, that China has become the fastest growing source of tourists in Asia. The fast growth of Chinese travelers going abroad has gained much attention from many destination countries throughout the world. Chinese tourists traveling abroad are changing the tourism pattern in the Asia-Pacific region, as well as the pattern throughout the world. The history of Chinese tourists traveling abroad is quite short. A decade or so before, people only traveled to Hong Kong and Macau to see their relatives. In 1992, only 2.93 million Chinese travelers went abroad, and most of them were part of government delegations. Civilians began traveling abroad just ten years ago and the rate of travel has been growing rapidly. Whenever golden weeks between May 1st and 7th and October 1st and 7th occur, there have been more people who want to travel abroad, according to a manager in the China International Tourism Agency.

The photo taken on June 14, 2007 shows the National Stadium in Beijing. The bowl-shaped stands of the National Stadium, dubbed the "Bird's Nest" have been completed recently after an eight-month installation process. The stands are composed of a total of 14,700 slabs in different size and form, with the biggest piece weighing 18 tons and being 11-meter long.

Harbin, the host city of the 18th Harbin Fair, is an attractive investment destination in Heilongjiang Province.Expanded exhibition scale, cooperation with neighboring countries, revitalization of traditional industrial bases in Northeast China and other economic and cultural activities will be the highlights of this year's 18th China Harbin Fair for Trade and Economic Cooperation (Harbin Fair).

China's biggest shipping firm, Cosco Holdings, is hoping to raise at least 13.5 billion yuan (1.78 billion U.S. dollars) when it launches 1.78 billion yuan-denominated shares on the Shanghai Stock Exchange this month. A statement from the company said it was offering the shares at an indicative price of 7.60 to 8.48 yuan each, cheaper than its Thursday closing price on the Hong Kong Exchange of 9.64 Hong Kong dollars. It is a rare example of a Chinese company returning to the mainland market, said securities brokers, who anticipated that the price would rise to 15 yuan by June 19. The company would use the capital raised to buy 51 percent of Cosco Logistics Co. and 12 new container ships, according to its listing prospectus. The funds will also be used to build new quays and for other logistics projects, it said. The company said 30 percent of the offering will be made available to strategic investors, 25 percent to institutional investors and the rest to retail investors. Online purchases of the shares will begin on June 18, said the statement. The company is scheduled to make its trading debut on the Shanghai Stock Exchange on June 26, said a U.S.-based news agency. However, a woman who works with lead underwriter China International Capital Corp. said that the trading date has not been fixed and the State Securities Regulatory Commission will issue a statement later to inform investors of the date. On June 4, China's securities regulatory body approved COSCO's IPO in Shanghai and said the company's entire capital stocks should not exceed 8.9 billion shares.

A section of the Jiujiang Bridge over the Xijiang River in Guangdong Province is seen collapsed after being hit by a boat laden with sand on June 15, 2007. The boat hit a pier of the bridge connecting Foshan to the neighbor city of  Heshan, and at least 150 meters of the 1,600-metre bridge structure collapsed. The number of casualties were still unknown.

Residents wrap Zongzi (Chinese rice dumplings), a traditional Chinese food made of glutinous rice stuffed with different fillings and wrapped in bamboo leaves, in Taizhou, East China's Jiangsu Province June 15, 2007.

Beijing has criticized the United States for a "Cold War" mentality after US President George W Bush attended the opening of a memorial for those killed in communist regimes.

The mainland's industrial output rebounded last month, growing 18.1 per cent year on year and strengthening the case for further macroeconomic tightening measures amid speculation that another interest rate increase is imminent. Last month's growth rate exceeded the 17.4 per cent in April and surprised economists. Most had forecast a slowdown after an 18.5 per cent peak in January and February. The output figures were released just a day after the State Council issued a report warning of the need for further tightening measures. Industrial output rose 18.1 per cent year on year in the first five months of the year, up from 16.6 per cent growth for all of last year, the National Bureau of Statistics said on its website yesterday. Booming exports were a key factor in the rapid growth of industrial output. Xinhua said the mainland exported 6.17 million tonnes of rolled steel last month, a decline of 13.8 per cent from the 7.16 million tonnes in April, but representing year-on-year growth of 76.8 per cent. Net imports of crude oil jumped 11.5 per cent, to 65.83 million tonnes, in the first five months of this year, largely a result of accelerating industrial production. A State Council report on Wednesday warned of risks facing the economy, indicating the government was considering measures to prevent it from overheating. The cabinet meeting, chaired by Premier Wen Jiabao , highlighted the "overly fast" growth of industrial production and the need to prevent a rebound in investment growth. Timothy Condon, chief economist with ING's Singapore-based Asia unit, said the latest data showed the economy was booming. "Premier Wen said recently that monetary policy needs tightening, which we believe indicates an imminent interest rate hike," Mr Condon said. He expected a 27 basis-point rate increase in the third quarter. Hong Liang, chief China economist with Goldman Sachs, said she believed industrial production growth would remain robust in the near future. "Strong activity growth and rising inflationary pressures highlight the need for further policy adjustments."

Shanghai Media Group aims to more than triple its internet protocol television subscribers by the end of the year to more than 1.6 million, a move that will also benefit network partners China Telecom (SEHK: 0728) and China Netcom, according to industry sources. The group had 400,000 to 500,000 internet protocol television users in the first four months of this year with operations in Shanghai, Guangzhou and the northeastern part of the country, such as Heilongjiang province. Shanghai is the single-largest market with more than 200,000 users while in the northeast the number exceeds 150,000. "Shanghai Media will expand the coverage of its IPTV service this year to more than 20 cities, which will make China the largest IPTV market by the end of this year, surpassing Hong Kong," the source said. PCCW (SEHK: 0008), which runs Now TV in Hong Kong, has claimed it is the world largest IPTV operator with more than 808,000 subscribers. Growth in IPTV business as a new revenue stream is especially important for China Telecom and China Netcom (SEHK: 0906), which lease infrastructure networks for Shanghai Media's services as their fixed-line phone users have been switching to mobile phones. The telecommunications firms have to rely on Shanghai Media because they still have not secured a licence from the State Administration of Radio, File and Television, the media industry regulator. Shanghai Media expected to expand into coastal regions in the southeastern, northeastern and central parts of the mainland including Quanzhou in Fujian province, Chongqing and the Xinjiang Uygur autonomous region. "Shanghai Media has reported to the regulator on the proposed IPTV service expansion," said the source. Shanghai Media Group could not be reached for comment yesterday. The group is hoping that as another licence holder, China Central Television, was busy preparing for the Beijing Olympic Games, it could establish a stronghold in those untapped regions, another source said.

June 16 - 17, 2007

Hong Kong: Shoemaker Stella International and networking equipment manufacturer Delta Networks will raise a combined US$650 million (HK$5.07 billion), following approval for a public float, market sources said.

Three technology companies operating in the mainland plan to raise a combined HK$1.6 billion from initial public offerings in Hong Kong by the middle of next month. Centron Telecom International Holdings, a mainland wireless telecommunications network firm, plans to raise as much as HK$844.9 million later this month. The company and shareholders will sell 238 million shares and are marketing the deal at between HK$2.96 and HK$3.55 a share. That represents 10 to 12 times the forecast earnings for this year. The new shares, which account for 75 per cent of the float, represent 34 per cent of the company's enlarged share capital. Its existing shareholders, including Cathay Mobile, Magicgrand Worldwide and Gainable Enterprise, will offer 25 per cent of the total shares in the deal, which is being arranged by JP Morgan. Revenue at Fujian-based Centron will increase 35 per cent to 1.05 billion yuan next year, according to a JP Morgan report. Regent Manner International, a Taiwanese assembler of printed circuit boards, plans to raise between HK$377.5 million and HK$470 million from an initial public offering later this month. The company, the mainland unit of Taiwan Surface Mounting Technology, would sell 250 million new shares at HK$1.51 to HK$1.88 per share, a market source said. "Two venture funds, Value Partners and Citic Capital, will subscribe to 2.5 per cent stakes each in the company while TSMT will keep 75 per cent," said Patrick Chen, the executive director and chief financial officer. Regent is seeking an initial public offering in Hong Kong as the Taiwan government restricts mainland investment in any local firm to 40 per cent of its asset value. The company, which has 76 production lines in the mainland, plans to spend about US$240 million to add 55 more lines by next year. Regent's profit increased 160 per cent to US$24 million last year as sales rose 40 per cent to US$300 million. Meanwhile, China Automation Group, a Beijing-based company, plans to raise about HK$200 million through a Hong Kong initial public offering next month. The company provides safety and critical control systems to chemical and railway companies. The deal will be arranged by First Shanghai Group.

Macao is expecting a new casino business boom as Las Vegas Sands Corp. announced Thursday to open a new mega-casino complex in the city's Cotai island on Aug. 28. The international gaming giant said in a statement that the Venetian Macao project will be the second largest casino building in the world and the largest in Asia. "This is truly a defining moment for Las Vegas Sands Corp. as our work to open Macao's first multi-use integrated resort comes to fruition and our vision of creating Asia's Las Vegas comes one step closer to reality," the statement quoted Sheldon G. Adelson, chairman and chief executive officer of the company, as saying. The new gaming complex will feature 3,000 all-suite rooms, 1.2 million square feet of meeting, convention and exhibition space, an 1,800-seat theater, a 15,000-seat arena and a 350-stall shopping space, according to the statement. The statement said the launch of the mega-complex will mark the opening of the first gaming project on the Cotai Strip, adding that upon completion, the strip will feature 20,000 hotel rooms, over 3 million square feet of retail space, and over 2.5 million square feet of meeting and convention facilities. The entire Cotai Strip development is reportedly budgeted to cost 11 billion U.S. dollars. Las Vegas Sands Corp. will build and own each of the properties on the strip that will, however, be operated by other companies including Four Seasons, Sheraton, St. Regis, Shangri-La, Traders, Hilton, Conrad, Fairmont, Raffles, Swiss Hotel, Inter-continental, Holiday Inn and Cosmopolitan, according to the statement. The strip will also be home to six Las Vegas-style showrooms and a large arena for a sports and entertainment events, offering a total of 20,000 seats for live entertainment, it said. Las Vegas Sands Corp., the world largest gambling company by market value, was the first U.S. casino owner to enter Macao with the Sands Macao project in 2004, ending the 40-year gaming monopoly of the local casino magnate Stanley Ho Hung Sun. The company is also investing 2 billion U.S. dollars in hotels and condominiums in the neighboring mainland city of Zhuhai. Shares of Las Vegas Sands Corp. recently rose two cents to 78. 40 U.S. dollars in New York Stock Exchange composite trading.

A student passes a billboard of Hong Kong in Hong Kong June 12, 2007. The mainland is poised to expand its free trade pact with Hong Kong in a bid to link the two economies more closely. The mainland is poised to expand its free trade pact with Hong Kong in a bid to link the two economies more closely. The fourth supplement to the Closer Economic Partnership Agreement, or CEPA, will be released by the end of this month to mark the 10th anniversary of Hong Kong's return to the motherland, Ministry of Commerce spokesman Yao Shenhong said at a press conference yesterday. The new supplementary agreement will mainly cover service industries, such as the finance sector, Yao said, without elaborating. He said the two sides are now finalizing the text. The mainland signed the first CEPA agreements with Hong Kong in 2003. Three supplements have been added to the basic agreement since then. Under CEPA, products originating from Hong Kong do not face tariffs when they enter the mainland, and Hong Kong-based companies are granted greater access to mainland markets. "The agreements will play a part in boosting the economic and trade exchanges between the mainland and Hong Kong as well as promote economic growth in Hong Kong," Yao said. According to a study released by the government of the Hong Kong Special Administrative Region, the CEPA has boosted Hong Kong's economy by increasing trade, creating jobs, attracting investment and unleashing tourism. By the end of last month, more than 23,000 certificates of origin had been issued, involving HK$8.3 billion ($1.06 billion) worth of exports. CEPA also helped create 36,000 new jobs in Hong Kong from 2004 to 2006, and the government forecasts another 3,600 jobs will be created this year. Of the 2,600 enterprises taking part in the government study, 89 percent said the CEPA has benefited the economy, and 77 percent said the preferential trade arrangement was beneficial to the manufacturing sector. CEPA brought HK$305 million worth of investment to the manufacturing industry in 2005 and 2006, and further HK$239 million is expected for this year. The agreement allowed for the injection of HK$4.8 billion worth of investment into the services sector last year, representing a rise of 380 percent over 2004. The number for this year is expected to be HK$2.4 billion.

An employee holds new stamps jointly issued by China Post and Hongkong Post during a news conference in Hong Kong June 11, 2007. The mainland is poised to expand its free trade pact with Hong Kong in a bid to link the two economies more closely.

The government proposes to drastically amend the Domestic Violence Ordinance which, for the first time, will give minors the right to protect themselves from abuse and allow a court to direct an abuser to receive anti-violence treatment, a source said Wednesday.

Skyrail-ITM has ruled out "operational problems" as the cause of the crash of a gondola at the Ngong Ping 360 attraction on Lantau Monday, and insisted that the ropeway tests carried out on the cable car system just before the accident were in accordance with the instructions of the Austria-based manufacturer.

Intervention by Beijing in Hong Kong affairs, such as interpretations of the Basic Law, could undermine local and international confidence in the city's autonomy and competitiveness, the United States' consul-general said yesterday. At a lunch organised by the Better Hong Kong Foundation, James Cunningham said such interventions, while infrequent, were troubling precedents and could undermine the high degree of autonomy promised in Hong Kong's Basic Law and the 1984 Sino-British Joint Declaration. He said it was not up to his government to specify a timetable for universal suffrage but said the US administration had "felt for a long time that Hong Kong is ready, not just for political reform but for universal suffrage", and that the sooner it was implemented the better. Mr Cunningham's remarks come a week after Wu Bangguo , the chairman of the National People's Congress, told a Basic Law conference in Beijing that "the provisions for the high degree of autonomy for the HKSAR are mandated by the central government ...The HKSAR only has as much power as is authorised by the central government". In what appeared to be a stern reminder of Beijing's authority on political reform issues, Mr Wu said it would not be appropriate to copy the US system of separation of powers between the executive, legislature and judiciary, or the British parliamentary system, directly to Hong Kong. Public figures from the pan-democratic camp feared Mr Wu's words suggested that freedoms granted could be withdrawn, and that Hong Kong did not practise the concept of separation of powers. Mr Cunningham did not comment on specifics of the speech, but said points raised, and the reaction it generated, interested him. "I think the speech itself and the reaction to it in Hong Kong and other places is interesting and shows there's a good discussion to be had over some of the points raised. I think it's better if people in Hong Kong discuss themselves the implications and the meaning of the speech than if I do," he said. Mr Cunningham noted that Executive Council convenor Leung Chun-ying begins a trip to the US on Sunday with a Better Hong Kong Foundation delegation. "Mr Leung has said [he could] provide some explanation or amplification to those remarks. So I think it's better the discussion takes place in that context," he said. The Standing Committee of the National People's Congress has interpreted the Basic Law three times since the handover - over the right of abode, political reform and the length of the chief executive's term. In 2004, anticipating Beijing's interpretation of the scope for political reform, Mr Cunningham's predecessor, James Keith expressed grave concern. "We believe that an open society with the highest possible degree of autonomy and governed by the rule of law is essential to maintaining stability and prosperity in Hong Kong," Mr Keith said. Mr Cunningham expressed optimism for Hong Kong's future, but reiterated that "political reform is an important and necessary component in maintaining competitiveness in the future".

Ocean Park expects new pandas to lift summer crowd numbers - As the countdown continues to the July 1 public debut of the city's new bamboo-munching darlings, Le Le and Ying Ying, Ocean Park says it is confident the two giant panda cubs will boost attendances. The two adorable pandas are a gift from the central government to celebrate the 10th anniversary of the handover. The park's chairman, Allan Zeman, said he expects summer attendance to surge past last year's million mark, particularly with the arrival of the panda cubs. The pandas, considered national treasures, would foster closer ties between the Hong Kong and the mainland, he said. "They symbolise the gesture from the mainland. It is a gift from the heart and draws the relationship closer." The pandas, which arrived in the city at the end of April, are acclimatising to the new surroundings and are growing healthily. Both have gained weight, with Le Le weighing in at 74kg and Ying Ying hitting 70kg. The cubs will spend the next 18 months in the refurbished Giant Panda Habitat before they are relocated to the "Astounding Asia" animal kingdom, which will open by the end of next year. The park is to launch a "Panda Channel" on Now Broadband TV. Fans of the city's four pandas - until now An An, a 20-year-old male, and Jia Jia, a 28-year-old female have been the stars at the park's Giant Panda Habitat - will be able to monitor their activities on television, the internet and on mobile phones. The park will also put on sale more than 300 types of panda souvenirs after the launch.

China: Chinese Commerce Minister Bo Xilai and EU Trade Commissioner Peter Mandelson reached consensus on a number of issues, including textiles, during Tuesday's annual China-EU trade talks.

The skeletal remains of a gigantic, surprisingly bird-like dinosaur, which has been classed as a new species and genus, is the largest of its kind known to the world. Eight metres long and standing at twice the height of a man at the shoulder, the fossil of the feathered but flightless Gigantoraptor erlianensis was found in the Erlian basin in Inner Mongolia, researchers wrote in the latest issue of Nature.

A deputy director of the Federal Bureau of Investigation (FBI) of the United States on Wednesday hailed its cooperation with China on terrorism. "I am satisfied with the level of cooperation on terrorism with China," Thomas Fuentes, assistant director of the FBI, told a briefing on Wednesday. He said the FBI is working with Chinese public security officials to track the role of "East Turkistan" groups in China's northwest in terrorist activities and their possible links with al Qaeda. The hour-long briefing took place in U.S. Embassy in Beijing and came one day ahead of the sixth meeting of Joint Liaison Group between China and the United States on law enforcement cooperation. Fuentes said the two-day meeting will address law-enforcement issues concerning the fight against corruption, cyber crime, fugitive matters, human smuggling, intellectual property, mutual legal assistance and repatriation.

China's Ministry of Commerce listed a number of measures to ensure control over direct investment of foreign fund in the real estate sector, as the country strives to avoid international speculative money to create bubbles in the sector.

The construction of a new high-speed railway connecting Guangzhou, the largest city in south China, and Nanning, capital of Guangxi Zhuang Autonomous Region, will start within the year. The railway, with a length of 560 km, will require an investment of 29.5 billion yuan which will be shared by the Chinese Ministry of Railways, Guangdong Province and Guangxi, said an official from Guangxi autonomous regional commission of development and reform. The Guangzhou-Nanning railway will have two electrified routes capable of accommodating passenger trains running at speeds of up to 250 km per hour, according to the official. "The line will help cut the travel time from Nanning to Guangzhou from the present 12 and a half hours to three hours and a half," said the official, who added that the railway would form a high-speed transport link connecting southeast China coast to members of the Association of Southeast Asian Nations (ASEAN). China launched new high-speed rail services on April 18 linking Beijing to Harbin, Beijing to Shanghai and Beijing to Guangzhou.

A train travels along the Qinghai-Tibet Railway in Golmud, Northwest China's Qinghai Province, June 13, 2007. The landscape, lakes and the frozen earth on the Tibetan Plateau have been well preserved and the wildlife's migration remained unchanged since the world's highest railway was put to use, the State Environmental Protection Administration says in a survey report.

Iraqi President Jalal Talabani will visit China later this month for meetings with top officials, the Foreign Ministry announced Thursday.

In the wake of accelerating inflation and renewed frenzy in the share market, the State Council said Wednesday the government will introduce further policy initiatives to mop up excess liquidity, signaling imminent tightening measures to temper economic growth and hold consumer prices in check.

Mainland retail sales last month grew at the fastest pace in three years as increasing incomes, and the wealth effect from stock market investment, allowed households to spend more.

June 15, 2007

Hong Kong: Hong Kong's international investment position remained strong and sound last year, with net external financial assets amounting to HK$4.2 trillion (US$538 billion), the Census and Statistics Department of the government of Hong Kong Special Administrative Region said on Monday. The net external financial assets of 2006 accounted for 282 percent of gross domestic product, significantly higher than that of 159 percent in 2001, according to the international investment position statistics issued Monday. The city's external financial assets amounted to 15.3 trillion HK dollars last year, with direct investment as the largest component, accounting for 34.9 percent. This was followed by portfolio investment, accounting for 30.1 percent. Comparing 2006 with 2005, total external financial assets rose 32.3 percent, while direct investment grew 46.6 percent and portfolio investment 36.3 percent. Last year saw Hong Kong's external financial liabilities at 11.2 trillion HK dollars, with 53.5 percent in the form of direct investment. Compared with 2005, total external financial liabilities surged 36.7 percent. Direct investment went up 47.4 percent while portfolio investment rose 47.6 percent. The ratios of both Hong Kong's external financial assets and liabilities last year to gross domestic product remained substantial, at 1,040 percent and 759 percent. This shows Hong Kong is a highly externally-oriented economy with considerable cross-territory investment and also a major financial center in the region with considerable cross-territory fund positions.

Ocean Park Chairman Allan Zeman, dressed in a panda costume, announces activities to celebrate the 10th anniversary of Hong Kong's handover on July 1, during a news conference in Hong Kong June 13, 2007. Two giant pandas given by the Chinese mainland to Hong Kong in April, christened Le Le and Ying Ying, are staying in Hong Kong's Ocean Park and will be shown to the public a few weeks later.

More extensive cooperation in the service sector should be established between Shanghai and Hong Kong, government officials, academics and business leaders from the two cities said on Friday in Shanghai. Further and deeper cooperation is good for both Hong Kong, whose flourishing service sector is hampered by space constraints, and Shanghai, which is keen to focus its development on the sector, Wang Ronghua, vice-chairman of Shanghai People's Political Consultative Conference, said. He was speaking at a forum on the opportunities for cooperation between the two cities. Wang said the two cities complemented each other in many ways and have great potential for working together. "Hong Kong has a long history of developing its service industry and has accumulated abundant experience and talent in the field," Wang said. "Shanghai is building itself into an international hub for finance and shipping, and is also working on the economic integration of the Yangtze River Delta. "Shanghai has a lot to learn from Hong Kong and at the same time can provide plenty of opportunities and serve as a platform for Hong Kong to expand its business in other mainland cities," he said. Leung Chun-ying, a member of the Executive Council of Hong Kong Special Administrative Region, said there was also competition between the two cities and that has to be faced. "We have to find an effective way to avoid unhealthy competition and increase cooperation," he said. Cai Laixing, chairman of Shanghai Industrial Investment (Holdings) Co Ltd, said that cooperation was the only way to help both cities bloom. Wang said: "We should encourage more service businesses from Hong Kong to set up in Shanghai as well as more state-owned or private enterprises in Shanghai to list in Hong Kong and expand their business abroad in that way." Wang said that cooperation on exhibitions, international merchandising and finance would be particularly encouraged.

China: The Bush administration on Wednesday refused to cite China as a country that manipulates its currency to gain unfair trade advantages.

China IT needs to develop as brand for global firms to reach it - The Indian software industry knows little about the Chinese IT and does not compete with the latter, Indian software giant Wipro's Chief Marketing Officer Jessie Paul told Xinhua in an interview on Wednesday. China, according to Paul, needs to portray itself as a brand in the software sector, like India for global firms to start reaching out to China for IT business. "Brand is harder to build. India has taken 25 years to build the brand," Paul said. "China is working harder at it than it was 10 years ago and the (Chinese) government is providing all the support which is good," Paul said. However, Paul added that China was excellent in manufacturing, an area India is not so good at. Speaking of software, Paul said the clients the Chinese firms target may be different from those of Indian firms. Indian firms get over 95 percent of business from global market. Communication, Paul said, is another area that China can work on for Chinese software firms to go global. "Language is something China needs to work on," Paul said. Wipro, which has now set up offices in Shanghai and Beijing, has about 150 staff members in China but at the same time has no Chinese clients. Its clients in China are the global firms that have their offices there. One third of Wipro's business comes from Research and Development (R and D) and happens to be the world's largest R and D support provider. Indian IT exports, she said, are valued at 30 billion U.S. dollars today. Explaining reasons for strong software industry in India, Paul said India has a strong base in education, invests a lot in engineering and Indians have always excelled in it. Wipro is expanding and understands that it needs to make its clients feel at home with the Indian firm staff. While it plans to hire staff in countries it plans expansion in, Wipro is also following a technique called Immersion, wherein it trains its Indian staff about the culture of the country they are expected to visit. Wipro plans expansion in Europe and the U.S.

A skull, on which a real craniotomy operation was carried 5,000 years ago, has been displayed in Shandong Museum recently. Regarded as the earliest evidence of a successful craniotomy practice in China, the skull was unearthed from a site of ancient cultural relics named Fujia Dawenkou in Guangrao, a county of east China's Shandong Province, in 1995.

Customers walk in a supermarket in Shenyang, in northeastern China's Liaoning Province June 12, 2007. The National Bureau of Statistics on Tuesday announced that the consumer price index (CPI) for May reached 3.4 percent. The figure well beats the three percent target set by the People's Bank of China for this year and triggers a new round of debates on the possibility of another interest rate hike.

China is taking a close interest in the IPO about to be launched in the United States by the Blackstone Group, the world's second largest private equity fund -- because a Chinese national investment company is poised to take a stake. The IPO could turn out to be the largest in the United States in the last five years. Company sources said Wednesday that the preliminary price range for the IPO had been set between 29 and 31 U.S. dollars per share. With 20 million common units available to cover over-allotment, the IPO will likely involve 238 million shares and raise as much as 7.75 billion U.S. dollars. According to the prospectus the company has filed with the U.S. Securities and Exchange Commission, 105 million shares will be sold at a 4.5 percent discount to China's state foreign exchange investment company SIC, which is being formed to manage a part of China's huge forex reserves. By the end of March, China's foreign exchange reserves had jumped 37 percent on a year earlier to exceed 1.2 trillion U.S. dollars, mainly invested in low-yielding dollar bonds. The SIC will have a 9.7 percent stake in Blackstone. Public shareholdings will account for 12.3 percent to 14.1 percent, and veteran shareholders, including Blackstone Group executives, 76.2 percent to 78 percent. The sources said the IPO price will be finalized in the last week of June. The company will list on the New York Stock Exchange at the end of June. Morgan Stanley and Citigroup Global Markets will act as the leading underwriters of the IPO. Other underwriters include Merrill Lynch, Lehman Brothers, Deutsche Bank Securities and Goldman Sachs. As of May 1, Blackstone Group managed 88.4 billion U.S. dollars worth of assets, up from 14.1 billion U.S. dollars worth at the end of 2001.

15-year-old Chinese gymnast Wang Yan falls into coma after she broke her neck in
an accidental falldown from uneven bars at the national championship in Shanghai, June 10, 2007. Wang may suffer a paralysis said an insider from the diagnosis group.

Telecoms network firm Ericsson on Sunday signed a framework agreement to provide US$1 billion worth of networking equipment to China Mobile Communications Corp. Ericsson Chief Executive Carl-Henric Svanberg signed the deal in Stockholm during a state visit by China's President Hu Jintao, the first by a Chinese leader to Sweden. "The most important thing was that we signed a contract today for deliveries of US$1 billion worth of telecoms equipment. We have a third of the telecom market in China so this was another significant step in that development," Svanberg told reporters at the ceremony. Ericsson said the new framework agreement would see it supply core and radio network equipment, along with related technical support and services, to China Mobile as it expands GSM coverage in 19 regions of China. The Swedish company said deliveries had already started.

The 2008 Beijing Olympic Games are expected to attract four billion viewers of TV relay around the globe, a top Olympics TV relay official has said. "The figure will be one billion more than that of the 2004 Athens Olympics, and I believe we can achieve that goal," Ma Guoli, Chief Operation Officer of Beijing Olympics Dissemination Corporation Ltd., told a forum at an on-going TV festival in Shanghai on Tuesday. Ma said that the company will use about 65 High Definition relay vehicles and 1,000 video cameras, build a broadcasting center with an area of up to 80,000 square meters, and produce live TV signals of 3,800 hours in 2008. The company has signed contracts with 45 TV producers and more than 50 equipment suppliers from across the world, Ma said. "High Definition signals will be used for TV relays for all 28 Olympics events," he said. The company has 180 staff members for now, and one third of them are from 15 other countries and regions, according to Ma. "By 2008, the number will increase to 4,000 and half of them will be from all over the world," he said.

Sharon Stone will be among celebrities who take a turn on the red carpet at Saturday's opening of the Shanghai International Film Festival. The "Basic Instinct" actress arrived in China's commercial hub late Tuesday, with local newspapers showing her stepping from a Mercedes Sedan into the lobby of the downtown Marriott hotel wearing white slacks and a dark, long-sleeved top. The festival's organizers said Stone, a star of last year's ensemble piece "Bobby," would be joined at Saturday's opening by Marion Cotillard, the star of the Edith Piaf biopic "La Vie en Rose," "Memoirs of a Geisha" actress Kaori Momoi, and Taiwanese singer-actor Jay Chou, along with a host of Chinese and South Korean stars. Acclaimed Chinese director Chen Kaige heads the multinational jury at this year's festival that also includes Luc Jacquet, director of the 2006 Academy Award winning documentary "March of the Penguins." The June 16-24 festival, now in its 10th year, features lectures, screenings, and a marketplace for films, as well as the awarding of its top prize, the Jin Jue, or "Golden Goblet" prize.

June 14, 2007

Hong Kong: We got it wrong on HK, Time admits - Ten years ago, Time's sister magazine, Fortune, predicted that the return of Hong Kong to the motherland would sound the death knell for the Pearl of the East. But in a cover story on its latest issue entitled "Hong Kong's future: Sunshine, with clouds", Time admits it made a mistake. The following are excerpts of the article. These days, 10 is practically the new teen - as knowing, and as confused, an age. You think you understand who you are, but you don't, not really. You want to be independent, but you still need adult supervision. You are developing a sense of righteousness, but find it runs up against a pragmatic world where compromise is a necessity. Ten is a neat number, but a messy stage in life. So it is with Hong Kong. At just past midnight on July 1, 1997, in a glittering and poignant ceremony, Hong Kong passed from being the last jewel of an old empire to a component of a new global power. Hong Kong matters not only because it is a vital driveshaft of the global economy, transmitting the raw power of China's (the mainland) manufacturing capability into a worldwide system for distributing consumer goods. The city matters because it is a unique experiment that will probably succeed but could possibly fail: the creation of a free, international city within China. In the short period since a collection of fishing villages were turned into a modern metropolis, Hong Kong has survived war, waves of refugees, pestilence, drought and economic near-implosions, consistently defying the doomsayers, repeatedly rebounding. In the past 10 years alone, Hong Kong has lived through a crippling regional financial crisis, bird flu, SARS... The city's run of luck has often seemed near the end; Time's sister magazine Fortune once infamously, and incorrectly, predicted that its return to China would bring about its death. Yet Hong Kong is more alive than ever. On the eve of the handover, the stock market index, a key barometer of Hong Kong's health, stood at the then record of 15,200; today it hovers near the 21,000 mark. Property prices - in many ways the best measure of the territory's success because they are followed so closely by the man (and woman) on the Kowloon minibus - dipped after the handover and again after SARS, but are now once again rising to stratospheric levels. "Things did not come to a grinding halt in 1997," says Sir David Akers-Jones, 80, a former acting governor who stayed on in Hong Kong after retiring. "Things continued Life went on." But not, of course, in the way it had. Neither China (the mainland) nor its SAR has stood still in the past 10 years. Once, Hong Kong's preeminent preoccupation was the pursuit of wealth, and the place remains obsessed with money. (Only in Hong Kong would the website for an investment seminar be As it becomes ever richer, however, Hong Kong has realized that there's more to life than making a fortune. A civil-society movement has come into being, agitating about everything from the filthy air (though it is probably the cleanest of all China's cities) to preserving old buildings to helping the poor... Hong Kong is a pulsating organism made up of the most enterprising conglomeration of humanity the world has ever known. That will never change. Identity crisis or no, Hong Kong understands that it's damned lucky to have become a part of China at so fortuitous a time, when the mainland is becoming ever freer and more open and in a position to give its hybrid, somewhat alien, child more opportunity than it could possibly have dreamed of. "I can't see what reason people in Hong Kong have to be pessimistic," says economist David O'Rear.

Thaksin Shinawatra, the ousted prime minister of Thailand, was the purchaser of the luxury townhouse on The Peak recently sold by Sun Hung Kai Properties (0016) - a property whose price tag of HK$41,000 per square foot set a record in Asia's luxury property market, sources told The Standard. A source close to the deal said it was billionaire Thaksin who paid an astounding HK$210 million for the 5,100 sq ft townhouse, referred to as House 1 at Severn 8, The Peak. Two other sources also named Thaksin as the buyer, whose identity was previously unknown. "It is obvious the seller is pushing the price to the limit," said a source who has been in the property industry for more than 30 years. "It would require someone who either loves the property very much or who does not care about money at all to make the call of buying it for more than HK$41,000 per square foot." The Severn 8 development is considered one of the biggest projects in Hong Kong in terms of size and luxury. Thaksin's townhouse - complete with swimming pool - does not stand on its own but is connected to other units and, therefore, was considered unlikely to fetch such a premium price. Local media had previously reported only that the property was sold to an unnamed "businessman."

Sun Hung Kai Properties (0016) bagged a prime seaview site in West Kowloon for HK$5.56 billion as it threw caution to the wind amid sluggish bidding from developers concerned about the high reserve price and the prospect of a judicial review related to the site.

Hongkong and Shanghai Banking Corp chief executive Michael Smith will leave HSBC Friday to become chief executive of Australia and New Zealand Banking Group, which will give him a total remuneration package of up to A$12 million (HK$79.1 million) per annum.

Skyrail-ITM - the Australian firm behind the Ngong Ping 360 cable car system on Lantau - will be asked to replace its entire management team if it is found to be responsible for the incident Monday in which a cabin plunged 50 meters to the ground after becoming detached from the cable. The warning came from Secretary for Economic Development and Labour Stephen Ip Shu-kwan Tuesday as he announced a thorough investigation will be launched with the help of overseas experts. The probe is expected to be completed within a month. The incident was the first of its kind at the Lantau tourist attraction since the trouble-plagued cable car system began operation in September last year. Ip said the investigation will cover not only the mishap itself, but also the overall management and maintenance of the system.

Commuters caught using foul language on MTR and KCR trains will not be jailed, as proposed earlier by the MTRC. The company has decided to withdraw the proposal calling for imprisonment and replace it with another that called for a HK$5,000 fine.

Hong Kong paid tribute to four world-scientific grandees yesterday with the announcement of this year's Shaw Prize, the city's version of the Nobel Prize. The winners are an astronomer who helped explain why so many galaxies look like spiralling discs; two mathematicians who found deep connections between prime numbers and the mathematical principle of symmetry; and a professor of medicine who made fundamental discoveries on how cell receptors mediate the body's responses to drugs. "The advancement of society and the prosperity of civilisations can be attributed to the contribution of great talents of past and present,' said Ma Lin, Shaw Prize council member and former Chinese University vice-chancellor, at the announcement ceremony yesterday. "Their achievements enable us to enjoy the advantages of modern civilization." This is the fourth year that the prize - worth US$1 million in each category - has been awarded and a presentation ceremony will be held on September 11. Peter Goldreich, of the California Institute of Technology and Princeton University, was awarded the astronomy prize for his lifetime achievements in theoretical astrophysics and planetary sciences, which range from the structure of galaxies to the low radio-frequency effects of one of Jupiter's moons on its planet. The life sciences and medicine award goes to Robert Lefkowitz, a professor of medicine and biochemistry at Duke University in North Carolina, whose research underlies much of contemporary understanding of drug treatment. Robert Langlands, of Princeton University, and Harvard University mathematician Richard Taylor will share the maths prize for their work in what has come to be known as the Langlands programme. This is a complex series of conjectures linking contemporary number theory to another important branch of mathematics called representation theory. A conjecture of Professor Langlands was used by British-American mathematician Andrew Wiles in his celebrated proof of the centuries-old Fermat's Last Theorem. Professor Taylor studied under Wiles and helped him complete his proof.

The number of Hong Kong teenagers identifying themselves as Chinese Hongkongers has risen in the past decade, a poll has found. Today's young people also agreed that China was a stronger economic power than Hong Kong but many said they were not willing to build good relations with mainlanders. The survey, conducted by the University of Hong Kong, interviewed 3,993 young people after a similar poll was conducted in 1996 of 9,226 students, where the average age was 15. Pollsters say that 22 per cent of the teenagers called themselves Chinese Hongkongers, up from 16 per cent in 1996. The number of people calling themselves Hongkongers also dropped from 34 to 29 per cent. But the number of teenagers who claimed to be Hong Kong Chinese has remained constant at 40 per cent. "The result shows a significant change in terms of national identification," said Lam Shui-fong, Hong Kong University's associate psychology professor, who headed the study. "More people give themselves a dual identity - Chinese Hongkonger. They include those who were born in Hong Kong and the mainland too." Dr Lam said there were several reasons for the stronger acceptance of a national identity, such as civic education in schools. "The survey did not ask them what has contributed to the change," she said. "[But] the national flag raising ceremony and national anthem being sung at school would also have enhanced the sense of belonging." The poll has also revealed that fewer teenagers would publicly criticise the mainland, while more said they were proud to be Chinese.

Hong Kong ranks as the world's top "business centre" and fifth in the world among cities in global commerce, according to the latest results of the 2007 MasterCard Worldwide Centres of Commerce Index. But the researchers said Hong Kong must strive to improve its environment if it wants to attract talented professionals. A business centre is measured by the ease of starting and closing a business, employing workers, international air passengers and air cargo traffic, and the number of five-star hotels. In turn, the dimension of "business centre" is one of six key measurements used to assess each city's ability to link with international markets. Economic stability and legal and political framework are two of the others. Danny Cheung, MasterCard worldwide vice-president and business manager for Hong Kong and Macau, said the city's high-quality facilities and high volume of airport cargo and passenger traffic were also significant. "Every little thing counts, and these things help Hong Kong, shape Hong Kong and make Hong Kong one of the best places for people to do business," he said. On the list of the 50 top Centres of Commerce, London was No1, followed by New York and Tokyo. Then came Chicago, Hong Kong and Singapore. The ranking, which is the first Centre of Commerce index compiled by MasterCard, highlights Hong Kong's leadership in commercial real estate development and control of the world's second-busiest port. Yuwa Hedrick-Wong, economic adviser to MasterCard Worldwide and the study's lead researcher, said air pollution subtracts from Hong Kong's quality of life indicators, a large part of the liveability index. "Unfortunately, it's not an issue that Hong Kong itself can address. It is a country-wide issue for China," he said in a statement for yesterday's press conference.

Mission to US hopes to rekindle interest in HK - Executive Council convenor Leung Chun-ying said yesterday he hoped a delegation from the Better Hong Kong Foundation, which starts a tour to the United States on Sunday, could rekindle Americans' interest in Hong Kong. While noting concerns voiced by the US on Hong Kong's future when he first visited the country to talk about the city's situation 12 years ago, Mr Leung said Americans now had a deeper understanding of the city and implementation of the Basic Law 10 years after the handover. "What they worried about in 1997 has not materialised," Mr Leung, a delegation member, said. "Ten years on, their reports on Hong Kong's affairs are much fairer, yet their curiosity level for Hong Kong has dwindled. In fact, their dwindling curiosity may not be a good thing for Hong Kong ... I hope that this trip can rekindle their interest." Mr Leung said he would talk about the implementation of the Basic Law and the economic integration between Hong Kong and the mainland, as well as the challenges stemming from this. He also said he was willing to clarify remarks last week by National People's Congress chairman Wu Bangguo on the limits to Hong Kong's autonomy, if anyone questioned them, and added that Hong Kong actually had more autonomy since the handover than in colonial days. The theme of the foundation's annual delegation this year is "Hong Kong in the past 10 years and the road ahead". The delegation will be led by the foundation's executive director, Karen Tang Shuk-tak, and will also include executive and legislative councillor Bernard Chan and a chair professor of finance at City University, Stephen Cheung Yan-leung. They will meet leaders from the government, Congress, academic and business sectors, think-tanks and NGOs in Washington and New York, during their week-long trip. Professor Cheung said while many people had feared Hong Kong might become marginalised after the handover, and some regarded Beijing as a potential threat to the world as well as to Hong Kong, developments in the past 10 years proved the handover had had a positive impact on the city.

China: A Chinese investor's acquisition of a German airport hits a stumbling block after the transaction did not get approval from Ministry of Commerce, reported the China Economic Weekly on Monday. The deal grabbed headlines in late May, when LinkGlobal Logistics bought Parchim Airport in Germany and was hailed as an unprecedented transaction that opened a new investment chapter in Chinese aviation history. Chairman of LinkGlobal Logistics Pang Yuliang, the main player, was in the media spotlight after beating out 10 other global competitors for this airport, which has an annual capacity of 180,000 flights and can handle all kinds of civil aircrafts. But now, the Ministry of Commerce has halted the transaction because the deal hasn't been filed with relevant authorities, which prevents LinkGlobal from completing the financial part of the deal. When the media tried to contact Pang about the setback, he refused to comment. Brought up in the poverty-stricken Shangcai County, Central China's Henan Province, Pang's logistics business currently covers more than 800 cities in mainland China and some 90 countries worldwide. When the transaction to buy Parchim Airport was announced, Pang said: "There will be no need for my fellow-villagers heading towards Germany to transfer in Beijing or Shanghai once a charter flight is organized." At the time, he is already in negotiations with aviation officials to link Zhengzhou, the capital of Henan Province to Parchim Airport. Pang diverted his global logistics business from Beijing, Shanghai and Shenzhen to Zhengzhou, and invested 300 million yuan (US$39.2 million) in 2006 to set up an international logistics center that provides global sea port, airport logistics, global express, bonded processing, and international trade services. A banner in front of Pang's company reads "If you only have a hammer, you always see problems as nails", perhaps Pang has already got a hammer to pound the pending issue.

Contest show names Red Chamber cast, sparks debate - The 10-month televised marathon audition looking for actors for the new adaptation of A Dream of Red Chamber, is over, but the debate has just begun. Li Xudan bets other hopefuls to win the role of Lin Daiyu in the new television adaptation of the story. Li Xudan and Yao Di beat other hopefuls to win the leading female roles of Lin Daiyu and Xue Baochai amid much controversy over the weekend during the four-hour final televised casting call. But who will play the leading male role of Jia Baoyu is still unknown, since the jury and audience felt the pool of candidates were not good enough, according to Hu Mei, the director of the new television series. Some of the actors who were screened out will have minor roles. However, there were heated debates on the Internet, with many netizens raising suspicions over how Li got the role of Lin Daiyu. Hu was reportedly furious after Li, then a promising candidate, was surprisingly eliminated during the audition process. The director threatened to quit if the talent selected by the jury and audience did not meet her expectations. As part of the audition process, if an actor is screened out, they can still "survive" but playing a "revival game," giving the ousted candidates a second chance. Li managed to win the game and in the end was given the leading role. But many netizens doubt the fairness of the contest.

People get together to eat lobster during a feast in Xuyi County, East China's Jiangsu Province, June 12, 2007. Some 15,000 people devoured nearly ten tons of lobster made by about 500 cooks during the feast.

A brand new official website of the BEIJING 2008 Olympic Games was launched on Tuesday. The new site is based on a solid foundation of quick Games-time turnaround making use of mature, mainstream technology, an elegant color scheme and tasteful design, and clear and simply organization for ease of use. Since 2001, the official website of the BEIJING 2008 Olympic Games has undergone numerous facelifts, from the modest website used solely for reporting news at the onset gradually evolving into a comprehensive platform for news about the preparation for the Games, society and sports news, as well as for interaction with web users. The volume of official website visitors surpassed 1.3 million visitors the day the official mascots were released. The changes in the official website of the BEIJING 2008 reflects the continual progress with the preparations for the Games. The new official website combines insight from the multiple discussions among various groups, including the design team for the new website, professionals from the IOC, professionals from internet project groups, and the contractor Inc. It fully takes into consideration the browsing experience of visitors. From a design angle, the new official website adheres to the BEIJING 2008 image and look using green-blue and Chinese scholar tree green as its main colors. The overall design has perfectly balanced, aesthetically pleasing look, representing a green and humanistic Olympics and possesses lasting representative Chinese characteristics and essence. In terms of content design, the new official website places more emphasis on the visitor's experience as well as service functions. The organization of the website is simple, with a more intuitive layout. The new official website uses page code technology, various media and mature technologies, giving users a whole new reading experience, with a range of interactive products and newly added service functions, thereby adding to the website's level of appeal and service standards. Currently, the official website of the BEIJING 2008 Olympic Games is offered in three languages -- Chinese, English, and French. The specific requirements for language group were fully considered in designing every part of the website, from column placement to subject schemes. "The site [new site] is going to be a more complete reflection of what BOCOG has grown into." An expert expressed his optimism about the brand new official website. "I congratulate the [design] team on the work that's been done and know that this will be an important next step to achieving the best Games-time website ever because the entire world will be coming to visit, and I'm sure that it will set every record for visitors to a website that's ever happened during the Olympic Games."

China has beefed up its laws against terrorist financing, describing it as an important step toward becoming a member of a global anti-money laundering task force.

June 13, 2007

Hong Kong: Families may have to pay for excessive storage time in public hospital mortuaries if interim measures fail to ease an acute shortage of space, Deputy Secretary for Health, Welfare and Food Patrick Nip Tak-kuen said Monday.

Six for Tsang team - Four new faces and two incumbents will be among Chief Executive Donald Tsang Yam-kuen's new team of ministers to be sworn in July 1, while five members of his old guard will step down.
Professor Ceajer Chan Ka-keung, dean of the Business School at the Hong Kong University of Science and Technology, will be the new secretary for financial services and the treasury. Chan, 50, will be one of the two outsiders appointed. The other is banker Norman Chan Tak-lam, who will become director of the Chief Executive Office, as reported exclusively by The Standard two weeks ago. Three top administrative officers will quit the civil service to accept the political appointments. Incumbent Director of Information Services Edward Yau Tang-wah, 47, will fill the hot seat of secretary for the environment, transport and works, Eva Cheng Yu-wah, 47, Permanent Secretary for Economic Development and Labour, will become secretary for housing and transport, and 50-year-old Carrie Lam Cheng Yuet-ngor, Permanent Secretary for Home Affairs, will take up the post of secretary for development. Ceajer Chan was one of the staunchest supporters of the SAR government's decision in 1998 to intervene in the stock market in a successful attempt to fend off speculators. He is an incumbent member of the Exchange Fund Advisory Committee, chairman of the Consumer Council and a member of the Committee on Economic Development and Economic Cooperation with the Mainland under the Commission on Strategic Development. The Hong Kong-born finance professor joined HKUST in 1993 after working at Ohio State University in the United States. He graduated from Wesleyan University and gained his MBA and PhD degrees at the University of Chicago. According to a well-informed source, the four new faces in the Cabinet will add vitality and new dynamics to Tsang's governance as he has vowed to recruit more like-minded, talented and dedicated people who can work with him cordially to help him deliver the policy initiatives he pledged during his re-election campaign. "Yau, Cheng and Lam are shining examples of Tsang's ideal ministers. Tsang has found them to be dedicated, like-minded, capable and able to work with him very well. Unlike some other potential candidates who have declined Tsang's offers, they're willing to risk their job security with the civil service and plunge themselves into the rough sea of politics," another senior government source said. "Both Yau and Cheng, at 47, are the youngest ministers-to-be in Tsang's new team, They are appreciated by their boss and colleagues for their receptiveness, quick-wittedness, good articulation and proficiency in bilingualism." Despite Yau's lack of an environmental track record, he beat pan- democrat candidate, the Civic Exchange's executive director, Christine Loh Kung-wai, for the post. "His extensive past portfolios in trade, education and, most importantly, his experience gathered in Washington have helped him develop the political and interpersonal skills to cope with contingencies and diverging concerns of environmental groups and growing public aspirations," one source said. Tsang lobbied hard for Lam to return to the government early last year from her trade office post in London. "She is strongly applauded by Tsang as the most formidable senior administrative officer in the government in handling lawmakers and the media, and she appeals to the public. Lam's outstanding performance in organizing and coordinating the activities to celebrate the 10th anniversary of the handover has won her praise from mainland officials," the source said. The two incumbent ministers who will stay on for another five-year term are Secretary for Housing, Planning and Lands Michael Suen Ming-yeung, 63, who will replace Arthur Li Kwok- cheung as secretary for education and manpower; and Secretary for Financial Services and the Treasury Frederick Ma Si-hang, who will take over as secretary for commerce and economic development after the retirement of Secretary for Economic Development and Labour Stephen Ip Shu-kwan. Ip, 56, informed Tsang of his wish to retire after 34 years of public service. He is tipped to join the business sector. Chief Secretary for Administration Rafael Hui Si-yan is also due to retire by the end of this month. The other four ministers on the way out are Secretary for Commerce, Industry and Technology Joseph Wong Wing-ping, Secretary for Education and Manpower Arthur Li Kwok-cheung, Secretary for the Environment, Transport and Works Sarah Liao Sau-tung and Secretary for Home Affairs Patrick Ho Chi-ping.

Expanded QDII good news for HK (Hong Liang) One of the most encouraging news items for the Hong Kong financial market in recent months must have been the expanded scope of investment by mainland banks for their clients under the QDII (qualified domestic institutional investors) scheme. The benefits that this new decree by China Banking Regulatory Commission (CBRC) can bring to Hong Kong are seen by policymakers and economists to extend far beyond the various investment markets. Helping to reaffirm Hong Kong's importance as a financial center to the mainland, the CBRC's decision has greatly bolstered Hong Kong people's confidence at a time of growing doubt about the city's relevance to China's economic development. In a column published on the website of Hong Kong Monetary Authority (HKMA), the de facto central bank, Joseph Yam, HKMA's chief executive, eloquently declared that the CBRC's "decision has longer-term, strategic significance" to the mainland in monetary management and to Hong Kong in financial market development. Yam and other economists in Hong Kong believe that the decision was an integral part of the capital account liberalization process which encourages the outflow of funds under a framework of effective regulation and control. Such an outflow can help relieve some of the pressures on the exchange rate of the renminbi and on monetary management brought about by the rising current account surplus, strong capital inflow and the rapid accumulation of foreign reserves. The latest expansion of the QDII scheme also offers mainland investors a welcome alternative to diversify their enormous savings from low-yielding bank deposits. The strong desire by mainland investors for other investment channels has been forcefully demonstrated by the flood of cash into the stock market from bank deposits in the past 18 months of so. At current price levels, the risk-return profile of the Chinese equity market may have become increasingly unpalatable to a growing number of mainland investors. The newly created opportunity to invest in the Hong Kong equity market under the QDII scheme would seem most welcome despite the inherent foreign exchange risks, which should remain small. Further expansion of investment flow from the mainland to Hong Kong under the QDII scheme and from Hong Kong to the mainland under the QFII (qualified foreign institutional investment) scheme could go a long way in addressing the nagging anomaly arising from the persistent price difference between the Hong Kong-listed H shares and mainland-listed A shares of the mainland enterprises. The price differential between these two classes of shares, which are entitled to the same rights, is a symptom of market segregation which is understandable but unhealthy, and, as Yam noted, "should be addressed in an orderly way before the market springs a surprise on everyone". The CBRC's decision must be seen as a move in achieving the objective to allow domestic supply and demand on the mainland to interact with the internationalized market forces in Hong Kong. Such interaction is seen as essential for making the market more structurally stable and price discovery more efficient. Some market participants may feel disappointed by the limitations of the QDII quota, which restricts the equity component to 50 percent and the investment in any one individual share to 5 percent. But as Yam said: "It is more important for us to appreciate what the mainland authorities are trying to achieve and the role the financial system of Hong Kong can play in helping to bring it about."

A two-tonne cable car plunged more than 50 meters from the troubled Ngong Ping 360 line on Lantau Island Monday night. The popular tourist attraction was closed for the night and there were no injuries. The incident has sparked fears over the safety of the system that began operation last September and services have been suspended. Officials from the government, emergency services, MTR Corp and operators were still investigating early today. A source said an emergency drill was being conducted at around 8pm when the mishap occurred. "Cable cars were being moved at about seven meters per second to perform emergency brakes. But one of the cars broke loose from a height of about 13 to 14 stories. The alarm system revealed there was a problem at Tower 2B," the source said. The cable car landed on a slope beneath a support tower close to the Chek Lap Kok South Road turnaround area near the Tung Chung bus terminal.

About 100 cataract sufferers in Tibet are to receive free surgery on a converted train to cure their blindness during a mission that will also act as an exchange between Hong Kong and mainland doctors. The Lifeline Express train, one of three taking doctors across the mainland to carry out the operations, has arrived in Lhasa on its first visit. The doctors will help Tibetans living in and around the provincial capital. "We have already made plans for [patients] and families to travel to the station where the train stops," said Medea Yip Wai-shan, general manager of Lifeline Express Hong Kong Foundation, which has operated the service for the past 10 years. Volunteer doctor Joan Ng said the trip would not only help the patients but also act as an exchange between doctors from Hong Kong and the mainland. "We will exchange views with each other during the operations. We will also bring along some of our new apparatus and teach them how to use it," she said. Lifeline Express has visited 22 cities and provinces, and a fourth eye train is expected to be in service by the middle of next year. While one train is in Tibet, another has just travelled to Hunan province. The foundation expects about 2,000 patients to have received free surgery by the time it leaves next week. Cataracts, a film that grows on the eye lens, mainly affect children and old people. In Hong Kong, a two-day exhibition will be staged on the third eye train at the Kowloon-Canton Railway Corporation's Fo Tan depot from June 23. About 20 cataract sufferers in the city will receive free surgery aboard the train in the two days before the exhibition starts.

Hong Kong should explore other ways to broaden the tax base after the public failed to agree on the controversial goods and services tax (GST), Financial Secretary Henry Tang Ying-yen said on Tuesday.

China: China is hoping to boost its chances of becoming a member of the Financial Action Task Force (FATF), an international anti-money laundering organization, with a set of tough new regulations which were released by the People's Bank of China (PBOC) on Monday. The regulations require financial institutions in China to immediately report suspected terrorist financing deals and to improve customer data collection and security measures. financial institutions are required to report suspect financing deals to the China Anti-Money Laundering Monitoring and Analysis Center (CAMLMAC) which is affiliated to the central bank. The regulations came into effect on Monday. Foreign owned financial institutions that operate in China are also required to abide by the regulations. The FATF is scheduled to vote on China's entry into the organization this month. The United States said last month it would support China's application for FATF membership.

China's trade surplus in May soared to US$22.45 billion, up 73% from the same period of last year, said the General Administration of Customs.

A China Minsheng Banking Corp office in Shanghai. China Life Insurance Co and Ping An Insurance (Group) Co, the country's two largest insurers, said they will each pay 5.45 billion yuan for shares (a respective stake of 4.93 percent) of China Minsheng Banking Corp.

French food giant Danone said in Shanghai on Tuesday that it still believes an amicable resolution to the dispute with Wahaha is possible. Emmanuel Faber, who was appointed the new interim chairman of Wahaha by Danone last week, said Danone hopes to reach an amicable resolution "with government support." Faber said the next step was to hold a board meeting with Chinese directors to discuss operations and management. The dispute did not interrupt the operation of Wahaha but will affect the company's development, Faber said. The feud between Danone and Wahaha, China's drink giant, began last year but was made public in April. Danone has accused Hangzhou-based Wahaha of violating their 1996 agreement by illegally setting up companies outside their joint venture. Danone is demanding a 51-percent stake in the companies. Wahaha says the joint venture agreement was never approved by China's trademark office and so is invalid and unenforceable. Danone has filed a lawsuit in the United States against the companies it says are using the Wahaha name to sell products outside the scope of the original joint venture agreement. Zong Qinghou, founder of Wahaha Group, resigned from his post as chairman of its 39 joint ventures with its French partner Group Danone after the lawsuit began in the United States.

A vendor arranges watermelons at a market in Nanjing June 12, 2007. The inflation in May hit the highest level in 27 months on rising pork and food stuff prices.

China and the United States will hold their fourth round of strategic dialogue in Washington from June 20 to 21, Chinese Foreign Ministry spokesman Qin Gang announced here Tuesday. Chinese Vice Foreign Minister Dai Bingguo and US Deputy Secretary of State John Negroponte will co-chair the dialogue, Qin said. This dialogue mechanism, which is built in accordance with the consensus reached by Chinese and US state leaders, is an important platform for the two countries to communicate on strategic and political level, the spokesman said. He said both sides will have an in-depth exchange of views on major issues concerning China-US relations on the basis of previous three rounds of dialogue.

Chairman and Chief Executive Officer of the U.S.-based W. W. Grainger Inc. Richard L. Keyser on Tuesday was given the Marco Polo Award, which honors American business people who support American volunteer professionals working in China. Ji Yunshi, director of the State Administration of Foreign Experts Affairs (SAFEA), presented Keyser with the award in recognition of his contribution to exchanges of Sino-U.S. experts and friendship between the two peoples. The SAFEA highly values cooperation with the United States and hopes the Marco Polo Award to serve as a bridge linking the two nations, said Zhang Jianguo, vice chairman of the SBFEA. According to statistics from China Customs, 2.5 million foreign experts have worked in China since 1978. At present, more than 240,000 come each year. "Grainger has a long tradition of supporting the community where we do business, and now we are in China ready to support the work of dedicated volunteers in economic development and scientific work," said Keyser. The award, named after Marco Polo, the Italian traveler who arrived in China in the 13th century and then introduced Chinese civilization to western nations, was initiated by the China Project of the Volunteers of America, a project that dispatches about 30 volunteers to work in China every year in areas such as finance, securities, auditing, scientific research, medicine, agriculture, industry, education, and business. Grainger, a leading North America provider of facility maintenance products, established its presence in China in 1995 and opened its first product distribution center in China's financial hub of Shanghai in September 2006.

Robert Zoellick, the U.S.'s nominee for the presidency of the World Bank, poses for a photographer during a break in an international tour in London, June 11, 2007. Zoellick, a vice chairman at Goldman Sachs and a former U.S. trade representative, said his first priority as president would be to soothe the wounded feelings of the institution's nearly 8,000 staff when he will succeed outgoing president Paul Wolfowitz, who is to step down on June 30. Zoellick defends China loans - Robert Zoellick, the next president of the World Bank, defended lending to China in spite of the country's record currency reserves and the fastest economic growth of any major economy. "China has grown a tremendous degree, but if you get out in the countryside you still see there's an awful lot of poverty," Zoellick said in his first interview since President George W. Bush nominated him for the post on May 30. He added that aid to Africa will be his top priority. In an hour-long discussion in Pretoria, South Africa, Zoellick struck a conciliatory note, stressing the need to consult with employees and member countries. Hostility from staff helped topple Paul Wolfowitz, who faced a rebellion over his management style and a pay increase for a bank employee with whom he was romantically involved. "It's been a period of turmoil," said Zoellick, 53, wrapping up the African leg of a three-continent tour. "There's a time now to sort of try to calm the waters and get people back on track." Zoellick takes the helm as the World Bank seeks to raise more than $28 billion from rich countries to help the poorest. The leadership change has also renewed questions over whether the bank should lend to countries such as China, India and Mexico, which can easily tap capital markets.

Sea World, a popular recreational centre in southwest Shenzhen which is teeming with bars, restaurants and trendy shops, was flooded by heavy rain early yesterday morning. "It's frightening - the whole area now looks like a big swimming pool," said Philip McMaster, a visitor from Hong Kong. No deaths or injuries were reported around Shenzhen. Torrential rain fell on Shekou , the seaside district 20 minutes' drive from central Shenzhen and 45 minutes by ferry from Kowloon, at around 2am yesterday morning. Shekou is home to 80 per cent of the expatriates living in the Shenzhen area. "The speed the water rose on the ground was staggering," said Mr McMaster. "Within 15 minutes it had risen to a metre." It took less than three hours to turn the theme park, which includes a nine-deck ship and a 6 sq km plaza, into "a huge reservoir", said Clara Li, a restaurant owner at the plaza. "I rushed here at around 5am and what I saw was just too dramatic to be true," said Ms Li. "I could see only the roof and the shop signs, and everything else was under the water." The loss of her restaurant, Noble Tea House, would cost her 1.5 million yuan, said Ms Li, who estimated losses of 1 million yuan for the owners of each of the other bars and restaurants swamped by the floods. Most of the businesses are owned by expatriates. "It only opened two months ago, and I've just introduced several items for the coming dragon boat festival," she said.

June 12, 2007

Hong Kong: A survey made public on Monday by Hong Kong Continuing Professional Development Alliance shows that more Hong Kong professionals than last year are having duties related to mainland business and willing to seek opportunities in the mainland. The alliance conducted a survey during April to May to study the trend and intention of Hong Kong professionals working in or moving into the Chinese mainland. More than 240 responses were received and most respondents mainly came from marketing, accounting and finance, human resource and property management. The survey revealed that 83 percent of the respondents currently have duties or responsibilities related to business or operations in the mainland, which is 14 percent higher than last year's record. Respondents who reported to have a higher proportion of business-related tasks in the mainland tend to be professionals of the arbitration, accounting and marketing fields, with more than 15 years of experience in their respective profession and at top managerial level. About 73 percent of respondents told that they need to work in the mainland and most of them, about 77 percent, worked in the first tier cities like Beijing and Shanghai. The findings also show that more professionals have moved to work in the second and third tier cities. For the coming two years, nearly 70 percent of the respondents expected that the proportion of their mainland business-related job contents will increase. According to the chairperson of the alliance Virginia Choi, nearly half of the respondents said they are actively seeking opportunities to develop career in the mainland due to the more promising career prospect in the mainland, and that they want to acquire experience in the mainland culture and practices for career development.

The stock market would have collapsed and banks forced to raise interest rates by 50 percent had the government not stepped in with HK$120 billion in 1998 to force speculators to retreat, said Chief Executive Donald Tsang Yam-kuen. In an interview with The Standard and its sister publications Sing Tao Daily and Eastweek, Tsang said he informed then-premier Zhu Rongji of the move, which marked a turning point in the Asian financial crisis. "I was pushed by [then-secretary for financial services] Rafael Hui Si-yan and [former Monetary Authority deputy chief executive] Norman Chan Tak-lam to make a quick decision as interest rates had risen sharply and there was little time to hesitate," said Tsang, who was financial secretary at the time. "With no loans and adequate fiscal reserves to thwart a market collapse, we decided to go on the defensive. But the question was when and how to retreat from the market and how to deal with the aftermath." He said: "We briefed the then-chief executive [Tung Chee-hwa] on our proposal for half an hour and received his staunch backing ... I launched the intervention on August 13, 1998. The following day, I phoned then-premier Zhu Rongji, who pledged his full support. "Fortunately, the battle lasted less than two weeks - shorter than an anticipated two-month battle. As the global speculative activities faded in Russia, we were better equipped with a stronger stake in hand. We then turned to fight the speculators in the New York stock market. "Many foreign speculators had expected us to fight till the Hang Seng Index had climbed to 10,000 points, but we decided to make a sudden halt at 7,800, which was proposed by [Monetary Authority chief executive] Joseph Yam Chi-kwong and Hui, who insisted such a move would give us good luck as the Hong Kong dollar is pegged to the greenback at HK$7.80." The public listing of the government's Tracker Fund was a rare opportunity. "The Tracker Fund turned a crisis into opportunity. It benefited the entire community and cushioned the impact of the government intervention in the stock market. We also introduced a series of financial reforms, like merging the two exchanges and unifying the clearing house system," Tsang said. Tsang said he was in anguish over the 1998 decision but that he had no choice. "We only intended to fight the vultures by going back to step one. Norman Chan, Rafael Hui and I are all superstitious about 7.8 as our lucky number, where our US peg-link stays and our index finally hit rock bottom at 7,800. "The biggest headache was to find a way out of the dire implications for the market as [the intervention] went against principles, as well as [brought about] the political backlash. The Tracker Fund turned the government into the biggest institutional investor in the market and we went for a public launch to resolve the impasse. "The market intervention has been the most agonizing experience in my 40-year career in public service, but it was short-lived and less traumatic than the greatest challenge to Hong Kong - the devastating SARS outbreak in 2003," Tsang said. Meanwhile, speaking in Hunan Sunday, Tsang vowed that Hong Kong will continue to peg its currency to the US dollar. He said Hong Kong has proved to the world it has the ability and the resources to maintain the peg.

Hong Kong stock market investors need not be unduly worried about adverse effects of possible A-share turmoil as the two markets operate pretty much independently of each other, according to a former chairman of the Hong Kong stock exchange, Charles Lee Yeh- kwong.

Leading developers are set to take center stage in tomorrow's auction of a waterfront residential site in West Kowloon, which analysts expect may fetch as much as HK$6.2 billion. The auction results are expected to be a benchmark for the housing market in the district, market watchers said. Located at Hoi Fai Road, the 122,204-square-foot site adjacent to One SilverSea - which was developed by Sino Land (0083) - is likely to draw bids from key developers and consortiums. Those include Cheung Kong (Holdings) (0001), New World Development (0017), Sun Hung Kai Properties (0016), Sino Land, Wheelock Properties (0049) and K Wah International (0173), which have all indicated interest in the site. The Hoi Fai Road auction was triggered by Wheelock Properties with a bid of HK$4.2 billion. NWD managing director Henry Cheng Kar-shun said the company has yet to decide whether to bid for the site solely or on a joint-venture basis. "However, we will take a prudent approach in order to lower potential risk," Cheng said. CB Richard Ellis' executive director of valuation and advisory services in Asia, Yu Kam-hung, reckoned the site would sell for HK$5.8 billion, or HK$6,338 per square foot.

Chief Executive Donald Tsang Yam- kuen has called for a greater sense of political realism in the community to enable Hong Kong to step forward without allowing political squabbles to threaten its status as an international financial center. Making the appeal in an interview with The Standard and its sister publications Sing Tao Daily and Eastweek, Tsang said most people in Hong Kong do not want to see the SAR's economic success stagger because of the row. But he remains hopeful there will be a breakthrough in the decade-long push for constitutional reform.

China Export-Import Bank (EximBank) is set to issue 2 billion yuan (US$261 million) in yuan-denominated bonds in Hong Kong this month, making it the first Chinese lender to do so, sources told Reuters on Monday. Exim Bank is to sell the 3-year bonds only to institutional investors, an investment banking source said, adding that the bank would decide on the yield later. A regulatory source confirmed the details of the sale. China published rules on Friday governing mainland financial institutions' issuance of yuan bonds in Hong Kong, fleshing out a nod it gave in principle in January. Banking sources told Reuters in April that five Chinese banks were each planning to issue about 2 billion yuan of bonds in Hong Kong and that the first might happen in early summer. The banks are EximBank, China Development Bank, Industrial and Commercial Bank of China Ltd, Bank of China and Construction Bank of China, the sources said.

Nanyang Commercial Bank (NCB), a subsidiary of the Bank of China Hong Kong (BOCHK), is likely to become the first overseas bank to directly transform into a mainland corporate bank. The Hong Kong-incorporated NCB has applied to the China Banking Regulatory Commission (CBRC) to become a mainland-registered corporate bank and it will move its headquarters to Shanghai after CBRC grants its approval. BOCHK executive Wang Yumin revealed that NCB will focus on high-end Renminbi business after gaining mainland corporate bank status.

Shanghai, Hong Kong, Singapore, NYSE, NASDAQ, London, Frankfurt... the list of suitors for Chinese companies these days is just endless when it comes to picking the right exchange to list. As the A-share market swings between an ultra-wide band - and analysts are saying the market will continue to be like this until 2008 - and overseas exchanges ease their rules to cozy up to new listing candidates, Chinese companies suddenly find themselves swamped with choices. In the last few months, NYSE has weaned away a few Chinese companies that are believed to have been originally planning to head for NASDAQ. The latest was Qiao Xing Mobile Communications Co Ltd, which controls CEC Telecom Co Ltd (CECT), the fourth-biggest Chinese mobile phone maker. It made its debut on the NYSE on May 3. The company was rumored to have been torn between NASDAQ and Hong Kong Stock Exchange until it fell for NYSE. These days it's not uncommon for Chinese companies in search of a home for its shares to be approached by representatives of the two exchanges at the same time. And the results are showing. Last year, six Chinese companies listed in NASDAQ and four in NYSE. In just the first five months of this year, 10 companies have listed in NASDAQ and five in NYSE. As the Chinese government clearly wants its large State-owned enterprises to list at home, the NYSE, the largest bourse in the world, has been chasing smaller - but perhaps more entrepreneurial - Chinese companies. Among the 99 overseas IPOs last year, 86 came from the private sector. NASDAQ, meanwhile, hasn't been sitting idle either. Going beyond its traditional focus on the technology industry, it's been actively courting companies from increasingly diverse trades, including services, manufacturing, healthcare and media. On April 3, Bob Greifeld, president and CEO of NASDAQ, flew to Beijing. Soon after landing, he rang a ceremonial bell in downtown Orient Plaza, announcing the opening of the electronic market for the first time in China, and then went off to release a NASDAQ China Index to track the performance of the 30 largest Chinese companies listed in the United States. Greifeld was like a man on a mission. And a mission it was, of revenge. Almost on the same day, NASDAQ's rival, the New York Stock Exchange Group, was celebrating its merger with Euronext - thus leading to the creation of the first transatlantic bourse - while NASDAQ failed to acquire the London Stock Exchange (LSE). "We focus with great intensity on competition with NYSE. We are in the process of taking a part of the floor of the NYSE 'board by board'," Greifeld said in Beijing. He was trying to avenge losing Europe to his rival by securing China.

China: AmCham: Stop pressuring China to revalue renminbi - The American Chamber of Commerce in China (AmCham) on Friday urged the US government to stop putting pressure on China to revalue the renminbi. The US-China trade balance issue could not be addressed by forcing Chinese currency revaluation, said a White Paper presented by AmCham to the 2007 China Trends Conference in Shanghai. China's steady reform of its banking and overall financial infrastructure is considered key to the full integration of China's currency globally, said the paper. The full global integration of China's financial sector and the enforcement of protection of intellectual property rights are also believed to be crucial factors contributing to the long-term and sustainable growth of the two countries' economies, the chamber noted. The chamber believes that the large and growing US trade deficit with China should not serve as the definite measure of US-China trade. AmCham members agreed that effective implementation of existing laws and regulations, and the skillful and targeted use of WTO dispute mechanism are the best means of dealing with shortcomings in the commercial relationship between the two countries. The paper pointed to the important progress China has made in reforming its capital market. It noted that the deepening of the reforms to further open the capital market in China would allow for the removal of capital controls and enable China to adopt a market-driven, flexible rate regime. AmCham supports current efforts under the US-China Strategic Economic Dialogue (SED) to encourage the greater participation of US financial sector firms, which is an indispensable part of helping China build a stronger financial service sector. In the past year, IPR enforcement was a key concern of AmCham members. The White Paper shows that most US companies in China appreciate China's sustained efforts in IPR protection. AmCham urges both sides to take the opportunities presented by the SED and the US-China Joint Commission on Commerce and Trade later this year to map out efforts to beef up China's IPR enforcement. AmCham also advised the US government to offer overall coordination and support for US companies' efforts to capture more opportunities in China. "China's rapidly expanding economy and liberalizing markets have revolutionized international business," said an AmCham spokesman. "Businesspeople from all corners are looking to take advantage of the ever-growing number of opportunities here."

Chinese and Russian companies on Sunday inked a series of contracts, ranging from agriculture to car-making, which are valued at about US$2 billion.

China's leading telecom provider, Huawei Technologies Co. Ltd., will increase investment in Russia, senior management officials said on Saturday. Huawei has set up jointly-funded factories and labs in Russia with a total sales volume of 1.2 billion U.S. dollars till 2006 and some 1,000 local employees.

China may entirely switch to non-food materials such as cassva, sweet potato, sorgo and cellulose in producing ethanol fuel as a substitute for petroleum, said a government official.

Silting in the Three Gorges Project has proved to be less of a problem than anticipated, according to a project official. A dozen hydrological stations collect data from the Three Gorges Reservoir. The data shows that the amount of silt carried into the reservoir from the upper reaches of the Yangtze River has averaged 200 million tons a year since June 2003, the year when the Three Gorges Project first began to retain water. This is 50 percent less than anticipated, said Cao Guangjing, deputy general manager of China Three Gorges Project Corporation. "The amount of silt washed into the Three Gorges Reservoir last year was less than 100 million tons, 40 percent of which was flushed downstream via the 23 low-set sluices in the dam, and this has helped extend the life span of the reservoir," said Cai. Silting is one of the key technical problems the Three Gorges Project builders had to conquer. Silting directly affects the life span of the Three Gorges Reservoir, the servicing of the navigable sections and the operation of turbines generating power. Scientists, backed by serious funding, have been assigned to work on or monitor the problem of silting in the Three Gorges Project. Zheng Shouren, a member of the Chinese Academy of Engineering who was in charge of overall designs of the Three Gorges Project, said the Three Gorges Reservoir could preserve its water storage capacity by following the practice of discharging muddy water downstream during the summer flood season on the Yangtze and retaining water after the flood season is over each year. Data monitored by the Yangtze River Hydrological Bureau show the amount of silt from the Jialing River, a main tributary of the Yangtze on the upper reaches, has gone down by 60 percent. "A number of factors explain why less silt is being swept into the reservoir: the construction of so many hydropower stations on the upper mainstream of the Yangtze and its tributaries, water and soil conservation projects, the reversion of farmland to forest, and sand dredging in the upper reaches of the Yangtze," said Zheng, who predicted silt inflows would continue to decline. The Three Gorges Project, the world's largest water control facility launched in 1993, is located on the middle reaches of the Yangtze River. It boasts a 185-meter-high dam, completed in June 2006, and a five-tier ship lock, and necessitated the resettlement of at least 1.2 million people. Electricity generation now spans the two banks, with the first turbine generator on the right bank of the river going into operation on Monday after a 72-hour trial. The 14 turbines on the left bank of the Gorges began operation in September 2005. The very first turbine started producing electricity almost four years ago, in July 2003. The installation of the 12 turbines on the right bank -- eight domestically made ones and four imported turbines -- began last June and is expected to be completed next year. The hydroelectric project plans to produce 370 billion kwh of electricity in the 2006-2010 period, according to Cao. The electricity will be transmitted to power grids in central, eastern and southern China. The dam, 2,309 meters long and 185 meters high, was completed in May last year and the water level in the reservoir was raised to 156 meters from 135 meters in October. The dam had been designed to help minimize damage caused by floods that might occur only once every 1,000 years.

An interpreter introduces the fossil of a Keichousaurus which measures 2.7 meters long and has two horns at a museum in Anshun, east China's Anhui Province, June 10, 2007. The limestone also shows three other small dinosaurs which is rare to find.

China's trade surplus soared 73 percent in May from a year earlier to US$22.45 billion, Xinhua reported, citing data from the customs bureau.

Chinese stocks laddered up toward the 4,000-point psychological mark today. The Shanghai Composite Index closed at 3,995.68, up 2.11 percent from previous closing.

June 11, 2007

Hong Kong: More than half of the scenes featuring Hong Kong star Chow Yun-fat in "Pirates of the Caribbean III" have been cut for its Chinese mainland release on June 12, including his recitation of a poem in Cantonese, Youth Daily reported today. Chow plays the role as Captain Sao Feng, a Singapore's pirate, who saves Jack Sparrow (Johnny Depp) from the world of the dead. Chow's performance lasts for 20 to 30 minutes in the version released around the world but in the domestic version, it has been cut to at most 10 minutes. In the Hollywood version, the captain recites a poem by Tang dynasty poet Li Bai (701¡ª762), the greatest of the romantic poets of ancient China, in one scene in which he appears with co-star Keira Knightly. The poem "Guan Shan Yue" (The Moon Shining over the Mountain on the Border) tells of the lonely life of an expat, which accords with the mood of the captain who is wandering far from his hometown. Chow recites the poem in Cantonese while the words are seen in English. The scene impressed the audience when the movie was shown at the Cannes Film Festival earlier this year. But this scene was cut from the domestic version, a reporter based in Beijing who saw the movie's media screening told the newspaper. Chow plays as a key figure in two scenes in the original version. The domestic version has cut the first one which reveals the background of Captain Sao Feng. The sudden debut of the captain confused the audience at the Beijing screening. The captain is quickly killed and the loss of the introduction weakens the role, the report said. Another scene with huge Chinese constructions at the beginning of the movie has also been cut. China's film watchdog had said earlier that the cut scenes involved too much violence and horror, the report said.

US Treasuries dropped for a second straight day Friday on expectations that accelerating economic growth and inflation will encourage central banks around the world to raise interest rates, causing the 10-year Treasury yield to surge to the highest since July and triggering a global equity sell-off.

Former chief executive Tung Chee-hwa has revealed he considered unpegging the exchange rate system with the US dollar during the financial crisis in 2002, but could not do it because it contradicted the government's "commitment to the peg." In an interview with Cable TV, Tung said he had to make a very tough decision - between increasing taxes and unpegging the exchange rate - at the end of 2002. "At that time, then-financial secretary Antony Leung Kam-chung and chief executive of the Hong Kong Monetary Authority, Joseph Yam Chi- kwong, came to me and said there were some financial sharks attacking the linked exchange rate system. There were two choices - unpeg the linked exchange rate or raise taxes. I had considered unpegging it," Tung said. But, eventually, he chose to increase taxes and cut government expenditure. "There were other problems - SARS and a high unemployment rate. The only way out was to cut or redress the government budget. I know the public might not accept higher taxes, but that had to be the way." He said history would decide whether the decision was right or wrong. The HKMA has repeatedly reiterated the territory's commitment to maintaining the currency link with the United States in spite of the appreciation of the yuan. Chief Executive Donald Tsang Yam-kuen has even said the peg should last until at least 2047, and the government has no intention of giving up the peg. Yam also said last November in his online column Viewpoint that the government is firmly committed to maintaining the linkage system that has helped stabilize the monetary system since its adoption in 1983. "It's quite clear to me that market participants well understand that the Hong Kong government remains committed to the linked exchange rate system and that there is no logical reason why appreciation in the renminbi exchange rate should lead to any change." Tung also said SARS gave him the hardest time during his eight-year rule. "During the epidemic, I read about the number of deaths and the number of people who got infected every day. I thought I was the chief of Hong Kong. It was my responsibility. I was under a lot of pressure at that time." But when asked if he ever regretted taking up the top post, Tung said he would take up the job again if he was offered. He also said he was not worried about Hong Kong's financial growth or the economic threat from the mainland. "We don't have any such problem. The mainland economy and ours will work together. "It's a win-win situation. For example, QDII [Qualified Domestic Institutional Investor scheme] is another proof of the support from the mainland government. It ensures our financial growth and development." But Tung said Hong Kong must have a strong financial system to ensure healthy economic growth as it is facing competition from other countries. "The central government is in support of Hong Kong, but there're a lot of competitors like New York, Singapore and London. They would like to take the job of listing Chinese companies from Hong Kong."

The yuan might become a reserve currency in "the fullness of time," with its growing importance as a global currency and the mainland's policy of gradually moving towards full and free convertibility, the Hong Kong Monetary Authority said Thursday.

Most of the amendments put forward by pan-democratic members of the Legislative Council in the past few days to the planned merger of the Mass Transit Railway and the Kowloon-Canton Railway have been voted down as debate continued into Thursday night.

Tom Online (8282) , a media company controlled by billionaire Li Ka-shing, will seek shareholder approval today to postpone the vote on its delisting proposal because it expects only a few American depositary receipt holders to participate.

National People's Congress chairman Wu Bangguo and other mainland law experts are not attempting to set up a new framework for discussion on Hong Kong's political advancement, Chief Executive Donald Tsang Yam-kuen said Thursday. Wu, he said, was merely pointing out the rationale behind the Basic Law. But former chief secretary Anson Chan Fang On-sang, a former colleague of Tsang, was worried by Wu's comments Wednesday. Tsang, who was rounding off an official tour of Tianjin, was pressed by journalists to respond to the comments by the NPC chairman at a Basic Law seminar in Beijing, in which the second- ranked Politburo state leader bluntly noted that the territory has only as much power as the central government authorizes. The remarks sent shock waves through political parties and pundits alike that Beijing may be taking a tougher line in the continuing row over the democratic development of the SAR. "The issues concerning residual powers and the separation of powers have already been discussed at the Joint Declaration discussions more than 10 years ago. China owns our sovereignty and our autonomy is granted by the central government, as clearly stated in the Basic Law. I don't think these should be matters of discussion nowadays," Tsang said. He stressed the Judiciary in Hong Kong has always been independent and effective. "The independence [of the Judiciary] has been apparent in the 10 years since the handover and is to continue in the future, and I believe there is no reason for the public to worry," he said, adding that both the central and Hong Kong governments have always abided by the laws. The chief executive also reiterated that various sectors of Hong Kong must be willing to compromise and accommodate to reach the final goal of achieving universal suffrage. After spending the day visiting the northeastern city, including stops at Tianjin Port where he was accompanied by Tianjin mayor Dai Xianglong, Tsang will continue his study tour in the Hunan city of Changsha today before returning to Hong Kong. However, Chan said she was personally worried about the stern comments made by Wu, who emphasized that, with an executive-led government, Hong Kong should not blindly follow US or British models. "The separation of three powers is greatly effective in checking and monitoring each other, and is also the guiding principle behind the idea of `one country, two systems' and our high degree of autonomy," Chan said after attending an inauguration ceremony for the Professional Commons, a 50-strong pan-democratic group chaired by Civic Party vice chairman Albert Lai Kwong-tak, which is concerned with issues such as achieving full democracy in 2012. "I think both the central and the SAR governments should clarify soon whether the Judiciary is independent from government interference," Chan said.

The Link REIT (0823), which runs former government shopping malls, has exceeded its initial public offering forecast for its 2007 total distribution per unit by 9.2 percent, thanks to higher rental income. The real estate investment trust squeezed out total distributable income of HK$1.44 billion for the financial year ended March 31, compared to HK$467 million for the period from listing in November 2005 to March 2006. It declared a final distribution per unit of 34.62 HK cents. Together with the interim DPU of 32.81 HK cents, final DPU is 67.43 HK cents, bettering its IPO estimate by 9.2 percent, and representing a distribution yield of 6.55 percent based on its final IPO price of HK$10.30. Total revenues, including retail and carpark rents, for the fiscal year was HK$3.95 billion. Average base unit rent at March 31 was HK$23.6 per square foot, compared to HK$23 last year. Its composite reversion rate or rent increase was 9.87 percent for the year. Occupancy rate was 90.3 percent, up from 91.2 percent last year. Its retention rate fell from 93.4 percent to 78.7 percent which chief executive Victor So Hing-woh attributed to renovations at its malls, which meant some tenants had to close and leave. Director for project and planning Ball Wong Kim-wing said The Link will spend HK$600 million in capital expenditures in 2007-08 in its ongoing mall renovation plan, double the nearly HK$300 million spent the year before.

Hong Kong's controversial rail merger is back on track after lawmakers gave the go-ahead following a marathon debate. The proposed tie-up between the MTR Corp and Kowloon-Canton Railway Corp, which had been blocked many times by government opponents fearing monopolization, was finally endorsed by 30 to 17 votes in the Legislative Council Friday after 24 hours of debate over the past three days. There was only one abstention. All 11 amendments to the Rail Merger Bill, mostly proposed by government critics, were rejected. The bill was backed by pro-government parties, including the Democratic Alliance for the Betterment and Progress of Hong Kong and the business-oriented Liberal Party. The merger is expected to be completed by the end of the year, subject to approval by minority shareholders of MTRC, in which the government has a controlling 76 percent stake. Critics of the merger and legislators from the pro-Beijing camp engaged in a war of words before the bill was passed, with both sides accusing each other of ignoring the public's welfare. Democrat Andrew Cheng Kar-foo condemned the DAB for keeping silent throughout the debate and failing to explain why it supported the merger plan although the deal would not include fare cuts for the Light Rail and there would be no public toilets at stations. "They chose to remain silent, and they supported the government blindly," Cheng said, while expressing appreciation for independent lawmaker Chim Pui-chung's call on members to vote with conscience. Tam Yiu-chung of the DAB hit back, saying their silence was because they did not want to follow other parties in using tactics to stall the bill. Fellow DAB member Lau Kong- wah hailed the passage of the bill, saying it will benefit the public, which will enjoy immediate fare reductions and a two-year fare freeze. Democratic Party chief Albert Ho Chun-yan said it was a shame that some kept silent. Mandy Tam Heung-man of the Civic Party said passage of the bill will mean the government and the Legislative Council will lose power to monitor railway fares in future. Secretary for the Environment, Transport and Works Sarah Liao Sau- tung said the merger will create synergy which, in turn, will create an opportunity for fare cuts. A spokesman for the Environment, Transport and Works Bureau said: "With the passage of the Rail Merger Bill today, we will submit the relevant subsidiary legislation to the Legislative Council, which has already set up the Subcommittee to Study the Draft Subsidiary Legislation Relating to the Rail Merger. "We hope the legislative procedures for approving the subsidiary legislation can be completed before the current Legislative Council session ends on July 11. "MTR Corporation will then immediately proceed with the necessary steps required under the listing rules and convene an extraordinary general meeting. If the merger proposal is approved by the minority shareholders of MTRC, the two railway companies will prepare for merger implementation. "These procedures are expected to be completed within a few months after completion of the legislative process." The spokesman said merging the two rail systems can create synergy, which creates an opportunity for fare reduction. A total of 2.8 million daily rail passenger trips will benefit from reduced fares from day one of the merger. MTRC has also said there would be no fare increase up to June 2009. MTRC chief executive Chow Chung-kong said the corporation will call for an extraordinary shareholders' meeting in September, and he is confident the company will get support from minority shareholders. If more than half of the shareholders vote for the merger, it will take place by the end of this year. Chow said he understood the public's petition for fare cuts in the Light Rail and assured that the new rail company will study the issue. Ko Pak-kwan, chairman of the KCRC Workers' Union, said the staff look forward to the merger, saying they have been assured their jobs are safe and they will be treated fairly. KCRC Operating Staff Association chairperson Rainbow Lau Choi-hung hopes the new company will communicate with staff to help cope with changes. But MTR staff union chief Chan Sin-wo expressed concern over their staff's future since many details have yet to be thrashed out, particularly job arrangements. All the proposals put forward by democrats, included setting up a railway development fund, and installing automatic platform screens at all MTR stations, were voted down Thursday. Legco debated Friday for more than six hours on three amendments on the installation of public toilets, noise and future development rights Friday. All amendments were vetoed. Cheng, who proposed installing toilets in all underground MTR stations, said they were for the the public. Independent "Long Hair" Leung Kwok- hung also questioned why there are staff toilets at MTR stations but no public toilets, saying the public's interest should come first. Liao argued that installing public toilets in underground stations would involve construction difficulties, adding the MTRC will build toilets inside or near stations when they build new ones. Democrat Lee Wing-tat suggested open tenders for property development rights at MTR stations. He said the current practice of not having an open tender on land the MTR develops property is not fair. He said it provides a form of indirect subsidy to private developers since the MTRC develops property with private developers, with the land sold to MTR below market prices. Transport chief Liao said the current financing of railway development is an effective way for railway and property management.

Beijing and Hong Kong have moved to contain the fallout from remarks on the SAR's autonomy by National People's Congress chief Wu Bangguo, and to forestall plans by the pro- democratic camp to stage a massive protest during the visit of President Hu Jintao July 1. Lu Xinhua, commissioner of the Foreign Ministry in Hong Kong, denied Friday that the central government is extending a tighter grip on the territory. On the contrary, he told local journalists, all decisions made by central leaders are for the good of Hong Kong. "How can state leaders not care for Hong Kong? These worries are unnecessary," Lu said. At a Basic Law seminar in Beijing Tuesday, attended by top Hong Kong officials, including Chief Executive Donald Tsang Yam-kuen, Wu said the SAR could not hope to get more autonomy than what is granted to it by the central government. Former chief secretary for administration Anson Chan Fang On-sang joined in the controversy, urging central leaders to alleviate local fears that Beijing is tightening its grip on Hong Kong. Lu also assured foreign investors they need not fear about Hong Kong's autonomy and its future as the central government has been supporting the territory's development on all fronts. A well-informed pro-Beijing source said the central government is aware that some pan- democrats have been trying to take advantage of the backlash over Wu's comments, and stir a row in order to fuel a big rally they have planned during the forthcoming visit of Hu, who will preside over the inauguration of Tsang's new administration. "Unlike the hands-off stance over the controversial Article 23 legislation, Beijing leaders have now clearly stated their position - that Hong Kong's political reform should fall within the orbit of the Basic Law to avert a possible confrontation over universal suffrage," the source said. Executive Council convener Leung Chun- ying, a former secretary-general of the Basic Law Consultative Committee, said Friday constitutional reform is far more complicated than picking a date for universal suffrage. In an article published in the Chinese- language daily Ming Pao, he said: "Political reform involves the Hong Kong leader's dual accountability - to Hong Kong and the central government, a two-part election as stipulated in the Basic Law, starting with nominations by consultation or election before universal suffrage polling, followed by appointment by the central government. "Universal suffrage is one of the three steps in the process. "The political structure, as stipulated in the Basic Law, is an intact and well-thought design. Besides the well-defined universal suffrage process, one should bear in mind the accountability of the chief executive as well as Hong Kong's autonomy are limited by the central government." Leung defended Wu's remarks that Hong Kong is unique with its high degree of autonomy and election arrangements, and is not a carbon copy of the format of other countries. "Unlike London mayor Ken Livingstone, mayor Michael Bloomberg of New York City and Tokyo governor Shintaro Ishihara who are returned on a one-man-one-vote basis, the mandate of Hong Kong's leader is authorized by the central government under its high degree of autonomy. "Should the content of our democratic development and electoral arrangements differ from other cities in the world? "Should universal suffrage for the chief executive election be a matter of timing?" the veteran Basic Law adviser asked.

China: In what is being widely seen as a major step in globalizing the Shanghai gold market, the People's Bank of China yesterday admitted five major foreign banks as members of Shanghai Gold Exchange (SGE).

Chinese President Hu Jintao (Front) attends a group meeting with leaders of Brazil, India, Mexico and South Africa in Berlin, capital of Germany, June 7, 2007. Hu on Thursday called for upholding the principle of "common but differentiated responsibilities" for developing countries in tackling climate change.

Quality inspection officials from nine southern Chinese provinces pledged on Friday to cooperate in the supervision of food exports and their processing factories. Officials from the export-oriented provinces agreed to cooperate in the supervision of the raw materials for exported food products, farm produce, pet food and as well as in food safety testing technologies. Last year, the nine southern provinces exported five billion U.S. dollars worth of farm produce, accounting for one sixth of the country's total. China's exported food products have raised safety concerns some countries following a series of alleged or confirmed quality issues. In May, China's quality control watchdog confirmed two domestic companies had exported melamine-contaminated wheat gluten and rice protein blamed for the deaths of dogs and cats in the United States.

A view of Shixin Peak on Mount Huangshan (Yellow Mountain) of East China's Anhui Province on June 7, 2007. Shixin Peak will reopen to tourists on July 1 this year after restoring trees and shrubs on the mountain. In the meantime, another peak called Danxia will be closed for regular maintenance.

China, the world's third-largest gold producer, is likely to surpass the United States to become the second-largest producer of the precious metal in 2007, a senior Chinese industry official said on Friday. China plans to raise its gold production by 8.3 percent to 260 tones in 2007 amid strong international prices. Gold prices hit a 25-year high last year. Domestic demand was seen in line with production at 260 tons this year, supported by the jewelry sector, Wu Junyun, vice general manager of the international trading arm of the China National Gold Group Corp., told reporters on the sidelines of a conference in Shanghai. China's gold output rose 14 percent in the first four months of this year to 77.75 tons, extending a 7 percent increase in 2006 when it hit a record of 240 tones, data from the China Gold Association showed. The World Gold Council has put China's gold consumption at about 240 tons in 2006. The state-owned China National Gold Group, one of the country's leading gold producers, produces about 20 percent of the country's total. Wu said the company was interested in gold mining in neighboring countries, including Myanmar and Vietnam as well as in Russia and other central Asian countries, although he gave no details.

Exam-takers pose for a photo after they finish the two-day national college entrance exams, or Gaokao, outside a high school in Changhai, Central China's Hunan Province June 8, 2007.

Asia Pulp and Paper, one of the world's biggest paper makers, plans to invest US$4.3 billion (HK$33.54 billion) in the second phase of a pulp-and-paper project in Guangxi Zhuang region, China Business News reported.

China's stock market frenzy has sparked concerns that bank loans might be misused to fund speculation. China Banking Regulatory Commission chairman Liu Mingkang said the regulator is actively monitoring whether bank loans have been inappropriately channeled into the capital market. Speaking at a seminar at Oxford University, Liu said Beijing fully supports the development of healthy equity markets in order to put the large accumulation of private savings to effective use. "Any market has got to be healthy and so we are carefully monitoring possible malpractice in the banking industry, in their customers using loans to possibly channel funds to capital markets," Liu said. "The capital markets are so important for China to channel high savings to productive uses. That is the reason why we are very supportive and stress the importance. So far, we haven't found any concrete instances of huge amounts of funds being channeled to the equity market." He gave a cautious endorsement to the development of private equity in China. "Private equity is a good means to nourish the market and allocate resources in a very effective and efficient way," Liu said. "The flip side of the coin is the risk attached, so we will be carefully monitoring the activity and we have got to have sound and solid regulations." The sizzling mainland stock market had raised fears of a bubble, which prompted Beijing to implement a series of austerity measures to cool the frenzy. In the most recent move, the government tripled the stamp duty on shares trading, sending shockwaves across the mainland bourses. Despite occasional spurts, the country's main index, the Shanghai Composite Index, has dropped about 5 percent since the introduction of the higher stamp duty.

Mainland sports shoes maker and retailer Anta China has won approval from the Hong Kong Exchanges & Clearing listing committee for its HK$2.5 billion initial public offering. The company is expected to start pre-marketing next week, with trading set for mid-July. The IPO is sponsored by Morgan Stanley, which is also involved in the share sales of small mainland property developer KWG Property Holding and wind gearbox manufacturer China High Speed Transmission. Both of them started pre-marketing this week, with trading debuts by mid-July. Meanwhile, RREEF China Commercial Trust, which is seeking to raise US$300 million (HK$2.34 billion), will open its retail offering Monday in a deal arranged by Deutsche Bank and HSBC. Centron Telecom will start its roadshow next week, aiming to raise up to US$100 million. The deal is led by JPMorgan. Centron is a mainland wireless telecommunications network firm mainly involved in mobile- related products for firms such as China Mobile (0941) and China Unicom (0762). Other firms waiting to float shares include New World Department Stores, an affiliate of New World Development (0017), which plans to raise more than HK$2 billion. Shares of silicone rubber keypad maker Ta Yang (1991) debuted Friday, gaining 7 percent over the offering price of HK$3.50, on trading volume of HK$449 million. "The increase was in line with expectations, with the retail tranche only 70 times oversubscribed," said Cherrie Yan at Phillip Securities.

June 9 - 10, 2007

Hong Kong: The Census and Statistics Department of Hong Kong announced on Thursday that the total port cargo throughput fell to 54.9 million tons in the first quarter of 2007, down 2 percent on the same period last year. The inward port cargo fell 7 percent to 32.4 million tons and outward grew 6 percent to 22.5 million tons. On a seasonally adjusted quarter-to-quarter comparison, total port cargo throughput fell 5 percent. Within this total, inward port cargo fell 9 percent and outward port cargo fell 1 percent. Within port cargo, seaborne cargo grew 1 percent over a year earlier to 39.3 million tons, and river cargo fell 9 percent to 15. 7 million tons. Within inward port cargo, imports fell 16 percent over a year earlier to 17.4 million tons, and inward transshipment grew 5 percent to 15 million tons. For outward port cargo, exports (including domestic exports and re-exports) fell 11 percent to 7.7 million tons, while outward transshipment rose 18 percent to 14.9 million tons. In the first quarter, the port of Hong Kong handled 5.4 million containers. Within this total, laden containers rose 1 percent to 4.5 million, while empty containers fell 5% to 900,000. Among laden containers, inward containers fell 2 percent to 2.2 million, while outward containers grew 5 percent to 2.3 million.

A model poses with a new wax figure of the former chairman Mao Zedong at Madame Tussauds in Hong Kong June 7, 2007. The figure was unveiled for the media in the run-up to the 10th anniversary of the July 1, 1997 handover of Hong Kong to the Chinese mainland.

A new wax figure of the late leader Deng Xiaoping is seen in front of a picture of the Hong Kong skyline at Madame Tussauds in Hong Kong June 7, 2007. The figure was unveiled for the media in the run-up to the 10th anniversary of the July 1, 1997 handover of Hong Kong to the Chinese mainland.

A model poses beside a wax figure of the Chinese premier Wen Jiabao (L) as a wax figure of the late Chinese leader Deng Xiaoping sits in the background at Madame Tussauds in Hong Kong June 7, 2007. The figures were unveiled for the media in the run-up to the 10th anniversary of the July 1, 1997 handover of Hong Kong to the Chinese mainland.

Summer evenings that once provided some respite from the heat of the day are now hotter than ever, according to research that found minimum temperatures have risen steadily over the past 40 years. The reason, according to Yan Yuk-yee, professor of geography at Baptist University, is the city's transformation into a high-rise concrete jungle that traps heat during the day and releases it at night. Analysing Observatory temperature data from 1965 to 2003, Professor Yan found the average minimum temperature had increased by 0.02 degrees Celsius a year on average. The average minimum temperatures were calculated using the daily minimum temperatures from May 1 to October 15. Her study also showed the average maximum temperature over the same period had decreased by 0.014 degrees every year.

Old China hands salute HK - People in Hong Kong should value the experience they gained under British rule, former British prime minister Baroness Thatcher said yesterday. In a special lunch gathering in London to mark the 10th anniversary of Hong Kong's handover, leading British politicians with links to the city said the transition had been a success and attributed this to the efforts of the Hong Kong public. Speaking before the lunch, hosted by the Hong Kong Association, Lady Thatcher - who negotiated and signed the Sino-British Joint Declaration, sealing Hong Kong's fate in 1984 - said she was glad to see Hong Kong's success 10 years after the handover in 1997. "The handover was something that had to happen," she said. "I hope the people of Hong Kong would remember what they have learned from the British." It was Lady Thatcher's first public comment about Hong Kong since her retirement from active politics in 1990. Prime Minister Tony Blair sent a message praising Hong Kong's success and rebuffing doomsayers' predictions that Hong Kong would go down after the handover. In a speech praising the late patriarch Deng Xiaoping , former premier Zhao Ziyang and also Lady Thatcher for their visions, former foreign secretary Lord Howe, who was considered a main architect of the Joint Declaration, said people in Hong Kong had earned their success due to their own efforts. "None of the impressive Hong Kong history of the last 10, 20, 30 years could possibly have happened had it not been for the qualities of the people of Hong Kong themselves," he said. "This showplace of energetic enterprise and dynamic self-discipline has been the child of two parents, Britain and China." Baroness Dunn, an executive councillor under the colonial government, and now chairwoman of the Hong Kong Association, said although the city had gone through challenges such as the financial crisis and Sars, it had remained as prosperous and energetic as before. Hong Kong's last governor, Lord Patten, who did not attend the lunch due to a clash of engagements, also garnered his share of the praise. Lady Dunn said: "He held the reins in the final run-up to the handover. He instilled in Hong Kong people a fresh confidence in their ability to run their own affairs." It was the first time such a large number of the so-called "old China hands" had met since 1997.

Requirements for Russians to apply for multiple-visit visas to Hong Kong may be relaxed after the government rejected Russia's request for its nationals to visit the territory visa free.

HK Basic Law 'guarantees democracy - Wu Bangguo,chairman of the Standing Committee of the National People's Congress,delivers a speech during the seminar marking the 10th anniversary of implementing the Basic Law in Beijing June 6, 2007. The central government will continue to support Hong Kong in developing a democratic system that suits its conditions, but any reform must be gradual and in accordance with the Basic Law, top legislator Wu Bangguo said yesterday in Beijing. Wu, chairman of the Standing Committee of the National People's Congress, the top legislature, made the remarks at a seminar marking the 10th anniversary of implementing the Basic Law. The Basic Law is the constitutional document for the Hong Kong Special Administrative Region (SAR). It enshrines the key concepts of "one country, two systems", "Hong Kong people governing Hong Kong" and "a high degree of autonomy". Wu said events have proved, and will continue to prove, that the principle of "one country, two systems" is workable and feasible and the Basic Law is a sound law able to withstand the test of time. He emphasized that Hong Kong must uphold State sovereignty and ensure prosperity and stability while enjoying a high degree of autonomy. Being an SAR directly under the central government, "Hong Kong's high degree of autonomy is not intrinsic, but authorized by the central government". "It only has as much power as authorized by the central government. There is no so-called residual power." But Wu said the central government will never interfere in affairs within the purview of the autonomy of the SAR. Hong Kong Chief Executive Donald Tsang said at the seminar that the SAR has retained its international features, rule by law and various kinds of freedoms guaranteed by the Basic Law after its return to the motherland. "With State care and assistance, we have strived to display our unique advantages and made significant achievements widely recognized by the international community," Tsang said. The Basic Law has laid a solid foundation for Hong Kong's economic and social development and the improvement of people's livelihood, he added. Former secretary of justice Elsie Leung added that to achieve the ultimate goal of universal suffrage, and maintain prosperity and stability in Hong Kong, it is necessary to have a clear understanding of the relationship between the central government and Hong Kong. Being an SAR directly under the central government, "Hong Kong's high degree of autonomy is not intrinsic, but authorized by the central government". Leung said Hong Kong has made gradual progress in democracy in accordance with the Basic Law over the years. Since its return to the motherland in 1997, the number of members in the Election Committee, which elects the chief executive, has grown from 400 to 800; and they are from different social strata and sectors. In the Legislative Council, the number of directly elected seats has also increased from one-third in the first term to half in the third term. The Basic Law itself is a result of broad participation of Hong Kong citizens as well, Wu said, pointing out that 23 of the 59 members of the drafting committee were from Hong Kong. The full text of the draft law was made public twice for public comments. Different social strata, sectors and groups in Hong Kong came up with nearly 80,000 comments and proposals. "In other words, each and every article of the Basic Law represents the broad consensus of Hong Kong society," Wu said.

The Hong Kong Monetary Authority warned Wednesday of the "obvious signs" of the overheating stock markets in the mainland and alerted investors to a further correction in the domestic bourses. But the city's de facto central bank predicted the frenzy is unlikely to rattle equities in Hong Kong or elsewhere. Speaking at a conference with Chinese bankers in Beijing, HKMA chief executive Joseph Yam Chi-kwong urged financial institutions to hold steady their risk management during a volatile period like this. Beijing's decision last week to triple the tax charged on stock trading initially slashed more than 600 points off the Shanghai Composite Index. The Chinese markets, however, regained momentum in the last two trading days as speculators say the government might issue policies to stabilize the market. "Markets go up and down and if you look at numbers like [price-earnings ratios] and all that, obviously there are signs of overheating in those markets, and if there were adjustments, then it would be an adjustment in a downward direction, hurting quite a lot of people, including small investors," Yam told Reuters. However, he said China's volatility would not affect the SAR that much, citing the fact that Hong Kong stocks still rose recently despite mainland shares plunging. Some analysts, however, say the high price-earnings ratio of Chinese stocks could actually be "more justifiable" in the medium term if these companies' earnings are to rise a further 10 to 13 percent, which is quite likely given China's robust economic growth. "The Chinese markets should be able to find their troughs within this week and we shall expect marked rebounds in the near term," said a Shenzhen-based analyst. "When QFII [qualified foreign institutional investor] players tap into more quota of the scheme, the markets would also be able to gain firmer support from this influx of capital."

China should step up market-opening and currency reforms to help avert a "protectionist tide" in the United States, US Treasury Secretary Henry Paulson said. Paulson, in a Washington speech, reiterated that Beijing is moving too slowly in its currency and economic reforms at a time when the US public and lawmakers are increasingly impatient. "We who believe in open economies are swimming against a strong protectionist tide these days," Paulson said in his remarks prepared for delivery at the Heritage Foundation, a conservative think-tank. "As I explained to the Chinese, a large section of the American public doesn't believe that the benefits of trade are being shared equally between or within our two countries, and Congress reflects that view." Some critics of China accuse Beijing of keeping its yuan currency grossly undervalued to make its exports to the United States cheaper - a key factor cited for the snowballing US trade deficit with the Asian giant that hit US$232.5 billion (HK$1.81 trillion) last year. Paulson argued that China needs to accelerate the pace of reform. "The Chinese have taken some steps, and they can do more," he said Tuesday. "While currency reform is not going to eliminate our trade deficit, a market-determined exchange rate that reflects the underlying fundamentals of the Chinese economy is one component of the actions needed to address imbalances." Paulson said competition and market principles would "spread the benefits of China's robust growth to all of China's people" and that Beijing should take more steps to reform an economy that is still partly state- controlled. "Americans are impatient to see real change," he said. "Today, China is part-way between an administered economy and a market-based one. I think that the greater risk for China is in moving too slowly, not in moving too quickly, and I have tried to impress that upon the Chinese at every opportunity." Paulson's comments came two weeks after the "strategic economic dialogue" talks in Washington, the second in a series of high-level discussions on economic ties between the US and Chinese governments. Paulson said the discussions produced a new civil aviation agreement and accords for cooperation on energy, the environment, and financial services. But Vice Premier Wu Yi said elasticity of the yuan exchange rate will be determined in an "orderly" manner, despite threats by US lawmakers of punitive tariffs on Beijing. Some analysts say Washington is too soft on China. "Offering China major power status by engaging it in multilateral dialogue will accomplish little, because the Communist Party is much more concerned about maintaining its grasp on power than becoming a respected stakeholder in the global community," said economist Peter Morici of the University of Maryland in a recent commentary, arguing the yuan currency effectively gives Chinese products a 24 percent subsidy. "Western democracies must recognize this unpleasant reality and deal with China differently than they do one another."

The marathon probe into alleged government meddling in the affairs of the Hong Kong Institute of Education ended Wednesday with the counsel for the commission of inquiry insisting that senior government officials did interfere in the institute's autonomy and academic freedom. The 35-day hearing concluded with the oral closing submissions by Benjamin Yu Yuk-hoi, SC, who said there could be no doubt that Secretary for Education and Manpower Arthur Li Kwok-cheung did say at a lunch in July 2002 that the HKIEd would be "raped" if it did not agree to merge with the Chinese University of Hong Kong, of which Li was a former vice chancellor. Yu said, in that situation, Li did interfere with institutional autonomy.

China: China and Costa Rica Thursday announced that the two countries signed a joint communique on establishment of diplomatic ties at ambassadorial level as of June 1. The joint communique was inked by Chinese Foreign Minister Yang Jiechi and Costa Rican Minister of Foreign Affairs Bruno Stagno Ugarte in Beijing on June 1.

Map of the Hangzhou Bay Bridge. The bridge, which starts in Cixi, a county-level city under the jurisdiction of Ningbo, a sub-provincial city, and ends at Zhapu port in Jiaxing, another city in Zhejiang Province, will span a total length of 36 kilometers, making it the longest cross-sea bridge in the world.

China's trade deficit in farm produce reached 100 million U.S. dollars in the first four months of 2007, the Ministry of Commerce (MOC) said in Beijing on Thursday. The country's exports of farm produce hit 11.48 billion dollars, up 23.9 percent year-on-year, while imports were 11.58 billion dollars, up 10.4 percent year-on-year. China's farm produce exports to the European Union hit 1.64 billion dollars, South Korea 1.37 billion dollars, the United States 1.39 billion dollars and ASEAN 1.17 billion dollars, according to MOC figures. Of the total, private enterprises exported 3.67 billion dollars, foreign-funded companies 4.68 billion dollars and state-owned firms 2.67 billion dollars. China's trade deficit in farm produce in 2006 stood at 670 million dollars, a decrease of 41.3 percent from the 2005 level of 1.14 billion dollars, according to official figures.

India and China have agreed to hold their first ever joint army exercise as part of a wider effort to improve ties between the one-time Asian enemies, military officials said Thursday. The manoeuvers are slated for October and will see 100 Indian troops sent to China for a workout in anti-terrorism tactics, the Indian army chief, General J.J. Singh, was quoted as saying by the Indian Express newspaper. "We had a small thing earlier -- not an exercise but a mountaineering expedition -- two years ago," army spokesman Colonel S.K. Sakhuja told AFP. The agreement comes after the army chief visited China at the end of May, which the defense ministry said had led to a decision on "engagement and mutual confidence building" including more joint training exercises. The two nations -- who fought a brief but bloody border war in 1962 -- conducted joint naval exercises in the East China Sea in 2003, but otherwise cooperation between two of the world's largest armed forces has been scant.

Visitors look at a series of contemporary jalopies on display at an auto exhibition in Southwest China's Chongqing Municipality June 7, 2007. Fifty auto manufacturers from home and abroad presented their some 300-model products at the exhibition.

Hello toilet, goodbye WC for Beijing Games - Beijing's battle to standardize and correct English-language signs ahead of the 2008 Olympics has claimed another head -- "WC." By the end of the year, all public conveniences in the city will be called "toilets" instead of the venerable, Victorian-era sounding abbreviation for "water closet," the Beijing Morning Post reported on Wednesday. "In many Western countries they don't use the term WC at all," the report said. "Because in English, it's equivalent to what we would call in China an outhouse, and is a rather crude slang term," it added, without explaining how it had got this impression. Also on the list are road signs. Use of the romanized form of Chinese, known as "pinyin," will be replaced by the actual English word, except for proper names, the newspaper added. Out will go Dong Changan Jie and in will come East Changan Avenue. But a rather more vexing question has been what to do about menus to help the hundreds of thousands of tourists, athletes and reporters expected to flood the city, many of whom will not speak a word of Chinese, let alone understand Chinese characters. An initial list had been formulated and sent to experts for approval, the Beijing News said. All restaurants and hotels rated three star and above will have to use the standard names once they come out, it added. Linguists are struggling about the best way to translate popular dishes like "ants climbing the tree" -- spicy fried vermicelli with finely chopped pork -- into English accurately yet preserving the original meaning, officials have said. They are hoping to avoid confusing visitors with the mish-mash of translations now on offer. One well-known Beijing restaurant chain has dishes called "It is small to fry the chicken miscellaneous" and "mixed elbow with garlic mud."

A 1700-year-old town named "Dachang" has been rebuilt at the side of the Dachang Lake in the region of Three Gorges in southwest China's Chongqing Municipality. The ancient town, covering an area about 48.7 square kilometers, will open on October 1, 2007. It has 35 rebuilt old buildings, which will make it a new tourism attraction in the region of Three Gorges.

Following its successful initial public offering (IPO) in October, the Industrial and Commercial Bank of China (ICBC) has reclaimed first spot in this year's Top 100 Chinese Banks. Bank of China was ranked second in terms of capital strength, according to The Banker, a British magazine known for its annual publication ranking the top 1,000 global banks. China Construction Bank, which topped last year's list after its 2005 IPO, dropped to third. The Agricultural Bank of China, the last State bank to undergo restructuring, claimed fourth place. The Big Four had an aggregated core capital of 1.29 trillion yuan at the end of 2006, an increase of 69.7 percent over the previous year, accounting for 77.7 percent of the total held by the top 100 banks, the report said. The big banks' pre-tax profit totaled 217.9 billion yuan last year, a year-on-year increase of 115.1 percent, accounting for 74.7 percent of the total. "This shows the extraordinary growth of the Chinese banking sector," said Stephen Timewell, editor-in-chief of The Banker. Chinese banks' aggregate profit ratio jumped to 16.9 percent, compared with 15 percent in last year's listing. The ratio for the world's top 1,000 banks was 22.7 percent, he said. The second-largest group on the list were the 11 joint-stock banks, led by Bank of Communications in fifth spot. They accounted for 15.1 percent of core capital, 19.2 percent of assets and 19 percent pre-tax profits. The list did not include Guangdong Development Bank and China Everbright Bank, which have not produced full financial results since 2003, Timewell said. A few new banks made their way toward the top of the list, including Beijing Rural Commercial Bank and Bohai Bank, which finished 14th and 19th respectively. City commercial banks composed the largest group on the list with 65, but accounted for just 5.4 percent of core capital, 5.6 percent of assets and 4.6 percent of pre-tax profits. "The latest listing demonstrates the dynamism and growing sophistication of China's banking sector, which is definitely needed if the economy is to maintain the current high levels of growth," said Timewell. "The ranking also represents an important step forward in the level of disclosure and transparency of the entire Chinese banking system," Timewell said.

Two riders compete in the "Girl's chase" game during the opening ceremony of the Ethnic Cultures and Tourism Festival in Huocheng County, Northwest China's Xinjiang Uygur Autonomous Region, June 6, 2007. Traditional sports in ethnic minority groups Kazakh and Uygur, such as catching the goat, camel race, donkey race, and girls' chase, were performed during the festival amid local government's efforts to develop the tourism.

A vendor sells cooked food at a market in Shenyang, Liaoning Province June 6, 2007. China will launch a sweeping offensive against dangerous medicines and bad food.

Gao Menzhong's office overlooks an arched stone bridge with intricate sculpture spanning a canal in Suzhou. The 1,000-year-old waterway was before part of the Grand Canal that linked the eastern city with the capital of ancient China. Inside the lobby of his company, some 400 young people, sitting elbow to elbow, are working on recruitment tests. Another 50 to 70 people in their early 20s are still queuing outside. They are waiting for job offers at factories producing cellphones, LCDs, hard drives - and cookies. "Every year more than 100 million Chinese migrate around the country for employment. I want to be the bridge, linking labor-abundant regions with the booming coastal areas that need labor," says Gao, general manager of Humanpool Human Resources Co Ltd. Humanpool is one of the largest blue-collar labor outsourcing companies for the Yangtze River Delta, a manufacturing power in East China. With subsidiaries in seven cities, the six-year-old company provides about 6,000 workers every month to more than 200 companies, mostly from the United States, Japan and Europe. Workers sign a labor contract with Humanpool and are then hired by its clients as temporary workers. Companies pay their salaries and insurance through Humanpool, which also provides housing and training. Humanpool's profit comes from commissions paid by companies, usually about 80 yuan per worker per month. About 20,000 workers now have signed contracts with the company. The service is popular among employers who need only seasonal or project-based workers. As demand changes, opening a new production line could require hundreds of workers quickly immediately.

In the latest remarks by a senior mainland official aimed at restoring confidence in the A-share market, People's Bank of China deputy governor Wu Xiaoling urged investors to keep faith in equities, saying share rallies are "inevitable" as the economy remains in "good shape." "Investors should have confidence in the country's economy," Wu said on the sidelines of a conference in Tianjin. "In a situation where the economy is growing, the stock market's advance is inevitable and long-term gains in the Chinese market are inevitable." Wu's comments came following earlier assurances by government officials and state-owned media this week to restore investor confidence in the equity markets, after share prices fell sharply following the government's decision last week to triple stamp duty on stock transactions from 0.1 percent to 0.3 percent. "Markets are always fluctuating," Wu said, referring to the recent plunge. "Short-term ups and downs in the market are inevitable. You are always going to get swings. How long those swings last does not matter. What really counts is the fundamental trend." Gao Xiqing, vice chairman of China's National Social Security Fund, also expressed optimism about the A-share market, saying that the long- term outlook is positive, in remarks that contrasted with his previous concerns about the pace of the share rally. The Shanghai Composite Index rose 0.24 percent Wednesday to end at 3,776.32 points, as equities clawed back. The Shenzhen Composite Index was up 1.89 percent to close at 1,086.22. In the five trading days to Tuesday, the market tumbled 21 percent as investors exited in panic.

Shanghai prosecutors have charged a brother and sister with producing and selling millions of yuan worth of fake health-food products in dozens of cities across China, local media reported Wednesday.

June 8, 2007

Hong Kong: The quota for live chicken import from the Chinese mainland will be raised on June 16-18 to meet the surge in demand for Dragon Boat Festival, the Health, Welfare and Food Bureau of Hong Kong said Tuesday. The Bureau said that the daily limit will rise from 20,000 to 50,000. But the move will be suspended if human or poultry avian influenza infections are found in Guangdong Province or Hong Kong during the period. The government cautiously decided to adopt last year's arrangement again in view of bird flu cases in the area, rather than lifting the quota further. The bureau reminded the trade and public to continue observing measures strictly to prevent bird flu during the festive period.

Asia Television received a fresh injection of capital and management expertise in a new deal as it prepares to transform itself from a two-channel broadcaster into a platform with a greater number of program offerings. A group of investors that includes Mingly Corp chairman Payson Cha Mou-sing, his brother Johnson Cha Mou-daid, ABN AMRO (Hong Kong) and former TVB managing director Louis Rajkumar Page obtained government approval Tuesday to take a 47.6 percent stake in ATV. Mainland cable network operator CITIC Guoan, owned by CITIC Group, will also secure a 14.8 percent interest. The total investment amount was not disclosed. Payson Cha will become the new chairman of ATV. Page and former TVB group general manager Ho Ting- kwan will become directors. Founded in 1957, ATV has failed to challenge the dominance of Television Broadcasts (0511) as the station lacked sufficient funds to expand. But new working capital and experience could help rejuvenate the broadcaster. "This would allow the new shareholders to invest substantially in ATV and raise the level of competition in Hong Kong's free television market," a government source said. "Given the financial capacity of CITIC Guoan Group, funds to be injected into ATV will help the station roll out digital terrestrial television and introduce diversified programming to narrow the gap with its larger rival." Analysts said TVB grabs more than 70 percent of advertising revenue every year, while the remainder is shared by ATV and pay-TV network Cable TV. ATV agreed to sell a 22.2 percent stake to CITIC Guoan in May last year. But under the Broadcasting Ordinance, a sound broadcasting licensee in Hong Kong is not allowed to control or own media and advertising companies either in the city or outside Hong Kong unless approval is granted by the government. The station said in April it agreed to sell a "major stake" to Mingly Corp, controlled by the family of the late property magnate Cha Chi-ming. A source in ATV had said earlier Mingly Corp would buy a combined 58 percent of ATV. Six proposed shareholders from CITIC Guoan and Mingly had to seek approval since they were deemed "disqualified persons" under the Broadcasting Ordinance. Page, for example, controls two mainland advertising agencies. The government source said the authority approved the application for the shareholding changes based on the financial benefits and licensee's commitment to freedom of expression and editorial independence. ATV has previously said it will spend HK$400 million on the roll-out of digital TV. At present, ATV chief executive Chan Wing-kee controls 49.15 percent of ATV through directly and indirectly held stakes. Liu Changle, chairman of Phoenix Satellite Television, holds about 36.8 percent. Once the deal is completed, Payson Cha will control about 58 percent of ATV through his stakes in Alnery No 112 Limited and Panfair Holdings. The holdings of present major shareholders Chan and Liu will be reduced to 26.85 percent. The remaining 14.8 percent will be held by China Light Group, controlled by CITIC Group. ATV said in a statement it will work with the new shareholders to lead the station into a new era.

New World Department Stores, an affiliate of New World Development (0017), is poised to raise more than HK$2 billion through a separate listing, group chairman Cheng Yu-tung disclosed Tuesday. It was the first time the Hong Kong tycoon has revealed the size of the proposed spinoff. The affiliate operates 27 department stores in mainland cities such as Beijing, Shanghai, Tianjin, Wuhan and Shenyang. Market sources said the planned initial public offering may take place as early as the end of this month after kicking off pre-marketing in Hong Kong later this week. NWD's stake in the affiliate would fall to 75 percent from 100 percent on completion of the separate listing. The share sale will be arranged by Deutsche Bank and HSBC Holdings (0005). Apart from spinning off its department store operation and management business in China, no similar plans for other subsidiaries are being considered by the parent company at present, chairman Cheng said following the group's extraordinary general meeting. NWD managing director Henry Cheng Kar-shun said the planned IPO would provide fresh capital for New World Department Stores for operations and business development in the mainland. Details regarding the proposed share sale would be announced later, he added. Meanwhile, Cheng Yu-tung dismissed bubble fears in China's stock market, saying the recent correction is normal. "It's common to see an adjustment in the market following a substantial rise," said the tycoon, adding that the market volatility is unlikely to affect the SAR's economy and stock market. Cheng said he will study whether to subscribe to shares of a couple of planned Hong Kong IPOs from mainland property developers and real estate investment trusts. Those include Guangdong-based KWG Property Holdings and RREEF China Commercial Trust. Sources said Henderson Land Development (0012) chairman Lee Shau- kee, the Kwok brothers of Sun Hung Kai Properties (0016), as well as other tycoons and strategic investors intend to acquire stakes in KWG. KWG aims to almost double its IPO to HK$4 billion from HK$2.3 billion.

If Hong Kong fails to take advantage of its status as China's financial center and further develop its financial markets, the yuan becoming a fully convertible currency in future will pose a threat to the city, former financial secretary Antony Leung Kam-chung warned Tuesday. "Hong Kong so far has three advantages right now: a fully convertible currency, a separate set of laws and an individual taxation system," Leung said. "Once China's currency becomes fully convertible, more foreign enterprises will consider raising funds in the [mainland]. And if Hong Kong does not ride on its current advantages, its status as an international financial center will be at risk." Leung is currently chairman of the China division of Blackstone Group, a US-based private equity firm. "China will definitely become the world's second-largest economy in 10 to 15 years, if there is not a war." Four years after his resignation as Hong Kong's finance chief, Leung is back in the spotlight after being the key arranger of the deal between Blackstone and the Chinese government, which has pledged to acquire a major stake in the initial public offering of the US firm. Leung, who became financial secretary in 2001, resigned two years later following his controversial purchase of a luxury Lexus automobile several weeks before he announced a substantial increase in the first registration tax of motor vehicles. The tax would have cost him HK$190,000. Leung admitted he had been an aggressive government official. "Having slashed salaries of our public servants in a bid to trim expenditures for the government, the feedback I have obtained in general is that I made a correct decision, which yet was politically incorrect," Leung said during a television interview. Leung's decision was made because civil service spending had accounted for 21 percent of the city's gross domestic product at the time - 4 percent higher than when the territory was under British rule. "Hong Kong had a deficit of HK$63.3 billion, and its interest rates were slated to soar if this problem was not resolved because the Hong Kong dollar was pegged to the [US dollar]," Leung said.

Hong Kong's 155,000 civil servants have edged another step closer to receiving their first pay rise in six years after the Executive Council approved a pay rise offer Tuesday. The biggest civil servants' union, however, did not rule out calling for increases larger that those proposed. The pay rises would cost the government HK$5.29 billion and lead to an estimated HK$42 million increase in pension payments for retirees this year, according to government documents presented to the Legislative Council. Based on a government pay trend survey released last month, the offers stand at 4.62 percent for the lower- and middle-band workers, and 4.96 percent for the upper-band civil servants. The offer for lower-band employees was adjusted to match with the middle- tier and follows an existing practice adopted since 1989.

China: China talk of the town across US - China Daily Newspaper - Since there are more conflicts in a close relationship than a superficial one, the US' trade ties with China will see more disputes. This seemed to be the message of a nationwide program in the US to discuss its relationship with China. Sponsored by the National Committee on US-China Relations (NCUSCR), the events featured presentations by China specialists, as well as a discussion between Deputy Assistant Secretary of State Thomas Christensen and committee president Stephen Orlins, which was webcast live from Washington, D.C. The program, referred to as China Town Hall, covered 30 cities across the US (the vast majority of which held their events on Thursday night) and was designed to stimulate dialogue on China across the US. Though NCUSCR, a non-profit group headquartered in New York City, was the national sponsor of the program, each event was co-hosted by a local organization involved in some way with China. In Boston, for instance, the host was the Boston Children's Museum, which has several China-related programs and events. It was Daniel Rosen, a visiting fellow of the Peterson Institute for International Economics, who told the audience to be prepared for more trade tension between the US and China in the years to come. To a great extent, however, such tension is a sign of success and an inevitable by-product of the two countries' economic ties getting closer, he said. Pointing out that the US has had the most trade conflicts with Canada because of its close economic relationship with it, Rosen said superficial relationships are marked by far less conflict than close ones. So instead of wasting energy on drafting legislation to punish China, Rosen suggested that the US accept China's strength - its extraordinary endowment of labor - and stop trying to protect dying US industries. It's better that Washington focus on its own advantages like its high-tech industry. The bottom line, Rosen said, is that a successful US-China relationship must be characterized by mutual trust and enthusiasm for one another's growth. After Rosen's speech, the audience at the Boston Children's Museum turned its attention to the live webcast of Christensen's conversation with Orlins. Speaking from the nation's capital, Christensen, whose sole responsibility is China, talked about the progress the US had made in its relationship with China, as well as the challenges that lie ahead. Set up in 1966, the NCUSCR is a private, non-partisan, non-profit organization promoting understanding and cooperation between the US and China. It believes that sound and productive Sino-US relations serve vital American and world interests. In 1972, the NCUSCR sponsored the historic visit of China's ping-pong team to the US. Since then, it has accumulated over four decades of experience developing innovative programs between the two countries.

A citizen holds various bank cards on June 5. Chinese banks have issued more than 1.23 billion bank cards, according to figures released by the People's Bank of China. Bank card transaction volume reached 1.89 trillion yuan in 2006, up 97 percent year on year. The volume represents 17 percent of the total retail sales of consumer goods for the year, seven percentage points higher than the previous year.

U.S. Treasury Secretary Henry Paulson said on Tuesday that the second Strategic Economic Dialogue (SED) meeting with China produced tangible results that have laid the groundwork for greater progress. "A newspaper headline at the conclusion of the recent SED meeting said that it did not 'resolve major issues.' This, in my opinion, misses the point," said Paulson in his remarks prepared for delivery at the Heritage Foundation in Washington. "The dialogue is an on-going process," said Paulson. "To get results, we must build relationships, and take smaller, deliberate steps forward together to create momentum for greater change." "Through candid discussions, we will ease, rather than increase, tensions and get to solutions and action," said the U.S. Treasure chief, who co-chaired the SED with Chinese Vice Premier Wu Yi last month. He said both countries made notable progress on civil aviation, energy and the environment, and financial services through the dialogue. "We announced a new air services agreement that will make it easier, cheaper, and more convenient to fly people and to ship goods between the U.S. and China," he said. "Through the SED, we also collaborated on a series of policies to help promote energy security and protect the environment, which will affect not only our two countries but nations around the world," he added. Paulson also emphasized the importance of the dialogue, saying the mechanism is important because both countries "must get this relationship right." "An open, honest economic relationship between our two countries is important to the future of the global economy," he said.

Washington does not back the suggestion of a boycott of the 2008 Olympic Games in Beijing to protest China's policy in Darfur, the US State Department said yesterday. The boycott proposal "is a private effort that is under way. Their perception of the ability of the Chinese government to influence the behavior of the Sudanese government is not a US government effort; is not something that we have supported", spokesman Sean McCormack said in response to a query at a news conference.

China Telecom and China Netcom yesterday called for the deregulation of the IPTV (Internet Protocol TV) market, which could give a major boost to the broadband Internet business of these two fixed-line carriers. "There is an ongoing worldwide deregulation trend in IPTV. However, it's not happening in China," said Wei Leping, China Telecom's chief engineer. Wei complained that regulators so far allow China Telecom offer IPTV commercial services in only six cities, preventing it from reaching millions of potential customers across the country. Speaking on the sidelines of the Broadband World Forum Asia 2007, which opened in Beijing yesterday, China Netcom Chairman Zhang Chunjiang said he hopes to offer IPTV services "in every city in China", but this can only happen when the government gives the green light. China Telecom and China Netcom have both built trial IPTV networks in a number of cities, but are unable to sign up commercial users without getting the nod from regulators. The two firms hope that IPTV can provide them with a major source of broadband revenue, but broadcasting authorities are concerned that IPTV could hurt cable TV operators. In December 2005, the broadcasting authorities in Quanzhou, in East China's Fujian Province, ordered the closure of an IPTV service jointly run by China Telecom and Shanghai Media Group (SMG), despite the fact that SMG had been granted a license to operate the service by the State Administration of Radio, Film and Television. Wei said he expected to see the further "convergence" of telephone, Internet and cable TV networks. But this convergence has sparked conflicts of interest between broadcasting and telecoms groups, which has also delayed the introduction of China's telecoms law. The law, drafting of which started in the 1980s, is expected to offer a regulatory framework for network convergence. Industry observers do not expect the law to be passed before March next year.

China should see a "turning point" this year in its pollution problems, and will likely meet its clean air and water goals in coming years, an environmental official said Tuesday in an unusually optimistic assessment. Zhang Lijun, vice minister of the State Environmental Protection Administration, said that while the amount of ammonia and nitrates in waterways increased in 2006 and overall air quality declined, protection measures such as pollution control facilities and stepped- up enforcement would have an impact. "It is true that last year the total discharge of pollutants was still rising," Zhang said. But he said that the increase in pollution in 2006 was smaller than the increase the previous year. "I'm confident that this year, the total pollutants discharged will come to a turning point," said Zhang, adding he expected a decrease in the amount of pollutants discharged, although he did not provide a specific figure. China has some of the world's most polluted cities after more than two decades of high- speed economic growth, and the government has been losing ground in recent years in trying to balance environmental concerns with economic growth. While the country's leaders have repeatedly promised a cleanup, they say they are constrained by a desire to promote economic growth and by a lack of technology. Last month, Zhang's agency reported that China's environmental situation was deteriorating, with several major rivers and lakes clogged by industrial waste. In February, it said China had failed to reach any of its pollution control goals for 2006. Last year's pollution-reduction goals were part of an eight-step plan to cut emissions of major pollutants by 10 percent in the five-year period ending in 2010, but Zhang said he was "confident" the targets would still be met. The measures include phasing out facilities or technologies that are heavy polluters or energy consumers, speeding up the establishment of pollution control facilities, and strengthening enforcement of environmental laws. He pointed to first-quarter data reported by local authorities that showed sulfur dioxide emissions were down 0.3 percent. Though chemical oxygen demand, a water pollution index, had grown 0.4 percent, Zhang said further adjustments to high-polluting industries would reduce both levels. Sulfur dioxide emissions are chiefly caused by coal burning, and China is already the world's largest producer and consumer of coal, depending heavily on coal-fired power plants for electricity. Ammonia and nitrate in water supplies stem from industry emissions, insufficient wastewater treatment plants, runoff from large-scale livestock operations and overuse of fertilizers, Zhang said.

June 7, 2007

Hong Kong: Move to breathe life into HK secondary board - Small and medium-sized enterprises (SMEs) on the mainland may have a better overseas listing choice in a few years as Hong Kong is beginning to take action to cure its ailing secondary board. Hong Kong Exchanges and Clearing (HKEx), operator of the world's second-largest listed bourse, proposed last week to allow only companies with at least HK$100 million market capitalization and HK$20 million cash flow to list on its Growth Enterprise Market (GEM). Though appearing to impose hurdles for listing candidates, the proposals, analysts said, is in fact aimed at revitalizing the lifeless board by introducing more quality listings. And therefore, "listing candidates, including those from the mainland, will benefit in the long term", said Kingston Lin, an analyst from Hong Kong-based Prudential Brokerage. The new requirements, which will be put under consultation before taking effect, do have some impact on listing candidates, said Castor Pang, a strategist of Sun Hung Kai Financial Group. However, that impact would "only be psychological". The new requirements would work better than the existing ones, he said, adding that people have lost confidence in a market with too low an entry barrier. Launched in 1999, the GEM was known for its low listing threshold. Companies that have been in operation for only a year can apply for a listing on the GEM, while Hong Kong's main board asks for at least a combined HK$50 million profit over three years and a HK$200 million market value. The loose regulations have resulted in a lack of quality listings, and as a result the board has been plagued by low turnover and poor reputation for years. It has not seen any new listings so far this year, while a number of quality companies opted to switch to the main board in the past years. "If we let the GEM carry on like this, the situation will get worse," said Prudential's Lin. An executive from a GEM-listed mainland company told China Daily that the firm has been trying to transfer to the main board regardless of costs. "People trust us when they come to know that we are listed in Hong Kong. But that trust wanes when they are told that we are listed on the GEM," said the executive, who did not want to be named. Bank of China (Hong Kong) said in a research report last year - when HKEx sought opinion to revamp the GEM - that the board could have a bigger role as many mainland hi-tech companies are in great need of capital to feed their growth. However, analysts believe more measures are needed to save the GEM and it would take time for the board to regain its reputation and become attractive again.

Tickets for the 2008 Olympics will go on sale on Tuesday in Hong Kong, said the China Travel Service (Hong Kong) Ltd (CTS) on Monday. As the official ticket agent of the Beijing 2008 Olympic Games, CTS said they will accept ticket reservation from 5 June, including ticket reservation for Opening and Closing ceremonies and all other sports session. According to CTS, all Hong Kong Identity Card holders are eligible to reserve and purchase the tickets. Each applicant can only reserve one opening and one closing ceremonies tickets. For other events, each applicant can reserve up to four tickets per sessions. For Equestrian events in Hong Kong, each applicant can reserve up to 10 tickets per session. Beside the face value of the tickets, CTS is permitted by BOCOG to collect a handling fee. Details are available from CTS website.

The Hong Kong Monetary Authority, the city's de facto central bank, said Monday it is difficult to predict whether China's economy would land softly and how the volatility of the mainland bourses would impact on Hong Kong's equity markets. Hong Kong blue chips surged to a triple-digit close Monday, shrugging off a sharp fall in mainland equities as investors were encouraged by forecast- beating US economic data on job creation and manufacturing activity Friday. Mainland retail investors who have already hit the panic button after last week's tripling of stamp duty on stock transactions are now experiencing further anxiety attacks worrying that the central government will introduce a capital gains tax shortly to further curb China's frenzied equity market.

An executive councillor and several legislators have given the thumbs-up for the proposed new lineup of Chief Executive Donald Tsang Yam-kuen's power center, describing Financial Secretary Henry Tang Ying-yen as a suitable candidate for the post of chief secretary for administration.

China: Chinese Foreign Ministry spokesman Liu Jianchao on Monday refuted a June 3 report by Japan's Kyodo News Agency claiming that Premier Wen Jiabao would not seek a second term. "This report is a sheer rumor," Liu said when asked to comment on the report.

President Hu Jintao shakes hands with Yu Huiwen, wife of late vice minister Huang Ju, while paying respects to Huan at the Babaoshan Revolutionary Cementery in Beijing June 5, 2007. Huang's remains were cremated on Tuesday. Top leaders Hu Jintao, Jiang Zemin, Wu Bangguo, Wen Jiabao, Jia Qinglin, Zeng Qinghong, Wu Guanzheng, Li Changchun and Luo Gan bid farewell to Huang who died of illness at 69 at the Cemetery.

The securities regulator has approved four new mutual funds, seen by analysts as an effort to stabilize the volatile stock markets. The benchmark Shanghai Composite Index plunged 8.26 percent on Monday, falling for the third time in four trading sessions after the country tripled tax on stock transactions to cool the market last Wednesday. The index recorded the largest drop since February 27 when it slumped 8.84 percent and triggered global stock sell-offs. Four mutual funds from the fund management firms of INVESCO Great Wall, Guangfa, Fortune SGAM, and Yimin have been approved by the China Securities Regulatory Commission (CSRC). The funds will mainly invest in the stock markets. The move ended the CSRC's suspension of new fund approvals in late May amid concerns the huge inflow of investors cash would cause a bubble. Five mutual funds were launched in May, raising 35.5 billion yuan (4.6 billion U.S. dollars), half of the 71.7 billion yuan raised by nine funds in April, according to the Shanghai-based financial data provider Wind Info. Analysts said the move would help to restore investor confidence after the sharp plunge over the past few days.

After having been involved in big-screen romances with Takeshi Kaneshiro and Daniel Wu, Chinese actress Zhou Xun will again open her heart on-screen, this time to another heartthrob - Vic Zhou. Shanghai Morning Post says that "The Banquet" actress will take on the leading role as a cab driver in the Huayi Brothers' unnamed love thriller, crazily searching for her missing boyfriend, who will be played by Taiwan actor/singer Vic Zhou. Zhou Xun was named best actress at the 2005 Hong Kong Film Critics Society Awards for her performance in Peter Chan's "Perhaps Love," which also stars Takeshi Kaneshiro. She worked with Daniel Wu in Feng Xiaogang's 2006 hit "The Banquet." The film received the Future Film Festival Digital Award at that year's Venice Film Festival. Sources from Zhou Xun's agent company, Huayi Brothers, say she has been waiting for a good screenplay ever since "The Banquet," and was drawn by the new thriller's interesting plot. Singaporean actress Fann Wong is also expected to appear in the film. Shooting is set to start next month.

Sun Yat-sen's wife Soong Ching- ling continues to be missed and remembered decades after her death. Her adopted child explains why to Dinah Gardner. Time stands still at number 46 Houhai Beiyan. For this is the home of Soong Ching-ling, the "mother of modern China," and the clocks have been stopped at 8.18pm and calendars stay fixed on May 29, 1981 - the moment and day she died.

Puer tea has been relished for centuries for its aged, aromatic infusions, but latter-day enthusiasts are appreciating it more for its investment potential. And as more speculators look to the tea as an alternative to shares and real estate, trouble may be brewing. Not much data on the market is available but mainland media report that millions of tea enthusiasts are buying up large stocks of puer tea and hoarding them as an investment, giving better and quicker returns than the stock market. Interest in puer tea has been on the rise in southern China since 2003 and reached a peak in April. The growth in the puer market can also be seen in the expansion in production in Yunnan province , where most puer tea is produced. In 2005, 50,000 tonnes was sold but last year that rose to 80,000 tonnes. Traditionally, puer has been most popular in Guangdong and is renowned for being gentle on the stomach. It has attracted more consumers in recent years with people believing it can help them lose weight or even prevent and cure cancer. The tea has also been called a drinkable antique because it can be stored for more than 20 years and its value appreciates as its qualities improve over time. But the main reason for puer's sudden rise in popularity is purely commercial - the idea that the cheap tea can lead to big money. Zhou Yong runs the Nan Tian Tea Trading Company which has exported puer from Yunnan to Hong Kong since 1985. He says local governments have made great contributions to promoting the puer market. "To generate interest in puer, most government departments in Yunnan have set up offices to show tea etiquette to visitors," Mr Zhou said. "Well-packaged puer has also become popular as high-class gifts among local officials and businesspeople. "To build up good relationships with local governments, rich businessmen have invested a lot in puer tea projects." In addition, frequent tea auctions organised by authorities have fuelled speculative buying in puer tea.

Makeshift tents are built to serve as temporary shelters for seism-stricken residents in Ning'er, Southwest China's Yunan Province June 4, 2006. The first batch of disaster relief goods have been transported to Ning'er, where a magnitude 6.4 earth quake took place on Sunday, killing three, injuring at least 300 and forcing the evacuation of 120,000 people.

Jimmy Carter, the 39th President of the United States, has recently been interviewed by Yong Tang, a Washington-based correspondent of People's Daily. His birthday is October 1, a day every Chinese person will celebrate. He cut diplomatic ties with Taiwan and established diplomatic relations with People's Republic of China. His administration didn't fire a single bullet overseas. He was awarded Nobel Peace Prize in 2002 for his contributions to world peace. He is still surprisingly active both physically and spiritually at the age of nearly 83. He enjoys working in his peanut field. He has so far written 21 books. He is The New York Times' best selling author. His name is Jimmy Carter, the 39th President of the United States. Recently he was interviewed in his office at the Carter Center in Atlanta by Yong Tang, a Washington-based correspondent of People's Daily. I first visited China in 1949 when I was a young naval officer. It was a year when the Nationalist Chinese left Mainland China and went to Taiwan. Then on October 1, 1949, my birthday, the People's Republic of China was formed. I was very excited and pleased when Nixon did go to China. But I was disappointed when they announced there was only one China and didn't say which one. As you know, the more conservative Americans, including particular Republicans, still looked upon Taiwan as the only China. So when I became President, I thought it was time to make a change. I saw the enormous need for better understanding, better communication, better friendship and cooperation with China. So I decided that would be one of my goals as President. So beginning in early 1978, Deng Xiaoping and I had very secret negotiations. I didn't even use the State Department. All of the messages went from the White House directly to China. I thought that it was one of the most needed diplomatic goals in my country's life. And I think it was the right thing to do and one of the best things I ever did. Well, it was proven to be one of the best things that ever happened to my country, and I think it has had a beneficial effect on China as well. When I went over in 1981 to visit China as the guest of Deng Xiaoping, he wanted me to see the first phases of economic freedom moving toward a free enterprise. And I think that may not have happened if we didn't have normal relations. Also his establishment of the right of little villages to have local elections was another possible result of the normalization. So I think that, in many ways, it has stabilized the political and military situation in the East, in Asia and also in several other countries. Well, the most remarkable changes in China have all been related to economic change. I saw the original birth of free enterprise when Deng Xiaoping would only permit small farmers to have one tiny project: buy chickens or repair bicycles or make clay pots; they couldn't have two, only one. And later he expanded that to villages, and then he expanded on up. So that has been the primary change that I have seen and that has been impressive to me. It has been profoundly noticeable to the whole world. I would say that in the field of freedom, religious freedom, there has been great progress made. I had an argument with him. I requested that he permit freedom of religion and that he permit Bibles to come back into China. I'm a Christian, and he agreed to do both of those things and did them. So in 1982 the Chinese National People's Congress approved the guarantee of freedom of religion. There are still some restraints on religion but progress has been made. And when I first visited China after I left the White House, it was impossible for a person in China to move from one place to another, except if the government ordered him to. Now there is more freedom of movement, more freedom of religion, and more economic freedom. My prayer and my hope are that the relation will always be friendly. But I think there's going to be more competition between China and the United States, which is already evident economically. I have seen your Premier Wen Jiabao making great efforts in Latin America, Africa, and other places around the world to expand the diplomatic and economic relationships with those countries. Some are in competition with the United States. I think that's healthy, but that shows what is going to happen in the future. I think the competition between the United States and China is going to be increasingly important. If we can maintain mutual respect and mutual trust, then that competition can be beneficial. Well, I like the word competition better than confrontation. You know, confrontation has the connation of possible military action. I don't believe that, with any degree of wisdom in Beijing or Washington, we are going to have a military confrontation. But it is inevitable that we are going to be more competitive, even in space and military capabilities as well as economics and politics. But if we retain our friendships then that competition can be peaceful and maybe mutually beneficial.

The United States submitted on Monday a paper to the World Trade Organization (WTO), proposing much tougher rules on trade-distorting subsidies.

China's largest hydropower project, the Three Gorges Project, is expected to start full operation three to four months ahead of schedule as workers speed up the installation of the 12 turbines on the right bank of the Gorges.

Customs officials in China and the United States will regularly share information about seizures of pirated goods and encourage more exchanges to better combat infringements of intellectual property rights (IPR), a top official has said. To help them better select targets for IPR enforcement and evaluate achievements, Chinese and US customs officials will every six months exchange statistics concerning seizures of counterfeit and pirated goods originating in or destined for the other side, Mu Xinsheng, minister of the General Administration of Customs (GAC), said in an interview yesterday. The statistics will include the number of seizures, quantity and value of goods, transportation type and the main ports of transit used. To help track down IPR violators and improve law enforcement, each side may also ask the other to provide information on up to 10 specific IPR-related seizures each quarter, the minister said. Measures aimed at increasing visits to each other's ports and respective offices and encouraging exchanges of IPR enforcement experiences among customs officers are also on the cards. Mu said all the new measures are included in the Memorandum on Strengthened Cooperation in Border IPR Enforcement between the GAC and the US Customs and Border Protection (CBP), which was signed on May 22. He said the US has regularly criticized China for its failure to prevent IPR infringements at its borders in recent years, while refusing to provide enough information about seizures of pirated products. "The new agreement will lead to more effective and efficient IPR enforcement in both countries," the minister said. Mu said piracy and counterfeiting are global problems that no country can solve on its own. "Instead of criticism and confrontation, communication and cooperation are better ways to resolve disputes," he said. The minister said China has made progress in preventing IPR infringements at its borders and that the agreement offers Chinese customs officers a chance to learn from their US counterparts. Having access to more information about seizures could help Chinese customs identify pirated goods. To better implement the agreement, the GAC and CBP have decided to open new channels of communication. Each side will create a point of contact, about which it will inform the other side in writing, according to the GAC. Official figures show that Chinese customs uncovered 2,473 IPR infringement cases last year, or double the amount in 2005. More than 200 million pirated or counterfeit goods were seized during the period. Meanwhile, China and the US will today kick off a four-day talks on the complaints Washington filed with the World Trade Organization. The two sides will also touch on issues such as opening the Chinese market to publications. The US filed formal complaints over copyright piracy and restrictions on the sale of US movies, music and books in China in April.

Hotel investments will rise in Asia this year and China will be the driving force along with Japan, says Scott Hetherington, managing director of Jones Lang LaSalle Hotels. According to the latest report of the hotel investment services firm, the global hotel transaction volume reached a historical peak in 2006, surpassing $72 billion, since 2002, when the global market began to recover from its lowest point. Although America and Europe are the two major regions where the transactions have been and will continue to be the highest, "Asia-Pacific would enjoy the highest growth by volume of transactions this year," said Arthur de Haast, global CEO of Jones Lang. "This year, the global volume will slightly fall to less than $70 billion. America would be flat, Europe, decrease, and Asia, accelerate," he predicted. China is already seeing a lot of action on the hotel investment front, said Hetherington. And the coming Olympics is acting as the catalyst. Ever since Beijing was chosen as the next Olympics venue, hotel investments have picked up rapidly in China. Despite the restrictions introduced in mid-2006 by the government on acquisition and funding of real estate investments by foreign entities on the mainland, investors look anything but discouraged. The number of deals in 2006 crossed 16 and the hotel transaction volume exceeded $1 billion, which is over one-sixth of the total volume in the whole of Asia. Under the new policies, foreign investors are required to have at least 50 percent of the total investment in registered capital, up from the previous 33.3 percent, for investments over $30 million. In line with previous years, sellers were private individuals, State-owned enterprises as well as Japanese and Singaporean owners. Buyers were a mix of private equities, owner-operators, venture funds and real estate investment trusts, the majority of which are based in the Asia-Pacific region. There will be strong investor demand across the mid- and upper-scale hotels in big cities like Beijing and Shanghai and strategic secondary locations, said Andreas Flaig, executive vice-president Jones Lang and head of its China business.

China's stock market crashed Monday as the benchmark index recorded its biggest one-day points plunge in history after retail investors fled the market in panic selling.

Singapore Airlines is confident of achieving synergy with China Eastern Airlines (0670) and helping it maintain a strong market share in its Shanghai home base after a proposed stake acquisition, chief executive Chew Choon Seng told The Standard in Vancouver. The planned stake purchase by the world's biggest airline by stock market value comes at a time when China Eastern faces fierce competition from the strategic alliance of Air China (0753) and Cathay Pacific Airways (0293). SIA "will work together with [China Eastern] to share knowledge, operational and technological ideas," Chew said Monday on the sidelines of an International Air Transport Association dinner. The Singapore-listed company informed the Shanghai carrier last week of its interest in a stake investment. "The aviation business is always too competitive. The important thing is organization," he said. Beijing is opening up the market step by step with the aim of giving domestic carriers a fast-track entry to international markets.

June 6, 2007

Hong Kong: Hong Kong police chief Tang King-shing has pledged strong measures to ensure public security during the carnival period marking the 10th anniversary of the region's return to its Chinese motherland. "Peace and order have prevailed in Hong Kong since its return to the motherland 10 years ago, and we will make sure that all the 10th anniversary celebration events will be held safely so that people can enjoy themselves," said Tang King-shing, commissioner of Police of the Hong Kong Special Administrative Region (HKSAR) government, in an recent interview with Xinhua. "We have sufficient manpower to protect VIPs and the mass public," he said, adding that he had ordered all regional police chiefs to step up their efforts to maintain public security when various celebrations are warming up. Hong Kong returned to the motherland on July 1, 1997, and the HKSAR government has planned more than 460 events to celebrate the 10th anniversary. It is reported that senior officials of the central government will also come to Hong Kong to attend celebration events around July 1. This seems to have posed the first major challenge to Tang after he was appointed police chief early this year. However, Tang said that he was confident of fulfilling his duty as he had experienced many major events over the past years such as the returning ceremony on July 1, 1997 and the 6th Ministerial Conference of the World Trade Organization held here in December 2005. Tang recalled that he was in charge of on-site security at the returning ceremony in 1997 as the Chief Superintendent of Police. "Everyone was focusing on the historic moment, but I had to ensure that every detail of the ceremony went right. I only slept a little more than one hour in two days," he said. As an international city, Hong Kong has hosted many international conferences over the past years, but what impressed Tang most was the successful convening of the 6th Ministerial Conference of the World Trade Organization. "The security of the meeting posed a grave challenge to Hong Kong police, but we finally managed to ensure the meeting to go on smoothly. We are proud of it," he said. Tang said that comparing with other international cities, Hong Kong still remains one of the safest ones in the world, citing the city's crime rate standing only at 1,100 to 1,200 cases per 100, 000 people. Talking about Hong Kong's hosting of the equestrian events of the 2008 Beijing Olympic Games, Tang acknowledged Hong Kong police still lack enough experience in dealing with major world sports events. "However, we are learning quickly," he said. Hong Kong police have, time and again, invited foreign experts to give lectures on the issue, and have also sent officers to 2006 Torino Winter Olympic Games and Doha Asian Games to learn their experience of security work, he said. "The Beijing Olympic Games Organization Committee is satisfied with the security plan we have mapped out, and we have also pledged to improve the plan whenever it is needed," he said. To further ensure the security work, Hong Kong police have also established close cooperation and friendly relationship with police in the mainland and the Chinese People's Liberation Army (PLA) Garrison in Hong Kong, he said.

Ping An Insurance (2318), which become the newest member of the Hang Seng Index today, said it will diversify its portfolio by investing in financial and infrastructure companies in the Asia- Pacific region once the regulator gives the go-ahead. The move will allow the insurer to move away from over-reliance on mainland assets. Chief executive Louis Cheung Chi- yan said the insurer will have US$7.5 billion (HK$58.5 billion) available for overseas investment when new rules become effective. The Shenzhen-based insurer has invested about US$2 billion in American depositary receipts and fixed-income products. "We have been studying the possibilities for almost 2 years and we are eyeing investments that offer at least 3 to 5 years long-term stable returns, with high dividend yields," Cheung said, adding that the return on investments would be greater than the current level, which is more than the 4.5 percent risk- free rate. He also said Ping An will join strategic partners such as Goldman Sachs, Morgan Stanley, or HSBC (0005), which has a 17 percent stake in the insurer, in considering private equity investments in India and eastern Europe.

China maker of optical components and optoelectronics and a Hong Kong-based pharmaceutical company open their share offers to retail investors today as they target a combined HK$1.856 billion. Sunny Optical Technology (Group) is seeking to raise HK$1.031 billion by offering 270 million shares, 27 percent of its enlarged issued share capital. Shares are being offered in a range between HK$3 and HK$3.82. Proceeds will be used to expand capacity, pay off debt and for research and development. Of the shares, 200 million are new and the rest existing shares. The deal is led by BNP Paribas. The price range values Sunny at 15 to 19 times historical 2006 earnings. Net profit last year was 117 million yuan (HK$119.49 million), up 42 percent from 2005. Revenue rose 53 percent to 900.7 million yuan. But the gross profit margin of its optoelectronic products fell to 16.3 percent last year from 27 percent in 2005, putting pressure on the overall margins, which narrowed to 27.5 percent from 30.7 percent. The margins narrowed as a result of a change in the product mix, with sales of low-margin optoelectronic products rising.

The Import and Export Bank of China, known as Exim Bank, announced on Monday that its board of directors has given the bank a "go-ahead" to issue Renminbi bonds on the Hong Kong market. This makes Exim Bank the third bank in less than two months to consider issuing Renminbi bonds in Hong Kong. The Exim Bank said it was fully prepared for the issuance but would not disclose specifics. "Once it is approved by the People's Bank of China, we will start issuance procedures and file with Hong Kong financial authorities," an Exim Bank statement said. The Bank of China announced on May 28 that it plans to issue Renminbi bonds valued at no more than three billion yuan in Hong Kong. The plan, however, has to be approved by its shareholders on June 14, according to China Business News. One month earlier, the China Construction Bank announced it was likely to issue Renminbi bonds in Hong Kong valued at five billion yuan if market conditions were favorable. Local banks' enthusiasm for Renminbi bond issuance in Hong Kong was kindled in January by a circular from the People's Bank of China, which said that mainland financial institutions, once approved, could issue Renminbi bonds on the Hong Kong market. However, the capital raised must be handled by Hong Kong clearing banks. Another factor piquing mainland banks' interest is the rising yuan. Although Renminbi bank deposits in Hong Kong stood at only 24.9 billion yuan (around 3.2 billion U.S. dollars) in February, equivalent to only five percent of non-Renminbi bank deposits, the appreciation potential of the yuan is regarded by many industrial analysts as a lure to investors in Hong Kong. The Hong Kong dollar has been cheaper than the yuan for several months, with the central parity rate of yuan against Hong Kong dollar standing at 0.97970 on Monday. It remains unclear when and how China's central bank will kick off Renminbi bond issuances in Hong Kong. But Hong Kong Financial Secretary Henry Tang has said he hopes the administrative arrangements and legislative procedures for the issuance could be introduced in the first half of the year. Established in 1994 and solely owned by the central government, China Exim Bank is a state export credit agency and an important element in the backup system for China's foreign trade.

Frontline public doctors are gearing up for industrial action, and have demanded that the Hospital Authority resolve within two weeks what they see as an unfair pay scale for some 2,000 doctors hired after year 2000. "We want a clear response from the Hospital Authority along with a specific deadline for concrete measures to equalize our wages," said Ernie Lo Chi- fung, chairman of the Frontline Doctors Union. Lo Sunday said the morale of frontline doctors has suffered as a result of an unfair pay system. "If the authority fails to provide a clear and satisfactory answer, we won't rule out the possibility of taking to the streets July 1 to voice our concerns. We might resort to industrial action without affecting services to patients," he said. The union is collecting signatures and the views of frontline doctors before making any decision, but Lo declined to say if they will go on strike. The salary of a fresh medical school graduate hired in 1999 was HK$41,965 a month, but a year later, doctors hired by both the authority and the government were offered HK$33,355 a month. The government has proposed raising their salaries, but the authority has yet to present a concrete proposal. At present, a doctor with eight years' working experience and who was hired by the authority before 2000 earns HK$72,135 a month. But those hired in 2000 with less than one year's experience get HK$43,940.

Mr. Stephen Selby, director of Hong Kong Intellectual Property Department, paid a visit to the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) on May 25, 2007 and exchanged views with BOCOG Legal Affairs Department on the joint efforts to protect the Olympic intellectual property rights in the Hong Kong Special Administrative Region. Since Beijing won the rights to hold the 2008 Olympic Games and especially since the Olympic equestrian events moved to Hong Kong, Mr. Selby's department has done a lot to protect the Olympic IPR in Hong Kong. The department has seen it as its routine work and set up a unit to supervise and register cases of infringement of Olympic IPR in Hong Kong. BOCOG has attached great importance to the Olympic IPR protection in Hong Kong and has maintained very good relations with Hong Kong Intellectual Property Department. As 2008 is drawing near, BOCOG will enhance cooperation with the department. As a statutory body of HK SAR, the Intellectual Property Department is responsible for the registration, publicity and management of the IPR in Hong Kong. It also makes efforts to promote awareness of IPR among HK citizens. Mr. Selby has contributed greatly to the work.

The recent rise in long-term interest rates around the world - largely ignored by investors - is a bigger threat to Asian equity markets than any potential crash in China, and could trigger widespread corrections given stretched valuations in Asia, HSBC has warned.

Hong Kong airport's new terminal will help strengthen the city's position as an Asian and global transportation hub, but competition from rivals in the region continues to grow, analysts said.

China: China issued a national plan on Monday to address climate change and show its determination to reduce greenhouse gas (GHG) emissions in an all round way. Under the National Climate Change Program, the first by a developing country, China pledges to restructure its economy, promoting clean technologies and improving energy efficiency. The plan is proof of China's determination to reduce GHG emissions, said Ma Kai, minister in charge of the National Development and Reform Commission. But the plan does not include any quantified targets for carbon dioxide emission. "The absence of any quantified targets for reducing greenhouse gas emissions does not mean China isn't serious about reducing GHG emissions," the top economic planner told a press conference in Beijing two days ahead of Chinese President Hu Jintao's visit to Germany for a G8 meeting at which global warming will top the agenda. China has come under increasing pressure from industrialized economies to reduce its carbon dioxide emissions. With the new plan, the nation has opted not to hide behind the fact that the Kyoto Protocol does not obligate developing nations to reduce GHG emissions. According to the calculations by Xinhua, if all the objectives in the program were achieved -- on hydro and nuclear power generation, upgrading of thermal power generation, facilitation of coal-bed-gas development, the use of renewable energy resources such as wind power, solar power and terrestrial heat, forestation and energy-saving -- the world's most populous country would emit 1.5 billion tons less carbon dioxide and equivalent by 2010 while still continuing to grow rapidly. Citing figures from the International Energy Agency, Ma rebutted the argument that China is a "menace to the global environment". "I don't see how China can be labeled a menace. Compared to the industrialized countries, until recently China had low greenhouse gas emissions and its emissions are still relatively low in per capita terms. Rises in gross domestic product in China produce smaller hikes in carbon dioxide discharges than in other countries. This kind of talk is grossly exaggerated and unfair," Ma said. China prefers to calculate GHG emissions in per capita terms pointing out that, in 2004, its per capita carbon dioxide emissions were 3.65 tons, compared to a world average of 4.20 tons and an average of 10.95 tons for the Economic Co-operation and Development (OECD) countries. More pertinently, China points out that a one-percent rise in GDP leads to an average 0.6 percent increase in carbon dioxide emissions worldwide, but the Chinese figure is only 0.38 percent. "Even if China overtook the United States one day in total carbon dioxide discharges, given that the former's population is five times as much as the latter, China's per capita greenhouse gas emission would remain low compared with the United States," Ma said. The minister advocated a more objective methodology to evaluate carbon dioxide emissions, pointing out that globalization had shifted a significant amount of production to developing countries, forcing up their energy consumption. Ma urged the international community to respect the developing countries right to develop, saying that China was ready to cooperate closely with other nations to combat climate change. The 62-page action plan details the policies and measures China will take to mitigate and adapt itself to climate change. "By mitigation, we mean curbing carbon dioxide emissions, emitting as little as possible. By adaptation, we mean minimizing the negative impact of greenhouse gases by improving our ability to forecast and prevent disasters," Ma said. The plan says that regional cooperation on climate change should function as "a helpful complement" to the United Nations Framework Convention on Climate Change and the Kyoto Protocol rather than replacing or weakening them. The China Meteorological Administration announced Friday that this year's Spring was the country's 11th warm Spring since 1997, with the temperature averaging 10.6 degrees Celsius from March to May, 1.2 degrees higher than normal years and the second highest since 1951. The National Climate Change Program notes that the most significant temperature increases have occurred in winter with 20 consecutive warm winters from 1986 to 2005. The sea level has risen by 2.5 mm annually along China's coasts over the last 50 years, slightly faster than the global average. But the nation's mountain glaciers are retreating much more rapidly. The program warns that the risk of desertification will intensify. "Climate change is a challenge China must cope with to realize sustainable development... Implementing a climate change containment policy may cost a fortune, but the cost will be even higher if we delay. Early action is imperative," Ma said.

Chinese shares plunged again on Monday, with the major Shanghai Composite Index falling by 8.26 percent after heavy falls last week.

People crowd around the Jeely booth at the West Coast Straits Auto Show 2007 in Xinmen, which runs from June 1st to 4th. A total of 15 Chinese-made autos enter the show to compete with the world brands.

A boy and his granny have their meal in a makeshift tent in quake-torn Ning'er, Southwest China's Yunan Province June 4, 2006. The first batch of disaster relief goods have been transported to Ning'er, where a magnitude 6.4 earth quake took place on Sunday, killing three, injuring at least 300.

June 5, 2007

Hong Kong: More extensive cooperation in the service sector should be established between Shanghai and Hong Kong, government officials, academics and business leaders from the two cities said on Friday in Shanghai. Further and deeper cooperation is good for both Hong Kong, whose flourishing service sector is hampered by space constraints, and Shanghai, which is keen to focus its development on the sector, Wang Ronghua, vice-chairman of Shanghai People's Political Consultative Conference, said. He was speaking at a forum on the opportunities for cooperation between the two cities. Wang said the two cities complemented each other in many ways and have great potential for working together. "Hong Kong has a long history of developing its service industry and has accumulated abundant experience and talent in the field," Wang said. "Shanghai is building itself into an international hub for finance and shipping, and is also working on the economic integration of the Yangtze River Delta. "Shanghai has a lot to learn from Hong Kong and at the same time can provide plenty of opportunities and serve as a platform for Hong Kong to expand its business in other mainland cities," he said. Leung Chun-ying, a member of the Executive Council of Hong Kong Special Administrative Region, said there was also competition between the two cities and that has to be faced. "We have to find an effective way to avoid unhealthy competition and increase cooperation," he said. Cai Laixing, chairman of Shanghai Industrial Investment (Holdings) Co Ltd, said that cooperation was the only way to help both cities bloom. Wang said: "We should encourage more service businesses from Hong Kong to set up in Shanghai as well as more state-owned or private enterprises in Shanghai to list in Hong Kong and expand their business abroad in that way." Wang said that cooperation on exhibitions, international merchandising and finance would be particularly encouraged.

Invest Hong Kong, an investment promotion agency, kicked off a three-year major investment promotion campaign here Friday, targeting private-owned enterprises in high-growth regions across China's mainland. The campaign, named "On Your Marks, Get-set, Go!", will focus on seven key economically developed provinces on China's mainland, including Zhejiang, Jiangsu, Shandong, Liaoning, Sichuan, Guangdong and Fujian, and provide private enterprises with the information and tools to expand internationally using Hong Kong as their gateway, according to InvestHK. Director-General of Investment Promotion Mike Rowse said the demand-driven campaign would guide companies through the business-expansion process. "We're raising the level of awareness of Hong Kong's role in helping local companies in China's mainland go global, we're providing practical advice on developing an expansion strategy -- and finally we're bringing these companies to Hong Kong to experience the city first hand," he said. According to InvestHK's estimates, more than 2,000 companies from China's mainland are operating business in Hong Kong, with about 268 of these using the city as their regional office or headquarters. Recent investors who have used Invest Hong Kong's free services include Tong Ren Tang, Kingdee, Nuctech and Duan & Duan.

Direct-general of the World Trade Organization (WTO) Pascal Lamy urged world economic powers on Friday to take concrete action on the deadlocked Doha-round talks. As leaders from the Group of Eight (G8) leading industrialized nations are ready to kick off their annual gathering in Germany next week, Lamy said his message to the summit was simply three words "just do it."

Hong Kong singer and actress Sammi Cheung has asked her lawyer to send a letter to YouTube, a popular video sharing website, requiring them to withdraw video clips of her latest solo concert. quoted a report from the Information Times on May 22. The pop queen last week kicked off her eight-day solo concert tour after two years away from the stage. Some fans shot parts of the concert and uploaded them on YouTube to share with other people. Sammi's agent says that they hope to remind fans to protect copyright of the concerts.

The Tourism Board has appointed a top man from the tobacco industry as its executive director. "Experience in the travel industry is important, but what is more important is their international experience, how they can promote Hong Kong overseas," Tourism Board chairman James Tien Pei-chun said. The new executive director is Anthony Lau Chun-hon, formerly general manager of Philip Morris Singapore. Lau spent 20 years with the tobacco giant after joining Philip Morris Asia in 1986. He has held senior positions at the company, including director of sales and marketing and general manager for different markets. He graduated from the University of Toronto in business administration in 1985. Philip Morris Asia is one of the world's largest tobacco producers with the world's best-selling cigarette brands such as Marlboro, 555, Dunhill, Mild Seven and Salem. The Tourism Board also appointed Daisy Lam Lui Wing-han as deputy executive director. Lam is currently Octopus Cards Limited's operation director. Before joining Octopus in 2003, Lam worked for various international corporations such as Cathay Pacific and Hongkong and Shanghai Banking Corporation. Tien said the executive director and his deputy would take up their posts on August 1 and September 1 respectively. He said they had a deep knowledge of local and international markets and management skills, putting them in a strong position to market and promote Hong Kong worldwide. The board, which is a government- subsidized body, spends more than HK$100 million each year and has been criticized as an "extravagant spender." Tien said Lau will also review the board's expenditure. Financial Secretary Henry Tang Ying-yen hopes the new appointees will do a good job at the board. "The most important thing is whether the money is spent appropriately, as this is public money," Tang said. "Every government department has this responsibility." However, Sin Chung-kai of the Democratic Party said the two appointees did not have sufficient experience in public service and the travel industry. "In the future, there should be a high accountability in spending public money," Sin said. Former executive director Clara Chong Ming-wah, whose six-year term expired last month, came under criticism after it was revealed she was drawing an annual pay package of HK$4.56 million, which included bonuses and subsidies. The pay package of the new executive director will be cut by 10 percent. Former deputy executive director Grace Lee Chan Ka-yan resigned in October after 20 years with the board and its predecessor, the Hong Kong Tourism Association.

A major fire at a mainland plant operated by mobile phone battery manufacturer SCUD Group (1399) may have caused as much as 250 million yuan (HK$255.3 million) in losses as the entire inventory had been destroyed, the company said Friday. But the company, which listed mid- December, said that much of the production lines were unaffected. The fire was reported at its Fuzhou plant Thursday and production has been disrupted. "Most, if not all, of the group's inventory has been destroyed while most of the production lines were unaffected," chairman Fang Jin said in a statement to the Hong Kong bourse after the market closed. SCUD had a net asset value of HK$835.7 million as at the end of last year. It said losses could range from 200 million to 250 million yuan before taking into account any compensation from insurers. However, total losses - including inventory and some lost sales pending resumption of normal production and possible claims from customers for late deliveries - would not be completely covered by the insurer. The cover is primarily for loss of inventory and products from fire, and not subsequent business disruption or other losses, according to the statement. "As part of the estimated loss, the portion attributable to the cost of inventory based on the group's management accounts as at April 30, 2007 was about 190 million yuan," the company said. Fang said in March that a new plant would be built in Fuzhou in the second quarter to centralize production.

Hang Seng China, the mainland incorporated subsidiary of Hang Seng Bank (0011), is set to widen its retail footprint by increasing the number of outlets and taking more employees on board.

The High Court has turned down an appeal by PCCW (0008) for a judicial review of a ruling by the Office of the Telecommunications Authority directing the dominant telco to allow an opening up of its network to an Internet services provider.

Restaurant chain Tao Heung Holdings will start its initial public offering pre- marketing next week after it won approval from the Hong Kong stock exchange's listing committee Thursday.

Financial Secretary Henry Tang Ying-yen is the frontrunner for the position of chief secretary in the new administration, after Rafael Hui Si-yan decided not to stay in the job beyond the end of this month. According to sources familiar with the situation, Mr Hui had made up his mind after months of discussion with central government officials over whether he could stay in the job for just two years, rather than serve a full five-year term. Media reports have also cited the lineup of the next administration as another factor influencing his decision. The sources said that in the light of Mr Hui's decision, Chief Executive Donald Tsang Yam-kuen had put forward a nominee for the post to Beijing on Thursday. The name of the nominee could not be confirmed last night, but a source close to Beijing said he understood Mr Tang had been named to the post, the second-highest ranking in the government. One source said John Tsang Chun-wah, currently director of the Chief Executive's Office, had been put forward for the post of financial secretary. Donald Tsang is known to be keen to groom John Tsang for high office. Neither Mr Tang nor John Tsang could be reached for comment last night. This source said the final list of nominees for ministerial posts in the next administration had been tabled to Beijing on Thursday. A Beijing loyalist said it was his understanding, from talking to central government officials, that the list would be finalised when the chief executive is in Beijing next week for a Basic Law forum. Donald Tsang will be accompanied by Mr Hui and Secretary for Justice Wong Yan-lung on the visit to the capital for the forum on Wednesday to mark the 10th anniversary of the Basic Law's implementation. Since Mr Hui, who is 59, rejoined the government in 2005, there has often been speculation about whether or not he would serve beyond June 30. The sources said the past month had been crucial to Mr Hui's decision about his future, since his discussions with Beijing about "the condition" for him staying on had entered their final stage. Two different sources attributed Mr Hui's decision to his reluctance to serve a full five-year term.

China: The Chinese government will continue to pay great attention to exported food safety, said an official with the country's quality control watchdog on Thursday. "Over the past two years, 99 percent of food exported to the United States was up to safety standards, which is a very high percentage," said Li Yuanping, senior official in charge of imported and exported food safety in the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ). The official said China has set up a complete monitoring system to ensure safety of exported food. All plantations and cultivation bases for export purposes are kept record for inspection and quarantine, he said. Companies exporting food have to meet safety requirements before producing, processing and exporting food and will receive regular inspection during production, Li said. Food that is up to the standards will also be labeled for track in case of possible problems. On May 8, the GAQSIQ announced that two Chinese companies exported melamine-contaminated wheat gluten and rice protein blamed for the deaths of dogs and cats in the United States. The watchdog said the two companies managed to evade quality check-ups by labeling them as exports that are not subject to quality inspection. It said it had ordered local branches to strengthen quality inspection on all vegetable proteins and pledged to include all vegetable proteins on the exports list subject for quality check-ups. The local public security authorities had launched an investigation into the cases and had detained related company officials, according to the GAQSIQ. The administration said it had found no further melamine-contaminated products after checking 399 samples from 173exporters nationwide. The watchdog said it had notified the U.S. Food and Drug Administration of the investigation results and proposed to set up a cooperation mechanism on food safety with the United States. The Chinese government will continue do its best to guarantee food safety for consumers worldwide, Li said.

The Chinese government has announced its first national action plan to respond to climate change during a state council conference chaired by the premier Wen Jiabao. The action plan describes climate change effects and outlines policies and measures China will adopt, said a statement from the State Council without describing specific policies and measures. Also in the plan, China clarified its basic stance on global warming and called for international cooperation. China would adhere to the principle of "common but differentiated responsibilities" in the UN Framework Convention on Climate Change, the statement said. Climate change should be dealt with under the framework of sustainable development, it said. Global warming was affecting China's ecological system and natural resources as well as life of the public. To cope with it, China had been taking a series of measures, including changing the economic growth pattern by adjusting economic structure and energy mix and controlling population growth. The meeting emphasized joint efforts by international community to address this issue. The meeting also urged governments and sectors at all levels to implement the action plan and called for a public awareness campaign on environment protection.

Modern love story, "The Longest Night in Shanghai", starring Chinese mainland actress Vicky Zhao and Japanese heartthrob Masahiro Motoki, is scheduled for a public release on June 26. The film is about the encounter of a Japanese hair designer with a Chinese woman taxi driver in the modern metropolis of Shanghai. Longing for a break from the daily routine, they spend a special night together in the modern city. Actress Vicky Zhao described her own role as that of "a sweet heart concealed inside a tough appearance". For her performance in the film, she was awarded the most popular actress at the 14th Beijing Student Film Festival in April. The film is expected to compete at the box office this summer with other blockbusters like "Pirates of the Caribbean III" and "Transformers".

Young Chinese pianist Li Yundi will work with Japanese conductor Seiji Ozawa on a one-hour documentary detailing their performances together. Li Yundi revealed the plan in a phone interview with the Beijing News.He said it was encouraging that the 72-year-old conductor was willing to make a commercial film with him. He and Seiji Ozawa just wrapped up their collaboration with the Berlin Philharmonic Orchestra. Their performances have won rave reviews from local critics.

UN Secretary-General Ban Ki- moon on Friday highly praised China's role in improving situation in Darfur, and rebuffed threats of linking Beijing's Olympics to the Darfur crisis. Ban told reporters at the UN Headquarters in New York that "this is separate issue" regarding to attempts of politicizing Beijing Olympic Games by some Western politicians. The UN chief also expressed his appreciation towards the Chinese government for its continuous efforts to improve the situation in the African country. "The Chinese government has been always exerting their utmost efforts," he said. "As I understand, I appreciate it." Meanwhile, Ban noted that he has been discussing this matter with the Chinese government. China recently appointed a special envoy to work on Darfur situation, and President Hu Jintao paid a visit last February, he said, adding that China has also sent high-level officials to discuss this matter with the Sudanese government. He finally clearly confirmed China's positive and helpful role in Darfur, saying he appreciates such a role played by the Chinese government. Ban expressed his optimism towards the future of Darfur issue, stressing he has made some progress even though slow. "There was an agreement to the second phase, heavy support package," he said, adding that "now we are almost at the final stage of presenting our common and joint proposal to the Sudanese government." The secretary-general said he had a telephone talk with Sudanese President Bashir, and the president was committed to see early resolution of this issue. He pointed out that the international community's effort should be made in a reinforcing manner, and the whole international community should cooperate fully in addressing these issues so as to find early resolution on this matter.

Huang Ju, member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee and Vice-Premier of the State Council, died of illness at 02:03 a.m. June 2 in Beijing at the age of 69.

Chinese President Hu Jintao (C) talks with children at the Tianyuan Kindergarten of Panggezhuang Town in the Daxing District of Beijing, capital of China, June 1, 2007. Hu Jintao on Friday spent the International Children's Day with the children at the Tianyuan Kindergarten and No. 2 Central Primary School of Panggezhuang Town.

Lars Thunell (left), IFC's executive vice president, shakes hand with Yan Xiaoyan, president of the Bank of Beijing, at a signing ceremony in Beijing. The International Finance Corporation (IFC) and Bank of Beijing on Friday signed cooperation agreements on financing energy efficiency and global trade. These are the first cooperation pacts between the two sides since the IFC made an equity investment in Bank of Beijing in May 2005, said Yan Bingzhu, chairman of the Beijing bank.

If you're a musician or an aspiring one, you won't want to miss the chance to compose an Olympic theme song. A group of four primary school children from Tianjin, 150-kilometer southeast to Beijing, were the latest to present their composition to the Beijing Olympic office. The students called themselves "20088", as all four kids are going to be eight years-old next year. Formed a year ago, the four children were chosen by their teacher Li Hongyu from a pool of 400 candidates from a local club in Tianjin. The parents of the members of the youngest electronic band in China said the trainer assured them their children would have enough time to study as well as work on their song. If anyone ended up with poor marks, the students would have to withdraw from entering. The Organizing Committee for the Beijing Olympic Games made the call for entries, which is ongoing until March 2008, will decide on the themes songs for both the Beijing Games and Paralympics, a song for the volunteers, the torch relay, and the music for awards ceremonies. American Giorgio Moroder, the theme song composer for the 1984, 1988 Olympic Games and the 1990 World Cup submitted his work earlier in May after working with Chinese pianist Kong Xiangdong. "Our composition will make it easy for people to hum the song after listening to it three times so that everyone can participate," Kong said. Former Chinese foreign minister Li Zhaoxing also had tried his hand after a music school teacher composed a tune for his poem on the Beijing Olympics. In his poem, "One World One Dream", Li writes, "Let war fires end here/ Let feud reconciled here/ Let peace and friendship extending from here/ Let the sun shines with seven-color light".

Within a year, beach volleyball player Tian Jia has lifted herself to the top of the world rankings with new partner Wang Jie. Now they have a bigger ambition - gold medaling at the 2008 Beijing Games. Tian, 26, and Wang, 24, first teamed up last May. A series of whirlwind victories in the 2006 World Tour then saw them catapult to World No 1.

The Shunyi Olympic Rowing-Canoeing Park is ready for the 2007 World Junior Rowing Championships, the first of the Good Luck Beijing events beginning in August. The brand-new venue has been completed recently and some 90 percent of its surroundings have been afforested. The 20km Baima Road linking the Park with downtown Beijing has also been completed, making the site a 30-minute drive from the city.

China has launched a telecommunications satellite that aims to bring television signals to every home in the nation, on the 100th flight of the homegrown Long March rocket series. The satellite was launched from the Xichang Satellite Launch Center in southwestern Sichuan province in the early hours of Friday. The Sino-Sat III satellite will provide telecommunications, television broadcasting and digital transmission services to commercial and state- enterprise clients. The satellite had been originally slated to work with the Sino-Sat II telecommunications satellite that was launched in October last year but was rendered inoperable after its solar panels failed to deploy. A replacement for Sino-Sat II will take another three years to build, operator Sino Satellite Communications said, at which time China hopes to be able to send television signals to every home in the nation, including those in remote mountainous regions. China has 12.6 million digital television subscribers and 400 million television sets, making it potentially a large market for satellite television. It was the 100th launch of the nation's Long March rocket series, the workhorse of China's space program, which first flew into space in 1970. The Long March rocket was built by China Aerospace Science and Technology, a key player in China's intercontinental missile program. China's satellite capabilities aroused international concern earlier this year, when it successfully destroyed one of its own aging weather satellites with a missile, releasing debris into orbit. Last month China launched a communications satellite for Nigeria, the first time a foreign buyer has purchased both a mainland-made satellite and its launching service. Foreign firms had previously used mainland rockets to launch satellites, which was cheaper than launching them from the United States or Europe. In 2003, China became only the third country - after the former Soviet Union and the United States - to launch a man into space aboard its own rocket. It now plans a space walk by next year and a lunar probe.

Work on a US Senate bill aimed at pressuring China to raise the value of its currency should be completed in the next few weeks, a spokeswoman for Senate Finance Committee chairman Max Baucus said.

June 4, 2007

Hong Kong: Global demand for gold reached 17.4 billion U.S. dollars in the first quarter of 2007, up 22 percent from the same period last year in terms of value, or four percent in terms of quantity, a report released by the World Gold Council (WGC) said here Thursday.

In a move believed to be the first of its kind in Hong Kong, the remuneration committee of PCCW (0008) has introduced new rules that will see senior executives' bonuses slashed by at least 50 percent if shares in the company do not outperform the Hang Seng Index. "Unless the share price outperforms the Hang Seng Index, executive directors cannot receive more than half of their targeted bonus, regardless of the financial performance of the company," PCCW chairman Richard Li Tzar-kai told a shareholders' meeting Thursday. The new measures will affect executive directors of the telecoms firm, including Li, group managing director Alex Arena and Peter Allen. "PCCW has been one of the worst stocks among the index constituent stocks since the year 2000," said Fulbright Securities general manager Francis Lun Sheung-nim. Over the past 12 months, PCCW shares have inched up 0.9 percent, while the benchmark HSI surged 30 percent. In March, deputy chairman and group managing director Jack So Chak- kwong suddenly tendered his resignation a day after the remuneration committee slashed his annual HK$8 million bonus by 70 percent, citing poor performance. "We are a very cold and calculating and hard-numbered company," Arena told reporters after the new rule was announced Thursday. Arena said PCCW would not name another deputy chairman to fill the slot left by So's departure. Non-executive director Tian Suning will continue as a deputy chairman, but the company will not appoint a second deputy as had been past custom. Li declined to say whether he plans to put PCCW's telecom assets on the block again, or whether he will attempt to sell his 28.06 percent stake in the firm.

As a successful lyricist with more than 3,000 songs to his name, it would be easy for Lin Xi to get stuck in a groove. But the Canto-pop veteran is alert to the risk and takes pains to stretch himself with offbeat projects. His latest challenge is a collaboration with experimental theatre group Zuni Icosahedron on Hua-yen Sutra, a multi-media production inspired by a Buddhist classic. The sutra is said to be the first teachings of the Buddha after he gained enlightenment. However, the show takes a more modern approach, combining installation, moving images, song and dance. Even so, Lin says coming up with suitable lyrics for the electronic-influenced theme song by composer Yu Yat-yiu tested his skills. "Using Cantonese to reflect the wisdom of classical Buddhist scripture is a challenge," he says. "Buddhism teaches us not to cling to things because everything is transient. You're the one who decides whether you're happy or sad. You can live happily and peacefully if you want to, regardless of the adverse environment." Keeping that in mind, Lin has tried to convey ideas of spiritual peace and create a harmonious world in the theme song. The 45-year-old songwriter has had some practice developing such lyrics. Lin turned to Buddhism about 10 years ago after suffering a painful break-up. "I wanted to write lyrics to comfort the broken-hearted and found that most healing philosophies matched Buddhist beliefs. So I started reading about Buddhism to find peace of mind," he says. However, it's only in recent years that he's introduced Buddhist wisdom into his lyrics. Moon Water, Illusory Flower, which was released by Miriam Yeung Chin-wah last year, is about letting go of failed relationships, for example. There's no sermonising, he says. "I don't use Buddhist jargon to avoid intimidating listeners. But I want to encourage people to take a different perspective, especially when things aren't going well." Although the teachings of relinquishing desire have enriched his spiritual life, Lin concedes he hasn't been able to renounce his favourite material pursuit - shopping. "I still can't do it. I like buying pretty things," he says, pointing to an oil painting by contemporary painter Yang Din. Like many Hongkongers, Lin is also active in the stockmarket. "I'm in love with it," he says with a grin, revealing that he derives most of his income from his investments. "In showbiz, careers don't last long, especially being a lyricist. I have to secure my future.

Strong corporate earnings will insulate blue chips from any fallout from an A-share market tumble, UBS analyst Andrew Look said Thursday, as he repeated his prediction that the benchmark index will hit 23,000 points by year's end. "Unless the A-share market plummets more than 30 percent, the Hong Kong market is unlikely to suffer a correction as big as 10 percent," Look said. His comments came a day after Hong Kong blue chips fell 0.86 percent to 20,293.76, dragged down by the A-share market's biggest dive since February 27 when mainland bourses slumped nearly 9 percent. The Hang Seng Index clawed back Thursday, rising 1.68 percent to close at 20,634.47, although the mainland benchmark slipped below 4,000 points in early trading, before bouncing back. "China is like all emerging markets, it is difficult to engineer a soft landing. You could deflate it, but soon it will rise again," Look said. But he believes the A-share market will only burst when it reaches 60 to 70 times price-earnings. "It is safe at the current 50 times." Earlier, Look had accurately predicted the February fall of 1,500 points in the HSI. He attributes weakness in the Hong Kong stock market to the high Hong Kong interbank offered rate, or HIBOR, an indicator of interbank lending activity, and a weak economy.

Poon chaired the conference's organizing committee. The three-day conference was attended by delegates from 26 countries and included academics, scientists and economists. Poon described the coordination between the Environment, Transport and Works and Economic Development and Labour bureaus, the two branches of government mainly involved in negotiations with China Light and Power and Hongkong Electric over greenhouse gases, as "unsmooth." He said "the two bureaus each have their own priorities - one mainly with money and the other with environmental impact - during negotiations. Coordination may not be good this way." The top-level office does not necessarily have to be in the form of a bureau. Calls for action by the government, business and individuals were made as the conference drew to a close. The government was urged to set energy and climate policies which incorporate sustainable development principles. "We hope the government will seriously consider our call for action," Poon said, admitting the demands were relatively general as the different countries participating in the conference had to be accommodated. One suggestion made at the conference involved the establishment of a community "climate change forum" in Hong Kong. "The forum will provide us with the basic foundation for follow-up action, including a continuing dialogue with the government, to ensure that what has been demanded will hopefully be carried out," Poon said.

The government has been urged to set up a top-level office to pinpoint action to be taken in the fight against global warming and to wrestle with power companies to reduce emissions. The call came Thursday from former Hong Kong Institution of Engineers president Otto Poon Lok-to at the end of the International Conference on Climate Change at the Hong Kong Convention and Exhibition Centre. A jewelry retailer has been fined HK$100,000 and given a suspended six-month jail term for falsely labeling jewelry made in China as Italian. Wan Chi-nang, manager of Silver Jubilee International, had pleaded guilty in Kowloon City Magistrates' Court to four charges of importing and possessing goods for sale with a false trading description and with failing to display the required notice under the Trade Descriptions Ordinance. He became the first person to be fined for selling falsely labeled items since national broadcaster CCTV aired a report in April about Hong Kong shops selling fake goods to mainland visitors. Principal magistrate Ernest Lin Kam-hung said Thursday although the prosecutor did not mention cases of mainland tourists being cheated during the hearing, he could not ignore the media reports about dishonest businessmen arranging to sell fake goods to mainland travelers. The magistrate also condemned all retailers who took advantage of visitors who were not familiar with the prices and markets in Hong Kong. He said ripping off visitors would give the city a bad image and hamper its growth. Lin said it was necessary to pass a deterrent sentence to curb similar incidents. However, since this was the first case following the CCTV expose, he was prepared to suspend the six- month term for three years. Future cases, he said, would lead to an immediate custodial sentence.

Hong Kong International Airport is today set for the grand opening of a new terminal built to meet increasing demand for passengers and strengthen its role as a regional and international transportation hub. The opening ceremony of the airport's Terminal 2 will be officiated by Chief Executive Donald Tsang Yam-kuen and top officials of the Airport Authority, which runs the facility. The opening is part of the celebration to mark the 10th anniversary of the handover in 1997. "The new terminal will cater for future expansion. We expect there will be a need to meet increased passenger demand here," a spokeswoman for the authority said. "We see a strong upward trend in the number of passengers." The 140,000-square-meter terminal, one-fourth the size of Terminal 1, already began a phased opening in February. Some 130 retail and catering outlets started opening during the month, while carriers Oasis and Emirates were among the first batch of airlines moving into the new facility in March. More carriers will progressively move to the terminal. The new terminal is for departing passengers but not for arrivals. It serves 10-15 percent of the total number of passengers using the airport.

A Hong Kong man who owns a six-floor house in a prime location in Shenzhen's financial district has accused a mainland developer of using underhand methods to try to force him to sell the property. Choi Chu-cheung, whose high-profile court battle against developer Kingkey Group put him in the media spotlight on the mainland, said yesterday he would hold his ground for as long as he could. The developer wants to build Shenzhen's tallest building - an 88-storey financial centre - on the site, but Mr Choi has refused to sell. Mr Choi, 57, said the developer had tried to force him into leaving by removing all security guards from the site - effectively turning the area into a thieves' den. Unidentified people have been seen near his house at night, digging holes and removing telephone cables. A telephone cable buried near Mr Choi's house was cut on Tuesday. But it was later found that the cable was linked to a nearby bank, and not his home. It was hurriedly repaired after protests by the bank. Mr Choi and neighbours said rampant thieving and sabotage was costing them dearly and posing a public-safety risk. There are more than 80 holes in a 500-metre-long stretch of road surrounding Mr Choi's house, none of which are properly marked. One passer-by said: "We have to be very careful. It's like walking past a minefield. It's irresponsible. They should at least put some signs near the holes." Mr Choi and another homeowner who has also refused to sell his property said they would not yield to the developer. "The situation is getting worse. But we will fight to the last minute," Mr Choi said. "We did nothing wrong. We should be protected by property law. No one can illegally demolish a building without its owner's approval." Zhang Tao , the mainland homeowner who lives nearby and has also refused to sell his flat, accused Kingkey of trying to muscle them out.

The ICAC's power to compel people to deliver to it documents held in other jurisdictions has been confirmed by the city's highest court. The Court of Final Appeal ruled yesterday that special investigative powers granted to the Independent Commission Against Corruption did extend to forcing people involved in an investigation, even non-suspects, to retrieve relevant documents that might be held outside Hong Kong. The ruling came after an appeal by a woman (who cannot be named) into charges brought against her for refusing a court-approved ICAC order to bring certain documents to the city that the commission thought were being held at an office in Zhongshan on the mainland. The woman was not a suspect in the investigation, which was into alleged misconduct by several senior figures at a Hong Kong-listed company, one of whom was her father. The corruption watchdog believed evidence of the alleged wrongdoing was being kept at a subsidiary of the company in Zhongshan. As part of the ICAC's special investigation powers, the commissioner is authorised to obtain, with judicial permission, information from suspects and non-suspects. Section 14 of the Prevention of Bribery Ordinance states that where a Court of First Instance judge is satisfied corruption may have occurred they can issue an order enabling the ICAC to require co-operation from people who it is believed could help further the investigation. Failure to comply without a reasonable excuse is a criminal offence punishable by a HK$250,000 fine and a one-year prison term. The ICAC sought and obtained the required order but the woman refused to comply with it on the grounds that she believed transporting the documents from the mainland would be against mainland law. She was charged as a result. The court noted that because Section 14 had an impact on rights central to Hong Kong's way of life, the judge's role was to ensure there was sufficient grounds for infringing on those rights. The judge must be satisfied of the case's merits and even then, the power to issue the notice was discretionary. If the judge believed the burden placed on the subject was too heavy, then the bench could choose not to grant such a special power, it said.

China: Most Asian countries do not see China's military buildup or increased defense spending as a threat to regional security, Singapore's prime minister said Friday. "Most Asian countries assess the challenge from China to be more economic than military," Prime Minister Lee Hsien Loong said in a speech to inaugurate a three-day regional security conference. The Shangri-La Dialogue is being attended by several defense ministers and top officials from 26 countries, including US Secretary of Defense Robert Gates, Japanese Defense Minister Fumio Kyuma, Indian Defense Minister A.K. Antony and the Chinese army's deputy chief of the general staff, Lt. Gen. Zhang Qisheng. Lee noted that the US and Japan have expressed concerns over China's military buildup, and sought more information on its defense spending and intentions. China announced in March it would boost military spending by 17.8 percent in 2007 to 350.92 billion yuan (US$44.94 billion), the biggest jump in more than a decade. Lee warned of negative consequences if Taiwan amends its Constitution and holds a referendum on the amendments. "These actions ... could lead to unintended and dangerous escalation of tensions between China and the US," he said. "Asian countries will be forced to choose sides, which none want to do," Lee told the forum, organized by the London-based International Institute for Strategic Studies. Lee also touched upon nuclear-powered India's growing weight in regional and international affairs. India's emerging relationship with the US has also created "a new dynamic." However, the debate caused in India by those who oppose closer relations with the US shows that that New Delhi "will not be a deputy sheriff to the United States, but fully intends to maintain its own strategic priorities," Lee said. The Shangri-La Dialogue, named after the hotel where it is held every year, has grown in stature after six years of bringing together defense ministers, army chiefs and other officials from countries that are friends and adversaries. The aim is to allow them to hold talks in an informal setting without political baggage. In a reflection of the conference's importance, China's chief delegate this year is of vice-ministerial rank and the highest ranking official ever sent to a regional forum of this level. Singapore's Lee set the tone for the freewheeling talks over the next two days with some frank comments of his own. Answering questions from the audience, he acknowledged that the Association of Southeast Asian Nations, a 10-nation grouping, had failed to make any progress in persuading fellow member Myanmar's military junta to adopt democracy. "We have exercised our influence, persuaded, encouraged, cajoled the authorities in Myanmar to move and adapt to the world which is leaving them behind. The impact has been limited," he said. Lee also urged the United States not to withdraw from Iraq without a clear victory, saying it would embolden extremists in other places.

Since 1978, more than 70 percent of all the Chinese who traveled abroad to study chose not to return home, a report has said. The Report on the Development of Chinese Talent in 2006, published yesterday by the Chinese Academy of Social Sciences, said that between 1978 and 2006, about 1.06 million Chinese went to study overseas. Of those just 275,000 returned home during the period, the report said. Of those who stayed overseas, more than 200,000 went on to find jobs or were granted citizenship, it said. About 300,000 people went abroad with the initial intention of visiting relatives, but later enroled in higher education and stayed, the report said. Yang Xiaojing, who helped draft the report, said: "This shows that Chinese students overseas, especially those with extraordinary abilities, are a real hit in the global tug war for talent. "While strictly controling the inflow of foreign labor to protect the interests of its domestic workforce, most developed countries spare no effort to attract the best talent from around the world," he said. "Against the backdrop of economic globalization, an excessive brain drain will inevitably threaten the human resources security and eventually the national economic and social security of any country," he said. The lack of first-class scientists and research pioneers is the main thing hindering China's innovation capability, the report said. "Of the many reasons for the brain drain of Chinese students, huge social and economic gaps in terms of personal income, employment opportunities, working conditions, research facilities and living standards are the main ones," the report said. The Ministry of Personnel has enacted a plan to lure about 150,000 to 200,000 overseas-based students back to China by 2010 by offering a series of preferential policies on income, welfare, housing and education for their children. To solve the relentless outflow of talent, the report urged the establishment of a talent security alarm system to monitor the flow of domestic talent. The report stressed the importance of implementing the promised preferential polices, as the main concern of many talented people was finding a good and solid home and work environment. China's backward management and lack of supervision of personnel recruitment, which is also sometimes plagued by corruption and nepotism, were also blamed for driving away talent, the report said.

China launched "SinoSat-3", a communications satellite for radio and television broadcasting, aboard a Long March-3A carrier rocket on early morning of June 1, 2007, marking the 100th flight of its Long March series.

China's government on Thursday pledged another 80 million yuan (10.4 million U.S. dollars) to help fight a widespread and prolonged drought that has left nearly 9 million people short of drinking water.

China plans to increase the ratio of Euros in its foreign exchange holdings given the stability in the European Union (EU) economic growth and in the value of the European single currency, central bank vice governor Wu Xiaoling said Thursday in Brussels. However, China has no plans yet to reduce the proportion of US dollar assets in its coffers, Wu Xiaoling told an economic forum in Brussels, the Shanghai-based Oriental Morning Post reported Friday. Chinese stocks are rising too quickly and a market crash would undermine investor and consumer confidence in the nation's economy, a Chinese deputy central bank governor said Thursday. But if economic reforms succeed, the yuan may strengthen against the US dollar - though China would ignore any external pressure for its currency's appreciation, Wu Xiaoling told a Brussels seminar on global imbalances. "In my view, every market develops in twists and turns. In my view, the Chinese stock market is growing too rapidly. We hope it can grow in a more steady manner," Wu said. The mainland's stocks rose Thursday, rebounding from a rout Wednesday that wiped out US$161 billion (HK$1.25 trillion) of market value. The CSI 300 Index gained 41.49, or 1.1 percent, to 3,927.95 at the close, having lost as much as 5.2 percent. It plunged 6.8 percent Wednesday, the most since February 27, after the finance ministry tripled the tax on share trades to cool a rally that was drawing more than 300,000 new investors a day. "The government definitely doesn't want to see a big correction," said Howard Wang, who helps manage JF Asset Management's US$443 million JF China Pioneer A-Share Fund in Hong Kong. "What it wants is for local investors to think of returns as more symmetrical than they have been. If the market comes off 20 percent, then you're looking at a social issue."

The Ministry of Railways announced yesterday that it had found five overseas firms to invest in 18 railway container-distribution centers in China, representing a major step forward for the financial reform of the country's railway sector. The ministry also announced the formation of China United International Rail Container Co Ltd, which is to build and operate the 18 centers. The centers will be located in regional economic centers throughout the country. China Railway Container Transport Corp Ltd, an affiliate of the ministry, will be the biggest shareholder in the new firm, with a 34 percent stake. China International Marine Containers (Group) Co Ltd will hold 10 percent. As far as the overseas firms, the Hong Kong-listed NWS Service Management Ltd will hold a 22 percent stake, while Hong Kong Promisky Investment Ltd will hold 10 percent. The Israel-based Zim Integrated Shipping Services Company, France-based CMA CGM Group and Germany-based Deutsche Bahn AG will each take 8 percent stakes. Ministry spokesman Wang Yongping described the establishment of the joint venture as "a milestone in the history of China's railway development". "It also fully reflects our resolve to accelerate the financial reform of the railway sector," Wang said. An initial assessment of the plan to build the 18 centers forecast investments worth at least 12 billion yuan ($1.60 billion). The company will have $560 million in registered capital, or about 35 percent of the total investment. The ministry said it hoped having overseas investors on board would help introduce new management concepts and sharpen railways' competitiveness in the container transport market. The ministry has been seeking foreign investment since last year. Railways Minister Liu Zhijun told a national conference earlier this year that local governments, State-owned and private enterprises, social investment institutions and overseas funds were all welcome to invest in the railways.

The US commerce department said it was imposing additional preliminary duties of up to 99.65 percent on imports of glossy paper from China, on top of earlier, much smaller duties that already have caused friction.

Authorities in a major mainland city issued emergency orders Thursday to stem panic water-buying after heavy pollution in a lake contaminated drinking supplies for millions of people. The Wuxi city government said it was doing everything it could to rid the Tai Lake of a huge algae bloom that was triggered by the pollution, but in the meantime drastic measures were needed to supply residents with water. "To rid the water of the odor and taste is a difficult problem for our water- treatment [plants]," it said. Orders have been issued for more bottled water supplies to be brought in to stop profiteering. Xinhua News Agency said the price of an 18-liter bottle of water in Wuxi sold for 50 yuan (HK$51.03) Wednesday, more than six times higher than the normal price of eight yuan. Officials have also ordered the diversion of water from local rivers into Tai Lake, the main source of drinking water for Wuxi, to help wash out the algae. Residents said the water coming out of taps was green or yellow and left a slimy film on the hands and body when used to wash. "The tap water is like waste water. It smells so bad that you want to throw up," a downtown shop owner surnamed Li said. "This is the third day that the water has been like this. If you wash with the water you end up smelling like it." Stores in the city of five million people in Jiangsu province began rationing sales of bottled water Wednesday, Li said.

June 2 - 3, 2007

Hong Kong: The total retail sales value in Hong Kong in April grew to a provisionally estimated 19.2 billion HK dollars (2.4 billion U.S. dollars), up 3.4 percent from the same month last year, official figures indicated Thursday. After netting out the effect of price changes, the total retail sales volume rose 2 percent in April, according to data released by the Census and Statistics Department of the Hong Kong Special Administrative Region. The revised estimate of the total retail sales value in March grew 4.9 percent to 18.8 billion HK dollars, while the total retail sales volume rose 3.4 percent. The department said the moderate growth in retail sales volume was partly due to the especially long holiday of adjacent Easter and Ching Ming Festival this year, which might have induced more people to take longer vacations outside Hong Kong. Also affecting retail business in April was the slow increase in incoming tourists, and the decline in Mainland visitors in particular, said the department.

The deposits of Renminbi, or Chinese yuan, in Hong Kong grew one percent to 25.5 billion yuan ( 3.35 billion U.S. dollars) in April, the Monetary Authority of Hong Kong said Thursday. In April, foreign-currency deposits also rose 1.4 percent, and however, total deposits with authorized institutions fell 0.7 percent, with Hong Kong dollar deposits down 2.4 percent, said the authority. Total loans and advances fell 3.2 percent, as the fall in Hong Kong dollar loans exceeded the rise in foreign-currency loans. Loans for use in Hong Kong shrank 4.1 percent, while loans for use outside Hong Kong grew 2.3 percent. Reflecting a larger contraction in loans relative to deposits, the Hong Kong dollar loan-to-deposit ratio fell to 73.9 percent. On a seasonally-adjusted basis, Hong Kong dollar M1 fell 2.2 percent in April but grew 9.4 percent on a year earlier. Unadjusted Hong Kong dollar M2 and M3 both fell 2.3 percent during the month. On a year-on-year basis, Hong Kong dollar M2 and M3 rose 14.9 percent and 14.8 percent, said the authority.

The total assets of Hong Kong's Exchange Fund surged 30 billion HK dollars (3.8 billion U.S. dollars) to 1.253 trillion HK dollars in April, Hong Kong's Monetary Authority said Thursday. The month also saw foreign-currency assets rise 15.1 billion HK dollars and Hong Kong dollar assets grow by 14.9 billion HK dollars, said the authority. The surge in foreign-currency assets was due mainly to valuation gains on foreign-currency investments and interest and dividend income from foreign-currency assets. The rise in Hong Kong dollar assets was due mainly to valuation gains of Hong Kong equities held by the Exchange Fund, placements received from fiscal reserves and a rise in Exchange Fund Bills and Notes issued but not yet settled. The Monetary Base fell 900 million HK dollars, or 0.3 percent, to 298.2 billion HK dollars. The fall was due mainly to a decrease in Certificates of Indebtedness. Backing Assets grew 800 million HK dollars, or 0.2 percent, to 332.6 billion HK dollars. The rise was attributable mainly to interest from investments and revaluation gains, which were partly offset by the redemption of Certificates of Indebtedness in the Monetary Base. Reflecting this, the backing ratio rose to 111.53 percent from 110.93 percent. (One U.S. dollar equals 7.8 HK dollars).

China's decision to raise stock trading tax, which caused a big fall of A share market on the Chinese mainland Wednesday may be a good news to most Hong Kong investors as they are expecting more mainland capitals to flow in through Qualified Domestic Institutional Investors (QDII) scheme to boost the sluggish Hong Kong market. Hong Kong stocks suffered a consecutive three-day loss until Thursday, when the benchmark of Hang Seng Index closed 340.71 points higher to 20634.47. However, most investors thought the three-day's fall just as a short term reflection dragged by the fall of A-share market due to the series of controlling policy, including the stamp duty rise from 0.1 percent to 0.3 percent Wednesday. Analysts said on the contrary to the previous containing policy issued by the government to cool down the market, including reserve ratio rise, interest rise and the expansion of exchange floating range, the stamp duty rise is interpreted by Hong Kong investors as positive instead of negative. They believe the stamp duty rise may promote more mainland investors to Hong Kong through QDII or through other investing channels. Some brokers even predicted that China Banking Regulatory Commission may further ease the investment volume of QDII by allowing Chinese banks to invest more than 50 percent of its overseas investment in stocks, which may attract more investors to put more money to overseas market instead of A-shares and thus reduce the A-share bubbles. Hong Kong stock market, which is an international investment platform yet getting more and more sensitive to the movement of A- shares, used to follow the up and down of A-shares. However, the pattern has changed this year into only following A-share's down trend but remaining sluggish even if its A-share counterparts going sky high, which leads to further price gap between H-shares and A-shares. Investors believe the money flow in through QDII may focus on companies with both A-shares and H-shares because the price gap between the two parts will attract investors to buy the relatively cheaper H-shares hoping the latter's catching-up may bring them big rewards. If that is the direction of Hong Kong stock market, analysts believe a balance will be achieved between A-share and H-share and therefore investors in Hong Kong market may not need to worry about further going down. Instead, they need to buy and wait for QDII to bring money in.

The rapid increase in the price of pork in the mainland, which is causing concern in some cities, has spilled over into Hong Kong with the city's sole fresh pork supplier increasing the wholesale price by a hefty 7 percent, effective immediately. A spokesman for the Ng Fung Hong company said the price was raised from HK$1,060 per 100 catties to HK$1,134. The industry estimates the increase to consumers will be around HK$2 a catty. The spokesman said the adjustment was in response to the increase in the price of pork in the mainland and the market demand. To ensure a constant daily supply of about 4,000 live pigs to Hong Kong, Ministry of Commerce spokesman Wang Xinpei said the central government will continue to monitor the supply in Guangzhou and Shenzhen. The deputy chairman of the Pork Traders General Association of Hong Kong, Hui Wai-kin, said the higher prices in the mainland are the result of greater demand, the increased cost of rearing pigs and the appreciation of the yuan.

Hong Kong health authorities are investigating an outbreak of gastroenteritis caused by norovirus that affected 92 people on a cruise ship that arrived in the SAR Wednesday. Star Cruises' Gemini, carrying 1,106 passengers and crew, is on a 22-day voyage around Asia. It departed from Singapore last Sunday, calling at ports in Thailand and Vietnam before docking in Hong Kong at 9am Wednesday. There were no Hong Kong citizens on board for the trip from Singapore. According to the Department of Health, four crew members and 88 passengers - 44 males and 44 females - aged from three to 83 years had probably contracted a norwalk-like virus with symptoms such as diarrhea, vomiting and fever. Chief port health officer Henry Kong Wing-ming, who boarded the ship to conduct an initial investigation, said he was satisfied with the hygiene conditions in the kitchens and restaurants. He said none of the 92 people required hospitalization and 74 had fully recovered after treatment by the ship's doctor. The others were in stable condition. Samples were collected from several passengers and some of the high- risk foods such as salads, sandwiches and cheese had been destroyed.

Lawmakers, including those from the opposition camp, will be invited to some of the activities to be attended by state leaders during celebrations marking the 10th anniversary of the handover, according to Secretary for Constitutional Affairs Stephen Lam Sui- lung.

Christie's, one of the world's largest auction houses, expects no letup in demand for Chinese art this year, with Asian sales set to rise up to 20 percent despite relatively flat global revenues.

Hutchison (SEHK: 0013) Telecom (SEHK: 2332) (Hong Kong), the city's second-largest mobile phone carrier, hopes the introduction of Japan's popular i-mode service will spur demand for mobile data transfers and attract more users of voice services to the company's 2.5 mobile business. At least 20 per cent of the company's new registered users would subscribe to the i-mode service, Hutchison's chief operating officer-mobile, Amy Lung, said after the official launch of i-mode, a mobile data service designed and founded by Japan's NTT DoCoMo. Having more innovative services such as i-mode "can help us to grab more high-spending young users", Miss Lung said. "We will make more of an effort to migrate traditional voice users to tap the data service in a bid to boost total data contribution." NTT DoCoMo, which launched its i-mode service in 1999, had registered 47 million users by the end of March, accounting for 33 per cent of Japan's total population. The success of the i-mode service is mainly due to its speedy links and range of content contributed by third parties. It allows users to manage dedicated e-mail, e-banking or securities accounts, or even buy train tickets.

Hong Kong is failing to reap the potential benefits from a youth working holiday scheme it has entered into with three other countries, a manpower expert warned yesterday. Lai Kam-tong, president of the Hong Kong Institute of Human Resources Management, made his remarks after it was disclosed that youngsters using the scheme to work overseas outnumber those coming in from the other countries by almost three to one. The scheme has attracted just 780 people from Australia, New Zealand and Ireland, while 2,100 Hongkongers have gone there on working holidays. The scheme was launched with Australia and New Zealand in 2001, with Ireland joining in 2005. It allows people aged 18 to 30 to take temporary jobs for up to three months at a time during a 12-month stay. The Labour Department said the scheme was largely aimed at providing youngsters with an opportunity to broaden their horizons with exposure to a different culture. But Mr Lai said the government should see the scheme as a means to capture young talent. "We don't just want them to experience our culture, we want them spread the good word about Hong Kong and perhaps stay on to work if they prove to be a useful talent for the economy," he said. The quota of working holiday visas for Australia and New Zealand was first set at 200, but last year the Australians agreed to expand it to 1,000 following strong demand from Hong Kong. In the second half of last year, applications for Australia reached 502, five times the 93 applications from Australia for the whole year, according to the Security Bureau. While Mr Lai said poor air quality and small and costly flats might deter young foreigners from coming to Hong Kong, Australian consulate-general spokeswoman Kirsty Boazman blamed the low turnout on competition from other countries. "We have a lot of choices. The United States is popular and there is also Singapore," Ms Boazman said. "Our people will compare before picking the destination they like best."

China: Cigarette-related deaths in China will more than double by 2020 unless the government introduces measures to curtail smoking.

Cementing and developing friendly Australia-China ties - China and Australia have witnessed a rapid development in terms of bilateral ties such as in economic and trade cooperation, in education, and in tourism since the establishment of diplomatic relations between the two countries thirty-five years ago. At the invitation of People's Daily Online, on May 29th, Australian ambassador to China, Dr. Geoffrey William Raby, paid a visit to the Strong China Forum in Beijing, during which he spoke freely about the current issues of common concern and answered questions raised by netizens on the subject of "Cementing and Developing Friendly Australian-China Relations." Australia and China great cooperation partners - The ambassador regarded China and Australia as complementary in terms of economic cooperation, and the economic partnership between the two countries should be based on the availability of rich natural resources in Australia, and the great demand of raw materials and resources from China. Since the establishment of diplomatic relations thirty-five years ago, the economic trade relationship between the two countries has witnessed considerable development, particularly the volume of trade which has made great strides forward. At present, Australia exports some 8 billion Australian dollars worth iron ore to China annually, taking up a considerable share of the total volume of trade between Australia and China. Apart from cooperation in the above-mentioned sectors, there are also many new areas in which the two can collaborate. For example, they can work together in the environmental arena, particularly in the area of clean coal technology. China has great demand for Australia's natural resources, and in 1998, China poured its initial batch of foreign investment into the establishment of an iron mine in West Australia in 1998. The ambassador voiced his confidence in the collaborative efforts of Australia and China in this area. Tourism brings Australia and China closer - In the past ten years, more and more Chinese tourists have visited Australia. At present, the number of Chinese tourists in Australia has hit 400,000, and is growing steadily. Generally speaking, Chinese tourists stay much longer in Australia than tourists visiting from other countries do. Currently, Chinese tourists visit Australia mainly to go sightseeing, visiting such places as the Sydney Harbour Bridge and Sydney Opera House, where they can enjoy sunshine, the beach, fresh air, and other things typically Australian.

Jialing River Bridge at Shangzhong Dam in Nachong city, southwest China's Sichuan province opened to traffic on May 30.

Girls play drums during a performance at Tiananmen Square in Beijing May 31,2007. Thousands of participants took part in the "Harmonious China, Welcome Olympics" event aimed at promoting the Beijing 2008 Olympics.

Monks perform Kung-fu at Tiananmen Square in Beijing May 31,2007. Thousands of participants took part in the "Harmonious China, Welcome Olympics" event aimed at promoting the Beijing 2008 Olympics.

From milk bottle washer to dairy industry king - Niu Gensheng began his career at Inner Mongolia Yili Industrial Group Co Ltd (Yili) as a milk bottle washer in 1982. Because of his hard work and intelligence, Niu rapidly ascended to general manager. But in 1999, Niu resigned because of irreconcilable differences with then boss, Zheng Junhuai. That year, he founded Mengniu Dairy Industry (Group) Co Ltd (Mengniu). In eight years, the 48-year-old has transformed the company from the 1116th ranked dairy producer in China to number one. Mengniu has held the milk market crown for four consecutive years, generating sales of 14.26 billion yuan in 2006, up 53.1 percent from the year before. Up until 2004, the overseas market remained untapped for the dairy giant. Since then, Mengniu has made inroads into Hong Kong and Taiwan and some Southeast Asian nations by joining forces with overseas players like Danone, Arla Foods and Hong Kong Disneyland. Still, the overseas market contributes just 10 percent of Mengniu's sales.

The central government's newly found nerve to impose serious measures to cool the mainland's overheated stock market has earned the praise of economists for its determination to tackle the tricky issue. "This kind of targeted measure for the domestic equity market should be more effective in cooling off the A-share market than macro measures such as raising interest rates or hiking the [banks'] reserve requirement ratio further," said Frank Gong, an economist at JPMorgan. Gong is among those who steadfastly believes that tax policy should be used to deal with the A-share problem. Dong Tao, economist at Credit Suisse, said the Beijing government seems reluctant to make overly aggressive moves - such as imposing a capital gains tax - because of the risk of overkill. "The capital market is strategically important to the next tightening measures," Tao said Wednesday. Both Tao and Gong, among others, agree there will be more targeted measures in the future. They will be accompanied by administrative measures such as an interest rate increase and another increase in the reserve requirement. Since the recovery of the A-share market, especially from July 2006 when the regulator approved new share listings again after a one-year hiatus, the central government has been handling the equity market with kid gloves, not wanting to impose measures to dampen the fragile but growing confidence of domestic investors. "The government really has concerns on the impact of imposing such stringent measures [such as a stamp duty adjustment]," said Jason Chang, economist at Standard Chartered Bank. "It [an increase in stamp duty] always ended a bull run in the past." But this time, the success of share reform, coupled with implementation of more market infrastructure, had led to a more stable market, which has served as a good foundation for Beijing to act more decisively, analysts said. "It would be about right and it is a healthy thing. It is good for people to not expect that markets will go up continuously," Mark Mobius, managing director at Templeton Asset Management, told Bloomberg. "If you get a real severe shock, where people give up hope entirely, then it could be a bit more prolonged." Jerry Lou, China strategist at Morgan Stanley, said the adjustment of the stamp duty has broken the perception the government will leave asset prices to the market and will not interfere. Despite the consensus that the latest move would be mild and not large enough to push down the market, economists and strategists believe the psychological effect should cause the market to become more self-disciplined.

Just a month after the discovery of the Jidong Nanpu oilfield in Bohai Bay by PetroChina (0857), China Petroleum & Chemical (0386) - better known as Sinopec - said it has found an oilfield in northwest China with up to 1.47 billion barrels of oil equivalent in place.

Moody's Investors Service has placed China's A2 rating on review for a possible upgrade, praising its strong external payments position, continued success in reform and favorable fiscal trends.

Disgraced drug chief Zheng Xiaoyu , the fourth senior official to be sentenced to death for corruption charges since the Cultural Revolution, is planning an appeal, according to state media. But a Beijing lawyer who has represented many victims of medical negligence said it would be virtually impossible for Zheng to escape execution because of his guilty plea and the size of the bribes he accepted. A Chengdu Shangbao report carried by major official internet portals yesterday quoted a lawyer representing Zheng, Liu Ning , as saying the former State Food and Drug Administration (SFDA) director had decided to appeal. Zheng was sentenced to death by a Beijing court on Tuesday for receiving bribes and gifts totaling 6.49 million yuan and dereliction of duty. Zhuo Xiaoqin , the Beijing lawyer who is also a consultant to the Ministry of Health, said the prospects of a successful appeal against the death sentence were slim. "The chances of him not dying are zero. As far as I know, Zheng has pleaded guilty to accepting bribes, and the litigation was mainly about the charge of dereliction of duty," he said. "The court can sentence someone to death for accepting more than 100,000 yuan in bribes and Zheng's case is particularly serious because his case is not just a normal corruption case, but also because he was causing immense health hazards."

June 1, 2007

Hong Kong: The government of the Hong Kong Special Administrative Region announced Wednesday that the relaxed immigration policy governing the entry of dependents for residence in Hong Kong would take effect from June 1. Under the policy announced on May 18, Chinese mainland spouses and unmarried dependent children under the age of 18 of the following categories of persons will be allowed to apply to reside in Hong Kong as the dependents of their sponsors: * persons admitted for employment, investment and training under the General Employment Policy; * persons admitted under the Capital Investment Entrant Scheme; * foreigners and overseas Chinese admitted under the Quality Migrant Admission Scheme; * overseas Chinese admitted for employment; and * overseas students admitted for studying in full-time undergraduate or post-graduate programs in local degree-awarding institutions. The length of stay of dependents is linked to that of their sponsors. They are required to leave Hong Kong as and when the sponsors leave.

Run Run decides to retire in his 100th year - Television Broadcasts (0511) executive chairman Run Run Shaw is planning to retire and is looking for a replacement, the company's deputy chairman said Wednesday. Mona Fong Yat-wah, however, declined to comment on whether Shaw will sell his stake in the company. Fong did not elaborate further on Shaw's retirement plans.

China's Macao Special Administrative Region saw a GDP growth rate of 25.6 percent in the first quarter of this year, according to official statistics issued Wednesday. The figures released by the government-run Statistics and Census Service (SCS) showed that rising gaming receipts and visitor expenditures in the quarter dedicated much to the two- digit growth in gross domestic product (GDP). The city in the first quarter saw year-on-year increase of 43.5 percent and 16 percent respectively in the above two sectors, the figures showed.

Robert Zoellick, a Goldman Sachs executive who has built contacts around the globe as President Bush's trade chief, is the White House's choice to be the next World Bank president.

Research analysts flashed out a HIBOR alert Tuesday, indicating banks may soon raise their interest rates as funds continue to depart from Hong Kong while its currency continues to weaken. The three-month Hong Kong interbank offered rate rose to 4.567 percent Tuesday compared to the 3.9 percent average in January. This suggests a higher funding cost for local lenders resulting from declining liquidity levels in the banking industry. When HIBOR reaches 4.5 percent, banks may have to raise their best lending rates to offset higher costs, Hang Seng Bank (0011) chief executive Raymond Or Ching-fai has said. Citigroup predicts Hong Kong banks may raise the prime rate by 25 basis points in one to three months to protect profit margins amid rising cost of funds. "A headache for banks in Hong Kong is that they need to keep lending rates low to boost loan growth," economist Joe Lo said in a research report. "On the other hand, banks are facing a higher cost of funds and lower net interest margins, particularly for mortgage loans on which interest rates are based on the prime rate." Another tactic Hong Kong banks may adopt to tackle the problem could be to raise savings rates paid to customers to attract more deposits, therefore allowing banks to rely less on borrowings from other banks. Margaret Leung Ko May-yee, HSBC's general manager and global co-head for commercial banking, does not rule out the possibility of raising interest rates in one to three months. "We could raise interest rates anytime, but we would have to identify carefully whether the high HIBOR level is a persistent situation or just temporary because of the three upcoming IPOs," Leung said Tuesday. Market watchers say the need to raise interest rates this time is more pressing than a few months ago, as the previous surge in HIBOR was due to several large initial public offerings that sucked out funds from the banking system. This time, the falling liquidity level could be due to fears of a bubble forming in the A-share market, which has probably caused investors to pull out their money from Hong Kong's equity market, which is 40 percent made up of Chinese enterprises. The rising yuan has also highlighted the weakening of the Hong Kong dollar. The mainland currency has risen past the 7.65 level against the US dollar, trading Tuesday at 7.6495. "The three-month HIBOR has pushed up to 4.6 percent, rising 20 basis points in the past 10 days, while the Hong Kong dollar has weakened to just over 7.82 against the US dollar," CLSA Asia Pacific said.

Hutchison Whampoa's (0013) British mobile operator has lodged a legal challenge to new rules by the United Kingdom telecoms watchdog that will see the fees it charges to connect calls on its network slashed by 45 percent.

An urban planning concern group has urged the government to rezone the Central waterfront to improve the area's vibrancy and diversity. Designing Hong Kong, an alliance of four individuals, has proposed fundamental changes to the government's zoning plans for the Central waterfront. One of the four, Paul Zimmerman, said the changes were based on a thorough study of different concern groups' opinions over the past five years. "We are confident that the proposals have broad support among many stakeholders," said Mr Zimmerman, convenor of Designing Hong Kong Harbor District. Compared to the existing plans, the group has proposed replacing big high-rises with smaller ones, for better views and air ventilation, and introducing more developers to increase competition. It has proposed extending the tram network to the waterfront and converting the Statue Square "corridor" into a park, enabling the Star Ferry Clock Tower to be returned to its original site. Other changes include reducing the width of the major road across the area, as well as the maximum height of new buildings between IFC and the ferry piers. The group also suggests turning half of the PLA barracks into open space and moving the military berth 20 meters offshore to free more harbourfront space. "We acknowledge that the proposals reduce the overall gross floor area and premium income potential, and that the changes will require the administration to revisit previous assumptions. However, this short-term loss will be more than compensated for by the economic benefits of the improved quality of life in the long term," said Mr Zimmerman. The group has submitted its proposals to the Town Planning Board, which is scheduled to discuss them in August. To further promote its idea, the group of four has launched an international urban planning and design competition. Group member Markus Shaw, chairman of the WWF in Hong Kong, said the design submissions were expected to be innovative, yet practical and feasible, and had basically to be based on the rezoning amendments put forward by the group. The submission deadline is September 1 and the winners will receive HK$1 million in prize money. In November, the winning entries will be proposed to the Planning Department in support of the central reclamation urban design study the department has been carrying out.

China: In 2006, the number of Chinese students studying abroad reached 134,000. Countries are attracting students in different ways.

Ningning Zhang waves after receiving the award as Miss Congeniality at the Miss Universe 2007 pageant at the National Auditorium in Mexico City May 28.

China will raise the stamp tax on securities trading from the current 0.1 percent to 0.3 percent beginning May 30, the Ministry of Finance said Tuesday night. The Chinese stock market had a "earthquake" today , caused by the stamp tax hike announced last night, and failed to recover from the "one-shock" loss by closing time.

If the yuan rises by 5-10%, 3.5 million workers in non-agriculture sectors might lose their jobs and some 10 million farmers could be affected.

The World Bank raised its forecast for China's economic growth this year to 10.4% from an earlier 9.6%.

China's leading web portal Sohu has opened a channel to bring college students' attention to the Olympic Games. Based on the 28 Olympic sports, the website has designed a number of delightful games entitled "Mini Olympics". Anyone who registers with can take part in the games and interact through blogs.and other platforms. The website also provides the students, numbering up to 20 million, an opportunity to make flash creations. Classified in the drama and cartoon categories, the creations may display such themes as Olympic charitable campaigns, host and co-host cities, messages to the Olympics, the Olympics and my campus, and so on. From now on, subscribers can upload their creations, which will go through appraisal of experts. The authors of the final 20 entries will compete at the CCTV representation hall to produce the top winner, who will be awarded a prize of 100,000 yuan. Under the auspices of the Media and Communications Department of the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG), the campaign was co-sponsored by the Education Ministry, General Administration of Sport, and Sohu Company, internet content services sponsor of the Beijing Olympic Games. "We run this campaign to integrate the wisdom and passion of the students into the preparatory work for the upcoming Olympics and inspire more people to spread the Olympic spirit," said Chen Luming, vice president of Sohu at the launching ceremony at the Great Hall of the People on Tuesday.

Oil refiner China Petroleum & Chemical Corp (0386), better known as Sinopec, got the green light from shareholders Tuesday to issue 20 billion yuan (HK$20.45 billion) bonds to raise capital for the Puguang gas field in Sichuan province.

 *News information are obtained via various sources deemed reliable, but not guaranteed

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